The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Community Affairs
BILL: SPB 7054
INTRODUCER: For consideration by the Community Affairs Committee
SUBJECT: Private Activity Bonds
DATE: February 5, 2024
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Hackett Ryon Pre-meeting
I. Summary:
SPB 7054 substantially revises Part VI, Private Activity Bonds, of ch. 159, F.S. The bill
modernizes, updates, and streamlines out-of-date provisions throughout the part, and codifies
certain Division of Bond Finance (Division) rules related to the administration of private activity
bonds. Specifically, the bill:
Provides legislative intent to maximize the annual use of private activity bonds to finance
improvements, projects, and programs serving public purposes and benefitting the social and
economic well-being of Floridians;
Refines and adds definitions used throughout;
Revises the regions, pools, and timelines related to bond allocations to consolidate
infrequently used pools and expedite usage of bonds;
Codifies current rules and procedures related to requests for volume limitation by notice of
intent to issue, evaluating such notices, and the division’s role in final certification of bond
issuance;
Allows for all volume cap allocated in a confirmation to be entitled to be carried forward,
rather than limiting to specific types of projects or basing it on the amount of the
confirmation;
Replaces the existing processes for requesting and granting allocation of volume cap with an
electronic application wherein all Notices and Issuance Reports will be submitted on the
Division’s website in lieu of via certified/overnight mail;
Repeals the Division’s rulemaking authority; and
Amends related statutes to correct cross references and outdated references.
The bill takes effect January 1, 2025.
REVISED: BILL: SPB 7054 Page 2
II. Present Situation:
Private Activity Bonds
State and local governments receive direct and indirect tax benefits under the Internal Revenue
Code (the “Code”) and associated federal tax regulations that typically result in lower borrowing
costs for capital projects through the issuance of tax-exempt bonds.
1
The tax exemption lowers
the cost of capital because the interest earnings on taxable bonds carry a tax liability, allowing
investors to receive the same rate of return while charging a lower interest rate.
2
Tax-Exempt Status of Governmental & Private Activity Bonds
Bonds issued by state and local governments, and conduit issuers on their behalf,
3
are classified
as either governmental bonds,
4
or private activity bonds (“PABs”).
5
Governmental bonds are
those bonds which are issued to finance programs and projects that are owned, operated, or used
by, governmental entities, including construction, maintenance, and repair of public
infrastructure;
6
and which have only a de minimis benefit to private businesses.
7
All other bonds
issued by state and local governments are considered PABs.
8
PABs can be issued by designated
state agencies and units of local government, including conduit issuers, to finance projects that
are owned, operated, or used by, nongovernmental, private businesses, that provide a public
benefit.
Generally, interest on governmental bonds excluded from gross income for federal income tax
purposes
9
and the interest on PABs is taxable;
10
however, Congress has authorized the issuance
of tax-exempt PABs as a mechanism to subsidize the development of capital projects by private
businesses that provide a public purpose by affording such projects the same tax benefits as
1
United States Department of the Treasury, Internal Revenue Service “Publication 4078, Tax-Exempt PABs” (Rev. 9-2019)
Catalog Number 34662G, available at https://www.irs.gov/pub/irs-pdf/p4078.pdf (last visited Feb. 2, 2024).
2
For example, if the interest earnings on taxable bonds carry a tax liability of 35% of the interest earnings, the after-tax rate
of return on taxable bonds that yield a 10% rate of return before taxes is equivalent to tax-exempt bonds that yield a 6.5% rate
of return; the investor receives the same return in both instances but, by issuing tax-exempt bonds capital can be raised at an
interest cost that is 3.5 percentage points lower. The greater the yield spread between taxable and tax-exempt bonds, the
greater the nominal savings. See Congressional Research Service, “Tax-Exempt Bonds: A Description of State and Local
Government Debt,” updated February 15, 2018, available at: https://crsreports.congress.gov/product/pdf/RL/RL30638 (last
visited Feb. 2, 2024).
3
Conduit issuers include governmental and quasi-governmental agencies and corporations, such as special districts, industrial
development authorities, local housing finance authorities, and other agencies statutorily authorized to issue PABs (e.g., the
Florida Housing Finance Corporation and the Florida Development Finance Corporation).
4
Treas. Reg. § 1.141-1(b).
5
I.R.C. § 141(a).
6
United States Department of the Treasury, Internal Revenue Service “Publication 4079, Tax-Exempt Governmental Bonds”
(Rev. 9-2019) Catalog Number 34663R, available at https://www.irs.gov/pub/irs-pdf/p4079.pdf (last visited Feb. 2, 2024).
7
If more than 10% of the proceeds will be used by a private business (the “private business use test”) and more than 10% of
the proceeds will be secured by property used by a private business (the “the private security or payment test”), then the
bonds will satisfy both prongs of the private business tests will be considered PABs and not governmental bonds.
Additionally, if more than the lesser of 5% of the proceeds or $5 million will be used to make or finance loans to persons or
entities other than governmental units, then the bonds will satisfy the private loan financing test and will be considered PABs
and not governmental bonds. See I.R.C. § 141(b)-(c).
