CS/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 and the amount of tax
31credits that may be claimed or applied against state taxes
32in any year; providing for the redemption or sale of
33certificates; providing for the issuance of the tax
34credits by the Department of Revenue; specifying the taxes
35against which the credits may be applied; limiting the
36period within which tax credits may be used; providing for
37the state's obligation for use of the tax credits;
38limiting the liability of the fund; requiring the
39department to provide a certain written assurance to the
40trust under certain circumstances; specifying that certain
41provisions regulating securities transactions do not apply
42to certificates and tax credits transferred or sold under
43the act; amending s. 213.053, F.S.; authorizing the
44department to provide tax credit information to the
45partnership and the trust; providing an effective date.
46
47Be It Enacted by the Legislature of the State of Florida:
48
49     Section 1.  Section 288.9621, Florida Statutes, is amended
50to read:
51     288.9621  Short title.-This part Sections 288.9621-288.9625
52may be cited as the "Florida Capital Formation Act."
53     Section 2.  Subsections (1) and (2) of section 288.9622,
54Florida Statutes, are amended to read:
55     288.9622  Findings and intent.-
56     (1)  The Legislature finds and declares that there is a
57need to increase the availability of seed capital and early
58stage venture equity capital for emerging companies in the
59state, including, without limitation, enterprises in life
60sciences, information technology, advanced manufacturing
61processes, aviation and aerospace, and homeland security and
62defense, as well as other strategic technologies and
63infrastructure funding.
64     (2)  It is the intent of the Legislature that this part ss.
65288.9621-288.9625 serve to mobilize private investment in a
66broad variety of venture capital partnerships in diversified
67industries and geographies; retain private sector investment
68criteria focused on rate of return; use the services of highly
69qualified managers in the venture capital industry regardless of
70location; facilitate the organization of the Florida Opportunity
71Fund as an investor in seed and early stage businesses,
72infrastructure projects, venture capital funds, infrastructure
73funds, and angel funds; and precipitate capital investment and
74extensions of credit to and in the Florida Opportunity Fund.
75     Section 3.  Section 288.9623, Florida Statutes, is amended
76to read:
77     288.9623  Definitions.- As used in this part, the term ss.
78288.9621-288.9625:
79     (1)  "Board" means the board of directors of the Florida
80Opportunity Fund.
81     (2)  "Certificate" means a contract between the trust and
82an investment partner under which the partner, under certain
83conditions, may redeem such certificate for a tax credit to
84guarantee the partner's investment in the partnership.
85     (3)  "Commitment agreement" means a contract between the
86partnership and an investment partner under which the partner
87commits to providing a specified amount of investment capital in
88exchange for an ownership interest in the partnership.
89     (4)(2)  "Fund" means the Florida Opportunity Fund.
90     (5)  "Infrastructure project" means a capital project in
91the state for a facility or other infrastructure need in the
92state, a county, or a municipality with respect to any of the
93following: water or wastewater system, communication system,
94power system, transportation system, renewable energy system,
95ancillary or support system for any of these types of projects,
96or other strategic infrastructure of the state, the county, or
97the municipality.
98     (6)  "Investment partner" or "partner" means a person,
99other than the partnership, the fund, or the trust, who
100purchases an ownership interest in the partnership.
101     (7)  "Partnership" means the Florida Infrastructure Fund
102Partnership.
103     (8)  "Tax credit" means a credit issued against the taxes
104specified in s. 288.9628(7)(c).
105     (9)  "Trust" means the Florida Infrastructure Investment
106Trust.
107     Section 4.  Section 288.9627, Florida Statutes, is created
108to read:
109     288.9627  Florida Infrastructure Fund Partnership;
110creation; duties.-
111     (1)  The Florida Opportunity Fund shall facilitate the
112creation of the Florida Infrastructure Fund Partnership, which
113shall be organized and operated under chapter 620 as a private,
114for-profit limited partnership or limited liability partnership
115with the fund as a general partner. The partnership shall manage
116its business affairs and conduct business consistent with its
117organizing documents and the purposes described in this section.
118However, the partnership is not an instrumentality of the state.
119     (2)  The primary purpose of the partnership is to raise
120investment capital and invest the capital in infrastructure
121projects in the state that promote the economic development of
122the state, a county, or a municipality.
123     (3)(a)  The fund, as a general partner of the partnership,
124shall manage the partnership's business affairs, including, but
125not limited to:
126     1.  Hiring one or more investment managers to assist with
127management of the partnership.
128     2.  Soliciting and negotiating the terms of, contracting
129for, and receiving investment capital with the assistance of the
130investment managers or other service providers.
131     3.  Receiving investment returns.
