Florida Senate - 2014                             CS for SB 1438
       
       
        
       By the Committee on Commerce and Tourism; and Senator Bean
       
       
       
       
       
       577-03115A-14                                         20141438c1
    1                        A bill to be entitled                      
    2         An act relating to the Qualified Television Loan Fund;
    3         creating s. 288.127, F.S.; defining terms; providing a
    4         purpose; creating the Qualified Television Loan Fund;
    5         requiring the Department of Economic Opportunity to
    6         contract with a fund administrator; providing fund
    7         administrator qualifications; providing for the fund
    8         administrator’s compensation and removal; specifying
    9         the fund administrator powers and duties; providing
   10         the structure of the loans; providing qualified
   11         television content criteria; requiring the Auditor
   12         General to conduct an operational audit of the fund
   13         and the fund administrator; authorizing the department
   14         to adopt rules; providing for expiration of the act;
   15         providing emergency rulemaking authority; providing an
   16         appropriation; providing an effective date.
   17          
   18  Be It Enacted by the Legislature of the State of Florida:
   19  
   20         Section 1. Section 288.127, Florida Statutes, is created to
   21  read:
   22         288.127 Qualified Television Loan Fund (QTV Fund).—
   23         (1) DEFINITIONS.—As used in this section, the term:
   24         (a) “Fund administrator” means a private sector
   25  organization under contract with the department to manage and
   26  administer the QTV Fund.
   27         (b) “Major broadcaster” means broadcasting organizations
   28  that include, but are not limited to, television broadcasting
   29  networks, cable television, direct broadcast satellite,
   30  telecommunications companies, and internet streaming or other
   31  digital media platforms.
   32         (c) “Private investment capital” means capital from
   33  private, nongovernmental funding sources that will be coinvested
   34  with the QTV Fund in segregated accounts.
   35         (d) “Qualified lending partner” means a financial
   36  institution, as defined in s. 655.005, selected by a fund
   37  administrator with demonstrated capability in providing
   38  financing to television production and specialized expertise in
   39  intellectual property, tax credit programs, customary broadcast
   40  license agreements, advertising inventories, and ancillary
   41  revenue sources, with a combined portfolio in film, television,
   42  and entertainment media of at least $500 million.
   43         (e) “Qualified television content” means series, mini
   44  series, or made-for-TV content produced by a qualified
   45  production company that has in place a distribution contract
   46  with a major broadcaster, under a customary broadcast license
   47  agreement. The term does not include a production that contains
   48  content that is obscene, as defined in s. 847.001.
   49         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   50  public-private partnership in the form of an evergreen fund to
   51  administer a loan program for television production. The QTV
   52  Fund shall be privately managed under state oversight to
   53  incentivize the use of this state as a site for producing
   54  qualified television content and to develop and sustain the
   55  workforce and infrastructure for television content production.
   56         (3) CREATION.—The Qualified Television Loan Fund is created
   57  within the department. The QTV Fund shall be a public fund that
   58  is privately managed by the fund administrator under contract
   59  entered into with the department. The department shall disburse
   60  the funds appropriated for this program to the fund
   61  administrator to invest in the QTV Fund during the existence of
   62  the program pursuant to this section and the contract entered
   63  into between the fund administrator and the department. State
   64  funds in the QTV Fund may be used only to enter into loan
   65  agreements and to pay any administrative costs or other
   66  authorized fees under this section.
   67         (a) The QTV Fund shall be an evergreen fund that shall
   68  invest and reinvest the principal and interest of the fund in
   69  accordance with s. 617.2104, in such a manner as to not subject
   70  the funds to state or federal taxes and to be consistent with
   71  the investment policy statement adopted by the fund
   72  administrator. As the production companies repay the principal
   73  and interest for the QTV Fund, the state funds shall be
   74  returned, less any QTV Fund expenses, to the account to be lent
   75  to subsequent borrowers.
