Texas 2015 - 84th Regular

Texas House Bill HB3853 Compare Versions

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1	1	By: Villalba H.B. No. 3853
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to creation of the university research initiative fund,
7	7	the abolishment of the Texas emerging technology fund, and the
8	8	disposition of balances from the Texas emerging technology fund.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle H, Title 3, Education Code, is amended
11	11	by adding Chapter 156 to read as follows:
12	12	CHAPTER 156. UNIVERSITY RESEARCH INITIATIVE FUND
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 156.001. DEFINITIONS. In this chapter:
15	15	(1) "Coordinating board" means the Texas Higher
16	16	Education Coordinating Board.
17	17	(2) "Fund" means the university research initiative
18	18	fund established under Subchapter B.
19	19	(3) "Institution of higher education" has the meaning
20	20	assigned by Section 61.003.
21	21	SUBCHAPTER B. OPERATION OF FUND AND PROGRAM
22	22	Sec. 156.051. UNIVERSITY RESEARCH INITIATIVE FUND. (a)
23	23	The university research initiative fund is a dedicated account in
24	24	the general revenue fund.
25	25	(b) The fund consists of:
26	26	(1) amounts appropriated or otherwise allocated or
27	27	transferred by law to the fund;
28	28	(2) any financial benefits realized from
29	29	commercialization of intellectual or other property developed in
30	30	connection with a grant award as provided by an agreement entered
31	31	into under Section 156.053; and
32	32	(3) gifts, grants, and other donations received for
33	33	the fund.
34	34	(c) The fund may be used by the coordinating board only for:
35	35	(1) the purpose specified by Section 156.052; and
36	36	(2) necessary expenses incurred in the administration
37	37	of the fund and this chapter.
38	38	Sec. 156.052. RECRUITMENT OF NATIONALLY OR INTERNATIONALLY
39	39	RENOWNED RESEARCHERS; MATCHING GRANTS. (a) The coordinating board
40	40	shall provide grants from the fund to institutions of higher
41	41	education to match available funding from those institutions for
42	42	the recruitment and retention of:
43	43	(1) members of recognized national academies in the
44	44	fields of science, technology, engineering, or mathematics or other
45	45	nationally recognized researchers in those fields and any
46	46	associated assistants; or
47	47	(2) researchers who are Nobel laureates in the fields
48	48	of science or mathematics or other internationally recognized
49	49	researchers in the fields described by this subsection or the
50	50	fields of technology or engineering and any associated assistants.
51	51	(b) In awarding grants, the coordinating board shall give
52	52	priority to proposals that involve the recruiting of researchers in
53	53	fields that are reasonably likely to contribute substantially to
54	54	this state's national and global economic competitiveness.
55	55	(c) The coordinating board may appoint one or more advisory
56	56	committees to assist the board with the review and evaluation of
57	57	grant proposals under this section.
58	58	Sec. 156.053. MATCHING GRANT AGREEMENT. (a) Before
59	59	awarding a matching grant under this chapter, the coordinating
60	60	board shall enter into a written agreement with the institution of
61	61	higher education selected to receive the grant.
62	62	(b) The agreement between the coordinating board and a grant
63	63	recipient under this chapter must provide for the distribution of
64	64	royalties, revenue, or other financial benefits realized from the
65	65	commercialization of intellectual or real property developed in
66	66	connection with receipt of a grant under this chapter. To the extent
67	67	authorized by law and not in conflict with another agreement, the
68	68	agreement shall appropriately allocate by assignment, licensing,
69	69	or other means 50 percent of the royalties, revenue, or other
70	70	financial benefits to this state for deposit in the fund.
71	71	(c) An agreement under this section may include a provision
72	72	specifying that if, as of a date certain provided in the agreement,
73	73	the grant recipient has not used the money received under this
74	74	chapter for the purposes for which the grant was intended, the
75	75	grant recipient shall repay that amount and any related interest
76	76	applicable under the agreement to the coordinating board for
77	77	deposit to the fund at the agreed rate and on the agreed terms.
78	78	Sec. 156.054. AUTHORIZED EXPENSES. Money awarded from the
79	79	fund may be used by the grant recipient to pay any expense
80	80	reasonably related to the purposes described by Section 156.052(a),
81	81	including for research and research capability, salaries and
82	82	benefits, travel, consumable supplies, and equipment.
