House Staff Analysis: PCS for CS/HB 1139 Economic Development (Commerce Committee)
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- 2020 2994 Commerce Committee Proposed Committee Bill Analyses Fn Pcs1139 Com
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- 2020 2994 Commerce Committee Proposed Committee Bill Analyses Fn Pcs1139 Com
Summary
A Florida House of Representatives staff analysis of the PCS for CS/HB 1139, Economic Development, sponsored by the Commerce Committee and dated February 18, 2020. The analysis states that the bill amends the Regional Rural Development Grants Program, raising the maximum annual award from $150,000 to $250,000 for the three regional organizations serving an entire rural area of opportunity and reducing the match to 25% of the state contribution. It raises Rural Infrastructure Fund awards to 50 percent of project cost, adds broadband Internet service, and requires a program review by September 1, 2021. It also replaces the CareerSource board of directors with a state board, enlarges the Florida Development Finance Corporation board from five to seven members, and provides for repeal of s. 288.9604, F.S., on October 1, 2022 unless saved. The effective date is July 1, 2020.
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Cite this document
“House Staff Analysis: PCS for CS/HB 1139 Economic Development (Commerce Committee).”
Original at www.flhouse.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2020-2994-commerce-committee-proposed-committee-bill-analyses-fn-pcs1139-com/
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for CS/HB 1139 Economic Development
SPONSOR(S): Commerce Committee
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Commerce Committee Willson Hamon
SUMMARY ANALYSIS
The Regional Rural Development Grants Program is a state matching grant program established to provide funding to
build the professional capacity of regional economic development organizations. The Rural Infrastructure Fund assists
units of local government with the planning, preparing, and financing of infrastructure projects that encourage job creation
and capital investment. Both programs are administered by the Department of Economic Opportunity (DEO).
The bill amends the Regional Rural Development Grants Program to clarify how regional economic development
organizations may build their professional capacity and to expand grant use for technical assistance. It also defines a
“regional economic development organization” to mean an economic development organization located in or contracted to
serve a rural area of opportunity (RAO).
The bill increases the total annual grant award available to the three regional economic development organizations
recognized by DEO as serving an entire RAO, decreases the annual grant award available to other organizations located
in or contracted to serve a RAO, and eliminates grant eligibility for organizations representing rural counties or
communities that are not located in a RAO. The bill reduces the percentage of grant funds that must be matched with non-
state funds, from 100% to 25% of the state’s contribution.
The bill amends the Rural Infrastructure Fund by increasing the percentage of total infrastructure costs that may be
funded by a grant award, expanding eligible projects and uses to include broadband internet service, and requiring a
review of the grant program and procedures by September 1, 2021.
CareerSource is a not-for-profit corporation that serves as Florida’s state-level workforce investment board. CareerSource
is responsible for developing and implementing a 5-year plan for the statewide workforce system in collaboration with
DEO, the local workforce development boards, and one-stop career centers to ensure that workforce services provided
are consistent with state and local plans.
The bill replaces the board of directors for CareerSource with a “state board”, and requires CareerSource to support and
work at the direction of the state board, in consultation with DEO. The bill reassigns many of CareerSource’s powers,
duties and policy-making responsibilities to DEO or the state board, or a combination of the two. The bill also makes a
number of conforming changes to reflect this adjustment in the relationship between DEO, CareerSource Florida, and the
state board.
The Florida Development Finance Corporation (FDFC) is a statewide development financing authority. The FDFC
operates as a conduit bond issuer that issues bonds on behalf of borrowers. FDFC is governed by a five-member board of
directors who are appointed by the Governor and confirmed by the Senate for four-year terms.
The bill requires DEO to establish annual performance standards and develop a detailed report of the performance of
FDFC each year. The bill increases the membership of the FDFC board from five to seven, adding the executive director
of DEO (to serve as chair of the board) and the director of the Division of Bond Finance. The bill provides that s.
288.9604, F.S., the statute creating and authorizing the FDFC, stands repealed October 1, 2022, and every fourth year
thereafter, unless reviewed and saved from repeal by the Legislature.
The bill has no fiscal impact on state funds. The bill may have a positive fiscal impact on local governments and the
private sector. See Fiscal Comments.
The effective date of the bill is July 1, 2020.
This document does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 2/18/2020
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Regional Economic Development Organizations
Three regional economic development organizations operate in Florida. Each coincides respectively
with one of the state’s three Rural Areas of Opportunity (RAO). A RAO is a rural community, or a region
comprised of rural communities, which has been adversely affected by an extraordinary economic
event, severe or chronic distress, or a natural disaster, or that presents a unique economic
development opportunity of regional impact.1 The Governor may designate up to three RAOs,
establishing each region as a priority assignment for Rural Economic Development Initiative agencies.
The Governor can waive the criteria, requirements, or similar provisions of any economic development
incentive for projects in a RAO.2
The three designated RAOs are:3
Northwest RAO: Calhoun, Franklin, Gadsden, Gulf, Holmes, Jackson, Liberty, Wakulla, and
Washington counties, and the City of Freeport in Walton County.
