CHAPTER 489. TEXAS ECONOMIC DEVELOPMENT BANK
GOVERNMENT CODE
TITLE 4. EXECUTIVE BRANCH
SUBTITLE F. COMMERCE AND INDUSTRIAL DEVELOPMENT
CHAPTER 489. TEXAS ECONOMIC DEVELOPMENT BANK
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 489.001. DEFINITIONS. In this chapter:
(1) "Bank" means the Texas Economic Development Bank established
under Section 489.101.
(2) "Fund" means the Texas economic development bank fund.
(3) "Office" means the Texas Economic Development and Tourism
Office.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.002. RULES. The office shall adopt rules necessary to
carry out the purposes of this chapter.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
SUBCHAPTER B. CREATION AND OPERATION OF BANK; TEXAS ECONOMIC
DEVELOPMENT BANK FUND
Sec. 489.101. CREATION OF BANK. (a) The office shall establish
the Texas Economic Development Bank for the purpose of:
(1) providing globally competitive, cost-effective state
incentives to expanding businesses operating in this state and
businesses relocating to this state; and
(2) ensuring that communities and businesses in this state have
access to capital for economic development purposes.
(b) The bank's effectiveness shall be measured on the basis of
the number of jobs created and retained and the total amount of
nonstate funds leveraged as a result of the bank's efforts.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.102. POWERS AND DUTIES OF BANK. (a) The bank shall
offer a variety of financial incentives to help communities and
businesses in this state compete and succeed in the global
marketplace. The bank shall assist communities in accessing
financing with which to fund their economic development efforts.
(b) The bank may:
(1) provide, as provided under the programs the bank administers
under Section 489.108 or otherwise as provided by law:
(A) qualifying communities with tax incentives for expanding
businesses or businesses relocating to this state;
(B) incentives to lenders to:
(i) make loans to near-bankable businesses in the lender's
community; and
(ii) make low-interest loans to qualifying businesses; and
(C) bond-based long-term debt financing for capital investment
in public entities, in large commercial and industrial projects,
and for other economic development purposes;
(2) act as a link between businesses searching for investment
capital and potential investors;
(3) inform institutional lenders of economic development plans
and strategies for each region of this state and encourage
institutional lenders to support those plans in their marketing
and investment strategies;
(4) offer communities a one-stop source of financing for their
economic development efforts;
(5) provide communities with technical assistance in the
development of their incentive programs to attract and retain
businesses and in the design of incentive packages for specific
proposals;
(6) provide expanding businesses or businesses relocating to
this state with a single source of information concerning
financial incentives offered by this state to those businesses;
and
(7) provide grants or financing to the Texas Department of
Transportation to implement the department's powers and duties
relating to rural rail development under Chapter 91,
Transportation Code.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1410, Sec. 1, eff. June 15, 2007.
Sec. 489.103. FEES. The bank shall charge fees to the
beneficiaries of its services as the bank determines necessary.
Amounts collected under this section may be used to support the
administration of the bank's programs and implementation of the
bank's strategies.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.104. ALLOCATION OF RESOURCES. The bank may allocate
its resources as necessary to efficiently meet the level of
demand experienced by:
(1) each program or service described by Section 489.108; and
(2) the Texas Department of Transportation under Section
489.102(b)(7).
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
1410, Sec. 2, eff. June 15, 2007.
Sec. 489.105. TEXAS ECONOMIC DEVELOPMENT BANK FUND. (a) The
Texas economic development bank fund is a dedicated account in
the general revenue fund.
(b) The fund consists of:
(1) appropriations for the implementation and administration of
this chapter;
(2) investment earnings under the capital access fund
established under Section 481.402;
(3) fees charged under Subchapter BB, Chapter 481;
(4) interest earned on the investment of money in the fund;
(5) fees charged under this chapter;
(6) investment earnings from the programs administered by the
bank;
(7) amounts transferred under Section 2303.504(b), as amended by
Article 2, Chapter 1134, Acts of the 77th Legislature, Regular
Session, 2001;
(8) investment earnings under the Texas product development fund
under Section 489.211;
(9) investment earnings under the Texas small business incubator
fund under Section 489.212; and
(10) any other amounts received by the state under this chapter.