83	83	Sec. 156.055. PROHIBITED ACTIVITIES. (a) An institution
84	84	of higher education may not knowingly attempt to recruit a person
85	85	described by Section 156.052(a)(1) or (2) who is an individual
86	86	researcher of another institution of higher education.
87	87	(b) An institution of higher education that violates this
88	88	section is ineligible to receive a grant under this chapter before
89	89	the third anniversary of the date the institution last engaged in
90	90	conduct prohibited by this section.
91	91	Sec. 156.056. DOCUMENTATION OF BENEFITS TO STATE. An
92	92	institution of higher education must document specific benefits
93	93	that this state may expect to gain as a result of recruiting
94	94	researchers described by Section 156.052(a)(1) or (2) to the
95	95	institution and enhancing the research capabilities and programs of
96	96	the institution before the institution may enter into an agreement
97	97	to receive a grant under this chapter.
98	98	Sec. 156.057. ANNUAL REPORT. (a) Not later than January 31
99	99	of each year, the coordinating board shall submit to the governor,
100	100	the lieutenant governor, the speaker of the house of
101	101	representatives, and the standing committee of each house of the
102	102	legislature with primary jurisdiction over economic development
103	103	matters a report that includes the following information regarding
104	104	grants awarded under this chapter during the preceding state fiscal
105	105	year:
106	106	(1) the total number and amount of grants awarded; and
107	107	(2) the name of each grant recipient and the amount of
108	108	the grant awarded to the recipient.
109	109	(b) The coordinating board shall post and maintain on the
110	110	coordinating board's Internet website each report submitted under
111	111	this section.
112	112	SECTION 2. Subchapter G, Chapter 404, Government Code, is
113	113	amended by adding Section 404.1031 to read as follows:
114	114	Sec. 404.1031. MANAGEMENT OF INVESTMENT PORTFOLIO FROM
115	115	FORMER TEXAS EMERGING TECHNOLOGY FUND. (a) In this section,
116	116	"state's emerging technology investment portfolio" means:
117	117	(1) the equity positions in the form of stock or other
118	118	security the governor took, on behalf of the state, in companies
119	119	that received awards under the former Texas emerging technology
120	120	fund; and
121	121	(2) any other investments made by the governor, on
122	122	behalf of the state, in connection with an award made under the
123	123	former Texas emerging technology fund.
124	124	(b) The trust company shall manage the state's emerging
125	125	technology investment portfolio in a manner that a prudent
126	126	investor would employ exercising reasonable care, skill, and
127	127	caution, taking into consideration the investment of all assets of
128	128	the portfolio. The trust company may recover its reasonable and
129	129	necessary costs incurred in the management of the portfolio from
130	130	the earnings on the investments in the portfolio.
131	131	(c) Any proceeds or other earnings from the sale of stock or
132	132	other investments in the state's emerging technology investment
133	133	portfolio, less the amount permitted to be retained for payment of
134	134	its costs for managing the portfolio as provided by Subsection (b),
135	135	shall be remitted by the trust company to the comptroller for
136	136	deposit in the general revenue fund.
137	137	SECTION 3. Effective September 1, 2016, Subchapter G,
138	138	Chapter 404, Government Code, is amended by adding Section 404.1032
139	139	to read as follows:
140	140	Sec. 404.1032. VALUATION OF INVESTMENTS FROM FORMER FUND;
141	141	ANNUAL REPORT. (a) To the maximum extent practicable, the
142	142	non-profit annually shall perform a valuation of the equity
143	143	positions the governor took, on behalf of the state, in companies
144	144	that received awards under the former Texas emerging technology
145	145	fund and of other investments made by the governor, on behalf of the
146	146	state, in connection with an award under that fund. The valuation
147	147	must be based on a methodology that is consistent with generally
148	148	accepted accounting principles.
149	149	(b) Not later than January 31 of each year, the trust
150	150	company shall submit to the lieutenant governor, the speaker of the
151	151	house of representatives, and the standing committee of each house
152	152	of the legislature with primary jurisdiction over economic
153	153	development matters and post on the office of the trust company's
154	154	Internet website a report of any valuation performed under this
155	155	section during the preceding state fiscal year.
156	156	SECTION 4. Section 481.078, Government Code, is amended by
157	157	adding Subsection (m) to read as follows:
158	158	(m) The office of the governor shall adopt rules for the
159	159	operation of the trusteed program established under this section.
