87R2824 RDS-F
By: Krause H.B. No. 1733
A BILL TO BE ENTITLED
AN ACT
relating to insurance premium tax credits for investments
supporting agriculture and rural development projects; authorizing
a fee; providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 230 to read as follows:
CHAPTER 230. PREMIUM TAX CREDIT FOR INVESTMENTS SUPPORTING
AGRICULTURE AND RURAL DEVELOPMENT PROJECTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 230.001. GENERAL DEFINITIONS. In this chapter:
(1) "Affiliate" has the meaning assigned by Section
228.002.
(2) "Agriculture development company" means a
partnership, corporation, trust, or limited liability company,
whether organized on a profit or nonprofit basis, that:
(A) has as the company's primary business
activity the investment of cash in qualified projects, including
rural projects; and
(B) is approved as meeting the criteria of this
chapter.
(3) "Allocation date" means the date on which approved
investors are allocated premium tax credits.
(4) "Approved investor" means an insurer or other
person that has state premium tax liability, other than a title
insurance company, and that contributes designated capital
pursuant to a premium tax credit allocation under this chapter.
(5) "Critical agriculture facility" means a structure
or facility that:
(A) is available or is to be made available for
public or private use, including:
(i) an appurtenance to the structure or
facility or other property necessary or appropriate to operate the
structure or facility; and
(ii) technology installed in the structure
or facility that relates to the structure's or facility's purpose;
and
(B) is related to or will be related to all or
part of one or more of the following:
(i) new or developing cyber-agriculture
communications systems;
(ii) rural broadband networks that address
and relieve digital poverty;
(iii) new efficient generation,
transmission, or storage of electric energy centered around
agricultural use;
(iv) agriculture-related robotic
development and related businesses;
(v) new exposition and industrial
agribusiness park complexes that include educational facilities;
(vi) transportation-related systems or
logistics focused on agriculture, including rail, truck, or
airplane facilities;
(vii) agriculture-related water or
wastewater system improvements or upgrades;
(viii) packaging, processing, or freezing
of any agricultural product; or
(ix) agriculture-related biological
product manufacturing or research facilities.
(6) "Designated capital" means an investment of cash
by an approved investor in an agriculture development company that
fully funds the purchase price of a qualified debt instrument
issued by the agriculture development company.
(7) "Governmental or authorized nonprofit entity"
means an entity that is authorized by the laws of this state to make
a public work contract and that is:
(A) a governmental entity or quasi-governmental
authority, including:
(i) this state, a county, or a
municipality;
(ii) a department, board, or agency of this
state, a county, or a municipality; and
(iii) a school district or a subdivision of
a school district; or
(B) a nonprofit corporation exempt from income
taxation under Section 501(a), Internal Revenue Code of 1986, by
being listed under Section 501(c)(3) of that code.
(8) "Liquidating distribution" means a distribution
or payment by an agriculture development company, other than a
qualified distribution.
(9) "Participating company" means an agriculture
development company that has not opted out of redistribution and
reallocation under Section 230.353.
(10) "Person" means an individual or entity, including
a corporation, general or limited partnership, trust, or limited
liability company.
(11) "Premium tax credit allocation claim" means a
claim for allocation of premium tax credits.
(12) "Qualified debt instrument" means a debt
instrument issued by an agriculture development company, at par
value or a premium, that:
(A) has an original maturity date that is a date
on or after the fifth anniversary of the date of issuance; and
(B) has a repayment schedule that is not faster
than the schedule by which the premium tax credits may be applied
under Sections 230.301 and 230.302.
(13) "Qualified distribution" means a distribution or
payment from designated capital by an agriculture development
company in connection with:
(A) the reasonable costs and expenses of forming,
syndicating, managing, and operating the company, including:
(i) reasonable and necessary fees paid for
professional services, including legal and accounting services,
related to the formation and operation of the company; and
(ii) an annual management fee in an amount
that does not exceed two and one-half percent of the designated
capital of the company; and
(B) any projected liability for federal or state
taxes, including penalties and interest related to federal or state
income taxes, of:
(i) the company; or
(ii) an equity owner of the company to the
extent that the tax liability is related to the ownership,
management, or operation of the company.