8
I.R.C. § 141(a).
9
I.R.C. § 103(a).
10
I.R.C. § 103(b)(1). BILL: SPB 7054 Page 3
governmental bonds.
11
Such projects include affordable housing projects, public works projects
(e.g., utility, water, sewage, solid waste facilities), and projects that will be used by 501(c)(3)
non-profit organizations.
12
These types of projects are deemed to provide sufficient public
benefits to merit excluding the interest on the PABs issued to finance such projects from gross
income for federal income tax purposes.
13
As such, governments can incentivize the private
sector to invest in infrastructure and develop programs and projects that benefit their citizens by
providing those private businesses with a more affordable (lower interest rate) source of funds
through the issuance of tax-exempt PABs.
14
The Division of Bond Finance
The Division of Bond Finance of the State Board of Administration of Florida (the “Division”)
was created to provide capital financing for state agencies and associated entities by issuing and
administering a variety of bonds authorized by s. 11, art. VII of the state constitution for
education, environmental, transportation, state facilities, and insurance programs.
15
The Division
is administratively housed within the State Board of Administration, and is governed by the
Governor and Cabinet.
Included in their duties is the administration of PABs, which includes calculating the volume
cap, allocating those bonds from the federal grant of authority to end users across the state, and
reporting their ultimate usage to the Internal Revenue Service to maintain tax exempt status.
16
The Division receives and executes applications for use of PABs from local governments, end
users, and conduit issuers such as the Florida Housing Finance Corporation and the Florida
Development Finance Corporation.
Types of Tax-Exempt PABs
Since PABs were defined in 1968, Congress has more than doubled the purposes for which
PABs can qualify for the tax exemption.
17
A “qualified bond” (i.e., one that may be issued as
tax-exempt) is any one of the following types of PABs
18
that also meets the applicable
requirements of Sections 146 and 147 of the Code:
Exempt facility bonds
19
that are issued to finance airports, docks and wharves, mass
commuting facilities, facilities for the furnishing of water, sewage facilities, solid waste
11
Congressional Research Service, “PABs: An Introduction,” updated January 31, 2022, available at:
https://crsreports.congress.gov/product/pdf/RL/RL31457 (last visited Feb. 2, 2024).
12
I.R.C. §§ 142-145.
13
Tax-exempt status only applies to PABs that are “qualified bonds” as defined in I.R.C. § 141. See I.R.C. § 103(b).
14
Supra, note 7.
15
The Division currently reports ratings for more than 30 different bonds. See State of Florida Division of Bond Finance,
Summary of Bond Program Ratings, available at https://www.flabonds.com/state-of-florida-investor-relations-fl/additional-
info/i678?i=3 (last visited Feb. 5, 2024).
16
See Generally, “Florida Private Activity Bond Allocation Act,” Part VI, Ch. 159, F.S.; Office of Program Policy Analysis
and Government Accountability, State Board of Administration of Florida, Bond Finance, available at
https://oppaga.fl.gov/ProgramSummary/ProgramDetail?programNumber=4041 (last visited Feb. 5, 2024).
17
Supra, note 12.
18
Those that are in bold italics are the ones that are subject to allocation of volume cap by the Division.
19
I.R.C. § 142(a) identifies 17 types of facilities that may be financed with exempt facility bonds. Additionally, Congress has
identified two other types of bonds that are to be treated as if they were exempt facility bonds, enterprise zone facility bonds
and empowerment zone facility bonds. See I.R.C. § 1394. BILL: SPB 7054 Page 4
disposal facilities, qualified residential rental projects, facilities for the local furnishing of
electric energy or gas, local district heating or cooling facilities, qualified hazardous waste
facilities, high-speed intercity rail facilities, environmental enhancements of hydro-electric
generating facilities, qualified public educational facilities, qualified green building and
sustainable design projects, qualified highway or surface freight transfer facilities, qualified
broadband projects, and qualified carbon dioxide capture facilities.
Qualified mortgage bonds
20
Qualified veterans’ mortgage bonds
21
Qualified small issue bonds
22
Qualified student loan bonds
23
Qualified redevelopment bonds
24
Qualified 501(c)(3) bonds
25
PAB Volume Cap and State Ceiling
The federal government imposes an annual limit (“volume cap” or “volume limitation”) on the
aggregate amount of certain types of tax-exempt PABs), that may be issued in each state and
U.S. territory (the “state ceiling”).
26
The state ceiling is based on the state’s population and may
be adjusted for inflation.
27
The inflation adjustments are published in a revenue procedure issued
prior to the beginning of each calendar year.
28
The formula for calculating the state ceiling for
2024 is the greater of $125 multiplied by the state population or $378.23 million.
29
The Division
has calculated Florida’s state ceiling for 2024 to be $2,826,340,750.
30
The following table shows
the historical increase to the state ceiling as the per capita rate and state population have
increased.
