Florida Senate - 2015                 (Corrected Copy)    SB 196
       By Senator Bean
       4-00002C-15                                            2015196__
    1                        A bill to be entitled                      
    2         An act relating to the qualified television revolving
    3         loan fund; creating s. 288.127, F.S.; defining terms;
    4         providing a purpose; creating the qualified television
    5         revolving loan fund; requiring the Department of
    6         Economic Opportunity to contract with a fund
    7         administrator; providing fund administrator
    8         qualifications; providing for the fund administrator’s
    9         compensation and removal; specifying the fund
   10         administrator’s powers and duties; providing the
   11         structure of the loans; providing qualified television
   12         content criteria; authorizing the Auditor General to
   13         conduct an operational audit of the fund and the fund
   14         administrator; authorizing the department to adopt
   15         rules; providing for expiration of the loan program;
   16         providing emergency rulemaking authority; providing
   17         for expiration of the emergency rulemaking authority;
   18         amending s. 288.0001, F.S.; requiring an analysis of
   19         the qualified television revolving loan fund in the
   20         Economic Development Programs Evaluation; providing an
   21         effective date.
   23  Be It Enacted by the Legislature of the State of Florida:
   25         Section 1. Section 288.127, Florida Statutes, is created to
   26  read:
   27         288.127 Qualified television revolving loan fund.—
   28         (1) DEFINITIONS.—As used in this section, the term:
   29         (a) “Fund administrator” means a private sector
   30  organization under contract with the department to manage and
   31  administer the qualified television revolving loan fund.
   32         (b) “Major broadcaster” means broadcasting organizations
   33  that include, but are not limited to, television broadcasting
   34  networks, cable television, direct broadcast satellite,
   35  telecommunications companies, and Internet streaming or other
   36  digital media platforms.
   37         (c) “Private investment capital” means capital from
   38  private, nongovernmental funding sources which will be
   39  coinvested with the QTV Fund in segregated accounts.
   40         (d) “Qualified lending partner” means a financial
   41  institution, as defined in s. 655.005, selected by a fund
   42  administrator that has demonstrated capability in providing
   43  financing to television production and specialized expertise in
   44  intellectual property, tax credit programs, customary broadcast
   45  license agreements, advertising inventories, and ancillary
   46  revenue sources, and a combined portfolio in film, television,
   47  and entertainment media of at least $500 million.
   48         (e) “Qualified television content” means series, mini
   49  series, or made-for-TV content produced by a qualified
   50  production company that has in place a distribution contract
   51  with a major broadcaster, under a customary broadcaster license
   52  agreement. The term does not include a production that contains
   53  content that is obscene, as defined in s. 847.001.
   54         (f) “QTV Fund” means the qualified television revolving
   55  loan fund.
   56         (2) PURPOSE.—The purpose of the QTV Fund is to create a
   57  public-private partnership in the form of a revolving loan fund
   58  to administer a loan program for television production. The QTV
   59  Fund is privately managed under state oversight to incentivize
   60  the use of this state as a site for producing qualified
   61  television content and to develop and sustain the workforce and
   62  infrastructure for television content production.
   63         (3) CREATION.—The qualified television revolving loan fund
   64  is created within the department. The QTV Fund shall be a public
   65  fund that is privately managed by the fund administrator under
   66  contract with the department. The department shall disburse the
   67  funds appropriated for this loan program to the fund
   68  administrator to invest in the QTV Fund during the existence of
   69  the program pursuant to this section and the contract between
   70  the fund administrator and the department. State funds in the
   71  QTV Fund may be used only to enter into loan agreements and to
   72  pay any administrative costs or other authorized fees under this
   73  section.
   74         (a) The QTV Fund shall be a revolving loan fund that
   75  invests and reinvests the principal and interest of the fund in
   76  accordance with s. 617.2104 in a manner so as not to subject the
   77  funds to state or federal taxes and to be consistent with the
   78  investment policy statement adopted by the fund administrator.
   79  As production companies repay the principal and interest to the
   80  QTV Fund, state funds, less any QTV Fund expenses, shall be
   81  returned to the account to be lent to subsequent borrowers.
   82         (b) Funds from the QTV Fund shall be disbursed by the fund
   83  administrator through a lending vehicle to make short-term loans
   84  pursuant to this section.
