Texas 2021 - 87th Regular

Texas House Bill HB1733 Compare Versions

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1	1	87R2824 RDS-F
2	2	By: Krause H.B. No. 1733
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to insurance premium tax credits for investments
8	8	supporting agriculture and rural development projects; authorizing
9	9	a fee; providing an administrative penalty.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subtitle B, Title 3, Insurance Code, is amended
12	12	by adding Chapter 230 to read as follows:
13	13	CHAPTER 230. PREMIUM TAX CREDIT FOR INVESTMENTS SUPPORTING
14	14	AGRICULTURE AND RURAL DEVELOPMENT PROJECTS
15	15	SUBCHAPTER A. GENERAL PROVISIONS
16	16	Sec. 230.001. GENERAL DEFINITIONS. In this chapter:
17	17	(1) "Affiliate" has the meaning assigned by Section
18	18	228.002.
19	19	(2) "Agriculture development company" means a
20	20	partnership, corporation, trust, or limited liability company,
21	21	whether organized on a profit or nonprofit basis, that:
22	22	(A) has as the company's primary business
23	23	activity the investment of cash in qualified projects, including
24	24	rural projects; and
25	25	(B) is approved as meeting the criteria of this
26	26	chapter.
27	27	(3) "Allocation date" means the date on which approved
28	28	investors are allocated premium tax credits.
29	29	(4) "Approved investor" means an insurer or other
30	30	person that has state premium tax liability, other than a title
31	31	insurance company, and that contributes designated capital
32	32	pursuant to a premium tax credit allocation under this chapter.
33	33	(5) "Critical agriculture facility" means a structure
34	34	or facility that:
35	35	(A) is available or is to be made available for
36	36	public or private use, including:
37	37	(i) an appurtenance to the structure or
38	38	facility or other property necessary or appropriate to operate the
39	39	structure or facility; and
40	40	(ii) technology installed in the structure
41	41	or facility that relates to the structure's or facility's purpose;
42	42	and
43	43	(B) is related to or will be related to all or
44	44	part of one or more of the following:
45	45	(i) new or developing cyber-agriculture
46	46	communications systems;
47	47	(ii) rural broadband networks that address
48	48	and relieve digital poverty;
49	49	(iii) new efficient generation,
50	50	transmission, or storage of electric energy centered around
51	51	agricultural use;
52	52	(iv) agriculture-related robotic
53	53	development and related businesses;
54	54	(v) new exposition and industrial
55	55	agribusiness park complexes that include educational facilities;
56	56	(vi) transportation-related systems or
57	57	logistics focused on agriculture, including rail, truck, or
58	58	airplane facilities;
59	59	(vii) agriculture-related water or
60	60	wastewater system improvements or upgrades;
61	61	(viii) packaging, processing, or freezing
62	62	of any agricultural product; or
63	63	(ix) agriculture-related biological
64	64	product manufacturing or research facilities.
65	65	(6) "Designated capital" means an investment of cash
66	66	by an approved investor in an agriculture development company that
67	67	fully funds the purchase price of a qualified debt instrument
68	68	issued by the agriculture development company.
69	69	(7) "Governmental or authorized nonprofit entity"
70	70	means an entity that is authorized by the laws of this state to make
71	71	a public work contract and that is:
72	72	(A) a governmental entity or quasi-governmental
73	73	authority, including:
74	74	(i) this state, a county, or a
75	75	municipality;
76	76	(ii) a department, board, or agency of this
77	77	state, a county, or a municipality; and
78	78	(iii) a school district or a subdivision of
79	79	a school district; or
80	80	(B) a nonprofit corporation exempt from income
81	81	taxation under Section 501(a), Internal Revenue Code of 1986, by
82	82	being listed under Section 501(c)(3) of that code.
83	83	(8) "Liquidating distribution" means a distribution
84	84	or payment by an agriculture development company, other than a
85	85	qualified distribution.
86	86	(9) "Participating company" means an agriculture
87	87	development company that has not opted out of redistribution and
88	88	reallocation under Section 230.353.
89	89	(10) "Person" means an individual or entity, including
90	90	a corporation, general or limited partnership, trust, or limited
91	91	liability company.
92	92	(11) "Premium tax credit allocation claim" means a
93	93	claim for allocation of premium tax credits.
94	94	(12) "Qualified debt instrument" means a debt
95	95	instrument issued by an agriculture development company, at par
96	96	value or a premium, that:
97	97	(A) has an original maturity date that is a date
98	98	on or after the fifth anniversary of the date of issuance; and
99	99	(B) has a repayment schedule that is not faster
100	100	than the schedule by which the premium tax credits may be applied
101	101	under Sections 230.301 and 230.302.