Florida’s State Ceiling 2014-2023
Calendar Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
IRS Per Capita $100 $100 $100 $100 $105 $105 $105 $110 $110 $120
State Pop. 19.55M 19.89M 20.27M 20.61M 20.98M 21.30M 21.48M 21.73M 21.78M 22.24M
State Ceiling $1.96B $1.99B $2.03B $2.06B $2.15B $2.24B $2.26B $2.39B $2.40B $2.67B
20
I.R.C. § 143(a).
21
I.R.C. § 143(b).
22
I.R.C. §§ 144(a) and 7871(c). Qualified small issue bonds are frequently referred to as industrial revenue bonds (“IRBs”)
or industrial development bonds (“IBDs”) and are issued to finance manufacturing facilities and farm property.
23
I.R.C. § 144(b). Additionally, qualified scholarship funding bonds, established in I.R.C. § 150(d)(2), are analyzed under
I.R.C. § 144(b)
24
I.R.C. § 144(c).
25
I.R.C. § 145.
26
I.R.C. § 146. The economic rationale for the limitation on the amount tax-exempt PABs that may be issued stems from the
inefficiency of the mechanism to subsidize private activity and the lack of congressional control of the subsidy absent such a
limitation. Supra, note 12.
27
I.R.C. § 146(d).
28
In 2022 the formula for the state ceiling was the greater of $110 multiplied by the state population or $335,115,000. This
amount increased in calendar year 2023 to the greater of $120 multiplied by the state population or $358,845,000. See § 3.20,
Rev. Proc. 2021-45, available at: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf and § 3.20, Rev. Proc. 2022-38, available at:
https://www.irs.gov/pub/irs-drop/rp-22-38.pdf (last visited Feb. 2, 2024).
29
See § 3.20, Rev. Proc. 2023-34, available at: https://www.irs.gov/pub/irs-drop/rp-23-34.pdf (last visited Feb. 2, 2024).
30
Division of Bond Finance, Act Summary, available at https://www.sbafla.com/bond/Other-Functions/Private-Activity-
Bond-Allocation-Programs (last visited Feb. 2, 2024). BILL: SPB 7054 Page 5
While the Code provides a default formula for the allocation of volume cap, each state may, by
law, provide its own formula for allocating its state ceiling.
31
The Division is statutorily
designated to allocate volume limitation to those entities authorized to issue PABs in Florida
pursuant to the Florida Private Activity Bond Allocation Act
32
and the rules promulgated
thereunder.
33
Allocation of State Ceiling
For PABs subject to the state ceiling,
34
issuers must have sufficient volume cap under the Code
or their state’s formula for allocating its state ceiling in order in order for the interest on those
bonds to be excluded from gross income for federal income tax purposes.
35
States have a variety
of methods for distributing their state ceiling at the beginning of each year based on the purpose
or type of the proposed PABs, the location of the project, and the issuer requesting an allocation
of volume cap; additionally, the timeframe within which state ceiling is available for various
types of projects varies greatly from state to state. There are two predominant methods for how
volume cap is allocated in each state; one in which broad discretion is given to the program
administrator to determine which issuers and projects should be allowed to access the tax-exempt
market, and one in which the state legislature has established a detailed framework making the
administration of the program a ministerial function based on legislative priorities.
36
31
I.R.C. § 146(e).
32
Part VI of chapter 159, F.S.
33
Chapter 19A-4, F.A.C.
34
The amounts of tax-exempt PABs issued as exempt facility bonds to finance mass commuting facilities, facilities for the
furnishing of water, sewage facilities, privately owned solid waste disposal facilities, qualified residential rental projects,
facilities for the furnishing local electric energy or gas, local district heating and cooling facilities, qualified hazardous waste
facilities, privately owned high-speed intercity rail facilities, privately owned qualified broadband projects, and qualified
carbon capture facilities, qualified mortgage revenue bonds, qualified small issue bonds, qualified student loan bonds, and
qualified redevelopment bonds are subject to an annual volume cap and cannot exceed the amount allocated. Tax-exempt
PABs issued to finance privately owned high-speed intercity rail facilities, privately owned qualified broadband projects, and
qualified carbon capture facilities only need an allocation for 25% of the amount of any tax-exempt exempt facility bonds
issued. I.R.C. §§ 142(a), 143, 144, and 146(g)(4)-(5). Certain types of PABs are not subject to the state ceiling but are subject
to other annual or lifetime caps under the Code. The amounts of tax-exempt PABs issued to finance qualified public
educational facilities, qualified green building and sustainable design projects, and qualified highway or surface freight
transfer facilities are separately limited in I.R.C. § 142. Qualified public educational facilities are subject to a separate annual
state volume cap, which is the greater of $10 per capita or $5 million, as allotted in the manner the state determines
appropriate pursuant to I.R.C. § 142(k)(5). See, s. 159.834, F.S. Qualified green building and sustainable design projects must
receive designation from the United States Secretary of the Treasury, after consultation with the Administrator of the
Environmental Protection Agency; exempt facility bonds issued to finance such project are subject to a lifetime volume cap
of $2 billion, allocated by the Secretary of the Treasury pursuant to I.R.C. §142(l)(7)(B). Exempt facility bonds for qualified
transfer facilities are subject to a lifetime volume cap of $30 billion, allocated by the United States Secretary of
Transportation pursuant to I.R.C. §142(m)(2)(C).
