Florida Senate - 2021                             CS for SB 1444
       By the Committee on Finance and Tax; and Senator Wright
       593-04156-21                                          20211444c1
    1                        A bill to be entitled                      
    2         An act relating to the Florida Small Manufacturing
    3         Business Recovery Act; creating s. 288.715, F.S.;
    4         providing a short title; defining terms; requiring the
    5         Department of Economic Opportunity to accept
    6         applications for certification of relief funds and
    7         relief contributions in a specified manner; specifying
    8         information required to be submitted in an
    9         application; requiring the department to approve or
   10         deny applications within a specified timeframe;
   11         prohibiting the department from approving more than a
   12         specified amount of relief investment authority and
   13         relief contributions; requiring the department to deny
   14         applications under certain circumstances; requiring
   15         the department to provide notice of approval or denial
   16         to applicants; requiring the department to certify
   17         approved applications; authorizing applicants whose
   18         applications were denied to provide additional
   19         information within a certain timeframe to cure defects
   20         in their applications; requiring the department to
   21         reconsider such applications; requiring certified
   22         relief funds to collect contributions and investments
   23         and submit certain documentation within a specified
   24         timeframe; requiring the department to revoke relief
   25         funds’ certification under certain circumstances;
   26         requiring the department to give notice relating to
   27         tax credit certificates; providing requirements
   28         relating to lapsed or revoked investment authority;
   29         authorizing nonrefundable tax credits for owners of
   30         tax credit certificates issued by the department;
   31         providing restrictions on the credit; requiring
   32         taxpayers to submit a copy of the tax credit
   33         certificate with the taxpayers’ annual statements;
   34         authorizing the department to revoke tax credit
   35         certificates under certain circumstances; prohibiting
   36         certain amounts invested in impact businesses from
   37         being counted as a relief investment; authorizing
   38         certain relief funds to apply to the department to be
   39         decertified; providing procedures for decertification;
   40         authorizing a relief fund to request certain opinions
   41         from the department; requiring relief funds to submit
   42         specified reports to the department; authorizing the
   43         department to adopt rules; providing an effective
   44         date.
   46  Be It Enacted by the Legislature of the State of Florida:
   48         Section 1. Section 288.715, Florida Statutes, is created to
   49  read:
   50         288.715 The Florida Small Manufacturing Business Recovery
   51  Act.—
   52         (1)This section may be cited as the “Florida Small
   53  Manufacturing Business Recovery Act.”
   54         (2)As used in this section, the term:
   55         (a)“Affiliate” means a person that directly, or indirectly
   56  through one or more intermediaries, controls, is controlled by,
   57  or is under common control with another person. For the purposes
   58  of this paragraph, a person is “controlled by” another person if
   59  the controlling person holds, directly or indirectly, the
   60  majority voting or ownership interest in the controlled person
   61  or has control over the day-to-day operations of the controlled
   62  person by contract or by law.
   63         (b)“Closing date” means the date on which a relief fund
   64  has collected the amounts specified in paragraph (3)(f).
   65         (c)“Department” means the Department of Economic
   66  Opportunity.
   67         (d)“Impact business” means a business that, at the time of
   68  the initial relief investment by a relief fund:
   69         1.Has fewer than 200 employees;
   70         2.Has its principal business operations in this state; and
   71         3.Is engaged in the North American Industry Classification
   72  System codes 31-33 or, if not engaged in such industries, the
   73  department determines that an investment in the business will be
   74  beneficial to this state’s recovery.
   76  For the purposes of this paragraph, a business has its principal
   77  business operations in this state if at least 60 percent of the
   78  business’ employees reside in this state, at least 80 percent of
   79  the business’ payroll is paid to individuals who reside in this
   80  state, or the business has agreed to use the proceeds of a
   81  relief investment to relocate at least 60 percent of the
   82  business’ employees to this state or pay at least 80 percent of
   83  the business’ payroll to individuals residing in this state.
   84         (e)“Premium taxes” means taxes imposed under s. 624.509 or
   85  s. 624.5091.
   86         (f)“Relief contribution” means a cash investment in a
   87  relief fund which equals the amount specified on a notice of tax
   88  credit allocation issued by the department under paragraph
   89  (3)(h). The investment must purchase an equity interest in the
   90  relief fund or purchases, at par value or premium, a debt
   91  instrument issued by the relief fund which has an original
   92  maturity date of at least 5 years after the date of issuance and
   93  a repayment schedule that is no greater than level principal
   94  amortization over 5 years.
