Amend HB 2914, on page 7, after line 9 (Committee Printing)
by adding the following as new SECTION 17 and renumbering
subsequent sections accordingly:
SECTION 17. Chapter 403, Government Code, is amended by
adding Subchapter P to read as follows:
SUBCHAPTER P. PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATORS
Sec. 403.401. DEFINITIONS. In this subchapter:
(1) "Board" means the Product Development and Small
Business Incubator Board.
(2) "Comptroller" includes the designee of the
comptroller.
(3) "Financing" means a loan, loan guarantee, or
equity investment from the product fund to a person for use in the
development and production of a product in this state, or a grant,
loan, or loan guarantee from the small business fund to a person
for use in the development of a small business in this state.
(4) "Office" means the office of the comptroller.
(5) "Product" includes an invention, device,
technique, or process, without regard to whether a patent has been
or could be granted, that has advanced beyond the theoretical stage
and has or is readily capable of having a commercial application.
The term does not include pure research.
(6) "Product fund" means the Texas product development
fund.
(7) "Program" means the product development program or
the small business incubator program.
(8) "Small business fund" means the Texas small
business incubator fund.
Sec. 403.402. PRODUCT DEVELOPMENT AND SMALL BUSINESS
INCUBATOR BOARD. (a) The Product Development and Small Business
Incubator Board is created in the office.
(b) The board shall administer the programs, the product
fund, and the small business fund.
Sec. 403.403. MEMBERS OF THE BOARD; APPOINTMENT; TERMS OF
OFFICE. (a) The board consists of the comptroller and eight
persons appointed by the governor.
(b) In appointing members of the board, the governor shall
appoint:
(1) two persons having significant business leadership
experience in technology, particularly experience with the transfer
of research results into commercial applications;
(2) two persons employed by institutions of higher
education of this state who have experience in technological
research and its commercial applications;
(3) two persons experienced and knowledgeable in
structuring and providing financing for technological products or
businesses; and
(4) two persons who reside in a county of this state
with above state average unemployment and below state average per
capita income and who have experience and knowledge in
technology-related business growth.
(c) Appointed members of the board serve two-year staggered
terms with the terms of four members expiring February 1 of each
odd-numbered year and the terms of four members expiring February 1
of each even-numbered year.
(d) The comptroller is the presiding officer of the board.
(e) The board shall appoint a secretary of the board whose
duties may be prescribed by law and by the board.
(f) Appointed members of the board serve without pay but are
entitled to reimbursement for their actual expenses incurred in
attending meetings of the board or in performing other work of the
board if that work is approved by the comptroller.
Sec. 403.404. REMOVAL OF BOARD MEMBER. (a) It is a ground
for removal from the board if an appointed member:
(1) cannot because of illness or disability discharge
the member's duties for a substantial part of the term for which
the member is appointed; or
(2) is absent from more than half of the regularly
scheduled board meetings that the member is eligible to attend
during a calendar year unless the absence is excused by majority
vote of the board.
(b) The validity of an action of the board is not affected
by the fact that the action was taken when a ground for removal of
a board member existed.
Sec. 403.405. TRAINING OF BOARD MEMBERS. (a) Before an
appointed member of the board may assume the member's duties, the
member must complete at least one course of the training program
established under this section.
(b) A training program established under this section shall
provide information to the member regarding:
(1) the enabling legislation that created the board;
(2) the programs operated by the board;
(3) the role and functions of the board;
(4) the rules of the board, with an emphasis on the
rules that relate to disciplinary and investigatory authority;
(5) the current budget for the board;
(6) the results of the most recent formal audit of the
board;
(7) the requirements of the:
(A) open meetings law, Chapter 551;
(B) open records law, Chapter 552; and
(C) administrative procedure law, Chapter 2001;
(8) the requirements of the conflict of interest laws
and other laws relating to public officials; and
(9) any applicable ethics policies adopted by the
board or the Texas Ethics Commission.
Sec. 403.406. MEETINGS. (a) The board shall hold regular
meetings in Austin and other meetings at places and times scheduled
by the board in formal sessions and called by the comptroller.
(b) The board shall develop and implement policies that
provide the public with a reasonable opportunity to appear before
the board and to speak on any issue under the jurisdiction of the
board.
(c) The board shall make minutes of all meetings available
in the board's office for public inspection.