102	102	(13) "Qualified distribution" means a distribution or
103	103	payment from designated capital by an agriculture development
104	104	company in connection with:
105	105	(A) the reasonable costs and expenses of forming,
106	106	syndicating, managing, and operating the company, including:
107	107	(i) reasonable and necessary fees paid for
108	108	professional services, including legal and accounting services,
109	109	related to the formation and operation of the company; and
110	110	(ii) an annual management fee in an amount
111	111	that does not exceed two and one-half percent of the designated
112	112	capital of the company; and
113	113	(B) any projected liability for federal or state
114	114	taxes, including penalties and interest related to federal or state
115	115	income taxes, of:
116	116	(i) the company; or
117	117	(ii) an equity owner of the company to the
118	118	extent that the tax liability is related to the ownership,
119	119	management, or operation of the company.
120	120	(14) "Qualified escrow account" means an escrow
121	121	account:
122	122	(A) maintained in a savings and loan association,
123	123	bank, or trust company;
124	124	(B) that the escrow holder clearly denotes in the
125	125	holder's records as an escrow account; and
126	126	(C) that allows solely for qualified
127	127	withdrawals.
128	128	(15) "Qualified investment" means the investment of
129	129	cash in a qualified project by an agriculture development company
130	130	for the purchase of any debt, including a debt instrument.
131	131	(16) "Qualified project" means:
132	132	(A) a project that, at the time of an agriculture
133	133	development company's first investment in the project:
134	134	(i) is or may be governed by one or more
135	135	public work contracts to which a governmental or authorized
136	136	nonprofit entity is a party; and
137	137	(ii) relates to the planning, design,
138	138	development, installation, construction, acquisition, or expansion
139	139	of a critical agriculture facility; or
140	140	(B) a rural project.
141	141	(17) "Qualified withdrawal" means a withdrawal from a
142	142	qualified escrow account that may be made only on the receipt of the
143	143	signed, written direction of:
144	144	(A) an authorized signatory of the agriculture
145	145	development company associated with the escrow account; and
146	146	(B) the comptroller under Section 230.201(c),
147	147	230.251(c), or 230.252(c), as applicable.
148	148	(18) "Rural project" means a project that, at the time
149	149	of an agriculture development company's first investment in the
150	150	project, relates to the planning, design, development,
151	151	installation, construction, acquisition, or expansion of a
152	152	critical agriculture facility in a non-metropolitan county as
153	153	defined by the United States Census Bureau in its most recent
154	154	census.
155	155	(19) "State premium tax liability" means:
156	156	(A) any liability incurred by any person under
157	157	Chapter 221, 222, 223A, or 224; or
158	158	(B) if the tax liability imposed under Chapter
159	159	221, 222, 223A, or 224 on January 1, 2021, is eliminated or reduced,
160	160	any tax liability imposed on an insurer or other person that had
161	161	premium tax liability under Chapter 221, 222, 223A, or 224 on that
162	162	date.
163	163	SUBCHAPTER B. ADMINISTRATION AND PROMOTION
164	164	Sec. 230.051. ADMINISTRATION BY COMPTROLLER. The
165	165	comptroller shall administer this chapter.
166	166	Sec. 230.052. RULES; FORMS. (a) The comptroller shall
167	167	adopt rules and forms as necessary to implement this chapter,
168	168	including rules that:
169	169	(1) establish the application procedures for approval
170	170	as agriculture development companies; and
171	171	(2) facilitate the transfer or assignment of premium
172	172	tax credits by approved investors.
173	173	(b) In establishing rules under Subsection (a)(1), the
174	174	comptroller shall consult with the Department of Agriculture.
175	175	Sec. 230.053. REPORT TO LEGISLATURE. (a) The comptroller
176	176	shall prepare a biennial report with respect to results of the
177	177	implementation of this chapter. The report must include:
178	178	(1) the number of agriculture development companies
179	179	holding designated capital;
180	180	(2) the amount of designated capital invested in each
181	181	agriculture development company;
182	182	(3) the amount of designated capital each agriculture
183	183	development company has invested in qualified projects as of
184	184	January 1, 2024, and the cumulative total for each subsequent year;
185	185	(4) the total amount of tax credits granted under this
186	186	chapter for each year that credits have been granted;
187	187	(5) the performance of each agriculture development
188	188	company with respect to renewal and reporting requirements imposed
189	189	under this chapter; and
190	190	(6) the agriculture development companies that have
191	191	been disapproved or that have failed to renew their approvals and
192	192	the reason for any disapproval.
193	193	(b) The comptroller shall file the report with the governor,
194	194	the lieutenant governor, and the speaker of the house of
195	195	representatives not later than December 15 of each even-numbered
196	196	year.
197	197	Sec. 230.054. PROMOTION OF PROGRAM. The Department of
198	198	Agriculture shall promote the program established under this
199	199	chapter, including through the department's newsletter.
200	200	SUBCHAPTER C. APPLICATION FOR APPROVAL AS AND GENERAL OPERATION OF
201	201	AGRICULTURE DEVELOPMENT COMPANIES
202	202	Sec. 230.101. APPLICATION FOR APPROVAL AS AN AGRICULTURE
203	203	DEVELOPMENT COMPANY. (a) An applicant for approval as an
204	204	agriculture development company must file the application in the
205	205	form prescribed by the comptroller. The application must be
206	206	accompanied by a nonrefundable application fee of $7,500.
