The Florida Senate

288.1045  Qualified defense contractor tax refund program.--

(1)  DEFINITIONS.--As used in this section:

(a)  "Consolidation of a Department of Defense contract" means the consolidation of one or more of an applicant's facilities under one or more Department of Defense contracts either from outside this state or from inside and outside this state, into one or more of the applicant's facilities inside this state.

(b)  "Average wage in the area" means the average of all wages and salaries in the state, the county, or in the standard metropolitan area in which the business unit is located.

(c)  "Applicant" means any business entity that holds a valid Department of Defense contract or any business entity that is a subcontractor under a valid Department of Defense contract or any business entity that holds a valid contract for the reuse of a defense-related facility, including all members of an affiliated group of corporations as defined in s. 220.03(1)(b).

(d)  "Office" means the Office of Tourism, Trade, and Economic Development.

(e)  "Department of Defense contract" means a competitively bid Department of Defense contract or a competitively bid federal agency contract issued on behalf of the Department of Defense for manufacturing, assembling, fabricating, research, development, or design with a duration of 2 or more years, but excluding any contract to provide goods, improvements to real or tangible property, or services directly to or for any particular military base or installation in this state.

(f)  "New Department of Defense contract" means a Department of Defense contract entered into after the date application for certification as a qualified applicant is made and after January 1, 1994.

(g)  "Jobs" means full-time equivalent positions, consistent with the use of such terms by the Department of Labor and Employment Security for the purpose of unemployment compensation tax, resulting directly from a project in this state. This number does not include temporary construction jobs involved with the construction of facilities for the project.

(h)  "Nondefense production jobs" means employment exclusively for activities that, directly or indirectly, are unrelated to the Department of Defense.

(i)  "Project" means any business undertaking in this state under a new Department of Defense contract, consolidation of a Department of Defense contract, or conversion of defense production jobs over to nondefense production jobs or reuse of defense-related facilities.

(j)  "Qualified applicant" means an applicant that has been approved by the director to be eligible for tax refunds pursuant to this section.

(k)  "Director" means the director of the Office of Tourism, Trade, and Economic Development.

(l)  "Taxable year" means the same as in s. 220.03(1)(z).

(m)  "Fiscal year" means the fiscal year of the state.

(n)  "Business unit" means an employing unit, as defined in s. 443.036, that is registered with the Department of Labor and Employment Security for unemployment compensation purposes or means a subcategory or division of an employing unit that is accepted by the Department of Labor and Employment Security as a reporting unit.

(o)  "Local financial support" means funding from local sources, public or private, which is paid to the Economic Development Trust Fund and which is equal to 20 percent of the annual tax refund for a qualified applicant. Local financial support may include excess payments made to a utility company under a designated program to allow decreases in service by the utility company under conditions, regardless of when application is made. A qualified applicant may not provide, directly or indirectly, more than 5 percent of such funding in any fiscal year. The sources of such funding may not include, directly or indirectly, state funds appropriated from the General Revenue Fund or any state trust fund, excluding tax revenues shared with local governments pursuant to law.

(p)  "Contract for reuse of a defense-related facility" means a contract with a duration of 2 or more years for the use of a facility for manufacturing, assembling, fabricating, research, development, or design of tangible personal property, but excluding any contract to provide goods, improvements to real or tangible property, or services directly to or for any particular military base or installation in this state. Such facility must be located within a port, as defined in s. 313.21, and have been occupied by a business entity that held a valid Department of Defense contract or occupied by any branch of the Armed Forces of the United States, within 1 year of any contract being executed for the reuse of such facility. A contract for reuse of a defense-related facility may not include any contract for reuse of such facility for any Department of Defense contract for manufacturing, assembling, fabricating, research, development, or design.

(q)  "Local financial support exemption option" means the option to exercise an exemption from the local financial support requirement available to any applicant whose project is located in a county designated by the Rural Economic Development Initiative, if the county commissioners of the county in which the project will be located adopt a resolution requesting that the applicant's project be exempt from the local financial support requirement. Any applicant that exercises this option is not eligible for more than 80 percent of the total tax refunds allowed such applicant under this section.

