85R5019 BEF-F
 
  By: Lucio S.B. No. 1295
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to an insurance premium tax credit for investment in
  certain communities; imposing a monetary penalty; authorizing
  fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle B, Title 3, Insurance Code, is amended
  by adding Chapter 231 to read as follows:
  CHAPTER 231. PREMIUM TAX CREDIT FOR INVESTMENT IN CERTAIN
  COMMUNITIES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 231.001.  GENERAL DEFINITIONS. In this chapter:
               (1)  "Applicable percentage" means zero percent for the
  first two credit allowance dates, seven percent for the third
  credit allowance date, and eight percent for the next four credit
  allowance dates.
               (2)  "Credit allowance date" means, with respect to any
  qualified equity investment:
                     (A)  the date on which the qualified equity
  investment is initially made; and
                     (B)  the anniversary of that date in each of the
  six years immediately following that date.
               (3)  "Federal tax regulations" means regulations
  adopted under the Internal Revenue Code of 1986 that are applicable
  to the tax year to which the provisions of the code in effect on
  September 1, 2017, applied.
               (4)  "Internal Revenue Code" means the Internal Revenue
  Code of 1986 in effect on September 1, 2017, excluding any changes
  made by federal law after that date, but including any regulations
  adopted under that code that are applicable to the tax year to which
  the provisions of the code in effect on that date applied.
               (5)  "Investing entity" means an entity, including an
  entity that incurs state premium tax liability, that makes or holds
  a qualified equity investment.
               (6)  "Issuer" means a qualified community development
  entity, or a subsidiary or affiliate of a qualified community
  development entity, that issues a qualified equity investment.
               (7)  "Low-income community" has the meaning assigned by
  Section 45D, Internal Revenue Code.
               (8)  "Metropolitan statistical area" means a core base
  statistical area associated with at least one urbanized area that
  has a population of at least 90,000. A metropolitan statistical
  area comprises the central county or counties containing the core,
  plus adjacent outlying counties having a high degree of social and
  economic integration with the central county or counties as
  measured through commuting.
               (9)  "Purchase price" means the amount paid to the
  issuer for a qualified equity investment.
               (10)  "Report" means a premium tax report or a report
  under Subchapter G, as applicable.
               (11)  "Rural allocation" means the allocation
  described by Section 231.104(c)(1).
               (12)  "Rural area" means a county in this state with a
  population less than 90,000.
               (13)  "State premium tax liability" means any premium
  tax liability incurred under Chapter 221, 222, 223, 223A, or 224.
               (14)  "Statewide low-income community allocation"
  means the allocation described by Section 231.104(c)(4).
               (15)  "Texas education allocation" means the
  allocation described by Section 231.104(c)(2).
               (16)  "Texas seaport allocation" means the allocation
  described by Section 231.104(c)(3).
         Sec. 231.002.  DEFINITION: LONG-TERM DEBT SECURITY.  (a)  In
  this chapter, "long-term debt security" means a debt instrument
  issued by a qualified community development entity, at par value or
  a premium, with an original maturity date not earlier than the
  seventh year after the date on which the debt instrument is issued,
  with no acceleration of repayment, amortization, or prepayment
  features before its original maturity date.
         (b)  The qualified community development entity that issues
  a long-term debt security may not make cash interest payments on the
  security during the period beginning on the date on which the
  security is issued and ending on the final credit allowance date in
  an amount that exceeds the cumulative operating income, as defined
  by federal tax regulations adopted under Section 45D, Internal
  Revenue Code, of the qualified community development entity for
  that period before giving effect to the interest expense of the
  long-term debt security.
         (c)  This section does not limit the holder's ability to
  accelerate payments on a long-term debt security in situations in
  which the issuer has defaulted on covenants designed to ensure
  compliance with this chapter or Section 45D, Internal Revenue Code.