   76         (b) Funds from the QTV Fund shall be disbursed by the fund
   77  administrator through a lending vehicle to make short-term loans
   78  pursuant to this section.
   79         (4) FUND ADMINISTRATOR.—
   80         (a) The department shall contract with a fund administrator
   81  by September 1, 2014, and award the contract in accordance with
   82  the competitive bidding requirements in s. 287.057.
   83         (b) The department shall select as fund administrator a
   84  private sector entity that demonstrates the ability to implement
   85  the program under this section and that meets the requirements
   86  set forth in this section. Preference shall be given to
   87  applicants that are headquartered in this state. Additional
   88  consideration may be given to applicants with experience in the
   89  management of economic development or job creation-related
   90  funds. The qualifications for the fund administrator must
   91  include, but are not limited to, the following:
   92         1. A demonstrated track record of managing private sector
   93  equity or debt funds in the entertainment and media industries.
   94         2. The ability to demonstrate through a partnership
   95  agreement that a qualified lending partner is in place, with the
   96  capability of providing leverage of a minimum of 2.5 times the
   97  capital amount of the QTV Fund, for financing the production
   98  cost of qualified television content in the form of senior debt.
   99         (c) For overseeing and administering the QTV Fund, the fund
  100  administrator shall be paid an annual management fee equal to 5
  101  percent of the loans under management during the first 5 years
  102  and 3 percent of the loans under management after the fifth year
  103  and for the remaining duration of the contract. However, after
  104  the first year of the QTV Fund, the annual management fee may
  105  not exceed the investment proceeds earned from its completed
  106  investments. The annual management fee shall be paid from state
  107  funds in the QTV Fund and shall be paid in advance, in equal
  108  quarterly installments. Any additional private investment
  109  capital in the segregated accounts is responsible for its own
  110  management fees. In addition, the fund administrator may receive
  111  income or profit distribution equal to 20 percent of the net
  112  income of the QTV Fund on an annual basis. Such distribution may
  113  not be made from any principal funds from the original
  114  appropriation.
  115         (d) The fund administrator shall provide services defined
  116  under this section for the duration of the QTV Fund term unless
  117  removed for cause. Cause shall be further defined under the
  118  contract with the fund administrator and must include, but is
  119  not limited to, the engagement in fraud or other criminal acts
  120  by board members, incapacity, unfitness, neglect of duty,
  121  official incompetence and irresponsibility, misfeasance,
  122  malfeasance, nonfeasance, or lack of performance.
  123         (5) FUND ADMINISTRATOR POWERS AND DUTIES.—
  124         (a) Authority to contract.—The fund administrator may enter
  125  into agreements with qualified lending partners for concurrent
  126  lending through the QTV Fund. A loan made by the qualified
  127  lending partner must be accounted for separately from the state
  128  funds or any other private investment capital. Such loan shall
  129  be made as senior debt. The fund administrator may raise private
  130  investment capital for mezzanine equity and other equity or
  131  raise junior capital for concurrent lending through the QTV
  132  Fund. However, loans from private investment capital may not be
  133  made at more favorable terms and conditions than the terms and
  134  conditions of the state funds in the QTV Fund. The state
  135  appropriation must be maintained in a separate account from any
  136  private investment capital and administered in a separate legal
  137  investment entity or entities. Private investment capital and
  138  loans shall be segregated from each other, and funds may not be
  139  commingled.
  140         (b) General duties.—The fund administrator:
  141         1. Shall prudently manage the funds in the QTV Fund as an
  142  evergreen fund.
  143         2. Shall contract with one or more qualified lending
  144  partners.
  145         3. Shall provide improvement of the credit profile of a
  146  structured financial transaction for qualified production
  147  companies that produce qualified television content meeting the
  148  criteria in subsection (7).
  149         4. May raise additional private investment capital to be
  150  held in separate accounts, in addition to the leverage provided
  151  by the qualified lending partner.
  152         5. Shall administer the QTV Fund in accordance with this
  153  part.
