HOUSE AMENDMENT Bill No. HB 809 CS
1	CHAMBER ACTION
2	Senate House
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12	Representative Davis, D. offered the following:
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14	Amendment (with title amendment)
15	Between lines 764 and 765, insert:
16	Section 6. Section 624.5108, Florida Statutes, is created
17	to read:
18	624.5108 Casualty insurance assessment offsets;
19	definitions; provider designations; permissible investments;
20	required reports; assessment offsets.--
21	(1) SHORT TITLE.--This section may be cited as the "State
22	Economic Stimulus Plan Act."
23	(2) DEFINITIONS.--As used in this section, the term:
24	(a) "Affiliate" means, with respect to any person:
25	1. A person who directly or indirectly:
26	a. Beneficially owns 10 percent or more of the outstanding
27	voting securities or other ownership interests of the other
28	person, whether through rights, options, convertible interests,
29	or otherwise; or
30	b. Controls or holds power to vote 10 percent or more of
31	the outstanding voting securities or other ownership interests
32	of the other person;
33	2. A person with 10 percent or more of the outstanding
34	voting securities or other ownership interests, of which are
35	directly or indirectly:
36	a. Beneficially owned by the other person, whether through
37	rights, options, convertible interest, or otherwise; or
38	b. Controlled or held with power to vote by the other
39	person;
40	3. A partnership in which the other person is a general
41	partner; or
42	4. An officer, employee, or agent of the other person or
43	an immediate family member of the officer, employee, or agent.
44	(b) "Assessments" means the assessments required pursuant
45	to s. 440.49.
46	(c) "Conversion cost" means, for each SESP provider, all
47	costs and expenses of closing its SESP fund, including, without
48	limitation, legal, accounting, rating agency, trustee and
49	placement agent fees and expenses, and any costs of defeasing
50	and insuring the obligations of the SESP provider to the
51	investing investors incurred in connection with the SESP fund or
52	any original issue discount in connection with the obligations.
53	(d) "Department" means the Office of Tourism, Trade, and
54	Economic Development, which has regulatory authority over this
55	section.
56	(e) "Economic development project" means a project or
57	business that meets the following criteria at the time of the
58	investment:
59	1. The project or business is headquartered and its
60	principal operations are located in this state, or at least 50
61	percent of the employees are employed in this state or the
62	project or business has committed in writing to move into this
63	state as a condition of the investment;
64	2. The project or business fosters economic development in
65	this state;
66	3. There are sufficient resources or the forecast or
67	business plan for the project or business projects that the
68	project or business will have sufficient resources to meet any
69	obligations due to the SESP provider as a result of the
70	investment;
71	4. The project or business has been approved by the
72	department pursuant to this section; and
73	5. The project or business is not a business predominately
74	engaged in professional services provided by accountants or
75	lawyers.
76	(f) "Fund allocation date" means, with respect to each
77	SESP provider, the date on which such SESP provider receives the
78	investments from its investors which entitle its investors to
79	receive an allocation of the full offset amount authorized by
80	this section for such SESP provider.
81	(g) "Full offset amount" means, with respect to each SESP
82	provider, the full face amount of any permitted debt instruments
83	offered by the SESP provider, which are issued to its investors
84	and evidence such investors' investment in the SESP provider.
85	(h) "Investor" means any insurer holding a certificate of
86	authority to transact insurance in this state with a liability
87	for assessments under s. 440.49.
88	(i) "Permissible investment" means investments that at the
89	time of initial purchase or initial investment are:
90	1. Deposits, including certificates of deposit, with a
91	financial institution that is a member of the Federal Deposit
92	Insurance Corporation;
93	2. Investment securities that are obligations of the
94	United States or its departments, agencies, or instrumentalities
95	or obligations that are guaranteed fully as to principal and
96	interest by the United States or its departments, agencies, or
97	instrumentalities;
98	3. Commercial paper rated at least A1, P1, or its
99	equivalent by at least one nationally recognized rating
100	organization with a maturity of no more than 365 days.
