JJG H.B. 2500 75(R)BILL ANALYSIS
ECONOMIC DEVELOPMENT
H.B. 2500
By: Oliveira
4-8-97
Committee Report (Amended)
BACKGROUND
During the interim of the 74th Legislature, the Speaker appointed the
House Joint Committee on State Loans and Grants to:
review the loan and grant programs sponsored by the state and its agencies
and to assess the merits of administrative consolidation of selected
programs. The review should focus on programs involving loans to
individuals, businesses, farms and ranches, or non-profits organizations,
but may consider other programs similar in nature.
One of the key findings of the committee is that "[t]he state system of
providing loans and grants is difficult for users to access and
understand." The number of state agencies dealing loan and grant programs
to help a specific economic sector contributes to the problem. The
committee concluded, "Forcing businesses to look to a wide variety of
state agencies makes it very difficult for anyone eligible for assistance
to find the right agency and next to impossible to even consider finding
the right package of assistance from these agencies."
The House Joint Committee on Loans and Grants made the following
recommendation "to the 75th Legislature to improve delivery, oversight and
efficiency of state loans and grant programs, to enhance the state
economic development efforts, and to aid the state's debt management
structure:
The Legislature should consider consolidating appropriate loan, grant, and
economic development information programs and agencies to improve lending
and grant making capabilities and to better coordinate programs.
PURPOSE
To create the Texas Economic Development Agency to administer state
agency loan and loan guarantee programs and to engage in capital formation
initiatives to further the state's economic development goals; to abolish
the Texas Department of Commerce and the Texas Agriculture Finance
Authority.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does expressly grant
rulemaking authority to the Texas Economic Development Agency in: SECTION
4.03 by providing for board rules for the call of meetings; SECTION 4.08
by providing that the board by rule shall establish a breakdown of lending
authority withing the development agency; and SECTION 4.18 by granting the
board authority to adopt rules regulating the economic emergency
assistance fund and the use of the money in the fund. (While the bill
does not expressly grant other rulemaking authority to the Texas Economic
Development Agency it does transfer rulemaking authority from other
entities as follows:
SECTION 2.03 by transferring all powers of the Texas Department of
Commerce to the development agency; SECTION 3.03 by transferring all
powers of the Texas Agricultural Finance Authority to the development
agency; SECTION 3.04 by granting the development agency the powers and
duties related to the administration of the farm and ranch finance program
fund formerly assigned by the constitution and law to the Texas
Agricultural Finance Authority; and SECTION 4.06 by transferring to the
development agency the powers and duties relating to administering a
program of an entity required by other law to administer a loan or loan
guarantee program.
SECTION BY SECTION ANALYSIS
ARTICLE 1.FINDINGS; PURPOSE; AGENCY GOALS; DEFINITIONS
SECTION 1.01. Lists the Legislative Findings.
SECTION 1.02 Spells out the purpose and agency goals. Subsection (a)
states that the Texas Economic Development Agency created by Article 3 of
this Act is a state agency created to operate a consolidated economic
development and lending agency, through consolidation of loan, grant, and
market programs aimed at assisting business, helping governments assist
business, and service the lending needs of groups of individuals targeted
by the legislature essential to the well-being of the state.
Subsection (b) describes the goals of the development agency. The agency
shall meet the needs of:
(1) business for low-cost capital to develop and promote new products and
to expand markets;
(2) expanding, relocating, or developing businesses for information on
Texas' economic sectors, industries, markets, and communities;
(3) communities to offer incentives, including infrastructure improvements
and tax relief, to attract new businesses or expand or retain existing
businesses;
(4) communities by facilitating and complementing the development of
economic incentive packages;
(5) the people of this state for a vibrant economy capable of creating
high-skill, high-wage jobs that pay a living wage;
(6) the taxpayers of this state to ensure that tax and bond revenues for
economic development are spent and managed effectively and efficiently;
and
(7) the tourism industry of this state.
