Texas 2013 - 83rd Regular

Texas House Bill HB2061 Compare Versions

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1	1	By: Murphy, et al. (Senate Sponsor - Hancock) H.B. No. 2061
2	2	(In the Senate - Received from the House May 10, 2013;
3	3	May 15, 2013, read first time and referred to Committee on Economic
4	4	Development; May 17, 2013, reported favorably by the following
5	5	vote: Yeas 5, Nays 0; May 17, 2013, sent to printer.)
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to a tax credit for investment in certain communities;
11	11	imposing a monetary penalty; authorizing a fee.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Subtitle B, Title 3, Insurance Code, is amended
14	14	by adding Chapter 231 to read as follows:
15	15	CHAPTER 231. TAX CREDIT FOR INVESTMENT IN CERTAIN COMMUNITIES
16	16	SUBCHAPTER A. GENERAL PROVISIONS
17	17	Sec. 231.001. GENERAL DEFINITIONS. In this chapter:
18	18	(1) "Applicable percentage" means zero percent for the
19	19	first two credit allowance dates, seven percent for the third
20	20	credit allowance date, and eight percent for the next four credit
21	21	allowance dates.
22	22	(2) "Comptroller" means the comptroller of public
23	23	accounts.
24	24	(3) "Credit allowance date" means, with respect to any
25	25	qualified equity investment:
26	26	(A) the date on which the investment is initially
27	27	made; and
28	28	(B) the anniversary of that date in each of the
29	29	six years immediately following that date.
30	30	(4) "Purchase price" means the amount paid to the
31	31	issuer of a qualified equity investment for the qualified equity
32	32	investment.
33	33	(5) "State premium tax liability" means any premium
34	34	tax liability incurred under Chapter 221, 222, 223, or 224.
35	35	Sec. 231.002. DEFINITION: LONG-TERM DEBT SECURITY. (a) In
36	36	this chapter, "long-term debt security" means a debt instrument
37	37	issued by a qualified community development entity, at par value or
38	38	a premium, with an original maturity date not earlier than the
39	39	seventh year after the date on which the debt instrument is issued,
40	40	with no acceleration of repayment, amortization, or prepayment
41	41	features before its original maturity date.
42	42	(b) The qualified community development entity that issues
43	43	a long-term debt security may not make cash interest payments on the
44	44	security during the period beginning on the date on which the
45	45	security is issued and ending on the final credit allowance date in
46	46	an amount that exceeds the cumulative operating income, as defined
47	47	by regulations adopted under Section 45D, Internal Revenue Code of
48	48	1986, of the qualified community development entity for that period
49	49	before giving effect to the interest expense of the long-term debt
50	50	security.
51	51	(c) This section does not limit the holder's ability to
52	52	accelerate payments on a long-term debt security in situations
53	53	where the issuer has defaulted on covenants designed to ensure
54	54	compliance with this chapter or Section 45D, Internal Revenue Code
55	55	of 1986.
56	56	Sec. 231.003. DEFINITION: QUALIFIED ACTIVE LOW-INCOME
57	57	COMMUNITY BUSINESS. (a) In this chapter, "qualified active
58	58	low-income community business" has the meaning assigned by Section
59	59	45D, Internal Revenue Code of 1986, and 26 C.F.R. Section 1.45D-1,
60	60	except that the term is limited to those businesses that do not
61	61	exceed the Small Business Administration size eligibility
62	62	standards established by 13 C.F.R. Section 121.201 at the time the
63	63	qualified low-income community investment is made.
64	64	(b) A business is considered a qualified active low-income
65	65	community business for the duration of the qualified community
66	66	development entity's investment in, or loan to, the business if the
67	67	entity reasonably expects, at the time it makes the investment or
68	68	loan, that the business will continue to satisfy the requirements
69	69	for being a qualified active low-income community business, other
70	70	than the Small Business Administration size standards, throughout
71	71	the entire period of the investment or loan.
72	72	(c) A business that derives or projects to derive 15 percent
73	73	or more of its annual revenue from the rental or sale of real estate
74	74	is not a qualified active low-income community business for
75	75	purposes of this chapter. This exclusion does not apply to a
76	76	business that is controlled by, or under common control with, an
77	77	affiliated entity if the affiliated entity:
78	78	(1) does not derive or project to derive 15 percent or
79	79	more of its annual revenue from the rental or sale of real estate;
80	80	and
81	81	(2) is the primary tenant of the real estate leased
82	82	from the business.