Sec. 403.407. APPLICABILITY OF OPEN MEETINGS LAW AND
ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
meetings law, Chapter 551, and the administrative procedure law,
Chapter 2001.
Sec. 403.408. STAFF. (a) The employees of the comptroller
selected by the comptroller for that purpose serve as the staff of
the board.
(b) The comptroller shall select and supervise the staff of
the board and perform other duties delegated to the comptroller by
the board.
(c) The comptroller shall provide to members of the board
and to board staff, as often as necessary, information regarding
their qualifications for office or employment under this subchapter
and their responsibilities under applicable laws relating to
standards of conduct for state officers or employees.
(d) The board shall develop and implement policies that
clearly separate the policy-making responsibilities of the board
and the management responsibilities of the comptroller and the
office.
Sec. 403.409. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
board shall comply with federal and state laws related to program
and facility accessibility.
(b) The board shall prepare and maintain a written plan that
describes how a person who does not speak English can be provided
reasonable access to the board's programs and services.
Sec. 403.410. POWERS OF THE BOARD; BONDS. (a) The board
has the powers necessary and reasonable to carry out this
subchapter and may adopt rules, policies, and procedures necessary
or reasonable to implement this subchapter.
(b) The board may issue general obligation bonds, up to the
amounts authorized and as provided by Section 71, Article XVI,
Texas Constitution, to fund the program.
(c) Not more than an amount equal to five percent of the
total amount of bonds issued may be used to pay administrative fees
involved in selling the bonds.
Sec. 403.411. TEXAS PRODUCT DEVELOPMENT FUND. (a) The
Texas product development fund is a revolving fund in the state
treasury.
(b) The product fund is composed of proceeds of bonds issued
under this subchapter, financing application fees, loan repayments,
guarantee fees, royalty receipts, dividend income, money
appropriated by the legislature for authorized purposes of the
product fund, amounts received by the state from loans, loan
guarantees, and equity investments made under this subchapter,
amounts received by the state from federal grants or other sources,
and any other amounts received under this subchapter and required
by resolution of the board to be deposited in the product fund.
The product fund contains a program account, an interest and
sinking account, and other accounts that the board authorizes to be
created and maintained. Money in the product fund is available for
use by the board under this subchapter. Notwithstanding any other
provision of this subchapter, any money in the product fund may be
used for debt service.
(c) Money in the program account of the product fund, minus
the costs of issuance of bonds under this subchapter and necessary
costs of administering the product fund, may be used only to
provide financing to aid in the development and production,
including the commercialization, of new or improved products in
this state. The board shall provide financing from the product
fund on the terms and conditions that the board determines to be
reasonable, appropriate, and consistent with the purposes and
objectives of the product fund and this subchapter, for the purpose
of aiding in the development and production of new or improved
products in this state.
Sec. 403.412. SMALL BUSINESS INCUBATOR FUND. (a) The Texas
small business incubator fund is a revolving fund in the state
treasury.
(b) The small business fund is composed of proceeds of bonds
issued under this subchapter, financing application fees, loan
repayments, guarantee fees, royalty receipts, dividend income,
money appropriated by the legislature for authorized purposes of
the small business fund, amounts received by the state from loans,
loan guarantees, and equity investments made under this subchapter,
amounts received by the state from federal grants or other sources,
and any other amounts received under this subchapter and required
by resolution of the board to be deposited in the small business
fund. The small business fund contains a project account, an
interest and sinking account, and other accounts that the board
authorizes to be created and maintained. Money in the small
business fund is available for use by the board under this
subchapter. Notwithstanding any other provision of this
subchapter, any money in the small business fund may be used for
debt service.
(c) Money in the project account of the small business fund,
minus the costs of issuance of bonds under this subchapter and
necessary costs of administering the small business fund, may be
used only to provide financing to foster and stimulate the
development of small businesses in this state. The board shall
provide financing from the small business fund on the terms and
conditions that the board determines to be reasonable, appropriate,
and consistent with the purposes and objectives of the small
business fund and this subchapter, for the purpose of fostering and
stimulating the development of new or existing small businesses in
this state.
Sec. 403.413. ELIGIBLE PRODUCTS AND BUSINESSES; FINANCING.
(a) Financing may be made under this subchapter only for a product
or small business approved by the board.
