78R12971 CLG-F
By: Keffer of Eastland H.B. No. 3549
Substitute the following for H.B. No. 3549:
By: Keffer of Eastland C.S.H.B. No. 3549
A BILL TO BE ENTITLED
AN ACT
relating to the establishment, operation, and funding of the Texas
Economic Development Bank and to the administration and operation
of the product development, small business incubator, and
enterprise zone programs.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 481.001, Government Code, is amended by
adding Subdivision (5) to read as follows:
(5) "Bank" means the Texas Economic Development Bank.
SECTION 2. Section 481.025, Government Code, is amended to
read as follows:
Sec. 481.025. EMPOWERMENT ZONE AND ENTERPRISE COMMUNITY
PROGRAM. The department or its successor is the agency of this
state responsible for administering the Empowerment Zone and
Enterprise Community grant program in this state. The bank
[department] shall cooperate with appropriate federal and local
agencies as necessary to administer the grant program.
SECTION 3. Section 481.191, Government Code, is amended by
amending Subdivision (2) and adding Subdivision (4-a) to read as
follows:
(2) "Eligible borrower" means:
(A) a person who proposes to begin operating a
small or medium-sized business in an enterprise zone, as defined by
Section 2303.003, or a historically underutilized business;
(B) a nonprofit corporation; or
(C) a child-care provider.
(4-a) "Medium-sized business" means a corporation,
partnership, sole proprietorship, or other legal entity that:
(A) is domiciled in this state or has at least 51
percent of its employees located in this state;
(B) is formed to make a profit; and
(C) employs 100 or more but fewer than 500
full-time employees.
SECTION 4. Sections 481.193(a), (d), (e), (f), (h), and
(i), Government Code, are amended to read as follows:
(a) The bank [department] shall establish a linked deposit
program to encourage commercial lending for the development of:
(1) small businesses in enterprise zones;
(2) historically underutilized businesses;
(3) medium-sized businesses;
(4) child-care services provided by and activities
engaged in this state by nonprofit organizations; and
(5) [(4)] quality, affordable child-care services in
this state.
(d) After reviewing an application and determining that the
applicant is an eligible borrower and is creditworthy, the eligible
lending institution shall send the application for a linked deposit
loan to the bank [department].
(e) The eligible lending institution shall certify the
interest rate applicable to the specific eligible borrower and
attach it to the application sent to the bank [department].
(f) After reviewing each linked deposit loan application,
the executive director of the department or the department's
successor shall approve or deny [recommend to the comptroller the
acceptance or rejection of] the application.
(h) Before the placing of a linked deposit, the eligible
lending institution and the state, represented by the bank
[comptroller and the department], shall enter into a written
deposit agreement containing the conditions on which the linked
deposit is made. The deposit agreement must provide that:
(1) the comptroller will place the linked deposit not
later than the 10th business day after the date on which the
agreement is executed;
(2) the lending institution will notify the bank
[comptroller] if the borrower to which the deposit is linked
defaults on the loan; and
(3) [(2)] in the event of a default the comptroller
may withdraw the linked deposit at the direction of the bank.
(i) If a lending institution holding linked deposits ceases
to be a state depository, the comptroller must [may] withdraw the
linked deposits at the direction of the bank.
SECTION 5. Section 481.193(g), Government Code, as amended
by Chapters 891, 1162, and 1423, Acts of the 75th Legislature,
Regular Session, 1997, is reenacted and amended to read as follows:
(g) After the executive director's approval [comptroller's
acceptance] of the application and after the lending institution
originates a loan to an eligible borrower, the bank shall authorize
the comptroller to [shall] place a linked deposit with the
applicable [eligible] lending institution for the period of the
loan, subject to Subsections (h) and (i). The bank [comptroller] is
not required to maintain the deposit with the lending institution
if the loan is extended, renewed, or renegotiated unless the bank
approves [comptroller accepts] a new linked deposit loan
application under this section for the loan as modified. Subject to
the limitation described by Section 481.197, the comptroller shall
[may] place, at the direction of the bank, a time deposit at an
interest rate described by Section 481.192 and may modify the
interest rate during the period of the loan, notwithstanding any
order of the State Depository Board to the contrary.
SECTION 6. Section 481.198, Government Code, is amended to
read as follows:
Sec. 481.198. MARKETING. (a) The bank [department] shall
promote the linked deposit program established by this subchapter
to eligible borrowers and financial institutions that make
commercial loans and are depositories of state funds.
(b) Not later than January 1 of each odd-numbered year, the
department or its successor shall prepare and deliver to the
governor, lieutenant governor, speaker of the house of
representatives, and clerks of the standing committees of the
senate and house of representatives with primary jurisdiction over
commerce and economic development a report concerning the bank's
[department's] efforts in promoting the linked deposit program
during the preceding two years.
SECTION 7. Subchapter N, Chapter 481, Government Code, is
amended by adding Section 481.199 to read as follows:
Sec. 481.199. REPORTS; AUDITS. (a) The department or its
successor shall submit to the comptroller a quarterly report
regarding the linked deposit program.
(b) The financial transactions of a linked deposit are
subject to audit by the state auditor as provided by Chapter 321.
SECTION 8. Section 481.401(9), Government Code, is amended
to read as follows:
(9) "Reserve account" means an account established in
a participating financial institution on approval of the bank
[department] in which money is deposited to serve as a source of
additional revenue to reimburse the financial institution for
losses on loans enrolled in the program.
SECTION 9. Sections 481.402(b) and (c), Government Code,
are amended to read as follows:
(b) Appropriations for the implementation and
administration of this subchapter[, investment earnings, fees
charged under this subchapter,] and any other amounts received by
the state under this subchapter shall be deposited in the fund.
(c) Money in the fund may be appropriated only to the bank
[department] for use in carrying out the purposes of this
subchapter.
SECTION 10. Section 481.404, Government Code, is amended to
read as follows:
Sec. 481.404. POWERS OF BANK [DEPARTMENT] IN ADMINISTERING
CAPITAL ACCESS FUND. In administering the fund, the bank
[department] has the powers necessary to carry out the purposes of
this subchapter, including the power to:
(1) make, execute, and deliver contracts,
conveyances, and other instruments necessary to the exercise of its
powers;
(2) invest money at the bank's [department's]
discretion in obligations determined proper by the bank
[department], and select and use depositories for its money;
(3) employ personnel and counsel and pay the persons
from money in the fund legally available for that purpose; and
(4) impose and collect fees and charges in connection
with any transaction and provide for reasonable penalties for
delinquent payment of fees or charges.
SECTION 11. Sections 481.405(a), (b), (c), and (d),
Government Code, are amended to read as follows:
(a) The bank [department] shall establish a capital access
program to assist a participating financial institution in making
loans to businesses and nonprofit organizations that face barriers
in accessing capital.
(b) The bank [department] shall use money in the fund to
make a deposit in a participating financial institution's reserve
account in an amount specified by this subchapter to be a source of
money the institution may receive as reimbursement for losses
attributable to loans in the program.
(c) The bank [department] shall determine the eligibility
of a financial institution to participate in the program and may set
a limit on the number of eligible financial institutions that may
participate in the program.
(d) To participate in the program, an eligible financial
institution must enter into a participation agreement with the bank
[department] that sets out the terms and conditions under which the
bank [department] will make contributions to the institution's
reserve account and specifies the criteria for a loan to qualify as
a capital access loan.
SECTION 12. Sections 481.407(a), (b), and (d), Government
Code, are amended to read as follows:
(a) Except as otherwise provided by this subchapter, the
bank [department] may not determine the recipient, amount, or
interest rate of a capital access loan or the fees or other
requirements related to the loan.
(b) A loan is not eligible to be enrolled under this
subchapter if the loan is for:
(1) construction or purchase of residential housing;
(2) simple real estate investments, excluding the
development or improvement of commercial real estate occupied by
the borrower's business or organization; or
(3) [refinancing of existing loans not originally
enrolled under this subchapter; or
[(4)] inside bank transactions, as defined by the
policy board.
(d) A capital access loan may be sold on the secondary
market with no recourse to the bank or to the loan loss reserve
correspondent to the loan and under conditions as may be determined
by the bank [department].
SECTION 13. Section 481.408, Government Code, is amended by
amending Subsections (a), (c), and (d) and adding Subsection (e) to
read as follows:
(a) On approval by the bank [department] and after entering
into a participation agreement with the bank [department], a
participating financial institution making a capital access loan
shall establish a reserve account. The reserve account shall be
used by the institution only to cover any losses arising from a
default of a capital access loan made by the institution under this
subchapter or as otherwise provided by this subchapter.
(c) For each capital access loan made by a financial
institution, the institution shall certify to the bank
[department], within the period prescribed by the bank
[department], that the institution has made a capital access loan,
the amount the institution has deposited in the reserve account,
including the amount of fees received from the borrower, and, if
applicable, that the borrower is financing an enterprise project or
is located in or financing a project, activity, or enterprise in an
area designated as an enterprise zone under Chapter 2303.
(d) On receipt of a certification made under Subsection (c)
and subject to Section 481.409, the bank [department] shall deposit
in the institution's reserve account for each capital access loan
made by the institution:
(1) an amount equal to the amount deposited by the
institution for each loan if the institution:
(A) has assets of more than $1 billion; or
(B) has previously enrolled loans in the program
that in the aggregate are more than $2 million;
(2) an amount equal to 150 percent of the total amount
deposited under Subsection (b) for each loan if the institution is
not described by Subdivision (1); or
(3) notwithstanding Subdivisions (1) and (2), an
amount equal to 200 percent of the total amount deposited under
Subsection (b) for each loan if:
(A) the borrower is financing an enterprise
project or is located in or financing a project, activity, or
enterprise in an area designated as an enterprise zone under
Chapter 2303; or
(B) the borrower is a small or medium-size
business or a nonprofit organization that operates or proposes to
operate a day-care center or a group day-care home, as those terms
are defined by Section 42.002, Human Resources Code.
(e) A participating financial institution must obtain
approval from the bank to withdraw funds from the reserve account.
SECTION 14. Section 481.409, Government Code, is amended to
read as follows:
Sec. 481.409. LIMITATIONS ON STATE CONTRIBUTION TO RESERVE
ACCOUNT. (a) The amount deposited by the bank [department] into a
participating financial institution's reserve account for any
single loan recipient may not exceed $150,000 during a three-year
period.
(b) The maximum amount the bank [department] may deposit
into a reserve account for each capital access loan made under this
subchapter is the lesser of $35,000 or an amount equal to:
(1) eight percent of the loan amount if:
(A) the borrower is financing an enterprise
project or is located in or financing a project, activity, or
enterprise in an area designated as an enterprise zone under
Chapter 2303; or
(B) the borrower is a small or medium-size
business or a nonprofit organization that operates or proposes to
operate a day-care center or a group day-care home, as those terms
are defined by Section 42.002, Human Resources Code; or
(2) six percent of the loan amount for any other
borrower.