(14) "Qualified escrow account" means an escrow
account:
(A) maintained in a savings and loan association,
bank, or trust company;
(B) that the escrow holder clearly denotes in the
holder's records as an escrow account; and
(C) that allows solely for qualified
withdrawals.
(15) "Qualified investment" means the investment of
cash in a qualified project by an agriculture development company
for the purchase of any debt, including a debt instrument.
(16) "Qualified project" means:
(A) a project that, at the time of an agriculture
development company's first investment in the project:
(i) is or may be governed by one or more
public work contracts to which a governmental or authorized
nonprofit entity is a party; and
(ii) relates to the planning, design,
development, installation, construction, acquisition, or expansion
of a critical agriculture facility; or
(B) a rural project.
(17) "Qualified withdrawal" means a withdrawal from a
qualified escrow account that may be made only on the receipt of the
signed, written direction of:
(A) an authorized signatory of the agriculture
development company associated with the escrow account; and
(B) the comptroller under Section 230.201(c),
230.251(c), or 230.252(c), as applicable.
(18) "Rural project" means a project that, at the time
of an agriculture development company's first investment in the
project, relates to the planning, design, development,
installation, construction, acquisition, or expansion of a
critical agriculture facility in a non-metropolitan county as
defined by the United States Census Bureau in its most recent
census.
(19) "State premium tax liability" means:
(A) any liability incurred by any person under
Chapter 221, 222, 223A, or 224; or
(B) if the tax liability imposed under Chapter
221, 222, 223A, or 224 on January 1, 2021, is eliminated or reduced,
any tax liability imposed on an insurer or other person that had
premium tax liability under Chapter 221, 222, 223A, or 224 on that
date.
SUBCHAPTER B. ADMINISTRATION AND PROMOTION
Sec. 230.051. ADMINISTRATION BY COMPTROLLER. The
comptroller shall administer this chapter.
Sec. 230.052. RULES; FORMS. (a) The comptroller shall
adopt rules and forms as necessary to implement this chapter,
including rules that:
(1) establish the application procedures for approval
as agriculture development companies; and
(2) facilitate the transfer or assignment of premium
tax credits by approved investors.
(b) In establishing rules under Subsection (a)(1), the
comptroller shall consult with the Department of Agriculture.
Sec. 230.053. REPORT TO LEGISLATURE. (a) The comptroller
shall prepare a biennial report with respect to results of the
implementation of this chapter. The report must include:
(1) the number of agriculture development companies
holding designated capital;
(2) the amount of designated capital invested in each
agriculture development company;
(3) the amount of designated capital each agriculture
development company has invested in qualified projects as of
January 1, 2024, and the cumulative total for each subsequent year;
(4) the total amount of tax credits granted under this
chapter for each year that credits have been granted;
(5) the performance of each agriculture development
company with respect to renewal and reporting requirements imposed
under this chapter; and
(6) the agriculture development companies that have
been disapproved or that have failed to renew their approvals and
the reason for any disapproval.
(b) The comptroller shall file the report with the governor,
the lieutenant governor, and the speaker of the house of
representatives not later than December 15 of each even-numbered
year.
Sec. 230.054. PROMOTION OF PROGRAM. The Department of
Agriculture shall promote the program established under this
chapter, including through the department's newsletter.
SUBCHAPTER C. APPLICATION FOR APPROVAL AS AND GENERAL OPERATION OF
AGRICULTURE DEVELOPMENT COMPANIES
Sec. 230.101. APPLICATION FOR APPROVAL AS AN AGRICULTURE
DEVELOPMENT COMPANY. (a) An applicant for approval as an
agriculture development company must file the application in the
form prescribed by the comptroller. The application must be
accompanied by a nonrefundable application fee of $7,500.