(2)  GRANTING OF A TAX REFUND; ELIGIBLE AMOUNTS.--

(a)  There shall be allowed, from the Economic Development Trust Fund, a refund to a qualified applicant for the amount of eligible taxes certified by the director which were paid by such qualified applicant. The total amount of refunds for all fiscal years for each qualified applicant shall be determined pursuant to subsection (3). The annual amount of a refund to a qualified applicant shall be determined pursuant to subsection (5).

(b)  A qualified applicant may not be qualified for any project to receive more than $5,000 times the number of jobs provided in the tax refund agreement pursuant to subparagraph (4)(a)1. A qualified applicant may not receive refunds of more than 25 percent of the total tax refunds provided in the tax refund agreement pursuant to subparagraph (4)(a)1. in any fiscal year, provided that no qualified applicant may receive more than $2.5 million in tax refunds pursuant to this section in any fiscal year.

(c)  A qualified applicant may not receive more than $7.5 million in tax refunds pursuant to this section in all fiscal years.

(d)  Contingent upon an annual appropriation by the Legislature, the director may approve not more in tax refunds than the amount appropriated to the Economic Development Trust Fund for tax refunds, for a fiscal year pursuant to subsection (5) and s. 288.095.

(e)  For the first 6 months of each fiscal year, the director shall set aside 30 percent of the amount appropriated for refunds pursuant to this section by the Legislature to provide tax refunds only to qualified applicants who employ 500 or fewer full-time employees in this state. Any unencumbered funds remaining undisbursed from this set-aside at the end of the 6-month period may be used to provide tax refunds for any qualified applicants pursuant to this section.

(f)  After entering into a tax refund agreement pursuant to subsection (4), a qualified applicant may receive refunds from the Economic Development Trust Fund for the following taxes due and paid by the qualified applicant beginning with the applicant's first taxable year that begins after entering into the agreement:

1.  Taxes on sales, use, and other transactions paid pursuant to chapter 212.

2.  Corporate income taxes paid pursuant to chapter 220.

3.  Intangible personal property taxes paid pursuant to chapter 199.

4.  Emergency excise taxes paid pursuant to chapter 221.

5.  Excise taxes paid on documents pursuant to chapter 201.

6.  Ad valorem taxes paid, as defined in s. 220.03(1)(a) on June 1, 1996.

However, a qualified applicant may not receive a tax refund pursuant to this section for any amount of credit, refund, or exemption granted such contractor for any of such taxes. If a refund for such taxes is provided by the office, which taxes are subsequently adjusted by the application of any credit, refund, or exemption granted to the qualified applicant other than that provided in this section, the qualified applicant shall reimburse the Economic Development Trust Fund for the amount of such credit, refund, or exemption. A qualified applicant must notify and tender payment to the office within 20 days after receiving a credit, refund, or exemption, other than that provided in this section.

(g)  Any qualified applicant who fraudulently claims this refund is liable for repayment of the refund to the Economic Development Trust Fund plus a mandatory penalty of 200 percent of the tax refund which shall be deposited into the General Revenue Fund. Any qualified applicant who fraudulently claims this refund commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

(h)  Funds made available pursuant to this section may not be expended in connection with the relocation of a business from one community to another community in this state unless the Office of Tourism, Trade, and Economic Development determines that without such relocation the business will move outside this state or determines that the business has a compelling economic rationale for the relocation which creates additional jobs.

(3)  APPLICATION PROCESS; REQUIREMENTS; AGENCY DETERMINATION.--

(a)  To apply for certification as a qualified applicant pursuant to this section, an applicant must file an application with the office which satisfies the requirements of paragraphs (b) and (e), paragraphs (c) and (e), or paragraphs (d) and (e). An applicant may not apply for certification pursuant to this section after a proposal has been submitted for a new Department of Defense contract, after the applicant has made the decision to consolidate an existing Department of Defense contract in this state for which such applicant is seeking certification, or after the applicant has made the decision to convert defense production jobs to nondefense production jobs for which such applicant is seeking certification.

(b)  Applications for certification based on the consolidation of a Department of Defense contract or a new Department of Defense contract must be submitted to the office as prescribed by the office and must include, but are not limited to, the following information:

1.  The applicant's federal employer identification number, the applicant's Florida sales tax registration number, and a notarized signature of an officer of the applicant.