207	207	(b) The application must include an audited balance sheet of
208	208	the applicant, with an unqualified opinion from an independent
209	209	certified public accountant, as of a date not more than 35 days
210	210	before the date of the application.
211	211	Sec. 230.102. QUALIFICATION. To qualify as an agriculture
212	212	development company:
213	213	(1) the applicant must have, at the time of
214	214	application for approval, an equity capitalization of at least
215	215	$500,000 in unencumbered cash or cash equivalents;
216	216	(2) at least two principals or persons employed to
217	217	manage the funds of the applicant must collectively have:
218	218	(A) at least four years of experience managing
219	219	the funds of a pooled investment vehicle; and
220	220	(B) at least four years of experience managing or
221	221	developing investments in public works or agriculturally related
222	222	projects;
223	223	(3) the applicant must have established a qualified
224	224	escrow account;
225	225	(4) the applicant must have signed and delivered the
226	226	sworn document required by Section 230.104; and
227	227	(5) the applicant must satisfy any additional
228	228	requirement imposed by the comptroller by rule.
229	229	Sec. 230.103. MANAGEMENT BY AND OWNERSHIP INTERESTS OF
230	230	INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of insurers,
231	231	or other persons who may have state premium tax liability or the
232	232	insurer's or other person's affiliates may not, directly or
233	233	indirectly:
234	234	(1) manage an agriculture development company;
235	235	(2) own, whether through rights, options, convertible
236	236	interests or otherwise, any outstanding securities of an
237	237	agriculture development company; or
238	238	(3) control the direction of investments for an
239	239	agriculture development company.
240	240	(b) Subsection (a) applies without regard to whether the
241	241	insurer or other person or the affiliate of the insurer or other
242	242	person is authorized by or engages in business in this state.
243	243	(c) Subsections (a) and (b) do not preclude an insurer,
244	244	approved investor, or any other party from exercising its legal
245	245	rights and remedies, including interim management of an agriculture
246	246	development company, if authorized by law, with respect to an
247	247	agriculture development company that is in default of its statutory
248	248	or contractual obligations to the insurer, approved investor, or
249	249	other party.
250	250	Sec. 230.104. SWORN AND SIGNED DOCUMENT REQUIRED AS
251	251	CONDITION OF APPROVAL. As a condition to approval as an agriculture
252	252	development company by the comptroller under Section 230.105, the
253	253	company must execute a signed, sworn writing in language
254	254	substantially similar to the following:
255	255	"The undersigned by this means agrees that, without further
256	256	consideration, at any time after the date this document is signed,
257	257	the undersigned will promptly execute and deliver such instruments
258	258	and documents and take such action, at the comptroller's request,
259	259	to permit the comptroller to carry out the comptroller's rights and
260	260	obligations resulting from the undersigned's disapproval as an
261	261	agriculture development company under the laws of this state. If
262	262	the comptroller is unable for any reason to secure the
263	263	undersigned's signature to any instrument or document that the
264	264	comptroller may request in connection with the undersigned's
265	265	disapproval as an agriculture development company, the undersigned
266	266	irrevocably designates and appoints the comptroller and the
267	267	comptroller's duly authorized officers and agents as the
268	268	undersigned's attorneys-in-fact, with full power of substitution
269	269	to act for and on the behalf of the undersigned to execute and file
270	270	any instrument or document described above and to perform all other
271	271	lawfully permitted acts to further the purposes of the above-stated
272	272	with the same legal force and effect as if the instrument or
273	273	document was executed or the acts were performed by the
274	274	undersigned. The undersigned agrees and acknowledges that this
275	275	appointment is coupled with an interest, and the undersigned agrees
276	276	not to take steps in opposition to or to terminate this
277	277	appointment."
278	278	Sec. 230.105. ACTION ON APPLICATION. (a) The comptroller
279	279	shall:
280	280	(1) review the application, organizational documents,
281	281	escrow agreement, sworn document required by Section 230.104, and
282	282	business history of each applicant; and
283	283	(2) ensure that the applicant satisfies the
284	284	requirements of this chapter.
285	285	(b) Not later than the 30th day after the date an
286	286	application is filed, the comptroller shall:
287	287	(1) issue the approval of the applicant as an
288	288	agriculture development company; or
289	289	(2) refuse to issue the approval and communicate in
290	290	detail to the applicant the grounds for the refusal, including
291	291	suggestions for the removal of those grounds.
292	292	Sec. 230.106. CONTINUATION OF APPROVED STATUS. To continue
293	293	to be approved, an agriculture development company must make
294	294	qualified investments according to the schedule established by
295	295	Section 230.151 or 230.152.
