CODING: Words stricken are deletions; words underlined are additions.House Bill 1133
Florida House of Representatives - 1997 HB 1133
By Representative Hafner
1 A bill to be entitled
2 An act relating to community organizations;
3 creating "The Community Asset Protection Act";
4 providing that all records and procedures
5 relating to the transfer of the assets or
6 management authority of a community
7 organization to outside interests are open to
8 the public; providing definitions; providing
9 legislative intent; providing notice; providing
10 for inspection and copying of records;
11 providing an effective date.
12
13 WHEREAS, the Legislature recognizes that community
14 organizations perform valuable services to their communities,
15 often in lieu of or in addition to services performed by
16 government agencies, and
17 WHEREAS, community organizations are often established
18 or supported through charitable contributions and grants,
19 including donations of money, valuables, and services
20 performed by community volunteers, and
21 WHEREAS, community organizations are recognized as
22 community assets that are exempt from a multitude of local,
23 state, and federal taxes, and
24 WHEREAS, transfers of the assets or management control
25 of these community assets to outside interests raises the very
26 real concern that services performed by community
27 organizations will be terminated or the cost of providing
28 those services will be shifted to the taxpayers of the
29 affected community, and
30 WHEREAS, the Legislature recognizes the need of the
31 affected community to make a reasonable evaluation of the
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1 fairness and effects of proposed transfers of its community
2 assets to outside interests before such transfers are
3 consummated, NOW, THEREFORE,
4
5 Be It Enacted by the Legislature of the State of Florida:
6
7 Section 1. Sale, lease, exchange, conveyance, merger,
8 or other transfer of the assets or management authority of a
9 community organization to outside interests.--
10 (1) This section may be cited as "The Community Asset
11 Protection Act."
12 (2) It is the intent of the Legislature that all
13 proposed transfers involving 20 percent or more of the assets
14 or management authority of a community organization to outside
15 interests be made public so that an affected community may
16 reasonably evaluate the fairness and effects of such transfers
17 before they are consummated. It is the further intent of the
18 Legislature to make such proposed transfers public by
19 requiring community organizations to give public notice at
20 least 60 days before the transfers are consummated and to make
21 all records relating to such transfers available for public
22 inspection and copying as if community organizations were
23 state agencies subject to the provisions of chapter 119,
24 Florida Statutes.
25 (3) As used in this section, the term:
26 (a) "Affected community" means the citizens and
27 political entities of this state that are served by, or
28 receive the benefit of the services provided by, a community
29 organization.
30 (b) "Community organization" means a nonprofit
31 corporation, trust, foundation, society, league, order,
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1 association, organization, or other entity recognized under 26
2 U.S.C. s. 501(c) that has current gross assets with a fair
3 market value of $3 million or more and is organized under the
4 laws of this state, or authorized to transact business in this
5 state, for the purpose of providing health, medical, or
6 hospital care, or charitable, social welfare, educational,
7 scientific, literary, fraternal, financial, insurance, or
8 similar services that benefit the community. A member-owned
9 organization that makes available to its members all records
10 relating to a proposed transaction for the purpose of
11 inspecting, copying, and evaluating such records reasonably in
12 advance of consummation of the transaction is not a community
13 organization subject to the provisions of this section.
14 (c) "Outside interests" means an individual,
15 partnership, corporation, trust, foundation, joint business
16 venture, or other entity, whether for-profit or
17 not-for-profit, that conducts business or provides services
18 and whose assets are not entirely owned and entirely
19 controlled by a community organization.
20 (d) "Public inspection period" means the 60 days
21 immediately following the date of publication by a community
22 organization of the first advertisement notifying the public
23 of a proposed transaction, during which time public hearings
24 are held, all records relating to the proposed transfer are
25 made available for public inspection and copying, and the
26 proposed transaction may not be consummated.
