Texas 2023 - 88th Regular

Texas Senate Bill SB675 Compare Versions

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1	1	By: Springer, Perry S.B. No. 675
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to small business recovery funds and insurance tax credits
7	7	for certain investments in those funds; imposing a monetary
8	8	penalty; authorizing fees.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle F, Title 4, Government Code, is amended
11	11	by adding Chapter 487A to read as follows:
12	12	CHAPTER 487A. SMALL BUSINESS RECOVERY FUNDS
13	13	SUBCHAPTER A. GENERAL PROVISIONS
14	14	Sec. 487A.0001. GENERAL DEFINITIONS. In this chapter:
15	15	(1) "Closing date" means the date a small business
16	16	recovery fund has collected all of the amounts described by Section
17	17	487A.0056(a)(1).
18	18	(2) "Growth investment" means any capital or equity
19	19	investment by a small business recovery fund in a targeted small
20	20	business or any loan by a small business recovery fund to a targeted
21	21	small business with a stated maturity date of at least one year
22	22	after the date of issuance.
23	23	(3) "Office" means the Texas Economic Development and
24	24	Tourism Office.
25	25	(4) "Rural area" means an area:
26	26	(A) other than a municipality with a population
27	27	of more than 50,000 or an urbanized area contiguous and adjacent to
28	28	the municipality; or
29	29	(B) determined to be rural in character by the
30	30	United States Department of Agriculture.
31	31	(5) "Small business recovery fund" means an entity
32	32	approved by the office as a small business recovery fund.
33	33	Sec. 487A.0002. DEFINITION: AFFILIATE. (a) In this
34	34	chapter, "affiliate" means an entity that directly or indirectly
35	35	through one or more intermediaries controls, is controlled by, or
36	36	is under common control with another entity.
37	37	(b) For purposes of Subsection (a), an entity is controlled
38	38	by another entity if the controlling entity:
39	39	(1) holds, directly or indirectly, the majority voting
40	40	or ownership interest in the controlled entity; or
41	41	(2) has control over the day-to-day operations of the
42	42	controlled entity by contract or by law.
43	43	Sec. 487A.0003. DEFINITION: CREDIT-ELIGIBLE CAPITAL
44	44	CONTRIBUTION. (a) In this chapter and subject to Subsection (b),
45	45	"credit-eligible capital contribution" means an investment of cash
46	46	that equals the amount specified on a tax credit certificate issued
47	47	by the office under Section 487A.0055(2) made by an entity that is
48	48	subject to state insurance tax liability, as defined by Section
49	49	232.0001, Insurance Code.
50	50	(b) An investment made by an entity qualifies as a
51	51	credit-eligible capital contribution only if the entity making the
52	52	investment receives in exchange for the investment:
53	53	(1) an equity interest in a small business recovery
54	54	fund; or
55	55	(2) at par value or premium, a debt instrument that has
56	56	a maturity date of at least five years from the closing date and a
57	57	repayment schedule that is no faster than level principal
58	58	amortization over five years.
59	59	Sec. 487A.0004. DEFINITION: INVESTMENT AUTHORITY. (a) In
60	60	this chapter, "investment authority" means the amount stated on the
61	61	notice issued under Section 487A.0055(1) approving the small
62	62	business recovery fund.
63	63	(b) At least 65 percent of a small business recovery fund's
64	64	investment authority must consist of credit-eligible capital
65	65	contributions.
66	66	Sec. 487A.0005. DEFINITION: JOBS CREATED. (a) In this
67	67	chapter, "jobs created" means, with respect to a targeted small
68	68	business, employment positions that:
69	69	(1) are created by the targeted small business;
70	70	(2) are located in this state;
71	71	(3) require at least 35 hours of work each week; and
72	72	(4) were not located in this state at the time of the
73	73	initial growth investment in the targeted small business.
74	74	(b) The number of jobs created by a targeted small business
75	75	is calculated each year by subtracting the number of employment
76	76	positions in this state at the targeted small business at the time
77	77	of the initial growth investment in the targeted small business
78	78	from the monthly average of those employment positions for that
79	79	year. If the number calculated under this subsection is less than
80	80	zero, the number shall be reported as zero.