296	296	Sec. 230.107. REPORTS TO COMPTROLLER; AUDITED FINANCIAL
297	297	STATEMENT. (a) Each agriculture development company shall report
298	298	to the comptroller as soon as practicable after the receipt of
299	299	designated capital:
300	300	(1) the name of each approved investor from which the
301	301	designated capital was received, including the approved investor's
302	302	insurance premium tax identification number;
303	303	(2) the amount of each approved investor's investment
304	304	of designated capital and premium tax credits;
305	305	(3) the date on which the designated capital was
306	306	received;
307	307	(4) the name and address of the agriculture
308	308	development company's escrow agent; and
309	309	(5) the account number of the agriculture development
310	310	company's qualified escrow account.
311	311	(b) Not later than January 31 of each year, each agriculture
312	312	development company shall report to the comptroller:
313	313	(1) the amount of the company's designated capital at
314	314	the end of the preceding year;
315	315	(2) whether the company has invested more than 20
316	316	percent of its total designated capital in any one project during
317	317	the preceding year;
318	318	(3) each qualified investment that the company made
319	319	during the preceding year;
320	320	(4) each investment in a rural project that the
321	321	company made during the preceding year; and
322	322	(5) any other information required by the comptroller,
323	323	including any information required by the comptroller to comply
324	324	with Section 230.053.
325	325	(c) Not later than April 1 of each year, each agriculture
326	326	development company shall provide to the comptroller an annual
327	327	audited financial statement that includes the opinion of an
328	328	independent certified public accountant. The audit must address
329	329	the methods of operation and conduct of the business of the company
330	330	to determine whether:
331	331	(1) the company is complying with this chapter and the
332	332	rules adopted under this chapter;
333	333	(2) the funds received by the company have been
334	334	invested as required within the time prescribed by Section 230.151
335	335	or 230.152; and
336	336	(3) the company has invested the funds in qualified
337	337	investments, including rural projects, as required by Section
338	338	230.151 or 230.152.
339	339	Sec. 230.108. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not
340	340	later than January 31 of each year, each agriculture development
341	341	company shall pay a nonrefundable renewal fee of $5,000 to the
342	342	comptroller.
343	343	(b) If an agriculture development company fails to pay the
344	344	company's renewal fee on or before the date specified by Subsection
345	345	(a), the company must pay, in addition to the renewal fee, a late
346	346	fee of $5,000 to continue the company's approved status.
347	347	(c) Notwithstanding Subsection (a), a renewal fee is not
348	348	required within six months of the date on which the company's
349	349	initial approval as an agriculture development company is issued
350	350	under Section 230.105.
351	351	Sec. 230.109. QUALIFIED ESCROW ACCOUNT. The designated
352	352	capital of an agriculture development company, other than
353	353	designated capital approved for investment under Section 230.201 or
354	354	for distribution or repayment of debt under Section 230.251 or
355	355	230.252, shall be deposited and held in a qualified escrow account.
356	356	SUBCHAPTER D. INVESTMENT BY AGRICULTURE DEVELOPMENT COMPANY
357	357	Sec. 230.151. REQUIRED SCHEDULE OF INVESTMENT FOR CERTAIN
358	358	DESIGNATED CAPITAL. (a) Except as provided by Section 230.152,
359	359	this section applies to qualified investments by an agriculture
360	360	development company.
361	361	(b) Before the second anniversary of an agriculture
362	362	development company's allocation date, the company must make
363	363	qualified investments in an amount cumulatively equal to at least
364	364	20 percent of the company's designated capital, with at least 50
365	365	percent of the amount of those qualified investments placed in
366	366	rural projects.
367	367	(c) Before the third anniversary of an agriculture
368	368	development company's allocation date, the company must make
369	369	qualified investments in an amount cumulatively equal to at least
370	370	30 percent of the company's designated capital, with at least 50
371	371	percent of the amount of those qualified investments placed in
372	372	rural projects.
373	373	(d) Before the fourth anniversary of an agriculture
374	374	development company's allocation date, the company must make
375	375	qualified investments in an amount cumulatively equal to at least
376	376	40 percent of the company's designated capital, with at least 50
377	377	percent of the amount of those qualified investments placed in
378	378	rural projects.
379	379	(e) Before the fifth anniversary of an agriculture
380	380	development company's allocation date, the company must make
381	381	qualified investments in an amount cumulatively equal to at least
382	382	50 percent of the company's designated capital, with at least 50
383	383	percent of the amount of those qualified investments placed in
384	384	rural projects.
385	385	Sec. 230.152. REQUIRED SCHEDULE OF INVESTMENT FOR
386	386	DESIGNATED CAPITAL RESULTING FROM REDISTRIBUTION. (a) This
387	387	section applies to qualified investments resulting from a
388	388	redistribution of the designated capital of an agriculture
389	389	development company under Section 230.353.
390	390	(b) Notwithstanding Section 230.001(3), for purposes of
391	391	this section, the allocation date of designated capital is the date
392	392	on which the designated capital was redistributed to the
393	393	agriculture development company.
