The Florida Senate

¹288.9607  Guaranty of bond issues.--

(1)  The corporation is hereby authorized to approve or deny, by a majority vote of the membership of the directors, the guaranty of any revenue bonds issued pursuant to this act. The guaranty may also be of the obligations of the corporation with respect to any letter of credit, bond insurance, or other form of credit enhancement provided by any person with respect to any revenue bonds issued by the corporation pursuant to this act.

(2)  Any applicant for financing from the corporation, requesting a guaranty of the bonds issued by the corporation under this act must submit a guaranty application, in a form acceptable to the corporation, together with supporting documentation to the corporation as provided in this section.

(3)  All applicants which have entered into a guaranty agreement with the corporation shall pay a guaranty premium on such terms and at such rates as the corporation shall determine prior to the issuance of the bonds. The corporation may adopt such guaranty premium structures as it deems appropriate, including, without limitation, guaranty premiums which are payable one time upon the issuance of bonds or annual premiums payable upon the outstanding principal balance of bonds from time to time. The premium payment may be collected by the corporation from the lessee of the project involved, from the applicant, or from any other payee of the loan agreement involved.

(4)  All applications for a guaranty must acknowledge that as a condition to the issuance of the guaranty, the financing must be secured by a mortgage or security interest on the property acquired which will have such priority over other liens on such property as may be required by the corporation, and that the financing must be guaranteed by such person or persons with such ownership interest in the applicant as may be required by the corporation.

(5)  Personal financial records, trade secrets, or proprietary information of applicants shall be confidential and exempt from the provisions of s. 119.07(1).

(6)  If the application for a guaranty is approved by the corporation, the corporation and the applicant shall enter into a guaranty agreement. In accordance with the provisions of the guaranty agreement, the corporation guarantees to use the funds on deposit in its Revenue Bond Guaranty Reserve Account to meet amortization payments on the bonds as they become due, in the event and to the extent that the applicant is unable to meet such payments in accordance with the terms of the bond indenture when called to do so by the trustee of the bondholders, or to make similar payments to reimburse any person which has provided credit enhancement for the bonds and which has advanced funds to meet such amortization payments as they become due. If the applicant defaults on bond amortization payments, the corporation may use funds on deposit in the Revenue Bond Guaranty Reserve Account to pay insurance, maintenance, and other costs which may be required for the preservation of any project or other collateral security for any bond issued by the corporation, or to otherwise protect the reserve account from loss, or to minimize losses to the reserve account, in each case in such manner as may be deemed necessary and advisable by the corporation.

(7)(a)  The corporation is authorized to enter into an investment agreement with the Department of Transportation and the State Board of Administration concerning the investment of the earnings accrued and collected upon the investment of the minimum balance of funds required to be maintained in the State Transportation Trust Fund pursuant to ²s. 339.135(7)(b). Such investment shall be limited as follows:

1.  Not more than $4 million of the investment earnings earned on the investment of the minimum balance of the State Transportation Trust Fund in a fiscal year shall be at risk at any time on one or more bonds or series of bonds issued by the corporation.

2.  The investment earnings shall not be used to guarantee any bonds issued after June 30, 1998, and in no event shall the investment earnings be used to guarantee any bond issued for a maturity longer than 15 years.

3.  The corporation shall pay a reasonable fee, set by the State Board of Administration, in return for the investment of such funds. The fee shall not be less than the comparable rate for similar investments in terms of size and risk.

4.  The proceeds of bonds, or portions thereof, issued by the corporation for which a guaranty has been or will be issued pursuant to s. 288.9606, s. 288.9608, or this section used to make loans to any one person, including any related interests, as defined in s. 658.48, of such person, shall not exceed 20 percent of the principal of all such outstanding bonds of the corporation issued prior to the first composite bond issue of the corporation, or December 31, 1995, whichever comes first, and shall not exceed 15 percent of the principal of all such outstanding bonds of the corporation issued thereafter, in each case determined as of the date of issuance of the bonds for which such determination is being made and taking into account the principal amount of such bonds to be issued. The provisions of this subparagraph shall not apply when the total amount of all such outstanding bonds issued by the corporation is less than $10 million. For the purpose of calculating the limits imposed by the provisions of this subparagraph, the first $10 million of bonds issued by the corporation shall be taken into account.

5.  The corporation shall establish a debt service reserve account which contains not less than 6 months' debt service reserves from the proceeds of the sale of any bonds, or portions thereof, guaranteed by the corporation.

