HB 1467

1A bill to be entitled
2An act relating to capital formation; creating s.
3288.9621, F.S.; providing a short title; providing
4definitions; requiring the Office of Tourism, Trade, and
5Economic Development to account for certain moneys
6separately within the Economic Development Trust Fund;
7requiring the office to make certain funds available for
8investment by the State Board of Administration; providing
9for deducting certain fees and expenses; requiring the
10State Board of Administration to liquidate investments and
11advance proceeds to the Florida Opportunity Fund for
12certain purposes; providing investment requirements for
13the State Board of Administration; providing operational
14requirements for the Florida Opportunity Fund; requiring
15Enterprise Florida, Inc., to organize the Florida
16Opportunity Fund as a wholly owned private, not-for-profit
17limited liability Florida-based company; requiring
18Enterprise Florida, Inc., to annually evaluate the company
19and report to the Governor and Legislature; providing for
20a board of directors for the company; providing for
21appointment and terms of board members; providing
22requirements and limitations for board members; requiring
23board members to serve without compensation; providing for
24reimbursement of expenses of board members and company
25officers and employees; specifying powers of the company;
26authorizing the company to indemnify board members;
27specifying a fiduciary duty of board members and company
28officers and employees; subjecting the company to public
29meetings and public records requirements; specifying
30duties of the company; requiring the company to select a
31Florida Opportunity Fund allocation manager; specifying
32duties and requirements of the allocation manager;
33requiring the company to guarantee private capital
34investments in the company; providing requirements for
35such guarantees; specifying investment requirements for
36the company; specifying investment limitations and
37prohibitions for the company; requiring the company to
38issue an annual report to the Governor and the
39Legislature; specifying report requirements; providing for
40an independent audit; providing for a transfer of
41nonrecurring funds in the General Revenue Fund to the
42Economic Development Trust Fund for subsequent investment
43in the Florida Opportunity Fund; providing for retention
44of balances in the trust fund each year; providing for
45continuing appropriation and use of such moneys for a
46certain time period; providing for return of certain funds
47to the General Revenue Fund; requiring the company to
48continue administering investments for certain purposes;
49providing for continuous reinvestment of certain funds by
50the company; providing for reversion of assets and funds
51of the company to the General Revenue Fund under certain
52circumstances; prohibiting Enterprise Florida, Inc., from
53selling or transferring ownership of the company;
54providing an effective date.
55
56Be It Enacted by the Legislature of the State of Florida:
57
58     Section 1.  Parts X and XI of chapter 288, Florida
59Statutes, are redesignated as parts XI and XII, respectively,
60and a new part X, consisting of section 288.9621, Florida
61Statutes, is added to that chapter to read:
62     288.9621  Capital formation.--
63     (1)  SHORT TITLE.--This section may be cited as the
64"Florida Capital Formation Act."
65     (2)  DEFINITIONS.--As used in this section, the term:
66     (a)  "Business unit" means an employing unit, as defined in
67s. 443.036, which is registered with the Agency for Workforce
68Innovation for purposes of unemployment compensation or a
69subcategory or division of an employing unit that is accepted by
70the agency as a reporting unit.
71     (b)  "Certificate" means a contract between a company and a
72designated investor evidencing the terms of a guarantee granted
73to a designated investor of an investment of funds in the
74company.
75     (c)  "Company" means the Florida Opportunity Fund.
76     (d)  "Designated investor" means a person, entity, or
77lender who is a party to a certificate.
78     (e)  "Florida Opportunity Fund allocation manager" or
79"allocation manager" means one or more fund-of-funds investment
80managers hired by the Florida Opportunity Fund to raise capital
81and invest assets of the company in venture capital funds.
82     (f)  "Florida-based" means operating in this state at a
83permanent address and maintaining at least one business unit in
84this state.
85     (g)  "Office" means the Governor's Office of Tourism,
86Trade, and Economic Development.