394	394	(c) Before the second anniversary of an agriculture
395	395	development company's allocation date, the company must make
396	396	qualified investments in an amount cumulatively equal to at least
397	397	20 percent of the designated capital redistributed to the company
398	398	on the allocation date, with at least 50 percent of the amount of
399	399	those qualified investments placed in rural projects.
400	400	(d) Before the third anniversary of an agriculture
401	401	development company's allocation date, the company must make
402	402	qualified investments in an amount cumulatively equal to at least
403	403	30 percent of the designated capital redistributed to the company
404	404	on the allocation date, with at least 50 percent of the amount of
405	405	those qualified investments placed in rural projects.
406	406	(e) Before the fourth anniversary of an agriculture
407	407	development company's allocation date, the company must make
408	408	qualified investments in an amount cumulatively equal to at least
409	409	40 percent of the designated capital redistributed to the company
410	410	on the allocation date, with at least 50 percent of the amount of
411	411	those qualified investments placed in rural projects.
412	412	(f) Before the fifth anniversary of an agriculture
413	413	development company's allocation date, the company must make
414	414	qualified investments in an amount cumulatively equal to at least
415	415	50 percent of the designated capital redistributed to the company
416	416	on the allocation date, with at least 50 percent of the amount of
417	417	those qualified investments placed in rural projects.
418	418	Sec. 230.153. COMPUTATION OF AMOUNT OF INVESTMENTS. (a)
419	419	The aggregate cumulative amount of all qualified investments made
420	420	by an agriculture development company after the company's
421	421	allocation date shall be considered in the computation of the
422	422	percentage requirements under this subchapter.
423	423	(b) An agriculture development company may invest proceeds
424	424	received from a qualified investment in another qualified
425	425	investment, and that investment counts toward any requirement of
426	426	this chapter with respect to investments of designated capital.
427	427	Sec. 230.154. LIMIT ON QUALIFIED INVESTMENT. An
428	428	agriculture development company may not make a qualified investment
429	429	at a cost to the company that is greater than 20 percent of the
430	430	company's total designated capital at the time of investment.
431	431	SUBCHAPTER E. QUALIFIED PROJECT; RURAL PROJECT
432	432	Sec. 230.201. EVALUATION OF PROJECT BY COMPTROLLER. (a) An
433	433	agriculture development company shall, before making an investment
434	434	in a project, request a written opinion from the comptroller as to
435	435	whether the project in which the agriculture development company
436	436	proposes to invest is a qualified project other than a rural project
437	437	or is a rural project, as applicable.
438	438	(b) Not later than the 30th day after the date of the receipt
439	439	of a request under Subsection (a), the comptroller shall:
440	440	(1) determine whether the project meets the definition
441	441	of a qualified project other than a rural project or of a rural
442	442	project, as applicable; and
443	443	(2) notify the agriculture development company in
444	444	writing of the determination and include an explanation of the
445	445	comptroller's determination.
446	446	(c) If the comptroller determines that the project meets the
447	447	definition of a qualified project other than a rural project or of a
448	448	rural project, as applicable, then the comptroller shall direct the
449	449	agriculture development company's escrow agent in a signed writing
450	450	to release the requested funds for investment in the project.
451	451	Sec. 230.202. CONTINUATION OF DETERMINATION AS QUALIFIED OR
452	452	RURAL PROJECT. (a) A project that the comptroller determines to be
453	453	a qualified project other than a rural project at the time of the
454	454	first investment in the project by an agriculture development
455	455	company remains a qualified project and may receive subsequent
456	456	investments from the company. A subsequent investment in the
457	457	qualified project is a qualified investment, even if the project no
458	458	longer meets the definition of a qualified project at the time of
459	459	the subsequent investment.
460	460	(b) A project the comptroller determines to be a rural
461	461	project at the time of the first investment in the project by an
462	462	agriculture development company remains a rural project and may
463	463	receive subsequent investments from the agriculture development
464	464	company. A subsequent investment in the rural project remains an
465	465	investment in a rural project, even if the project no longer meets
466	466	the definition of a rural project at the time of the subsequent
467	467	investment.
468	468	SUBCHAPTER F. DISTRIBUTIONS; REPAYMENT OF DEBT
469	469	Sec. 230.251. DISTRIBUTIONS BY AGRICULTURE DEVELOPMENT
470	470	COMPANY. (a) An agriculture development company shall, before
471	471	making a qualified distribution or a liquidating distribution, as
472	472	applicable, request a written opinion from the comptroller as to
473	473	whether the distribution the company proposes to make is a
474	474	qualified distribution or a liquidating distribution.
475	475	(b) Not later than the 30th day after the date of the receipt
476	476	of a request under Subsection (a), the comptroller shall:
477	477	(1) determine whether the proposed distribution is
478	478	either a qualified distribution or a liquidating distribution; and
479	479	(2) notify the agriculture development company in
480	480	writing of the determination and include an explanation of the
481	481	comptroller's determination.