81	81	(c) The monthly average of employment positions for a year
82	82	is calculated by adding the number of employment positions existing
83	83	on the last day of each month of the year and dividing that sum by
84	84	12.
85	85	Sec. 487A.0006. DEFINITION: JOBS RETAINED. (a) In this
86	86	chapter, "jobs retained" means, with respect to a targeted small
87	87	business, employment positions that:
88	88	(1) are located in this state, require at least 35
89	89	hours of work each week, and existed before the initial growth
90	90	investment in the targeted small business; and
91	91	(2) would have been lost or moved out of this state had
92	92	a growth investment in the targeted small business not been made, as
93	93	certified in writing by an executive officer of the targeted small
94	94	business to the small business recovery fund.
95	95	(b) The number of jobs retained by a targeted small business
96	96	is calculated each year based on the monthly average of employment
97	97	positions for that year.
98	98	(c) The monthly average of employment positions for a year
99	99	is calculated by adding the number of employment positions existing
100	100	on the last day of each month of the year and dividing that sum by
101	101	12.
102	102	(d) The reported number of jobs retained for a year may not
103	103	exceed the number reported on the initial report under Section
104	104	487A.0155. The small business recovery fund shall reduce the
105	105	number of jobs retained for a year if employment at the targeted
106	106	small business is less than the number reported on the initial
107	107	report.
108	108	Sec. 487A.0007. DEFINITION: TARGETED SMALL BUSINESS. (a)
109	109	In this chapter, "targeted small business" means a business that,
110	110	at the time of the initial growth investment in the business:
111	111	(1) had fewer than 250 employees, including any
112	112	persons who would be considered employees under the federal law to
113	113	which 13 C.F.R. Section 121.103(h)(4) applies as a result of the
114	114	application of that provision; and
115	115	(2) has its principal business operations located in
116	116	this state.
117	117	(b) For purposes of Subsection (a)(2), the principal
118	118	business operations of a business are located at a place where:
119	119	(1) at least 80 percent of the business's employees
120	120	work; or
121	121	(2) employees who are paid at least 80 percent of the
122	122	business's payroll work.
123	123	(c) An out-of-state business that agrees to relocate or hire
124	124	new employees using the proceeds of a growth investment to
125	125	establish principal business operations in this state qualifies as
126	126	a targeted small business if the business satisfies the
127	127	requirements of:
128	128	(1) Subsection (a)(1) at the time of the initial
129	129	growth investment in the business; and
130	130	(2) Subsection (a)(2) not later than the 180th day
131	131	after receiving the initial growth investment or a later date
132	132	agreed to by the office.
133	133	Sec. 487A.0008. RULES. The office shall adopt rules
134	134	necessary to implement this chapter.
135	135	SUBCHAPTER B. APPROVAL OF SMALL BUSINESS RECOVERY FUNDS; TAX
136	136	CREDIT CERTIFICATES
137	137	Sec. 487A.0051. APPLICATION. (a) Subject to Section
138	138	487A.0202, the office shall accept applications from entities
139	139	seeking approval as small business recovery funds.
140	140	(b) An application must include:
141	141	(1) the total investment authority sought by the
142	142	applicant under the applicant's business plan;
143	143	(2) evidence sufficient to prove to the office's
144	144	satisfaction that, as of the date the applicant submits the
145	145	application:
146	146	(A) the applicant or affiliates of the applicant
147	147	have invested, in the aggregate, at least $100 million in nonpublic
148	148	companies; and
149	149	(B) at least one principal in a rural business
150	150	investment company licensed under 7 U.S.C. Section 2009cc et seq.
151	151	or a small business investment company licensed under 15 U.S.C.