         Sec. 231.003.  DEFINITION: QUALIFIED ACTIVE LOW-INCOME
  COMMUNITY BUSINESS.  (a)  In this chapter, "qualified active
  low-income community business" has the meaning assigned by Section
  45D, Internal Revenue Code, and Section 1.45D-1 of the federal tax
  regulations.
         (b)  A business is considered a qualified active low-income
  community business for the duration of the qualified community
  development entity's investment in, or loan to, the business if the
  entity reasonably expects, at the time it makes the investment or
  loan, that the business will continue to satisfy the requirements
  for being a qualified active low-income community business
  throughout the entire period of the investment or loan.
         Sec. 231.004.  DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT
  ENTITY.  In this chapter, "qualified community development entity"
  has the meaning assigned by Section 45D, Internal Revenue Code,
  provided that the entity has entered into, for the current year or a
  prior year with an allocation effective date on or after July 1,
  2016, an allocation agreement with the Community Development
  Financial Institutions Fund of the United States Department of the
  Treasury with respect to credits authorized by Section 45D,
  Internal Revenue Code, that includes this state in the service area
  specified in the allocation agreement. The term includes a
  subsidiary or affiliate of a qualified community development entity
  and any other qualified community development entity that is
  controlled by or under common control with a qualified community
  development entity.
         Sec. 231.005.  DEFINITION: QUALIFIED EQUITY INVESTMENT.  (a)  
  An investment is a "qualified equity investment" for purposes of
  this chapter if:
               (1)  the investment is an equity investment in, or
  long-term debt security issued by, a qualified community
  development entity;
               (2)  the investment is acquired on or after October 1,
  2017, at its original issuance solely in exchange for cash, except
  as provided by Subsection (b);
               (3)  not later than the 20th month after the date of
  issuance at least 85 percent of the investment's purchase price is
  used by the issuer to make qualified low-income community
  investments in this state; and
               (4)  the investment is designated by the issuer as a
  qualified equity investment under this section and is certified by
  the comptroller as not exceeding the limitations provided by
  Section 231.104.
         (b)  A qualified equity investment includes an investment
  that does not satisfy the requirements of Subsection (a)(2) if the
  investment was a qualified equity investment in the hands of a prior
  holder.
         Sec. 231.006.  DEFINITION: QUALIFIED LOW-INCOME COMMUNITY
  INVESTMENT.  In this chapter, "qualified low-income community
  investment" means an equity investment in, or loan to, a qualified
  active low-income community business made by a qualified community
  development entity.
         Sec. 231.007.  DEFINITION: RURAL COMMUNITY DEVELOPMENT
  ENTITY. In this chapter, "rural community development entity" means
  a qualified community development entity:
               (1)  whose allocation agreement with the Community
  Development Financial Institutions Fund of the United States
  Department of the Treasury requires the entity to invest at least 25
  percent of that allocation in rural areas; or
               (2)  that demonstrates to the comptroller in writing
  that the entity or its affiliates invested at least 25 percent of
  the entity's most recent federal allocation outside the boundaries
  of a metropolitan statistical area.
         Sec. 231.008.  RULES.  The comptroller shall adopt rules
  necessary to implement this chapter.
         Sec. 231.009.  REVIEW BY COMPTROLLER.  The comptroller shall
  review the qualified low-income community investments of a
  qualified community development entity not later than the sixth
  month after each anniversary of the investment.  In conducting the
  review, the comptroller shall ensure that the qualified community
  development entity has made and maintained the qualified low-income
  community investments required under Sections 231.151(a)(3) and
  (4) to avoid recapture of a credit claimed in connection with a
  qualified equity investment.
  SUBCHAPTER B. PREMIUM TAX CREDIT
         Sec. 231.051.  ELIGIBILITY FOR CREDIT. An investing entity
  is eligible for a credit against the entity's state premium tax
  liability in the amount provided by this subchapter and under the
  conditions and limitations provided by this chapter.
         Sec. 231.052.  QUALIFICATION. An investing entity is
  eligible for a credit if the investing entity holds a qualified
  equity investment on a credit allowance date.
