Bill Text: FL S0976 | 2011 | Regular Session | Comm Sub
Bill Title: Capital Formation for Infrastructure Projects
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S0976 Detail]
Download: Florida-2011-S0976-Comm_Sub.html
Florida Senate - 2011 CS for SB 976 By the Committee on Commerce and Tourism; and Senator Bogdanoff 577-03869-11 2011976c1 1 A bill to be entitled 2 An act relating to capital formation for 3 infrastructure projects; amending ss. 288.9621, 4 288.9622, and 288.9623, F.S.; conforming a short 5 title, revising legislative findings and intent, and 6 providing definitions for the Florida Capital 7 Formation Act; conforming cross-references; creating 8 s. 288.9627, F.S.; providing for creation of the 9 Florida Infrastructure Fund Partnership; providing the 10 partnership’s purpose and duties; providing for 11 management of the partnership by the Florida 12 Opportunity Fund; authorizing the fund to lend moneys 13 to the partnership; requiring the partnership to raise 14 funds from investment partners; providing for 15 commitment agreements with and issuance of 16 certificates to investment partners; authorizing the 17 partnership to invest in certain infrastructure 18 projects; requiring the partnership to submit an 19 annual report to the Governor and Legislature; 20 prohibiting the partnership from pledging the credit 21 or taxing power of the state or its political 22 subdivisions; prohibiting the partnership from 23 investing in projects with or accepting investments 24 from certain companies; creating s. 288.9628, F.S.; 25 creating the Florida Infrastructure Investment Trust; 26 providing for powers and duties, a board of trustees, 27 and an administrative officer of the trust; providing 28 for the trust’s issuance of certificates to investment 29 partners; specifying that the certificates guarantee 30 the availability of tax credits under certain 31 conditions; authorizing the trust and the fund to 32 charge fees; limiting the amount of tax credits that 33 may be claimed or applied against state taxes in any 34 year; providing for the redemption of certificates or 35 sale of tax credits; providing for the issuance of the 36 tax credits by the Department of Revenue; specifying 37 the taxes against which the credits may be applied; 38 limiting the period within which tax credits may be 39 used; providing for the state’s obligation for use of 40 the tax credits; limiting the liability of the fund; 41 providing for the transferability of certificates and 42 tax credits; requiring the department to provide a 43 certain written assurance to the trust under certain 44 circumstances; specifying that certain provisions 45 regulating securities transactions do not apply to 46 certificates and tax credits transferred or sold under 47 the act; amending s. 213.053, F.S.; authorizing the 48 department to disclose certain information to the 49 partnership and the trust relative to certain tax 50 credits; providing an effective date. 51 52 Be It Enacted by the Legislature of the State of Florida: 53 54 Section 1. Section 288.9621, Florida Statutes, is amended 55 to read: 56 288.9621 Short title.—This partSections288.9621-288.962557 may be cited as the “Florida Capital Formation Act.” 58 Section 2. Subsections (1) and (2) of section 288.9622, 59 Florida Statutes, are amended to read: 60 288.9622 Findings and intent.— 61 (1) The Legislature finds and declares that there is a need 62 to increase the availability of seed capital and early stage 63 venture equity capital for emerging companies in the state, 64 including, without limitation, enterprises in life sciences, 65 information technology, advanced manufacturing processes, 66 aviation and aerospace, and homeland security and defense, as 67 well as other strategic technologies and infrastructure funding. 68 (2) It is the intent of the Legislature that this partss.69288.9621-288.9625serve to mobilize private investment in a 70 broad variety of venture capital partnerships in diversified 71 industries and geographies; retain private sector investment 72 criteria focused on rate of return; use the services of highly 73 qualified managers in the venture capital industry regardless of 74 location; facilitate the organization of the Florida Opportunity 75 Fund as an investor in seed and early stage businesses, 76 infrastructure projects, venture capital funds, infrastructure 77 funds, and angel funds; and precipitate capital investment and 78 extensions of credit to and in the Florida Opportunity Fund. 79 Section 3. Section 288.9623, Florida Statutes, is amended 80 to read: 81 288.9623 Definitions.—As used in this part, the termss.82288.9621-288.9625: 83 (1) “Board” means the board of directors of the Florida 84 Opportunity Fund. 85 (2) “Certificate” means a contract between the trust and an 86 investment partner which guarantees the availability of tax 87 credits for use by the partner, or for transfer or sale under s. 88 288.9628, in order to guarantee the partner’s investment capital 89 in the partnership. 90 (3) “Commitment agreement” means a contract between the 91 partnership and an investment partner under which the partner 92 commits to providing a specified amount of investment capital in 93 exchange for an ownership interest in the partnership. 94 (4)(2)“Fund” means the Florida Opportunity Fund. 95 (5) “Infrastructure project” means a capital project in the 96 state for a facility or other infrastructure need in the state 97 with respect to any of the following: water or wastewater 98 system, communication system, power system, transportation 99 system, renewable energy system, ancillary or support system for 100 any of these types of projects, or other strategic 101 infrastructure located within the state. 102 (6) “Investment capital” means the total capital committed 103 by the investment partner for an equity interest in the 104 partnership pursuant to a commitment agreement. 