JJG C.S.S.B. 932 75(R) BILL ANALYSIS ECONOMIC DEVELOPMENT C.S.S.B. 932 By: Sibley (Oliveira) 5-8-97 Committee Report (Substituted) 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 4 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 Chapter 481.002, Government Code, to abolish the Texas Department of Commerce (TDOC) as a state agency. 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 2.04Provides that a reference in law to the Texas Department of Commerce is considered to be a reference to the development agency. SECTION 2.05Provides that if a provision of Subchapter A, Chapter 481, Government Code, conflicts with a provision of Article 4 of this Act, Article 4 of this Act controls. SECTION 2.06Effective date for this article is January 15, 1998. ARTICLE 3. ABOLITION OF THE TEXAS AGRICULTURAL FINANCE AUTHORITY SECTION 3.01.Repeals Section 58.011(a), 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.Provides that if a provision of Subchapter B, Chapter 58, Agriculture Code, conflicts with a provision of Article 4 of this Act, Article 4 of this Act controls. SECTION 3.06Effective 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 development agency 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 grants program; (2) from the General Land Office, the 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, other than the operation of the department's Travel Information Centers, 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 12.02Amends Sec. 481.082, Government Code, to change the legislative finding of the Texas Rural Economic Development Act. Subsection (a) is amended to recognize that communities in this state are at a disadvantage with communities in this state and other states for the location or expansion of businesses because of available financial resources and other incentives. Subsection (b) is amended to focus the purposes of this subchapter to the promotion of economic development and employment in rural areas. Subsection (c) states that the office of rural affairs shall ensure that assistance is provided to improve economic development conditions and opportunity for citizens in rural areas, and strikes giving preference to assisting the food and fiber processing industries. SECTION 12.03Amends Sec. 481.083(7), Government Code, to amend the definition of "Rural area" to clarify that a rural area includes an area that meets the conditions of a rural area, as defined by the department. SECTION 12.04Amends Sec. 481.0831, Government Code, to require the department to hire a rural director. The director must have a strong commitment and involvement in rural affairs in the state. SECTION 12.05Amends Sec. 481.088, Government Code, to list the general duties of the office of rural affairs and strikes the duties of the executive director under the Texas Rural Economic Development Act. SECTION 12.06.Amends Sec. 481.089, Government Code, to list the specific duties of the office of rural affairs in order to carry out its duties under Sec. 481.088, Government Code. Strikes the current duties of the executive director for assessing the availability of rural economic development data services and the capability of data banks. SECTION 12.07Amends Sec. 481.090, Government Code, to authorize the department to: employ and set the compensation of personnel to carry out the functions under this subchapter; consult with rural, economic and community development experts, regulatory, legal, economic, or financial experts and individuals who represent the public interest. Strikes the duty to and criteria for assessing the availability of business information outreach service offices in Texas. SECTION 12.08Amends Sec. 481.092, Government Code, to require each state agency to furnish the office of rural affairs, on request, with reports and other information necessary to carry out the functions of this subchapter. Strikes the comptroller's duty to review the implementation of Sections 481.088 - 481.090 and assess programs and activities authorized by those sections. Also removes the comptroller's requirement report to the appropriate committees of the legislature regarding the studies and analyses prepared by the executive director. SECTION 12.09Amends Sec. 481.093, Government Code, to allow the office of rural affairs to accept gifts, grants, and donations, to perform specific projects, studies, or procedures or to provide assistance to small business. SECTION 12.10Amends Subchapter F, Chapter 481, Government Code, by adding Sec. 481.094 to require the department, not later than September 1 of each even- numbered year, to report to the governor and the legislature information regarding each of the functions performed by the office of rural affairs, including suggestions