SECTION 1.03.Defines "board" and "development agency."
ARTICLE 2. ABOLITION OF TEXAS DEPARTMENT OF COMMERCE
SECTION 2.01.Repeals Subchapter A, Chapter 481, Government Code, to
abolish the Texas Department of Commerce (TDOC).
SECTION 2.02.Transfers all money, records, property, and equipment of the
TDOC to the development agency on January 15, 1998.
SECTION 2.03.Transfers all powers, duties, functions, programs, and
activities of the TDOC to the development agency on January 15, 1998.
SECTION 2.04Effective date for this article is January 15, 1998.
ARTICLE 3. ABOLITION OF THE TEXAS AGRICULTURAL FINANCE AUTHORITY
SECTION 3.01.Repeals Subchapter B, Chapter 58, Agriculture Code, to
abolish the Texas Agricultural Finance Authority (TAFA).
SECTION 3.02.Transfers all money, records, property, and equipment of the
TAFA to the development agency on May 1, 1998.
SECTION 3.03.Transfers all powers, duties, functions, programs, and
activities of the TAFA to the development agency on May 1, 1998.
SECTION 3.04.Provides that the development agency is the successor agency
for purposes of statutory and constitutional references to the TAFA. The
development agency has the powers and duties related to the administration
of the farm and ranch finance program fund formerly assigned by the
constitution and law to the TAFA.
SECTION 3.05.Effective date for this article is May 1, 1998.
ARTICLE 4. TEXAS ECONOMIC DEVELOPMENT AGENCY
SECTION 4.01.Establishes the Texas Economic Development Agency as a state
agency.
SECTION 4.02.Provides for board membership. Subsection (a) establishes a
nine member board. Subsection (b) states the governor shall appoint the
members of the board, and that four of the appointments shall be made as
follows:
(1) one person who is an agricultural producer;
(2) one person who is an economic development professional who
represents an economic development organization;
(3) one person who represents the tourism industry; and
(4) one person who represents a small, locally owned community bank.
Subsection (c) establishes the terms of board members at two years,
expiring on February 1 of each odd numbered year.
SECTION 4.03.Provides that the governor select the presiding officer from
the board members, and that the board shall meet at least monthly and at
the call of the presiding officer or of a majority of the members, as
provided by board rule.
SECTION 4.04States the board members are not entitled to receive
compensation, but are entitled to reimbursement of the member's travel
expenses as provided by the General Appropriations Act.
SECTION 4.05Subjects the governmental body of the development agency to
the open records laws, Chapter 552, Government Code, except that the
financial records of an applicant or borrower are not public record. The
board is subject to the open meetings law, Chapter 551, Government Code,
except that an open meeting is not required to discuss the financial
matters of an applicant or borrower.
SECTION 4.06.Grants, on full implementation of this Act, to the
development agency exclusive authority to act as the administer of state
agency loan and loan guarantee programs. Subject to Subsection (b), the
powers and duties relating to administering a program of an entity
administering a loan or loan guarantee program are transferred to the
development agency, and the entity shall transfer all program records to
the development agency. Subsection (b) provides that each entity from
which a program is transferred shall execute a memorandum of understanding
with the development agency governing the transfer, and that the transfer
shall be accomplished in accordance with the memorandum. Subsection (c)
states that the Texas Economic Development Agency shall serve as the
administrator of all existing and future state agency loan and loan
guarantee programs.
SECTION 4.07.Provides that the board shall employ a chief operating
officer who may execute any of the board's powers and duties as delegated
by the board, and may employ persons necessary for the management of the
development agency.
SECTION 4.08Instructs the board, by rule, to establish a breakdown of
lending authority, and instructs the chief operating officer to establish
the loan authority of agency employees within board rules.
SECTION 4.09.Allows the development agency to enter into participations to
develop a securitization program to sell into secondary markets.
SECTION 4.10.Provides that the state auditor or a private auditing firm
shall audit the financial condition of the agency annually.
