83R10063 KLA-D
By: Parker, et al. H.B. No. 2340
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of the Texas First Investment Fund.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 4, Government Code, is amended
by adding Chapter 490D to read as follows:
CHAPTER 490D. TEXAS FIRST INVESTMENT FUND
Sec. 490D.001. DEFINITIONS. In this chapter:
(1) "Board" means the board established by Section
490D.004 to control and manage the fund.
(2) "Fund" means the Texas First Investment Fund
created under this chapter.
(3) "Investment manager" means the nonprofit
corporation contracted by the board to manage the investments of
the fund.
(4) "Security" means an instrument, including a bond,
certificate, note, or other type of obligation authorized to be
issued by an issuer and that complies with:
(A) applicable federal securities laws and
regulations; and
(B) applicable state securities laws, including
rules.
Sec. 490D.002. PURPOSE. The Texas First Investment Fund is
established to invest in energy, transportation, water, and other
infrastructure in this state that is expected to produce revenue,
including toll roads, and to attract capital to invest in that
infrastructure.
Sec. 490D.003. TEXAS FIRST INVESTMENT FUND. (a) The Texas
First Investment Fund is created as a trust fund outside the state
treasury to be held and managed by the board as trustee on behalf of
persons investing in the fund.
(b) Except as otherwise provided by this chapter, the fund
is subject to the general laws of this state governing private
sector trusts.
(c) The fund consists of public and private investment
capital invested in exchange for securities issued by the fund. The
fund is an authorized investment for the governing boards of the
permanent university fund, the permanent school fund, the Teacher
Retirement System of Texas, the Employees Retirement System of
Texas, and any other pension system created under the Texas
Constitution or other laws of this state, another state, or the
United States.
(d) Securities issued by the fund are payable from income
and returns realized from fund investments and are not general
obligations of or otherwise guaranteed or repayable by this state.
Sec. 490D.004. BOARD. (a) The fund is managed by a board of
five members appointed by the governor, three of whom are public
sector investment fund managers and two of whom are private sector
investment fund managers.
(b) A member of the board must have demonstrated substantial
investment expertise.
(c) A member of the board serves at the pleasure of the
governor.
(d) The board shall control and oversee the fund and manage
the investment of the fund. To perform those functions, the board,
subject to the requirements of this chapter, may:
(1) employ and retain staff, including a chief
executive officer;
(2) analyze and structure investments;
(3) set the investment policy of the fund;
(4) take any action necessary for the creation,
administration, and protection of the fund;
(5) enter into investment contracts with the
participating funds, systems, and other prospective investors;
(6) pay fund expenses based on an assessment on
investor contributions; and
(7) contract for the management of investments with a
nonprofit corporation.
(e) The board shall operate the fund to the extent
practicable under generally accepted business procedures and shall
value the investments for determining the purchase or sales price
of participating shares of investors in the fund consistent with
investment contracts.
Sec. 490D.005. INVESTMENT MANAGER. (a) The investment
manager must be organized as a nonprofit corporation under the
Business Organizations Code. The investment manager is not a state
agency, and the board of directors of the investment manager are not
state employees.
(b) The board shall enter into a contract with the
investment manager for the investment manager to invest the assets
of the fund.
Sec. 490D.006. INVESTMENT STRATEGY; AUTHORIZED
INVESTMENTS. (a) The board, through the investment manager, shall
ensure that assets of the fund are invested in accordance with the
investment strategy under this section.
(b) Fund assets shall be invested according to an investment
strategy that maximizes the total investment return to the
investors. In making investments, the investment manager shall
exercise the judgment and care under the circumstances then
prevailing that persons of ordinary prudence, discretion, and
intelligence exercise in the management of their own affairs, not
in regard to speculation but in regard to the permanent disposition
of their funds, considering the probable income as well as the
probable safety of the capital of the fund.
(c) Fund assets shall be invested in a manner that leverages
the resources and investing experience of public and private sector
investors by making investments on terms that are necessary and
reasonably calculated to attract significant investment by those
investors, both from inside and outside this state, and in such a
way as to maximize the aggregate capital used to develop
infrastructure in this state.
(d) All investments of fund assets must be directly related
to developing or maintaining infrastructure located or to be
located in this state that has the potential for producing a return
on investment for fund investors. The investments may include
investments in equity or debt security, or a combination of equity
and debt security, for the initial construction, expansion, or
modernization of infrastructure in this state.
Sec. 490D.007. DISTRIBUTION OF INVESTMENT RETURNS. (a)
All income and returns realized on investments shall be retained in
the fund until distributed to investors.
(b) The board shall ensure that income and returns realized
on investments are distributed on a quarterly basis to each
investor in the fund in proportion to the number of participating
shares of each investor. The distributions may be in the form of
coupons, cash yields, or other forms determined by the board and
investment manager.
Sec. 490D.008. OVERSIGHT. The board shall review the
activities of the investment manager to ensure compliance with the
investment strategy and operating guidelines provided by this
chapter.
SECTION 2. Not later than the 30th day after the effective
date of this Act, the governor shall appoint the members of the
board of the Texas First Investment Fund under Section 490D.004,
Government Code, as added by this Act.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2013.