Bill Text: TX HB1733 | 2021-2022 | 87th Legislature | Introduced


Bill Title: Relating to insurance premium tax credits for investments supporting agriculture and rural development projects; authorizing a fee; providing an administrative penalty.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2021-03-30 - Left pending in committee [HB1733 Detail]

Download: Texas-2021-HB1733-Introduced.html
  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.
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