By: Paddie, Button, Harris, Burrows, Guillen, H.B. No. 570
      et al.
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to small business recovery funds and insurance tax credits
  for certain investments in those funds; imposing a monetary
  penalty; authorizing fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle F, Title 4, Government Code, is amended
  by adding Chapter 487A to read as follows:
  CHAPTER 487A. SMALL BUSINESS RECOVERY FUNDS
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 487A.0001.  GENERAL DEFINITIONS. In this chapter:
               (1)  "Closing date" means the date a small business
  recovery fund has collected all of the amounts described by Section
  487A.0056(a)(1).
               (2)  "Growth investment" means any capital or equity
  investment by a small business recovery fund in a targeted small
  business or any loan by a small business recovery fund to a targeted
  small business with a stated maturity date of at least one year
  after the date of issuance.
               (3)  "Office" means the Texas Economic Development and
  Tourism Office.
               (4)  "Rural area" means an area:
                     (A)  other than a municipality with a population
  of more than 50,000 or an urbanized area contiguous and adjacent to
  the municipality; or
                     (B)  determined to be rural in character by the
  United States Department of Agriculture.
               (5)  "Small business recovery fund" means an entity
  approved by the office as a small business recovery fund.
         Sec. 487A.0002.  DEFINITION: AFFILIATE. (a) In this
  chapter, "affiliate" means an entity that directly or indirectly
  through one or more intermediaries controls, is controlled by, or
  is under common control with another entity.
         (b)  For purposes of Subsection (a), an entity is controlled
  by another entity if the controlling entity:
               (1)  holds, directly or indirectly, the majority voting
  or ownership interest in the controlled entity; or
               (2)  has control over the day-to-day operations of the
  controlled entity by contract or by law.
         Sec. 487A.0003.  DEFINITION: CREDIT-ELIGIBLE CAPITAL
  CONTRIBUTION. (a) In this chapter and subject to Subsection (b),
  "credit-eligible capital contribution" means an investment of cash
  that equals the amount specified on a tax credit certificate issued
  by the office under Section 487A.0055(2) made by an entity that is
  subject to state insurance tax liability, as defined by Section
  232.0001, Insurance Code.
         (b)  An investment made by an entity qualifies as a
  credit-eligible capital contribution only if the entity making the
  investment receives in exchange for the investment:
               (1)  an equity interest in a small business recovery
  fund; or
               (2)  at par value or premium, a debt instrument that has
  a maturity date of at least five years from the closing date and a
  repayment schedule that is no faster than level principal
  amortization over five years.
         Sec. 487A.0004.  DEFINITION: INVESTMENT AUTHORITY. (a) In
  this chapter, "investment authority" means the amount stated on the
  notice issued under Section 487A.0055(1) approving the small
  business recovery fund.
         (b)  At least 65 percent of a small business recovery fund's
  investment authority must consist of credit-eligible capital
  contributions.
         Sec. 487A.0005.  DEFINITION: JOBS CREATED. (a) In this
  chapter, "jobs created" means, with respect to a targeted small
  business, employment positions that:
               (1)  are created by the targeted small business;
               (2)  are located in this state;
               (3)  require at least 35 hours of work each week; and
               (4)  were not located in this state at the time of the
  initial growth investment in the targeted small business.
         (b)  The number of jobs created by a targeted small business
  is calculated each year by subtracting the number of employment
  positions in this state at the targeted small business at the time
  of the initial growth investment in the targeted small business
  from the monthly average of those employment positions for that
  year. If the number calculated under this subsection is less than
  zero, the number shall be reported as zero.
         (c)  The monthly average of employment positions for a year
  is calculated by adding the number of employment positions existing
  on the last day of each month of the year and dividing that sum by
  12.
         Sec. 487A.0006.  DEFINITION: JOBS RETAINED. (a) In this
  chapter, "jobs retained" means, with respect to a targeted small
  business, employment positions that:
               (1)  are located in this state, require at least 35
  hours of work each week, and existed before the initial growth
  investment in the targeted small business; and
               (2)  would have been lost or moved out of this state had
  a growth investment in the targeted small business not been made, as
  certified in writing by an executive officer of the targeted small
  business to the small business recovery fund.
