85R5019 BEF-F
	By: Lucio III	H.B. No. 2453

	A BILL TO BE ENTITLED
	AN ACT
	relating to an insurance premium tax credit for investment in
	certain communities; imposing a monetary penalty; authorizing
	fees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle B, Title 3, Insurance Code, is amended
	by adding Chapter 231 to read as follows:
	CHAPTER 231. PREMIUM TAX CREDIT FOR INVESTMENT IN CERTAIN
	COMMUNITIES
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 231.001.  GENERAL DEFINITIONS. In this chapter:
	(1)  "Applicable percentage" means zero percent for the
	first two credit allowance dates, seven percent for the third
	credit allowance date, and eight percent for the next four credit
	allowance dates.
	(2)  "Credit allowance date" means, with respect to any
	qualified equity investment:
	(A)  the date on which the qualified equity
	investment is initially made; and
	(B)  the anniversary of that date in each of the
	six years immediately following that date.
	(3)  "Federal tax regulations" means regulations
	adopted under the Internal Revenue Code of 1986 that are applicable
	to the tax year to which the provisions of the code in effect on
	September 1, 2017, applied.
	(4)  "Internal Revenue Code" means the Internal Revenue
	Code of 1986 in effect on September 1, 2017, excluding any changes
	made by federal law after that date, but including any regulations
	adopted under that code that are applicable to the tax year to which
	the provisions of the code in effect on that date applied.
	(5)  "Investing entity" means an entity, including an
	entity that incurs state premium tax liability, that makes or holds
	a qualified equity investment.
	(6)  "Issuer" means a qualified community development
	entity, or a subsidiary or affiliate of a qualified community
	development entity, that issues a qualified equity investment.
	(7)  "Low-income community" has the meaning assigned by
	Section 45D, Internal Revenue Code.
	(8)  "Metropolitan statistical area" means a core base
	statistical area associated with at least one urbanized area that
	has a population of at least 90,000. A metropolitan statistical
	area comprises the central county or counties containing the core,
	plus adjacent outlying counties having a high degree of social and
	economic integration with the central county or counties as
	measured through commuting.
	(9)  "Purchase price" means the amount paid to the
	issuer for a qualified equity investment.
	(10)  "Report" means a premium tax report or a report
	under Subchapter G, as applicable.
	(11)  "Rural allocation" means the allocation
	described by Section 231.104(c)(1).
	(12)  "Rural area" means a county in this state with a
	population less than 90,000.
	(13)  "State premium tax liability" means any premium
	tax liability incurred under Chapter 221, 222, 223, 223A, or 224.
	(14)  "Statewide low-income community allocation"
	means the allocation described by Section 231.104(c)(4).
	(15)  "Texas education allocation" means the
	allocation described by Section 231.104(c)(2).
	(16)  "Texas seaport allocation" means the allocation
	described by Section 231.104(c)(3).
	Sec. 231.002.  DEFINITION: LONG-TERM DEBT SECURITY.  (a)  In
	this chapter, "long-term debt security" means a debt instrument
	issued by a qualified community development entity, at par value or
	a premium, with an original maturity date not earlier than the
	seventh year after the date on which the debt instrument is issued,
	with no acceleration of repayment, amortization, or prepayment
	features before its original maturity date.
	(b)  The qualified community development entity that issues
	a long-term debt security may not make cash interest payments on the
	security during the period beginning on the date on which the
	security is issued and ending on the final credit allowance date in
	an amount that exceeds the cumulative operating income, as defined
	by federal tax regulations adopted under Section 45D, Internal
	Revenue Code, of the qualified community development entity for
	that period before giving effect to the interest expense of the
	long-term debt security.
	(c)  This section does not limit the holder's ability to
	accelerate payments on a long-term debt security in situations in
	which the issuer has defaulted on covenants designed to ensure
	compliance with this chapter or Section 45D, Internal Revenue Code.