South Central RAO: DeSoto, Glades, Hardee, Hendry, Highlands, and Okeechobee counties,
and the cities of Pahokee, Belle Glade, and South Bay (Palm Beach County), and Immokalee
(Collier County).
North Central RAO: Baker, Bradford, Columbia, Dixie, Gilchrist, Hamilton, Jefferson, Lafayette,
Levy, Madison, Putnam, Suwannee, Taylor, and Union counties.
Coinciding with the RAOs are three regional economic development organizations which are
public/private 501(c)(6) organizations that provide economic development support to the local
governments represented in the RAOs. Opportunity Florida serves the Northwest RAO; Florida’s
Heartland Regional Economic Development Initiative, Inc. serves the South Central RAO; and North
Florida Economic Development Partnership serves the North Central RAO.
Regional Rural Development Grants Program
The Regional Rural Development Grants Program is a state matching grant program established to
provide funding to build the professional capacity of regional economic development organizations.4
Additionally, grants may be used by an economic development organization to provide technical
assistance to businesses within the rural counties and communities that it serves.5
Applications submitted to DEO must provide proof:
of official commitments of support from each local government represented by the regional
organization;
that each local government has made a financial or in-kind commitment to the regional
organization;
that the private sector has made financial or in-kind commitments to the regional organization;
that the regional organization is in existence and actively involved in economic development
activities serving the region; and
1
S. 288.0656(2)(d), F.S.
2
S. 288.0656(7)(a), F.S.
3
Department of Economic Opportunity, Rural Areas of Opportunity, http://www.floridajobs.org/community-planning-and-
development/rural-community-programs/rural-areas-of-opportunity (last visited Jan. 27, 2020).
4
S. 288.018, F.S.
5
S. 288.018(1), F.S.
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the manner in which the regional organization coordinates its efforts with those of other local
and state organizations.6
An organization may receive up to $50,000 a year or $150,000 if located in a RAO.7 Grants must be
matched by an equivalent amount of non-state resources.8 DEO is authorized to spend up to $750,000
each fiscal year from funds appropriated to the Rural Community Development Revolving Loan Fund to
carry out this program.9
Rural Infrastructure Fund
The Rural Infrastructure Fund is a grant program created to facilitate the planning, preparing, and
financing of infrastructure projects in rural communities.10 The program provides access to federal and
state infrastructure funding programs, including, but not limited to, those offered by the U.S.
Departments of Agriculture, and Commerce.11 The program funds total infrastructure project grants,
infrastructure feasibility grants, and preclearance review grants.
DEO may award grants for up to 30 percent of the total infrastructure project cost. If an application is
for a catalyst site,12 up to 40 percent of the total infrastructure project cost may be awarded.13 Projects
must be related to specific job-creation or job-retention opportunities. Additionally, projects may include
improving any inadequate infrastructure that has resulted in regulatory action that prohibits economic or
community growth or reducing the costs to community users of proposed infrastructure improvements
that exceed such costs in comparable communities.14
Eligible uses of funds include improvements to public infrastructure for industrial or commercial sites
and upgrades to or development of public tourism infrastructure.15 Infrastructure can include public or
public-private partnership facilities, like storm water systems, telecommunication, broadband, roads,
and nature-based tourism.16
The infrastructure feasibility grant provides awards of up to 30 percent of the total project costs for
infrastructure feasibility studies, design and engineering activities, or other infrastructure planning and
preparation activities.17 Maximum awards are dependent on the number of jobs that a business
commits to create and may be up to $300,000 if the project is located in a RAO. The total project
participation grant may be used in conjunction with the infrastructure feasibility grant.
The preclearance review grant provides awards to help a local government participate in expedited
permitting processes through technical assistance in preparing permit applications and local
comprehensive plan amendments.18 Grants may be used for surveys, feasibility studies, and other
activities related to the identification and preclearance review of land use modifications. Grants are
limited to $75,000 and must be matched 50 percent with local funds. However, projects in a RAO may
receive up to $300,000 and must be matched 33 percent with local funds.19
6
S. 288.018(2), F.S.
7
S. 288.018(1), F.S.
8
Id.
9
S. 288.018(4), F.S.
10
See s. 288.0655, F.S.
11
S. 288.0655(2)(b), F.S.
12
S. 288.0656(2)(b), F.S., defines “catalyst site” as a parcel or parcels of land within a rural area of opportunity that has been
prioritized as a geographic site for economic development through partnerships with state, regional, and local organizations. The site
must be reviewed by the rural economic development initiative and approved by DEO for the purposes of locating a catalyst project.
13
S. 288.0655(2)(b), F.S.
14
Id.
15
Id.
16
Id.
