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 executive
258director of the Department of Revenue, the director of the
259Office of Tourism, Trade, and Economic Development, and the vice
260chair of Enterprise Florida, Inc., or their designees. The board
261of trustees shall appoint an administrative officer who may act
262on behalf of the trust under the direction of the board of
263trustees.
264     (c)  Members of the board of trustees and the board's
265administrative officer shall serve without compensation but are
266entitled to reimbursement of their expenses. Each member of the
267board of trustees has a duty of care to the trust in his or her
268capacity as a trustee. Neither a member nor the administrative
269officer may have a financial interest in any investment partner.
270     (2)  The trust may hire consultants, retain professional
271services, issue certificates, sell tax credits in accordance
272with paragraph (5)(b), expend funds, invest funds, contract,
273bond or insure against loss, or perform any other act necessary
274to administer this section.
275     (3)(a)  The trust shall, pursuant to s. 288.9627 and this
276section, issue certificates to investment partners in the
277Florida Infrastructure Fund Partnership, or their assignees,
278guaranteeing the availability of tax credits of a maximum amount
279equal to the investment capital committed by such investment
280partners to the partnership.
281     (b)  The trust and the fund may each seek reimbursement of
282their respective reasonable costs and expenses from the
283partnership by charging a fee for the issuance of certificates
284to investment partners of up to 0.25 percent of the aggregate
285investment capital committed to the partnership by the
286investment partners who are issued certificates.
287     (c)  The total aggregate amount of all tax credits made
288available under the terms of certificates issued by the trust
289may not exceed $700 million, and each certificate must include
290the maximum amount of the tax credits that may be issued under
291such certificate, which shall be the total amount of investment
292capital committed to the partnership by the investment partner.
293     (d)  A certificate shall be issued concurrently with a
294commitment agreement between the investment partner and the
295partnership. A certificate issued by the trust must include a
296specific calendar year maturity date designated by the trust of
297at least 12 years after issuance. Contingent tax credits may not
298be claimed or redeemed except by an investment partner or
299purchaser in accordance with this section and the terms of a
300certificate issued by the trust.
301     (e)  Once investment capital is committed to the
302partnership by an investment partner pursuant to his or her
303commitment agreement, the certificate is binding, and the
304partnership, the trust, and the Department of Revenue may not
305modify, terminate, or rescind the certificate, except for
306administrative items, including the assignment or sale of tax
307credits guaranteed to be available under the terms of a
308certificate.
309     (4)(a)  The partnership shall provide written notice to
310each investment partner if, on the maturity date of his or her
311certificate, the partner has a net capital loss. The notice must
312include, at a minimum:
313     1.  A good faith estimate of the fair market value of the
314partnership's assets as of the date of the notice.
315     2.  The total investment capital of all investment partners
316as of the date of the notice.
317     3.  The total amount of distributions received by the
318investment partners.
319     4.  The amount of the tax credits the investment partner is
320entitled to be issued by the Department of Revenue.
321     (b)  The partnership shall concurrently provide a copy of
322each investment partner's notice to the trust.
323     (c)  Upon receipt of the notice from the partnership, each
324affected investment partner may make a one-time election to:
325     1.  Have tax credits issued to the investment partner;
326     2.  Have the trust sell, on the partner's behalf, the tax
327credits guaranteed to be available under the terms of the
328partner's certificate with the proceeds of the sale to be paid
329to the partner by the trust; or
330     3.  Maintain the investment partner's investment in the
331partnership.
332     (d)  Except as provided in paragraph (6)(c), the election
333made by an investment partner under paragraph (c) is final and
334may not be revoked or modified.
335     (e)  An investment partner must provide written notice to
336the partnership and the trust of his or her election within 30
337days after his or her receipt of the notice from the
338partnership. If an investment partner fails to provide notice
339within 30 days, the investment partner is deemed to have elected
340to maintain his or her investment in the partnership under
341subparagraph (c)3.
342     (5)(a)  If an investment partner makes the election under
343subparagraph (4)(c)1. to have tax credits issued to him or her,
344the trust shall apply to the Department of Revenue on the
345partner's behalf for issuance of the tax credits in his or her
346name in an amount equal to such partner's net capital loss. In
347order to receive the tax credits, the investment partner must
348agree in writing to transfer his or her ownership interest in
349the partnership to the fund.
350     (b)  If an investment partner makes the election under
351subparagraph (4)(c)2., the trust shall exercise its best efforts
352to sell the tax credits. In order to receive the proceeds from
353the trust's sale of the tax credits, the investment partner must
354agree in writing to transfer his or her ownership interest in
355the partnership to the fund. A purchaser's payment for tax
356credits must be made to the trust on behalf of the investment
357partner or, upon the partner's request, directly to the
358investment partner. The trust may sell tax credits in an amount
359not to exceed the lesser of:
360     1.  The maximum amount of the tax credits available under
361the terms of certificate issued to the investment partner; or
362     2.  The amount of tax credits necessary to yield net
363proceeds to the investment partner equal to his or her net
364capital loss as of the date of the partnership's notice.