152	152	Section 681 is, and has been for at least four years, an officer or
153	153	employee of the applicant or of an affiliate of the applicant on the
154	154	date the application is submitted;
155	155	(3) a copy of the rural business investment company
156	156	license or small business investment company license described by
157	157	Subdivision (2)(B);
158	158	(4) an estimate of the number of jobs created and jobs
159	159	retained that will result from the applicant's growth investments;
160	160	(5) a business plan that includes a revenue impact
161	161	assessment that:
162	162	(A) projects state and local tax revenue to be
163	163	generated by the applicant's proposed growth investments; and
164	164	(B) is prepared by a nationally recognized third
165	165	party independent economic forecasting firm using a dynamic
166	166	economic forecasting model that analyzes the applicant's business
167	167	plan for the 10-year period following the date the applicant
168	168	submits the application;
169	169	(6) a signed affidavit from each committed investor
170	170	stating the amount of credit-eligible capital contributions the
171	171	investor commits to making; and
172	172	(7) a nonrefundable application fee of $5,000.
173	173	Sec. 487A.0052. DECISION ON APPLICATION. (a) The office
174	174	shall make a determination on each application not later than the
175	175	30th day after the date the office receives the application. The
176	176	office shall make application determinations in the order in which
177	177	applications are received and shall consider applications received
178	178	on the same day to be received simultaneously.
179	179	(b) The office shall approve up to $300 million of
180	180	investment authority under this chapter.
181	181	(c) If a request for investment authority exceeds the limit
182	182	under Subsection (b), the office shall reduce the investment
183	183	authority and the credit-eligible capital contributions for that
184	184	application as necessary to avoid exceeding the limit. If multiple
185	185	applications received on the same day request a combined investment
186	186	authority that exceeds the limit under Subsection (b), the office
187	187	shall proportionally reduce the investment authority and the
188	188	credit-eligible capital contributions for those applications as
189	189	necessary to avoid exceeding the limit. The office may not reduce
190	190	an applicant's investment authority for any reason other than as
191	191	authorized by this subsection.
192	192	Sec. 487A.0053. GROUNDS FOR DENIAL. The office may deny an
193	193	application under this subchapter only if:
194	194	(1) the application is incomplete or the application
195	195	fee is not paid in full;
196	196	(2) the applicant fails to satisfy the requirements of
197	197	Section 487A.0051(b)(2);
198	198	(3) the revenue impact assessment submitted under
199	199	Section 487A.0051(b)(5) does not demonstrate that the applicant's
200	200	business plan will result in a positive economic impact on combined
201	201	state and local revenue during the 10-year period covered by the
202	202	assessment that exceeds the cumulative amount of tax credits that
203	203	would be issued to the applicant's investors under Chapter 232,
204	204	Insurance Code, if the application were approved;
205	205	(4) the credit-eligible capital contributions
206	206	described in affidavits submitted under Section 487A.0051(b)(6) do
207	207	not equal at least 65 percent of the total amount of investment
208	208	authority sought under the applicant's business plan; or
209	209	(5) the office has already approved the maximum amount
210	210	of investment authority allowed under Section 487A.0052(b).
211	211	Sec. 487A.0054. SUBMISSION OF ADDITIONAL INFORMATION
212	212	FOLLOWING DENIAL. (a) If the office denies an application the
213	213	applicant may, not later than the 15th day after the date the office
214	214	provides notice of denial, provide additional information to the
215	215	office to complete, clarify, or cure defects in the application
216	216	identified by the office.
217	217	(b) If the applicant completes, clarifies, or cures the
218	218	defects in its application during the period prescribed by
219	219	Subsection (a), the application is considered complete as of the
220	220	original submission date.
221	221	(c) If the applicant fails to complete, clarify, or cure the
222	222	defects in its application during the period prescribed by
223	223	Subsection (a), the application is finally denied. An applicant
224	224	who wishes to reapply must resubmit an application in full with a
225	225	new submission date.
226	226	(d) The office shall review and reconsider an application
227	227	described by Subsection (a) for which the applicant provides
228	228	additional information not later than the 30th day after the date
229	229	the applicant provides the information. The office shall consider
230	230	that application before any pending applications submitted after
231	231	the date that application was originally submitted.