         (b)  The number of jobs retained by a targeted small business
  is calculated each year based on the monthly average of employment
  positions for that year.
         (c)  The monthly average of employment positions for a year
  is calculated by adding the number of employment positions existing
  on the last day of each month of the year and dividing that sum by
  12.
         (d)  The reported number of jobs retained for a year may not
  exceed the number reported on the initial report under Section
  487A.0155. The small business recovery fund shall reduce the
  number of jobs retained for a year if employment at the targeted
  small business is less than the number reported on the initial
  report.
         Sec. 487A.0007.  DEFINITION: TARGETED SMALL BUSINESS. (a)
  In this chapter, "targeted small business" means a business that,
  at the time of the initial growth investment in the business:
               (1)  had fewer than 250 employees, including any
  persons who would be considered employees under the federal law to
  which 13 C.F.R. Section 121.103(h)(4) applies as a result of the
  application of that provision; and
               (2)  has its principal business operations located in
  this state.
         (b)  For purposes of Subsection (a)(2), the principal
  business operations of a business are located at a place where:
               (1)  at least 80 percent of the business's employees
  work; or
               (2)  employees who are paid at least 80 percent of the
  business's payroll work.
         (c)  An out-of-state business that agrees to relocate or hire
  new employees using the proceeds of a growth investment to
  establish principal business operations in this state qualifies as
  a targeted small business if the business satisfies the
  requirements of:
               (1)  Subsection (a)(1) at the time of the initial
  growth investment in the business; and
               (2)  Subsection (a)(2) not later than the 180th day
  after receiving the initial growth investment or a later date
  agreed to by the office.
         Sec. 487A.0008.  RULES. The office shall adopt rules
  necessary to implement this chapter.
  SUBCHAPTER B. APPROVAL OF SMALL BUSINESS RECOVERY FUNDS; TAX
  CREDIT CERTIFICATES
         Sec. 487A.0051.  APPLICATION. (a) Subject to Section
  487A.0202, the office shall accept applications from entities
  seeking approval as small business recovery funds.
         (b)  An application must include:
               (1)  the total investment authority sought by the
  applicant under the applicant's business plan;
               (2)  evidence sufficient to prove to the office's
  satisfaction that, as of the date the applicant submits the
  application:
                     (A)  the applicant or affiliates of the applicant
  have invested, in the aggregate, at least $100 million in nonpublic
  companies; and
                     (B)  at least one principal in a rural business
  investment company licensed under 7 U.S.C. Section 2009cc et seq.
  or a small business investment company licensed under 15 U.S.C.
  Section 681 is, and has been for at least four years, an officer or
  employee of the applicant or of an affiliate of the applicant on the
  date the application is submitted;
               (3)  a copy of the rural business investment company
  license or small business investment company license described by
  Subdivision (2)(B);
               (4)  an estimate of the number of jobs created and jobs
  retained that will result from the applicant's growth investments;
               (5)  a business plan that includes a revenue impact
  assessment that:
                     (A)  projects state and local tax revenue to be
  generated by the applicant's proposed growth investments; and
                     (B)  is prepared by a nationally recognized third
  party independent economic forecasting firm using a dynamic
  economic forecasting model that analyzes the applicant's business
  plan for the 10-year period following the date the applicant
  submits the application;
               (6)  a signed affidavit from each committed investor
  stating the amount of credit-eligible capital contributions the
  investor commits to making; and
               (7)  a nonrefundable application fee of $5,000.
         Sec. 487A.0052.  DECISION ON APPLICATION. (a) The office
  shall make a determination on each application not later than the
  30th day after the date the office receives the application. The
  office shall make application determinations in the order in which
  applications are received and shall consider applications received
  on the same day to be received simultaneously.
         (b)  The office shall approve up to $500 million of
  investment authority under this chapter.
