Bill Text: FL H0943 | 2011 | Regular Session | Engrossed

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Bill Title: Capital Formation for Infrastructure Projects

Spectrum: Partisan Bill (Republican 2-0)

Status: (Engrossed - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [H0943 Detail]

Download: Florida-2011-H0943-Engrossed.html

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HB 943

1	A bill to be entitled
2	An act relating to capital formation for infrastructure
3	projects; amending ss. 288.9621, 288.9622, and 288.9623,
4	F.S.; conforming a short title, revising legislative
5	findings and intent, and providing definitions for the
6	Florida Capital Formation Act; conforming cross-
7	references; creating s. 288.9627, F.S.; providing for
8	creation of the Florida Infrastructure Fund Partnership;
9	providing the partnership's purpose and duties; providing
10	for management of the partnership by the Florida
11	Opportunity Fund; authorizing the fund to lend moneys to
12	the partnership; requiring the partnership to raise funds
13	from investment partners; providing for commitment
14	agreements with and issuance of certificates to investment
15	partners; authorizing the partnership to invest in certain
16	infrastructure projects; requiring the partnership to
17	submit an annual report to the Governor and Legislature;
18	prohibiting the partnership from pledging the credit or
19	taxing power of the state or its political subdivisions;
20	prohibiting the partnership from investing in projects
21	with or accepting investments from certain companies;
22	creating s. 288.9628, F.S.; creating the Florida
23	Infrastructure Investment Trust; providing for powers and
24	duties, a board of trustees, and an administrative officer
25	of the trust; providing for the trust's issuance of
26	certificates to investment partners; specifying that the
27	certificates guarantee the availability of tax credits
28	under certain conditions; authorizing the trust and the
29	fund to charge fees; limiting the amount of tax credits
30	that may be claimed or applied against state taxes in any
31	year; providing for the redemption of certificates or sale
32	of tax credits; providing for the issuance of the tax
33	credits by the Department of Revenue; specifying the taxes
34	against which the credits may be applied; limiting the
35	period within which tax credits may be used; providing for
36	the state's obligation for use of the tax credits;
37	limiting the liability of the fund; providing for the
38	transferability of certificates and tax credits; requiring
39	the department to provide a certain written assurance to
40	the trust under certain circumstances; specifying that
41	certain provisions regulating securities transactions do
42	not apply to certificates and tax credits transferred or
43	sold under the act; amending s. 213.053, F.S.; authorizing
44	the department to disclose certain information to the
45	partnership and the trust relative to certain tax credits;
46	providing an effective date.
47
48	Be It Enacted by the Legislature of the State of Florida:
49
50	Section 1.  Section 288.9621, Florida Statutes, is amended
51	to read:
52	288.9621  Short title.-This part Sections 288.9621-288.9625
53	may be cited as the "Florida Capital Formation Act."
54	Section 2.  Subsections (1) and (2) of section 288.9622,
55	Florida Statutes, are amended to read:
56	288.9622  Findings and intent.-
57	(1)  The Legislature finds and declares that there is a
58	need to increase the availability of seed capital and early
59	stage venture equity capital for emerging companies in the
60	state, including, without limitation, enterprises in life
61	sciences, information technology, advanced manufacturing
62	processes, aviation and aerospace, and homeland security and
63	defense, as well as other strategic technologies and
64	infrastructure funding.
65	(2)  It is the intent of the Legislature that this part ss.
66	288.9621-288.9625 serve to mobilize private investment in a
67	broad variety of venture capital partnerships in diversified
68	industries and geographies; retain private sector investment
69	criteria focused on rate of return; use the services of highly
70	qualified managers in the venture capital industry regardless of
71	location; facilitate the organization of the Florida Opportunity
72	Fund as an investor in seed and early stage businesses,
73	infrastructure projects, venture capital funds, infrastructure
74	funds, and angel funds; and precipitate capital investment and
75	extensions of credit to and in the Florida Opportunity Fund.
76	Section 3.  Section 288.9623, Florida Statutes, is amended
77	to read:
78	288.9623  Definitions.-As used in this part, the term ss.
79	288.9621-288.9625:
80	(1)  "Board" means the board of directors of the Florida
81	Opportunity Fund.
82	(2)  "Certificate" means a contract between the trust and
83	an investment partner that guarantees the availability of tax
84	credits for use by the partner, or for transfer or sale under s.
85	288.9628, in order to guarantee the partner's investment capital
86	in the partnership.
