Florida Senate - 2017                             CS for SB 1576
       
       
        
       By the Committee on Commerce and Tourism; and Senator Gibson
       
       
       
       
       
       577-03939-17                                          20171576c1
    1                        A bill to be entitled                      
    2         An act relating to the Florida Film Investment
    3         Corporation; creating s. 288.1259, F.S.; defining
    4         terms; creating the Florida Film Investment
    5         Corporation and stating its purpose; authorizing the
    6         corporation to make investments in scripted
    7         productions in the state subject to certain
    8         conditions; requiring the board of directors to
    9         establish criteria, bylaws, rules, and policies for
   10         making investments; requiring the board to adopt
   11         criteria that give preference to certain productions;
   12         authorizing the corporation to charge fees subject to
   13         certain limits; providing membership requirements for
   14         the board; specifying term requirements; providing
   15         that board members are subject to the code of ethics
   16         for public officers and employees; providing voting
   17         and compliance requirements; providing applicability;
   18         prohibiting board members from commenting on or
   19         discussing certain applications for a specified
   20         timeframe; providing that the board serves without
   21         compensation; authorizing the board to be reimbursed
   22         for specified expenses; requiring the board to adopt
   23         rules and hold meetings; requiring the board to create
   24         the Florida Film Investment Account for specified
   25         purposes; requiring funds appropriated to the
   26         corporation to be deposited in the account;
   27         authorizing the board to deposit a portion of funds
   28         into a bank and invest the remaining portion in
   29         specified securities; requiring dividends to be
   30         deposited in the account; providing for the board’s
   31         operating expenses; requiring claims against the
   32         corporation to be paid from the account; requiring the
   33         board to appoint a president; specifying that the
   34         president serves at the pleasure of the board and is
   35         compensated as determined by the board; requiring the
   36         president to perform certain duties of the
   37         corporation; requiring the president to submit an
   38         annual budget to be approved by the board; requiring
   39         the corporation to notify the Department of Economic
   40         Opportunity upon final execution of certain contracts
   41         or agreements; providing notice requirements;
   42         providing an effective date.
   43          
   44  Be It Enacted by the Legislature of the State of Florida:
   45  
   46         Section 1. Section 288.1259, Florida Statutes, is created
   47  to read:
   48         288.1259 Florida Film Investment Corporation.—
   49         (1) DEFINITIONS.—As used in this section, the term:
   50         (a) “Account” means the Florida Film Investment Account.
   51         (b) “Board” means the corporation’s board of directors.
   52         (c) “Corporation” means the Florida Film Investment
   53  Corporation.
   54         (d) “In-state expenditures” means the costs of tangible
   55  property used in this state, and services performed by residents
   56  of this state, for scripted production, including preproduction
   57  and postproduction, but excluding costs for development,
   58  marketing, and distribution.
   59         (e) “President” means the chief executive officer of the
   60  corporation.
   61         (f) “Scripted production” or “production” means a feature
   62  film of at least 70 minutes in length, whether produced for
   63  theatrical, television, or direct-to-video release; a television
   64  series created to run multiple seasons and having an order for
   65  distribution of at least five episodes, or a miniseries, which
   66  is produced predominantly from a written screenplay or teleplay.
   67  The term does not include a commercial, infomercial, or
   68  political advertising; a reality show; a game show; an awards
   69  show; a music video; an industrial or educational film; a
   70  weather or market program; a sporting event or sporting event
   71  broadcast; a gala; a production that solicits funds; a home
   72  shopping program; a political program; a documentary; a
   73  gambling-related production; a concert production; a local,
   74  regional, or Internet-distributed-only news show or current
   75  events show; a sports news or sports recap show; a video game; a
   76  pornographic production; or any production deemed obscene under
   77  chapter 847. A production may be produced on or by film, video
   78  tape, or otherwise through the use of a motion picture camera,
   79  digital camera or device, video tape device, computer, any
   80  combination of the foregoing, or by any other means, method, or
   81  device.
   82         (g) “Television” includes broadcast, cable, and Internet
   83  television.
