Florida Senate - 2019                        COMMITTEE AMENDMENT
       Bill No. SB 298
                              LEGISLATIVE ACTION                        
                    Senate             .             House              

       The Committee on Finance and Tax (Montford) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Section 288.062, Florida Statutes, is created to
    6  read:
    7         288.062Florida Rural Jobs and Business Recovery Act.—
    8         (1)This section may be cited as the “Florida Rural Jobs
    9  and Business Recovery Act.”
   10         (2)The following terms when used in this section shall
   11  have the following meanings except where the context clearly
   12  indicates a different meaning:
   13         (a)“Affiliate” means an entity that directly, or
   14  indirectly through one or more intermediaries, controls, is
   15  controlled by, or is under common control with another entity.
   16  For the purposes of this paragraph, an entity is “controlled by”
   17  another entity if the controlling entity holds, directly or
   18  indirectly, the majority voting or ownership interest in the
   19  controlled entity or has control over the day-to-day operations
   20  of the controlled entity.
   21         (b)“Closing date” means the date on which a growth fund
   22  has collected all amounts specified by paragraph (8)(a).
   23         (c)“Department” means the Department of Economic
   24  Opportunity.
   25         (d)“Full-time high wage employment position” means an
   26  employment position that is filled, pays a high wage and
   27  requires at least 35 hours of work per week or any other period
   28  of time generally accepted by custom, industry, or practice as
   29  full-time employment.
   30         (e)“Growth business” means a business that, at the time a
   31  growth fund initially invests in the business:
   32         1.Has fewer than 200 employees;
   33         2.Has its principal business operations in at least one
   34  growth zone in the state; and
   35         3.Is engaged in North American Industry Classification
   36  System sectors: 11, 21, 22, 23, 31-33, 48-49, 54, or 62.
   37  However, if the business is not engaged in such industries, the
   38  department shall determine whether the investment will create
   39  new jobs or retain jobs.
   40         (f)“Growth fund” means an entity certified by the
   41  department under subsection (7).
   42         (g)“Growth investment” means any capital or equity
   43  investment in a growth business or any loan to a growth business
   44  with a stated maturity at least 1 year after the date of
   45  issuance.
   46         (h)“Growth zone” means:
   47         1.All locations outside an urbanized area with a
   48  population equal to or greater than 50,000, as identified by the
   49  United States Census Bureau; or
   50         2.Any urbanized area within a county designated by Federal
   51  Emergency management Agency declaration FEMA-4399-DR if the
   52  urbanized area had sustained winds in excess of 100 miles per
   53  hour during Hurricane Michael.
   54         (i)“High wage” means a wage in any county that is greater
   55  than 100 percent of the county average.
   56         (j)“Investment authority” means the amount certified by
   57  the department under subsection (7). At least 75 percent of a
   58  growth fund’s investment authority must consist of investor
   59  contributions.
   60         (k)“Investor contribution” means a cash investment in a
   61  growth fund by an entity that is subject to the state premium
   62  tax under ss. 624.509 and 624.5091. The cash investment must
   63  equal the amount specified for that entity in the department’s
   64  approval of a growth fund’s application under subsection (4).
   65  The cash investment shall purchase an equity interest in the
   66  growth fund or purchase, at par value or premium, a debt
   67  instrument that has a maturity date at least 5 years from the
   68  closing date and a repayment schedule that is no greater than
   69  level principal amortization over 5 years.
   70         (l)“Jobs retained” means the number of full-time high wage
   71  employment positions that existed before the initial growth
   72  investment in a growth business and for which the growth
   73  business’s chief executive officer or similar officer certifies
   74  that the employment positions would have been eliminated but for
   75  the initial growth investment.
   76         (m)“New annual jobs” means the difference between:
   77         1.a.The average monthly number of full-time high wage
   78  employment positions at a growth business in the preceding
   79  calendar year; or
   80         b.If the initial growth investment occurred during the
   81  preceding calendar year, the average monthly number of full-time
   82  high wage employment positions for the months during which the
   83  initial growth investment was made through the end of the
   84  preceding calendar year; and
   85         2.The number of full-time high wage employment positions
   86  at the growth business on the date of the initial growth
   87  investment.
   89  If the resulting total is less than zero, the new annual jobs
   90  amount is equal to zero.
