Bill Text: FL H7213 | 2010 | Regular Session | Comm Sub

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Bill Title: Capital Formation for Infrastructure Projects

Spectrum: Partisan Bill (Republican 3-0)

Status: (Failed) 2010-04-30 - Died in Messages [H7213 Detail]

Download: Florida-2010-H7213-Comm_Sub.html

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CS/HB 7213

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 and the fund from pledging the
19	credit or taxing power of the state or its political
20	subdivisions; prohibiting the partnership from investing
21	in projects with or accepting investments from certain
22	companies; creating s. 288.9628, F.S.; creating the
23	Florida Infrastructure Investment Trust; providing for
24	powers and duties, a board of trustees, and an
25	administrative officer of the trust; providing for the
26	trust's issuance of certificates to investment partners
27	who invest in the partnership; specifying that the
28	certificates are redeemable for tax credits under certain
29	conditions; authorizing the trust to charge fees; limiting
30	the amount of tax credits issued and the amount of tax
31	credits that may be claimed or applied against state taxes
32	in any year; providing for the redemption or sale of
33	certificates; providing for the issuance of the tax
34	credits by the Department of Revenue; specifying the taxes
35	against which the credits may be applied; limiting the
36	period within which tax credits may be used; providing for
37	the state's obligation for use of the tax credits;
38	limiting the liability of the fund; requiring the
39	department to provide a certain written assurance to the
40	trust under certain circumstances; specifying that certain
41	provisions regulating securities transactions do not apply
42	to certificates and tax credits transferred or sold under
43	the act; amending s. 213.053, F.S.; authorizing the
44	department to provide tax credit information to the
45	partnership and the trust; providing an effective date.
46
47	Be It Enacted by the Legislature of the State of Florida:
48
49	Section 1. Section 288.9621, Florida Statutes, is amended
50	to read:
51	288.9621 Short title.-This part Sections 288.9621-288.9625
52	may be cited as the "Florida Capital Formation Act."
53	Section 2. Subsections (1) and (2) of section 288.9622,
54	Florida Statutes, are amended to read:
55	288.9622 Findings and intent.-
56	(1) The Legislature finds and declares that there is a
57	need to increase the availability of seed capital and early
58	stage venture equity capital for emerging companies in the
59	state, including, without limitation, enterprises in life
60	sciences, information technology, advanced manufacturing
61	processes, aviation and aerospace, and homeland security and
62	defense, as well as other strategic technologies and
63	infrastructure funding.
64	(2) It is the intent of the Legislature that this part ss.
65	288.9621-288.9625 serve to mobilize private investment in a
66	broad variety of venture capital partnerships in diversified
67	industries and geographies; retain private sector investment
68	criteria focused on rate of return; use the services of highly
69	qualified managers in the venture capital industry regardless of
70	location; facilitate the organization of the Florida Opportunity
71	Fund as an investor in seed and early stage businesses,
72	infrastructure projects, venture capital funds, infrastructure
73	funds, and angel funds; and precipitate capital investment and
74	extensions of credit to and in the Florida Opportunity Fund.
75	Section 3. Section 288.9623, Florida Statutes, is amended
76	to read:
77	288.9623 Definitions.- As used in this part, the term ss.
78	288.9621-288.9625:
79	(1) "Board" means the board of directors of the Florida
80	Opportunity Fund.
81	(2) "Certificate" means a contract between the trust and
82	an investment partner under which the partner, under certain
83	conditions, may redeem such certificate for a tax credit to
84	guarantee the partner's investment in the partnership.
85	(3) "Commitment agreement" means a contract between the
86	partnership and an investment partner under which the partner
87	commits to providing a specified amount of investment capital in
88	exchange for an ownership interest in the partnership.
89	(4)(2) "Fund" means the Florida Opportunity Fund.
90	(5) "Infrastructure project" means a capital project in
91	the state for a facility or other infrastructure need in the
92	state, a county, or a municipality with respect to any of the
93	following: water or wastewater system, communication system,
94	power system, transportation system, renewable energy system,
95	ancillary or support system for any of these types of projects,
96	or other strategic infrastructure of the state, the county, or
97	the municipality.