         Sec. 231.053.  AMOUNT OF CREDIT; LIMITATION. (a) The amount
  of credit for a tax year is equal to the credit accrued, as
  determined under Subsection (b), on each credit allowance date:
               (1)  that occurs during the tax year; and
               (2)  on which the investing entity holds the qualified
  equity investment.
         (b)  The amount of credit accrued on a credit allowance date
  equals the applicable percentage for the credit allowance date
  multiplied by the purchase price paid to the issuer of the qualified
  equity investment.
         (c)  The total credit claimed for a tax year, including the
  amount of any carryforward under Section 231.054, may not exceed
  the amount of state premium tax liability due for the tax year after
  applying all other applicable tax credits.
         (d)  Credits may be applied to the investing entity's
  estimated or final tax payments for the tax year.
         Sec. 231.054.  CARRYFORWARD. If an investing entity is
  eligible for a credit that exceeds the limitation under Section
  231.053(c), the investing entity may carry the unused credit
  forward for not more than 20 consecutive tax reports. Credits,
  including credit carryforwards, are considered to be used in the
  following order:
               (1)  a credit carryforward under this subchapter; and
               (2)  a current year credit.
         Sec. 231.055.  ASSIGNMENT PROHIBITED. (a)  Except as
  provided by Subsection (b), an investing entity may not convey,
  assign, or transfer the credit allowed under this subchapter to
  another entity.
         (b)  A partnership, limited liability company, S
  corporation, or other pass-through entity for federal income tax
  purposes may allocate the credit to the entity's partners, members,
  or shareholders for their direct use in accordance with an
  agreement between the partners, members, or shareholders.
         Sec. 231.056.  RETALIATORY TAX. (a) An entity claiming a
  credit under this subchapter is not required to pay any additional
  retaliatory tax levied under Chapter 281 as a result of claiming
  that credit.
         (b)  In addition to the exclusion provided by Subsection (a),
  an entity claiming a credit under this subchapter is not required to
  pay any additional tax that may arise as a result of claiming that
  credit.
  SUBCHAPTER C. CERTIFICATION AS QUALIFIED EQUITY INVESTMENT
         Sec. 231.101.  APPLICATION FOR CERTIFICATION AS QUALIFIED
  EQUITY INVESTMENT. (a)  A qualified community development entity
  that seeks to have an equity investment or long-term debt security
  certified as a qualified equity investment eligible for credits
  under this chapter must apply to the comptroller as provided by this
  section.
         (b)  The comptroller shall provide an application date each
  year for applications under Subsection (a).  The date may not be
  later than October 2.  The comptroller shall consider all
  applications received on or before the application date to be
  received simultaneously on the application date.
         (c)  An application under this section must include the
  following:
               (1)  evidence of the applicant's certification as a
  qualified community development entity, including evidence of the
  service area of the entity that includes this state;
               (2)  a copy of an allocation agreement executed by the
  applicant, or its controlling entity, and the Community Development
  Financial Institutions Fund of the United States Department of the
  Treasury;
               (3)  a certificate executed by an executive officer of
  the applicant attesting that the allocation agreement remains in
  effect and has not been revoked or canceled by the Community
  Development Financial Institutions Fund;
               (4)  a description of the amount and structure of the
  equity investment or long-term debt security proposed to be
  certified;
               (5)  examples of the types of qualified active
  low-income community businesses in which the applicant, its
  controlling entity, or affiliates of its controlling entity have
  invested under the federal New Markets Tax Credit Program or a state
  new markets tax credit program, including written proof that the
  applicant or an affiliate has made at least one qualified
  low-income community investment or a similar loan to a business in a
  low-income census tract in this state;
               (6)  evidence that:
                     (A)  the entity qualifies as a rural community
  development entity, if the entity is applying for a rural
  allocation;
                     (B)  the entity or the entity's affiliate has
  previously made at least one qualified low-income community
  investment that would meet the investment requirements for a Texas
  education allocation, if the entity is applying for a Texas
  education allocation; or
                     (C)  the entity or the entity's affiliate has
  previously made at least one qualified low-income community
  investment that would meet the investment requirements for a Texas
  seaport allocation, if the entity is applying for a Texas seaport
  allocation;
               (7)  a nonrefundable application fee of $5,000 to be
  paid to the comptroller; and
               (8)  the refundable performance deposit required by
  Subchapter E.