482	482	(c) If the comptroller determines that the proposed
483	483	distribution is either a qualified distribution or a liquidating
484	484	distribution, the comptroller shall direct the agriculture
485	485	development company's escrow agent in a signed writing to release
486	486	the requested money for distribution.
487	487	(d) To make a liquidating distribution, an agriculture
488	488	development company must have made qualified investments in an
489	489	amount cumulatively equal to 100 percent of the company's
490	490	designated capital.
491	491	(e) A qualified distribution may not be made directly or
492	492	indirectly to an approved investor.
493	493	Sec. 230.252. REPAYMENT OF DEBT. (a) An agriculture
494	494	development company shall, before making a repayment of principal
495	495	or interest on the agriculture development company's indebtedness,
496	496	including repaying the company's indebtedness on which approved
497	497	investors earned premium tax credits, request from the comptroller
498	498	a written opinion as to whether the repayment the company proposes
499	499	to make complies with the requirements of this chapter.
500	500	(b) Not later than the 30th day after the date of the receipt
501	501	of a request under Subsection (a), the comptroller shall:
502	502	(1) determine whether the proposed repayment complies
503	503	with the requirements of this chapter; and
504	504	(2) notify the agriculture development company in
505	505	writing of the determination and include an explanation of the
506	506	comptroller's determination.
507	507	(c) If the comptroller determines that the proposed
508	508	repayment complies with the requirements of this chapter, the
509	509	comptroller shall direct the agriculture development company's
510	510	escrow agent in a signed writing to release the requested money for
511	511	repayment.
512	512	SUBCHAPTER G. PREMIUM TAX CREDIT
513	513	Sec. 230.301. PREMIUM TAX CREDIT. (a) An approved investor
514	514	that makes an investment of designated capital shall earn in the
515	515	year of investment a vested credit against state premium tax
516	516	liability equal to 100 percent of the approved investor's
517	517	investment of designated capital, subject to the limits imposed by
518	518	this subchapter.
519	519	(b) Beginning with the tax report due March 1, 2024, for the
520	520	2023 tax year, an approved investor may take up to 25 percent of the
521	521	vested premium tax credit in any taxable year of the approved
522	522	investor. The credit may not be applied to estimated payments due
523	523	in 2023 but may be applied to estimated payments beginning with
524	524	those payments made in 2024.
525	525	Sec. 230.302. LIMIT ON PREMIUM TAX CREDIT. (a) The credit
526	526	to be applied against state premium tax liability of an approved
527	527	investor in any one year may not exceed the state premium tax
528	528	liability of the investor for the taxable year.
529	529	(b) An approved investor may carry forward any unused credit
530	530	against state premium tax liability indefinitely until the premium
531	531	tax credits are used.
532	532	Sec. 230.303. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED.
533	533	(a) An approved investor must prepare and execute a premium tax
534	534	credit allocation claim on a form provided by the comptroller.
535	535	(b) The agriculture development company must file the
536	536	credit allocation claims with the comptroller by the date on which
537	537	the comptroller sets to accept claims on behalf of approved
538	538	investors by rule.
539	539	(c) The premium tax credit allocation claim form must
540	540	include an affidavit of the approved investor under which the
541	541	approved investor becomes legally bound and irrevocably committed
542	542	to make an investment of designated capital in an agriculture
543	543	development company in the amount allocated even if the amount
544	544	allocated is less than the amount of the claim, subject only to the
545	545	receipt of an allocation under Section 230.305.
546	546	(d) A certified investor may not claim a premium tax credit
547	547	under Section 230.301 for an investment that has not been funded,
548	548	even if the approved investor has committed to fund the investment.
549	549	Sec. 230.304. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The
550	550	total amount of designated capital for which premium tax credits
551	551	may be allowed under this chapter for all years in which premium tax
552	552	credits are allowed is $250 million.
553	553	(b) The total amount of designated capital for which premium
554	554	tax credits may be allowed for all approved investors under this
555	555	chapter may not exceed the amount that would entitle all approved
556	556	investors in agriculture development companies to take total
557	557	credits of $62.5 million in a year.
558	558	(c) An agriculture development company and the company's
559	559	affiliates may not file premium tax credit allocation claims in
560	560	excess of the maximum amount of designated capital for which
561	561	premium tax credits may be allowed as provided by this section.
562	562	Sec. 230.305. ALLOCATION OF PREMIUM TAX CREDITS. (a) If
563	563	the total premium tax credits claimed by all approved investors
564	564	exceeds the total limits on premium tax credits established by
565	565	Section 230.304, the comptroller shall allocate the total amount of
566	566	premium tax credits allowed under this chapter to approved
567	567	investors in agriculture development companies on a pro rata basis
568	568	in accordance with this section.
569	569	(b) The pro rata allocation for each approved investor shall
570	570	be the product of:
571	571	(1) a fraction, the numerator of which is the amount of
572	572	the premium tax credit allocation claim filed on behalf of the
573	573	investor and the denominator of which is the total amount of all
574	574	premium tax credit allocation claims filed on behalf of all
575	575	approved investors; and
576	576	(2) the total amount of designated capital for which
577	577	premium tax credits may be allowed under this chapter.