6.  The corporation shall establish an account known as the Revenue Bond Guaranty Reserve Account, the Guaranty Fund. The corporation shall deposit a sum of money or other cash equivalents into this fund and maintain a balance of money or cash equivalents in this fund, from sources other than the investment of earnings accrued and collected upon the investment of the minimum balance of funds required to be maintained in the State Transportation Trust Fund, not less than a sum equal to 1 year of maximum debt service on all outstanding bonds, or portions thereof, of the corporation for which a guaranty has been issued pursuant to ss. 288.9606, 288.9607, and 288.9608. In the event the corporation fails to maintain the balance required pursuant to this subparagraph for any reason other than a default on a bond issue of the corporation guaranteed pursuant to this section or because of the use by the corporation of any such funds to pay insurance, maintenance, or other costs which may be required for the preservation of any project or other collateral security for any bond issued by the corporation, or to otherwise protect the Revenue Bond Guaranty Reserve Account from loss while the applicant is in default on amortization payments, or to minimize losses to the reserve account in each case in such manner as may be deemed necessary or advisable by the corporation, the corporation shall immediately notify the Department of Transportation of such deficiency. Any supplemental funding authorized by an investment agreement entered into with the Department of Transportation and the State Board of Administration concerning the use of investment earnings of the minimum balance of funds is void unless such deficiency of funds is cured by the corporation within 90 days after the corporation has notified the Department of Transportation of such deficiency.

(b)  Unless specifically prohibited in the General Appropriations Act, the earnings accrued and collected upon the investment of the minimum balance of funds required to be maintained in the State Transportation Trust Fund may continue to be used pursuant to paragraph (a).

(c)  The guaranty shall not be a general obligation of the corporation or of the state, but shall be a special obligation, which constitutes the investment of a public trust fund. In no event shall the guaranty constitute an indebtedness of the corporation, the State of Florida, or any political subdivision thereof within the meaning of any constitutional or statutory limitation. Each guaranty agreement shall have plainly stated on the face thereof that it has been entered into under the provisions of this act and that it does not constitute an indebtedness of the corporation, the state, or any political subdivision thereof within any constitutional or statutory limitation, and that neither the full faith and credit of the State of Florida nor any of its revenues is pledged to meet any of the obligations of the corporation under such guaranty agreement. Each such agreement shall state that the obligation of the corporation under the guaranty shall be limited to the funds available in the Revenue Bond Guaranty Reserve Account as authorized by this section.

The corporation shall include, as part of the annual report prepared pursuant to s. 288.9610, a detailed report concerning the use of guaranteed bond proceeds for loans guaranteed or issued pursuant to any agreement with the Florida Black Business Investment Board, including the percentage of such loans guaranteed or issued and the total volume of such loans guaranteed or issued.

(8)  In the event the corporation does not approve the application for a guaranty, the applicant shall be notified in writing of the corporation's determination that the application not be approved.

(9)  The membership of the corporation is authorized and directed to conduct such investigation as it may deem necessary for promulgation of regulations to govern the operation of the guaranty program authorized by this section. The regulations may include such other additional provisions, restrictions, and conditions as the corporation, after its investigation referred to in this subsection, shall determine to be proper to achieve the most effective utilization of the guaranty program. This may include, without limitation, a detailing of the remedies that must be exhausted by the bondholders, or a trustee acting on their behalf, prior to calling upon the corporation to perform under its guaranty agreement and the subrogation of other rights of the corporation with reference to the project and its operation or the financing in the event the corporation makes payment pursuant to the applicable guaranty agreement. The regulations promulgated by the corporation to govern the operation of the guaranty program shall contain specific provisions with respect to the rights of the corporation to enter, take over, and manage all financed properties upon default. These regulations shall set forth the respective rights of the corporation and the bondholders in regard thereto.

History.--ss. 31, 62, ch. 93-187; s. 1, ch. 93-402; s. 14, ch. 94-136; s. 3, ch. 95-386; s. 103, ch. 96-320; s. 148, ch. 96-406.

¹Note.--Section 62, ch. 93-187, as amended by s. 1, ch. 93-402, provides that "[b]y December 31, 1998, the Legislature shall review the Florida Development Finance Corporation, including evaluating its success in attaining its statutory mission, identifying any new or unintended risks created for the state by it, and its record in covering increasing portions of its operating expenses."

²Note.--Section 339.135(6)(b) relates to the minimum balance to be maintained in the State Transportation Trust Fund.