   95         (g)“Relief fund” means an entity certified by the
   96  department under paragraph (3)(e).
   97         (h)“Relief investment” means any capital or equity
   98  investment in an impact business or any loan to an impact
   99  business which has a stated maturity at least 2 years after the
  100  date of issuance. A secured loan is a relief investment only if
  101  it has an initial interest rate of less than 2 percent or
  102  principal and interest payments deferred for at least 1 year. A
  103  subordinate loan is a relief investment only if it has an
  104  initial interest rate of less than 6 percent or principal and
  105  interest payments deferred for at least 1 year. An equity
  106  investment is a relief investment only if the relief fund does
  107  not acquire a majority interest in the small business as a
  108  result of such investment. The term “relief investment” does not
  109  include any transaction that includes an origination fee.
  110         (i)“Relief investment authority” means the amount stated
  111  on the notice issued under paragraph (3)(e) certifying the
  112  relief fund. Eighty percent of a relief fund’s relief investment
  113  authority must consist of relief contributions.
  114         (j)“Small business” means any business that has its
  115  principal business operations in this state, as described in
  116  paragraph (d), and which, at the time the initial relief
  117  investment is made, has fewer than 250 employees or the number
  118  of employees set forth for the business’ North American Industry
  119  Classification System code under 13 C.F.R. s. 121.201, whichever
  120  is greater.
  121         (3)(a)Beginning August 1, 2021, the department shall
  122  accept applications for certification of relief funds and relief
  123  contributions. The application must include:
  124         1.The total relief investment authority sought by the
  125  applicant;
  126         2.Evidence that proves, to the satisfaction of the
  127  department, that:
  128         a.The applicant or an affiliate of the applicant is a
  129  federally approved or licensed rural business investment company
  130  under 7 U.S.C. s. 2009cc or a small business investment company
  131  under 15 U.S.C. s. 681. The applicant must include a certificate
  132  executed by an executive officer of the applicant attesting that
  133  the approval or license remains in effect and has not been
  134  revoked;
  135         b.At least one principal or similar officer of such entity
  136  is, and has been for at least 4 years, an officer or employee of
  137  the applicant or an affiliate of the applicant on the date the
  138  application is submitted; and
  139         c.As of the date the application is submitted, the
  140  applicant and its affiliates have invested more than $500
  141  million in small businesses, regardless of whether the principal
  142  business operations of the small business are in this state; and
  143         3.A signed affidavit from each investor stating that the
  144  investor agrees to make a relief contribution and the amount of
  145  the relief contribution.
  146         (b)1.Except as provided in subparagraph 2., the department
  147  shall approve or deny an application within 30 days after
  148  receiving the application. The department shall deem
  149  applications received on the same day as having been received
  150  simultaneously. The department may not approve more than $100
  151  million in relief investment authority and may not approve more
  152  than $80 million in relief contributions. If approving
  153  simultaneously submitted applications would result in exceeding
  154  these limits, the department shall proportionally reduce the
  155  relief investment authority and the relief contributions for
  156  each approved application as necessary to avoid exceeding the
  157  limit.
  158         2.If the department denies an application for
  159  certification as a relief fund, and approving a subsequently
  160  submitted application would result in exceeding the dollar
  161  limitation on relief investment authority or relief
  162  contributions, assuming the previously denied application was
  163  completed, clarified, or cured under subparagraph (e)2., the
  164  agency may not make a determination on the subsequently
  165  submitted application until the previously denied application is
  166  reconsidered or the 15-day period for submitting additional
  167  information regarding that application has passed, whichever
  168  occurs first.
  169         (c)The department must deny an application if:
  170         1.The application is incomplete, including failing to
  171  submit the affidavits accounting for at least 80 percent of the
  172  relief investment authority sought;
  173         2.The applicant does not satisfy the requirements of
  174  subparagraph (a)2.; or
  175         3.The department has already approved the maximum total
  176  relief investment authority and relief contributions authorized
  177  under subparagraph (b)1.
  178         (d)The department may not deny a relief fund application
  179  or reduce the requested relief investment authority for reasons
  180  other than those described in paragraphs (b) and (c).
