Senate Bill sb2668c1
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Florida Senate - 2006 CS for SB 2668
By the Committee on Commerce and Consumer Services; and
Senator Atwater
577-2211-06
1 A bill to be entitled
2 An act relating to capital formation; creating
3 s. 288.996, F.S., the Florida Capital Formation
4 Act; providing definitions; requiring
5 Enterprise Florida, Inc., to organize the
6 Florida Opportunity Fund as a wholly owned
7 private, not-for-profit limited liability
8 company; providing for a board of directors for
9 the company; providing for filling vacancies on
10 the board of directors and for terms of office;
11 specifying duties of the company; requiring the
12 company to select a Florida Opportunity Fund
13 Allocation Manager; providing requirements for
14 investments; requiring the Florida Opportunity
15 Fund to issue an annual report to the Governor
16 and the Legislature; providing for a transfer
17 of nonrecurring funds from the General Revenue
18 Fund to the Economic Development Trust Fund for
19 subsequent investment in the Florida
20 Opportunity Fund; providing for future
21 dissolution of the account; providing an
22 effective date.
23
24 Be It Enacted by the Legislature of the State of Florida:
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26 Section 1. Section 288.996, Florida Statutes, is
27 created to read:
28 288.996 Capital formation.--
29 (1) SHORT TITLE.--This section may be cited as the
30 "Florida Capital Formation Act."
31 (2) DEFINITIONS.--As used in this section, the term:
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Florida Senate - 2006 CS for SB 2668
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1 (a) "Company" means the Florida Opportunity Fund.
2 (b) "Florida Opportunity Fund Allocation Manager" or
3 "allocation manager" means one or more fund-of-funds
4 investment managers hired by the Florida Opportunity Fund to
5 invest assets of the company in venture capital funds.
6 (3) FLORIDA CAPITAL INVESTMENT ACCOUNT.--
7 (a) The Governor's Office of Tourism, Trade, and
8 Economic Development shall account for the funds separately
9 within the Economic Development Trust Fund created in s.
10 288.095 for moneys transferred under this section. The office
11 shall make all funds available for investment by the State
12 Board of Administration or its investment manager as requested
13 by the State Board of Administration. The State Board of
14 Administration or its designated investment manager shall
15 invest and reinvest the moneys in accordance with s. 215.47
16 and subject to the terms of any trust agreement between the
17 State Board of Administration and the office. Fees and
18 expenses incurred by the State Board of Administration for
19 investing the moneys shall be deducted as provided in a trust
20 agreement. Upon request of the office, the State Board of
21 Administration shall liquidate investments and advance the
22 proceeds to the company as required to fund its investments
23 pursuant to this section as well as its reasonable and
24 necessary operational expenses. The exercise by the State
25 Board of Administration or its designated investment manager
26 of powers conferred by this section shall be deemed and held
27 to be the performance of essential public purposes.
28 (b) The State Board of Administration or its
29 designated investment manager shall invest and reinvest any
30 funds returned to the account by the company in accordance
31 with s. 215.47 and subject to the terms of any trust agreement
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Florida Senate - 2006 CS for SB 2668
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1 between the State Board of Administration and the office. The
2 company shall maintain necessary working capital moneys;
3 obtain funding from the account for its investments,
4 reasonable and necessary operating costs, or replenishment of
5 working capital balances; and return for liquidity investment
6 any moneys received in excess of its working capital needs.
7 (4) FLORIDA OPPORTUNITY FUND; CREATION; POWERS AND
8 DUTIES.--
9 (a) Enterprise Florida, Inc., shall organize the
10 Florida Opportunity Fund as a wholly owned, private,
11 not-for-profit limited liability Florida company. The Florida
12 Opportunity Fund is not a public company or instrumentality of
13 the state.
14 (b) The Florida Opportunity Fund shall be governed by
15 a board of directors consisting of five members who have
16 expertise in the area of the selection and supervision of
17 early-stage investment managers or in the fiduciary management
18 of investment funds or who have expertise in other areas
19 considered appropriate by the appointment committee. The vice
20 chair of Enterprise Florida, Inc., shall select from among its
21 board of directors a five-person appointment committee to
22 appoint the company's initial board of directors. After
23 selection of the initial board of directors, vacancies on the
24 board of directors shall be filled by appointment by
25 Enterprise Florida, Inc. The board of directors shall be
26 appointed to serve terms in accordance with the company's
27 organizational documents. Members of the board of directors
28 are subject to any restrictions on conflicts of interest
29 specified in the organizational documents and may not have an
30 interest in the Florida Opportunity Fund Allocation Manager or
31 in any investments made by the company. Members of the board
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Florida Senate - 2006 CS for SB 2668
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1 of directors shall serve without compensation, but members,
2 the president, and staff may be reimbursed for all reasonable,
3 necessary, and actual expenses, as determined by the board.
4 (c) The company shall have all powers granted under
5 chapter 608 and may indemnify directors to the broadest extent
6 permissible under state law. However, the directors and
7 investment staff shall have a fiduciary duty with respect to
8 the management of company assets and selection and oversight
9 of its allocation manager.
