HB 1467CS

CHAMBER ACTION



1The Transportation & Economic Development Appropriations
2Committee recommends the following:
3
4     Council/Committee Substitute
5     Remove the entire bill and insert:
6A bill to be entitled
7An act relating to capital formation; creating s.
8288.9621, F.S.; providing a short title; providing
9definitions; requiring the Office of Tourism, Trade, and
10Economic Development to account for certain moneys
11separately within the Economic Development Trust Fund;
12requiring the office to make certain funds available for
13investment by the State Board of Administration; providing
14for deducting certain fees and expenses; requiring the
15State Board of Administration to liquidate investments and
16advance proceeds to the Florida Opportunity Fund for
17certain purposes; providing investment requirements for
18the State Board of Administration; providing operational
19requirements for the Florida Opportunity Fund; requiring
20Enterprise Florida, Inc., to organize the Florida
21Opportunity Fund as a wholly owned private, not-for-profit
22limited liability Florida-based company; requiring
23Enterprise Florida, Inc., to annually evaluate the company
24and report to the Governor and Legislature; providing for
25a board of directors for the company; providing for
26appointment and terms of board members; providing
27requirements and limitations for board members; requiring
28board members to serve without compensation; providing for
29reimbursement of expenses of board members and company
30officers and employees; specifying powers of the company;
31authorizing the company to indemnify board members;
32specifying a fiduciary duty of board members and company
33officers and employees; subjecting the company to public
34meetings and public records requirements; specifying
35duties of the company; requiring the company to select a
36Florida Opportunity Fund allocation manager; specifying
37duties and requirements of the allocation manager;
38requiring the company to guarantee private capital
39investments in the company; providing requirements for
40such guarantees; specifying investment requirements for
41the company; specifying investment limitations and
42prohibitions for the company; requiring the company to
43issue an annual report to the Governor and the
44Legislature; specifying report requirements; providing for
45an independent audit; providing for a transfer of
46nonrecurring funds in the General Revenue Fund to the
47Economic Development Trust Fund for subsequent investment
48in the Florida Opportunity Fund; providing for retention
49of balances in the trust fund each year; providing for
50continuing appropriation and use of such moneys for a
51certain time period; providing for return of certain funds
52to the General Revenue Fund; requiring the company to
53continue administering investments for certain purposes;
54providing for continuous reinvestment of certain funds by
55the company; providing for reversion of assets and funds
56of the company to the General Revenue Fund under certain
57circumstances; prohibiting Enterprise Florida, Inc., from
58selling or transferring ownership of the company;
59providing an effective date.
60
61Be It Enacted by the Legislature of the State of Florida:
62
63     Section 1.  Parts X and XI of chapter 288, Florida
64Statutes, are redesignated as parts XI and XII, respectively,
65and a new part X, consisting of section 288.9621, Florida
66Statutes, is added to that chapter to read:
67     288.9621  Capital formation.--
68     (1)  SHORT TITLE.--This section may be cited as the
69"Florida Capital Formation Act."
70     (2)  DEFINITIONS.--As used in this section, the term:
71     (a)  "Business unit" means an employing unit, as defined in
72s. 443.036, which is registered with the Agency for Workforce
73Innovation for purposes of unemployment compensation or a
74subcategory or division of an employing unit that is accepted by
75the agency as a reporting unit.
76     (b)  "Certificate" means a contract between a company and a
77designated investor evidencing the terms of a guarantee granted
78to a designated investor of an investment of funds in the
79company.
80     (c)  "Company" means the Florida Opportunity Fund.
81     (d)  "Designated investor" means a person, entity, or
82lender who is a party to a certificate.
83     (e)  "Florida Opportunity Fund allocation manager" or
84"allocation manager" means one or more fund-of-funds investment
85managers hired by the Florida Opportunity Fund to raise capital
86and invest assets of the company in venture capital funds.
87     (f)  "Florida-based" means operating in this state at a
88permanent address and maintaining at least one business unit in
89this state.
90     (g)  "Office" means the Governor's Office of Tourism,
91Trade, and Economic Development.
