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A BILL TO BE ENTITLED
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AN ACT
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relating to insurance premium tax credits for investments |
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supporting agriculture and rural development projects; authorizing |
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a fee; providing an administrative penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle B, Title 3, Insurance Code, is amended |
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by adding Chapter 230 to read as follows: |
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CHAPTER 230. PREMIUM TAX CREDIT FOR INVESTMENTS SUPPORTING |
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AGRICULTURE AND RURAL DEVELOPMENT PROJECTS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 230.001. GENERAL DEFINITIONS. In this chapter: |
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(1) "Affiliate" has the meaning assigned by Section |
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228.002. |
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(2) "Agriculture development company" means a |
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partnership, corporation, trust, or limited liability company, |
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whether organized on a profit or nonprofit basis, that: |
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(A) has as the company's primary business |
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activity the investment of cash in qualified projects, including |
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rural projects; and |
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(B) is approved as meeting the criteria of this |
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chapter. |
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(3) "Allocation date" means the date on which approved |
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investors are allocated premium tax credits. |
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(4) "Approved investor" means an insurer or other |
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person that has state premium tax liability, other than a title |
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insurance company, and that contributes designated capital |
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pursuant to a premium tax credit allocation under this chapter. |
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(5) "Critical agriculture facility" means a structure |
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or facility that: |
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(A) is available or is to be made available for |
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public or private use, including: |
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(i) an appurtenance to the structure or |
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facility or other property necessary or appropriate to operate the |
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structure or facility; and |
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(ii) technology installed in the structure |
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or facility that relates to the structure's or facility's purpose; |
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and |
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(B) is related to or will be related to all or |
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part of one or more of the following: |
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(i) new or developing cyber-agriculture |
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communications systems; |
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(ii) rural broadband networks that address |
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and relieve digital poverty; |
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(iii) new efficient generation, |
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transmission, or storage of electric energy centered around |
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agricultural use; |
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(iv) agriculture-related robotic |
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development and related businesses; |
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(v) new exposition and industrial |
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agribusiness park complexes that include educational facilities; |
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(vi) transportation-related systems or |
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logistics focused on agriculture, including rail, truck, or |
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airplane facilities; |
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(vii) agriculture-related water or |
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wastewater system improvements or upgrades; |
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(viii) packaging, processing, or freezing |
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of any agricultural product; or |
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(ix) agriculture-related biological |
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product manufacturing or research facilities. |
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(6) "Designated capital" means an investment of cash |
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by an approved investor in an agriculture development company that |
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fully funds the purchase price of a qualified debt instrument |
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issued by the agriculture development company. |
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(7) "Governmental or authorized nonprofit entity" |
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means an entity that is authorized by the laws of this state to make |
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a public work contract and that is: |
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(A) a governmental entity or quasi-governmental |
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authority, including: |
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(i) this state, a county, or a |
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municipality; |
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(ii) a department, board, or agency of this |
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state, a county, or a municipality; and |
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(iii) a school district or a subdivision of |
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a school district; or |
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(B) a nonprofit corporation exempt from income |
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taxation under Section 501(a), Internal Revenue Code of 1986, by |
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being listed under Section 501(c)(3) of that code. |
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(8) "Liquidating distribution" means a distribution |
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or payment by an agriculture development company, other than a |
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qualified distribution. |
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(9) "Participating company" means an agriculture |
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development company that has not opted out of redistribution and |
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reallocation under Section 230.353. |
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(10) "Person" means an individual or entity, including |
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a corporation, general or limited partnership, trust, or limited |
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liability company. |
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(11) "Premium tax credit allocation claim" means a |
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claim for allocation of premium tax credits. |
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(12) "Qualified debt instrument" means a debt |
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instrument issued by an agriculture development company, at par |
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value or a premium, that: |
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(A) has an original maturity date that is a date |
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on or after the fifth anniversary of the date of issuance; and |
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(B) has a repayment schedule that is not faster |
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than the schedule by which the premium tax credits may be applied |
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under Sections 230.301 and 230.302. |
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(13) "Qualified distribution" means a distribution or |
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payment from designated capital by an agriculture development |
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company in connection with: |