regarding issues critical to the rural areas of this state. SECTION 12.11Directs the executive director to employ a rural affairs director as required by Sec. 481.0831, Government Code, as amended by this article, not later than January 1, 1998. SECTION 12.12. Amends Section 481.102, Government Code, to provide that the Office of Small Business Assistance shall be headed by a director of small business. Allows the office to accept gifts, grants, and donations form sources other than the state for purposes of performing certain projects to provide assistance to small businesses. SECTION12.13.Amends Section 481.103(a), Government Code, so that the office shall be a "focal point" rather than an "advocate" for small businesses by providing to the legislature information on the effects of proposed policies or actions; assisting state agencies in determining the impact proposed rules have on small businesses as required by Section 2006.002; assisting the agencies in reducing the adverse effect that rules have on small businesses. Strikes requirement that the office to provide advice on administrative and legislative matters. The office shall evaluate the effectiveness of state agencies and other entities and make recommendations to the legislature and state agencies; identify regulations (rather than specific instances) that inhibit small business development; identify (rather than describe) the reasons for small and historically underutilized business (HUBs) successes and failures; serve as a focal point for comments (rather than complaints) concerning matters that affect small businesses and HUBs; (strikes language requiring the office to assist with the resolution of problems among state agencies and small and historically underutilized businesses) requires the office to develop and suggest (rather than advocate) proposals for changes in matters that adversely affect small businesses and HUBs, renumbers this and subsequent subsections; not be required to provide certain information to legislative committees; assist small businesses and HUBs by working with relevant organizations to identify (rather than establish) financing programs, match those businesses with sources of credit enhancement, assist those businesses with preparing applications for government loans, loan guarantees, and credit enhancement programs. Strikes language that requires the office to develop and implement programs to encourage certain entities to provide useful services to small and HUBs. The office shall identify potential business opportunities in economically distressed areas; enlist the cooperation of certain entities in disseminating information about programs and services provided by the state that benefit small businesses and how to access such services; defer to the small business stationary source assistance program for assistance related to environmental programs. SECTION 12.14Amends Subchapter G, Chapter 481, Government Code, by adding Section 481.109 to require the department to cooperate with the other state agencies by providing information as requested in an effort to carry out the functions of this subchapter. SECTION 12.15Amends Sec.2006.002, Government Code, by adding subsection (f) allowing the a state agency to adopt provisions concerning micro-businesses similar to those outlined in Subsection (b) for small businesses. SECTION 12.16Amends Section 481.155, Government Code, Subsection (a) by stating the legislature's intent that money from the smart jobs fund be spent in all areas of the state. Allows the executive director to award a grant or a combination of grants in any fiscal year to a single employer in excess of $1 million or at a rate greater than 10 percent of the annual wages of the new or existing job being created or retained with the grant only if the employer locates or expands in an enterprise zone; the employer locates or expands in an adversely affected defense-dependent community; the employer locates or expands in an area having an unemployment rate of 1 1/2 times or greater than the statewide average; the employer locates or expands in a county with a population of less than 75,000; at least 25 percent of the employees hired or retained by the employer are economically disadvantaged individuals; or the employer is a small business or a micro-business. Renumbers subsequent subsections accordingly. Subsection (d) is amended to provide that a grant may not be awarded unless each employer participating in the program certifies that the starting wage for a new job will be equal to or greater than the prevailing wage for that occupation in the local labor market, and that the wage for an existing job will increase to the greater of (1) three percent for a small business or five