(b) The application must include an audited balance sheet of
the applicant, with an unqualified opinion from an independent
certified public accountant, as of a date not more than 35 days
before the date of the application.
Sec. 230.102. QUALIFICATION. To qualify as an agriculture
development company:
(1) the applicant must have, at the time of
application for approval, an equity capitalization of at least
$500,000 in unencumbered cash or cash equivalents;
(2) at least two principals or persons employed to
manage the funds of the applicant must collectively have:
(A) at least four years of experience managing
the funds of a pooled investment vehicle; and
(B) at least four years of experience managing or
developing investments in public works or agriculturally related
projects;
(3) the applicant must have established a qualified
escrow account;
(4) the applicant must have signed and delivered the
sworn document required by Section 230.104; and
(5) the applicant must satisfy any additional
requirement imposed by the comptroller by rule.
Sec. 230.103. MANAGEMENT BY AND OWNERSHIP INTERESTS OF
INSURANCE ENTITIES PROHIBITED. (a) An insurer, group of insurers,
or other persons who may have state premium tax liability or the
insurer's or other person's affiliates may not, directly or
indirectly:
(1) manage an agriculture development company;
(2) own, whether through rights, options, convertible
interests or otherwise, any outstanding securities of an
agriculture development company; or
(3) control the direction of investments for an
agriculture development company.
(b) Subsection (a) applies without regard to whether the
insurer or other person or the affiliate of the insurer or other
person is authorized by or engages in business in this state.
(c) Subsections (a) and (b) do not preclude an insurer,
approved investor, or any other party from exercising its legal
rights and remedies, including interim management of an agriculture
development company, if authorized by law, with respect to an
agriculture development company that is in default of its statutory
or contractual obligations to the insurer, approved investor, or
other party.
Sec. 230.104. SWORN AND SIGNED DOCUMENT REQUIRED AS
CONDITION OF APPROVAL. As a condition to approval as an agriculture
development company by the comptroller under Section 230.105, the
company must execute a signed, sworn writing in language
substantially similar to the following:
"The undersigned by this means agrees that, without further
consideration, at any time after the date this document is signed,
the undersigned will promptly execute and deliver such instruments
and documents and take such action, at the comptroller's request,
to permit the comptroller to carry out the comptroller's rights and
obligations resulting from the undersigned's disapproval as an
agriculture development company under the laws of this state. If
the comptroller is unable for any reason to secure the
undersigned's signature to any instrument or document that the
comptroller may request in connection with the undersigned's
disapproval as an agriculture development company, the undersigned
irrevocably designates and appoints the comptroller and the
comptroller's duly authorized officers and agents as the
undersigned's attorneys-in-fact, with full power of substitution
to act for and on the behalf of the undersigned to execute and file
any instrument or document described above and to perform all other
lawfully permitted acts to further the purposes of the above-stated
with the same legal force and effect as if the instrument or
document was executed or the acts were performed by the
undersigned. The undersigned agrees and acknowledges that this
appointment is coupled with an interest, and the undersigned agrees
not to take steps in opposition to or to terminate this
appointment."
Sec. 230.105. ACTION ON APPLICATION. (a) The comptroller
shall:
(1) review the application, organizational documents,
escrow agreement, sworn document required by Section 230.104, and
business history of each applicant; and
(2) ensure that the applicant satisfies the
requirements of this chapter.
(b) Not later than the 30th day after the date an
application is filed, the comptroller shall:
(1) issue the approval of the applicant as an
agriculture development company; or
(2) refuse to issue the approval and communicate in
detail to the applicant the grounds for the refusal, including
suggestions for the removal of those grounds.
Sec. 230.106. CONTINUATION OF APPROVED STATUS. To continue
to be approved, an agriculture development company must make
qualified investments according to the schedule established by
Section 230.151 or 230.152.
