Florida Senate - 2018 CS for SB 1606 By the Committee on Commerce and Tourism; and Senators Taddeo and Gibson 577-03432-18 20181606c1 1 A bill to be entitled 2 An act relating to film and television production; 3 creating s. 288.1259, F.S.; defining terms; 4 establishing the Florida Motion Picture Capital 5 Corporation to encourage the use of this state as a 6 site for scripted productions by providing financing 7 to certain productions; providing powers of and 8 imposing limitations on the corporation; requiring the 9 board of directors to adopt specified criteria for 10 evaluating applications for financing; requiring 11 productions to use a bonded third-party collection 12 account management firm; requiring that certain 13 presales or sales estimates meet a specified minimum 14 value; requiring productions to carry an insurance 15 package meeting certain standards; requiring 16 productions to provide certain proof of funds within a 17 specified period; requiring that the lead producer or 18 production company have a specified sales record or 19 provide a completion bond; requiring that certain 20 items be evaluated and approved by a production expert 21 selected by the board; requiring that the production 22 budget include a certain amount of contingency funds; 23 providing for the release of corporation funds 24 according to a specified schedule; requiring the board 25 to approve the expenditure of certain contingency 26 funds; requiring the board to release corporation 27 funds to a production in a specified manner; requiring 28 the production company to allow the board to inspect 29 and audit certain reports and ledgers within a certain 30 timeframe; requiring the board to give preference to 31 productions that meet specified criteria; authorizing 32 the corporation to charge certain fees; requiring the 33 board to be composed of certain members; providing for 34 the appointment of the board, terms for the board, and 35 guidelines for the board; prohibiting board members 36 from discussing certain pending applications with 37 applicants outside of a board meeting for a specified 38 period; requiring board members to serve without 39 compensation; authorizing the board members to be 40 reimbursed for certain expenses; requiring the board 41 to adopt bylaws, rules, and policies before the 42 expenditure of funds; requiring the board to hold 43 regularly scheduled meetings; requiring the board to 44 create the Florida Motion Picture Capital Account and 45 maintain exclusive control of the account; authorizing 46 the board to deposit funds with certain institutions 47 and to invest certain funds in permissible securities; 48 requiring that certain dividend payments be 49 redeposited in the account for a specified purpose; 50 requiring that the corporation’s operating expenses be 51 kept to a minimum and funded by appropriations and 52 certain net returns; requiring that a claim against 53 the account be solely paid from the account; requiring 54 the board to appoint a president who meets specified 55 criteria; limiting the salary and benefits of the 56 president; providing the powers and duties of the 57 president; requiring the corporation to provide 58 certain notice of financing contracts or agreements to 59 the Department of Economic Opportunity and on the 60 corporation’s website for a specified period of time; 61 requiring that the notice include specified 62 information; requiring the corporation to submit a 63 supplemental report to the department which contains 64 certain information; requiring the Auditor General to 65 conduct an annual financial audit of the corporation 66 and the account; amending s. 20.60, F.S.; conforming a 67 provision to changes made by the act; providing an 68 effective date. 69 70 Be It Enacted by the Legislature of the State of Florida: 71 72 Section 1. Section 288.1259, Florida Statutes, is created 73 to read: 74 288.1259 Florida Motion Picture Capital Corporation.— 75 (1) DEFINITIONS.—As used in this section, the term: 76 (a) “Account” means the Florida Motion Picture Capital 77 Account. 78 (b) “Board” means the corporation’s board of directors. 79 (c) “Corporation” means the Florida Motion Picture Capital 80 Corporation. 81 (d) “High-wage jobs” are jobs that pay at least 120 percent 82 of the median wage for the arts, design, entertainment, sports, 83 and media occupations category as determined by the most recent 84 State Occupational Employment and Wage Estimates for this state 85 published by the United States Department of Labor’s Bureau of 86 Labor Statistics. 87 (e) “In-state expenditures” means the costs of tangible 88 property used in this state and services performed by residents 89 of this state for a scripted production, including preproduction 90 and postproduction, but excluding costs for development, 91 marketing, and distribution. 92 (f) “President” means the chief executive officer of the 93 corporation. 94 (g) “Scripted production” or “production” means a feature 95 film at least 70 minutes in length, whether produced for 96 theatrical, television, or direct-to-video release; a television 97 series created to run multiple seasons having an order for 98 distribution of at least five episodes; or a miniseries, which 99 is produced predominately from a written screenplay or teleplay. 100 The term does not include a commercial, an infomercial, or a 101 political advertisement; a reality show; a game show; an awards 102 show; a music video; an industrial or educational film; a 103 weather or market program; a sporting event or sporting event 104 broadcast; a gala; a production that solicits funds; a home 105 shopping program; a political program; a documentary; a 106 gambling-related production; a concert production; a local, 107 regional, or Internet-distributed-only news show or current 108 events show; a sports news or sports recap show; a video game; a 109 pornographic production; or any production deemed obscene under 110 chapter 847. 