HB 1467CS

CHAMBER ACTION



1The Economic Development, Trade & Banking Committee recommends
2the following:
3
4     Council/Committee Substitute
5     Remove the entire bill and insert:
6
A bill to be entitled
7An act relating to capital formation; creating a new pt. X
8of ch. 288, F.S.; providing a short title; providing
9legislative findings and intent; providing definitions;
10creating the Florida Capital Investment Trust as a state
11beneficiary public trust; providing for administration by
12a board of trustees; providing for appointment of board
13members; providing for terms; providing for serving
14without compensation; providing for travel and other
15direct expenses; providing criteria for trustees;
16providing for powers and duties of trustees; providing for
17hiring employees; providing for meetings of the board;
18authorizing the trust to receive, hold, use, transfer, and
19sell certain tax credits for certain purposes; providing
20requirements and limitations; authorizing the Department
21of Revenue to adopt rules for certain purposes; requiring
22Enterprise Florida, Inc., to facilitate establishment of
23the Florida Opportunity Fund Management Corporation;
24specifying criteria of the corporation; providing for
25appointment of a board of directors selection committee;
26providing for selection of a board of directors of the
27corporation by Enterprise Florida, Inc.; specifying
28criteria; providing for terms and requirements of
29directors; providing purposes of the corporation;
30providing duties and responsibilities of the corporation;
31authorizing the corporation to charge a management fee for
32certain purposes; providing for travel and other direct
33expenses; providing for powers of the corporation;
34creating the Florida Opportunity Fund as a for-profit,
35limited partnership or a limited liability corporation to
36be organized and incorporated by the Florida Opportunity
37Fund Management Corporation; authorizing certain entities
38to contract with Enterprise Florida, Inc., for certain
39purposes; providing investment requirements for the fund;
40requiring the board of trustees to issue annual reports on
41activities of the fund; providing report requirements;
42amending s. 213.053, F.S.; authorizing the Department of
43Revenue to provide certain tax credit information to the
44board of trustees; amending s. 220.02, F.S.; including tax
45credits transferred or sold by the board of trustees
46within the priority list of applied credits against
47certain taxes; amending s. 624.509, F.S.; including tax
48credits transferred or sold by the board of trustees
49within the order of taking credits or deductions against
50the insurance premium tax; providing an appropriation;
51providing an effective date.
52
53Be It Enacted by the Legislature of the State of Florida:
54
55     Section 1.  Parts X and XI of chapter 288, Florida
56Statutes, are redesignated as parts XI and XII, respectively,
57and a new part X of that chapter, consisting of sections
58288.9621, 288.9622, 288.9623, 288.9624, 288.9625, 288.9626,
59288.9627, and 288.9628, is created to read:
60     288.9621  Short title.--This part may be cited as the
61"Florida Capital Formation Act."
62     288.9622  Findings and intent.--
63     (1)  The Legislature finds and declares that there is need
64to increase the availability of seed capital and early stage
65venture equity capital for emerging companies in the state,
66including, without limitation, enterprises in life sciences,
67information technology, advanced manufacturing processes,
68aviation and aerospace, and homeland security and defense, as
69well as other strategic technologies.
70     (2)  It is the intent of the Legislature that this part
71serve to mobilize private investment in a broad variety of
72venture capital partnerships in diversified industries and
73geographies; retain private-sector investment criteria focused
74on rate of return; use the services of highly qualified managers
75in the venture capital industry regardless of location;
76facilitate the organization of the Florida Opportunity Fund as a
77fund-of-funds investor in seed and early stage venture capital
78and angel funds; and precipitate capital investment and
79extensions of credit to and in the Florida Opportunity Fund.
80     (3)  It is the intent of the Legislature to mobilize
81venture equity capital for investment in such a manner as to
82result in a significant potential to create new businesses and
83jobs in this state that are based on high growth potential
84technologies, products, or services and that will further
85diversify the economy of this state.
