Texas 2013 - 83rd Regular

Texas House Bill HB2340 Compare Versions

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1	1	83R10063 KLA-D
2	2	By: Parker, et al. H.B. No. 2340
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the establishment of the Texas First Investment Fund.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Subtitle F, Title 4, Government Code, is amended
10	10	by adding Chapter 490D to read as follows:
11	11	CHAPTER 490D. TEXAS FIRST INVESTMENT FUND
12	12	Sec. 490D.001. DEFINITIONS. In this chapter:
13	13	(1) "Board" means the board established by Section
14	14	490D.004 to control and manage the fund.
15	15	(2) "Fund" means the Texas First Investment Fund
16	16	created under this chapter.
17	17	(3) "Investment manager" means the nonprofit
18	18	corporation contracted by the board to manage the investments of
19	19	the fund.
20	20	(4) "Security" means an instrument, including a bond,
21	21	certificate, note, or other type of obligation authorized to be
22	22	issued by an issuer and that complies with:
23	23	(A) applicable federal securities laws and
24	24	regulations; and
25	25	(B) applicable state securities laws, including
26	26	rules.
27	27	Sec. 490D.002. PURPOSE. The Texas First Investment Fund is
28	28	established to invest in energy, transportation, water, and other
29	29	infrastructure in this state that is expected to produce revenue,
30	30	including toll roads, and to attract capital to invest in that
31	31	infrastructure.
32	32	Sec. 490D.003. TEXAS FIRST INVESTMENT FUND. (a) The Texas
33	33	First Investment Fund is created as a trust fund outside the state
34	34	treasury to be held and managed by the board as trustee on behalf of
35	35	persons investing in the fund.
36	36	(b) Except as otherwise provided by this chapter, the fund
37	37	is subject to the general laws of this state governing private
38	38	sector trusts.
39	39	(c) The fund consists of public and private investment
40	40	capital invested in exchange for securities issued by the fund. The
41	41	fund is an authorized investment for the governing boards of the
42	42	permanent university fund, the permanent school fund, the Teacher
43	43	Retirement System of Texas, the Employees Retirement System of
44	44	Texas, and any other pension system created under the Texas
45	45	Constitution or other laws of this state, another state, or the
46	46	United States.
47	47	(d) Securities issued by the fund are payable from income
48	48	and returns realized from fund investments and are not general
49	49	obligations of or otherwise guaranteed or repayable by this state.
50	50	Sec. 490D.004. BOARD. (a) The fund is managed by a board of
51	51	five members appointed by the governor, three of whom are public
52	52	sector investment fund managers and two of whom are private sector
53	53	investment fund managers.
54	54	(b) A member of the board must have demonstrated substantial
55	55	investment expertise.
56	56	(c) A member of the board serves at the pleasure of the
57	57	governor.
58	58	(d) The board shall control and oversee the fund and manage
59	59	the investment of the fund. To perform those functions, the board,
60	60	subject to the requirements of this chapter, may:
61	61	(1) employ and retain staff, including a chief
62	62	executive officer;
63	63	(2) analyze and structure investments;
64	64	(3) set the investment policy of the fund;
65	65	(4) take any action necessary for the creation,
66	66	administration, and protection of the fund;
67	67	(5) enter into investment contracts with the
68	68	participating funds, systems, and other prospective investors;
69	69	(6) pay fund expenses based on an assessment on
70	70	investor contributions; and
71	71	(7) contract for the management of investments with a
72	72	nonprofit corporation.
73	73	(e) The board shall operate the fund to the extent
74	74	practicable under generally accepted business procedures and shall
75	75	value the investments for determining the purchase or sales price
76	76	of participating shares of investors in the fund consistent with
77	77	investment contracts.
78	78	Sec. 490D.005. INVESTMENT MANAGER. (a) The investment
79	79	manager must be organized as a nonprofit corporation under the
80	80	Business Organizations Code. The investment manager is not a state
81	81	agency, and the board of directors of the investment manager are not
82	82	state employees.
83	83	(b) The board shall enter into a contract with the
84	84	investment manager for the investment manager to invest the assets
85	85	of the fund.
86	86	Sec. 490D.006. INVESTMENT STRATEGY; AUTHORIZED
87	87	INVESTMENTS. (a) The board, through the investment manager, shall
88	88	ensure that assets of the fund are invested in accordance with the
89	89	investment strategy under this section.
90	90	(b) Fund assets shall be invested according to an investment
91	91	strategy that maximizes the total investment return to the
92	92	investors. In making investments, the investment manager shall
93	93	exercise the judgment and care under the circumstances then
94	94	prevailing that persons of ordinary prudence, discretion, and
95	95	intelligence exercise in the management of their own affairs, not
96	96	in regard to speculation but in regard to the permanent disposition
97	97	of their funds, considering the probable income as well as the
98	98	probable safety of the capital of the fund.
99	99	(c) Fund assets shall be invested in a manner that leverages
100	100	the resources and investing experience of public and private sector
101	101	investors by making investments on terms that are necessary and
102	102	reasonably calculated to attract significant investment by those
103	103	investors, both from inside and outside this state, and in such a
104	104	way as to maximize the aggregate capital used to develop
105	105	infrastructure in this state.
106	106	(d) All investments of fund assets must be directly related
107	107	to developing or maintaining infrastructure located or to be
108	108	located in this state that has the potential for producing a return
109	109	on investment for fund investors. The investments may include
110	110	investments in equity or debt security, or a combination of equity
111	111	and debt security, for the initial construction, expansion, or
112	112	modernization of infrastructure in this state.
113	113	Sec. 490D.007. DISTRIBUTION OF INVESTMENT RETURNS. (a)
114	114	All income and returns realized on investments shall be retained in
115	115	the fund until distributed to investors.
116	116	(b) The board shall ensure that income and returns realized
117	117	on investments are distributed on a quarterly basis to each
118	118	investor in the fund in proportion to the number of participating
119	119	shares of each investor. The distributions may be in the form of
120	120	coupons, cash yields, or other forms determined by the board and
121	121	investment manager.
122	122	Sec. 490D.008. OVERSIGHT. The board shall review the
123	123	activities of the investment manager to ensure compliance with the
124	124	investment strategy and operating guidelines provided by this
125	125	chapter.
126	126	SECTION 2. Not later than the 30th day after the effective
127	127	date of this Act, the governor shall appoint the members of the
128	128	board of the Texas First Investment Fund under Section 490D.004,
129	129	Government Code, as added by this Act.
130	130	SECTION 3. This Act takes effect immediately if it receives
131	131	a vote of two-thirds of all the members elected to each house, as
132	132	provided by Section 39, Article III, Texas Constitution. If this
133	133	Act does not receive the vote necessary for immediate effect, this
134	134	Act takes effect September 1, 2013.