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(A) the reasonable costs and expenses of forming, |
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syndicating, managing, and operating the company, including: |
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(i) reasonable and necessary fees paid for |
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professional services, including legal and accounting services, |
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related to the formation and operation of the company; and |
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(ii) an annual management fee in an amount |
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that does not exceed two and one-half percent of the designated |
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capital of the company; and |
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(B) any projected liability for federal or state |
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taxes, including penalties and interest related to federal or state |
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income taxes, of: |
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(i) the company; or |
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(ii) an equity owner of the company to the |
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extent that the tax liability is related to the ownership, |
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management, or operation of the company. |
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(14) "Qualified escrow account" means an escrow |
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account: |
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(A) maintained in a savings and loan association, |
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bank, or trust company; |
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(B) that the escrow holder clearly denotes in the |
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holder's records as an escrow account; and |
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(C) that allows solely for qualified |
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withdrawals. |
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(15) "Qualified investment" means the investment of |
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cash in a qualified project by an agriculture development company |
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for the purchase of any debt, including a debt instrument. |
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(16) "Qualified project" means: |
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(A) a project that, at the time of an agriculture |
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development company's first investment in the project: |
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(i) is or may be governed by one or more |
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public work contracts to which a governmental or authorized |
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nonprofit entity is a party; and |
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(ii) relates to the planning, design, |
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development, installation, construction, acquisition, or expansion |
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of a critical agriculture facility; or |
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(B) a rural project. |
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(17) "Qualified withdrawal" means a withdrawal from a |
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qualified escrow account that may be made only on the receipt of the |
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signed, written direction of: |
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(A) an authorized signatory of the agriculture |
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development company associated with the escrow account; and |
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(B) the comptroller under Section 230.201(c), |
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230.251(c), or 230.252(c), as applicable. |
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(18) "Rural project" means a project that, at the time |
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of an agriculture development company's first investment in the |
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project, relates to the planning, design, development, |
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installation, construction, acquisition, or expansion of a |
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critical agriculture facility in a non-metropolitan county as |
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defined by the United States Census Bureau in its most recent |
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census. |
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(19) "State premium tax liability" means: |
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(A) any liability incurred by any person under |
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Chapter 221, 222, 223A, or 224; or |
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(B) if the tax liability imposed under Chapter |
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221, 222, 223A, or 224 on January 1, 2021, is eliminated or reduced, |
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any tax liability imposed on an insurer or other person that had |
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premium tax liability under Chapter 221, 222, 223A, or 224 on that |
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date. |
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SUBCHAPTER B. ADMINISTRATION AND PROMOTION |
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Sec. 230.051. ADMINISTRATION BY COMPTROLLER. The |
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comptroller shall administer this chapter. |
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Sec. 230.052. RULES; FORMS. (a) The comptroller shall |
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adopt rules and forms as necessary to implement this chapter, |
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including rules that: |
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(1) establish the application procedures for approval |
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as agriculture development companies; and |
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(2) facilitate the transfer or assignment of premium |
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tax credits by approved investors. |
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(b) In establishing rules under Subsection (a)(1), the |
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comptroller shall consult with the Department of Agriculture. |
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Sec. 230.053. REPORT TO LEGISLATURE. (a) The comptroller |
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shall prepare a biennial report with respect to results of the |
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implementation of this chapter. The report must include: |
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(1) the number of agriculture development companies |
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holding designated capital; |
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(2) the amount of designated capital invested in each |
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agriculture development company; |
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(3) the amount of designated capital each agriculture |
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development company has invested in qualified projects as of |
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January 1, 2024, and the cumulative total for each subsequent year; |
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(4) the total amount of tax credits granted under this |
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chapter for each year that credits have been granted; |
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(5) the performance of each agriculture development |
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company with respect to renewal and reporting requirements imposed |
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under this chapter; and |
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(6) the agriculture development companies that have |
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been disapproved or that have failed to renew their approvals and |
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the reason for any disapproval. |
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(b) The comptroller shall file the report with the governor, |
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the lieutenant governor, and the speaker of the house of |
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representatives not later than December 15 of each even-numbered |
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year. |
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Sec. 230.054. PROMOTION OF PROGRAM. The Department of |
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Agriculture shall promote the program established under this |
