Florida Senate - 2012                                    SB 1472
       
       
       
       By Senator Richter
       
       
       
       
       37-01326-12                                           20121472__
    1                        A bill to be entitled                      
    2         An act relating to capital formation for
    3         infrastructure projects; amending ss. 288.9621,
    4         288.9622, and 288.9623, F.S.; conforming a short
    5         title, revising legislative findings and intent, and
    6         providing definitions for the Florida Capital
    7         Formation Act; conforming cross-references; creating
    8         s. 288.9627, F.S.; providing for creation of the
    9         Florida Infrastructure Fund Partnership; providing the
   10         partnership’s purpose and duties; providing for
   11         management of the partnership by the Florida
   12         Opportunity Fund; authorizing the fund to lend moneys
   13         to the partnership; requiring the partnership to raise
   14         funds from investment partners; providing for
   15         commitment agreements with and issuance of
   16         certificates to investment partners; authorizing the
   17         partnership to invest in certain infrastructure
   18         projects; requiring the partnership to submit an
   19         annual report to the Governor and Legislature;
   20         prohibiting the partnership from pledging the credit
   21         or taxing power of the state or its political
   22         subdivisions; prohibiting the partnership from
   23         investing in projects with or accepting investments
   24         from certain companies; creating s. 288.9628, F.S.;
   25         creating the Florida Infrastructure Investment Trust;
   26         providing for powers and duties, a board of trustees,
   27         and an administrative officer of the trust; providing
   28         for the trust’s issuance of certificates to investment
   29         partners; specifying that the certificates guarantee
   30         the availability of tax credits under certain
   31         conditions; authorizing the trust and the fund to
   32         charge fees; limiting the amount of tax credits that
   33         may be claimed or applied against state taxes in any
   34         year; providing for the redemption of certificates or
   35         sale of tax credits; providing for the issuance of the
   36         tax credits by the Department of Revenue; specifying
   37         the taxes against which the credits may be applied;
   38         limiting the period within which tax credits may be
   39         used; providing for the state’s obligation for use of
   40         the tax credits; limiting the liability of the fund;
   41         providing for the transferability of certificates and
   42         tax credits; requiring the department to provide a
   43         certain written assurance to the trust under certain
   44         circumstances; specifying that certain provisions
   45         regulating securities transactions do not apply to
   46         certificates and tax credits transferred or sold under
   47         the act; amending s. 213.053, F.S.; authorizing the
   48         department to disclose certain information to the
   49         partnership and the trust relative to certain tax
   50         credits; providing an effective date.
   51  
   52  Be It Enacted by the Legislature of the State of Florida:
   53  
   54         Section 1. Section 288.9621, Florida Statutes, is amended
   55  to read:
   56         288.9621 Short title.—This part Sections 288.9621-288.9625
   57  may be cited as the “Florida Capital Formation Act.”
   58         Section 2. Subsections (1) and (2) of section 288.9622,
   59  Florida Statutes, are amended to read:
   60         288.9622 Findings and intent.—
   61         (1) The Legislature finds and declares that there is a need
   62  to increase the availability of seed capital and early stage
   63  venture equity capital for emerging companies in the state,
   64  including, without limitation, enterprises in life sciences,
   65  information technology, advanced manufacturing processes,
   66  aviation and aerospace, and homeland security and defense, as
   67  well as other strategic technologies and infrastructure funding.
   68         (2) It is the intent of the Legislature that this part ss.
   69  288.9621-288.9625 serve to mobilize private investment in a
   70  broad variety of venture capital partnerships in diversified
   71  industries and geographies; retain private sector investment
   72  criteria focused on rate of return; use the services of highly
   73  qualified managers in the venture capital industry regardless of
   74  location; facilitate the organization of the Florida Opportunity
   75  Fund as an investor in seed and early stage businesses,
   76  infrastructure projects, venture capital funds, infrastructure
   77  funds, and angel funds; and precipitate capital investment and
   78  extensions of credit to and in the Florida Opportunity Fund.