SECTION 15. Sections 481.410(b)-(d), Government Code, are
amended to read as follows:
(b) The state is entitled to earn interest on the amount of
contributions made by the bank [department], borrower, and
institution to a reserve account under this subchapter. The bank
[department] shall withdraw monthly or quarterly from a reserve
account the amount of the interest earned by the state. The bank
[department] shall deposit the amount withdrawn under this
subsection into the fund.
(c) If the amount in a reserve account exceeds an amount
equal to 33 percent of the balance of the financial institution's
outstanding capital access loans, the bank [department] may
withdraw the excess amount and deposit the amount in the fund. A
withdrawal of money authorized under this subsection may not reduce
an active reserve account to an amount that is less than $200,000.
(d) The bank [department] shall withdraw from the
institution's reserve account the total amount in the account and
any interest earned on the account and deposit the amount in the
fund when:
(1) a financial institution is no longer eligible to
participate in the program or a participation agreement entered
into under this subchapter expires without renewal by the bank
[department] or institution;
(2) the financial institution has no outstanding
capital access loans; [and]
(3) the financial institution has not made a capital
access loan within the preceding 24 months; or
(4) the financial institution fails to submit a report
or other document requested by the bank within the time or in the
manner prescribed.
SECTION 16. Section 481.411, Government Code, is amended to
read as follows:
Sec. 481.411. ANNUAL REPORT. A participating financial
institution shall submit an annual report to the bank [department].
The report must:
(1) provide information regarding outstanding capital
access loans, capital access loan losses, and any other information
on capital access loans the bank [department] considers
appropriate;
(2) state the total amount of loans for which the bank
[department] has made a contribution from the fund under this
subchapter;
(3) include a copy of the institution's most recent
financial statement; and
(4) include information regarding the type and size of
businesses and nonprofit organizations with capital access loans.
SECTION 17. Section 481.412(a), Government Code, is amended
to read as follows:
(a) The department or its successor shall submit to the
legislature an annual status report on the program's activities.
SECTION 18. Section 481.414, Government Code, is amended to
read as follows:
Sec. 481.414. GIFTS AND GRANTS. The bank [department] may
accept gifts, grants, and donations from any source for the
purposes of this subchapter.
SECTION 19. Subtitle F, Title 4, Government Code, is
amended by adding Chapter 489 to read as follows:
CHAPTER 489. TEXAS ECONOMIC DEVELOPMENT BANK
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 489.001. DEFINITIONS. In this chapter:
(1) "Bank" means the Texas Economic Development Bank
established under Section 489.101.
(2) "Department" means the Texas Department of
Economic Development.
(3) "Fund" means the Texas economic development bank
fund.
Sec. 489.002. RULES. The department or its successor shall
adopt rules necessary to carry out the purposes of this chapter.
[Sections 489.003-489.100 reserved for expansion]
SUBCHAPTER B. CREATION AND OPERATION OF BANK; TEXAS ECONOMIC
DEVELOPMENT BANK FUND
Sec. 489.101. CREATION OF BANK. (a) The department or its
successor shall establish the Texas Economic Development Bank for
the purpose of:
(1) providing globally competitive, cost-effective
state incentives to expanding businesses operating in this state
and businesses relocating to this state; and
(2) ensuring that communities and businesses in this
state have access to capital for economic development purposes.
(b) The bank's effectiveness shall be measured on the basis
of the number of jobs created and retained and the total amount of
nonstate funds leveraged as a result of the bank's efforts.
Sec. 489.102. POWERS AND DUTIES OF BANK. (a) The bank
shall offer a variety of financial incentives to help communities
and businesses in this state compete and succeed in the global
marketplace. The bank shall assist communities in accessing
financing with which to fund their economic development efforts.
(b) The bank may:
(1) provide, as provided under the programs the bank
administers under Section 489.108 or otherwise as provided by law:
(A) qualifying communities with tax incentives
for expanding businesses or businesses relocating to this state;
(B) incentives to lenders to:
(i) make loans to near-bankable businesses
in the lender's community; and
(ii) make low-interest loans to qualifying
businesses; and
(C) bond-based long-term debt financing for
capital investment in public entities, in large commercial and
industrial projects, and for other economic development purposes;
(2) act as a link between businesses searching for
investment capital and potential investors;
(3) inform institutional lenders of economic
development plans and strategies for each region of this state and
encourage institutional lenders to support these plans in their
marketing and investment strategies;
(4) offer communities a one-stop source of financing
for their economic development efforts;
(5) provide communities with technical assistance in
the development of their incentive programs to attract and retain
businesses and in the design of incentive packages for specific
proposals; and
(6) provide expanding businesses or businesses
relocating to this state with a single source of information
concerning financial incentives offered by this state to those
businesses.
Sec. 489.103. FEES. The bank shall charge fees to the
beneficiaries of its services as the bank determines necessary.
Amounts collected under this section may be used to support the
administration of the bank's programs and implementation of the
bank's strategies.
Sec. 489.104. ALLOCATION OF RESOURCES. The bank may
allocate its resources as necessary to efficiently meet the level
of demand experienced by each program or service described by
Section 489.108.
Sec. 489.105. TEXAS ECONOMIC DEVELOPMENT BANK FUND. (a)
The Texas economic development bank fund is a dedicated account in
the general revenue fund.
(b) The fund consists of:
(1) appropriations for the implementation and
administration of this chapter;
(2) investment earnings under the capital access fund
established under Section 481.402;
(3) fees charged under Subchapter BB, Chapter 481;
(4) interest earned on the investment of money in the
fund;
(5) fees charged under this chapter;
(6) investment earnings from the programs
administered by the bank;
(7) amounts transferred from Section 2303.504(b), as
amended by Article 2, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001;
(8) investment earnings under the Texas product
development fund under Section 489.211;
(9) investment earnings under the Texas small business
incubator fund under Section 489.212; and
(10) any other amounts received by the state under
this chapter.
(c) Money in the fund may be used only to carry out the
purposes of this chapter.
(d) The financial transactions of the fund are subject to
audit by the state auditor as provided by Chapter 321.
Sec. 489.106. ADMINISTRATION OF FUND AND CHAPTER. The
department or its successor shall administer the fund. In
administering the fund and this chapter, the department or its
successor has the powers necessary to carry out the purposes of this
chapter, including the power to:
(1) make, execute, and deliver contracts,
conveyances, and other instruments;
(2) impose and collect fees and charges in connection
with any transaction and provide for reasonable penalties for
delinquent payments or performance; and
(3) issue bonds for economic development projects as
that term is defined by Section 2(11)(A) or 4B(a)(2), Development
Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
Statutes).
Sec. 489.107. ANNUAL REPORT. On or before January 1 of each
year, the department or its successor shall submit to the
legislature an annual status report on the activities of the bank.
Sec. 489.108. PROGRAMS, SERVICES, AND FUNDS UNDER BANK'S
DIRECTION. Notwithstanding any other law, the bank shall perform
the duties and functions of the department or its successor with
respect to the following programs, services, and funds:
(1) the Texas small business industrial development
corporation established under Section 4, Development Corporation
Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes);
(2) the capital access program established under
Section 481.405;
(3) the Texas leverage fund;
(4) the linked deposit program established under
Section 481.193;
(5) the enterprise zone program established under
Chapter 2303;
(6) the industrial revenue bond program;
(7) the defense economic readjustment zone program
established under Chapter 2310;
(8) the Empowerment Zone and Enterprise Community
program established under Section 481.025; and
(9) the renewal community program.
[Sections 489.109-489.150 reserved for expansion]
SUBCHAPTER C. MISCELLANEOUS PROVISIONS
Sec. 489.151. STATE LIABILITY PROHIBITED. The state and
state officers or employees are not liable to participants for
grants, loans, or other transactions under this chapter except as
specifically provided by law.
Sec. 489.152. GIFTS, GRANTS, AND DONATIONS. The department
or its successor may accept gifts, grants, and donations from any
source for the purposes of this chapter.
[Sections 489.153-489.200 reserved for expansion]
SUBCHAPTER D. PRODUCT DEVELOPMENT AND SMALL
BUSINESS INCUBATORS
Sec. 489.201. DEFINITIONS. In this subchapter:
(1) "Board" means the Product Development and Small
Business Incubator Board.
(2) "Department" includes the designee of the
department or its successor.
(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) "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.
(5) "Product fund" means the Texas product development
fund.
(6) "Program" means the product development program or
the small business incubator program.
(7) "Small business fund" means the Texas small
business incubator fund.
Sec. 489.202. PRODUCT DEVELOPMENT AND SMALL BUSINESS
INCUBATOR BOARD. (a) The Product Development and Small Business
Incubator Board is created in the department or its successor.
(b) The bank administers the programs, the product fund, and
the small business fund.
Sec. 489.203. MEMBERS OF THE BOARD; APPOINTMENT; TERMS OF
OFFICE. (a) The board consists of nine persons appointed by the
governor.
(b) In appointing members of the board, the governor shall
appoint:
(1) three 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 three members expiring February 1 of each
odd-numbered year.
(d) The governor shall appoint 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 governor or the governor's
designee.
Sec. 489.204. 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. 489.205. 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. 489.206. 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 bank.
(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. 489.207. 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. 489.208. STAFF. (a) The employees of the department
or its successor selected by the executive director of the
department or its successor for that purpose serve as the staff of
the board.
(b) The executive director of the department or its
successor shall select and supervise the staff of the board and
perform other duties delegated to the department or its successor
by the board.
(c) The executive director of the department or its
successor 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 department or its
successor, the bank, and the executive director of the department
or its successor.
Sec. 489.209. 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. 489.210. POWERS OF THE BOARD AND BANK; BONDS. (a) The
board and bank have the powers necessary and reasonable to carry out
this subchapter and the board may adopt rules, policies, and
procedures necessary or reasonable to implement this subchapter.
(b) The bank 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. 489.211. 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 the bank to be deposited in the product fund. The product fund
contains a program account, an interest and sinking account, and
other accounts that the bank authorizes to be created and
maintained. Money in the product fund is available for use by the
board under this subchapter. Investment earnings under the product
fund must be transferred to the fund created under Section 489.105.
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
bank shall provide financing from the product fund on the terms and
conditions that the bank 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. 489.212. 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 the bank 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 bank authorizes to be created
and maintained. Money in the small business fund is available for
use by the board under this subchapter. Investment earnings under
the small business fund must be transferred to the fund created
under Section 489.105. 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 bank shall
provide financing from the small business fund on the terms and
conditions that the bank 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. 489.213. ELIGIBLE PRODUCTS AND BUSINESSES; FINANCING.
(a) Financing may be made under this subchapter only for a product
or small business approved by the bank.
