Florida Senate - 2014                        COMMITTEE AMENDMENT
       Bill No. HB 5601
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  04/25/2014           .                                

    1         Senate Amendment to Amendment (477076) (with title
    2  amendment)
    4         Between lines 369 and 370
    5  insert:
    6         Section 9. Section 288.127, Florida Statutes, is created to
    7  read:
    8         288.127 Qualified Television Loan Fund (QTV Fund).—
    9         (1) DEFINITIONS.—As used in this section, the term:
   10         (a) “Fund administrator” means a private sector
   11  organization under contract with the department to manage and
   12  administer the QTV Fund.
   13         (b) “Major broadcaster” means broadcasting organizations
   14  that include, but are not limited to, television broadcasting
   15  networks, cable television, direct broadcast satellite,
   16  telecommunications companies, and internet streaming or other
   17  digital media platforms.
   18         (c) “Private investment capital” means capital from
   19  private, nongovernmental funding sources that will be coinvested
   20  with the QTV Fund in segregated accounts.
   21         (d) “Qualified lending partner” means a financial
   22  institution, as defined in s. 655.005, selected by a fund
   23  administrator with demonstrated capability in providing
   24  financing to television production and specialized expertise in
   25  intellectual property, tax credit programs, customary broadcast
   26  license agreements, advertising inventories, and ancillary
   27  revenue sources, with a combined portfolio in film, television,
   28  and entertainment media of at least $500 million.
   29         (e) “Qualified television content” means series, mini
   30  series, or made-for-TV content produced by a qualified
   31  production company that has in place a distribution contract
   32  with a major broadcaster, under a customary broadcast license
   33  agreement. The term does not include a production that contains
   34  content that is obscene, as defined in s. 847.001.
   35         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   36  public-private partnership in the form of a revolving loan fund
   37  to administer a loan program for television production. The QTV
   38  Fund shall be privately managed under state oversight to
   39  incentivize the use of this state as a site for producing
   40  qualified television content and to develop and sustain the
   41  workforce and infrastructure for television content production.
   42         (3) CREATION.—The Qualified Television Loan Fund is created
   43  within the department. The QTV Fund shall be a public fund that
   44  is privately managed by the fund administrator under contract
   45  entered into with the department. The department shall disburse
   46  the funds appropriated for this program to the fund
   47  administrator to invest in the QTV Fund during the existence of
   48  the program pursuant to this section and the contract entered
   49  into between the fund administrator and the department. State
   50  funds in the QTV Fund may be used only to enter into loan
   51  agreements and to pay any administrative costs or other
   52  authorized fees under this section.
   53         (a) The QTV Fund shall be a revolving loan fund that shall
   54  invest and reinvest the principal and interest of the fund in
   55  accordance with s. 617.2104, in such a manner as to not subject
   56  the funds to state or federal taxes and to be consistent with
   57  the investment policy statement adopted by the fund
   58  administrator. As the production companies repay the principal
   59  and interest for the QTV Fund, the state funds shall be
   60  returned, less any QTV Fund expenses, to the account to be lent
   61  to subsequent borrowers.
   62         (b) Funds from the QTV Fund shall be disbursed by the fund
   63  administrator through a lending vehicle to make short-term loans
   64  pursuant to this section.
   65         (4) FUND ADMINISTRATOR.—
   66         (a) The department shall contract with a fund administrator
   67  by September 1, 2014, and award the contract in accordance with
   68  the competitive bidding requirements in s. 287.057.
   69         (b) The department shall select as fund administrator a
   70  private sector entity that demonstrates the ability to implement
   71  the program under this section and that meets the requirements
   72  set forth in this section. Preference shall be given to
   73  applicants that are headquartered in this state. Additional
   74  consideration may be given to applicants with experience in the
   75  management of economic development or job creation-related
   76  funds. The qualifications for the fund administrator must
   77  include, but are not limited to, the following:
   78         1. A demonstrated track record of managing private sector
   79  equity or debt funds in the entertainment and media industries.
   80         2. The ability to demonstrate through a partnership
   81  agreement that a qualified lending partner is in place, with the
   82  capability of providing leverage of a minimum of 2.5 times the
   83  capital amount of the QTV Fund, for financing the production
   84  cost of qualified television content in the form of senior debt.
   85         (c) For overseeing and administering the QTV Fund, the fund
   86  administrator shall be reimbursed for the portion of costs the
   87  fund administrator incurrs in establishing and operating the
   88  Fund related to the state’s investment, which shall be paid from
   89  state funds in the QTV Fund. Any additional private investment
   90  capital in the segregated accounts is responsible for its own
   91  management fees. The fund administrator shall be entitled to a
   92  reasonable profit, but such distribution may not be made from
   93  any principal funds from the original appropriation.
