Florida Senate - 2014 CS for CS for SB 900 By the Committees on Community Affairs; and Education; and Senator Latvala 578-03196-14 2014900c2 1 A bill to be entitled 2 An act relating to public-private partnerships; 3 creating s. 1013.505, F.S.; defining terms; providing 4 legislative findings and intent; authorizing formation 5 of a public-private partnership between a state 6 university or direct-support organization and a 7 private entity; establishing procedures and 8 requirements for the receipt, solicitation, and 9 evaluation of proposals received by a state university 10 board of trustees or direct-support organization; 11 authorizing the Board of Governors to establish a fee 12 for unsolicited proposal submissions; requiring a 13 board of trustees or direct-support organization to 14 conduct an analysis before entering a comprehensive 15 agreement; specifying analysis requirements; requiring 16 approval of comprehensive agreements by the Board of 17 Governors; requiring additional approval by the 18 Governor and Cabinet for certain comprehensive 19 agreements; requiring a state university to provide a 20 summary of a proposal to the Board of Governors, the 21 Governor, Cabinet officers, and the Legislature; 22 specifying summary requirements; prohibiting a board 23 of trustees or direct-support organization from 24 proceeding with a comprehensive agreement under 25 certain circumstances; requiring the Board of 26 Governors to establish procedures for the evaluation 27 and approval of comprehensive agreements; requiring 28 the private entity to enter into a comprehensive 29 agreement with the board of trustees or direct-support 30 organization; establishing requirements for a 31 comprehensive agreement; authorizing certain financing 32 agreements for a qualifying project; specifying the 33 responsibilities of the private entity; specifying the 34 powers and duties of a board of trustees or direct 35 support organization upon expiration or termination of 36 an agreement; providing for the sole authority for a 37 board of trustees or direct-support organization to 38 enter a comprehensive agreement; providing for 39 applicability of sovereign immunity to a comprehensive 40 agreement; requiring a state university to prepare an 41 annual report to the Board of Governors after a 42 certain date; requiring the Board of Governors to 43 specify the format and the timeframe of the report; 44 authorizing the Board of Governors to adopt rules and 45 specify certain restrictions; providing for 46 applicability of other laws; providing an effective 47 date. 48 49 Be It Enacted by the Legislature of the State of Florida: 50 51 Section 1. Section 1013.505, Florida Statutes, is created 52 to read: 53 1013.505 Public-private partnerships; state universities.- 54 (1) DEFINITIONS.–As used in this section, the term: 55 (a) “Board” means a state university board of trustees. 56 (b) “Comprehensive agreement” or “agreement” means an 57 agreement between a state university or a direct-support 58 organization and a private entity which permits the private 59 entity to assume financial and administrative responsibility for 60 the acquisition, construction, reconstruction, improvement, 61 purchase, management, or operation of a project of, or for the 62 benefit of, the state university or a direct-support 63 organization. Additionally, a public-private partnership 64 agreement may also provide for a state university or direct 65 support organization to transfer to a private entity the 66 operation of a revenue-producing project to which the state 67 university or direct-support organization holds title, in 68 exchange for either a payment or payments to the state 69 university or direct-support organization or the construction of 70 a project to benefit the state university or direct-support 71 organization. 72 (c) “Debt” means bonds, including revenue bonds issued 73 pursuant to s. 11(d), Art. VII of the State Constitution, loans, 74 promissory notes, lease-purchase agreements, certificates of 75 participation, installment sales, leases, or any other financing 76 mechanism or financial arrangement, whether or not a debt for 77 legal purposes, for financing or refinancing for or on behalf of 78 a state university or a direct-support organization or for the 79 acquisition, construction, improvement, or purchase of capital 80 outlay projects. 81 (d) “Develop” means to plan, design, finance, lease, 82 acquire, install, construct, or expand. 83 (e) “Direct-support organization” means an organization 84 created pursuant to s. 1004.28 or any entity specifically 85 established to incur debt. 86 (f) “Fees” means charges imposed by the private entity of a 87 qualifying project for use of all or a portion of such 88 qualifying project pursuant to a comprehensive agreement. 89 (g) “Lease payment” means any form of payment, including a 90 land lease, by a board or direct-support organization to the 91 private entity of a qualifying project for the use of the 92 project. 93 (h) “Material default” means a nonperformance of its duties 94 by the private entity of a qualifying project which jeopardizes 95 adequate service to the public from the project. 96 (i) “Operate” means to finance, maintain, improve, equip, 97 modify, or repair. 