(b) In determining eligible products and small businesses,
the bank 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 bank 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 bank in the event of a default
on the loan. The rules must include a requirement that applicants
report to the bank on the use of money distributed through the
product fund or small business fund.
(d) Before approving the provision of financing to a person,
the bank shall enter into an agreement with the person under which
the bank 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 bank.
(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. 489.214. APPLICATION PROCESS. (a) To apply for
financing from the bank, an applicant shall submit to the bank:
(1) an application for financing on a form prescribed
by the bank; and
(2) a reasonable application fee set by the bank.
(b) The application must include a business plan containing
the information required by the bank, 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 bank 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 bank.
(d) After considering the application and all other
information it considers relevant, the bank shall approve or deny
the application and promptly notify the applicant of its decision.
Sec. 489.215. INFORMATION CONFIDENTIAL. (a) Information
described by Subsection (b) collected, assembled, or maintained by
or for the bank is confidential and may not be disclosed by the
bank, the board, the department or its successor, or the executive
director of the department or its successor.
(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 bank,
board, or the department or its successor under this subchapter.
(c) Any application for financing that is withdrawn by the
applicant before approval or funding or that is denied by the bank
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 bank may retain a record
of the submission and disposition of the application that does not
include any information described by Subsection (b).
Sec. 489.216. PROGRAM COORDINATION. The bank and the
department or its successor shall coordinate the administration and
funding of the programs.
Sec. 489.217. EXPENDITURES. All expenditures of the
program must be approved on behalf of the state by the bank.
Expenses incurred by the program in the operation and
administration of its programs and affairs, including expenditures
for employees and program assistance or development, shall be paid
out of fees collected or revenues generated under this subchapter.
SECTION 20. Section 2303.003, Government Code, is amended
by amending Subdivisions (1) and (5) and adding Subdivisions (1-a),
(1-b), (3-a), and (6-a) to read as follows:
(1) "Bank" means the Texas Economic Development Bank
established under Chapter 489.
(1-a) "Block group" has the meaning assigned by the
Bureau of the Census of the United States Department of Commerce.
(1-b) "Day" means the period between 8 a.m. and 5 p.m.
of a day other than a Saturday, Sunday, or state or federal holiday.
(3-a) "Governing body of an enterprise zone" means the
governing body of a municipality or county in which an enterprise
zone is located.
(5) "Nominating body" means the governing body of a
municipality or county[, or a combination of the governing bodies
of municipalities or counties,] that nominates a project or
activity of a qualified business [and applies] for designation [of
an area] as an enterprise project [zone].
(6-a) "Qualified business site" means the specific
business site of an enterprise project.
SECTION 21. Sections 2303.051, 2303.052, 2303.053, and
2303.054, Government Code, are amended to read as follows:
Sec. 2303.051. GENERAL POWERS AND DUTIES. (a) The bank
[department] shall administer and monitor the implementation of
this chapter.
(a-1) The bank shall compile data identifying the block
groups in this state that qualify for enterprise zone designation
using the poverty data available from the most recent federal
decennial census. The bank shall update the block group
information as soon as practicable after the date on which the next
federal decennial census is released. The bank shall make the
information and updates available in an electronic format on the
department's or its successor's Internet website.
(b) The bank [department] shall establish criteria and
procedures for designating a project or activity of a qualified
business [area] as an [enterprise zone and for designating an]
enterprise project.
(c) The department or its successor shall adopt rules
necessary to carry out the purposes of this chapter.
Sec. 2303.052. EVALUATION; REPORT. (a) The bank
[department] shall conduct a continuing evaluation of the [programs
of] enterprise zone program [zones].
(b) The bank [department] shall develop data from available
information demonstrating the relationship between the incentives
provided under this chapter and the economy.
(c) The bank [department] biennially shall review local
incentives.
(d) On or before January 1 [December 15] of each year the
bank [department] shall submit to the governor, the legislature,
and the Legislative Budget Board a report that:
(1) evaluates the effectiveness of the enterprise zone
program;
(2) describes the use of state and local incentives
under this chapter and their effect on revenue; and
(3) suggests legislation.
Sec. 2303.053. ASSISTANCE. (a) The bank [department]
shall assist:
(1) a qualified business in obtaining the benefits of
any incentive or inducement program provided by law;
(2) a unit of local government in obtaining status as a
federal [enterprise] zone designation that furthers the purpose of
this chapter;
(3) a nominating [the governing] body [of an
enterprise zone] in obtaining assistance from another state agency,
including training and technical assistance to qualified
businesses in an enterprise [a] zone; and
(4) a nominating [the governing] body [of an
enterprise zone] in developing small business incubators.
(b) The bank [department] shall provide to persons desiring
to locate and engage in business in an enterprise zone information
and appropriate assistance relating to the required legal
authorization, including a state license, permit, certificate,
approval, registration, or charter, to engage in business in this
state.
(c) The bank [department] shall publicize existing tax
incentives and economic development programs in enterprise zones.
(d) On request the bank [department] shall offer to a unit
of local government having an enterprise zone within its
jurisdiction technical assistance relating to tax abatement and the
development of alternative revenue sources.
Sec. 2303.054. COORDINATION WITH OTHER GOVERNMENTAL
ENTITIES. (a) In cooperation with the appropriate units of local
government and other state agencies, the bank [department] shall
coordinate and streamline state business assistance programs and
permit or license application procedures for businesses in
enterprise zones.
(b) The bank [department] shall:
(1) work with the responsible state and federal
agencies to coordinate enterprise zone programs with other programs
carried out in an enterprise zone, including housing, community and
economic development, small business, banking, financial
assistance, transportation, and employment training programs;
(2) work to expedite, to the greatest extent possible,
the consideration of applications for those programs by
consolidating forms or by other means; and
(3) work, when possible, for the consolidation of
periodic reports required under those programs into one summary
report.
(c) The bank [department] shall encourage other state
agencies in awarding grants, loans, or services to give priority to
businesses in enterprise zones.
SECTION 22. Section 2303.101, Government Code, is amended
to read as follows:
Sec. 2303.101. QUALIFICATION [CRITERIA] FOR ENTERPRISE
ZONE DESIGNATION. [(a)] To qualify for designation [be
designated] as an enterprise zone, an area must:
(1) be a block group, as defined by the most recent
federal decennial census available at the time of designation, in
which at least 20 percent of the residents of the block group have
an income at or below 100 percent of the federal poverty level [have
a continuous boundary]; or
(2) be an area designated as a renewal community,
federal empowerment zone, or federal enterprise community,
including any developable area [at least one square mile but not
larger than the greater of:
[(A) 10 square miles, excluding lakes,
waterways, and transportation arteries; or
[(B) an area, not to exceed 20 square miles, that
is equal to five percent of the area, excluding lakes, waterways,
and transportation arteries, of the municipality, county, or
combination of municipalities or counties nominating the area as an
enterprise zone;
[(3) be an area of pervasive poverty, unemployment,
and economic distress; and
[(4) be nominated as an enterprise zone by an
ordinance or order adopted by the nominating body].
[(b) The department may not designate an area as an
enterprise zone if three enterprise zones are located in the
jurisdiction of and were nominated as enterprise zones by the
governing body of the municipality or county nominating the area as
an enterprise zone.]
SECTION 23. Section 2303.109, Government Code, is amended
to read as follows:
Sec. 2303.109. PERIOD OF DESIGNATION. (a) [An area may be
designated as an enterprise zone for a maximum of seven years.] An
enterprise zone [A] designation remains in effect indefinitely so
long as the area continues to qualify for designation as an
enterprise zone under this chapter. If an area no longer qualifies
for enterprise zone designation following the release of a
subsequent federal decennial census, the area's designation
remains in effect until the date on which the bank makes the updated
information for that subsequent census available to the public as
required by Section 2303.051 [until September 1 of the final year of
the designation].
(b) Notwithstanding Subsection (a), an area designated as a
federal enterprise zone, federal empowerment zone, federal renewal
community, or federal enterprise community may be designated as an
enterprise zone without further qualification for [longer than
seven years but] not longer than the period permitted for the
respective designation by federal law.
SECTION 24. The heading of Subchapter D, Chapter 2303,
Government Code, is amended to read as follows:
SUBCHAPTER D. ADMINISTRATION [OF ENTERPRISE ZONE]
SECTION 25. Section 2303.201, Government Code, is amended
to read as follows:
Sec. 2303.201. ADMINISTRATION BY GOVERNING BODY. The
governing body of an enterprise zone is the governing body of the
municipality or county with jurisdiction over[, or the governing
bodies of the combination of municipalities or counties, that
applied to have] the area designated as an enterprise zone.
SECTION 26. Section 2303.204, Government Code, is amended
to read as follows:
Sec. 2303.204. LIAISON. A nominating [The governing] body
[of an enterprise zone] shall designate a liaison to oversee
enterprise projects it has nominated under this chapter and to
communicate and negotiate with:
(1) the bank or the department or its successor;
(2) [the administrative authority, if one exists;
[(3)] an enterprise project; and
(3) [(4)] other entities in an enterprise zone or
affected by an [the] enterprise project, including a qualified
business, within the jurisdiction of the nominating governmental
entity [zone].
SECTION 27. Sections 2303.205(a) and (c), Government Code,
are amended to read as follows:
(a) Not later than October 1 of each year, the nominating
[the governing] body of a project or activity designated as an
enterprise project [zone] shall submit to the bank [department] a
report in the form required by the bank [department].
(c) The report must include for the year preceding the date
of the report:
(1) a list of local incentives for community
development available in the jurisdiction of the governmental
entity nominating the enterprise project [zone];
(2) the use of local incentives described by [for
which] the nominating [governing] body [provided] in the ordinance
or order nominating the enterprise project [zone] and the effect of
those incentives on revenue;
(3) the number of businesses assisted, located, and
retained in the jurisdiction of the governmental entity nominating
the enterprise project [zone since its designation] due to the
existence of the enterprise zone program; and
(4) a summary of all industrial revenue bonds issued
to finance enterprise projects located in the jurisdiction of the
governmental entity nominating the enterprise project [zone; and
[(5) a description of all efforts made to attain
revitalization goals for the zone].
SECTION 28. Section 2303.401, Government Code, is amended
to read as follows:
Sec. 2303.401. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "New permanent job" means a new employment
position created by a qualified business as described by Section
2303.402 that:
(A) has provided at least 1,820 hours of
employment a year to a qualified employee; and
(B) is intended to exist at [during the period
that] the qualified business site for at least three years after the
date on which a state benefit is received as authorized by this
chapter [is designated as an enterprise project under Section
2303.406].
