Florida Law
Florida Governmental Law
Governmental Law
Some businesses have frequent contact with government, but exclusively with one or more specific branches of government. Other businesses only have to deal with the government to get permission to embark on certain projects. This chapter focuses on areas in which businesses frequently come into contact with federal, state, and local governments, such as public financing, government contracts, lobbying, and dealing with administrative agencies.
Public Financing
One of the government' s primary interests is to expand
the economy and increase opportunities for a wider
cross-section of the population to participate in the
economy. In a poor economy, businesses lay off employees,
and people without jobs tend to vote against incumbent
politicians. Therefore, politicians have created a
variety of government programs that aim to promote
the interests of businesses. One of the most important
means by which the government seeks to help businesses
is by making available various forms of public financing
so that businesses can expand and grow. Public financing
is available from state, local, and federal sources.
Federal Financing
The federal government offers a number of assistance
programs primarily through an organization called the
Small Business Administration (SBA). Created by Congress
in 1953 to help small businesses, the SBA provides
financial, procurement, advocacy, and management assistance.
Every year, the SBA guarantees bank loans totaling
over three billion dollars for small businesses. For
small businesses that qualify, SBA loans usually offer
far more favorable terms than other types of loans.
Most SBA loans are for a long period of time and have
a relatively low interest rate. Despite their advantages,
however, SBA loans are not right for all businesses:
the SBA loan process usually takes longer than the
conventional loan process, the SBA can require more
personal guarantees and collateral, and the SBA sometimes
restricts a business' ability to get additional financing
as a pre-condition to the SBA loan.
State Financing
Private and public financial institutions in Florida
offer various financial support services to businesses
in the state.
Conventional Financing
Obviously, Florida businesses have available to them
the two most common sources of business financingdebt
and equity. These common sources of financing may be
especially beneficial to businesses in Florida, because
Florida has a reputation for a pro-business attitude.
Banks, savings and loan associations, and credit unions offer conventional debt financing, Florida law also allows limited interstate banking, which increases the pool of investment capital for businesses. Commercial banks usually offer short-term financing for operating capital and equipment, as well as long-term financing for real estate.
Recognizing that many businesses prefer to, the State of Florida has structured its securities laws to make financing of operations using equity funds free of excessive government intervention while still protecting investors. Information on filing private stock placements or public offerings, is available through the Division of Securities of the Florida Department of Banking and Finance.
Venture Capital
Information about venture capital, including sources
of financing, is readily available in Florida through
the Bureau of Business Assistance, Florida' s Small
Business Development Centers, and the Florida Economic
Development Center.
" Local area venture capital clubs" and similar organizations are located in various regions throughout Florida. These informal networks strive to increase interactions among entrepreneurs, accountants, lawyers, bankers, investors, and government service providers. Information about these clubs is available from the Bureau of Business Assistance at the Florida Department of Commerce.
State of Florida Business Financing Programs
Florida supports and operates sources of finance for businesses with special needs or gaps in financing.
" Private activity bonds" (industrial development bonds) are available for a variety of new industrial development purposes. Primarily because bondholders do not pay income tax on interest income, the cost of tax-exempt financing is relatively low. There are federal restrictions on the use of these bonds.
The Florida Black Business Investment Board seeks to address the needs of Florida' s black-owned businesses by administering an investment trust fund to provide financial assistance to African-American entrepreneurs. Low-interest business loans in specific low-income areas of Florida are available through Community Development Corporations.
Loans and grants to local government come from various state and federal sources and are funded through local governments. The Florida Economic Development Transportation Fund provides funding to build roadways or other transportation improvements for new or expanding companies. In addition, some local governments have their own financing programs to assist businesses. Local government officials are the appropriate persons to contact for details.
Florida' s Enterprise Zone Program offers incentives to businesses that locate in or invest resources in designated declining areas, and which are subject to Florida corporate income taxes or which collect or pay sales taxes. The Enterprise Florida Capital Partnership (EFCP) is a not-for-profit corporation that assists in forming and coordinating the state' s economic development policy regarding capital availability for businesses. The EFCP provides leadership in identifying areas of capital inadequacy. It is governed by a board comprised of legislators, top executives from Florida' s major financial institutions, and manufacturing and economic development leaders.
