Florida Senate - 2014 CS for CS for SB 900
By the Committees on Community Affairs; and Education; and
Senator Latvala
578-03196-14 2014900c2
1 A bill to be entitled
2 An act relating to public-private partnerships;
3 creating s. 1013.505, F.S.; defining terms; providing
4 legislative findings and intent; authorizing formation
5 of a public-private partnership between a state
6 university or direct-support organization and a
7 private entity; establishing procedures and
8 requirements for the receipt, solicitation, and
9 evaluation of proposals received by a state university
10 board of trustees or direct-support organization;
11 authorizing the Board of Governors to establish a fee
12 for unsolicited proposal submissions; requiring a
13 board of trustees or direct-support organization to
14 conduct an analysis before entering a comprehensive
15 agreement; specifying analysis requirements; requiring
16 approval of comprehensive agreements by the Board of
17 Governors; requiring additional approval by the
18 Governor and Cabinet for certain comprehensive
19 agreements; requiring a state university to provide a
20 summary of a proposal to the Board of Governors, the
21 Governor, Cabinet officers, and the Legislature;
22 specifying summary requirements; prohibiting a board
23 of trustees or direct-support organization from
24 proceeding with a comprehensive agreement under
25 certain circumstances; requiring the Board of
26 Governors to establish procedures for the evaluation
27 and approval of comprehensive agreements; requiring
28 the private entity to enter into a comprehensive
29 agreement with the board of trustees or direct-support
30 organization; establishing requirements for a
31 comprehensive agreement; authorizing certain financing
32 agreements for a qualifying project; specifying the
33 responsibilities of the private entity; specifying the
34 powers and duties of a board of trustees or direct
35 support organization upon expiration or termination of
36 an agreement; providing for the sole authority for a
37 board of trustees or direct-support organization to
38 enter a comprehensive agreement; providing for
39 applicability of sovereign immunity to a comprehensive
40 agreement; requiring a state university to prepare an
41 annual report to the Board of Governors after a
42 certain date; requiring the Board of Governors to
43 specify the format and the timeframe of the report;
44 authorizing the Board of Governors to adopt rules and
45 specify certain restrictions; providing for
46 applicability of other laws; providing an effective
47 date.
48
49 Be It Enacted by the Legislature of the State of Florida:
50
51 Section 1. Section 1013.505, Florida Statutes, is created
52 to read:
53 1013.505 Public-private partnerships; state universities.-
54 (1) DEFINITIONS.–As used in this section, the term:
55 (a) “Board” means a state university board of trustees.
56 (b) “Comprehensive agreement” or “agreement” means an
57 agreement between a state university or a direct-support
58 organization and a private entity which permits the private
59 entity to assume financial and administrative responsibility for
60 the acquisition, construction, reconstruction, improvement,
61 purchase, management, or operation of a project of, or for the
62 benefit of, the state university or a direct-support
63 organization. Additionally, a public-private partnership
64 agreement may also provide for a state university or direct
65 support organization to transfer to a private entity the
66 operation of a revenue-producing project to which the state
67 university or direct-support organization holds title, in
68 exchange for either a payment or payments to the state
69 university or direct-support organization or the construction of
70 a project to benefit the state university or direct-support
71 organization.
72 (c) “Debt” means bonds, including revenue bonds issued
73 pursuant to s. 11(d), Art. VII of the State Constitution, loans,
74 promissory notes, lease-purchase agreements, certificates of
75 participation, installment sales, leases, or any other financing
76 mechanism or financial arrangement, whether or not a debt for
77 legal purposes, for financing or refinancing for or on behalf of
78 a state university or a direct-support organization or for the
79 acquisition, construction, improvement, or purchase of capital
80 outlay projects.
81 (d) “Develop” means to plan, design, finance, lease,
82 acquire, install, construct, or expand.
83 (e) “Direct-support organization” means an organization
84 created pursuant to s. 1004.28 or any entity specifically
85 established to incur debt.
86 (f) “Fees” means charges imposed by the private entity of a
87 qualifying project for use of all or a portion of such
88 qualifying project pursuant to a comprehensive agreement.
89 (g) “Lease payment” means any form of payment, including a
90 land lease, by a board or direct-support organization to the
91 private entity of a qualifying project for the use of the
92 project.