   94         (d) The fund administrator shall provide services defined
   95  under this section for the duration of the QTV Fund term unless
   96  removed for cause. Cause shall be further defined under the
   97  contract with the fund administrator and must include, but is
   98  not limited to, the engagement in fraud or other criminal acts
   99  by board members, incapacity, unfitness, neglect of duty,
  100  official incompetence and irresponsibility, misfeasance,
  101  malfeasance, nonfeasance, or lack of performance.
  103         (a) Authority to contract.—The fund administrator may enter
  104  into agreements with qualified lending partners for concurrent
  105  lending through the QTV Fund. A loan made by the qualified
  106  lending partner must be accounted for separately from the state
  107  funds or any other private investment capital. Such loan shall
  108  be made as senior debt. The fund administrator may raise private
  109  investment capital for mezzanine equity and other equity or
  110  raise junior capital for concurrent lending through the QTV
  111  Fund. However, loans from private investment capital may not be
  112  made at more favorable terms and conditions than the terms and
  113  conditions of the state funds in the QTV Fund. The state
  114  appropriation must be maintained in a separate account from any
  115  private investment capital and administered in a separate legal
  116  investment entity or entities. Private investment capital and
  117  loans shall be segregated from each other, and funds may not be
  118  commingled.
  119         (b) General duties.—The fund administrator:
  120         1. Shall prudently manage the funds in the QTV Fund as a
  121  revolving loan fund.
  122         2. Shall contract with one or more qualified lending
  123  partners.
  124         3. Shall provide improvement of the credit profile of a
  125  structured financial transaction for qualified production
  126  companies that produce qualified television content meeting the
  127  criteria in subsection (7).
  128         4. May raise additional private investment capital to be
  129  held in separate accounts, in addition to the leverage provided
  130  by the qualified lending partner.
  131         5. Shall administer the QTV Fund in accordance with this
  132  part.
  133         6. Shall agree to maintain the recipient’s books and
  134  records relating to funds received from the department according
  135  to generally accepted accounting principles and in accordance
  136  with the requirements of s. 215.97(7) and to make those books
  137  and records available to the department for inspection upon
  138  reasonable notice. The books and records must be maintained with
  139  detailed records showing the use of proceeds from loans to fund
  140  qualified television content.
  141         7. Shall maintain its registered office in this state
  142  throughout the duration of the contract.
  143         (c) Financial reporting.—The fund administrator shall
  144  submit to the department by February 28 each year audited
  145  financial statements for the preceding tax year which are
  146  audited by an independent certified public accountant after the
  147  end of each year in which the fund administrator is under
  148  contract with the department. In addition to providing an
  149  independent opinion on the annual financial statements, such
  150  audit provides a basis to verify the segregation of state funds
  151  from those of any private investment capital.
  152         (d) Program reporting.—The fund administrator shall submit
  153  an annual report to the department by February 28 after the end
  154  of each year in which the fund administrator is under contract
  155  with the department. The report must include information on the
  156  loans made in the preceding calendar year and must include, but
  157  need not be limited to, the following:
  158         1. The name of the qualified television content.
  159         2. The names of the counties in which the production
  160  occurred.
  161         3. The number of jobs created and retained as a result of
  162  the production.
  163         4. The loan amounts, including the amount of private
  164  investment capital and funds provided by a qualified lending
  165  partner.
  166         5. The loan repayment status for each loan.
  167         6. The number, and amounts, of any loans with payments past
  168  due.
  169         7. The number, and amounts, of any loans in default.
  170         8. A description of the assets securing the loans.
  171         9. Other information and documentation required by the
  172  department.
  173         (e) Plan of accountability.—The fund administrator shall
  174  submit an annual plan of accountability of economic development,
  175  including a report detailing the job creation resulting from the
  176  QTV Fund loans made during the current year and cumulatively
  177  since the inception of the program. The fund administrator shall
  178  also provide any additional information requested by the
  179  department pertaining to economic development and job creation
  180  in the state.
  181         (f) Conflict-of-interest statement.—The fund administrator
  182  shall provide a conflict-of-interest statement from its
  183  governing board certifying that no board member, director,
  184  employee, agent, immediate family member thereof, or other
  185  person connected to or affiliated with the fund administrator is
  186  receiving or will receive any type of compensation or
  187  remuneration from a production company that has received or will
  188  receive funds from the loan program or from a qualified lending
  189  partner. The department may waive this requirement for good
  190  cause shown.
