HB 943

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 from pledging the credit or
19taxing power of the state or its political subdivisions;
20prohibiting the partnership from investing in projects
21with or accepting investments from certain companies;
22creating s. 288.9628, F.S.; creating the Florida
23Infrastructure Investment Trust; providing for powers and
24duties, a board of trustees, and an administrative officer
25of the trust; providing for the trust's issuance of
26certificates to investment partners; specifying that the
27certificates guarantee the availability of tax credits
28under certain conditions; authorizing the trust and the
29fund to charge fees; limiting the amount of tax credits
30that may be claimed or applied against state taxes in any
31year; providing for the redemption of certificates or sale
32of tax credits; providing for the issuance of the tax
33credits by the Department of Revenue; specifying the taxes
34against which the credits may be applied; limiting the
35period within which tax credits may be used; providing for
36the state's obligation for use of the tax credits;
37limiting the liability of the fund; providing for the
38transferability of certificates and tax credits; requiring
39the department to provide a certain written assurance to
40the trust under certain circumstances; specifying that
41certain provisions regulating securities transactions do
42not apply to certificates and tax credits transferred or
43sold under the act; amending s. 213.053, F.S.; authorizing
44the department to disclose certain information to the
45partnership and the trust relative to certain tax credits;
46providing an effective date.
47
48Be It Enacted by the Legislature of the State of Florida:
49
50     Section 1.  Section 288.9621, Florida Statutes, is amended
51to read:
52     288.9621  Short title.-This part Sections 288.9621-288.9625
53may be cited as the "Florida Capital Formation Act."
54     Section 2.  Subsections (1) and (2) of section 288.9622,
55Florida Statutes, are amended to read:
56     288.9622  Findings and intent.-
57     (1)  The Legislature finds and declares that there is a
58need to increase the availability of seed capital and early
59stage venture equity capital for emerging companies in the
60state, including, without limitation, enterprises in life
61sciences, information technology, advanced manufacturing
62processes, aviation and aerospace, and homeland security and
63defense, as well as other strategic technologies and
64infrastructure funding.
65     (2)  It is the intent of the Legislature that this part ss.
66288.9621-288.9625 serve to mobilize private investment in a
67broad variety of venture capital partnerships in diversified
68industries and geographies; retain private sector investment
69criteria focused on rate of return; use the services of highly
70qualified managers in the venture capital industry regardless of
71location; facilitate the organization of the Florida Opportunity
72Fund as an investor in seed and early stage businesses,
73infrastructure projects, venture capital funds, infrastructure
74funds, and angel funds; and precipitate capital investment and
75extensions of credit to and in the Florida Opportunity Fund.
76     Section 3.  Section 288.9623, Florida Statutes, is amended
77to read:
78     288.9623  Definitions.-As used in this part, the term ss.
79288.9621-288.9625:
80     (1)  "Board" means the board of directors of the Florida
81Opportunity Fund.
82     (2)  "Certificate" means a contract between the trust and
83an investment partner that guarantees the availability of tax
84credits for use by the partner, or for transfer or sale under s.
85288.9628, in order to guarantee the partner's investment capital
86in the partnership.
87     (3)  "Commitment agreement" means a contract between the
88partnership and an investment partner under which the partner
89commits to providing a specified amount of investment capital in
90exchange for an ownership interest in the partnership.
91     (4)(2)  "Fund" means the Florida Opportunity Fund.
92     (5)  "Infrastructure project" means a capital project in
93the state for a facility or other infrastructure need in the
94state with respect to any of the following: water or wastewater
95system, communication system, power system, transportation
96system, renewable energy system, ancillary or support system for
97any of these types of projects, or other strategic
98infrastructure located within the state.
99     (6)  "Investment capital" means the total capital committed
100by the investment partner for an equity interest in the
101partnership pursuant to a commitment agreement.
102     (7)  "Investment partner" or "partner" means a person,
103other than the partnership, the fund, or the trust, who
104purchases an ownership interest in the partnership or a
105transferee of such interest.
106     (8)  "Net capital loss" means an amount equal to the
107difference between the total investment capital actually
108advanced by the investment partner to the partnership and the
109amount of the aggregate actual distributions received by the
110investment partner.