(c) Money in the fund may be used only to carry out the purposes
of this chapter.
(d) The financial transactions of the fund are subject to audit
by the state auditor as provided by Chapter 321.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.106. ADMINISTRATION OF FUND AND CHAPTER. The office
shall administer the fund. In administering the fund and this
chapter, the office has the powers necessary to carry out the
purposes of this chapter, including the power to:
(1) make, execute, and deliver contracts, conveyances, and
other instruments;
(2) impose and collect fees and charges in connection with any
transaction and provide for reasonable penalties for delinquent
payments or performance; and
(3) issue bonds for economic development projects as that term
is defined by Section 501.101, Local Government Code, or Section
505.151, 505.152, 505.153, 505.154, 505.155, or 505.156, Local
Government Code.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 3.08, eff. April 1, 2009.
Sec. 489.107. ANNUAL REPORT. On or before January 1 of each
year, the office shall submit to the legislature an annual status
report on the activities of the bank.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.108. PROGRAMS, SERVICES, AND FUNDS UNDER BANK'S
DIRECTION. Notwithstanding any other law, the bank shall perform
the duties and functions of the office with respect to the
following programs, services, and funds:
(1) the Texas Small Business Industrial Development Corporation
established under Chapter 503, Local Government Code;
(2) the capital access program established under Section
481.405;
(3) the Texas leverage fund;
(4) the linked deposit program established under Section
481.193;
(5) the enterprise zone program established under Chapter 2303;
(6) the industrial revenue bond program;
(7) the defense economic readjustment zone program established
under Chapter 2310;
(8) the Empowerment Zone and Enterprise Community grant program
established under Section 481.025; and
(9) the renewal community program.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 3.09, eff. April 1, 2009.
SUBCHAPTER C. MISCELLANEOUS PROVISIONS
Sec. 489.151. STATE LIABILITY PROHIBITED. The state and state
officers or employees are not liable to participants for grants,
loans, or other transactions under this chapter except as
specifically provided by law.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.152. GIFTS, GRANTS, AND DONATIONS. The office may
accept gifts, grants, and donations from any source for the
purposes of this chapter.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
SUBCHAPTER D. PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATORS
Sec. 489.201. DEFINITIONS. In this subchapter:
(1) "Board" means the Product Development and Small Business
Incubator Board.
(2) "Financing" means a loan, loan guarantee, or equity
investment from the product fund to a person for use in the
development and production of a product in this state, or a
grant, loan, or loan guarantee from the small business fund to a
person for use in the development of a small business in this
state.
(3) "Office" includes the designee of the office.
(4) "Product" includes an invention, device, technique, or
process, without regard to whether a patent has been or could be
granted, that has advanced beyond the theoretical stage and has
or is readily capable of having a commercial application. The
term does not include pure research.
(5) "Product fund" means the Texas product development fund.
(6) "Program" means the product development program or the small
business incubator program.
(7) "Small business fund" means the Texas small business
incubator fund.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.202. PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATOR
BOARD. (a) The Product Development and Small Business Incubator
Board is created in the office.
(b) The bank administers the programs, the product fund, and the
small business fund.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.203. BOARD MEMBERS; APPOINTMENT; TERMS OF OFFICE. (a)
The board consists of nine persons appointed by the governor.
(b) In appointing members of the board, the governor shall
appoint:
(1) three persons having significant business leadership
experience in technology, particularly experience with the
transfer of research results into commercial applications;
(2) two persons employed by institutions of higher education of
this state who have experience in technological research and its
commercial applications;
(3) two persons experienced and knowledgeable in structuring and
providing financing for technological products or businesses; and
(4) two persons who reside in a county of this state with above
state average unemployment and below state average per capita
income and who have experience and knowledge in
technology-related business growth.
(c) Appointed members of the board serve six-year staggered
terms, with the terms of three members expiring February 1 of
each odd-numbered year.
(d) The governor shall appoint the presiding officer of the
board.
