Senate Bill sb2414c1

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    Florida Senate - 2007                           CS for SB 2414

    By the Committee on Higher Education; and Senator Ring





    589-2163-07

  1                      A bill to be entitled

  2         An act relating to commercialization of

  3         university research; creating s. 288.956, F.S.;

  4         providing legislative intent for the Sure

  5         Ventures Commercialization Program; creating s.

  6         288.9561, F.S.; creating Sure Ventures

  7         Commercialization, Inc., a not-for-profit

  8         corporation; requiring Enterprise Florida,

  9         Inc., to provide administrative support to the

10         corporation and be its successor in interest;

11         providing for its administration by a board;

12         providing for appointment of board members;

13         providing for terms; providing for service

14         without compensation; providing for

15         reimbursement for per diem, travel, and other

16         direct expenses; providing criteria for

17         membership; providing for powers and duties of

18         the board; providing for hiring employees;

19         providing for meetings of the board;

20         authorizing the board to invest funds through

21         the State Board of Administration; providing

22         for contracts with state universities;

23         requiring the board to prepare and deliver an

24         annual report to the Governor and the

25         Legislature by a specified date; detailing the

26         content of the report; providing for exclusion

27         of liability by the corporation; creating s.

28         288.9562, F.S.; creating the Sure Ventures

29         Commercialization Grant Program; providing for

30         the types of grants that may be made to state

31         universities for the commercialization of

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    Florida Senate - 2007                           CS for SB 2414
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 1         research projects; creating s. 288.9563, F.S.;

 2         providing for grant application and approval

 3         procedures; providing appropriations; providing

 4         an effective date.

 5  

 6  Be It Enacted by the Legislature of the State of Florida:

 7  

 8         Section 1.  Section 288.956, Florida Statutes, is

 9  created to read:

10         288.956  Sure Ventures Commercialization Program.--

11         (1)  The Sure Ventures Commercialization Program is

12  established for the purpose of financing the commercialization

13  of products and services developed from the research and

14  development conducted at public universities in this state.

15  The purpose of the program is to enhance the economy of this

16  state by:

17         (a)  Converting products from research performed at

18  public universities into viable consumer products; and

19         (b)  Precipitating the formation of new Florida

20  companies to further develop and sell those products in the

21  commercial marketplace.

22         (2)  The Sure Ventures Commercialization Program is

23  designed so that a public university can apply for funding

24  from Sure Ventures Commercialization, Inc., in order to

25  commercially develop products and services resulting from

26  research at the university. Funding from the Sure Ventures

27  Commercialization Trust Fund may be used for a variety of

28  premarketing activities, including, but not limited to,

29  securing patents, establishing start-up companies, developing

30  license agreements, attracting private investment, and

31  supporting other activities that are necessary to establish

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    Florida Senate - 2007                           CS for SB 2414
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 1  commercially viable ventures for the marketing and sale of

 2  products. Funds may not be used for research or development.

 3         Section 2.  Section 288.9561, Florida Statutes, is

 4  created to read:

 5         288.9561  Sure Ventures Commercialization, Inc.--

 6         (1)  CREATION.--There is created Sure Ventures

 7  Commercialization, Inc., a not-for-profit corporation, which

 8  shall be registered, incorporated, organized, and operated

 9  under chapter 617 with Enterprise Florida, Inc., as its sole

10  member.

11         (a)  The corporation is not a unit of state government

12  or a political subdivision of the state. However, the

13  Legislature declares that the corporation is subject to s. 24,

14  Art. I of the State Constitution and chapter 119, relating to

15  public records, and the provisions of chapter 286 relating to

16  public meetings and records. Furthermore, all officers,

17  directors, and employees of the corporation must comply with

18  the code of ethics for public officers and employees under

19  part III of chapter 112.

20         (b)  The corporation shall adopt suitable articles of

21  incorporation and bylaws and must establish at least one

22  corporate office in this state and appoint a registered agent.

23         (c)  The corporation may hire or contract for all

24  personnel necessary to properly execute the powers and duties

25  bestowed upon it within the funds appropriated to implement

26  ss. 288.956-288.9566. Using funds appropriated to implement

27  this section, the corporation may not expend more than $1

28  million each year for personnel and necessary administrative

29  expenditures, including, but not limited to, travel and per

30  diem, legal fees, consultant's fees, rents and utilities, and

31  audit fees.