111 (h) “Television” includes broadcast, cable, and Internet 112 television. 113 (2) CORPORATION.—The Florida Motion Picture Capital 114 Corporation is created as a nonprofit corporation, to be 115 incorporated under chapter 617 and approved by the Department of 116 State. The corporation shall be organized on a nonstock basis. 117 The purpose of the corporation is to encourage the use of this 118 state as a site for scripted productions by providing financing 119 to such productions. The corporation is subject to the 120 provisions of chapter 119 relating to public records and the 121 provisions of chapter 286 relating to public meetings and 122 records. 123 (3) POWERS AND LIMITATIONS.— 124 (a) The corporation is authorized to provide financing to 125 scripted productions in this state pursuant to the criteria, 126 bylaws, rules, and policies adopted by the board, which must 127 include the following: 128 1. The corporation shall provide financing to productions 129 that it estimates will generate the greatest economic impact to 130 this state. 131 2. The amount of financing provided to a production must 132 not exceed the amount of the production’s in-state expenditures 133 for that production. 134 3. The financing provided to a production must rank and 135 remain pari passu with the highest class of ownership in the 136 production, such that, in the event of liquidation or 137 bankruptcy, the corporation’s investment shares the highest 138 priority with other preferred shareholders. 139 4. Any financing provided under this section must be less 140 than one-half of the cost of the production’s total shares or 141 other ownership interest. 142 5. The amount of financing provided to any one production 143 must not exceed 12.5 percent of the sum of the remaining amount 144 of uncommitted funds in the account plus the amounts of all 145 outstanding investments in other productions. 146 6. The corporation may not have any voting rights, creative 147 control, or management authority over a production receiving 148 financing under this section. 149 7. The corporation shall limit the return on its 150 investments by establishing variable limits on returns that 151 account for time value and reduce returns in exchange for a 152 production’s early buyout of financing positions. For a 153 production exercising an early buyout, the corporation shall 154 limit its return on investment to the minimum that is 155 actuarially measurable and credible and sufficiently related to 156 actual and expected losses to ensure the corporation’s self 157 sufficiency and preservation of the state appropriations 158 provided for the investment. 159 8. The corporation shall establish an application process 160 and conduct at least two application periods per fiscal year, 161 providing no more than 40 percent of the total funds in the 162 account for the fiscal year to productions in any one 163 application period. 164 (b) The board shall adopt objective criteria for evaluating 165 applications for financing scripted productions in this state. 166 1. The criteria must require: 167 a. The production to use a bonded third-party collection 168 account management firm to ensure that the corporation receives 169 all funds due from sales proceeds in accordance with a waterfall 170 agreement included in the corporation’s investment terms. 171 b. Presales or sales estimates from a sales agency that has 172 sold at least $50 million in feature films which are based on 173 the cast and script of the production and which reflect a value 174 of at least 1.5 times the exposure of the corporation. 175 c. The production to carry an insurance package from an 176 insurance company rated “A” or higher by A.M. Best Company which 177 must include general liability insurance, workers’ compensation, 178 and key cast and director insurance that covers the costs of 179 disruption or replacement downtime in the event of illness or 180 other loss of services from such individuals. If at least 75 181 percent of the production’s filming schedule occurs after June 1 182 and before November 30, the production’s insurance package must 183 include hurricane coverage. 184 d. The production to provide proof of funds for the 185 remaining budget within 60 days after application approval and 186 place the remaining budget in escrow before the release of 187 corporation funds. 188 e. That the lead producer or production company has 189 completed, sold, and delivered at least five feature films, or 190 the production must provide a completion bond. 191 f. That the production’s budget, script, and filming 192 schedule have been evaluated and approved by a production expert 193 selected by the board. 194 g. The production budget to include contingency funds in an 195 amount equal to at least 5 percent of the total budget. Up to 40 196 percent of the contingency funds may be expended during 197 production without the approval of the board. The remaining 198 contingency funds may only be expended with prior approval of 199 the board. 200 h. The board to release corporation funds to a production 201 in the following manner: 202 (I) Fifty percent of corporation funds shall be released on 203 the first day of principal photography. 204 (II) Twenty-five percent of corporation funds shall be 205 released upon completion of principal photography. 206 (III) Twenty-five percent of corporation funds shall be 207 released after final picture lock, as that term is generally 208 understood in the production industry. 