By Oliveira H.B. No. 2500
75R8077 RJA-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to state agency loan and loan guarantee programs, the
1-3 creation, administration, and operation of the Texas Economic
1-4 Development Agency to administer state agency loan and loan
1-5 guarantee programs and to engage in capital formation initiatives
1-6 to further the state's economic and agricultural development goals,
1-7 and to the abolition of the Texas Department of Commerce and the
1-8 Texas Agricultural Finance Authority.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 ARTICLE 1. FINDINGS; PURPOSE; AGENCY GOALS; DEFINITIONS
1-11 SECTION 1.01. LEGISLATIVE FINDINGS. The legislature finds
1-12 that:
1-13 (1) the economic future of Texas and its citizens
1-14 depends on the ability of businesses to secure low-cost capital
1-15 that promotes the high-quality jobs that improve the living
1-16 standards of all Texans;
1-17 (2) the voters of Texas and the legislature have
1-18 created many programs within several state agencies that offer
1-19 hundreds of millions of dollars to assist businesses and
1-20 individuals to create jobs, sustain economic viability, own land,
1-21 and promote other activities deemed critical to Texas;
1-22 (3) having loan and grant programs spread through many
1-23 different agencies makes it very difficult for businesses and
1-24 individuals to access programs designed to assist them;
2-1 (4) these loan and grant programs represent a
2-2 substantial financial liability to the state's general revenue
2-3 fund;
2-4 (5) consolidating the current fragmented system will
2-5 improve the state's ability to control its liabilities and business
2-6 activities;
2-7 (6) economic and administrative efficiencies can be
2-8 gained by consolidating some of the loan and grant programs into
2-9 one agency;
2-10 (7) consumer access to the state's loan and grant
2-11 programs can be improved by consolidating some of the loan and
2-12 grant programs into one agency with one marketing effort offering
2-13 "one-stop shopping"; and
2-14 (8) the quality and efficiency of the programs can be
2-15 improved by consolidation.
2-16 SECTION 1.02. PURPOSE; AGENCY GOALS. (a) The Texas
2-17 Economic Development Agency created as provided by Article 3 of
2-18 this Act is a state agency created to operate a consolidated
2-19 economic development and lending agency, in particular through the
2-20 consolidation of loan, grant, and market programs aimed at
2-21 assisting business, helping governments assist business, and
2-22 servicing the lending needs of groups of individuals targeted by
2-23 the legislature essential to the well-being of Texas.
2-24 (b) The development agency with programs established by the
2-25 voters and the legislature shall meet the needs of:
2-26 (1) business for low-cost capital to develop and
2-27 promote new products and to expand markets;
3-1 (2) expanding, relocating, or developing businesses
3-2 for information on Texas' economic sectors, industries, markets,
3-3 and communities;
3-4 (3) communities to offer incentives, including
3-5 infrastructure improvements and tax relief, to attract new
3-6 businesses or expand or retain existing businesses;
3-7 (4) communities by facilitating and complementing the
3-8 development of economic incentive packages;
3-9 (5) the people of this state for a vibrant economy
3-10 capable of creating high-skill, high-wage jobs that pay a living
3-11 wage;
3-12 (6) the taxpayers of this state to ensure that tax and
3-13 bond revenues for economic development are spent and managed
3-14 effectively and efficiently; and
3-15 (7) the tourism industry in this state.
3-16 SECTION 1.03. DEFINITIONS. In this Act:
3-17 (1) "Board" means the board of the development agency.
3-18 (2) "Development agency" means the Texas Economic
3-19 Development Agency.
3-20 ARTICLE 2. ABOLITION OF TEXAS DEPARTMENT OF COMMERCE
3-21 SECTION 2.01. ABOLITION OF TEXAS DEPARTMENT OF COMMERCE.
3-22 Subchapter A, Chapter 481, Government Code, is repealed.
3-23 SECTION 2.02. TRANSFER OF PROPERTY. All money, records,
3-24 property, and equipment in the custody of the Texas Department of
3-25 Commerce shall be transferred to the custody of the development
3-26 agency on January 15, 1998.