	Sec. 231.003.  DEFINITION: QUALIFIED ACTIVE LOW-INCOME
	COMMUNITY BUSINESS.  (a)  In this chapter, "qualified active
	low-income community business" has the meaning assigned by Section
	45D, Internal Revenue Code, and Section 1.45D-1 of the federal tax
	regulations.
	(b)  A business is considered a qualified active low-income
	community business for the duration of the qualified community
	development entity's investment in, or loan to, the business if the
	entity reasonably expects, at the time it makes the investment or
	loan, that the business will continue to satisfy the requirements
	for being a qualified active low-income community business
	throughout the entire period of the investment or loan.
	Sec. 231.004.  DEFINITION: QUALIFIED COMMUNITY DEVELOPMENT
	ENTITY.  In this chapter, "qualified community development entity"
	has the meaning assigned by Section 45D, Internal Revenue Code,
	provided that the entity has entered into, for the current year or a
	prior year with an allocation effective date on or after July 1,
	2016, an allocation agreement with the Community Development
	Financial Institutions Fund of the United States Department of the
	Treasury with respect to credits authorized by Section 45D,
	Internal Revenue Code, that includes this state in the service area
	specified in the allocation agreement. The term includes a
	subsidiary or affiliate of a qualified community development entity
	and any other qualified community development entity that is
	controlled by or under common control with a qualified community
	development entity.
	Sec. 231.005.  DEFINITION: QUALIFIED EQUITY INVESTMENT.  (a)
	An investment is a "qualified equity investment" for purposes of
	this chapter if:
	(1)  the investment is an equity investment in, or
	long-term debt security issued by, a qualified community
	development entity;
	(2)  the investment is acquired on or after October 1,
	2017, at its original issuance solely in exchange for cash, except
	as provided by Subsection (b);
	(3)  not later than the 20th month after the date of
	issuance at least 85 percent of the investment's purchase price is
	used by the issuer to make qualified low-income community
	investments in this state; and
	(4)  the investment is designated by the issuer as a
	qualified equity investment under this section and is certified by
	the comptroller as not exceeding the limitations provided by
	Section 231.104.
	(b)  A qualified equity investment includes an investment
	that does not satisfy the requirements of Subsection (a)(2) if the
	investment was a qualified equity investment in the hands of a prior
	holder.
	Sec. 231.006.  DEFINITION: QUALIFIED LOW-INCOME COMMUNITY
	INVESTMENT.  In this chapter, "qualified low-income community
	investment" means an equity investment in, or loan to, a qualified
	active low-income community business made by a qualified community
	development entity.
	Sec. 231.007.  DEFINITION: RURAL COMMUNITY DEVELOPMENT
	ENTITY. In this chapter, "rural community development entity" means
	a qualified community development entity:
	(1)  whose allocation agreement with the Community
	Development Financial Institutions Fund of the United States
	Department of the Treasury requires the entity to invest at least 25
	percent of that allocation in rural areas; or
	(2)  that demonstrates to the comptroller in writing
	that the entity or its affiliates invested at least 25 percent of
	the entity's most recent federal allocation outside the boundaries
	of a metropolitan statistical area.
	Sec. 231.008.  RULES.  The comptroller shall adopt rules
	necessary to implement this chapter.
	Sec. 231.009.  REVIEW BY COMPTROLLER.  The comptroller shall
	review the qualified low-income community investments of a
	qualified community development entity not later than the sixth
	month after each anniversary of the investment.  In conducting the
	review, the comptroller shall ensure that the qualified community
	development entity has made and maintained the qualified low-income
	community investments required under Sections 231.151(a)(3) and
	(4) to avoid recapture of a credit claimed in connection with a
	qualified equity investment.
	SUBCHAPTER B. PREMIUM TAX CREDIT
	Sec. 231.051.  ELIGIBILITY FOR CREDIT. An investing entity
	is eligible for a credit against the entity's state premium tax
	liability in the amount provided by this subchapter and under the
	conditions and limitations provided by this chapter.