93 (h) “Material default” means a nonperformance of its duties
94 by the private entity of a qualifying project which jeopardizes
95 adequate service to the public from the project.
96 (i) “Operate” means to finance, maintain, improve, equip,
97 modify, or repair.
98 (j) “Private entity” means a natural person, corporation,
99 general partnership, limited liability company, limited
100 partnership, joint venture, business trust, public-benefit
101 corporation, nonprofit entity, or other private business entity.
102 (k) “Proposal” means a plan for a qualifying project with
103 detail beyond a conceptual level for which terms such as fixing
104 costs, payment schedules, financing, deliverables, and project
105 schedule are defined.
106 (l) “Qualifying project” means one or more buildings,
107 structures, or facilities that serves a public educational,
108 research, housing, parking, infrastructure, recreational, or
109 cultural purpose of a state university or direct-support
110 organization that will be used by or on behalf of a state
111 university or direct-support organization. The term also means
112 the monetization of the operation of a revenue-producing project
113 to which the board or direct-support organization holds title,
114 in exchange for a guaranteed payment to the board or direct
115 support organization.
116 (m) “Revenues” means those revenues authorized under s.
117 1010.62, except that money received as grants or otherwise from
118 the Federal Government, a public entity, or an agency or
119 instrumentality in aid of a qualifying project or gifts from
120 private donors that are donated for the purpose of constructing
121 or equipping a facility may be used without limitation, unless a
122 gift is used to secure debt, in which event the maturity of the
123 debt shall not exceed 5 years.
124 (n) “Service contract” means a contract between a board or
125 direct-support organization and the private entity which defines
126 the terms of the services to be provided with respect to a
127 qualifying project.
128 (2) LEGISLATIVE FINDINGS AND INTENT.—
129 (a)1. The Legislature finds that there is a public need for
130 the construction or upgrade of facilities that are used
131 predominantly for public purposes and that it is in the public’s
132 interest to provide for the construction or upgrade of such
133 facilities.
134 2. The Legislature also finds that:
135 a. There is a public need for timely and cost-effective
136 acquisition, design, construction, improvement, renovation,
137 expansion, equipping, maintenance, operation, implementation, or
138 installation of projects serving a public purpose, including
139 educational and auxiliary facilities and projects within the
140 state which serve a public need and purpose, and that such
141 public need may not be wholly satisfied by existing procurement
142 methods.
143 b. There are inadequate resources to develop new
144 educational and auxiliary facilities and projects for the
145 benefit of residents of this state, and that a public-private
146 partnership has demonstrated that it can meet the needs by
147 improving the schedule for delivery, lowering the cost, and
148 providing other benefits to the public.
149 c. There may be state and federal tax incentives that
150 promote partnerships between public and private entities to
151 develop and operate qualifying projects.
152 d. A procurement under this section serves the public
153 purpose of this section if such procurement facilitates the
154 timely development or operation of a qualifying project.
155 (b) It is the intent of the Legislature to encourage
156 investment in the state by private entities; to facilitate
157 various bond financing mechanisms, private capital, and other
158 funding sources for the development and operation of qualifying
159 projects, including expansion and acceleration of such financing
160 to meet the public need; and to provide the greatest possible
161 flexibility to public and private entities contracting for the
162 provision of public services.
163 (3) PROCUREMENT PROCEDURES.—A board or direct-support
164 organization may receive unsolicited proposals or may solicit
165 proposals for qualifying projects and may thereafter enter into
166 an agreement with a private entity, or a consortium of private
167 entities, to build, upgrade, operate, own, or finance
168 facilities.
169 (a) The Board of Governors may establish a reasonable
170 application fee for the submission of an unsolicited proposal to
171 a board or direct-support organization under this section. The
172 fee must be sufficient to pay the costs of evaluating the
173 proposal. A board or direct-support organization may engage the
174 services of a private consultant to assist in the evaluation.
175 The Board of Governors may also establish a reasonable fee that
176 may be charged by a board or direct-support organization to
177 cover the costs of evaluating all other proposals received by a
178 board or direct-support organization as part of a competitive
179 procurement process to select a private entity for purposes of
180 establishing a public-private partnership.