92     (3)  FLORIDA CAPITAL INVESTMENT.--
93     (a)  The office shall account for moneys transferred under
94this section separately within the Economic Development Trust
95Fund created in s. 288.095. The office shall make all such funds
96available for investments by the State Board of Administration
97or its designated investment manager as requested by the State
98Board of Administration. The State Board of Administration or
99its designated investment manager shall invest and reinvest the
100moneys in accordance with s. 215.47 and subject to the terms of
101any trust agreement between the State Board of Administration
102and the office. Fees and expenses incurred by the State Board of
103Administration for investing the moneys shall be deducted as
104provided in a trust agreement. Upon request of the office, the
105State Board of Administration shall liquidate investments and
106advance the proceeds to the company as required to fund
107certificate obligations pursuant to this section as well as the
108company's reasonable and necessary operational expenses. The
109exercise by the State Board of Administration or its designated
110investment manager of powers conferred by this section is deemed
111the performance of essential public purposes.
112     (b)  The State Board of Administration or its designated
113investment manager shall invest and reinvest any funds returned
114by the company in accordance with s. 215.47 and subject to the
115terms of any trust agreement between the State Board of
116Administration and the office. The company shall maintain
117necessary working capital moneys; obtain funding from the trust
118fund for certificate obligations, reasonable and necessary
119operating costs, or replenishment of working capital balances;
120and return for liquidity investment any moneys received in
121excess of the company's working capital needs.
122     (4)  FLORIDA OPPORTUNITY FUND; CREATION; POWERS AND
123DUTIES.--
124     (a)  Enterprise Florida, Inc., shall organize the Florida
125Opportunity Fund as a wholly owned, private, not-for-profit,
126limited liability Florida-based company. Enterprise Florida,
127Inc., shall be the company's sole owner. The Florida Opportunity
128Fund is not a public company or instrumentality of the state.
129Enterprise Florida, Inc., shall annually evaluate and report to
130the Governor, the President of the Senate, and the Speaker of
131the House of Representatives whether the company is being
132operated and state funds are being obligated in the best
133interest of the state.
134     (b)  The Florida Opportunity Fund shall be governed by a
135board of directors consisting of five members who have expertise
136in the area of the selection and supervision of early-stage
137investment managers or in the fiduciary management of investment
138funds or who have expertise in other areas considered
139appropriate by the appointment committee. The vice chair of
140Enterprise Florida, Inc., shall select from among its board of
141directors a five-person appointment committee to appoint the
142company's initial board of directors. After appointment of the
143initial board of directors, vacancies on the board of directors
144shall be filled by appointment by Enterprise Florida, Inc. The
145board of directors shall be appointed to serve staggered 3-year
146terms in accordance with the company's organizational documents.
147Members of the board of directors and officers and employees of
148the company are subject to any restrictions on conflicts of
149interest specified in the organizational documents of the
150company and may not have an interest in the Florida Opportunity
151Fund allocation manager or in any investments made by the
152company. Members of the board of directors shall serve without
153compensation, but board members and officers and employees of
154the company may be reimbursed for all reasonable, necessary, and
155actual expenses, as determined by the board and approved by
156Enterprise Florida, Inc.
157     (c)  The company has all of the powers specified under
158chapter 608 for limited liability companies and may indemnify
159members of the board of directors to the broadest extent
160permissible under the laws of this state. However, board members
161and officers and employees of the company have a fiduciary duty
162with respect to the management of company assets and selection
163and oversight of the company's allocation manager and shall
164discharge those duties in the best interest of the state.
165     (d)  The company is subject to chapter 119, relating to
166public meetings, and s. 286.011, relating to public records.
167     (e)  The company shall select a Florida Opportunity Fund
168allocation manager for the raising and investing of capital by
169the company. The allocation manager shall demonstrate expertise
170in the successful management and fund allocation of investments
171in venture capital funds. In selecting an allocation manager,
172the company shall consider, among other pertinent factors, each
173candidate's level of experience, probability of success in
174fundraising, quality of management performance, investment
175philosophy and process, prior investment fund results, and
176potential for achieving the purposes of this section.
