By: West S.B. No. 2331
  relating to the establishment of the Texas power source fund.
         SECTION 1.  Subtitle F, Title 4, Government Code, is amended
  by adding Chapter 490D to read as follows:
         Sec. 490D.001.  TEXAS POWER SOURCE FUND.  (a)  In this
               (1)  "Board of trustees" means the board of trustees of
  the Texas power source fund.
               (2)  "Fund" means the Texas power source fund.
         (b)  The Texas power source fund is created as a trust fund
  outside the state treasury.  Except as otherwise provided by this
  section, the fund is subject to the general laws of this state
  governing private sector trusts.  Only individuals who are
  residents of this state and political subdivisions of this state
  may invest in the fund.
         (c)  The comptroller shall invest in the fund on the behalf
  of this state one dollar from the general revenue fund to match each
  dollar invested by other investors in the fund after the total
  amount invested by other investors reaches $500 million.  The
  comptroller may not invest under this subsection more than $500
         (d)  In the year of investment, an individual investor in the
  fund is entitled to an incentive in the amount of non-school ad
  valorem taxes owed by the investor for that tax year, but not to
  exceed the lesser of 20 percent of the amount invested in the fund
  during that year, the total amount of non-school ad valorem taxes
  owed by the investor for that tax year, or $3,000.  The board of
  trustees may give the investor the incentive amount in the form of a
  cash payment from the fund or as additional shares in the fund, as
  the investor chooses.
         (e)  The fund is managed by a board of trustees consisting of
  nine members appointed by the governor.
         (f)  Each member of the board must have demonstrated
  substantial investment expertise.  Each member serves for a
  six-year term expiring February 1 of an odd-numbered year.
         (g)  The governor shall designate a presiding officer from
  among the members of the board of trustees who serves a term of two
  years expiring February 1 of each odd-numbered year.  A member may
  serve more than one term as presiding officer.
         (h)  The board of trustees shall manage the fund, and may:
               (1)  employ and retain staff, including a chief
  executive officer;
               (2)  take any action necessary for the creation,
  administration, and protection of the fund;
               (3)  enter into investment contracts with investors;
               (4)  adopt rules regarding the operation of the fund;
               (5)  acquire, hold, and dispose of assets;
               (6)  execute contracts;
               (7)  pay expenses of the fund based on an assessment on
  investor contributions;
               (8)  provide for different classes of voting and
  non-voting shares; and
               (9)  alternatively, or in combination with its own
  staff, contract for the management of investments under this
  section with a private investment management firm or with an
  investing fund or system electing a member of the board of trustees.
         (i)  The board of trustees shall appoint regional investment
  boards.  Each part of the state must be in the territory of one
  regional investment board.  Each regional investment board shall
  evaluate potential investment opportunities in its region and make
  investment decisions in its region.  The board of trustees by a vote
  of six members may override an investment decision of a regional
  investment board.
         (j)  The fund may invest only in Texas businesses.  The fund
  may invest in publicly traded or closely held businesses.
         (k)  In making investments, the board of trustees and
  regional investment boards shall exercise the judgment and care
  under the circumstances then prevailing that persons of ordinary
  prudence, discretion, and intelligence exercise in the management
  of their own affairs, not in regard to speculation but in regard to
  the permanent disposition of their funds, considering the probable
  income as well as the probable safety of the capital of the fund.
         (l)  The board of trustees shall establish and operate the
  fund to the extent practicable under the generally accepted
  business procedures relating to a mutual fund and shall value the
  investments for determining the purchase or sales price of
  participating shares of investors in the fund consistent with
  investment contracts.  Evidences of participation in the fund shall
  be held by the comptroller of public accounts in keeping with the
  custodial responsibilities of that office.
         (m)  On a quarterly basis, the amount of income realized on
  investments under this section shall be distributed to each of the
  investors in the fund in proportion to the number of participating
  shares of each investor.  Capital appreciation becomes a part of the
  corpus of the fund and shall be distributed in accordance with the
  investment contracts.
         (n)  The board of trustees shall make arrangements to begin
  liquidation, phase out investments, and return the principal and
  capital gains on investments to the investors in the fund not later
  than the 10th anniversary of the effective date of this section or
  the date of extension of the fund, as applicable.  Except under
  unusual circumstances where it may be necessary to protect
  investments previously made, further investments may not be made in
  or by the fund after the 10th anniversary of the effective date of
  this section or the date of extension of the fund, as applicable.
         (o)  At the regular legislative session next preceding the
  10th anniversary of the effective date of this section or the date
  of extension of the fund, as applicable, the legislature, by
  two-thirds vote of each house, may extend the duration of the fund
  for 10 years.
         (p)  The board of trustees may purchase liability insurance
  for the coverage of the trustees, employees, and agents of the
         (q)  Not later than December 1, 2014, the Sunset Advisory
  Commission shall review the fund and issue a report to the
         (r)  The board of directors shall make an annual report to the
  legislature regarding the finances and operation of the fund.
         (s)  The comptroller may adopt rules governing the operation
  of the fund.
         SECTION 2.  Not later than December 1, 2009, the governor
  shall appoint the board of trustees of the Texas power source fund.
         SECTION 3.  This Act takes effect September 1, 2009.