Florida Senate - 2013                              CS for SB 446
       By the Committee on Commerce and Tourism; and Senator Hukill
       577-01870-13                                           2013446c1
    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 an insurer;
   22         providing that the cancellation of the surety bond
   23         violates the contract or agreement; providing an
   24         exception; providing for a waiver if certain
   25         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 for a waiver of the surety bond or other
   34         security if certain information is provided and the
   35         department determines it to be in the best interest of
   36         the state; providing that the waiver of the surety
   37         bond or other security, for funding in excess of $5
   38         million, must be approved by the Legislative Budget
   39         Commission; providing that the state may bring suit
   40         upon default or upon a violation of this section;
   41         providing that the department may adopt rules to
   42         implement this section; providing an effective date.
   44  Be It Enacted by the Legislature of the State of Florida:
   46         Section 1. Subsection (2) of section 288.061, Florida
   47  Statutes, is amended, present subsection (3) of that section is
   48  redesignated as subsection (5), and new subsections (3), (4),
   49  and (6) are added to that section, to read:
   50         288.061 Economic development incentive application
   51  process.—
   52         (2) Within 10 business days after the department receives
   53  the submitted economic development incentive application, the
   54  executive director shall approve or disapprove the application
   55  and issue a letter of certification to the applicant which
   56  includes a justification of that decision, unless the business
   57  requests an extension of that time.
   58         (a) The contract or agreement with the applicant must shall
   59  specify the total amount of the award, the performance
   60  conditions that must be met to obtain the award, the schedule
   61  for payment, and sanctions that would apply for failure to meet
   62  performance conditions. The department may enter into one
   63  agreement or contract covering all of the state incentives that
   64  are being provided to the applicant. The contract must provide
   65  that release of funds is contingent upon sufficient
   66  appropriation of funds by the Legislature.
   67         (b) The release of funds for the incentive or incentives
   68  awarded to the applicant depends upon the statutory requirements
   69  of the particular incentive program, except as provided in
   70  subsection (3).
   71         (3)(a)In order to receive an incentive under s. 288.1088
   72  or s. 288.1089, an applicant must provide the department with a
   73  surety bond, issued by an insurer authorized to do business in
   74  this state, for the amount of the award under the incentive
   75  contract or agreement. Funds may not be paid to an applicant
   76  until the department certifies compliance with this subsection.
   77         1. The contract or agreement must provide that the bond
   78  remain in effect until all performance conditions in the
   79  contract or agreement have been satisfied. The department may
   80  require the bond to cover the entire amount of the contract or
   81  agreement or allow for a bond to be renewed upon the completion
   82  of scheduled performance measurements specified in the contract
   83  or agreement. The contract or agreement must provide that the
   84  release of any funds is contingent upon receipt by the
   85  department of the surety bond.
   86         2.The contract or agreement must provide that up to half
   87  of the premium payment on the surety bond may be paid from the
   88  award amount, not to exceed 3 percent of the award.
   89         3. The applicant shall notify the department at least 10
   90  days before each premium payment is due.
   91         4. Any notice of cancellation or nonrenewal issued by an
   92  insurer must comply with the notice requirements of s. 626.9201.
   93  If the applicant receives a notice of cancellation or
   94  nonrenewal, the applicant must immediately notify the
   95  department.
   96         5.The cancellation of the surety bond is a violation of
   97  the contract or agreement between the applicant and the
   98  department. The department is released from any obligation to
   99  make future scheduled payments unless the applicant is able to
  100  secure a new surety bond or comply with the requirements of
  101  paragraphs (b) and (c) within 90 days before the effective date
  102  of the cancellation.