17
S. 288.0655(2)(c), F.S.
18
S. 288.0655(2)(e), F.S. Expedited permitting is pursuant to s. 403.9739(18), F.S.
19
S. 288.0655(2)(e), F.S.
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Grant applications are reviewed and certified by DEO in consultation with: Enterprise Florida, Inc.,
VISIT Florida, the Department of Environmental Protection, and the Florida Fish and Wildlife
Conservation Commission. Reviews include an evaluation of the economic benefit of the projects and
their long-term viability.20
Effect of Proposed Changes
Regional Rural Development Grants Program
The bill amends the Regional Rural Development Grants Program to clarify how regional economic
development organizations may build their professional capacity, expand grant use for technical
assistance, increase the annual grant awards for regional economic development organizations, and
reduce match requirements. It also defines a “regional economic development organization” to mean
an economic development organization that is located in, or contracted to serve, a RAO.
One authorized use of the matching grant program is to build the professional capacity of regional
economic development organizations. The bill specifies that efforts to build professional capacity hiring
professional staff to develop, deliver, and provide needed economic development professional
services, including technical assistance, education and leadership development, marketing, and project
recruitment.
Regional economic development organizations may currently use grant funds to provide technical
assistance to businesses within the rural counties and communities it serves. The bill expands this by
allowing technical assistance to local governments, local economic development organizations, and
existing and prospective businesses.
The bill increases the maximum annual grant award from $150,000 to $250,000 for any three regional
economic development organizations recognized by DEO as serving an entire region of a RAO. These
organizations are: Opportunity Florida, Florida’s Heartland Regional Economic Development Initiative,
Inc., and North Florida Economic Development Partnership.
For organizations located in or contracted to serve a RAO, but not recognized as serving the entire
RAO, the bill reduces the maximum annual grant amount from $150,000 to $50,000.
Under the bill, any organizations that represent rural counties and communities, but are not located in
or serve a RAO, would not meet the definition of “regional economic development organizations” and
therefore would no longer be eligible to receive any grant funds.
The bill reduces the required match for a grant under this program to a 25% match of the state
contribution, instead of the current one-to-one match requirement.
Rural Infrastructure Fund
The bill amends the Rural Infrastructure Fund by revising grant award percentages, expanding eligible
projects and uses to include broadband internet service, and requiring a review of the grant program
and procedures by a specific date.
Currently, grants awarded under the Rural Infrastructure Fund program are limited to 30 percent of the
total infrastructure project cost, or up to 40 percent if funding is for a catalyst site. The bill increases the
percentage for all grants awarded, including catalyst sites, to 50 percent of the total infrastructure
project cost.
The bill specifies that eligible projects may include improving certain inadequate infrastructure that
reduces costs to community users of proposed infrastructure improvements that exceeds costs in
comparable communities, and improving access to and the availability of broadband Internet service.
20
S. 288.0655(3), F.S.
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Further, eligible uses are expanded to include improvements to broadband Internet service and access
in unserved or underserved rural communities. These projects must be conducted through a
partnership or partnerships with one or more dealers of communications services21, established by a
publicly noticed and competitive selected process.
The bill requires DEO to reevaluate the Rural Infrastructure Fund application guidelines and criteria by
September 1, 2021. The review is to be done in consultation with Enterprise Florida, Inc., VISIT Florida,
the Department of Environmental Protection, and the Florida Fish and Wildlife Conservation
Commission and must include specific factors such as:
the project’s potential for enhanced job creation or increased capital investment;
the demonstration and level of local public and private commitment;
whether the project is located in a community development corporation service area or in an
urban high-crime area;
the unemployment rate of the county the project would be located; and
the poverty rate of the community.
Contracts or Agreements - Regional Rural Development Grants Program and Rural
Infrastructure Fund
The bill amends both the Regional Rural Development Grant Program and the Rural Infrastructure
Fund to include the same requirements for contracts or agreements that expend grant funds.
A contract or agreement that involves the expenditure of grant funds must include:
The purpose of the contract or agreement.
Specific performance standards and responsibilities for each entity under the agreement.
A detailed project or contract budget, if applicable.
The value of any services provided.
The projected travel expenses for employees and board members, if applicable.
These required contract provisions apply to any contract or agreement that expends grant funds,
including any contract or agreement between another entity and a regional economic development
organization, a unit of local government, or an economic development organization substantially
underwritten by a unit of local government.
All contracts and agreements are required to be posted on the contracting regional economic
development organization’s website at least 14 days before execution. However, specific contracts or
agreements that exceed $35,000 must be posted in “plain-language.” This applies to a contract or
agreement with a private entity, a municipality, or a vendor of services, supplies, or programs, including
marketing, or for the purchase or lease or use of lands, facilities, or properties.
Additionally, the bill repeals obsolete language relating to enterprise zones.
Present Situation
Florida’s Workforce Development System
The federal Workforce Investment Act of 1998 (WIA) was passed by Congress in an effort to improve
the quality of the nation’s workforce through implementation of a comprehensive workforce investment
system.22 WIA required each state to establish an investment board at the state level and to also
establish workforce investment boards to represent local service areas.23 WIA also called for the
delivery of workforce development services through a system of “one-stop” centers in local
21
S. 202.11(2), F.S., defines a “dealer” as a person registered with the Florida Department of Revenue as a provider of
communications services in this state.