132     4.  Disbursing returns to investment partners.
133     5.  Approving investments in order to provide financial
134returns together with strategic returns designed to satisfy the
135state's, the county's, or the municipality's infrastructure
136needs; result in a significant potential to create or retain
137jobs in this state; and further diversify the state's economy.
138     6.  Engaging in other activities necessary to operate the
139partnership.
140     (b)  The fund may lend up to $350,000 to the partnership to
141pay the initial expenses of organizing the partnership and
142soliciting investment partners.
143     (4)(a)  The partnership shall raise funds from investment
144partners for investment in infrastructure projects in the state
145by entering into commitment agreements with such partners on
146terms approved by the fund's board.
147     (b)  The Florida Infrastructure Investment Trust shall,
148pursuant to s. 288.9628, concurrently with the execution of a
149commitment agreement with an investment partner, issue a
150certificate redeemable for a contingent tax credit to guarantee
151the partner's investment in the partnership.
152     (c)  The partnership shall provide a copy of each
153commitment agreement to the trust upon execution of the
154agreement by all parties.
155     (d)  The partnership may enter into commitment agreements
156with investment partners beginning July 1, 2010. The total
157principal investment payable to the partnership under all
158commitment agreements, and the corresponding amount of the
159certificates issued by the trust under s. 288.9628, may not
160exceed the total aggregate amount of $350 million. However, if
161the partnership does not obtain commitment agreements totaling
162at least $75 million by December 1, 2011, the partnership must
163cancel any executed agreement and return the investment capital
164of each investment partner who executed an agreement.
165     (5)(a)  The partnership may only invest in an
166infrastructure project:
167     1.  That fulfills a critical infrastructure need in the
168state.
169     2.  That raises enough equity or debt capital from other
170sources so that the total amount invested in the project is at
171least twice the amount invested by the partnership.
172     3.  For which legal measures exist, appropriate to the
173individual project, to ensure that the project is not
174fraudulently closed to the detriment of the residents of the
175state.
176     (b)  The partnership may not invest more than 20 percent of
177its total available investment capital in any single
178infrastructure project.
179     (6)  The partnership may only invest in an infrastructure
180project based on an evaluation of the following:
181     (a)  A written business plan for the project, including all
182expected revenue sources.
183     (b)  The likelihood of the project's attracting operating
184capital from investment partners, grants, or other lenders.
185     (c)  The management team for the proposed project.
186     (d)  The project's potential for job creation in the state.
187     (e)  The financial resources of the entity proposing the
188project.
189     (f)  The existence of reasonable safeguards to ensure that
190the project provides a continuing benefit for residents of the
191state.
192     (g)  Other factors not inconsistent with this section that
193are deemed by the partnership as relevant to the likelihood of
194the project's success.
195     (7)  By December 1 of each year beginning in 2010, the
196partnership shall submit an annual report of its activities to
197the Governor, the President of the Senate, and the Speaker of
198the House of Representatives. The annual report must include, at
199a minimum:
200     (a)  An accounting of the amounts of investment capital
201raised and disbursed by the partnership and the progress of the
202partnership, including the progress of each infrastructure
203project in which the partnership has invested.
204     (b)  A description of the benefits to the state that result
205from the partnership's investments, including a list of
206infrastructure projects; the benefits of those projects to the
207state, the county, or the municipality; the number of businesses
208and associated industries positively affected; the number,
209types, and average annual wages of the jobs created or retained;
210and the positive impact on the state's economy.
211     (c)  Independently audited financial statements, including
212statements that show receipts and expenditures during the
213preceding fiscal year for the operational costs of the
214partnership.
215     (8)  The partnership and the fund may not pledge the credit
216or taxing power of the state or any political subdivision
217thereof and may not make their debts payable from any moneys or
218resources except those of the partnership or the fund. An
219obligation of the partnership or the fund is not an obligation
220of the state or any political subdivision thereof but is an
221obligation of the partnership or the fund, payable exclusively
222from the partnership's or the fund's resources.
223     (9)  The partnership may not invest in an infrastructure
224project with, or accept investment capital from, a company
225described in s. 215.472 or a scrutinized company as defined in
226s. 215.473. The entity owning an infrastructure project in which
227the partnership has invested must provide reasonable assurances
228to the partnership that the entity will not provide such company
229or scrutinized company with an ownership interest in the
230infrastructure project.
231     Section 5.  Section 288.9628, Florida Statutes, is created
232to read:
233     288.9628  Florida Infrastructure Investment Trust;
234creation; duties; issuance of certificates; applications for tax
235credits.-
236     (1)(a)  There is created the Florida Infrastructure
237Investment Trust, which shall be organized as a state
238beneficiary public trust to be administered by a board of
239trustees. The powers and duties of the board of trustees under
240this section are deemed to be performed for essential public
241purposes.