111     (9)  "Partnership" means the Florida Infrastructure Fund
112Partnership.
113     (10)  "Tax credits" means credits issued against the taxes
114specified in s. 288.9628(7)(c).
115     (11)  "Trust" means the Florida Infrastructure Investment
116Trust.
117     Section 4.  Section 288.9627, Florida Statutes, is created
118to read:
119     288.9627  Florida Infrastructure Fund Partnership;
120creation; duties.-
121     (1)  The Florida Opportunity Fund shall facilitate the
122creation of the Florida Infrastructure Fund Partnership, which
123shall be organized and operated under chapter 620 as a private,
124for-profit limited partnership or limited liability partnership
125with the fund as a general partner. The partnership shall manage
126its business affairs and conduct business consistent with its
127organizing documents and the purposes described in this section.
128However, the partnership is not an instrumentality of the state.
129     (2)  The primary purpose of the partnership is to raise
130investment capital and invest the capital in infrastructure
131projects in the state that promote economic development.
132     (3)(a)  The fund, as the general partner of the
133partnership, shall manage the partnership's business affairs,
134including, but not limited to:
135     1.  Hiring one or more investment managers to assist with
136management of the partnership through a solicitation for
137qualified investment managers for the raising and investing of
138capital by the partnership. Any such investment manager must
139have maintained an office in the state for at least 2 years
140before such solicitation with a full-time investment
141professional. The evaluation of an investment manager candidate
142must address the investment manager's level of experience,
143quality of management, investment philosophy and process,
144demonstrable success in fundraising, and prior investment
145results.
146     2.  Soliciting and negotiating the terms of, contracting
147for, and receiving investment capital with the assistance of the
148investment managers or other service providers.
149     3.  Receiving investment returns.
150     4.  Disbursing returns to investment partners.
151     5.  Approving investments.
152     6.  Engaging in other activities necessary to operate the
153partnership.
154     (b)  The fund may lend up to $750,000 to the partnership to
155pay the initial expenses of organizing the partnership and
156soliciting investment partners.
157     (4)(a)  The partnership shall raise funds from investment
158partners for investment in infrastructure projects in the state
159by entering into commitment agreements with such partners on
160terms approved by the fund's board.
161     (b)  The Florida Infrastructure Investment Trust shall,
162pursuant to s. 288.9628, concurrently with the execution of a
163commitment agreement with an investment partner, issue a
164certificate.
165     (c)  The partnership shall provide a copy of each
166commitment agreement to the trust upon execution of the
167agreement by all parties.
168     (d)  The partnership may enter into commitment agreements
169with investment partners beginning July 1, 2011. The total
170principal investment capital payable to the partnership under
171all commitment agreements may not exceed the total aggregate
172amount of $700 million. However, if the partnership does not
173obtain commitment agreements totaling at least $100 million by
174December 1, 2012, the partnership must cancel any executed
175agreement and return the investment capital of each investment
176partner who executed an agreement.
177     (5)(a)  The partnership may only invest in an
178infrastructure project:
179     1.  That fulfills an important infrastructure need in the
180state.
181     2.  That raises funding from other sources so that the
182total amount invested in the project is at least twice the
183amount invested by the partnership, inclusive of the
184partnership's investment.
185     3.  For which legal measures exist, appropriate to the
186individual project, to ensure that the project is not
187fraudulently closed to the detriment of the residents of the
188state.
189     (b)  The partnership may not invest more than 20 percent of
190its total available investment capital in any single
191infrastructure project.
192     (c)  The partnership may not invest in any infrastructure
193project that involves any phase of a project authorized under
194the Florida Rail Enterprise Act, ss. 341.8201-341.842.
195     (6)  The partnership may only invest in an infrastructure
196project based on an evaluation of the following:
197     (a)  A written business plan for the project, including all
198expected revenue sources.
199     (b)  The likelihood of the project's attracting operating
200capital from investment partners, grants, or other lenders.
201     (c)  The management team for the proposed project.
202     (d)  The project's potential for job creation in the state.
203     (e)  The financial resources of the entity proposing the
204project.