	Sec. 231.052.  QUALIFICATION. An investing entity is
	eligible for a credit if the investing entity holds a qualified
	equity investment on a credit allowance date.
	Sec. 231.053.  AMOUNT OF CREDIT; LIMITATION. (a) The amount
	of credit for a tax year is equal to the credit accrued, as
	determined under Subsection (b), on each credit allowance date:
	(1)  that occurs during the tax year; and
	(2)  on which the investing entity holds the qualified
	equity investment.
	(b)  The amount of credit accrued on a credit allowance date
	equals the applicable percentage for the credit allowance date
	multiplied by the purchase price paid to the issuer of the qualified
	equity investment.
	(c)  The total credit claimed for a tax year, including the
	amount of any carryforward under Section 231.054, may not exceed
	the amount of state premium tax liability due for the tax year after
	applying all other applicable tax credits.
	(d)  Credits may be applied to the investing entity's
	estimated or final tax payments for the tax year.
	Sec. 231.054.  CARRYFORWARD. If an investing entity is
	eligible for a credit that exceeds the limitation under Section
	231.053(c), the investing entity may carry the unused credit
	forward for not more than 20 consecutive tax reports. Credits,
	including credit carryforwards, are considered to be used in the
	following order:
	(1)  a credit carryforward under this subchapter; and
	(2)  a current year credit.
	Sec. 231.055.  ASSIGNMENT PROHIBITED. (a)  Except as
	provided by Subsection (b), an investing entity may not convey,
	assign, or transfer the credit allowed under this subchapter to
	another entity.
	(b)  A partnership, limited liability company, S
	corporation, or other pass-through entity for federal income tax
	purposes may allocate the credit to the entity's partners, members,
	or shareholders for their direct use in accordance with an
	agreement between the partners, members, or shareholders.
	Sec. 231.056.  RETALIATORY TAX. (a) An entity claiming a
	credit under this subchapter is not required to pay any additional
	retaliatory tax levied under Chapter 281 as a result of claiming
	that credit.
	(b)  In addition to the exclusion provided by Subsection (a),
	an entity claiming a credit under this subchapter is not required to
	pay any additional tax that may arise as a result of claiming that
	credit.
	SUBCHAPTER C. CERTIFICATION AS QUALIFIED EQUITY INVESTMENT
	Sec. 231.101.  APPLICATION FOR CERTIFICATION AS QUALIFIED
	EQUITY INVESTMENT. (a)  A qualified community development entity
	that seeks to have an equity investment or long-term debt security
	certified as a qualified equity investment eligible for credits
	under this chapter must apply to the comptroller as provided by this
	section.
	(b)  The comptroller shall provide an application date each
	year for applications under Subsection (a).  The date may not be
	later than October 2.  The comptroller shall consider all
	applications received on or before the application date to be
	received simultaneously on the application date.
	(c)  An application under this section must include the
	following:
	(1)  evidence of the applicant's certification as a
	qualified community development entity, including evidence of the
	service area of the entity that includes this state;
	(2)  a copy of an allocation agreement executed by the
	applicant, or its controlling entity, and the Community Development
	Financial Institutions Fund of the United States Department of the
	Treasury;
	(3)  a certificate executed by an executive officer of
	the applicant attesting that the allocation agreement remains in
	effect and has not been revoked or canceled by the Community
	Development Financial Institutions Fund;
	(4)  a description of the amount and structure of the
	equity investment or long-term debt security proposed to be
	certified;
	(5)  examples of the types of qualified active
	low-income community businesses in which the applicant, its
	controlling entity, or affiliates of its controlling entity have
	invested under the federal New Markets Tax Credit Program or a state
	new markets tax credit program, including written proof that the
	applicant or an affiliate has made at least one qualified
	low-income community investment or a similar loan to a business in a
	low-income census tract in this state;
	(6)  evidence that:
	(A)  the entity qualifies as a rural community
	development entity, if the entity is applying for a rural
	allocation;
	(B)  the entity or the entity's affiliate has
	previously made at least one qualified low-income community
	investment that would meet the investment requirements for a Texas
	education allocation, if the entity is applying for a Texas
	education allocation; or
	(C)  the entity or the entity's affiliate has
	previously made at least one qualified low-income community
	investment that would meet the investment requirements for a Texas
	seaport allocation, if the entity is applying for a Texas seaport
	allocation;
	(7)  a nonrefundable application fee of $5,000 to be
	paid to the comptroller; and
	(8)  the refundable performance deposit required by
	Subchapter E.