Sec. 230.107. REPORTS TO COMPTROLLER; AUDITED FINANCIAL
STATEMENT. (a) Each agriculture development company shall report
to the comptroller as soon as practicable after the receipt of
designated capital:
(1) the name of each approved investor from which the
designated capital was received, including the approved investor's
insurance premium tax identification number;
(2) the amount of each approved investor's investment
of designated capital and premium tax credits;
(3) the date on which the designated capital was
received;
(4) the name and address of the agriculture
development company's escrow agent; and
(5) the account number of the agriculture development
company's qualified escrow account.
(b) Not later than January 31 of each year, each agriculture
development company shall report to the comptroller:
(1) the amount of the company's designated capital at
the end of the preceding year;
(2) whether the company has invested more than 20
percent of its total designated capital in any one project during
the preceding year;
(3) each qualified investment that the company made
during the preceding year;
(4) each investment in a rural project that the
company made during the preceding year; and
(5) any other information required by the comptroller,
including any information required by the comptroller to comply
with Section 230.053.
(c) Not later than April 1 of each year, each agriculture
development company shall provide to the comptroller an annual
audited financial statement that includes the opinion of an
independent certified public accountant. The audit must address
the methods of operation and conduct of the business of the company
to determine whether:
(1) the company is complying with this chapter and the
rules adopted under this chapter;
(2) the funds received by the company have been
invested as required within the time prescribed by Section 230.151
or 230.152; and
(3) the company has invested the funds in qualified
investments, including rural projects, as required by Section
230.151 or 230.152.
Sec. 230.108. RENEWAL FEE; LATE FEE; EXCEPTION. (a) Not
later than January 31 of each year, each agriculture development
company shall pay a nonrefundable renewal fee of $5,000 to the
comptroller.
(b) If an agriculture development company fails to pay the
company's renewal fee on or before the date specified by Subsection
(a), the company must pay, in addition to the renewal fee, a late
fee of $5,000 to continue the company's approved status.
(c) Notwithstanding Subsection (a), a renewal fee is not
required within six months of the date on which the company's
initial approval as an agriculture development company is issued
under Section 230.105.
Sec. 230.109. QUALIFIED ESCROW ACCOUNT. The designated
capital of an agriculture development company, other than
designated capital approved for investment under Section 230.201 or
for distribution or repayment of debt under Section 230.251 or
230.252, shall be deposited and held in a qualified escrow account.
SUBCHAPTER D. INVESTMENT BY AGRICULTURE DEVELOPMENT COMPANY
Sec. 230.151. REQUIRED SCHEDULE OF INVESTMENT FOR CERTAIN
DESIGNATED CAPITAL. (a) Except as provided by Section 230.152,
this section applies to qualified investments by an agriculture
development company.
(b) Before the second anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
20 percent of the company's designated capital, with at least 50
percent of the amount of those qualified investments placed in
rural projects.
(c) Before the third anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
30 percent of the company's designated capital, with at least 50
percent of the amount of those qualified investments placed in
rural projects.
(d) Before the fourth anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
40 percent of the company's designated capital, with at least 50
percent of the amount of those qualified investments placed in
rural projects.
(e) Before the fifth anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
50 percent of the company's designated capital, with at least 50
percent of the amount of those qualified investments placed in
rural projects.
Sec. 230.152. REQUIRED SCHEDULE OF INVESTMENT FOR
DESIGNATED CAPITAL RESULTING FROM REDISTRIBUTION. (a) This
section applies to qualified investments resulting from a
redistribution of the designated capital of an agriculture
development company under Section 230.353.
(b) Notwithstanding Section 230.001(3), for purposes of
this section, the allocation date of designated capital is the date
on which the designated capital was redistributed to the
agriculture development company.
(c) Before the second anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
20 percent of the designated capital redistributed to the company
on the allocation date, with at least 50 percent of the amount of
those qualified investments placed in rural projects.
(d) Before the third anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
30 percent of the designated capital redistributed to the company
on the allocation date, with at least 50 percent of the amount of
those qualified investments placed in rural projects.