160	160	The rules must include:
161	161	(1) forms and procedures for applications for and
162	162	award of grants;
163	163	(2) procedures for evaluating grant applications;
164	164	(3) provisions governing the grant agreement process;
165	165	and
166	166	(4) methods and procedures for monitoring grant
167	167	recipients and projects or activities for which a grant is awarded
168	168	from the fund to determine whether and to what extent the grant
169	169	recipients comply with job creation performance targets, capital
170	170	investment commitments, or other specified performance targets in
171	171	the grant agreement.
172	172	SECTION 5. Subchapter D, Chapter 490, Government Code, is
173	173	repealed.
174	174	SECTION 6. Section 490.001(4), Government Code, is amended
175	175	to read as follows:
176	176	(4) "Award" means:
177	177	(A) for purposes of former Subchapter D, an
178	178	investment in the form of equity or a convertible note;
179	179	(B) for purposes of Subchapter E, an investment
180	180	in the form of a debt instrument;
181	181	(C) for purposes of Subchapter F, a grant; or
182	182	(D) other forms of contribution or investment as
183	183	recommended by the committee and approved by the governor,
184	184	lieutenant governor, and speaker of the house of representatives.
185	185	SECTION 7. Sections 490.005(a) and (b), Government Code,
186	186	are amended to read as follows:
187	187	(a) Not later than January 31 of each year, the governor
188	188	shall submit to the lieutenant governor, the speaker of the house of
189	189	representatives, and the standing committee of each house of the
190	190	legislature with primary jurisdiction over economic development
191	191	matters and post on the office of the governor's Internet website a
192	192	report that includes the following information regarding awards
193	193	made under the fund during each preceding state fiscal year:
194	194	(1) the total number and amount of awards made;
195	195	(2) the number and amount of awards made under
196	196	Subchapters [D,] E[,] and F;
197	197	(3) the aggregate total of private sector investment,
198	198	federal government funding, and contributions from other sources
199	199	obtained in connection with awards made under each of the
200	200	subchapters listed in Subdivision (2);
201	201	(4) the name of each award recipient and the amount of
202	202	the award made to the recipient; and
203	203	(5) a brief description of any [the] equity position
204	204	that the governor, on behalf of the state, may take in companies
205	205	receiving awards and the names of the companies in which the state
206	206	has taken an equity position.
207	207	(b) The annual report must also contain:
208	208	(1) the total number of jobs actually created by each
209	209	project receiving funding under this chapter;
210	210	(2) an analysis of the number of jobs actually created
211	211	by each project receiving funding under this chapter; and
212	212	(3) a brief description regarding[:
213	213	(A)] the methodology used to determine the
214	214	information provided under Subdivisions (1) and (2), which may be
215	215	developed in consultation with the comptroller's office[;].
216	216	[(B) the intended outcomes of projects funded
217	217	under Subchapter D during each preceding state fiscal year; and
218	218	(C) the actual outcomes of all projects funded
219	219	under Subchapter D during each preceding state fiscal year,
220	220	including any financial impact on the state resulting from a
221	221	liquidity event involving a company whose project was funded under
222	222	that subchapter.]
223	223	SECTION 8. Subchapter A, Chapter 490, Government Code, is
224	224	amended by adding Section 490.007 to read as follows:
225	225	Sec. 490.007. TRANSFER OF EQUITY INVESTMENTS AND
226	226	CONVERTIBLE NOTES.
227	227	All investments in the form of equity or convertible notes
228	228	made by the fund under the former Subchapter D and under Subchapter
229	229	E prior to September 1, 2015 are hereby transferred to the Texas
230	230	Technology Investment Portfolio, an investment portfolio, and
231	231	governed by Subchapter R, Chapter 403, Government Code.
232	232	SECTION 9. Section 490.102(a), Government Code, is amended
233	233	to read as follows:
234	234	(a) Money appropriated to the fund by the legislature, less
235	235	amounts necessary to administer the fund under Section 490.055,
236	236	shall be allocated as follows:
237	237	(1) 50 percent of the money [for incentives for
238	238	collaboration between certain entities as provided by Subchapter D;
239	239	[(2) 16.67 percent of the money for research award
240	240	matching as provided by Subchapter E to the university research
241	241	initiative fund under Subchapter B, Chapter 156, Education Code, as
242	242	added by this Act.; and
243	243	(2) 50 [(3) 33.33] percent of the money for
244	244	acquisition of research superiority as provided by Subchapter F.