   79         Section 3. Section 288.9623, Florida Statutes, is amended
   80  to read:
   81         288.9623 Definitions.—As used in this part, the term ss.
   82  288.9621-288.9625:
   83         (1) “Board” means the board of directors of the Florida
   84  Opportunity Fund.
   85         (2) “Certificate” means a contract between the trust and an
   86  investment partner which guarantees the availability of tax
   87  credits for use by the partner, or for transfer or sale under s.
   88  288.9628, in order to guarantee the partner’s investment capital
   89  in the partnership.
   90         (3) “Commitment agreement” means a contract between the
   91  partnership and an investment partner under which the partner
   92  commits to providing a specified amount of investment capital in
   93  exchange for an ownership interest in the partnership.
   94         (4)(2) “Fund” means the Florida Opportunity Fund.
   95         (5) “Infrastructure project” means a capital project in the
   96  state for a facility or other infrastructure need in the state
   97  with respect to any of the following: water or wastewater
   98  system, communication system, power system, transportation
   99  system, renewable energy system, ancillary or support system for
  100  any of these types of projects, or other strategic
  101  infrastructure located within the state.
  102         (6) “Investment capital” means the total capital committed
  103  by the investment partner for an equity interest in the
  104  partnership pursuant to a commitment agreement.
  105         (7) “Investment partner” or “partner” means a person, other
  106  than the partnership, the fund, or the trust, who purchases an
  107  ownership interest in the partnership or a transferee of such
  108  interest.
  109         (8) “Net capital loss” means an amount equal to the
  110  difference between the total investment capital actually
  111  advanced by the investment partner to the partnership and the
  112  amount of the aggregate actual distributions received by the
  113  investment partner.
  114         (9) “Partnership” means the Florida Infrastructure Fund
  115  Partnership.
  116         (10) “Tax credits” means credits issued against the taxes
  117  specified in s. 288.9628(7)(c).
  118         (11) “Trust” means the Florida Infrastructure Investment
  119  Trust.
  120         Section 4. Section 288.9627, Florida Statutes, is created
  121  to read:
  122         288.9627 Florida Infrastructure Fund Partnership; creation;
  123  duties.—
  124         (1) The Florida Opportunity Fund shall facilitate the
  125  creation of the Florida Infrastructure Fund Partnership, which
  126  shall be organized and operated under chapter 620 as a private,
  127  for-profit limited partnership or limited liability partnership
  128  with the fund as a general partner. The partnership shall manage
  129  its business affairs and conduct business consistent with its
  130  organizing documents and the purposes described in this section.
  131  However, the partnership is not an instrumentality of the state.
  132         (2) The primary purpose of the partnership is to raise
  133  investment capital and invest the capital in infrastructure
  134  projects in the state that promote economic development.
  135         (3)(a) The fund, as the general partner of the partnership,
  136  shall manage the partnership’s business affairs, including, but
  137  not limited to:
  138         1. Hiring one or more investment managers to assist with
  139  management of the partnership through a solicitation for
  140  qualified investment managers for the raising and investing of
  141  capital by the partnership. Any such investment manager must
  142  have maintained an office in the state for at least 2 years
  143  before such solicitation with a full-time investment
  144  professional. The evaluation of an investment manager candidate
  145  must address the investment manager’s level of experience,
  146  quality of management, investment philosophy and process,
  147  demonstrable success in fundraising, and prior investment
  148  results.
  149         2. Soliciting and negotiating the terms of, contracting
  150  for, and receiving investment capital with the assistance of the
  151  investment managers or other service providers.
  152         3. Receiving investment returns.
  153         4. Disbursing returns to investment partners.
  154         5. Approving investments.
  155         6. Engaging in other activities necessary to operate the
  156  partnership.
  157         (b) The fund may lend up to $750,000 to the partnership to
  158  pay the initial expenses of organizing the partnership and
  159  soliciting investment partners.
