HB 7213

1
A bill to be entitled
2An act relating to capital formation for infrastructure
3projects; amending ss. 288.9621, 288.9622, and 288.9623,
4F.S.; conforming a short title, revising legislative
5findings and intent, and providing definitions for the
6Florida Capital Formation Act; conforming cross-
7references; creating s. 288.9627, F.S.; providing for
8creation of the Florida Infrastructure Fund Partnership;
9providing the partnership's purpose and duties; providing
10for management of the partnership by the Florida
11Opportunity Fund; authorizing the fund to lend moneys to
12the partnership; requiring the partnership to raise funds
13from investment partners; providing for commitment
14agreements with and issuance of certificates to investment
15partners; authorizing the partnership to invest in certain
16infrastructure projects; requiring the partnership to
17submit an annual report to the Governor and Legislature;
18prohibiting the partnership and the fund from pledging the
19credit or taxing power of the state or its political
20subdivisions; prohibiting the partnership from investing
21in projects with or accepting investments from certain
22companies; creating s. 288.9628, F.S.; creating the
23Florida Infrastructure Investment Trust; providing for
24powers and duties, a board of trustees, and an
25administrative officer of the trust; providing for the
26trust's issuance of certificates to investment partners
27who invest in the partnership; specifying that the
28certificates are redeemable for tax credits under certain
29conditions; authorizing the trust to charge fees; limiting
30the amount of tax credits issued; providing for the
31redemption or sale of certificates; providing for the
32issuance of the tax credits by the Department of Revenue;
33specifying the taxes against which the credits may be
34applied; limiting the period within which tax credits may
35be used; providing for the state's obligation for use of
36the tax credits; limiting the liability of the fund;
37requiring the department to provide a certain written
38assurance to the trust under certain circumstances;
39amending s. 213.053, F.S.; authorizing the department to
40provide tax credit information to the partnership and the
41trust; providing an effective date.
42
43Be It Enacted by the Legislature of the State of Florida:
44
45     Section 1.  Section 288.9621, Florida Statutes, is amended
46to read:
47     288.9621  Short title.-This part Sections 288.9621-288.9625
48may be cited as the "Florida Capital Formation Act."
49     Section 2.  Subsections (1) and (2) of section 288.9622,
50Florida Statutes, are amended to read:
51     288.9622  Findings and intent.-
52     (1)  The Legislature finds and declares that there is a
53need to increase the availability of seed capital and early
54stage venture equity capital for emerging companies in the
55state, including, without limitation, enterprises in life
56sciences, information technology, advanced manufacturing
57processes, aviation and aerospace, and homeland security and
58defense, as well as other strategic technologies and
59infrastructure funding.
60     (2)  It is the intent of the Legislature that this part ss.
61288.9621-288.9625 serve to mobilize private investment in a
62broad variety of venture capital partnerships in diversified
63industries and geographies; retain private sector investment
64criteria focused on rate of return; use the services of highly
65qualified managers in the venture capital industry regardless of
66location; facilitate the organization of the Florida Opportunity
67Fund as an investor in seed and early stage businesses,
68infrastructure projects, venture capital funds, infrastructure
69funds, and angel funds; and precipitate capital investment and
70extensions of credit to and in the Florida Opportunity Fund.
71     Section 3.  Section 288.9623, Florida Statutes, is amended
72to read:
73     288.9623  Definitions.- As used in this part, the term ss.
74288.9621-288.9625:
75     (1)  "Board" means the board of directors of the Florida
76Opportunity Fund.
77     (2)  "Certificate" means a contract between the trust and
78an investment partner under which the partner, under certain
79conditions, may redeem such certificate for a tax credit to
80guarantee the partner's investment in the partnership.
81     (3)  "Commitment agreement" means a contract between the
82partnership and an investment partner under which the partner
83commits to providing a specified amount of investment capital in
84exchange for an ownership interest in the partnership.
85     (4)(2)  "Fund" means the Florida Opportunity Fund.
