82R5123 ATP-D

By: Carona S.B. No. 991

A BILL TO BE ENTITLED

AN ACT

relating to the administration of the Texas Enterprise Fund and the Texas emerging technology fund and of awards from those funds.

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

SECTION 1. Subtitle F, Title 4, Government Code, is amended by adding Chapter 490F to read as follows:

CHAPTER 490F. TEXAS ENTERPRISE FUND

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 490F.001. DEFINITIONS. In this chapter:

(1) "Committee" means the Texas Enterprise Fund Oversight Committee.

(2) "Fund" means the Texas Enterprise Fund.

[Sections 490F.002-490F.050 reserved for expansion]

SUBCHAPTER B. TEXAS ENTERPRISE FUND OVERSIGHT COMMITTEE

Sec. 490F.051. COMPOSITION OF COMMITTEE. (a) The Texas Enterprise Fund Oversight Committee is composed of the following 11 members:

(1) three members appointed by the governor;

(2) three members appointed by the lieutenant governor;

(3) three members appointed by the speaker of the house of representatives;

(4) the comptroller or the comptroller's designee; and

(5) the attorney general or the attorney general's designee.

(b) The members of the committee must represent the geographic and cultural diversity of the state.

(c) A person may not be a member of the committee if the person or the person's spouse:

(1) is employed by or participates in the management of a business entity receiving money from the fund;

(2) owns or controls, directly or indirectly, more than a five percent interest in a business entity or other organization receiving grant money from the fund; or

(3) uses or receives a substantial amount of grant money from the fund, other than authorized reimbursement.

Sec. 490F.052. REMOVAL. (a) It is a ground for removal from the committee that a member:

(1) is ineligible for membership under Section 490F.051(c);

(2) cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(3) is absent from more than half of the regularly scheduled committee meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the committee.

(b) The validity of an action of the committee is not affected by the fact that the action is taken when a ground for removal of a committee member exists.

(c) If the governor has knowledge that a potential ground for removal exists, the governor shall notify the presiding member of the committee of the potential ground. The presiding member shall then notify the appointing authority and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding member, the governor shall notify the next highest ranking officer of the committee, who shall then notify the appointing authority and the attorney general that a potential ground for removal exists.

Sec. 490F.053. PRESIDING MEMBER. The committee shall select from among its members a presiding member.

Sec. 490F.054. TERMS. Members of the committee appointed by the governor, lieutenant governor, and speaker of the house of representatives serve staggered six-year terms, with the terms of three members expiring on January 31 of each odd-numbered year.

Sec. 490F.055. STAFF AND FUNDING. Necessary staff and funding for the administration of the fund shall be provided by:

(1) the office of the governor; and

(2) gifts, grants, and donations for overhead expenses to the office of the governor.

Sec. 490F.056. ADVISORY SUBCOMMITTEES. The committee may establish advisory subcommittees as necessary to advise the committee.

Sec. 490F.057. CONFIDENTIALITY. Information collected by the governor's office, the committee, or the committee's advisory subcommittees concerning the identity, background, finance, marketing plans, trade secrets, or other commercially sensitive information of an individual or entity being considered for an award from the fund is confidential unless the individual or entity consents to disclosure of the information.

SECTION 2. Sections 481.078 and 481.079, Government Code, are transferred to Chapter 490F, Government Code, redesignated as Sections 490F.101 and 490F.102, Government Code, designated as Subchapter C, Chapter 490F, Government Code, and amended, and a heading is added for Subchapter C, Chapter 490F, Government Code, to read as follows:

SUBCHAPTER C. TEXAS ENTERPRISE FUND

Sec. 490F.101 [481.078]. TEXAS ENTERPRISE FUND. (a) The Texas Enterprise 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 for purposes described by this section;

(2) interest earned on the investment of money in the fund; and

(3) gifts, grants, and other donations received for the fund.

(c) Except as provided by Subsection (d), the fund may be used only for economic development, infrastructure development, community development, job training programs, and business incentives.

(d) The fund may be temporarily used by the comptroller for cash management purposes.

(e) [The administration of the fund is considered to be a trusteed program within the office of the governor.] The committee [governor] may negotiate on behalf of the state regarding 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.

