Senate President Jim King is considering repealing a state program that is giving three venture capital companies $75 million in taxpayer money but has so far resulted in a loss of 174 jobs.
The “CAPCO” program, originally passed in 1998, was supposed to bring more high-paying jobs to the state. Under the way the law was written, however, the amount of money flowing to the venture capital companies is not based on the number of jobs created, meaning the companies could pocket all of that $75 million investment’s final value even if more jobs are lost.
“It was never our intent to enrich venture capitalists,” said King, who said he learned details about the program from an article in The Palm Beach Post last month. He said he plans a summer study of the program, with legislation undoing the program if possible next spring. “The Senate is going to be prepared to make some changes if it appears that is what is necessary, and it seems like it is necessary.”
The author of the law, Tallahassee lobbyist Pete Dunbar, could not be reached for comment Friday. He was able to get the law through both chambers with little discussion five years ago on behalf of New Orleans-based Advantage Capital Partners, which pushed similar laws through other statehouses. Tate Garrett, the head of Advantage’s Florida office in Tampa, also could not be reached Friday.
The CAPCO program uses a complicated system of tax credits for insurance companies totaling $150 million over 10 years to put $75 million into the hands of the venture capital companies to invest in Florida businesses.
Unlike a traditional venture capital partnership, in which the party putting up the money makes 80 percent of the profits, the Florida law gives 100 percent of the profits to the venture capital companies until the $75 million has doubled to $150 million, and 90 percent of the profits thereafter with 10 percent going to the state. Once the state has recovered its original $150 million, the venture capital companies would once again get 100 percent of all subsequent profits.
King said that setup does not pass the straight-face test, and that he owes it to taxpayers to repeal at least the second phase of CAPCO passed in 2002, if not the original law, “even it means risking a lawsuit.”
Advantage Capital has threatened Gov. Jeb Bush with a lawsuit if the state does not allocate another $150 million to pay for the program’s second phase. The legislature authorized the expansion – pushed by Advantage Capital – but did not appropriate money to pay for it in 2002, and lawmakers declined again this spring to appropriate any new money for it.
s_v_date@pbpost.com