177     (f)  The company shall guarantee private capital
178investments in the company pursuant to this section and shall
179issue certificates to designated investors evidencing the terms
180of a guarantee. The company shall invest on a fund-of-funds
181basis in seed and early-state venture capital funds having
182experienced managers or management teams with demonstrated
183experience and expertise and a successful history in the
184investment of venture capital funds, focusing on opportunities
185in this state. The company may not make direct investments in
186individual businesses. While not precluded from investing in
187venture capital funds that have investments outside this state,
188the company must require a venture capital fund to show a record
189of successful investment in this state, to be based in this
190state, or to have an office in this state staffed with a full-
191time, professional venture investment executive in order to be
192eligible for investment. The company may negotiate any terms and
193conditions for its investments, including the clawback of
194management fees and other provisions that maximize investment in
195seed and early-state Florida-based companies. The company may
196charge fees and earn a rate of return for its guarantees such
197that the company can pay for its operational expenses and
198reinvest in venture capital funds to create new businesses and
199jobs in this state and further diversify the economy of this
200state.
201     (g)  The company may not invest in a venture capital fund
202unless that venture capital fund has raised capital from other
203sources in an amount at least equal to the investment of the
204company, such that the total invested in Florida-based companies
205by the receiving venture capital fund totals at least twice the
206investment of the company. Investments must be made in Florida-
207based companies, including, without limitation, enterprises in
208life sciences, information technology, advanced manufacturing
209processes, aviation and aerospace, and homeland security and
210defense, as well as other strategic technologies.
211     (5)  ANNUAL REPORT.--The company shall submit an annual
212report of its activities to the Governor, the President of the
213Senate, and the Speaker of the House of Representatives within 3
214months after the end of the company's fiscal year. The annual
215report must include a copy of an independent audit of the
216company and a valuation of the assets of the company, a review
217of the progress of the Florida Opportunity Fund allocation
218manager in implementing the allocation manager's investment
219plan, the rate of return, and the benefits to the state
220resulting from this program, including the amount of capital
221raised and deployed and the amount of investment. The annual
222report must also include a list of venture capital funds in
223which investments were made and the number of Florida-based
224businesses created and their associated industry.
225     Section 2.  (1)  For the 2006-2007 fiscal year, the sum of
226$300,000 is appropriated from the General Revenue Fund to the
227Economic Development Trust Fund in the Office of Tourism, Trade,
228and Economic Development to be used for startup activities
229necessary to implement s. 288.9621, Florida Statutes, including
230creation of the Florida Opportunity Fund and the solicitation
231and related due diligence required for contracting the services
232of the Florida Opportunity Fund allocation manager.
233     (2)  For the 2006-2007 fiscal year, the sum of $15 million
234is transferred from nonrecurring moneys in the General Revenue
235Fund to the Economic Development Trust Fund in the Office of
236Tourism, Trade, and Economic Development for subsequent
237investment in the Florida Opportunity Fund pursuant to s.
238288.9621, Florida Statutes. Notwithstanding s. 216.301, Florida
239Statutes, any balance remaining in the trust fund at the end of
240any fiscal year shall remain in the trust fund and shall be
241available for carrying out the purposes of s. 288.9621, Florida
242Statutes. The transferred amount and any earnings on such amount
243are appropriated and may be used for the purposes of s.
244288.9621, Florida Statutes, until July 1, 2020, at which time
245the sum of $15 million or the balance of funds in the trust
246fund, whichever is less, shall be returned to the General
247Revenue Fund and any obligated funds for outstanding
248certificates shall remain until these certificates expire or are
249terminated. The Florida Opportunity Fund shall continue to
250administer its investments after July 1, 2020, until such
251investments are liquidated. Proceeds from liquidation of
252investments and any proceeds in excess of $15 million may be
253retained for continuous reinvestment by the Florida Opportunity
254Fund, if an amount of not less than $15 million has been
255returned to the General Revenue Fund on or before July 1, 2020.
256If at any time Enterprise Florida, Inc., dissolves the Florida
257Opportunity Fund, all assets of the Florida Opportunity Fund and
258any funds remaining for the purpose of this section shall revert
259to the General Revenue Fund. Enterprise Florida, Inc., may not
260sell or transfer ownership of the company.
261     Section 3.  This act shall take effect July 1, 2006.


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