         Sec. 231.102.  ACTION ON APPLICATION.  (a)  Not later than
  the 30th day after the date an application under Section 231.101 is
  received, the comptroller shall grant or deny the application in
  full or part.
         (b)  If the comptroller denies the application, the
  comptroller shall inform the applicant of the denial.
         (c)  If the comptroller denies an application because the
  application is incomplete, the applicant may, not later than the
  15th day after the date the applicant receives notice under
  Subsection (b), provide additional information required by the
  comptroller to complete the application. The comptroller shall
  consider an application completed under this subsection to be
  completed on the date the application was initially submitted.
         (d)  If an applicant does not complete an application in the
  time required under Subsection (c), the application is finally
  denied and the applicant must submit a new application if the
  applicant wishes to reapply. The comptroller shall determine the
  application date for the new application without regard to the
  previously denied application.
         Sec. 231.103.  CERTIFICATION OF QUALIFIED EQUITY
  INVESTMENT.  (a)  If an application under Section 231.101 is
  granted, the comptroller shall certify the proposed equity
  investment or long-term debt security as a qualified equity
  investment that is eligible for credits under this chapter, subject
  to Section 231.104.
         (b)  The comptroller shall provide written notice of the
  certification to the qualified community development entity.
         (c)  The certification of a qualified equity investment is
  effective on the date the comptroller provides notice under
  Subsection (b).
         Sec. 231.104.  LIMIT ON CERTIFIED INVESTMENTS.  (a)  Subject
  to Subsections (b) and (c), the comptroller shall limit the amount
  of qualified equity investments that may be certified under Section
  231.103 to an amount the comptroller estimates will result in not
  more than:
               (1)  $60 million in credits being claimed under this
  chapter in any state fiscal year; and
               (2)  $300 million in total credits being claimed under
  this chapter.
         (b)  The comptroller shall estimate the amounts under
  Subsection (a) without regard to the carryforward provision under
  Section 231.054.
         (c)  The comptroller shall allocate 25 percent, or as nearly
  as possible to 25 percent, of the amount available under Subsection
  (a) for each of the following:
               (1)  a rural allocation, which may be used only by
  rural community development entities to make qualified low-income
  community investments in rural areas;
               (2)  a Texas education allocation, which may be used
  only to make qualified low-income community investments in
  nonprofit or for-profit entities offering primary, secondary, or
  higher education in low-income communities in this state;
               (3)  a Texas seaport allocation, which may be used only
  to make qualified low-income community investments in businesses
  operating at a port, harbor, or municipality:
                     (A)  accessible to seagoing ships that are limited
  to 35 miles from the coastline; and
                     (B)  located in a low-income community in this
  state; and
               (4)  a statewide low-income community allocation,
  which may be used to make qualified low-income community
  investments in any low-income community in this state.
         (d)  A qualified community development entity may apply in a
  single application for and receive certification of qualified
  equity investments in more than one allocation category under
  Subsection (c).
         (e)  Subject to Subsection (f), if a pending application
  cannot be fully certified due to the limit specified by Subsection
  (a) or (c), the comptroller shall certify the portion that can be
  certified.
         (f)  The comptroller shall certify qualified equity
  investments in the order in which applications are received by the
  comptroller.  Applications received on or before the application
  date provided under Section 231.101(b) are considered to have been
  received simultaneously on the application date.  For applications
  that are complete and received on or before the application date
  provided under Section 231.101(b) and for which the total amounts
  requested cannot be certified because of the limit specified by
  Subsection (a) or (c), the comptroller shall certify qualified
  equity investments in each allocation category under Subsection (c)
  on a pro rata basis based on the ratio of the amount of qualified
  equity investments available in an allocation category to the total
  amount of qualified equity investments requested in that allocation
  category.
