Senate Bill sb2668c3
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Florida Senate - 2006 CS for CS for CS for SB 2668
By the Committees on Transportation and Economic Development
Appropriations; Governmental Oversight and Productivity;
Commerce and Consumer Services; and Senators Atwater, Crist
and Lynn
606-2394-06
1 A bill to be entitled
2 An act relating to capital formation; creating
3 s. 288.9621, F.S., the Florida Capital
4 Formation Act; providing definitions; requiring
5 Enterprise Florida, Inc., to organize the
6 Florida Opportunity Fund as a wholly owned
7 private, not-for-profit limited liability
8 company; providing for a board of directors for
9 the company; providing for filling vacancies on
10 the board of directors and for terms of office;
11 specifying duties of the company; requiring the
12 company to select a Florida Opportunity Fund
13 Allocation Manager; providing requirements for
14 investments; requiring the Florida Opportunity
15 Fund to issue an annual report to the Governor
16 and the Legislature; providing for a transfer
17 of nonrecurring funds from the General Revenue
18 Fund to the Economic Development Trust Fund for
19 subsequent investment in the Florida
20 Opportunity Fund; providing for return of funds
21 to the General Revenue Fund; providing for
22 future dissolution of the company; providing an
23 effective date.
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25 Be It Enacted by the Legislature of the State of Florida:
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27 Section 1. Parts X and XI of chapter 288, Florida
28 Statutes, are redesignated as parts XI and XII, respectively,
29 and a new part X of that chapter, consisting of section
30 288.9621, is created to read:
31 288.9621 Capital formation.--
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Florida Senate - 2006 CS for CS for CS for SB 2668
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1 (1) SHORT TITLE.--This section may be cited as the
2 "Florida Capital Formation Act."
3 (2) DEFINITIONS.--As used in this section, the term:
4 (a) "Company" means the Florida Opportunity Fund.
5 (b) "Florida Opportunity Fund Allocation Manager" or
6 "allocation manager" means one or more fund-of-funds
7 investment managers hired by the Florida Opportunity Fund to
8 invest assets of the company in venture capital funds.
9 (c) "Office" means the Governor's Office of Tourism,
10 Trade, and Economic Development.
11 (d) "Florida-based" means operating in this state at a
12 permanent address and maintaining at least one business unit
13 in this state.
14 (e) "Business unit" means an employing unit, as
15 defined in s. 443.036, which is registered with the Agency for
16 Workforce Innovation for purposes of unemployment compensation
17 or means a subcategory or division of an employing unit that
18 is accepted by the Agency for Workforce Innovation as a
19 reporting unit.
20 (3) FLORIDA CAPITAL INVESTMENT.--
21 (a) The Governor's Office of Tourism, Trade, and
22 Economic Development shall account for the funds separately
23 within the Economic Development Trust Fund created in s.
24 288.095 for moneys transferred under this section. The office
25 shall make all funds available for investment by the State
26 Board of Administration or its investment manager as requested
27 by the State Board of Administration. The State Board of
28 Administration or its designated investment manager shall
29 invest and reinvest the moneys in accordance with s. 215.47
30 and subject to the terms of any trust agreement between the
31 State Board of Administration and the office. Fees and
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1 expenses incurred by the State Board of Administration for
2 investing the moneys shall be deducted as provided in a trust
3 agreement. Upon request of the office, the State Board of
4 Administration shall liquidate investments and advance the
5 proceeds to the company as required to fund its investments
6 pursuant to this section as well as its reasonable and
7 necessary operational expenses. The exercise by the State
8 Board of Administration or its designated investment manager
9 of powers conferred by this section shall be deemed and held
10 to be the performance of essential public purposes.
11 (b) The State Board of Administration or its
12 designated investment manager shall invest and reinvest any
13 funds returned by the company in accordance with s. 215.47 and
14 subject to the terms of any trust agreement between the State
15 Board of Administration and the office. The company shall
16 maintain necessary working capital moneys; obtain funding from
17 the trust fund for its investments, reasonable and necessary
18 operating costs, or replenishment of working capital balances;
19 and return for liquidity investment any moneys received in
20 excess of its working capital needs.
21 (4) FLORIDA OPPORTUNITY FUND; CREATION; POWERS AND
22 DUTIES.--
23 (a) Enterprise Florida, Inc., shall organize the
24 Florida Opportunity Fund as a wholly owned, private,
25 not-for-profit limited liability Florida company. Enterprise
26 Florida, Inc., shall be the company's sole owner. The Florida
27 Opportunity Fund is not a public company or instrumentality of
28 the state. Enterprise Florida, Inc., shall annually evaluate
29 and report to the Governor, the President of the Senate, and
30 the Speaker of the House of Representatives whether the
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1 company is being operated and state funds are being invested
2 in the best interest of the state.
3 (b) The Florida Opportunity Fund shall be governed by
4 a board of directors consisting of five members appointed by
5 and serving at the pleasure of the Governor. The members
6 shall have expertise in the area of the selection and
7 supervision of early-stage investment managers or in the
8 fiduciary management of investment funds or have expertise in
9 other areas considered appropriate by the Governor. Vacancies
10 shall be filled in the same manner as the initial appointment.
11 The board of directors shall be appointed to serve staggered
12 3-year terms in accordance with the company's organizational
13 documents. Members of the board of directors, the officers,
14 and employees are subject to any restrictions on conflicts of
15 interest specified in the organizational documents and may not
16 have an interest in the Florida Opportunity Fund Allocation
17 Manager or in any investments made by the company. Members of
18 the board of directors shall serve without compensation, but
19 members, officers, and employees may be reimbursed for all
20 reasonable, necessary, and actual expenses, as determined by
21 the board and approved by Enterprise Florida, Inc.
