Florida Senate - 2021 CS for SB 1444 By the Committee on Finance and Tax; and Senator Wright 593-04156-21 20211444c1 1 A bill to be entitled 2 An act relating to the Florida Small Manufacturing 3 Business Recovery Act; creating s. 288.715, F.S.; 4 providing a short title; defining terms; requiring the 5 Department of Economic Opportunity to accept 6 applications for certification of relief funds and 7 relief contributions in a specified manner; specifying 8 information required to be submitted in an 9 application; requiring the department to approve or 10 deny applications within a specified timeframe; 11 prohibiting the department from approving more than a 12 specified amount of relief investment authority and 13 relief contributions; requiring the department to deny 14 applications under certain circumstances; requiring 15 the department to provide notice of approval or denial 16 to applicants; requiring the department to certify 17 approved applications; authorizing applicants whose 18 applications were denied to provide additional 19 information within a certain timeframe to cure defects 20 in their applications; requiring the department to 21 reconsider such applications; requiring certified 22 relief funds to collect contributions and investments 23 and submit certain documentation within a specified 24 timeframe; requiring the department to revoke relief 25 funds’ certification under certain circumstances; 26 requiring the department to give notice relating to 27 tax credit certificates; providing requirements 28 relating to lapsed or revoked investment authority; 29 authorizing nonrefundable tax credits for owners of 30 tax credit certificates issued by the department; 31 providing restrictions on the credit; requiring 32 taxpayers to submit a copy of the tax credit 33 certificate with the taxpayers’ annual statements; 34 authorizing the department to revoke tax credit 35 certificates under certain circumstances; prohibiting 36 certain amounts invested in impact businesses from 37 being counted as a relief investment; authorizing 38 certain relief funds to apply to the department to be 39 decertified; providing procedures for decertification; 40 authorizing a relief fund to request certain opinions 41 from the department; requiring relief funds to submit 42 specified reports to the department; authorizing the 43 department to adopt rules; providing an effective 44 date. 45 46 Be It Enacted by the Legislature of the State of Florida: 47 48 Section 1. Section 288.715, Florida Statutes, is created to 49 read: 50 288.715 The Florida Small Manufacturing Business Recovery 51 Act.— 52 (1) This section may be cited as the “Florida Small 53 Manufacturing Business Recovery Act.” 54 (2) As used in this section, the term: 55 (a) “Affiliate” means a person that directly, or indirectly 56 through one or more intermediaries, controls, is controlled by, 57 or is under common control with another person. For the purposes 58 of this paragraph, a person is “controlled by” another person if 59 the controlling person holds, directly or indirectly, the 60 majority voting or ownership interest in the controlled person 61 or has control over the day-to-day operations of the controlled 62 person by contract or by law. 63 (b) “Closing date” means the date on which a relief fund 64 has collected the amounts specified in paragraph (3)(f). 65 (c) “Department” means the Department of Economic 66 Opportunity. 67 (d) “Impact business” means a business that, at the time of 68 the initial relief investment by a relief fund: 69 1. Has fewer than 200 employees; 70 2. Has its principal business operations in this state; and 71 3. Is engaged in the North American Industry Classification 72 System codes 31-33 or, if not engaged in such industries, the 73 department determines that an investment in the business will be 74 beneficial to this state’s recovery. 75 76 For the purposes of this paragraph, a business has its principal 77 business operations in this state if at least 60 percent of the 78 business’ employees reside in this state, at least 80 percent of 79 the business’ payroll is paid to individuals who reside in this 80 state, or the business has agreed to use the proceeds of a 81 relief investment to relocate at least 60 percent of the 82 business’ employees to this state or pay at least 80 percent of 83 the business’ payroll to individuals residing in this state. 84 (e) “Premium taxes” means taxes imposed under s. 624.509 or 85 s. 624.5091. 86 (f) “Relief contribution” means a cash investment in a 87 relief fund which equals the amount specified on a notice of tax 88 credit allocation issued by the department under paragraph 89 (3)(h). The investment must purchase an equity interest in the 90 relief fund or purchases, at par value or premium, a debt 91 instrument issued by the relief fund which has an original 92 maturity date of at least 5 years after the date of issuance and 93 a repayment schedule that is no greater than level principal 94 amortization over 5 years. 95 (g) “Relief fund” means an entity certified by the 96 department under paragraph (3)(e). 