181 (b) A board or direct-support organization may request a
182 proposal from private entities for a public-private project or,
183 if the board or direct-support organization receives an
184 unsolicited proposal for a public-private project and the board
185 or direct-support organization intends to enter into a
186 comprehensive agreement for the project described in such
187 unsolicited proposal, the board or direct-support organization
188 shall publish notice in a newspaper of general circulation at
189 least once a week for 2 weeks stating that the board or direct
190 support organization has received a proposal and will accept
191 other proposals for the same project. The timeframe within which
192 the board or direct-support organization may accept other
193 proposals shall be determined on a project-by-project basis
194 based upon the complexity of the project and the public benefit
195 to be gained by allowing a longer or shorter period of time
196 within which other proposals may be received; however, the
197 timeframe for allowing other proposals must be at least 21 days,
198 but no more than 120 days, after the initial date of
199 publication.
200 (c) In considering an unsolicited proposal, the board or
201 direct-support organization may require the private entity to
202 provide a technical study prepared by a nationally recognized
203 expert with experience in preparing analyses for bond rating
204 agencies. In evaluating the technical study, the board or
205 direct-support organization may rely upon internal staff reports
206 prepared by personnel familiar with the operation of similar
207 facilities or the advice of external advisors or consultants who
208 have relevant experience. In addition, an unsolicited proposal
209 must be accompanied by the following information, unless waived
210 by the board or the direct-support organization:
211 1. A description of the qualifying project, including the
212 conceptual design of the facilities or a conceptual plan for the
213 provision of services, and a schedule for the initiation and
214 completion of the qualifying project.
215 2. If applicable, a description of the method by which the
216 private entity proposes to secure the necessary property
217 interests that are required for the qualifying project.
218 3. A description of the private entity’s general plans for
219 financing the qualifying project, including the sources of the
220 private entity’s funds and the identity of a dedicated revenue
221 source or proposed debt or equity investment on behalf of the
222 private entity.
223 4. The name and address of a person who may be contacted
224 for additional information concerning the proposal.
225 5. The proposed user fees, lease payments, or other service
226 payments over the term of a comprehensive agreement, and the
227 methodology for and circumstances that would allow changes to
228 the user fees, lease payments, and other service payments over
229 time.
230 6. Additional material or information that the board or
231 direct-support organization reasonably requests.
232 (d) After the public notification period has expired in the
233 case of an unsolicited proposal or upon receipt of all proposals
234 if using the traditional process for competitive procurement
235 authorized under Board of Governors’ and university regulations,
236 the board or direct-support organization shall rank the
237 proposals received in order of preference. The board or direct
238 support organization may then begin negotiations for a
239 comprehensive agreement with the highest-ranked firm. If the
240 board or direct-support organization is not satisfied with the
241 results of the negotiations, the board or direct-support
242 organization may terminate negotiations with the proposer and
243 negotiate with the second-ranked or subsequent-ranked firms, in
244 the order consistent with this procedure. If only one proposal
245 is received, the board or direct-support organization may
246 negotiate in good faith, and if the board or direct-support
247 organization is not satisfied with the results of the
248 negotiations, the board or direct-support organization may
249 terminate negotiations with the proposer. Notwithstanding this
250 paragraph, the board or direct-support organization may reject
251 all proposals at any point in the process.