	Sec. 231.102.  ACTION ON APPLICATION.  (a)  Not later than
	the 30th day after the date an application under Section 231.101 is
	received, the comptroller shall grant or deny the application in
	full or part.
	(b)  If the comptroller denies the application, the
	comptroller shall inform the applicant of the denial.
	(c)  If the comptroller denies an application because the
	application is incomplete, the applicant may, not later than the
	15th day after the date the applicant receives notice under
	Subsection (b), provide additional information required by the
	comptroller to complete the application. The comptroller shall
	consider an application completed under this subsection to be
	completed on the date the application was initially submitted.
	(d)  If an applicant does not complete an application in the
	time required under Subsection (c), the application is finally
	denied and the applicant must submit a new application if the
	applicant wishes to reapply. The comptroller shall determine the
	application date for the new application without regard to the
	previously denied application.
	Sec. 231.103.  CERTIFICATION OF QUALIFIED EQUITY
	INVESTMENT.  (a)  If an application under Section 231.101 is
	granted, the comptroller shall certify the proposed equity
	investment or long-term debt security as a qualified equity
	investment that is eligible for credits under this chapter, subject
	to Section 231.104.
	(b)  The comptroller shall provide written notice of the
	certification to the qualified community development entity.
	(c)  The certification of a qualified equity investment is
	effective on the date the comptroller provides notice under
	Subsection (b).
	Sec. 231.104.  LIMIT ON CERTIFIED INVESTMENTS.  (a)  Subject
	to Subsections (b) and (c), the comptroller shall limit the amount
	of qualified equity investments that may be certified under Section
	231.103 to an amount the comptroller estimates will result in not
	more than:
	(1)  $60 million in credits being claimed under this
	chapter in any state fiscal year; and
	(2)  $300 million in total credits being claimed under
	this chapter.
	(b)  The comptroller shall estimate the amounts under
	Subsection (a) without regard to the carryforward provision under
	Section 231.054.
	(c)  The comptroller shall allocate 25 percent, or as nearly
	as possible to 25 percent, of the amount available under Subsection
	(a) for each of the following:
	(1)  a rural allocation, which may be used only by
	rural community development entities to make qualified low-income
	community investments in rural areas;
	(2)  a Texas education allocation, which may be used
	only to make qualified low-income community investments in
	nonprofit or for-profit entities offering primary, secondary, or
	higher education in low-income communities in this state;
	(3)  a Texas seaport allocation, which may be used only
	to make qualified low-income community investments in businesses
	operating at a port, harbor, or municipality:
	(A)  accessible to seagoing ships that are limited
	to 35 miles from the coastline; and
	(B)  located in a low-income community in this
	state; and
	(4)  a statewide low-income community allocation,
	which may be used to make qualified low-income community
	investments in any low-income community in this state.
	(d)  A qualified community development entity may apply in a
	single application for and receive certification of qualified
	equity investments in more than one allocation category under
	Subsection (c).
	(e)  Subject to Subsection (f), if a pending application
	cannot be fully certified due to the limit specified by Subsection
	(a) or (c), the comptroller shall certify the portion that can be
	certified.