242     (b)  The board of trustees shall consist of the Chief
243Financial Officer, the director of the Office of Tourism, Trade,
244and Economic Development, and the vice chair of Enterprise
245Florida, Inc., or their designees. The board of trustees shall
246appoint an administrative officer who may act on behalf of the
247trust under the direction of the board of trustees.
248     (c)  Members of the board of trustees and its
249administrative officer shall serve without compensation. Neither
250a member nor the administrative officer may have a financial
251interest in any investment partner.
252     (2)  The trust may hire consultants, retain professional
253services, issue certificates, sell certificates in accordance
254with paragraph (5)(b), expend funds, invest funds, contract,
255bond or insure against loss, or perform any other act necessary
256to administer this section.
257     (3)(a)  The trust shall, pursuant to s. 288.9627 and this
258section, issue certificates redeemable for contingent tax
259credits to investment partners who make equity investments in
260the Florida Infrastructure Fund Partnership.
261     (b)  The trust may seek reimbursement of its reasonable
262costs and expenses from the partnership by charging a fee for
263the issuance of certificates to investment partners of up to
2640.25 percent of the aggregate investment capital committed to
265the partnership by the investment partners who are issued
266certificates.
267     (c)  All certificates issued by the trust may not exceed
268the total aggregate amount specified in s. 288.9627(4)(d).
269     (d)  A certificate may only be issued concurrently with a
270commitment agreement between the investment partner and the
271partnership. A certificate issued by the trust must include a
272specific calendar year maturity date designated by the trust of
273at least 12 years after issuance. A contingent tax credit may
274not be claimed or redeemed except by an investment partner or
275purchaser in accordance with this section and the terms of a
276certificate issued by the trust.
277     (e)  Once the total amount of the investment capital
278committed by an investment partner in his or her commitment
279agreement is provided to the partnership by the partner, the
280certificate is binding, and the partnership, the trust, and the
281Department of Revenue may not modify, terminate, or rescind the
282certificate.
283     (4)(a)  The partnership shall provide written notice to
284each investment partner if, on the maturity date of his or her
285certificate, the partner's net capital investment is greater
286than zero. The notice must include, at a minimum:
287     1.  A good faith estimate of the fair market value of the
288partnership's assets as of the date of the notice.
289     2.  The total capital investment of all investment partners
290as of the date of the notice.
291     3.  The total amount of distributions received by the
292investment partners.
293     4.  The amount of the tax credit the investment partner is
294entitled to be issued by the Department of Revenue.
295
296For purposes of this section, an investment partner's net
297capital investment is an amount equal to the difference between
298the total investment capital actually advanced by the investment
299partner to the partnership and the amount of the aggregate
300actual distributions received by the investment partner.
301     (b)  The partnership shall concurrently provide a copy of
302each investment partner's notice to the trust.
303     (c)  Upon receipt of the notice from the partnership, each
304affected investment partner may make a one-time election to:
305     1.  Have a tax credit issued to the investment partner;
306     2.  Have the trust sell the partner's certificate on his or
307her behalf with the proceeds of the sale to be paid to the
308partner by the trust; or
309     3.  Maintain the investment partner's investment in the
310partnership.
311     (d)  Except as provided in paragraph (6)(d), the election
312made by an investment partner under paragraph (c) is final and
313may not be revoked or modified.
314     (e)  An investment partner must provide written notice to
315the partnership and the trust of his or her election within 30
316days after his or her receipt of the notice from the
317partnership. If an investment partner fails to provide notice
318within 30 days, the investment partner is deemed to have elected
319to maintain his or her investment in the partnership under
320subparagraph (c)3.
321     (5)(a)  If an investment partner elects to have a tax
322credit issued to him or her, the trust shall apply to the
323Department of Revenue on the partner's behalf for issuance of
324the tax credit in his or her name. In order to receive the tax
325credit, the investment partner must agree in writing to transfer
326his or her ownership interest in the partnership to the fund.
327     (b)  If an investment partner elects to have the trust sell
328his or her certificate, the trust shall exercise its best
329efforts to sell the certificate. In order to receive the
330proceeds from the trust's sale of the certificate, the
331investment partner must agree in writing to transfer his or her
332ownership interest in the partnership to the fund. A purchaser's
333payment for the certificate, or any portion thereof, shall be
334made to the trust on behalf of the investment partner or, upon
335the partner's request, directly to the investment partner. The
336trust may sell a certificate in an amount that does not exceed
337the lesser of:
338     1.  The amount of the certificate issued to the investment
339partner; or
340     2.  The amount necessary to yield proceeds to the
341investment partner equal to his or her net capital investment as
342of the date of the partnership's notice.