[(e-1)] To be eligible to receive a grant under this section, the entity must:

(1) be in good standing under the laws of the state in which the entity was formed or organized, as evidenced by a certificate issued by the secretary of state or the state official having custody of the records pertaining to entities or other organizations formed under the laws of that state; and

(2) owe no delinquent taxes to a taxing unit of this state.

(f) Before awarding a grant under this section, the committee [governor] shall enter into a written agreement with the entity to be awarded the grant money specifying that:

(1) if the committee [governor] finds that the grant recipient has not met each of the performance targets specified in the agreement as of a date certain provided in the agreement:

(A) the recipient shall repay the grant and any related interest to the state at the agreed rate and on the agreed terms;

(B) the committee [governor] will not distribute to the recipient any grant money that remains to be awarded under the agreement; and

(C) the committee [governor] may assess specified penalties for noncompliance against the recipient;

(2) if all or any portion of the amount of the grant is used to build a capital improvement, the state may:

(A) retain a lien or other interest in the capital improvement in proportion to the percentage of the grant amount used to pay for the capital improvement; and

(B) require the recipient of the grant, if the capital improvement is sold, to:

(i) repay to the state the 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

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

(g) The grant agreement may include a provision providing that a reasonable percentage of the total amount of the grant will be withheld until specified performance targets are met by the entity as of the date described by Subsection (f)(1).

(h) The committee [governor], after consultation with the speaker of the house of representatives and the lieutenant governor, shall determine:

(1) the performance targets and date required to be contained in the grant agreement as provided by Subsection (f)(1); and

(2) if the grant agreement includes the provision authorized by Subsection (g), the percentage of grant money required to be withheld.

(i) An entity entering into a grant agreement under this section shall submit to the committee, governor, lieutenant governor, and speaker of the house of representatives an annual progress report containing the information compiled during the previous calendar year regarding the attainment of each of the performance targets specified in the agreement.

(j) Repayment of a grant under Subsection (f)(1)(A) may be prorated to reflect a partial attainment of performance targets.

(k) To encourage the development and location of small businesses in this state, the committee [governor] shall consider making grants from the fund:

(1) to recipients that are small businesses in this state that commit to using the grants to create additional jobs;

(2) to recipients that are small businesses from outside the state that commit to relocate to this state; or

(3) for individual projects that create 100 or fewer additional jobs.

(l) For purposes of Subsection (k), "small business" means a legal entity, including a corporation, partnership, or sole proprietorship, that:

(1) is formed for the purpose of making a profit;

(2) is independently owned and operated; and

(3) has fewer than 100 employees.

Sec. 490F.102 [481.079]. REPORT ON USE OF MONEY IN TEXAS ENTERPRISE FUND. (a) Before the beginning of each regular session of the legislature, the committee [governor] shall submit to the governor, the lieutenant governor, the speaker of the house of representatives, and each other member of the legislature a report on grants made under Section 490F.101 [481.078] that states:

(1) the number of direct jobs each recipient committed to create in this state;

(2) the number of direct jobs each recipient created in this state;

(3) the median wage of the jobs each recipient created in this state;

(4) the amount of capital investment each recipient committed to expend or allocate per project in this state;

(5) the amount of capital investment each recipient expended or allocated per project in this state;

(6) the total amount of grants made to each recipient;

(7) the average amount of money granted in this state for each job created in this state by grant recipients;

(8) the number of jobs created in this state by grant recipients in each sector of the North American Industry Classification System (NAICS); and

(9) of the number of direct jobs each recipient created in this state, the number of positions created that provide health benefits for employees.

(b) The report may not include information that is made confidential by law.

(c) The committee [governor] may require a recipient of a grant under Section 490F.101 [481.078] to submit, on a form the committee [governor] provides, information required to complete the report.

SECTION 3. Section 481.080(a), Government Code, is amended to read as follows:

(a) Before the Texas Enterprise Fund Oversight Committee [governor] awards a grant under Chapter 490F [Section 481.078] to an entity for a proposed initiative, the office shall prepare a statement that, specifically and in detail, assesses the direct economic impact that approval of the grant will have on the residents of this state.

