81R30100 ATP-D

By: Swinford H.B. No. 4133

Substitute the following for H.B. No. 4133:

By: Solomons C.S.H.B. No. 4133

A BILL TO BE ENTITLED

AN ACT

relating to the creation of the Texas Export Financial Assistance Guarantee Program.

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

SECTION 1. Subtitle F, Title 4, Government Code, is amended by adding Chapter 482 to read as follows:

CHAPTER 482. TEXAS EXPORT FINANCIAL ASSISTANCE GUARANTEE PROGRAM

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 482.001. DEFINITIONS. In this chapter:

(1) "Financial institution" has the meaning assigned by Section 31.002, Finance Code.

(2) "Fund" means the Texas export financial assistance guarantee program fund.

(3) "Office" means the Texas Economic Development and Tourism Office.

(4) "Participating financial institution" means an eligible financial institution that makes loans guaranteed under the program.

(5) "Program" means the Texas Export Financial Assistance Guarantee Program established under this chapter.

(6) "Qualified export product" means a product described by Section 482.051.

Sec. 482.002. PURPOSES; ESTABLISHMENT OF PROGRAM. (a) The purposes of the program include:

(1) promoting Texas as an exporter in the international arena;

(2) accelerating delivery of products manufactured in Texas to international markets; and

(3) stimulating the economy of this state by creating manufacturing jobs and tax bases.

(b) To accomplish the purposes described by Subsection (a), the office shall establish the Texas Export Financial Assistance Guarantee Program to guarantee a portion of loans made to eligible manufacturers by participating financial institutions to facilitate the manufacture of qualified products in Texas for international export.

Sec. 482.003. ADMINISTRATION BY OFFICE OF ECONOMIC DEVELOPMENT AND TOURISM; RULES. The office shall administer the program under this chapter and shall adopt rules as necessary for the administration of the program, including rules regarding the use of money in the fund for administrative costs.

[Sections 482.004-482.050 reserved for expansion]

SUBCHAPTER B. MANUFACTURERS OF QUALIFIED EXPORT PRODUCTS

Sec. 482.051. QUALIFIED EXPORT PRODUCTS. A person may obtain a loan guarantee under the program with respect to the manufacture of a product if the product:

(1) is manufactured in Texas;

(2) will be exported to an international market; and

(3) relates to one or more of the following preferred manufacturing industries:

(A) alternative energies;

(B) medical goods;

(C) green technologies;

(D) high fuel efficiency vehicles;

(E) water conservation and purification technologies; or

(F) scientific goods.

Sec. 482.052. MANUFACTURER EXPERIENCE. A manufacturer may obtain a loan guarantee under the program for costs associated with the manufacture of a qualified export product only after the manufacturer has been in the business of manufacturing the same or a substantially similar product for at least two years.

Sec. 482.053. LETTER OF CREDIT AND OTHER FINANCIAL REQUIREMENTS. (a) To obtain a loan guarantee under the program, a manufacturer must provide to a participating financial institution a letter of credit or other documentation evidencing a creditworthy customer's undertaking to pay for the manufacturer's products.

(b) A financial institution may impose other requirements on the manufacturer as the financial institution considers necessary to conform to prudent lending practices.

Sec. 482.054. MAXIMUM AMOUNT TO BE FINANCED. (a) A loan to be guaranteed under the program may finance an amount not to exceed 80 percent of the costs to be incurred in manufacturing the products to be purchased under the letter of credit or other documentation described by Section 482.053(a). A financial institution may require that a manufacturer demonstrate that the manufacturer has the ability to finance the remaining 20 percent of the products' manufacturing costs.

(b) A participating financial institution may not lend any single manufacturer more than $5 million for purposes of this chapter.

Sec. 482.055. USE OF LOAN PROCEEDS. A manufacturer must use the proceeds of a loan guaranteed under the program only to finance the costs of manufacturing in this state a product for international export.

Sec. 482.056. DURATION; REAPPLICATION. A manufacturer may not receive any portion of the proceeds of a loan guaranteed under the program after the fifth anniversary of the date on which the manufacturer first received loan proceeds under the program unless the manufacturer and financial institution reapply for the loan guarantee in the same manner as a person who has not previously applied for a loan guarantee under the program.

[Sections 482.057-482.100 reserved for expansion]

SUBCHAPTER C. LOAN GUARANTEE PROGRAM

Sec. 482.101. FINANCIAL INSTITUTION PARTICIPATION. (a) The office shall by rule determine criteria for a financial institution to apply for loan guarantees under the program.