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chapter, including through the department's newsletter. |
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SUBCHAPTER C. APPLICATION FOR APPROVAL AS AND GENERAL OPERATION OF |
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AGRICULTURE DEVELOPMENT COMPANIES |
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Sec. 230.101. APPLICATION FOR APPROVAL AS AN AGRICULTURE |
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DEVELOPMENT COMPANY. (a) An applicant for approval as an |
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agriculture development company must file the application in the |
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form prescribed by the comptroller. The application must be |
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accompanied by a nonrefundable application fee of $7,500. |
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(b) The application must include an audited balance sheet of |
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the applicant, with an unqualified opinion from an independent |
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certified public accountant, as of a date not more than 35 days |
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before the date of the application. |
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Sec. 230.102. QUALIFICATION. To qualify as an agriculture |
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development company: |
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(1) the applicant must have, at the time of |
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application for approval, an equity capitalization of at least |
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$500,000 in unencumbered cash or cash equivalents; |
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(2) at least two principals or persons employed to |
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manage the funds of the applicant must collectively have: |
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(A) at least four years of experience managing |
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the funds of a pooled investment vehicle; and |
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(B) at least four years of experience managing or |
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developing investments in public works or agriculturally related |
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projects; |
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(3) the applicant must have established a qualified |
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escrow account; |
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(4) the applicant must have signed and delivered the |
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sworn document required by Section 230.104; and |
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(5) the applicant must satisfy any additional |
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requirement imposed by the comptroller by rule. |
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Sec. 230.103. MANAGEMENT BY AND OWNERSHIP INTERESTS OF |
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INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of insurers, |
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or other persons who may have state premium tax liability or the |
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insurer's or other person's affiliates may not, directly or |
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indirectly: |
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(1) manage an agriculture development company; |
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(2) own, whether through rights, options, convertible |
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interests or otherwise, any outstanding securities of an |
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agriculture development company; or |
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(3) control the direction of investments for an |
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agriculture development company. |
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(b) Subsection (a) applies without regard to whether the |
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insurer or other person or the affiliate of the insurer or other |
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person is authorized by or engages in business in this state. |
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(c) Subsections (a) and (b) do not preclude an insurer, |
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approved investor, or any other party from exercising its legal |
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rights and remedies, including interim management of an agriculture |
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development company, if authorized by law, with respect to an |
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agriculture development company that is in default of its statutory |
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or contractual obligations to the insurer, approved investor, or |
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other party. |
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Sec. 230.104. SWORN AND SIGNED DOCUMENT REQUIRED AS |
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CONDITION OF APPROVAL. As a condition to approval as an agriculture |
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development company by the comptroller under Section 230.105, the |
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company must execute a signed, sworn writing in language |
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substantially similar to the following: |
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"The undersigned by this means agrees that, without further |
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consideration, at any time after the date this document is signed, |
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the undersigned will promptly execute and deliver such instruments |
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and documents and take such action, at the comptroller's request, |
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to permit the comptroller to carry out the comptroller's rights and |
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obligations resulting from the undersigned's disapproval as an |
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agriculture development company under the laws of this state. If |
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the comptroller is unable for any reason to secure the |
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undersigned's signature to any instrument or document that the |
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comptroller may request in connection with the undersigned's |
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disapproval as an agriculture development company, the undersigned |
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irrevocably designates and appoints the comptroller and the |
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comptroller's duly authorized officers and agents as the |
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undersigned's attorneys-in-fact, with full power of substitution |
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to act for and on the behalf of the undersigned to execute and file |
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any instrument or document described above and to perform all other |
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lawfully permitted acts to further the purposes of the above-stated |
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with the same legal force and effect as if the instrument or |
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document was executed or the acts were performed by the |
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undersigned. The undersigned agrees and acknowledges that this |
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appointment is coupled with an interest, and the undersigned agrees |
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not to take steps in opposition to or to terminate this |
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appointment." |
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Sec. 230.105. ACTION ON APPLICATION. (a) The comptroller |
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shall: |
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(1) review the application, organizational documents, |
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escrow agreement, sworn document required by Section 230.104, and |
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business history of each applicant; and |
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(2) ensure that the applicant satisfies the |
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requirements of this chapter. |
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(b) Not later than the 30th day after the date an |
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application is filed, the comptroller shall: |
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(1) issue the approval of the applicant as an |
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agriculture development company; or |
