Florida Senate - 2020                                     SB 848
       
       
        
       By Senator Montford
       
       
       
       
       
       3-00617-20                                             2020848__
    1                        A bill to be entitled                      
    2         An act relating to rural communities; creating s.
    3         288.062, F.S.; providing a short title; defining
    4         terms; requiring the Department of Economic
    5         Opportunity to accept applications for approval as
    6         growth funds in a specified manner; requiring certain
    7         information to be submitted in an application;
    8         requiring the department to approve or deny
    9         applications within a specified timeframe; prohibiting
   10         the department from approving more than a certain
   11         amount of investment authority or investor
   12         contributions; requiring the department to deny
   13         applications under certain circumstances; authorizing
   14         an applicant whose application was denied to provide
   15         additional information within a certain timeframe to
   16         cure defects in the application; requiring the
   17         department to review and reconsider such applications
   18         within a certain timeframe; prohibiting the department
   19         from reducing the investment authority of an
   20         application or denying an application unless certain
   21         circumstances are met; requiring the department to
   22         certify approved applications; providing requirements
   23         for certified growth funds; requiring the department
   24         to provide a tax credit certificate to certain
   25         taxpayers; requiring the department to revoke a growth
   26         fund’s certification under specified conditions;
   27         requiring the department to distribute revoked
   28         investment authority among certain growth funds;
   29         authorizing growth funds to allocate associated
   30         investor contribution authority to certain taxpayers;
   31         granting a credit against state premium tax liability
   32         for specified investors; providing restrictions on the
   33         credit; requiring that taxpayers claiming a credit
   34         submit a copy of the tax credit certificate with their
   35         tax return; requiring the department to revoke a tax
   36         credit certificate under certain circumstances;
   37         authorizing growth funds to request certain
   38         determinations from the department; providing a
   39         formula for calculating the maximum amount of
   40         investments; specifying a timeframe within which
   41         growth funds may correct violations to avoid
   42         revocation of a tax credit certificate; authorizing
   43         the department to distribute reverted investment
   44         authority among certain growth funds; authorizing
   45         growth funds to submit an exit application; providing
   46         a timeframe and procedures for use by the department
   47         in handling exit applications; prohibiting growth
   48         funds that have exited the program from making certain
   49         distributions or paying certain fees under certain
   50         circumstances; requiring growth funds to remit certain
   51         payments to the department under certain
   52         circumstances; prohibiting the department from
   53         revoking a growth fund’s tax credit certificate after
   54         it exits the program; requiring growth funds to submit
   55         an annual report to the department; requiring that the
   56         annual report include certain information; providing
   57         for rulemaking; requiring the department to notify the
   58         Department of Revenue of any insurance company that is
   59         allocated tax credits; specifying that a growth fund
   60         is deemed to be a recipient of state financial
   61         assistance under certain circumstances; providing
   62         applicability; providing for future expiration;
   63         providing an effective date.
   64          
   65  Be It Enacted by the Legislature of the State of Florida:
   66  
   67         Section 1. Section 288.062, Florida Statutes, is created to
   68  read:
   69         288.062Florida Rural Jobs and Business Recovery Act.—
   70         (1)This section may be cited as the “Florida Rural Jobs
   71  and Business Recovery Act.”
   72         (2)The following terms when used in this section shall
   73  have the following meanings unless the context clearly indicates
   74  otherwise:
   75         (a)“Affiliate” means an entity that directly, or
   76  indirectly through one or more intermediaries, controls, is
   77  controlled by, or is under common control with another entity.
   78  For the purposes of this paragraph, an entity is controlled by
   79  another entity if the controlling entity holds, directly or
   80  indirectly, the majority voting or ownership interest in the
   81  controlled entity or has control over the day-to-day operations
   82  of the controlled entity.
   83         (b)“Closing date” means the date on which a growth fund
   84  has collected all amounts specified by paragraph (8)(a).
   85         (c)“Department” means the Department of Economic
   86  Opportunity.
   87         (d)“Full-time high wage employment position” means an
   88  employment position that is filled, pays a high wage, and
   89  requires at least 35 hours of work per week or any other period
   90  of time generally accepted by custom, industry, or practice as
   91  full-time employment.
   92         (e)“Growth business” means a business that, at the time a
   93  growth fund initially invests in the business:
   94         1.Has fewer than 200 employees;
   95         2.Has its principal business operations in at least one
   96  growth zone in this state; and
   97         3.Is engaged in North American Industry Classification
   98  System sectors: 11, 21, 22, 23, 31-33, 48-49, 54, or 62.
   99  However, if the business is not engaged in such industries, the
  100  department shall determine whether the investment will create
  101  new jobs or retain jobs.