87	(3)  "Commitment agreement" means a contract between the
88	partnership and an investment partner under which the partner
89	commits to providing a specified amount of investment capital in
90	exchange for an ownership interest in the partnership.
91	(4)(2)  "Fund" means the Florida Opportunity Fund.
92	(5)  "Infrastructure project" means a capital project in
93	the state for a facility or other infrastructure need in the
94	state with respect to any of the following: water or wastewater
95	system, communication system, power system, transportation
96	system, renewable energy system, ancillary or support system for
97	any of these types of projects, or other strategic
98	infrastructure located within the state.
99	(6)  "Investment capital" means the total capital committed
100	by the investment partner for an equity interest in the
101	partnership pursuant to a commitment agreement.
102	(7)  "Investment partner" or "partner" means a person,
103	other than the partnership, the fund, or the trust, who
104	purchases an ownership interest in the partnership or a
105	transferee of such interest.
106	(8)  "Net capital loss" means an amount equal to the
107	difference between the total investment capital actually
108	advanced by the investment partner to the partnership and the
109	amount of the aggregate actual distributions received by the
110	investment partner.
111	(9)  "Partnership" means the Florida Infrastructure Fund
112	Partnership.
113	(10)  "Tax credits" means credits issued against the taxes
114	specified in s. 288.9628(7)(c).
115	(11)  "Trust" means the Florida Infrastructure Investment
116	Trust.
117	Section 4.  Section 288.9627, Florida Statutes, is created
118	to read:
119	288.9627  Florida Infrastructure Fund Partnership;
120	creation; duties.-
121	(1)  The Florida Opportunity Fund shall facilitate the
122	creation of the Florida Infrastructure Fund Partnership, which
123	shall be organized and operated under chapter 620 as a private,
124	for-profit limited partnership or limited liability partnership
125	with the fund as a general partner. The partnership shall manage
126	its business affairs and conduct business consistent with its
127	organizing documents and the purposes described in this section.
128	However, the partnership is not an instrumentality of the state.
129	(2)  The primary purpose of the partnership is to raise
130	investment capital and invest the capital in infrastructure
131	projects in the state that promote economic development.
132	(3)(a)  The fund, as the general partner of the
133	partnership, shall manage the partnership's business affairs,
134	including, but not limited to:
135	1.  Hiring one or more investment managers to assist with
136	management of the partnership through a solicitation for
137	qualified investment managers for the raising and investing of
138	capital by the partnership. Any such investment manager must
139	have maintained an office in the state for at least 2 years
140	before such solicitation with a full-time investment
141	professional. The evaluation of an investment manager candidate
142	must address the investment manager's level of experience,
143	quality of management, investment philosophy and process,
144	demonstrable success in fundraising, and prior investment
145	results.
146	2.  Soliciting and negotiating the terms of, contracting
147	for, and receiving investment capital with the assistance of the
148	investment managers or other service providers.
149	3.  Receiving investment returns.
150	4.  Disbursing returns to investment partners.
151	5.  Approving investments.
152	6.  Engaging in other activities necessary to operate the
153	partnership.
154	(b)  The fund may lend up to $750,000 to the partnership to
155	pay the initial expenses of organizing the partnership and
156	soliciting investment partners.
157	(4)(a)  The partnership shall raise funds from investment
158	partners for investment in infrastructure projects in the state
159	by entering into commitment agreements with such partners on
160	terms approved by the fund's board.
161	(b)  The Florida Infrastructure Investment Trust shall,
162	pursuant to s. 288.9628, concurrently with the execution of a
163	commitment agreement with an investment partner, issue a
164	certificate.
165	(c)  The partnership shall provide a copy of each
166	commitment agreement to the trust upon execution of the
167	agreement by all parties.
168	(d)  The partnership may enter into commitment agreements
169	with investment partners beginning July 1, 2011. The total
170	principal investment capital payable to the partnership under
171	all commitment agreements may not exceed the total aggregate
172	amount of $700 million. However, if the partnership does not
173	obtain commitment agreements totaling at least $100 million by
174	December 1, 2012, the partnership must cancel any executed
175	agreement and return the investment capital of each investment
176	partner who executed an agreement.
177	(5)(a)  The partnership may only invest in an
178	infrastructure project:
179	1.  That fulfills an important infrastructure need in the
180	state.
181	2.  That raises funding from other sources so that the
182	total amount invested in the project is at least twice the
183	amount invested by the partnership, inclusive of the
184	partnership's investment.
185	3.  For which legal measures exist, appropriate to the
186	individual project, to ensure that the project is not
187	fraudulently closed to the detriment of the residents of the
188	state.