(e) The board shall appoint a secretary of the board whose
duties may be prescribed by law and by the board.
(f) Appointed members of the board serve without pay but are
entitled to reimbursement for their actual expenses incurred in
attending meetings of the board or in performing other work of
the board if that work is approved by the governor or the
governor's designee.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Amended by:
Acts 2005, 79th Leg., Ch.
40, Sec. 1, eff. May 10, 2005.
Sec. 489.204. REMOVAL OF BOARD MEMBER. (a) It is a ground for
removal from the board if an appointed member:
(1) cannot because of illness or disability discharge the
member's duties for a substantial part of the term for which the
member is appointed; or
(2) is absent from more than half of the regularly scheduled
board meetings that the member is eligible to attend during a
calendar year unless the absence is excused by majority vote of
the board.
(b) The validity of an action of the board is not affected by
the fact that the action was taken when a ground for removal of a
board member existed.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.205. TRAINING OF BOARD MEMBERS. (a) Before an
appointed member of the board may assume the member's duties, the
member must complete at least one course of the training program
established under this section.
(b) A training program established under this section shall
provide information to the member regarding:
(1) the enabling legislation that created the board;
(2) the programs operated by the board;
(3) the role and functions of the board;
(4) the rules of the board, with an emphasis on the rules that
relate to disciplinary and investigatory authority;
(5) the current budget for the board;
(6) the results of the most recent formal audit of the board;
(7) the requirements of the:
(A) open meetings law, Chapter 551;
(B) open records law, Chapter 552; and
(C) administrative procedure law, Chapter 2001;
(8) the requirements of the conflict of interest laws and other
laws relating to public officials; and
(9) any applicable ethics policies adopted by the board or the
Texas Ethics Commission.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.206. MEETINGS. (a) The board shall hold regular
meetings in Austin and other meetings at places and times
scheduled by the board in formal sessions and called by the bank.
(b) The board shall develop and implement policies that provide
the public with a reasonable opportunity to appear before the
board and to speak on any issue under the jurisdiction of the
board.
(c) The board shall make minutes of all meetings available in
the board's office for public inspection.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.207. APPLICABILITY OF OPEN MEETINGS LAW AND
ADMINISTRATIVE PROCEDURE LAW. The board is subject to the open
meetings law, Chapter 551, and the administrative procedure law,
Chapter 2001.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.208. STAFF. (a) The employees of the office selected
by the executive director of the office for that purpose serve as
the staff of the board.
(b) The executive director of the office shall select and
supervise the staff of the board and perform other duties
delegated to the office by the board.
(c) The executive director of the office shall provide to
members of the board and to board staff, as often as necessary,
information regarding their qualifications for office or
employment under this subchapter and their responsibilities under
applicable laws relating to standards of conduct for state
officers or employees.
(d) The board shall develop and implement policies that clearly
separate the policy-making responsibilities of the board and the
management responsibilities of the office, the bank, and the
executive director of the office.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.209. PROGRAM AND FACILITY ACCESSIBILITY. (a) The
board shall comply with federal and state laws related to program
and facility accessibility.
(b) The board shall prepare and maintain a written plan that
describes how a person who does not speak English can be provided
reasonable access to the board's programs and services.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.210. POWERS OF BOARD AND BANK; BONDS. (a) The board
and bank have the powers necessary and reasonable to carry out
this subchapter and the board may adopt rules, policies, and
procedures necessary or reasonable to implement this subchapter.
(b) The bank may issue general obligation bonds, up to the
amounts authorized and as provided by Section 71, Article XVI,
Texas Constitution, to fund the program.
(c) Not more than an amount equal to five percent of the total
amount of bonds issued may be used to pay administrative fees
involved in selling the bonds.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.211. TEXAS PRODUCT DEVELOPMENT FUND. (a) The Texas
product development fund is a revolving fund in the state
treasury.