98	(6) "Investment partner" or "partner" means a person,
99	other than the partnership, the fund, or the trust, who
100	purchases an ownership interest in the partnership.
101	(7) "Partnership" means the Florida Infrastructure Fund
102	Partnership.
103	(8) "Tax credit" means a credit issued against the taxes
104	specified in s. 288.9628(7)(c).
105	(9) "Trust" means the Florida Infrastructure Investment
106	Trust.
107	Section 4. Section 288.9627, Florida Statutes, is created
108	to read:
109	288.9627 Florida Infrastructure Fund Partnership;
110	creation; duties.-
111	(1) The Florida Opportunity Fund shall facilitate the
112	creation of the Florida Infrastructure Fund Partnership, which
113	shall be organized and operated under chapter 620 as a private,
114	for-profit limited partnership or limited liability partnership
115	with the fund as a general partner. The partnership shall manage
116	its business affairs and conduct business consistent with its
117	organizing documents and the purposes described in this section.
118	However, the partnership is not an instrumentality of the state.
119	(2) The primary purpose of the partnership is to raise
120	investment capital and invest the capital in infrastructure
121	projects in the state that promote the economic development of
122	the state, a county, or a municipality.
123	(3)(a) The fund, as a general partner of the partnership,
124	shall manage the partnership's business affairs, including, but
125	not limited to:
126	1. Hiring one or more investment managers to assist with
127	management of the partnership.
128	2. Soliciting and negotiating the terms of, contracting
129	for, and receiving investment capital with the assistance of the
130	investment managers or other service providers.
131	3. Receiving investment returns.
132	4. Disbursing returns to investment partners.
133	5. Approving investments in order to provide financial
134	returns together with strategic returns designed to satisfy the
135	state's, the county's, or the municipality's infrastructure
136	needs; result in a significant potential to create or retain
137	jobs in this state; and further diversify the state's economy.
138	6. Engaging in other activities necessary to operate the
139	partnership.
140	(b) The fund may lend up to $350,000 to the partnership to
141	pay the initial expenses of organizing the partnership and
142	soliciting investment partners.
143	(4)(a) The partnership shall raise funds from investment
144	partners for investment in infrastructure projects in the state
145	by entering into commitment agreements with such partners on
146	terms approved by the fund's board.
147	(b) The Florida Infrastructure Investment Trust shall,
148	pursuant to s. 288.9628, concurrently with the execution of a
149	commitment agreement with an investment partner, issue a
150	certificate redeemable for a contingent tax credit to guarantee
151	the partner's investment in the partnership.
152	(c) The partnership shall provide a copy of each
153	commitment agreement to the trust upon execution of the
154	agreement by all parties.
155	(d) The partnership may enter into commitment agreements
156	with investment partners beginning July 1, 2010. The total
157	principal investment payable to the partnership under all
158	commitment agreements, and the corresponding amount of the
159	certificates issued by the trust under s. 288.9628, may not
160	exceed the total aggregate amount of $350 million. However, if
161	the partnership does not obtain commitment agreements totaling
162	at least $75 million by December 1, 2011, the partnership must
163	cancel any executed agreement and return the investment capital
164	of each investment partner who executed an agreement.
165	(5)(a) The partnership may only invest in an
166	infrastructure project:
167	1. That fulfills a critical infrastructure need in the
168	state.
169	2. That raises enough equity or debt capital from other
170	sources so that the total amount invested in the project is at
171	least twice the amount invested by the partnership.
172	3. For which legal measures exist, appropriate to the
173	individual project, to ensure that the project is not
174	fraudulently closed to the detriment of the residents of the
175	state.
176	(b) The partnership may not invest more than 20 percent of
177	its total available investment capital in any single
178	infrastructure project.
179	(6) The partnership may only invest in an infrastructure
180	project based on an evaluation of the following:
181	(a) A written business plan for the project, including all
182	expected revenue sources.