189	(b)  The partnership may not invest more than 20 percent of
190	its total available investment capital in any single
191	infrastructure project.
192	(c)  The partnership may not invest in any infrastructure
193	project that involves any phase of a project authorized under
194	the Florida Rail Enterprise Act, ss. 341.8201-341.842.
195	(6)  The partnership may only invest in an infrastructure
196	project based on an evaluation of the following:
197	(a)  A written business plan for the project, including all
198	expected revenue sources.
199	(b)  The likelihood of the project's attracting operating
200	capital from investment partners, grants, or other lenders.
201	(c)  The management team for the proposed project.
202	(d)  The project's potential for job creation in the state.
203	(e)  The financial resources of the entity proposing the
204	project.
205	(f)  The partnership's assessment that the project
206	reasonably provides a continuing benefit for residents of the
207	state.
208	(g)  Other factors not inconsistent with this section that
209	are deemed by the partnership as relevant to the likelihood of
210	the project's success.
211	(7)  By December 1 of each year beginning in 2011, the
212	partnership shall submit an annual report of its activities to
213	the Governor, the President of the Senate, and the Speaker of
214	the House of Representatives. The annual report must include, at
215	a minimum:
216	(a)  An accounting of the amounts of investment capital
217	raised and disbursed by the partnership and the progress of the
218	partnership, including the progress of each infrastructure
219	project in which the partnership has invested.
220	(b)  A description of the costs and benefits to the state
221	that result from the partnership's investments, including a list
222	of infrastructure projects; the costs and benefits of those
223	projects to the state and, if applicable, the county or
224	municipality; the number of businesses and associated industries
225	affected; the number, types, and average annual wages of the
226	jobs created or retained; and the impact on the state's economy.
227	(c)  Independently audited financial statements, including
228	statements that show receipts and expenditures during the
229	preceding fiscal year for the operational costs of the
230	partnership.
231	(8)  The partnership may not pledge the credit or taxing
232	power of the state or any political subdivision thereof and may
233	not make its debts payable from any moneys or resources except
234	those of the partnership. An obligation of the partnership is
235	not an obligation of the state or any political subdivision
236	thereof but is an obligation of the partnership, payable
237	exclusively from the partnership's resources.
238	(9)  The partnership may not invest in an infrastructure
239	project with, or accept investment capital from, a company
240	described in s. 215.472 or a scrutinized company as defined in
241	s. 215.473, and the entity owning an infrastructure project in
242	which the partnership has invested must provide reasonable
243	assurances to the partnership that the entity will not provide
244	such a company or scrutinized company with an ownership interest
245	in the infrastructure project.
246	Section 5.  Section 288.9628, Florida Statutes, is created
247	to read:
248	288.9628  Florida Infrastructure Investment Trust;
249	creation; duties; issuance of certificates; applications for tax
250	credits.-
251	(1)(a)  There is created the Florida Infrastructure
252	Investment Trust, which shall be organized as a state
253	beneficiary public trust to be administered by a board of
254	trustees. The powers and duties of the board of trustees under
255	this section are deemed to be performed for essential public
256	purposes.
257	(b)  The board of trustees shall consist of the executive
258	director of the Department of Revenue, the director of the
259	Office of Tourism, Trade, and Economic Development, and the vice
260	chair of Enterprise Florida, Inc., or their designees. The board
261	of trustees shall appoint an administrative officer who may act
262	on behalf of the trust under the direction of the board of
263	trustees.
264	(c)  Members of the board of trustees and the board's
265	administrative officer shall serve without compensation but are
266	entitled to reimbursement of their expenses. Each member of the
267	board of trustees has a duty of care to the trust in his or her
268	capacity as a trustee. Neither a member nor the administrative
269	officer may have a financial interest in any investment partner.
270	(2)  The trust may hire consultants, retain professional
271	services, issue certificates, sell tax credits in accordance
272	with paragraph (5)(b), expend funds, invest funds, contract,
273	bond or insure against loss, or perform any other act necessary
274	to administer this section.
275	(3)(a)  The trust shall, pursuant to s. 288.9627 and this
276	section, issue certificates to investment partners in the
277	Florida Infrastructure Fund Partnership, or their assignees,
278	guaranteeing the availability of tax credits of a maximum amount
279	equal to the investment capital committed by such investment
280	partners to the partnership.
281	(b)  The trust and the fund may each seek reimbursement of
282	their respective reasonable costs and expenses from the
283	partnership by charging a fee for the issuance of certificates
284	to investment partners of up to 0.25 percent of the aggregate
285	investment capital committed to the partnership by the
286	investment partners who are issued certificates.
