By Hinojosa                                     H.B. No. 1421

      75R4678 CLG-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the authority of a certain economic development

 1-3     corporation to contract with a member of the board of directors of

 1-4     the corporation or a member's spouse.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Section 4A, Development Corporation Act of 1979

 1-7     (Article 5190.6, Vernon's Texas Civil Statutes), is amended by

 1-8     adding Subsection (s) to read as follows:

 1-9           (s)  While the director serves on the board, a corporation

1-10     created under this section may not enter into a contract with a

1-11     director of the corporation, the spouse of a director, or a

1-12     business entity in which a director or the spouse of a director has

1-13     a substantial interest.  For purposes of this subsection, a person

1-14     has a substantial interest in a business entity if:

1-15                 (1)  the person owns 10 percent or more of the voting

1-16     stock or shares of the business entity;

1-17                 (2)  the person owns either 10 percent or more or

1-18     $5,000 or more of the fair market value of the business entity; or

1-19                 (3)  money received by the person from the business

1-20     entity exceeds 10 percent of the person's gross income for the

1-21     previous year.

1-22           SECTION 2.  Section 4B, Development Corporation Act of 1979

1-23     (Article 5190.6, Vernon's Texas Civil Statutes), is amended by

1-24     adding Subsection (o) to read as follows:

 2-1           (o)  While the director serves on the board, a corporation

 2-2     created under this section may not enter into a contract with a

 2-3     director of the corporation, the spouse of a director, or a

 2-4     business entity in which a director or the spouse of a director has

 2-5     a substantial interest.  For purposes of this subsection, a person

 2-6     has a substantial interest in a business entity if:

 2-7                 (1)  the person owns 10 percent or more of the voting

 2-8     stock or shares of the business entity;

 2-9                 (2)  the person owns either 10 percent or more or

2-10     $5,000 or more of the fair market value of the business entity; or

2-11                 (3)  money received by the person from the business

2-12     entity exceeds 10 percent of the person's gross income for the

2-13     previous year.

2-14           SECTION 3.  This Act takes effect September 1, 1997, and

2-15     applies only to a contract that is entered into on or after that

2-16     date.  A contract that is entered into before the effective date of

2-17     this Act is governed by the law in effect on the date on which the

2-18     contract was entered into, and the former law is continued in

2-19     effect for that purpose.

2-20           SECTION 4.  The importance of this legislation and the

2-21     crowded condition of the calendars in both houses create an

2-22     emergency and an imperative public necessity that the

2-23     constitutional rule requiring bills to be read on three several

2-24     days in each house be suspended, and this rule is hereby suspended.