HB 1467

1
A bill to be entitled
2An act relating to capital formation; creating a new pt. X
3of ch. 288, F.S.; providing a short title; providing
4legislative findings and intent; providing definitions;
5creating the Florida Capital Investment Trust as a state
6beneficiary public trust; providing for administration by
7a board of trustees; providing for appointment of board
8members; providing for terms; providing for serving
9without compensation; providing for travel and other
10direct expenses; providing criteria for trustees;
11providing for powers and duties of trustees; providing for
12hiring employees; providing for meetings of the board;
13authorizing the trust to receive, hold, use, transfer, and
14sell certain tax credits for certain purposes; providing
15requirements and limitations; authorizing the Department
16of Revenue to adopt rules for certain purposes; requiring
17Enterprise Florida, Inc., to facilitate establishment of
18the Florida Opportunity Fund Management Corporation;
19specifying criteria of the corporation; providing for
20appointment of a board of directors selection committee;
21providing for selection of a board of directors of the
22corporation by Enterprise Florida, Inc.; specifying
23criteria; providing for terms and requirements of
24directors; providing purposes of the corporation;
25providing duties and responsibilities of the corporation;
26authorizing the corporation to charge a management fee for
27certain purposes; providing for travel and other direct
28expenses; providing for powers of the corporation;
29creating the Florida Opportunity Fund as a for-profit,
30limited partnership or a limited liability corporation to
31be organized and incorporated by the Florida Opportunity
32Fund Management Corporation; authorizing certain entities
33to contract with Enterprise Florida, Inc., for certain
34purposes; providing investment requirements for the fund;
35requiring the board of trustees to issue annual reports on
36activities of the fund; providing report requirements;
37amending s. 213.053, F.S.; authorizing the Department of
38Revenue to provide certain tax credit information to the
39board of trustees; amending s. 220.02, F.S.; including tax
40credits transferred or sold by the board of trustees
41within the priority list of applied credits against
42certain taxes; amending s. 624.509, F.S.; including tax
43credits transferred or sold by the board of trustees
44within the order of taking credits or deductions against
45the insurance premium tax; providing an appropriation;
46providing an effective date.
47
48Be It Enacted by the Legislature of the State of Florida:
49
50     Section 1.  Parts X and XI of chapter 288, Florida
51Statutes, are redesignated as parts XI and XII, respectively,
52and a new part X of that chapter, consisting of sections
53288.9621, 288.9622, 288.9623, 288.9624, 288.9625, 288.9626,
54288.9627, and 288.9628, is created to read:
55     288.9621  Short title.--This part may be cited as the
56"Florida Capital Formation Act."
57     288.9622  Findings and intent.--
58     (1)  The Legislature finds and declares that there is need
59to increase the availability of seed capital and early stage
60venture equity capital for emerging companies in the state,
61including, without limitation, enterprises in life sciences,
62information technology, advanced manufacturing processes,
63aviation and aerospace, and homeland security and defense, as
64well as other strategic technologies.
65     (2)  It is the intent of the Legislature that this part
66serve to mobilize private investment in a broad variety of
67venture capital partnerships in diversified industries and
68geographies; retain private-sector investment criteria focused
69on rate of return; use the services of highly qualified managers
70in the venture capital industry regardless of location;
71facilitate the organization of the Florida Opportunity Fund as a
72fund-of-funds investor in seed and early stage venture capital
73and angel funds; and precipitate capital investment and
74extensions of credit to and in the Florida Opportunity Fund.
75     (3)  It is the intent of the Legislature to mobilize
76venture equity capital for investment in such a manner as to
77result in a significant potential to create new businesses and
78jobs in this state that are based on high growth potential
79technologies, products, or services and that will further
80diversify the economy of this state.
81     288.9623  Definitions.--As used in this part:
82     (1)  "Board" means the board of trustees of the Florida
83Capital Investment Trust.
84     (2)  "Certificate" means a contract between the trust and a
85designated investor evidencing the terms of a guarantee or
86incentive granted to a designated investor.