  102         (f)“Growth fund” means an entity certified by the
  103  department under subsection (7).
  104         (g)“Growth investment” means any capital or equity
  105  investment in a growth business or any loan to a growth business
  106  with a stated maturity at least 1 year after the date of
  107  issuance.
  108         (h)“Growth zone” means:
  109         1.All locations outside an urbanized area with a
  110  population equal to or greater than 50,000, as identified by the
  111  United States Census Bureau; or
  112         2.Any urbanized area within a county designated by Federal
  113  Emergency Management Agency declaration FEMA-4399-DR if the
  114  urbanized area had sustained winds in excess of 100 miles per
  115  hour during Hurricane Michael.
  116         (i)“High wage” means a wage in any county which is greater
  117  than 100 percent of the county average.
  118         (j)“Investment authority” means the amount certified by
  119  the department under subsection (7). At least 75 percent of a
  120  growth fund’s investment authority must consist of investor
  121  contributions.
  122         (k)“Investor contribution” means a cash investment in a
  123  growth fund by an entity that is subject to the state premium
  124  tax under ss. 624.509 and 624.5091. The cash investment must
  125  equal the amount specified for that entity in the department’s
  126  approval of a growth fund’s application under subsection (4).
  127  The cash investment shall purchase an equity interest in the
  128  growth fund or purchase at par value or premium a debt
  129  instrument that has a maturity date at least 5 years from the
  130  closing date and a repayment schedule that is no greater than
  131  level principal amortization over 5 years.
  132         (l)“Jobs retained” means the number of full-time high wage
  133  employment positions that existed before the initial growth
  134  investment in a growth business and for which the growth
  135  business’ chief executive officer or similar officer certifies
  136  that the employment positions would have been eliminated but for
  137  the initial growth investment.
  138         (m)“New annual jobs” means the difference between:
  139         1.a.The average monthly number of full-time high wage
  140  employment positions at a growth business in the preceding
  141  calendar year; or
  142         b.If the initial growth investment occurred during the
  143  preceding calendar year, the average monthly number of full-time
  144  high wage employment positions for the months during which the
  145  initial growth investment was made through the end of the
  146  preceding calendar year; and
  147         2.The number of full-time high wage employment positions
  148  at the growth business on the date of the initial growth
  149  investment.
  150  
  151  If the resulting total is less than zero, the new annual jobs
  152  amount is equal to zero.
  153         (n)“Principal business operation” of a business means the
  154  location or locations where at least 60 percent of the
  155  business’s employees work or where the employees who are paid at
  156  least 60 percent of the business’ payroll are located. A
  157  business that agrees to relocate or hire new employees using the
  158  proceeds of a growth investment to establish its principal
  159  business operation in a growth zone in this state is deemed to
  160  have its principal business operations in the new location
  161  provided it satisfies this definition within 180 days after
  162  receiving the growth investment, unless the department agrees to
  163  a later date.
  164         (o)“State premium tax” means the tax identified in s.
  165  624.509 or s. 624.5091.
  166         (3)Beginning September 1, 2020, the department shall
  167  accept applications for approval as a growth fund on a form
  168  adopted by the department. The application shall include the
  169  following:
  170         (a)The total investment authority sought by the applicant.
  171         (b)Evidence that:
  172         1.The applicant or an affiliate of the applicant is
  173  licensed as a rural business investment company under 7 U.S.C.
  174  s. 2009cc or as a small business investment company under 15
  175  U.S.C. s. 681. The applicant or the affiliate must include a
  176  certificate executed by an executive officer of the applicant
  177  attesting that such license remains in effect and has not been
  178  revoked; and
  179         2.At least one principal in a rural business investment
  180  company or a small business investment company is, and has been
  181  for at least 4 years, an officer or employee of the applicant or
  182  an affiliate of the applicant on the date the application is
  183  submitted.
  184         (c)Evidence that, as of the date the application is
  185  submitted, the applicant or affiliates of the applicant have
  186  invested at least $100 million in nonpublic companies located in
  187  nonmetropolitan counties as defined by the Office of Management
  188  and Budget within the Office of the President of the United
  189  States on the basis of county or county-equivalent units.
  190         (d)An estimate of the total number of new annual jobs that
  191  will be created and jobs that will be retained over the life of
  192  the program in this state because of the applicant’s growth
  193  investments.