(e) Before the fourth anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
40 percent of the designated capital redistributed to the company
on the allocation date, with at least 50 percent of the amount of
those qualified investments placed in rural projects.
(f) Before the fifth anniversary of an agriculture
development company's allocation date, the company must make
qualified investments in an amount cumulatively equal to at least
50 percent of the designated capital redistributed to the company
on the allocation date, with at least 50 percent of the amount of
those qualified investments placed in rural projects.
Sec. 230.153. COMPUTATION OF AMOUNT OF INVESTMENTS. (a)
The aggregate cumulative amount of all qualified investments made
by an agriculture development company after the company's
allocation date shall be considered in the computation of the
percentage requirements under this subchapter.
(b) An agriculture development company may invest proceeds
received from a qualified investment in another qualified
investment, and that investment counts toward any requirement of
this chapter with respect to investments of designated capital.
Sec. 230.154. LIMIT ON QUALIFIED INVESTMENT. An
agriculture development company may not make a qualified investment
at a cost to the company that is greater than 20 percent of the
company's total designated capital at the time of investment.
SUBCHAPTER E. QUALIFIED PROJECT; RURAL PROJECT
Sec. 230.201. EVALUATION OF PROJECT BY COMPTROLLER. (a) An
agriculture development company shall, before making an investment
in a project, request a written opinion from the comptroller as to
whether the project in which the agriculture development company
proposes to invest is a qualified project other than a rural project
or is a rural project, as applicable.
(b) Not later than the 30th day after the date of the receipt
of a request under Subsection (a), the comptroller shall:
(1) determine whether the project meets the definition
of a qualified project other than a rural project or of a rural
project, as applicable; and
(2) notify the agriculture development company in
writing of the determination and include an explanation of the
comptroller's determination.
(c) If the comptroller determines that the project meets the
definition of a qualified project other than a rural project or of a
rural project, as applicable, then the comptroller shall direct the
agriculture development company's escrow agent in a signed writing
to release the requested funds for investment in the project.
Sec. 230.202. CONTINUATION OF DETERMINATION AS QUALIFIED OR
RURAL PROJECT. (a) A project that the comptroller determines to be
a qualified project other than a rural project at the time of the
first investment in the project by an agriculture development
company remains a qualified project and may receive subsequent
investments from the company. A subsequent investment in the
qualified project is a qualified investment, even if the project no
longer meets the definition of a qualified project at the time of
the subsequent investment.
(b) A project the comptroller determines to be a rural
project at the time of the first investment in the project by an
agriculture development company remains a rural project and may
receive subsequent investments from the agriculture development
company. A subsequent investment in the rural project remains an
investment in a rural project, even if the project no longer meets
the definition of a rural project at the time of the subsequent
investment.
SUBCHAPTER F. DISTRIBUTIONS; REPAYMENT OF DEBT
Sec. 230.251. DISTRIBUTIONS BY AGRICULTURE DEVELOPMENT
COMPANY. (a) An agriculture development company shall, before
making a qualified distribution or a liquidating distribution, as
applicable, request a written opinion from the comptroller as to
whether the distribution the company proposes to make is a
qualified distribution or a liquidating distribution.
(b) Not later than the 30th day after the date of the receipt
of a request under Subsection (a), the comptroller shall:
(1) determine whether the proposed distribution is
either a qualified distribution or a liquidating distribution; and
(2) notify the agriculture development company in
writing of the determination and include an explanation of the
comptroller's determination.
(c) If the comptroller determines that the proposed
distribution is either a qualified distribution or a liquidating
distribution, the comptroller shall direct the agriculture
development company's escrow agent in a signed writing to release
the requested money for distribution.
(d) To make a liquidating distribution, an agriculture
development company must have made qualified investments in an
amount cumulatively equal to 100 percent of the company's
designated capital.
(e) A qualified distribution may not be made directly or
indirectly to an approved investor.