87     (3)  "Corporation" means the Florida Opportunity Fund
88Management Corporation created under this part.
89     (4)  "Designated investor" means a person, other than the
90board, who purchases an equity interest in the Florida
91Opportunity Fund or is a party to a certificate or who is a
92lender to the Florida Opportunity Fund and is a party to a
93certificate.
94     (5)  "Florida Capital Investment Trust" or "trust" means a
95state beneficiary public trust created under this part.
96     (6)  "Florida Opportunity Fund" or "fund" means the
97private, for-profit limited partnership or limited liability
98company in which a designated investor purchases an equity
99interest or to which a designated investor extends credit.
100     (7)  "Tax credit" means a contingent tax credit issued
101under this part or subsequent legislative action that is
102available to offset tax liabilities imposed by this state,
103provided the proceeds of such tax are payable to the General
104Revenue Fund. A tax credit is not eligible to offset tax
105liabilities imposed by a political subdivision within this
106state.
107     288.9624  Florida Capital Investment Trust.--
108     (1)  The Florida Capital Investment Trust is created as a
109state beneficiary public trust to be administered by the board.
110The exercise by the board of powers conferred by this part is
111deemed and held to be the performance of essential public
112purposes.
113     (2)(a)  The board shall consist of five voting trustees and
114two nonvoting ex officio trustees. A majority of voting trustees
115shall constitute a quorum.
116     (b)  Three voting trustees shall be appointed by the
117Governor; one voting trustee shall be appointed by the President
118of the Senate; and one voting trustee shall be appointed by the
119Speaker of the House of Representatives. The Governor shall
120appoint one trustee to a term ending April 30, 2007, and two
121trustees to terms ending April 30, 2009. The President of the
122Senate and the Speaker of the House of Representatives shall
123each appoint trustees to terms ending April 30, 2008.
124Thereafter, each voting trustee shall be appointed for a 3-year
125term.
126     (c)  One nonvoting ex officio trustee shall be the designee
127of Enterprise Florida, Inc., and one nonvoting ex officio
128trustee shall be the designee of the Florida Research
129Consortium. Ex officio trustees serve annual terms at the
130pleasure of their appointing organizations and may be
131reappointed. A trustee's term shall end on April 30 of his or
132her term expiration year. Trustees whose terms have expired may
133continue to serve until their replacements have been duly
134appointed.
135     (d)  Vacancies shall be filled in the same manner as the
136appointment of the original trustee to whom a successor is
137sought.
138     (3)  Trustees shall serve on the board without compensation
139in the form of fees, per diem, or salary. Trustees may receive
140compensation or reimbursement for direct expenses, mileage, and
141other travel expenses related to the performance of their duties
142pursuant to s. 112.061. Trustees shall be selected based upon
143demonstrated expertise and competence in the supervision of
144early stage investment managers, the fiduciary management of
145funds, the administration and management of a publicly listed
146company, or experience and competence in public accounting,
147auditing, and fiduciary responsibilities. Trustees may not have
148an interest in any entity to which a certificate is issued.
149     (4)  The board may engage consultants, expend funds, invest
150funds, contract, bond or insure against loss, provide guarantees
151or other incentives, hold transferable tax credits, sell tax
152credits, or enter into any financial or other transaction or
153perform any other act necessary to carry out its purpose under
154this part. The board, in conjunction with the Department of
155Revenue, shall develop a system for registration of any tax
156credits received by the trust and transferred under this part.
157The board shall also create a system of documentation that
158permits verification that any tax credit claimed upon a tax
159return is validly held by the person claiming such tax credit
160and properly taken in the year of claim and that any transfers
161of the tax credit are made in accordance with the requirements
162of this part.
163     (5)  If the board elects to hire employees, such persons
164shall be selected by the board based upon knowledge and
165leadership in the field for which the person performs services
166for the board. The board shall charge fees for its guarantees to
167designated investors or for other services such that the board's
168operations may be conducted without subsequent legislative
169appropriation.