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(2) refuse to issue the approval and communicate in |
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detail to the applicant the grounds for the refusal, including |
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suggestions for the removal of those grounds. |
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Sec. 230.106. CONTINUATION OF APPROVED STATUS. To continue |
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to be approved, an agriculture development company must make |
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qualified investments according to the schedule established by |
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Section 230.151 or 230.152. |
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Sec. 230.107. REPORTS TO COMPTROLLER; AUDITED FINANCIAL |
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STATEMENT. (a) Each agriculture development company shall report |
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to the comptroller as soon as practicable after the receipt of |
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designated capital: |
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(1) the name of each approved investor from which the |
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designated capital was received, including the approved investor's |
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insurance premium tax identification number; |
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(2) the amount of each approved investor's investment |
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of designated capital and premium tax credits; |
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(3) the date on which the designated capital was |
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received; |
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(4) the name and address of the agriculture |
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development company's escrow agent; and |
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(5) the account number of the agriculture development |
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company's qualified escrow account. |
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(b) Not later than January 31 of each year, each agriculture |
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development company shall report to the comptroller: |
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(1) the amount of the company's designated capital at |
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the end of the preceding year; |
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(2) whether the company has invested more than 20 |
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percent of its total designated capital in any one project during |
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the preceding year; |
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(3) each qualified investment that the company made |
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during the preceding year; |
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(4) each investment in a rural project that the |
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company made during the preceding year; and |
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(5) any other information required by the comptroller, |
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including any information required by the comptroller to comply |
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with Section 230.053. |
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(c) Not later than April 1 of each year, each agriculture |
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development company shall provide to the comptroller an annual |
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audited financial statement that includes the opinion of an |
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independent certified public accountant. The audit must address |
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the methods of operation and conduct of the business of the company |
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to determine whether: |
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(1) the company is complying with this chapter and the |
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rules adopted under this chapter; |
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(2) the funds received by the company have been |
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invested as required within the time prescribed by Section 230.151 |
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or 230.152; and |
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(3) the company has invested the funds in qualified |
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investments, including rural projects, as required by Section |
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230.151 or 230.152. |
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Sec. 230.108. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not |
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later than January 31 of each year, each agriculture development |
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company shall pay a nonrefundable renewal fee of $5,000 to the |
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comptroller. |
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(b) If an agriculture development company fails to pay the |
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company's renewal fee on or before the date specified by Subsection |
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(a), the company must pay, in addition to the renewal fee, a late |
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fee of $5,000 to continue the company's approved status. |
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(c) Notwithstanding Subsection (a), a renewal fee is not |
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required within six months of the date on which the company's |
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initial approval as an agriculture development company is issued |
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under Section 230.105. |
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Sec. 230.109. QUALIFIED ESCROW ACCOUNT. The designated |
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capital of an agriculture development company, other than |
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designated capital approved for investment under Section 230.201 or |
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for distribution or repayment of debt under Section 230.251 or |
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230.252, shall be deposited and held in a qualified escrow account. |
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SUBCHAPTER D. INVESTMENT BY AGRICULTURE DEVELOPMENT COMPANY |
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Sec. 230.151. REQUIRED SCHEDULE OF INVESTMENT FOR CERTAIN |
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DESIGNATED CAPITAL. (a) Except as provided by Section 230.152, |
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this section applies to qualified investments by an agriculture |
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development company. |
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(b) Before the second anniversary of an agriculture |
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development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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20 percent of the company's designated capital, with at least 50 |
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percent of the amount of those qualified investments placed in |
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rural projects. |
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(c) Before the third anniversary of an agriculture |
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development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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30 percent of the company's designated capital, with at least 50 |
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percent of the amount of those qualified investments placed in |
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rural projects. |
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(d) Before the fourth anniversary of an agriculture |
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development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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40 percent of the company's designated capital, with at least 50 |
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percent of the amount of those qualified investments placed in |
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rural projects. |
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(e) Before the fifth anniversary of an agriculture |
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development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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50 percent of the company's designated capital, with at least 50 |
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percent of the amount of those qualified investments placed in |