35
The aggregate face amount of tax-exempt PABs issued by a particular issuing authority during a calendar year cannot
exceed such authority’s volume cap for such calendar year. I.R.C. §146(a).
36
California’s Debt Limit Allocation Committee has been delegated broad discretion to annually set priorities and method of
allocation. See e.g., Cal. Govt. Code § 8869.80 et seq. (2021); Cal. Code Regs. Tit. 4, §§ 5010, 5020-5022, and 5150-5155;
California Debt Limit Allocation Committee (CDLAC), CALIFORNIA STATE TREASURER, available at
https://www.treasurer.ca.gov/cdlac/index.asp (last visited Feb. 2, 2024). Some states have a hybrid approach, either setting
aside only a portion of their state ceiling to be allocated at the discretion of the program administrator, or giving the program
administrator discretion in the event that requests exceed the available state ceiling. See, Ga. Code Ann. §§ 36-82-195 – 36-
82-196, Ariz. Rev. Stat. §§ 35-901 – 35-913, Va. Code Ann. § 15.2-5002, and Rule 122-4-02, Ohio Admin. Code.
Comparatively, states including Texas and Washington allocate volume cap in accordance with prescriptive legislative
frameworks similar to Florida. BILL: SPB 7054 Page 6
Additionally, a number of state legislatures have designated percentages or set amounts of their
state ceiling for affordable housing projects (multifamily and single-family housing bonds and
mortgage credit certificates (“MCCs”), for low- and moderate-income families),
37
industrial
development projects (manufacturing facility bonds), and public works projects (exempt facility
bonds). The Division’s administration of Florida’s state ceiling falls is ministerial pursuant to a
detailed legislative framework, with a first-come, first-served system with discrete pools
reserved, for at least part of the year, for specific purposes and/or projects located in specified
regions.
Current Allocation of Florida’s State Ceiling by the Division
The Division has calculated Florida’s state ceiling and allocated volume cap to issuers
throughout the state pursuant to the Act since 1986. Prior to January 1 of each year, the Division
calculates the state ceiling for the upcoming calendar year; then, on January 1 of each year, the
Division allocates the state ceiling to the Manufacturing Facility Bond Pool (“MFBP”), among
the 17 Regional Allocation Pools, to the Florida Housing Finance Corporation (“FHFC”), to the
Florida First Business allocation pool (“FFBP”), and to the state allocation pool (the “State
Pool”), all as described in the following table:
38
37
Typically, states that designate a portion of their state ceiling for affordable housing split it into two parts; either based on
purpose (single-family housing bonds and MCCs vs. multifamily housing bonds) or based on the issuer (state-level housing
agency vs. local HFAs). See, Ariz. Rev. Stat. §§ 35-901 – 35-913; Code Ann. § 15.2-5002; Me. Stat. tit. 10, § 363; Iowa
Code § 7C, available at https://www.legis.iowa.gov/docs/ico/chapter/7C.pdfW; Wash. Rev. Code §39.86.120; and Bond Cap
Allocation Program, WASHINGTON DEPARTMENT OF COMMERCE, https://www.commerce.wa.gov/about-us/research-
services/bond-cap-allocation-program/ (last visited Feb. 2, 2024).
38
Section 159.804, F.S. BILL: SPB 7054 Page 7
Current Allocation of Florida’s State Ceiling
Pool/Entity Amount
39
Purpose/Limitations
MFBP $97.5 million Available Jan 1 – Nov 15 to finance manufacturing facility
projects
o Amount remaining on Nov 16 is transferred to the state pool
The first $73,125,000 available to issuers on first come, first
served basis, with $14,620,000 is reserve for small counties Jan 1
– June 30; and the final $24,375,000 requires Department of
Commerce review and approval
Regional
Allocation
Pools
50% after MFBP
($1,364,420,375)
Available local issuers on first come, first served basis from Jan 1
– June 30 to finance projects within that region
o Any amounts remaining on July 1 are transferred to FFBP
The amount distributed to each region is proportional to its share
of the state population
FHFC 25% after MFBP
($682,210,187.50)
Available for FHFC to use to issue housing bonds; FHFC may
assign a portion to other issuers to issue housing bonds
o Amount remaining on July 1 is transferred to the state pool
FFBP 20% after MFBP
($545,768,150)
Available Jan 1 – Nov 15 to finance “Florida First Business
projects”
40
o Amount remaining on Nov 16 is transferred to the state pool
Issuer must have project certified as a Florida first business
project by Department of Commerce prior to requesting
allocation
State Pool 5% after MFBP
($136,442,037.50)
Available Jan 1 – May 30 to finance “Priority Projects,”
41
which
may be subject to Governor’s review and approval
o Amount remaining on June 1 is transferred to FFBP
Following inflows from FFBP available to all issuers after Nov
16
Balance remaining on Dec 30 is available for carryforward
39
Amounts shown for each pool are for calendar year 2024. See “2024 Private Activity Bond State Volume Cap Allocation
By Pool,” available at
https://www.sbafla.com/bond/Portals/0/Content/FinancialInformation/2024%20PAB%20State%20Volume%20Cap%20Alloc
ation%20By%20Pool%20with%20MAP.pdf?ver=2023-12-28-090525-327 (last visited Feb. 2, 2024).