         Sec. 231.105.  TRANSFER OF INVESTMENT AUTHORITY.  A
  qualified community development entity whose application for
  certification of a qualified equity investment is approved under
  this subchapter may transfer all or a portion of its certified
  qualified equity investment authority to its controlling entity or
  to a qualified community development entity controlled by or under
  common control with the transferring entity, if the transferring
  entity:
               (1)  provides the information required in the
  application under Section 231.101(c) with respect to the recipient
  of the transfer; and
               (2)  notifies the comptroller of the transfer not later
  than the 30th day after the date of the transfer.
         Sec. 231.106.  ISSUANCE OF QUALIFIED EQUITY INVESTMENT; FEE.  
  (a)  Not later than the 20th month after the date the qualified
  community development entity receives notice of certification, the
  entity or a recipient of a transfer under Section 231.105 shall
  issue the qualified equity investment and receive cash in the
  amount certified.
         (b)  The qualified community development entity or a
  recipient of a transfer under Section 231.105 must provide the
  comptroller with evidence of the receipt of the cash investment not
  later than the 10th business day after the date the cash investment
  is received.
         (c)  At the time the qualified community development entity
  or a recipient of a transfer under Section 231.105 issues the
  qualified equity investment, the qualified community development
  entity or transfer recipient shall pay to the comptroller a fee
  equal to 20 basis points, or 0.2 percent, of the amount issued.  
  Fees collected under this subsection may be appropriated only to
  pay the cost of preparing a report under Section 231.302.
         Sec. 231.107.  LAPSE OF CERTIFICATION.  (a)  If the qualified
  community development entity or a recipient of a transfer under
  Section 231.105 does not issue the qualified equity investment and
  receive the cash investment before the 20th month after the date the
  certification notice is received as required by Section 231.106,
  the certification lapses and the qualified community development
  entity or recipient of the transfer may not accept an equity
  investment or issue a long-term debt security as a qualified equity
  investment without reapplying to the comptroller for
  certification.
         (b)  If a certification lapses under this section, the
  comptroller shall reissue the previously certified amount, giving
  preference to an applicant for reissuance of certification whose
  proposed amount for certification was previously certified in a
  reduced amount under Section 231.104. If more than one applicant
  for reissuance of certification had its proposed amount reduced,
  the comptroller shall reissue the certified amount to those
  applicants on a pro rata basis, subject to the limits specified by
  Section 231.104.
         (c)  After reissuing certifications under Subsection (b),
  the comptroller shall reissue any certified amounts remaining to
  applicants in amounts determined by the comptroller, subject to the
  limits specified by Section 231.104.
  SUBCHAPTER D.  RECAPTURE OF CREDIT
         Sec. 231.151.  RECAPTURE. (a)  Subject to Section 231.152,
  the comptroller shall recapture the amount of a credit claimed on a
  premium tax report filed under Chapter 221, 222, 223, 223A, or 224
  from the investing entity if:
               (1)  any amount of a federal tax credit available with
  respect to a qualified equity investment that is eligible for a
  credit under this chapter is recaptured under Section 45D, Internal
  Revenue Code, in which case the comptroller's recapture must be
  proportionate to the federal recapture with respect to the
  qualified equity investment;
               (2)  the issuer redeems or makes principal repayment
  with respect to a qualified equity investment before the seventh
  anniversary of the date the qualified equity investment is issued,
  in which case the comptroller's recapture must be proportionate to
  the amount of the redemption or repayment with respect to the
  qualified equity investment;
               (3)  the issuer fails to invest an amount equal to 85
  percent of the purchase price of the qualified equity investment in
  qualified low-income community investments in this state not later
  than the 20th month after the date the qualified equity investment
  is issued, in which case the comptroller's recapture may not exceed
  the amount of tax credits associated with the portion of the
  purchase price received but not invested on the date of the
  recapture; or
               (4)  the issuer fails to maintain an amount of
  investment equal to 85 percent of the purchase price of the
  qualified equity investment in qualified low-income community
  investments in this state until the last credit allowance date for
  the qualified equity investment, in which case the comptroller's
  recapture may not exceed the amount of tax credits associated with
  the portion of the purchase price received but not maintained in
  qualified low-income community investments on the date of
  recapture.