27 (e) "Transaction" means an action by a community
28 organization to:
29 1. Sell, lease, exchange, convey, merge, or otherwise
30 transfer control of 20 percent or more of its current gross
31 assets in a single transaction, or 30 percent or more of its
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1 current gross assets in a series of transactions occurring
2 over a period of 3 years, to outside interests;
3 2. Grant 20 percent or more of the vote on its board
4 of directors or board of trustees in a single transaction, or
5 30 percent or more of the vote of such board in a series of
6 transactions occurring over a period of 3 years, to outside
7 interests; or
8 3. Enter into a joint venture, joint operating
9 agreement, management agreement, partnership or other business
10 agreement that transfers 20 percent or more of the community
11 organization's management authority in a single transaction,
12 or 30 percent or more of its management authority in a series
13 of transactions occurring over a period of 3 years, to outside
14 interests.
15 (4)(a) When a community organization proposes to enter
16 into a transaction, before providing notice under paragraph
17 (b), the community organization shall:
18 1. Obtain one or more written reports by independent
19 experts assessing the following aspects of the proposed
20 transaction:
21 a. Whether the community organization is receiving
22 fair market value for any assets or management authority,
23 which shall include a detailed valuation of such assets or
24 management authority and a detailed analysis of all competing
25 offers, if any, made to the community organization;
26 b. Whether the proposed use of the proceeds of the
27 proposed transaction is consistent with the charitable
28 services and benefits provided by the community organization
29 and the donative intent of the benefactors of the community
30 organization; and
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1 c. Whether the proposed transaction was negotiated at
2 arms' length and is fair to the affected community from both a
3 financial and community service standpoint.
4 2. Obtain signed affidavits regarding conflicts of
5 interest from each member of its board of directors or board
6 of trustees and each officer and executive employee. These
7 affidavits must disclose whether the affiant has been offered
8 or has accepted, orally or in writing, any personal or
9 familial benefit, including future employment or stock
10 options, from any outside interests or any affiliated
11 entities. In addition, the affiants must disclose whether
12 they have been offered or have accepted, orally or in writing,
13 any position with a foundation, trust, corporation, or other
14 entity that will direct the use of any part of the proceeds of
15 the proposed transaction or otherwise function as a successor
16 to the community organization.
17 3. State in writing whether there are any contractual
18 or other agreements with outside interests regarding future
19 use of the assets or future exercise of the management
20 authority involved in the proposed transaction and, if so,
21 what penalties are available if the outside interests do not
22 comply with those agreements.
23 (b) After complying with the provisions of paragraph
24 (a), a community organization must provide notice describing
25 clearly and concisely the nature of the proposed transaction;
26 the parties to the transaction; the geographical area of the
27 affected community; the date, time, and location of the public
28 hearings required by this section; and, for purposes of public
29 examination and copying, the location of all records related
30 to the proposed transaction.
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1 1. Such notice must be provided, before the public
2 inspection period commences, to the state attorney where the
3 community organization maintains its principal place of
4 business and to the Attorney General.
5 2. Such notice must be provided to the affected
6 community by placing 2 advertisements in a newspaper of
7 general paid circulation in the affected community and of
8 general interest and readership in the affected community, and
9 not one of limited subject matter, under chapter 50, no less
10 than 3 weeks apart, the first before the public inspection
11 period commences and the other at least 30 days before the end
12 of the public inspection period. The required advertisements
13 must be no less than 2 columns wide by 10 inches long in a
14 standard size or a tabloid size newspaper, and the headline in
15 the advertisement must be in type no smaller than 18 point.
16 The advertisements must not be placed in that portion of the
17 newspaper where legal notices and classified advertisements
18 appear. When possible, the advertisements must appear in a
19 newspaper that is published at least 5 days a week unless the
20 only newspaper in the affected community is published less
21 frequently than 5 days a week. The advertisements must be in
22 substantially the following form:
23
24 NOTICE OF ... (TYPE OF TRANSACTION) ... INVOLVING SUBSTANTIAL
25 ... (ASSETS OR MANAGEMENT AUTHORITY) ... OF ... (NAME OF
26 COMMUNITY ORGANIZATION) ...
27
28 The ... (name of community organization) ... proposes to
29 (clear, concise description of proposed transaction, including
30 the name of the outside interests) ... in no fewer than (60 or
31 30 days, as appropriate) from the date of this Notice. All
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1 records relating to this proposed transaction are available
2 for public inspection and copying during regular business
3 hours at ... (location where records will be made available)
4 .... Public hearings regarding this proposed transaction will
5 be held ... (date, time, and location of public hearings) ...,
6 at which knowledgeable representatives of ... (name of
7 community organization) ... will be available to explain the
8 proposed transaction and respond to questions or comments
9 regarding the nature, purpose, and effects of the proposed
10 transaction.
11 (c) A community organization shall permit public
12 inspection at no cost, and copying at the rate set forth in
13 section 119.07(1), Florida Statutes, during the public
14 inspection period, of all records relating to the transaction,
15 including but not limited to records setting forth the terms,
16 conditions and structure of the transaction, due diligence
17 records, written reports of experts, relevant financial
18 records, affidavits required by this section, records relating
19 to collateral agreements, minutes of the board of directors or
20 trustees of all meetings where the proposed transaction was
21 considered and any reports or other materials presented at
22 such meetings, and any other relevant records, including
23 offers by other outside interests that are reasonably related
24 to the proposed transaction. These records must be made
25 available to the public in a single location during regular
26 business hours in the locale where the community organization
27 maintains its principal place of business.
28 (d) A community organization must hold no fewer than 2
29 public hearings in the affected community during the public
30 inspection period at times and locations that are reasonably
31 convenient for members of the affected community to attend and
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1 be heard. At such meetings, knowledgeable representatives of
2 the community organization must be available to explain the
3 proposed transaction and respond to questions or comments
4 regarding the nature, purpose, and effects of the proposed
5 transaction.
6 (5) The Attorney General or state attorney, on behalf
7 of the affected community, may challenge a proposed
8 transaction by bringing an action for declaratory judgment
9 under chapter 86, Florida Statutes, in the circuit court. In
10 such action, the court may address issues that might be
11 brought before it in a common law cy-pres action. The court
12 may declare that the proposed transaction or any part of it is
13 invalid and may not be consummated, or it may establish a
14 mechanism to monitor future compliance by the outside
15 interests with the terms of the transaction, or it may order
16 any other equitable or legal relief necessary to ensure that
17 the proposed transaction is fair to the affected community,
18 upon a finding that:
19 (a) The community organization failed to fully comply
20 with the provisions of this section;
21 (b) The community organization will not receive fair
22 market value for the assets or management authority involved
23 in the proposed transaction;
24 (c) The proposed transaction permits assets held by
25 the community organization for charitable purposes to be used,
26 transferred, or distributed for non-charitable purposes;
27 (d) The proposed transaction is not the product of an
28 arms-length negotiation; there exists a material conflict of
29 interest relating to the proposed transaction; there has been
30 a material breach of fiduciary duty; or there are other
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1 aspects of the negotiating process that call into question the
2 fairness of the proposed transaction;
3 (e) The proceeds from the proposed transaction will
4 not be applied, or there are insufficient safeguards to ensure
5 that such proceeds will be applied, in a manner consistent
6 with either the current services and benefits provided to the
7 affected community by the community organization or the
8 donative intent of the benefactors of the community
9 organization; or
10 (f) The proposed transaction is fundamentally unfair
11 and not in the best interests of the affected community.
12 (6) Nothing in this section contravenes or limits
13 state or federal antitrust laws or the existing authority of
14 the Attorney General or a state attorney to protect the public
15 interest in matters relating to charitable trusts.
16 Section 2. This act shall take effect July 1, 1997.
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19 SENATE SUMMARY
20 Creates "The Community Asset Protection Act". Provides
that all records and procedures relating to the transfer
21 of the assets or management authority of a community
organization to outside interests are open to the public.
22 Provides definitions. Provides legislative intent.
Provides notice. Provides for inspection and copying of
23 records.
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