40
“Florida First Business project” means (1) any project proposed by a business which qualifies as a target industry business
or (2) any project providing a substantial economic benefit to this state. The department shall develop measurement protocols
and performance measures to determine what competitive value a project by a target industry business will bring to the state
which is certified by the Department of Commerce as eligible to receive an allocation from the FFBP. Section 159.803(11),
F.S.
41
“Priority project” means (1) a solid waste disposal facility, (2) a sewage facility, (3) a water facility, which is operated by a
member-owned, not-for-profit utility, or (4) any project which is to be located in an area which is an enterprise zone. Section
159.803(5), F.S. BILL: SPB 7054 Page 8
Manufacturing Facility Bond Pool
When first created for the 1993 calendar year,
42
$75 million of the state ceiling was distributed to
the MFBP.
43
Currently, $97.5 million is distributed to the MFBP annually.
44
Following a large
amount of PABs issued to finance manufacturing facilities in the late 1990s, requests for and
issuances of PABs with volume cap for such projects has steadily declined over the past 20
years.
45
Regional Allocation Pools
Prior to the establishment of the regions for the Regional Allocation Pools, each county received
a pro rata share of 50 percent of the state ceiling.
46
The Legislature created the Regional
Allocation Pools for the 1988 calendar year,
47
and last revised the regions effective in 2000.
48
Currently, there are currently 17 statutorily created single- and multi-county regions (10 multi-
42
Section 2, ch. 92-127, LAWS OF FLA.
43
Section 159.804(1)(a), F.S.
44
The portion of the state ceiling distributed to the MFBP increased by $7.5 million on January 1, 1997, 1998, and 1999,
pursuant to s. 159.804(1)(a), F.S., because more than 75 percent of the state ceiling distributed to the MFBP was used to issue
qualified small issue bonds for manufacturing facilities prior to November 15 in each of the preceding years. There hasn’t
been a change to the amount of the state ceiling distributed to the MFBP since 1999.
45
Approximately 70% of the state ceiling distributed to the MFBP for manufacturing facilities was allocated and issued in
1999; thereafter, PABs issued to finance manufacturing facilities steadily declined (65% of the state ceiling distributed to the
MFBP was utilized in 2000, decreasing to 55% in 2005, and further decreasing to 17% in 2010, 13% in 2015, and then 10%
in 2020).
46
Section 1, ch. 85-282, Laws of Fla.
47
Section 3, ch. 87-222, Laws of Fla.
48
Section 1, ch. 99-173, Laws of Fla. (effective Jan. 1, 2000). BILL: SPB 7054 Page 9
county and seven single county geographic regions) that receive a pro rata share of the state
ceiling.
49
In 2024, the three regions receiving the most volume cap were region 11 (Miami-Dade County)
with over $166.91 million, region 8 (Charlotte, Collier, Glades, Hendry, Lee, Monroe, and
Sarasota Counties) with over $120.97 million, and region 10 (Broward County) with over
$118.97 million.
50
The regional allocation pools are the only pools from which issuers located within a region,
including housing finance authorities created pursuant to s. 159.604 F.S. (“HFAs”), can be
allocated volume cap, subject to availability, for a majority of the calendar year, unless the
proposed PABs will be issued to finance a project that is certified by the Department of
Commerce as a Florida First Business project,
51
or that meets the statutory definition of
manufacturing facility
52
project or priority project.
53
The majority of requests for and issuance of
PABs with volume cap by from the regional allocation pools are for the issuance of multifamily
and single-family housing bonds for low- and moderate-income families.
Florida Housing Finance Corporation
The volume cap allocated to FHFC must be used for “housing bonds” as defined in s. 159.803,
F.S., these include both multifamily and single-family housing bonds for low- and moderate-
income families.
54
During the first six months of the calendar year, FHFC may, in its discretion,
assign any portion of its volume cap to any HFA for the issuance of housing bonds, taking into
consideration the ability of the HFA to timely issue such PABs, the need and public purpose to
be served by the issue, and the ability of the HFA to comply with the requirements of federal and
state law.
55
This is the only provision in the Act that allows one issuer to transfer any portion of
its volume cap to another issuer. However, FHFC has never transferred a portion of their volume
cap to another issuer.
Florida First Business Allocation Pool
Established beginning in the 1996 calendar year,
56
the FFBP is available solely for those projects
certified by Department of Commerce as “Florida First Business projects;” Department of
49
Section 159.804(2)(b), F.S.