98 (j) “Private entity” means a natural person, corporation, 99 general partnership, limited liability company, limited 100 partnership, joint venture, business trust, public-benefit 101 corporation, nonprofit entity, or other private business entity. 102 (k) “Proposal” means a plan for a qualifying project with 103 detail beyond a conceptual level for which terms such as fixing 104 costs, payment schedules, financing, deliverables, and project 105 schedule are defined. 106 (l) “Qualifying project” means one or more buildings, 107 structures, or facilities that serves a public educational, 108 research, housing, parking, infrastructure, recreational, or 109 cultural purpose of a state university or direct-support 110 organization that will be used by or on behalf of a state 111 university or direct-support organization. The term also means 112 the monetization of the operation of a revenue-producing project 113 to which the board or direct-support organization holds title, 114 in exchange for a guaranteed payment to the board or direct 115 support organization. 116 (m) “Revenues” means those revenues authorized under s. 117 1010.62, except that money received as grants or otherwise from 118 the Federal Government, a public entity, or an agency or 119 instrumentality in aid of a qualifying project or gifts from 120 private donors that are donated for the purpose of constructing 121 or equipping a facility may be used without limitation, unless a 122 gift is used to secure debt, in which event the maturity of the 123 debt shall not exceed 5 years. 124 (n) “Service contract” means a contract between a board or 125 direct-support organization and the private entity which defines 126 the terms of the services to be provided with respect to a 127 qualifying project. 128 (2) LEGISLATIVE FINDINGS AND INTENT.— 129 (a)1. The Legislature finds that there is a public need for 130 the construction or upgrade of facilities that are used 131 predominantly for public purposes and that it is in the public’s 132 interest to provide for the construction or upgrade of such 133 facilities. 134 2. The Legislature also finds that: 135 a. There is a public need for timely and cost-effective 136 acquisition, design, construction, improvement, renovation, 137 expansion, equipping, maintenance, operation, implementation, or 138 installation of projects serving a public purpose, including 139 educational and auxiliary facilities and projects within the 140 state which serve a public need and purpose, and that such 141 public need may not be wholly satisfied by existing procurement 142 methods. 143 b. There are inadequate resources to develop new 144 educational and auxiliary facilities and projects for the 145 benefit of residents of this state, and that a public-private 146 partnership has demonstrated that it can meet the needs by 147 improving the schedule for delivery, lowering the cost, and 148 providing other benefits to the public. 149 c. There may be state and federal tax incentives that 150 promote partnerships between public and private entities to 151 develop and operate qualifying projects. 152 d. A procurement under this section serves the public 153 purpose of this section if such procurement facilitates the 154 timely development or operation of a qualifying project. 155 (b) It is the intent of the Legislature to encourage 156 investment in the state by private entities; to facilitate 157 various bond financing mechanisms, private capital, and other 158 funding sources for the development and operation of qualifying 159 projects, including expansion and acceleration of such financing 160 to meet the public need; and to provide the greatest possible 161 flexibility to public and private entities contracting for the 162 provision of public services. 163 (3) PROCUREMENT PROCEDURES.—A board or direct-support 164 organization may receive unsolicited proposals or may solicit 165 proposals for qualifying projects and may thereafter enter into 166 an agreement with a private entity, or a consortium of private 167 entities, to build, upgrade, operate, own, or finance 168 facilities. 169 (a) The Board of Governors may establish a reasonable 170 application fee for the submission of an unsolicited proposal to 171 a board or direct-support organization under this section. The 172 fee must be sufficient to pay the costs of evaluating the 173 proposal. A board or direct-support organization may engage the 174 services of a private consultant to assist in the evaluation. 175 The Board of Governors may also establish a reasonable fee that 176 may be charged by a board or direct-support organization to 177 cover the costs of evaluating all other proposals received by a 178 board or direct-support organization as part of a competitive 179 procurement process to select a private entity for purposes of 180 establishing a public-private partnership. 