By: Morrison H.B. No. 1188

A BILL TO BE ENTITLED

AN ACT

relating to the Texas emerging technology fund.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 490.001, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended by amending Subdivision (1) and adding Subdivision (4) to read as follows:

(1) "Committee" means the Texas Emerging Technology Advisory Committee.

(4) "Award" means:

(A) for purposes of Subchapter D, an investment in the form of equity or a convertible note;

(B) for purposes of Subchapter E, an investment in the form of a debt instrument;

(C) for purposes of Subchapter F, a grant; or

(D) other forms of contribution or investment as recommended by the committee and approved by the governor, lieutenant governor, and speaker of the house of representatives.

SECTION 2. Section 490.003(a), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(a) An emerging technology industry participant is eligible for funding under this chapter if the activity to be funded:

(1) will result in the creation of high-quality new jobs in this state, immediately or over a longer period; or

(2) has the potential to result in a medical or scientific breakthrough or a breakthrough in the area of clean energy.

SECTION 3. The heading to Subchapter B, Chapter 490, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

SUBCHAPTER B. TEXAS EMERGING TECHNOLOGY ADVISORY COMMITTEE

SECTION 4. Section 490.051, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.051. COMPOSITION OF COMMITTEE. The Texas Emerging Technology Advisory Committee is composed of 17 members.

SECTION 5. Section 490.052(b), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(b) The following persons may nominate one or more individuals who are industry leaders in this state or who are nationally recognized leaders [researchers] from public or private institutions of higher education in this state for appointment to the committee:

(1) [the Texas Higher Education Coordinating Board;

[(2)] a president of a public or private institution of higher education in this state;

(2) [(3) the members of the Texas Workforce Commission;

[(4)] a representative of the governor's office involved in economic development activities;

(3) [(5)] a representative of the lieutenant governor's office involved in economic development activities;

(4) [(6)] a representative of the office of the speaker of the house involved in economic development activities; and

(5) [(7)] other persons considered appropriate by the governor.

SECTION 6. Section 490.054, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.054. TERMS. Members of the committee serve staggered two-year terms, subject to the pleasure of the governor.

SECTION 7. Section 490.055, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.055. [COMMITTEE] STAFF AND FUNDING. Necessary staff and funding for the administration of the fund [committee] shall be provided by:

(1) the office of the governor; and

(2) [the Texas Higher Education Coordinating Board;

[(3)the Texas Education Agency;

[(4)the Texas Workforce Commission;

[(5) another public entity represented by a committee member; and

[(6)] gifts, grants, and donations for overhead expenses to the office of the governor [entities listed in Subdivisions (1)-(5)].

SECTION 8. Section 490.101, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended by amending Subsections (c), (f), and (g) and adding Subsections (h) and (i) to read as follows:

(c) The fund may be used only for:

(1) the purposes described by Section 490.002; and

(2) necessary staff, administration of the fund including administration by the office of the governor, and services and expenses related to the fund as provided for by Section 490.055.

(f) The administration of the fund is considered to be a trusteed program within the office of the governor. The governor may negotiate on behalf of the state regarding awards [awarding, by grant, money appropriated] from the fund. The governor may award money appropriated from the fund only with the express written prior approval of the lieutenant governor and speaker of the house of representatives.

(g) Before making an award [awarding a grant] under this chapter, the governor shall enter into a written agreement with the entity to receive the award [be awarded the grant money]. An agreement may specify that:

(1) if all or any portion of the amount of the award [grant] is used to build a capital improvement:

(A) the state retains a lien or other interest in the capital improvement in proportion to the percentage of the award [grant] amount used to pay for the capital improvement; and

(B) the recipient of the award [grant] shall, if the capital improvement is sold:

(i) repay to the state the award [grant money] used to pay for the capital improvement, with interest at the rate and according to the other terms provided by the agreement; and

(ii) share with the state a proportionate amount of any profit realized from the sale; and

(2) if, as of a date certain provided in the agreement, the award [grant] recipient has not used the award received [grant money awarded] under this chapter for the purposes for which the award [grant] was intended, the recipient shall repay that amount and any related interest applicable under the agreement to the state at the agreed rate and on the agreed terms.

(h) The governor may make awards in the form of loans, charge and receive reasonable interest for the loans, take an equity position in the form of stock or other security in consideration of an award, and sell or otherwise trade or exchange the security for the benefit of the fund. Interest or proceeds received as a result of a transaction authorized by this subsection shall be deposited to the corpus of the fund and may be used in the same manner as the corpus of the fund.

(i) The contract between the governor and a recipient of an award under this chapter may set the terms relating to an award.

SECTION 9. Section 490.102(a), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(a) Money appropriated to the fund by the legislature, less amounts necessary to administer the fund under Section 490.055, shall be allocated as follows:

(1) 50 percent of the money for incentives for collaboration between certain entities as provided by Subchapter D;

(2) 16.67 [25] percent of the money for research award [grant] matching as provided by Subchapter E; and

(3) 33.33 [25] percent of the money for acquisition of research superiority as provided by Subchapter F.

