HB4735 - Relating to rural development funds and insurance tax credits for certain investments in those funds; authorizing fees.

  89R25787 CJC-F     By: Ashby, Button, King H.B. No. 4735       A BILL TO BE ENTITLED   AN ACT   relating to rural development funds and insurance tax credits for   certain investments in those funds; authorizing fees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle F, Title 4, Government Code, is amended   by adding Chapter 487A to read as follows:   CHAPTER 487A. RURAL DEVELOPMENT FUNDS   SUBCHAPTER A. GENERAL PROVISIONS           Sec. 487A.0001.  GENERAL DEFINITIONS. In this chapter:                 (1)     "Closing date" means the date a rural development   fund has collected all of the amounts described by Section   487A.0056(a)(1).                 (2)  "Rural area" means an area:                       (A)     other than a municipality with a population   of more than 50,000 or an urbanized area contiguous and adjacent to   the municipality; or                       (B)     determined to be rural in character by the   United States Department of Agriculture.                 (3)     "Rural development fund" means an entity approved   by the comptroller as a rural development fund.           Sec.   487A.0002.     DEFINITION: AFFILIATE. (a) In this   chapter, "affiliate" means an entity that directly or indirectly   through one or more intermediaries controls, is controlled by, or   is under common control with another entity.           (b)     For purposes of Subsection (a), an entity is controlled   by another entity if the controlling entity:                 (1)     holds, directly or indirectly, the majority voting   or ownership interest in the controlled entity; or                 (2)     has control over the day-to-day operations of the   controlled entity by contract or by law.           Sec.   487A.0003.     DEFINITION: CREDIT-ELIGIBLE CAPITAL   CONTRIBUTION. In this chapter, "credit-eligible capital   contribution" means an investment of cash in a rural development   fund made by an entity that is subject to state insurance tax   liability, as defined by Section 232.0001, Insurance Code, in   exchange for which the investor receives:                 (1)  an equity interest in a rural development fund; or                 (2)     at par value or premium, a debt instrument that has   a maturity date of at least five years from the closing date and a   repayment schedule that is no faster than level principal   amortization over five years.           Sec.   487A.0004.     DEFINITION: GROWTH INVESTMENT.   (a)   In   this chapter and subject to Subsection (b), "growth investment"   means any capital or equity investment by a rural development fund   in a targeted small business or any loan by a rural development fund   to a targeted small business with a stated maturity date of at least   one year after the date of issuance.           (b)     A loan by a rural development fund to a targeted small   business is a growth investment only if the targeted small business   obtains an affidavit from the chief executive officer or equivalent   position of the targeted small business attesting that:                 (1)     the targeted small business sought and was denied   similar financing from a commercial bank; or                 (2)     the targeted small business was referred to the   rural development fund by a commercial bank.           Sec.   487A.0005.     DEFINITION: INVESTMENT AUTHORITY.   In this   chapter, "investment authority" means the amount stated on the   notice issued under Section 487A.0055(1) approving the rural   development fund.           Sec.   487A.0006.     DEFINITION: JOBS CREATED. (a) In this   chapter, "jobs created" means, with respect to a targeted small   business, employment positions that:                 (1)  are created by the targeted small business;                 (2)  are located in this state;                 (3)     subject to Subsection (d), require at least 35   hours of work each week; and                 (4)     were not located in this state at the time of the   initial growth investment in the targeted small business.           (b)     The number of jobs created by a targeted small business   is calculated each year by subtracting the number of employment   positions in this state at the targeted small business at the time   of the initial growth investment in the targeted small business   from the monthly average of those employment positions for that   year. If the number calculated under this subsection is less than   zero, the number shall be reported as zero.           (c)     The monthly average of employment positions for a year   is calculated by adding the number of employment positions existing   on the last day of each month of the year and dividing that sum by   12.           (d)     An employment position that requires less than 35 hours   of work each week is considered to meet the requirements of   Subsection (a) if the number of hours of work each week the job   requires is considered to constitute full-time employment for   purposes of the industry standards and practices applicable to the   targeted small business that created the employment position.           Sec.   487A.0007.     