101	4. Debt instruments rated at the time of the investment at
102	least AA or its equivalent by a nationally recognized rating
103	organization, or issued by, or guaranteed with respect to
104	payment by, an entity whose unsecured indebtedness is rated at
105	the time of the investment at least AA or its equivalent by a
106	nationally recognized credit rating organization and is not
107	subordinated to other unsecured indebtedness of the issuer or
108	the guarantor;
109	5. Obligations of this state or any political subdivision
110	thereof;
111	6. Interests in money market funds or other mutual funds,
112	the portfolios of which are limited to cash and permissible
113	investments; or
114	7. Any other investments approved in advance and in
115	writing by the department.
116	(j) "Permitted debt instrument" means a debt instrument
117	issued by the SESP provider to one or more investors that do not
118	own any voting equity interest in the SESP provider which:
119	1. Is issued in exchange for the investment by the
120	investors of cash in the SESP provider and for no other
121	consideration;
122	2. Is issued at a discount by the SESP provider;
123	3. Is repayable by the SESP provider, with interest, only
124	by the availability of offsets to the investor earned as a
125	result of the investor's investment in the SESP provider;
126	4. Does not entitle the investor to any consideration or
127	compensation based upon the profits, income, or other operation
128	of the SESP provider; and
129	5. May not be prepaid by the SESP provider without the
130	investor's consent.
131	(k) "Person" means any natural person, corporation,
132	limited liability company, partnership, joint venture, trust,
133	incorporated or unincorporated association, joint stock company,
134	government, or agency or political subdivision thereof, or other
135	entity of any kind.
136	(l) "Principal" means:
137	1. A senior officer or director of a corporation;
138	2. An individual manager of a limited liability company or
139	a principal of any entity manager;
140	3. An individual general partner of a partnership or
141	limited partnership or a principal of any entity that serves as
142	a general partner; or
143	4. An individual in a position of similar authority in an
144	entity not specifically named in this subsection.
145	(m) "SESP" means the state economic stimulus plan.
146	(n) "SESP costs" means:
147	1. The bona fide costs and expenses of managing and
148	operating the SESP provider, including, without limitation, an
149	annual management fee that is not to exceed 2.5 percent of the
150	full offset amount plus professional fees; and
151	2. Distributions to direct or indirect parent entities of
152	the SESP provider, if the SESP is taxed as partnership, equal to
153	any projected increase in federal or state income taxes of such
154	entities, including any related penalties or interest, resulting
155	from the earnings of the SESP provider, without regard to any
156	revenues or expenses from other operations of affiliates of the
157	SESP provider, to the extent that the increase is related to the
158	ownership, management, or operations of the SESP provider.
159	(o) "SESP fund" means, for each SESP provider, its full
160	offset amount less its conversion costs.
161	(p) "SESP provider" means an entity designated under this
162	section to receive investments from investors and invest its
163	SESP fund in economic development projects.
164	(3) SESP PROVIDER APPLICATION.--
165	(a) To seek a designation as a SESP provider to the state,
166	a SESP provider applicant shall submit to the department an
167	application by November 1, 2003.
168	(b) Each SESP provider applicant shall demonstrate in its
169	application that it meets the following criteria:
170	1. No principal of the SESP provider applicant shall have
171	been found guilty of a crime involving fraud, theft,
172	embezzlement, or moral turpitude;
173	2. The SESP provider applicant shall include with its
174	application copies of executed written commitments from
175	potential investors committing to invest cash sufficient to
176	acquire permitted debt instruments with a face value equal to at
177	least 10 percent of the maximum full offset amount being
178	allocated pursuant to subparagraph (5)(a)1.;
179	3. The SESP provider applicant, together with the members
180	of its control group, as defined in Treasury Regulation
181	1.414(c)-2, shall have raised at least $50 million, in the
182	aggregate, for investment in small and emerging businesses
183	within the past 5 calendar years;
184	4. The SESP provider applicant, together with its
185	affiliates, shall have raised at least $200 million for
186	investment purposes within the past 5 calendar years;
187	5. The SESP provider shall be a bankruptcy-remote, special
188	purpose entity that has no purpose other than participation
189	under this act and all related activities; and
190	6. No investor or affiliate of an investor shall own any
191	equity securities in the SESP provider or any affiliate of the
192	SESP provider.
193	(c) The department shall perform background checks of the
194	principals of the SESP provider applicant to ensure compliance
195	with subparagraph (b)1.