         (c)  If a request for investment authority exceeds the limit
  under Subsection (b), the office shall reduce the investment
  authority and the credit-eligible capital contributions for that
  application as necessary to avoid exceeding the limit. If multiple
  applications received on the same day request a combined investment
  authority that exceeds the limit under Subsection (b), the office
  shall proportionally reduce the investment authority and the
  credit-eligible capital contributions for those applications as
  necessary to avoid exceeding the limit. The office may not reduce
  an applicant's investment authority for any reason other than as
  authorized by this subsection.
         Sec. 487A.0053.  GROUNDS FOR DENIAL. The office may deny an
  application under this subchapter only if:
               (1)  the application is incomplete or the application
  fee is not paid in full;
               (2)  the applicant fails to satisfy the requirements of
  Section 487A.0051(b)(2);
               (3)  the revenue impact assessment submitted under
  Section 487A.0051(b)(5) does not demonstrate that the applicant's
  business plan will result in a positive economic impact on combined
  state and local revenue during the 10-year period covered by the
  assessment that exceeds the cumulative amount of tax credits that
  would be issued to the applicant's investors under Chapter 232,
  Insurance Code, if the application were approved;
               (4)  the credit-eligible capital contributions
  described in affidavits submitted under Section 487A.0051(b)(6) do
  not equal at least 65 percent of the total amount of investment
  authority sought under the applicant's business plan; or
               (5)  the office has already approved the maximum amount
  of investment authority allowed under Section 487A.0052(b).
         Sec. 487A.0054.  SUBMISSION OF ADDITIONAL INFORMATION
  FOLLOWING DENIAL. (a) If the office denies an application the
  applicant may, not later than the 15th day after the date the office
  provides notice of denial, provide additional information to the
  office to complete, clarify, or cure defects in the application
  identified by the office.
         (b)  If the applicant completes, clarifies, or cures the
  defects in its application during the period prescribed by
  Subsection (a), the application is considered complete as of the
  original submission date.
         (c)  If the applicant fails to complete, clarify, or cure the
  defects in its application during the period prescribed by
  Subsection (a), the application is finally denied. An applicant
  who wishes to reapply must resubmit an application in full with a
  new submission date.
         (d)  The office shall review and reconsider an application
  described by Subsection (a) for which the applicant provides
  additional information not later than the 30th day after the date
  the applicant provides the information. The office shall consider
  that application before any pending applications submitted after
  the date that application was originally submitted.
         (e)  This section does not apply to an application denied as
  a result of the applicant's failure to submit with the application
  affidavits required by Section 487A.0051(b)(6).
         Sec. 487A.0055.  APPROVAL BY OFFICE. On approval of an
  application, the office shall provide:
               (1)  written notice to the applicant of the applicant's
  approval as a small business recovery fund, including the amount of
  the fund's investment authority; and
               (2)  a tax credit certificate to each investor whose
  affidavit was included in the application and include on the
  certificate the amount of the investor's credit-eligible capital
  contribution.
         Sec. 487A.0056.  DUTIES OF FUND FOLLOWING APPROVAL. (a) A
  small business recovery fund shall:
               (1)  not later than the 60th day after the date the fund
  receives the approval notice under Section 487A.0055:
                     (A)  collect the credit-eligible capital
  contribution from each investor issued a tax credit certificate
  under Section 487A.0055; and
                     (B)  subject to Subsection (b), collect one or
  more investments of cash that, when added to the contributions
  collected under Paragraph (A), equal the fund's investment
  authority; and
               (2)  not later than the 65th day after the date the fund
  receives the approval notice under Section 487A.0055, send to the
  office documentation sufficient to prove that the fund has
  collected the amounts described in Subdivision (1).
         (b)  At least 10 percent of the small business recovery
  fund's investment authority must consist of equity investments
  contributed directly or indirectly by affiliates of the fund,
  including employees, officers, and directors of those affiliates.