170     (6)  Meetings of the board shall be subject to the
171provisions of s. 286.011, except information on securities
172acquired and held by the Florida Opportunity Fund shall be
173maintained in confidence.
174     288.9625  Issuance of tax credits.--
175     (1)  The trust shall receive and hold for the purposes of
176this part tax credits under this part that may be used to reduce
177any tax liability imposed by the state under chapter 212,
178chapter 220, s. 624.509, or s. 624.510. The total amount of tax
179credits issued and transferred to the trust is $75 million. The
180tax credits shall be transferable by the board as provided in
181this part, provided no such transferred tax credit shall be
182exercisable before July 1, 2011, or after July 1, 2036.
183     (2)  The board may transfer and sell tax credits solely for
184the purpose of fulfilling, in whole or in part, any certificate
185obligation issued by the board. The board shall immediately
186notify the Governor, the President of the Senate, the Speaker of
187the House of Representatives, and the Department of Revenue, in
188writing, if any tax credit is transferred. The board shall be
189notified immediately of any transfers of tax credits by persons
190or businesses other than the board and shall notify the
191Department of Revenue, in writing, of such transfers.
192     (3)  The board shall ensure that no more than $20 million
193in tax credits is transferred that may be claimed and used to
194reduce taxes payable to the General Revenue Fund for any single
195state fiscal year. The board shall clearly indicate upon the
196face of the document transferring the tax credit the principal
197amount of the tax credit and the state fiscal year or years
198during which the credit may be claimed. Tax credits may be
199transferred in increments of no less than $100,000. A copy of
200the document transferring the tax credit shall be transmitted to
201the executive director of the Department of Revenue, who shall
202allow the credit to be claimed against tax liabilities of the
203person or business consistent with the terms appearing in the
204transfer document.
205     (4)  If the tax liabilities of the taxpayer are
206insufficient to exhaust the tax credit for which the taxpayer is
207eligible, the balance of the tax credit may be refunded by the
208state. If a tax credit granted under this section is not claimed
209in the year designated for claiming the credit on the transfer
210document, any return for the year in which the credit was
211eligible to be claimed may be amended to claim the credit within
212the time specified by ss. 95.091 and 215.26
213     (5)  Persons or businesses to which tax credits under this
214section are transferred shall retain documentation supporting
215eligibility to claim the tax credits and evidence of the
216transfer of the tax credits, if applicable, until the time
217period provided to audit the tax returns on which the tax
218credits were claimed has passed.
219     (6)  The Department of Revenue, in conjunction with the
220board, may adopt rules governing the manner and form of
221documentation required to claim tax credits granted or
222transferred under this section and may establish guidelines as
223to the requisites for an affirmative showing of qualification
224for tax credits granted or transferred under this section.
225     (7)  An insurance company claiming a credit against premium
226tax liability under this section shall not be required to pay
227any additional retaliatory tax levied pursuant to s. 624.5091 as
228a result of claiming such credit. Because credits under this
229section are available to an insurance company, s. 624.5091 does
230not limit such credit in any manner.
231     (8)  Any original sale of tax credits by the board shall be
232by competitive bidding unless the sale is for the full face
233value of the credits.
234     288.9626  Florida Opportunity Fund Management
235Corporation.--
236     (1)  At the request of the board, Enterprise Florida, Inc.,
237shall facilitate the creation of the Florida Opportunity Fund
238Management Corporation as a private, not-for-profit corporation.
239Enterprise Florida, Inc., shall be the corporation's sole
240member. The corporation is not a public corporation or
241instrumentality of the state.