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    Florida Senate - 2007                           CS for SB 2414
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 1         (d)  Subject to appropriations, Enterprise Florida,

 2  Inc., shall contract to provide administrative support to the

 3  corporation as requested by the corporation. If the

 4  corporation is dissolved, Enterprise Florida, Inc., becomes

 5  the corporation's successor in interest and assumes all

 6  rights, duties, and obligations of the corporation under any

 7  contract to which the corporation is then a party and under

 8  law.

 9         (2)  PURPOSE.--The corporation shall be organized to

10  administer a commercialization grants program as defined in

11  this act with funding from the Sure Ventures Commercialization

12  Trust Fund, and the corporation may receive, hold, invest,

13  administer, and disburse funds appropriated by the

14  Legislature.

15         (3)  BOARD; MEMBERSHIP.--The corporation shall be

16  governed by a board of directors.

17         (a)  The board of directors shall consist of nine

18  voting members, of whom the Governor shall appoint three, the

19  President of the Senate shall appoint three, and the Speaker

20  of the House of Representatives shall appoint three.

21         (b)  As a candidate to be selected to the board of

22  directors, an individual must have prior experience with and

23  demonstrated expertise and competence in early stage business

24  investment, corporate management, the fiduciary management of

25  investment funds, or the commercialization of research

26  products. The individual must also demonstrate competence with

27  respect to the administration and management of a publicly

28  listed company, or experience and competence in public

29  accounting, auditing, and fiduciary responsibilities. A board

30  member may not have an interest in any grant proposal

31  submitted to the corporation.

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    Florida Senate - 2007                           CS for SB 2414
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 1         (c)  Each member of the board of directors shall be

 2  appointed to a term of 4 years, except that for the initial

 3  appointments the Governor, the President of the Senate, and

 4  the Speaker of the House of Representatives each shall appoint

 5  one member for a term of 1 year, one member for a term of 2

 6  years, and one member for a term of 4 years in order to

 7  achieve staggered terms among the members of the board. A

 8  member is not eligible for reappointment to the board, except

 9  that a member appointed to an initial term of 1 year or 2

10  years may be reappointed for an additional term of 4 years,

11  and a person appointed to fill a vacancy having 2 years or

12  less remaining on the term may be reappointed for an

13  additional term of 4 years. The Governor, the President of the

14  Senate, and the Speaker of the House of Representatives shall

15  make their initial appointments to the board by October 1,

16  2007.

17         (d)  The Governor, the President of the Senate, or the

18  Speaker of the House of Representatives, respectively, shall

19  fill a vacancy on the board of directors, according to who

20  appointed the member whose vacancy is to be filled or whose

21  term has expired. A vacancy that occurs before the scheduled

22  expiration of the term of the member shall be filled for the

23  remainder of the unexpired term. A board member whose term has

24  expired shall continue to serve until his or her replacement

25  has been appointed.

26         (e)  Each member of the board of directors who is not

27  otherwise required to file financial disclosure under s. 8,

28  Art. II of the State Constitution or s. 112.3144 shall file

29  disclosure of financial interests under s. 112.3145.

30         (f)1.  A person appointed to the board of directors

31  must agree to refrain from having any direct interest in any

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    Florida Senate - 2007                           CS for SB 2414
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 1  contract, franchise, privilege, or other benefit arising from

 2  a university project receiving financing from the board during

 3  the term of his or her appointment and for 2 years after the

 4  termination of the appointment.

 5         2.  If a person accepts a direct interest in any

 6  contract, franchise, privilege, or other benefit granted by

 7  the institution, an affiliate, or a corporation benefited by

 8  Sure Ventures Commercialization Grant proceeds within 2 years

 9  after the termination of his or her service on the board, the

10  person commits a misdemeanor of the first degree, punishable

11  as provided in s. 775.083 or s. 775.084.

12         (g)  Members of the board of directors shall receive no

13  compensation for their services, but are entitled to receive

14  reimbursement for necessary expenses, including travel and per

15  diem expenses, incurred in the performance of their duties as

16  provided in s. 112.061.

17         (h)  Each member of the board of directors is

18  accountable for the proper performance of his or her duties of

19  office, and each member owes a fiduciary duty to the people of

20  the state to ensure that funds provided in furtherance of this

21  section are disbursed and used as prescribed by law and

22  contract and in the best interests of the state.