         Sec. 487A.0057.  LAPSE OF APPROVAL. (a) If a small business
  recovery fund fails to comply with the requirements of Section
  487A.0056, the fund's approval lapses and the corresponding
  investment authority described by Section 487A.0056(a)(1) does not
  count toward the limit prescribed by Section 487A.0052(b).
         (b)  The office shall first award lapsed investment
  authority pro rata to each small business recovery fund whose
  requested investment authority was reduced under Section
  487A.0052(c). The small business recovery fund may allocate the
  investment authority awarded under this subsection to the fund's
  investors in the fund's discretion. The office may award any
  remaining investment authority to new applicants.
         Sec. 487A.0058.  DISPOSITION OF APPLICATION FEES.
  Application fees submitted to the office under Section
  487A.0051(b)(7) shall be deposited to the credit of the general
  revenue fund and may be appropriated only to the office for the
  purpose of administering this chapter.
  SUBCHAPTER C. REVOCATION OF TAX CREDIT CERTIFICATE
         Sec. 487A.0101.  GROUNDS FOR REVOCATION. (a) The office
  shall revoke a tax credit certificate issued under Subchapter B in
  connection with an investment in a small business recovery fund if,
  before the fund exits the program under Section 487A.0151, the
  fund:
               (1)  subject to Subsection (b), fails to invest at
  least 60 percent of the fund's investment authority in growth
  investments in this state on or before the second anniversary of the
  closing date and 100 percent of the fund's investment authority in
  growth investments in this state on or before the third anniversary
  of the closing date;
               (2)  subject to Subsection (c) and after making the
  investments necessary to avoid revocation under Subdivision (1),
  fails to maintain growth investments equal to 100 percent of the
  fund's investment authority until the sixth anniversary of the
  closing date;
               (3)  makes a distribution or payment that results in
  the fund having less than 100 percent of its investment authority:
                     (A)  invested in growth investments in this state;
  or
                     (B)  available for investment in growth
  investments and held in:
                           (i)  cash;
                           (ii)  United States Treasury securities;
                           (iii)  bonds or notes issued by this state or
  an agency or political subdivision of this state; or
                           (iv)  a deposit account with a depository
  institution headquartered or chartered in this state; or
               (4)  subject to Subsection (d), makes a growth
  investment in a targeted small business that directly or indirectly
  through an affiliate owns, has the right to acquire an ownership
  interest in, makes a loan to, or makes an investment in the fund, an
  affiliate of the fund, or an investor in the fund.
         (b)  For purposes of Subsection (a)(1):
               (1)  the amount of growth investments that a small
  business recovery fund may count with respect to a particular
  targeted small business, including any amount invested in an
  affiliate of the targeted small business, may not exceed $5
  million; and
               (2)  at least 75 percent of the required amounts of
  growth investments must consist of growth investments in targeted
  small businesses whose principal business operations are located
  in, or are relocated to, a rural area in this state.
         (c)  For purposes of Subsection (a)(2):
               (1)  the amount of growth investments that a small
  business recovery fund may count with respect to a particular
  targeted small business, including any amount invested in an
  affiliate of the targeted small business, may not exceed $5
  million;
               (2)  an investment that is sold or repaid is considered
  to be maintained if the small business recovery fund reinvests an
  amount equal to the capital returned or recovered by the fund from
  the original investment, excluding any profit realized, in another
  growth investment in this state on or before the first anniversary
  of the date the capital is returned or recovered; and
               (3)  an amount received periodically by a small
  business recovery fund is considered to be continually invested in
  growth investments if that amount is reinvested in one or more
  growth investments by the end of the calendar year following the
  year of receipt.
         (d)  Subsection (a)(4) does not apply to investments in
  publicly traded securities by a targeted small business or an owner
  or affiliate of the targeted small business. For purposes of
  Subsection (a)(4), a small business recovery fund is not considered
  an affiliate of a targeted small business solely as a result of the
  fund's growth investment in the targeted small business.
         (e)  The office shall:
               (1)  notify the comptroller when the office revokes a
  tax credit certificate; and
               (2)  on request, provide the comptroller with lists of
  valid and revoked tax credit certificates.