(2) "Retained job" means a job that existed with a
qualified business before designation of the business's project or
activity as an enterprise project that:
(A) has provided employment to a qualified
employee of at least 1,820 hours annually; and
(B) is intended to be an employment position for
at least three years after the date on which a state benefit is
received as authorized by this chapter [during the period the
business is designated as an enterprise project in accordance with
Chapter 151, Tax Code].
SECTION 29. Section 2303.402(a), Government Code, is
amended to read as follows:
(a) A person is a qualified business if the bank
[department], for the purpose of state benefits under this chapter,
or the nominating [governing] body of a project or activity of the
person under this chapter [an enterprise zone], for the purpose of
local incentives [benefits], certifies that:
(1) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in an [the] enterprise zone,[;] and
[(2)] at least 25 percent of the person's new employees
in the enterprise zone are:
(A) residents of any enterprise zone in this
state [the jurisdiction of the governing body of the enterprise
zone]; or
(B) economically disadvantaged individuals; or
(2) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in an area of this state that does not qualify as an
enterprise zone, and at least 35 percent of the person's new
employees at the qualified business site are:
(A) residents of any enterprise zone in this
state; or
(B) individuals who are economically
disadvantaged.
SECTION 30. Sections 2303.403 and 2303.404, Government
Code, are amended to read as follows:
Sec. 2303.403. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION. If the bank [department] determines that the
governing body eligible to nominate [of] an enterprise project
[zone] is not complying with this chapter, the bank [department]
shall prohibit the certification of a qualified business [in the
zone] until the bank [department] determines that the governing
body is complying with this chapter. The bank [department] may not
designate more than 85 businesses as enterprise projects during any
biennium.
Sec. 2303.404. REQUEST FOR APPLICATION FOR ENTERPRISE
PROJECT DESIGNATION. (a) A qualified business [in an enterprise
zone described by Subsection (b)] may request that the governing
body of a municipality or county in which the qualified business is
located [of the enterprise zone] apply to the bank [department] for
designation of a project or activity of the business as an
enterprise project. [The request must also be made to the
enterprise zone's administrative authority, if one exists.]
(b) The enterprise project designation must be for:
(1) an expansion or relocation from out-of-state, an
expansion, renovation, or new construction, or other property to be
undertaken by a qualified business; and
(2) a predetermined designation period approved by the
bank, with beginning and ending dates for each proposed project or
activity [A request may be made under this section only to the
governing body of an enterprise zone that has:
[(1) an unemployment rate that is at least one and
one-half times the state average; or
[(2) a population loss of at least:
[(A) 12 percent during the most recent six-year
period; or
[(B) four percent during the most recent
three-year period].
(c) The designation period for an enterprise project may not
exceed five years from the date on which the designation is made.
(d) If an enterprise project designation is for a franchise
or subsidiary, separate books and records must be maintained for
the business activity conducted at the qualified business site.
SECTION 31. Section 2303.405, Government Code, is amended
by amending Subsections (a), (b), and (c) and adding Subsection (f)
to read as follows:
(a) If the governing body approves [of an enterprise zone or
the governing body and administrative authority of an enterprise
zone, as appropriate, approve] a request made under Section
2303.404, the governing body may apply to the bank [department] for
the designation of the qualified business as an enterprise project,
only after it submits to the bank the order or ordinance and other
information that complies with the requirements of Sections
2303.4051 and 2303.4052.
(b) An application must[:
[(1) describe completely the conditions in the
enterprise zone that constitute pervasive poverty, unemployment,
and economic distress for purposes of Section 2303.101;
[(2) describe the procedures and efforts of the
governmental entity or entities that applied to have the area
designated as an enterprise zone to facilitate and encourage
participation by and negotiation among all affected entities in the
zone in which the qualified business is located;
[(3)] contain an economic analysis of the plans of the
qualified business for expansion, revitalization, or other
activity with regard to the enterprise project [in the enterprise
zone], including:
(1) [(A)] the number of anticipated new permanent jobs
the enterprise project [business] will create during the
designation period;
(2) [(B)] the anticipated number of permanent jobs the
enterprise project [business] will retain during the designation
period;
(3) [(C)] the amount of investment to be made by the
enterprise project [in the zone]; [and]
(4) a complete description of the projected schedule
for completion of the specific activity described by Section
2303.404(b) to be undertaken by the enterprise project;
(5) [(D)] other information the bank [department]
requires; [and]
(6) a description of [(4) describe] the local effort
made by the nominating body [governmental entity or entities that
applied to have the area designated as an enterprise zone, the
administrative authority, if one exists], the qualified business,
and other affected entities to develop and revitalize the
jurisdiction of the governmental entity nominating the project or
activity; and
(7) if the nominating body is applying for a double or
triple jumbo enterprise project, as defined by Section 2303.407, an
indication of which of those types of designations is being sought
[zone].
(c) For the purposes of this section, local effort to
develop and revitalize a municipality or county [an enterprise
zone] is:
(1) the willingness of public entities in the
municipality or county [zone] to provide services, incentives, and
regulatory relief authorized by this chapter and to negotiate with
the qualified business for which application is made and with
[neighborhood enterprise associations and] other local groups or
businesses to achieve the public purposes of this chapter; and
(2) the effort of the qualified business and other
affected entities to cooperate in achieving those public purposes.
(f) A nominating body may submit an application for a
project or activity that during the application process loses its
eligibility for designation as an enterprise project solely because
the project or activity is no longer located in an enterprise zone
if the bank receives the application not later than the 30th day
after the date on which the bank makes the updated block group data
used to make the eligibility determination available as required
by Section 2303.051.
SECTION 32. Subchapter F, Chapter 2303, Government Code, is
amended by adding Sections 2303.4051 and 2303.4052 to read as
follows:
Sec. 2303.4051. ORDINANCE OR ORDER FOR IDENTIFICATION OF
LOCAL INCENTIVES. (a) In this section, "local incentive" means
each tax incentive, grant, other financial incentive or benefit, or
program to be provided by the governing body to business
enterprises in the block group and any other local incentive listed
in Section 2303.511.
(b) Before nominating the project or activity of a qualified
business for designation as an enterprise project, the governing
body of the municipality or county in which the business is located,
by ordinance or order, as appropriate, must identify and summarize
briefly any local incentives available:
(1) in each of the block groups or other areas within
its jurisdiction that qualify as an enterprise zone under Section
2303.101, if any; and
(2) in any area within its jurisdiction that does not
qualify as an enterprise zone.
(c) The ordinance or order must:
(1) state whether the project or activity to be
nominated as an enterprise project is located in an area designated
as an enterprise zone under this chapter;
(2) summarize briefly the local incentives, including
tax incentives, that, at the election of the governing body, are or
will be made available to the nominated project or activity of the
qualified business; and
(3) nominate a project or activity as an enterprise
project.
(d) At least one of the local incentives summarized under
Subsection (b)(1) must not apply throughout the nominating
governmental entity.
(e) Unless the nominating body holds a public hearing before
adopting an ordinance or order under this section, the ordinance or
order is not valid.
(f) If the nominating body has previously nominated a
project or activity for designation as an enterprise project, the
nominating body, in lieu of issuing a new ordinance or order under
this section for a nominated project or activity, may by resolution
make a reference to a previously issued ordinance or order that met
the requirements of this section if:
(1) the resolution nominates the project or activity
for designation as an enterprise project and states whether the
nominated project or activity is located in an area designated as an
enterprise zone;
(2) the local incentives described in the previously
issued ordinance or order for the areas described by Subsections
(b)(1) and (2) are substantially the same on the date on which the
resolution is issued; and
(3) the local incentives to be made available to the
nominated project or activity are the same as those made available
to the project or activity that is the subject of the previously
issued ordinance or order.
(g) This section does not prohibit a municipality or county
from extending additional incentives, including tax incentives,
for business enterprises in an enterprise zone by a separate order
or ordinance.
Sec. 2303.4052. REQUIRED INFORMATION FROM NOMINATING BODY.
Before nominating the project or activity of a qualified business
for designation as an enterprise project, the nominating body must
submit to the bank:
(1) a certified copy of the ordinance or order, as
appropriate, or reference to an ordinance or order as required by
Section 2303.4051;
(2) a transcript of all public hearings conducted with
respect to local incentives available to business enterprises
within the jurisdiction of the governmental entity nominating the
project or activity, regardless of whether those business
enterprises are located in an enterprise zone;
(3) the name, title, address, telephone number, and
electronic mail address of the nominating body's liaison designated
under Section 2303.204; and
(4) any additional information the bank may require.
SECTION 33. Section 2303.406, Government Code, is amended
to read as follows:
Sec. 2303.406. ENTERPRISE PROJECT DESIGNATION. (a) The
bank [department] may designate a project or activity of a business
as an enterprise project only if the bank receives all of the
information required by Section 2303.4052 and [department]
determines that:
(1) the business is a qualified business under Section
2303.402 that is located in or has made a substantial commitment to
locate in an enterprise zone or at a qualified business site
[described by Section 2303.404(b)];
(2) the nominating [governing] body [of the enterprise
zone] making the application has demonstrated that a high level of
cooperation exists among public, private, and neighborhood
entities within the jurisdiction of the governmental entity
nominating the project or activity [in the zone];
(3) the designation will contribute significantly to
the achievement of the plans of the nominating [governing] body
making the application for development and revitalization of the
area in which the enterprise project will be located [zone]; and
(4) if the business is seeking job retention benefits:
(A) the permanent employees of the business will
be permanently laid off;
(B) the business will close down permanently;
(C) the business will relocate out-of-state;
(D) a 10 percent increase in the production
capacity of the business will occur;
(E) a 10 percent decrease in overall cost per
unit produced will occur; [or]
(F) the business facility has been legitimately
destroyed or impaired because of fire, flood, tornado, hurricane,
or any other natural disaster; or
(G) the business facility is both adding a new
business line or product and deleting or decreasing an existing
business line or product, and the designation will prevent the
facility's net production capacity from decreasing.
(b) This subsection does not apply to a qualified business
located in a federally designated zone, which will receive priority
designation in allocating the number of enterprise projects allowed
statewide per biennium as provided by Section 2303.403. The bank
[department] shall designate qualified businesses as enterprise
projects on a competitive basis. The bank [department] shall
[establish a minimum scoring threshold that must be met by the
qualified business applying for a project designation and] make its
designation decisions using a weighted scale in which:
(1) 40 [50] percent of the evaluation depends on the
economic distress of[:
[(A)] the block group [enterprise zone] in which
a proposed enterprise project is located; [and
[(B) the area within the enterprise zone where
the project is located;]
(2) 25 percent of the evaluation depends on the local
effort to achieve development and revitalization of the block group
in which a proposed enterprise project is located [enterprise
zone]; and
(3) 35 [25] percent of the evaluation depends on the
evaluation criteria as determined by the bank [department], which
must include:
(A) the level of cooperation and support the
project applicant commits to the revitalization goals of all of the
enterprise zone block groups within the jurisdiction of the
nominating governmental entity [zone]; and
(B) the type and wage level of the jobs to be
created or retained by the business.