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rural projects. |
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Sec. 230.152. REQUIRED SCHEDULE OF INVESTMENT FOR |
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DESIGNATED CAPITAL RESULTING FROM REDISTRIBUTION. (a) This |
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section applies to qualified investments resulting from a |
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redistribution of the designated capital of an agriculture |
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development company under Section 230.353. |
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(b) Notwithstanding Section 230.001(3), for purposes of |
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this section, the allocation date of designated capital is the date |
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on which the designated capital was redistributed to the |
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agriculture development company. |
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(c) Before the second anniversary of an agriculture |
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development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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20 percent of the designated capital redistributed to the company |
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on the allocation date, with at least 50 percent of the amount of |
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those qualified investments placed in rural projects. |
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(d) Before the third anniversary of an agriculture |
|
development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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30 percent of the designated capital redistributed to the company |
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on the allocation date, with at least 50 percent of the amount of |
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those qualified investments placed in rural projects. |
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(e) Before the fourth anniversary of an agriculture |
|
development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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40 percent of the designated capital redistributed to the company |
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on the allocation date, with at least 50 percent of the amount of |
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those qualified investments placed in rural projects. |
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(f) Before the fifth anniversary of an agriculture |
|
development company's allocation date, the company must make |
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qualified investments in an amount cumulatively equal to at least |
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50 percent of the designated capital redistributed to the company |
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on the allocation date, with at least 50 percent of the amount of |
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those qualified investments placed in rural projects. |
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Sec. 230.153. COMPUTATION OF AMOUNT OF INVESTMENTS. (a) |
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The aggregate cumulative amount of all qualified investments made |
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by an agriculture development company after the company's |
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allocation date shall be considered in the computation of the |
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percentage requirements under this subchapter. |
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(b) An agriculture development company may invest proceeds |
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received from a qualified investment in another qualified |
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investment, and that investment counts toward any requirement of |
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this chapter with respect to investments of designated capital. |
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Sec. 230.154. LIMIT ON QUALIFIED INVESTMENT. An |
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agriculture development company may not make a qualified investment |
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at a cost to the company that is greater than 20 percent of the |
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company's total designated capital at the time of investment. |
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SUBCHAPTER E. QUALIFIED PROJECT; RURAL PROJECT |
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Sec. 230.201. EVALUATION OF PROJECT BY COMPTROLLER. (a) An |
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agriculture development company shall, before making an investment |
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in a project, request a written opinion from the comptroller as to |
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whether the project in which the agriculture development company |
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proposes to invest is a qualified project other than a rural project |
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or is a rural project, as applicable. |
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(b) Not later than the 30th day after the date of the receipt |
|
of a request under Subsection (a), the comptroller shall: |
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(1) determine whether the project meets the definition |
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of a qualified project other than a rural project or of a rural |
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project, as applicable; and |
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(2) notify the agriculture development company in |
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writing of the determination and include an explanation of the |
|
comptroller's determination. |
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(c) If the comptroller determines that the project meets the |
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definition of a qualified project other than a rural project or of a |
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rural project, as applicable, then the comptroller shall direct the |
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agriculture development company's escrow agent in a signed writing |
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to release the requested funds for investment in the project. |
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Sec. 230.202. CONTINUATION OF DETERMINATION AS QUALIFIED OR |
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RURAL PROJECT. (a) A project that the comptroller determines to be |
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a qualified project other than a rural project at the time of the |
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first investment in the project by an agriculture development |
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company remains a qualified project and may receive subsequent |
|
investments from the company. A subsequent investment in the |
|
qualified project is a qualified investment, even if the project no |
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longer meets the definition of a qualified project at the time of |
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the subsequent investment. |
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(b) A project the comptroller determines to be a rural |
|
project at the time of the first investment in the project by an |
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agriculture development company remains a rural project and may |
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receive subsequent investments from the agriculture development |
|
company. A subsequent investment in the rural project remains an |
|
investment in a rural project, even if the project no longer meets |
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the definition of a rural project at the time of the subsequent |
|
investment. |
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SUBCHAPTER F. DISTRIBUTIONS; REPAYMENT OF DEBT |
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Sec. 230.251. DISTRIBUTIONS BY AGRICULTURE DEVELOPMENT |
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COMPANY. (a) An agriculture development company shall, before |
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making a qualified distribution or a liquidating distribution, as |
|
applicable, request a written opinion from the comptroller as to |
|
whether the distribution the company proposes to make is a |
|
qualified distribution or a liquidating distribution. |
|
(b) Not later than the 30th day after the date of the receipt |
|
of a request under Subsection (a), the comptroller shall: |
|
(1) determine whether the proposed distribution is |
|
either a qualified distribution or a liquidating distribution; and |
|
(2) notify the agriculture development company in |
|
writing of the determination and include an explanation of the |
|
comptroller's determination. |
|
(c) If the comptroller determines that the proposed |
|
distribution is either a qualified distribution or a liquidating |