SECTION 4. Sections 490.001(1) and (4), Government Code, are amended to read as follows:

(1) "Committee" means the Texas Emerging Technology Oversight [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 determined [recommended] by the committee [and approved by the governor, lieutenant governor, and speaker of the house of representatives].

SECTION 5. Section 490.005(a), Government Code, is amended to read as follows:

(a) Not later than January 1 of each year, the committee [governor] shall submit to the legislature and post on the office of the governor's Internet website a report that includes the following information regarding the fund for the preceding three state fiscal years:

(1) the total number and amount of awards made;

(2) the number and amount of awards made under Subchapters D, E, and F;

(3) the aggregate total of private sector investment, federal government funding, and contributions from other sources obtained in connection with awards made under each of the subchapters listed in Subdivision (2);

(4) the name of each award recipient and the amount of the award made to the recipient; and

(5) a brief description of the equity position that the committee [governor], on behalf of the state, may take in companies receiving awards and the names of the companies in which the state has taken an equity position.

SECTION 6. The heading to Subchapter B, Chapter 490, Government Code, is amended to read as follows:

SUBCHAPTER B. TEXAS EMERGING TECHNOLOGY OVERSIGHT [ADVISORY]

COMMITTEE

SECTION 7. Section 490.051, Government Code, is amended to read as follows:

Sec. 490.051. COMPOSITION OF COMMITTEE. (a) The Texas Emerging Technology Oversight [Advisory] Committee is composed of the following 11 [17] members:

(1) three members appointed by the governor;

(2) three members appointed by the lieutenant governor;

(3) three members appointed by the speaker of the house of representatives;

(4) the comptroller or the comptroller's designee; and

(5) the attorney general or the attorney general's designee.

(b) The members of the committee must represent the geographic and cultural diversity of the state.

(c) A person may not be a member of the committee if the person or the person's spouse:

(1) is employed by or participates in the management of a business entity receiving an award from the fund;

(2) owns or controls, directly or indirectly, more than a five percent interest in a business entity or other organization receiving an award from the fund; or

(3) uses or receives a substantial amount of money awarded from the fund, other than authorized reimbursement.

SECTION 8. Subchapter B, Chapter 490, Government Code, is amended by adding Section 490.0511 to read as follows:

Sec. 490.0511. REMOVAL. (a) It is a ground for removal from the committee that a member:

(1) is ineligible for membership under Section 490.051(c);

(2) cannot, because of illness or disability, discharge the member's duties for a substantial part of the member's term; or

(3) is absent from more than half of the regularly scheduled committee meetings that the member is eligible to attend during a calendar year without an excuse approved by a majority vote of the committee.

(b) The validity of an action of the committee is not affected by the fact that the action is taken when a ground for removal of a committee member exists.

(c) If the governor has knowledge that a potential ground for removal exists, the governor shall notify the presiding member of the committee of the potential ground. The presiding member shall then notify the appointing authority and the attorney general that a potential ground for removal exists. If the potential ground for removal involves the presiding member, the governor shall notify the next highest ranking officer of the committee, who shall then notify the appointing authority and the attorney general that a potential ground for removal exists.

SECTION 9. Sections 490.053, 490.054, 490.056, and 490.057, Government Code, are amended to read as follows:

Sec. 490.053. PRESIDING MEMBER. The committee [governor] shall select from among its members [appoint] a presiding member [of the committee].

Sec. 490.054. TERMS. Members of the committee appointed by the governor, lieutenant governor, and speaker of the house of representatives serve staggered six-year [two-year] terms, with the terms of three members expiring on January 31 of each odd-numbered year [subject to the pleasure of the governor].

Sec. 490.056. ADVISORY SUBCOMMITTEES [RECOMMENDATIONS FOR FUNDING]. [(a) The committee shall make recommendations, through peer review and evaluation processes established by the committee, to the governor, lieutenant governor, and speaker of the house of representatives for the award of money from the fund as provided by this chapter.

[(b)] The committee may establish advisory subcommittees as necessary to advise the committee. The subcommittees may include [panels of] knowledgeable individuals from industry, state government, or academic occupations to assist in peer review activities under this chapter.