Sec. 230.252. REPAYMENT OF DEBT. (a) An agriculture
development company shall, before making a repayment of principal
or interest on the agriculture development company's indebtedness,
including repaying the company's indebtedness on which approved
investors earned premium tax credits, request from the comptroller
a written opinion as to whether the repayment the company proposes
to make complies with the requirements of this chapter.
(b) Not later than the 30th day after the date of the receipt
of a request under Subsection (a), the comptroller shall:
(1) determine whether the proposed repayment complies
with the requirements of this chapter; and
(2) notify the agriculture development company in
writing of the determination and include an explanation of the
comptroller's determination.
(c) If the comptroller determines that the proposed
repayment complies with the requirements of this chapter, the
comptroller shall direct the agriculture development company's
escrow agent in a signed writing to release the requested money for
repayment.
SUBCHAPTER G. PREMIUM TAX CREDIT
Sec. 230.301. PREMIUM TAX CREDIT. (a) An approved investor
that makes an investment of designated capital shall earn in the
year of investment a vested credit against state premium tax
liability equal to 100 percent of the approved investor's
investment of designated capital, subject to the limits imposed by
this subchapter.
(b) Beginning with the tax report due March 1, 2024, for the
2023 tax year, an approved investor may take up to 25 percent of the
vested premium tax credit in any taxable year of the approved
investor. The credit may not be applied to estimated payments due
in 2023 but may be applied to estimated payments beginning with
those payments made in 2024.
Sec. 230.302. LIMIT ON PREMIUM TAX CREDIT. (a) The credit
to be applied against state premium tax liability of an approved
investor in any one year may not exceed the state premium tax
liability of the investor for the taxable year.
(b) An approved investor may carry forward any unused credit
against state premium tax liability indefinitely until the premium
tax credits are used.
Sec. 230.303. PREMIUM TAX CREDIT ALLOCATION CLAIM REQUIRED.
(a) An approved investor must prepare and execute a premium tax
credit allocation claim on a form provided by the comptroller.
(b) The agriculture development company must file the
credit allocation claims with the comptroller by the date on which
the comptroller sets to accept claims on behalf of approved
investors by rule.
(c) The premium tax credit allocation claim form must
include an affidavit of the approved investor under which the
approved investor becomes legally bound and irrevocably committed
to make an investment of designated capital in an agriculture
development company in the amount allocated even if the amount
allocated is less than the amount of the claim, subject only to the
receipt of an allocation under Section 230.305.
(d) A certified investor may not claim a premium tax credit
under Section 230.301 for an investment that has not been funded,
even if the approved investor has committed to fund the investment.
Sec. 230.304. TOTAL LIMIT ON PREMIUM TAX CREDITS. (a) The
total amount of designated capital for which premium tax credits
may be allowed under this chapter for all years in which premium tax
credits are allowed is $250 million.
(b) The total amount of designated capital for which premium
tax credits may be allowed for all approved investors under this
chapter may not exceed the amount that would entitle all approved
investors in agriculture development companies to take total
credits of $62.5 million in a year.
(c) An agriculture development company and the company's
affiliates may not file premium tax credit allocation claims in
excess of the maximum amount of designated capital for which
premium tax credits may be allowed as provided by this section.
Sec. 230.305. ALLOCATION OF PREMIUM TAX CREDITS. (a) If
the total premium tax credits claimed by all approved investors
exceeds the total limits on premium tax credits established by
Section 230.304, the comptroller shall allocate the total amount of
premium tax credits allowed under this chapter to approved
investors in agriculture development companies on a pro rata basis
in accordance with this section.
(b) The pro rata allocation for each approved investor shall
be the product of:
(1) a fraction, the numerator of which is the amount of
the premium tax credit allocation claim filed on behalf of the
investor and the denominator of which is the total amount of all
premium tax credit allocation claims filed on behalf of all
approved investors; and
(2) the total amount of designated capital for which
premium tax credits may be allowed under this chapter.