183	(b) The likelihood of the project's attracting operating
184	capital from investment partners, grants, or other lenders.
185	(c) The management team for the proposed project.
186	(d) The project's potential for job creation in the state.
187	(e) The financial resources of the entity proposing the
188	project.
189	(f) The existence of reasonable safeguards to ensure that
190	the project provides a continuing benefit for residents of the
191	state.
192	(g) Other factors not inconsistent with this section that
193	are deemed by the partnership as relevant to the likelihood of
194	the project's success.
195	(7) By December 1 of each year beginning in 2010, the
196	partnership shall submit an annual report of its activities to
197	the Governor, the President of the Senate, and the Speaker of
198	the House of Representatives. The annual report must include, at
199	a minimum:
200	(a) An accounting of the amounts of investment capital
201	raised and disbursed by the partnership and the progress of the
202	partnership, including the progress of each infrastructure
203	project in which the partnership has invested.
204	(b) A description of the benefits to the state that result
205	from the partnership's investments, including a list of
206	infrastructure projects; the benefits of those projects to the
207	state, the county, or the municipality; the number of businesses
208	and associated industries positively affected; the number,
209	types, and average annual wages of the jobs created or retained;
210	and the positive impact on the state's economy.
211	(c) Independently audited financial statements, including
212	statements that show receipts and expenditures during the
213	preceding fiscal year for the operational costs of the
214	partnership.
215	(8) The partnership and the fund may not pledge the credit
216	or taxing power of the state or any political subdivision
217	thereof and may not make their debts payable from any moneys or
218	resources except those of the partnership or the fund. An
219	obligation of the partnership or the fund is not an obligation
220	of the state or any political subdivision thereof but is an
221	obligation of the partnership or the fund, payable exclusively
222	from the partnership's or the fund's resources.
223	(9) The partnership may not invest in an infrastructure
224	project with, or accept investment capital from, a company
225	described in s. 215.472 or a scrutinized company as defined in
226	s. 215.473. The entity owning an infrastructure project in which
227	the partnership has invested must provide reasonable assurances
228	to the partnership that the entity will not provide such company
229	or scrutinized company with an ownership interest in the
230	infrastructure project.
231	Section 5. Section 288.9628, Florida Statutes, is created
232	to read:
233	288.9628 Florida Infrastructure Investment Trust;
234	creation; duties; issuance of certificates; applications for tax
235	credits.-
236	(1)(a) There is created the Florida Infrastructure
237	Investment Trust, which shall be organized as a state
238	beneficiary public trust to be administered by a board of
239	trustees. The powers and duties of the board of trustees under
240	this section are deemed to be performed for essential public
241	purposes.
242	(b) The board of trustees shall consist of the Chief
243	Financial Officer, the director of the Office of Tourism, Trade,
244	and Economic Development, and the vice chair of Enterprise
245	Florida, Inc., or their designees. The board of trustees shall
246	appoint an administrative officer who may act on behalf of the
247	trust under the direction of the board of trustees.
248	(c) Members of the board of trustees and its
249	administrative officer shall serve without compensation. Neither
250	a member nor the administrative officer may have a financial
251	interest in any investment partner.
252	(2) The trust may hire consultants, retain professional
253	services, issue certificates, sell certificates in accordance
254	with paragraph (5)(b), expend funds, invest funds, contract,
255	bond or insure against loss, or perform any other act necessary
256	to administer this section.
257	(3)(a) The trust shall, pursuant to s. 288.9627 and this
258	section, issue certificates redeemable for contingent tax
259	credits to investment partners who make equity investments in
260	the Florida Infrastructure Fund Partnership.
261	(b) The trust may seek reimbursement of its reasonable
262	costs and expenses from the partnership by charging a fee for
263	the issuance of certificates to investment partners of up to
264	0.25 percent of the aggregate investment capital committed to
265	the partnership by the investment partners who are issued
266	certificates.
267	(c) All certificates issued by the trust may not exceed
268	the total aggregate amount specified in s. 288.9627(4)(d).