  194         (e)A business plan that includes a revenue impact
  195  assessment projecting state and local tax revenues to be
  196  generated, as well as state expenditures to be reduced, by the
  197  applicant’s proposed growth investments, prepared by a
  198  nationally recognized third-party independent economic
  199  forecasting firm using a dynamic economic forecasting model that
  200  analyzes the applicant’s business plan over the 10 years
  201  following the date the application is submitted to the
  202  department.
  203         (f)A signed affidavit from each investor stating the
  204  amount of investor contribution the investor will make.
  205         (g)A commitment by the growth fund applicant to give first
  206  priority to growth investments located in those counties
  207  designated by Federal Emergency Management Agency declaration
  208  FEMA-4399-DR.
  209         (4)(a)Within 45 days after receipt of a completed
  210  application containing the information set forth in subsection
  211  (3), the department shall approve or deny the application.
  212         (b)The department shall deem applications that are
  213  received on the same day as having been received simultaneously.
  214         (c)The department shall approve investment authority up to
  215  an amount that would allow no more than $5 million in tax
  216  credits to be taken in any one year, excluding any credits
  217  carried forward pursuant to paragraph (10)(c). No more than a
  218  total of $25 million in tax credits may be approved by the
  219  department under the program. If requests for investment
  220  authority exceed this tax credit limitation, the department
  221  shall proportionally reduce the investment authority and the
  222  investor contributions for each approved application as
  223  necessary to avoid exceeding the limit.
  224         (5)The department shall deny an application if:
  225         (a)The application is incomplete;
  226         (b)The applicant does not satisfy the criteria set forth
  227  in subsection (3);
  228         (c)The revenue impact assessment submitted under paragraph
  229  (3)(e) does not demonstrate that the applicant’s business plan
  230  will result in a positive revenue impact on this state over a
  231  10-year period which exceeds the cumulative amount of tax
  232  credits that would be issued to the applicant’s investors;
  233         (d)The investor contributions described in affidavits
  234  submitted under paragraph (3)(f) do not equal at least 75
  235  percent of the total amount of investment authority sought under
  236  the applicant’s business plan; or
  237         (e)The department has already approved the maximum amount
  238  of investment authority and investor contributions allowed under
  239  subsection (4).
  240         (6)If the department denies an application, the applicant,
  241  within 15 days after the denial, may provide additional
  242  information to the department to cure any defects in the
  243  application identified by the department, except for failure to
  244  comply with paragraph (5)(c), paragraph (5)(d), or paragraph
  245  (5)(e). The department shall review and reconsider such
  246  applications within 30 days after receipt and before approving
  247  any pending applications submitted after the original submission
  248  date of the reconsidered application.
  249         (7)The department shall not reduce the requested
  250  investment authority or deny a growth fund application for
  251  reasons other than those described in subsection (4) or
  252  subsection (5). After the department approves an application, it
  253  shall certify:
  254         (a)The applicant as a growth fund;
  255         (b)The amount of the applicant’s investment authority;
  256         (c)The investor contributions required from each investor
  257  that submitted an affidavit with the growth fund’s application;
  258  and
  259         (d)The number of new annual jobs and jobs retained that
  260  will be required of the growth fund, as prorated, based on the
  261  investment authority awarded to the growth fund.
  262         (8)(a)Within 60 days after receiving the certification
  263  issued under subsection (7), a growth fund shall collect all
  264  investor contributions and collect additional investments of
  265  cash which, when added to the investor contributions, at least
  266  equal the growth fund’s investment authority. Within 65 days
  267  after receiving the certification issued under subsection (7), a
  268  growth fund shall send to the department documentation that it
  269  has collected the amounts described in this subsection. At least
  270  10 percent of the growth fund’s investment authority must
  271  consist of equity investments contributed by affiliates of the
  272  growth fund. The growth fund shall report to the department the
  273  date on which the investor contributions and additional
  274  investments of cash were collected.
  275         (b)Upon receipt of the documentation required by paragraph
  276  (a), the department shall provide a tax credit certificate to
  277  each taxpayer who has made an investor contribution in the
  278  amount of the investor contribution.
  279         (9)If the growth fund fails to fully comply with
  280  subsection (8), the department shall revoke the growth fund’s
  281  certification and the corresponding investment authority and
  282  investor contributions will not count toward the limits on the
  283  program size set forth in subsection (4). The department shall
  284  first award revoked investment authority pro rata to each growth
  285  fund that was awarded less than the investment authority for
  286  which it applied, and a growth fund may allocate the associated
  287  investor contribution authority to any taxpayer with state
  288  premium tax liability in its discretion. Any remaining
  289  investment authority may be awarded by the department to new
  290  applicants.