97 (h) “Relief investment” means any capital or equity 98 investment in an impact business or any loan to an impact 99 business which has a stated maturity at least 2 years after the 100 date of issuance. A secured loan is a relief investment only if 101 it has an initial interest rate of less than 2 percent or 102 principal and interest payments deferred for at least 1 year. A 103 subordinate loan is a relief investment only if it has an 104 initial interest rate of less than 6 percent or principal and 105 interest payments deferred for at least 1 year. An equity 106 investment is a relief investment only if the relief fund does 107 not acquire a majority interest in the small business as a 108 result of such investment. The term “relief investment” does not 109 include any transaction that includes an origination fee. 110 (i) “Relief investment authority” means the amount stated 111 on the notice issued under paragraph (3)(e) certifying the 112 relief fund. Eighty percent of a relief fund’s relief investment 113 authority must consist of relief contributions. 114 (j) “Small business” means any business that has its 115 principal business operations in this state, as described in 116 paragraph (d), and which, at the time the initial relief 117 investment is made, has fewer than 250 employees or the number 118 of employees set forth for the business’ North American Industry 119 Classification System code under 13 C.F.R. s. 121.201, whichever 120 is greater. 121 (3)(a) Beginning August 1, 2021, the department shall 122 accept applications for certification of relief funds and relief 123 contributions. The application must include: 124 1. The total relief investment authority sought by the 125 applicant; 126 2. Evidence that proves, to the satisfaction of the 127 department, that: 128 a. The applicant or an affiliate of the applicant is a 129 federally approved or licensed rural business investment company 130 under 7 U.S.C. s. 2009cc or a small business investment company 131 under 15 U.S.C. s. 681. The applicant must include a certificate 132 executed by an executive officer of the applicant attesting that 133 the approval or license remains in effect and has not been 134 revoked; 135 b. At least one principal or similar officer of such entity 136 is, and has been for at least 4 years, an officer or employee of 137 the applicant or an affiliate of the applicant on the date the 138 application is submitted; and 139 c. As of the date the application is submitted, the 140 applicant and its affiliates have invested more than $500 141 million in small businesses, regardless of whether the principal 142 business operations of the small business are in this state; and 143 3. A signed affidavit from each investor stating that the 144 investor agrees to make a relief contribution and the amount of 145 the relief contribution. 146 (b)1. Except as provided in subparagraph 2., the department 147 shall approve or deny an application within 30 days after 148 receiving the application. The department shall deem 149 applications received on the same day as having been received 150 simultaneously. The department may not approve more than $100 151 million in relief investment authority and may not approve more 152 than $80 million in relief contributions. If approving 153 simultaneously submitted applications would result in exceeding 154 these limits, the department shall proportionally reduce the 155 relief investment authority and the relief contributions for 156 each approved application as necessary to avoid exceeding the 157 limit. 158 2. If the department denies an application for 159 certification as a relief fund, and approving a subsequently 160 submitted application would result in exceeding the dollar 161 limitation on relief investment authority or relief 162 contributions, assuming the previously denied application was 163 completed, clarified, or cured under subparagraph (e)2., the 164 agency may not make a determination on the subsequently 165 submitted application until the previously denied application is 166 reconsidered or the 15-day period for submitting additional 167 information regarding that application has passed, whichever 168 occurs first. 169 (c) The department must deny an application if: 170 1. The application is incomplete, including failing to 171 submit the affidavits accounting for at least 80 percent of the 172 relief investment authority sought; 173 2. The applicant does not satisfy the requirements of 174 subparagraph (a)2.; or 175 3. The department has already approved the maximum total 176 relief investment authority and relief contributions authorized 177 under subparagraph (b)1. 178 (d) The department may not deny a relief fund application 179 or reduce the requested relief investment authority for reasons 180 other than those described in paragraphs (b) and (c). 181 (e)1. If the department approves an application, the 182 department must issue a written notice to the applicant 183 certifying the applicant as a relief fund and specifying the 184 applicant’s amount of relief investment authority. 