Texas 2019 - 86th Regular

Texas House Bill HB1000 Compare Versions

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1	1		86R16954 BEF-D
2		-	By: Paddie, Price, Phelan, Nevárez, Springer, H.B. No. 1000
3		-	et al.
	2	+	By: Paddie, Price, Phelan, Nevárez H.B. No. 1000
	3	+	Substitute the following for H.B. No. 1000:
	4	+	By: Metcalf C.S.H.B. No. 1000
4	5
5	6
6	7		A BILL TO BE ENTITLED
7	8		AN ACT
8	9		relating to rural and opportunity funds and insurance tax credits
9	10		for certain investments in those funds; imposing a monetary
10	11		penalty; authorizing fees.
11	12		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	13		SECTION 1. Subtitle F, Title 4, Government Code, is amended
13	14		by adding Chapter 487A to read as follows:
14	15		CHAPTER 487A. RURAL AND OPPORTUNITY FUNDS
15	16		SUBCHAPTER A. GENERAL PROVISIONS
16	17		Sec. 487A.0001. GENERAL DEFINITIONS. In this chapter:
17	18		(1) "Closing date" means the date a rural and
18	19		opportunity fund has collected all of the amounts described by
19	20		Section 487A.0056(a)(1).
20	21		(2) "Growth investment" means any capital or equity
21	22		investment by a rural and opportunity fund in a targeted small
22	23		business or any loan by a rural and opportunity fund to a targeted
23	24		small business with a stated maturity date of at least one year
24	25		after the date of issuance.
25	26		(3) "Office" means the Texas Economic Development and
26	27		Tourism Office.
27	28		(4) "Qualified area" means:
28	29		(A) a rural community as defined by Section
29	30		12.046, Agriculture Code, that is not a geographic area delineated
30	31		as urbanized by the United States Census Bureau; or
31	32		(B) a qualified opportunity zone as defined by
32	33		Section 1400Z-1, Internal Revenue Code of 1986.
33	34		(5) "Rural and opportunity fund" means an entity
34	35		approved by the office as a rural and opportunity fund.
35	36		Sec. 487A.0002. DEFINITION: AFFILIATE. (a) In this
36	37		chapter, "affiliate" means an entity that directly or indirectly
37	38		through one or more intermediaries controls, is controlled by, or
38	39		is under common control with another entity.
39	40		(b) For purposes of Subsection (a), an entity is controlled
40	41		by another entity if the controlling entity:
41	42		(1) holds, directly or indirectly, the majority voting
42	43		or ownership interest in the controlled entity; or
43	44		(2) has control over the day-to-day operations of the
44	45		controlled entity by contract or by law.
45	46		Sec. 487A.0003. DEFINITION: CREDIT-ELIGIBLE CAPITAL
46	47		CONTRIBUTION. (a) In this chapter and subject to Subsection (b),
47	48		"credit-eligible capital contribution" means an investment of cash
48	49		that equals the amount specified on a tax credit certificate issued
49	50		by the office under Section 487A.0055(2) made by an entity that is
50	51		subject to state insurance tax liability, as defined by Section
51	52		232.0001, Insurance Code.
52	53		(b) An investment made by an entity qualifies as a
53	54		credit-eligible capital contribution only if the entity making the
54	55		investment receives in exchange for the investment:
55	56		(1) an equity interest in the rural and opportunity
56	57		fund; or
57	58		(2) at par value or premium, a debt instrument that has
58	59		a maturity date of at least five years from the closing date and a
59	60		repayment schedule that is no faster than level principal
60	61		amortization over five years.
61	62		Sec. 487A.0004. DEFINITION: INVESTMENT AUTHORITY. (a) In
62	63		this chapter, "investment authority" means the amount stated on the
63	64		notice issued under Section 487A.0055(1) approving the rural and
64	65		opportunity fund.
65	66		(b) At least 65 percent of a rural and opportunity fund's
66	67		investment authority must consist of credit-eligible capital
67	68		contributions.