23         (i)  The Governor, the President of the Senate, or the

24  Speaker of the House of Representatives, according to which

25  officer appointed the member, may remove a member for

26  malfeasance, misfeasance, neglect of duty, incompetence,

27  permanent inability to perform official duties, unexcused

28  absence from three consecutive meetings of the board, arrest

29  or indictment for a crime that is a felony or a misdemeanor

30  involving theft or a crime of dishonesty, or pleading nolo

31  contendere to, or being found guilty of, any crime.

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    Florida Senate - 2007                           CS for SB 2414
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 1         (4)  ORGANIZATION; MEETINGS.--

 2         (a)1.  The board of directors shall annually elect a

 3  chairperson and a vice chairperson from among the board's

 4  members. The members may, by a vote of five of the nine board

 5  members, remove a member from the position of chairperson or

 6  vice chairperson before the expiration of his or her term as

 7  chairperson or vice chairperson. His or her successor shall be

 8  elected to serve for the balance of the removed chairperson's

 9  or vice chairperson's term.

10         2.  The chairperson shall ensure that records are kept

11  of the proceedings of the board of directors and is the

12  custodian of all books, documents, and papers filed with the

13  board; the minutes of meetings of the board; and the official

14  seal of the corporation.

15         (b)1.  The board of directors shall meet upon the call

16  of the chairperson or at the request of a majority of the

17  members, but not less than twice each calendar year if a

18  university request for funding under this section is pending.

19         2.  A majority of the voting members of the board of

20  directors constitutes a quorum. Except as otherwise provided

21  in this section, the board may take official action by a

22  majority vote of the members present at any meeting at which a

23  quorum is present. Members may not vote by proxy.

24         3.  A member of the board may participate in a meeting

25  of the board by telephone or videoconference through which

26  each member may hear every other member.

27         (5)  POWERS AND DUTIES.--The corporation shall be

28  organized to receive, hold, invest, administer, and disburse

29  funds appropriated by the Legislature in support of ss.

30  288.956-288.9566 and to disburse any income generated from the

31  investment of these funds consistent with the purpose and

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    Florida Senate - 2007                           CS for SB 2414
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 1  provisions of this section. In addition to the powers and

 2  duties prescribed in chapter 617 and the articles and bylaws

 3  adopted under that chapter, the corporation:

 4         (a)  May make and enter into contracts and assume any

 5  other functions that are necessary to carry out the provisions

 6  of this section.

 7         (b)  May enter into leases and hold notes, mortgages,

 8  guarantees, or security agreements to secure the performance

 9  of obligations of the university under a contract.

10         (c)  May perform all acts and things necessary or

11  convenient to carry out the powers expressly granted in ss.

12  288.956-288.9566 and a contract entered into between the

13  corporation and a university.

14         (d)  May make expenditures from funds provided by this

15  state, including any necessary administrative expenditures

16  consistent with its powers.

17         (e)  Shall indemnify, and purchase and maintain

18  insurance on behalf of, directors, officers, and employees of

19  the corporation against any personal liability or

20  accountability.

21         (f)  Shall disburse funds under this section and a

22  contract entered into between the corporation and a

23  university.

24         (g)  Shall receive and review reports and financial

25  documentation provided by a university to ensure compliance

26  with this section and the contract.

27         (h)  Shall prepare an annual report as prescribed in

28  subsection (8).

29         (i)  May accept gifts, grants, donations, in-kind

30  services, or other goods and services for carrying out its

31  purposes.

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 1         (6)  INVESTMENT OF FUNDS.--The corporation may enter

 2  into an agreement with the State Board of Administration under

 3  which funds received by the corporation which are not

 4  disbursed to a university or invested must be invested by the

 5  State Board of Administration on behalf of the corporation.

 6  Funds shall be invested in suitable instruments authorized

 7  under s. 215.47 and specified in investment guidelines

 8  established and agreed to by the State Board of Administration

 9  and the corporation.

10         (7)  CONTRACTS FOR THE AWARD OF GRANTS.--

11         (a)  The corporation shall negotiate and execute

12  contracts with universities governing the terms of grants

13  provided under ss. 288.956-288.9566. Grants must be approved

14  by a two-thirds vote of the board of directors when a quorum

15  is present at a duly noticed meeting.