22
Workforce Investment Act of 1998, 29 U.S.C. § 2801 (1998), repealed by Workforce Innovation and Opportunity Act, Pub. L. No.
113-128, H.R. 803, 113th Cong. (July 22, 2014)(codified at 29 U.S.C. § 3101, et seq.).
23
See 29 U.S.C. § 2821 and 29 U.S.C. § 2832 (1998).
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communities.24 Some key principles of WIA were to better integrate workforce services, empower
individuals, provide universal access to participants, increase accountability, and improve youth
programs.25
In response to WIA, Florida established a workforce development system under the Workforce
Investment Act of 2000.26 The act aimed to better connect the state’s economic development strategies
with its workforce development system and to implement the principles of the federal WIA.27
Federal Workforce Innovation and Opportunity Act of 2014
In 2014, Congress passed the Workforce Innovation and Opportunity Act (WIOA), which superseded
the Workforce Investment Act of 1998.28 WIOA requires each state to develop a single, unified plan for
aligning workforce services through the identification and evaluation of core workforce programs.29 In
general, WIOA maintains the one-stop framework of WIA, and encompasses provisions aimed at
streamlining services, easing reporting requirements, and reducing administrative barriers.30 WIOA
officially became effective on July 1, 2015, the first full program year after enactment.
Core Programs
WIOA identifies four core programs that must coordinate and complement each other in a manner that
ensures job seekers have access to needed resources.31 The core programs are:
Adult, Dislocated Worker and Youth Programs;
Employment Services under the Wagner-Peyser Employment Act;
Vocational Rehabilitation Services; and
Adult Education and Literacy Activities.
Performance Measures
In an effort to promote transparency and accountability, WIOA created a single set of common
measures for the evaluation of core programs.32 WIOA requires performance reports to be provided at
the state, local, and trainer provider levels. The performance measures that now apply across all core
programs are:
The percentage of participants in unsubsidized employment during second quarter after exit;
The percentage of participants in unsubsidized employment during fourth quarter after exit;
The median earnings of participants during second quarter after exit;
The percentage of participants who obtain a postsecondary credential or secondary school
diploma within 1 year after exit;
The achievement of measureable skill gains toward credentials or employment; and
The effectiveness in serving employers.
State Workforce Development Plan
Using the common performance measures for core programs, WIOA requires each state to develop
and submit a unified state plan based on a 4-year strategy for workforce development.33 The state plan
must describe an overall strategy for the core programs and how the strategy will meet needs for
24
See 29 U.S.C. § 2841 (1998).
25
See 29 U.S.C. § 2811 (1998).
26
Ch. 2000-165, Laws of Fla.
27
See s. 445.003, F.S.
28
Workforce Innovation and Opportunity Act, 29 U.S.C. § 3101 et seq. (2014).
29
See 29 U.S.C. § 3112(a).
30
See 29 U.S.C. § 3111.
31
See 29 U.S.C. § 3102(13).
32
See 29 U.S.C. § 3141.
33
See 29 U.S.C. § 3112(a).
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workers, job seekers, and employers.34 WIOA also provides an option for states to submit a combined
plan that outlines plans for the core programs along with additional workforce programs.35
Regional Planning and Local Workforce Development Boards
WIOA requires states to identify regional planning areas for workforce development strategies.36 Within
each area, a local workforce development board must be established.37 Each local workforce
development board is required to coordinate planning and service delivery strategies within their area.38
Formulated strategies are then used by the local workforce development board to develop and submit a
local plan for the delivery of workforce services.39
One-Stop Delivery System
WIOA aims to strengthen the one-stop delivery system by requiring each local area to have at least one
comprehensive one-stop delivery provider.40 A comprehensive one-stop delivery provider supplies
physical access to services provided by core partners, as well as other mandatory partners.41 WIOA
mandates that each partner shares in the funding of services and infrastructure costs of the one-stop
delivery system.42
Florida’s Implementation of WIOA
In 2016, Florida made changes to the workforce development system to conform to the new federal
guidelines established by WIOA.43 Under the current workforce development system, DEO,
CareerSource, and 24 local workforce development boards act as partners in administering Florida’s
comprehensive system for the delivery of workforce strategies, services, and programs.
Department of Economic Opportunity (DEO)
DEO serves as Florida’s lead workforce agency.44 DEO is responsible for the fiscal and administrative
affairs of the workforce development system.45 DEO receives and distributes federal funds for
employment-related programs to the local workforce development boards.46 Additionally, under the
direction of CareerSource, DEO must annually meet with each local workforce development board to
review the board’s performance and to certify that the board is in compliance with applicable state and
federal law.47
CareerSource Florida, Inc. (CareerSource)
CareerSource Florida, Inc., a not-for-profit corporation, serves as Florida’s state-level workforce
development board.48 CareerSource is responsible for the development of a 4-year plan that is
consistent with the requirements of WIOA49 and collaborates with DEO, the local workforce
34
See 29 U.S.C. § 3112(b).
