1-1     By:  Ellis, et al.                                     S.B. No. 265

 1-2           (In the Senate - Filed January 22, 1997; January 23, 1997,

 1-3     read first time and referred to Committee on Economic Development;

 1-4     April 11, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 11, Nays 0; April 11, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 265                   By:  Harris

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the linked deposit program.

1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-12           SECTION 1.  The heading to Subchapter N, Chapter 481,

1-13     Government Code, is amended to read as follows:

1-14             SUBCHAPTER N.  [HISTORICALLY UNDERUTILIZED BUSINESS

1-15                 AND SMALL BUSINESS] LINKED DEPOSIT PROGRAM

1-16           SECTION 2.  Section 481.191, Government Code, is amended to

1-17     read as follows:

1-18           Sec. 481.191.  DEFINITIONS.  In this subchapter:

1-19                 (1)  "Child-care provider" means a small business that

1-20     operates or proposes to operate a day-care center or group day-care

1-21     home, as those terms are defined by Section 42.002, Human Resources

1-22     Code.

1-23                 (2)  "Eligible borrower" means:

1-24                       (A)  a person who proposes to begin operating a

1-25     small business in an enterprise zone, as defined by Section

1-26     2303.003, [a distressed community] or a historically underutilized

1-27     business; or

1-28                       (B)  a child-care provider.

1-29                 (3) [(2)]  "Eligible lending institution" means a

1-30     financial institution that makes commercial loans, is a depository

1-31     of state funds, and agrees to participate in the linked deposit

1-32     program established by this subchapter and to provide collateral

1-33     equal to the amount of linked deposits placed with it.

1-34                 (4) [(3)]  "Historically underutilized business" means:

1-35                       (A)  a corporation formed for the purpose of

1-36     making a profit in which at least 51 percent of all classes of the

1-37     shares of stock or other equitable securities is owned by one or

1-38     more persons who are members of certain groups, including black

1-39     Americans, Hispanic Americans, women, Asian Pacific Americans, and

1-40     American Indians;

1-41                       (B)  a sole proprietorship formed for the purpose

1-42     of making a profit that is 100 percent owned, operated, and

1-43     controlled by a person described by Paragraph (A) of this

1-44     subdivision;

1-45                       (C)  a partnership formed for the purpose of

1-46     making a profit in which 51 percent of the assets and interest in

1-47     the partnership is owned by one or more persons described by

1-48     Paragraph (A) of this subdivision.  Those persons must have

1-49     proportionate interest and demonstrate active participation in the

1-50     control, operation, and management of the partnership's affairs; or

1-51                       (D)  a joint venture in which each entity in the

1-52     joint venture is a historically underutilized business under this

1-53     subdivision.

1-54                 (5) [(4)]  "Small business" means a corporation,

1-55     partnership, sole proprietorship, or other legal entity that:

1-56                       (A)  is domiciled in this state;

1-57                       (B)  is formed to make a profit;

1-58                       (C)  is independently owned and operated; and

1-59                       (D)  employs fewer than 100 full-time employees.

1-60           SECTION 3.  Subsections (a) and (g), Section 481.193,

1-61     Government Code, are amended to read as follows:

1-62           (a)  The department shall establish a linked deposit program

1-63     to encourage commercial lending for the development of:

1-64                 (1)  small businesses in enterprise zones;

 2-1                 (2)  [distressed communities and] historically

 2-2     underutilized businesses; and

 2-3                 (3)  quality, affordable child-care services in this

 2-4     state.

 2-5           (g)  After the comptroller's [state treasurer's] acceptance

 2-6     of the application and the lending institution originates a loan to

 2-7     an eligible borrower, the comptroller [state treasurer] shall place

 2-8     a linked deposit with the applicable eligible lending institution

 2-9     for the period of the loan, subject to Subsections (h) and (i).

2-10     The comptroller is not required to maintain the deposit with the

2-11     lending institution if the loan is extended, renewed, or

2-12     renegotiated unless the comptroller accepts a new linked deposit

2-13     loan application under this section for the loan as modified [the

2-14     treasurer considers appropriate.  The state treasurer may not place

2-15     a deposit for a period extending beyond the state fiscal biennium

2-16     in which it is placed].  Subject to the limitation described by

2-17     Section 481.197, the comptroller [treasurer] may place a time

2-18     deposit [deposits] at an interest rate described by Section 481.192

2-19     and may modify the interest rate during the period of the loan,

2-20     notwithstanding any order of the State Depository Board to the

2-21     contrary.

2-22           SECTION 4.  Subsection (b), Section 481.197, Government Code,

2-23     is amended to read as follows:

2-24           (b)  The maximum amount of a loan under the linked deposit

2-25     program is $250,000 [$100,000].

2-26           SECTION 5.  Subchapter N, Chapter 481, Government Code, is

2-27     amended by adding Section 481.198 to read as follows:

2-28           Sec. 481.198.  MARKETING.  (a)  The department shall promote

2-29     the linked deposit program established by this subchapter to

2-30     eligible borrowers and financial institutions that make commercial

2-31     loans and are depositories of state funds.

2-32           (b)  Not later than January 1 of each odd-numbered year, the

2-33     department shall prepare and deliver to the governor, lieutenant

2-34     governor, speaker of the house of representatives, and clerks of

2-35     the standing committees of the senate and house of representatives

2-36     with primary jurisdiction over commerce and economic development a

2-37     report concerning the department's efforts in promoting the linked

2-38     deposit program during the preceding two years.

2-39           SECTION 6.  Section 481.195, Government Code, is repealed.

2-40           SECTION 7.  This Act does not apply to a linked deposit

2-41     governed by a written deposit agreement executed before the

2-42     effective date of this Act.  A linked deposit governed by a written

2-43     deposit agreement executed before the effective date of this Act is

2-44     governed by the law in effect at the time the agreement was

2-45     executed, and that law is continued in effect for that purpose.

2-46           SECTION 8.  This Act takes effect September 1, 1997.

2-47           SECTION 9.  The importance of this legislation and the

2-48     crowded condition of the calendars in both houses create an

2-49     emergency and an imperative public necessity that the

2-50     constitutional rule requiring bills to be read on three several

2-51     days in each house be suspended, and this rule is hereby suspended.

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