196	(d) The department may adopt additional rules to govern
197	the application process, including the preparation of forms to
198	be completed as a part of the application process, if any such
199	rules or forms have been adopted by the department at least 30
200	days prior to the deadline for receipt of applications.
201	(e) The department may deny the application or rescind the
202	application of a SESP provider if the grounds for rescission are
203	not removed or corrected within 90 days after the notice of such
204	grounds is received by the SESP provider applicant. The
205	department may deny the application or rescind the application
206	of a SESP provider applicant if the SESP provider applicant, or
207	any principal or director of the SESP provider applicant, has:
208	1. Violated any provision of this section; or
209	2. Made a material misrepresentation or concealed any
210	essential or material fact from any person during the
211	application process or in connection with the information and
212	reports required of SESP providers under section 3 of this act.
213	(f) A SESP provider applicant must file an application in
214	the form prescribed by the department accompanied by a
215	nonrefundable application fee of $7,500. The application must
216	include an audited balance sheet of the SESP provider applicant,
217	with an unqualified opinion from an independent certified public
218	accountant, as of a date not more than 35 days before the date
219	of the application.
220	(g) The SESP provider applicant must have incorporated or
221	organized within the state no later than 15 days before applying
222	for certification.
223	(h) The SESP provider applicant must have established an
224	office within the state before or within 60 days of SESP
225	provider status.
226	(4) ALLOCATION PROCESS.--
227	(a) The maximum full offset amount to be allocated to SESP
228	providers pursuant to this section shall be an amount equal to
229	the aggregate of all allocation claims received by the
230	department by the department's stated deadline, if such
231	allocation is limited to $200 million.
232	(b) No single investor, together with its affiliates,
233	shall invest or commit to invest more than 20 percent of the
234	maximum full offset amount in all SESP providers.
235	(c) The SESP provider allocation process shall occur on or
236	before 60 days following the SESP provider application deadline
237	and shall include all SESP providers, so designated by the
238	department as of the SESP application deadline.
239	(d) Each SESP provider must apply to the department for an
240	allocation of offsets for potential investors on a form
241	developed by the department. The form must be accompanied by an
242	affidavit from each potential investor confirming that the
243	potential investor has agreed to make an investment in a
244	permitted debt instrument issued by a SESP provider up to a
245	specified amount, subject only to the offset allocation pursuant
246	to this subsection. A SESP provider may not submit offset
247	allocation claims on behalf of investors that, in the aggregate,
248	total more than the maximum full offset amount authorized under
249	paragraph (5)(a). An allocation may not be made to the potential
250	investors of a SESP provider unless such SESP provider has met
251	all requirements of subsection (3), and has filed allocation
252	claims of not less than $20 million in the aggregate.
253	(e) The department shall inform each SESP provider of its
254	share of full offsets available for allocation to each of its
255	potential investors.
256	(f) If within 10 business days after the investor received
257	a notice of offset allocation a SESP provider does not receive
258	investments sufficient to purchase permitted debt instruments
259	issued by the SESP provider to a potential investor, the SESP
260	provider shall notify the department by overnight common carrier
261	delivery service of the company's failure to receive the
262	investment. That portion of the offset allocated to the SESP
263	provider shall be forfeited. If the office must make a pro rata
264	allocation under subsection (5), the department shall reallocate
265	such available offsets among the other SESP providers on the
266	same pro rata basis as the initial allocation.
267	(g) If the full face amount of the permitted debt
268	instruments offered by the SESP providers committed by all
269	investors to SESP providers in offset allocation claims received
270	by a deadline set by the department exceeds the aggregate cap on
271	the amount of offsets, the offsets that may be allowed to any
272	one investor shall be allocated using the following ratio:
273	A/B = X/$200,000,000
274	where the letter "A" represents the full face amount that
275	investors have agreed to invest in any one SESP provider, the
276	letter "B" represents the aggregate face amount of investments
277	that all investors have agreed to invest in all SESP providers,
278	the letter "X" is the numerator and represents the full amount
279	of offsets or full offset amount that may be allocated to a SESP
280	provider on a date determined by rule adopted by the department,
281	and $200 million is the denominator and represents the full
282	offset amount that may be allocated to all SESP providers.