252 (4) PROJECT FEASIBILITY.-Prior to entering into a
253 comprehensive agreement, a board or direct-support organization
254 shall conduct an analysis of the feasibility and desirability of
255 the project or the activities proposed to be funded under the
256 comprehensive agreement, and shall develop sufficient
257 information to determine:
258 (a) That the agreement is in the best interest of the
259 public, the state, and the state university;
260 (b) The conformity of any project with the master plan of
261 the state university and a determination that the project or
262 activities are essential to the state university’s core mission;
263 (c) The need for the project or the activities proposed to
264 be funded under the agreement based on quantitative metrics;
265 (d) The amount and source of funds to be used to fully fund
266 the capital, operation, maintenance, or other expenses under the
267 agreement;
268 (e) The cost of any investment to be made under the
269 agreement by the board or a direct-support organization;
270 (f) The economic and financial feasibility of any project
271 or activities proposed to be funded under the agreement;
272 (g) That the projected demand for use of any project is
273 adequate in relation to the cost of the project;
274 (h) The expected return on investment or internal rate of
275 return for a revenue-generating project or another appropriate
276 quantitative measure for a non-revenue-generating project;
277 (i) That the cost of any project is reasonable in relation
278 to similar facilities;
279 (j) The financial, operational, or technological risk
280 associated with any project;
281 (k) That any increase in the cost of financing the project
282 over the cost of financing the project under s. 1010.62 will be
283 offset by quantifiable savings in operational costs or other
284 activities that will be performed by the private entity and
285 specifies the anticipated amount of such savings;
286 (l) Any impact to the state’s finances of undertaking the
287 project or the activities proposed to be funded under the
288 agreement by the state university or direct-support
289 organization;
290 (m) The impact of the agreement on similar activities of
291 the state university or direct-support organization that will
292 not be placed under the agreement;
293 (o) The anticipated use of money to be received by the
294 state university or direct-support organization under the
295 agreement;
296 (p) The relationship between the source of any funds
297 committed by the board or direct-support organization pursuant
298 to subsection (8) and the project or activities proposed to be
299 funded under the agreement;
300 (q) The private entity has the available sources of funding
301 or other financial resources that are necessary to carry out the
302 agreement;
303 (r) That the staff of the private entity have sufficient
304 experience and qualifications to perform the managerial,
305 organizational, and technical activities proposed to be funded
306 under the agreement;
307 (s) That no director, officer, partner, owner, or other
308 individual with direct and significant control over the policy
309 of the private entity has been convicted of corruption or fraud;
310 and
311 (t) Any other factors determined to be appropriate by the
312 board, direct-support organization or the Board of Governors.
313 (5) APPROVAL OF COMPREHENSIVE AGREEMENTS.-All comprehensive
314 agreements are contingent upon approval by the Board of
315 Governors. A comprehensive agreement between a direct-support
316 organization and a private entity must be approved by the
317 university board prior to submission to the Board of Governors
318 for approval.
319 (a) In addition to Board of Governors’ approval, approval
320 of the Governor and Cabinet, in their role as the governing
321 board of the Division of Bond Finance, is required for any
322 comprehensive agreement that:
323 1. Has a term of over ten years, including any renewals or
324 extensions;
325 2. Provides for an up-front payment from the private entity
326 to the board or direct-support organization which constitutes
327 more than 10 percent of the total compensation anticipated to be
328 paid by the private entity to the board or direct-support
329 organization over the initial term or any renewal term or
330 extension of the agreement;
331 3. Provides for the creation of debt of the board or a
332 direct-support organization as permitted pursuant to s. 1010.62;
333 4. Pledges or uses revenues permitted under s. 1010.62 to
334 secure or pay amounts due under the agreement; or
335 5. Is implemented pursuant to paragraph (b).
336 (b) Before a board or direct-support organization enters
337 into an agreement under which the board or a direct-support
338 organization is expected to receive over $10 million, the state
339 university must provide a summary of the proposal to the Board
340 of Governors, the Governor, the members of the Cabinet, the
341 President of the Senate, and the Speaker of the House of
342 Representatives. The summary must include a description of the
343 anticipated use of money to be received by the board or direct
344 support organization under the public-private partnership
345 agreement and any other information requested by a recipient of
346 the summary. If the President of the Senate or the Speaker of
347 the House of Representatives objects to the proposed agreement
348 in writing within 14 days after receipt of the summary, the
349 board or direct-support organization may not proceed with the
350 agreement unless all objections are resolved.
351 (c) The Board of Governors shall establish a process for
352 the evaluation and approval of comprehensive agreements by a
353 university board, the Board of Governors or other state
354 officers, and requirements for additional information to be
355 provided by a state university in obtaining approval for a
356 comprehensive agreement.
357 (6) COMPREHENSIVE AGREEMENT.—
358 (a) Before developing or operating the qualifying project,
359 the private entity must enter into a comprehensive agreement
360 with the board or direct-support organization. The comprehensive
361 agreement must provide for:
362 1. Delivery of performance and payment bonds, letters of
363 credit, or other security acceptable to the board or direct
364 support organization in connection with the development or
365 operation of the qualifying project in the form and amount
366 satisfactory to the board or direct-support organization. For
367 the components of the qualifying project which involve
368 construction, the form and amount of the bonds must comply with
369 ss. 255.05 and 1013.47.