         Sec. 487A.0102.  OPPORTUNITY TO CORRECT VIOLATION. (a)
  Before revoking a tax credit certificate under this subchapter, the
  office shall notify the small business recovery fund of the reasons
  for the pending revocation.
         (b)  The small business recovery fund may, not later than the
  90th day after the date the notice is received, correct any
  violation outlined in the notice to the satisfaction of the office
  and avoid revocation of the tax credit certificate.
         Sec. 487A.0103.  ALLOCATION OF REVOKED INVESTMENT
  AUTHORITY. (a) If a tax credit certificate is revoked under this
  subchapter, the associated investment authority does not count
  toward the limit on total investment authority described in Section
  487A.0052(b).
         (b)  The office shall first award revoked investment
  authority pro rata to each small business recovery fund whose
  requested investment authority was reduced under Section
  487A.0052(c). The office may award any remaining investment
  authority to new applicants.
  SUBCHAPTER D. CERTAIN FUND OPERATIONS
         Sec. 487A.0151.  APPLICATION TO EXIT PROGRAM. (a) On or
  after the sixth anniversary of the closing date, a small business
  recovery fund may apply to the office to exit the program and no
  longer be subject to regulation under this chapter.
         (b)  The office shall respond to the application not later
  than the 30th day after receipt.
         (c)  A small business recovery fund is eligible to exit the
  program under this section if no tax credit certificates related to
  investments in the fund have been revoked and the fund has not
  received any revocation notice that has not been corrected under
  Section 487A.0102.
         (d)  The office may not unreasonably deny an application
  under this section. The office shall give the small business
  recovery fund notice of a denial and include in the notice the
  reasons for the denial.
         Sec. 487A.0152.  NO REVOCATION FOLLOWING EXIT. The office
  may not revoke a tax credit certificate related to an investment in
  a small business recovery fund after the fund's exit from the
  program.
         Sec. 487A.0153.  PENALTY FOR CERTAIN DISTRIBUTIONS. (a)
  For purposes of this section:
               (1)  the "actual number of jobs created and retained"
  is the number of jobs created and jobs retained as a result of all of
  a small business recovery fund's current and former growth
  investments, as reported on the fund's reports submitted under
  Section 487A.0155; and
               (2)  the "estimated number of jobs created and
  retained" is the estimated number of jobs created and jobs retained
  included in a small business recovery fund's application under
  Section 487A.0051(b)(4) reduced, if applicable, by the same
  percentage as the total investment authority sought under the
  fund's business plan submitted under Section 487A.0051(b)(1) was
  reduced under Section 487A.0052(c).
         (b)  A small business recovery fund is subject to a penalty
  in the amount provided by Subsection (c) if:
               (1)  the fund authorizes a distribution to the fund's
  equity holders in an amount that, when added to all previous
  distributions to the fund's equity holders and any previous
  penalties under this section, exceeds the fund's investment
  authority; and
               (2)  the fund's actual number of jobs created and
  retained is less than the fund's estimated number of jobs created
  and retained.
         (c)  The amount of the penalty is equal to the amount of the
  authorized distribution multiplied by a fraction:
               (1)  the numerator of which is the fund's estimated
  number of jobs created and retained less the fund's actual number of
  jobs created and retained; and
               (2)  the denominator of which is the fund's estimated
  number of jobs created and retained.
         (d)  Before making a distribution to the fund's equity
  holders, the fund shall deduct the amount of the penalty from the
  amount otherwise authorized to be distributed to the equity holders
  and pay the penalty to the office.
         (e)  The office shall deposit penalties received under
  Subsection (d) in the general revenue fund.
         Sec. 487A.0154.  EVALUATION OF PROPOSED INVESTMENT. (a) A
  small business recovery fund, before making a growth investment,
  may request from the office a written opinion as to whether the
  business in which the fund proposes to invest qualifies as a
  targeted small business.
         (b)  Not later than the 15th business day after receiving the
  request, the office shall notify the small business recovery fund
  of its determination.