(c) Not later than the 15th day after the date on which the
comptroller accepts premium tax credit allocation claims on behalf
of approved investors, the comptroller shall notify each
agriculture development company of the amount of tax credits
allocated to each approved investor in the agriculture development
company. Each agriculture development company shall notify each
approved investor of the investor's premium tax credit allocation.
(d) If an agriculture development company does not receive
an investment of designated capital equaling the amount of premium
tax credits allocated to an approved investor for which the company
filed a premium tax credit allocation claim before the end of the
10th business day after the date of receipt of notice of the
allocation, the company shall notify the comptroller as soon as
practicable, but not later than 24 hours, and the portion of
designated capital allocated to the approved investor shall be
forfeited. The comptroller shall reallocate the forfeited
designated capital among the approved investors in the other
agriculture development companies that originally received an
allocation so that the result after reallocation is the same as if
the initial allocation under this section had been performed
without considering any premium tax credit allocation claims
forfeited under this subsection.
Sec. 230.306. TREATMENT OF CREDITS AND CAPITAL. In any case
under this code or another insurance law of this state in which the
assets of an approved investor are examined or considered, the
designated capital may be treated as an admitted asset, subject to
the applicable statutory valuation procedures.
Sec. 230.307. TRANSFERABILITY OF CREDIT. (a) An approved
investor may transfer or assign premium tax credits only as
established by the comptroller by rule.
(b) The transfer or assignment of a premium tax credit does
not affect the schedule for taking the premium tax credit under this
chapter.
Sec. 230.308. IMPACT OF PREMIUM TAX CREDITS ON INSURANCE
RATEMAKING. An approved investor is not required to reduce the
amount of premium tax included by the investor in connection with
ratemaking for any insurance contract written in this state because
of a reduction in the investor's Texas premium tax derived from the
credit granted under this chapter.
SUBCHAPTER H. ENFORCEMENT
Sec. 230.351. ANNUAL REVIEW BY COMPTROLLER. (a) The
comptroller shall conduct an annual review of each agriculture
development company to:
(1) ensure that the agriculture development company:
(A) continues to satisfy the requirements of this
chapter; and
(B) has not made any investment, distribution, or
repayment in violation of this chapter; and
(2) determine the eligibility status of the company's
qualified investments.
(b) Each agriculture development company shall pay the cost
of the annual review according to a reasonable fee schedule adopted
by the comptroller.
Sec. 230.352. DISAPPROVAL OF AGRICULTURE DEVELOPMENT
COMPANY. (a) A material violation of Subchapter D or E or Section
230.106, 230.107, or 230.108 is grounds for the disapproval of an
agriculture development company.
(b) If the comptroller determines that an agriculture
development company is not in compliance with a law listed in
Subsection (a), the comptroller shall notify the company's officers
in writing that the company may be subject to disapproval after the
120th day after the date the notice is mailed unless the company:
(1) corrects the deficiencies; and
(2) returns to compliance with the law.
(c) The comptroller may disapprove an agriculture
development company, after opportunity for hearing, if the
comptroller finds that the company is not in compliance with a law
listed in Subsection (a) at the end of the period prescribed by
Subsection (b).
(d) Disapproval is effective on the date the agriculture
development company receives the notice of disapproval under
Subsection (b).
(e) The comptroller shall notify any appropriate state
agency of the disapproval of an agriculture development company.
Sec. 230.353. REDISTRIBUTION OF DESIGNATED CAPITAL AND
REALLOCATION OF PREMIUM TAX CREDITS AFTER DISAPPROVAL. (a) On
disapproval of an agriculture development company, the comptroller
shall, in accordance with this section, cause the redistribution of
the disapproved company's designated capital and the reallocation
of the premium tax credits corresponding to the redistributed
designated capital to participating companies. The comptroller
shall:
(1) cause the amount of designated capital remaining
in the disapproved agriculture development company's qualified
escrow account to be redistributed among the participating
companies on a pro rata basis determined by dividing the amount of
designated capital then held by each participating company by the
aggregate amount of designated capital then held by all
participating companies;
(2) cause that portion of a qualified debt instrument
that corresponds to the redistributed designated capital to be
assigned by the disapproved agriculture development company to the
participating company to which the designated capital was
redistributed; and
(3) reallocate that portion of the premium tax credits
that corresponds to the redistributed designated capital to the
participating company to which the designated capital was
redistributed.