343     (6)(a)  Within 30 days after receipt of an investment
344partner's election to be issued a tax credit under paragraph
345(5)(a), or within 30 days after the sale of a partner's
346certificate under paragraph (5)(b), the trust shall apply to the
347Department of Revenue for issuance of the tax credit on behalf
348of the partner or on behalf of the certificate's purchaser, as
349applicable. However, the trust's failure to timely submit an
350application to the Department of Revenue does not affect the
351investment partner's or certificate purchaser's eligibility for
352the tax credit.
353     (b)  The trust's application for a tax credit must include
354the partnership's certification of the amount of tax credit to
355be issued, the identity of the taxpayer to whom the tax credit
356is to be issued, and the tax against which the credit shall be
357applied. The Department of Revenue shall issue the tax credit
358within 30 days after receipt of a timely and complete
359application.
360     (c)  If an investment partner's certificate is sold by the
361trust under paragraph (5)(b) to more than one purchaser, the
362Department of Revenue shall issue tax credits to such purchasers
363in such amounts as designated by the trust in the application.
364     (d)  The trust shall provide the investment partner with
365written notice if the trust is unable to sell the partner's
366certificate within 90 days after the partner's election. Within
36730 days after receipt of such notice, the investment partner
368may:
369     1.  Revoke his or her prior election and make a new
370election under paragraph (4)(c); or
371     2.  Modify the election and have a tax credit issued to him
372or her for the amount of any unsold credit. Within 30 days after
373such modified election, the trust shall apply to the Department
374of Revenue in accordance with paragraph (a) for issuance of tax
375credits on behalf of the investment partner in the amount of any
376unsold credit and on behalf of the purchasers in the amount of
377their purchased credit.
378     (7)(a)  The Department of Revenue may not issue more than
379$350 million in tax credits. The trust may not approve tax
380credits in excess of the total capital invested through
381commitment agreements.
382     (b)  The amount of tax credits that may be claimed by the
383owner of the credits, or applied against state taxes, in any one
384state fiscal year may not exceed an amount equal to $87.5
385million multiplied by a fraction the numerator of which is the
386amount of credits that the Department of Revenue issued to such
387owner and the denominator of which is the amount of all credits
388that the Department of Revenue issued to all tax credit owners.
389     (c)  A tax credit issued by the Department of Revenue under
390this section may be used by the owner of the credit as an offset
391against any taxes owed to the state under chapter 212, chapter
392220, or chapter 624. The offset may be applied by the owner on
393any return for an eligible tax due on or after the date that the
394credit is issued by the Department of Revenue but within 7 years
395after the credit is issued. The owner of the tax credit may
396elect to have the amount authorized in the credit, or any
397portion thereof, claimed as a refund of taxes paid rather than
398applied as an offset against eligible taxes, if such election is
399made within 7 years after the credit is issued.
400     (d)  To the extent that a tax credit issued under this
401section is used by its owner either as a credit against taxes
402due or to obtain payment from the state, the amount of such
403credit becomes an obligation to the state by the partnership,
404secured exclusively by the ownership interest transferred to the
405fund by the investment partner whose investment generated the
406tax credit. In such case, the state's recovery is limited to
407such forfeited ownership interest. The Department of Revenue
408shall account for tax credits used under this section and make
409such information available to the partnership. The fund, as
410general partner, is not liable to the state for repayment of the
411used tax credits from the fund's separate assets unrelated to
412its interest in the partnership.
413     (8)  The Department of Revenue, upon the request of the
414trust, shall provide the trust with a written assurance that the
415certificates issued by the trust will be honored by the
416Department of Revenue as provided in this section.
417     (9)  Chapter 517 does not apply to the certificates and tax
418credits transferred or sold under this section.
419     Section 6.  Paragraph (z) is added to subsection (8) of
420section 213.053, Florida Statutes, to read:
421     213.053  Confidentiality and information sharing.-
422     (8)  Notwithstanding any other provision of this section,
423the department may provide:
424     (z)  Information relative to tax credits under ss. 288.9627
425and 288.9628 to the Florida Infrastructure Fund Partnership and
426the Florida Infrastructure Investment Trust.
427
428Disclosure of information under this subsection shall be
429pursuant to a written agreement between the executive director
430and the agency. Such agencies, governmental or nongovernmental,
431shall be bound by the same requirements of confidentiality as
432the Department of Revenue. Breach of confidentiality is a
433misdemeanor of the first degree, punishable as provided by s.
434775.082 or s. 775.083.
435     Section 7.  This act shall take effect July 1, 2010.


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