269	(d) A certificate may only be issued concurrently with a
270	commitment agreement between the investment partner and the
271	partnership. A certificate issued by the trust must include a
272	specific calendar year maturity date designated by the trust of
273	at least 12 years after issuance. A contingent tax credit may
274	not be claimed or redeemed except by an investment partner or
275	purchaser in accordance with this section and the terms of a
276	certificate issued by the trust.
277	(e) Once the total amount of the investment capital
278	committed by an investment partner in his or her commitment
279	agreement is provided to the partnership by the partner, the
280	certificate is binding, and the partnership, the trust, and the
281	Department of Revenue may not modify, terminate, or rescind the
282	certificate.
283	(4)(a) The partnership shall provide written notice to
284	each investment partner if, on the maturity date of his or her
285	certificate, the partner's net capital investment is greater
286	than zero. The notice must include, at a minimum:
287	1. A good faith estimate of the fair market value of the
288	partnership's assets as of the date of the notice.
289	2. The total capital investment of all investment partners
290	as of the date of the notice.
291	3. The total amount of distributions received by the
292	investment partners.
293	4. The amount of the tax credit the investment partner is
294	entitled to be issued by the Department of Revenue.
295
296	For purposes of this section, an investment partner's net
297	capital investment is an amount equal to the difference between
298	the total investment capital actually advanced by the investment
299	partner to the partnership and the amount of the aggregate
300	actual distributions received by the investment partner.
301	(b) The partnership shall concurrently provide a copy of
302	each investment partner's notice to the trust.
303	(c) Upon receipt of the notice from the partnership, each
304	affected investment partner may make a one-time election to:
305	1. Have a tax credit issued to the investment partner;
306	2. Have the trust sell the partner's certificate on his or
307	her behalf with the proceeds of the sale to be paid to the
308	partner by the trust; or
309	3. Maintain the investment partner's investment in the
310	partnership.
311	(d) Except as provided in paragraph (6)(d), the election
312	made by an investment partner under paragraph (c) is final and
313	may not be revoked or modified.
314	(e) An investment partner must provide written notice to
315	the partnership and the trust of his or her election within 30
316	days after his or her receipt of the notice from the
317	partnership. If an investment partner fails to provide notice
318	within 30 days, the investment partner is deemed to have elected
319	to maintain his or her investment in the partnership under
320	subparagraph (c)3.
321	(5)(a) If an investment partner elects to have a tax
322	credit issued to him or her, the trust shall apply to the
323	Department of Revenue on the partner's behalf for issuance of
324	the tax credit in his or her name. In order to receive the tax
325	credit, the investment partner must agree in writing to transfer
326	his or her ownership interest in the partnership to the fund.
327	(b) If an investment partner elects to have the trust sell
328	his or her certificate, the trust shall exercise its best
329	efforts to sell the certificate. In order to receive the
330	proceeds from the trust's sale of the certificate, the
331	investment partner must agree in writing to transfer his or her
332	ownership interest in the partnership to the fund. A purchaser's
333	payment for the certificate, or any portion thereof, shall be
334	made to the trust on behalf of the investment partner or, upon
335	the partner's request, directly to the investment partner. The
336	trust may sell a certificate in an amount that does not exceed
337	the lesser of:
338	1. The amount of the certificate issued to the investment
339	partner; or
340	2. The amount necessary to yield proceeds to the
341	investment partner equal to his or her net capital investment as
342	of the date of the partnership's notice.
343	(6)(a) Within 30 days after receipt of an investment
344	partner's election to be issued a tax credit under paragraph
345	(5)(a), or within 30 days after the sale of a partner's
346	certificate under paragraph (5)(b), the trust shall apply to the
347	Department of Revenue for issuance of the tax credit on behalf
348	of the partner or on behalf of the certificate's purchaser, as
349	applicable. However, the trust's failure to timely submit an
350	application to the Department of Revenue does not affect the
351	investment partner's or certificate purchaser's eligibility for
352	the tax credit.