   84         (h) “Tier one sales agency” means an agency that has sold
   85  at least $50 million in feature films.
   86         (2) CORPORATION.—The Florida Film Investment Corporation is
   87  created as a corporation not for profit, to be incorporated
   88  under chapter 617 and approved by the Department of State. The
   89  corporation shall be organized on a nonstock basis. The purpose
   90  of the corporation is to encourage this state to be used as a
   91  site for scripted productions through equity investment in such
   92  productions.
   93         (3) POWERS AND LIMITATIONS.—
   94         (a) The corporation may make equity investments in scripted
   95  productions in this state pursuant to the criteria, bylaws,
   96  rules, and policies adopted by the board which must include all
   97  of the following:
   98         1. The corporation shall make investments in productions
   99  that it estimates will generate maximum economic impact to the
  100  state by providing high-wage jobs for Florida residents and
  101  significant in-state expenditures.
  102         2. The amount of the corporation’s investment in a
  103  production must not exceed the amount of the production’s in
  104  state expenditures for that production.
  105         3. The corporation’s investment in a production must rank
  106  and remain equal with the highest class of ownership in the
  107  production, such that, in the event of liquidation or
  108  bankruptcy, the corporation’s investment share retains the
  109  highest priority with other preferred shareholders.
  110         4. An equity investment made by the corporation under this
  111  section must be less than one-half of the production’s total
  112  shares or other ownership interest.
  113         5. The amount of the corporation’s investment in any one
  114  production must not exceed 12.5 percent of the sum of the
  115  remaining amount of uncommitted funds in the account plus the
  116  amounts of all outstanding investments in other productions.
  117         6. The corporation must not have any voting rights,
  118  creative control, or management authority over a production
  119  receiving an equity investment under this section.
  120         7. The corporation shall limit the return on its
  121  investments, establishing variable limits on returns that
  122  account for time value and reduce returns in exchange for a
  123  production’s early buyout of investment equity. For a production
  124  exercising an early buyout, the corporation shall limit its
  125  return on investment to the minimum that is actuarially
  126  measurable, credible, and sufficiently related to actual and
  127  expected losses to ensure the corporation’s self-sufficiency and
  128  preservation of the state appropriations provided for
  129  investment.
  130         8. The corporation shall conduct at least two investment
  131  cycles per fiscal year, committing no more than 40 percent of
  132  its total investment in productions for the fiscal year in any
  133  one investment cycle.
  134         (b) The board shall adopt objective criteria for making
  135  equity investments in scripted productions in this state.
  136         1.The criteria must require:
  137         a. The production to use a bonded third-party collection
  138  account management firm to ensure that the corporation receives
  139  all funds due from sales proceeds in accordance with a waterfall
  140  agreement included in the corporation’s investment terms.
  141         b. Presales or sales estimates based on the cast and script
  142  of the production from a tier one sales agency which reflect a
  143  value of at least 1.5 times the exposure of the corporation.
  144         c. The production to carry an insurance package from an
  145  insurance company rated “A” or higher by A.M. Best Company which
  146  must include general liability insurance, workers’ compensation,
  147  and key cast and director insurance that covers the costs of
  148  disruption or replacement downtime in the event of illness or
  149  other loss of services from such individuals. If at least 75
  150  percent of the production’s filming schedule occurs after June 1
  151  and before November 30, the production’s insurance package must
  152  include hurricane coverage.
  153         d. The production to provide proof of funds for the
  154  remaining budget within 60 days after tentative approval and
  155  place the remaining budget in escrow before the release of
  156  corporation funds.
  157         e. That the lead producer or production company has
  158  completed, sold, and delivered at least five feature films, or
  159  the production must provide a completion bond.
  160         f. That the production’s budget, script, and filming
  161  schedule have been evaluated and approved by a production expert
  162  selected by the board.
  163         g. The production budget to include contingency funds in an
  164  amount equal to at least 5 percent of the total budget. Up to 40
  165  percent of the contingency funds may be expended during
  166  production without the approval of the board. The remaining
  167  contingency funds may only be expended with prior approval of
  168  the board.