The Florida Development Finance Corporation serves as a development bank for small manufacturers and related firms by providing access to loans for up to 15 years for $500,000 or more with fixed or floating interest rates at or below prime. The Cypress Equity Fund is a $50 million venture capital pool to be invested by Abbott Capital Management of Boston, Massachusetts in leading venture capital partnerships nationally to create access for Florida firms to the national venture capital industry. The Cypress Venture Capital fund is a Florida-based venture capital fund currently being designed to invest in high-growth enterprises at start-up, early, and intermediate stages.
The Enterprise Florida Innovation Partnership is a not-for-profit corporation established by the Florida Legislature to provide technology-based economic development leadership and improve the competitiveness of innovation-driven firms. Its ultimate goal is to provide employment opportunities with higher wages for Floridians. Two of its current funding programs are the Technology Research Investment Fund, for company technologies with emphasis on applied research and development leading to marketable products and processes, and the Technology Reinvestment Project, a competitive program for allocating defense conversion matching funds for Florida applicants to the federal program.
Local Financing
Many local government units provide assistance in various
forms to new businesses. Some offer technical assistance
or financial services, while others offer tax credits
or loan packaging assistance. A businessperson interested
in programs offered in a given area should contact
the business services or planning unit of the county
or city in which the business is or will be located.
Government Contracts and Technical Assistance
Of all the corporations in the United States, the single
largest is the federal government. Similarly, Florida'
s state government is one of the largest corporations
in Florida. Despite these figures, government entities
are frequently overlooked by business managers as a
source of business opportunities. There are a number
of ways a business can secure government contracts
at the federal, state, and local levels.
On the federal level, each individual federal agency receives requests for bids from small businesses. To receive copies of various federal agencies' requests for bids, a business files an application with each federal agency with which the business wants to contract. Many of these federal agencies have special programs specifically designed to assist small and minority-owned businesses because regulations require that a certain percentage of all government contracts be reserved for such businesses. The SBA provides assistance to small businesses in this regard by publishing a list called the Small Business Subcontracting Directory. The directory lists the major contractors to the federal government and which are most likely to be in need of subcontracting.
One of the missions the SBA takes most seriously is its goal of management assistance. To this end, the SBA offers a number of different programs from which businesses can obtain advice in such areas as marketing, buying, financial management and administration. Among these programs is the Service Corps of Retired Executives (SCORE), which connects small businesses with retired executive volunteers who offer counseling and advice. The Small Business Institute, a coalition of college business schools and small business people is another resources; it offers management training seminars and various other services. The SBA' s Office of Procurement Assistance helps businesses get information about and develop strategies for selling to the federal government. The SBA also lobbies Congress and other federal organizations on behalf of small businesses.
There are several other government agencies of which a small business should be aware. For example, the various branches of the armed services offer assistance to businesses in securing defense-related contracts. The United States Army maintains an office known as the Defense Logistics Agency to assist small businesses with contracts. Also, the General Services Administration helps businesses that want to sell their products directly to the government by providing information on which government agencies purchase products.
Lobbying
Lobbying is the business of persuading politicians to
pass laws favorable to a particular person or agency
and to defeat potential laws that are unfavorable to
lobbyists or their clients. Despite the negative image
that some lobbyists have, lobbying government on behalf
of business is a long respected tradition in this country.
Many government agencies and departments rely on lobbyists
to provide them with information necessary to make
decisions and set policy. The government is not the
large faceless machine it sometimes appears to be.
There are people behind every decision and every regulation,
and many of these people are sincerely concerned about
staying abreast of changes in the law and industry
and in promoting the economic vitality in their area
of interest.
There are laws governing lobbying at both the state and federal level, including requirements for lobbyists to identify the clients on whose behalf they lobby. Lobbyists who lobby the United States Congress are governed by federal lobbyist registration statutes. These laws require lobbyists to register with the Clerk of the House of Representatives, and to maintain and periodically file detailed records of major contributors and all expenditures made by the lobbyist or lobbying organization. Lobbyists also are required to register with the Secretary of the Senate.