87     (3)  FLORIDA CAPITAL INVESTMENT.--
88     (a)  The office shall account for moneys transferred under
89this section separately within the Economic Development Trust
90Fund created in s. 288.095. The office shall make all such funds
91available for investments by the State Board of Administration
92or its designated investment manager as requested by the State
93Board of Administration. The State Board of Administration or
94its designated investment manager shall invest and reinvest the
95moneys in accordance with s. 215.47 and subject to the terms of
96any trust agreement between the State Board of Administration
97and the office. Fees and expenses incurred by the State Board of
98Administration for investing the moneys shall be deducted as
99provided in a trust agreement. Upon request of the office, the
100State Board of Administration shall liquidate investments and
101advance the proceeds to the company as required to fund
102certificate obligations pursuant to this section as well as the
103company's reasonable and necessary operational expenses. The
104exercise by the State Board of Administration or its designated
105investment manager of powers conferred by this section is deemed
106the performance of essential public purposes.
107     (b)  The State Board of Administration or its designated
108investment manager shall invest and reinvest any funds returned
109by the company in accordance with s. 215.47 and subject to the
110terms of any trust agreement between the State Board of
111Administration and the office. The company shall maintain
112necessary working capital moneys; obtain funding from the trust
113fund for certificate obligations, reasonable and necessary
114operating costs, or replenishment of working capital balances;
115and return for liquidity investment any moneys received in
116excess of the company's working capital needs.
117     (4)  FLORIDA OPPORTUNITY FUND; CREATION; POWERS AND
118DUTIES.--
119     (a)  Enterprise Florida, Inc., shall organize the Florida
120Opportunity Fund as a wholly owned, private, not-for-profit,
121limited liability Florida-based company. Enterprise Florida,
122Inc., shall be the company's sole owner. The Florida Opportunity
123Fund is not a public company or instrumentality of the state.
124Enterprise Florida, Inc., shall annually evaluate and report to
125the Governor, the President of the Senate, and the Speaker of
126the House of Representatives whether the company is being
127operated and state funds are being obligated in the best
128interest of the state.
129     (b)  The Florida Opportunity Fund shall be governed by a
130board of directors consisting of five members who have expertise
131in the area of the selection and supervision of early-stage
132investment managers or in the fiduciary management of investment
133funds or who have expertise in other areas considered
134appropriate by the appointment committee. The vice chair of
135Enterprise Florida, Inc., shall select from among its board of
136directors a five-person appointment committee to appoint the
137company's initial board of directors. After appointment of the
138initial board of directors, vacancies on the board of directors
139shall be filled by appointment by Enterprise Florida, Inc. The
140board of directors shall be appointed to serve staggered 3-year
141terms in accordance with the company's organizational documents.
142Members of the board of directors and officers and employees of
143the company are subject to any restrictions on conflicts of
144interest specified in the organizational documents of the
145company and may not have an interest in the Florida Opportunity
146Fund allocation manager or in any investments made by the
147company. Members of the board of directors shall serve without
148compensation, but board members and officers and employees of
149the company may be reimbursed for all reasonable, necessary, and
150actual expenses, as determined by the board and approved by
151Enterprise Florida, Inc.
152     (c)  The company has all of the powers specified under
153chapter 608 for limited liability companies and may indemnify
154members of the board of directors to the broadest extent
155permissible under the laws of this state. However, board members
156and officers and employees of the company have a fiduciary duty
157with respect to the management of company assets and selection
158and oversight of the company's allocation manager and shall
159discharge those duties in the best interest of the state.
160     (d)  The company is subject to chapter 119, relating to
161public meetings, and s. 286.011, relating to public records.
162     (e)  The company shall select a Florida Opportunity Fund
163allocation manager for the raising and investing of capital by
164the company. The allocation manager shall demonstrate expertise
165in the successful management and fund allocation of investments
166in venture capital funds. In selecting an allocation manager,
167the company shall consider, among other pertinent factors, each
168candidate's level of experience, probability of success in
169fundraising, quality of management performance, investment
170philosophy and process, prior investment fund results, and
171potential for achieving the purposes of this section.