283	(h) To the extent that the full face amount of investments
284	raised in connection with the procedure set forth in this
285	subsection is less than $200 million, the department may adopt
286	rules to allow a subsequent allocation of the remaining offsets
287	authorized under this subsection.
288	(i) The department shall issue a certification letter for
289	each investor, showing the approved offset amount and the face
290	amount and price of the permitted debt instrument under which
291	the investor invested in the SESP provider. The applicable SESP
292	provider shall attest to the validity of the certification
293	letter.
294	(5) SESP FUND INVESTMENT.--
295	(a) Until the SESP provider has invested 100 percent of
296	the full offset amount in economic development projects, money
297	in the SESP fund shall be used only for:
298	1. Investments in economic development projects;
299	2. Permissible investments; and
300	3. SESP costs.
301	(b) The SESP provider may not make any payments, other
302	than SESP costs, to any affiliate or any other person owning
303	equity securities in the SESP provider has invested 100 percent
304	of the full offset amount in economic development projects.
305	(c) All amounts invested in economic development projects
306	made by the SESP provider shall count toward the 100 percent-
307	investment-requirement of paragraphs (b) and (c), including
308	money returned to the SESP provider by or as a result of a prior
309	investment in an economic development project.
310	(d) Any investment that is an economic development project
311	at the time of the SESP provider's initial investment shall be
312	classified as an economic development project for any follow-on
313	investment by the SESP provider so long as the economic
314	development project still meets the criteria in subparagraphs
315	(2)(e)1. and 2.
316	(e) The SESP provider shall, within 24 months after the
317	fund allocation date, invest no less than 20 percent of the full
318	offset amount in economic development projects and, within each
319	12 months thereafter, shall invest no less than an additional 10
320	percent until 100 percent of the full offset amount is invested.
321	If, within the initial 24-month period or any 12-month period
322	thereafter, the SESP provider fails to meet the investment
323	target of this subsection, the management fee for that period
324	shall be reduced by the percentage equal to the cumulative
325	investments made divided by the cumulative investment target for
326	that period subtracted from 100 percent. A determination of a
327	reduction pursuant to this subsection shall be made during the
328	annual audit required by subsection (6).
329	(f) Any SESP funds not held in economic development
330	projects shall be held in cash or permissible investments.
331	(g) The department shall approve a proposed investment as
332	an economic development project or a permissible investment, as
333	the case may be, within 20 days after its receipt of a written
334	request from the SESP provider. If the department fails to
335	respond within the 20-day period, the proposed investment shall
336	be deemed to be approved as an economic development project or
337	permissible investment, as requested by the SESP provider.
338	Absent fraud or material misrepresentations by the SESP provider
339	or its proposed investee, the approval of the department
340	pursuant to this subsection shall be conclusive.
341	(6) SESP PROVIDER; REPORTS.--
342	(a) Within 30 days after the fund allocation date, the
343	SESP provider shall report to the department and the Chief
344	Financial Officer the following:
345	1. The name of each investor from whom an investment was
346	received, including the investor's identification number;
347	2. The amount of each investor's investment; and
348	3. The date on which the money was received.
349	(b) Within 90 days after an economic development project
350	investment made by the SESP provider, the SESP provider shall
351	report to the department the following:
352	1. The name and address of each project receiving the
353	investment and a description of its business;
354	2. The amount of the investment and a brief description of
355	the terms;
356	3. The date on which the money was received; and
357	4. Any other information required by the department.
358	(c) Not later than each anniversary of the fund allocation
359	date, the SESP provider shall report to the department the
360	amount the SESP provider has invested in economic development
361	projects during the previous year, the percentage of the SESP
362	funds invested to determine the threshold required in paragraph
363	(5)(f), along with a copy of the material documentation
364	pertaining to the investment, and any other information required
365	by the department.