205     (f)  The partnership's assessment that the project
206reasonably provides a continuing benefit for residents of the
207state.
208     (g)  Other factors not inconsistent with this section that
209are deemed by the partnership as relevant to the likelihood of
210the project's success.
211     (7)  By December 1 of each year beginning in 2011, the
212partnership shall submit an annual report of its activities to
213the Governor, the President of the Senate, and the Speaker of
214the House of Representatives. The annual report must include, at
215a minimum:
216     (a)  An accounting of the amounts of investment capital
217raised and disbursed by the partnership and the progress of the
218partnership, including the progress of each infrastructure
219project in which the partnership has invested.
220     (b)  A description of the costs and benefits to the state
221that result from the partnership's investments, including a list
222of infrastructure projects; the costs and benefits of those
223projects to the state and, if applicable, the county or
224municipality; the number of businesses and associated industries
225affected; the number, types, and average annual wages of the
226jobs created or retained; and the impact on the state's economy.
227     (c)  Independently audited financial statements, including
228statements that show receipts and expenditures during the
229preceding fiscal year for the operational costs of the
230partnership.
231     (8)  The partnership may not pledge the credit or taxing
232power of the state or any political subdivision thereof and may
233not make its debts payable from any moneys or resources except
234those of the partnership. An obligation of the partnership is
235not an obligation of the state or any political subdivision
236thereof but is an obligation of the partnership, payable
237exclusively from the partnership's resources.
238     (9)  The partnership may not invest in an infrastructure
239project with, or accept investment capital from, a company
240described in s. 215.472 or a scrutinized company as defined in
241s. 215.473, and the entity owning an infrastructure project in
242which the partnership has invested must provide reasonable
243assurances to the partnership that the entity will not provide
244such a company or scrutinized company with an ownership interest
245in the infrastructure project.
246     Section 5.  Section 288.9628, Florida Statutes, is created
247to read:
248     288.9628  Florida Infrastructure Investment Trust;
249creation; duties; issuance of certificates; applications for tax
250credits.-
251     (1)(a)  There is created the Florida Infrastructure
252Investment Trust, which shall be organized as a state
253beneficiary public trust to be administered by a board of
254trustees. The powers and duties of the board of trustees under
255this section are deemed to be performed for essential public
256purposes.
257     (b)  The board of trustees shall consist of the Chief
258Financial Officer, the director of the Office of Tourism, Trade,
259and Economic Development, and the vice chair of Enterprise
260Florida, Inc., or their designees. The board of trustees shall
261appoint an administrative officer who may act on behalf of the
262trust under the direction of the board of trustees.
263     (c)  Members of the board of trustees and the board's
264administrative officer shall serve without compensation but are
265entitled to reimbursement of their expenses. Each member of the
266board of trustees has a duty of care to the trust in his or her
267capacity as a trustee. Neither a member nor the administrative
268officer may have a financial interest in any investment partner.
269     (2)  The trust may hire consultants, retain professional
270services, issue certificates, sell tax credits in accordance
271with paragraph (5)(b), expend funds, invest funds, contract,
272bond or insure against loss, or perform any other act necessary
273to administer this section.
274     (3)(a)  The trust shall, pursuant to s. 288.9627 and this
275section, issue certificates to investment partners in the
276Florida Infrastructure Fund Partnership, or their assignees,
277guaranteeing the availability of tax credits of a maximum amount
278equal to the investment capital committed by such investment
279partners to the partnership.
280     (b)  The trust and the fund may each seek reimbursement of
281their respective reasonable costs and expenses from the
282partnership by charging a fee for the issuance of certificates
283to investment partners of up to 0.25 percent of the aggregate
284investment capital committed to the partnership by the
285investment partners who are issued certificates.
286     (c)  The total aggregate amount of all tax credits made
287available under the terms of certificates issued by the trust
288may not exceed $700 million, and each certificate must include
289the maximum amount of the tax credits that may be issued under
290such certificate, which shall be the total amount of investment
291capital committed to the partnership by the investment partner.