  160         (4)(a) The partnership shall raise funds from investment
  161  partners for investment in infrastructure projects in the state
  162  by entering into commitment agreements with such partners on
  163  terms approved by the fund’s board.
  164         (b) The Florida Infrastructure Investment Trust shall,
  165  pursuant to s. 288.9628, concurrently with the execution of a
  166  commitment agreement with an investment partner, issue a
  167  certificate.
  168         (c) The partnership shall provide a copy of each commitment
  169  agreement to the trust upon execution of the agreement by all
  170  parties.
  171         (d) The partnership may enter into commitment agreements
  172  with investment partners beginning July 1, 2012. The total
  173  principal investment capital payable to the partnership under
  174  all commitment agreements may not exceed the total aggregate
  175  amount of $700 million. However, if the partnership does not
  176  obtain commitment agreements totaling at least $100 million by
  177  December 1, 2013, the partnership must cancel any executed
  178  agreement and return the investment capital of each investment
  179  partner who executed an agreement.
  180         (5)(a) The partnership may only invest in an infrastructure
  181  project:
  182         1. That fulfills an important infrastructure need in the
  183  state.
  184         2. That raises funding from other sources so that the total
  185  amount invested in the project is at least twice the amount
  186  invested by the partnership, inclusive of the partnership’s
  187  investment.
  188         3. For which legal measures exist, appropriate to the
  189  individual project, to ensure that the project is not
  190  fraudulently closed to the detriment of the residents of the
  191  state.
  192         (b) The partnership may not invest more than 20 percent of
  193  its total available investment capital in any single
  194  infrastructure project.
  195         (c) The partnership may not invest in any infrastructure
  196  project that involves any phase of a project authorized under
  197  the Florida Rail Enterprise Act, ss. 341.8201-341.842.
  198         (6) The partnership may only invest in an infrastructure
  199  project based on an evaluation of the following:
  200         (a) A written business plan for the project, including all
  201  expected revenue sources.
  202         (b) The likelihood of the project’s attracting operating
  203  capital from investment partners, grants, or other lenders.
  204         (c) The management team for the proposed project.
  205         (d) The project’s potential for job creation in the state.
  206         (e) The financial resources of the entity proposing the
  207  project.
  208         (f) The partnership’s assessment that the project
  209  reasonably provides a continuing benefit for residents of the
  210  state.
  211         (g) Other factors not inconsistent with this section that
  212  are deemed by the partnership as relevant to the likelihood of
  213  the project’s success.
  214         (7) By December 1 of each year beginning in 2012, the
  215  partnership shall submit an annual report of its activities to
  216  the Governor, the President of the Senate, and the Speaker of
  217  the House of Representatives. The annual report must include, at
  218  a minimum:
  219         (a) An accounting of the amounts of investment capital
  220  raised and disbursed by the partnership and the progress of the
  221  partnership, including the progress of each infrastructure
  222  project in which the partnership has invested.
  223         (b) A description of the costs and benefits to the state
  224  that result from the partnership’s investments, including a list
  225  of infrastructure projects; the costs and benefits of those
  226  projects to the state and, if applicable, the county or
  227  municipality; the number of businesses and associated industries
  228  affected; the number, types, and average annual wages of the
  229  jobs created or retained; and the impact on the state’s economy.
  230         (c) Independently audited financial statements, including
  231  statements that show receipts and expenditures during the
  232  preceding fiscal year for the operational costs of the
  233  partnership.
  234         (8) The partnership may not pledge the credit or taxing
  235  power of the state or any political subdivision thereof and may
  236  not make its debts payable from any moneys or resources except
  237  those of the partnership. An obligation of the partnership is
  238  not an obligation of the state or any political subdivision
  239  thereof but is an obligation of the partnership, payable
  240  exclusively from the partnership’s resources.