         (c)  If the office fails to notify the small business
  recovery fund of its determination on or before the 15th business
  day after receiving the request, the business in which the fund
  proposes to invest is considered to be a targeted small business for
  purposes of this chapter.
         Sec. 487A.0155.  ANNUAL REPORT. (a) A small business
  recovery fund shall submit a report to the office on or before the
  fifth business day after each anniversary of the closing date until
  the fund has exited the program under Section 487A.0151.
         (b)  The report must document the small business recovery
  fund's growth investments and include:
               (1)  a bank statement showing each growth investment;
               (2)  the name, location, and industry of each business
  receiving a growth investment, including either the determination
  notice described by Section 487A.0154 or evidence that the business
  qualified as a targeted small business at the time the investment
  was made;
               (3)  the number of jobs created and jobs retained in the
  preceding calendar year as a result of the fund's growth
  investments as of the last day of that period;
               (4)  the average annual salary of the jobs described by
  Subdivision (3) and evidence of any other monetary or social
  benefit to this state as a result of those jobs;
               (5)  a description, including the amount, of each
  growth investment in a targeted small business located in a rural
  area made in the 24 months following the closing date; and
               (6)  any other information the office requires.
         (c)  A small business recovery fund may, but is not required
  to, include in any report submitted under this section information
  about the number of jobs created and jobs retained with respect to a
  former growth investment that the fund has exited.
  SUBCHAPTER E. REPORT; CONDITIONS FOR ACCEPTANCE OF CERTAIN
  APPLICATIONS
         Sec. 487A.0201.  REPORT. (a) Before the beginning of the
  90th Legislature, Regular Session, the office shall submit to the
  lieutenant governor, the speaker of the house of representatives,
  and each member of the legislature a report on the economic benefits
  of this chapter.
         (b)  The report must include an assessment of:
               (1)  the aggregate effects of growth investments made
  under this chapter, including:
                     (A)  the total number of jobs created by all
  targeted small businesses, including direct jobs, indirect jobs,
  and induced jobs;
                     (B)  the total number of jobs retained by all
  targeted small businesses;
                     (C)  the total amount of wages paid in connection
  with jobs created and jobs retained by all targeted small
  businesses;
                     (D)  the median wage of jobs created and jobs
  retained by all targeted small businesses;
                     (E)  the total effect on personal income in this
  state, including direct and indirect effects;
                     (F)  the total amount of growth investments;
                     (G)  the gross domestic product of this state
  attributable to targeted small businesses;
                     (H)  the total taxable value of property of
  targeted small businesses in this state according to tax appraisal
  rolls;
                     (I)  the total positive fiscal effect on this
  state and local governments in this state; and
                     (J)  the total number and dollar amount of growth
  investments in targeted small businesses located in rural areas;
               (2)  the benefits to this state from cost savings
  attributable to jobs created and jobs retained by all targeted
  small businesses, including:
                     (A)  Medicaid savings, with savings to this state
  and the federal government listed separately;
                     (B)  food assistance program savings;
                     (C)  unemployment insurance payment savings; and
                     (D)  any other savings that can be reasonably
  estimated using data available to the office in connection with
  some or all targeted small businesses; and
               (3)  the total positive fiscal effect on this state and
  local governments in this state of the benefits described by
  Subdivision (2).
         (c)  The report may not include information that is
  confidential by law.
         (d)  In preparing the portion of the report described by
  Subsection (b)(1), the office shall:
               (1)  use standard, nationally recognized economic
  estimation techniques, including economic multipliers; and
               (2)  base the assessment on data submitted to the
  office by each small business recovery fund.
         Sec. 487A.0202.  CONDITIONS FOR ACCEPTANCE OF CERTAIN
  APPLICATIONS. (a) The office may not accept applications under
  Section 487A.0051 after January 1, 2022, unless the total positive
  fiscal effects described by Section 487A.0201(b) exceed the sum of
  all tax credit certificates issued by the office under Subchapter
  B.