292     (d)  A certificate shall be issued concurrently with a
293commitment agreement between the investment partner and the
294partnership. A certificate issued by the trust must include a
295specific calendar year maturity date designated by the trust of
296at least 12 years after issuance. Contingent tax credits may not
297be claimed or redeemed except by an investment partner or
298purchaser in accordance with this section and the terms of a
299certificate issued by the trust.
300     (e)  Once investment capital is committed to the
301partnership by an investment partner pursuant to his or her
302commitment agreement, the certificate is binding, and the
303partnership, the trust, and the Department of Revenue may not
304modify, terminate, or rescind the certificate, except for
305administrative items, including the assignment or sale of tax
306credits guaranteed to be available under the terms of a
307certificate.
308     (4)(a)  The partnership shall provide written notice to
309each investment partner if, on the maturity date of his or her
310certificate, the partner has a net capital loss. The notice must
311include, at a minimum:
312     1.  A good faith estimate of the fair market value of the
313partnership's assets as of the date of the notice.
314     2.  The total investment capital of all investment partners
315as of the date of the notice.
316     3.  The total amount of distributions received by the
317investment partners.
318     4.  The amount of the tax credits the investment partner is
319entitled to be issued by the Department of Revenue.
320     (b)  The partnership shall concurrently provide a copy of
321each investment partner's notice to the trust.
322     (c)  Upon receipt of the notice from the partnership, each
323affected investment partner may make a one-time election to:
324     1.  Have tax credits issued to the investment partner;
325     2.  Have the trust sell, on the partner's behalf, the tax
326credits guaranteed to be available under the terms of the
327partner's certificate with the proceeds of the sale to be paid
328to the partner by the trust; or
329     3.  Maintain the investment partner's investment in the
330partnership.
331     (d)  Except as provided in paragraph (6)(c), the election
332made by an investment partner under paragraph (c) is final and
333may not be revoked or modified.
334     (e)  An investment partner must provide written notice to
335the partnership and the trust of his or her election within 30
336days after his or her receipt of the notice from the
337partnership. If an investment partner fails to provide notice
338within 30 days, the investment partner is deemed to have elected
339to maintain his or her investment in the partnership under
340subparagraph (c)3.
341     (5)(a)  If an investment partner makes the election under
342subparagraph (4)(c)1. to have tax credits issued to him or her,
343the trust shall apply to the Department of Revenue on the
344partner's behalf for issuance of the tax credits in his or her
345name in an amount equal to such partner's net capital loss. In
346order to receive the tax credits, the investment partner must
347agree in writing to transfer his or her ownership interest in
348the partnership to the fund.
349     (b)  If an investment partner makes the election under
350subparagraph (4)(c)2., the trust shall exercise its best efforts
351to sell the tax credits. In order to receive the proceeds from
352the trust's sale of the tax credits, the investment partner must
353agree in writing to transfer his or her ownership interest in
354the partnership to the fund. A purchaser's payment for tax
355credits must be made to the trust on behalf of the investment
356partner or, upon the partner's request, directly to the
357investment partner. The trust may sell tax credits in an amount
358not to exceed the lesser of:
359     1.  The maximum amount of the tax credits available under
360the terms of certificate issued to the investment partner; or
361     2.  The amount of tax credits necessary to yield net
362proceeds to the investment partner equal to his or her net
363capital loss as of the date of the partnership's notice.
364     (6)(a)  Within 30 days after receipt of an investment
365partner's election to be issued tax credits under paragraph
366(5)(a), or within 30 days after the sale of tax credits under
367paragraph (5)(b), the trust shall apply to the Department of
368Revenue for issuance of the tax credits on behalf of the partner
369or on behalf of the purchaser of the tax credits, as applicable.
370However, the trust's failure to timely submit an application to
371the Department of Revenue does not affect the investment
372partner's or purchaser's eligibility for the tax credits.
373     (b)  The trust's application for tax credits must include
374the partnership's certification of the amount of tax credits to
375be issued, the identity of the taxpayer to whom the tax credits
376are to be issued, and the tax against which the credits shall be
377applied. The Department of Revenue shall issue the tax credits
378within 30 days after receipt of a timely and complete
379application.