35
See 29 U.S.C. § 3113.
36
See 29 U.S.C. § 3121.
37
Id.
38
See 29 U.S.C. § 3122.
39
See 29 U.S.C. § 3123.
40
See 29 U.S.C. § 3151.
41
Other mandatory partners may include programs under the Older Americans Act, Department of Housing and Urban Development,
Social Security Act, Perkins Career and Technical Education Act, the Community Service Block Grant Act, and certain adult
education and literacy activities. 29 U.S.C. § 3151(b).
42
See 29 U.S.C. § 3151(2).
43
Ch. 2016-216, Laws of Fla.
44
Primarily through the Division of Workforce Services. See s. 20.60, F.S.
45
S. 445.009(3)(c), F.S.
46
See s. 445.003, F.S.
47
See s. 445.007(3), F.S.
48
S. 445.004(5)(a), F.S. Prior to 2014, CareerSource was known as Workforce Florida, Inc.
49
S. 445.003(2), F.S.
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development boards, and one-stop service providers to ensure workforce services are consistent with
state and local plans.50 CareerSource also provides state-level policy direction, planning, and
performance evaluation of the delivery of workforce services.51
Local Workforce Development Boards
Twenty-four local workforce development boards deliver Florida’s workforce development services
through over 100 one-stop service providers.52 The one-stop service providers give Floridians access
to available workforce services, including job placement, career counseling, and skills training.53
Collectively, the local workforce development boards operate under a charter approved by
CareerSource.54 Each local workforce development board formulates a local budget and oversees the
one-stop delivery system within its local area.55
Review of CareerSource Tampa Bay and CareerSource Pinellas
In response to a series of articles by the Tampa Bay Times,56 reporting on questionable practices,
violations and malfeasance by CareerSource Tampa Bay and CareerSource Pinellas, the US
Department of Labor conducted a review of the two local workforce development boards. The review
found “fake” job placements, falsified records, and a number of other violations of WIA and WIOA,
resulting in over $17 million in questionable costs.57
In summary, the US Department of Labor reported that “The improper administration of Federal
employment and training funds by the two local workforce boards lead to blatant non-compliance with
WIOA requirements. This was further compounded by the lack of fiduciary oversight which fostered an
environment vulnerable to mismanagement, waste, fraud, and abuse to occur undetected.” 58 The
report detailed 17 findings of non-compliance and 3 areas of concern.
Florida Development Finance Corporation
The Florida Development Finance Corporation (FDFC) is a statewide development financing authority
created by the Legislature in 1993.59 The original purpose of the FDFC was to foster the growth of
manufacturing and other strong job-creating businesses in Florida by brokering private-activity bond
financing through inter-local agreements with counties, municipalities, and other local political
subdivisions.60
The FDFC is governed by a five-member board of directors who are appointed by the Governor and
confirmed by the Senate for four-year terms.61 At least three of the FDFC’s directors must be bankers
selected from a list of candidates nominated by the Enterprise Florida, Inc. (EFI), and one must be an
economic development specialist.62 The directors are vested with the FDFC’s powers, and may take
action on behalf of the corporation by a vote of a majority of the directors present at a meeting, unless
50
See s. 445.004, F.S.
51
Id.
52
DEO, CareerSource Florida Network Directory, http://lcd.floridajobs.org/ (last visited Jan. 17, 2020).
53
See s. 445.009, F.S.
54
See s. 445.004, F.S.
55
S. 445.007(12), F.S.
56
Puente and Sampson, CareerSource: Read the entire investigation, TAMPA BAY TIMES (Dec. 21, 2018),
https://www.tampabay.com/investigations/2018/12/20/careersource-read-the-entire-investigation/ (last visited Jan. 22, 2020).
57
U.S. Dept. of Labor, Compliance Review of CareerSource Tampa Bay and CareerSource Pinellas (May 15, 2019),
http://floridajobs.org/docs/default-source/lwdb-resources/program-monitoring-and-reports/2019-usdol-compliance-review-and-deo-
response/final-florida-compliance-review---cstb-csp-workforce-areas---16-may-2019.pdf?sfvrsn=2 (last visited Jan. 22, 2020)
58
Id.
59
Ch. 288, part X, F.S. The corporation was created as a “public body corporate and politic” meaning that it is a legal entity or
corporation with a public function. Ch. 93-187, ss. 24-45, Laws of Fla.