16         (b)  Each contract, at a minimum, must contain

17  provisions:

18         1.  Specifying the procedures and schedules that govern

19  the disbursement of funds under this section and specifying

20  the conditions or deliverables that the university must

21  satisfy before the release of each disbursement.

22         2.  Requiring the university to expend 95 percent of

23  grant proceeds for described uses in the approved grant

24  application and not otherwise reduce grant proceeds with

25  facilities charges or fees by the university.

26         3.  Requiring the university to submit data to the

27  corporation concerning the activities and performance of

28  projects funded under this section and to provide to the

29  corporation an annual accounting of the expenditure of funds

30  disbursed under this section by August 1 of each year until 1

31  year elapses from the university's final disbursement of all

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 1  grant funds received from the Sure Ventures Commercialization

 2  Program.

 3         (8)  ANNUAL REPORT.--By December 1 of each year, the

 4  corporation shall prepare a report of the activities and

 5  outcomes under ss. 288.956-288.9566 for the preceding fiscal

 6  year and submit the report to the Governor, the President of

 7  the Senate, and the Speaker of the House of Representatives.

 8  The report, at a minimum, must include:

 9         (a)  An accounting of the amount of grants awarded and

10  disbursed during the preceding fiscal year by project and

11  university.

12         (b)  Project level summaries of the information

13  reported by grant recipients in paragraph (7)(b).

14         (c)  A description of the benefits to this state

15  resulting from the grant program, including the number of

16  businesses created, associated industries started, and the

17  growth of related research projects at the university.

18         (d)  An independent audit of the corporation's

19  financial statements, which should include a statement of

20  operations that reports receipts and expenditures during the

21  preceding fiscal year for personnel, administration, and

22  operational costs of the corporation.

23         (e)  A description of those projects funded by the

24  grant program in which two or more universities are working

25  cooperatively together to avoid duplicating the activities,

26  programs, and functions of the cooperating universities and to

27  leverage the expertise offered by other universities.

28         (9)  LIABILITY.--

29         (a)  The appropriation or disbursement of funds under

30  this section does not constitute a debt, liability, or

31  obligation of the state, any political subdivision thereof, or

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 1  the corporation, or a pledge of the faith and credit of the

 2  state or of any political subdivision.

 3         (b)  The appropriation or disbursement of funds under

 4  this section does not subject the state, any political

 5  subdivision, or the corporation to liability related to the

 6  research activities, commercialization activities, and

 7  research products that receive funding under this section.

 8         (10)  DEBT.--The corporation may not incur debt. This

 9  prohibition includes long-term leases, promissory notes,

10  loans, lease-purchase agreements, certificates of

11  participation, the sale of bonds or revenue bonds, or the

12  award or commitment to award grants in excess of the

13  unencumbered cash balance in the Sure Ventures

14  Commercialization Trust Fund.

15         Section 3.  Section 288.9562, Florida Statutes, is

16  created to read:

17         288.9562  Sure Ventures Commercialization Grant

18  Program.--The Sure Ventures Commercialization Grant Program is

19  established to provide early stage capital funding from the

20  Sure Ventures Commercialization Trust Fund in support of the

21  commercialization of university research products. Grants from

22  the Sure Ventures Commercialization Trust Fund shall be

23  disbursed under the following categories:

24         (1)  Phase One grants, which may not exceed $50,000 per

25  project, may be used to assist with early market research,

26  independent evaluation, consultation, and other initial

27  activities that may be required to develop an initial business

28  model for a university research product having the potential

29  for commercialization.

30         (2)  Phase Two grants, which may not exceed $100,000

31  per project, may be used to match private investment in a

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    Florida Senate - 2007                           CS for SB 2414
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 1  university research commercialization proposal. The university

 2  proposal must have been successfully evaluated and developed

 3  into a level of readiness contemplated for projects that have

 4  received Phase One grants. Phase Two grants shall be used to

 5  develop a complete business plan for the commercialization of

 6  a university research product. For a Phase Two grant proposal,

 7  the university must document the availability of $1 in private

 8  support for each $1 in state funding requested.

 9         (3)  Phase Three grants, which may not exceed $250,000

10  per project, may be used to match private investment relating

11  to the implementation of a completed business plan for a

12  university research product. For a Phase Three grant proposal,

13  the university must document the availability of $1 in private

14  support for each $1 in state funding requested.