(b) The designated capital and premium tax credits of any
agriculture development company that has invested an amount
cumulatively equal to 100 percent of the company's designated
capital in qualified investments is not subject to redistribution
or reallocation under this section.
(c) The comptroller shall send written notice to the address
shown on the last premium tax filing of each approved investor whose
premium tax credit is subject to reallocation under this section.
(d) An approved agriculture development company may opt out
of participating in future redistributions and reallocations under
this section by delivering a written opt-out notice to the
comptroller at any time.
Sec. 230.354. ADMINISTRATIVE PENALTY. (a) The comptroller
may impose an administrative penalty on an agriculture development
company that violates this chapter.
(b) The amount of the penalty may not exceed $10,000 per
violation. Each day a violation continues or occurs is a separate
violation for the purpose of imposing the penalty. The amount of
the penalty shall be based on:
(1) the seriousness of the violation, including the
nature, circumstances, and extent of the violation;
(2) the economic harm caused by the violation;
(3) the history of previous violations;
(4) the amount necessary to deter a future violation;
(5) efforts to correct the violation; and
(6) any other matter that justice may require.
(c) An agriculture development company assessed a penalty
under this chapter may request a redetermination as provided by
Chapter 111, Tax Code.
(d) The attorney general may sue to collect the penalty.
(e) A proceeding to impose the penalty is a contested case
under Chapter 2001, Government Code.
SECTION 2. (a) Notwithstanding anything in this Act to the
contrary, the comptroller of public accounts may implement Chapter
230, Insurance Code, as added by this Act, only if the comptroller
determines, on the basis of a revenue estimate made after the 87th
Legislature, Regular Session, 2021, adjourns sine die that revenues
are anticipated in amounts sufficient to finance all appropriations
made during that session of the 87th Legislature after making
deductions for all reductions in taxes, including the reduction in
premium tax through premium tax credits authorized under Chapter
230, Insurance Code, as added by this Act.
(b) If the comptroller of public accounts determines under
Subsection (a) of this section that revenues are anticipated to
support a part, but less than all, of the premium tax credits
authorized under Chapter 230, Insurance Code, as added by this Act,
the comptroller shall:
(1) reduce the total amount of premium tax credits
allowed under Chapter 230, Insurance Code, as added by this Act, in
the amount necessary to comply with Subsection (a) of this section;
and
(2) adopt rules as necessary to implement Chapter 230,
Insurance Code, as added by this Act, taking into account the
reduction to the amount of premium tax credits allowed that is made
under Subdivision (1) of this subsection.
(c) In adopting rules under Subsection (b)(2) of this
section, the comptroller of public accounts may adjust any deadline
or other date established under this Act as necessary to implement
Chapter 230, Insurance Code, as added by this Act, as limited by
this section.
(d) The comptroller of public accounts shall notify the
governor, lieutenant governor, and speaker of the house of
representatives of the determination made under Subsection (a) of
this section.
SECTION 3. (a) Subject to Section 2 of this Act, the
comptroller of public accounts shall, not later than the 60th day
after the effective date of this Act, adopt rules as necessary to
implement Chapter 230, Insurance Code, as added by this Act.
(b) The comptroller shall begin accepting applications for
approval as an agriculture development company under Chapter 230,
Insurance Code, as added by this Act, on January 31, 2022.
(c) An approved investor may not make an investment with an
agriculture development company under Chapter 230, Insurance Code,
as added by this Act, before June 30, 2022.
SECTION 4. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2021.