DEFINITION: JOBS RETAINED. (a) In this   chapter, "jobs retained" means, with respect to a targeted small   business, employment positions that:                 (1)     are located in this state, require at least 35   hours of work each week, and existed before the initial growth   investment in the targeted small business; and                 (2)     would have been lost or moved out of this state had   a growth investment in the targeted small business not been made, as   certified in writing by an executive officer of the targeted small   business to the rural development fund.           (b)     The number of jobs retained by a targeted small business   is calculated each year based on the monthly average of employment   positions for that year.           (c)     The monthly average of employment positions for a year   is calculated by adding the number of employment positions existing   on the last day of each month of the year and dividing that sum by   12.           (d)     The reported number of jobs retained for a year may not   exceed the number reported on the initial report under Section   487A.0156. The rural development fund shall reduce the number of   jobs retained for a year if employment at the targeted small   business is less than the number reported on the initial report.           (e)     Notwithstanding Subsection (a)(1), an employment   position that requires less than 35 hours of work each week is   considered to meet the requirements of that subdivision if the   number of hours of work each week the job requires is considered to   constitute full-time employment for purposes of the industry   standards and practices applicable to the targeted small business   that created the employment position.           Sec.   487A.0008.     DEFINITION: TARGETED SMALL BUSINESS. (a)   In this chapter, "targeted small business" means a business that,   at the time of the initial growth investment in the business:                 (1)     is part of an industry assigned a primary North   American Industry Classification System code listed under Sector   11, 21, 22, 23, 31, 32, 33, 42, 48, 49, 54, 56, 62, 72, or 81 of the   North American Industry Classification System;                 (2)     has fewer than 250 employees, including any   persons who would be considered employees under the federal law to   which 13 C.F.R. Section 121.103(h)(2) applies as a result of the   application of that provision; and                 (3)     has its principal business operations located in   this state.           (b)     For purposes of this chapter, the principal business   operations of a business are located at a place where:                 (1)     at least 65 percent of the business's employees   work; or                 (2)     employees who are paid at least 65 percent of the   business's payroll work.           (c)     An out-of-state business that agrees to relocate or hire   new employees using the proceeds of a growth investment to   establish principal business operations in this state qualifies as   a targeted small business if the business satisfies the   requirements of:                 (1)     Subsections (a)(1) and (2) at the time of the   initial growth investment in the business; and                 (2)     Subsection (a)(3) not later than the 180th day   after receiving the initial growth investment or a later date   agreed to by the comptroller.           (d)     Notwithstanding any other provision of this section,   the comptroller may consider a business other than a business   described by Subsection (a)(1) to be a targeted small business for   purposes of this chapter if the comptroller determines the business   is of significant economic benefit to this state.           Sec.   487A.0009.     RULES. The comptroller shall adopt rules   necessary to implement, monitor, and evaluate this chapter.           Sec.   487A.0010.     DISPOSITION OF FEES. Application fees   submitted under Section 487A.0051(b)(6), amounts remitted under   Section 487A.0151(e), and participation fees collected under   Section 487A.0157 shall be deposited to the credit of the general   revenue fund and may be appropriated only to the comptroller for the   purpose of administering this chapter and Chapter 232, Insurance   Code.   SUBCHAPTER B. APPROVAL OF RURAL DEVELOPMENT FUNDS; TAX CREDIT   CERTIFICATES           Sec.   487A.0051.     APPLICATION. (a) Subject to Section   487A.0202, the comptroller shall accept applications from entities   seeking approval as rural development funds.           (b)  An application must include:                 (1)     the total investment authority sought by the   applicant under the applicant's business plan;                 (2)     evidence sufficient to prove to the comptroller's   satisfaction that, as of the date the applicant submits the   application:                       (A)     the applicant or affiliates of the applicant   have invested, in the aggregate, at least $100 million in nonpublic   companies located in the United States, including at least $70   million in nonpublic companies located in rural areas in the United   States; and                       (B)  either:                             (i)     at least one principal or affiliate in a   rural busine [Text truncated for display. Full text available on Congress.gov.]