   85         (4) FUND ADMINISTRATOR.—
   86         (a) The department shall contract with a fund administrator
   87  within 90 days after funds are appropriated for the loan program
   88  and shall award the contract in accordance with the competitive
   89  bidding requirements in s. 287.057.
   90         (b) The department shall select as fund administrator a
   91  private sector entity that demonstrates the ability to implement
   92  the program under this section and that meets the requirements
   93  set forth in this section. Preference shall be given to
   94  applicants that are headquartered in this state. Additional
   95  consideration may be given to applicants that have experience in
   96  the management of economic development or job creation-related
   97  funds. The qualifications for the fund administrator must
   98  include, but are not limited to:
   99         1. A demonstrated track record of managing private sector
  100  equity or debt funds in the entertainment and media industries.
  101         2. The ability to demonstrate through a partnership
  102  agreement that a qualified lending partner is in place which has
  103  the capability of providing leverage of a minimum of 2.5 times
  104  the capital amount of the QTV Fund, for financing the production
  105  cost of qualified television content in the form of senior debt.
  106         (c) For overseeing and administering the QTV Fund, the fund
  107  administrator shall be reimbursed for the costs that the fund
  108  administrator incurs in establishing and operating the fund
  109  related to the state’s investment, which shall be paid from
  110  state funds in the QTV Fund. Any additional private investment
  111  capital in the segregated accounts is responsible for its own
  112  management fees. The fund administrator is entitled to a
  113  reasonable profit, but such distribution may not be made from
  114  the principal funds from the original appropriation.
  115         (d) The fund administrator shall provide services defined
  116  under this section for the duration of the QTV Fund term unless
  117  removed by the department. The contract between the department
  118  and the fund administrator shall set forth the circumstances
  119  under which the contract may be terminated.
  121         (a) Authority to contract.—The fund administrator may enter
  122  into agreements with qualified lending partners for concurrent
  123  lending through the QTV Fund. A loan made by the qualified
  124  lending partner must be accounted for separately from the state
  125  funds or other private investment capital. Such loan shall be
  126  made as senior debt. The fund administrator may raise private
  127  investment capital for mezzanine equity and other equity or
  128  raise junior capital for concurrent lending through the QTV
  129  Fund. However, loans from private investment capital may not be
  130  made at more favorable terms and conditions than the terms and
  131  conditions of the state funds in the QTV Fund. The state
  132  appropriation must be maintained in a separate account from
  133  private investment capital and administered in a separate legal
  134  investment entity or entities. Private investment capital and
  135  loans shall be segregated from each other, and funds may not be
  136  commingled.
  137         (b) General duties.—The fund administrator:
  138         1. Shall prudently manage the funds in the QTV Fund as a
  139  revolving loan fund.
  140         2. Shall contract with one or more qualified lending
  141  partners.
  142         3. Shall provide improvement of the credit profile of a
  143  structured financial transaction for qualified production
  144  companies that produce qualified television content meeting the
  145  criteria in subsection (7).
  146         4. May raise additional private investment capital to be
  147  held in separate accounts, in addition to the leverage provided
  148  by the qualified lending partner.
  149         5. Shall administer the QTV Fund in accordance with this
  150  part.
  151         6. Shall agree to maintain the recipient’s books and
  152  records relating to funds received from the department according
  153  to generally accepted accounting principles and in accordance
  154  with s. 215.97(7) and to make those books and records available
  155  to the department for inspection upon reasonable notice. The
  156  books and records must be maintained with detailed records
  157  showing the use of proceeds from loans to fund qualified
  158  television content.
  159         7. Shall maintain its registered office in this state
  160  throughout the duration of the contract.
  161         (c) Financial reporting.By February 28 of each year, the
  162  fund administrator shall submit to the department financial
  163  statements for the preceding tax year which are audited by an
  164  independent certified public accountant after the end of each
  165  year in which the fund administrator is under contract with the
  166  department. In addition to providing an independent opinion on
  167  the annual financial statements, such audit provides a basis for
  168  verifying the segregation of state funds from those of any
  169  private investment capital.