86     288.9623  Definitions.--As used in this part:
87     (1)  "Board" means the board of trustees of the Florida
88Capital Investment Trust.
89     (2)  "Certificate" means a contract between the trust and a
90designated investor evidencing the terms of a guarantee or
91incentive granted to a designated investor.
92     (3)  "Corporation" means the Florida Opportunity Fund
93Management Corporation created under this part.
94     (4)  "Designated investor" means a person, other than the
95board, who purchases an equity interest in the Florida
96Opportunity Fund or is a party to a certificate or who is a
97lender to the Florida Opportunity Fund and is a party to a
98certificate.
99     (5)  "Florida Capital Investment Trust" or "trust" means a
100state beneficiary public trust created under this part.
101     (6)  "Florida Opportunity Fund" or "fund" means the
102private, for-profit limited partnership or limited liability
103company in which a designated investor purchases an equity
104interest or to which a designated investor extends credit.
105     (7)  "Tax credit" means a contingent tax credit issued
106under this part or subsequent legislative action that is
107available to offset tax liabilities imposed by this state,
108provided the proceeds of such tax are payable to the General
109Revenue Fund. A tax credit is not eligible to offset tax
110liabilities imposed by a political subdivision within this
111state.
112     288.9624  Florida Capital Investment Trust.--
113     (1)  The Florida Capital Investment Trust is created as a
114state beneficiary public trust to be administered by the board.
115The exercise by the board of powers conferred by this part is
116deemed and held to be the performance of essential public
117purposes.
118     (2)(a)  The board shall consist of five voting trustees and
119two nonvoting ex officio trustees. A majority of voting trustees
120shall constitute a quorum.
121     (b)  Three voting trustees shall be appointed by the
122Governor; one voting trustee shall be appointed by the President
123of the Senate; and one voting trustee shall be appointed by the
124Speaker of the House of Representatives. The Governor shall
125appoint one trustee to a term ending April 30, 2007, and two
126trustees to terms ending April 30, 2009. The President of the
127Senate and the Speaker of the House of Representatives shall
128each appoint trustees to terms ending April 30, 2008.
129Thereafter, each voting trustee shall be appointed for a 3-year
130term.
131     (c)  One nonvoting ex officio trustee shall be the designee
132of Enterprise Florida, Inc., and one nonvoting ex officio
133trustee shall be the designee of the Florida Research
134Consortium. Ex officio trustees serve annual terms at the
135pleasure of their appointing organizations and may be
136reappointed. A trustee's term shall end on April 30 of his or
137her term expiration year. Trustees whose terms have expired may
138continue to serve until their replacements have been duly
139appointed.
140     (d)  Vacancies shall be filled in the same manner as the
141appointment of the original trustee to whom a successor is
142sought.
143     (3)  Trustees shall serve on the board without compensation
144in the form of fees, per diem, or salary. Trustees may receive
145compensation or reimbursement for direct expenses, mileage, and
146other travel expenses related to the performance of their duties
147pursuant to s. 112.061. Trustees shall be selected based upon
148demonstrated expertise and competence in the supervision of
149early stage investment managers, the fiduciary management of
150funds, the administration and management of a publicly listed
151company, or experience and competence in public accounting,
152auditing, and fiduciary responsibilities. Trustees may not have
153an interest in any entity to which a certificate is issued.
154     (4)  The board may engage consultants, expend funds, invest
155funds, contract, bond or insure against loss, provide guarantees
156or other incentives, hold transferable tax credits, sell tax
157credits, or enter into any financial or other transaction or
158perform any other act necessary to carry out its purpose under
159this part. The board, in conjunction with the Department of
160Revenue, shall develop a system for registration of any tax
161credits received by the trust and transferred under this part.
162The board shall also create a system of documentation that
163permits verification that any tax credit claimed upon a tax
164return is validly held by the person claiming such tax credit
165and properly taken in the year of claim and that any transfers
166of the tax credit are made in accordance with the requirements
167of this part.
