JKM C.S.H.B. 365 75(R) BILL ANALYSIS ECONOMIC DEVELOPMENT C.S.H.B. 365 By: Hunter 4-24-97 Committee Report (Substituted) BACKGROUND Filmed entertainment is a large and rapidly growing industry that represents economic development and job creation opportunities for Texas and its communities. The Film Commission estimates that about $150 million was spent by non-local producers in Texas last year. The total was closer to $1 billion when you include the impact it has had on other sectors and industries. This is a growing market and Texas is competing with at least a dozen other states for an increasing share of the industry. Success, however, can only be assured if Texas has in place the requisite physical infrastructure that it currently lacks. Compared with some of our competitors, notably Florida and North Carolina, Texas is critically short of state-of-the art sound stages and backlots. By one estimate, Texas needs another three sound stages, totaling 50,000 square feet, just to keep up with the anticipated growth of demand. Another study, completed in 1996 by the University of North Texas under contract with the Texas Department of Commerce, found that a studio backlot should be built in partnership with the State of Texas in order to attract and greatly increase film and video production in the state. Legislative leaders have explored similar possibilities in years past. In the 74th Session, SB 1677, authorizing a sound stage complex to be built by the state to promote film production in Texas, passed the Senate with funding of up to 10 million dollars. (The House determined that additional study should be given to the matter since the location was predetermined in the bill and not enough was known about the project in the waning days of the session.) This type of legislation, with a public-private partnership, would be a strong incentive for the private sector, city and county governments, and city film commissions to take every possible opportunity to capture a greater share of this multi-billion dollar enterprise in our country. PURPOSE This legislation proposes a public/private matching funds partnership in an effort to encourage one or more localities to construct a studio back lot or sound stage facility in Texas. RULEMAKING AUTHORITY It is the committee's opinion that this bill does expressly grant additional rulemaking authority to the Texas Department of Commerce in SECTION 1, Subchapter K, Chapter 481, Sec. 481.169 (b), Government Code. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 481, Government Code, by adding Subchapter K. Section 481.163: DEFINITIONS. Defines terms used in this section: "account," "motion picture facility," and "qualified application." Section 481.164: LOANS. Provides that the Texas Department of Commerce shall make 20-year, no-interest loans, from money set aside for this purpose, to fund motion picture facilities. They may not fund more than two facilities. A loan may only be made to an approved, qualified applicant. Section 481.165: DEPARTMENT CONSIDERATIONS. (a) The department shall determine the amount, the acceptable security, and any other terms of the loan. (b) Before making loans, the department must determine that the borrower has the ability and intent to construct and operate a motion picture facility and that they have the financial resources to provide at least half of the amount required for initial construction of that facility. Section 481.166. MOTION PICTURE FACILITY ACCOUNT. Provides that this account is an account in the state treasury. Appropriations for the implementation and administration of this subchapter, as well as any earnings or fees collected, shall be deposited in this account. Section 481.167. PAYMENTS NOT TO BE MADE TO DEFAULTING BORROWERS. (a) Requires the department to report to the comptroller the name of a borrower who has defaulted on a loan. Lays out the conditions under which the comptroller may and may not issue a warrant or initiate an electronic funds transfer. (b) Provides that a state agency may not use funds to pay a borrower if they know that the borrower is in default on a loan made under this subchapter. (c) Defines the terms "compensation," "state agency," and "state officer or employee" used in this section. Section 481.168. PENALTY FOR FALSE INFORMATION ON APPLICATION. Provides that an applicant who knowingly provided false information on their application may not submit another application within 2 years of when the application was submitted. They are also liable to the state for any expense incurred, due to the false information. Section 481.169. FEES; RULES. Allows the department to impose fees and adopt rules as necessary for the administration of this subchapter. SECTION 2. Provides that the loans shall be made to the extent of available appropriations. SECTION 3. Effective date. SECTION 4. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE SECTION 1. CSHB, Section 481.163, adds definitions of "account" and "qualified application." HB 365, Section 481.164, GRANTS, provides for rules, and allows for the Texas Department of Commerce to make grants, with money appropriated for this purpose. CSHB 365, Section 481.164, is renamed LOANS and allows TxDOC to make 20year, no-interest loans and lays out restrictions on loans. CSHB 365 does not make provisions for rules in this section. HB 365, Section 481.165, ELIGIBILITY, defines the eligibility requirements for a grant under this subchapter. CSHB 365 adds language that requires the department to determine the amount of the loan, the acceptable security for the loan, and any other terms or conditions relating to the loan. HB 365, Section 481.166, limits the number of grants the department can make to not more than two. CSHB 365 moves this language to Sec. 481.164. CSHB 365 Sec.481.166, MOTION PICTURE FACILITY ACCOUNT, is added and provides that this account is an account in the state treasury. Appropriations for the implementation and administration of this subchapter, as well as any earnings or fees collected, shall be deposited in this account. CSHB 365 adds Sec. 481.167, PAYMENTS NOT TO BE MADE TO DEFAULTING BORROWERS. (a) Requires the department to report to the comptroller the name of a borrower who has defaulted on a loan. Lays out the conditions under which the comptroller may and may not issue a warrant or initiate an electronic funds transfer. (b) Provides that a state agency may not use funds to pay a borrower if they know that the borrower is in default on a loan made under this subchapter. (c) Defines the terms "compensation," "state agency," and "state officer or employee" used in this section. CSHB 365 adds Sec. 481.168 PENALTY FOR FALSE INFORMATION ON APPLICATION. Provides that an applicant who knowingly provided false information on their application may not submit another application within 2 years of when the application was submitted. They are also liable to the state for any expense incurred, due to the false information. CSHB 365 adds Sec. 481.169 FEES; RULES. Allows the department to impose fees and adopt rules as necessary for the administration of this subchapter. SECTION 2. HB 365 contained the effective date. CSHB 365 requires the department to make loans to the extent of available appropriations. SECTION 3. HB 365 contained the emergency clause. CSHB 365 contains the effective date. SECTION 4. CSHB 365 adds this section to contain the emergency clause.