  241         (9) The partnership may not invest in an infrastructure
  242  project with, or accept investment capital from, a company
  243  described in s. 215.472 or a scrutinized company as defined in
  244  s. 215.473, and the entity owning an infrastructure project in
  245  which the partnership has invested must provide reasonable
  246  assurances to the partnership that the entity will not provide
  247  such a company or scrutinized company with an ownership interest
  248  in the infrastructure project.
  249         Section 5. Section 288.9628, Florida Statutes, is created
  250  to read:
  251         288.9628 Florida Infrastructure Investment Trust; creation;
  252  duties; issuance of certificates; applications for tax credits.—
  253         (1)(a) There is created the Florida Infrastructure
  254  Investment Trust, which shall be organized as a state
  255  beneficiary public trust to be administered by a board of
  256  trustees. The powers and duties of the board of trustees under
  257  this section are deemed to be performed for essential public
  258  purposes.
  259         (b) The board of trustees shall consist of the executive
  260  director of the Department of Revenue, the executive director of
  261  the Department of Economic Opportunity, and the vice chair of
  262  Enterprise Florida, Inc., or their designees. The board of
  263  trustees shall appoint an administrative officer who may act on
  264  behalf of the trust under the direction of the board of
  265  trustees.
  266         (c) Members of the board of trustees and the board’s
  267  administrative officer shall serve without compensation but are
  268  entitled to reimbursement of their expenses. Each member of the
  269  board of trustees has a duty of care to the trust in his or her
  270  capacity as a trustee. Neither a member nor the administrative
  271  officer may have a financial interest in any investment partner.
  272         (2) The trust may hire consultants, retain professional
  273  services, issue certificates, sell tax credits in accordance
  274  with paragraph (5)(b), expend funds, invest funds, contract,
  275  bond or insure against loss, or perform any other act necessary
  276  to administer this section.
  277         (3)(a) The trust shall, pursuant to s. 288.9627 and this
  278  section, issue certificates to investment partners in the
  279  Florida Infrastructure Fund Partnership, or their assignees,
  280  guaranteeing the availability of tax credits of a maximum amount
  281  equal to the investment capital committed by such investment
  282  partners to the partnership.
  283         (b) The trust and the fund may each seek reimbursement of
  284  their respective reasonable costs and expenses from the
  285  partnership by charging a fee for the issuance of certificates
  286  to investment partners of up to 0.25 percent of the aggregate
  287  investment capital committed to the partnership by the
  288  investment partners who are issued certificates.
  289         (c) The total aggregate amount of all tax credits made
  290  available under the terms of certificates issued by the trust
  291  may not exceed $700 million, and each certificate must include
  292  the maximum amount of the tax credits that may be issued under
  293  such certificate, which shall be the total amount of investment
  294  capital committed to the partnership by the investment partner.
  295         (d) A certificate shall be issued concurrently with a
  296  commitment agreement between the investment partner and the
  297  partnership. A certificate issued by the trust must include a
  298  specific calendar year maturity date designated by the trust of
  299  at least 12 years after issuance. Contingent tax credits may not
  300  be claimed or redeemed except by an investment partner or
  301  purchaser in accordance with this section and the terms of a
  302  certificate issued by the trust.
  303         (e) Once investment capital is committed to the partnership
  304  by an investment partner pursuant to his or her commitment
  305  agreement, the certificate is binding, and the partnership, the
  306  trust, and the Department of Revenue may not modify, terminate,
  307  or rescind the certificate, except for administrative items,
  308  including the assignment or sale of tax credits guaranteed to be
  309  available under the terms of a certificate.
  310         (4)(a) The partnership shall provide written notice to each
  311  investment partner if, on the maturity date of his or her
  312  certificate, the partner has a net capital loss. The notice must
  313  include, at a minimum:
  314         1. A good faith estimate of the fair market value of the
  315  partnership’s assets as of the date of the notice.
  316         2. The total investment capital of all investment partners
  317  as of the date of the notice.
  318         3. The total amount of distributions received by the
  319  investment partners.