  181         (e)1.If the department approves an application, the
  182  department must issue a written notice to the applicant
  183  certifying the applicant as a relief fund and specifying the
  184  applicant’s amount of relief investment authority.
  185         2.If the department denies an application, the department
  186  must notify the applicant of the reasons for denial. If the
  187  application was denied for any reason other than a reason
  188  specified in paragraph (c) or because the applicant failed to
  189  satisfy subparagraph (a)3., the applicant may submit additional
  190  information to the agency to cure defects in the application
  191  within 15 days after receipt of the notice of denial. The
  192  department must reconsider such application within 15 days after
  193  receiving any additional information and, if the application is
  194  approved, treat it as approved as of its original filing date.
  195         (f)Within 30 days after receiving a certification under
  196  paragraph (e), a relief fund must:
  197         1.Collect the relief contributions from each investor
  198  whose affidavit was included in the application;
  199         2.Collect direct or indirect equity investments from
  200  affiliates of the relief fund, including employees, officers,
  201  and directors of such affiliates, equal to at least 10 percent
  202  of the relief fund’s investment authority; and
  203         3.For each investor seeking a tax credit certificate,
  204  provide the department with the investor’s federal employer
  205  identification number, if a business, or the investor’s social
  206  security number, if an individual.
  207         (g)Within 35 days after receiving certification under
  208  paragraph (e), a relief fund must send documentation to the
  209  department which proves the relief fund has collected the
  210  amounts required under paragraph (f). If the relief fund fails
  211  to comply with this paragraph, the department shall revoke the
  212  relief fund’s certification.
  213         (h)After a relief fund satisfies the requirement under
  214  paragraph (g), the department shall issue to each investor or
  215  affiliate identified under paragraph (g) a notice of the amount
  216  and utilization schedule of the tax credit certificates
  217  allocated to the investor or affiliate as a result of the
  218  investor or affiliate’s relief contribution. The department
  219  shall provide the Department of Revenue, for each person who is
  220  allocated tax credit certificates, the person’s name, the amount
  221  of the credit allocation, the utilization schedule, the
  222  information required by subparagraph (f)3., and the closing date
  223  of the relief fund to which the person made a relief
  224  contribution.
  225         (i)If a relief fund’s certification is revoked under
  226  paragraph (g) or the relief fund has tax credits revoked under
  227  paragraph (5)(b), the corresponding relief investment authority
  228  and relief contributions do not count toward limits on total
  229  relief investment authority and relief contributions authorized
  230  under paragraph (b). The department shall first award lapsed or
  231  revoked relief investment authority and the corresponding relief
  232  contributions pro rata to each relief fund awarded less than the
  233  relief investment authority for which it applied pursuant to
  234  subparagraph (b)1. The department may award any remaining relief
  235  investment authority to new applicants. The department shall
  236  notify the Department of Revenue of lapsed or revoked relief
  237  investment authority.
  238         (4)(a)A nonrefundable tax credit certificate is authorized
  239  for owners of tax credit certificates issued by the department
  240  under paragraph (b). The credit may be claimed against premium
  241  taxes and is transferable to any person that pays premium taxes
  242  in this state.
  243         (b)On the closing date, a taxpayer that made a relief
  244  contribution is eligible for a credit equal to the amount
  245  specified in the notice issued under paragraph (3)(h). On or
  246  before the anniversaries of the closing date occurring in 2023,
  247  2024, 2025, 2026, and 2027, the department shall issue a tax
  248  credit certificate equal to one-fifth of the relief
  249  contributions allocated to the taxpayer.
  250         (c)Any amount of credits which exceeds the tax otherwise
  251  due for that year may be carried forward for any ensuing taxable
  252  years. An additional retaliatory tax may not be required as a
  253  result of using the credit. A taxpayer claiming a credit under
  254  this section shall submit a copy of the tax credit certificate
  255  with the taxpayer’s annual statement for each taxable year in
  256  which the credit is claimed.
  257         (5)(a)The department is not required to issue a tax credit
  258  certificate to a relief fund that does not invest at least 70
  259  percent of its relief investment authority in relief investments
  260  within 1 year after the closing date or 100 percent of its
  261  relief investment authority in relief investments within 2 years
  262  after the closing date.