86     (5)  "Infrastructure project" means a capital project in
87the state for a facility or other infrastructure need of the
88state, a county, or a municipality with respect to any of the
89following: water or wastewater system, communication system,
90power system, transportation system, renewable energy system,
91ancillary or support system for any of these types of projects,
92or other strategic infrastructure of the state, the county, or
93the municipality.
94     (6)  "Investment partner" or "partner" means a person,
95other than the partnership, the fund, or the trust, who
96purchases an ownership interest in the partnership.
97     (7)  "Partnership" means the Florida Infrastructure Fund
98Partnership.
99     (8)  "Tax credit" means a credit issued against the taxes
100specified in s. 288.9628(7)(b).
101     (9)  "Trust" means the Florida Infrastructure Investment
102Trust.
103     Section 4.  Section 288.9627, Florida Statutes, is created
104to read:
105     288.9627  Florida Infrastructure Fund Partnership;
106creation; duties.-
107     (1)  The Florida Opportunity Fund shall facilitate the
108creation of the Florida Infrastructure Fund Partnership, which
109shall be organized and operated under chapter 620 as a private,
110for-profit limited partnership or limited liability partnership
111with the fund as a general partner. The partnership shall manage
112its business affairs and conduct business consistent with its
113organizing documents and the purposes described in this section.
114However, the partnership is not an instrumentality of the state.
115     (2)  The primary purpose of the partnership is to raise
116investment capital and invest the capital in infrastructure
117projects in the state that promote the economic development of
118the state, a county, or a municipality.
119     (3)(a)  The fund, as a general partner of the partnership,
120shall manage the partnership's business affairs, including, but
121not limited to:
122     1.  Hiring one or more investment managers to assist with
123management of the partnership.
124     2.  Soliciting and negotiating the terms of, contracting
125for, and receiving investment capital with the assistance of the
126investment managers or other service providers.
127     3.  Receiving investment returns.
128     4.  Disbursing returns to investment partners.
129     5.  Approving investments in order to provide financial
130returns together with strategic returns designed to satisfy the
131state's, the county's, or the municipality's infrastructure
132needs; result in a significant potential to create or retain
133jobs in this state; and further diversify the state's economy.
134     6.  Engaging in other activities necessary to operate the
135partnership.
136     (b)  The fund may lend up to $350,000 to the partnership to
137pay the initial expenses of organizing the partnership and
138soliciting investment partners.
139     (4)(a)  The partnership shall raise funds from investment
140partners for investment in infrastructure projects in the state
141by entering into commitment agreements with such partners on
142terms approved by the fund's board.
143     (b)  The Florida Infrastructure Investment Trust shall,
144pursuant to s. 288.9628, concurrently with the execution of a
145commitment agreement with an investment partner, issue a
146certificate redeemable for a contingent tax credit to guarantee
147the partner's investment in the partnership.
148     (c)  The partnership shall provide a copy of each
149commitment agreement to the trust upon execution of the
150agreement by all parties.
151     (d)  The partnership may enter into commitment agreements
152with investment partners beginning July 1, 2010. The total
153principal investment payable to the partnership under all
154commitment agreements, and the corresponding amount of the
155certificates issued by the trust under s. 288.9628, may not
156exceed the total aggregate amount of $350 million. However, if
157the partnership does not obtain commitment agreements totaling
158at least $75 million by December 1, 2011, the partnership must
159cancel any executed agreement and return the investment capital
160of each investment partner who executed an agreement.
161     (5)(a)  The partnership may only invest in an
162infrastructure project:
163     1.  That fulfills a critical infrastructure need of the
164state.
165     2.  That raises enough equity or debt capital from other
166sources so that the total amount invested in the project is at
167least twice the amount invested by the partnership.
168     3.  For which legal measures exist, appropriate to the
169individual project, to ensure that the project is not
170fraudulently closed to the detriment of the residents of the
171state.
172     (b)  The partnership may not invest more than 20 percent of
173its total available investment capital in any single
174infrastructure project.