Sec. 490.057. CONFIDENTIALITY. Information collected by the governor's office, the committee, or the committee's advisory subcommittees [panels] concerning the identity, background, finance, marketing plans, trade secrets, or other commercially or academically sensitive information of an individual or entity being considered for an award from the fund is confidential unless the individual or entity consents to disclosure of the information.

SECTION 10. Subchapter B, Chapter 490, Government Code, is amended by adding Section 490.058 to read as follows:

Sec. 490.058. CONFLICT OF INTEREST. The committee shall adopt conflict of interest rules to govern committee members.

SECTION 11. Sections 490.101(f), (g), (h), and (i), Government Code, are amended to read as follows:

(f) [The administration of the fund is considered to be a trusteed program within the office of the governor.] The committee [governor] may negotiate on behalf of the state regarding awards 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 under this chapter, the committee [governor] shall enter into a written agreement with the entity to receive the award. An agreement may specify that:

(1) if all or any portion of the amount of the award 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 amount used to pay for the capital improvement; and

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

(i) repay to the state the award 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 recipient has not used the award received under this chapter for the purposes for which the award 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 committee [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 committee [governor] and a recipient of an award under this chapter may set the terms relating to an award.

SECTION 12. Section 490.102(b), Government Code, is amended to read as follows:

(b) The committee [governor] may reallocate money from one component of the fund to another component subject to the prior approval of the lieutenant governor and speaker of the house of representatives.

SECTION 13. Section 490.103, Government Code, is amended to read as follows:

Sec. 490.103. ALLOCATION OF PROCEEDS. (a) The contract between the committee [governor] and a recipient of an award 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 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.

(b) The contract under Subsection (a) shall also specify other matters considered necessary by the committee [governor, lieutenant governor, and speaker of the house of representatives].

SECTION 14. Sections 490.152(a) and (d), Government Code, are amended to read as follows:

(a) In determining which proposals will receive [recommending proposals for] funding under this subchapter, the committee shall give specific emphasis to the formation of regional centers of innovation and commercialization.

(d) Subject to the availability of suitable partners and resources, the committee shall propose and initiate the establishment of a regional center of innovation and commercialization in:

(1) Harris County;

(2) Lubbock County;

(3) Bexar County;

(4) the Dallas-Fort Worth Metroplex;

(5) El Paso County;

(6) the Middle and Lower Rio Grande Valley; and

(7) other suitable locations as determined by the committee [governor] in consultation with the lieutenant governor and the speaker of the house of representatives.

SECTION 15. Section 490.153(b), Government Code, is amended to read as follows:

(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 16. Section 490.154(a), Government Code, is amended to read as follows:

(a) An entity participating in a regional center of innovation and commercialization that receives funding or another incentive under this subchapter shall guarantee by contract with the committee [governor's office] that the entity will perform specific actions expected to provide benefits to this state.

SECTION 17. Section 490.156(a), Government Code, is amended to read as follows:

(a) A person receiving 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 committee [office of the governor].

SECTION 18. Section 490.203(a), Government Code, is amended to read as follows:

(a) An entity receiving funding or another incentive under this subchapter shall guarantee by contract with the committee [governor's office] that the entity will perform specific actions that are expected to provide benefits to this state.

SECTION 19. Section 490.257(b), Government Code, is amended to read as follows:

(b) The committee [governor], with the express written prior approval of the lieutenant governor and the speaker of the house of representatives, may terminate funding to an institution if the institution fails to realize a benefit specified in the contract before a time specified in the contract, as determined by a periodic program review conducted by the committee.

SECTION 20. Section 490.302, Government Code, is amended to read as follows:

Sec. 490.302. USE OF MONEY FOR CLEAN COAL PROJECT. (a) Notwithstanding Section 490.102, the committee [governor] may allocate money appropriated to the fund by the legislature to provide matching money for a clean coal project as described by Section 2305.037 if the committee [governor] has the express written prior approval of the lieutenant governor and the speaker of the house of representatives to do so.