380     (c)  The trust shall provide the investment partner with
381written notice if, within 90 days after the partner's election,
382the trust is unable to sell enough tax credits to yield net
383proceeds to the investment partner equal to his or her net
384capital loss as of the date of the partnership's notice and tax
385credits available under the terms of the partner's certificate
386remain unsold. Within 30 days after receipt of such notice, the
387investment partner may:
388     1.  Revoke his or her prior election and make a new
389election under paragraph (4)(c); or
390     2.  Modify the election and:
391     a.  Have unsold tax credits issued to him or her, to the
392extent that unsold tax credits are available, in an amount equal
393to the partner's net capital loss, less the proceeds of any sold
394credits; or
395     b.  Have the trust continue to sell tax credits until the
396partner's net capital loss is satisfied or the maximum amount of
397tax credits available under the partner's certificate is
398reached, whichever occurs first.
399
400Within 30 days after such modified election, the trust shall
401apply to the Department of Revenue in accordance with paragraph
402(a) for issuance of tax credits on behalf of the investment
403partner and on behalf of the purchasers in the amount of their
404purchased credits.
405     (7)(a)  The Department of Revenue may not issue more than
406$700 million in tax credits. The trust may not approve tax
407credits in excess of the total capital committed through
408commitment agreements.
409     (b)  The amount of tax credits that may be claimed by the
410owner of the credits, or applied against state taxes, in any one
411state fiscal year may not exceed an amount equal to $150 million
412multiplied by a fraction the numerator of which is the amount of
413credits that the Department of Revenue issued to such owner and
414the denominator of which is the amount of all credits that the
415Department of Revenue issued to all tax credit owners.
416     (c)  Tax credits issued by the Department of Revenue under
417this section may be used by the owner of the credits as an
418offset against any state taxes owed to the state under chapter
419212, chapter 220, or ss. 624.509 and 624.5091. The offset may be
420applied by the owner on any return for an eligible tax due on or
421after the date that the credits are issued by the Department of
422Revenue but within 7 years after the credits are issued. The
423owner of the tax credits may elect to have the amount authorized
424in the credits, or any portion thereof, claimed as a refund of
425taxes paid rather than applied as an offset against eligible
426taxes if such election is made within 7 years after the credits
427are issued.
428     (d)  To the extent that tax credits issued under this
429section are used by their owner either as credits against taxes
430due or to obtain payment from the state, the amount of such
431credits becomes an obligation to the state by the partnership,
432secured exclusively by the ownership interest transferred to the
433fund by the investment partner whose investment generated the
434tax credits. In such case, the state's recovery is limited to
435such forfeited ownership interest. The Department of Revenue
436shall account for tax credits used under this section and make
437such information available to the partnership. The fund, as
438general partner, is not liable to the state for repayment of the
439used tax credits.
440     (e)  Any certificate and related tax credits issued under
441this section are transferable in whole or in part by their
442owner. An owner of a certificate or tax credits must notify the
443trust and the Department of Revenue of any such transfer.
444     (8)  The Department of Revenue, upon the request of the
445trust, shall provide the trust with a written assurance that the
446certificates issued by the trust will be honored by the
447Department of Revenue as provided in this section.
448     (9)  Chapter 517 does not apply to the certificates and tax
449credits transferred or sold under this section.
450     Section 6.  Paragraph (dd) is added to subsection (8) of
451section 213.053, Florida Statutes, as amended by chapter 2010-
452280, Laws of Florida, to read:
453     213.053  Confidentiality and information sharing.-
454     (8)  Notwithstanding any other provision of this section,
455the department may provide:
456     (dd)  Information relative to tax credits under ss.
457288.9627 and 288.9628 to the Florida Infrastructure Fund
458Partnership and the Florida Infrastructure Investment Trust.
459
460Disclosure of information under this subsection shall be
461pursuant to a written agreement between the executive director
462and the agency. Such agencies, governmental or nongovernmental,
463shall be bound by the same requirements of confidentiality as
464the Department of Revenue. Breach of confidentiality is a
465misdemeanor of the first degree, punishable as provided by s.
466775.082 or s. 775.083.
467     Section 7.  This act shall take effect July 1, 2011.


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