209 i. The production company to provide the board with the 210 right to inspect and audit the weekly cost reports and general 211 ledger of the production throughout preproduction, production, 212 and postproduction. 213 2. Preference shall be given to: 214 a. Productions that will generate the greatest comparative 215 economic impact for this state. The corporation shall make a 216 determination of each project’s comparative economic impact to 217 this state by comparing the project budgets submitted during the 218 application period and determining which projects create the 219 greatest number of high-wage jobs for state residents and 220 propose the most significant in-state expenditures as a 221 percentage of total production expenditures. 222 b. Productions in which the proposed financing by the 223 corporation is lowest as a percentage of the production’s total 224 shares or other ownership interest. 225 c. Productions with the quickest deployment, in which the 226 production’s in-state expenditures will begin soonest after the 227 corporation commits to financing. 228 d. Productions by companies with a verifiable track record 229 in producing successful productions. 230 e. Productions by production companies based in this state 231 or by producers, writers, or directors who are residents of this 232 state. 233 f. Productions expected to significantly increase tourism 234 to the state by using a screenplay or teleplay based on a 235 Florida story or including recognizable locations in this state. 236 g. Productions whose development demonstrates the 237 likelihood of success, including, but not limited to, having a 238 recognized director, actor, or other creative talent attached to 239 the production. 240 h. Productions in which the corporation’s financing is 241 matched from local sources, including, but not limited to, 242 county or municipal agencies, local film commissions, or other 243 community resources. 244 (c) The corporation may charge fees, including, but not 245 limited to, application fees from productions seeking financing 246 under this section, but such fees may not exceed the reasonable 247 estimated cost of the activity for which the fee is charged, 248 such as the cost of processing an application. 249 (4) BOARD OF DIRECTORS; POWERS AND DUTIES.— 250 (a)1. The board shall consist of seven members who are 251 permanent residents of this state. Minority and gender 252 representation must be considered when making appointments to 253 the board. The board shall be composed of the following: 254 a. Two members who have experience in investment banking 255 and funds management focused on feature film and television 256 production. 257 b. Three members who have recent experience and are 258 recognized leaders in the production of feature films or 259 television in this state. Such members may include, but are not 260 limited to, producers, directors, production managers or 261 supervisors, or similar persons in positions of production 262 leadership. 263 c. One member who represents businesses that provide 264 supplies for feature film and television production in this 265 state, such as small businesses through which productions buy or 266 rent equipment, house and feed cast and crew, purchase supplies 267 and raw materials, or build production infrastructure. 268 d. One member who represents this state’s feature film and 269 television workforce. 270 2. The initial board shall be appointed as follows: 271 a. The Florida Venture Forum and the Florida Chamber of 272 Commerce shall each appoint one member pursuant to sub 273 subparagraph 1.a. 274 b. The Governor, the President of the Senate, and the 275 Speaker of the House of Representatives shall each appoint one 276 member pursuant to sub-subparagraph 1.b. 277 c. The department shall appoint one member pursuant to sub 278 subparagraph 1.c. 279 d. The Congress of Motion Picture Associations of Florida 280 shall appoint one member pursuant to sub-subparagraph 1.d. 281 282 To establish staggered terms, the initial members appointed by 283 the Florida Chamber of Commerce and the Congress of Motion 284 Picture Associations of Florida shall be appointed to 1-year 285 terms; the initial members appointed by the President of the 286 Senate and the Speaker of the House of Representatives shall be 287 appointed to 2-year terms; and the initial members appointed by 288 the Governor, the department, and the Florida Venture Forum 289 shall be appointed to 3-year terms. 290 3. Board members shall serve for a term of 3 years and are 291 eligible for reappointment. Vacancies shall be filled by 292 appointment in the same manner as the member whose position is 293 being filled. Vacancies shall be filled within 30 days after the 294 date of the vacancy. A vacancy that occurs before the scheduled 295 expiration of the term of a member shall be filled for the 296 remainder of the unexpired term. 297 (b) Board members are subject to the Code of Ethics for 298 Public Officers and Employees as set forth in part III of 299 chapter 112. A board member must abstain from voting and comply 300 with the disclosure requirements of s. 112.3143 if there appears 301 to be a possible conflict under s. 112.311, s. 112.313, or s. 302 112.3143. This paragraph does not prohibit any principal by whom 303 a board member is retained, as defined in s. 112.3143(1)(a), 304 from applying for or receiving financing under this section. 305 (c) A board member must, with respect to an application for 306 financing which is currently pending before the corporation or 307 which the board member knows or reasonably expects will be 308 submitted to the corporation within 180 days, refrain from 309 commenting on or discussing the application outside of a board 310 meeting with the applicant or any person retained by the 311 applicant. 