  169         h.The board to release corporation funds to a production
  170  in the following manner:
  171         (I)Fifty percent of corporation funds shall be released on
  172  the first day of principal photography.
  173         (II)Twenty-five percent of corporation funds shall be
  174  released upon completion of principal photography.
  175         (III)Twenty-five percent of corporation funds shall be
  176  released after final picture lock, as that term is generally
  177  understood in the production industry.
  178         i.The production company to provide the board with the
  179  right to inspect and audit the weekly cost reports and general
  180  ledger of the production throughout preproduction, production,
  181  and postproduction.
  182         2.The criteria shall give preference to:
  183         a. Productions with the greatest economic impact to the
  184  state as demonstrated by the greatest number of high-wage jobs
  185  provided for state residents and the greatest amount of in-state
  186  expenditures as a percentage of total production expenditures.
  187         b. Productions in which the proposed investment by the
  188  corporation is lowest as a percentage of the production’s total
  189  shares or other ownership interests.
  190         c. Productions with the quickest deployment, in which the
  191  production’s in-state expenditures will be made soonest after
  192  the corporation’s investment.
  193         d. Productions by companies with a verifiable track record
  194  of producing successful productions.
  195         e. Productions by state-based production companies or by
  196  producers, writers, or directors who are state residents.
  197         f. Productions estimated to significantly increase tourism
  198  to the state by using a screenplay or teleplay based on a
  199  Florida story or including recognizable state locations.
  200         g. Productions whose development demonstrates the
  201  likelihood of their success, including, but not limited to,
  202  having a recognized director, actor, or other creative talent
  203  attached to the production.
  204         h. Productions in which the corporation’s investment is
  205  matched from local sources, such as county or municipal
  206  agencies, local film commissions, or other community resources.
  207         (c) The corporation may charge fees, such as application
  208  fees, from productions seeking equity investment under this
  209  section, but such fees may not exceed the reasonable estimated
  210  cost of the activity for which the fee is charged, such as the
  211  cost of processing an application.
  212         (4) BOARD OF DIRECTORS; POWERS AND DUTIES.—
  213         (a)1. The corporation shall have a board of directors
  214  consisting of seven members who are permanent residents of the
  215  state. Minority and gender representation must be considered
  216  when making appointments to the board. The board shall be
  217  composed of the following members:
  218         a. Two members with experience in investment banking and
  219  funds management focused on feature film and television
  220  production.
  221         b. Three members who have recent experience and are
  222  recognized leaders in the production of feature films or
  223  television in this state. Such board members may include, but
  224  are not limited to, producers, directors, production managers or
  225  supervisors, or similar persons in positions of production
  226  leadership.
  227         c. One member representing businesses that provide supplies
  228  for feature film and television production in the state, such as
  229  small businesses through which production companies buy or rent
  230  equipment, house and feed cast and crew, purchase supplies and
  231  raw materials, or build production infrastructure.
  232         d. One member representing the state’s feature film and
  233  television workforce.
  234         2. The initial board of directors shall be appointed as
  235  follows:
  236         a. The Florida Venture Forum and the Florida Chamber of
  237  Commerce shall each appoint one member pursuant to sub
  238  subparagraph 1.a.
  239         b. The Governor, the President of the Senate, and the
  240  Speaker of the House of Representatives shall each appoint one
  241  member pursuant to sub-subparagraph 1.b.
  242         c. The Department of Economic Opportunity shall appoint one
  243  member pursuant to sub-subparagraph 1.c.
  244         d. The Congress of Motion Picture Associations of Florida
  245  shall appoint one member pursuant to sub-subparagraph 1.d.
  246  
  247  To establish staggered terms, three of the initial board members
  248  shall be appointed to 1-year terms, two initial board members
  249  shall be appointed to 2-year terms, and two initial board
  250  members shall be appointed to 3-year terms.