50
Annual allocation information for calendar year 2024 by pool, including each of the regions, is available on the Division’s
website at
https://www.sbafla.com/bond/Portals/0/Content/FinancialInformation/2024%20PAB%20State%20Volume%20Cap%20Alloc
ation%20By%20Pool%20with%20MAP.pdf and https://www.sbafla.com/bond/Other-Functions/Private-Activity-Bond-
Allocation-Programs (last visited Feb. 2, 2024).
51
Section 159.803(11), F.S. “Florida First Business project” means any project which is certified by DEO as eligible to
receive an allocation from the FFBP because it either (1) meets the criteria set forth in s. 288.106(4)(b), F.S., or (2) will
provide a substantial economic benefit to this state.
52
Section 159.803(10), F.S. A “manufacturing facility” is a facility that meets the definition of “manufacturing facility” in
I.R.C. § 144(a)(12)(C).
53
Section 159.803(5), F.S. A “priority project” means (1) a solid waste disposal facility; (2) a sewage facility; (3) a facility
for the furnishing of water, which is operated by a member-owned, not-for-profit utility; or (4) any project located in an
enterprise zone designated pursuant to section 290.0065, F.S.
54
Section 159.804(3)(a), F.S.
55
Section 159.804(c)(3), F.S.
56
Section 11, ch. 95-416, Laws of Fla. BILL: SPB 7054 Page 10
Commerce must certify that the project either meets the criteria for targeted business industries
or will provide a substantial economic benefit to this state.
57
From 1996-2002, the FFBP was
used for a variety of solid waste disposal facility projects and qualified student loan bonds that
were certified as Florida First Business projects. Thereafter, there were no projects certified as
Florida First Business projects from 2003-2008, 2010-2017, or 2020 and the pool was not used.
The amount of projects certified as Florida First Business projects has substantially increased
over the last few years.
58
State Allocation Pool
The State Pool is available exclusively to finance Priority Projects from January 1 to June 1;
except that it is available at all times for allocations to state agencies, and for those portions of
governmental bonds requiring an allocation of volume cap under Code.
59
Priority Projects are
unable to receive an allocation of volume cap prior to May 1 of any calendar year; the Division is
required evaluate all requests submitted from January 1 through April 30 on May 1 to determine
whether the total amount of volume requested exceeds the portion of the state ceiling allocated to
the state pool.
60
If there is a sufficient amount, all requests for Priority Projects submitted before
May 1 will receive an allocation of volume cap by May 15; however, if there is not a sufficient
amount, the Division is required to forward all such requests to the Governor, who is required to
establish an order within which such projects should receive an allocation of volume cap by June
1.
61
The Division has only had to forward requests to the Governor for consideration twice in the
past 20 years, in 2004 and 2023.
62
Annually on November 16, any state ceiling remaining in either the MFBP or FFBP is
transferred to the state pool.
63
Such amount is available on first-come, first-served basis, except
that those projects that weren’t selected by the Governor to receive an allocation on June 1,
receive priority, in the order established by the Governor, for allocation of volume cap from any
portion of the state ceiling transferred to the State Pool later in the calendar year; such projects
would receive priority over non-priority projects already on the pending list.
64
Process to Obtain an Allocation of Volume Cap
After the project has obtained the public approval (by the applicable elected official or voter
referendum of the appropriate governmental unit), if any, required by section 147(f) of the Code
(the “TEFRA approval”), the issuer can request an allocation of volume cap by submitting an
57
Section 159.803(11), F.S.
58
Florida First Business projects receiving volume cap from the FFBP since 2021 include high-speed rail facility projects
($125M in 2021 and $125M in 2023), a solid waste disposal facility project ($350M in 2022), and a sewage facility project
($250M in 2022).
59
The Division has not received any requests for volume cap from state agencies, and for those portions of governmental bonds
requiring an allocation of volume cap pursuant to section 146(m) of the Code.
60
Section 159.807(2), F.S.
61
Id.
62
From 2005 through 2022, there were 1-2 Priority Projects requesting an allocation of volume cap from the State Pool prior
to June 1 in 2006–09, 2014–16, and 2019–21, all of which were for solid waste and sewage facilities; in each of these years
there was sufficient volume cap to fill all requests without sending to the Governor for ranking and all such requests received
allocation by June 1.
63
Section 159.809(4), F.S.
64
Section 159.807(2), F.S. BILL: SPB 7054 Page 11
application, called a notice of intent to issue private activity bonds (a “Notice”), to the Division.
Each Notice filed with the Division must include a certification that TEFRA approval has been
obtained and be accompanied by an opinion or statement of bond counsel that the project to be
financed with the requested allocation of volume cap may be financed with PABs and that
allocation is required under the Code to issue such Bonds and a nonrefundable filing fee.
65
The
fee is $100.00.The Division allocates volume cap, subject to availability, through written
confirmations of allocation (“Confirmations”).
The majority of notices are processed on a first-come, first-served basis based on a twenty-four-
hour period from noon on one business day to noon the next business day.