SECTION 4.11.Allows the agency to adopt a policy to market the programs
the agency administers.
SECTION 4.12.Instructs the development agency and the Texas Public Finance
Authority to jointly execute a memorandum of understanding relating to the
agency retaining earnings that exceed the cost of bond retirement and the
costs of the Texas Public Finance Authority.
SECTION 4.13.Allows the development agency to form a subsidiary as
determined necessary by the agency.
SECTION 4.14.Instructs the board to adopt a written cash management policy
and review it annually.
SECTION 4.15.Provides that an entity from which a program is transferred
shall perform, on request of the development agency, technical services
related to program and projects transferred from the entity. The
development agency may contract with other entities to perform technical
services.
SECTION 4.16.Allows the development agency to accept gifts and grants form
any private or public source.
SECTION 4.17.Allows the excess earnings from program administered by the
development agency to be pooled and used for any program administered by
the agency or used to create an economic emergency assistance fund.
SECTION 4.18.Permits the board to create an economic emergency assistance
fund and adopt rules regulating the fund and the use of money in the fund.
The board may deposit earning from other programs administered by the
agency into the economic emergency assistance fund.
SECTION 4.19.Permits the development agency to contract with a private
entity to perform an activity related to a program transferred by this Act
as long as the activity is not solely a sovereign function of the state.
SECTION 4.20.Effective date for this article is set as January 15, 1998.
ARTICLE 5. LEGISLATIVE OVERSIGHT COMMITTEE
SECTION 5.01.Subsection (a) establishes a legislative oversight committee
composed of six members; three members of the Senate appointed by the
Lieutenant Governor; and three members of the House appointed by the
Speaker. Subsection (b) instructs the Lieutenant Governor to appoint the
initial presiding officer for a term ending January 31, 1999, and the
Speaker to appoint the successor presiding officer for a term beginning
February 1, 1999. Subsection (c) subjects the committee to Chapter 325,
Government Code (Texas Sunset Act), and abolishes the committee August 31,
1999 unless existence is continued under that chapter.
SECTION 5.02.Lists the powers and duties of the committee. Subsection (a)
instructs the committee to meet quarterly with the board and receive
information regarding rules adopted by the board or proposed for adoption.
Subsection (b) allows the committee to request reports and other
information relating to the operation of the board. Subsection (c)
instructs the committee to review the specific recommendations for
legislation proposed by the board.
SECTION 5.03.Subsection (a) instructs the committee to file a report with
the governor, lieutenant governor, and the speaker not later than December
31 of each even numbered year. Subsection (b) details the criteria for
the report.
SECTION 5.04. Effective date for this article is January 15, 1998.
ARTICLE 6. COMPTROLLER STUDY
SECTION 6.01.Provides for a comptroller's study. Subsection (a) instructs
the comptroller to study the programs transferred by this act, and develop
and make recommendations to the governor, lieutenant governor, and the
speaker concerning the integrated structure of the development agency.
Subsection (b) instructs each entity involved to cooperate with the
comptroller in formulating and implementing a transition plan. Subsection
(c) instructs the comptroller to report and recommend a structure of the
commission and transition of programs transferred to the governor,
lieutenant governor, and the speaker not later than January 15, 1998.
Subsection (d) provides that the development agency, after review of the
comptroller's plan by the governor lieutenant governor, and the speaker,
and to the extent practicable, implement the program transition in a
manner consistent with the comptroller's plan. Subsection (e) instructs
each state agency affected by the transfer of programs to cooperate with
the comptroller and the development agency in formulating and implementing
a transition plan.
SECTION 6.02.Effective date for this article is September 1, 1997, and the
expiration date is August 31, 1999.