60
S. 288.9602, F.S., generally expresses the legislative intent of the FDFC.
61
S. 288.9604(2), F.S.
62
S. 288.9604(2), F.S.
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otherwise required by the FDFC’s bylaws.63 The directors do not receive compensation for their
service, but are entitled to necessary expenses, including travel expenses.64 Lastly, the board is
empowered to employ a staff to facilitate the FDFC’s functions.65
The FDFC must provide an annual report to the Governor, the Legislature, the Auditor General, and the
governing body of each public entity with which it has an interlocal agreement, which details:
The FDFC’s activities, operations, and accomplishments, including the specific number of
businesses that the FDFC assisted;
The FDFC’s assets, liabilities, income, and operating expenses, including a description of all
outstanding revenue bonds; and
Any findings made by the Auditor General in an audit conducted pursuant to s. 11.45, F.S.
In the 2010 legislative session, the FDFC’s responsibilities were broadened to allow it to participate in a
federal Department of Energy guaranteed loan program for the development of renewable energy
infrastructure projects, and related energy projects that may be eligible under federal law.66 The FDFC
has the power to function within the corporate limits of any public agency including local governments
with which it enters into an inter-local agreement.67
Pursuant to s. 288.9605, F.S., the FDFC operates as a conduit bond issuer that issues bonds on behalf
of borrowers.68 While the FDFC functions as a mechanism to help borrowers access capital markets, it
does not take on responsibility of debt repayment, even when a borrower fails to repay.69 Conversely,
the FDFC does not guarantee the bonds it issues but certain borrowers may opt in to the guaranty fund
established by the FDFC pursuant to s. 288.9607, F.S., which guarantees that the bonds issued will be
repaid. This guaranty fund consists of premiums paid by businesses that wish to participate in the fund
and by a property interest in the infrastructure built with the insured bond’s proceeds.70
A majority of the FDFC’s financial assistance results from the issuance of municipal bonds, of which it
may issue either a taxable revenue bond or a tax-exempt bond.71 The bonds issued can provide
financing for projects that further public purposes and are issued on behalf of a range of organizations.
Tax exempt bonds, known also as Private Activity Bonds, require additional borrower qualification
processes, including approval pursuant to the Tax Equity and Fiscal Responsibility Act of 1986
(TEFRA) and allocation from the Florida State Board of Administration’s Division of Bond Finance.
These bonds are more lucrative financing options because they tend to have a lower interest rate than
bank loans or taxable fixed-income securities, and investors benefit by not paying income taxes on
interest payments.72 The FDFC helps its borrowers pursue Private Activity Bonds by assisting them
with the additional qualification processes.73 In the fiscal year ending June 30, 2019, the FDFC
facilitated the issuance of $2,885,710,000 in eight new money bonds.
63
S. 288.9604(3), F.S.
64
S. 288.9604(3)(a)1., F.S.
65
S. 288.9604(3)(c), F.S.
66
Ch. 2010-139, ss. 2-10, Laws of Fla.
67
S. 288.9605(2)(e), F.S.
68
“[The] FDFC facilitated the issuance of debt obligations…[t]hese bonds do not constitute a general debt, liability or obligation of
FDFC, the state, or any local government.” Florida Development Finance Corporation, Financial Statements for the Year Ended June
30, 2019, 12 (on file with the Senate Committee on Commerce and Tourism). See also, FDFC, Bond Financing,
https://www.fdfcbonds.com/traditional-bonds (last visited Jan. 21, 2020).
69
Id.
70
The guaranty may not exceed 5% of the aggregate principal amount of bonds or other indebtedness relating to any capital project.
S. 288.9607, F.S.
71
FDFC, About Us, https://www.fdfcbonds.com/copy-of-about-us (last visited Jan. 21, 2020).
72
Steven Maguire and Joseph Hughes, Congressional Research Service, Private Activity Bonds: An Introduction (July 13, 2018),
https://fas.org/sgp/crs/misc/RL31457.pdf (last visited Jan. 21, 2020).
73
FDFC, Bond Financing, supra.
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The FDFC also administers the Property Assessed Clean Energy (PACE) program, for which it also
may issue bonds and other financial assistance that supports energy conservation.74 The PACE
Program was launched June 29, 2017, and allows a property owner to use equity accrued from the
original purchase as the basis for an extension of credit.75 The PACE Program facilitated $19,353,886
in five taxable residential bonds for the 2018-19 fiscal year.76
FDFC’s revenues are generated exclusively by fees it charges for the issuance of bonds.77 The fees
assessed are a $1,500 application fee and a tiered issuance fee due at the time of closing (sale of
bonds). The tiered issuance fee is based on the face value of the bond issued: bonds valued from $0 -
$2.5 million pay 75 basis points (0.75%); bonds valued from $2.5-$32.5 million pay 25 basis points
(0.25%); and bonds valued over $32.5 million pay 10 basis points (0.10%).78
Division of Bond Finance
The Division of Bond Finance (Division) was created by the Legislature in 1969 to issue bonds on
behalf of local governments and agencies of the State of Florida. It assumed the powers of its
predecessor, the Florida Development Commission. The Division has been administratively housed
within the State Board of Administration since 1992, and operates under the control of a governing
board which consists of the Governor and Cabinet.79 The Division has the power to:
Sue and be sued;
Issue any bonds of the state, and to issue bonds on behalf of any state agency;
Exercise all of the powers relating to the issuance of bonds of any state agency;
Employ a director of the division to be designated by the Governor;
Employ or retain persons, firms, or corporations;
Prepare resolutions and other necessary proceedings relating to the issuance and sale of
bonds;
Sell all state bonds authorized by law;
Request assistance related to bond issuance from any state agency;
Exercise the power of eminent domain;
Remit the proceeds of any bonds sold for any state agency;
Exercise control over the state’s arbitrage compliance program; and
Undertake investigations.80
The Division also determines the allocations for private activity bonds permitted to be issued in Florida
under the Internal Revenue Code.81
Effect of Proposed Changes
Florida’s Workforce Development System
The bill defines the term "state board" to mean the state workforce development board established
pursuant to the Workforce Innovation and Opportunity Act, Pub. L. No. 113-128, Title I, s. 101. The bill
provides that the state board will be supported by CareerSource, which works at the direction of the
state board in consultation with DEO.