370 2. Review of the design for the qualifying project by the
371 board or direct-support organization and, if the design conforms
372 to acceptable standards, the approval of the board or the
373 direct-support organization. This subparagraph does not require
374 the private entity to complete the design of the qualifying
375 project before the execution of the comprehensive agreement.
376 3. Inspection of the qualifying project by the board or
377 direct-support organization to ensure that the private entity’s
378 activities are acceptable to the board or direct-support
379 organization in accordance with the comprehensive agreement.
380 4. Maintenance of a policy of public liability insurance, a
381 copy of which must be filed with the board or direct-support
382 organization and accompanied by proofs of coverage, or self
383 insurance, each in the form and amount satisfactory to the board
384 or direct-support organization and reasonably sufficient to
385 ensure coverage of tort liability to the public and employees
386 and to enable the continued operation of the qualifying project.
387 5. Monitoring by the board or direct-support organization
388 of the maintenance practices to be performed by the private
389 entity to ensure that the qualifying project is properly
390 maintained.
391 6. Periodic filing by the private entity of the appropriate
392 financial statements that pertain to the qualifying project.
393 7. Procedures that govern the rights and responsibilities
394 of the board or direct-support organization and the private
395 entity in the course of the construction and operation of the
396 qualifying project and in the event of the termination of the
397 comprehensive agreement or a material default by the private
398 entity. The procedures must include conditions that govern the
399 assumption of the duties and responsibilities of the private
400 entity by an entity that funded, in whole or part, the
401 qualifying project or by the board or direct-support
402 organization, and must provide for the transfer or purchase of
403 property or other interests of the private entity by the board
404 or direct-support organization.
405 8. Fees, lease payments, or service payments. In
406 negotiating user fees, the fees must be the same for persons
407 using the facility under like conditions and must not materially
408 discourage use of the qualifying project. The execution of the
409 comprehensive agreement or a subsequent amendment is conclusive
410 evidence that the fees, lease payments, or service payments
411 provided for in the comprehensive agreement comply with this
412 section. Fees or lease payments established in the comprehensive
413 agreement as a source of revenue may be in addition to, or in
414 lieu of, service payments.
415 9. Duties of the private entity, including the terms and
416 conditions that the board or direct-support organization
417 determines serve the public purpose of this section.
418 10. A limitation on the term of the comprehensive agreement
419 not to exceed 30 years, inclusive of all renewal terms.
420 11. A provision under which each entity agrees to provide
421 notice of default and cure rights for the benefit of the other
422 entity, including, but not limited to, a provision regarding
423 unavoidable delays.
424 12. A provision that terminates the authority and duties of
425 the private entity under this section and dedicates the
426 qualifying project to the board or direct-support organization.
427 (b) A comprehensive agreement may not obligate the full
428 faith and credit of the state, a state university, or the Board
429 of Governors, but shall only be secured by the revenues of the
430 board or direct-support organization pledged for such purpose.
431 Revenues of a board or direct-support organization may not be
432 pledged to secure, or be used to make payments on or in relation
433 to, a comprehensive agreement, nor shall any debt of a board or
434 direct-support organization be created, except as provided in s.
435 1010.62, and only the revenues authorized to be used pursuant to
436 s. 1010.62 may be used to secure or pay obligations under or
437 related to such agreement. In addition, a comprehensive
438 agreement may not contain any provisions limiting the ability of
439 the state university or direct-support organization to perform
440 its functions, including any limitation on the ability to
441 perform responsibilities and duties relating to debt issued for,
442 by or on behalf of the state university or direct-support
443 organization.
444 (7) FINANCING.—
445 (a) A private entity may enter into a private-source
446 financing agreement between financing sources and the private
447 entity. A financing agreement must be paid in full at the
448 applicable closing that transfers ownership or operation of the
449 facility to the board or direct-support organization at the
450 conclusion of the term of the comprehensive agreement. In the
451 event of a material default by the private entity, the board or
452 the direct-support organization will assume ownership or
453 operation of the qualifying project pursuant to the terms of the
454 comprehensive agreement.
455 (b) The board or direct-support organization may use
456 innovative finance techniques associated with a public-private
457 partnership under this section, including, but not limited to,
458 federal loans as provided in Titles 23 and 49 C.F.R., commercial
459 bank loans, and hedges against inflation from commercial banks
460 or other private sources. In addition, the board or direct
461 support organization may provide its own capital or operating
462 budget to support a qualifying project. The budget may be from
463 any legally permissible funding sources of the board or direct
464 support organization, including the proceeds of debt issuances.