168     (5)  If the board elects to hire employees, such persons
169shall be selected by the board based upon knowledge and
170leadership in the field for which the person performs services
171for the board. The board shall charge fees for its guarantees to
172designated investors or for other services such that the board's
173operations may be conducted without subsequent legislative
174appropriation.
175     288.9625  Issuance of tax credits.--
176     (1)  The trust shall receive and hold for the purposes of
177this part tax credits under this part that may be used to reduce
178any tax liability imposed by the state under chapter 212,
179chapter 220, s. 624.509, or s. 624.510. The total amount of tax
180credits issued and transferred to the trust is $75 million. The
181tax credits shall be transferable by the board as provided in
182this part, provided no such transferred tax credit shall be
183exercisable before July 1, 2011, or after July 1, 2036.
184     (2)  The board may transfer and sell tax credits solely for
185the purpose of fulfilling, in whole or in part, any certificate
186obligation issued by the board. The board shall immediately
187notify the Governor, the President of the Senate, the Speaker of
188the House of Representatives, and the Department of Revenue, in
189writing, if any tax credit is transferred. The board shall be
190notified immediately of any transfers of tax credits by persons
191or businesses other than the board and shall notify the
192Department of Revenue, in writing, of such transfers.
193     (3)  The board shall ensure that no more than $20 million
194in tax credits is transferred that may be claimed and used to
195reduce taxes payable to the General Revenue Fund for any single
196state fiscal year. The board shall clearly indicate upon the
197face of the document transferring the tax credit the principal
198amount of the tax credit and the state fiscal year or years
199during which the credit may be claimed. Tax credits may be
200transferred in increments of no less than $100,000. A copy of
201the document transferring the tax credit shall be transmitted to
202the executive director of the Department of Revenue, who shall
203allow the credit to be claimed against tax liabilities of the
204person or business consistent with the terms appearing in the
205transfer document.
206     (4)  If the tax liabilities of the taxpayer are
207insufficient to exhaust the tax credit for which the taxpayer is
208eligible, the balance of the tax credit may be refunded by the
209state. If a tax credit granted under this section is not claimed
210in the year designated for claiming the credit on the transfer
211document, any return for the year in which the credit was
212eligible to be claimed may be amended to claim the credit within
213the time specified by ss. 95.091 and 215.26
214     (5)  Persons or businesses to which tax credits under this
215section are transferred shall retain documentation supporting
216eligibility to claim the tax credits and evidence of the
217transfer of the tax credits, if applicable, until the time
218period provided to audit the tax returns on which the tax
219credits were claimed has passed.
220     (6)  The Department of Revenue, in conjunction with the
221board, may adopt rules governing the manner and form of
222documentation required to claim tax credits granted or
223transferred under this section and may establish guidelines as
224to the requisites for an affirmative showing of qualification
225for tax credits granted or transferred under this section.
226     (7)  An insurance company claiming a credit against premium
227tax liability under this section shall not be required to pay
228any additional retaliatory tax levied pursuant to s. 624.5091 as
229a result of claiming such credit. Because credits under this
230section are available to an insurance company, s. 624.5091 does
231not limit such credit in any manner.
232     (8)  Any original sale of tax credits by the board shall be
233by competitive bidding unless the sale is for the full face
234value of the credits.
235     288.9626  Florida Opportunity Fund Management
236Corporation.--
237     (1)  At the request of the board, Enterprise Florida, Inc.,
238shall facilitate the creation of the Florida Opportunity Fund
239Management Corporation as a private, not-for-profit corporation.
240Enterprise Florida, Inc., shall be the corporation's sole
241member. The corporation is not a public corporation or
242instrumentality of the state.