232	232	(e) This section does not apply to an application denied as
233	233	a result of the applicant's failure to submit with the application
234	234	affidavits required by Section 487A.0051(b)(6).
235	235	Sec. 487A.0055. APPROVAL BY OFFICE. On approval of an
236	236	application, the office shall provide:
237	237	(1) written notice to the applicant of the applicant's
238	238	approval as a small business recovery fund, including the amount of
239	239	the fund's investment authority; and
240	240	(2) a tax credit certificate to each investor whose
241	241	affidavit was included in the application and include on the
242	242	certificate the amount of the investor's credit-eligible capital
243	243	contribution.
244	244	Sec. 487A.0056. DUTIES OF FUND FOLLOWING APPROVAL. (a) A
245	245	small business recovery fund shall:
246	246	(1) not later than the 60th day after the date the fund
247	247	receives the approval notice under Section 487A.0055:
248	248	(A) collect the credit-eligible capital
249	249	contribution from each investor issued a tax credit certificate
250	250	under Section 487A.0055; and
251	251	(B) subject to Subsection (b), collect one or
252	252	more investments of cash that, when added to the contributions
253	253	collected under Paragraph (A), equal the fund's investment
254	254	authority; and
255	255	(2) not later than the 65th day after the date the fund
256	256	receives the approval notice under Section 487A.0055, send to the
257	257	office documentation sufficient to prove that the fund has
258	258	collected the amounts described in Subdivision (1).
259	259	(b) At least 10 percent of the small business recovery
260	260	fund's investment authority must consist of equity investments
261	261	contributed directly or indirectly by affiliates of the fund,
262	262	including employees, officers, and directors of those affiliates.
263	263	Sec. 487A.0057. LAPSE OF APPROVAL. (a) If a small business
264	264	recovery fund fails to comply with the requirements of Section
265	265	487A.0056, the fund's approval lapses and the corresponding
266	266	investment authority described by Section 487A.0056(a)(1) does not
267	267	count toward the limit prescribed by Section 487A.0052(b).
268	268	(b) The office shall first award lapsed investment
269	269	authority pro rata to each small business recovery fund whose
270	270	requested investment authority was reduced under Section
271	271	487A.0052(c). The small business recovery fund may allocate the
272	272	investment authority awarded under this subsection to the fund's
273	273	investors in the fund's discretion. The office may award any
274	274	remaining investment authority to new applicants.
275	275	Sec. 487A.0058. DISPOSITION OF APPLICATION FEES.
276	276	Application fees submitted to the office under Section
277	277	487A.0051(b)(7) shall be deposited to the credit of the general
278	278	revenue fund and may be appropriated only to the office for the
279	279	purpose of administering this chapter.
280	280	SUBCHAPTER C. REVOCATION OF TAX CREDIT CERTIFICATE
281	281	Sec. 487A.0101. GROUNDS FOR REVOCATION. (a) The office
282	282	shall revoke a tax credit certificate issued under Subchapter B in
283	283	connection with an investment in a small business recovery fund if,
284	284	before the fund exits the program under Section 487A.0151, the
285	285	fund:
286	286	(1) subject to Subsection (b), fails to invest at
287	287	least 60 percent of the fund's investment authority in growth
288	288	investments in this state on or before the second anniversary of the
289	289	closing date and 100 percent of the fund's investment authority in
290	290	growth investments in this state on or before the third anniversary
291	291	of the closing date;
292	292	(2) subject to Subsection (c) and after making the
293	293	investments necessary to avoid revocation under Subdivision (1),
294	294	fails to maintain growth investments equal to 100 percent of the
295	295	fund's investment authority until the sixth anniversary of the
296	296	closing date;
297	297	(3) makes a distribution or payment that results in
298	298	the fund having less than 100 percent of its investment authority:
299	299	(A) invested in growth investments in this state;
300	300	or
301	301	(B) available for investment in growth
302	302	investments and held in:
303	303	(i) cash;
304	304	(ii) United States Treasury securities;
305	305	(iii) bonds or notes issued by this state or
306	306	an agency or political subdivision of this state; or
307	307	(iv) a deposit account with a depository
308	308	institution headquartered or chartered in this state; or
309	309	(4) subject to Subsection (d), makes a growth
310	310	investment in a targeted small business that directly or indirectly
311	311	through an affiliate owns, has the right to acquire an ownership
312	312	interest in, makes a loan to, or makes an investment in the fund, an
313	313	affiliate of the fund, or an investor in the fund.
