Texas 2009 - 81st Regular

Texas House Bill HB4076 Compare Versions

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1	1	81R29439 BEF-F
2	2	By: Paxton, Pitts, McCall, Oliveira, Raymond H.B. No. 4076
3	3	Substitute the following for H.B. No. 4076:
4	4	By: Otto C.S.H.B. No. 4076
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the establishment of the Texas Power Source.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle F, Title 4, Government Code, is amended
12	12	by adding Chapter 490D to read as follows:
13	13	CHAPTER 490D. TEXAS POWER SOURCE
14	14	Sec. 490D.001. DEFINITIONS. In this chapter:
15	15	(1) "Investment team" means the nonprofit corporation
16	16	contracted by the oversight committee to manage the investments of
17	17	the Texas Power Source.
18	18	(2) "Oversight committee" means the committee
19	19	appointed by the governor with management and control of the Texas
20	20	Power Source.
21	21	(3) "Selection committee" means the committee
22	22	appointed by the governor to nominate members of the board of
23	23	directors of the investment team.
24	24	(4) "Texas Power Source" means the account created
25	25	under this chapter.
26	26	Sec. 490D.002. PURPOSE. (a) The Texas Power Source is
27	27	established to invest in Texas businesses and assets and to attract
28	28	capital to invest in Texas businesses and assets.
29	29	(b) The establishment, management, and investment of the
30	30	Texas Power Source is a program under Section 52-a, Article III,
31	31	Texas Constitution.
32	32	Sec. 490D.003. TEXAS POWER SOURCE. (a) The Texas Power
33	33	Source is an account outside the state treasury.
34	34	(b) The comptroller shall deposit funds in the Texas Power
35	35	Source as provided by the General Appropriations Act.
36	36	Sec. 490D.004. OVERSIGHT COMMITTEE. (a) The governor shall
37	37	appoint a nine-member oversight committee.
38	38	(b) The oversight committee has control and management of
39	39	the Texas Power Source.
40	40	(c) The oversight committee shall consider and approve or
41	41	reject nominees to the board of directors of the investment team.
42	42	The oversight committee shall approve nominees to the board of
43	43	directors of the investment team who have demonstrated and
44	44	substantial investment expertise.
45	45	(d) The governor may remove and replace members of the
46	46	oversight committee.
47	47	Sec. 490D.005. SELECTION COMMITTEE. (a) The governor, in
48	48	consultation with the lieutenant governor and the speaker of the
49	49	house of representatives, shall appoint a five-member selection
50	50	committee.
51	51	(b) The selection committee shall identify and select
52	52	nominees to the board of directors of the investment team. The
53	53	selection committee shall engage an executive search firm to ensure
54	54	each selection is conducted with due diligence. The selection
55	55	committee shall submit the names of nominees to the oversight
56	56	committee for approval.
57	57	(c) The governor may remove and replace members of the
58	58	selection committee.
59	59	Sec. 490D.006. INVESTMENT TEAM. (a) The investment team
60	60	must be organized as a nonprofit corporation under the Business
61	61	Organizations Code. The investment team is not a state agency and
62	62	the board of directors of the investment team are not state
63	63	employees.
64	64	(b) The oversight committee shall enter into a contract with
65	65	the investment team for the investment team to invest the Texas
66	66	Power Source. The investment team may not engage in any business
67	67	other than investing funds designated by the oversight committee
68	68	under the contract.
69	69	(c) The oversight committee must approve the:
70	70	(1) certificate of formation and bylaws of the
71	71	investment team and any amendment to the certificate of formation
72	72	or bylaws;
73	73	(2) investment policies of the investment team,
74	74	including changes to those policies;
75	75	(3) audit and ethics committee of the investment team;
76	76	and
77	77	(4) code of ethics of the investment team.
78	78	(d) The contract between the oversight committee and the
79	79	investment team must provide for industry-standard compensation
80	80	for the team's services. The contract may provide for an
81	81	asset-based fee and a performance-based fee. The contract must
82	82	contain representations by the investment team that it has all
83	83	required licenses and registrations to act as investment manager of
84	84	the Texas Power Source. The investment team compensation is an
85	85	expense of the Texas Power Source. The contract must allow the
86	86	investment team to purchase, as an expense of the Texas Power
87	87	Source, liability insurance for the coverage of the board of
88	88	directors, employees, and agents of the investment team.