105 (7) “Investment partner” or “partner” means a person, other 106 than the partnership, the fund, or the trust, who purchases an 107 ownership interest in the partnership or a transferee of such 108 interest. 109 (8) “Net capital loss” means an amount equal to the 110 difference between the total investment capital actually 111 advanced by the investment partner to the partnership and the 112 amount of the aggregate actual distributions received by the 113 investment partner. 114 (9) “Partnership” means the Florida Infrastructure Fund 115 Partnership. 116 (10) “Tax credits” means credits issued against the taxes 117 specified in s. 288.9628(7)(c). 118 (11) “Trust” means the Florida Infrastructure Investment 119 Trust. 120 Section 4. Section 288.9627, Florida Statutes, is created 121 to read: 122 288.9627 Florida Infrastructure Fund Partnership; creation; 123 duties.— 124 (1) The Florida Opportunity Fund shall facilitate the 125 creation of the Florida Infrastructure Fund Partnership, which 126 shall be organized and operated under chapter 620 as a private, 127 for-profit limited partnership or limited liability partnership 128 with the fund as a general partner. The partnership shall manage 129 its business affairs and conduct business consistent with its 130 organizing documents and the purposes described in this section. 131 However, the partnership is not an instrumentality of the state. 132 (2) The primary purpose of the partnership is to raise 133 investment capital and invest the capital in infrastructure 134 projects in the state which promote economic development. 135 (3)(a) The fund, as the general partner of the partnership, 136 shall manage the partnership’s business affairs, including, but 137 not limited to: 138 1. Hiring one or more investment managers to assist with 139 management of the partnership through a solicitation for 140 qualified investment managers for the raising and investing of 141 capital by the partnership. Any such investment manager must 142 have maintained an office in the state for at least 2 years 143 before such solicitation with a full-time investment 144 professional. The evaluation of an investment manager candidate 145 must address the investment manager’s level of experience, 146 quality of management, investment philosophy and process, 147 demonstrable success in fundraising, and prior investment 148 results. 149 2. Soliciting and negotiating the terms of, contracting 150 for, and receiving investment capital with the assistance of the 151 investment managers or other service providers. 152 3. Receiving investment returns. 153 4. Disbursing returns to investment partners. 154 5. Approving investments. 155 6. Engaging in other activities necessary to operate the 156 partnership. 157 (b) The fund may lend up to $750,000 to the partnership to 158 pay the initial expenses of organizing the partnership and 159 soliciting investment partners. 160 (4)(a) The partnership shall raise funds from investment 161 partners for investment in infrastructure projects in the state 162 by entering into commitment agreements with such partners on 163 terms approved by the fund’s board. 164 (b) The Florida Infrastructure Investment Trust shall, 165 pursuant to s. 288.9628, concurrently with the execution of a 166 commitment agreement with an investment partner, issue a 167 certificate. 168 (c) The partnership shall provide a copy of each commitment 169 agreement to the trust upon execution of the agreement by all 170 parties. 171 (d) The partnership may enter into commitment agreements 172 with investment partners beginning July 1, 2011. The total 173 principal investment capital payable to the partnership under 174 all commitment agreements may not exceed the total aggregate 175 amount of $700 million. However, if the partnership does not 176 obtain commitment agreements totaling at least $100 million by 177 December 1, 2012, the partnership must cancel any executed 178 agreement and return the investment capital of each investment 179 partner who executed an agreement. 180 (5)(a) The partnership may only invest in an infrastructure 181 project: 182 1. That fulfills an important infrastructure need in the 183 state. 184 2. That raises funding from other sources so that the total 185 amount invested in the project is at least twice the amount 186 invested by the partnership, inclusive of the partnership’s 187 investment. 188 3. For which legal measures exist, appropriate to the 189 individual project, to ensure that the project is not 190 fraudulently closed to the detriment of the residents of the 191 state. 192 (b) The partnership may not invest more than 20 percent of 193 its total available investment capital in any single 194 infrastructure project. 195 (c) The partnership may not invest in any infrastructure 196 project that involves any phase of a project authorized under 197 the Florida Rail Enterprise Act, ss. 341.8201-341.842. 198 (6) The partnership may only invest in an infrastructure 199 project based on an evaluation of the following: 200 (a) A written business plan for the project, including all 201 expected revenue sources. 202 (b) The likelihood of the project’s attracting operating 203 capital from investment partners, grants, or other lenders. 204 (c) The management team for the proposed project. 205 (d) The project’s potential for job creation in the state. 206 (e) The financial resources of the entity proposing the 207 project. 208 (f) The partnership’s assessment that the project 209 reasonably provides a continuing benefit for residents of the 210 state. 211 (g) Other factors not inconsistent with this section which 212 are deemed by the partnership as relevant to the likelihood of 213 the project’s success. 