ARTICLE 7.TRANSFER OF CERTAIN PROPERTY, RECORDS, OBLIGATIONS, FUNDS,
FUNCTIONS, PROGRAMS, AND ACTIVITIES TO DEVELOPMENT AGENCY
SECTION 7.01.On May 1, 1998, or earlier by interagency agreement, the
following functions, programs, and activities are transferred to the
development agency:
(1) from the Texas Department of Housing and Community Affairs, the
community and economic development local training and development grants
program;
(2) from the General Land Office, natural gas promotion program, and
recycled products market expansion program;
(3) from the Parks and Wildlife Department, the public information
program to communicate the state's natural and cultural resource
conservation message through various media; and
(4) from the Texas Department of Transportation, the travel information
program to support and promote tourism.
SECTION 7.02.Amends Section 9B(a), Texas Public Finance Authority Act
(Article 601d, V.T.C.S.) to give the Texas Public Finance Authority the
exclusive authority to act on behalf of the Texas Economic Development
Agency in issuing bonds with respect to all bonds authorized to be issued
by entities to fund programs administered by the development agency.
SECTION 7.03.Effective date for this article is January 15, 1998.
ARTICLE 8.TRANSFER OF CERTAIN PROPERTY, RECORDS, OBLIGATIONS, FUNDS,
FUNCTIONS, PROGRAMS, AND ACTIVITIES TO DEVELOPMENT AGENCY
SECTION 8.01.Transfers, on May 1, 1998, the following functions, programs,
and activities from the Texas Agricultural Finance Authority to the
development agency:
(1) TAFA loan guarantee program;
(2) linked deposit program;
(3) microenterprise support program;
(4) young farmers endowment program; and
(5) farm and ranch finance program.
ARTICLE 9. TEXAS DEPARTMENT OF BANKING REPORT
SECTION 9.01.Instructs the Texas Department of Banking to: examine loans
in programs administered by the development agency for credit quality and
value; recommend appropriate loan underwriting standards; and report its
recommendations to the governor, lieutenant governor, and speaker not
later than August 1, 1998.
SECTION 9.02.Effective date for this article is January 1, 1998, and the
expiration date is January 1, 1999.
ARTICLE 10. AUDITOR EVALUATION
SECTION 10.01.Instructs the state auditor to: evaluate the management and
fiscal control systems of the development agency; recommend improvements
to the governor, the legislature, and the development agency; and report
the results of the evaluation to the governor and the legislature not
later than December 1, 1998.
SECTION 10.02.Effective date of this article is January 15, 1998.
ARTICLE 11. TRANSFER OF PERSONNEL
SECTION 11.01.Provides that an employee of a program transferred to the
development agency becomes an employee of the development agency on the
date the program transfer is completed.
ARTICLE 12.AMENDMENT AND REPEAL OF CERTAIN FUNCTIONS, POWERS, AND DUTIES
OF THE TEXAS DEPARTMENT OF COMMERCE
SECTION 12.01.States that the amendment by this article of a statute
referring to the Texas Department of Commerce or a division of the
department does not affect the abolition of that department by this Act.
SECTION 12.02.Amends Section 481.172, Government Code, substitute
"distribution channels" instead of "agencies, including the United States
Travel and Tourism Agency." Makes conforming changes to refer to the
Texas Department of Transportation instead of the Texas Transportation
Commission. Strikes "in this state" so that the Department shall
encourage communities, organizations, and individuals in and out of state
to use their own funds in the pursuit of the objectives of this
subchapter.
SECTION 12.03.Amends Section 481.221, Government Code, by deleting the
obsolete definition of "office" meaning Office of Advanced Technology
within the Texas Department of Commerce. Makes conforming changes by
renumbering subsections to reflect this amendment and codify a 1995
amendment.
SECTION 12.04.Repeals Chapter 146, Education Code, to abolish the unfunded
Texas-Mexico Development Fund.
SECTION 12.05.Repeals Section 481.061, Government Code, to abolish unused
authority to explore, develop, and negotiate interstate compacts with
officials of the United Mexican States or any of its political
subdivisions or any other foreign trading partners.