  320         4. The amount of the tax credits the investment partner is
  321  entitled to be issued by the Department of Revenue.
  322         (b) The partnership shall concurrently provide a copy of
  323  each investment partner’s notice to the trust.
  324         (c) Upon receipt of the notice from the partnership, each
  325  affected investment partner may make a one-time election to:
  326         1. Have tax credits issued to the investment partner;
  327         2. Have the trust sell, on the partner’s behalf, the tax
  328  credits guaranteed to be available under the terms of the
  329  partner’s certificate with the proceeds of the sale to be paid
  330  to the partner by the trust; or
  331         3. Maintain the investment partner’s investment in the
  332  partnership.
  333         (d) Except as provided in paragraph (6)(c), the election
  334  made by an investment partner under paragraph (c) is final and
  335  may not be revoked or modified.
  336         (e) An investment partner must provide written notice to
  337  the partnership and the trust of his or her election within 30
  338  days after his or her receipt of the notice from the
  339  partnership. If an investment partner fails to provide notice
  340  within 30 days, the investment partner is deemed to have elected
  341  to maintain his or her investment in the partnership under
  342  subparagraph (c)3.
  343         (5)(a) If an investment partner makes the election under
  344  subparagraph (4)(c)1. to have tax credits issued to him or her,
  345  the trust shall apply to the Department of Revenue on the
  346  partner’s behalf for issuance of the tax credits in his or her
  347  name in an amount equal to such partner’s net capital loss. In
  348  order to receive the tax credits, the investment partner must
  349  agree in writing to transfer his or her ownership interest in
  350  the partnership to the fund.
  351         (b) If an investment partner makes the election under
  352  subparagraph (4)(c)2., the trust shall exercise its best efforts
  353  to sell the tax credits. In order to receive the proceeds from
  354  the trust’s sale of the tax credits, the investment partner must
  355  agree in writing to transfer his or her ownership interest in
  356  the partnership to the fund. A purchaser’s payment for tax
  357  credits must be made to the trust on behalf of the investment
  358  partner or, upon the partner’s request, directly to the
  359  investment partner. The trust may sell tax credits in an amount
  360  not to exceed the lesser of:
  361         1. The maximum amount of the tax credits available under
  362  the terms of the certificate issued to the investment partner;
  363  or
  364         2. The amount of tax credits necessary to yield net
  365  proceeds to the investment partner equal to his or her net
  366  capital loss as of the date of the partnership’s notice.
  367         (6)(a) Within 30 days after receipt of an investment
  368  partner’s election to be issued tax credits under paragraph
  369  (5)(a), or within 30 days after the sale of tax credits under
  370  paragraph (5)(b), the trust shall apply to the Department of
  371  Revenue for issuance of the tax credits on behalf of the partner
  372  or on behalf of the purchaser of the tax credits, as applicable.
  373  However, the trust’s failure to timely submit an application to
  374  the Department of Revenue does not affect the investment
  375  partner’s or purchaser’s eligibility for the tax credits.
  376         (b) The trust’s application for tax credits must include
  377  the partnership’s certification of the amount of tax credits to
  378  be issued, the identity of the taxpayer to whom the tax credits
  379  are to be issued, and the tax against which the credits shall be
  380  applied. The Department of Revenue shall issue the tax credits
  381  within 30 days after receipt of a timely and complete
  382  application.
  383         (c) The trust shall provide the investment partner with
  384  written notice if, within 90 days after the partner’s election,
  385  the trust is unable to sell enough tax credits to yield net
  386  proceeds to the investment partner equal to his or her net
  387  capital loss as of the date of the partnership’s notice and tax
  388  credits available under the terms of the partner’s certificate
  389  remain unsold. Within 30 days after receipt of such notice, the
  390  investment partner may:
  391         1. Revoke his or her prior election and make a new election
  392  under paragraph (4)(c); or
  393         2. Modify the election and:
  394         a. Have unsold tax credits issued to him or her, to the
  395  extent that unsold tax credits are available, in an amount equal
  396  to the partner’s net capital loss, less the proceeds of any sold
  397  credits; or
  398         b. Have the trust continue to sell tax credits until the
  399  partner’s net capital loss is satisfied or the maximum amount of
  400  tax credits available under the partner’s certificate is
  401  reached, whichever occurs first.