68	69		Sec. 487A.0005. DEFINITION: JOBS CREATED. (a) In this
69	70		chapter, "jobs created" means, with respect to a targeted small
70	71		business, employment positions that are created by the targeted
71	72		small business, are located in this state, require at least 35 hours
72	73		of work each week, and were not located in this state at the time of
73	74		the initial growth investment in the targeted small business.
74	75		(b) The number of jobs created by a targeted small business
75	76		is calculated each year by subtracting the number of employment
76	77		positions in this state at the targeted small business at the time
77	78		of the initial growth investment in the targeted small business
78	79		from the monthly average of those employment positions for that
79	80		year. If the number calculated under this subsection is less than
80	81		zero, the number shall be reported as zero.
81	82		(c) The monthly average of employment positions for a year
82	83		is calculated by adding together the number of employment positions
83	84		existing on the last day of each month of the year and dividing by
84	85		12.
85	86		Sec. 487A.0006. DEFINITION: JOBS RETAINED. (a) In this
86	87		chapter, "jobs retained" means, with respect to a targeted small
87	88		business, employment positions:
88	89		(1) located in this state requiring at least 35 hours
89	90		of work each week that existed before the initial growth investment
90	91		in the targeted small business; and
91	92		(2) that would have been lost or moved out of this
92	93		state had a growth investment in the targeted small business not
93	94		been made, as certified in writing by an executive officer of the
94	95		targeted small business to the rural and opportunity fund.
95	96		(b) The number of jobs retained by a targeted small business
96	97		is calculated each year based on the monthly average of employment
97	98		positions for that year.
98	99		(c) The monthly average of employment positions for a year
99	100		is calculated by adding together the number of employment positions
100	101		existing on the last day of each month of the year and dividing by
101	102		12.
102	103		(d) The reported number of jobs retained for a year may not
103	104		exceed the number reported on the initial report under Section
104	105		487A.0155. The rural and opportunity fund shall reduce the number
105	106		of jobs retained for a year if employment at the targeted small
106	107		business drops below the number reported on the initial report.
107	108		Sec. 487A.0007. DEFINITION: TARGETED SMALL BUSINESS. (a)
108	109		In this chapter, "targeted small business" means a business that,
109	110		at the time of the initial growth investment in the business:
110	111		(1) had fewer than 250 employees; and
111	112		(2) has its principal business operations located in
112	113		one or more qualified areas in this state.
113	114		(b) For purposes of Subsection (a)(2), the principal
114	115		business operations of a business are located at a place where:
115	116		(1) at least 60 percent of the business's employees
116	117		work; or
117	118		(2) employees who are paid at least 60 percent of the
118	119		business's payroll work.
119	120		(c) An out-of-state business that agrees to relocate or hire
120	121		new employees using the proceeds of a growth investment to
121	122		establish principal business operations in a qualified area in this
122	123		state qualifies as a targeted small business if the business
123	124		satisfies the requirements of:
124	125		(1) Subsection (a)(1) at the time of the initial
125	126		growth investment in the business; and
126	127		(2) Subsection (a)(2) not later than the 180th day
127	128		after receiving the initial growth investment or a later date
128	129		agreed to by the office.
129	130		Sec. 487A.0008. RULES. The office shall adopt rules
130	131		necessary to implement this chapter.
131	132		SUBCHAPTER B. APPROVAL OF RURAL AND OPPORTUNITY FUNDS
132	133		Sec. 487A.0051. APPLICATION. (a) Subject to Section
133	134		487A.0202, the office shall accept applications from entities
134	135		seeking approval as rural and opportunity funds.
135	136		(b) An application must include:
136	137		(1) the total investment authority sought by the
137	138		applicant under the applicant's business plan;
138	139		(2) evidence sufficient to prove to the office's
139	140		satisfaction that, as of the date the applicant submits the
140	141		application:
141	142		(A) the applicant or affiliates of the applicant
142	143		have invested, in the aggregate, at least $100 million in nonpublic
143	144		companies located in:
144	145		(i) a municipality with a population of
145	146		less than 50,000, regardless of whether the municipality is located
146	147		inside or outside this state;
147	148		(ii) a county with a population of less than
148	149		200,000, regardless of whether the county is located inside or
149	150		outside this state; or
150	151		(iii) a census tract designated as a
151	152		qualified opportunity zone in accordance with Section 1400Z-1,
152	153		Internal Revenue Code of 1986, regardless of when the designation
153	154		is made and regardless of whether the census tract is located inside
154	155		or outside this state; and
155	156		(B) at least one principal in a rural business
156	157		investment company licensed under 7 U.S.C. Section 2009cc et seq.