	(f)  The comptroller shall certify qualified equity
	investments in the order in which applications are received by the
	comptroller.  Applications received on or before the application
	date provided under Section 231.101(b) are considered to have been
	received simultaneously on the application date.  For applications
	that are complete and received on or before the application date
	provided under Section 231.101(b) and for which the total amounts
	requested cannot be certified because of the limit specified by
	Subsection (a) or (c), the comptroller shall certify qualified
	equity investments in each allocation category under Subsection (c)
	on a pro rata basis based on the ratio of the amount of qualified
	equity investments available in an allocation category to the total
	amount of qualified equity investments requested in that allocation
	category.
	Sec. 231.105.  TRANSFER OF INVESTMENT AUTHORITY.  A
	qualified community development entity whose application for
	certification of a qualified equity investment is approved under
	this subchapter may transfer all or a portion of its certified
	qualified equity investment authority to its controlling entity or
	to a qualified community development entity controlled by or under
	common control with the transferring entity, if the transferring
	entity:
	(1)  provides the information required in the
	application under Section 231.101(c) with respect to the recipient
	of the transfer; and
	(2)  notifies the comptroller of the transfer not later
	than the 30th day after the date of the transfer.
	Sec. 231.106.  ISSUANCE OF QUALIFIED EQUITY INVESTMENT; FEE.
	(a)  Not later than the 20th month after the date the qualified
	community development entity receives notice of certification, the
	entity or a recipient of a transfer under Section 231.105 shall
	issue the qualified equity investment and receive cash in the
	amount certified.
	(b)  The qualified community development entity or a
	recipient of a transfer under Section 231.105 must provide the
	comptroller with evidence of the receipt of the cash investment not
	later than the 10th business day after the date the cash investment
	is received.
	(c)  At the time the qualified community development entity
	or a recipient of a transfer under Section 231.105 issues the
	qualified equity investment, the qualified community development
	entity or transfer recipient shall pay to the comptroller a fee
	equal to 20 basis points, or 0.2 percent, of the amount issued.
	Fees collected under this subsection may be appropriated only to
	pay the cost of preparing a report under Section 231.302.
	Sec. 231.107.  LAPSE OF CERTIFICATION.  (a)  If the qualified
	community development entity or a recipient of a transfer under
	Section 231.105 does not issue the qualified equity investment and
	receive the cash investment before the 20th month after the date the
	certification notice is received as required by Section 231.106,
	the certification lapses and the qualified community development
	entity or recipient of the transfer may not accept an equity
	investment or issue a long-term debt security as a qualified equity
	investment without reapplying to the comptroller for
	certification.
	(b)  If a certification lapses under this section, the
	comptroller shall reissue the previously certified amount, giving
	preference to an applicant for reissuance of certification whose
	proposed amount for certification was previously certified in a
	reduced amount under Section 231.104. If more than one applicant
	for reissuance of certification had its proposed amount reduced,
	the comptroller shall reissue the certified amount to those
	applicants on a pro rata basis, subject to the limits specified by
	Section 231.104.
	(c)  After reissuing certifications under Subsection (b),
	the comptroller shall reissue any certified amounts remaining to
	applicants in amounts determined by the comptroller, subject to the
	limits specified by Section 231.104.