   91         (n)“Principal business operation” of a business is the
   92  location or locations where at least 60 percent of the
   93  business’s employees work or where the employees who are paid at
   94  least 60 percent of the business’s payroll are located. A
   95  business that agrees to relocate or hire new employees using the
   96  proceeds of a growth investment to establish its principal
   97  business operation in a growth zone in the state is deemed to
   98  have its principal business operations in the new location
   99  provided it satisfies this definition within 180 days after
  100  receiving the growth investment, unless the department agrees to
  101  a later date.
  102         (o)“State premium tax” means the tax identified in s.
  103  624.509 or s. 624.5091.
  104         (3)Beginning September 1, 2019, the department shall
  105  accept applications for approval as a growth fund on a form
  106  adopted by the department. The application shall include the
  107  following:
  108         (a)The total investment authority sought by the applicant.
  109         (b)Evidence that:
  110         1.The applicant or an affiliate of the applicant is
  111  licensed as a rural business investment company under 7 U.S.C.
  112  s. 2009cc or as a small business investment company under 15
  113  U.S.C. s. 681. The applicant or the affiliate must include a
  114  certificate executed by an executive officer of the applicant
  115  attesting that such license remains in effect and has not been
  116  revoked; and
  117         2.At least one principal in a rural business investment
  118  company or a small business investment company is, and has been
  119  for at least 4 years, an officer or employee of the applicant or
  120  an affiliate of the applicant on the date the application is
  121  submitted.
  122         (c)Evidence that as of the date the application is
  123  submitted, the applicant or affiliates of the applicant have
  124  invested at least $100 million in nonpublic companies located in
  125  nonmetropolitan counties as defined by the Office of Management
  126  and Budget within the Office of the President of the United
  127  States on the basis of county or county-equivalent units.
  128         (d)An estimate of the total number of new annual jobs that
  129  will be created and jobs retained over the life of the program
  130  in this state because of the applicant’s growth investments.
  131         (e)A business plan that includes a revenue impact
  132  assessment projecting state and local tax revenues to be
  133  generated, as well as state expenditures to be reduced, by the
  134  applicant’s proposed growth investments, prepared by a
  135  nationally recognized third-party independent economic
  136  forecasting firm using a dynamic economic forecasting model that
  137  analyzes the applicant’s business plan over the 10 years
  138  following the date the application is submitted to the
  139  department.
  140         (f)A signed affidavit from each investor stating the
  141  amount of investor contribution the investor will make.
  142         (g)A commitment by the growth fund applicant to give first
  143  priority to growth investments located in those counties
  144  designated by Federal Emergency Management Agency declaration
  145  FEMA-4399-DR.
  146         (4)(a)Within 45 days after receipt of a completed
  147  application containing the information set forth in subsection
  148  (3), the department shall approve or deny the application.
  149         (b)The department shall deem applications that are
  150  received on the same day as having been received simultaneously.
  151         (c)The department shall approve investment authority up to
  152  an amount that would allow no more than $5 million in tax
  153  credits to be taken in any one year, excluding any credits that
  154  are carried forward pursuant to paragraph (10)(c). No more than
  155  a total of $25 million in tax credits may be approved by the
  156  department under the program. If requests for investment
  157  authority exceed this tax credit limitation, the department
  158  shall proportionally reduce the investment authority and the
  159  investor contributions for each approved application as
  160  necessary to avoid exceeding the limit.
  161         (5)The department shall deny an application if:
  162         (a)The application is incomplete;
  163         (b)The applicant does not satisfy the criteria set forth
  164  in subsection (3);
  165         (c)The revenue impact assessment submitted under paragraph
  166  (3)(e) does not demonstrate that the applicant’s business plan
  167  will result in a positive revenue impact on this state over a
  168  10-year period that exceeds the cumulative amount of tax credits
  169  that would be issued to the applicant’s investors;
  170         (d)The investor contributions described in affidavits
  171  submitted under paragraph (3)(f) do not equal at least 75
  172  percent of the total amount of investment authority sought under
  173  the applicant’s business plan; or
  174         (e)The department has already approved the maximum amount
  175  of investment authority and investor contributions allowed under
  176  subsection (4).
  177         (6)If the department denies an application, the applicant,
  178  within 15 days after the denial, may provide additional
  179  information to the department to cure any defects in the
  180  application identified by the department, except for failure to
  181  comply with paragraph (5)(c), paragraph (5)(d), or paragraph
  182  (5)(e). The department shall review and reconsider such
  183  applications within 30 days after receipt and before approving
  184  any pending applications submitted after the original submission
  185  date of the reconsidered application.