366	(d) Not later than April 30 of each year, the SESP
367	provider shall provide to the department an annual audited
368	financial statement for the SESP provider which includes the
369	opinion of an independent accountant.
370	(e) Upon investment in economic development projects
371	equaling 100 percent of the full offset amount, the SESP
372	provider shall no longer be subject to the State Economic
373	Stimulus Plan Act.
374	(7) SESP PROVIDER ASSESSMENT OFFSETS.--
375	(a) Each investor that makes an investment in the SESP
376	provider shall earn offsets against future assessments under s.
377	440.49 equal to the face amount of the permitted debt instrument
378	offered by the SESP provider, issued to the investors and
379	evidencing their investment of cash in the SESP provider. Such
380	offsets shall be earned on the fund allocation date.
381	(b) Each investor investing in the SESP provider may:
382	1. Take up to 10 percent of the vested assessment offsets
383	against investor assessments each year for 10 consecutive years,
384	beginning with the annual return filed with respect to the fund
385	allocation date;
386	2. Reduce its estimated payments of assessment liability
387	for each year for which offsets are available to offset
388	assessment liability by the same percentage as the percentage
389	payment due on each estimated payment date; and
390	3. Credits shall be applied to assessments under s.
391	440.49.
392	(c) The offsets against assessments which are used by an
393	investor with respect to any year may not exceed the full
394	assessment liability of the investor for that year.
395	(d) Any offsets against assessments which an investor is
396	permitted to use under paragraphs (a) and (b) but is unable to
397	use because of paragraph (c), may be carried forward
398	indefinitely and used to offset the investor's assessment
399	liability in any subsequent year in which the investor has
400	sufficient assessment liability, including in a year in which
401	the investor also uses assessment offsets that are allocated to
402	that year under paragraph (b).
403	(e) An investor that has invested in the SESP provider is
404	not required to reduce the amount of assessment including by the
405	investor in connection with the ratemaking for any insurance
406	contract written in this department because of a reduction in
407	the investor's assessment derived from the offsets granted under
408	this subsection.
409	(f) If the assessments that an investor does not pay by
410	virtue of the offsets earned under this subsection would
411	constitute a credit against another tax or assessment if paid,
412	the investor shall continue to earn the credit as though the
413	offset assessments were paid by cash.
414	(g) An investor may transfer the offsets it earns under
415	this subsection to another investor if the transferor delivers
416	to the director of the Office of Insurance Regulation within 30
417	days after the transfer a written notice indicating the name of
418	the transferee, the amount of offsets being transferred and the
419	year or years to which such offsets are allocable as provided in
420	paragraph (b).
421	(h) The general revenue surcharges payable by the Special
422	Disabilities Trust Fund shall not be reduced by the offsets
423	taken under this act.
424
425	================= T I T L E A M E N D M E N T =================
426	Remove line(s) 40, and insert:
427	facilitate the formation of investor networks; creating s.
428	624.5108, F.S., relating to casualty insurance assessment
429	offsets; providing definitions; providing for an application
430	procedure for designation as a state economic stimulus plan
431	provider; creating application criteria; authorizing the Office
432	of Tourism, Trade, and Economic Development to perform
433	background checks on applicants; authorizing the Office of
434	Tourism, Trade, and Economic Development to deny the application
435	if the criteria for a provider applicant is not met; requiring
436	the provider applicant to be incorporated in Florida; requiring
437	the provider applicant to establish an office in the state
438	within 60 days after being designated a SESP provider;
439	authorizing the Office of Tourism, Trade, and Economic
440	Development to adopt rules to govern the application process;
441	providing for a SESP provider allocation offset process;
442	establishing a State Economic Stimulus Plan Fund; providing for
443	permissible uses for the SESP funds; requiring the Office of
444	Tourism, Trade, and Economic Development to approve economic
445	development projects or permissible investment proposals no
446	later than 20 days after receiving a written proposal; requiring
447	the SESP provider to report certain information to the Office of
448	Tourism, Trade, and Economic Development no later than 30 days
449	after the fund allocation date; requiring the SESP provider to
450	file an annual report; requiring the SESP provider to provide an
451	annual audited financial statement; providing for SESP provider
452	assessment offsets; repealing
453