10 (d) The company shall select a Florida Opportunity
11 Fund Allocation Manager who has a demonstrated expertise in
12 the successful management and fund allocation of investments
13 in venture capital funds. In selecting a manager, the company
14 shall consider, among other pertinent factors, each
15 candidate's level of experience, quality of management,
16 investment philosophy and process, prior investment fund
17 results, and potential for achieving the purposes of this
18 section.
19 (e) The company shall invest on a fund-of-funds basis
20 in seed and early-stage venture capital funds having
21 experienced managers or management teams with demonstrated
22 experience, expertise, and a successful history in the
23 investment of venture capital funds, focusing on opportunities
24 in this state. The company may not make direct investments in
25 individual businesses. While not precluded from investing in
26 venture capital funds that have investments outside this
27 state, the company must require a venture capital fund to show
28 a record of successful investment in this state, to be based
29 in this state, or to have an office in this state staffed with
30 a full-time, professional venture investment executive in
31 order to be eligible for investment. The company may negotiate
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Florida Senate - 2006 CS for SB 2668
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1 any and all terms and conditions for its investments,
2 including the claw back of management fees and other
3 provisions that maximize investment in seed and early-stage
4 Florida-based companies.
5 (f) The company may not invest in a venture capital
6 fund unless that venture capital fund has raised capital from
7 other sources in an amount at least equal to the investment of
8 the company, such that the total invested in Florida-based
9 companies by the receiving venture capital fund totals at
10 least twice the investment of the company. Investments must be
11 made in Florida-based companies, including, without
12 limitation, enterprises in life sciences, information
13 technology, advanced manufacturing processes, aviation and
14 aerospace, and homeland security and defense, as well as other
15 strategic technologies.
16 (5) ANNUAL REPORT.--The company shall submit an annual
17 report of its activities to the Governor, the President of the
18 Senate, and the Speaker of the House of Representatives within
19 3 months after the end of its fiscal year. The annual report
20 must include a copy of the independent audit of the company
21 and a valuation of the assets of the company, a review of the
22 progress of the Florida Opportunity Fund Allocation Manager in
23 implementing its investment plan, the rate of return, and the
24 benefits to the state resulting from this program. The annual
25 report must also include a list of venture capital funds in
26 which investments were made and the number of Florida
27 businesses created and their associated industry. The annual
28 report must include the number of jobs created if such
29 information is available.
30 Section 2. For the 2006-2007 fiscal year, the sum of
31 $300,000 is appropriated from the General Revenue Fund to the
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Florida Senate - 2006 CS for SB 2668
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1 Economic Development Trust Fund in the Office of Tourism,
2 Trade, and Economic Development to be used for start-up
3 activities necessary to implement this act, including creation
4 of the Florida Opportunity Fund and the solicitation, and
5 related due diligence, required for contracting the services
6 of the Florida Opportunity Fund Allocation Manager.
7 Section 3. For the 2006-2007 fiscal year, the sum of
8 $_________ is transferred from nonrecurring moneys in the
9 General Revenue Fund to the Economic Development Trust Fund in
10 the Office of Tourism, Trade, and Economic Development for
11 subsequent investment in the Florida Opportunity Fund as
12 described in this act. Notwithstanding s. 216.301, Florida
13 Statutes, and pursuant to s. 216.351, Florida Statutes, any
14 balance in the account at the end of any fiscal year shall
15 remain in the account at the end of the year and shall be
16 available for carrying out the purposes of the account. The
17 transferred amount and any earnings thereon are appropriated
18 and may be used for the purposes of this act until July 1,
19 2020, at which time $________ or the balance of funds,
20 whichever is less, shall be returned to the General Revenue
21 Fund. The Florida Opportunity Fund shall continue to
22 administer its investments after July 1, 2020, until such
23 investments are liquidated. Proceeds from liquidation of
24 investments and any proceeds in excess of $__________ may be
25 retained for continuous reinvestment by the Florida
26 Opportunity Fund, if an amount of not less than $________ has
27 been returned to the General Revenue Fund on or before July 1,
28 2020. If at any time the Florida Opportunity Fund dissolves,
29 all assets of the Florida Opportunity Fund and any funds
30 remaining for the purpose of this section shall revert to the
31 General Revenue Fund.
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Florida Senate - 2006 CS for SB 2668
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1 Section 4. This act shall take effect July 1, 2006.
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3 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
4 Senate Bill 2668
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6 The committee substitute differs from the bill in the
following ways:
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- Appropriates an unspecified dollar amount from the
8 General Revenue Fund to be invested by the Florida
Opportunity Fund in private venture capital funds, rather
9 than providing $75 million in contingent tax credits as a
source of value for guaranty of return on investment in
10 the Florida Opportunity Fund.
11 - Provides that, on July 1, 2020, the unspecified dollar
amount appropriated to the Economic Development Trust
12 Fund for purposes of this act must be returned to the
General Revenue Fund and any proceeds in excess of that
13 amount may be retained for continuous reinvestment by the
Florida Opportunity Fund.
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- Creates only one entity, the Florida Opportunity Fund, to
15 carry out the provisions of the act, rather than creating
three entities, the Florida Capital Investment Trust, the
16 Florida Opportunity Management Corporation, and the
Florida Opportunity Fund.
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- Appropriates $300,000 rather than $750,000, to the Office
18 of Tourism, Trade, and Economic Development to be used
for start-up activities necessary to implement the act.
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