3-27 SECTION 2.03. TRANSFERS. On January 15, 1998, all powers,
4-1 duties, functions, programs, and activities of the Texas Department
4-2 of Commerce are transferred to the development agency.
4-3 SECTION 2.04. EFFECTIVE DATE. This article takes effect
4-4 January 15, 1998.
4-5 ARTICLE 3. ABOLITION OF TEXAS AGRICULTURAL FINANCE AUTHORITY
4-6 SECTION 3.01. ABOLITION OF TEXAS AGRICULTURAL FINANCE
4-7 AUTHORITY. Subchapter B, Chapter 58, Agriculture Code, is
4-8 repealed.
4-9 SECTION 3.02. TRANSFER OF PROPERTY. All money, records,
4-10 property, and equipment in the custody of the Texas Agricultural
4-11 Finance Authority shall be transferred to the custody of the
4-12 development agency on May 1, 1998.
4-13 SECTION 3.03. TRANSFERS. On May 1, 1998, all powers,
4-14 duties, functions, programs, and activities of the Texas
4-15 Agricultural Finance Authority are transferred to the development
4-16 agency.
4-17 SECTION 3.04. SUCCESSOR AGENCY. The development agency is
4-18 the successor agency for purposes of statutory and constitutional
4-19 references to the Texas Agricultural Finance Authority. The
4-20 development agency has the powers and duties related to the
4-21 administration of the farm and ranch finance program fund formerly
4-22 assigned by the constitution and law to the Texas Agricultural
4-23 Finance Authority.
4-24 SECTION 3.05. EFFECTIVE DATE. This article takes effect
4-25 January 15, 1998.
4-26 ARTICLE 4. TEXAS ECONOMIC DEVELOPMENT AGENCY
4-27 SECTION 4.01. TEXAS ECONOMIC DEVELOPMENT AGENCY. The Texas
5-1 Economic Development Agency is an agency of the state.
5-2 SECTION 4.02. BOARD MEMBERSHIP. (a) The board is composed
5-3 of nine members as provided by this section.
5-4 (b) The governor shall appoint the members of the board.
5-5 Four of the appointments shall be made as follows:
5-6 (1) one person who is an agricultural producer;
5-7 (2) one person who is an economic development
5-8 professional who represents an economic development organization;
5-9 (3) one person who represents the tourism industry;
5-10 and
5-11 (4) one person who represents a small, locally owned
5-12 community bank.
5-13 (c) A member of the board serves for a term of two years
5-14 expiring on February 1 of each odd-numbered year.
5-15 SECTION 4.03. PRESIDING OFFICER; MEETINGS. (a) The
5-16 governor shall select a presiding officer from the board members.
5-17 (b) The board shall meet at least monthly and at the call of
5-18 the presiding officer or of a majority of the members, as provided
5-19 by board rule.
5-20 SECTION 4.04. COMPENSATION; EXPENSES. A board member is not
5-21 entitled to receive compensation but is entitled to reimbursement
5-22 of the member's travel expenses as provided in the General
5-23 Appropriations Act.
5-24 SECTION 4.05. APPLICATION OF OPEN RECORDS AND OPEN MEETINGS
5-25 LAW. (a) The development agency is a governmental body subject to
5-26 the open records law, Chapter 552, Government Code, except that the
5-27 financial records of an applicant or borrower are not a public
6-1 record.
6-2 (b) The board is a governmental body subject to the open
6-3 meetings law, Chapter 551, Government Code, except that the board
6-4 is not required to conduct an open meeting to discuss the financial
6-5 matters of an applicant or borrower.
6-6 SECTION 4.06. EXCLUSIVE AUTHORITY. (a) On full
6-7 implementation of this Act, the development agency has the
6-8 exclusive authority to act as the administrator of state agency
6-9 loan and loan guarantee programs, including approving and servicing
6-10 loans. Subject to Subsection (b) of this section, the powers and
6-11 duties of an entity required by other law to administer a loan or
6-12 loan guarantee program relating to administering the program are
6-13 transferred to the development agency, and the entity shall
6-14 transfer all records relating to the program to the development
6-15 agency.