287	(c)  The total aggregate amount of all tax credits made
288	available under the terms of certificates issued by the trust
289	may not exceed $700 million, and each certificate must include
290	the maximum amount of the tax credits that may be issued under
291	such certificate, which shall be the total amount of investment
292	capital committed to the partnership by the investment partner.
293	(d)  A certificate shall be issued concurrently with a
294	commitment agreement between the investment partner and the
295	partnership. A certificate issued by the trust must include a
296	specific calendar year maturity date designated by the trust of
297	at least 12 years after issuance. Contingent tax credits may not
298	be claimed or redeemed except by an investment partner or
299	purchaser in accordance with this section and the terms of a
300	certificate issued by the trust.
301	(e)  Once investment capital is committed to the
302	partnership by an investment partner pursuant to his or her
303	commitment agreement, the certificate is binding, and the
304	partnership, the trust, and the Department of Revenue may not
305	modify, terminate, or rescind the certificate, except for
306	administrative items, including the assignment or sale of tax
307	credits guaranteed to be available under the terms of a
308	certificate.
309	(4)(a)  The partnership shall provide written notice to
310	each investment partner if, on the maturity date of his or her
311	certificate, the partner has a net capital loss. The notice must
312	include, at a minimum:
313	1.  A good faith estimate of the fair market value of the
314	partnership's assets as of the date of the notice.
315	2.  The total investment capital of all investment partners
316	as of the date of the notice.
317	3.  The total amount of distributions received by the
318	investment partners.
319	4.  The amount of the tax credits the investment partner is
320	entitled to be issued by the Department of Revenue.
321	(b)  The partnership shall concurrently provide a copy of
322	each investment partner's notice to the trust.
323	(c)  Upon receipt of the notice from the partnership, each
324	affected investment partner may make a one-time election to:
325	1.  Have tax credits issued to the investment partner;
326	2.  Have the trust sell, on the partner's behalf, the tax
327	credits guaranteed to be available under the terms of the
328	partner's certificate with the proceeds of the sale to be paid
329	to the partner by the trust; or
330	3.  Maintain the investment partner's investment in the
331	partnership.
332	(d)  Except as provided in paragraph (6)(c), the election
333	made by an investment partner under paragraph (c) is final and
334	may not be revoked or modified.
335	(e)  An investment partner must provide written notice to
336	the partnership and the trust of his or her election within 30
337	days after his or her receipt of the notice from the
338	partnership. If an investment partner fails to provide notice
339	within 30 days, the investment partner is deemed to have elected
340	to maintain his or her investment in the partnership under
341	subparagraph (c)3.
342	(5)(a)  If an investment partner makes the election under
343	subparagraph (4)(c)1. to have tax credits issued to him or her,
344	the trust shall apply to the Department of Revenue on the
345	partner's behalf for issuance of the tax credits in his or her
346	name in an amount equal to such partner's net capital loss. In
347	order to receive the tax credits, the investment partner must
348	agree in writing to transfer his or her ownership interest in
349	the partnership to the fund.
350	(b)  If an investment partner makes the election under
351	subparagraph (4)(c)2., the trust shall exercise its best efforts
352	to sell the tax credits. In order to receive the proceeds from
353	the trust's sale of the tax credits, the investment partner must
354	agree in writing to transfer his or her ownership interest in
355	the partnership to the fund. A purchaser's payment for tax
356	credits must be made to the trust on behalf of the investment
357	partner or, upon the partner's request, directly to the
358	investment partner. The trust may sell tax credits in an amount
359	not to exceed the lesser of:
360	1.  The maximum amount of the tax credits available under
361	the terms of certificate issued to the investment partner; or
362	2.  The amount of tax credits necessary to yield net
363	proceeds to the investment partner equal to his or her net
364	capital loss as of the date of the partnership's notice.
365	(6)(a)  Within 30 days after receipt of an investment
366	partner's election to be issued tax credits under paragraph
367	(5)(a), or within 30 days after the sale of tax credits under
368	paragraph (5)(b), the trust shall apply to the Department of
369	Revenue for issuance of the tax credits on behalf of the partner
370	or on behalf of the purchaser of the tax credits, as applicable.
371	However, the trust's failure to timely submit an application to
372	the Department of Revenue does not affect the investment
373	partner's or purchaser's eligibility for the tax credits.
374	(b)  The trust's application for tax credits must include
375	the partnership's certification of the amount of tax credits to
376	be issued, the identity of the taxpayer to whom the tax credits
377	are to be issued, and the tax against which the credits shall be
378	applied. The Department of Revenue shall issue the tax credits
379	within 30 days after receipt of a timely and complete
380	application.