74
FDFC, Property Assessed Clean Energy “PACE”- Commercial PACE, https://www.fdfcbonds.com/pace-commerical (last visited Jan.
21, 2020). See also, s. 288.9606(7), F.S.
75
Id.
76
FDFC, Financial Statements for the Year Ended June 30, 2019, supra, at 3.
77
Id. at 6.
78
FDFC, Conduit Issuance Policy, 6-7 (Feb. 26, 2019), https://ca5cce56-0e6c-4988-82a7-
74892bf1d07e.filesusr.com/ugd/b1b27e_0b227d45ff2b4e139bb36f2846f70b4b.pdf (last visited Jan. 21, 2020).
79
Division of Bond Finance, About the Division of Bond Finance, https://www.sbafla.com/bond/Home/About-the-Division-of-Bond-
Finance (last visited January 21, 2020).
80
S. 215.64, F.S.
81
S. 159.804, F.S. See also, Division of Bond Finance, Tax Equity and Fiscal Responsibility Act (TEFRA) Approval,
https://www.sbafla.com/bondfinance/Other-Functions/TEFRA (last visited Jan. 21, 2020).
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The bill reassigns many of CareerSource powers, duties and responsibilities to DEO, the state board,
or the state board in consultation with DEO and makes a number of conforming changes to reflect this
adjustment in the relationship between DEO, CareerSource, and the state board.
The bill specifies that CareerSource must operate under an agreement with DEO and repeals the
provision in current law which states that CareerSource is not subject to the control, supervision, or
direction of DEO.
The bill provides for the state board to serve as the board of directors of CareerSource. The bill also
provides for the state board to hire an executive director for CareerSource, who will serve as the
president, the chief executive officer, and an employee of CareerSource.
The bill directs CareerSource to:
operate at the direction of the state board;
provide support, including administrative support, to the state board;
work at the direction of the state board in consultation with DEO when appropriate; and
implement the policy directives of the state board and administer state workforce development
programs as authorized by law, in accordance with its agreement with DEO.
The bill authorizes the state board to hire a director and staff to assist in carrying out the functions and
spending the funds made available through WIOA. The bill also directs the state board to authorize the
director and staff to work with the department in carrying out the functions of WIOA.
The bill requires that the state board notify the Governor and DEO of statewide or local workforce
development and training needs that may require policy changes or an update to the state plan
required under s. 445.003, F.S. The bill also requires CareerSource to report all donations and grants
they receive to the state board and DEO.
The bill authorizes the chief elected official of a local workforce development board to remove, for
cause, a member of the local board, the executive director of the local board, or the designated person
responsible for the operational and administrative functions of the local board.
The bill defines the term "for cause" to include, but not limited to, engaging in fraud or other criminal
acts, incapacity, unfitness, neglect of duty, official incompetence and irresponsibility, misfeasance,
malfeasance, nonfeasance, or lack of performance.
The bill also deletes a number of obsolete provisions.
Florida Development Finance Corporation
Relating to the board of directors of the Florida Development Finance Corporation, the bill:
Increases the board of directors from five to seven members.
Provides that the executive director of DEO, or his or her designee, serve as the chair of the
board.
Provides that the director of the Division of Bond Finance, or his or her designee, serve on the
board.
Specifies that the Governor will appoint the remaining five members, subject to confirmation by
the Senate. Of the five appointed members:
o Three or more must be bankers or persons with experience in finance.
o One must be an economic development specialist.
Specifies that the board may remove appointed directors under certain circumstances.
The bill requires DEO to develop a detailed report concerning the performance of FDFC each year, and
to include the report, along with an existing summary report of FDFC, in its annual report to the
Governor, President and Speaker. The bill also requires DEO to establish annual performance
standards for FDFC and to annually report on how such performance measures are being met.