2.  The permanent location of the manufacturing, assembling, fabricating, research, development, or design facility in this state at which the project is or is to be located.

3.  The Department of Defense contract numbers of the contract to be consolidated, the new Department of Defense contract number, or the "RFP" number of a proposed Department of Defense contract.

4.  The date the contract was executed or is expected to be executed, and the date the contract is due to expire or is expected to expire.

5.  The commencement date for project operations under the contract in this state.

6.  The number of full-time equivalent jobs in this state which are or will be dedicated to the project during the year and the average wage of such jobs.

7.  The total number of full-time equivalent employees employed by the applicant in this state.

8.  The percentage of the applicant's gross receipts derived from Department of Defense contracts during the 5 taxable years immediately preceding the date the application is submitted.

9.  The amount of:

a.  Taxes on sales, use, and other transactions paid pursuant to chapter 212;

b.  Corporate income taxes paid pursuant to chapter 220;

c.  Intangible personal property taxes paid pursuant to chapter 199;

d.  Emergency excise taxes paid pursuant to chapter 221;

e.  Excise taxes paid on documents pursuant to chapter 201; and

f.  Ad valorem taxes paid

during the 5 fiscal years immediately preceding the date of the application, and the projected amounts of such taxes to be due in the 3 fiscal years immediately following the date of the application.

10.  The estimated amount of tax refunds to be claimed in each fiscal year.

11.  A brief statement concerning the applicant's need for tax refunds, and the proposed uses of such refunds by the applicant.

12.  A resolution adopted by the county commissioners of the county in which the project will be located, which recommends the applicant be approved as a qualified applicant, and which indicates that the necessary commitments of local financial support for the applicant exist. Prior to the adoption of the resolution, the county commission may review the proposed public or private sources of such support and determine whether the proposed sources of local financial support can be provided or, for any applicant whose project is located in a county designated by the Rural Economic Development Initiative, a resolution adopted by the county commissioners of such county requesting that the applicant's project be exempt from the local financial support requirement.

13.  Any additional information requested by the office.

(c)  Applications for certification based on the conversion of defense production jobs to nondefense production jobs must be submitted to the office as prescribed by the office and must include, but are not limited to, the following information:

1.  The applicant's federal employer identification number, the applicant's Florida sales tax registration number, and a notarized signature of an officer of the applicant.

2.  The permanent location of the manufacturing, assembling, fabricating, research, development, or design facility in this state at which the project is or is to be located.

3.  The Department of Defense contract numbers of the contract under which the defense production jobs will be converted to nondefense production jobs.

4.  The date the contract was executed, and the date the contract is due to expire or is expected to expire, or was canceled.

5.  The commencement date for the nondefense production operations in this state.

6.  The number of full-time equivalent jobs in this state which are or will be dedicated to the nondefense production project during the year and the average wage of such jobs.

7.  The total number of full-time equivalent employees employed by the applicant in this state.

8.  The percentage of the applicant's gross receipts derived from Department of Defense contracts during the 5 taxable years immediately preceding the date the application is submitted.

9.  The amount of:

a.  Taxes on sales, use, and other transactions paid pursuant to chapter 212;

b.  Corporate income taxes paid pursuant to chapter 220;

c.  Intangible personal property taxes paid pursuant to chapter 199;

d.  Emergency excise taxes paid pursuant to chapter 221;

e.  Excise taxes paid on documents pursuant to chapter 201; and

f.  Ad valorem taxes paid

during the 5 fiscal years immediately preceding the date of the application, and the projected amounts of such taxes to be due in the 3 fiscal years immediately following the date of the application.

10.  The estimated amount of tax refunds to be claimed in each fiscal year.

11.  A brief statement concerning the applicant's need for tax refunds, and the proposed uses of such refunds by the applicant.