	SUBCHAPTER D.  RECAPTURE OF CREDIT
	Sec. 231.151.  RECAPTURE. (a)  Subject to Section 231.152,
	the comptroller shall recapture the amount of a credit claimed on a
	premium tax report filed under Chapter 221, 222, 223, 223A, or 224
	from the investing entity if:
	(1)  any amount of a federal tax credit available with
	respect to a qualified equity investment that is eligible for a
	credit under this chapter is recaptured under Section 45D, Internal
	Revenue Code, in which case the comptroller's recapture must be
	proportionate to the federal recapture with respect to the
	qualified equity investment;
	(2)  the issuer redeems or makes principal repayment
	with respect to a qualified equity investment before the seventh
	anniversary of the date the qualified equity investment is issued,
	in which case the comptroller's recapture must be proportionate to
	the amount of the redemption or repayment with respect to the
	qualified equity investment;
	(3)  the issuer fails to invest an amount equal to 85
	percent of the purchase price of the qualified equity investment in
	qualified low-income community investments in this state not later
	than the 20th month after the date the qualified equity investment
	is issued, in which case the comptroller's recapture may not exceed
	the amount of tax credits associated with the portion of the
	purchase price received but not invested on the date of the
	recapture; or
	(4)  the issuer fails to maintain an amount of
	investment equal to 85 percent of the purchase price of the
	qualified equity investment in qualified low-income community
	investments in this state until the last credit allowance date for
	the qualified equity investment, in which case the comptroller's
	recapture may not exceed the amount of tax credits associated with
	the portion of the purchase price received but not maintained in
	qualified low-income community investments on the date of
	recapture.
	(b)  For purposes of this chapter, a qualified low-income
	community investment is considered held by an issuer even if the
	investment has been sold or repaid if the issuer reinvests an amount
	equal to the capital returned to or recovered by the issuer from the
	original investment, exclusive of any profits realized, in another
	qualified low-income community investment not later than the 12th
	month after the date the issuer receives the capital.
	(c)  An issuer is not required to reinvest capital returned
	from a qualified low-income community investment after the sixth
	anniversary of the date the qualified equity investment whose
	proceeds were used to make the qualified low-income community
	investment was issued.  The qualified low-income community
	investment is considered held by the issuer through the seventh
	anniversary of the date the qualified equity investment was issued.
	(d)  Periodic amounts received during a calendar year as
	repayment of principal on a loan that is a qualified low-income
	community investment shall be treated as continuously invested in a
	qualified low-income community investment if the amounts are
	reinvested in one or more qualified low-income community
	investments not later than the last day of the following calendar
	year.
	(e)  After the seventh anniversary of the date a qualified
	equity investment is issued, the qualified community development
	entity may request that the comptroller certify that tax credits
	associated with the qualified equity investment are not subject to
	recapture under this section.
	(f)  Not later than the 60th day after the date the
	comptroller receives a request under Subsection (e), the
	comptroller shall:
	(1)  certify in writing to the qualified community
	development entity that tax credits associated with the qualified
	equity investment are not subject to recapture and that the
	qualified community development entity has satisfied all the
	requirements of this chapter; or
	(2)  notify the qualified community development entity
	that tax credits associated with the qualified equity investment
	are subject to recapture and that the qualified community
	development entity has not satisfied the requirements of this
	chapter and shall provide a written explanation of the reason for
	that determination.
	(g)  After the comptroller certifies under Subsection (f)(1)
	that tax credits associated with a qualified equity investment are
	not subject to recapture:
	(1)  the comptroller may not recapture any tax credits
	associated with that qualified equity investment; and
	(2)  the qualified community development entity is not
	subject to regulation by the comptroller or to the reporting
	requirements under Section 231.301 in connection with that
	qualified equity investment.
	Sec. 231.152.  NOTICE OF NONCOMPLIANCE. (a)  The
	comptroller shall notify a qualified community development entity
	and an investing entity that has claimed a credit on a report if the
	credit is subject to recapture under Section 231.151.
	(b)  The comptroller may not recapture a credit under this
	subchapter if the qualified community development entity cures the
	noncompliance described by Section 231.151 before the 90th day
	after the date the qualified community development entity receives
	notice under Subsection (a).
	SUBCHAPTER E.  SECURITY FOR PERFORMANCE
	Sec. 231.201.  SECURITY REQUIRED. (a)  Not later than the
	14th day after the date a qualified equity investment is certified
	under Subchapter C, the qualified community development entity that
	received investment authority for the qualified equity investment
	must deposit $500,000 with the comptroller as a refundable
	performance deposit to be deposited as required by Section 231.204.