175     (6)  The partnership may only invest in an infrastructure
176project based on an evaluation of the following:
177     (a)  A written business plan for the project, including all
178expected revenue sources.
179     (b)  The likelihood of the project's attracting operating
180capital from investment partners, grants, or other lenders.
181     (c)  The management team for the proposed project.
182     (d)  The project's potential for job creation in the state.
183     (e)  The financial resources of the entity proposing the
184project.
185     (f)  The existence of reasonable safeguards to ensure that
186the project provides a continuing benefit for residents of the
187state.
188     (g)  Other factors not inconsistent with this section that
189are deemed by the partnership as relevant to the likelihood of
190the project's success.
191     (7)  By December 1 of each year beginning in 2010, the
192partnership shall submit an annual report of its activities to
193the Governor, the President of the Senate, and the Speaker of
194the House of Representatives. The annual report must include, at
195a minimum:
196     (a)  An accounting of the amounts of investment capital
197raised and disbursed by the partnership and the progress of the
198partnership, including the progress of each infrastructure
199project in which the partnership has invested.
200     (b)  A description of the benefits to the state that result
201from the partnership's investments, including a list of
202infrastructure projects; the benefits of those projects to the
203state, the county, or the municipality; the number of businesses
204and associated industries positively affected; the number,
205types, and average annual wages of the jobs created or retained;
206and the positive impact on the state's economy.
207     (c)  Independently audited financial statements, including
208statements that show receipts and expenditures during the
209preceding fiscal year for the operational costs of the
210partnership.
211     (8)  The partnership and the fund may not pledge the credit
212or taxing power of the state or any political subdivision
213thereof and may not make their debts payable from any moneys or
214resources except those of the partnership or the fund. An
215obligation of the partnership or the fund is not an obligation
216of the state or any political subdivision thereof but is an
217obligation of the partnership or the fund, payable exclusively
218from the partnership's or the fund's resources.
219     (9)  The partnership may not invest in an infrastructure
220project with, or accept investment capital from, a company
221described in s. 215.472 or a scrutinized company as defined in
222s. 215.473. The entity owning an infrastructure project in which
223the partnership has invested must provide reasonable assurances
224to the partnership that the entity will not provide such company
225or scrutinized company with an ownership interest in the
226infrastructure project.
227     Section 5.  Section 288.9628, Florida Statutes, is created
228to read:
229     288.9628  Florida Infrastructure Investment Trust;
230creation; duties; issuance of certificates; applications for tax
231credits.-
232     (1)(a)  There is created the Florida Infrastructure
233Investment Trust, which shall be organized as a state
234beneficiary public trust to be administered by a board of
235trustees. The powers and duties of the board of trustees under
236this section are deemed to be performed for essential public
237purposes.
238     (b)  The board of trustees shall consist of the Chief
239Financial Officer, the director of the Office of Tourism, Trade,
240and Economic Development, and the vice chair of Enterprise
241Florida, Inc., or their designees. The board of trustees shall
242appoint an administrative officer who may act on behalf of the
243trust under the direction of the board of trustees.
244     (c)  Members of the board of trustees and its
245administrative officer shall serve without compensation. Neither
246a member nor the administrative officer may have a financial
247interest in any investment partner.
248     (2)  The trust may hire consultants, retain professional
249services, issue certificates, sell certificates in accordance
250with paragraph (5)(b), expend funds, invest funds, contract,
251bond or insure against loss, or perform any other act necessary
252to administer this section.
253     (3)(a)  The trust shall, pursuant to s. 288.9627 and this
254section, issue certificates redeemable for contingent tax
255credits to investment partners who make equity investments in
256the Florida Infrastructure Fund Partnership.
257     (b)  The trust may seek reimbursement of its reasonable
258costs and expenses from the partnership by charging a fee for
259the issuance of certificates to investment partners of up to
2600.25 percent of the aggregate investment capital committed to
261the partnership by the investment partners who are issued
262certificates.