  103         (b) If an applicant is unable to secure a surety bond or
  104  can demonstrate that obtaining a bond is unreasonable in cost,
  105  the department may waive the requirements specified in paragraph
  106  (a) by certifying in writing to the Governor, President of the
  107  Senate, and Speaker of the House of Representatives the
  108  following information:
  109         1.An explanation stating the reasons why the applicant
  110  could not obtain a bond, to the extent such information is not
  111  confidential under s. 288.075;
  112         2. A description of the economic benefits expected to be
  113  generated by the incentive award which indicates that the
  114  project warrants waiver of the requirement; and
  115         3. An evaluation of the quality and value of the applicant
  116  which supports the selection of the alternative securitization
  117  under paragraph (c). The department’s evaluation must consider
  118  the following information when determining the form for securing
  119  the award amount:
  120         a. A financial analysis of the company, including an
  121  evaluation of the company’s short-term liquidity ratio as
  122  measured by its assets to liability, the company’s profitability
  123  ratio, and the company’s long-term solvency as measured by its
  124  debt-to-equity ratio;
  125         b. The historical market performance of the company;
  126         c. Any independent evaluations of the company;
  127         d. The latest audit of the company’s financial statement
  128  and the related auditor’s management letter; and
  129         e. Any other types of reports that are related to the
  130  internal controls or management of the company.
  131         (c)1. If the department grants a waiver under paragraph
  132  (b), the incentives contract or agreement must provide for
  133  securing the award amount in one of the following forms:
  134         a. An irrevocable letter of credit issued by a financial
  135  institution, as defined in s. 655.005;
  136         b. Cash or securities held in trust by a financial
  137  institution, as defined in s. 655.005, and subject to a control
  138  agreement; or
  139         c. A secured transaction in collateral under the control or
  140  possession of the applicant for the value of the award amount.
  141  The department is authorized to negotiate the terms and
  142  conditions of the security agreement.
  143         2.The contract or agreement must provide that the release
  144  of any funds is contingent upon the receipt of documentation by
  145  the department which satisfies all of the requirements found in
  146  this paragraph. Funds may not be paid to the applicant until the
  147  department certifies compliance with this subsection.
  148         3.The irrevocable letter of credit, trust, or security
  149  agreement must remain in effect until all performance conditions
  150  specified in the contract or agreement have been satisfied.
  151  Failure to comply with this provision results in a violation of
  152  the contract or agreement between the applicant and the
  153  department and releases the department from any obligation to
  154  make future scheduled payments.
  155         (d) The department may waive the requirements of paragraphs
  156  (a) through (c) by certifying to the Governor and the chair and
  157  vice chair of the Legislative Budget Commission the following
  158  information:
  159         1. The applicant demonstrates the financial ability to
  160  fulfill the requirements of the contract and has submitted an
  161  independently audited financial statement for the previous 5
  162  years;
  163         2. If applicable, the applicant was previously a recipient
  164  of an incentive under an economic development program, was
  165  subject to clawback requirements, and timely complied with those
  166  provisions; and
  167         3. The department has determined that waiver of the
  168  requirements of paragraphs (a) through (c) is in the best
  169  interest of the state.
  170         (e) For waivers granted under paragraph (d), the department
  171  shall provide a written description and evaluation of the waiver
  172  to the chair and vice chair of the Legislative Budget
  173  Commission. Such information may be provided at the same time
  174  that the information for the project consultation is provided to
  175  the Legislative Budget Commission under s. 288.1088 or s.
  176  288.1089. If the chair or vice chair of the Legislative Budget
  177  Commission timely advises the department that such action or
  178  proposed action exceeds delegated authority or is contrary to
  179  legislative policy or intent, the department shall void the
  180  waiver until the Legislative Budget Commission or the
  181  Legislature addresses the issue. Notwithstanding such
  182  requirement, any project exceeding $5 million must be approved
  183  by the Legislative Budget Commission.
  184         (f) The provisions of this subsection shall apply to any
  185  contract entered into on or after July 1, 2013.
  186         (4) In the event of default on the performance conditions
  187  specified in the contract or agreement, or violation of any of
  188  the provisions found in this section, the state may, in addition
  189  to any other remedy provided by law, bring suit to enforce its
  190  interest.
  191         (5)(3) The department shall validate contractor
  192  performance. Such validation shall be reported in the annual
  193  incentive report required under s. 288.907.
  194         (6) The department is authorized to adopt rules to
  195  implement this section.
  196         Section 2. This act shall take effect July 1, 2013.