|
distribution, the comptroller shall direct the agriculture |
|
development company's escrow agent in a signed writing to release |
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the requested money for distribution. |
|
(d) To make a liquidating distribution, an agriculture |
|
development company must have made qualified investments in an |
|
amount cumulatively equal to 100 percent of the company's |
|
designated capital. |
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(e) A qualified distribution may not be made directly or |
|
indirectly to an approved investor. |
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Sec. 230.252. REPAYMENT OF DEBT. (a) An agriculture |
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development company shall, before making a repayment of principal |
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or interest on the agriculture development company's indebtedness, |
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including repaying the company's indebtedness on which approved |
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investors earned premium tax credits, request from the comptroller |
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a written opinion as to whether the repayment the company proposes |
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to make complies with the requirements of this chapter. |
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(b) Not later than the 30th day after the date of the receipt |
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of a request under Subsection (a), the comptroller shall: |
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(1) determine whether the proposed repayment complies |
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with the requirements of this chapter; and |
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(2) notify the agriculture development company in |
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writing of the determination and include an explanation of the |
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comptroller's determination. |
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(c) If the comptroller determines that the proposed |
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repayment complies with the requirements of this chapter, the |
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comptroller shall direct the agriculture development company's |
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escrow agent in a signed writing to release the requested money for |
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repayment. |
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SUBCHAPTER G. PREMIUM TAX CREDIT |
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Sec. 230.301. PREMIUM TAX CREDIT. (a) An approved investor |
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that makes an investment of designated capital shall earn in the |
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year of investment a vested credit against state premium tax |
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liability equal to 100 percent of the approved investor's |
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investment of designated capital, subject to the limits imposed by |
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this subchapter. |
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(b) Beginning with the tax report due March 1, 2024, for the |
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2023 tax year, an approved investor may take up to 25 percent of the |
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vested premium tax credit in any taxable year of the approved |
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investor. The credit may not be applied to estimated payments due |
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in 2023 but may be applied to estimated payments beginning with |
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those payments made in 2024. |
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Sec. 230.302. LIMIT ON PREMIUM TAX CREDIT. (a) The credit |
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to be applied against state premium tax liability of an approved |
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investor in any one year may not exceed the state premium tax |
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liability of the investor for the taxable year. |
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(b) An approved investor may carry forward any unused credit |
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against state premium tax liability indefinitely until the premium |
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tax credits are used. |
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Sec. 230.303. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED. |
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(a) An approved investor must prepare and execute a premium tax |
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credit allocation claim on a form provided by the comptroller. |
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(b) The agriculture development company must file the |
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credit allocation claims with the comptroller by the date on which |
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the comptroller sets to accept claims on behalf of approved |
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investors by rule. |
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(c) The premium tax credit allocation claim form must |
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include an affidavit of the approved investor under which the |
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approved investor becomes legally bound and irrevocably committed |
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to make an investment of designated capital in an agriculture |
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development company in the amount allocated even if the amount |
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allocated is less than the amount of the claim, subject only to the |
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receipt of an allocation under Section 230.305. |
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(d) A certified investor may not claim a premium tax credit |
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under Section 230.301 for an investment that has not been funded, |
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even if the approved investor has committed to fund the investment. |
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Sec. 230.304. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The |
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total amount of designated capital for which premium tax credits |
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may be allowed under this chapter for all years in which premium tax |
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credits are allowed is $250 million. |
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(b) The total amount of designated capital for which premium |
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tax credits may be allowed for all approved investors under this |
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chapter may not exceed the amount that would entitle all approved |
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investors in agriculture development companies to take total |
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credits of $62.5 million in a year. |
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(c) An agriculture development company and the company's |
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affiliates may not file premium tax credit allocation claims in |
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excess of the maximum amount of designated capital for which |
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premium tax credits may be allowed as provided by this section. |
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Sec. 230.305. ALLOCATION OF PREMIUM TAX CREDITS. (a) If |
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the total premium tax credits claimed by all approved investors |
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exceeds the total limits on premium tax credits established by |
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Section 230.304, the comptroller shall allocate the total amount of |
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premium tax credits allowed under this chapter to approved |
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investors in agriculture development companies on a pro rata basis |
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in accordance with this section. |
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(b) The pro rata allocation for each approved investor shall |
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be the product of: |
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(1) a fraction, the numerator of which is the amount of |
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the premium tax credit allocation claim filed on behalf of the |
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investor and the denominator of which is the total amount of all |
