76R10924 CLG-D
By Hunter, Greenberg, Chavez, Goolsby, H.B. No. 1687
Van de Putte
Substitute the following for H.B. No. 1687:
By Chavez C.S.H.B. No. 1687
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a state program of loan guarantees to promote the film
1-3 industry in this state; providing a penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 403, Government Code, is amended by
1-6 adding Subchapter N to read as follows:
1-7 SUBCHAPTER N. TEXAS FILM INDUSTRY DEVELOPMENT LOAN GUARANTEE
1-8 PROGRAM
1-9 Sec. 403.321. DEFINITIONS. In this subchapter:
1-10 (1) "Eligible Texas film" means a Texas film in which:
1-11 (A) the budget for the production costs of the
1-12 film is at least 70 percent of the budget for the total cost to
1-13 produce the film; and
1-14 (B) the budget for the total cost to produce the
1-15 film is at least $1 million but not more than $5 million.
1-16 (2) "Filmed entertainment" means a visual and sound
1-17 production that may be displayed in any media, including a theater
1-18 or television broadcast, or through technology by means of a
1-19 consumer owned or operated device.
1-20 (3) "Production costs" means the total cost of
1-21 producing filmed entertainment minus the sum of:
1-22 (A) the total costs incurred for the producer,
1-23 director, writer, and screenplay of the production;
1-24 (B) the total amount paid to the actors
2-1 appearing in the production, not to exceed the total amount paid to
2-2 the five highest-paid actors appearing in the production; and
2-3 (C) the ordinary and necessary interstate and
2-4 foreign travel expenses involved in the production.
2-5 (4) "Program" means the loan guarantee indemnity
2-6 program administered by the comptroller under this subchapter.
2-7 (5) "Texas derivation" means goods purchased or leased
2-8 or services purchased, leased, or employed from a:
2-9 (A) resident of this state; or
2-10 (B) vendor or supplier who is located and doing
2-11 business in this state.
2-12 (6) "Texas film" means filmed entertainment in which
2-13 at least 80 percent of the budget for the production costs of the
2-14 filmed entertainment is dedicated for goods and services of Texas
2-15 derivation.
2-16 (7) "Texas film producer" means:
2-17 (A) an individual resident of this state who
2-18 produces Texas films; or
2-19 (B) a corporation, limited liability company,
2-20 partnership, or other private entity that:
2-21 (i) is organized under the laws of this
2-22 state; and
2-23 (ii) includes as one of its purposes the
2-24 production of one or more Texas films.
2-25 (8) "Texas lender" means a state or national bank that
2-26 is domiciled in or has a branch office in this state.
2-27 Sec. 403.322. LIBERAL CONSTRUCTION. This subchapter shall
3-1 be liberally construed to accomplish the purposes stated in this
3-2 subchapter.
3-3 Sec. 403.323. TEXAS FILM INDUSTRY ADMINISTRATIVE FUND. (a)
3-4 The Texas film industry administrative fund is an account in the
3-5 general revenue fund.
3-6 (b) The following amounts shall be deposited in the fund:
3-7 (1) appropriations for the implementation and
3-8 administration of this subchapter;
3-9 (2) interest paid on money in the fund;
3-10 (3) fees charged under this subchapter;
3-11 (4) any proceeds from the realization of collateral
3-12 provided to this state under the program; and
3-13 (5) any other amounts received by this state for loan
3-14 guarantees approved for issuance under this subchapter.
3-15 (c) Money in the fund may be used only for the
3-16 administration of this subchapter.
3-17 (d) Section 403.095 does not apply to the fund.
3-18 Sec. 403.324. TEXAS FILM INDUSTRY LOAN GUARANTEE INDEMNITY
3-19 PROGRAM. (a) The comptroller shall administer a program to
3-20 guarantee a certain amount of one or more qualified Texas film
3-21 production loans as a means to facilitate access to capital for the
3-22 production of filmed entertainment in this state. The comptroller
3-23 may approve the issuance of a guarantee of a qualified Texas film
3-24 production loan or loans for the production of more than one Texas
3-25 film by a single Texas film producer.
3-26 (b) The comptroller may not approve the issuance of a loan
3-27 guarantee except on approval of a qualified application submitted
4-1 by a Texas film producer with the approval of a Texas lender who
4-2 has agreed to make a qualified Texas film production loan to the
4-3 producer.
4-4 (c) For each guarantee, the comptroller shall:
4-5 (1) determine the maximum guarantee amounts; and
4-6 (2) determine the terms and conditions relating to a
4-7 guarantee.