  154         6. Shall agree to maintain the recipient’s books and
  155  records relating to funds received from the department according
  156  to generally accepted accounting principles and in accordance
  157  with the requirements of s. 215.97(7) and to make those books
  158  and records available to the department for inspection upon
  159  reasonable notice. The books and records must be maintained with
  160  detailed records showing the use of proceeds from loans to fund
  161  qualified television content.
  162         7. Shall maintain its registered office in this state
  163  throughout the duration of the contract.
  164         (c) Financial reporting.—The fund administrator shall
  165  submit to the department by February 28 each year audited
  166  financial statements for the preceding tax year which are
  167  audited by an independent certified public accountant after the
  168  end of each year in which the fund administrator is under
  169  contract with the department. In addition to providing an
  170  independent opinion on the annual financial statements, such
  171  audit provides a basis to verify the segregation of state funds
  172  from those of any private investment capital.
  173         (d) Program reporting.—The fund administrator shall submit
  174  an annual report to the department by February 28 after the end
  175  of each year in which the fund administrator is under contract
  176  with the department. The report must include information on the
  177  loans made in the preceding calendar year and must include, but
  178  need not be limited to, the following:
  179         1. The name of the qualified television content.
  180         2. The names of the counties in which the production
  181  occurred.
  182         3. The number of jobs created and retained as a result of
  183  the production.
  184         4. The loan amounts, including the amount of private
  185  investment capital and funds provided by a qualified lending
  186  partner.
  187         5. The loan repayment status for each loan.
  188         6. The number, and amounts, of any loans with payments past
  189  due.
  190         7. The number, and amounts, of any loans in default.
  191         8. A description of the assets securing the loans.
  192         9. Other information and documentation required by the
  193  department.
  194         (e) Plan of accountability.—The fund administrator shall
  195  submit an annual plan of accountability of economic development,
  196  including a report detailing the job creation resulting from the
  197  QTV Fund loans made during the current year and cumulatively
  198  since the inception of the program. The fund administrator shall
  199  also provide any additional information requested by the
  200  department pertaining to economic development and job creation
  201  in the state.
  202         (f) Conflict-of-interest statement.—The fund administrator
  203  shall provide a conflict-of-interest statement from its
  204  governing board certifying that no board member, director,
  205  employee, agent, or other person connected to or affiliated with
  206  the fund administrator is receiving or will receive any type of
  207  compensation or remuneration from a production company that has
  208  received or will receive funds from the loan program or from a
  209  qualified lending partner. The department may waive this
  210  requirement for good cause shown.
  211         (6) LOAN STRUCTURE.—
  212         (a) The QTV Fund may make loans to production companies to
  213  fund production costs or provide improvement of the credit
  214  profile of a structured financial transaction for qualified
  215  television content that meets the criteria requirements of
  216  subsection (7). To make a loan, the fund administrator shall
  217  take into consideration the types of eligible collateral, the
  218  credit worthiness of the project, the producer’s track record,
  219  the possibility that the project will encourage, enhance, or
  220  create economic benefits, and the extent to which assistance
  221  would foster innovative public-private partnerships and attract
  222  private debt or equity investment.
  223         (b) The QTV Fund loan package shall be secured by
  224  contractual and predictable sources of repayment such as
  225  domestic and international broadcaster license agreements and
  226  other ancillary revenues that are derived from media content
  227  rights. Unsecured loans may not be made.
  228         (c) The loans shall be made on the basis of a second lien
  229  or primary security rights on the media assets listed in
  230  paragraph (b).
  231         (d) The QTV Fund shall provide funding only in conjunction
  232  with senior loans provided by a qualified lending partner. Loans
  233  from the QTV Fund may be subordinated to senior debt from the
  234  qualified lending partner and may not exceed 30 percent of the
  235  total production funding cost of any particular project.
  236         (e) The production company’s repayment of any loan shall be
  237  in accordance with the broadcast license agreement and the
  238  delivery of qualified television content to the major
  239  broadcaster and shall be within 60 days after such delivery.
