Florida Senate - 2013                                     SB 446
       By Senator Hukill
       8-00420B-13                                            2013446__
    1                        A bill to be entitled                      
    2         An act relating to the economic development incentive
    3         application process; amending s. 288.061, F.S.;
    4         requiring an applicant to provide a surety bond to the
    5         Department of Economic Opportunity before the
    6         applicant receives incentive awards through the Quick
    7         Action Closing Fund or the Innovation Incentive
    8         Program; requiring the contract or agreement to
    9         provide that the bond remain in effect until all
   10         conditions have been satisfied; providing that the
   11         department may require the bond to cover the entire
   12         contracted amount or allow for bonds to be renewed
   13         upon completion of certain performance measures;
   14         requiring the contract or agreement to provide that
   15         funds are contingent upon receipt of the surety bond;
   16         requiring the contract or agreement to provide that up
   17         to half of the premium payment on the bond may be paid
   18         from the award up to a certain amount; requiring an
   19         applicant to notify the department of premium
   20         payments; providing for certain notice requirements
   21         upon cancellation or nonrenewal by a bonding or
   22         insurance company; providing that the cancellation of
   23         the surety bond violates the contract or agreement;
   24         providing an exception; providing for a waiver if
   25         certain information is provided; providing that if the
   26         department grants a waiver, the contract or agreement
   27         must provide for securing the award in a certain form;
   28         requiring the contract or agreement to provide that
   29         the release of funds is contingent upon satisfying
   30         certain requirements; requiring the irrevocable letter
   31         of credit, trust, or security agreement to remain in
   32         effect until certain conditions have been satisfied;
   33         providing that the state may bring suit upon default
   34         or upon a violation of this section; providing that
   35         the department may adopt rules to implement this
   36         section; providing an effective date.
   38  Be It Enacted by the Legislature of the State of Florida:
   40         Section 1. Subsection (2) of section 288.061, Florida
   41  Statutes, is amended, present subsection (3) of that section is
   42  redesignated as subsection (5), and new subsections (3), (4),
   43  and (6) are added to that section, to read:
   44         288.061 Economic development incentive application
   45  process.—
   46         (2) Within 10 business days after the department receives
   47  the submitted economic development incentive application, the
   48  executive director shall approve or disapprove the application
   49  and issue a letter of certification to the applicant which
   50  includes a justification of that decision, unless the business
   51  requests an extension of that time.
   52         (a) The contract or agreement with the applicant must shall
   53  specify the total amount of the award, the performance
   54  conditions that must be met to obtain the award, the schedule
   55  for payment, and sanctions that would apply for failure to meet
   56  performance conditions. The department may enter into one
   57  agreement or contract covering all of the state incentives that
   58  are being provided to the applicant. The contract must provide
   59  that release of funds is contingent upon sufficient
   60  appropriation of funds by the Legislature.
   61         (b) The release of funds for the incentive or incentives
   62  awarded to the applicant depends upon the statutory requirements
   63  of the particular incentive program, except as provided in
   64  subsection (3).
   65         (3)(a)In order to receive an incentive under s. 288.1088
   66  or s. 288.1089, an applicant must provide the department with a
   67  surety bond, issued by an eligible or authorized bonding company
   68  or insurance company, for the amount of the award under the
   69  incentive contract or agreement. Funds may not be paid to an
   70  applicant until the department certifies compliance with this
   71  subsection.
   72         1. The contract or agreement must provide that the bond
   73  remain in effect until all performance conditions in the
   74  contract or agreement have been satisfied. The department may
   75  require the bond to cover the entire amount of the contract or
   76  agreement or allow for a bond to be renewed upon the completion
   77  of scheduled performance measurements specified in the contract
   78  or agreement. The contract or agreement must provide that the
   79  release of any funds is contingent upon receipt by the
   80  department of the surety bond.