  170         (d) Program reporting.—The fund administrator shall submit
  171  a report to the department by February 28 after the end of each
  172  year in which the fund administrator is under contract with the
  173  department. The report must include information on the loans
  174  made in the preceding calendar year, including:
  175         1. The name of the qualified television content.
  176         2. The names of the counties in which the production
  177  occurred.
  178         3. The number of jobs created and retained as a result of
  179  the production.
  180         4. The loan amounts, including the amount of private
  181  investment capital and funds provided by a qualified lending
  182  partner.
  183         5. The loan repayment status for each loan.
  184         6. The number and amounts of any loans with payments past
  185  due.
  186         7. The number and amounts of any loans in default.
  187         8. A description of the assets securing the loans.
  188         9. Other information and documentation required by the
  189  department.
  190         (e) Plan of accountability.—The fund administrator shall
  191  submit an annual plan of accountability of economic development,
  192  including a report detailing the job creation resulting from the
  193  QTV Fund loans made during the current year and cumulatively
  194  since the inception of the program. The fund administrator shall
  195  also provide any additional information requested by the
  196  department pertaining to economic development and job creation
  197  in the state.
  198         (f) Conflict-of-interest statement.—The fund administrator
  199  shall provide a conflict-of-interest statement from its
  200  governing board certifying that no board member, director,
  201  employee, or agent, or immediate family member thereof, or other
  202  person connected to or affiliated with the fund administrator is
  203  receiving or will receive any type of compensation or
  204  remuneration from a production company that has received or will
  205  receive funds from the loan program or from a qualified lending
  206  partner. The department may waive this requirement for good
  207  cause shown.
  208         (6) LOAN STRUCTURE.—
  209         (a) The QTV Fund may be used to make loans to production
  210  companies to fund production costs or provide improvement of the
  211  credit profile of a structured financial transaction for
  212  qualified television content that meets the criteria
  213  requirements of subsection (7). To make a loan, the fund
  214  administrator shall consider the types of eligible collateral,
  215  the credit worthiness of the project, the producer’s track
  216  record, the possibility that the project will encourage,
  217  enhance, or create economic benefits, and the extent to which
  218  assistance would foster innovative public-private partnerships
  219  and attract private debt or equity investment.
  220         (b) The QTV Fund loan package shall be secured by
  221  contractual and predictable sources of repayment such as
  222  domestic and international broadcaster license agreements and
  223  other ancillary revenues that are derived from media content
  224  rights. Unsecured loans may not be made.
  225         (c) The loans shall be made on the basis of a second lien
  226  or primary security rights on the media assets listed in
  227  paragraph (b).
  228         (d) The QTV Fund shall provide funding only in conjunction
  229  with senior loans provided by a qualified lending partner. Loans
  230  from the fund may be subordinated to senior debt from the
  231  qualified lending partner and may not exceed 30 percent of the
  232  total production funding cost of any particular project.
  233         (e) The production company’s repayment of a loan shall be
  234  in accordance with the broadcast license agreement and the
  235  delivery of qualified television content to the major
  236  broadcaster and shall be within 60 days after such delivery.
  237         (f) Loans made by the QTV Fund may not exceed 36 months in
  238  duration, except for extenuating circumstances for which the
  239  fund administrator may grant an extension upon making written
  240  findings to the department specifying the conditions requiring
  241  the extension.
  242         (g) The fund administrator, or a board member, employee, or
  243  agent thereof, or an immediate family member of a board member,
  244  employee, or agent, may not have a financial interest in an
  245  entity that is awarded a loan under the loan program and may not
  246  benefit directly or indirectly from the making of such loan. A
  247  loan may not be made to a person if it violates this paragraph.
  248  As used in this section, the term “immediate family” means a
  249  parent, child, or spouse, or other relative by blood, marriage,
  250  or adoption, of the fund administrator, or a board member,
  251  employee, or agent thereof.
  252         (h) Except for funds appropriated to the department for the
  253  loan program, the credit of the state may not be pledged. The
  254  state is not liable or obligated in any way for claims against
  255  the QTV Fund or against the fund administrator, the qualified
  256  lending partner, or the department.
  258  administrator must, at a minimum, consider the following
  259  criteria for evaluating the qualifying television content:
  260         (a) The content is intended for broadcast by a major
  261  broadcaster on a major network, cable, or streaming channel.