  186         (7)The department shall not reduce the requested
  187  investment authority or deny a growth fund application for
  188  reasons other than those described in subsection (4) or
  189  subsection (5). After the department approves an application, it
  190  shall certify:
  191         (a)The applicant as a growth fund;
  192         (b)The amount of the applicant’s investment authority;
  193         (c)The investor contributions required from each investor
  194  that submitted an affidavit with the growth fund’s application;
  195  and
  196         (d)The number of new annual jobs and jobs retained that
  197  will be required of the growth fund, as prorated, based on the
  198  investment authority awarded to the growth fund.
  199         (8)(a)Within 60 days after receiving the certification
  200  issued under subsection (7), a growth fund shall collect all
  201  investor contributions and collect additional investments of
  202  cash that, when added to the investor contributions, at least
  203  equal the growth fund’s investment authority. Within 65 days
  204  after receiving the certification issued under subsection (7), a
  205  growth fund shall send to the department documentation that it
  206  has collected the amounts described in this subsection. At least
  207  10 percent of the growth fund’s investment authority must
  208  consist of equity investments contributed by affiliates of the
  209  growth fund. The growth fund shall report to the department the
  210  date on which the investor contributions and additional
  211  investments of cash were collected.
  212         (b)Upon receipt of the documentation required by paragraph
  213  (a), the department shall provide a tax credit certificate to
  214  each taxpayer who has made an investor contribution in the
  215  amount of the investor contribution.
  216         (9)If the growth fund fails to fully comply with
  217  subsection (8), the department shall revoke the growth fund’s
  218  certification and the corresponding investment authority and
  219  investor contributions will not count toward the limits on the
  220  program size set forth in subsection (4). The department shall
  221  first award revoked investment authority pro rata to each growth
  222  fund that was awarded less than the investment authority for
  223  which it applied, and a growth fund may allocate the associated
  224  investor contribution authority to any taxpayer with state
  225  premium tax liability in its discretion. Any remaining
  226  investment authority may be awarded by the department to new
  227  applicants.
  228         (10)(a) Any taxpayer that makes an investor contribution is
  229  vested with an earned credit against state premium tax liability
  230  equal to that investor’s investor contribution. The credit may
  231  be used over 5 years such that 20 percent of the credit is
  232  applied in each of the taxable years that includes the year of
  233  the closing date through the fourth anniversary of the closing
  234  date, unless a specific request is made to carry them forward
  235  for a period not to exceed 10 years.
  236         (b)The credit is nonrefundable and may not be sold,
  237  transferred, or allocated to any other entity other than an
  238  affiliate that was an affiliate at the time of the submission of
  239  the investor’s affidavit included in the growth fund’s
  240  application.
  241         (c)The amount of the credit claimed by a taxpayer may not
  242  exceed the amount of such taxpayer’s state premium tax liability
  243  for the tax year for which the credit is claimed.
  244         (d)A taxpayer claiming a credit under this section shall
  245  submit a copy of the tax credit certificate with the taxpayer’s
  246  return for each taxable year for which the credit is claimed.
  247         (e)The credit shall be allowed after deducting from the
  248  tax the deductions for assessments made pursuant to s. 440.51;
  249  the credits for taxes paid under ss. 175.101 and 185.08; the
  250  credits for income taxes paid under chapter 220; the credit
  251  allowed under s. 624.509(5), as such credit is limited by s.
  252  624.509(6); and the credit allowed under s. 624.51055.
  253         (11)The department must revoke the tax credit certificates
  254  issued under paragraph (8)(b) if any of the following occur with
  255  respect to a growth fund before the growth fund exits the
  256  program in accordance with paragraph (16)(a):
  257         (a)The growth fund does not invest 100 percent of its
  258  investment authority in growth investments in this state within
  259  2 years of the closing date;
  260         (b)The growth fund, after initially satisfying paragraph
  261  (a), fails to maintain growth investments equal to 100 percent
  262  of its investment authority until the sixth anniversary of the
  263  closing date. For purposes of this paragraph, an investment is
  264  “maintained” even if it is sold or repaid, so long as the growth
  265  fund reinvests an amount equal to the capital returned or
  266  recovered from the original investment, exclusive of any profits
  267  realized, in other growth investments in this state within 12
  268  months of the receipt of such capital. Amounts received
  269  periodically by a growth fund shall be treated as continuously
  270  invested in growth investments if the amounts are reinvested in
  271  one or more growth investments by the end of the following
  272  calendar year;
  273         (c)The growth fund, before exiting the program in
  274  accordance with paragraph (16)(a), makes a distribution or
  275  payment that results in the growth fund having less than 100
  276  percent of its investment authority invested in growth
  277  investments in this state or available for investment in growth
  278  investments and held in cash and other marketable securities; or
  279         (d)The growth fund invests in a growth business that
  280  directly or indirectly through an affiliate owns, has the right
  281  to acquire an ownership interest, makes a loan to, or makes an
  282  investment in the growth fund, an affiliate of the growth fund,
  283  or an investor in the growth fund. This paragraph does not apply
  284  to investments in publicly traded securities by a growth
  285  business or an owner or affiliate of such growth business. For
  286  purposes of this paragraph, a growth fund is not considered an
  287  affiliate of a growth business solely because of its growth
  288  investment.