12.  A resolution adopted by the county commissioners of the county in which the project will be located, which recommends the applicant be approved as a qualified applicant, and which indicates that the necessary commitments of local financial support for the applicant exist. Prior to the adoption of the resolution, the county commission may review the proposed public or private sources of such support and determine whether the proposed sources of local financial support can be provided or, for any applicant whose project is located in a county designated by the Rural Economic Development Initiative, a resolution adopted by the county commissioners of such county requesting that the applicant's project be exempt from the local financial support requirement.

13.  Any additional information requested by the office.

(d)  Applications for certification based on a contract for reuse of a defense-related facility must be submitted to the office as prescribed by the office and must include, but are not limited to, the following information:

1.  The applicant's Florida sales tax registration number and a notarized signature of an officer of the applicant.

2.  The permanent location of the manufacturing, assembling, fabricating, research, development, or design facility in this state at which the project is or is to be located.

3.  The business entity holding a valid Department of Defense contract or branch of the Armed Forces of the United States that previously occupied the facility, and the date such entity last occupied the facility.

4.  A copy of the contract to reuse the facility, or such alternative proof as may be prescribed by the office that the applicant is seeking to contract for the reuse of such facility.

5.  The date the contract to reuse the facility was executed or is expected to be executed, and the date the contract is due to expire or is expected to expire.

6.  The commencement date for project operations under the contract in this state.

7.  The number of full-time equivalent jobs in this state which are or will be dedicated to the project during the year and the average wage of such jobs.

8.  The total number of full-time equivalent employees employed by the applicant in this state.

9.  The amount of:

a.  Taxes on sales, use, and other transactions paid pursuant to chapter 212.

b.  Corporate income taxes paid pursuant to chapter 220.

c.  Intangible personal property taxes paid pursuant to chapter 199.

d.  Emergency excise taxes paid pursuant to chapter 221.

e.  Excise taxes paid on documents pursuant to chapter 201.

f.  Ad valorem taxes paid during the 5 fiscal years immediately preceding the date of the application, and the projected amounts of such taxes to be due in the 3 fiscal years immediately following the date of the application.

10.  The estimated amount of tax refunds to be claimed in each fiscal year.

11.  A brief statement concerning the applicant's need for tax refunds, and the proposed uses of such refunds by the applicant.

12.  A resolution adopted by the county commissioners of the county in which the project will be located, which recommends the applicant be approved as a qualified applicant, and which indicates that the necessary commitments of local financial support for the applicant exist. Prior to the adoption of the resolution, the county commission may review the proposed public or private sources of such support and determine whether the proposed sources of local financial support can be provided or, for any applicant whose project is located in a county designated by the Rural Economic Development Initiative, a resolution adopted by the county commissioners of such county requesting that the applicant's project be exempt from the local financial support requirement.

13.  Any additional information requested by the office.

(e)  To qualify for review by the office, the application of an applicant must, at a minimum, establish the following to the satisfaction of the office:

1.  The jobs proposed to be provided under the application, pursuant to subparagraph (b)6. or subparagraph (c)6., must pay an estimated annual average wage equaling at least 115 percent of the average wage in the area where the project is to be located.

2.  The consolidation of a Department of Defense contract must result in a net increase of at least 25 percent in the number of jobs at the applicant's facilities in this state or the addition of at least 80 jobs at the applicant's facilities in this state.

3.  The conversion of defense production jobs to nondefense production jobs must result in net increases in nondefense employment at the applicant's facilities in this state.

4.  The Department of Defense contract cannot allow the business to include the costs of relocation or retooling in its base as allowable costs under a cost-plus, or similar, contract.

5.  A business unit of the applicant must have derived not less than 70 percent of its gross receipts in this state from Department of Defense contracts over the applicant's last fiscal year, and must have derived not less than 80 percent of its gross receipts in this state from Department of Defense contracts over the 5 years preceding the date an application is submitted pursuant to this section. This subparagraph does not apply to any application for certification based on a contract for reuse of a defense-related facility.

6.  The reuse of a defense-related facility must result in the creation of at least 100 jobs at such facility.

(f)  Each application meeting the requirements of paragraphs (b) and (e), paragraphs (c) and (e), or paragraphs (d) and (e) must be submitted to the office for a determination of eligibility. The office shall review, evaluate, and score each application based on, but not limited to, the following criteria:

1.  Expected contributions to the state strategic economic development plan adopted by Enterprise Florida, Inc., taking into account the extent to which the project contributes to the state's high-technology base, and the long-term impact of the project and the applicant on the state's economy.