(b) The product fund is composed of proceeds of bonds issued
under this subchapter, financing application fees, loan
repayments, guarantee fees, royalty receipts, dividend income,
money appropriated by the legislature for authorized purposes of
the product fund, amounts received by the state from loans, loan
guarantees, and equity investments made under this subchapter,
amounts received by the state from federal grants or other
sources, and any other amounts received under this subchapter and
required by the bank to be deposited in the product fund. The
product fund contains a program account, an interest and sinking
account, and other accounts that the bank authorizes to be
created and maintained. Money in the product fund is available
for use by the board under this subchapter. Investment earnings
under the product fund must be transferred to the fund created
under Section 489.105. Notwithstanding any other provision of
this subchapter, any money in the product fund may be used for
debt service.
(c) Money in the program account of the product fund, minus the
costs of issuance of bonds under this subchapter and necessary
costs of administering the product fund, may be used only to
provide financing to aid in the development and production,
including the commercialization, of new or improved products in
this state. The bank shall provide financing from the product
fund on the terms and conditions that the bank determines to be
reasonable, appropriate, and consistent with the purposes and
objectives of the product fund and this subchapter, for the
purpose of aiding in the development and production of new or
improved products in this state.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.212. SMALL BUSINESS INCUBATOR FUND. (a) The Texas
small business incubator fund is a revolving fund in the state
treasury.
(b) The small business fund is composed of proceeds of bonds
issued under this subchapter, financing application fees, loan
repayments, guarantee fees, royalty receipts, dividend income,
money appropriated by the legislature for authorized purposes of
the small business fund, amounts received by the state from
loans, loan guarantees, and equity investments made under this
subchapter, amounts received by the state from federal grants or
other sources, and any other amounts received under this
subchapter and required by the bank to be deposited in the small
business fund. The small business fund contains a project
account, an interest and sinking account, and other accounts that
the bank authorizes to be created and maintained. Money in the
small business fund is available for use by the board under this
subchapter. Investment earnings under the small business fund
must be transferred to the fund created under Section 489.105.
Notwithstanding any other provision of this subchapter, any money
in the small business fund may be used for debt service.
(c) Money in the project account of the small business fund,
minus the costs of issuance of bonds under this subchapter and
necessary costs of administering the small business fund, may be
used only to provide financing to foster and stimulate the
development of small businesses in this state. The bank shall
provide financing from the small business fund on the terms and
conditions that the bank determines to be reasonable,
appropriate, and consistent with the purposes and objectives of
the small business fund and this subchapter, for the purpose of
fostering and stimulating the development of new or existing
small businesses in this state.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.213. ELIGIBLE PRODUCTS AND BUSINESSES; FINANCING. (a)
Financing may be made under this subchapter only for a product or
small business approved by the bank.
(b) In determining eligible products and businesses, the bank
shall give special preference to products or businesses in the
areas of semiconductors, nanotechnology, biotechnology, and
biomedicine that have the greatest likelihood of commercial
success, job creation, and job retention in this state. The bank
shall give further preference to providing financing to projects
or businesses that are:
(1) grantees under the small business innovation research
program established under 15 U.S.C. Section 638, as amended;
(2) companies formed in this state to commercialize research
funded at least in part with state funds;
(3) applicants that have acquired other sources of financing;
(4) companies formed in this state and receiving assistance from
designated state small business development centers; or
(5) applicants who are residents of this state doing business in
this state and performing financed activities predominantly in
this state.
(c) The board shall adopt rules governing the terms and
conditions of the financing, specifically including requirements
for appropriate security or collateral, equity interest, and the
rights and remedies of the board and bank in the event of a
default on the loan. The rules must include a requirement that
applicants report to the bank on the use of money distributed
through either fund.
(d) Before approving the provision of financing to a person, the
bank shall enter into an agreement with the person under which
the bank will obtain an appropriate portion of royalties, patent
rights, equitable interests, or a combination of those royalties,
rights, and interests from or in the product or the proceeds of
the product for which financing is requested. Contracts executed
under this subchapter must include agreements to ensure proper
use of funds and the receipt of royalties, patent rights, or
equity interest, as appropriate.
(e) The board may appoint an advisory committee of experts in
the areas of semiconductors, nanotechnology, biotechnology, and
biomedicine to review projects and businesses seeking financing
from the bank.
