By Hunter H.B. No. 1687
76R6833 CLG-F
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 481, Government Code, is amended by
1-6 adding Subchapter CC to read as follows:
1-7 SUBCHAPTER CC. TEXAS FILM INDUSTRY DEVELOPMENT LOAN GUARANTEE
1-8 PROGRAM
1-9 Sec. 481.601. 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 program
2-6 established by the department 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. 481.602. LIBERAL CONSTRUCTION. This subchapter shall
3-1 be liberally construed to accomplish the purposes stated in this
3-2 subchapter.
3-3 Sec. 481.603. TEXAS FILM INDUSTRY DEVELOPMENT LOAN GUARANTEE
3-4 FUND. (a) The Texas film industry development loan guarantee fund
3-5 is a dedicated account in the 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 made under this subchapter.
3-15 (c) Money in the fund may be used only for the purposes of
3-16 this subchapter.
3-17 (d) Section 403.095 does not apply to the fund.
3-18 Sec. 481.604. TEXAS FILM INDUSTRY DEVELOPMENT LOAN GUARANTEE
3-19 PROGRAM. (a) The department shall establish 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 department
3-23 may guarantee under the program a qualified Texas film production
3-24 loan or loans for the production of more than one Texas film by a
3-25 single Texas film producer.
3-26 (b) The department may not make a loan guarantee except on
3-27 approval of a qualified application submitted by a Texas film
4-1 producer with the approval of a Texas lender who has agreed to make
4-2 a qualified Texas film production loan to the producer.
4-3 (c) For each guarantee, the department shall:
4-4 (1) determine the maximum guarantee amounts;
4-5 (2) determine the terms and conditions relating to a
4-6 guarantee; and
4-7 (3) specifically provide that an action or claim under
4-8 the guarantee must be brought not later than the third anniversary
4-9 of the date on which the department issues the guarantee.
4-10 (d) The guarantee amount provided by the department under
4-11 this subchapter may not exceed the lesser of:
4-12 (1) 80 percent of the total amount of the Texas film
4-13 production loan; or
4-14 (2) $2.4 million.
4-15 Sec. 481.605. QUALIFIED TEXAS FILM PRODUCTION LOAN. To
4-16 qualify as a Texas film production loan, a loan must:
4-17 (1) be in an amount not to exceed the lesser of:
4-18 (A) 60 percent of the total cost to produce the
4-19 film; or
4-20 (B) $3 million; and
4-21 (2) be made by a Texas lender under a written loan
4-22 agreement that:
4-23 (A) is entered into with a Texas film producer
4-24 to finance the production of an eligible Texas film;
4-25 (B) may be conditioned on the issuance of a loan
4-26 guarantee under this subchapter;
4-27 (C) provides that the loan must be secured by:
5-1 (i) a security interest on the eligible
5-2 Texas film to be financed by the loan; and
5-3 (ii) a security or other interest in a
5-4 distribution agreement covering the film, or by a letter of credit,
5-5 presale agreement, certificate of deposit, marketable security, or
5-6 other instrument that meets the terms and conditions specified by
5-7 the department; and
5-8 (D) meets any other requirement prescribed by
5-9 the department.
5-10 Sec. 481.606. APPLICATION FOR LOAN GUARANTEE. (a) An
5-11 application for a Texas film industry development loan guarantee
5-12 must:
5-13 (1) contain the names and addresses of the lender and
5-14 the producer of the film that is the subject of the loan;
5-15 (2) contain a certification by the producer of the
5-16 film that the film is an eligible Texas film;
5-17 (3) be accompanied by:
5-18 (A) a certification by the lender that:
5-19 (i) the lender has reviewed the
5-20 application;
5-21 (ii) the budget for the total cost to
5-22 produce the film as disclosed in the application is the same as the
5-23 budget for the total cost to produce the film that was disclosed to
5-24 the lender for purposes of determining whether to make the loan;
5-25 and
5-26 (iii) the information contained in the
5-27 application is not contrary to the information submitted to the
6-1 lender in connection with the loan;
6-2 (B) a copy of the loan agreement described by
6-3 Section 481.605; and
6-4 (C) a copy of a distribution agreement or other
6-5 instrument described by Section 481.605(2)(C)(ii), as appropriate;
6-6 and
6-7 (4) contain any other information required by the
6-8 department.
6-9 (b) The department shall charge an application fee in a
6-10 reasonable amount not to exceed $100 to cover the cost of
6-11 processing the application.
6-12 (c) On receipt of an application, the department shall
6-13 verify the information contained in the application. The
6-14 department may conduct investigations as necessary to make a
6-15 determination regarding information provided in the application.
6-16 (d) The department may contract with a private company to
6-17 perform any of the department's duties under Subsection (c) and to
6-18 submit a written report of the company's findings to the
6-19 department.
6-20 (e) The department may not approve an application submitted
6-21 under this section unless it is complete and meets the requirements
6-22 of this section.
6-23 Sec. 481.607. GUARANTEE FEE. For each film to be produced
6-24 with the proceeds from a loan approved to be guaranteed under the
6-25 program, the producer of the film shall pay to the department a
6-26 guarantee fee in an amount equal to two percent of the budget for
6-27 the total cost to produce the Texas film. The fee must be paid in
7-1 full before the date on which the department issues the loan
7-2 guarantee.