314	314	(b) For purposes of Subsection (a)(1):
315	315	(1) the amount of growth investments that a small
316	316	business recovery fund may count with respect to a particular
317	317	targeted small business, including any amount invested in an
318	318	affiliate of the targeted small business, may not exceed $5
319	319	million; and
320	320	(2) at least 75 percent of the required amounts of
321	321	growth investments must consist of growth investments in targeted
322	322	small businesses whose principal business operations are located
323	323	in, or are relocated to, a rural area in this state.
324	324	(c) For purposes of Subsection (a)(2):
325	325	(1) the amount of growth investments that a small
326	326	business recovery fund may count with respect to a particular
327	327	targeted small business, including any amount invested in an
328	328	affiliate of the targeted small business, may not exceed $5
329	329	million;
330	330	(2) an investment that is sold or repaid is considered
331	331	to be maintained if the small business recovery fund reinvests an
332	332	amount equal to the capital returned or recovered by the fund from
333	333	the original investment, excluding any profit realized, in another
334	334	growth investment in this state on or before the first anniversary
335	335	of the date the capital is returned or recovered; and
336	336	(3) an amount received periodically by a small
337	337	business recovery fund is considered to be continually invested in
338	338	growth investments if that amount is reinvested in one or more
339	339	growth investments by the end of the calendar year following the
340	340	year of receipt.
341	341	(d) Subsection (a)(4) does not apply to investments in
342	342	publicly traded securities by a targeted small business or an owner
343	343	or affiliate of the targeted small business. For purposes of
344	344	Subsection (a)(4), a small business recovery fund is not considered
345	345	an affiliate of a targeted small business solely as a result of the
346	346	fund's growth investment in the targeted small business.
347	347	(e) The office shall:
348	348	(1) notify the comptroller when the office revokes a
349	349	tax credit certificate; and
350	350	(2) on request, provide the comptroller with lists of
351	351	valid and revoked tax credit certificates.
352	352	Sec. 487A.0102. OPPORTUNITY TO CORRECT VIOLATION. (a)
353	353	Before revoking a tax credit certificate under this subchapter, the
354	354	office shall notify the small business recovery fund of the reasons
355	355	for the pending revocation.
356	356	(b) The small business recovery fund may, not later than the
357	357	90th day after the date the notice is received, correct any
358	358	violation outlined in the notice to the satisfaction of the office
359	359	and avoid revocation of the tax credit certificate.
360	360	Sec. 487A.0103. ALLOCATION OF REVOKED INVESTMENT
361	361	AUTHORITY. (a) If a tax credit certificate is revoked under this
362	362	subchapter, the associated investment authority does not count
363	363	toward the limit on total investment authority described in Section
364	364	487A.0052(b).
365	365	(b) The office shall first award revoked investment
366	366	authority pro rata to each small business recovery fund whose
367	367	requested investment authority was reduced under Section
368	368	487A.0052(c). The office may award any remaining investment
369	369	authority to new applicants.
370	370	SUBCHAPTER D. CERTAIN FUND OPERATIONS
371	371	Sec. 487A.0151. APPLICATION TO EXIT PROGRAM. (a) On or
372	372	after the sixth anniversary of the closing date, a small business
373	373	recovery fund may apply to the office to exit the program and no
374	374	longer be subject to regulation under this chapter.
375	375	(b) The office shall respond to the application not later
376	376	than the 30th day after receipt.
377	377	(c) A small business recovery fund is eligible to exit the
378	378	program under this section if no tax credit certificates related to
379	379	investments in the fund have been revoked and the fund has not
380	380	received any revocation notice that has not been corrected under
381	381	Section 487A.0102.