185 2. If the department denies an application, the department 186 must notify the applicant of the reasons for denial. If the 187 application was denied for any reason other than a reason 188 specified in paragraph (c) or because the applicant failed to 189 satisfy subparagraph (a)3., the applicant may submit additional 190 information to the agency to cure defects in the application 191 within 15 days after receipt of the notice of denial. The 192 department must reconsider such application within 15 days after 193 receiving any additional information and, if the application is 194 approved, treat it as approved as of its original filing date. 195 (f) Within 30 days after receiving a certification under 196 paragraph (e), a relief fund must: 197 1. Collect the relief contributions from each investor 198 whose affidavit was included in the application; 199 2. Collect direct or indirect equity investments from 200 affiliates of the relief fund, including employees, officers, 201 and directors of such affiliates, equal to at least 10 percent 202 of the relief fund’s investment authority; and 203 3. For each investor seeking a tax credit certificate, 204 provide the department with the investor’s federal employer 205 identification number, if a business, or the investor’s social 206 security number, if an individual. 207 (g) Within 35 days after receiving certification under 208 paragraph (e), a relief fund must send documentation to the 209 department which proves the relief fund has collected the 210 amounts required under paragraph (f). If the relief fund fails 211 to comply with this paragraph, the department shall revoke the 212 relief fund’s certification. 213 (h) After a relief fund satisfies the requirement under 214 paragraph (g), the department shall issue to each investor or 215 affiliate identified under paragraph (g) a notice of the amount 216 and utilization schedule of the tax credit certificates 217 allocated to the investor or affiliate as a result of the 218 investor or affiliate’s relief contribution. The department 219 shall provide the Department of Revenue, for each person who is 220 allocated tax credit certificates, the person’s name, the amount 221 of the credit allocation, the utilization schedule, the 222 information required by subparagraph (f)3., and the closing date 223 of the relief fund to which the person made a relief 224 contribution. 225 (i) If a relief fund’s certification is revoked under 226 paragraph (g) or the relief fund has tax credits revoked under 227 paragraph (5)(b), the corresponding relief investment authority 228 and relief contributions do not count toward limits on total 229 relief investment authority and relief contributions authorized 230 under paragraph (b). The department shall first award lapsed or 231 revoked relief investment authority and the corresponding relief 232 contributions pro rata to each relief fund awarded less than the 233 relief investment authority for which it applied pursuant to 234 subparagraph (b)1. The department may award any remaining relief 235 investment authority to new applicants. The department shall 236 notify the Department of Revenue of lapsed or revoked relief 237 investment authority. 238 (4)(a) A nonrefundable tax credit certificate is authorized 239 for owners of tax credit certificates issued by the department 240 under paragraph (b). The credit may be claimed against premium 241 taxes and is transferable to any person that pays premium taxes 242 in this state. 243 (b) On the closing date, a taxpayer that made a relief 244 contribution is eligible for a credit equal to the amount 245 specified in the notice issued under paragraph (3)(h). On or 246 before the anniversaries of the closing date occurring in 2023, 247 2024, 2025, 2026, and 2027, the department shall issue a tax 248 credit certificate equal to one-fifth of the relief 249 contributions allocated to the taxpayer. 250 (c) Any amount of credits which exceeds the tax otherwise 251 due for that year may be carried forward for any ensuing taxable 252 years. An additional retaliatory tax may not be required as a 253 result of using the credit. A taxpayer claiming a credit under 254 this section shall submit a copy of the tax credit certificate 255 with the taxpayer’s annual statement for each taxable year in 256 which the credit is claimed. 257 (5)(a) The department is not required to issue a tax credit 258 certificate to a relief fund that does not invest at least 70 259 percent of its relief investment authority in relief investments 260 within 1 year after the closing date or 100 percent of its 261 relief investment authority in relief investments within 2 years 262 after the closing date. 263 (b) The department may revoke tax credit certificates 264 issued pursuant to subsection (4) if: 265 1. Before satisfying paragraph (a), the relief fund makes a 266 distribution or payment in excess of the cumulative investment 267 earnings of the relief fund as of the date of the distribution 268 or payment, taking into account all past distributions and 269 payments; 270 2. After satisfying paragraph (a), the relief fund fails to 271 maintain those levels of investment until the fifth anniversary 272 of the closing date. For the purposes of this subparagraph, an 273 investment is maintained even if the investment is sold or 274 repaid, so long as the relief fund reinvests an amount equal to 275 the capital returned or recovered from the original investment, 276 exclusive of any profits realized, in other relief investments 277 in this state within 1 year of the receipt of such capital. 