7-3 Sec. 481.608. INDEMNITY POLICY. For each film to be
7-4 produced with the proceeds from a loan approved to be guaranteed
7-5 under the program, the department shall require the producer of the
7-6 film to provide an indemnity insurance policy in an amount that is
7-7 at least 80 percent of the loan guarantee. The insurance policy
7-8 must be issued to the department as the insured party by an
7-9 insurance company authorized to do business in this state.
7-10 Sec. 481.609. SURETY BOND FOR COMPLETION OF FILM. As a
7-11 condition of receiving a loan guarantee under the program, the
7-12 department shall require an applicant to file a surety bond
7-13 indemnifying this state, the lender, and the insurance company
7-14 providing indemnity insurance under Section 481.608 against loss
7-15 that results from the film not being completed by the date and for
7-16 the budget certified to the state in the application required by
7-17 Section 481.606.
7-18 Sec. 481.610. ISSUANCE OF LOAN GUARANTEE. The department
7-19 may not issue a loan guarantee under the program unless:
7-20 (1) the loan for which the guarantee is sought meets
7-21 the qualifications of a Texas film production loan under Section
7-22 481.605;
7-23 (2) the department approves the application for the
7-24 loan guarantee;
7-25 (3) the department has received:
7-26 (A) the application fee required by Section
7-27 481.606(b); and
8-1 (B) the guarantee fee required by Section
8-2 481.607; and
8-3 (4) the insurance requirements of Section 481.608, the
8-4 surety bond requirements of Section 481.609, and any other bond or
8-5 insurance requirements prescribed under this subchapter or by
8-6 department rule have been satisfied.
8-7 Sec. 481.611. RULEMAKING AUTHORITY. The department shall
8-8 adopt rules relating to the implementation of the program and any
8-9 other rules necessary to accomplish the purposes of this
8-10 subchapter. The rules must include:
8-11 (1) terms and conditions for a security interest or
8-12 other pledge of collateral to be provided to a lender or this state
8-13 as security for any default of a loan guaranteed under the program;
8-14 and
8-15 (2) procedures for the enforcement of obligations owed
8-16 and pledge of collateral provided to the department under the
8-17 program.
8-18 Sec. 481.612. OFFENSE. (a) A person commits an offense if
8-19 the person signs an application or submits to the department a
8-20 document the person knows is false in any material respect with the
8-21 intent of causing the department to issue a loan guarantee under
8-22 the program.
8-23 (b) An offense under this section is a felony of the third
8-24 degree.
8-25 Sec. 481.613. LIMITATIONS IN PROGRAM. Not more than $50
8-26 million of guarantees issued under this program may be outstanding
8-27 at any one time.
9-1 Sec. 481.614. QUARTERLY REPORT. At least quarterly, the
9-2 department shall provide to the comptroller, the director of the
9-3 Legislative Budget Board, the presiding officer of the Senate
9-4 Finance Committee, and the presiding officer of the House
9-5 Appropriations Committee a report that contains:
9-6 (1) the names and addresses of the Texas film
9-7 producers that have applied to the department for, and the Texas
9-8 lenders that would benefit from, a loan guarantee under the
9-9 program;
9-10 (2) the names and addresses of the Texas film
9-11 producers and their respective Texas lenders that have been
9-12 approved to receive a loan guarantee under the program;
9-13 (3) the amount of the loan guarantee issued by the
9-14 department to each applicant described by Subdivision (2); and
9-15 (4) any other information relating to the program that
9-16 may be requested to be included in the report.
9-17 Sec. 481.615. GIFTS AND GRANTS. The department may solicit
9-18 and accept gifts, grants, and donations from any source for the
9-19 purposes of this subchapter.
9-20 Sec. 481.616. APPLICATION OF SUNSET ACT TO PROGRAM. (a)
9-21 The program is subject to review under Chapter 325 (Texas Sunset
9-22 Act) as if it were a state agency subject to review under that
9-23 chapter. If the program is not continued in existence in
9-24 accordance with that chapter, the program is abolished and this
9-25 subchapter expires September 1, 2005.
9-26 (b) To the extent that Chapter 325 (Texas Sunset Act) places
9-27 a duty on a state agency subject to review under that chapter, the
10-1 department shall perform the duty as it relates to the program.
10-2 SECTION 2. Subchapter B, Chapter 481, Government Code, is
10-3 amended by adding Section 481.030 to read as follows:
10-4 Sec. 481.030. TRANSFER OF CERTAIN MONEY TO GENERAL REVENUE
10-5 FUND. On the expiration of Subchapter CC:
10-6 (1) the department shall compute the amount sufficient
10-7 to cover loan guarantees or other obligations of the department
10-8 that remain outstanding under the Texas film industry development
10-9 loan guarantee program; and
10-10 (2) any amount in the Texas film industry development
10-11 loan guarantee fund that exceeds the amount computed under
10-12 Subdivision (1) may be used only by the Music, Film, Television,
10-13 and Multimedia Office in the governor's office for the purpose of
10-14 promoting the film industry in this state.
10-15 SECTION 3. The Texas Department of Economic Development
10-16 shall adopt rules required by Section 481.611, Government Code, as
10-17 added by this Act, not later than December 1, 1999.
10-18 SECTION 4. This Act takes effect September 1, 1999.
10-19 SECTION 5. The importance of this legislation and the
10-20 crowded condition of the calendars in both houses create an
10-21 emergency and an imperative public necessity that the
10-22 constitutional rule requiring bills to be read on three several
10-23 days in each house be suspended, and this rule is hereby suspended.