157	158		or a small business investment company licensed under 15 U.S.C.
158	159		Section 681 is, and has been for at least four years, an officer or
159	160		employee of the applicant or of an affiliate of the applicant on the
160	161		date the application is submitted;
161	162		(3) a copy of the rural business investment company
162	163		license or small business investment company license described by
163	164		Subdivision (2)(B);
164	165		(4) an estimate of the number of jobs created and jobs
165	166		retained as a result of the applicant's growth investments;
166	167		(5) a business plan that includes a revenue impact
167	168		assessment that:
168	169		(A) projects state and local tax revenue to be
169	170		generated by the applicant's proposed growth investments; and
170	171		(B) is prepared by a nationally recognized third
171	172		party independent economic forecasting firm using a dynamic
172	173		economic forecasting model that analyzes the applicant's business
173	174		plan for the 10-year period following the date the applicant
174	175		submits the application;
175	176		(6) a signed affidavit from each committed investor
176	177		stating the amount of credit-eligible capital contributions the
177	178		investor commits to making; and
178	179		(7) a nonrefundable application fee of $5,000.
179	180		Sec. 487A.0052. DECISION ON APPLICATION. (a) The office
180	181		shall make a determination on each application not later than the
181	182		30th day after the date the office receives the application. The
182	183		office shall make application determinations in the order in which
183	184		applications are received and shall consider applications received
184	185		on the same day to be received simultaneously.
185	186		(b) The office may approve investment authority under this
186	187		chapter in amounts that would allow not more than $35 million in tax
187	188		credits to be claimed under Section 232.0053, Insurance Code, in
188	189		any calendar year, excluding any credit carryforwards under Section
189	190		232.0054, Insurance Code.
190	191		(c) If a request for investment authority exceeds the
191	192		limitation under Subsection (b), the office shall reduce the
192	193		investment authority and the credit-eligible capital contributions
193	194		for that application as necessary to avoid exceeding the limit. If
194	195		multiple applications received on the same day request a combined
195	196		investment authority that exceeds the limit under Subsection (b),
196	197		the office shall proportionally reduce the investment authority and
197	198		the credit-eligible capital contributions for those applications
198	199		as necessary to avoid exceeding the limit. The office may not
199	200		reduce an applicant's investment authority for any reason other
200	201		than as authorized by this subsection.
201	202		Sec. 487A.0053. GROUNDS FOR DENIAL. The office may deny an
202	203		application under this subchapter only if:
203	204		(1) the application is incomplete or the application
204	205		fee is not paid in full;
205	206		(2) the applicant fails to satisfy the requirements of
206	207		Section 487A.0051(b)(2);
207	208		(3) the revenue impact assessment submitted under
208	209		Section 487A.0051(b)(5) does not demonstrate that the applicant's
209	210		business plan will result in a positive economic impact on combined
210	211		state and local revenue during the 10-year period covered by the
211	212		assessment that exceeds the cumulative amount of tax credits that
212	213		would be issued to the applicant's investors under Chapter 232,
213	214		Insurance Code, if the application were approved;
214	215		(4) the credit-eligible capital contributions
215	216		described in affidavits submitted under Section 487A.0051(b)(6) do
216	217		not equal at least 65 percent of the total amount of investment
217	218		authority sought under the applicant's business plan; or
218	219		(5) the office has already approved the maximum amount
219	220		of investment authority allowed under Section 487A.0052(b).
220	221		Sec. 487A.0054. SUBMISSION OF ADDITIONAL INFORMATION
221	222		FOLLOWING DENIAL. (a) If the office denies an application the
222	223		applicant may, not later than the 15th day after the date the office
223	224		provides notice of denial, provide additional information to the
224	225		office to complete, clarify, or cure defects in the application
225	226		identified by the office.