         (b)  For purposes of this chapter, a qualified low-income
  community investment is considered held by an issuer even if the
  investment has been sold or repaid if the issuer reinvests an amount
  equal to the capital returned to or recovered by the issuer from the
  original investment, exclusive of any profits realized, in another
  qualified low-income community investment not later than the 12th
  month after the date the issuer receives the capital.
         (c)  An issuer is not required to reinvest capital returned
  from a qualified low-income community investment after the sixth
  anniversary of the date the qualified equity investment whose
  proceeds were used to make the qualified low-income community
  investment was issued.  The qualified low-income community
  investment is considered held by the issuer through the seventh
  anniversary of the date the qualified equity investment was issued.
         (d)  Periodic amounts received during a calendar year as
  repayment of principal on a loan that is a qualified low-income
  community investment shall be treated as continuously invested in a
  qualified low-income community investment if the amounts are
  reinvested in one or more qualified low-income community
  investments not later than the last day of the following calendar
  year.
         (e)  After the seventh anniversary of the date a qualified
  equity investment is issued, the qualified community development
  entity may request that the comptroller certify that tax credits
  associated with the qualified equity investment are not subject to
  recapture under this section.
         (f)  Not later than the 60th day after the date the
  comptroller receives a request under Subsection (e), the
  comptroller shall:
               (1)  certify in writing to the qualified community
  development entity that tax credits associated with the qualified
  equity investment are not subject to recapture and that the
  qualified community development entity has satisfied all the
  requirements of this chapter; or 
               (2)  notify the qualified community development entity
  that tax credits associated with the qualified equity investment
  are subject to recapture and that the qualified community
  development entity has not satisfied the requirements of this
  chapter and shall provide a written explanation of the reason for
  that determination. 
         (g)  After the comptroller certifies under Subsection (f)(1)
  that tax credits associated with a qualified equity investment are
  not subject to recapture:
               (1)  the comptroller may not recapture any tax credits
  associated with that qualified equity investment; and
               (2)  the qualified community development entity is not
  subject to regulation by the comptroller or to the reporting
  requirements under Section 231.301 in connection with that
  qualified equity investment.
         Sec. 231.152.  NOTICE OF NONCOMPLIANCE. (a)  The
  comptroller shall notify a qualified community development entity
  and an investing entity that has claimed a credit on a report if the
  credit is subject to recapture under Section 231.151.
         (b)  The comptroller may not recapture a credit under this
  subchapter if the qualified community development entity cures the
  noncompliance described by Section 231.151 before the 90th day
  after the date the qualified community development entity receives
  notice under Subsection (a).
  SUBCHAPTER E.  SECURITY FOR PERFORMANCE
         Sec. 231.201.  SECURITY REQUIRED. (a)  Not later than the
  14th day after the date a qualified equity investment is certified
  under Subchapter C, the qualified community development entity that
  received investment authority for the qualified equity investment
  must deposit $500,000 with the comptroller as a refundable
  performance deposit to be deposited as required by Section 231.204.
         (b)  This section applies regardless of whether the
  investment authority is for a rural allocation, a Texas education
  allocation, a Texas seaport allocation, or a statewide low-income
  community allocation.
         Sec. 231.202.  FAILURE TO PROVIDE SECURITY: LOSS OF
  CERTIFICATION. The comptroller shall revoke the certification of
  the qualified equity investment of a qualified community
  development entity that fails to make a deposit under Section
  231.201.