66
This system applies
to the Regional Allocation Pools, the first 75% of the volume cap in the MFBP,
67
and volume
cap in the State after June 1. If there is insufficient volume cap available in the FFBP, the
Division will forward all Notices to Department of Commerce, which will determine which
one(s) will receive a Confirmation.
68
On any day when there is insufficient volume cap available
in the appropriate pool(s) to issue Confirmations for all Notices, a random selection is held to
determine the Notice(s) that will receive the available volume cap.
69
Any Notices for which there
is insufficient volume cap following the random selection are placed on a pending list in case
volume cap becomes available at a later date in the calendar year and will receive priority from
the next available volume cap that may become available during the calendar year, prior to
Notices received by the Division after that day’s random selection, except that Notices on the
pending list for Priority Projects pursuant to Section 159.807(2), F.S., will take priority from the
next available volume cap available in the State Allocation Pool, regardless of when such other
Notices were placed on the pending list.
70
Deadlines for Issuing PABs Pursuant to a Confirmation
Generally, PABs must be issued within 155 days of allocation or by December 29, whichever is
earlier; after such time, the Confirmation ceases to be effective and the volume cap reverts to the
appropriate pool.
71
Confirmations from the FFBP expire on either October 1 or November 15,
depending on the date on which they are issued,
72
and confirmations from the MFBP expire the
earlier of 90 days after issued or November 15.
73
These limits are tolled during a validation
proceeding, if written notice is provided to the Division prior to the expiration.
74
Confirmations
for Priority Projects and those of $50 million or more are not subject to these time limitations
and are valid through December 30.
75
65
Section 159.805(1), F.S., Except that FHFC is not required to submit a Notice to use the volume cap in its pool for PABs it
issues prior to July 1 of any year and is not subject to the fee; However, FHFC most submit a Notice for volume cap it intends
to use for PABs issued after July 1 no later than June 30 of such year. Section 159.804(3)(b), F.S.
66
Section 159.805(1), F.S.
67
All Notices that are eligible to receive Confirmation using the final 25% of volume cap in the MFBP are forwarded to the
Department of Commerce to determine which ones will receive a Confirmation. Section 159.8081(2)(a), F.S.
68
Section 159.8083, F.S.
69
Section 159.805(6), F.S.
70
Id.
71
Section 159.805(2), F.S.
72
Sections 159.809(2) and (3), F.S.
73
Section 159.8081(3), F.S.
74
Section 159.805(4), F.S. Except that pendency of a validation proceeding does not extend a Confirmation beyond December
29 of such year. Rule 19A-4.007(2), F.A.C.
75
Section 159.805(4), F.S. BILL: SPB 7054 Page 12
End of Year Allocation and Carryforward Lottery
Unused allocations of volume cap may be carried forward for up to three years. The Code
permits carryforward for the following types of projects that require an allocation of volume cap
from the Division: mass commuting facilities, facilities for the furnishing of water, sewerage
facilities, solid waste disposal facilities, multi-family housing projects, local electric or gas
generating facilities, local district heating or cooling facilities, hazardous waste facilities, high
speed rail facilities, single family housing bonds, student loan bonds, and redevelopment
bonds.
76
Volume cap that is allocated for a Florida First Business project is entitled to be carried
forward at the request of the Agency, if the Department of Commerce has approved the project
to receive carryforward.
77
Additionally, volume cap that is allocated for Priority Projects and
those projects of $50 million or more are entitled to be carried forward at the request of the
Agency.
78
All other requests for carryforward are subject to availability on December 30; such
volume cap is allocated on a lottery basis to fund carryforward projects as defined by the Code.
79
Historical Utilization of Volume Cap in Florida
The majority of volume cap is allocated and used to issue multifamily and single-family housing
bonds for low- and moderate-income families. From 2010 through 2023, approximately 92.5%
of all volume cap (current year and carryforward) has been used for affordable housing
(multifamily and single-family housing bonds and MCCs for low- and moderate-income
families).
76
I.R.C. § 146(f).
77
Section 159.81(1), F.S.
78
Section 159.81(2)(a)1., F.S.
79
Id.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$2,200
20102011201220132014201520162017201820192020202120222023
Historical Volume Cap Usage at Issuance
(Amounts in Millions)
Single-Family Multifamily Mortgage Credits BILL: SPB 7054 Page 13
Increasing Demand
In recent years, demand for volume cap has exceeded the state ceiling. Since 2020, a growing
number of regions have had requests for volume cap in excess of the portion of the state ceiling
available in their Regional Allocation Pool.
80
When requests for volume cap exceed the amount
available, the request is placed on a pending list to receive an allocation of volume cap if and
when available; this is usually from the state pool after November 15. The number of requests
and the amount on the pending list had increased dramatically over the past five years. As of
January 26, 2024, there were 11 Notices, 10 of which are eligible for volume cap allocation from
a Regional Allocation Pool and one of which is a Priority Project eligible for allocation from the
State Pool after May 1, totaling $1,214,725,019.72 on the pending list.