percent for a business that is not a small business, or (2) 100 percent of the prevailing wage for that occupation in the local labor market area. Subsection (e) is amended so that an employer who is a micro- business may apply for a grant and request a modification of the requirements in Subsection (d) and Section 481.159 (c) if: substantial changes in the skills required in the employer's business are caused by technological changes, the executive director determines that other reasonable factors exist. Renumbers subsequent subsections. SECTION 12.17Amends 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 12.18Amends 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 12.19Repeals Chapter 146, Education Code, to abolish the unfunded Texas-Mexico Development Fund. SECTION 12.20Repeals 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 12.21Repeals 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 12.22Repeals Chapter 483, Government Code, to abolish the unfunded Texas Business Enhancement Fund. ARTICLE 13. BOARD APPOINTMENT; EMERGENCY SECTION 13.01Instructs 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 13.02Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE S.B. 932, as engrossed, would abolish the Texas Department of Commerce (TDOC) and create the Texas Department of Economic Development and Tourism (TDEDT). All powers and duties of the TDOC would transfer to the TDEDT, and the governing structure of TDOC - an executive director appointed by the governor and confirmed by the senate - would change to a 9 member board at TDEDT. S.B. 932 also deletes several provisions of TDOC enabling statutes which were never funded by the legislature. The bill would privatize two TDOC programs; the Texas Manufacturing Assistance Centers and the Capital Certified Development Corporation. C.S.S.B. 932 would abolish the TDOC and the Texas Agricultural Finance Authority and create the Texas Economic Development Agency. The committee substitute would combine the staff of the two abolished agencies to form the new agency. In addition, the committee substitute would transfer program staff and funding involved in economic development activity from several different agencies including: the General Land Office; the Department of Housing and Community Affairs; Parks and Wildlife Department; and the Texas Department of Transportation. C.S.S.B. 932 also amends statutes concerning the Office of Small Business Assistance, the Smart Jobs Fund program, and rural economic development directives by creating the Office of Rural Affairs. Additionally, the committee substitute also deletes several provisions of TDOC enabling statutes which were never funded by the legislature. The following side-by-side comparison addresses the differences from the original to the substitute in greater detail. Side-by-Side Comparision of S.B. 932 to C.S.S.B. 932 S.B. 932 C.S.S.B. 932 SECTION 1. Changes heading of Chapter 481, Government Code to "Texas Department of Economic Development and Tourism. ARTICLE 1. SECTION 1.01. Lists the legislative findings. SECTION 2. Amends definitions to add "Governing Board" and "Texas Department of Economic Development and Tourism" (TDEDT). SECTION 1.02. Lists the purpose and agency goals of the Texas Economic Development Agency (TEDA). SECTION 3. Amends Sec. 481.002, Government Code, to establish the TDEDT as a state agency. SECTION 1.03. Defines "board" and "Development Agency" for this Act. SECTION 4. Amends Sec. 481.003 to change TDOC to TDEDT and set a sunset date for TDEDT on September 1, 2001. ARTICLE 2. SECTION 2.01. Repeals Sec. 481.002, Government Code, to abolish the TDOC. SECTION 5. Amends Sec. 481.004, Government Code, to establish a governing board over the TDEDT composed of nine members, appointed for six year terms, with certain criteria. SECTION 2.02. Transfers all money, records, property, accounts, and equipment from TDOC to TEDA on January 15, 1998. SECTION 6. Makes conforming amendments to Sec. 481.0041, Government Code to change policy board to governing board. SECTION 2.03. Transfers all powers, duties, functions, programs, funds, and activities from TDOC to TEDA on January 15, 1998. SECTION 7. Makes conforming amendments to Sec. 481.0042(a), (b), and (e), Government Code, to change policy board to governing board. SECTION 2.04. Provides that references in law to TDOC is considered a reference to TEDA. SECTION 8. Makes conforming amendment to Sec. 481.0043, Government Code, to change policy board to governing board SECTION 2.05. Provides that Article 4 of this Act controls if there is a conflict with a provision of Subchapter A, Chapter 481., Government Code. SECTION 9. Makes conforming amendment to Sec. 481.0044, Government Code, to change policy board to