         Sec. 231.203.  FORFEITURE OF SECURITY.  (a)  A qualified
  community development entity that makes a performance deposit under
  Section 231.201 forfeits the deposit in its entirety if:
               (1)  the qualified community development entity or any
  qualified community development entity to which a transfer is made
  under Section 231.105 fails to issue the total amount of qualified
  equity investments certified by the comptroller and receive cash in
  the amount certified under Section 231.103 not later than the date
  specified by Section 231.106; or
               (2)  subject to Subsection (b), the qualified community
  development entity or a qualified community development entity to
  which a transfer is made under Section 231.105 that issues a
  qualified equity investment certified under Section 231.103 fails
  to make or maintain the investment required under Sections
  231.151(a)(3) and (4) to avoid recapture of a credit claimed in
  connection with the qualified equity investment.
         (b)  A deposit is not subject to forfeiture under Subsection
  (a)(2) if the qualified community development entity cures the
  noncompliance before the 90th day after the date the qualified
  community development entity receives notice under Subsection (c).
         (c)  The comptroller shall notify a qualified community
  development entity that made a deposit under Section 231.201 in
  writing if the deposit is subject to forfeiture under this section.
         Sec. 231.204.  NEW MARKETS PERFORMANCE GUARANTEE FUND.  (a)  
  The new markets performance guarantee fund is an interest-bearing
  fund outside the state treasury with the comptroller. The fund
  consists of money the comptroller deposits under Subsection (b).
  The comptroller shall administer the fund.
         (b)  The comptroller shall deposit a performance deposit
  made under Section 231.201 to the credit of the new markets
  performance guarantee fund. The deposit must remain on deposit with
  the fund until the comptroller determines that:
               (1)  the qualified community development entity has
  complied with the provisions of this chapter; or
               (2)  the deposit has been forfeited and will be
  deposited in accordance with Section 231.206.
         Sec. 231.205.  RELEASE OF SECURITY.  (a)  Not earlier than
  the 30th day after the date the requirements that must be satisfied
  to avoid forfeiture of a deposit as described by Section 231.203 are
  satisfied, a qualified community development entity that made the
  deposit may request a refund of the deposit from the comptroller.
         (b)  The comptroller shall refund the deposit or, if
  applicable, give notice of noncompliance as described by Section
  231.203 not later than the 30th day after the date of receiving a
  request under Subsection (a).
         Sec. 231.206.  DEPOSIT OF FORFEITED SECURITY. The
  comptroller shall deposit in the general revenue fund a deposit
  forfeited under Section 231.203.
  SUBCHAPTER F.  EVALUATION OF BUSINESS BY COMPTROLLER
         Sec. 231.251.  EVALUATION REQUIRED. (a) Except as provided
  by Subsection (c), a qualified community development entity or a
  recipient of a transfer under Section 231.105 must, before making
  an investment in a business, request a written opinion from the
  comptroller as to whether:
               (1)  the business in which the qualified community
  development entity proposes to invest would qualify as a qualified
  active low-income community business under Section 231.003; and
               (2)  the location where the qualified community
  development entity proposes to invest would meet the location
  requirements for a rural allocation, a Texas education allocation,
  or a Texas seaport allocation, as applicable.
         (b)  Not later than the 10th business day after the date of
  the receipt of a request under Subsection (a), the comptroller
  shall make the requested determinations and issue the written
  opinion, including explanations for the determinations.
         (c)  A qualified community development entity or a recipient
  of a transfer under Section 231.105 may, but is not required to,
  request a written opinion under Subsection (a) before making an
  investment in a business if the qualified community development
  entity or transfer recipient concurrently makes a federal qualified
  low-income community investment in the business.
         Sec. 231.252.  CONSIDERATION OF FEDERAL TAX LAWS.  In
  issuing a written opinion and making other determinations under
  this chapter, the comptroller shall consider Section 45D, Internal
  Revenue Code, and the federal tax regulations issued under that
  code, to the extent that those provisions are applicable.