  291         (10)(a)Any taxpayer that makes an investor contribution is
  292  vested with an earned credit against state premium tax liability
  293  equal to that investor’s investor contribution. The credit may
  294  be used over 5 years such that 20 percent of the credit is
  295  applied in each of the taxable years that includes the year of
  296  the closing date through the fourth anniversary of the closing
  297  date, unless a specific request is made to carry them forward
  298  for a period not to exceed 10 years.
  299         (b)The credit is nonrefundable and may not be sold,
  300  transferred, or allocated to any other entity other than an
  301  affiliate that was an affiliate at the time of the submission of
  302  the investor’s affidavit included in the growth fund’s
  303  application.
  304         (c)The amount of the credit claimed by a taxpayer may not
  305  exceed the amount of such taxpayer’s state premium tax liability
  306  for the tax year for which the credit is claimed.
  307         (d)A taxpayer claiming a credit under this section shall
  308  submit a copy of the tax credit certificate with the taxpayer’s
  309  return for each taxable year for which the credit is claimed.
  310         (e)The credit shall be allowed after deducting from the
  311  tax the deductions for assessments made pursuant to s. 440.51;
  312  the credits for taxes paid under ss. 175.101 and 185.08; the
  313  credits for income taxes paid under chapter 220; the credit
  314  allowed under s. 624.509(5), as such credit is limited by s.
  315  624.509(6); and the credit allowed under s. 624.51055.
  316         (11)The department must revoke the tax credit certificates
  317  issued under paragraph (8)(b) if any of the following occurs
  318  with respect to a growth fund before the growth fund exits the
  319  program in accordance with paragraph (16)(a):
  320         (a)The growth fund does not invest 100 percent of its
  321  investment authority in growth investments in this state within
  322  2 years of the closing date;
  323         (b)The growth fund, after initially satisfying paragraph
  324  (a), fails to maintain growth investments equal to 100 percent
  325  of its investment authority until the sixth anniversary of the
  326  closing date. For purposes of this paragraph, an investment is
  327  maintained even if it is sold or repaid, so long as the growth
  328  fund reinvests an amount equal to the capital returned or
  329  recovered from the original investment, exclusive of any profits
  330  realized, in other growth investments in this state within 12
  331  months of the receipt of such capital. Amounts received
  332  periodically by a growth fund shall be treated as continuously
  333  invested in growth investments if the amounts are reinvested in
  334  one or more growth investments by the end of the following
  335  calendar year;
  336         (c)The growth fund, before exiting the program in
  337  accordance with paragraph (16)(a), makes a distribution or
  338  payment that results in the growth fund having less than 100
  339  percent of its investment authority invested in growth
  340  investments in this state or available for investment in growth
  341  investments and held in cash and other marketable securities; or
  342         (d)The growth fund invests in a growth business that
  343  directly, or indirectly through an affiliate, owns, has the
  344  right to acquire an ownership interest in, makes a loan to, or
  345  makes an investment in the growth fund of an affiliate of the
  346  growth fund or an investor in the growth fund. This paragraph
  347  does not apply to investments in publicly traded securities by a
  348  growth business or an owner or affiliate of such growth
  349  business. For purposes of this paragraph, a growth fund is not
  350  considered an affiliate of a growth business solely because of
  351  its growth investment.
  352         (12)Before making a growth investment, a growth fund may
  353  request a written opinion from the department as to whether the
  354  business in which it proposes to invest satisfies the definition
  355  of a growth business. The department, not later than the 15th
  356  business day after the date of receipt of the request, shall
  357  provide the growth fund with a determination letter providing
  358  its opinion. If the department fails to issue a determination
  359  letter by the 15th business day, the business in which the
  360  growth fund proposes to invest shall be considered a growth
  361  business.
  362         (13)The maximum amount of growth investments in a growth
  363  business, including amounts invested in affiliates of the growth
  364  business, which a growth fund may count in satisfying the
  365  requirements of paragraphs (11)(a) and (b) is the greater of $5
  366  million or 20 percent of its investment authority, exclusive of
  367  repaid or redeemed growth investments.
  368         (14)Before revoking a tax credit certificate under
  369  subsection (11), the department shall notify the growth fund of
  370  the reasons for the pending revocation. The growth fund shall
  371  have 90 days from the date the notice was received to correct
  372  any violation outlined in the notice to the satisfaction of the
  373  department and avoid revocation of the tax credit certificate.