governing board, and prescribes the contents of the report the governing body is to submit to the governor and legislature annually. SECTION 2.06. Sets the effective date of the article as January 15, 1998. SECTION 10. Makes conforming amendments to Sec. 481.005, Government Code, to change policy board to governing board and modify and clarify the duties of the board and the executive director. ARTICLE 3. SECTION 3.01. Repeals Sec. 58.001(a), Agriculture Code, to abolish the Texas Agricultural Finance Authority (TAFA). SECTION 11. Amends Sec. 481.006, Government Code, to change executive director to governing board and alter the divisions within the department the governing board may establish. SECTION 3.02. Transfers all money, records, property, accounts, and equipment from TAFA to TEDA on May 1, 1998. SECTION 12. Adds Sec. 481.0065 to the Government Code, to establish the Office of Defense Affairs. SECTION 3.03. Transfers all powers, duties, functions, programs, and activities from TAFA to TEDA on May 1, 1998. SECTION 13. Amends Sec. 481.007, Government Code, to change advisory boards to advisory committees and policy board to governing board. SECTION 3.04. Establishes TEDA as the successor to TAFA for statutory and constitutional purposes. SECTION 14. Makes conforming changes to 481.010(a), (b), and (c) to change policy board to governing board. SECTION 3.05. Provides that Article 4 of this Act controls if there is a conflict with a provision of Subchapter B, Chapter 58, Agriculture Code. SECTION 15. Makes conforming amendments to 481.012, Government Code, to change policy board to governing board. SECTION 3.06. Establishes the effective date of this article as May 1, 1998. SECTION 16. Establishes the general duties of the TDEDT. ARTICLE 4. SECTION 4.01. Establishes TEDA as a state agency. SECTION 17. Amends Sec. 481.023, Government Code, to reduce TDEDT's duties to administer other statutes. SECTION 4.02. Establishes a nine member board over TEDA and list the criteria for board membership. Establishes the length of term as two years SECTION 18. Amends Sec. 481.024(a) and (f) to change policy board to governing board and TDOC to TDEDT. SECTION 4.03. Provides for the governor to select the presiding officer of the board and that the board shall meet at least monthly. SECTION 19. Amends Sec. 481.028(b) , Government Code, to require the TDEDT to enter into agreements with those entities TDOC was required to enter into agreements with and add the Texas Workforce Commission, and delete the Texas Higher Education Coordinating Board and the Texas Department of Human Services. SECTION 4.04. States that board members are not entitled to compensation, but are entitled to reimbursement for travel expenses. SECTION 20. Amends Sec. 481.029, Government Code, to allow TDEDT to recover cost for "other services" to business and communities. SECTION 4.05. Subjects TEDA and the board to open records and open meetings laws. SECTION 21. Amends Subchapter B, Chapter 481, Government Code, to establish the Texas Strategic Economic Development Planning Commission. Lists the composition requirements of the commission and the duties of the commission, including the development of a strategic plan by November 1, 1998. Abolishes the commission on February 1, 1999. SECTION 4.06 Grants, on full implementation of this Act, exclusive authority over the program transferred by this Act to the TEDA. SECTION 22. Changes the heading of Subchapter D, Chapter 481, Government Code, to International Trade. SECTION 4.07. Requires the board to employ a chief operating officer. and allows the COO to employ persons for the proper management of the agency. SECTION 23. Amends Sec. 481.041, Government Code, to amend legislative findings concerning international trade. SECTION 4.08. Requires the board to establish a breakdown of lending authority and requires the COO to establish loan authority for employees. SECTION 24. Amends Sec. 481.043, Government Code, to amend the general powers and duties of the department relating to international trade. SECTION 4.09. Allows TEDA to enter into participations in secondary markets. SECTION 25. Amends Sec. 481.059, Government Code, to simply statute concerning the Texas exporters loan fund. SECTION 4.10. Provides for annual audits of the financial condition of TEDA. SECTION 26. Amends the heading of Subchapter E, Chapter 481, Government Code, to read Business Development--General Provisions. SECTION 4.11. Allows TEDA to develop a marketing policy for its programs. SECTION 27. Amends Sec. 481.071, Government Code, to change the legislative findings for business development. SECTION 4.12. Directs TEDA and the Texas Public Finance Authority to execute a memorandum of understanding relating to