382	382	(d) The office may not unreasonably deny an application
383	383	under this section. The office shall give the small business
384	384	recovery fund notice of a denial and include in the notice the
385	385	reasons for the denial.
386	386	Sec. 487A.0152. NO REVOCATION FOLLOWING EXIT. The office
387	387	may not revoke a tax credit certificate related to an investment in
388	388	a small business recovery fund after the fund's exit from the
389	389	program.
390	390	Sec. 487A.0153. PENALTY FOR CERTAIN DISTRIBUTIONS. (a)
391	391	For purposes of this section:
392	392	(1) the "actual number of jobs created and retained"
393	393	is the number of jobs created and jobs retained as a result of all of
394	394	a small business recovery fund's current and former growth
395	395	investments, as reported on the fund's reports submitted under
396	396	Section 487A.0155; and
397	397	(2) the "estimated number of jobs created and
398	398	retained" is the estimated number of jobs created and jobs retained
399	399	included in a small business recovery fund's application under
400	400	Section 487A.0051(b)(4) reduced, if applicable, by the same
401	401	percentage as the total investment authority sought under the
402	402	fund's business plan submitted under Section 487A.0051(b)(1) was
403	403	reduced under Section 487A.0052(c).
404	404	(b) A small business recovery fund is subject to a penalty
405	405	in the amount provided by Subsection (c) if:
406	406	(1) the fund authorizes a distribution to the fund's
407	407	equity holders in an amount that, when added to all previous
408	408	distributions to the fund's equity holders and any previous
409	409	penalties under this section, exceeds the fund's investment
410	410	authority; and
411	411	(2) the fund's actual number of jobs created and
412	412	retained is less than the fund's estimated number of jobs created
413	413	and retained.
414	414	(c) The amount of the penalty is equal to the amount of the
415	415	authorized distribution multiplied by a fraction:
416	416	(1) the numerator of which is the fund's estimated
417	417	number of jobs created and retained less the fund's actual number of
418	418	jobs created and retained; and
419	419	(2) the denominator of which is the fund's estimated
420	420	number of jobs created and retained.
421	421	(d) Before making a distribution to the fund's equity
422	422	holders, the fund shall deduct the amount of the penalty from the
423	423	amount otherwise authorized to be distributed to the equity holders
424	424	and pay the penalty to the office.
425	425	(e) The office shall deposit penalties received under
426	426	Subsection (d) in the general revenue fund.
427	427	Sec. 487A.0154. EVALUATION OF PROPOSED INVESTMENT. (a) A
428	428	small business recovery fund, before making a growth investment,
429	429	may request from the office a written opinion as to whether the
430	430	business in which the fund proposes to invest qualifies as a
431	431	targeted small business.
432	432	(b) Not later than the 15th business day after receiving the
433	433	request, the office shall notify the small business recovery fund
434	434	of its determination.
435	435	(c) If the office fails to notify the small business
436	436	recovery fund of its determination on or before the 15th business
437	437	day after receiving the request, the business in which the fund
438	438	proposes to invest is considered to be a targeted small business for
439	439	purposes of this chapter.
440	440	Sec. 487A.0155. ANNUAL REPORT. (a) A small business
441	441	recovery fund shall submit a report to the office on or before the
442	442	fifth business day after each anniversary of the closing date until
443	443	the fund has exited the program under Section 487A.0151.
444	444	(b) The report must document the small business recovery
445	445	fund's growth investments and include:
446	446	(1) a bank statement showing each growth investment;
447	447	(2) the name, location, and industry of each business
448	448	receiving a growth investment, including either the determination
449	449	notice described by Section 487A.0154 or evidence that the business
450	450	qualified as a targeted small business at the time the investment
451	451	was made;
452	452	(3) the number of jobs created and jobs retained in the
453	453	preceding calendar year as a result of the fund's growth
454	454	investments as of the last day of that period;
455	455	(4) the average annual salary of the jobs described by
456	456	Subdivision (3) and evidence of any other monetary or social
457	457	benefit to this state as a result of those jobs;
458	458	(5) a description, including the amount, of each
459	459	growth investment in a targeted small business located in a rural
460	460	area made in the 24 months following the closing date; and
461	461	(6) any other information the office requires.