226	227		(b) If the applicant completes, clarifies, or cures the
227	228		defects in its application during the period prescribed by
228	229		Subsection (a), the application is considered complete as of the
229	230		original submission date.
230	231		(c) If the applicant fails to complete, clarify, or cure the
231	232		defects in its application during the period prescribed by
232	233		Subsection (a), the application is finally denied. An applicant
233	234		who wishes to reapply must resubmit an application in full with a
234	235		new submission date.
235	236		(d) The office shall review and reconsider an application
236	237		described by Subsection (a) for which the applicant provides
237	238		additional information not later than the 30th day after the date
238	239		the applicant provides the information. The office shall consider
239	240		that application before any pending applications submitted after
240	241		the date that application was originally submitted.
241	242		(e) This section does not apply to an application denied as
242	243		a result of the applicant's failure to submit with the application
243	244		affidavits required by Section 487A.0051(b)(6).
244	245		Sec. 487A.0055. APPROVAL BY OFFICE. On approval of an
245	246		application, the office shall provide:
246	247		(1) written notice to the applicant of the applicant's
247	248		approval as a rural and opportunity fund, including the amount of
248	249		the fund's investment authority; and
249	250		(2) a tax credit certificate to each investor whose
250	251		affidavit was included in the application and include on the
251	252		certificate the amount of the investor's credit-eligible capital
252	253		contribution.
253	254		Sec. 487A.0056. DUTIES OF FUND FOLLOWING APPROVAL. (a) A
254	255		rural and opportunity fund shall:
255	256		(1) not later than the 60th day after the date the fund
256	257		receives the approval notice under Section 487A.0055:
257	258		(A) collect the credit-eligible capital
258	259		contribution from each investor issued a tax credit certificate
259	260		under Section 487A.0055; and
260	261		(B) subject to Subsection (b), collect one or
261	262		more investments of cash that, when added to the contributions
262	263		collected under Paragraph (A), equal the fund's investment
263	264		authority; and
264	265		(2) not later than the 65th day after the date the fund
265	266		receives the approval notice under Section 487A.0055, send to the
266	267		office documentation sufficient to prove that the fund has
267	268		collected the amounts described in Subdivision (1).
268	269		(b) At least 10 percent of the rural and opportunity fund's
269	270		investment authority must consist of equity investments
270	271		contributed directly or indirectly by affiliates of the fund,
271	272		including employees, officers, and directors of those affiliates.
272	273		Sec. 487A.0057. LAPSE OF APPROVAL. (a) If a rural and
273	274		opportunity fund fails to comply with the requirements of Section
274	275		487A.0056, the fund's approval lapses and the corresponding
275	276		investment authority described by Section 487A.0056(a)(1) does not
276	277		count toward the limit prescribed by Section 487A.0052(b).
277	278		(b) The office shall first award lapsed investment
278	279		authority pro rata to each rural and opportunity fund whose
279	280		requested investment authority was reduced under Section
280	281		487A.0052(c). The rural and opportunity fund may allocate the
281	282		investment authority awarded under this subsection to the fund's
282	283		investors in the fund's discretion. The office may award any
283	284		remaining investment authority to new applicants.
284	285		Sec. 487A.0058. DISPOSITION OF APPLICATION FEES.
285	286		Application fees submitted to the office under Section
286	287		487A.0051(b)(7) shall be deposited to the credit of the general
287	288		revenue fund and may be appropriated only to the office for the
288	289		purpose of administering this chapter.