181 (b) A board or direct-support organization may request a 182 proposal from private entities for a public-private project or, 183 if the board or direct-support organization receives an 184 unsolicited proposal for a public-private project and the board 185 or direct-support organization intends to enter into a 186 comprehensive agreement for the project described in such 187 unsolicited proposal, the board or direct-support organization 188 shall publish notice in a newspaper of general circulation at 189 least once a week for 2 weeks stating that the board or direct 190 support organization has received a proposal and will accept 191 other proposals for the same project. The timeframe within which 192 the board or direct-support organization may accept other 193 proposals shall be determined on a project-by-project basis 194 based upon the complexity of the project and the public benefit 195 to be gained by allowing a longer or shorter period of time 196 within which other proposals may be received; however, the 197 timeframe for allowing other proposals must be at least 21 days, 198 but no more than 120 days, after the initial date of 199 publication. 200 (c) In considering an unsolicited proposal, the board or 201 direct-support organization may require the private entity to 202 provide a technical study prepared by a nationally recognized 203 expert with experience in preparing analyses for bond rating 204 agencies. In evaluating the technical study, the board or 205 direct-support organization may rely upon internal staff reports 206 prepared by personnel familiar with the operation of similar 207 facilities or the advice of external advisors or consultants who 208 have relevant experience. In addition, an unsolicited proposal 209 must be accompanied by the following information, unless waived 210 by the board or the direct-support organization: 211 1. A description of the qualifying project, including the 212 conceptual design of the facilities or a conceptual plan for the 213 provision of services, and a schedule for the initiation and 214 completion of the qualifying project. 215 2. If applicable, a description of the method by which the 216 private entity proposes to secure the necessary property 217 interests that are required for the qualifying project. 218 3. A description of the private entity’s general plans for 219 financing the qualifying project, including the sources of the 220 private entity’s funds and the identity of a dedicated revenue 221 source or proposed debt or equity investment on behalf of the 222 private entity. 223 4. The name and address of a person who may be contacted 224 for additional information concerning the proposal. 225 5. The proposed user fees, lease payments, or other service 226 payments over the term of a comprehensive agreement, and the 227 methodology for and circumstances that would allow changes to 228 the user fees, lease payments, and other service payments over 229 time. 230 6. Additional material or information that the board or 231 direct-support organization reasonably requests. 232 (d) After the public notification period has expired in the 233 case of an unsolicited proposal or upon receipt of all proposals 234 if using the traditional process for competitive procurement 235 authorized under Board of Governors’ and university regulations, 236 the board or direct-support organization shall rank the 237 proposals received in order of preference. The board or direct 238 support organization may then begin negotiations for a 239 comprehensive agreement with the highest-ranked firm. If the 240 board or direct-support organization is not satisfied with the 241 results of the negotiations, the board or direct-support 242 organization may terminate negotiations with the proposer and 243 negotiate with the second-ranked or subsequent-ranked firms, in 244 the order consistent with this procedure. If only one proposal 245 is received, the board or direct-support organization may 246 negotiate in good faith, and if the board or direct-support 247 organization is not satisfied with the results of the 248 negotiations, the board or direct-support organization may 249 terminate negotiations with the proposer. Notwithstanding this 250 paragraph, the board or direct-support organization may reject 251 all proposals at any point in the process. 252 (4) PROJECT FEASIBILITY.-Prior to entering into a 253 comprehensive agreement, a board or direct-support organization 254 shall conduct an analysis of the feasibility and desirability of 255 the project or the activities proposed to be funded under the 256 comprehensive agreement, and shall develop sufficient 257 information to determine: 258 (a) That the agreement is in the best interest of the 259 public, the state, and the state university; 260 (b) The conformity of any project with the master plan of 261 the state university and a determination that the project or 262 activities are essential to the state university’s core mission; 263 (c) The need for the project or the activities proposed to 264 be funded under the agreement based on quantitative metrics; 265 (d) The amount and source of funds to be used to fully fund 266 the capital, operation, maintenance, or other expenses under the 267 agreement; 268 (e) The cost of any investment to be made under the 269 agreement by the board or a direct-support organization; 270 (f) The economic and financial feasibility of any project 271 or activities proposed to be funded under the agreement; 272 (g) That the projected demand for use of any project is 273 adequate in relation to the cost of the project; 274 (h) The expected return on investment or internal rate of 275 return for a revenue-generating project or another appropriate 276 quantitative measure for a non-revenue-generating project; 277 (i) That the