	(b)  This section applies regardless of whether the
	investment authority is for a rural allocation, a Texas education
	allocation, a Texas seaport allocation, or a statewide low-income
	community allocation.
	Sec. 231.202.  FAILURE TO PROVIDE SECURITY: LOSS OF
	CERTIFICATION. The comptroller shall revoke the certification of
	the qualified equity investment of a qualified community
	development entity that fails to make a deposit under Section
	231.201.
	Sec. 231.203.  FORFEITURE OF SECURITY.  (a)  A qualified
	community development entity that makes a performance deposit under
	Section 231.201 forfeits the deposit in its entirety if:
	(1)  the qualified community development entity or any
	qualified community development entity to which a transfer is made
	under Section 231.105 fails to issue the total amount of qualified
	equity investments certified by the comptroller and receive cash in
	the amount certified under Section 231.103 not later than the date
	specified by Section 231.106; or
	(2)  subject to Subsection (b), the qualified community
	development entity or a qualified community development entity to
	which a transfer is made under Section 231.105 that issues a
	qualified equity investment certified under Section 231.103 fails
	to make or maintain the investment required under Sections
	231.151(a)(3) and (4) to avoid recapture of a credit claimed in
	connection with the qualified equity investment.
	(b)  A deposit is not subject to forfeiture under Subsection
	(a)(2) if the qualified community development entity cures the
	noncompliance before the 90th day after the date the qualified
	community development entity receives notice under Subsection (c).
	(c)  The comptroller shall notify a qualified community
	development entity that made a deposit under Section 231.201 in
	writing if the deposit is subject to forfeiture under this section.
	Sec. 231.204.  NEW MARKETS PERFORMANCE GUARANTEE FUND.  (a)
	The new markets performance guarantee fund is an interest-bearing
	fund outside the state treasury with the comptroller. The fund
	consists of money the comptroller deposits under Subsection (b).
	The comptroller shall administer the fund.
	(b)  The comptroller shall deposit a performance deposit
	made under Section 231.201 to the credit of the new markets
	performance guarantee fund. The deposit must remain on deposit with
	the fund until the comptroller determines that:
	(1)  the qualified community development entity has
	complied with the provisions of this chapter; or
	(2)  the deposit has been forfeited and will be
	deposited in accordance with Section 231.206.
	Sec. 231.205.  RELEASE OF SECURITY.  (a)  Not earlier than
	the 30th day after the date the requirements that must be satisfied
	to avoid forfeiture of a deposit as described by Section 231.203 are
	satisfied, a qualified community development entity that made the
	deposit may request a refund of the deposit from the comptroller.
	(b)  The comptroller shall refund the deposit or, if
	applicable, give notice of noncompliance as described by Section
	231.203 not later than the 30th day after the date of receiving a
	request under Subsection (a).
	Sec. 231.206.  DEPOSIT OF FORFEITED SECURITY. The
	comptroller shall deposit in the general revenue fund a deposit
	forfeited under Section 231.203.
	SUBCHAPTER F.  EVALUATION OF BUSINESS BY COMPTROLLER
	Sec. 231.251.  EVALUATION REQUIRED. (a) Except as provided
	by Subsection (c), a qualified community development entity or a
	recipient of a transfer under Section 231.105 must, before making
	an investment in a business, request a written opinion from the
	comptroller as to whether:
	(1)  the business in which the qualified community
	development entity proposes to invest would qualify as a qualified
	active low-income community business under Section 231.003; and
	(2)  the location where the qualified community
	development entity proposes to invest would meet the location
	requirements for a rural allocation, a Texas education allocation,
	or a Texas seaport allocation, as applicable.
	(b)  Not later than the 10th business day after the date of
	the receipt of a request under Subsection (a), the comptroller
	shall make the requested determinations and issue the written
	opinion, including explanations for the determinations.