214 (7) By December 1 of each year beginning in 2011, the 215 partnership shall submit an annual report of its activities to 216 the Governor, the President of the Senate, and the Speaker of 217 the House of Representatives. The annual report must include, at 218 a minimum: 219 (a) An accounting of the amounts of investment capital 220 raised and disbursed by the partnership and the progress of the 221 partnership, including the progress of each infrastructure 222 project in which the partnership has invested. 223 (b) A description of the costs and benefits to the state 224 that result from the partnership’s investments, including a list 225 of infrastructure projects; the costs and benefits of those 226 projects to the state and, if applicable, the county or 227 municipality; the number of businesses and associated industries 228 affected; the number, types, and average annual wages of the 229 jobs created or retained; and the impact on the state’s economy. 230 (c) Independently audited financial statements, including 231 statements that show receipts and expenditures during the 232 preceding fiscal year for the operational costs of the 233 partnership. 234 (8) The partnership may not pledge the credit or taxing 235 power of the state or any political subdivision thereof and may 236 not make its debts payable from any moneys or resources except 237 those of the partnership. An obligation of the partnership is 238 not an obligation of the state or any political subdivision 239 thereof but is an obligation of the partnership, payable 240 exclusively from the partnership’s resources. 241 (9) The partnership may not invest in an infrastructure 242 project with, or accept investment capital from, a company 243 described in s. 215.472 or a scrutinized company as defined in 244 s. 215.473, and the entity owning an infrastructure project in 245 which the partnership has invested must provide reasonable 246 assurances to the partnership that the entity will not provide 247 such a company or scrutinized company with an ownership interest 248 in the infrastructure project. 249 Section 5. Section 288.9628, Florida Statutes, is created 250 to read: 251 288.9628 Florida Infrastructure Investment Trust; creation; 252 duties; issuance of certificates; applications for tax credits.— 253 (1)(a) There is created the Florida Infrastructure 254 Investment Trust, which shall be organized as a state 255 beneficiary public trust to be administered by a board of 256 trustees. The powers and duties of the board of trustees under 257 this section are deemed to be performed for essential public 258 purposes. 259 (b) The board of trustees shall consist of the Chief 260 Financial Officer, the director of the Office of Tourism, Trade, 261 and Economic Development, and the vice chair of Enterprise 262 Florida, Inc., or their designees. The board of trustees shall 263 appoint an administrative officer who may act on behalf of the 264 trust under the direction of the board of trustees. 265 (c) Members of the board of trustees and the board’s 266 administrative officer shall serve without compensation but are 267 entitled to reimbursement of their expenses. Each member of the 268 board of trustees has a duty of care to the trust in his or her 269 capacity as a trustee. Neither a member nor the administrative 270 officer may have a financial interest in any investment partner. 271 (2) The trust may hire consultants, retain professional 272 services, issue certificates, sell tax credits in accordance 273 with paragraph (5)(b), expend funds, invest funds, contract, 274 bond or insure against loss, or perform any other act necessary 275 to administer this section. 276 (3)(a) The trust shall, pursuant to s. 288.9627 and this 277 section, issue certificates to investment partners in the 278 Florida Infrastructure Fund Partnership, or their assignees, 279 guaranteeing the availability of tax credits of a maximum amount 280 equal to the investment capital committed by such investment 281 partners to the partnership. 282 (b) The trust and the fund may each seek reimbursement of 283 their respective reasonable costs and expenses from the 284 partnership by charging a fee for the issuance of certificates 285 to investment partners of up to 0.25 percent of the aggregate 286 investment capital committed to the partnership by the 287 investment partners who are issued certificates. 288 (c) The total aggregate amount of all tax credits made 289 available under the terms of certificates issued by the trust 290 may not exceed $700 million, and each certificate must include 291 the maximum amount of the tax credits that may be issued under 292 such certificate, which shall be the total amount of investment 293 capital committed to the partnership by the investment partner. 294 (d) A certificate shall be issued concurrently with a 295 commitment agreement between the investment partner and the 296 partnership. A certificate issued by the trust must include a 297 specific calendar year maturity date designated by the trust of 298 at least 12 years after issuance. Contingent tax credits may not 299 be claimed or redeemed except by an investment partner or 300 purchaser in accordance with this section and the terms of a 301 certificate issued by the trust. 302 (e) Once investment capital is committed to the partnership 303 by an investment partner pursuant to his or her commitment 304 agreement, the certificate is binding, and the partnership, the 305 trust, and the Department of Revenue may not modify, terminate, 306 or rescind the certificate, except for administrative items, 307 including the assignment or sale of tax credits guaranteed to be 308 available under the terms of a certificate. 309 (4)(a) The partnership shall provide written notice to each 310 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 election 390 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. 288.9627 458 and 288.9628 to the Florida Infrastructure Fund Partnership and 459 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.