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premium tax credit allocation claims filed on behalf of all |
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approved investors; and |
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(2) the total amount of designated capital for which |
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premium tax credits may be allowed under this chapter. |
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(c) Not later than the 15th day after the date on which the |
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comptroller accepts premium tax credit allocation claims on behalf |
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of approved investors, the comptroller shall notify each |
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agriculture development company of the amount of tax credits |
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allocated to each approved investor in the agriculture development |
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company. Each agriculture development company shall notify each |
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approved investor of the investor's premium tax credit allocation. |
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(d) If an agriculture development company does not receive |
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an investment of designated capital equaling the amount of premium |
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tax credits allocated to an approved investor for which the company |
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filed a premium tax credit allocation claim before the end of the |
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10th business day after the date of receipt of notice of the |
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allocation, the company shall notify the comptroller as soon as |
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practicable, but not later than 24 hours, and the portion of |
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designated capital allocated to the approved investor shall be |
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forfeited. The comptroller shall reallocate the forfeited |
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designated capital among the approved investors in the other |
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agriculture development companies that originally received an |
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allocation so that the result after reallocation is the same as if |
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the initial allocation under this section had been performed |
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without considering any premium tax credit allocation claims |
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forfeited under this subsection. |
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Sec. 230.306. TREATMENT OF CREDITS AND CAPITAL. In any case |
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under this code or another insurance law of this state in which the |
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assets of an approved investor are examined or considered, the |
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designated capital may be treated as an admitted asset, subject to |
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the applicable statutory valuation procedures. |
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Sec. 230.307. TRANSFERABILITY OF CREDIT. (a) An approved |
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investor may transfer or assign premium tax credits only as |
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established by the comptroller by rule. |
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(b) The transfer or assignment of a premium tax credit does |
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not affect the schedule for taking the premium tax credit under this |
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chapter. |
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Sec. 230.308. IMPACT OF PREMIUM TAX CREDITS ON INSURANCE |
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RATEMAKING. An approved investor is not required to reduce the |
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amount of premium tax included by the investor in connection with |
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ratemaking for any insurance contract written in this state because |
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of a reduction in the investor's Texas premium tax derived from the |
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credit granted under this chapter. |
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SUBCHAPTER H. ENFORCEMENT |
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Sec. 230.351. ANNUAL REVIEW BY COMPTROLLER. (a) The |
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comptroller shall conduct an annual review of each agriculture |
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development company to: |
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(1) ensure that the agriculture development company: |
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(A) continues to satisfy the requirements of this |
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chapter; and |
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(B) has not made any investment, distribution, or |
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repayment in violation of this chapter; and |
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(2) determine the eligibility status of the company's |
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qualified investments. |
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(b) Each agriculture development company shall pay the cost |
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of the annual review according to a reasonable fee schedule adopted |
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by the comptroller. |
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Sec. 230.352. DISAPPROVAL OF AGRICULTURE DEVELOPMENT |
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COMPANY. (a) A material violation of Subchapter D or E or Section |
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230.106, 230.107, or 230.108 is grounds for the disapproval of an |
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agriculture development company. |
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(b) If the comptroller determines that an agriculture |
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development company is not in compliance with a law listed in |
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Subsection (a), the comptroller shall notify the company's officers |
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in writing that the company may be subject to disapproval after the |
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120th day after the date the notice is mailed unless the company: |
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(1) corrects the deficiencies; and |
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(2) returns to compliance with the law. |
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(c) The comptroller may disapprove an agriculture |
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development company, after opportunity for hearing, if the |
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comptroller finds that the company is not in compliance with a law |
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listed in Subsection (a) at the end of the period prescribed by |
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Subsection (b). |
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(d) Disapproval is effective on the date the agriculture |
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development company receives the notice of disapproval under |
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Subsection (b). |
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(e) The comptroller shall notify any appropriate state |
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agency of the disapproval of an agriculture development company. |
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Sec. 230.353. REDISTRIBUTION OF DESIGNATED CAPITAL AND |
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REALLOCATION OF PREMIUM TAX CREDITS AFTER DISAPPROVAL. (a) On |
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disapproval of an agriculture development company, the comptroller |
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shall, in accordance with this section, cause the redistribution of |
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the disapproved company's designated capital and the reallocation |
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of the premium tax credits corresponding to the redistributed |
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designated capital to participating companies. The comptroller |
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shall: |
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(1) cause the amount of designated capital remaining |
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in the disapproved agriculture development company's qualified |
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escrow account to be redistributed among the participating |