245	245	SECTION 10. Section 490.303, Government Code, is amended to
246	246	read as follows:
247	247	Sec. 490.303. ELIGIBILITY OF CLEAN COAL PROJECT FOR MONEY.
248	248	Notwithstanding any other provision of this subchapter, a clean
249	249	coal project constitutes an opportunity for emerging technology
250	250	suitable for consideration for a grant under Subchapter C,
251	251	[incentives as provided by Subchapter D,] grant matching as
252	252	provided by Subchapter E, and acquisition of research superiority
253	253	under Subchapter F.
254	254	SECTION 11. Subchapter R, Chapter 403, Government Code, is
255	255	added to read as follows:
256	256	Sec. 403.501. DEFINITIONS.
257	257	In this subchapter:
258	258	(1) "Board" or "board" means the board of the
259	259	non-profit organization managing the Texas Technology Investment
260	260	Portfolio.
261	261	(2) "Institution" and "institutional fund" have the
262	262	meanings assigned by Chapter 163, Property Code.
263	263	(3) "Participated" means to have taken action as an
264	264	officer or employee through decision, approval, disapproval,
265	265	recommendation, giving advice, investigation, or similar action.
266	266	(4) "Particular matter" means a specific
267	267	investigation, application, request for a ruling or determination,
268	268	rulemaking proceeding, contract, claim, charge, accusation,
269	269	arrest, or judicial or other proceeding.
270	270	Sec. 403.502. TEXAS TECHNOLOGY INVESTMENT PORTFOLIO
271	271	MANAGEMENT; AUTHORITY.
272	272	(a) The office of the comptroller is hereby delegated
273	273	investment authority for the management of the former Subchapter D,
274	274	Section 490, Government Code investments, hereafter referred to as
275	275	the Texas Technology Investment Portfolio, to the same extent as an
276	276	institution with respect to an institutional fund under Chapter
277	277	163, Property Code.
278	278	(b) The office of the comptroller may enter into a contract
279	279	with a nonprofit corporation for the corporation to manage the
280	280	Texas Technology Investment Portfolio and appoint the members of
281	281	the board of the nonprofit corporation. The corporation may not
282	282	engage in any business other than portfolio management and
283	283	investment/re-investment of funds designated by the board under the
284	284	contract.
285	285	Sec. 403.503. PORTFOLIO MANAGEMENT; BOARD AUTHORITY,
286	286	MEMBERSHIP, REQUIREMENTS.
287	287	(a) The board of the nonprofit corporation must approve the:
288	288	(1) articles of incorporation and bylaws of the
289	289	corporation and any amendment to the articles of incorporation or
290	290	bylaws;
291	291	(2) investment policies of the corporation, including
292	292	changes to those policies;
293	293	(3) audit and ethics committee of the corporation;
294	294	(4) code of ethics of the corporation;
295	295	(5) hiring and firing of the officers of the
296	296	corporation;
297	297	(6) annual operating budget for the corporation; and
298	298	(6) approving material amendments or changes to any
299	299	existing contract with a recipient.
300	300	(b) The board of directors of the corporation shall have
301	301	five members;
302	302	(c) The appointed board of directors shall possess
303	303	background and expertise in law, finance and/or investment
304	304	portfolio management; and
305	305	(d) Each appointed member of the board of directors of the
306	306	corporation is subject to removal and replacement by and at the
307	307	pleasure of the comptroller.
308	308	(e) The corporation shall file quarterly reports with the
309	309	board concerning matters required by the board.
310	310	(h) The corporation is subject to the Texas Non-Profit
311	311	Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil
312	312	Statutes).
313	313	Sec. 403.504. CONFIDENTIAL INFORMATION; CONFLICTS.
314	314	(a) Information collected by the corporation, the board or
315	315	the office of the comptroller concerning the identity, background,
316	316	finance, marketing plans, trade secrets, or other commercially or
317	317	academically sensitive information of an individual or entity being
318	318	considered for, receiving, or having received an award from the
319	319	fund is confidential unless the individual or entity consents to
320	320	disclosure of the information.
321	321	(b) The following information collected by the
322	322	corporation, the board or the office of the comptroller under this
323	323	chapter is public information and may be disclosed under Chapter
324	324	552:
325	325	(1) the name and address of each individual or entity
326	326	that comprises the portfolio;
327	327	(2) the balances of funds advanced and encumbered to
328	328	each portfolio company;
329	329	(3) a brief description of the project for which the
330	330	funds have been applied; and
331	331	(4) if applicable, a brief description of the equity
332	332	position taken in an entity that has received funds from the state.