83	83	Sec. 231.004. DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT
84	84	ENTITY. In this chapter, "qualified community development entity"
85	85	has the meaning assigned by Section 45D, Internal Revenue Code of
86	86	1986, provided that the entity has entered into, for the current
87	87	year or any prior year, an allocation agreement with the community
88	88	development financial institutions fund of the United States
89	89	Department of the Treasury with respect to credits authorized by
90	90	Section 45D, Internal Revenue Code of 1986, that includes this
91	91	state in the service area set forth in the allocation agreement.
92	92	The term includes a qualified community development entity that is
93	93	controlled by or under common control with another qualified
94	94	community development entity described by this section.
95	95	Sec. 231.005. DEFINITION: QUALIFIED EQUITY INVESTMENT. (a)
96	96	An investment or security is a "qualified equity investment" for
97	97	purposes of this chapter if:
98	98	(1) the investment or security is an equity investment
99	99	in, or long-term debt security issued by, a qualified community
100	100	development entity;
101	101	(2) the investment or security is acquired on or after
102	102	October 1, 2013, at its original issuance solely in exchange for
103	103	cash;
104	104	(3) not later than the first anniversary of the
105	105	initial credit allowance date at least 100 percent of the
106	106	investment's or security's cash purchase price is used by the issuer
107	107	to make qualified low-income community investments in qualified
108	108	active low-income community businesses located in this state; and
109	109	(4) the investment or security is designated by the
110	110	issuer as a qualified equity investment under this section and is
111	111	certified by the comptroller as not exceeding the limitation
112	112	provided by Section 231.104.
113	113	(b) Qualified equity investment includes an investment or
114	114	security that does not satisfy the requirements of Subsection (a)
115	115	if the investment or security was a qualified equity investment in
116	116	the hands of a prior holder.
117	117	Sec. 231.006. DEFINITION: QUALIFIED LOW-INCOME COMMUNITY
118	118	INVESTMENT. In this chapter, "qualified low-income community
119	119	investment" means a capital or equity investment in, or loan to, a
120	120	qualified active low-income community business with respect to
121	121	which a federal qualified low-income community investment of some
122	122	amount is made concurrently with the investment or loan.
123	123	Sec. 231.007. DEFINITION: QUALIFIED INVESTOR. In this
124	124	chapter, "qualified investor" means an entity that makes a
125	125	qualified equity investment as defined by Section 231.005, or an
126	126	entity that is allocated premium tax credits under Section
127	127	231.052(b).
128	128	Sec. 231.008. NEW MARKETS PERFORMANCE GUARANTEE ACCOUNT.
129	129	The new markets performance guarantee account is established as a
130	130	special account outside the state treasury. The comptroller shall
131	131	administer the account and shall deposit a refundable performance
132	132	deposit received from a qualified community development entity
133	133	under Subchapter E into the account.
134	134	Sec. 231.009. RULES AND STANDARDS. (a) The comptroller may
135	135	adopt rules as necessary to implement the duties of the comptroller
136	136	under this chapter.
137	137	(b) The comptroller, acting as the administrator, may:
138	138	(1) by rule set limits and restrictions on the use of
139	139	the proceeds raised by a qualified community development entity,
140	140	consistent with Section 45D, Internal Revenue Code of 1986;
141	141	(2) review or audit the investments of a qualified
142	142	community development entity on a periodic basis;
143	143	(3) establish limits on the formation and syndication
144	144	costs of a qualified community development entity and the entity's
145	145	debt instruments;
146	146	(4) consistent with practices under Section 45D,
147	147	Internal Revenue Code of 1986, establish limits of a qualified
148	148	community development entity's operating expenses, including legal
149	149	fees, loan sourcing or origination fees, loan servicing fees,
150	150	management fees paid to affiliated firms, including
151	151	non-Texas-based firms, organizational and formation expenses, and
152	152	performance bonds; and
153	153	(5) limit any original issue discount on a debt
154	154	instrument issued by a qualified community development entity.
155	155	SUBCHAPTER B. TAX CREDIT
156	156	Sec. 231.051. CREDIT ESTABLISHED. (a) Subject to Section
157	157	231.052(b), a qualified investor that makes a qualified equity
158	158	investment earns a vested right to credit against the qualified
159	159	investor's state premium tax liability.