  SUBCHAPTER G.  REPORTING
         Sec. 231.301.  REPORT TO COMPTROLLER. (a)  Except as
  provided by this subsection, a qualified community development
  entity that issues a qualified equity investment under Section
  231.106 shall submit an annual report to the comptroller not later
  than the fifth business day after the anniversary of a credit
  allowance date applicable to the investment.  The qualified
  community development entity is not required to submit any report
  under this subsection after the annual report following the final
  credit allowance date.
         (b)  The report must:
               (1)  provide evidence that the qualified community
  development entity has made and maintained the investment required
  under Sections 231.151(a)(3) and (4) to avoid recapture of a credit
  claimed in connection with the qualified equity investment;
               (2)  include one or more bank statements for the
  qualified community development entity that reflect each qualified
  low-income community investment made by the qualified community
  development entity in connection with the qualified equity
  investment;
               (3)  state the name, location, and industry code of
  each qualified active low-income community business receiving a
  qualified low-income community investment in connection with the
  qualified equity investment;
               (4)  state the number of employment positions created
  and retained as a result of each qualified low-income community
  investment made in connection with the qualified equity investment;
               (5)  state whether the qualified community development
  entity has been subject to a recapture of any amount of a federal
  tax credit available under Section 45D, Internal Revenue Code, with
  respect to the qualified equity investment; and
               (6)  include a copy of the most recent annual report
  submitted by the qualified community development entity to the
  United States Department of the Treasury regarding Section 45D,
  Internal Revenue Code.
         (c)  A qualified community development entity that fails to
  submit a report to the comptroller within the time prescribed by
  Subsection (a) shall pay to the comptroller a penalty equal to the
  sum of:
               (1)  $25,000; and
               (2)  $5,000 for each day the report is not submitted
  after the date the report is due under Subsection (a).
         Sec. 231.302.  COMPTROLLER'S REPORT TO LEGISLATURE.  (a)
  The comptroller shall contract with an independent researcher at a
  center for education research established under Section 1.005,
  Education Code, to prepare a biennial report with respect to the
  implementation of this chapter.
         (b)  The report must include:
               (1)  the number of qualified community development
  entities holding certified qualified equity investments;
               (2)  the amount of qualified equity investments of each
  qualified community development entity;
               (3)  the investments each qualified community
  development entity has made in qualified active low-income
  community businesses as of the most recent annual report submitted
  to the comptroller by the qualified community development entity;
               (4)  the total amount of credits earned under this
  chapter;
               (5)  the performance of each qualified community
  development entity with respect to reporting requirements imposed
  by this chapter;
               (6)  with respect to each qualified active low-income
  community business in which a qualified community development
  entity has invested:
                     (A)  the classification of the qualified active
  low-income community business according to the industrial sector
  and the size of the business;
                     (B)  the total number of jobs created by the
  qualified low-income community investment and the average wages
  paid for the jobs; and
                     (C)  the total number of jobs retained as a result
  of the qualified low-income community investment and the average
  wages paid for the jobs; and
               (7)  an analysis of the effect implementation of this
  chapter has had during the period covered by the report on:
                     (A)  economic activity in this state; and
                     (B)  state tax revenue.
         (c)  The comptroller shall file the report with the governor,
  the lieutenant governor, and the speaker of the house of
  representatives not later than December 15 of each even-numbered
  year.
         SECTION 2.  (a)  As soon as practicable after the effective
  date of this Act, the comptroller of public accounts shall adopt
  rules necessary to implement the provisions of Chapter 231,
  Insurance Code, as added by this Act.
         (b)  The comptroller of public accounts shall provide an
  initial application date under Section 231.101(b), Insurance Code,
  as added by this Act, of October 2, 2017.
         SECTION 3.  Subchapter B, Chapter 231, Insurance Code, as
  added by this Act, applies only to a tax report originally due on or
  after January 1, 2018.
         SECTION 4.  This Act takes effect September 1, 2017.