289	290		SUBCHAPTER C. REVOCATION OF TAX CREDIT CERTIFICATE
290	291		Sec. 487A.0101. GROUNDS FOR REVOCATION. (a) The office
291	292		shall revoke a tax credit certificate issued under Subchapter B in
292	293		connection with an investment in a rural and opportunity fund if,
293	294		before the fund exits the program under Section 487A.0151, the
294	295		fund:
295	296		(1) subject to Subsection (b), fails to invest at
296	297		least 60 percent of the fund's investment authority in growth
297	298		investments in this state on or before the second anniversary of the
298	299		closing date and 100 percent of the fund's investment authority in
299	300		growth investments in this state on or before the third anniversary
300	301		of the closing date;
301	302		(2) subject to Subsection (c) and after making the
302	303		investments necessary to avoid revocation under Subdivision (1),
303	304		fails to maintain growth investments equal to 100 percent of the
304	305		fund's investment authority until the sixth anniversary of the
305	306		closing date;
306	307		(3) makes a distribution or payment that results in
307	308		the fund having less than 100 percent of its investment authority
308	309		invested in growth investments in this state or available for
309	310		investment in growth investments and held in cash or marketable
310	311		securities; or
311	312		(4) subject to Subsection (d), makes a growth
312	313		investment in a targeted small business that directly or indirectly
313	314		through an affiliate owns, has the right to acquire an ownership
314	315		interest in, makes a loan to, or makes an investment in the fund, an
315	316		affiliate of the fund, or an investor in the fund.
316	317		(b) For purposes of Subsection (a)(1):
317	318		(1) the amount of growth investments that a rural and
318	319		opportunity fund may count with respect to a particular targeted
319	320		small business, including any amount invested in an affiliate of
320	321		the targeted small business, may not exceed the greater of $5
321	322		million or 20 percent of the fund's investment authority; and
322	323		(2) at least 67 percent of the required investments
323	324		must be growth investments in targeted small businesses whose
324	325		principal business operations are located in, or are relocated to,
325	326		one or more qualified areas described by Section 487A.0001(4)(A).
326	327		(c) For purposes of Subsection (a)(2):
327	328		(1) the amount of growth investments that a rural and
328	329		opportunity fund may count with respect to a particular targeted
329	330		small business, including any amount invested in an affiliate of
330	331		the targeted small business, may not exceed the greater of $5
331	332		million or 20 percent of the fund's investment authority;
332	333		(2) an investment that is sold or repaid is considered
333	334		to be maintained if the rural and opportunity fund reinvests an
334	335		amount equal to the capital returned or recovered by the fund from
335	336		the original investment, excluding any profit realized, in another
336	337		growth investment in this state on or before the first anniversary
337	338		of the date the capital is returned or recovered; and
338	339		(3) an amount received periodically by a rural and
339	340		opportunity fund is considered to be continually invested in growth
340	341		investments if that amount is reinvested in one or more growth
341	342		investments by the end of the calendar year following the year of
342	343		receipt.
343	344		(d) Subsection (a)(4) does not apply to investments in
344	345		publicly traded securities by a targeted small business or an owner
345	346		or affiliate of the targeted small business. For purposes of
346	347		Subsection (a)(4), a rural and opportunity fund is not considered
347	348		an affiliate of a targeted small business solely as a result of the
348	349		fund's growth investment in the targeted small business.
349	350		(e) The office shall:
350	351		(1) notify the comptroller when the office revokes a
351	352		tax credit certificate; and
352	353		(2) on request, provide the comptroller with lists of
353	354		valid and revoked tax credit certificates.
354	355		Sec. 487A.0102. OPPORTUNITY TO CORRECT VIOLATION. (a)
355	356		Before revoking a tax credit certificate under this subchapter, the
356	357		office shall notify the rural and opportunity fund of the reasons
357	358		for the pending revocation.
358	359		(b) The rural and opportunity fund may, not later than the
359	360		90th day after the date the notice is received, correct any
360	361		violation outlined in the notice to the satisfaction of the office
361	362		and avoid revocation of the tax credit certificate.
362	363		Sec. 487A.0103. ALLOCATION OF REVOKED INVESTMENT
363	364		AUTHORITY. (a) If a tax credit certificate is revoked under this
364	365		subchapter, the associated investment authority does not count
365	366		toward the limit on total investment authority described in Section
366	367		487A.0052(b).
367	368		(b) The office shall first award revoked investment
368	369		authority pro rata to each rural and opportunity fund whose
369	370		requested investment authority was reduced under Section
370	371		487A.0052(c). The office may award any remaining investment
371	372		authority to new applicants.
372	373		SUBCHAPTER D. CERTAIN FUND OPERATIONS
373	374		Sec. 487A.0151. APPLICATION TO EXIT PROGRAM. (a) On or
374	375		after the sixth anniversary of the closing date, a rural and
375	376		opportunity fund may apply to the office to exit the program and no
376	377		longer be subject to regulation under this chapter.