462	462	(c) A small business recovery fund may, but is not required
463	463	to, include in any report submitted under this section information
464	464	about the number of jobs created and jobs retained with respect to a
465	465	former growth investment that the fund has exited.
466	466	SUBCHAPTER E. REPORT; CONDITIONS FOR ACCEPTANCE OF CERTAIN
467	467	APPLICATIONS
468	468	Sec. 487A.0201. REPORT. (a) Before the beginning of the
469	469	90th Legislature, Regular Session, the office shall submit to the
470	470	lieutenant governor, the speaker of the house of representatives,
471	471	and each member of the legislature a report on the economic benefits
472	472	of this chapter.
473	473	(b) The report must include an assessment of:
474	474	(1) the aggregate effects of growth investments made
475	475	under this chapter, including:
476	476	(A) the total number of jobs created by all
477	477	targeted small businesses, including direct jobs, indirect jobs,
478	478	and induced jobs;
479	479	(B) the total number of jobs retained by all
480	480	targeted small businesses;
481	481	(C) the total amount of wages paid in connection
482	482	with jobs created and jobs retained by all targeted small
483	483	businesses;
484	484	(D) the median wage of jobs created and jobs
485	485	retained by all targeted small businesses;
486	486	(E) the total effect on personal income in this
487	487	state, including direct and indirect effects;
488	488	(F) the total amount of growth investments;
489	489	(G) the gross domestic product of this state
490	490	attributable to targeted small businesses;
491	491	(H) the total taxable value of property of
492	492	targeted small businesses in this state according to tax appraisal
493	493	rolls;
494	494	(I) the total positive fiscal effect on this
495	495	state and local governments in this state; and
496	496	(J) the total number and dollar amount of growth
497	497	investments in targeted small businesses located in rural areas;
498	498	(2) the benefits to this state from cost savings
499	499	attributable to jobs created and jobs retained by all targeted
500	500	small businesses, including:
501	501	(A) Medicaid savings, with savings to this state
502	502	and the federal government listed separately;
503	503	(B) food assistance program savings;
504	504	(C) unemployment insurance payment savings; and
505	505	(D) any other savings that can be reasonably
506	506	estimated using data available to the office in connection with
507	507	some or all targeted small businesses; and
508	508	(3) the total positive fiscal effect on this state and
509	509	local governments in this state of the benefits described by
510	510	Subdivision (2).
511	511	(c) The report may not include information that is
512	512	confidential by law.
513	513	(d) In preparing the portion of the report described by
514	514	Subsection (b)(1), the office shall:
515	515	(1) use standard, nationally recognized economic
516	516	estimation techniques, including economic multipliers; and
517	517	(2) base the assessment on data submitted to the
518	518	office by each small business recovery fund.
519	519	Sec. 487A.0202. CONDITIONS FOR ACCEPTANCE OF CERTAIN
520	520	APPLICATIONS. (a) The office may not accept applications under
521	521	Section 487A.0051 after January 1, 2022, unless the total positive
522	522	fiscal effects described by Section 487A.0201(b) exceed the sum of
523	523	all tax credit certificates issued by the office under Subchapter
524	524	B.
525	525	(b) The office shall resume accepting applications under
526	526	Section 487A.0051 when the condition provided by Subsection (a) is
527	527	satisfied.
528	528	SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
529	529	by adding Chapter 232 to read as follows:
530	530	CHAPTER 232. TAX CREDIT FOR INVESTMENT IN SMALL BUSINESS RECOVERY
531	531	FUND
532	532	SUBCHAPTER A. GENERAL PROVISIONS
533	533	Sec. 232.0001. DEFINITIONS. In this chapter:
534	534	(1) "Affiliate" has the meaning assigned by Section
535	535	487A.0002, Government Code.
536	536	(2) "Closing date" has the meaning assigned by Section
537	537	487A.0001, Government Code.