the agency retaining earnings that exceed the costs of bond retirement and costs of the Texas Public Finance Authority. SECTION 28. Amends Subchapter E, Chapter 481, Government Code, by adding Sec. 481.0725 to list the general powers and duties of TDEDT regarding business development. SECTION 4.13. Allows TEDA to form subsidiaries as determined necessary by the agency. SECTION 29. Amends Sec. 481.073, Government Code, to change policy board to governing board. SECTION 4.14. Requires the board to adopt a written cash management policy and review it annually. SECTION 30. Amends Sec. 481.075, Government Code, to change policy board to governing board. SECTION 4.15. Provides than an entity from which a program is transferred shall perform technical services related to the program on request of TEDA. SECTION 31. Amends Section 481.077, Government Code, by adding Subsection (f) to require TDEDT to transfer the Statewide Certified Development Corporation to the private sector by June 1, 1999. SECTION 4.16. Allows TEDA to accept gifts and grants. SECTION 32. Amends the heading of Subchapter H, Chapter 481, Government Code, to read Business Development--Permit Assistance. SECTION 4.17. Allows excess earning from TEDA programs to be pooled and used for other agency programs or used to create an economic emergency assistance fund. SECTION 33. Amends the heading of Subchapter J, Chapter 481, Government Code, to read Business Development--Smart Jobs. SECTION 4.18. Allows the board to create an economic emergency assistance fund and deposit earnings from other programs into the fund. SECTION 34. Amends Sec. 481.153, Government Code, to change policy board to governing board. SECTION 4.19. Allows TEDA to contract with private entities to perform activities which are not solely a sovereign function of the state. SECTION 35. Amends Sec. 481.157(b), Government Code, to change policy board to governing board. SECTION 4.20. Sets the effective date of this article for January 15, 1998. SECTION 36. Amends Sec. 481.172, Government Code, to add new duties and delete other duties of TDEDT regarding tourism. ARTICLE 5. SECTION 5.01. Establishes a legislative oversight committee, outlines membership, and sunsets the committee on August 31, 1999. SECTION 37. Amends the heading of Subchapter N, Chapter 481, Government Code to read Business Development--Linked Deposit Program. SECTION 5.02. Outlines the powers and duties of the committee. SECTION 38. Amends Chapter 481, Government Code to by adding Subchapters K and P. Subchapter K establishes the Texas Business and Community Economic Development Clearinghouse. Subchapter P establishes TDEDT's powers and duties regarding research and data services. SECTION 5.03. Requires the committee to report to the governor, lt. governor, and speaker not later than December 31 of each even-numbered year. Outlines report requirements. SECTION 39. Amends Chapter 484, Government Code, regarding the Texas Manufacturing Institute to establish it as a nonprofit corporation, establish a governing board, provide confidentiality provisions, establish funding, grant immunity to board members, and mandate the institute's transfer to the private sector. ARTICLE 6. SECTION 6.01. Requires the comptroller to study the programs transferred and develop recommendations which, to the greatest extent practicable, TEDA will implement as a transition plan. SECTION 40. (a) Repealers: Sections 481.0075, 481.026, 481.042, 481.044, 481.046, 481.048-481.058, 481.060, 481.061, 481.074, 481.078, 481.081-481.0831, 481.0841-481.086, 481.088-481.093, and 483.001- 483.006, Government Code (Texas-Mexico Authority, Literacy, Definitions, Powers and Duties Relating to Financing, Honorary Commercial Attache Program, Program Rules, Tax Exemption; Exempt Securities, Conflicts of Interest, Personal Liability of Members of Persons Acting on Behalf of Department, Revenue Bonds Authorized, Bond Sale and Issuance, Agreements in Bonds, Refunding Bonds, Bond Proceeds; Funds, Tax Exemption, Obligations as Legal Investments for Fiduciaries, Electronic Data Base, Compact Exploration With the United Mexican States, Bonds, and Major Employer Development Programs, Short Title, Purpose, Definitions, Office of Rural Affairs, Payments not to be Made to Defaulting Users, Guarantee-to-Reserve Ratio, Penalty for False Information on Application, Additional Powers and Duties, Directive, Criteria, Business Service Outreach Study, Expired, Review, Gifts and Grants, Definitions, Texas Business Enhancement Fund; Creation and Administration, Powers of Department, Support to Department by Other State Departments and Agencies, Provisions Relating to Loan Guarantees, Reports; Audits). (b) Repealers: Subchapters G, I, M, Q, R, S, T, U, V, X, and