cost of any project is reasonable in relation 278 to similar facilities; 279 (j) The financial, operational, or technological risk 280 associated with any project; 281 (k) That any increase in the cost of financing the project 282 over the cost of financing the project under s. 1010.62 will be 283 offset by quantifiable savings in operational costs or other 284 activities that will be performed by the private entity and 285 specifies the anticipated amount of such savings; 286 (l) Any impact to the state’s finances of undertaking the 287 project or the activities proposed to be funded under the 288 agreement by the state university or direct-support 289 organization; 290 (m) The impact of the agreement on similar activities of 291 the state university or direct-support organization that will 292 not be placed under the agreement; 293 (o) The anticipated use of money to be received by the 294 state university or direct-support organization under the 295 agreement; 296 (p) The relationship between the source of any funds 297 committed by the board or direct-support organization pursuant 298 to subsection (8) and the project or activities proposed to be 299 funded under the agreement; 300 (q) The private entity has the available sources of funding 301 or other financial resources that are necessary to carry out the 302 agreement; 303 (r) That the staff of the private entity have sufficient 304 experience and qualifications to perform the managerial, 305 organizational, and technical activities proposed to be funded 306 under the agreement; 307 (s) That no director, officer, partner, owner, or other 308 individual with direct and significant control over the policy 309 of the private entity has been convicted of corruption or fraud; 310 and 311 (t) Any other factors determined to be appropriate by the 312 board, direct-support organization or the Board of Governors. 313 (5) APPROVAL OF COMPREHENSIVE AGREEMENTS.-All comprehensive 314 agreements are contingent upon approval by the Board of 315 Governors. A comprehensive agreement between a direct-support 316 organization and a private entity must be approved by the 317 university board prior to submission to the Board of Governors 318 for approval. 319 (a) In addition to Board of Governors’ approval, approval 320 of the Governor and Cabinet, in their role as the governing 321 board of the Division of Bond Finance, is required for any 322 comprehensive agreement that: 323 1. Has a term of over ten years, including any renewals or 324 extensions; 325 2. Provides for an up-front payment from the private entity 326 to the board or direct-support organization which constitutes 327 more than 10 percent of the total compensation anticipated to be 328 paid by the private entity to the board or direct-support 329 organization over the initial term or any renewal term or 330 extension of the agreement; 331 3. Provides for the creation of debt of the board or a 332 direct-support organization as permitted pursuant to s. 1010.62; 333 4. Pledges or uses revenues permitted under s. 1010.62 to 334 secure or pay amounts due under the agreement; or 335 5. Is implemented pursuant to paragraph (b). 336 (b) Before a board or direct-support organization enters 337 into an agreement under which the board or a direct-support 338 organization is expected to receive over $10 million, the state 339 university must provide a summary of the proposal to the Board 340 of Governors, the Governor, the members of the Cabinet, the 341 President of the Senate, and the Speaker of the House of 342 Representatives. The summary must include a description of the 343 anticipated use of money to be received by the board or direct 344 support organization under the public-private partnership 345 agreement and any other information requested by a recipient of 346 the summary. If the President of the Senate or the Speaker of 347 the House of Representatives objects to the proposed agreement 348 in writing within 14 days after receipt of the summary, the 349 board or direct-support organization may not proceed with the 350 agreement unless all objections are resolved. 351 (c) The Board of Governors shall establish a process for 352 the evaluation and approval of comprehensive agreements by a 353 university board, the Board of Governors or other state 354 officers, and requirements for additional information to be 355 provided by a state university in obtaining approval for a 356 comprehensive agreement. 357 (6) COMPREHENSIVE AGREEMENT.— 358 (a) Before developing or operating the qualifying project, 359 the private entity must enter into a comprehensive agreement 360 with the board or direct-support organization. The comprehensive 361 agreement must provide for: 362 1. Delivery of performance and payment bonds, letters of 363 credit, or other security acceptable to the board or direct 364 support organization in connection with the development or 365 operation of the qualifying project in the form and amount 366 satisfactory to the board or direct-support organization. For 367 the components of the qualifying project which involve 368 construction, the form and amount of the bonds must comply with 369 ss. 255.05 and 1013.47. 