  289         (12)Before making a growth investment, a growth fund may
  290  request a written opinion from the department as to whether the
  291  business in which it proposes to invest satisfies the definition
  292  of a growth business. The department, not later than the 15th
  293  business day after the date of receipt of the request, shall
  294  provide the growth fund with a determination letter providing
  295  its opinion. If the department fails to issue a determination
  296  letter by the 15th business day, the business in which the
  297  growth fund proposes to invest shall be considered a growth
  298  business.
  299         (13)The maximum amount of growth investments in a growth
  300  business, including amounts invested in affiliates of the growth
  301  business, that a growth fund may count in satisfying the
  302  requirements of paragraphs (11)(a) and (b) is the greater of $5
  303  million or 20 percent of its investment authority, exclusive of
  304  repaid or redeemed growth investments.
  305         (14)Before revoking a tax credit certificate under
  306  subsection (11), the department shall notify the growth fund of
  307  the reasons for the pending revocation. The growth fund shall
  308  have 90 days from the date the notice was received to correct
  309  any violation outlined in the notice to the satisfaction of the
  310  department and avoid revocation of the tax credit certificate.
  311         (15)If the department revokes any tax credit certificates
  312  under subsection (11), the associated investment authority and
  313  investor contributions will not count toward the limit on total
  314  investment authority and investor contributions described in
  315  subsection (4). The department may award any remaining
  316  investment authority to new applicants.
  317         (16)(a)On or after the seventh anniversary of the closing
  318  date, a growth fund may apply to the department to exit the
  319  program and no longer be subject to regulation except as set
  320  forth in paragraph (b). The department shall approve or deny the
  321  application within 30 days of receipt. In evaluating the
  322  application, the fact that no tax credit certificates have been
  323  revoked and that the growth fund has not received a notice of
  324  revocation that has not been cured pursuant to subsection (14)
  325  is sufficient evidence to prove that the growth fund is eligible
  326  for exit. The department shall not unreasonably deny an
  327  application submitted under this paragraph. If the application
  328  is denied, the notice shall include the reasons for the
  329  determination.
  330         (b)After its exit from the program in accordance with
  331  paragraph (a), a growth fund may not make distributions or pay
  332  any fees except as allowed under paragraph (11)(c) to its
  333  investors unless it has made growth investments equal to at
  334  least 150 percent of its investment authority. Each growth fund
  335  shall continue to report the amount of growth investments made
  336  to the department annually until it has made growth investments
  337  equal to at least 150 percent of its investment authority.
  338         (c)After its exit from the program in accordance with
  339  paragraph (a), at any time the growth fund proposes to make a
  340  distribution to its investors that, when added to all previous
  341  distributions to its investors, exceeds its investment
  342  authority, the growth fund shall remit to the department a
  343  payment equal the product of the proposed distribution and the
  344  difference between one and a fraction, the numerator of which is
  345  the aggregate number of new annual jobs and jobs retained
  346  reported to the department pursuant to subsection (18) and the
  347  denominator of which is the number of new annual jobs and jobs
  348  retained as set forth in the growth fund’s certification. No
  349  payment is due if the aggregate number of new annual jobs and
  350  jobs retained as of the date of the proposed distribution equal
  351  or exceed the number of new annual jobs and jobs retained as
  352  projected set forth in the growth fund’s certificate issued
  353  under subsection (7).
  354         (17)The department may not revoke a tax credit certificate
  355  after a growth fund exits from the program.