6-16 (b) Each entity from which a program is transferred by this
6-17 Act to the development agency shall execute with the development
6-18 agency a memorandum of understanding governing the transfer. The
6-19 transfer shall be accomplished in accordance with the memorandum.
6-20 (c) The Texas Economic Development Agency shall serve as the
6-21 administrator of all existing and future state agency loan and loan
6-22 guarantee programs.
6-23 SECTION 4.07. CHIEF OPERATING OFFICER; EMPLOYEES. (a) The
6-24 board shall employ a chief operating officer of the development
6-25 agency. The board may delegate to the officer any of the board's
6-26 powers and duties.
6-27 (b) The chief operating officer may employ persons necessary
7-1 for the proper management of the development agency.
7-2 SECTION 4.08. LENDING AUTHORITY. (a) The board by rule
7-3 shall establish a breakdown of lending authority within the
7-4 development agency.
7-5 (b) The chief operating officer shall establish the loan
7-6 authority of the development agency's employees within board rules.
7-7 SECTION 4.09. SECONDARY MARKET PARTICIPATION. The
7-8 development agency may enter into participations to develop a
7-9 securitization program to sell into secondary markets.
7-10 SECTION 4.10. DEVELOPMENT AGENCY AUDIT. The development
7-11 agency shall provide for an annual audit of the financial condition
7-12 of the agency by:
7-13 (1) the state auditor; or
7-14 (2) a private auditing firm.
7-15 SECTION 4.11. PROGRAM MARKETING. The development agency may
7-16 adopt a policy to market the programs administered by the agency.
7-17 SECTION 4.12. MEMORANDUM OF UNDERSTANDING. The development
7-18 agency and the Texas Public Finance Authority shall jointly execute
7-19 a memorandum of understanding relating to the agency retaining
7-20 earnings that exceed the costs of bond retirement and costs of the
7-21 Texas Public Finance Authority.
7-22 SECTION 4.13. SUBSIDIARY. The development agency may form a
7-23 subsidiary as determined necessary by the agency.
7-24 SECTION 4.14. CASH MANAGEMENT. The board shall adopt a
7-25 written cash management policy and review it annually.
7-26 SECTION 4.15. TECHNICAL SERVICES. (a) An entity from which
7-27 a program is transferred by this Act shall perform, on request of
8-1 the development agency, technical services related to programs and
8-2 projects transferred from the entity to the development agency by
8-3 this Act.
8-4 (b) The development agency may contract with other entities
8-5 to perform the technical services.
8-6 SECTION 4.16. GIFTS AND GRANTS. The development agency may
8-7 accept gifts and grants from any private or public source.
8-8 SECTION 4.17. EARNINGS. The excess earnings from programs
8-9 administered by the development agency after payment of
8-10 administrative overhead and payment for debt retirement may be
8-11 pooled and used for any program administered by the agency or used
8-12 to create an economic emergency assistance fund.
8-13 SECTION 4.18. ECONOMIC EMERGENCY ASSISTANCE FUND. The board
8-14 may create an economic emergency assistance fund and adopt rules
8-15 regulating the fund and the use of money in the fund. The board
8-16 may deposit any earnings from programs administered by the
8-17 development agency into the economic emergency assistance fund.
8-18 SECTION 4.19. CONTRACTS WITH PRIVATE ENTITIES. The
8-19 development agency may contract with a private entity to perform an
8-20 activity related to a program transferred by this Act as long as
8-21 the activity is not solely a sovereign function of the state.
8-22 SECTION 4.20. EFFECTIVE DATE. This article takes effect
8-23 January 15, 1998.
8-24 ARTICLE 5. LEGISLATIVE OVERSIGHT COMMITTEE
8-25 SECTION 5.01. LEGISLATIVE OVERSIGHT COMMITTEE; SUNSET DATE.
8-26 (a) The Legislative Oversight Committee is composed of six members
8-27 as follows:
9-1 (1) three members must be members of the senate,
9-2 appointed by the lieutenant governor; and
9-3 (2) three members must be members of the house of
9-4 representatives, appointed by the speaker of the house of
9-5 representatives.