         (b)  The office shall resume accepting applications under
  Section 487A.0051 when the condition provided by Subsection (a) is
  satisfied.
         SECTION 2.  Subtitle B, Title 3, Insurance Code, is amended
  by adding Chapter 232 to read as follows:
  CHAPTER 232. TAX CREDIT FOR INVESTMENT IN SMALL BUSINESS RECOVERY
  FUND
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 232.0001.  DEFINITIONS. In this chapter:
               (1)  "Affiliate" has the meaning assigned by Section
  487A.0002, Government Code.
               (2)  "Closing date" has the meaning assigned by Section
  487A.0001, Government Code.
               (3)  "State insurance tax liability" means any tax
  liability incurred under Chapter 221, 222, 223, 223A, 224, 225,
  226, or 281.
         Sec. 232.0002.  RULES. The comptroller shall adopt rules
  necessary to implement this chapter.
  SUBCHAPTER B. TAX CREDIT
         Sec. 232.0051.  ELIGIBILITY FOR CREDIT. An entity is
  eligible for a credit against the entity's state insurance tax
  liability in the amount and under the conditions and limitations
  provided by this chapter.
         Sec. 232.0052.  QUALIFICATION. An entity is eligible for a
  credit for a tax year if the entity holds a tax credit certificate
  issued under Section 487A.0055, Government Code, and the third,
  fourth, fifth, or sixth anniversary of the closing date in
  connection with which the certificate was issued occurs during the
  tax year.
         Sec. 232.0053.  AMOUNT OF CREDIT; LIMITATION. (a) The
  amount of credit for a tax year in connection with a tax credit
  certificate described by Section 232.0052 is equal to 25 percent of
  the amount of the credit-eligible capital contribution stated on
  the certificate.
         (b)  The total credit claimed for a tax year, including the
  amount of any carryforward under Section 232.0054, may not exceed
  the amount of state insurance tax liability due for the entity for
  the tax year after applying all other applicable tax credits.
         (c)  Credits may be applied to the entity's estimated or
  final tax payments for the tax year.
         Sec. 232.0054.  CARRYFORWARD. If an entity is eligible for a
  credit that exceeds the limitation under Section 232.0053(b), the
  entity may carry the unused credit forward and apply the credit to a
  subsequent tax report.
         Sec. 232.0055.  ASSIGNMENT PROHIBITED. (a) Except as
  provided by Subsection (b), an entity may not convey, assign, or
  transfer the credit allowed under this chapter to another entity.
         (b)  An entity may convey, assign, or transfer the credit
  allowed under this chapter to an affiliate of the entity that is
  subject to state insurance tax liability.
         Sec. 232.0056.  RETALIATORY TAX. An entity claiming a
  credit under this chapter is not required to pay any additional
  retaliatory tax levied under Chapter 281 as a result of claiming
  that credit.
  SUBCHAPTER C. RECAPTURE OF CREDIT
         Sec. 232.0101.  RECAPTURE. The comptroller shall recapture
  the amount of a credit claimed on a tax report filed under Chapter
  221, 222, 223, 223A, 224, 225, 226, or 281 from an entity if the tax
  credit certificate on which the credit is based is revoked under
  Subchapter C, Chapter 487A, Government Code.
         SECTION 3.  (a) As soon as practicable after this Act
  becomes law as provided by Section 2001.006, Government Code:
               (1)  the Texas Economic Development and Tourism Office
  shall adopt rules necessary to implement Chapter 487A, Government
  Code, as added by this Act; and
               (2)  the comptroller of public accounts shall adopt
  rules necessary to implement Chapter 232, Insurance Code, as added
  by this Act.
         (b)  Not later than October 1, 2021, the Texas Economic
  Development and Tourism Office shall begin accepting applications
  under Section 487A.0051(a), Government Code, as added by this Act.
         SECTION 4.  Chapter 232, Insurance Code, as added by this
  Act, applies only to a tax report originally due on or after January
  1, 2021.
         SECTION 5.  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, 2021.