333	333	(c) The corporation may not enter into an agreement or
334	334	transaction with a:
335	335	(1) director, officer, or employee of the corporation
336	336	acting in other than an official capacity on behalf of the
337	337	corporation; or
338	338	(2) business entity in which a director, officer, or
339	339	employee of the corporation has an interest
340	340	(d) An agreement or transaction entered into in violation of
341	341	Subsection (c) is void.
342	342	(e) For purposes of this section, a person has an interest
343	343	in a business entity if:
344	344	(1) the person owns five percent or more of the voting
345	345	stock or shares of the business entity;
346	346	(2) the person owns five percent or more of the fair
347	347	market value of the business entity; or
348	348	(3) money received by the person from the business
349	349	entity exceeds five percent of the person's gross income for the
350	350	preceding calendar year.
351	351	(f) A former director of the corporation may not make any
352	352	communication to or appearance before a director, officer, or
353	353	employee of the corporation before the second anniversary of the
354	354	date an individual ceased to be a director of the corporation if the
355	355	communication or appearance is made:
356	356	(1) with the intent to influence; and
357	357	(2) on behalf of any person in connection with any
358	358	matter on which the person seeks action by the corporation.
359	359	(g) A former officer or employee of the corporation may not
360	360	represent any person or receive compensation for services rendered
361	361	on behalf of any person regarding a particular matter in which the
362	362	former officer or employee participated during the period of
363	363	service or employment with the corporation, either through
364	364	personal involvement or because the particular matter was within
365	365	the officer's or employee's responsibility.
366	366	(h) An individual who violates Subsection (f) or (g)
367	367	commits an offense. An offense under this subsection is a Class A
368	368	misdemeanor.
369	369	SECTION 12. (a) The repeal by this Act of Subchapter D,
370	370	Chapter 490, Government Code, relating to certain
371	371	commercialization of emerging technology activities funded by the
372	372	Texas emerging technology fund, does not affect the validity of an
373	373	agreement between the governor and the recipient of an award
374	374	awarded under Subchapter D, Chapter 490, or a person to be awarded
375	375	money under that subchapter that is entered into under Chapter 490
376	376	before September 1, 2015.
377	377	(b) Money from the Texas emerging technology fund that is
378	378	encumbered because the money is awarded under Subchapter D, Chapter
379	379	490, Government Code, or otherwise obligated by agreement before
380	380	September 1, 2015, but under the terms of the award or agreement
381	381	will not be distributed until a later date is now subject to
382	382	Subchapter R, Section 403, Government Code and shall be distributed
383	383	in accordance with the terms of the award or agreement.
384	384	SECTION 13. (a) Notwithstanding Section 490.005(a),
385	385	Government Code, as amended by this Act, the report due under that
386	386	section by January 31, 2016, must also include the specified
387	387	information required by Subdivisions (1)-(5) of that section
388	388	regarding awards made under Subchapter D, Chapter 490, Government
389	389	Code, during the 2015 state fiscal year and each preceding state
390	390	fiscal year.
391	391	(b) Notwithstanding Sections 490.005(a) and (b), Government
392	392	Code, as amended by this Act, the report due under Section
393	393	490.005(a) by January 31, 2016, must also contain the specified
394	394	information required by Section 490.005(b) regarding projects
395	395	receiving funding under Subchapter D, Chapter 490, Government Code,
396	396	during the 2015 state fiscal year and each preceding state fiscal
397	397	year.
398	398	SECTION 14. A regional center of innovation and
399	399	commercialization established under Section 490.152, Government
400	400	Code, is abolished on the effective date of this Act. Each center
401	401	shall transfer to the office of the governor a copy of any meeting
402	402	minutes required to be retained under Section 490.1521, Government
403	403	Code, as that section existed immediately before that section's
404	404	repeal by this Act, and the office shall retain the minutes for the
405	405	period prescribed by that section.
406	406	SECTION 15. If a conflict exists between this Act and
407	407	another Act of the 84th Legislature, Regular Session, 2015, that
408	408	relates to the Texas emerging technology fund, this Act controls
409	409	without regard to the relative dates of enactment.
410	410	SECTION 16. Except as otherwise provided by this Act, this
411	411	Act takes effect September 1, 2015.