  356         (18)(a)Each growth fund shall submit an annual report to
  357  the department on or before the 5th business day after each
  358  anniversary of the closing date prior to its exit from the
  359  program in accordance with paragraph (16)(a). The report shall
  360  identify each growth investment made by the growth fund and
  361  shall include:
  362         1.A bank statement evidencing each growth investment, if
  363  not previously reported;
  364         2.The name, location, and industry of each growth business
  365  receiving a growth investment, including either the
  366  determination letter set forth in subsection (12) or evidence
  367  that the business qualified as a growth business at the time the
  368  investment was made, if not previously reported;
  369         3.The number of full-time high wage employment positions
  370  at each growth business and jobs retained on the date of the
  371  growth fund’s initial growth investment;
  372         4.The number of new annual jobs and jobs retained at each
  373  growth business, provided the number of jobs retained may not
  374  exceed the number of jobs retained, as reported in subsection
  375  (3) and the number of jobs retained that must be reduced if the
  376  full-time high wage employment positions reported drops below
  377  the jobs retained as reported in subsection (3);
  378         5.The average annual salary of the positions described in
  379  paragraph (3)(d);
  380         6.The cumulative amount of growth investments made in
  381  growth businesses; and
  382         7.Any other information required by the department.
  383         (b)The growth fund is not required to provide information
  384  with respect to growth investments that have been redeemed or
  385  repaid as part of the annual report set forth in paragraph (a)
  386  but shall provide such information if available.
  387         (19)The department:
  388         (a)May adopt rules to implement the provisions of this
  389  section.
  390         (b)Shall adopt forms and notices to implement this
  391  section.
  392         (c)Shall notify the Department of Revenue of the name and
  393  federal employer identification number of any insurance company
  394  allocated tax credits under this act and the amount of such
  395  credits.
  396         (20)A growth fund that issues a growth investment approved
  397  by the department shall be deemed a recipient of state financial
  398  assistance under s. 215.97, the Florida Single Audit Act.
  399  However, a growth fund business that receives a growth fund
  400  investment is not a subrecipient for the purposes of s. 215.97.
  401         (21)The provisions of this section apply only to tax
  402  returns or reports originally due on or after January 1, 2020.
  403         (22)This section expires on December 21, 2030.
  404         Section 2. This act shall take effect July 1, 2019.
  406  ================= T I T L E  A M E N D M E N T ================
  407  And the title is amended as follows:
  408         Delete everything before the enacting clause
  409  and insert:
  410                        A bill to be entitled                      
  411         An act relating to rural communities; creating s.
  412         288.062, F.S.; providing a short title; defining
  413         terms; requiring the Department of Economic
  414         Opportunity to accept applications for approval as
  415         growth funds in a specified manner; specifying
  416         information required to be submitted in an
  417         application; requiring the department to approve or
  418         deny the applications within a specified timeframe;
  419         prohibiting the department from approving more than a
  420         certain amount of investment authority or investor
  421         contributions; requiring the department to deny
  422         applications under certain circumstances; authorizing
  423         an applicant whose application was denied to provide
  424         additional information within a certain timeframe to
  425         cure defects in the application; prohibiting the
  426         department from reducing the investment authority of
  427         an application or denying an application unless
  428         certain circumstances are met; requiring the
  429         department to certify approved applications; requiring
  430         the growth fund to collect contributions and
  431         investments within a certain timeframe; requiring the
  432         department to provide a tax credit certificate to
  433         certain taxpayers; requiring the department to revoke
  434         a growth fund’s certification under specified
  435         conditions; granting a credit against state premium
  436         tax liability for specified investors; providing
  437         restrictions on the credit; requiring that a taxpayer
  438         claiming a credit submit a copy of the tax credit
  439         certificate with his or her tax return; requiring the
  440         department to revoke a tax credit certificate under
  441         certain circumstances; authorizing a growth fund to
  442         request certain determinations from the department;
  443         providing a formula for calculating the maximum amount
  444         of investments; specifying a timeframe within which a
  445         growth fund may correct violations to avoid revocation
  446         of a tax credit certificate; requiring the department
  447         to distribute reverted investment authority among
  448         certain growth funds; authorizing the growth fund to
  449         submit an exit application; providing procedures for
  450         use by the department in handling exit applications;
  451         prohibiting a growth fund that has exited the program
  452         from making certain distributions or paying certain
  453         fees under certain circumstances; requiring the growth
  454         fund to remit certain payments to the department under
  455         certain circumstances; requiring the growth fund to
  456         submit a report to the department at a specified time;
  457         prohibiting the department from revoking a growth
  458         fund’s tax credit certificate after it exits the
  459         program; requiring the growth fund to submit an annual
  460         report to the department; requiring that the annual
  461         report include certain information; providing for
  462         rulemaking; requiring the department to notify the
  463         Department of Revenue of any insurance company that is
  464         allocated tax credits; specifying that a growth fund
  465         is deemed to be a recipient of state financial
  466         assistance under certain circumstances; providing
  467         applicability; providing for future expiration;
  468         providing an effective date.