Lobbyists who lobby the Florida State Legislature, and each principal represented, must register with the Lobby Registration Office, Joint Legislative Management Committee. Registered lobbyists must file quarterly statements that contain all lobbying expenditures by the lobbyist and principal and the source of funding for such expenditures. Expenditures made must be reported by the category of the expenditure, such as food and beverages, entertainment, research, communication, media advertising, publications, travel, and lodging. Supervision and enforcement of these regulations has become tighter in recent years.
Many law firms have attorneys who specialize in lobbying. In addition, there are non-legal political consulting firms available to perform lobbying services. Their employees are often experts at influencing government.
Dealing with Administrative Agencies When the average person imagines how the government makes decisions, he or she envisions the House or the Senate deliberating in session or the Chief Executive sitting in his or her office poring over papers. While it might be nice to have direct input into these decisions, few business managers will ever be asked to testify before Congress or to personally advise the President. Instead, the decisions that most directly affect the average business usually are made by government administrative agencies set up to formulate rules and oversee their implementation. Because administrative agencies deal with a wide variety of substantive problems, it would be impossible to summarize in this Guide all the work they do. However, because administrative procedures are so similar from agency to agency, a business manager should have a basic grasp of how agencies make decisions and the role he or she can play in dealing with administrative agencies.
The Limited Role of Administrative Agencies
It is easier to understand the role of administrative
agencies if one understands their constitutional limitations.
Theoretically, Congress makes all federal laws and
the Florida State Legislature makes all state laws.
Realistically, it would be impossible for either of
these two legislative bodies to handle every detail
of the laws they create. Legislatures are forced to
rely heavily on the advice of numerous administrative
agencies in suggesting new laws and implementing existing
laws. Frequently, Congress or the state legislature
establishes an agency, gives it broad outlines to follow
in regulating an industry, then delegates to that agency
the power to make rules that industry must follow.
There are limits on how much authority Congress or the state legislature can delegate to administrative agencies. Once they are created, federal agencies must follow the federal Administrative Procedure Act; state agencies, similarly, must follow, state administrative rules. The statutes creating the agency can sometimes be attacked as an overly broad delegation of legislative power or a particular agency action can be attacked as overstepping the proper bounds of the agency' s authority. Thus, an important first step in challenging an agency action is to ask whether the agency has been properly delegated power and whether that power is being properly exercised. The next step in challenging an administrative action is to ask whether the agency has followed the requisite procedures.
The Administrative Process
Understanding how agencies work is easier if one understands
that all agency actions must fit into one of three
broad categoriesrulemaking, adjudication, or informal
agency action. Each of these categories has unique
rules that apply to it, and each offers affected parties
a different degree of input into the agency' s decision-making
process. Thus, the first step for any business wanting
input into a particular agency action is to determine
into which category the action fits. The determination
of what to call the agency action is rarely simple.
The category that the particular action fits into determines
how many procedural safeguards the agency must observe.
An agency may try to avoid the cumbersome procedure
required for one type of action by trying to fit it
into another category of administrative action that
requires less formal procedure. Many legal disputes
over agency action have centered around how to characterize
what the agency is doing, rather than the actions themselves.
Rulemaking usually is done quite informally after a period of notice and comment. An agency gives notice that it is considering adopting a proposed rule and gives notice to interested parties that may want to comment on the rule. The agency considers the comments and then promulgates a final rule. Commenting on a proposed rule is one of the most direct ways in which businesses can have a voice in formulating new rules. Unfortunately, an agency is not required to heed comments received. Because the agency is not required to follow any of the comments received, an affected party may try to argue that what the agency is doing is not rulemaking at all, but instead is adjudication. Under some circumstances, a new rule may be made only after the agency follows detailed procedures known as formal rulemaking.
Adjudication is a procedure very much like a civil court trial. Court rules and agency rules are not identical, but agency adjudication allows for direct examination of witnesses, testimony under oath before an administrative law judge and the development of a substantial written record upon which the agency' s decision must be based.
Informal agency action is a very broad category in which the procedures vary considerably. Parties to informal agency action often have minimal procedural protection. For example, an agency might be required only to give the reason for taking a particular action. It need not allow for public comments or other input into the process.
The Role of Courts
Although most administrative decisions are subject to
judicial review, few are ever overturned on review.