160	160	(b) On each credit allowance date of a qualified equity
161	161	investment, the qualified investor, or a subsequent holder of the
162	162	qualified equity investment, may claim a portion of the credit
163	163	during the tax year of that credit allowance date.
164	164	(c) The credit amount is equal to the applicable percentage
165	165	for the credit allowance date multiplied by the purchase price paid
166	166	to the issuer of the qualified equity investment.
167	167	(d) The amount of the credit claimed by a qualified investor
168	168	may not exceed the amount of the qualified investor's state premium
169	169	tax liability for the tax year for which the credit is claimed. Any
170	170	amount of tax credit that the qualified investor is prohibited from
171	171	claiming in a tax year as a result of this subsection may be carried
172	172	forward for use in a subsequent tax year.
173	173	Sec. 231.052. TRANSFERABILITY. (a) A premium tax credit
174	174	claimed under this chapter is not refundable or salable.
175	175	(b) A premium tax credit earned by or allocated to a
176	176	partnership, limited liability company, S corporation, or other
177	177	pass-through entity may be allocated to the partners, members, or
178	178	shareholders of the entity for their direct use in accordance with
179	179	an agreement among the partners, members, or shareholders. An
180	180	allocation under this subsection does not constitute a sale for
181	181	purposes of this chapter.
182	182	Sec. 231.053. RETALIATORY TAX. (a) A qualified investor or
183	183	a subsequent holder of a qualified equity investment claiming a
184	184	premium tax credit under this chapter is not required to pay any
185	185	additional retaliatory tax levied under Chapter 281 as a result of
186	186	claiming that credit.
187	187	(b) In addition to the exclusion provided by Subsection (a),
188	188	a qualified investor or a subsequent holder of the qualified equity
189	189	investment claiming a credit under this chapter is not required to
190	190	pay any additional tax that may arise as a result of claiming that
191	191	credit.
192	192	SUBCHAPTER C. CERTIFICATION OF QUALIFIED EQUITY INVESTMENTS
193	193	Sec. 231.101. APPLICATION FOR CERTIFICATION OF QUALIFIED
194	194	EQUITY INVESTMENT. (a) A qualified community development entity
195	195	that seeks to have an equity investment or long-term debt security
196	196	certified as a qualified equity investment eligible for premium tax
197	197	credits under this chapter must apply to the comptroller, acting as
198	198	administrator under this chapter, as provided by this section.
199	199	(b) An application under this section must include the
200	200	following:
201	201	(1) evidence of the applicant's certification as a
202	202	qualified community development entity, including evidence of the
203	203	service area of the entity that includes this state;
204	204	(2) a copy of an allocation agreement executed by the
205	205	applicant, or its controlling entity, and the community development
206	206	financial institutions fund;
207	207	(3) a certificate executed by an executive officer of
208	208	the applicant attesting that the allocation agreement remains in
209	209	effect and has not been revoked or canceled by the community
210	210	development financial institutions fund;
211	211	(4) a description of the proposed amount and
212	212	structure, and of the purchaser, of the qualified equity
213	213	investment;
214	214	(5) identifying information for a qualified investor
215	215	that will earn premium tax credits as a result of the issuance of
216	216	the qualified equity investment;
217	217	(6) except as provided by Subsection (c), examples of
218	218	the types of qualified active low-income community businesses in
219	219	which the applicant, its controlling entity, or affiliates of its
220	220	controlling entity have invested under the federal New Markets Tax
221	221	Credit Program;
222	222	(7) a nonrefundable application fee of $5,000 to be
223	223	paid to the comptroller; and
224	224	(8) except as provided by Section 231.201(c), the
225	225	refundable performance deposit of $500,000 required by Subchapter
226	226	E.
227	227	(c) An applicant is not required to have invested under the
228	228	federal New Markets Tax Credit Program, and an application is not
229	229	required to include the examples described by Subsection (b)(6), if
230	230	the application includes information in the form required by the
231	231	comptroller demonstrating that the applicant, together with the
232	232	applicant's controlling entity and the affiliates of its
233	233	controlling entity:
234	234	(1) is a duly formed qualified community development
235	235	entity;
236	236	(2) has total assets under management in the amount of
237	237	$250 million or less; and
238	238	(3) has a demonstrable track record of successfully
239	239	investing in low-income communities, as defined by Section 45D,
240	240	Internal Revenue Code of 1986.