263     (c)  All certificates issued by the trust may not exceed
264the total aggregate amount specified in s. 288.9627(4)(d).
265     (d)  A certificate may only be issued concurrently with a
266commitment agreement between the investment partner and the
267partnership. A certificate issued by the trust must include a
268specific calendar year maturity date designated by the trust of
269at least 12 years after issuance. A contingent tax credit may
270not be claimed or redeemed except by an investment partner or
271purchaser in accordance with this section and the terms of a
272certificate issued by the trust.
273     (e)  Once the total amount of the investment capital
274committed by an investment partner in his or her commitment
275agreement is provided to the partnership by the partner, the
276certificate is binding, and the partnership, the trust, and the
277Department of Revenue may not modify, terminate, or rescind the
278certificate.
279     (4)(a)  The partnership shall provide written notice to
280each investment partner if, on the maturity date of his or her
281certificate, the partner's net capital investment is greater
282than zero. The notice must include, at a minimum:
283     1.  A good faith estimate of the fair market value of the
284partnership's assets as of the date of the notice.
285     2.  The total capital investment of all investment partners
286as of the date of the notice.
287     3.  The total amount of distributions received by the
288investment partners.
289     4.  The amount of the tax credit the investment partner is
290entitled to be issued by the Department of Revenue.
291
292For purposes of this section, an investment partner's net
293capital investment is an amount equal to the difference between
294the total investment capital actually advanced by the investment
295partner to the partnership and the amount of the aggregate
296actual distributions received by the investment partner.
297     (b)  The partnership shall concurrently provide a copy of
298each investment partner's notice to the trust.
299     (c)  Upon receipt of the notice from the partnership, each
300affected investment partner may make a one-time election to:
301     1.  Have a tax credit issued to the investment partner;
302     2.  If the investment partner does not have a tax liability
303for any of the taxes specified in paragraph (7)(b), have the
304trust sell the partner's certificate on his or her behalf with
305the proceeds of the sale to be paid to the partner by the trust;
306or
307     3.  Maintain the investment partner's investment in the
308partnership.
309     (d)  Except as provided in paragraph (6)(d), the election
310made by an investment partner under paragraph (c) is final and
311may not be revoked or modified.
312     (e)  An investment partner must provide written notice to
313the partnership and the trust of his or her election within 30
314days after his or her receipt of the notice from the
315partnership. If an investment partner fails to provide notice
316within 30 days, the investment partner is deemed to have elected
317to maintain his or her investment in the partnership under
318subparagraph (c)3.
319     (5)(a)  If an investment partner elects to have a tax
320credit issued to him or her, the trust shall apply to the
321Department of Revenue on the partner's behalf for issuance of
322the tax credit in his or her name. In order to receive the tax
323credit, the investment partner must agree in writing to transfer
324his or her ownership interest in the partnership to the fund.
325     (b)  If an investment partner elects to have the trust sell
326his or her certificate, the trust shall exercise its best
327efforts to sell the certificate. In order to receive the
328proceeds from the trust's sale of the certificate, the
329investment partner must agree in writing to transfer his or her
330ownership interest in the partnership to the fund. A purchaser's
331payment for the certificate, or any portion thereof, shall be
332made to the trust on behalf of the investment partner or, upon
333the partner's request, directly to the investment partner. The
334trust may sell a certificate in an amount that does not exceed
335the lesser of:
336     1.  The amount of the certificate issued to the investment
337partner; or
338     2.  The amount necessary to yield proceeds to the
339investment partner equal to his or her net capital investment as
340of the date of the partnership's notice, except that the
341aggregate amount of a certificate sold under this subparagraph
342may not exceed 107 percent of the investment partner's net
343capital investment.