377	378		(b) The office shall respond to the application not later
378	379		than the 30th day after receipt.
379	380		(c) A rural and opportunity fund is eligible to exit the
380	381		program under this section if no tax credit certificates related to
381	382		investments in the fund have been revoked and the fund has not
382	383		received any revocation notice that has not been corrected under
383	384		Section 487A.0102.
384	385		(d) The office may not unreasonably deny an application
385	386		under this section. The office shall give the rural and opportunity
386	387		fund notice of a denial and include in the notice the reasons for
387	388		the denial.
388	389		Sec. 487A.0152. NO REVOCATION FOLLOWING EXIT. The office
389	390		may not revoke a tax credit certificate related to an investment in
390	391		a rural and opportunity fund after the fund's exit from the program.
391	392		Sec. 487A.0153. PENALTY FOR CERTAIN DISTRIBUTIONS. (a)
392	393		For purposes of this section:
393	394		(1) the "actual number of jobs created and retained"
394	395		is the number of jobs created and jobs retained as a result of all of
395	396		a rural and opportunity fund's current and former growth
396	397		investments, as reported on the fund's reports submitted under
397	398		Section 487A.0155; and
398	399		(2) the "estimated number of jobs created and
399	400		retained" is the estimated number of jobs created and jobs retained
400	401		included in a rural and opportunity fund's application under
401	402		Section 487A.0051(b)(4) reduced, if applicable, by the same
402	403		percentage as the total investment authority sought under the
403	404		fund's business plan submitted under Section 487A.0051(b)(1) was
404	405		reduced under Section 487A.0052(c).
405	406		(b) A rural and opportunity fund is subject to a penalty in
406	407		the amount provided by Subsection (c) if:
407	408		(1) the fund authorizes a distribution to the fund's
408	409		equity holders in an amount that, when added to all previous
409	410		distributions to the fund's equity holders and any previous
410	411		penalties under this section, exceeds the fund's investment
411	412		authority; and
412	413		(2) the fund's actual number of jobs created and
413	414		retained is less than the fund's estimated number of jobs created
414	415		and retained.
415	416		(c) The amount of the penalty is equal to the amount of the
416	417		authorized distribution multiplied by a fraction:
417	418		(1) the numerator of which is the fund's estimated
418	419		number of jobs created and retained less the fund's actual number of
419	420		jobs created and retained; and
420	421		(2) the denominator of which is the fund's estimated
421	422		number of jobs created and retained.
422	423		(d) Before making a distribution to the fund's equity
423	424		holders, the fund shall deduct the amount of the penalty from the
424	425		amount otherwise authorized to be distributed to the equity holders
425	426		and pay the penalty to the office.
426	427		(e) The office shall deposit penalties received under
427	428		Subsection (d) in the general revenue fund.
428	429		Sec. 487A.0154. EVALUATION OF PROPOSED INVESTMENT. (a) A
429	430		rural and opportunity fund, before making a growth investment, may
430	431		request from the office a written opinion as to whether the business
431	432		in which the fund proposes to invest qualifies as a targeted small
432	433		business.
433	434		(b) Not later than the 15th business day after receiving the
434	435		request, the office shall notify the rural and opportunity fund of
435	436		its determination.
436	437		(c) If the office fails to notify the rural and opportunity
437	438		fund of its determination on or before the 15th business day after
438	439		receiving the request, the business in which the fund proposes to
439	440		invest is considered to be a targeted small business for purposes of
440	441		this chapter.
441	442		Sec. 487A.0155. ANNUAL REPORT. (a) A rural and opportunity
442	443		fund shall submit a report to the office on or before the fifth
443	444		business day after each anniversary of the closing date until the
444	445		fund has exited the program under Section 487A.0151.