241	241	Sec. 231.102. ACTION ON APPLICATION. (a) Not later than
242	242	the 30th day after the date an application under Section 231.101 is
243	243	received, the comptroller shall grant or deny the application in
244	244	full or in part.
245	245	(b) If the comptroller denies part of the application, the
246	246	comptroller shall inform the applicant of the grounds for denial.
247	247	(c) If the applicant provides additional information
248	248	required by the comptroller or otherwise completes the application
249	249	not later than the 15th day after the date of the notice of denial,
250	250	the application is considered completed as of the date on which it
251	251	was originally submitted. If the qualified community development
252	252	entity fails to provide the information or complete its application
253	253	before that date, the application is denied and must be resubmitted
254	254	in full and has a new submission date.
255	255	Sec. 231.103. CERTIFICATION OF QUALIFIED EQUITY
256	256	INVESTMENT. (a) If an application under Section 231.101 is granted
257	257	under Section 231.102, the comptroller shall certify the proposed
258	258	equity investment or long-term debt security as a qualified equity
259	259	investment that is eligible for premium tax credits under this
260	260	chapter, subject to Section 231.104.
261	261	(b) The comptroller shall provide written notice of the
262	262	certification to the qualified community development entity.
263	263	(c) The notice must include the names of those entities that
264	264	will earn the credits and their respective credit amounts. If the
265	265	names of the entities that are eligible to claim the credits change
266	266	due to a transfer of a qualified equity investment or an allocation
267	267	under Section 231.052, the qualified community development entity
268	268	shall notify the comptroller of the change.
269	269	(d) The comptroller shall certify qualified equity
270	270	investments in the order in which applications are received by the
271	271	comptroller. Applications received on the same day are considered
272	272	to have been received simultaneously. For applications that are
273	273	complete and received on the same day, the comptroller shall
274	274	certify, consistent with remaining qualified equity investment
275	275	capacity, the qualified equity investments in proportionate
276	276	percentages based on the proportion that the amount of qualified
277	277	equity investment requested in an application bears to the total
278	278	amount of qualified equity investments requested in all
279	279	applications received on the same day.
280	280	Sec. 231.104. LIMIT ON CERTIFIED INVESTMENTS. Not more
281	281	than $750 million in qualified equity investments may be certified
282	282	under Section 231.103. If a pending request cannot be fully
283	283	certified due to this limit, the comptroller shall certify the
284	284	portion that can be certified unless the qualified community
285	285	development entity elects to withdraw the request rather than
286	286	receive partial certification.
287	287	Sec. 231.105. TRANSFER OF INVESTMENT AUTHORITY. An
288	288	approved applicant may transfer all or a portion of its certified
289	289	qualified equity investment authority to its controlling entity or
290	290	to a qualified community development entity controlled by or under
291	291	common control with the applicant, if the applicant:
292	292	(1) provides the information required in the
293	293	application with respect to the recipient of the transfer; and
294	294	(2) notifies the comptroller of the transfer not later
295	295	than the 30th day after the date of the transfer.
296	296	Sec. 231.106. ISSUANCE OF QUALIFIED EQUITY INVESTMENT. (a)
297	297	Not later than the 60th day after the date the applicant receives
298	298	notice of certification, the qualified community development
299	299	entity or a recipient of a transfer under Section 231.105 shall
300	300	issue the qualified equity investment and receive cash in the
301	301	amount certified.
302	302	(b) The qualified community development entity or a
303	303	recipient of a transfer under Section 231.105 must provide the
304	304	comptroller with evidence of the receipt of the cash investment not
305	305	later than the 10th business day after the date the cash investment
306	306	is received.
307	307	Sec. 231.107. LAPSE OF CERTIFICATION. (a) If the qualified
308	308	community development entity or a recipient of a transfer under
309	309	Section 231.105 does not receive the cash investment and issue the
310	310	qualified equity investment before the 30th day after the date the
311	311	certification notice is received as required by Section 231.106,
312	312	the certification lapses and the qualified community development
313	313	entity may not issue the qualified equity investment without
314	314	reapplying to the comptroller for certification.
315	315	(b) If a certification lapses under this section, the
316	316	comptroller shall reissue the certified amount, giving preference
317	317	to an applicant whose allocation was reduced under Section 231.104.
318	318	If more than one applicant had its allocation reduced, the
319	319	comptroller shall reissue the certified amount on a pro rata basis.