2.  The economic benefit of the jobs created or retained by the project in this state, taking into account the cost and average wage of each job created or retained, and the potential risk to existing jobs.

3.  The amount of capital investment to be made by the applicant in this state.

4.  The local commitment and support for the project and applicant.

5.  The impact of the project on the local community, taking into account the unemployment rate for the county where the project will be located.

6.  The dependence of the local community on the defense industry.

7.  The impact of any tax refunds granted pursuant to this section on the viability of the project and the probability that the project will occur in this state if such tax refunds are granted to the applicant, taking into account the expected long-term commitment of the applicant to economic growth and employment in this state.

8.  The length of the project, or the expected long-term commitment to this state resulting from the project.

(g)  The office shall forward its written findings and evaluation on each application meeting the requirements of paragraphs (b) and (e), paragraphs (c) and (e), or paragraphs (d) and (e) to the director within 60 calendar days of receipt of a complete application. The office shall notify each applicant when its application is complete, and when the 60-day period begins. In its written report to the director, the office shall specifically address each of the factors specified in paragraph (f), and shall make a specific assessment with respect to the minimum requirements established in paragraph (e). The office shall include in its report projections of the tax refund claims that will be sought by the applicant in each fiscal year based on the information submitted in the application.

(h)  Within 30 days after receipt of the office's findings and evaluation, the director shall enter a final order that either approves or disapproves an application. The decision must be in writing and provide the justifications for either approval or disapproval. If appropriate, the director shall enter into a written agreement with the qualified applicant pursuant to subsection (4).

(i)  The director may not enter any final order that certifies any applicant as a qualified applicant when the value of tax refunds to be included in that final order exceeds the available amount of authority to enter final orders as determined in s. 288.095(3). A final order that approves an application must specify the maximum amount of a tax refund that is to be available to the contractor in each fiscal year and the total amount of tax refunds for all fiscal years.

(j)  This section does not create a presumption that an applicant should receive any tax refunds under this section.

(4)  QUALIFIED DEFENSE CONTRACTOR TAX REFUND AGREEMENT.--

(a)  A qualified applicant shall enter into a written agreement with the office containing, but not limited to, the following:

1.  The total number of full-time equivalent jobs in this state that are or will be dedicated to the qualified applicant's project, the average wage of such jobs, the definitions that will apply for measuring the achievement of these terms during the pendency of the agreement, and a time schedule or plan for when such jobs will be in place and active in this state. This information must be the same as the information contained in the application submitted by the contractor pursuant to subsection (3).

2.  The maximum amount of a refund that the qualified applicant is eligible to receive in each fiscal year.

3.  An agreement with the office allowing the office to review and verify the financial and personnel records of the qualified applicant to ascertain whether the qualified applicant is complying with the requirements of this section.

4.  The date after which, each fiscal year, the qualified applicant may file an annual claim pursuant to subsection (5).

5.  That local financial support shall be annually available and will be paid to the Economic Development Trust Fund.

(b)  Compliance with the terms and conditions of the agreement is a condition precedent for receipt of tax refunds each year. The failure to comply with the terms and conditions of the agreement shall result in the loss of eligibility for receipt of all tax refunds previously authorized pursuant to this section, and the revocation of the certification as a qualified applicant by the director.

(c)  The agreement shall be signed by the director and the authorized officer of the qualified applicant.

(d)  The agreement must contain the following legend, clearly printed on its face in bold type of not less than 10 points:

"This agreement is neither a general obligation of the State of Florida, nor is it backed by the full faith and credit of the State of Florida. Payment of tax refunds are conditioned on and subject to specific annual appropriations by the Florida Legislature of funds sufficient to pay amounts authorized in s. 288.1045, Florida Statutes."