  263         (b)The department may revoke tax credit certificates
  264  issued pursuant to subsection (4) if:
  265         1.Before satisfying paragraph (a), the relief fund makes a
  266  distribution or payment in excess of the cumulative investment
  267  earnings of the relief fund as of the date of the distribution
  268  or payment, taking into account all past distributions and
  269  payments;
  270         2.After satisfying paragraph (a), the relief fund fails to
  271  maintain those levels of investment until the fifth anniversary
  272  of the closing date. For the purposes of this subparagraph, an
  273  investment is maintained even if the investment is sold or
  274  repaid, so long as the relief fund reinvests an amount equal to
  275  the capital returned or recovered from the original investment,
  276  exclusive of any profits realized, in other relief investments
  277  in this state within 1 year of the receipt of such capital.
  278  Regularly scheduled principal payments on a loan that is a
  279  relief investment are deemed continuously invested in a relief
  280  investment if the amounts are reinvested in one or more relief
  281  investments by the end of the following calendar year; or
  282         3.After satisfying paragraph (a) and before the relief
  283  fund is decertified pursuant to paragraph (d), the relief fund
  284  makes a distribution or payment that results in the relief fund
  285  having less than 100 percent of its relief investment authority
  286  invested in relief investments or held in cash or marketable
  287  securities available for investment in relief investments.
  289  The department must notify the relief fund of the reasons for
  290  revocation before revoking tax credit certificates pursuant to
  291  this paragraph. If, within 30 days after the department sends
  292  such notice, the relief fund corrects the reasons given in the
  293  notice to the satisfaction of the department, the department may
  294  not revoke the tax credit certificates.
  295         (c)The amount by which one or more relief investments by a
  296  relief fund in the same impact business exceeds $3.5 million may
  297  not be counted as a relief investment for the purposes of this
  298  section, exclusive of capital repaid or redeemed by such small
  299  business and reinvested as a relief investment in such small
  300  business. A relief investment in an affiliate of an impact
  301  business shall be treated as a relief investment in that impact
  302  business for the purposes of this paragraph.
  303         (d)1.On or after the sixth anniversary of the closing
  304  date, a relief fund that has invested 100 percent of its relief
  305  investment authority in relief investments may apply to the
  306  department to be decertified as a relief fund. The department
  307  shall respond to and not unreasonably deny the application
  308  within 60 days after receiving the application. In evaluating
  309  the application, the fact that no tax credit certificates have
  310  been revoked with respect to the relief fund shall be evidence
  311  to prove that the relief fund is eligible for decertification.
  312         2.The department shall send notice to the relief fund of
  313  its determination with respect to decertification and reasons
  314  for denial, if applicable.
  315         3.The department may not revoke a tax credit certificate
  316  due to any actions of a relief fund which occur after
  317  decertification, but the department may revoke tax credit
  318  certificates due to the actions of a relief fund which occur
  319  before decertification even if such actions are discovered after
  320  the date of decertification.
  321         (e)A relief fund may request a written opinion from the
  322  department as to whether a business qualifies as an impact
  323  business. The department shall issue a written opinion to the
  324  relief fund within 10 business days after receiving such a
  325  request. If the department determines that the business
  326  qualifies as an impact business or if the department fails to
  327  timely issue the written opinion, the business shall be
  328  considered a small business or impact business for the purposes
  329  of this section.
  330         (6)(a)Each relief fund shall submit a report to the
  331  department on or before April 1 of each year, including the
  332  closing date year, until the calendar year after the relief fund
  333  is decertified. The report must provide an itemization of the
  334  relief fund’s relief investments and must include the following
  335  documents and information:
  336         1.A bank statement evidencing each relief investment;
  337         2.The name, location, and industry class of each impact
  338  business that received a relief investment from the relief fund
  339  and evidence that the business qualified as an impact business
  340  at the time the investment was made, if applicable;
  341         3.The jobs created and retained as a result of each relief
  342  investment; and
  343         4.Any other information required by the department.
  344         (b)Each relief fund shall submit a report to the
  345  department on or before the fifth business day after the first
  346  and second anniversaries of the closing date which provides
  347  documentation to prove that the relief fund has met the
  348  investment thresholds required in paragraph (5)(a) and has not
  349  violated any of the other revocation provisions described in
  350  paragraph (5)(b).
  351         (7)The department may adopt rules to implement this
  352  section.
  353         Section 2. This act shall take effect July 1, 2021.