   81         2.The contract or agreement must provide that up to half
   82  of the premium payment on the surety bond may be paid from the
   83  award amount, not to exceed 3 percent of the award.
   84         3. The applicant shall notify the department at least 10
   85  days before each premium payment is due.
   86         4. Any notice of cancellation or nonrenewal issued by a
   87  bonding company or insurance company must comply with the notice
   88  requirements of s. 626.9201. If the applicant receives a notice
   89  of cancellation or nonrenewal, the applicant must immediately
   90  notify the department.
   91         5.The cancellation of the surety bond is a violation of
   92  the contract or agreement between the applicant and the
   93  department. The department is released from any obligation to
   94  make future scheduled payments unless the applicant is able to
   95  secure a new surety bond or comply with the requirements of
   96  paragraphs (b) and (c) within 90 days before the effective date
   97  of the cancellation.
   98         (b) If an applicant is unable to secure a surety bond or
   99  can demonstrate that obtaining a bond is unreasonable in cost,
  100  the department may waive the requirements specified in paragraph
  101  (a) by certifying in writing to the Governor, President of the
  102  Senate, and Speaker of the House of Representatives the
  103  following information:
  104         1.An explanation stating the reasons why the applicant
  105  could not obtain a bond, to the extent such information is not
  106  confidential under s. 288.075;
  107         2. A description of the economic benefits expected to be
  108  generated by the incentive award which indicates that the
  109  project warrants waiver of the requirement; and
  110         3. An evaluation of the quality and value of the applicant
  111  which supports the selection of the alternative securitization
  112  under paragraph (c). The department’s evaluation must consider
  113  the following information when determining the form for securing
  114  the award amount:
  115         a. A financial analysis of the company, including an
  116  evaluation of the company’s short-term liquidity ratio as
  117  measured by its assets to liability, the company’s profitability
  118  ratio, and the company’s long-term solvency as measured by its
  119  debt-to-equity ratio;
  120         b. The historical market performance of the company;
  121         c. A review of any independent evaluations of the company;
  122         d. A review of the latest audit of the company’s financial
  123  statement and the related auditor’s management letter; and
  124         e. A review of any other types of audits that are related
  125  to the internal and management controls of the company.
  126         (c)1. If the department grants a waiver under paragraph
  127  (b), the incentives contract or agreement must provide for
  128  securing the award amount in one of the following forms:
  129         a. An irrevocable letter of credit issued by a financial
  130  institution, as defined in s. 655.005, with an office physically
  131  located within the state, and the deposits of which are
  132  federally insured;
  133         b. Cash or securities held in trust by a financial
  134  institution, as defined in s. 655.005, and subject to a control
  135  agreement; or
  136         c. A secured transaction in collateral under the control or
  137  possession of the applicant for the value of the award amount.
  138  The department is authorized to negotiate the terms and
  139  conditions of the security agreement.
  140         2.The contract or agreement must provide that the release
  141  of any funds is contingent upon the receipt of documentation by
  142  the department which satisfies all of the requirements found in
  143  this paragraph. Funds may not be paid to the applicant until the
  144  department certifies compliance with this subsection.
  145         3.The irrevocable letter of credit, trust, or security
  146  agreement must remain in effect until all performance conditions
  147  specified in the contract or agreement have been satisfied.
  148  Failure to comply with this provision results in a violation of
  149  the contract or agreement between the applicant and the
  150  department and releases the department from any obligation to
  151  make future scheduled payments.
  152         (4) In the event of default on the performance conditions
  153  specified in the contract or agreement, or violation of any of
  154  the provisions found in this section, the state may, in addition
  155  to any other remedy provided by law, bring suit to enforce its
  156  interest.
  157         (5)(3) The department shall validate contractor
  158  performance. Such validation shall be reported in the annual
  159  incentive report required under s. 288.907.
  160         (6) The department is authorized to adopt rules to
  161  implement this section.
  162         Section 2. This act shall take effect July 1, 2013.