(5)  ANNUAL CLAIM FOR REFUND FROM A QUALIFIED DEFENSE CONTRACTOR.--

(a)  Qualified applicants who have entered into a written agreement with the office pursuant to subsection (4) and who have entered into a valid new Department of Defense contract, commenced the consolidation of a Department of Defense contract, commenced the conversion of defense production jobs to nondefense production jobs or who have entered into a valid contract for reuse of a defense-related facility may apply once each fiscal year to the office for tax refunds. The application must be made on or after the date contained in the agreement entered into pursuant to subsection (4) and must include a notarized signature of an officer of the applicant.

(b)  The claim for refund by the qualified applicant must include a copy of all receipts pertaining to the payment of taxes for which a refund is sought, and data related to achieving each performance item contained in the tax refund agreement pursuant to subsection (4). The amount requested as a tax refund may not exceed the amount for the fiscal year in the written agreement entered pursuant to subsection (4).

(c)  A tax refund may not be approved for any qualified applicant unless local financial support has been paid to the Economic Development Trust Fund in that fiscal year. If the local financial support is less than 20 percent of the approved tax refund, the tax refund shall be reduced. The tax refund paid may not exceed 5 times the local financial support received. Funding from local sources includes tax abatement under s. 196.1995 provided to a qualified applicant. The amount of any tax refund for an applicant approved under this section shall be reduced by the amount of any such tax abatement, and the limitations in subsection (2) and paragraph (3)(h) shall be reduced by the amount of any such tax abatement. A report listing all sources of the local financial support shall be provided to the office when such support is paid to the Economic Development Trust Fund.

(d)  The director, with assistance from the office, the Department of Revenue, and the Department of Labor and Employment Security, shall determine the amount of the tax refund that is authorized for the qualified applicant for the fiscal year in a written final order within 30 days after the date the claim for the annual tax refund is received by the office.

(e)  The total amount of tax refunds approved by the director under this section in any fiscal year may not exceed the amount appropriated to the Economic Development Trust Fund for such purposes for the fiscal year. If the Legislature does not appropriate an amount sufficient to satisfy projections by the office for tax refunds in a fiscal year, the director shall, not later than July 15 of such year, determine the proportion of each refund claim which shall be paid by dividing the amount appropriated for tax refunds for the fiscal year by the projected total amount of refund claims for the fiscal year. The amount of each claim for a tax refund shall be multiplied by the resulting quotient. If, after the payment of all such refund claims, funds remain in the Economic Development Trust Fund for tax refunds, the director shall recalculate the proportion for each refund claim and adjust the amount of each claim accordingly.

(f)  Upon approval of the tax refund pursuant to paragraphs (c) and (d), the Comptroller shall issue a warrant for the amount included in the final order. In the event of any appeal of the final order, the Comptroller may not issue a warrant for a refund to the qualified applicant until the conclusion of all appeals of the final order.

(g)  A prorated tax refund, less a 5 percent penalty, shall be approved for a qualified applicant provided all other applicable requirements have been satisfied and the applicant proves to the satisfaction of the director that it has achieved at least 80 percent of its projected employment.

(6)  ADMINISTRATION.--

(a)  The office may adopt rules pursuant to chapter 120 for the administration of this section.

(b)  The office may verify information provided in any claim submitted for tax credits under this section with regard to employment and wage levels or the payment of the taxes with the appropriate agency or authority including the Department of Revenue, the Department of Labor and Employment Security, or any local government or authority.

(c)  To facilitate the process of monitoring and auditing applications made under this program, the office may provide a list of qualified applicants to the Department of Revenue, the Department of Labor and Employment Security, or to any local government or authority. The office may request the assistance of said entities with respect to monitoring the payment of the taxes listed in subsection (2).

(d)  By December 1 of each year, the office shall submit a complete and detailed report to the Governor, the President of the Senate, and the Speaker of the House of Representatives of all tax refunds paid under this section, including analyses of benefits and costs, types of projects supported, employment and investment created, geographic distribution of tax refunds granted, and minority business participation. The report must indicate whether the moneys appropriated by the Legislature to the qualified applicant tax refund program were expended in a prudent, fiducially sound manner.

(7)  EXPIRATION.--An applicant may not be certified as qualified under this section after June 30, 2004.

History.--s. 1, ch. 96-348; s. 10, ch. 97-79; s. 30, ch. 97-99; s. 17, ch. 97-278; s. 85, ch. 99-251.