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companies on a pro rata basis determined by dividing the amount of |
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designated capital then held by each participating company by the |
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aggregate amount of designated capital then held by all |
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participating companies; |
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(2) cause that portion of a qualified debt instrument |
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that corresponds to the redistributed designated capital to be |
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assigned by the disapproved agriculture development company to the |
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participating company to which the designated capital was |
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redistributed; and |
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(3) reallocate that portion of the premium tax credits |
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that corresponds to the redistributed designated capital to the |
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participating company to which the designated capital was |
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redistributed. |
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(b) The designated capital and premium tax credits of any |
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agriculture development company that has invested an amount |
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cumulatively equal to 100 percent of the company's designated |
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capital in qualified investments is not subject to redistribution |
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or reallocation under this section. |
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(c) The comptroller shall send written notice to the address |
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shown on the last premium tax filing of each approved investor whose |
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premium tax credit is subject to reallocation under this section. |
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(d) An approved agriculture development company may opt out |
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of participating in future redistributions and reallocations under |
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this section by delivering a written opt-out notice to the |
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comptroller at any time. |
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Sec. 230.354. ADMINISTRATIVE PENALTY. (a) The comptroller |
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may impose an administrative penalty on an agriculture development |
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company that violates this chapter. |
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(b) The amount of the penalty may not exceed $10,000 per |
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violation. Each day a violation continues or occurs is a separate |
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violation for the purpose of imposing the penalty. The amount of |
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the penalty shall be based on: |
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(1) the seriousness of the violation, including the |
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nature, circumstances, and extent of the violation; |
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(2) the economic harm caused by the violation; |
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(3) the history of previous violations; |
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(4) the amount necessary to deter a future violation; |
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(5) efforts to correct the violation; and |
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(6) any other matter that justice may require. |
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(c) An agriculture development company assessed a penalty |
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under this chapter may request a redetermination as provided by |
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Chapter 111, Tax Code. |
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(d) The attorney general may sue to collect the penalty. |
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(e) A proceeding to impose the penalty is a contested case |
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under Chapter 2001, Government Code. |
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SECTION 2. (a) Notwithstanding anything in this Act to the |
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contrary, the comptroller of public accounts may implement Chapter |
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230, Insurance Code, as added by this Act, only if the comptroller |
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determines, on the basis of a revenue estimate made after the 87th |
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Legislature, Regular Session, 2021, adjourns sine die that revenues |
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are anticipated in amounts sufficient to finance all appropriations |
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made during that session of the 87th Legislature after making |
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deductions for all reductions in taxes, including the reduction in |
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premium tax through premium tax credits authorized under Chapter |
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230, Insurance Code, as added by this Act. |
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(b) If the comptroller of public accounts determines under |
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Subsection (a) of this section that revenues are anticipated to |
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support a part, but less than all, of the premium tax credits |
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authorized under Chapter 230, Insurance Code, as added by this Act, |
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the comptroller shall: |
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(1) reduce the total amount of premium tax credits |
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allowed under Chapter 230, Insurance Code, as added by this Act, in |
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the amount necessary to comply with Subsection (a) of this section; |
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and |
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(2) adopt rules as necessary to implement Chapter 230, |
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Insurance Code, as added by this Act, taking into account the |
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reduction to the amount of premium tax credits allowed that is made |
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under Subdivision (1) of this subsection. |
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(c) In adopting rules under Subsection (b)(2) of this |
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section, the comptroller of public accounts may adjust any deadline |
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or other date established under this Act as necessary to implement |
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Chapter 230, Insurance Code, as added by this Act, as limited by |
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this section. |
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(d) The comptroller of public accounts shall notify the |
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governor, lieutenant governor, and speaker of the house of |
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representatives of the determination made under Subsection (a) of |
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this section. |
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SECTION 3. (a) Subject to Section 2 of this Act, the |
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comptroller of public accounts shall, not later than the 60th day |
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after the effective date of this Act, adopt rules as necessary to |
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implement Chapter 230, Insurance Code, as added by this Act. |
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(b) The comptroller shall begin accepting applications for |
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approval as an agriculture development company under Chapter 230, |
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Insurance Code, as added by this Act, on January 31, 2022. |
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(c) An approved investor may not make an investment with an |
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agriculture development company under Chapter 230, Insurance Code, |
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as added by this Act, before June 30, 2022. |
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SECTION 4. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2021. |