  262         (b) The content is produced in this state, or a minimum of
  263  80 percent of the production budget must be spent in this state.
  264  This requirement may be amended by the fund administrator upon
  265  notice to the department. Such notice must include a specific
  266  justification for the change and must be transmitted to the
  267  department in writing. The department has 10 business days to
  268  object to the change. If the department does not object within
  269  10 business days, the change is deemed acceptable by the
  270  department, and the fund administrator may grant the amendment.
  271         (c) If the content is a series, there is a programming
  272  order for at least 13 episodes. This requirement may be amended
  273  by the fund administrator upon notice to the department. Such
  274  notice must include a specific justification for the change and
  275  must be transmitted to the department in writing. The department
  276  has 10 business days to object to the change. If the department
  277  does not object within 10 business days, the change is deemed
  278  acceptable by the department, and the fund administrator may
  279  grant the amendment.
  280         (d) The producer must have a contract in place with a major
  281  broadcaster to acquire content programming under a customary
  282  broadcast license agreement, and the contract must cover at
  283  least 60 percent of the budget.
  284         (e) The producer must retain a foreign sales agent and must
  285  be able to provide the fund administrator with the foreign sales
  286  agent’s official estimates of foreign and ancillary sales.
  287         (f) The project must be bonded and secured by an industry
  288  approved completion guarantor if the production cost per episode
  289  exceeds $1 million. This requirement may be waived if the loan
  290  applicant provides the fund administrator with evidence of
  291  adequate structure to protect the state’s funds.
  292         (8) AUDITOR GENERAL AUDIT.—The Auditor General may conduct
  293  operational audits, as defined in s. 11.45, of the QTV Fund and
  294  fund administrator. The scope of the audit must include, but is
  295  not limited to, internal controls evaluations, internal audit
  296  functions, reporting and performance requirements for the use of
  297  the funds, and compliance with state and federal law. The fund
  298  administrator shall provide to the Auditor General any detail or
  299  supplemental data required.
  300         (9) RULEMAKING AUTHORITY.—The department may adopt rules to
  301  administer this section.
  302         (10) EXPIRATION.—This section expires December 31, 2025, at
  303  which point all funds remaining in the QTV Fund revert to the
  304  General Revenue Fund.
  305         (11) EMERGENCY RULES.—
  306         (a) The executive director of the department is authorized,
  307  and all conditions are deemed met, to adopt emergency rules
  308  pursuant to ss. 120.536(1) and 120.54(4) for the purpose of
  309  implementing this section.
  310         (b) Notwithstanding any other law, the emergency rules
  311  adopted pursuant to paragraph (a) remain in effect for 6 months
  312  after adoption and may be renewed during the pendency of
  313  procedures to adopt permanent rules addressing the subject of
  314  the emergency rules.
  315         (c) This subsection expires October 1, 2016.
  316         Section 2. Paragraph (b) of subsection (2) of section
  317  288.0001, Florida Statutes, is amended to read:
  318         288.0001 Economic Development Programs Evaluation.—The
  319  Office of Economic and Demographic Research and the Office of
  320  Program Policy Analysis and Government Accountability (OPPAGA)
  321  shall develop and present to the Governor, the President of the
  322  Senate, the Speaker of the House of Representatives, and the
  323  chairs of the legislative appropriations committees the Economic
  324  Development Programs Evaluation.
  325         (2) The Office of Economic and Demographic Research and
  326  OPPAGA shall provide a detailed analysis of economic development
  327  programs as provided in the following schedule:
  328         (b) By January 1, 2018 2015, and every 3 years thereafter,
  329  an analysis of the following:
  330         1. The entertainment industry financial incentive program
  331  established under s. 288.1254.
  332         2. The entertainment industry sales tax exemption program
  333  established under s. 288.1258.
  334         3. The VISIT Florida Tourism Industry Marketing Corporation
  335  and its programs established or funded under ss. 288.122,
  336  288.1226, 288.12265, and 288.124.
  337         4. The Florida Sports Foundation and related programs
  338  established under ss. 288.1162, 288.11621, 288.1166, 288.1167,
  339  288.1168, 288.1169, and 288.1171.
  340         5. The qualified television revolving loan fund established
  341  under s. 288.127.
  342         Section 3. This act shall take effect July 1, 2015.