312 (d) Board members shall serve without compensation but may 313 be reimbursed in accordance with s. 112.061 for all necessary 314 expenses in the performance of their duties, including attending 315 board meetings and conducting board business. 316 (e) The board shall: 317 1. Before the expenditure of funds from the account, adopt 318 bylaws, rules, and policies that are necessary to carry out the 319 corporation’s responsibilities under this section. 320 2. Hold regularly scheduled meetings, at least once per 321 application period, in order to carry out the objectives and 322 responsibilities of the board. 323 (5) ACCOUNT.— 324 (a) The board shall create the account for the purpose of 325 receiving state, federal, county, municipal, and private 326 financial resources, and the returns from productions financed 327 by allocations from those resources, and for the purposes of 328 this section. The account shall be under the exclusive control 329 of the board. 330 (b) Appropriations provided to the corporation for 331 financing productions shall be deposited into the account. 332 (c) The board may deposit the funds of the account with 333 state or federally chartered financial institutions in this 334 state and may invest any funds not allocated to a production 335 during a fiscal year in permissible securities as described in 336 s. 560.210(1). 337 (d) Dividend payments received from the investments made by 338 the corporation shall be redeposited into the account to be used 339 for the purposes of this section. 340 (e) The corporation shall keep its operating expenses to 341 the minimum amount necessary. Such operating expenses shall be 342 funded by appropriations provided for that purpose and from net 343 returns from financing provided under this section. 344 (f) Any claims against the account shall be paid solely 345 from the account. Under no circumstances shall the credit of the 346 state be pledged other than funds appropriated by law to the 347 account, nor shall the state be liable or obligated in any way 348 for claims on the account or against the corporation. 349 (6) PRESIDENT OF THE CORPORATION.— 350 (a) The board shall appoint a president. The president must 351 be knowledgeable about private and public financing of feature 352 film and television projects. 353 (b) The president shall serve at the pleasure of the board 354 and shall receive a salary and benefits as fixed by the board. 355 The president’s salary and benefits may not exceed the salary 356 and benefits authorized to be paid to the Governor. 357 (c) The president shall administer the programs of the 358 corporation and perform such duties as delegated by the board. 359 (d) The president shall provide support staff to the board 360 as requested. 361 (e) The president shall submit an annual budget to be 362 approved by the board. 363 (7) PUBLIC NOTICE OF FINANCING; ANNUAL REPORT; AUDIT.— 364 (a) The corporation shall notify the department upon final 365 execution of each contract or agreement by which the corporation 366 provides financing to a production. The corporation shall also 367 publish and maintain a copy of the notice on the corporation’s 368 website while the financing remains outstanding. To provide 369 adequate notice to the businesses and workforce that supply 370 feature film and television production in this state, the notice 371 must include, but need not be limited to, a brief description of 372 the production, the name of the production company, and, to the 373 extent available, the names of the director, cinematographer, 374 production designer, costume designer, and transportation 375 coordinator. 376 (b) The corporation shall submit a report to the department 377 on all corporation activities for the previous fiscal year as a 378 supplement to the department’s annual report required under s. 379 20.60. This supplemental report must include: 380 1. A status report on all projects currently being financed 381 through the corporation, the number of projects financed 382 pursuant to this section, the dollar amount of financing 383 provided to such projects, and the names of the recipients; and 384 2. Information as to the economic impact of the projects 385 financed by the corporation. 386 (c) The Auditor General shall annually conduct a financial 387 audit, as defined in s. 11.45, of the corporation and the 388 account. 389 Section 2. Paragraph (b) of subsection (10) of section 390 20.60, Florida Statutes, is amended to read 391 20.60 Department of Economic Opportunity; creation; powers 392 and duties.— 393 (10) The department, with assistance from Enterprise 394 Florida, Inc., shall, by November 1 of each year, submit an 395 annual report to the Governor, the President of the Senate, and 396 the Speaker of the House of Representatives on the condition of 397 the business climate and economic development in the state. 398 (b) The report must incorporate annual reports of other 399 programs, including: 400 1. Information provided by the Department of Revenue under 401 s. 290.014. 402 2. Information provided by enterprise zone development 403 agencies under s. 290.0056 and an analysis of the activities and 404 accomplishments of each enterprise zone. 405 3. The Economic Gardening Business Loan Pilot Program 406 established under s. 288.1081 and the Economic Gardening 407 Technical Assistance Pilot Program established under s. 408 288.1082. 409 4. A detailed report of the performance of the Black 410 Business Loan Program and a cumulative summary of quarterly 411 report data required under s. 288.714. 412 5. The Rural Economic Development Initiative established 413 under s. 288.0656. 414 6. The Florida Unique Abilities Partner Program. 415 7. The Florida Motion Picture Capital Corporation 416 established under s. 288.1259. 417 Section 3. This act shall take effect July 1, 2018.