(c) The bank [department] may remove an enterprise project
designation if it determines that the business is not complying
with a requirement for its designation.
(d) The maximum number of qualified businesses that the bank
[department] may designate as enterprise projects for each
nominating body during any biennium is:
(1) four, plus two additional bonus projects the bank
[department] may award in a municipality or county with a
population of less than 250,000; or
(2) six, if the nominating [governing] body [of the
enterprise zone] is the governing body of a municipality or county
with a population of 250,000 or more.
(e) The department may designate multiple concurrent
enterprise projects to a qualified business during any biennium.
(f) An approved designation as a double jumbo enterprise
project, as defined by Section 2303.407, counts as two project
designations against both the nominating body for purposes of
Subsection (d) and the number of enterprise project designations
allowed statewide per biennium under Section 2303.403. An approved
designation as a triple jumbo enterprise project, as defined by
Section 2303.407, counts as three project designations against both
the nominating body for purposes of Subsection (d) and the number of
enterprise project designations allowed statewide per biennium
under Section 2303.403.
SECTION 34. Section 2303.407, Government Code, as amended
by Article 1, Chapter 1134, Acts of the 77th Legislature, Regular
Session, 2001, is amended to read as follows:
Sec. 2303.407. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
(a) The bank [When the department designates a business as an
enterprise project, the department] shall allocate to an enterprise
[the] project the maximum number of new permanent jobs or retained
jobs eligible based on the amount of capital investment made in the
project and the refund per job with a maximum refund to be included
in a computation of a tax refund for the project.
(b) A capital investment in a project of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $149,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $1,250,000 for the
creation or retention of 250 jobs;
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per job with a maximum refund of $2,500,000
for the creation or retention of 500 jobs; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per job with a maximum refund of $3,750,000 for the
creation or retention of 500 jobs.
(c) A capital investment in the range amount and the
creation or retention of the number of jobs described by Subsection
(b)(5) is considered a double jumbo enterprise project.
(d) A capital investment in the range amount and the
creation or retention of the number of jobs described by Subsection
(b)(6) is considered a triple jumbo enterprise project. [The
number may not exceed 250 or a number equal to 110 percent of the
number of anticipated new permanent jobs or retained jobs specified
in the application for designation of the business as an enterprise
project under Section 2303.405, whichever is less.]
SECTION 35. Section 2303.407, Government Code, as amended
by Article 2, Chapter 1134, Acts of the 77th Legislature, Regular
Session, 2001, is amended to read as follows:
Sec. 2303.407. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
(a) The bank [When the department designates a business as an
enterprise project, the department] shall allocate to an enterprise
[the] project the maximum number of new permanent jobs or retained
jobs eligible based on the amount of capital investment made in the
project and the refund per job with a maximum refund to be included
in a computation of a tax refund for the project.
(b) A capital investment in a project of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $149,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $1,250,000 for the
creation or retention of 250 jobs;
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per job with a maximum refund of $2,500,000
for the creation or retention of 500 jobs; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per job with a maximum refund of $3,750,000 for the
creation or retention of 500 jobs.
(c) A capital investment in the range amount and the
creation or retention of the number of jobs described by Subsection
(b)(5) is considered a double jumbo enterprise project.
(d) A capital investment in the range amount and the
creation or retention of the number of jobs described by Subsection
(b)(6) is considered a triple jumbo enterprise project. [The
number may not exceed 625 or a number equal to 110 percent of the
number of anticipated new permanent jobs or retained jobs specified
in the application for designation of the business as an enterprise
project under Section 2303.405, whichever is less.]
SECTION 36. Subchapter F, Chapter 2303, Government Code, is
amended by adding Sections 2303.4071 and 2303.4072 to read as
follows:
Sec. 2303.4071. MAXIMUM TAX REFUND. (a) In this section,
"double jumbo enterprise project" and "triple jumbo enterprise
project" have the meanings assigned by Section 2303.407.
(b) An enterprise project is eligible for a maximum refund
of $250,000 in each state fiscal year.
(c) A double jumbo enterprise project is eligible for a
maximum refund of $500,000 in each state fiscal year.
(d) A triple jumbo enterprise project is eligible for a
maximum refund of $750,000 in each state fiscal year.
Sec. 2303.4072. ENTERPRISE PROJECT CLAIM FOR STATE BENEFIT.
A person must make a claim to the comptroller for a state benefit as
prescribed under this chapter and Chapters 151 and 171, Tax Code,
not later than 18 months after the date on which the term of the
enterprise project designation expires as provided by Section
2303.404.
SECTION 37. Section 2303.408, Government Code, is amended
to read as follows:
Sec. 2303.408. DURATION OF CERTAIN DESIGNATIONS. The
bank's [department's] designation of the project or activity of a
qualified business as an enterprise project is effective until the
period approved by the bank under Section 2303.404 [fifth
anniversary of the date on which the designation is made]
regardless of whether the enterprise zone in which the project is
located, if any, fails to qualify as an enterprise zone [expires]
before the expiration [fifth anniversary] of the project.
SECTION 38. Section 2303.501(a), Government Code, is
amended to read as follows:
(a) A state agency may exempt from its regulation a
qualified business, qualified employee, or qualified property[, or
neighborhood enterprise association] in an enterprise zone if the
exemption is consistent with:
(1) the purposes of this chapter; and
(2) the protection and promotion of the general health
and welfare.
SECTION 39. Sections 2303.502(b) and (c), Government Code,
are amended to read as follows:
(b) Annually each state agency shall:
(1) review the rules it administers that:
(A) may adversely affect:
(i) the renovation, improvement, or new
construction of housing in enterprise zones; or
(ii) the economic viability and
profitability of business and commerce in enterprise zones; or
(B) may otherwise affect the implementation of
this chapter; and
(2) report the results of the review to the bank
[department].
(c) The bank [department] shall disseminate the reports to
the governing bodies of enterprise zones and others as necessary to
advance the purposes of this chapter.
SECTION 40. Sections 2303.504(b) and (c), Government Code,
as amended by Article 1, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, are amended to read as follows:
(b) At the time of receipt of any tax benefit available as a
result of participating in the enterprise zone program, including a
state sales and use tax refund or franchise tax credit, three
percent of the amount of the tax benefit shall be transferred to the
Texas economic development bank fund under Subchapter B, Chapter
489, to defray the cost of administering this chapter [Subject to
Section 2303.516, a qualified business is entitled to a refund of
state taxes under Sections 151.431 and 171.501, Tax Code].
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank [department]
the statewide total of actual jobs created, actual jobs retained,
and the tax refunds and credits made under this section during that
fiscal year.
SECTION 41. Sections 2303.504(b) and (c), Government Code,
as amended by Article 2, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, are amended to read as follows:
(b) At the time of receipt of any tax benefit available as a
result of participating in the enterprise zone program, including a
state sales and use tax refund or franchise tax credit, three
percent of the amount of the tax benefit shall be transferred to the
Texas economic development bank fund under Subchapter B, Chapter
489, to defray the cost of administering this chapter [Subject to
Section 2303.516, a qualified business is entitled to a refund of
state taxes under Sections 151.431 and 171.501, Tax Code].
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank [department]
the statewide total of actual jobs created, actual jobs retained,
and the tax refunds made under this section during that fiscal year.
SECTION 42. Sections 2303.513(a) and (b), Government Code,
are amended to read as follows:
(a) After an area is designated as an enterprise zone, the
state, a municipality, or a county that owns a surplus building or
vacant land in the zone may dispose of the building or land by:
(1) selling the building or land at a public auction;
or
(2) [selling the land to a neighborhood enterprise
association; or
[(3)] establishing an urban homestead program
described by Subsection (c).
(b) A municipality or county may sell a surplus building or
vacant land in the enterprise zone at less than fair market value if
the governing body of the municipality or county by ordinance or
order, as appropriate, adopts criteria that specify the conditions
and circumstances under which the sale may occur and the public
purpose to be achieved by the sale. The building or land may be sold
to a buyer who is not the highest bidder if the criteria and public
purpose specified in the ordinance or order are satisfied. A copy
of the ordinance or order must be filed with the bank [department]
not later than the day on which the sale occurs.
SECTION 43. Section 2303.516, Government Code, is amended
to read as follows:
Sec. 2303.516. MONITORING QUALIFIED BUSINESS OR ENTERPRISE
PROJECT COMMITMENTS. (a) The bank [department] may monitor a
qualified business or enterprise project to determine whether and
to what extent the business or project has followed through on any
commitments made by it or on its behalf under this chapter.
(b) The bank [department] may determine that the business or
project is not entitled to a refund or credit of state taxes under
Section 2303.504 if the bank [department] finds that:
(1) the business or project is not willing to
cooperate with the bank [department] in providing the bank
[department] with the information the bank [department] needs to
make the determination under Subsection (a); or
(2) the business or project has substantially failed
to follow through on any commitments made by it or on its behalf
under this chapter.
(c) On the date on which a certificate of occupancy is
issued with respect to an enterprise project, the nominating body
shall audit the qualified business to determine whether the
business or project has followed through on any commitments or
goals made by it or on its behalf in the designation application.
On completion, the nominating body shall submit a certified copy of
the audit findings to the bank and comptroller.
(d) A qualified business may obtain a state benefit, earned
through a specific enterprise project designation, on completion of
an audit performed by the comptroller that will certify hiring
commitments and eligible purchases made by or on behalf of a
qualified business under this chapter.
SECTION 44. Subchapter G, Chapter 2303, Government Code, is
amended by adding Section 2303.517 to read as follows:
Sec. 2303.517. REPORT. Before obtaining a state benefit,
the qualified business must submit to the bank a certified report of
the actual number of jobs created or retained and the capital
investment made at or committed to the qualified business site.
SECTION 45. Section 2310.001, Government Code, is amended
by amending Subdivision (1) and adding Subdivision (1-a) to read as
follows:
(1) "Bank" means the Texas Economic Development Bank
established under Chapter 489.
(1-a) "Defense worker" means:
(A) an employee of the United States Department
of Defense, including a member of the armed forces and a government
civilian worker;
(B) an employee of a government agency or private
business, or an entity providing a department of defense related
function, who is employed on a defense facility;
(C) an employee of a business that provides
direct services or products to the department of defense and whose
job is directly dependent on defense expenditures; or
(D) an employee or private contractor employed by
the United States Department of Energy working on a defense or
department of energy facility in support of a department of defense
related project.
SECTION 46. Section 2310.051, Government Code, is amended
to read as follows:
Sec. 2310.051. GENERAL POWERS AND DUTIES. (a) The bank
[department] shall administer and monitor the implementation of
this chapter.