344     (6)(a)  Within 30 days after receipt of an investment
345partner's election to be issued a tax credit under paragraph
346(5)(a), or within 30 days after the sale of a partner's
347certificate under paragraph (5)(b), the trust shall apply to the
348Department of Revenue for issuance of the tax credit on behalf
349of the partner or on behalf of the certificate's purchaser, as
350applicable. However, the trust's failure to timely submit an
351application to the Department of Revenue does not affect the
352investment partner's or certificate purchaser's eligibility for
353the tax credit.
354     (b)  The trust's application for a tax credit must include
355the partnership's certification of the amount of tax credit to
356be issued, the identity of the taxpayer to whom the tax credit
357is to be issued, and the tax against which the credit shall be
358applied. The Department of Revenue shall issue the tax credit
359within 30 days after receipt of a timely and complete
360application.
361     (c)  If an investment partner's certificate is sold by the
362trust under paragraph (5)(b) to more than one purchaser, the
363Department of Revenue shall issue tax credits to such purchasers
364in such amounts as designated by the trust in the application.
365     (d)  The trust shall provide the investment partner with
366written notice if the trust is unable to sell the partner's
367certificate within 90 days after the partner's election. Within
36830 days after receipt of such notice, the investment partner
369may:
370     1.  Revoke his or her prior election and make a new
371election under paragraph (4)(c); or
372     2.  Modify the election and have a tax credit issued to him
373or her for the amount of any unsold credit. Within 30 days after
374such modified election, the trust shall apply to the Department
375of Revenue in accordance with paragraph (a) for issuance of tax
376credits on behalf of the investment partner in the amount of any
377unsold credit and on behalf of the purchasers in the amount of
378their purchased credit.
379     (7)(a)  The amount of the tax credits certified to the
380Department of Revenue may not exceed the investment partner's
381net capital investment. However, the amount of tax credits that
382may be claimed for a certificate in a calendar year may not
383exceed 25 percent of the amount for which the certificate is
384issued.
385     (b)  A tax credit issued by the Department of Revenue under
386this section may be used by the owner of the credit as an offset
387against any taxes owed to the state under chapter 212, chapter
388220, or chapter 624. The offset may be applied by the owner on
389any return for an eligible tax due on or after the date that the
390credit is issued by the Department of Revenue but within 7 years
391after the credit is issued. The owner of the tax credit may
392elect to have the amount authorized in the credit, or any
393portion thereof, claimed as a refund of taxes paid rather than
394applied as an offset against eligible taxes, if such election is
395made within 7 years after the credit is issued.
396     (c)  To the extent that a tax credit issued under this
397section is used by its owner either as a credit against taxes
398due or to obtain payment from the state, the amount of such
399credit becomes an obligation to the state by the partnership,
400secured exclusively by the ownership interest transferred to the
401fund by the investment partner whose investment generated the
402tax credit. In such case, the state's recovery is limited to
403such forfeited ownership interest. The Department of Revenue
404shall account for tax credits used under this section and make
405such information available to the partnership. The fund, as
406general partner, is not liable to the state for repayment of the
407used tax credits from the fund's separate assets unrelated to
408its interest in the partnership.
409     (8)  The Department of Revenue, upon the request of the
410trust, shall provide the trust with a written assurance that the
411certificates issued by the trust will be honored by the
412Department of Revenue as provided in this section.
413     Section 6.  Paragraph (z) is added to subsection (8) of
414section 213.053, Florida Statutes, to read:
415     213.053  Confidentiality and information sharing.-
416     (8)  Notwithstanding any other provision of this section,
417the department may provide:
418     (z)  Information relative to tax credits under ss. 288.9627
419and 288.9628 to the Florida Infrastructure Fund Partnership and
420the Florida Infrastructure Investment Trust.
421
422Disclosure of information under this subsection shall be
423pursuant to a written agreement between the executive director
424and the agency. Such agencies, governmental or nongovernmental,
425shall be bound by the same requirements of confidentiality as
426the Department of Revenue. Breach of confidentiality is a
427misdemeanor of the first degree, punishable as provided by s.
428775.082 or s. 775.083.
429     Section 7.  This act shall take effect July 1, 2010.


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