465 A financing agreement may not subject the board’s or direct
466 support organization’s facility to liens in violation of s.
467 11.066(5).
468 (8) RESPONSIBILITIES OF THE PRIVATE ENTITY.—
469 (a) The private entity shall:
470 1. Develop or operate the qualifying project in a manner
471 that is acceptable to the board or direct-support organization
472 in accordance with the provisions of the comprehensive
473 agreement.
474 2. Maintain, or provide by contract for the maintenance or
475 improvement of, the qualifying project if required by the
476 comprehensive agreement.
477 3. Cooperate with the board or direct-support organization
478 in making best efforts to establish interconnection between the
479 qualifying project and any other facility or infrastructure as
480 requested by the board or direct-support organization in
481 accordance with the provisions of the comprehensive agreement.
482 4. Comply with the comprehensive agreement and a lease or
483 service contract.
484 (b) Each private facility that is constructed pursuant to
485 this section must comply with the requirements of federal,
486 state, and local laws; state, regional, and local comprehensive
487 plans; the regulations, procedures, and standards for facilities
488 of the board or direct-support organization, as applicable; and
489 such other conditions that the board or direct-support
490 organization determines to be in the public’s best interest and
491 that are included in the comprehensive agreement.
492 (c) The board or direct-support organization may provide
493 services to the private entity. An agreement for maintenance and
494 other services entered into pursuant to this section must
495 provide for full reimbursement for services rendered for
496 qualifying projects.
497 (d) A private entity of a qualifying project may provide
498 additional services for the qualifying project to the public or
499 to other private entities if the provision of additional
500 services does not impair the private entity’s ability to meet
501 its commitments to the board or direct-support organization
502 pursuant to the comprehensive agreement and the services do not
503 differ in kind from those provided under the agreement.
504 (9) EXPIRATION OR TERMINATION OF AGREEMENTS.—Upon the
505 expiration or termination of a comprehensive agreement, the
506 board or direct-support organization may use revenues from the
507 qualifying project to pay current operation and maintenance
508 costs of the qualifying project. Revenues in excess of the costs
509 for operation and maintenance costs may be paid to the investors
510 and lenders to satisfy payment obligations under their
511 respective agreements if allowed under the provisions of the
512 comprehensive agreement. A board or direct-support organization
513 may terminate with cause and without prejudice a comprehensive
514 agreement and may exercise other rights or remedies that may be
515 available to it in accordance with the provisions of the
516 comprehensive agreement. The assumption of the development or
517 operation of the qualifying project does not obligate the board
518 or direct-support organization to pay an obligation of the
519 private entity from sources other than revenues from the
520 qualifying project.
521 (10) SOLE AUTHORITY.-This section shall provide the sole
522 authority for a state university or direct-support organization
523 to enter into a comprehensive agreement.
524 (11) SOVEREIGN IMMUNITY.-A comprehensive agreement may not
525 be construed as waiving the sovereign immunity of the state or
526 as a grant of sovereign immunity to a private entity.
527 (12) ANNUAL REPORT.-For any comprehensive agreement
528 executed by a state university or direct-support organization
529 after the effective date of this act, the university shall
530 prepare an annual report to the Board of Governors which updates
531 information provided for the initial approval of the public
532 private partnership and provides any other information required
533 by the Board of Governors. The format and specific timeframe for
534 reporting shall be as specified by the Board of Governors.
535 However, the initial annual report shall be filed no later than
536 November 30th after the public-private partnership has been in
537 effect for one full fiscal year.
538 (13) RULES.-The Board of Governors may adopt such rules as
539 may be necessary for carrying out all of the requirements of
540 this section and may do all things necessary to carry out the
541 powers granted under this section. The Board of Governors may
542 establish additional restrictions relating to public-private
543 partnerships but may not take any action which would reduce the
544 requirements of this section.
545 (14) APPLICABILITY OF OTHER LAWS.—This section does not
546 waive any requirement in s. 255.103, s. 287.055, or s. 1013.45,
547 if applicable.
548 Section 2. This act shall take effect July 1, 2014.