365     (6)(a)  Within 30 days after receipt of an investment
366partner's election to be issued tax credits under paragraph
367(5)(a), or within 30 days after the sale of tax credits under
368paragraph (5)(b), the trust shall apply to the Department of
369Revenue for issuance of the tax credits on behalf of the partner
370or on behalf of the purchaser of the tax credits, as applicable.
371However, the trust's failure to timely submit an application to
372the Department of Revenue does not affect the investment
373partner's or purchaser's eligibility for the tax credits.
374     (b)  The trust's application for tax credits must include
375the partnership's certification of the amount of tax credits to
376be issued, the identity of the taxpayer to whom the tax credits
377are to be issued, and the tax against which the credits shall be
378applied. The Department of Revenue shall issue the tax credits
379within 30 days after receipt of a timely and complete
380application.
381     (c)  The trust shall provide the investment partner with
382written notice if, within 90 days after the partner's election,
383the trust is unable to sell enough tax credits to yield net
384proceeds to the investment partner equal to his or her net
385capital loss as of the date of the partnership's notice and tax
386credits available under the terms of the partner's certificate
387remain unsold. Within 30 days after receipt of such notice, the
388investment partner may:
389     1.  Revoke his or her prior election and make a new
390election under paragraph (4)(c); or
391     2.  Modify the election and:
392     a.  Have unsold tax credits issued to him or her, to the
393extent that unsold tax credits are available, in an amount equal
394to the partner's net capital loss, less the proceeds of any sold
395credits; or
396     b.  Have the trust continue to sell tax credits until the
397partner's net capital loss is satisfied or the maximum amount of
398tax credits available under the partner's certificate is
399reached, whichever occurs first.
400
401Within 30 days after such modified election, the trust shall
402apply to the Department of Revenue in accordance with paragraph
403(a) for issuance of tax credits on behalf of the investment
404partner and on behalf of the purchasers in the amount of their
405purchased credits.
406     (7)(a)  The Department of Revenue may not issue more than
407$700 million in tax credits. The trust may not approve tax
408credits in excess of the total capital committed through
409commitment agreements.
410     (b)  The amount of tax credits that may be claimed by the
411owner of the credits, or applied against state taxes, in any one
412state fiscal year may not exceed an amount equal to $150 million
413multiplied by a fraction the numerator of which is the amount of
414credits that the Department of Revenue issued to such owner and
415the denominator of which is the amount of all credits that the
416Department of Revenue issued to all tax credit owners.
417     (c)  Tax credits issued by the Department of Revenue under
418this section may be used by the owner of the credits as an
419offset against any state taxes owed to the state under chapter
420212, chapter 220, or ss. 624.509 and 624.5091. The offset may be
421applied by the owner on any return for an eligible tax due on or
422after the date that the credits are issued by the Department of
423Revenue but within 7 years after the credits are issued. The
424owner of the tax credits may elect to have the amount authorized
425in the credits, or any portion thereof, claimed as a refund of
426taxes paid rather than applied as an offset against eligible
427taxes if such election is made within 7 years after the credits
428are issued.
429     (d)  To the extent that tax credits issued under this
430section are used by their owner either as credits against taxes
431due or to obtain payment from the state, the amount of such
432credits becomes an obligation to the state by the partnership,
433secured exclusively by the ownership interest transferred to the
434fund by the investment partner whose investment generated the
435tax credits. In such case, the state's recovery is limited to
436such forfeited ownership interest. The Department of Revenue
437shall account for tax credits used under this section and make
438such information available to the partnership. The fund, as
439general partner, is not liable to the state for repayment of the
440used tax credits.
441     (e)  Any certificate and related tax credits issued under
442this section are transferable in whole or in part by their
443owner. An owner of a certificate or tax credits must notify the
444trust and the Department of Revenue of any such transfer.
445     (8)  The Department of Revenue, upon the request of the
446trust, shall provide the trust with a written assurance that the
447certificates issued by the trust will be honored by the
448Department of Revenue as provided in this section.
449     (9)  Chapter 517 does not apply to the certificates and tax
450credits transferred or sold under this section.
451     Section 6.  Paragraph (dd) is added to subsection (8) of
452section 213.053, Florida Statutes, as amended by chapter 2010-
453280, Laws of Florida, to read:
454     213.053  Confidentiality and information sharing.-
455     (8)  Notwithstanding any other provision of this section,
456the department may provide:
457     (dd)  Information relative to tax credits under ss.
458288.9627 and 288.9628 to the Florida Infrastructure Fund
459Partnership and the Florida Infrastructure Investment Trust.
460
461Disclosure of information under this subsection shall be
462pursuant to a written agreement between the executive director
463and the agency. Such agencies, governmental or nongovernmental,
464shall be bound by the same requirements of confidentiality as
465the Department of Revenue. Breach of confidentiality is a
466misdemeanor of the first degree, punishable as provided by s.
467775.082 or s. 775.083.
468     Section 7.  This act shall take effect July 1, 2011.


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