172     (f)  The company shall guarantee private capital
173investments in the company pursuant to this section and shall
174issue certificates to designated investors evidencing the terms
175of a guarantee. The company shall invest on a fund-of-funds
176basis in seed and early-state venture capital funds having
177experienced managers or management teams with demonstrated
178experience and expertise and a successful history in the
179investment of venture capital funds, focusing on opportunities
180in this state. The company may not make direct investments in
181individual businesses. While not precluded from investing in
182venture capital funds that have investments outside this state,
183the company must require a venture capital fund to show a record
184of successful investment in this state, to be based in this
185state, or to have an office in this state staffed with a full-
186time, professional venture investment executive in order to be
187eligible for investment. The company may negotiate any terms and
188conditions for its investments, including the clawback of
189management fees and other provisions that maximize investment in
190seed and early-state Florida-based companies. The company may
191charge fees and earn a rate of return for its guarantees such
192that the company can pay for its operational expenses and
193reinvest in venture capital funds to create new businesses and
194jobs in this state and further diversify the economy of this
195state.
196     (g)  The company may not invest in a venture capital fund
197unless that venture capital fund has raised capital from other
198sources in an amount at least equal to the investment of the
199company, such that the total invested in Florida-based companies
200by the receiving venture capital fund totals at least twice the
201investment of the company. Investments must be made in Florida-
202based companies, including, without limitation, enterprises in
203life sciences, information technology, advanced manufacturing
204processes, aviation and aerospace, and homeland security and
205defense, as well as other strategic technologies.
206     (5)  ANNUAL REPORT.--The company shall submit an annual
207report of its activities to the Governor, the President of the
208Senate, and the Speaker of the House of Representatives within 3
209months after the end of the company's fiscal year. The annual
210report must include a copy of an independent audit of the
211company and a valuation of the assets of the company, a review
212of the progress of the Florida Opportunity Fund allocation
213manager in implementing the allocation manager's investment
214plan, the rate of return, and the benefits to the state
215resulting from this program, including the amount of capital
216raised and deployed and the amount of investment. The annual
217report must also include a list of venture capital funds in
218which investments were made and the number of Florida-based
219businesses created and their associated industry.
220     Section 2.  (1)  For the 2006-2007 fiscal year, the sum of
221$300,000 is appropriated from the General Revenue Fund to the
222Economic Development Trust Fund in the Office of Tourism, Trade,
223and Economic Development to be used for startup activities
224necessary to implement s. 288.9621, Florida Statutes, including
225creation of the Florida Opportunity Fund and the solicitation
226and related due diligence required for contracting the services
227of the Florida Opportunity Fund allocation manager.
228     (2)  For the 2006-2007 fiscal year, the sum of $15 million
229is appropriated from nonrecurring moneys in the General Revenue
230Fund to the Economic Development Trust Fund in the Office of
231Tourism, Trade, and Economic Development for subsequent
232investment in the Florida Opportunity Fund pursuant to s.
233288.9621, Florida Statutes. Notwithstanding s. 216.301, Florida
234Statutes, any balance remaining in the trust fund at the end of
235any fiscal year shall remain in the trust fund and shall be
236available for carrying out the purposes of s. 288.9621, Florida
237Statutes. The transferred amount and any earnings on such amount
238are appropriated and may be used for the purposes of s.
239288.9621, Florida Statutes, until July 1, 2020, at which time
240the sum of $15 million or the balance of funds in the trust
241fund, whichever is less, shall be returned to the General
242Revenue Fund and any obligated funds for outstanding
243certificates shall remain until these certificates expire or are
244terminated. The Florida Opportunity Fund shall continue to
245administer its investments after July 1, 2020, until such
246investments are liquidated. Proceeds from liquidation of
247investments and any proceeds in excess of $15 million may be
248retained for continuous reinvestment by the Florida Opportunity
249Fund, if an amount of not less than $15 million has been
250returned to the General Revenue Fund on or before July 1, 2020.
251If at any time Enterprise Florida, Inc., dissolves the Florida
252Opportunity Fund, all assets of the Florida Opportunity Fund and
253any funds remaining for the purpose of this section shall revert
254to the General Revenue Fund. Enterprise Florida, Inc., may not
255sell or transfer ownership of the company.
256     Section 3.  This act shall take effect July 1, 2006.


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