  191         (6) LOAN STRUCTURE.—
  192         (a) The QTV Fund may make loans to production companies to
  193  fund production costs or provide improvement of the credit
  194  profile of a structured financial transaction for qualified
  195  television content that meets the criteria requirements of
  196  subsection (7). To make a loan, the fund administrator shall
  197  take into consideration the types of eligible collateral, the
  198  credit worthiness of the project, the producer’s track record,
  199  the possibility that the project will encourage, enhance, or
  200  create economic benefits, and the extent to which assistance
  201  would foster innovative public-private partnerships and attract
  202  private debt or equity investment.
  203         (b) The QTV Fund loan package shall be secured by
  204  contractual and predictable sources of repayment such as
  205  domestic and international broadcaster license agreements and
  206  other ancillary revenues that are derived from media content
  207  rights. Unsecured loans may not be made.
  208         (c) The loans shall be made on the basis of a second lien
  209  or primary security rights on the media assets listed in
  210  paragraph (b).
  211         (d) The QTV Fund shall provide funding only in conjunction
  212  with senior loans provided by a qualified lending partner. Loans
  213  from the QTV Fund may be subordinated to senior debt from the
  214  qualified lending partner and may not exceed 30 percent of the
  215  total production funding cost of any particular project.
  216         (e) The production company’s repayment of any loan shall be
  217  in accordance with the broadcast license agreement and the
  218  delivery of qualified television content to the major
  219  broadcaster and shall be within 60 days after such delivery.
  220         (f) Loans made by the QTV Fund may not exceed 36 months in
  221  duration, except for extenuating circumstances for which the
  222  fund administrator may grant an extension upon making written
  223  findings to the department specifying the conditions requiring
  224  the extension.
  225         (g) The fund administrator or a board member, employee, or
  226  agent thereof, or an immediate family member of a board member,
  227  employee, or agent, may not have a financial interest in an
  228  entity that is awarded a loan under a loan program and may not
  229  benefit directly or indirectly from the making of such a loan. A
  230  loan may not be made to a person if it violates this paragraph.
  231  As used in this section, the term “immediate family” means a
  232  parent, child, or spouse, or any other relative by blood,
  233  marriage, or adoption, of a board member, employee, or agent of
  234  the loan administrator.
  235         (h) With the exception of funds appropriated to the
  236  department for the loan program, the credit of the state may not
  237  be pledged. The state is not liable or obligated in any way for
  238  claims against the QTV Fund or against the fund administrator,
  239  the qualified lending partner, or the department.
  241  administrator must consider at a minimum the following criteria
  242  for evaluating the qualifying television content:
  243         (a) The content is intended for broadcast by a major
  244  broadcaster on a major network, cable, or streaming channel.
  245         (b) The content is produced in this state, or a minimum of
  246  80 percent of the production budget must be spent in this state.
  247  This requirement may be amended by the fund administrator upon
  248  notice to the department. Such notice must include a specific
  249  justification for the change and must be transmitted to the
  250  department in writing. The department has 10 business days to
  251  object to the change. If the department does not object to the
  252  change within 10 business days, the change is deemed acceptable
  253  by the department, and the fund administrator may grant the
  254  amendment to the requirement in this paragraph.
  255         (c) If the content is a series, there is a programming
  256  order for at least 13 episodes. This requirement may be amended
  257  by the fund administrator upon notice to the department. Such
  258  notice must include a specific justification for the change and
  259  must be transmitted to the department in writing. The department
  260  has 10 business days to object to the change. If the department
  261  does not object to the change within 10 business days, the
  262  change is deemed acceptable by the department, and the fund
  263  administrator may grant the amendment to the requirement in this
  264  paragraph.
  265         (d) The producer must have a contract in place with a major
  266  broadcaster to acquire content programming under a customary
  267  broadcast license agreement and the contract must cover at least
  268  60 percent of the budget.
  269         (e) The producer must retain a foreign sales agent and must
  270  be able to provide the fund administrator with the foreign sales
  271  agent’s official estimates of foreign and ancillary sales.
  272         (f) The project must be bonded and secured by an industry
  273  approved completion guarantor if the production cost per episode
  274  exceeds $1 million. This requirement may be waived if the loan
  275  applicant provides the fund administrator with evidence of
  276  adequate structure to protect the state’s funds.
  277         (8) AUDITOR GENERAL AUDIT.—The Auditor General is
  278  authorized to conduct operational audits, as defined in s.