242     (2)  The vice chair of Enterprise Florida, Inc., shall
243select from among its sitting board of directors a five-person
244appointment committee. The appointment committee shall select
245five initial members of a board of directors for the
246corporation. The persons elected to the initial board of
247directors by the appointment committee shall include persons who
248have expertise in the area of the selection and supervision of
249early stage investment managers or in the fiduciary management
250of investment funds and other areas of expertise as deemed
251appropriate by the appointment committee. After election of the
252initial board of directors, vacancies on the board of directors
253of the corporation shall be elected by the board of directors of
254Enterprise Florida, Inc., and shall serve terms as provided in
255the corporation's organizational documents. Members of the board
256of directors shall be subject to any restrictions on conflicts
257of interest specified in the organizational documents and shall
258have no interest in any venture capital investment fund
259allocation manager selected by the corporation pursuant to the
260provisions of this part or in any investments made by the
261Florida Opportunity Fund.
262     (3)  The purposes of the corporation shall be to organize
263the Florida Opportunity Fund, select an early stage venture
264capital investment fund allocation manager, negotiate the terms
265of a contract with the venture capital investment fund
266allocation manager, execute the contract with the selected
267venture capital investment fund allocation manager on behalf of
268the Florida Opportunity Fund, manage the business affairs of the
269Florida Opportunity Fund such as accounting, audit, insurance,
270and related requirements, receive investment returns from the
271Florida Opportunity Fund, and reinvest the investment returns in
272the Florida Opportunity Fund in order to provide additional
273venture capital investments designed to result in a significant
274potential to create new businesses and jobs in this state and
275further diversify the economy of this state.
276     (4)  Upon organization, the corporation shall conduct a
277national solicitation for investment plan proposals from
278qualified venture capital investment fund allocation managers
279for the raising and investing of capital by the corporation. Any
280proposed investment plan shall address the applicant's level of
281experience, quality of management, investment philosophy and
282process, provability of success in fundraising, prior investment
283fund results, and plan for achieving the purposes of this part.
284The corporation shall select only a venture capital investment
285fund allocation manager with demonstrated expertise in the
286management and fund allocation of investments in venture capital
287funds.
288     (5)  The corporation may charge a management fee on assets
289under management in the Florida Opportunity Fund. The fee shall
290be in addition to any fee charged to the Florida Opportunity
291Fund by the venture capital investment fund allocation manager,
292but the fee shall be charged only to pay for reasonable and
293necessary costs of the corporation.
294     (6)  Directors of the corporation shall be compensated for
295direct expenses and mileage pursuant to s. 112.061 but shall not
296receive a fee or salary for service as directors.
297     (7)  The corporation shall have all powers granted under
298its organizational documents and shall indemnify directors to
299the broadest extent permissible under the laws of this state.
300     288.9627  Florida Opportunity Fund.--
301     (1)  The Florida Opportunity Fund is created as a
302for-profit limited partnership or limited liability corporation
303that shall be organized and incorporated in this state by the
304Florida Opportunity Fund Management Corporation upon request by
305the board. The board, the corporation, or the fund may contract
306with Enterprise Florida, Inc., for provision of services
307necessary for continuing operations.
308     (2)  The fund shall invest on a fund-of-funds basis and
309emphasize investment in seed capital and early stage venture
310capital funds focusing on opportunities in this state. While not
311precluded from investing in funds with a wider geographic spread
312of portfolio investment, the fund shall require an investment
313fund to have a record of investment in this state, be based in
314this state, or have an office in this state staffed with a full-
315time, professional venture investment executive to be eligible
316for investment. The investments by the fund shall be on
317partnership interests in private venture capital funds and not
318in direct investments in individual businesses. The fund shall
319invest in venture capital funds with experienced managers or
320management teams with demonstrated expertise and a successful
321history in the investment of early stage venture capital funds.
322The fund may invest in newly created early stage venture capital
323funds as long as the manager or management teams of the funds
324have experience, expertise, and a successful history in the
325investment of venture capital funds. The Florida Opportunity
326Fund may not invest in a fund unless that fund has raised
327capital from other sources in an amount greater than the
328investment of the Florida Opportunity Fund. The corporation and
329its partners or shareholders may negotiate any and all terms and
330conditions for its investments, including draw back of
331management fees and other provisions that maximize investment in
332seed and early stage companies based in this state.