9-6 (b) The lieutenant governor shall appoint the initial
9-7 presiding officer for a term ending January 31, 1999, and the
9-8 speaker of the house of representatives shall appoint the successor
9-9 presiding officer for a term beginning February 1, 1999.
9-10 (c) The committee is subject to Chapter 325, Government Code
9-11 (Texas Sunset Act). Unless continued in existence as provided by
9-12 that chapter, the committee is abolished August 31, 1999.
9-13 SECTION 5.02. COMMITTEE POWERS AND DUTIES. (a) The
9-14 committee shall:
9-15 (1) meet quarterly with the board; and
9-16 (2) receive information regarding rules adopted by the
9-17 board or proposed for adoption by the board.
9-18 (b) The committee may request reports and other information
9-19 from the board relating to the operation of the board.
9-20 (c) The committee shall review the specific recommendations
9-21 for legislation proposed by the board.
9-22 SECTION 5.03. REPORT. (a) The committee shall file a
9-23 report with the governor, lieutenant governor, and speaker of the
9-24 house of representatives not later than December 31 of each
9-25 even-numbered year.
9-26 (b) The report must include:
9-27 (1) identification of any problems in the board's
10-1 administration of programs with recommended solutions for
10-2 commission and legislative action; and
10-3 (2) other recommendations for legislative action.
10-4 SECTION 5.04. EFFECTIVE DATE. This article takes effect
10-5 January 15, 1998.
10-6 ARTICLE 6. COMPTROLLER STUDY
10-7 SECTION 6.01. COMPTROLLER STUDY. (a) The comptroller shall
10-8 conduct a study to review the programs transferred to the
10-9 development agency by this Act. Based on the study, the
10-10 comptroller shall develop and make recommendations to the governor,
10-11 lieutenant governor, and speaker of the house of representatives
10-12 concerning the integrated structure of the development agency.
10-13 (b) Each state entity affected by the transfer of program
10-14 jurisdiction shall cooperate with the comptroller in formulating
10-15 and implementing a transition plan, including the development of
10-16 program transition plans and an interim operating budget and the
10-17 temporary assignment of staff as necessary to ensure an orderly
10-18 transition.
10-19 (c) The comptroller's report and recommendations for the
10-20 structure of the commission and the transition of the programs
10-21 transferred shall be filed with the governor, lieutenant governor,
10-22 and speaker of the house of representatives not later than January
10-23 15, 1998.
10-24 (d) After review of the comptroller's plan by the governor,
10-25 lieutenant governor, and speaker of the house of representatives,
10-26 the development agency shall, to the extent practicable, implement
10-27 the program transition in a manner consistent with the
11-1 comptroller's plan.
11-2 (e) Each state agency affected by the transfer of program
11-3 jurisdiction shall cooperate with the comptroller and the
11-4 development agency in formulating and implementing a transition
11-5 plan.
11-6 SECTION 6.02. EFFECTIVE DATE; EXPIRATION. This article
11-7 takes effect September 1, 1997, and expires August 31, 1999.
11-8 ARTICLE 7. TRANSFER OF CERTAIN PROPERTY, RECORDS,
11-9 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES
11-10 TO DEVELOPMENT AGENCY
11-11 SECTION 7.01. TRANSFERS. On May 1, 1998, or an earlier date
11-12 provided by an interagency agreement with the affected entity, the
11-13 following functions, programs, and activities are transferred to
11-14 the development agency:
11-15 (1) from the Texas Department of Housing and Community
11-16 Affairs, the community and economic development local training and
11-17 development grants program;
11-18 (2) from the General Land Office:
11-19 (A) natural gas promotion program; and
11-20 (B) recycled products market expansion program;
11-21 (3) from the Parks and Wildlife Department, the public
11-22 information program to communicate the state's natural and cultural
11-23 resource conservation message through various media, including
11-24 television, radio, newspapers, and magazines; and
11-25 (4) from the Texas Department of Transportation, the
11-26 travel information program to support and promote tourism.