15         Section 4.  Section 288.9563, Florida Statutes, is

16  created to read:

17         288.9563  Sure Ventures Commercialization grants;

18  application and approval procedures.--

19         (1)  A university, or any two or more universities,

20  upon approval by an authorized officer of the university, may

21  submit a request to Sure Ventures Commercialization, Inc., for

22  a grant to facilitate the commercialization of a university

23  research product or the commercialization of a patent held by

24  a university.

25         (2)  Subject to the availability of trust funds, the

26  corporation shall periodically solicit specific proposals from

27  universities for grants to be funded by the corporation.

28         (a)1.  The corporation shall meet at least once every 6

29  months for the purpose of evaluating the grant proposals and

30  for awarding grants if the uncommitted balance in the Sure

31  Ventures Commercialization Trust Fund exceeds $750,000.

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 1         2.  The minimum time between the date when the notice

 2  for the solicitation for proposals is issued and the date when

 3  the finished proposal is received by the corporation may not

 4  be less than 60 days. The corporation must approve or deny a

 5  completed proposal not more than 60 days after receiving the

 6  proposal.

 7         3.  The board of directors, by a majority vote, may

 8  increase the time allotted to approve or deny the submitted

 9  proposals by an additional 60 days when complex proposals

10  require additional time for proper evaluation.

11         (b)1.  The board shall establish guidelines prescribing

12  the criteria and format for proposed projects submitted by

13  universities.

14         2.  A university need not receive prior stage grants to

15  be eligible for phase two or phase three grants.

16         (3)  When evaluating the projects submitted for funding

17  support through Sure Ventures Commercialization, Inc., the

18  board must consider the following criteria:

19         (a)  The potential return to the university which may

20  be reasonably assumed based on the business case presented in

21  support of the proposed project;

22         (b)  The potential for the creation of high-wage jobs

23  resulting from the success of the proposed project;

24         (c)  The potential of the proposed project to address

25  pressing needs of the residents of the state;

26         (d)  The potential of the proposed project to

27  "spin-off" other related business enterprises;

28         (e)  The potential of the proposed project to enhance

29  the economic competitiveness of the state and the university;

30  and

31  

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 1         (f)  The technical, financial, organizational, and

 2  marketing feasibility of the project and its business plan.

 3         (4)  The proposed project must be evaluated on its

 4  individual merits.

 5         Section 5.  The nonrecurring sum of $1 million is

 6  appropriated from the General Revenue Fund to Sure Ventures

 7  Commercialization, Inc., for the purpose of creating and

 8  organizing the corporation, implementing a grant program as

 9  defined in this act, and carrying out the administration of

10  administering the Sure Ventures Commercialization Trust Fund

11  during the 2007-2008 fiscal year.

12         Section 6.  The nonrecurring sum of $10 million is

13  appropriated from the General Revenue Fund to the Sure

14  Ventures Commercialization Trust Fund for the purpose of

15  implementing the provisions of this act during the 2007-2008

16  fiscal year.

17         Section 7.  This act shall take effect July 1, 2007.

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 1          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
 2                             SB 2414

 3                                 

 4  The committee substitute clarifies the purpose, organization,
    and financial requirements of the Sure Ventures
 5  Commercialization Program by:

 6  Adding that a purpose of the program is precipitating the
    formation of new Florida companies to develop and sell
 7  products from university research;

 8  Specifying that Enterprise Florida, Inc., is the corporation's
    sole member;
 9  
    Specifying that the corporation must be organized to
10  administer a commercialization grant program with funding from
    the Sure Ventures Commercialization Trust Fund;
11  
    Requiring a two-thirds vote of the board of directors when a
12  quorum is present at a duly noticed meeting to approve grants;

13  Making travel reimbursement and per diem of board members
    subject to s.112.061, F.S.;
14  
    Requiring a university to expend 95 percent of grant proceeds
15  as approved in the grant application;

16  Eliminating a provision that required grant recipients to
    negotiate repayment to the corporation when an approved grant
17  resulted in sufficient revenues to sustain a profitable
    operation;
18  
    Permitting an authorized officer of the university to submit
19  the grant proposal for approval; and

20  Stipulating that a university need not receive prior stage
    grants in order to be eligible for phase two or phase three
21  grants.

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