320	320	After the allocation to applicants whose allocation was reduced
321	321	under Section 231.104, the comptroller shall reissue any certified
322	322	amount that remains in accordance with the application process.
323	323	SUBCHAPTER D. RECAPTURE OF PREMIUM TAX CREDIT
324	324	Sec. 231.151. RECAPTURE. (a) Subject to Section 231.152,
325	325	the comptroller shall recapture the amount of a tax credit claimed
326	326	on a premium tax report filed under this subtitle from the qualified
327	327	investor or a subsequent holder of the qualified equity investment
328	328	that claims the credit if:
329	329	(1) any amount of a federal tax credit available with
330	330	respect to a qualified equity investment that is eligible for a
331	331	credit under this chapter is recaptured under Section 45D, Internal
332	332	Revenue Code of 1986, in which case the comptroller's recapture
333	333	must be proportionate to the federal recapture with respect to the
334	334	qualified equity investment;
335	335	(2) the issuer redeems or makes principal repayment
336	336	with respect to a qualified equity investment before the seventh
337	337	anniversary of the date the qualified equity investment is issued,
338	338	in which case the comptroller's recapture must be proportionate to
339	339	the amount of the redemption or repayment with respect to the
340	340	qualified equity investment;
341	341	(3) the issuer fails to invest an amount equal to 100
342	342	percent of the purchase price of the qualified equity investment in
343	343	qualified low-income community investments in this state during the
344	344	12-month period immediately following the date the qualified equity
345	345	investment is issued or to maintain at least 100 percent of that
346	346	level of investment in qualified low-income community investments
347	347	in this state until the last credit allowance date for the qualified
348	348	equity investment; or
349	349	(4) at any time before the final credit allowance date
350	350	of a qualified equity investment, the issuer uses the cash proceeds
351	351	of the qualified equity investment to make qualified low-income
352	352	community investments in any one qualified active low-income
353	353	community business, including affiliated qualified active
354	354	low-income community businesses, exclusive of reinvestments of
355	355	capital returned or repaid with respect to earlier investments in
356	356	the qualified active low-income community business and its
357	357	affiliates, in excess of 25 percent of the cash proceeds of all
358	358	qualified equity investments issued by the issuer under this
359	359	chapter.
360	360	(b) For purposes of this chapter, an investment is
361	361	considered held by an issuer even if the investment has been sold or
362	362	repaid if the issuer reinvests an amount equal to the capital
363	363	returned to or recovered by the issuer from the original
364	364	investment, exclusive of any profits realized, in another qualified
365	365	low-income community investment not later than the 12th month after
366	366	the date the issuer receives the capital.
367	367	(c) An issuer is not required to reinvest capital returned
368	368	from a qualified low-income community investment after the sixth
369	369	anniversary of the date the qualified equity investment is issued,
370	370	the proceeds of which were used to make the qualified low-income
371	371	community investment, and the qualified low-income community
372	372	investment is considered held by the issuer through the seventh
373	373	anniversary of the date the qualified equity investment was issued.
374	374	(d) Periodic amounts received during a calendar year as
375	375	repayment of principal on a loan that is a qualified low-income
376	376	community investment shall be treated as continuously invested in a
377	377	qualified low-income community investment if the amounts are
378	378	reinvested in one or more qualified low-income community
379	379	investments not later than the last day of the following calendar
380	380	year.
381	381	Sec. 231.152. NOTICE OF NONCOMPLIANCE. (a) The comptroller
382	382	shall notify a qualified community development entity and a
383	383	qualified investor that has claimed a tax credit on a premium tax
384	384	report if the credit is subject to recapture under Section 231.151.
385	385	(b) The comptroller may not recapture a tax credit under
386	386	this subchapter if the qualified community development entity cures
387	387	the noncompliance described by Section 231.151 before the 180th day
388	388	after the date the qualified community development entity receives
389	389	notice under Subsection (a).
390	390	SUBCHAPTER E. PERFORMANCE DEPOSIT
391	391	Sec. 231.201. PERFORMANCE DEPOSIT OR SURETY BOND REQUIRED.
392	392	(a) Except as provided by Subsection (c), a qualified community
393	393	development entity that submits an application to have an equity
394	394	investment or long-term debt security certified as a qualified
395	395	equity investment eligible for premium tax credits under this
396	396	chapter must deposit $500,000 with the comptroller for deposit in
397	397	the new markets performance guarantee account, or maintain a surety
398	398	bond of an equal amount.