333     (3)  The interest of the corporation in the fund shall be
334to serve as general partner or manager and to be paid a
335management fee to cover its costs.
336     (4)  Investments by designated investors in the fund shall
337be deemed permissible investments for state-chartered banks and
338for domestic insurance companies under applicable state law.
339     (5)  If the fund is liquidated or has returned all capital
340to designated investors in accordance with contractual
341agreements, or the guarantee capacity of the trust, at the sole
342discretion of the board, is sufficient for additional
343certificates, a new funding of the Florida Opportunity Fund may
344be implemented for subsequent venture capital fund-of-funds
345investments. If the board takes exception to an additional
346funding, such additional funding may only be implemented without
347the benefit of certificates from the board.
348     288.9628  Annual reporting.--The board shall issue an
349annual report on the activities conducted by the Florida
350Opportunity Fund and present the report to the Governor, the
351President of the Senate, and the Speaker of the House of
352Representatives. The annual report shall include a copy of the
353independent audit of the fund and a valuation of the assets of
354the fund and shall review the progress of the investment fund
355allocation manager in implementing the fund's investment plan,
356the benefits to the state resulting from this program, including
357the number of businesses created and their associated industry,
358and the number of jobs created. The annual report shall also
359describe any sale of tax certificates and any sale of tax
360certificates that is reasonably anticipated by the board to meet
361its certificate obligations.
362     Section 2.  Paragraph (y) is added to subsection (7) of
363section 213.053, Florida Statutes, to read:
364     213.053  Confidentiality and information sharing.--
365     (7)  Notwithstanding any other provision of this section,
366the department may provide:
367     (y)  Information relative to tax credits claimed under part
368X of chapter 288 to the board of trustees of the Florida Capital
369Investment Trust in the conduct of the trust's official
370business.
371
372Disclosure of information under this subsection shall be
373pursuant to a written agreement between the executive director
374and the agency. Such agencies, governmental or nongovernmental,
375shall be bound by the same requirements of confidentiality as
376the Department of Revenue. Breach of confidentiality is a
377misdemeanor of the first degree, punishable as provided by s.
378775.082 or s. 775.083.
379     Section 3.  Subsection (8) of section 220.02, Florida
380Statutes, is amended to read:
381     220.02  Legislative intent.--
382     (8)  It is the intent of the Legislature that credits
383against either the corporate income tax or the franchise tax be
384applied in the following order: those enumerated in s. 631.828,
385those enumerated in s. 220.191, those enumerated in s. 220.181,
386those enumerated in s. 220.183, those enumerated in s. 220.182,
387those enumerated in s. 220.1895, those enumerated in s. 221.02,
388those enumerated in s. 220.184, those enumerated in s. 220.186,
389those enumerated in s. 220.1845, those enumerated in s. 220.19,
390those enumerated in s. 220.185, and those enumerated in s.
391220.187, and those enumerated in part X of chapter 288.
392     Section 4.  Subsection (7) of section 624.509, Florida
393Statutes, is amended to read:
394     624.509  Premium tax; rate and computation.--
395     (7)  Credits and deductions against the tax imposed by this
396section shall be taken in the following order: deductions for
397assessments made pursuant to s. 440.51; credits for taxes paid
398under ss. 175.101 and 185.08; credits for income taxes paid
399under chapter 220, the emergency excise tax paid under chapter
400221 and the credit allowed under subsection (5), as these
401credits are limited by subsection (6); credits allowed under
402part X of chapter 288; and all other available credits and
403deductions.
404     Section 5.  For fiscal year 2006-2007, the sum of $750,000
405is appropriated from the General Revenue Fund to the Florida
406Capital Investment Trust to be used for startup activities
407necessary to implement part X of chapter 288, Florida Statutes,
408as created by this act.
409     Section 6.  This act shall take effect July 1, 2006.


CODING: Words stricken are deletions; words underlined are additions.