370 2. Review of the design for the qualifying project by the 371 board or direct-support organization and, if the design conforms 372 to acceptable standards, the approval of the board or the 373 direct-support organization. This subparagraph does not require 374 the private entity to complete the design of the qualifying 375 project before the execution of the comprehensive agreement. 376 3. Inspection of the qualifying project by the board or 377 direct-support organization to ensure that the private entity’s 378 activities are acceptable to the board or direct-support 379 organization in accordance with the comprehensive agreement. 380 4. Maintenance of a policy of public liability insurance, a 381 copy of which must be filed with the board or direct-support 382 organization and accompanied by proofs of coverage, or self 383 insurance, each in the form and amount satisfactory to the board 384 or direct-support organization and reasonably sufficient to 385 ensure coverage of tort liability to the public and employees 386 and to enable the continued operation of the qualifying project. 387 5. Monitoring by the board or direct-support organization 388 of the maintenance practices to be performed by the private 389 entity to ensure that the qualifying project is properly 390 maintained. 391 6. Periodic filing by the private entity of the appropriate 392 financial statements that pertain to the qualifying project. 393 7. Procedures that govern the rights and responsibilities 394 of the board or direct-support organization and the private 395 entity in the course of the construction and operation of the 396 qualifying project and in the event of the termination of the 397 comprehensive agreement or a material default by the private 398 entity. The procedures must include conditions that govern the 399 assumption of the duties and responsibilities of the private 400 entity by an entity that funded, in whole or part, the 401 qualifying project or by the board or direct-support 402 organization, and must provide for the transfer or purchase of 403 property or other interests of the private entity by the board 404 or direct-support organization. 405 8. Fees, lease payments, or service payments. In 406 negotiating user fees, the fees must be the same for persons 407 using the facility under like conditions and must not materially 408 discourage use of the qualifying project. The execution of the 409 comprehensive agreement or a subsequent amendment is conclusive 410 evidence that the fees, lease payments, or service payments 411 provided for in the comprehensive agreement comply with this 412 section. Fees or lease payments established in the comprehensive 413 agreement as a source of revenue may be in addition to, or in 414 lieu of, service payments. 415 9. Duties of the private entity, including the terms and 416 conditions that the board or direct-support organization 417 determines serve the public purpose of this section. 418 10. A limitation on the term of the comprehensive agreement 419 not to exceed 30 years, inclusive of all renewal terms. 420 11. A provision under which each entity agrees to provide 421 notice of default and cure rights for the benefit of the other 422 entity, including, but not limited to, a provision regarding 423 unavoidable delays. 424 12. A provision that terminates the authority and duties of 425 the private entity under this section and dedicates the 426 qualifying project to the board or direct-support organization. 427 (b) A comprehensive agreement may not obligate the full 428 faith and credit of the state, a state university, or the Board 429 of Governors, but shall only be secured by the revenues of the 430 board or direct-support organization pledged for such purpose. 431 Revenues of a board or direct-support organization may not be 432 pledged to secure, or be used to make payments on or in relation 433 to, a comprehensive agreement, nor shall any debt of a board or 434 direct-support organization be created, except as provided in s. 435 1010.62, and only the revenues authorized to be used pursuant to 436 s. 1010.62 may be used to secure or pay obligations under or 437 related to such agreement. In addition, a comprehensive 438 agreement may not contain any provisions limiting the ability of 439 the state university or direct-support organization to perform 440 its functions, including any limitation on the ability to 441 perform responsibilities and duties relating to debt issued for, 442 by or on behalf of the state university or direct-support 443 organization. 444 (7) FINANCING.— 445 (a) A private entity may enter into a private-source 446 financing agreement between financing sources and the private 447 entity. A financing agreement must be paid in full at the 448 applicable closing that transfers ownership or operation of the 449 facility to the board or direct-support organization at the 450 conclusion of the term of the comprehensive agreement. In the 451 event of a material default by the private entity, the board or 452 the direct-support organization will assume ownership or 453 operation of the qualifying project pursuant to the terms of the 454 comprehensive agreement. 