89	89	(e) Under the contract between the oversight committee and
90	90	the investment team, the oversight committee may delegate to the
91	91	investment team the discretion and authority to:
92	92	(1) employ and retain staff within budgetary
93	93	constraints;
94	94	(2) acquire and dispose of the fund's assets for
95	95	investment purposes;
96	96	(3) determine all matters relating to the manner,
97	97	method, terms, conditions, and timing of investments and engage
98	98	consultants and analysts in connection with those matters;
99	99	(4) select brokers, dealers, and other intermediaries
100	100	by or through whom investments are executed;
101	101	(5) take any action necessary for the administration
102	102	and protection of the Texas Power Source;
103	103	(6) exercise all voting and other powers and
104	104	privileges attributable to an investment under contract by the
105	105	Texas Power Source;
106	106	(7) make and execute all documents and take all other
107	107	actions as necessary or appropriate to carry out the investment
108	108	team's duties under this chapter; and
109	109	(8) pay expenses of the Texas Power Source.
110	110	Sec. 490D.007. INVESTMENT STRATEGY; AUTHORIZED
111	111	INVESTMENTS. (a) The oversight committee shall ensure that the
112	112	Texas Power Source is invested in accordance with the investment
113	113	strategy under this section.
114	114	(b) The contract between the oversight committee and the
115	115	investment team must require the investment team to comply with the
116	116	investment strategy under this section.
117	117	(c) The Texas Power Source shall be invested according to an
118	118	investment strategy that maximizes the total investment return, as
119	119	described by this section, to this state. The total return may be
120	120	measured by the sum of:
121	121	(1) the direct taxpayer return, represented by the
122	122	creation of jobs in this state and the stimulation of the economy of
123	123	this state resulting from the aggregate invested capital; and
124	124	(2) the capital return, represented by the return to
125	125	this state of invested and appreciated capital.
126	126	(d) In implementing the investment strategy, the investment
127	127	team may consider the current economic conditions and give
128	128	significant weight to the direct taxpayer return, as described by
129	129	Subsection (c)(1), as appropriate. In implementing the investment
130	130	strategy, the investment team shall consider both the current
131	131	return and future potential returns.
132	132	(e) Eighty percent of the Texas Power Source assets shall be
133	133	invested according to a co-investment strategy in a manner that
134	134	leverages the resources and investing experience of private-sector
135	135	investors in order to ensure an efficient allocation of Texas Power
136	136	Source assets. Under the co-investment strategy, the investment
137	137	team shall make investment decisions identical to those made by
138	138	substantial and experienced private-sector investors, such as
139	139	seasoned venture capital investors. The amount of Texas Power
140	140	Source assets invested in a co-investment may not be greater than
141	141	the amount of assets invested by the private-sector investor. The
142	142	investment team shall make co-investments on terms and conditions
143	143	that are necessary and reasonably calculated to attract significant
144	144	investment by private-sector investors, from both inside and
145	145	outside this state, and in such a way as to maximize the aggregate
146	146	capital deployed into the economy of this state in accordance with
147	147	the objectives of the investment strategy. To the extent allowed by
148	148	law, the co-investment terms may include the deployment of debt,
149	149	equity, or subsidies as necessary to facilitate an appropriate
150	150	investment.
151	151	(f) Twenty percent of the Texas Power Source assets shall be
152	152	invested in small businesses. The total amount of investments made
153	153	in small businesses under the control of any individual may not
154	154	exceed $2 million. Investments under this subsection may be made
155	155	with or without coinvestor participation.
156	156	(g) The assets of the Texas Power Source may be invested
157	157	only in businesses, public or private, with operations and assets
158	158	substantially located in this state and only in investments with
159	159	the potential for job and economic growth in this state in
160	160	accordance with the investment strategy.