445	446		(b) The report must document the rural and opportunity
446	447		fund's growth investments and include:
447	448		(1) a bank statement showing each growth investment;
448	449		(2) the name, location, and industry of each business
449	450		receiving a growth investment, including either the determination
450	451		notice described by Section 487A.0154 or evidence that the business
451	452		qualified as a targeted small business at the time the investment
452	453		was made;
453	454		(3) the number of jobs created and jobs retained in the
454	455		preceding calendar year as a result of the fund's growth
455	456		investments as of the last day of that period;
456	457		(4) the average annual salary of the jobs described by
457	458		Subdivision (3) and evidence of any other monetary or social
458	459		benefit to this state as a result of those jobs; and
459	460		(5) any other information the office requires.
460	461		(c) A rural and opportunity fund may, but is not required
461	462		to, include in any report submitted under this section information
462	463		about the number of jobs created and jobs retained with respect to a
463	464		former growth investment that the fund has exited.
464	465		SUBCHAPTER E. REPORT; CONDITIONS FOR ACCEPTANCE OF CERTAIN
465	466		APPLICATIONS
466	467		Sec. 487A.0201. REPORT. (a) Before the beginning of the
467	468		90th Legislature, Regular Session, the office shall submit to the
468	469		lieutenant governor, the speaker of the house of representatives,
469	470		and each member of the legislature a report on the economic benefits
470	471		of this chapter.
471	472		(b) The report must include an assessment of:
472	473		(1) the aggregate effects of growth investments made
473	474		under this chapter, including:
474	475		(A) the total number of jobs created by all
475	476		targeted small businesses, including direct jobs, indirect jobs,
476	477		and induced jobs;
477	478		(B) the total number of jobs retained by all
478	479		targeted small businesses;
479	480		(C) the total amount of wages paid in connection
480	481		with jobs created and jobs retained by all targeted small
481	482		businesses;
482	483		(D) the median wage of jobs created and jobs
483	484		retained by all targeted small businesses;
484	485		(E) the total effect on personal income in this
485	486		state, including direct and indirect effects;
486	487		(F) the total amount of growth investments;
487	488		(G) the gross domestic product of this state
488	489		attributable to targeted small businesses;
489	490		(H) the total taxable value of property of
490	491		targeted small businesses in this state according to tax appraisal
491	492		rolls; and
492	493		(I) the total positive fiscal effect on this
493	494		state and local governments in this state;
494	495		(2) the benefits to this state from cost savings
495	496		attributable to jobs created and jobs retained by all targeted
496	497		small businesses, including:
497	498		(A) Medicaid savings, with savings to this state
498	499		and the federal government listed separately;
499	500		(B) food assistance program savings;
500	501		(C) unemployment insurance payment savings; and
501	502		(D) any other savings that can be reasonably
502	503		estimated using data available to the office in connection with
503	504		some or all targeted small businesses; and
504	505		(3) the total positive fiscal effect on this state and
505	506		local governments in this state of the benefits described by
506	507		Subdivision (2).
507	508		(c) The report may not include information that is
508	509		confidential by law.
509	510		(d) In preparing the portion of the report described by
510	511		Subsection (b)(1), the office shall use standard, nationally
511	512		recognized economic estimation techniques, including economic
512	513		multipliers.
513	514		(e) The portion of the report described by Subsection (b)(1)
514	515		must be based on data submitted to the office by each rural and
515	516		opportunity fund.
516	517		Sec. 487A.0202. CONDITIONS FOR ACCEPTANCE OF CERTAIN
517	518		APPLICATIONS. (a) The office may not accept applications under
518	519		Section 487A.0051 after January 1, 2022, unless the total positive
519	520		fiscal effects described by Section 487A.0201(b) exceed the sum of
520	521		all tax credit certificates issued by the office under Section
521	522		487A.0055(2).
522	523		(b) The office shall resume accepting applications under
523	524		Section 487A.0051 when the condition provided by Subsection (a) is
524	525		satisfied.
525	526		SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
526	527		by adding Chapter 232 to read as follows:
527	528		CHAPTER 232. TAX CREDIT FOR INVESTMENT IN RURAL AND OPPORTUNITY
528	529		FUND
529	530		SUBCHAPTER A. GENERAL PROVISIONS
530	531		Sec. 232.0001. DEFINITIONS. In this chapter:
531	532		(1) "Affiliate" has the meaning assigned by Section
532	533		487A.0002, Government Code.