11-27 SECTION 7.02. AMENDMENT. Section 9B(a), Texas Public
12-1 Finance Authority Act (Article 601d, Vernon's Texas Civil
12-2 Statutes), is amended to read as follows:
12-3 (a) With respect to all bonds authorized to be issued by the
12-4 Texas National Guard Armory Board, Texas National Research
12-5 Laboratory Commission, Parks and Wildlife Department, and all
12-6 institutions of higher education authorized to issue bonds under
12-7 Chapter 55, Education Code, and with respect to all bonds
12-8 authorized to be issued by entities to fund programs administered
12-9 by the Texas Economic Development Agency, the authority has the
12-10 exclusive authority to act on behalf of those entities in issuing
12-11 bonds on their behalf. In connection with those issuances and with
12-12 the issuance of refunding bonds on behalf of those entities, the
12-13 authority is subject to all rights, duties, and conditions
12-14 surrounding issuance previously applicable to the issuing entity
12-15 under the statute authorizing the issuance. All references in an
12-16 authorizing statute to the entity on whose behalf the bonds are
12-17 being issued apply equally to the authority in its capacity as
12-18 issuer on behalf of the entity.
12-19 SECTION 7.03. EFFECTIVE DATE. This article takes effect
12-20 January 15, 1998.
12-21 ARTICLE 8. TRANSFER OF CERTAIN PROPERTY, RECORDS,
12-22 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES
12-23 TO DEVELOPMENT AGENCY
12-24 SECTION 8.01. TRANSFERS. On May 1, 1998, the following
12-25 functions, programs, and activities are transferred to the
12-26 development agency from the Texas Agricultural Finance Authority:
12-27 (1) TAFA loan guarantee program;
13-1 (2) linked deposit program;
13-2 (3) microenterprise support program;
13-3 (4) young farmers endowment program; and
13-4 (5) farm and ranch finance program.
13-5 ARTICLE 9. TEXAS DEPARTMENT OF BANKING REPORT
13-6 SECTION 9.01. UNDERWRITING STANDARDS. (a) The Texas
13-7 Department of Banking shall examine loans in programs administered
13-8 by the development agency to determine the credit quality and value
13-9 of the loans.
13-10 (b) The Texas Department of Banking shall recommend
13-11 appropriate loan underwriting standards consistent with the
13-12 development agency's mission and programs.
13-13 (c) The Texas Department of Banking shall file a report of
13-14 the department's recommendations with the governor, lieutenant
13-15 governor, and speaker of the house of representatives not later
13-16 than August 1, 1998.
13-17 SECTION 9.02. EFFECTIVE DATE; EXPIRATION. This article
13-18 takes effect January 1, 1998, and expires January 1, 1999.
13-19 ARTICLE 10. AUDITOR EVALUATION
13-20 SECTION 10.01. AUDITOR EVALUATION. (a) The state auditor
13-21 shall evaluate the management and fiscal control systems of the
13-22 development agency and make any recommendation for improvement to
13-23 the governor, the legislature, and the development agency.
13-24 (b) The state auditor shall report the results of the
13-25 evaluation conducted under Subsection (a) of this section to the
13-26 governor and the legislature not later than December 1, 1998.
13-27 SECTION 10.02. EFFECTIVE DATE. This article takes effect
14-1 January 15, 1998.
14-2 ARTICLE 11. TRANSFER OF PERSONNEL
14-3 SECTION 11.01. TRANSFER OF PERSONNEL. A person employed by
14-4 a program transferred to the development agency by this Act becomes
14-5 an employee of the development agency on the date on which the
14-6 transfer of the program to the development agency is completed.
14-7 ARTICLE 12. AMENDMENT AND REPEAL OF CERTAIN FUNCTIONS,
14-8 POWERS, AND DUTIES OF THE TEXAS DEPARTMENT OF COMMERCE
14-9 SECTION 12.01. EFFECT OF CERTAIN AMENDMENTS. The amendment
14-10 by this article of a statute referring to the Texas Department of
14-11 Commerce or a division of the department does not affect the
14-12 abolition of that department by this Act.