578	578	(c) Not later than the 15th day after the date on which the
579	579	comptroller accepts premium tax credit allocation claims on behalf
580	580	of approved investors, the comptroller shall notify each
581	581	agriculture development company of the amount of tax credits
582	582	allocated to each approved investor in the agriculture development
583	583	company. Each agriculture development company shall notify each
584	584	approved investor of the investor's premium tax credit allocation.
585	585	(d) If an agriculture development company does not receive
586	586	an investment of designated capital equaling the amount of premium
587	587	tax credits allocated to an approved investor for which the company
588	588	filed a premium tax credit allocation claim before the end of the
589	589	10th business day after the date of receipt of notice of the
590	590	allocation, the company shall notify the comptroller as soon as
591	591	practicable, but not later than 24 hours, and the portion of
592	592	designated capital allocated to the approved investor shall be
593	593	forfeited. The comptroller shall reallocate the forfeited
594	594	designated capital among the approved investors in the other
595	595	agriculture development companies that originally received an
596	596	allocation so that the result after reallocation is the same as if
597	597	the initial allocation under this section had been performed
598	598	without considering any premium tax credit allocation claims
599	599	forfeited under this subsection.
600	600	Sec. 230.306. TREATMENT OF CREDITS AND CAPITAL. In any case
601	601	under this code or another insurance law of this state in which the
602	602	assets of an approved investor are examined or considered, the
603	603	designated capital may be treated as an admitted asset, subject to
604	604	the applicable statutory valuation procedures.
605	605	Sec. 230.307. TRANSFERABILITY OF CREDIT. (a) An approved
606	606	investor may transfer or assign premium tax credits only as
607	607	established by the comptroller by rule.
608	608	(b) The transfer or assignment of a premium tax credit does
609	609	not affect the schedule for taking the premium tax credit under this
610	610	chapter.
611	611	Sec. 230.308. IMPACT OF PREMIUM TAX CREDITS ON INSURANCE
612	612	RATEMAKING. An approved investor is not required to reduce the
613	613	amount of premium tax included by the investor in connection with
614	614	ratemaking for any insurance contract written in this state because
615	615	of a reduction in the investor's Texas premium tax derived from the
616	616	credit granted under this chapter.
617	617	SUBCHAPTER H. ENFORCEMENT
618	618	Sec. 230.351. ANNUAL REVIEW BY COMPTROLLER. (a) The
619	619	comptroller shall conduct an annual review of each agriculture
620	620	development company to:
621	621	(1) ensure that the agriculture development company:
622	622	(A) continues to satisfy the requirements of this
623	623	chapter; and
624	624	(B) has not made any investment, distribution, or
625	625	repayment in violation of this chapter; and
626	626	(2) determine the eligibility status of the company's
627	627	qualified investments.
628	628	(b) Each agriculture development company shall pay the cost
629	629	of the annual review according to a reasonable fee schedule adopted
630	630	by the comptroller.
631	631	Sec. 230.352. DISAPPROVAL OF AGRICULTURE DEVELOPMENT
632	632	COMPANY. (a) A material violation of Subchapter D or E or Section
633	633	230.106, 230.107, or 230.108 is grounds for the disapproval of an
634	634	agriculture development company.
635	635	(b) If the comptroller determines that an agriculture
636	636	development company is not in compliance with a law listed in
637	637	Subsection (a), the comptroller shall notify the company's officers
638	638	in writing that the company may be subject to disapproval after the
639	639	120th day after the date the notice is mailed unless the company:
640	640	(1) corrects the deficiencies; and
641	641	(2) returns to compliance with the law.
642	642	(c) The comptroller may disapprove an agriculture
643	643	development company, after opportunity for hearing, if the
644	644	comptroller finds that the company is not in compliance with a law
645	645	listed in Subsection (a) at the end of the period prescribed by
646	646	Subsection (b).
647	647	(d) Disapproval is effective on the date the agriculture
648	648	development company receives the notice of disapproval under
649	649	Subsection (b).
650	650	(e) The comptroller shall notify any appropriate state
651	651	agency of the disapproval of an agriculture development company.
652	652	Sec. 230.353. REDISTRIBUTION OF DESIGNATED CAPITAL AND
653	653	REALLOCATION OF PREMIUM TAX CREDITS AFTER DISAPPROVAL. (a) On
654	654	disapproval of an agriculture development company, the comptroller
655	655	shall, in accordance with this section, cause the redistribution of
656	656	the disapproved company's designated capital and the reallocation
657	657	of the premium tax credits corresponding to the redistributed
658	658	designated capital to participating companies. The comptroller
659	659	shall:
660	660	(1) cause the amount of designated capital remaining
661	661	in the disapproved agriculture development company's qualified
662	662	escrow account to be redistributed among the participating
663	663	companies on a pro rata basis determined by dividing the amount of
664	664	designated capital then held by each participating company by the
665	665	aggregate amount of designated capital then held by all
666	666	participating companies;
667	667	(2) cause that portion of a qualified debt instrument
668	668	that corresponds to the redistributed designated capital to be
669	669	assigned by the disapproved agriculture development company to the
670	670	participating company to which the designated capital was
671	671	redistributed; and
672	672	(3) reallocate that portion of the premium tax credits
673	673	that corresponds to the redistributed designated capital to the
674	674	participating company to which the designated capital was
675	675	redistributed.