  374         (15)If the department revokes any tax credit certificates
  375  under subsection (11), the associated investment authority and
  376  investor contributions will not count toward the limit on total
  377  investment authority and investor contributions described in
  378  subsection (4). The department may award any remaining
  379  investment authority to new applicants.
  380         (16)(a)On or after the seventh anniversary of the closing
  381  date, a growth fund may apply to the department to exit the
  382  program and no longer be subject to regulation except as set
  383  forth in paragraph (b). The department shall approve or deny the
  384  application within 30 days of receipt. In evaluating the
  385  application, the fact that no tax credit certificates have been
  386  revoked and that the growth fund has not received a notice of
  387  revocation that has not been cured pursuant to subsection (14)
  388  is sufficient evidence to prove that the growth fund is eligible
  389  for exit. The department shall not unreasonably deny an
  390  application submitted under this paragraph. If the application
  391  is denied, the notice shall include the reasons for the
  392  determination.
  393         (b)After its exit from the program in accordance with
  394  paragraph (a), a growth fund may not make distributions or pay
  395  any fees except as allowed under paragraph (11)(c) to its
  396  investors unless it has made growth investments equal to at
  397  least 150 percent of its investment authority. Each growth fund
  398  shall continue to report the amount of growth investments made
  399  to the department annually until it has made growth investments
  400  equal to at least 150 percent of its investment authority.
  401         (c)After its exit from the program in accordance with
  402  paragraph (a), if the growth fund proposes to make a
  403  distribution to its investors which, when added to all previous
  404  distributions to its investors, exceeds its investment
  405  authority, the growth fund shall remit to the department a
  406  payment equal the product of the proposed distribution and the
  407  difference between one and a fraction, the numerator of which is
  408  the aggregate number of new annual jobs and jobs retained
  409  reported to the department pursuant to subsection (18) and the
  410  denominator of which is the number of new annual jobs and jobs
  411  retained as set forth in the growth fund’s certification. No
  412  payment is due if the aggregate number of new annual jobs and
  413  jobs retained as of the date of the proposed distribution equals
  414  or exceeds the number of new annual jobs and jobs retained as
  415  projected in the growth fund’s certificate issued under
  416  subsection (7).
  417         (17)The department may not revoke a tax credit certificate
  418  after a growth fund exits the program.
  419         (18)(a)Each growth fund shall submit an annual report to
  420  the department on or before the 5th business day after each
  421  anniversary of the closing date prior to its exit from the
  422  program in accordance with paragraph (16)(a). The report shall
  423  identify each growth investment made by the growth fund and
  424  shall include:
  425         1.A bank statement evidencing each growth investment, if
  426  not previously reported;
  427         2.The name, location, and industry of each growth business
  428  receiving a growth investment, including either the
  429  determination letter set forth in subsection (12) or evidence
  430  that the business qualified as a growth business at the time the
  431  investment was made, if not previously reported;
  432         3.The number of full-time high wage employment positions
  433  at each growth business and jobs retained on the date of the
  434  growth fund’s initial growth investment;
  435         4.The number of new annual jobs and jobs retained at each
  436  growth business, provided the number of jobs retained may not
  437  exceed the number of jobs retained, as reported in subsection
  438  (3) and the number of jobs retained that must be reduced if the
  439  full-time high wage employment positions reported drops below
  440  the jobs retained as reported in subsection (3);
  441         5.The average annual salary of the positions described in
  442  paragraph (3)(d);
  443         6.The cumulative amount of growth investments made in
  444  growth businesses; and
  445         7.Any other information required by the department.
  446         (b)The growth fund is not required to provide information
  447  with respect to growth investments that have been redeemed or
  448  repaid as part of the annual report set forth in paragraph (a)
  449  but shall provide such information if available.
  450         (19)The department:
  451         (a)May adopt rules to implement this section.
  452         (b)Shall adopt forms and notices to implement this
  453  section.
  454         (c)Shall notify the Department of Revenue of the name and
  455  federal employer identification number of any insurance company
  456  allocated tax credits under this act and the amount of such
  457  credits.
  458         (20)A growth fund that issues a growth investment approved
  459  by the department shall be deemed a recipient of state financial
  460  assistance under s. 215.97, the Florida Single Audit Act.
  461  However, a growth fund business that receives a growth fund
  462  investment is not a subrecipient for the purposes of s. 215.97.
  463         (21)This section applies only to tax returns or reports
  464  originally due on or after January 1, 2021.
  465         (22)This section expires on December 21, 2031.
  466         Section 2. This act shall take effect July 1, 2020.