(b) The committee [governor] may allocate proceeds deposited in the fund as provided by an agreement described by Section 490.103 to provide matching money for a clean coal project as described by Section 2305.037 if the committee [governor] has the express written prior approval of the lieutenant governor and the speaker of the house of representatives to do so.

SECTION 21. Section 1372.031(b), Government Code, is amended to read as follows:

(b) Until August 1 of the program year, within the category described by Section 1372.022(a)(6), the board shall grant priority to the Texas Economic Development Bank for projects that the Texas Economic Development and Tourism Office determines meet the Texas Enterprise Fund Oversight Committee's [governor's] criteria for funding from the Texas Enterprise Fund. Notwithstanding the priority, the Texas Economic Development Bank may not receive an amount greater than one-sixth of the portion of the state ceiling available under Section 1372.022(a)(6) on January 1 of the program year.

SECTION 22. Section 1372.063, Government Code, is amended to read as follows:

Sec. 1372.063. PRIORITY 1 CARRYFORWARD CLASSIFICATION. The priority 1 carryforward classification applies to:

(1) an issuer of a state-voted issue; and

(2) a state agency, other than an issuer of a state-voted issue, that applies for a carryforward designation for a project that:

(A) is described by Section 1372.067(a)(2); and

(B) the Texas Economic Development and Tourism Office determines meets the Texas Enterprise Fund Oversight Committee's [governor's] criteria for funding from the Texas Enterprise Fund.

SECTION 23. Section 204.123(a), Labor Code, is amended to read as follows:

(a) If, on September 1 of a year, the commission determines that the amount in the compensation fund will exceed 100 percent of its floor as computed under Section 204.061 on the next October 1 computation date, the commission shall transfer from the holding fund created under Section 204.122:

(1) from the first $160 million deposited in the holding fund in any state fiscal biennium:

(A) during the state fiscal biennium ending August 31, 2007:

(i) 67 percent to the Texas Enterprise Fund created under Chapter 490F [Section 481.078], Government Code, except that the amount transferred under this paragraph may not exceed the amount appropriated by the legislature to the Texas Enterprise Fund in that biennium; and

(ii) 33 percent to the skills development fund created under Section 303.003, except that the amount transferred under this paragraph may not exceed the amount appropriated by the legislature to the skills development program strategies and activities in that biennium; and

(B) during any state fiscal biennium beginning on or after September 1, 2007:

(i) 75 percent to the Texas Enterprise Fund created under Chapter 490F [Section 481.078], Government Code, except that the amount transferred under this paragraph may not exceed the amount appropriated by the legislature to the Texas Enterprise Fund in that biennium; and

(ii) 25 percent to the skills development fund created under Section 303.003, except that the amount transferred under this paragraph may not exceed the amount appropriated by the legislature to the skills development program strategies and activities in that biennium; and

(2) any remaining amount in the holding fund after the distribution under Subdivision (1) to the training stabilization fund created under Section 302.101.

SECTION 24. Section 303.005(a), Labor Code, is amended to read as follows:

(a) An employer may not apply both to a public community or technical college for customized training and assessment from the college through a grant issued to the college under the skills development fund program established under this chapter and for a grant under the Texas Enterprise Fund program established under Chapter 490F [Subchapter E, Chapter 481], Government Code, unless the employer and the college file an application for concurrent participation in both programs that complies with any rules adopted by the Texas Workforce Commission on concurrent participation.

SECTION 25. Sections 490.052, 490.151(b), 490.201(b), and 490.253(b), Government Code, are repealed.

SECTION 26. Not later than October 1, 2011, the members of the Texas Enterprise Fund Oversight Committee established under Subchapter B, Chapter 490F, Government Code, as added by this Act, shall be appointed in a manner that complies with that subchapter, as added by this Act.

SECTION 27. (a) The terms of the members of the Texas Emerging Technology Advisory Committee serving on the effective date of this Act expire October 1, 2011.

(b) Not later than October 1, 2011, the members of the Texas Emerging Technology Oversight Committee established under Subchapter B, Chapter 490, Government Code, as amended by this Act, shall be appointed in a manner that complies with that subchapter, as amended by this Act.

SECTION 28. This Act takes effect September 1, 2011.