  402  
  403  Within 30 days after such modified election, the trust shall
  404  apply to the Department of Revenue in accordance with paragraph
  405  (a) for issuance of tax credits on behalf of the investment
  406  partner and on behalf of the purchasers in the amount of their
  407  purchased credits.
  408         (7)(a) The Department of Revenue may not issue more than
  409  $700 million in tax credits. The trust may not approve tax
  410  credits in excess of the total capital committed through
  411  commitment agreements.
  412         (b) The amount of tax credits that may be claimed by the
  413  owner of the credits, or applied against state taxes, in any one
  414  state fiscal year may not exceed an amount equal to $150 million
  415  multiplied by a fraction, the numerator of which is the amount
  416  of credits that the Department of Revenue issued to such owner
  417  and the denominator of which is the amount of all credits that
  418  the Department of Revenue issued to all tax credit owners.
  419         (c) Tax credits issued by the Department of Revenue under
  420  this section may be used by the owner of the credits as an
  421  offset against any state taxes owed to the state under chapter
  422  212, chapter 220, or ss. 624.509 and 624.5091. The offset may be
  423  applied by the owner on any return for an eligible tax due on or
  424  after the date that the credits are issued by the Department of
  425  Revenue but within 7 years after the credits are issued. The
  426  owner of the tax credits may elect to have the amount authorized
  427  in the credits, or any portion thereof, claimed as a refund of
  428  taxes paid rather than applied as an offset against eligible
  429  taxes if such election is made within 7 years after the credits
  430  are issued.
  431         (d) To the extent that tax credits issued under this
  432  section are used by their owner either as credits against taxes
  433  due or to obtain payment from the state, the amount of such
  434  credits becomes an obligation to the state by the partnership,
  435  secured exclusively by the ownership interest transferred to the
  436  fund by the investment partner whose investment generated the
  437  tax credits. In such case, the state’s recovery is limited to
  438  such forfeited ownership interest. The Department of Revenue
  439  shall account for tax credits used under this section and make
  440  such information available to the partnership. The fund, as
  441  general partner, is not liable to the state for repayment of the
  442  used tax credits.
  443         (e) Any certificate and related tax credits issued under
  444  this section are transferable in whole or in part by their
  445  owner. An owner of a certificate or tax credits must notify the
  446  trust and the Department of Revenue of any such transfer.
  447         (8) The Department of Revenue, upon the request of the
  448  trust, shall provide the trust with a written assurance that the
  449  certificates issued by the trust will be honored by the
  450  Department of Revenue as provided in this section.
  451         (9) Chapter 517 does not apply to the certificates and tax
  452  credits transferred or sold under this section.
  453         Section 6. Paragraph (cc) is added to subsection (8) of
  454  section 213.053, Florida Statutes, to read:
  455         213.053 Confidentiality and information sharing.—
  456         (8) Notwithstanding any other provision of this section,
  457  the department may provide:
  458         (cc) Information relative to tax credits under ss. 288.9627
  459  and 288.9628 to the Florida Infrastructure Fund Partnership and
  460  the Florida Infrastructure Investment Trust.
  461  
  462  Disclosure of information under this subsection shall be
  463  pursuant to a written agreement between the executive director
  464  and the agency. Such agencies, governmental or nongovernmental,
  465  shall be bound by the same requirements of confidentiality as
  466  the Department of Revenue. Breach of confidentiality is a
  467  misdemeanor of the first degree, punishable as provided by s.
  468  775.082 or s. 775.083.
  469         Section 7. This act shall take effect July 1, 2012.