(f) Repealed by Acts 2003, 78th Leg., 3rd C.S., ch. 10, Sec.
9.02.
(g) A claim of the state for a payment owed to the state under
this subchapter by a person who has been provided financing has
priority over all other claims against the person.
(h) Any business in this state is eligible for funding
distributed through the small business incubator fund if it is
determined that the business is substantially likely to develop
and expand the opportunities for small businesses in the
semiconductor, nanotechnology, biotechnology, or biomedicine
industry in this state.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003. Amended by Acts 2003, 78th Leg., 3rd C.S., ch. 10, Sec.
9.01, eff. Oct. 20, 2003; Acts 2003, 78th Leg., 3rd C.S., ch. 10,
Sec. 9.02, eff. Oct. 20, 2003.
Sec. 489.214. APPLICATION PROCESS. (a) To apply for financing
from the bank, an applicant shall submit to the bank:
(1) an application for financing on a form prescribed by the
bank; and
(2) a reasonable application fee set by the bank.
(b) The application must include a business plan containing the
information required by the bank, including at a minimum:
(1) information regarding:
(A) the history and financial condition of the applicant,
including the applicant's income statement;
(B) the applicant's present markets and market prospects; and
(C) the integrity of the applicant's management;
(2) a statement of the feasibility of the product for which
financing is requested, including the state of development of any
product to be developed and the proposed schedule of its
commercialization; and
(3) if applicable, documentation of attempts to obtain private
financing.
(c) The bank shall determine, with respect to each application
for financing, whether:
(1) the product or business for which financing is requested is
economically sound;
(2) there is a reasonable expectation that the product or
business will be successful;
(3) the product or business will create or preserve jobs and
otherwise benefit the economy of the state;
(4) the applicant has the management resources and other funding
to complete the project;
(5) financing is necessary because full financing is unavailable
in traditional capital markets or credit has been offered on
terms that would preclude the success of the project; and
(6) there is reasonable assurance that the potential revenues to
be derived from the sale of the product will be sufficient to
repay any financing approved by the bank.
(d) After considering the application and all other information
it considers relevant, the bank shall approve or deny the
application and promptly notify the applicant of its decision.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.215. INFORMATION CONFIDENTIAL. (a) Information
described by Subsection (b) collected, assembled, or maintained
by or for the bank is confidential and may not be disclosed by
the bank, the board, the office, or the executive director of the
office.
(b) This section applies to information in any form provided by
or on behalf of an applicant for financing or a recipient of
financing under this subchapter, including information contained
in, accompanying, or derived from any application or report, that
relates to a product, to the development, application,
manufacture, or use of a product, or to the markets, market
prospects, or marketing of a product and that is proprietary
information of actual or potential commercial value to the
applicant or recipient that has not been disclosed to the public.
Confidential information includes scientific and technological
information, including computer programs and software, and
marketing and business operation information, regardless of
whether the product to which the information relates is
patentable or capable of being registered under copyright or
trademark laws or has a potential for being sold, traded, or
licensed for a fee. This section does not make confidential
information in an account, voucher, or contract relating to the
receipt or expenditure of public funds by the bank, board, or the
department or its successor under this subchapter.
(c) Any application for financing that is withdrawn by the
applicant before approval or funding or that is denied by the
bank shall be returned to the applicant promptly on request,
together with all materials submitted by or on behalf of the
applicant that relate to the application, except that the bank
may retain a record of the submission and disposition of the
application that does not include any information described by
Subsection (b).
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.216. PROGRAM COORDINATION. The bank and the office
shall coordinate the administration and funding of the programs.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.
Sec. 489.217. EXPENDITURES. All expenditures of the program
must be approved on behalf of the state by the bank. Expenses
incurred by the program in the operation and administration of
its programs and affairs, including expenditures for employees
and program assistance or development, shall be paid out of fees
collected or revenues generated under this subchapter.
Added by Acts 2003, 78th Leg., ch. 814, Sec. 2.01, eff. Sept. 1,
2003.