(b) If multiple financial institutions are used by a single manufacturer that applies to participate in the program, the office shall designate one financial institution as the lead financial institution that shall solely hold the state's guarantee.

Sec. 482.102. TERMS OF LOAN. A participating financial institution shall set the terms of a loan to be guaranteed under the program. The terms must conform to prudent banking practices.

Sec. 482.103. PERFORMANCE OF DUE DILIGENCE. A participating financial institution shall perform due diligence before making a loan to be guaranteed under the program. This state is not required to perform due diligence before guaranteeing a loan under the program.

Sec. 482.104. LOAN GUARANTEE APPROVAL; SUBMISSION TO OFFICE. (a) Not later than the 30th day after the date on which a participating financial institution receives a complete application for a loan to be guaranteed under the program and all necessary supporting documentation, including the letter of credit or other documentation described by Section 482.053(a), the financial institution must perform due diligence and approve or deny the loan.

(b) As soon as practicable after approving a loan to be guaranteed under the program, a participating financial institution shall submit an application for a loan guarantee to the office. The application for the loan guarantee must include the completed loan application approved by the financial institution, all supporting documentation, including the letter of credit or other documentation described by Section 482.053(a), and any other information or documentation required by office rule.

(c) Not later than the 10th business day after the date the office receives a complete application for a loan guarantee, the office shall determine whether to guarantee the loan.

Sec. 482.105. AMOUNT OF STATE GUARANTEE. (a) This state may guarantee up to 50 percent of the amount of a loan made by a participating financial institution under this chapter, except that this state may guarantee a greater amount as provided by Subsection (b).

(b) This state may guarantee a percentage of the amount of a loan made by a participating financial institution under this chapter that is equal to the percentage of raw materials obtained from Texas sources used to manufacture the product, except that the percentage of the loan amount guaranteed under this subsection may not exceed 80 percent.

Sec. 482.106. SERVICE OF LOAN. A participating financial institution shall service any loan made by the institution under the program, collect payments on the loan, and pay this state accordingly.

Sec. 482.107. FEE FOR GUARANTEE OF LOAN. (a) Every six months, a participating financial institution shall pay to the office a 25-basis-point fee applied to the outstanding balance of the state's guaranteed portion of loans made by the financial institution under the program.

(b) The office shall by rule prescribe the manner in which a financial institution must pay the fee required under this section.

[Sections 482.108-482.150 reserved for expansion]

SUBCHAPTER D. ADMINISTRATION BY AND DUTIES OF OFFICE

Sec. 482.151. OFFICE REQUIREMENTS FOR PARTICIPATING FINANCIAL INSTITUTIONS. The office shall:

(1) have final approval of any financial institutions that apply for participation in the program;

(2) establish a structured application process for a financial institution to apply for a guarantee under the program of a loan made by the financial institution; and

(3) establish eligibility criteria for a financial institution to participate in the program.

Sec. 482.152. ANNUAL AUDIT. The office shall perform an annual audit of the program.

Sec. 482.153. BIENNIAL REPORT TO LEGISLATURE. Not later than January 1 of each odd-numbered year, the office shall submit a report on the program to the legislature. The report must include:

(1) the amounts of loans guaranteed under the program;

(2) the uses of loans guaranteed under the program;

(3) an assessment of whether the program has accomplished the stated purposes of this chapter;

(4) the number of jobs created as a result of the program; and

(5) the income, including tax revenue, received by this state as a result of the program.

[Sections 482.154-482.200 reserved for expansion]

SUBCHAPTER E. TEXAS EXPORT FINANCIAL ASSISTANCE GUARANTEE PROGRAM

FUND

Sec. 482.201. ESTABLISHMENT OF FUND. (a) The Texas export financial assistance guarantee program fund is a dedicated account in the general revenue fund.

(b) The following amounts shall be deposited in the fund:

(1) any amounts appropriated by the legislature for the fund;

(2) gifts, grants, and other donations received for the fund; and

(3) income and interest earned on the investment of money in the fund.

(c) The fund may be used only:

(1) to guarantee loans made as provided by this chapter; and

(2) for the administration of the program.

SECTION 2. Section 481.078, Government Code, is amended by adding Subsection (c-1) to read as follows:

(c-1) The fund may be used to support the Texas Export Financial Assistance Guarantee Program to the extent that sufficient amounts are unavailable in the Texas export financial assistance guarantee program fund to make payments as required by a guarantee made under Chapter 482 for a defaulted loan, the full repayment of which is unrecoverable under the letter of credit or other documentation described by Section 482.053(a) or from the borrower's assets.

SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.