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The bill provides that s. 288.9604, F.S., the statute creating and authorizing the FDFC, stands repealed
October 1, 2022, and every fourth year thereafter, unless reviewed and saved from repeal by the
Legislature.
The bill specifies that an FDFC contract or interlocal agreement in existence before July 1, 2020, will
remain in effect and be binding on successors.
The bill provides for an effective date of July 1, 2020.
B. SECTION DIRECTORY:
Section 1 Amends subsections (1) and (3) of s. 288.018, F.S., relating to the Regional Rural
Development Grants Program.
Section 2 Amends s. 288.0655, F.S., relating to the Rural Infrastructure Fund.
Section 3 Amends s. 445.002, F.S., defining the terms "for cause" and "state board".
Section 4 Amends s. 445.003, F.S., replacing CareerSource Florida, Inc., with the state board or
the Department of Economic Opportunity in provisions relating to the implementation of
the federal Workforce Innovation and Opportunity Act; authorizing, rather than requiring,
certain funds to be reserved for the Incumbent Worker Training Program; conforming
provisions to changes made by the act; authorizing the state board to hire a director and
staff; requiring the state board to authorize the director and staff to work with the
department for specified reasons.
Section 5 Amends s. 445.004, F.S., revising provisions relating to the operation of CareerSource
Florida, Inc.; revising the purpose of CareerSource Florida, Inc.; providing purpose for
the state board; revising the organizational structure of CareerSource Florida, Inc.;
providing requirements for the organizational structure of the state board; providing the
state board with powers and authority previously held by CareerSource Florida, Inc.;
revising the requirements related to such powers and authority; requiring the state
board, rather than CareerSource Florida, Inc., to submit an annual report to the
Governor and the Legislature; authorizing the Auditor General to conduct an audit of the
state board and programs or entities created by the state board; requiring the state
board, rather than CareerSource Florida, Inc., to establish certain uniform performance
accountability measures; requiring the state board, in consultation with the department,
to design the workforce development strategy for the state; requiring that the strategy be
approved by the Governor; revising requirements relating to the workforce development
system; authorizing the department to consult with the state board to issue certain
technical assistance letters.
Section 6 Amends s. 445.006, F.S., requiring that the state board, rather than CareerSource
Florida, Inc., take certain actions relating to the state plan for workforce development.
Section 7 Amends s. 445.007, F.S., replacing CareerSource Florida, Inc., with the state board or
the department in provisions relating to local workforce development boards; deleting the
definition of the term "cause"; authorizing a chief elected official for a local workforce
development board to remove certain persons from the board for cause; requiring the
department to provide certain guidance to specified entities; deleting an obsolete
provision; making technical changes.
Section 8 Amends s. 445.0071, F.S., replacing CareerSource Florida, Inc., with the state board or
the department in provisions relating to the Florida Youth Summer Jobs Pilot Program.
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Section 9 Amends s. 445.008, F.S., revising authority relating to the Workforce Training Institute;
requiring that certain donations and grants be reported to the state board and the
department.
Section 10 Amends s. 445.009, F.S., replacing CareerSource Florida, Inc., with the state board or
the department in provisions relating to one-stop delivery systems; deleting an obsolete
provision.
Section 11 Amends s. 445.011, F.S., replacing CareerSource Florida, Inc., with the department in
provisions relating to workforce information systems; requiring the department to consult
with the state board in implementing certain automated information systems; deleting a
provision requiring CareerSource Florida, Inc., to take certain actions when procuring
workforce information systems.
Sections 12-34 Conforms provisions to changes made by the act.
Section 35 Amends s. 20.60, F.S., requiring the executive director of the Department of Economic
Opportunity to serve as the chair of the board of directors of the Florida Development
Finance Corporation; requiring the department to include specified information in its
annual report and develop annual performance standards for the corporation;
conforming provisions to changes made by the act.
Section 36 Amends s. 288.9604, F.S., revising the membership of the board of directors of the
Florida Development Finance Corporation; conforming provisions to changes made by
the act; providing for future repeals; requiring the current chair and vice chair of the
board of directors of the Florida Development Finance Corporation to serve as appointed
directors after a specified date.
Section 37 Provides construction.
Section 38 Amends s. 288.9610, F.S., requiring the Florida Development Finance Corporation to
submit an annual report containing specified information to the Department of Economic
Opportunity.
Section 39 Provides that certain contracts and interlocal agreements remain in effect and binding
under certain circumstances.
Section 40 Provides an effective date of July 1, 2020.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
See Fiscal Comments.
2. Expenditures:
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See Fiscal Comments.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
See Fiscal Comments.
D. FISCAL COMMENTS:
The bill reduces the required match under the Regional Rural Development Grant Program to a 25
percent match of the state contribution, instead of the current one-to-one match requirement.
The bill also increases the allowable grant award for Rural Infrastructure Fund projects from 30 percent
to 50 percent of the total infrastructure project cost.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not appear to create a need for rulemaking or rulemaking authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/ COMMITTEE SUBSTITUTE CHANGES
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