(b) The bank [department] shall establish criteria and
procedures for designating a qualified area as a readjustment zone
and for designating a defense readjustment project.
(c) The department or its successor shall adopt rules
necessary to carry out the purposes of this chapter.
SECTION 47. Section 2310.052, Government Code, is amended
to read as follows:
Sec. 2310.052. EVALUATION; REPORT. (a) The bank
[department] shall conduct a continuing evaluation of the programs
of readjustment zones.
(b) On or before December 1 of each year, the department or
its successor shall submit to the governor, the legislature, and
the Legislative Budget Board a report that:
(1) evaluates the effectiveness of the readjustment
zone program;
(2) describes the use of state and local incentives
under this chapter and their effect on revenue; and
(3) suggests legislation, as appropriate.
SECTION 48. Section 2310.053, Government Code, is amended
to read as follows:
Sec. 2310.053. ASSISTANCE. (a) The bank [department]
shall assist:
(1) a qualified business in obtaining the benefits of
any state incentive or inducement program provided by law;
(2) the governing body of a readjustment zone in
obtaining assistance from another state agency, including job
training and technical assistance to qualified businesses in a
zone; and
(3) the governing body of a readjustment zone in
encouraging small business development.
(b) The bank [department] shall provide to persons desiring
to locate and engage in business in a readjustment zone information
and appropriate assistance relating to the required legal
authorization, including a state license, permit, certificate,
approval, registration, or charter, to engage in business in this
state.
(c) The bank [department] shall publicize existing tax
incentives and economic development programs in readjustment
zones.
(d) On request the bank [department] shall offer to a unit
of local government having a readjustment zone within its
jurisdiction technical assistance relating to tax abatement and the
development of alternative revenue sources.
SECTION 49. Section 2310.054, Government Code, is amended
to read as follows:
Sec. 2310.054. COORDINATION WITH OTHER GOVERNMENTAL
ENTITIES. (a) In cooperation with the appropriate units of local
government and other state agencies, the bank [department] shall
coordinate and streamline state business assistance programs and
permit or license application procedures for businesses in
readjustment zones.
(b) The bank [department] shall work with the responsible
state and federal agencies to coordinate readjustment zone programs
with other programs carried out in a readjustment zone, including
housing, community and economic development, small business,
banking, financial assistance, transportation, and employment
training programs.
(c) The bank [department] shall encourage other state
agencies in awarding grants, loans, or services to give priority to
businesses in readjustment zones.
SECTION 50. Section 2310.102, Government Code, is amended
to read as follows:
Sec. 2310.102. ADVERSELY AFFECTED DEFENSE-DEPENDENT
COMMUNITY. A municipality or county is an adversely affected
defense-dependent community if the bank [department] determines
that:
(1) the municipality or county requires assistance
because of:
(A) the proposed or actual establishment,
realignment, or closure of a defense facility;
(B) the cancellation or termination of a United
States Department of Defense contract or the failure of the
department of defense to proceed with an approved major weapon
system program;
(C) a publicly announced planned major reduction
in department of defense spending that would directly and adversely
affect the municipality or county; or
(D) the closure or a significant reduction of the
operations of a defense facility as the result of a merger,
acquisition, or consolidation of a defense contractor operating the
facility; and
(2) the municipality or county is expected to
experience, during the period between the beginning of the federal
fiscal year during which an event described by Subdivision (1) is
finally approved and the date that the event is to be substantially
completed, a direct loss of:
(A) 2,500 or more defense worker jobs in any area
of the municipality or county that is located in an urbanized area
of a metropolitan statistical area;
(B) 1,000 or more defense worker jobs in any area
of the municipality or county that is not located in an urbanized
area of a metropolitan statistical area; or
(C) one percent of the civilian jobs in the
municipality or county.
SECTION 51. Sections 2310.105(a) and (b), Government Code,
are amended to read as follows:
(a) For an area to be designated as a readjustment zone, the
nominating body, after nominating the area as a readjustment zone,
must send to the bank [department] a written application for
designation of the area as a readjustment zone.
(b) The application must include:
(1) a certified copy of the ordinance or order, as
appropriate, nominating the area as a readjustment zone;
(2) a map of the area showing existing streets and
highways;
(3) an analysis and appropriate supporting documents
and statistics demonstrating that the area qualifies for
designation as a readjustment zone;
(4) a statement that specifies each tax incentive,
grant, other financial incentive or benefit, or program to be
provided by the nominating body to business enterprises in the area
that is not to be provided throughout the governmental entity or
entities nominating the area as a readjustment zone;
(5) a statement of the economic development and
planning objectives for the area;
(6) an estimate of the economic impact of the
designation of the area as a readjustment zone on the revenues of
the governmental entity or entities nominating the area as a
readjustment zone, considering all the financial incentives and
benefits and the programs contemplated;
(7) a transcript or tape recording of all public
hearings on the proposed zone;
(8) if the application is a joint application, a
description and copy of the agreement between the applicants;
(9) the procedures for negotiating with residents,
community groups, and other entities affected by the designation of
the area as a readjustment zone and with qualified businesses in the
area;
(10) a description of the administrative authority, if
one is to be appointed for the readjustment zone under Section
2310.202; and
(11) any additional information the bank [department]
requires.
SECTION 52. Section 2310.106, Government Code, is amended
to read as follows:
Sec. 2310.106. REVIEW OF APPLICATION. (a) On receipt of an
application for the designation of a readjustment zone, the bank
[department] shall review the application to determine if the
nominated area qualifies for designation as a readjustment zone
under this chapter.
(b) The bank [department] shall allow an applicant to
correct any omission or clerical error in the application and to
return the application to the bank [department] on or before the
15th day after the date on which the bank [department] receives the
application.
SECTION 53. Sections 2310.107(a), (c), and (d), Government
Code, are amended to read as follows:
(a) If the bank [department] determines that a nominated
area for which a designation application has been received
satisfies the criteria under Section 2310.101, the bank
[department] shall negotiate with the nominating body for a
designation agreement.
(c) The bank [department] shall complete the negotiations
and sign the agreement not later than the 60th day after the date on
which the application is received unless the bank [department]
extends that period to the 90th day after the date on which the
application was received.
(d) If an agreement is not completed within the 60-day
period provided by Subsection (c), the bank [department] shall
provide to the nominating body the specific areas of concern and a
final proposal for the agreement.
SECTION 54. Section 2310.108, Government Code, is amended
to read as follows:
Sec. 2310.108. DENIAL OF APPLICATION; NOTICE. (a) The bank
[department] may deny an application for the designation of a
readjustment zone only if the bank [department] determines that the
nominated area does not satisfy the criteria under Section
2310.101.
(b) The bank [department] shall inform the nominating body
of the specific reasons for denial of an application, including
denial under Section 2310.107(e).
SECTION 55. Section 2310.110(e), Government Code, is
amended to read as follows:
(e) For each amendment of a readjustment zone boundary, the
nominating body shall pay the bank [department] a reasonable fee,
in an amount specified by the bank [department], not to exceed $500.
The bank [department] may use fees collected under this subsection
to administer this chapter and for other purposes to advance this
chapter.
SECTION 56. Section 2310.111(a), Government Code, is
amended to read as follows:
(a) The bank [department] may remove the designation of an
area as a readjustment zone if:
(1) the area no longer meets the criteria for
designation under this chapter or by [department] rule of the
department or its successor adopted under this chapter; or
(2) the bank [department] determines that the
governing body of the readjustment zone has not complied with
commitments made in the ordinance or order nominating the area as a
readjustment zone.
SECTION 57. Section 2310.203, Government Code, is amended
to read as follows:
Sec. 2310.203. LIAISON. The governing body of a
readjustment zone shall designate a liaison to communicate and
negotiate with:
(1) the bank [department];
(2) the administrative authority, if one exists;
(3) a defense readjustment project; and
(4) other entities in or affected by the readjustment
zone.
SECTION 58. Section 2310.204(a), Government Code, is
amended to read as follows:
(a) Not later than October 1 of each year, the governing
body of a readjustment zone shall submit to the bank [department] a
report in the form required by the bank [department].
SECTION 59. Section 2310.302(a), Government Code, is
amended to read as follows:
(a) A person is a qualified business if the bank
[department], for the purpose of state benefits under this chapter,
or the governing body of a readjustment zone, for the purpose of
local benefits, certifies that:
(1) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in the readjustment zone; and
(2) at least 25 percent of the person's new employees
in the readjustment zone are:
(A) residents of the governing jurisdiction;
(B) economically disadvantaged individuals, as
defined by Section 2303.402(c); or
(C) dislocated defense workers.
SECTION 60. Sections 2310.303 and 2310.304, Government
Code, are amended to read as follows:
Sec. 2310.303. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION. If the bank [department] determines that the
governing body of a readjustment zone is not complying with this
chapter, the bank [department] shall prohibit the certification of
a qualified business in the zone until the bank [department]
determines that the governing body is complying with this chapter.
The bank [department] may not designate more than two businesses in
a single readjustment zone as defense readjustment projects.
Sec. 2310.304. REQUEST FOR APPLICATION FOR DEFENSE
READJUSTMENT PROJECT DESIGNATION. A qualified business in a
readjustment zone may request that the governing body of the
readjustment zone apply to the bank [department] for designation of
the business as a defense readjustment project. The request must
also be made to the readjustment zone's administrative authority,
if one exists.
SECTION 61. Sections 2310.305(a) and (b), Government Code,
are amended to read as follows:
(a) If the governing body of a readjustment zone or the
governing body and administrative authority of a readjustment zone,
as appropriate, approve a request made under Section 2310.304, the
governing body may apply to the bank [department] for the
designation of the qualified business as a defense readjustment
project.
(b) An application must:
(1) describe the procedures and efforts of the
governmental entity or entities that applied to have the area
designated as a readjustment zone to facilitate and encourage
participation by and negotiation among affected entities in the
zone in which the qualified business is located;
(2) contain an economic analysis of the plans of the
qualified business for expansion, revitalization, or other
activity in the readjustment zone, including:
(A) the number of anticipated new permanent jobs
the business will create;
(B) the anticipated number of permanent jobs the
business will retain;
(C) the amount of investment to be made in the
zone; and
(D) other information the bank [department]
requires; and
(3) describe the local effort made by the governmental
entity or entities that applied to have the area designated as a
readjustment zone, the administrative authority, if one exists, the
qualified business, and other affected entities to develop and
revitalize the zone.
SECTION 62. Sections 2310.306, 2310.307, and 2310.308,
Government Code, are amended to read as follows:
Sec. 2310.306. DEFENSE READJUSTMENT PROJECT DESIGNATION.