399	399	(b) If the comptroller denies an application described by
400	400	Subsection (a) in full, the comptroller shall refund the deposit to
401	401	the applicant not later than the 15th day after the date of the
402	402	denial.
403	403	(c) A qualified community development entity is not
404	404	required to make a deposit under this section if the qualified
405	405	community development entity is:
406	406	(1) formed or operated by a governmental entity; or
407	407	(2) a nonprofit organization.
408	408	Sec. 231.202. FORFEITURE OF DEPOSIT. (a) A qualified
409	409	community development entity that makes a performance deposit under
410	410	Section 231.201(a) shall forfeit the deposit in its entirety if:
411	411	(1) the qualified community development entity and any
412	412	qualified community development entity to which a transfer is made
413	413	by the qualified community development entity under Section 231.105
414	414	fail to issue the total amount of qualified equity investments
415	415	certified by the comptroller and receive cash in the total amount
416	416	certified under Section 231.103 not later than the date specified
417	417	by Section 231.106; or
418	418	(2) the qualified community development entity or a
419	419	qualified community development entity to which a transfer is made
420	420	by the qualified community development entity under Section 231.105
421	421	that issues a qualified equity investment certified under Section
422	422	231.103 fails to meet the investment requirement under Section
423	423	231.151(a)(3) by the second credit allowance date of the qualified
424	424	equity investment.
425	425	(b) The comptroller shall notify a qualified community
426	426	development entity that has made a deposit under Section 231.201(a)
427	427	if the deposit is subject to forfeiture under this section.
428	428	(c) A deposit is not subject to forfeiture under Subsection
429	429	(a)(2) if the qualified community development entity cures the
430	430	noncompliance before the 180th day after the date the qualified
431	431	community development entity receives notice under Subsection (b).
432	432	Sec. 231.203. NEW MARKETS PERFORMANCE GUARANTEE
433	433	ACCOUNT. (a) The deposit required by Section 231.201(a) shall be
434	434	made with the comptroller and held in the new markets performance
435	435	guarantee account until the comptroller finds that the qualified
436	436	community development entity has complied with the provisions of
437	437	this chapter.
438	438	(b) The qualified community development entity may request
439	439	a refund of the deposit from the comptroller not earlier than the
440	440	30th day after the date the requirements that must be satisfied to
441	441	avoid forfeiture of the deposit, as described by Section 231.202,
442	442	are satisfied.
443	443	(c) The comptroller shall refund the deposit or, if
444	444	applicable, give notice of noncompliance not later than the 30th
445	445	day after the date of receiving a request that complies with
446	446	Subsection (b).
447	447	SUBCHAPTER F. EVALUATION OF BUSINESS BY COMPTROLLER
448	448	Sec. 231.251. REQUEST FOR EVALUATION. (a) A qualified
449	449	community development entity may, before making an investment in a
450	450	business, request a written opinion from the comptroller as to
451	451	whether the business in which the qualified community development
452	452	entity proposes to invest would qualify as a qualified active
453	453	low-income community business according to Section 231.003.
454	454	(b) Not later than the 15th business day after the date of
455	455	the receipt of a request under Subsection (a), the comptroller
456	456	shall:
457	457	(1) determine whether the business meets the
458	458	definition of a qualified active low-income community business, as
459	459	applicable, and notify the qualified community development entity
460	460	of the determination and provide an explanation of the
461	461	determination; or
462	462	(2) notify the qualified community development entity
463	463	that the comptroller requires additional time, which may not exceed
464	464	15 days, to review the request and make the determination.
465	465	(c) If the comptroller fails to notify the qualified
466	466	community development entity with respect to the proposed
467	467	investment within the period as specified by Subsection (b), the
468	468	business in which the qualified community development entity
469	469	proposes to invest is considered to be a qualified active
470	470	low-income community business.
471	471	Sec. 231.252. CONSIDERATION OF INTERNAL REVENUE CODE. In
472	472	issuing a written opinion and making other determinations under
473	473	this chapter, the comptroller shall consider Section 45D, Internal
474	474	Revenue Code of 1986, and the rules and regulations issued under
475	475	that code, to the extent that those provisions are applicable.