SECTION 12.06.Repeals Subchapters R, T, U, and V, Chapter 481, Government
Code, to abolish: the unfunded Small Business Incubators Program; the
unused authority to indemnify against loss or damage art and artifacts;
the unfunded Product Commercialization Program; and the unfunded Small
Business Innovation Research Program.
SECTION 12.07.Repeals Chapter 483, Government Code, to abolish the
unfunded Texas Business Enhancement Fund.
ARTICLE 13.CONTINGENT ON CONSTITUTIONAL AMENDMENT; BOARD APPOINTMENT;
EMERGENCY
SECTION 13.01.States that Article 8 of this Act take effect only if the
constitutional amendment proposed by House Joint Resolution No. ____ is
approved by the voters.
SECTION 13.02.Instructs the governor to appoint the initial members of the
board in a timely manner so that a quorum has qualified for office not
later than January 15, 1998. The term of each initial board member
expires February 1, 1999.
SECTION 13.03. Emergency clause.
EXPLANATION OF AMENDMENTS
Committee Amendment No. 1 makes the following technical and substantive
changes:
(1)In SECTION 1.02, corrects the reference to the creation of the Texas
Economic Development Agency from Article 3 to Article 4 of this Act;
(2)In SECTION 2.01, reduces the repealing of Chapter 481, Government Code
(Commerce Legislation), to Sec. 481.002 which states that Commerce is an
agency. The change ensures that the development agency will have all the
powers and duties of the Department of Commerce;
(3)In SECTION 3.01, reduces the repealing of Chapter 58, Agriculture Code
(Texas Agricultural Finance Authority Legislation), to Sec. 58.001(a)
which states that TAFA is an agency. The change ensures that the
development agency will have all the powers and duties of the Department
of Commerce;
(4)In SECTION 4.06, clarifies that the development agency's exclusive
authority over loan and loan guarantee programs applies only to programs
transferred by this Act;
(5)In SECTION 4.06, clarifies that the powers and duties only of loan and
loan guarantee programs transferred by this Act are transferred to the
development agency;
(6)In SECTION 6.01, clarifies a reference to the "commission" when it
should be the "development agency;"
(7)In SECTION 7.01, removes local training programs under the Department
of Housing and Community Affairs from transfer to the development agency;
(8)In SECTION 7.01, removes the natural gas promotion program from
transfer to the development agency;
(9)In SECTION 7.01, exempts the Texas Department of Transportation's
Travel Information Centers from transfer to the development agency;
(10)In SECTION 13.01, strikes "CONTINGENT ON CONSTITUTIONAL AMENDMENT;"
from the title of ARTICLE 13;
(11)strikes SECTION 13.01, ARTICLE CONTINGENT ON ADOPTION OF
CONSTITUTIONAL AMENDMENT, because a constitutional amendment is not
required to make the changes under this Act;
(12)Renumbers SECTION 13.02 to SECTION 13.01; and
(13)Renumbers SECTION 13.03 to SECTION 13.02.
Committee Amendment No. 2 adds SECTIONS 12.02 - 12.05 to the bill, and
renumbers subsequent sections appropriately.
SECTION 12.02.Amends Sec. 481.102, Government Code, to add a Small
Business Ombudsman to the Office of Small Business Administration and
makes the Ombudsman the head of the office. Allows the office to accept
gifts, grants, and donations to perform specific projects, studies,
procedures, or provide assistance to small business.
SECTION 12.03.Amends Sec. 481.103(a) to add to the list of duties of the
Office.
SECTION 12.04.Adds Sec. 481.109, Government Code, to authorize and direct
each department, agency, and instrumentality of state government to
furnish the Office reports and other information necessary to carry out
its functions.
SECTION 12.05.Adds Subsection (f) to Sec. 2006.002, Government Code, to
allow state agencies to adopt provisions concerning micro businesses
similar to those outline in Subsection (b) of Sec. 2006.002, Government
Code, for small business.