  279  11.45, of the QTV Fund and fund administrator. The scope of
  280  audit must include, but is not limited to, internal controls
  281  evaluations, internal audit functions, reporting and performance
  282  requirements for the use of the funds, and compliance with state
  283  and federal law. The fund administrator shall provide to the
  284  Auditor General any detail or supplemental data required.
  285         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  286  administer this section.
  287         (10) EXPIRATION.—This section expires December 31, 2024, at
  288  which point all funds remaining in the QTV Fund shall revert to
  289  the General Revenue Fund.
  290         (11) EMERGENCY RULES.—
  291         (a) The executive director of the department is authorized,
  292  and all conditions are deemed met, to adopt emergency rules
  293  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  294  implementing this section.
  295         (b) Notwithstanding any other law, the emergency rules
  296  adopted pursuant to paragraph (a) remain in effect for 6 months
  297  after adoption and may be renewed during the pendency of
  298  procedures to adopt permanent rules addressing the subject of
  299  the emergency rules.
  300         (c) This subsection expires October 1, 2015.
  301         Section 10. Paragraph (b) of subsection (2) of section
  302  288.0001, Florida Statutes, is amended to read:
  303         288.0001 Economic Development Programs Evaluation.—The
  304  Office of Economic and Demographic Research and the Office of
  305  Program Policy Analysis and Government Accountability (OPPAGA)
  306  shall develop and present to the Governor, the President of the
  307  Senate, the Speaker of the House of Representatives, and the
  308  chairs of the legislative appropriations committees the Economic
  309  Development Programs Evaluation.
  310         (2) The Office of Economic and Demographic Research and
  311  OPPAGA shall provide a detailed analysis of economic development
  312  programs as provided in the following schedule:
  313         (b) By January 1, 2015, and every 3 years thereafter, an
  314  analysis of the following:
  315         1. The entertainment industry financial incentive program
  316  established under s. 288.1254.
  317         2. The entertainment industry sales tax exemption program
  318  established under s. 288.1258.
  319         3. The VISIT Florida Tourism Industry Marketing Corporation
  320  and its programs established or funded under ss. 288.122,
  321  288.1226, 288.12265, and 288.124.
  322         4. The Florida Sports Foundation and related programs
  323  established under ss. 288.1162, 288.11621, 288.1166, 288.1167,
  324  288.1168, 288.1169, and 288.1171.
  325         5. The qualified television loan fund established under s.
  326  288.127.
  328  ================= T I T L E  A M E N D M E N T ================
  329  And the title is amended as follows:
  330         Delete lines 378 - 404
  331  and insert:
  332         An act relating to economic development; amending s.
  333         202.12, F.S.; reducing the tax rate applied to the
  334         sale of communications services; reducing the tax rate
  335         applied to the retail sale of direct-to-home satellite
  336         services; amending s. 202.12001, F.S.; conforming
  337         rates to the reduction of the communications services
  338         tax; amending s. 202.18, F.S.; revising the
  339         distribution of tax revenues received; amending s.
  340         203.001. F.S.; conforming rates to the reduction of
  341         the communications services tax; amending s. 212.20,
  342         F.S.; providing for a monthly distribution of a
  343         specified amount of sales tax revenue to a complex
  344         certified as a motorsports entertainment complex by
  345         the Department of Economic Opportunity; amending s.
  346         288.1171, F.S.; authorizing the department to certify
  347         a single applicant as a motorsports entertainment
  348         complex if it meets specified criteria; authorizing
  349         the Auditor General to verify the expenditure of
  350         specified distributions and to notify the Department
  351         of Revenue of improperly expended funds so that it may
  352         pursue recovery; specifying a period during which the
  353         sale of clothing, wallets, bags, school supplies,
  354         personal computers, and personal computer-related
  355         accessories are exempt from the sales tax; providing
  356         definitions; providing exceptions; authorizing the
  357         Department of Revenue to adopt emergency rules;
  358         providing an appropriation; creating s. 288.127, F.S.;
  359         providing definitions; providing a purpose; creating
  360         the Qualified Television Loan Fund; requiring the
  361         Department of Economic Opportunity to contract with a
  362         fund administrator; providing fund administrator
  363         qualifications; providing for the fund administrator’s
  364         compensation and removal; specifying the fund
  365         administrator powers and duties; providing the
  366         structure of the loans; providing qualified television
  367         content criteria; permitting the Auditor General to
  368         conduct an operational audit of the fund and the fund
  369         administrator; authorizing the department to adopt
  370         rules; providing for expiration of the act; providing
  371         emergency rulemaking authority; amending s. 288.0001,
  372         F.S.; requiring an analysis of the qualified
  373         television loan fund in the Economic Development
  374         Programs Evaluation; providing effective dates.