4-8 (d) An action or claim under a loan guarantee must be
4-9 brought not later than the third anniversary of the date on which
4-10 the comptroller approves the issuance of the guarantee.
4-11 (e) The guarantee amount approved for issuance by the
4-12 comptroller under this subchapter may not exceed the lesser of:
4-13 (1) 80 percent of the total amount of the Texas film
4-14 production loan; or
4-15 (2) $2.4 million.
4-16 Sec. 403.325. QUALIFIED TEXAS FILM PRODUCTION LOAN. To
4-17 qualify as a Texas film production loan, a loan must:
4-18 (1) be in an amount not to exceed the lesser of:
4-19 (A) 60 percent of the total cost to produce the
4-20 film; or
4-21 (B) $3 million; and
4-22 (2) be made by a Texas lender under a written loan
4-23 agreement that:
4-24 (A) is entered into with a Texas film producer
4-25 to finance the production of an eligible Texas film;
4-26 (B) may be conditioned on the approval for the
4-27 issuance of a loan guarantee under this subchapter;
5-1 (C) provides that the loan must be secured by:
5-2 (i) a security interest on the eligible
5-3 Texas film to be financed by the loan and proceeds and receivables
5-4 due from the film; and
5-5 (ii) a security or other interest in a
5-6 distribution agreement covering the film, an irrevocable letter of
5-7 credit, a presale agreement covering the film, a certificate of
5-8 deposit, a marketable security, or another instrument that meets
5-9 all requirements and is secured in the manner and to the extent
5-10 provided by rules adopted by the comptroller; and
5-11 (D) meets any other requirement prescribed by
5-12 the comptroller.
5-13 Sec. 403.326. APPLICATION FOR LOAN GUARANTEE. (a) An
5-14 application for a loan guarantee under the program must:
5-15 (1) contain the names and addresses of the Texas
5-16 lender and the Texas film producer of the film that is the subject
5-17 of the loan;
5-18 (2) contain a certification by the Texas film producer
5-19 that the film is an eligible Texas film;
5-20 (3) be accompanied by:
5-21 (A) a certification by the Texas lender that:
5-22 (i) the Texas lender has reviewed the
5-23 application;
5-24 (ii) the budget for the total cost to
5-25 produce the Texas film as disclosed in the application is the same
5-26 as the budget for the total cost to produce the film that was
5-27 disclosed to the Texas lender for purposes of determining whether
6-1 to make the loan; and
6-2 (iii) the information contained in the
6-3 application is not contrary to the information submitted to the
6-4 Texas lender in connection with the loan;
6-5 (B) a copy of the loan agreement described by
6-6 Section 403.325; and
6-7 (C) a copy of a distribution agreement or other
6-8 instrument described by Section 403.325(2)(C)(ii), as appropriate;
6-9 and
6-10 (4) contain any other information required by the
6-11 comptroller.
6-12 (b) The comptroller shall charge an application fee in a
6-13 reasonable amount not to exceed $100 to cover the cost of
6-14 processing the application.
6-15 (c) On receipt of an application, the comptroller shall
6-16 verify the information contained in the application. The
6-17 comptroller may conduct investigations as necessary to make a
6-18 determination regarding information provided in the application.
6-19 (d) The comptroller may contract with a private company to
6-20 perform any of the comptroller's duties under Subsection (c) and to
6-21 submit a written report of the company's findings to the
6-22 comptroller.
6-23 (e) The comptroller may not approve an application submitted
6-24 under this section unless it is complete and meets the requirements
6-25 of this section.
6-26 Sec. 403.327. INDEMNITY REQUIREMENT. For each film to be
6-27 produced with the proceeds from a loan approved to be guaranteed
7-1 under the program, the producer of the film shall provide an
7-2 indemnity against loss in an amount equal to the full amount of the
7-3 loan guarantee. The indemnity must be issued to the comptroller as
7-4 the beneficiary of the indemnity by an insurance company, surety
7-5 company, or financial institution that is:
7-6 (1) licensed and authorized to do business in this
7-7 state; and
7-8 (2) approved by the comptroller.
7-9 Sec. 403.328. SURETY BOND FOR COMPLETION OF FILM. An
7-10 applicant shall file with the comptroller a surety bond
7-11 indemnifying this state, the lender, and the entity providing
7-12 indemnity under Section 403.327 against loss that results from the
7-13 film not being completed by the date and for the budget certified
7-14 to the state in the application required by Section 403.326.