  251         3. Board members shall serve for a term of 3 years and be
  252  eligible for reappointment. Vacancies shall be filled by the
  253  board within 30 days after the vacancy occurs.
  254         (b) Board members are subject to the code of ethics for
  255  public officers and employees as set forth in part III of
  256  chapter 112. A board member must abstain from voting and must
  257  comply with the disclosure requirements of s. 112.3143 if there
  258  appears to be a possible conflict under s. 112.311, s. 112.313,
  259  or s. 112.3143. This paragraph does not prohibit any principal
  260  by whom a board member is retained, as described in s.
  261  112.3143(1)(a), from applying for or receiving an equity
  262  investment under this section.
  263         (c) A board member must, with respect to an application for
  264  an equity investment which is pending before the corporation or
  265  an application the board member knows or reasonably expects will
  266  be submitted to the corporation within 180 days, refrain from
  267  commenting on or discussing the application outside of a board
  268  meeting with the applicant or any person retained by the
  269  applicant.
  270         (d) Board members shall serve without compensation but may
  271  be reimbursed in accordance with s. 112.061 for all necessary
  272  expenses in the performance of their duties, including attending
  273  board meetings and conducting board business.
  274         (e) The board shall:
  275         1. Before the expenditure of funds from the Florida Film
  276  Investment Account, adopt bylaws, rules, and policies necessary
  277  to carry out the corporation’s responsibilities under this
  278  section.
  279         2. Hold regularly scheduled meetings, at least once per
  280  investment cycle, in order to carry out the objectives and
  281  responsibilities of the board.
  282         (5) ACCOUNT.—
  283         (a) The board shall create the Florida Film Investment
  284  Account for the purpose of receiving state, federal, county,
  285  municipal, and private financial resources, and the return from
  286  investments of those resources, and for the purposes of this
  287  section. The account shall be under the exclusive control of the
  288  board.
  289         (b) Appropriations provided to the corporation for making
  290  equity investments shall be deposited into the account.
  291         (c) The board may deposit the funds of the account with
  292  state or federally chartered financial institutions in this
  293  state and may invest the remaining portion in permissible
  294  investments as described in s. 560.210(1).
  295         (d) Dividend payments received from the investments made by
  296  the corporation shall be redeposited in the account to be used
  297  to support the purposes of this section.
  298         (e) The corporation shall keep its operating expenses to
  299  the minimum amount necessary. Such operating expenses shall be
  300  funded by appropriations provided for that purpose and from net
  301  returns on investments made under this section.
  302         (f) Any claims against the account shall be paid solely
  303  from the account. Under no circumstances shall the credit of the
  304  state be pledged, other than funds appropriated by law to the
  305  account, nor shall the state be liable or obligated in any way
  306  for claims on the account or against the corporation.
  307         (6) PRESIDENT OF THE CORPORATION.—
  308         (a) The board shall appoint a president. The president must
  309  be knowledgeable about private and public financing of feature
  310  film and television projects.
  311         (b) The president shall serve at the pleasure of the board
  312  and shall receive a salary and benefits as determined by the
  313  board.
  314         (c) The president shall administer the programs of the
  315  corporation and perform such duties as are delegated by the
  316  board.
  317         (d) The president shall provide staff to the board as
  318  requested.
  319         (e) The president shall submit an annual budget to be
  320  approved by the board.
  321         (7) PUBLIC NOTICE OF INVESTMENTS.—The corporation shall
  322  notify the Department of Economic Opportunity upon final
  323  execution of each contract or agreement by which the corporation
  324  makes an equity investment in a production. The corporation
  325  shall also publish and maintain a copy of the notice on the
  326  corporation’s website while the investment remains outstanding.
  327  To provide adequate notice to the businesses and workforce that
  328  provide supplies for feature film and television production in
  329  the state, the notice shall include, but need not be limited to,
  330  a brief description of the production, the name of the
  331  production company, and, to the extent available, the names of
  332  the director, cinematographer, production designer, costume
  333  designer, and transportation coordinator.
  334         Section 2. This act shall take effect July 1, 2017.