381	(c)  The trust shall provide the investment partner with
382	written notice if, within 90 days after the partner's election,
383	the trust is unable to sell enough tax credits to yield net
384	proceeds to the investment partner equal to his or her net
385	capital loss as of the date of the partnership's notice and tax
386	credits available under the terms of the partner's certificate
387	remain unsold. Within 30 days after receipt of such notice, the
388	investment partner may:
389	1.  Revoke his or her prior election and make a new
390	election under paragraph (4)(c); or
391	2.  Modify the election and:
392	a.  Have unsold tax credits issued to him or her, to the
393	extent that unsold tax credits are available, in an amount equal
394	to the partner's net capital loss, less the proceeds of any sold
395	credits; or
396	b.  Have the trust continue to sell tax credits until the
397	partner's net capital loss is satisfied or the maximum amount of
398	tax credits available under the partner's certificate is
399	reached, whichever occurs first.
400
401	Within 30 days after such modified election, the trust shall
402	apply to the Department of Revenue in accordance with paragraph
403	(a) for issuance of tax credits on behalf of the investment
404	partner and on behalf of the purchasers in the amount of their
405	purchased credits.
406	(7)(a)  The Department of Revenue may not issue more than
407	$700 million in tax credits. The trust may not approve tax
408	credits in excess of the total capital committed through
409	commitment agreements.
410	(b)  The amount of tax credits that may be claimed by the
411	owner of the credits, or applied against state taxes, in any one
412	state fiscal year may not exceed an amount equal to $150 million
413	multiplied by a fraction the numerator of which is the amount of
414	credits that the Department of Revenue issued to such owner and
415	the denominator of which is the amount of all credits that the
416	Department of Revenue issued to all tax credit owners.
417	(c)  Tax credits issued by the Department of Revenue under
418	this section may be used by the owner of the credits as an
419	offset against any state taxes owed to the state under chapter
420	212, chapter 220, or ss. 624.509 and 624.5091. The offset may be
421	applied by the owner on any return for an eligible tax due on or
422	after the date that the credits are issued by the Department of
423	Revenue but within 7 years after the credits are issued. The
424	owner of the tax credits may elect to have the amount authorized
425	in the credits, or any portion thereof, claimed as a refund of
426	taxes paid rather than applied as an offset against eligible
427	taxes if such election is made within 7 years after the credits
428	are issued.
429	(d)  To the extent that tax credits issued under this
430	section are used by their owner either as credits against taxes
431	due or to obtain payment from the state, the amount of such
432	credits becomes an obligation to the state by the partnership,
433	secured exclusively by the ownership interest transferred to the
434	fund by the investment partner whose investment generated the
435	tax credits. In such case, the state's recovery is limited to
436	such forfeited ownership interest. The Department of Revenue
437	shall account for tax credits used under this section and make
438	such information available to the partnership. The fund, as
439	general partner, is not liable to the state for repayment of the
440	used tax credits.
441	(e)  Any certificate and related tax credits issued under
442	this section are transferable in whole or in part by their
443	owner. An owner of a certificate or tax credits must notify the
444	trust and the Department of Revenue of any such transfer.
445	(8)  The Department of Revenue, upon the request of the
446	trust, shall provide the trust with a written assurance that the
447	certificates issued by the trust will be honored by the
448	Department of Revenue as provided in this section.
449	(9)  Chapter 517 does not apply to the certificates and tax
450	credits transferred or sold under this section.
451	Section 6.  Paragraph (dd) is added to subsection (8) of
452	section 213.053, Florida Statutes, as amended by chapter 2010-
453	280, Laws of Florida, to read:
454	213.053  Confidentiality and information sharing.-
455	(8)  Notwithstanding any other provision of this section,
456	the department may provide:
457	(dd)  Information relative to tax credits under ss.
458	288.9627 and 288.9628 to the Florida Infrastructure Fund
459	Partnership and the Florida Infrastructure Investment Trust.
460
461	Disclosure of information under this subsection shall be
462	pursuant to a written agreement between the executive director
463	and the agency. Such agencies, governmental or nongovernmental,
464	shall be bound by the same requirements of confidentiality as
465	the Department of Revenue. Breach of confidentiality is a
466	misdemeanor of the first degree, punishable as provided by s.
467	775.082 or s. 775.083.
468	Section 7.  This act shall take effect July 1, 2011.

CODING: Words stricken are deletions; words underlined are additions.