7-15 Sec. 403.329. ISSUANCE OF LOAN GUARANTEE. The comptroller
7-16 may not approve the issuance of a loan guarantee under the program
7-17 unless:
7-18 (1) the loan for which the guarantee is sought meets
7-19 the qualifications of a Texas film production loan under Section
7-20 403.325;
7-21 (2) the comptroller approves the application for the
7-22 loan guarantee;
7-23 (3) the comptroller has received the application fee
7-24 required by Section 403.326(b); and
7-25 (4) the indemnity requirements of Section 403.327, the
7-26 surety bond requirements of Section 403.328, and any other bond or
7-27 insurance requirements prescribed under this subchapter or by
8-1 comptroller rule have been satisfied.
8-2 Sec. 403.330. RULEMAKING AUTHORITY. The comptroller shall
8-3 adopt rules relating to the implementation of the program and any
8-4 other rules necessary to accomplish the purposes of this
8-5 subchapter. The rules must include:
8-6 (1) terms and conditions for a security interest or
8-7 other pledge of collateral to be provided to a lender or this state
8-8 as security for any default of a loan guaranteed under the program;
8-9 and
8-10 (2) procedures for the enforcement of obligations owed
8-11 and pledges of collateral provided to the comptroller under the
8-12 program.
8-13 Sec. 403.331. OFFENSE. (a) A person commits an offense if
8-14 the person signs an application or submits to the comptroller a
8-15 document the person knows is false in any material respect with the
8-16 intent of causing the comptroller to issue a loan guarantee under
8-17 the program.
8-18 (b) An offense under this section is a felony of the third
8-19 degree.
8-20 Sec. 403.332. LIMITATIONS IN PROGRAM. (a) Not more than $50
8-21 million of guarantees issued under this program may be outstanding
8-22 at any one time.
8-23 (b) The liability of the state for a loan guarantee for a
8-24 film is limited to the amount of the indemnity provided for the
8-25 film under Section 403.327.
8-26 Sec. 403.333. QUARTERLY REPORT. At least quarterly, the
8-27 comptroller shall provide to the director of the Legislative Budget
9-1 Board, the presiding officer of the Senate Finance Committee, and
9-2 the presiding officer of the House Appropriations Committee a
9-3 report that contains:
9-4 (1) the names and addresses of the Texas film
9-5 producers that have applied to the comptroller for a loan guarantee
9-6 under the program and their respective Texas lenders;
9-7 (2) the names and addresses of the Texas film
9-8 producers and their respective Texas lenders that have been
9-9 approved to receive a loan guarantee under the program;
9-10 (3) the amount of the loan guarantee approved by the
9-11 comptroller to each applicant described by Subdivision (2); and
9-12 (4) any other information relating to the program that
9-13 may be requested to be included in the report.
9-14 Sec. 403.334. GIFTS AND GRANTS. The comptroller may solicit
9-15 and accept gifts, grants, and donations from any source for the
9-16 purposes of this subchapter.
9-17 Sec. 403.335. APPLICATION OF SUNSET ACT TO PROGRAM. (a)
9-18 The program is subject to review under Chapter 325 (Texas Sunset
9-19 Act) as if it were a state agency subject to review under that
9-20 chapter. If the program is not continued in existence in
9-21 accordance with that chapter, the program is abolished and this
9-22 subchapter expires September 1, 2005.
9-23 (b) To the extent that Chapter 325 (Texas Sunset Act) places
9-24 a duty on a state agency subject to review under that chapter, the
9-25 comptroller shall perform the duty as it relates to the program.
9-26 SECTION 2. Subchapter B, Chapter 403, Government Code, is
9-27 amended by adding Section 403.029 to read as follows:
10-1 Sec. 403.029. TRANSFER OF CERTAIN MONEY TO GENERAL REVENUE
10-2 FUND. On the expiration of Subchapter N:
10-3 (1) the comptroller shall determine the amount
10-4 sufficient to administer loan guarantees or obligations of the
10-5 comptroller that remain outstanding under the Texas film industry
10-6 loan guarantee indemnity program administered by the comptroller
10-7 under Subchapter N; and
10-8 (2) any amount in the Texas film industry
10-9 administrative fund that exceeds the amount determined under
10-10 Subdivision (1) may be used only by the Music, Film, Television,
10-11 and Multimedia Office in the governor's office for the purpose of
10-12 promoting the film industry in this state.
10-13 SECTION 3. The comptroller shall adopt rules required by
10-14 Section 403.330, Government Code, as added by this Act, not later
10-15 than December 1, 1999.
10-16 SECTION 4. This Act takes effect September 1, 1999.
10-17 SECTION 5. The importance of this legislation and the
10-18 crowded condition of the calendars in both houses create an
10-19 emergency and an imperative public necessity that the
10-20 constitutional rule requiring bills to be read on three several
10-21 days in each house be suspended, and this rule is hereby suspended.