At the federal level, the United States Supreme Court
has sent very strong signals to lower courts that they
are not to overturn agency decisions absent very strong
evidence that the agency acted erroneously. A business
manager would be foolish to treat administrative agencies
lightly because he or she assumes that a reviewing
court will correct any mistakes the agency might make.
The ability of reviewing courts to overturn agency
action is so limited that the only sensible strategy
is to assume that a case must be won at the agency
level or not at all.
Freedom of Information Act
The federal Administrative Procedure Act gives individuals,
businesses, and organizations a very powerful tool
to use in obtaining information from government agenciesthe
Federal Freedom of Information Act (FOIA). The FOIA
gives unprecedented access to government information.
Under FOIA, an agency must make available to the public:
*Final opinions, including concurring and dissenting
opinions, as well as orders made in the adjudication
of cases
*Statements of policy and interpretation adopted by
the agency but not published in the Federal Register
*Administrative staff manuals and instructions to staff
that affect a member of the public
This general list is only a starting point, however, as there are a number of specific exceptions to what agencies must provide to the public. An agency is not required to disclose:
*National security information
*Internal personnel rules and files
*Information specifically exempted by another statute
*Commercial information
*Financial information
*Trade secrets
*Inter- or intra-agency memoranda
*Personnel, medical, or other files, the disclosure
of which would violate personal privacy
*Law enforcement and investigation files
*Data about financial institutions
*Geological and geophysical information on oil and natural
gas wells
The definition of agencies subject to the FOIA is quite broad and includes independent regulatory commissions, the executive office of the President, other executive departments, all government corporations, the Central Intelligence Agency, and the Federal Bureau of Investigation.
FOIA requests are usually made in writing to the agency. Most agencies process so many FOIA requests that they have designated an officer to process the requests. The Code of Federal Regulations publishes the names and addresses of FOIA contacts in many agencies. Procedures for seeing these documents are very informal and no written request is necessary. The party making the request is obligated to describe the records reasonably well and to pay photocopying and search fees. Frequently requested documents may be made available at established Information Reading Rooms.
Resources
The Entrepreneur' s Guide to Doing Business with the
Federal Government: A Source Book for Small and Growing
Businesses, Charles R. Bevers et al., Prentice Hall,
New York, NY, 1989.
Black Business Investment Board, 519 East Park Avenue, Tallahassee, FL 32301, (904) 487-4850.
Florida Department of Banking and Finance, Division of Securities, Tallahassee, FL 32399-0350, (904) 488-9805
Florida Department of Commerce, Collins Building, 107 West Gaines Street, Suite 443, Tallahasee, FL 32399-2000, (904) 488-9357 (Bureaus of Business Assistance, Finance Section); (904) 487-0466 (Florida First Capital Finance Corporation). The Bureau of Business Assistance publishes the Florida Venture Finance Directory which provides information about moderate to high-risk debt, sources of venture capital, and venture capital intermediaries.
Florida Department of Community Affairs, Community Development Corporation Support and Assistance Program, 2740 Centerview Drive, Tallahassee, FL 32399-2100, (904) 488-3581.
Florida Department of State, Division of Corporations, Limited Partnership Section, P.O. Box 6327, Tallahassee, FL 32314, (904) 487-6051.
The Florida Economic Development Center, 119 College of Business, Tallahassee, FL 32306-1007, (904) 644-1044 maintains a national database of venture capital firms.
Florida Small Business Development Centers, State Director' s Office, University of West Florida, 11000 University Parkway, Building 8, Pensacola, FL 32514, (904) 474-2908.
General Services Administration, 17th & D Streets, SW, Washington, D.C. 20407.
Doing Business with Government: Federal, State, Local and Foreign Government Purchasing Practices for Every Business and Public Institution, Susan A. McManus, Paragon House, New York, NY, 1992.
Proposals That Win Federal Contracts: How to Plan, Price, Write, and Negotiate to Get Your Fair Share of Government Business, Barry L. McVay, Panoptic Enterprises, Woodbridge, VA, 1989.
United States Small Business Administration, P.O. Box 15434, Fort Worth, TX 76119. The SBA offers government publications on all aspects of business planning and organization, such as the U.S. Government Purchasing and Sales Directory. These publications are available by sending a self-addressed stamped envelope to the Small Business Administration Office of Procurement and Technical Assistance.