(a) The bank [department] may designate a qualified business as a
defense readjustment project only if the bank [department]
determines that:
(1) the business is a qualified business under Section
2310.302 that is located in or has made a substantial commitment to
locate in a defense readjustment zone;
(2) the governing body of the readjustment zone making
the application has demonstrated that a high level of cooperation
exists among public, private, and neighborhood entities in the
zone; and
(3) the designation will contribute significantly to
the achievement of the plans of the governing body making the
application for development and revitalization of the zone.
(b) The bank [department] shall designate qualified
businesses as defense readjustment projects on a competitive basis.
The bank [department] shall make its designation decisions using a
weighted scale in which:
(1) 50 percent of the evaluation is based on the effect
of the loss of defense expenditures and employment on the
community;
(2) 25 percent of the evaluation depends on the local
effort to achieve development and revitalization of the
readjustment zone; and
(3) 25 percent of the evaluation depends on the
evaluation criteria as determined by the bank [department], which
must include:
(A) the level of cooperation and support the
project applicant commits to the revitalization goals of the zone;
and
(B) the type and wage level of the jobs to be
created or retained by the business.
(c) The bank [department] may remove a defense readjustment
project designation if it determines that the business is not
complying with a requirement for its designation.
Sec. 2310.307. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
When the bank [department] designates a business as a defense
readjustment project, the bank [department] shall allocate to the
project the maximum number of new permanent jobs or retained jobs
eligible to be included in a computation of a tax refund for the
project. The number may not exceed 500 or a number equal to 110
percent of the number of anticipated new permanent jobs or retained
jobs specified in the application for designation of the business
as a defense readjustment project under Section 2310.305, whichever
is less.
Sec. 2310.308. DURATION OF CERTAIN DESIGNATIONS. The
bank's [department's] designation of a qualified business as a
defense readjustment project is effective until the fifth
anniversary of the date on which the designation is made regardless
of whether the readjustment zone in which the project is located
expires before the fifth anniversary of the project.
SECTION 63. Section 2310.402(b), Government Code, is
amended to read as follows:
(b) The bank [department] shall disseminate the reports to
the governing bodies of readjustment zones and others as necessary
to advance the purposes of this chapter.
SECTION 64. Section 2310.403(d), Government Code, is
amended to read as follows:
(d) The department or its successor or another state agency
may give preference to readjustment zones in granting economic
development money or other benefits.
SECTION 65. Section 2310.404(b), Government Code, as
amended by Article 1, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, is amended to read as follows:
(b) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank [department]
the statewide total of the tax refunds or credits made under this
section during that fiscal year.
SECTION 66. Section 2310.404(b), Government Code, as
amended by Article 2, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, is amended to read as follows:
(b) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the bank [department]
the statewide total of the tax refunds made under this section
during that fiscal year.
SECTION 67. Section 2310.410(b), Government Code, is
amended to read as follows:
(b) A municipality or county may sell a surplus building or
vacant land in the readjustment zone at less than fair market value
if the governing body of the municipality or county by ordinance or
order, as appropriate, adopts criteria that specify the conditions
and circumstances under which the sale may occur and the public
purpose to be achieved by the sale. A copy of the ordinance or order
must be filed with the bank [department] not later than the day on
which the sale occurs.
SECTION 68. Section 2310.413, Government Code, is amended
to read as follows:
Sec. 2310.413. MONITORING DEFENSE READJUSTMENT PROJECT
COMMITMENTS. (a) The bank [department] may monitor a defense
readjustment project to determine whether and to what extent the
project has followed through on any commitments made by it or on its
behalf under this chapter.
(b) The bank [department] may determine that the defense
readjustment project is not eligible for state tax refunds and
credits under Section 2310.404 if the bank [department] finds that:
(1) the project is not willing to cooperate with the
bank [department] in providing the bank [department] with the
information the bank [department] needs to make the determination
under Subsection (a); or
(2) the project has substantially failed to follow
through on its commitments made by it or on its behalf under this
chapter.
SECTION 69. Sections 151.429(a) and (b), Tax Code, as
amended by Article 1, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, are amended to read as follows:
(a) An enterprise project is eligible for a refund in the
amount provided by this section of the taxes imposed by this chapter
on purchases of:
(1) equipment or machinery sold to an enterprise
project for use at the qualified business site [in an enterprise
zone];
(2) building materials sold to an enterprise project
for use in remodeling, rehabilitating, or constructing a structure
at the qualified business site [in an enterprise zone];
(3) labor for remodeling, rehabilitating, or
constructing a structure by an enterprise project at the qualified
business site [in an enterprise zone];
(4) electricity and natural gas purchased and consumed
in the normal course of business at the qualified business site [in
the enterprise zone];
(5) tangible personal property purchased and consumed
in the normal course of business at the qualified business site [in
the enterprise zone]; and
(6) taxable services.
(b) Subject to the limitations provided by Subsection (c) of
this section, an enterprise project qualifies for a refund of taxes
under this section based on the amount of capital investment made at
the qualified business site and the refund per job with a maximum
refund to be included in a computation of a tax refund for the
project. A capital investment at the qualified business site of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $149,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $1,250,000 for the
creation or retention of 250 jobs;
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per job with a maximum refund of $2,500,000
for the creation or retention of 500 jobs; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per job with a maximum refund of $3,750,000 for the
creation or retention of 500 jobs [of $5,000 for each new permanent
job or job that has been retained by the enterprise project for a
qualified employee].
SECTION 70. Sections 151.429(a) and (b), Tax Code, as
amended by Article 2, Chapter 1134, Acts of the 77th Legislature,
Regular Session, 2001, are amended to read as follows:
(a) An enterprise project is eligible for a refund in the
amount provided by this section of the taxes imposed by this chapter
on purchases of:
(1) equipment or machinery sold to an enterprise
project for use at the qualified business site [in an enterprise
zone];
(2) building materials sold to an enterprise project
for use in remodeling, rehabilitating, or constructing a structure
at the qualified business site [in an enterprise zone];
(3) labor for remodeling, rehabilitating, or
constructing a structure by an enterprise project at the qualified
business site [in an enterprise zone]; and
(4) electricity and natural gas purchased and consumed
in the normal course of business at the qualified business site [in
the enterprise zone].
(b) Subject to the limitations provided by Subsection (c) of
this section, an enterprise project qualifies for a refund of taxes
under this section based on the amount of capital investment made at
the qualified business site and refund per job with a maximum refund
to be included in a computation of a tax refund for the project. A
capital investment at the qualified business site of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 to $149,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $1,250,000 for the
creation or retention of 250 jobs;
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per job with a maximum refund of $2,500,000
for the creation or retention of 500 jobs; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per job with a maximum refund of $3,750,000 for the
creation or retention of 500 jobs [of $2,000 for each new permanent
job or job that has been retained by the enterprise project for a
qualified employee].
SECTION 71. Section 151.429, Tax Code, is amended by
amending Subsections (c), (d), (e), and (g) and adding Subsections
(i) and (j) to read as follows:
(c) The total amount of tax refund that an enterprise
project may apply for in a state fiscal year may not exceed
$250,000. If an enterprise project qualifies in a state fiscal year
for a refund of taxes in an amount in excess of the limitation
provided by this subsection, it may apply for a refund of those
taxes in a subsequent year, subject to the $250,000 limitation for
each year. [However, an enterprise project may not apply for a
refund under this section after the end of the state fiscal year
immediately following the state fiscal year in which the enterprise
project's designation as an enterprise project expires or is
removed.] The total amount that may be refunded to an enterprise
project under this section may not exceed the amount determined by
multiplying $250,000 by the number of state fiscal years during
which the enterprise project created one or more jobs for qualified
employees.
(d) To receive a refund under this section, an enterprise
project must apply to the comptroller for the refund. The Texas
[Department of] Economic Development Bank established under
Chapter 489, Government Code, shall provide the comptroller with
the assistance that the comptroller requires in administering this
section.
(e) In this section:
(1) "Enterprise project" means a person designated by
the Texas [Department of] Economic Development Bank as an
enterprise project under Chapter 2303, Government Code.
(2) "Enterprise zone[,]" and "qualified employee[,]"
[and "qualified hotel project"] have the meanings assigned to those
terms by Section 2303.003, Government Code.
(3) "New permanent job" means a new employment
position created by a qualified business as described by Section
2303.402, Government Code, that:
(A) has provided at least 1,820 hours of
employment a year to a qualified employee; and
(B) is intended to exist for at least three years
after a state benefit is received [during the period that the
qualified business is designated as an enterprise project] under
Chapter 2303, Government Code.
(4) "Retained job" has the meaning assigned by Section
2303.401, Government Code.
(5) "Double jumbo enterprise project" and "triple
jumbo enterprise project" have the meanings assigned by Section
2303.407, Government Code.
(g) The refund provided by this section is conditioned on
the enterprise project maintaining at least the same level of
employment of qualified employees as existed at the time it
qualified for a refund for a period of three years from that date.
The comptroller [Texas Department of Economic Development] shall
annually certify [to the comptroller] whether that level of
employment of qualified employees has been maintained. On [the
Texas Department of Economic Development] certifying that such a
level has not been maintained, the comptroller shall assess that
portion of the refund attributable to any such decrease in
employment, including penalty and interest from the date of the
refund.
(i) As provided by Subsection (c), a double jumbo enterprise
project is eligible for a maximum refund of $500,000 and a triple
jumbo enterprise project is eligible for a maximum refund of
$750,000 in each state fiscal year.
(j) An enterprise project approved by the Texas Economic
Development Bank after September 1, 2003, may not receive a refund
before September 1, 2005.
SECTION 72. Sections 151.4291(d) and (g), Tax Code, are
amended to read as follows:
(d) To receive a refund under this section, a defense
readjustment project must apply to the comptroller for the refund.
The Texas [Department of] Economic Development Bank shall provide
the comptroller with the assistance that the comptroller requires
in administering this section.
(g) The refund provided by this section is conditioned on
the defense readjustment project maintaining at least the same
level of employment of qualified employees as existed at the time it
qualified for a refund for a period of three years from that date.
The comptroller [Texas Department of Economic Development] shall
annually certify to [the comptroller and] the Legislative Budget
Board whether that level of employment of qualified employees has
been maintained. On [the Texas Department of Economic Development]
certifying that such a level has not been maintained, the
comptroller shall assess that portion of the refund attributable to
any such decrease in employment, including penalty and interest
from the date of the refund.
SECTION 73. Section 151.4291(e)(1), Tax Code, is amended to
read as follows:
(1) "Defense readjustment project" means a person
designated by the Texas [Department of] Economic Development Bank
as a defense readjustment project under Chapter 2310, Government
Code.