476	476	SUBCHAPTER G. REPORTING
477	477	Sec. 231.301. REPORT TO COMPTROLLER. (a) Except as
478	478	provided by this subsection, a qualified community development
479	479	entity that issues a qualified equity investment under Section
480	480	231.106 shall submit an annual report to the comptroller not later
481	481	than the fifth business day after the anniversary of a credit
482	482	allowance date applicable to the investment. The qualified
483	483	community development entity is not required to submit any report
484	484	under this section after the annual report following the final
485	485	applicable credit allowance date.
486	486	(b) The report must:
487	487	(1) provide evidence that the qualified community
488	488	development entity has not failed to meet the investment
489	489	requirement under Section 231.151(a)(3);
490	490	(2) include one or more bank statements for the
491	491	qualified community development entity that reflect each qualified
492	492	low-income community investment made by the qualified community
493	493	development entity in connection with the qualified equity
494	494	investment;
495	495	(3) state the name, location, and industry code of
496	496	each qualified active low-income community business receiving a
497	497	qualified low-income community investment in connection with the
498	498	qualified equity investment and, if the qualified community
499	499	development entity did not receive a written opinion under Section
500	500	231.251 with respect to a qualified active low-income community
501	501	business, include evidence that the business was a qualified active
502	502	low-income community business at the time the qualified low-income
503	503	community investment was made;
504	504	(4) state the number of employment positions created
505	505	and retained as a result of each qualified low-income community
506	506	investment made in connection with the qualified equity investment;
507	507	(5) state whether the qualified community development
508	508	entity has been subject to a recapture of any amount of a federal
509	509	tax credit available under Section 45D, Internal Revenue Code of
510	510	1986, with respect to the qualified equity investment; and
511	511	(6) include a copy of the most recent annual report
512	512	submitted by the qualified community development entity to the
513	513	United States Department of the Treasury regarding Section 45D,
514	514	Internal Revenue Code of 1986.
515	515	(c) A qualified community development entity that fails to
516	516	submit a report to the comptroller within the time prescribed by
517	517	Subsection (a) shall pay to the comptroller a penalty equal to:
518	518	(1) $25,000; plus
519	519	(2) $5,000 for each day the report is not submitted
520	520	after the date the report is due under Subsection (a).
521	521	Sec. 231.302. COMPTROLLER'S REPORT TO THE LEGISLATURE. (a)
522	522	The comptroller shall contract with an independent researcher from
523	523	an education research center established under Section 1.005,
524	524	Education Code, to prepare a biennial report with respect to the
525	525	implementation of this chapter.
526	526	(b) The report must include:
527	527	(1) the number of qualified community development
528	528	entities holding certified qualified equity investments;
529	529	(2) the amount of qualified equity investments of each
530	530	qualified community development entity;
531	531	(3) the amount of qualified low-income community
532	532	investments each qualified community development entity has
533	533	invested in qualified active low-income community businesses as of
534	534	the most recent annual report submitted to the comptroller by the
535	535	qualified community development entity;
536	536	(4) the total amount of premium tax credits earned
537	537	under this chapter;
538	538	(5) the performance of each qualified community
539	539	development entity with respect to reporting requirements imposed
540	540	by this chapter;
541	541	(6) with respect to each qualified active low-income
542	542	community business in which a qualified community development
543	543	entity has invested:
544	544	(A) the classification of the qualified active
545	545	low-income community business according to the industrial sector
546	546	and the size of the business;
547	547	(B) the total number of jobs created by the
548	548	qualified low-income community investment and the average wages
549	549	paid for the jobs; and
550	550	(C) the total number of jobs retained as a result
551	551	of the qualified low-income community investment and the average
552	552	wages paid for the jobs; and
553	553	(7) an examination of the effect the implementation of
554	554	this chapter has had on economic activity in this state and on state
555	555	tax revenue during the biennium.
556	556	(c) The comptroller shall file the report with the governor,
557	557	the lieutenant governor, and the speaker of the house of
558	558	representatives not later than December 15 of each even-numbered
559	559	year.
560	560	SECTION 2. (a) As soon as practicable after the effective
561	561	date of this Act, the comptroller of public accounts shall adopt
562	562	rules necessary to implement the provisions of Chapter 231,
563	563	Insurance Code, as added by this Act, that apply to the comptroller
564	564	of public accounts.
565	565	(b) The comptroller of public accounts shall accept
566	566	applications for certification of qualified equity investments as
567	567	required by Chapter 231, Insurance Code, as added by this Act,
568	568	beginning not later than October 2, 2013.
569	569	SECTION 3. This Act takes effect September 1, 2013.
570	570	* * * * *