Y, Chapter 481, Government Code (Small Business Assistance, State and Local Permits, Data Depository, Development of Products, Small Business Incubators, Shared Foreign Sales Corporations, Indemnification in Connection with Art and Artifacts, Product Commercialization, Small Business Innovation Research, International Trade Commission, At Risk Youth and Dropouts). (c) Repealer: Chapter 481AA, Government Code (Workforce Development Incentive for Youth; Recycling Market Development). SECTION 6.02. Establishes the effective date of this article as September 1, 1997, and expiration date as August 31, 1999. SECTION 41. Establishes the effective date as September 1, 1997. Transfers powers and duties of TDOC to TDEDT. Provides for the timing of appointments, allows the executive director of TDOC to continue to perform those duties and complete the term of office. Grants TDEDT all the powers, duties, property, funds, rules, employees unspent appropriations, documents, right and obligations of TDOC. Carries all rules, policies, procedures, and decisions of TDOC to exist until superseded by TDEDT. ARTICLE 7. SECTION 7.01. Transfers program from other agencies to TEDA on May 1, 1998. SECTION 7.02. Amends Section 9B(a), Texas Public Finance Authority Act to add TEDA bonds to the list of bonds the TPFA can issue. SECTION 7.03. Establishes the effective date of this article as January 15, 1998. ARTICLE 8. SECTION 8.01. Transfers TAFA programs to TEDA on May 1, 1998. ARTICLE 9. SECTION 9.01. Requires the Texas Department of Banking to examine the loans in programs, recommend underwriting standards, and report by August 1, 1998. SECTION 9.02. Establishes the effective date of this article as January 1, 1998 and the expiration date as January 1, 1999. ARTICLE 10. SECTION 10.01. Requires the state auditor evaluate the management and fiscal controls of TEDA. SECTION 10.02. Establishes the effective date of this article as January 1 5, 1998. ARTICLE 11. SECTION 11.01. Provides for the transfer of employees of the programs transferred. ARTICLE 12. SECTION 12.01. States that an amendment by this article to TDOC statute does not affect the abolition of TDOC. SECTION 12.02. Amends Sec. 481.082, Government Code, to change the legislative findings for Rural Economic Development. SECTION 12.03. Amends Sec. 481.083(7), Government Code, to modify the definition of rural area. SECTION 12.04. Amends Sec. 481.0831, Government Code, to establish a rural affairs director and list requirements. SECTION 12.05. Amends Sec. 481.008, Government Code, to list the general duties of the office of rural affairs. SECTION 12.06. Amends Sec. 481.089, Government Code, to list specific duties of office of rural affairs. SECTION 12.07. Amends Sec. 481.090, Government Code, to allow for staffing and powers of the office of rural affairs. SECTION 12.08. Amends Sec. 481.092, Government Code, to require state agencies, on request, to furnish reports and other information to the office of rural affairs. SECTION 12.09. Amends Sec. 481.093, Government Code, to allow the office of rural affairs to accept gifts, grants, and donations. SECTION 12.10. Amends Subchapter F, Chapter 481, Government Code, to require the office of rural affairs to report certain information. SECTION 12.11. Directs the executive director to employ a rural affairs director by January 1, 1998. SECTION 12.12. Amends Sec. 481.102, Government Code, to provide for a small business director, and allow the office of small business assistance to accept gifts, grants and donations. SECTION 12.13. Amends Sec. 481.103(a), Government Code, to change the duties of the office of small business assistance. SECTION 12.14. Amends Subchapter G, Chapter 481, Government Code, to add Sec. 481.109 to require state entities to furnish reports and other information to the office of small business assistance. SECTION 12.15. Amends Sec. 2006.002, Government Code, to allow state agencies to adopt provisions concerning micro-businesses. SECTION 12.16. Amends Sec. 481.115, Government Code, to change requirements for grants under the Smart Jobs program. SECTION 12.17. Amends Sec. 481.172, Government Code, change the duties and make conforming changes to TDOC's requirements regarding tourism. SECTION 12.18. Amends Sec. 481.221, Government Code, delete the definition of the Office of Advanced Technology. SECTION 12.19. Repeals Chapter 146, Education Code. SECTION 12.20. Repeals Sec. 481.061, Government Code. SECTION 12.21. Repeals Subchapters R, T, U, and V, Chapter 481, Government Code. SECTION 12.22. Repeals Chapter 483, Government Code. ARTICLE 13. SECTION 13.01. Directs the governor to appoint the TEDA board members by January 15, 1998, with terms expiring February 1, 1999. SECTION 13.02.