SECTION 74. Sections 151.431(a) and (b), Tax Code, are
amended to read as follows:
(a) A qualified business operating in the [enterprise
zone's] jurisdiction of the nominating governmental entity for at
least three consecutive years may apply for and be granted a onetime
refund of sales and use tax paid by the qualified business after
certification of the qualified business as provided by Subsection
(b) of this section to a vendor or directly to the state for the
purchase of equipment or machinery sold to the business for use in
an enterprise project [zone] if the governing body or bodies
certify to the comptroller [Texas Department of Economic
Development] that the business is retaining 10 or more jobs held by
qualified employees during the year. For the purposes of this
subsection "job" means an existing employment position of a
qualified business that has provided employment to a qualified
employee of at least 1,820 hours annually.
(b) Only qualified businesses that have been certified as
eligible for a refund under this section by the governing body or
bodies to the [department and by the department to the]
comptroller, including certification of the number of jobs
retained, are entitled to the refund. [During each calendar year,
no more than three eligible qualified businesses may be certified
to the department by a municipality or county, subject to
Subsection (c).]
SECTION 75. Section 151.431(e)(2), Tax Code, is amended to
read as follows:
(2) "Governing body" means the governing body of a
municipality or county that applied to have the project or activity
of a qualified business [area] designated as an enterprise project
[zone] under Section 2303.405 [2303.105], Government Code.
SECTION 76. Sections 171.501(a) and (b), Tax Code, are
amended to read as follows:
(a) A corporation that has been certified a qualified
business as provided by Chapter 2303, Government Code, may apply
for and be granted a refund of franchise tax paid with an initial or
annual report if the governing body certifies [or bodies certify]
to the comptroller [Texas Department of Economic Development] that
the business has created 10 or more new jobs [in its enterprise
zone] held by qualified employees during the calendar year that
contains the end of the accounting period on which the report is
based. [The Texas Department of Economic Development shall certify
eligibility for any refund to the comptroller.]
(b) Only qualified businesses that have been certified as
eligible for a refund under this section by the governing body [or
bodies] to the [department and by the department to the]
comptroller are entitled to the refund. [During each calendar
year, no more than three eligible qualified businesses may be
certified to the department by a municipality or county, subject to
Subsection (c).]
SECTION 77. Section 171.501(e)(2), Tax Code, is amended to
read as follows:
(2) "Governing body" means the governing body of a
municipality or county that applied to have the project or activity
of a qualified business [area] designated as an enterprise project
[zone] under Section 2303.405 [2303.105], Government Code.
SECTION 78. Sections 171.751(13) and (14), Tax Code, as
amended by Chapter 1134, Acts of the 77th Legislature, Regular
Session, 2001, effective September 1, 2003, are amended to read as
follows:
(13) "Defense readjustment project" means:
(A) a person designated by the Texas Department
of Economic Development as a defense readjustment project under
Chapter 2310, Government Code, on or after September 1, 2001, but
before September 1, 2003; and
(B) a person designated by the Texas Economic
Development Bank as a defense readjustment project under Chapter
2310, Government Code, on or after September 1, 2003.
(14) "Enterprise project" means:
(A) a person designated by the Texas Department
of Economic Development as an enterprise project under Chapter
2303, Government Code, on or after September 1, 2001, but before
September 1, 2003; and
(B) a person designated by the Texas Economic
Development Bank as an enterprise project under Chapter 2303,
Government Code, on or after September 1, 2003.
SECTION 79. Article 21.49B, Insurance Code, is amended to
read as follows:
Art. 21.49B. PROPERTY AND CASUALTY INSURANCE INITIATIVES
TASK FORCE. The commissioner may establish a task force to study
the utility and feasibility of instituting various property and
casualty insurance initiatives in this state. The initiatives to
be studied may include, but are not limited to:
(1) possible coordination with the Texas Economic
Development Bank [Department of Commerce] to make certain property
and casualty insurance an enterprise zone program pursuant to
Chapter 2303, Government Code;
(2) possible coordination with Neighborhood Housing
Service (NHS) Programs to establish voluntary NHS-Insurance
Industry Partnerships;
(3) possible insurance agent programs to increase
minority agency access to standard insurance companies, including
minority intern programs with insurance companies;
(4) possible tax incentives for insurance written in
underserved areas; and
(5) a consumer education program designed to increase
the ability of consumers to differentiate among different products
and providers in the property and casualty market.
SECTION 80. Sections 4(b), (d), (e), (f), and (g),
Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas
Civil Statutes), are amended to read as follows:
(b) There is hereby created the Texas Small Business
Industrial Development Corporation which shall act on behalf of the
state to carry out the public purposes of this Act. The Texas Small
Business Industrial Development Corporation shall be considered to
be a corporation within the meaning of this Act, shall be organized
and governed in accordance with the provisions of this Act, and
shall have all of the powers, and shall be subject to all of the
limitations, provided for corporations by this Act, except as
otherwise provided by this section. For purposes of this Act, the
state shall be considered to be the unit under whose auspices the
Texas Small Business Industrial Development Corporation is created
and the Texas Economic Development Bank established under Chapter
489, Government Code, [department] shall be considered to be the
governing body. To the extent that the provisions of this section
are inconsistent with other provisions of this Act, the provisions
of this section shall control as to the existence, powers,
limitations, organization, administration, operation, and affairs
of the Texas Small Business Industrial Development Corporation.
(d) The members of the board of the department or its
successor shall serve ex officio as the board of directors of the
Texas Small Business Industrial Development Corporation.
(e) A director, officer, employee, or member of the
department or its successor acting on behalf of the Texas Small
Business Industrial Development Corporation is not personally
liable for damage, loss, or injury resulting from the performance
of the person's duties under this Act or on any contract,
commitment, or agreement executed on behalf of the Texas Small
Business Industrial Development Corporation under this Act.
(f) All programs and expenditures of the Texas Small
Business Industrial Development Corporation must be approved on
behalf of the state by the Texas Economic Development Bank
[department]. Expenses incurred by the Texas Small Business
Industrial Development Corporation in the operation and
administration of its programs and affairs, including expenditures
for employees and program assistance or development, shall be paid
out of fees collected or revenues generated under this Act.
(g) The revenues and funds of the Texas Small Business
Industrial Development Corporation shall be deposited with one or
more financial institutions chosen for that purpose by the board of
directors. Funds of the Texas Small Business Industrial
Development Corporation may not be used or made available for use by
the Texas Economic Development Bank [department] except to
reimburse the bank [department] for expenses it incurs in its
official capacity on behalf of the Texas Small Business Industrial
Development Corporation.
SECTION 81. The following provisions are repealed:
(1) Subchapter P, Chapter 403, Government Code;
(2) Sections 481.023(b) and (c), Government Code;
(3) Section 481.194(b), Government Code;
(4) Section 481.197(a), Government Code;
(5) Sections 2303.003(4) and (8), Government Code;
(6) Sections 2303.102-2303.108, Government Code;
(7) Sections 2303.110-2303.112, Government Code;
(8) Sections 2303.202 and 2303.203, Government Code;
(9) Section 2303.205(b), Government Code;
(10) Subchapter E, Chapter 2303, Government Code;
(11) Section 2303.402(b), Government Code;
(12) Section 2303.5055, Government Code;
(13) Section 2303.508, Government Code;
(14) Section 2303.512, Government Code;
(15) Section 386.031(d), Local Government Code;
(16) Section 151.431(c), Tax Code; and
(17) Section 171.501(c), Tax Code.
SECTION 82. The changes in law made by this Act to Chapter
2303, Government Code, and Chapters 151 and 171, Tax Code, apply
only to an application for a designation under the enterprise zone
program under Chapter 2303, Government Code, as amended by this
Act, that is filed on or after the effective date of this Act. An
application for designation under the enterprise zone program that
is filed before the effective date of this Act is governed by the
law in effect on the date the application was filed, and the former
law is continued in effect for that purpose.
SECTION 83. On September 1, 2003:
(1) all functions and activities performed by the
comptroller relating to the small business incubator program, the
Texas small business incubator fund, and the Texas product
development fund immediately before that date are transferred to
the Texas Department of Economic Development or its successor or
the Texas Economic Development Bank, as provided by this Act;
(2) a rule adopted by the Product Development and
Small Business Incubator Board under Subchapter P, Chapter 403,
Government Code, as that law existed immediately before the
effective date of this Act, with respect to the small business
incubator program, the Texas small business incubator fund, and the
Texas product development fund remains in effect until rules are
adopted by the Product Development and Small Business Incubator
Board established under Subchapter D, Chapter 489, Government Code,
as added by this Act;
(3) all money, contracts, leases, rights, and
obligations of the comptroller related to functions and activities
performed by the comptroller relating to the small business
incubator program, the Texas small business incubator fund, and the
Texas product development fund are transferred to the Texas
Department of Economic Development or its successor or the Texas
Economic Development Bank, as provided by this Act;
(4) all funds appropriated by the legislature to the
comptroller for purposes related to the small business incubator
program, the Texas small business incubator fund, and the Texas
product development fund are transferred to the Texas Department of
Economic Development or its successor or the Texas Economic
Development Bank, as provided by this Act; and
(5) all property, including records, in the custody of
the comptroller related to functions and activities performed by
the comptroller relating to the small business incubator program,
the Texas small business incubator fund, and the Texas product
development fund becomes property of the Texas Department of
Economic Development or its successor or the Texas Economic
Development Bank, as provided by this Act.
SECTION 84. (a) As soon as possible on or after the
effective date of this Act, the governor shall appoint nine new
members to the Product Development and Small Business Incubator
Board in accordance with Subchapter D, Chapter 489, Government
Code, as added by this Act. In making the appointments, the
governor shall designate three members for terms expiring February
1, 2005, three members for terms expiring February 1, 2007, and
three members for terms expiring February 1, 2009. The members
appointed under this subsection may not perform the functions of
the board until the day after the date a majority of the new members
take office.
(b) Until the date the new members of the Product
Development and Small Business Incubator Board may begin performing
the functions of the board under Subsection (a) of this section, the
members serving on the board immediately before the effective date
of this Act shall continue to carry out the functions of the board.
On the date the new members may begin performing the functions of
the board, the offices of the members serving immediately before
the effective date of this Act are abolished.
(c) The changes in law made by this Act in the
qualifications of, and the prohibitions applying to, members of the
Product Development and Small Business Incubator Board do not
affect the entitlement of a member serving on the board immediately
before the effective date of this Act to continue to carry out the
functions of the board for the period prescribed by Subsection (b)
of this section. The changes in law apply only to a member
appointed on or after the effective date of this Act. This Act does
not prohibit a person who is a member of the board on the effective
date of this Act from being reappointed to the board if the person
has the qualifications required for a member under Subchapter D,
Chapter 489, Government Code, as added by this Act.
SECTION 85. On the effective date of this Act, unobligated
and unexpended money in the capital access fund created under
Section 481.402, Government Code, as amended by this Act, and in the
Texas leverage fund shall be transferred to the Texas economic
development bank fund created under Section 489.105, Government
Code, as added by this Act.
SECTION 86. This Act takes effect September 1, 2003.