278 Regularly scheduled principal payments on a loan that is a 279 relief investment are deemed continuously invested in a relief 280 investment if the amounts are reinvested in one or more relief 281 investments by the end of the following calendar year; or 282 3. After satisfying paragraph (a) and before the relief 283 fund is decertified pursuant to paragraph (d), the relief fund 284 makes a distribution or payment that results in the relief fund 285 having less than 100 percent of its relief investment authority 286 invested in relief investments or held in cash or marketable 287 securities available for investment in relief investments. 288 289 The department must notify the relief fund of the reasons for 290 revocation before revoking tax credit certificates pursuant to 291 this paragraph. If, within 30 days after the department sends 292 such notice, the relief fund corrects the reasons given in the 293 notice to the satisfaction of the department, the department may 294 not revoke the tax credit certificates. 295 (c) The amount by which one or more relief investments by a 296 relief fund in the same impact business exceeds $3.5 million may 297 not be counted as a relief investment for the purposes of this 298 section, exclusive of capital repaid or redeemed by such small 299 business and reinvested as a relief investment in such small 300 business. A relief investment in an affiliate of an impact 301 business shall be treated as a relief investment in that impact 302 business for the purposes of this paragraph. 303 (d)1. On or after the sixth anniversary of the closing 304 date, a relief fund that has invested 100 percent of its relief 305 investment authority in relief investments may apply to the 306 department to be decertified as a relief fund. The department 307 shall respond to and not unreasonably deny the application 308 within 60 days after receiving the application. In evaluating 309 the application, the fact that no tax credit certificates have 310 been revoked with respect to the relief fund shall be evidence 311 to prove that the relief fund is eligible for decertification. 312 2. The department shall send notice to the relief fund of 313 its determination with respect to decertification and reasons 314 for denial, if applicable. 315 3. The department may not revoke a tax credit certificate 316 due to any actions of a relief fund which occur after 317 decertification, but the department may revoke tax credit 318 certificates due to the actions of a relief fund which occur 319 before decertification even if such actions are discovered after 320 the date of decertification. 321 (e) A relief fund may request a written opinion from the 322 department as to whether a business qualifies as an impact 323 business. The department shall issue a written opinion to the 324 relief fund within 10 business days after receiving such a 325 request. If the department determines that the business 326 qualifies as an impact business or if the department fails to 327 timely issue the written opinion, the business shall be 328 considered a small business or impact business for the purposes 329 of this section. 330 (6)(a) Each relief fund shall submit a report to the 331 department on or before April 1 of each year, including the 332 closing date year, until the calendar year after the relief fund 333 is decertified. The report must provide an itemization of the 334 relief fund’s relief investments and must include the following 335 documents and information: 336 1. A bank statement evidencing each relief investment; 337 2. The name, location, and industry class of each impact 338 business that received a relief investment from the relief fund 339 and evidence that the business qualified as an impact business 340 at the time the investment was made, if applicable; 341 3. The jobs created and retained as a result of each relief 342 investment; and 343 4. Any other information required by the department. 344 (b) Each relief fund shall submit a report to the 345 department on or before the fifth business day after the first 346 and second anniversaries of the closing date which provides 347 documentation to prove that the relief fund has met the 348 investment thresholds required in paragraph (5)(a) and has not 349 violated any of the other revocation provisions described in 350 paragraph (5)(b). 351 (7) The department may adopt rules to implement this 352 section. 353 Section 2. This act shall take effect July 1, 2021.