243     (2)  The vice chair of Enterprise Florida, Inc., shall
244select from among its sitting board of directors a five-person
245appointment committee. The appointment committee shall select
246five initial members of a board of directors for the
247corporation. The persons elected to the initial board of
248directors by the appointment committee shall include persons who
249have expertise in the area of the selection and supervision of
250early stage investment managers or in the fiduciary management
251of investment funds and other areas of expertise as deemed
252appropriate by the appointment committee. After election of the
253initial board of directors, vacancies on the board of directors
254of the corporation shall be elected by the board of directors of
255Enterprise Florida, Inc., and shall serve terms as provided in
256the corporation's organizational documents. Members of the board
257of directors shall be subject to any restrictions on conflicts
258of interest specified in the organizational documents and shall
259have no interest in any venture capital investment fund
260allocation manager selected by the corporation pursuant to the
261provisions of this part or in any investments made by the
262Florida Opportunity Fund.
263     (3)  The purposes of the corporation shall be to organize
264the Florida Opportunity Fund, select an early stage venture
265capital investment fund allocation manager, negotiate the terms
266of a contract with the venture capital investment fund
267allocation manager, execute the contract with the selected
268venture capital investment fund allocation manager on behalf of
269the Florida Opportunity Fund, manage the business affairs of the
270Florida Opportunity Fund such as accounting, audit, insurance,
271and related requirements, receive investment returns from the
272Florida Opportunity Fund, and reinvest the investment returns in
273the Florida Opportunity Fund in order to provide additional
274venture capital investments designed to result in a significant
275potential to create new businesses and jobs in this state and
276further diversify the economy of this state.
277     (4)  Upon organization, the corporation shall conduct a
278national solicitation for investment plan proposals from
279qualified venture capital investment fund allocation managers
280for the raising and investing of capital by the corporation. Any
281proposed investment plan shall address the applicant's level of
282experience, quality of management, investment philosophy and
283process, provability of success in fundraising, prior investment
284fund results, and plan for achieving the purposes of this part.
285The corporation shall select only a venture capital investment
286fund allocation manager with demonstrated expertise in the
287management and fund allocation of investments in venture capital
288funds.
289     (5)  The corporation may charge a management fee on assets
290under management in the Florida Opportunity Fund. The fee shall
291be in addition to any fee charged to the Florida Opportunity
292Fund by the venture capital investment fund allocation manager,
293but the fee shall be charged only to pay for reasonable and
294necessary costs of the corporation.
295     (6)  Directors of the corporation shall be compensated for
296direct expenses and mileage pursuant to s. 112.061 but shall not
297receive a fee or salary for service as directors.
298     (7)  The corporation shall have all powers granted under
299its organizational documents and shall indemnify directors to
300the broadest extent permissible under the laws of this state.
301     288.9627  Florida Opportunity Fund.--
302     (1)  The Florida Opportunity Fund is created as a
303for-profit limited partnership or limited liability corporation
304that shall be organized and incorporated in this state by the
305Florida Opportunity Fund Management Corporation upon request by
306the board. The board, the corporation, or the fund may contract
307with Enterprise Florida, Inc., for provision of services
308necessary for continuing operations.
309     (2)  The fund shall invest on a fund-of-funds basis and
310emphasize investment in seed capital and early stage venture
311capital funds focusing on opportunities in this state. While not
312precluded from investing in funds with a wider geographic spread
313of portfolio investment, the fund shall require an investment
314fund to have a record of investment in this state, be based in
315this state, or have an office in this state staffed with a full-
316time, professional venture investment executive to be eligible
317for investment. The investments by the fund shall be on
318partnership interests in private venture capital funds and not
319in direct investments in individual businesses. The fund shall
320invest in venture capital funds with experienced managers or
321management teams with demonstrated expertise and a successful
322history in the investment of early stage venture capital funds.
323The fund may invest in newly created early stage venture capital
324funds as long as the manager or management teams of the funds
325have experience, expertise, and a successful history in the
326investment of venture capital funds. The Florida Opportunity
327Fund may not invest in a fund unless that fund has raised
328capital from other sources in an amount greater than the
329investment of the Florida Opportunity Fund such that the amount
330invested in an entity in this state by the receiving venture
331capital fund is at least twice the amount invested by the
332corporation. The corporation and its partners or shareholders
333may negotiate any and all terms and conditions for its
334investments, including draw back of management fees and other
335provisions that maximize investment in seed and early stage
336companies based in this state.