  240         (f) Loans made by the QTV Fund may not exceed 36 months in
  241  duration, except for extenuating circumstances for which the
  242  fund administrator may grant an extension upon making written
  243  findings to the department specifying the conditions requiring
  244  the extension.
  245         (g) With the exception of funds appropriated to the loan
  246  program by the Legislature, the credit of the state may not be
  247  pledged. The state is not liable or obligated in any way for
  248  claims on the loan program or against the lender or the
  249  department.
  250         (7) QUALIFIED TELEVISION CONTENT CRITERIA.—The fund
  251  administrator must consider at a minimum the following criteria
  252  for evaluating the qualifying television content:
  253         (a) The content is intended for broadcast by a major
  254  broadcaster on a major network, cable, or streaming channel.
  255         (b) The content is produced in this state, or a minimum of
  256  80 percent of the production budget must be spent in this state.
  257  This requirement may be amended by the fund administrator upon
  258  notice to the department. Such notice must include a specific
  259  justification for the change and must be transmitted to the
  260  department in writing. The department has 10 business days to
  261  object to the change. If the department does not object to the
  262  change within 10 business days, the change is deemed acceptable
  263  by the department, and the fund administrator may grant the
  264  amendment to the requirement in this paragraph.
  265         (c) If the content is a series, there is a programming
  266  order for at least 13 episodes. This requirement may be amended
  267  by the fund administrator upon notice to the department. Such
  268  notice must include a specific justification for the change and
  269  must be transmitted to the department in writing. The department
  270  has 10 business days to object to the change. If the department
  271  does not object to the change within 10 business days, the
  272  change is deemed acceptable by the department, and the fund
  273  administrator may grant the amendment to the requirement in this
  274  paragraph.
  275         (d) The producer must have a contract in place with a major
  276  broadcaster to acquire content programming under a customary
  277  broadcast license agreement and the contract must cover 60
  278  percent of the budget.
  279         (e) The producer must retain a foreign sales agent and must
  280  be able to provide the fund administrator with the foreign sales
  281  agent’s official estimates of foreign and ancillary sales.
  282         (f) The project must be bonded and secured by an industry
  283  approved completion guarantor if the production cost per episode
  284  exceeds $1 million. This requirement may be waived if the loan
  285  applicant provides the fund administrator with evidence of
  286  adequate structure to protect the state’s funds.
  287         (8) AUDITOR GENERAL REPORT.—The Auditor General shall
  288  conduct an operational audit, as defined in s. 11.45, of the QTV
  289  Fund and fund administrator. The scope of review must include,
  290  but is not limited to, internal controls evaluations, internal
  291  audit functions, reporting and performance requirements for the
  292  use of the funds, and compliance with state and federal law. The
  293  fund administrator shall provide to the Auditor General any
  294  detail or supplemental data required.
  295         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  296  administer this section.
  297         (10) EXPIRATION.—This section expires December 31, 2024, at
  298  which point all funds remaining in the QTV Fund shall revert to
  299  the General Revenue Fund.
  300         (11) EMERGENCY RULES.—
  301         (a) The executive director of the department is authorized,
  302  and all conditions are deemed met, to adopt emergency rules
  303  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  304  implementing this act.
  305         (b) Notwithstanding any other law, the emergency rules
  306  adopted pursuant to paragraph (a) remain in effect for 6 months
  307  after adoption and may be renewed during the pendency of
  308  procedures to adopt permanent rules addressing the subject of
  309  the emergency rules.
  310         (c) This subsection expires October 1, 2015.
  311         Section 2. The sum of $20,000,000 is appropriated to the
  312  Department of Economic Opportunity from nonrecurring funds from
  313  the General Revenue Fund for the 2014-2015 fiscal year. These
  314  funds shall be used for the Qualified Television Loan Fund in s.
  315  288.127, Florida Statutes, as created by this act.
  316         Section 3. This act shall take effect upon becoming a law.