161	161	(h) All income and returns realized on investments shall be
162	162	retained in the Texas Power Source and made available for
163	163	additional investments until the Texas Power Source is dissolved.
164	164	Sec. 490D.008. OVERSIGHT. (a) The oversight committee
165	165	shall review the activities of the investment team to ensure
166	166	compliance with the investment strategy and operating guidelines
167	167	provided by this chapter.
168	168	(b) On a determination by at least two-thirds of the members
169	169	of the oversight committee that the activities of the investment
170	170	team are in material noncompliance with the provisions of this
171	171	chapter or the terms of the investment team's contract, the state
172	172	oversight committee may remove any or all of the members of the
173	173	board of directors of the investment team. The selection committee
174	174	shall nominate members to fill vacancies created by the removal of
175	175	members of the board of directors.
176	176	(c) The investment team shall make quarterly reports to the
177	177	oversight committee and annual reports to the state oversight
178	178	committee and the legislature regarding the finances and operation
179	179	of the Texas Power Source.
180	180	Sec. 490D.009. DISSOLUTION. (a) The investment team shall
181	181	begin dissolution of the Texas Power Source not later than
182	182	September 1, 2019, or the 10th anniversary of the date of extension
183	183	of the Texas Power Source, as applicable. The investment team shall
184	184	use reasonable efforts to plan the orderly liquidation of
185	185	investments so that all investments will be liquidated before
186	186	September 1, 2020, or the 11th anniversary of the date of extension
187	187	of the Texas Power Source, as applicable.
188	188	(b) Except under unusual circumstances in which it may be
189	189	necessary to protect investments previously made, further
190	190	investments may not be made in or by the Texas Power Source after
191	191	September 1, 2019, or the 10th anniversary of the date of extension,
192	192	as applicable.
193	193	(c) Upon dissolution, the Texas Power Source's assets shall
194	194	be returned to the comptroller.
195	195	(d) At the regular legislative session next preceding
196	196	September 1, 2019, or the 10th anniversary of the date of the
197	197	previous extension of the Texas Power Source, as applicable, the
198	198	legislature, by a two-thirds vote of the members present in each
199	199	house, may extend the duration of the Texas Power Source for 10
200	200	years.
201	201	Sec. 490D.010. RESTRICTIONS ON LOBBYING EXPENDITURES. (a) A
202	202	political subdivision or private entity that receives Texas Power
203	203	Source funds may not use those funds to pay:
204	204	(1) lobbying expenses;
205	205	(2) a person or entity that is required to register
206	206	with the Texas Ethics Commission under Chapter 305;
207	207	(3) a partner, employee, employer, relative,
208	208	contractor, consultant, or related entity of a person described by
209	209	Subdivision (2); or
210	210	(4) a person that has been hired to represent
211	211	associations or other entities for the purpose of affecting the
212	212	outcome of legislation, agency rules, ordinances, or other
213	213	government policies.
214	214	(b) A person serving on the selection committee, oversight
215	215	committee, or board of directors of the investment team or as an
216	216	employee of the investment team may not receive or give a gift in
217	217	exchange for taking an action in connection with the person's
218	218	duties under this chapter.
219	219	Sec. 490D.011. PROHIBITED ACTS. The Texas Power Source and
220	220	persons on the oversight committee, selection committee, or board
221	221	of directors of the investment team may not use Texas Power Source
222	222	money under the person's control, including appropriated money,
223	223	capital appreciation, or money invested in a co-investment, to
224	224	finance or otherwise support the candidacy of a person for an office
225	225	of a local or county government, of the legislative, executive, or
226	226	judicial branch of state government, or of the government of the
227	227	United States.
228	228	SECTION 2. Not later than the 30th day after the effective
229	229	date of this Act, the governor shall appoint the members of the
230	230	selection committee and the oversight committee under Chapter 490D,
231	231	Government Code, as added by this Act.
232	232	SECTION 3. This Act takes effect immediately if it receives
233	233	a vote of two-thirds of all the members elected to each house, as
234	234	provided by Section 39, Article III, Texas Constitution. If this
235	235	Act does not receive the vote necessary for immediate effect, this
236	236	Act takes effect September 1, 2009.