538	538	(3) "State insurance tax liability" means any tax
539	539	liability incurred under Chapter 221, 222, 223, 223A, 224, 225,
540	540	226, or 281.
541	541	Sec. 232.0002. RULES. The comptroller shall adopt rules
542	542	necessary to implement this chapter.
543	543	SUBCHAPTER B. TAX CREDIT
544	544	Sec. 232.0051. ELIGIBILITY FOR CREDIT. An entity is
545	545	eligible for a credit against the entity's state insurance tax
546	546	liability in the amount and under the conditions and limitations
547	547	provided by this chapter.
548	548	Sec. 232.0052. QUALIFICATION. An entity is eligible for a
549	549	credit for a tax year if the entity holds a tax credit certificate
550	550	issued under Section 487A.0055, Government Code, and the third,
551	551	fourth, fifth, or sixth anniversary of the closing date in
552	552	connection with which the certificate was issued occurs during the
553	553	tax year.
554	554	Sec. 232.0053. AMOUNT OF CREDIT; LIMITATION. (a) The
555	555	amount of credit for a tax year in connection with a tax credit
556	556	certificate described by Section 232.0052 is equal to 25 percent of
557	557	the amount of the credit-eligible capital contribution stated on
558	558	the certificate.
559	559	(b) The total credit claimed for a tax year, including the
560	560	amount of any carryforward under Section 232.0054, may not exceed
561	561	the amount of state insurance tax liability due for the entity for
562	562	the tax year after applying all other applicable tax credits.
563	563	(c) Credits may be applied to the entity's estimated or
564	564	final tax payments for the tax year.
565	565	Sec. 232.0054. CARRYFORWARD. If an entity is eligible for a
566	566	credit that exceeds the limitation under Section 232.0053(b), the
567	567	entity may carry the unused credit forward and apply the credit to a
568	568	subsequent tax report.
569	569	Sec. 232.0055. ASSIGNMENT PROHIBITED. (a) Except as
570	570	provided by Subsection (b), an entity may not convey, assign, or
571	571	transfer the credit allowed under this chapter to another entity.
572	572	(b) An entity may convey, assign, or transfer the credit
573	573	allowed under this chapter to an affiliate of the entity that is
574	574	subject to state insurance tax liability.
575	575	Sec. 232.0056. RETALIATORY TAX. An entity claiming a
576	576	credit under this chapter is not required to pay any additional
577	577	retaliatory tax levied under Chapter 281 as a result of claiming
578	578	that credit.
579	579	SUBCHAPTER C. RECAPTURE OF CREDIT
580	580	Sec. 232.0101. RECAPTURE. The comptroller shall recapture
581	581	the amount of a credit claimed on a tax report filed under Chapter
582	582	221, 222, 223, 223A, 224, 225, 226, or 281 from an entity if the tax
583	583	credit certificate on which the credit is based is revoked under
584	584	Subchapter C, Chapter 487A, Government Code.
585	585	SECTION 3. (a) As soon as practicable after this Act
586	586	becomes law as provided by Section 2001.006, Government Code:
587	587	(1) the Texas Economic Development and Tourism Office
588	588	shall adopt rules necessary to implement Chapter 487A, Government
589	589	Code, as added by this Act; and
590	590	(2) the comptroller of public accounts shall adopt
591	591	rules necessary to implement Chapter 232, Insurance Code, as added
592	592	by this Act.
593	593	(b) Not later than October 1, 2021, the Texas Economic
594	594	Development and Tourism Office shall begin accepting applications
595	595	under Section 487A.0051(a), Government Code, as added by this Act.
596	596	SECTION 4. Chapter 232, Insurance Code, as added by this
597	597	Act, applies only to a tax report originally due on or after January
598	598	1, 2021.
599	599	SECTION 5. This Act takes effect immediately if it receives
600	600	a vote of two-thirds of all the members elected to each house, as
601	601	provided by Section 39, Article III, Texas Constitution. If this
602	602	Act does not receive the vote necessary for immediate effect, this
603	603	Act takes effect September 1, 2023.