337     (3)  The interest of the corporation in the fund shall be
338to serve as general partner or manager and to be paid a
339management fee to cover its costs.
340     (4)  Investments by designated investors in the fund shall
341be deemed permissible investments for state-chartered banks and
342for domestic insurance companies under applicable state law.
343     (5)  If the fund is liquidated or has returned all capital
344to designated investors in accordance with contractual
345agreements, or the guarantee capacity of the trust, at the sole
346discretion of the board, is sufficient for additional
347certificates, a new funding of the Florida Opportunity Fund may
348be implemented for subsequent venture capital fund-of-funds
349investments. If the board takes exception to an additional
350funding, such additional funding may only be implemented without
351the benefit of certificates from the board.
352     288.9628  Annual reporting.--The board shall issue an
353annual report on the activities conducted by the Florida
354Opportunity Fund and present the report to the Governor, the
355President of the Senate, and the Speaker of the House of
356Representatives. The annual report shall include a copy of the
357independent audit of the fund and a valuation of the assets of
358the fund and shall review the progress of the investment fund
359allocation manager in implementing the fund's investment plan,
360the benefits to the state resulting from this program, including
361the number of businesses created and their associated industry,
362and the number of jobs created. The annual report shall also
363describe any sale of tax certificates and any sale of tax
364certificates that is reasonably anticipated by the board to meet
365its certificate obligations.
366     Section 2.  Paragraph (y) is added to subsection (7) of
367section 213.053, Florida Statutes, to read:
368     213.053  Confidentiality and information sharing.--
369     (7)  Notwithstanding any other provision of this section,
370the department may provide:
371     (y)  Information relative to tax credits claimed under part
372X of chapter 288 to the board of trustees of the Florida Capital
373Investment Trust in the conduct of the trust's official
374business.
375
376Disclosure of information under this subsection shall be
377pursuant to a written agreement between the executive director
378and the agency. Such agencies, governmental or nongovernmental,
379shall be bound by the same requirements of confidentiality as
380the Department of Revenue. Breach of confidentiality is a
381misdemeanor of the first degree, punishable as provided by s.
382775.082 or s. 775.083.
383     Section 3.  Subsection (8) of section 220.02, Florida
384Statutes, is amended to read:
385     220.02  Legislative intent.--
386     (8)  It is the intent of the Legislature that credits
387against either the corporate income tax or the franchise tax be
388applied in the following order: those enumerated in s. 631.828,
389those enumerated in s. 220.191, those enumerated in s. 220.181,
390those enumerated in s. 220.183, those enumerated in s. 220.182,
391those enumerated in s. 220.1895, those enumerated in s. 221.02,
392those enumerated in s. 220.184, those enumerated in s. 220.186,
393those enumerated in s. 220.1845, those enumerated in s. 220.19,
394those enumerated in s. 220.185, and those enumerated in s.
395220.187, and those enumerated in part X of chapter 288.
396     Section 4.  Subsection (7) of section 624.509, Florida
397Statutes, is amended to read:
398     624.509  Premium tax; rate and computation.--
399     (7)  Credits and deductions against the tax imposed by this
400section shall be taken in the following order: deductions for
401assessments made pursuant to s. 440.51; credits for taxes paid
402under ss. 175.101 and 185.08; credits for income taxes paid
403under chapter 220, the emergency excise tax paid under chapter
404221 and the credit allowed under subsection (5), as these
405credits are limited by subsection (6); credits allowed under
406part X of chapter 288; and all other available credits and
407deductions.
408     Section 5.  For fiscal year 2006-2007, the sum of $750,000
409is appropriated from the General Revenue Fund to the Florida
410Capital Investment Trust to be used for startup activities
411necessary to implement part X of chapter 288, Florida Statutes,
412as created by this act.
413     Section 6.  This act shall take effect July 1, 2006.


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