353	(b) The trust's application for a tax credit must include
354	the partnership's certification of the amount of tax credit to
355	be issued, the identity of the taxpayer to whom the tax credit
356	is to be issued, and the tax against which the credit shall be
357	applied. The Department of Revenue shall issue the tax credit
358	within 30 days after receipt of a timely and complete
359	application.
360	(c) If an investment partner's certificate is sold by the
361	trust under paragraph (5)(b) to more than one purchaser, the
362	Department of Revenue shall issue tax credits to such purchasers
363	in such amounts as designated by the trust in the application.
364	(d) The trust shall provide the investment partner with
365	written notice if the trust is unable to sell the partner's
366	certificate within 90 days after the partner's election. Within
367	30 days after receipt of such notice, the investment partner
368	may:
369	1. Revoke his or her prior election and make a new
370	election under paragraph (4)(c); or
371	2. Modify the election and have a tax credit issued to him
372	or her for the amount of any unsold credit. Within 30 days after
373	such modified election, the trust shall apply to the Department
374	of Revenue in accordance with paragraph (a) for issuance of tax
375	credits on behalf of the investment partner in the amount of any
376	unsold credit and on behalf of the purchasers in the amount of
377	their purchased credit.
378	(7)(a) The Department of Revenue may not issue more than
379	$350 million in tax credits. The trust may not approve tax
380	credits in excess of the total capital invested through
381	commitment agreements.
382	(b) The amount of tax credits that may be claimed by the
383	owner of the credits, or applied against state taxes, in any one
384	state fiscal year may not exceed an amount equal to $87.5
385	million multiplied by a fraction the numerator of which is the
386	amount of credits that the Department of Revenue issued to such
387	owner and the denominator of which is the amount of all credits
388	that the Department of Revenue issued to all tax credit owners.
389	(c) A tax credit issued by the Department of Revenue under
390	this section may be used by the owner of the credit as an offset
391	against any taxes owed to the state under chapter 212, chapter
392	220, or chapter 624. The offset may be applied by the owner on
393	any return for an eligible tax due on or after the date that the
394	credit is issued by the Department of Revenue but within 7 years
395	after the credit is issued. The owner of the tax credit may
396	elect to have the amount authorized in the credit, or any
397	portion thereof, claimed as a refund of taxes paid rather than
398	applied as an offset against eligible taxes, if such election is
399	made within 7 years after the credit is issued.
400	(d) To the extent that a tax credit issued under this
401	section is used by its owner either as a credit against taxes
402	due or to obtain payment from the state, the amount of such
403	credit becomes an obligation to the state by the partnership,
404	secured exclusively by the ownership interest transferred to the
405	fund by the investment partner whose investment generated the
406	tax credit. In such case, the state's recovery is limited to
407	such forfeited ownership interest. The Department of Revenue
408	shall account for tax credits used under this section and make
409	such information available to the partnership. The fund, as
410	general partner, is not liable to the state for repayment of the
411	used tax credits from the fund's separate assets unrelated to
412	its interest in the partnership.
413	(8) The Department of Revenue, upon the request of the
414	trust, shall provide the trust with a written assurance that the
415	certificates issued by the trust will be honored by the
416	Department of Revenue as provided in this section.
417	(9) Chapter 517 does not apply to the certificates and tax
418	credits transferred or sold under this section.
419	Section 6. Paragraph (z) is added to subsection (8) of
420	section 213.053, Florida Statutes, to read:
421	213.053 Confidentiality and information sharing.-
422	(8) Notwithstanding any other provision of this section,
423	the department may provide:
424	(z) Information relative to tax credits under ss. 288.9627
425	and 288.9628 to the Florida Infrastructure Fund Partnership and
426	the Florida Infrastructure Investment Trust.
427
428	Disclosure of information under this subsection shall be
429	pursuant to a written agreement between the executive director
430	and the agency. Such agencies, governmental or nongovernmental,
431	shall be bound by the same requirements of confidentiality as
432	the Department of Revenue. Breach of confidentiality is a
433	misdemeanor of the first degree, punishable as provided by s.
434	775.082 or s. 775.083.
435	Section 7. This act shall take effect July 1, 2010.

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