22 (c) The company shall have all powers granted under
23 chapter 608 and may indemnify members of the board of
24 directors to the broadest extent permissible under state law.
25 However, the members, officers, and employees shall have a
26 fiduciary duty with respect to the management of company
27 assets and selection and oversight of its allocation manager
28 and shall discharge those duties in the best interest of the
29 state.
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1 (d) The company shall be subject to chapter 119,
2 relating to public meetings, and s. 286.011, relating to
3 public records.
4 (e) The company shall select a Florida Opportunity
5 Fund Allocation Manager who has a demonstrated expertise in
6 the successful management and fund allocation of investments
7 in venture capital funds. In selecting a manager, the company
8 shall consider, among other pertinent factors, each
9 candidate's level of experience, quality of management
10 performance, investment philosophy and process, prior
11 investment fund results, and potential for achieving the
12 purposes of this section.
13 (f) The company shall invest on a fund-of-funds basis
14 in seed and early-stage venture capital funds having
15 experienced managers or management teams with demonstrated
16 experience, expertise, and a successful history in the
17 investment of venture capital funds, focusing on opportunities
18 in this state. The company may not make direct investments in
19 individual businesses. While not precluded from investing in
20 venture capital funds that have investments outside this
21 state, the company must require a venture capital fund to show
22 a record of successful investment in this state, to be based
23 in this state, or to have an office in this state staffed with
24 a full-time, professional venture investment executive in
25 order to be eligible for investment. The company may negotiate
26 any and all terms and conditions for its investments,
27 including the clawback of management fees and other provisions
28 that maximize investment in seed and early-stage Florida-based
29 companies.
30 (g) The company may not invest in a venture capital
31 fund unless that venture capital fund has raised capital from
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1 other sources in an amount at least equal to the investment of
2 the company, such that the total invested in Florida-based
3 companies by the receiving venture capital fund totals at
4 least twice the investment of the company. Investments must be
5 made in Florida-based companies, including, without
6 limitation, enterprises in life sciences, information
7 technology, advanced manufacturing processes, aviation and
8 aerospace, and homeland security and defense, as well as other
9 strategic technologies.
10 (5) ANNUAL REPORT.--The company shall submit an annual
11 report of its activities to the Governor, the President of the
12 Senate, and the Speaker of the House of Representatives within
13 3 months after the end of its fiscal year. The annual report
14 must include a copy of the independent audit of the company
15 and a valuation of the assets of the company, a review of the
16 progress of the Florida Opportunity Fund Allocation Manager in
17 implementing its investment plan, the rate of return, and the
18 benefits to the state resulting from this program, including
19 the amount of capital deployed and the amount of investment.
20 The annual report must also include a list of venture capital
21 funds in which investments were made and the number of Florida
22 businesses created and their associated industry.
23 Section 2. For the 2006-2007 fiscal year, the sum of
24 $300,000 is appropriated from the General Revenue Fund to the
25 Economic Development Trust Fund in the Office of Tourism,
26 Trade, and Economic Development to be used for start-up
27 activities necessary to implement this act, including creation
28 of the Florida Opportunity Fund and the solicitation, and
29 related due diligence, required for contracting the services
30 of the Florida Opportunity Fund Allocation Manager.
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1 Section 3. For the 2006-2007 fiscal year, the sum of
2 $35 million is transferred from nonrecurring moneys in the
3 General Revenue Fund to the Economic Development Trust Fund in
4 the Office of Tourism, Trade, and Economic Development for
5 subsequent investment in the Florida Opportunity Fund as
6 described in this act. Notwithstanding s. 216.301, Florida
7 Statutes, and pursuant to s. 216.351, Florida Statutes, any
8 balance remaining at the end of any fiscal year shall remain
9 in the trust fund and shall be available for carrying out the
10 purposes of this section. The transferred amount and any
11 earnings thereon are appropriated and may be used for the
12 purposes of this act until July 1, 2020, at which time the sum
13 of $35 million or the balance of funds, whichever is less,
14 shall be returned to the General Revenue Fund. The Florida
15 Opportunity Fund shall continue to administer its investments
16 after July 1, 2020, until such investments are liquidated.
17 Proceeds from liquidation of investments and any proceeds in
18 excess of $35 million may be retained for continuous
19 reinvestment by the Florida Opportunity Fund, if an amount of
20 not less than $35 million has been returned to the General
21 Revenue Fund on or before July 1, 2020. If at any time
22 Enterprise Florida, Inc., dissolves the Florida Opportunity
23 Fund, all assets of the Florida Opportunity Fund and any funds
24 remaining for the purpose of this section shall revert to the
25 General Revenue Fund. Enterprise Florida, Inc., may not sell
26 or transfer ownership of the company.
27 Section 4. This act shall take effect July 1, 2006.
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Florida Senate - 2006 CS for CS for CS for SB 2668
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1 STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
COMMITTEE SUBSTITUTE FOR
2 CS/CS/Senate Bill 2668
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4 This committee substitute revises the appointment process for
the five-member board of directors of the Florida Opportunity
5 Fund. Instead of being appointed by a five-person selection
committee selected from among the Enterprise Florida, Inc.,
6 board of directors, all appointments will be made by the
Governor, and appointees shall serve at the pleasure of the
7 Governor.
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