(b) In determining eligible products and small businesses,
the board shall give special preference to products or businesses
in the areas of biotechnology and biomedicine that have the
greatest likelihood of commercial success, job creation, and job
retention in this state. The board shall give further preference
to providing financing to projects or businesses that are:
(1) grantees under the small business innovation
research program established under 15 U.S.C. Section 638, as
amended;
(2) companies formed in this state to commercialize
research funded at least in part with state funds;
(3) applicants that have acquired other sources of
financing;
(4) companies formed in this state and receiving
assistance from designated state small business development
centers; or
(5) applicants who are residents of this state doing
business in this state and performing financed activities
predominantly in this state.
(c) The board shall adopt rules governing the terms and
conditions of the financing, specifically including requirements
for appropriate security or collateral, equity interest, and the
rights and remedies of the board and office in the event of a
default on the loan. The rules must include a requirement that
applicants report to the board on the use of money distributed
through either fund.
(d) Before approving the provision of financing to a person,
the board shall enter into an agreement with the person under which
the board will obtain an appropriate portion of royalties, patent
rights, equitable interests, or a combination of those royalties,
rights, and interests from or in the product or proceeds of the
product for which financing is requested. Contracts executed under
this subchapter must include agreements to ensure proper use of
funds and the receipt of royalties, patent rights, or equity
interest, as appropriate.
(e) The board may appoint an advisory committee of experts
in the areas of biotechnology and biomedicine to review projects
and businesses seeking financing from the board.
(f) The amount of financing provided to a single recipient
may not exceed 10 percent of the total amount of bonds issued.
(g) A claim of the state for a payment owed to the state
under this subchapter by a person who has been provided financing
has priority over all other claims against the person.
Sec. 403.414. APPLICATION PROCESS. (a) To apply for
financing from the board, an applicant shall submit to the board:
(1) an application for financing on a form prescribed
by the board; and
(2) a reasonable application fee set by the board.
(b) The application must include a business plan, containing
the information required by the board, including at a minimum:
(1) information regarding:
(A) the history and financial condition of the
applicant, including the applicant's income statement;
(B) the applicant's present markets and market
prospects; and
(C) the integrity of the applicant's management;
(2) a statement of the feasibility of the product for
which financing is requested, including the state of development of
any product to be developed and the proposed schedule of its
commercialization; and
(3) if applicable, documentation of attempts to obtain
private financing.
(c) The board shall determine, with respect to each
application for financing, whether:
(1) the product or business for which financing is
requested is economically sound;
(2) there is a reasonable expectation that the product
or business will be successful;
(3) the product or business will create or preserve
jobs and otherwise benefit the economy of the state;
(4) the applicant has the management resources and
other funding to complete the project;
(5) financing is necessary because full financing is
unavailable in traditional capital markets or credit has been
offered on terms that would preclude the success of the project;
and
(6) there is reasonable assurance that the potential
revenues to be derived from the sale of the product will be
sufficient to repay any financing approved by the board.
(d) After considering the application and all other
information it considers relevant, the board shall approve or deny
the application and promptly notify the applicant of its decision.
Sec. 403.415. INFORMATION CONFIDENTIAL. (a) Information
described by Subsection (b) collected, assembled, or maintained by
or for the board is confidential and may not be disclosed by the
board, the comptroller, or the office.
(b) This section applies to information in any form provided
by or on behalf of an applicant for financing or a recipient of
financing under this subchapter, including information contained
in, accompanying, or derived from any application or report, that
relates to a product, to the development, application, manufacture,
or use of a product, or to the markets, market prospects, or
marketing of a product, and that is proprietary information of
actual or potential commercial value to the applicant or recipient
that has not been disclosed to the public. Confidential
information includes scientific and technological information,
including computer programs and software, and marketing and
business operation information, regardless of whether the product
to which the information relates is patentable or capable of being
registered under copyright or trademark laws or has a potential for
being sold, traded, or licensed for a fee. This section does not
make confidential information in an account, voucher, or contract
relating to the receipt or expenditure of public funds by the board
or the comptroller under this subchapter.
(c) Any application for financing that is withdrawn by the
applicant before approval or funding or that is denied by the board
shall be returned to the applicant promptly on request, together
with all materials submitted by or on behalf of the applicant that
relate to the application, except that the board may retain a
record of the submission and disposition of the application that
does not include any information described by Subsection (b).
Sec. 403.416. PROGRAM COORDINATION. The board and office
shall coordinate the administration and funding of the programs.