455 (b) The board or direct-support organization may use 456 innovative finance techniques associated with a public-private 457 partnership under this section, including, but not limited to, 458 federal loans as provided in Titles 23 and 49 C.F.R., commercial 459 bank loans, and hedges against inflation from commercial banks 460 or other private sources. In addition, the board or direct 461 support organization may provide its own capital or operating 462 budget to support a qualifying project. The budget may be from 463 any legally permissible funding sources of the board or direct 464 support organization, including the proceeds of debt issuances. 465 A financing agreement may not subject the board’s or direct 466 support organization’s facility to liens in violation of s. 467 11.066(5). 468 (8) RESPONSIBILITIES OF THE PRIVATE ENTITY.— 469 (a) The private entity shall: 470 1. Develop or operate the qualifying project in a manner 471 that is acceptable to the board or direct-support organization 472 in accordance with the provisions of the comprehensive 473 agreement. 474 2. Maintain, or provide by contract for the maintenance or 475 improvement of, the qualifying project if required by the 476 comprehensive agreement. 477 3. Cooperate with the board or direct-support organization 478 in making best efforts to establish interconnection between the 479 qualifying project and any other facility or infrastructure as 480 requested by the board or direct-support organization in 481 accordance with the provisions of the comprehensive agreement. 482 4. Comply with the comprehensive agreement and a lease or 483 service contract. 484 (b) Each private facility that is constructed pursuant to 485 this section must comply with the requirements of federal, 486 state, and local laws; state, regional, and local comprehensive 487 plans; the regulations, procedures, and standards for facilities 488 of the board or direct-support organization, as applicable; and 489 such other conditions that the board or direct-support 490 organization determines to be in the public’s best interest and 491 that are included in the comprehensive agreement. 492 (c) The board or direct-support organization may provide 493 services to the private entity. An agreement for maintenance and 494 other services entered into pursuant to this section must 495 provide for full reimbursement for services rendered for 496 qualifying projects. 497 (d) A private entity of a qualifying project may provide 498 additional services for the qualifying project to the public or 499 to other private entities if the provision of additional 500 services does not impair the private entity’s ability to meet 501 its commitments to the board or direct-support organization 502 pursuant to the comprehensive agreement and the services do not 503 differ in kind from those provided under the agreement. 504 (9) EXPIRATION OR TERMINATION OF AGREEMENTS.—Upon the 505 expiration or termination of a comprehensive agreement, the 506 board or direct-support organization may use revenues from the 507 qualifying project to pay current operation and maintenance 508 costs of the qualifying project. Revenues in excess of the costs 509 for operation and maintenance costs may be paid to the investors 510 and lenders to satisfy payment obligations under their 511 respective agreements if allowed under the provisions of the 512 comprehensive agreement. A board or direct-support organization 513 may terminate with cause and without prejudice a comprehensive 514 agreement and may exercise other rights or remedies that may be 515 available to it in accordance with the provisions of the 516 comprehensive agreement. The assumption of the development or 517 operation of the qualifying project does not obligate the board 518 or direct-support organization to pay an obligation of the 519 private entity from sources other than revenues from the 520 qualifying project. 521 (10) SOLE AUTHORITY.-This section shall provide the sole 522 authority for a state university or direct-support organization 523 to enter into a comprehensive agreement. 524 (11) SOVEREIGN IMMUNITY.-A comprehensive agreement may not 525 be construed as waiving the sovereign immunity of the state or 526 as a grant of sovereign immunity to a private entity. 527 (12) ANNUAL REPORT.-For any comprehensive agreement 528 executed by a state university or direct-support organization 529 after the effective date of this act, the university shall 530 prepare an annual report to the Board of Governors which updates 531 information provided for the initial approval of the public 532 private partnership and provides any other information required 533 by the Board of Governors. The format and specific timeframe for 534 reporting shall be as specified by the Board of Governors. 535 However, the initial annual report shall be filed no later than 536 November 30th after the public-private partnership has been in 537 effect for one full fiscal year. 538 (13) RULES.-The Board of Governors may adopt such rules as 539 may be necessary for carrying out all of the requirements of 540 this section and may do all things necessary to carry out the 541 powers granted under this section. The Board of Governors may 542 establish additional restrictions relating to public-private 543 partnerships but may not take any action which would reduce the 544 requirements of this section. 545 (14) APPLICABILITY OF OTHER LAWS.—This section does not 546 waive any requirement in s. 255.103, s. 287.055, or s. 1013.45, 547 if applicable. 548 Section 2. This act shall take effect July 1, 2014.