533	534		(2) "Closing date" has the meaning assigned by Section
534	535		487A.0001, Government Code.
535	536		(3) "State insurance tax liability" means any tax
536	537		liability incurred under Chapter 221, 222, 223, 223A, 224, 225,
537	538		226, or 281.
538	539		Sec. 232.0002. RULES. The comptroller shall adopt rules
539	540		necessary to implement this chapter.
540	541		SUBCHAPTER B. TAX CREDIT
541	542		Sec. 232.0051. ELIGIBILITY FOR CREDIT. An entity is
542	543		eligible for a credit against the entity's state insurance tax
543	544		liability in the amount and under the conditions and limitations
544	545		provided by this chapter.
545	546		Sec. 232.0052. QUALIFICATION. An entity is eligible for a
546	547		credit for a tax year if:
547	548		(1) the entity holds a tax credit certificate issued
548	549		under Section 487A.0055, Government Code; and
549	550		(2) the third, fourth, fifth, or sixth anniversary of
550	551		the closing date in connection with which the certificate was
551	552		issued occurs during the tax year.
552	553		Sec. 232.0053. AMOUNT OF CREDIT; LIMITATION. (a) The
553	554		amount of credit for a tax year is equal to 25 percent of the amount
554	555		of the credit-eligible capital contribution stated on the tax
555	556		credit certificate described by Section 232.0052.
556	557		(b) The total credit claimed for a tax year, including the
557	558		amount of any carryforward under Section 232.0054, may not exceed
558	559		the amount of state insurance tax liability due for the entity for
559	560		the tax year after applying all other applicable tax credits.
560	561		(c) Credits may be applied to the entity's estimated or
561	562		final tax payments for the tax year.
562	563		Sec. 232.0054. CARRYFORWARD. If an entity is eligible for a
563	564		credit that exceeds the limitation under Section 232.0053(b), the
564	565		entity may carry the unused credit forward for not more than 20
565	566		consecutive tax reports. Credits, including credit carryforwards,
566	567		are considered to be used in the following order:
567	568		(1) a credit carryforward under this chapter; and
568	569		(2) a current year credit.
569	570		Sec. 232.0055. ASSIGNMENT PROHIBITED. (a) Except as
570	571		provided by Subsection (b), an entity may not convey, assign, or
571	572		transfer the credit allowed under this chapter to another entity.
572	573		(b) An entity may convey, assign, or transfer the credit
573	574		allowed under this chapter to an affiliate of the entity that is
574	575		subject to state insurance tax liability.
575	576		Sec. 232.0056. RETALIATORY TAX. An entity claiming a
576	577		credit under this chapter is not required to pay any additional
577	578		retaliatory tax levied under Chapter 281 as a result of claiming
578	579		that credit.
579	580		SUBCHAPTER C. RECAPTURE OF CREDIT
580	581		Sec. 232.0101. RECAPTURE. The comptroller shall recapture
581	582		the amount of a credit claimed on a tax report filed under Chapter
582	583		221, 222, 223, 223A, 224, 225, 226, or 281 from an entity if the tax
583	584		credit certificate on which the credit is based is revoked under
584	585		Subchapter C, Chapter 487A, Government Code.
585	586		SECTION 3. (a) As soon as practicable after this Act
586	587		becomes law as provided by Section 2001.006, Government Code:
587	588		(1) the Texas Economic Development and Tourism Office
588	589		shall adopt rules necessary to implement Chapter 487A, Government
589	590		Code, as added by this Act; and
590	591		(2) the comptroller of public accounts shall adopt
591	592		rules necessary to implement Chapter 232, Insurance Code, as added
592	593		by this Act.
593	594		(b) Not later than January 1, 2020, the Texas Economic
594	595		Development and Tourism Office shall begin accepting applications
595	596		under Section 487A.0051(a), Government Code, as added by this Act.
596	597		SECTION 4. Chapter 232, Insurance Code, as added by this
597	598		Act, applies only to a tax report originally due on or after January
598	599		1, 2020.
599	600		SECTION 5. This Act takes effect September 1, 2019.