676	676	(b) The designated capital and premium tax credits of any
677	677	agriculture development company that has invested an amount
678	678	cumulatively equal to 100 percent of the company's designated
679	679	capital in qualified investments is not subject to redistribution
680	680	or reallocation under this section.
681	681	(c) The comptroller shall send written notice to the address
682	682	shown on the last premium tax filing of each approved investor whose
683	683	premium tax credit is subject to reallocation under this section.
684	684	(d) An approved agriculture development company may opt out
685	685	of participating in future redistributions and reallocations under
686	686	this section by delivering a written opt-out notice to the
687	687	comptroller at any time.
688	688	Sec. 230.354. ADMINISTRATIVE PENALTY. (a) The comptroller
689	689	may impose an administrative penalty on an agriculture development
690	690	company that violates this chapter.
691	691	(b) The amount of the penalty may not exceed $10,000 per
692	692	violation. Each day a violation continues or occurs is a separate
693	693	violation for the purpose of imposing the penalty. The amount of
694	694	the penalty shall be based on:
695	695	(1) the seriousness of the violation, including the
696	696	nature, circumstances, and extent of the violation;
697	697	(2) the economic harm caused by the violation;
698	698	(3) the history of previous violations;
699	699	(4) the amount necessary to deter a future violation;
700	700	(5) efforts to correct the violation; and
701	701	(6) any other matter that justice may require.
702	702	(c) An agriculture development company assessed a penalty
703	703	under this chapter may request a redetermination as provided by
704	704	Chapter 111, Tax Code.
705	705	(d) The attorney general may sue to collect the penalty.
706	706	(e) A proceeding to impose the penalty is a contested case
707	707	under Chapter 2001, Government Code.
708	708	SECTION 2. (a) Notwithstanding anything in this Act to the
709	709	contrary, the comptroller of public accounts may implement Chapter
710	710	230, Insurance Code, as added by this Act, only if the comptroller
711	711	determines, on the basis of a revenue estimate made after the 87th
712	712	Legislature, Regular Session, 2021, adjourns sine die that revenues
713	713	are anticipated in amounts sufficient to finance all appropriations
714	714	made during that session of the 87th Legislature after making
715	715	deductions for all reductions in taxes, including the reduction in
716	716	premium tax through premium tax credits authorized under Chapter
717	717	230, Insurance Code, as added by this Act.
718	718	(b) If the comptroller of public accounts determines under
719	719	Subsection (a) of this section that revenues are anticipated to
720	720	support a part, but less than all, of the premium tax credits
721	721	authorized under Chapter 230, Insurance Code, as added by this Act,
722	722	the comptroller shall:
723	723	(1) reduce the total amount of premium tax credits
724	724	allowed under Chapter 230, Insurance Code, as added by this Act, in
725	725	the amount necessary to comply with Subsection (a) of this section;
726	726	and
727	727	(2) adopt rules as necessary to implement Chapter 230,
728	728	Insurance Code, as added by this Act, taking into account the
729	729	reduction to the amount of premium tax credits allowed that is made
730	730	under Subdivision (1) of this subsection.
731	731	(c) In adopting rules under Subsection (b)(2) of this
732	732	section, the comptroller of public accounts may adjust any deadline
733	733	or other date established under this Act as necessary to implement
734	734	Chapter 230, Insurance Code, as added by this Act, as limited by
735	735	this section.
736	736	(d) The comptroller of public accounts shall notify the
737	737	governor, lieutenant governor, and speaker of the house of
738	738	representatives of the determination made under Subsection (a) of
739	739	this section.
740	740	SECTION 3. (a) Subject to Section 2 of this Act, the
741	741	comptroller of public accounts shall, not later than the 60th day
742	742	after the effective date of this Act, adopt rules as necessary to
743	743	implement Chapter 230, Insurance Code, as added by this Act.
744	744	(b) The comptroller shall begin accepting applications for
745	745	approval as an agriculture development company under Chapter 230,
746	746	Insurance Code, as added by this Act, on January 31, 2022.
747	747	(c) An approved investor may not make an investment with an
748	748	agriculture development company under Chapter 230, Insurance Code,
749	749	as added by this Act, before June 30, 2022.
750	750	SECTION 4. This Act takes effect immediately if it receives
751	751	a vote of two-thirds of all the members elected to each house, as
752	752	provided by Section 39, Article III, Texas Constitution. If this
753	753	Act does not receive the vote necessary for immediate effect, this
754	754	Act takes effect September 1, 2021.