81
III. Effect of Proposed Changes:
The bill substantially revises Part VI, Private Activity Bonds, of Chapter 159, F.S. The bill
modernizes, updates, and streamlines out-of-date provisions throughout the part, and codifies
certain provisions from the Division’s rules related to the administration of private activity
bonds. Specifically, the bill:
Provides legislative intent to maximize the annual use of private activity bonds to finance
improvements, projects, and programs serving public purposes and benefitting the social and
economic well-being of Floridians;
Refines and adds definitions used throughout;
Revises the regions, pools, and timelines related to bond allocations to consolidate
infrequently used pools and expedite usage of bonds, detailed below;
Codifies current rules and procedures related to requests for volume limitation by notice of
intent to issue, evaluating such notices, and the division’s role in final certification of bond
issuance;
Allows for all volume cap allocated in a Confirmation to be entitled to be carried forward,
rather than limiting to specific types of projects or basing it on the amount of the
Confirmation;
Replaces the existing processes for requesting and granting allocation of volume cap with an
electronic application wherein all Notices and Issuance Reports will be submitted on the
Division’s website in lieu of via certified/overnight mail;
Repeals the Division’s rulemaking authority; and
Amends related statutes to correct cross references and outdated references.
Bond Allocation Regions, Pools, and Timeline Amendments
The bill combines the purposes of FFBP, MFBP, and the existing State Pool (prior to June 1,
when available for Priority Projects). Into a single pool, the Economic Development Allocation
Pool, which is available for all PABs other than those issued to finance affordable housing
projects. The bill also consolidates a number of regions from the existing Regional Allocation
Pools and specifies that the regional pools are specific to affordable housing projects. The
80
Data on file with the Division.
81
Division of Bond Finance, Act Summary, available at https://www.sbafla.com/bond/Other-Functions/Private-Activity-Bond-
Allocation-Programs (last visited Feb. 2, 2024). BILL: SPB 7054 Page 14
following table describes new pools under the bill with amounts of volume cap shown as what
they would be for calendar year 2024:
Pool Amount Purpose/Availability
Affordable Housing
Allocation Pools
50%
(approx.
$1.413B)
Available 1/1 – 9/30 for affordable housing projects
1/1 – 5/31: Regional Affordable Housing Allocation Pools (11
regions)
o Available on a first-come, first-served basis to issuers within each
region for projects within such region
6/1 – 9/30: Statewide Affordable Housing Allocation Pools (no
regions)
o Available for single and multifamily housing projects statewide
o Initial priority for unfilled requests for allocation from the
Regional Affordable Housing Allocation Pools (first pending
multifamily, then pending single-family), available on first-come,
first-served basis thereafter
FHFC Pool 25%
(approx.
$706.6M)
Available 1/1 – 9/30 to FHFC for affordable housing projects
Economic
Development
Allocation Pool
25%
(approx.
$706.6M)
Available 1/1 – 9/30 for all non-affordable housing projects
1/1 – 5/31: Available following ranking by Secretary of Commerce
o Applications received by 5/31 sent to the Department of
Commerce
o Secretary of Commerce has 15 days to rank order applications
6/1 – 9/30: Available on a first-come, first-served basis with
notification to the Department of Commerce
State Allocation Pool Rollover on
9/30
Available 10/1 – 11/30 for all PABs on a first-come, first-served basis
Carryforward
Allocation Pool
Rollover on
11/30
Carryforward requests submitted Dec 1 – 15; processed on Dec 15 (lottery)
Based on the changes to the regions that increase the number of counties within seven regions, a
number of counties (small, medium, and large) will have access to more volume cap.
82
The new
regions for the Regional Affordable Housing Allocation Pools are shown in the following map:
82
Under the bill the regions would have the following amounts of volume cap in 2024: Region 1: $101,359,720.58, Region 2:
$127,495,261.83, Region 3: $136,178,995.75, Region 4: $101,750,476.19, Region 5: $137,986,608.48, Region 6:
$117,350,855.82, Region 7: $87,775,926.25, Region 8: $115,544,051.27, Region 9: $87,638,708.62, Region 10:
$113,670,629.50, and Region 11: $159,188,145.71. BILL: SPB 7054 Page 15
The bill takes effect January 1, 2025.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
None identified. BILL: SPB 7054 Page 16
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
None.
C. Government Sector Impact:
The Division of Bond Finance will see an indeterminate impact, with potential costs
related to administering the changes and potential savings related to increased efficiency
in the process.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends the following sections of the Florida Statutes: 159.608, 159.802,
159.803, 159.8081, 159.811, 159.814, 159.816, 420.504, and 163.2520.
This bill creates the following sections of the Florida Statutes: 159.8041, 159.8051, 159.8052,
159.8053, 159.8061, 159.8062, 159.8063, 159.8071, 159.80751, 159.8091, and 159.8101.
This bill repeals the following sections of the Florida Statutes: 159.804, 159.805, 159.806,
159.807, 159.8075, 159.8083, 159.809, 159.81, 159.8105, 159.812, and 159.815.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.