SECTION 10. Section 490.103(a), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(a) The contract between the governor and a recipient of an award [awarded a grant] under this chapter shall provide for the distribution of royalties, revenue, or other financial benefits realized from the commercialization of intellectual or real property developed from any award [grant awarded] from the fund. To the extent authorized by law and not in conflict with another agreement, the contract shall appropriately allocate by assignment, licensing, or other means the royalties, revenue, or other financial benefits among identifiable collaborating parties and in a specified percentage to this state for deposit in the fund.

SECTION 11. The heading to Subchapter D, Chapter 490, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

SUBCHAPTER D. INCENTIVES FOR [TO CREATE REGIONAL CENTERS OF

INNOVATION AND] COMMERCIALIZATION ACTIVITIES

SECTION 12. Section 490.153, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.153. PRIORITY FOR FUNDING. (a) In allocating [awarding] money from the fund under this subchapter, priority shall be given to proposals that:

(1) involve emerging scientific or technology fields that have a reasonable probability of enhancing this state's national and global economic competitiveness;

(2) may result in a medical or scientific breakthrough or a breakthrough in the area of clean energy;

(3) are collaborative between any combination of private or nonprofit entities and public or private agencies or institutions in this state;

(4) are matched with other available funds, including funds from the private or nonprofit entity or institution of higher education collaborating on the project; or

(5) have a demonstrable economic development benefit to this state.

(b) An amount not to exceed two percent of the amount allocated for a fiscal biennium for incentives under this subchapter may be invested directly in the regional centers of innovation and commercialization as recommended by the committee and approved by the governor, lieutenant governor, and speaker of the house of representatives to support commercialization activities.

SECTION 13. Section 490.155, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.155. GUARANTEE OF COMMERCIALIZATION OR MANUFACTURING IN TEXAS. A person or entity receiving [awarded] money from the fund under this subchapter must guarantee by contract that a substantial percentage of any new or expanded commercialization or manufacturing [of any real or intellectual product] resulting from the award will be established in this state.

SECTION 14. Section 490.156(a), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(a) A person receiving [awarded] money from the fund under this subchapter may use the money to expedite commercialization that will lead to an increase in high-quality jobs in this state and shall use the money in accordance with a contract between the person and the office of the governor [committee].

SECTION 15. The heading to Subchapter E, Chapter 490, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

SUBCHAPTER E. RESEARCH AWARD [GRANT] MATCHING

SECTION 16. The heading to Section 490.201, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.201. USE OF MONEY FOR RESEARCH AWARD [GRANT] MATCHING.

SECTION 17. Section 490.202, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.202. PRIORITY FOR FUNDING. In allocating [awarding] money from the fund under this subchapter, priority shall be given to proposals that accelerate commercialization into production by targeting programs that:

(1) address federal or other major research sponsors' priorities in emerging scientific or technology fields;

(2) are interdisciplinary;

(3) are collaborative with a combination of public or private institutions of higher education in this state;

(4) are likely to result in a medical or scientific breakthrough or a breakthrough in the area of clean energy; or

(5) have a demonstrable economic development benefit to this state.

SECTION 18. Section 490.253(a), Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

(a) The committee shall review and consider [solicit and identify] proposals by public institutions of higher education for:

(1) creating new research superiority;

(2) attracting existing research superiority from institutions not located in this state and other research entities; or

(3) enhancing existing research superiority by attracting from outside this state additional researchers and resources.

SECTION 19. Section 490.254, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.254. PRIORITY FOR FUNDING. In allocating [awarding] money from the fund under this subchapter, priority shall be given to proposals that:

(1) involve scientific or technical fields that have a reasonable probability of enhancing this state's national and global economic competitiveness;

(2) may result in a medical or scientific breakthrough or a breakthrough in the area of clean energy;

(3) are interdisciplinary;

(4) have attracted or may attract federal and other funding for research superiority;

(5) are likely to create a nationally or internationally recognized locus of research superiority; or

(6) are matched with other funds available to the institution seeking funding under this subchapter.

SECTION 20. Section 490.255, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, is amended to read as follows:

Sec. 490.255. AUTHORIZED EXPENSES. Money allocated [awarded] from the fund under this subchapter may be used for research and research capability acquisition, including salaries and benefits, travel, consumable supplies, other operating expenses, capital equipment, and construction or renovation of facilities.

SECTION 21. (a) The changes in law made by this Act to Sections 490.052 and 490.054, Government Code, as added by Chapter 280, Acts of the 79th Legislature, Regular Session, 2005, apply only to a member of the Texas Emerging Technology Advisory Committee for a term beginning on or after September 1, 2007.

(b) At the first meeting of the Texas Emerging Technology Advisory Committee after September 1, 2007, the committee members shall draw lots to determine which eight members will serve one-year terms beginning on the date on which the next term beginning on or after September 1, 2007, begins.

SECTION 22. This Act takes effect September 1, 2007.