14-13 SECTION 12.02. AMENDMENT. Section 481.172, Government Code,
14-14 is amended to read as follows:
14-15 Sec. 481.172. DUTIES. The department shall:
14-16 (1) promote and advertise within the United States and
14-17 in foreign countries, by radio, television, newspaper, and other
14-18 means considered appropriate, tourism in this state by non-Texans,
14-19 including persons from foreign countries, and distribute
14-20 promotional materials through appropriate distribution channels
14-21 [agencies, including the United States Travel and Tourism Agency];
14-22 (2) encourage travel by Texans to this state's scenic,
14-23 historical, natural, agricultural, educational, recreational, and
14-24 other attractions;
14-25 (3) coordinate and stimulate orderly and accelerated
14-26 development of tourist attractions throughout this state;
14-27 (4) conduct a public relations campaign to create a
15-1 responsible and accurate national and international image of this
15-2 state;
15-3 (5) cooperate fully with the Parks and Wildlife
15-4 Department in all matters relating to promotion of tourism;
15-5 (6) cooperate with the Texas Department of
15-6 Transportation [Commission] in the administration of the Texas
15-7 Department of Transportation's [commission's] collateral program of
15-8 highway map distribution and operation of travel information
15-9 bureaus and other tourist-related functions of the Texas Department
15-10 of Transportation [commission]; and
15-11 (7) encourage communities, organizations, and
15-12 individuals [in this state] to cooperate with its program by their
15-13 activities and use of their own funds and collaborate with those
15-14 organizations and other governmental entities in the pursuit of
15-15 the objectives of this subchapter.
15-16 SECTION 12.03. AMENDMENT. Section 481.221, Government Code,
15-17 is amended to read as follows:
15-18 Sec. 481.221. DEFINITIONS. In this subchapter:
15-19 (1) [(2)] "Executive director" means the executive
15-20 director of the department or the executive director's designee.
15-21 (2) [(3)] "Fund" means the product development fund.
15-22 [(4) "Office" means the Office of Advanced Technology
15-23 within the Texas Department of Commerce.]
15-24 (3) [(5)] "Product" means an invention, product,
15-25 device, technique, or process, without regard to whether a patent
15-26 has or could be granted, that is or may be exploitable
15-27 commercially. The term does not refer to pure research but
16-1 includes products, devices, techniques, or processes that have
16-2 advanced beyond the theoretical stage and have or are readily
16-3 capable of having a commercial application.
16-4 (4) [(6)] "Venture financing" means a revolving loan,
16-5 loan guarantee, or equity investment from the Texas product
16-6 development fund to a person for use in the development of new or
16-7 improved products.
16-8 SECTION 12.04. REPEALER. Chapter 146, Education Code, is
16-9 repealed.
16-10 SECTION 12.05. REPEALER. Section 481.061, Government Code,
16-11 is repealed.
16-12 SECTION 12.06. REPEALER. Subchapters R, T, U, and V,
16-13 Chapter 481, Government Code, are repealed.
16-14 SECTION 12.07. REPEALER. Chapter 483, Government Code, is
16-15 repealed.
16-16 ARTICLE 13. CONTINGENT ON CONSTITUTIONAL AMENDMENT; BOARD
16-17 APPOINTMENT; EMERGENCY
16-18 SECTION 13.01. ARTICLE CONTINGENT ON ADOPTION OF
16-19 CONSTITUTIONAL AMENDMENT. Article 8 of this Act takes effect only
16-20 if the constitutional amendment proposed by House Joint Resolution
16-21 No. ___ is approved by the voters. If that constitutional
16-22 amendment is not approved by the voters, Article 8 of this Act has
16-23 no effect.
16-24 SECTION 13.02. APPOINTMENT OF INITIAL TEXAS ECONOMIC
16-25 DEVELOPMENT AGENCY BOARD MEMBERS. The governor shall appoint the
16-26 initial members of the board of the development agency in a timely
16-27 manner so that a quorum of the board has qualified for office not
17-1 later than January 15, 1998. The term of office of each of the
17-2 initial board members expires February 1, 1999.
17-3 SECTION 13.03. EMERGENCY. The importance of this
17-4 legislation and the crowded condition of the calendars in both
17-5 houses create an emergency and an imperative public necessity that
17-6 the constitutional rule requiring bills to be read on three several
17-7 days in each house be suspended, and this rule is hereby suspended.