	(c)  A qualified community development entity or a recipient
	of a transfer under Section 231.105 may, but is not required to,
	request a written opinion under Subsection (a) before making an
	investment in a business if the qualified community development
	entity or transfer recipient concurrently makes a federal qualified
	low-income community investment in the business.
	Sec. 231.252.  CONSIDERATION OF FEDERAL TAX LAWS.  In
	issuing a written opinion and making other determinations under
	this chapter, the comptroller shall consider Section 45D, Internal
	Revenue Code, and the federal tax regulations issued under that
	code, to the extent that those provisions are applicable.
	SUBCHAPTER G.  REPORTING
	Sec. 231.301.  REPORT TO COMPTROLLER. (a)  Except as
	provided by this subsection, a qualified community development
	entity that issues a qualified equity investment under Section
	231.106 shall submit an annual report to the comptroller not later
	than the fifth business day after the anniversary of a credit
	allowance date applicable to the investment.  The qualified
	community development entity is not required to submit any report
	under this subsection after the annual report following the final
	credit allowance date.
	(b)  The report must:
	(1)  provide evidence that the qualified community
	development entity has made and maintained the investment required
	under Sections 231.151(a)(3) and (4) to avoid recapture of a credit
	claimed in connection with the qualified equity investment;
	(2)  include one or more bank statements for the
	qualified community development entity that reflect each qualified
	low-income community investment made by the qualified community
	development entity in connection with the qualified equity
	investment;
	(3)  state the name, location, and industry code of
	each qualified active low-income community business receiving a
	qualified low-income community investment in connection with the
	qualified equity investment;
	(4)  state the number of employment positions created
	and retained as a result of each qualified low-income community
	investment made in connection with the qualified equity investment;
	(5)  state whether the qualified community development
	entity has been subject to a recapture of any amount of a federal
	tax credit available under Section 45D, Internal Revenue Code, with
	respect to the qualified equity investment; and
	(6)  include a copy of the most recent annual report
	submitted by the qualified community development entity to the
	United States Department of the Treasury regarding Section 45D,
	Internal Revenue Code.
	(c)  A qualified community development entity that fails to
	submit a report to the comptroller within the time prescribed by
	Subsection (a) shall pay to the comptroller a penalty equal to the
	sum of:
	(1)  $25,000; and
	(2)  $5,000 for each day the report is not submitted
	after the date the report is due under Subsection (a).
	Sec. 231.302.  COMPTROLLER'S REPORT TO LEGISLATURE.  (a)
	The comptroller shall contract with an independent researcher at a
	center for education research established under Section 1.005,
	Education Code, to prepare a biennial report with respect to the
	implementation of this chapter.
	(b)  The report must include:
	(1)  the number of qualified community development
	entities holding certified qualified equity investments;
	(2)  the amount of qualified equity investments of each
	qualified community development entity;
	(3)  the investments each qualified community
	development entity has made in qualified active low-income
	community businesses as of the most recent annual report submitted
	to the comptroller by the qualified community development entity;
	(4)  the total amount of credits earned under this
	chapter;
	(5)  the performance of each qualified community
	development entity with respect to reporting requirements imposed
	by this chapter;
	(6)  with respect to each qualified active low-income
	community business in which a qualified community development
	entity has invested:
	(A)  the classification of the qualified active
	low-income community business according to the industrial sector
	and the size of the business;
	(B)  the total number of jobs created by the
	qualified low-income community investment and the average wages
	paid for the jobs; and
	(C)  the total number of jobs retained as a result
	of the qualified low-income community investment and the average
	wages paid for the jobs; and
	(7)  an analysis of the effect implementation of this
	chapter has had during the period covered by the report on:
	(A)  economic activity in this state; and
	(B)  state tax revenue.
	(c)  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.
	SECTION 2.  (a)  As soon as practicable after the effective
	date of this Act, the comptroller of public accounts shall adopt
	rules necessary to implement the provisions of Chapter 231,
	Insurance Code, as added by this Act.
	(b)  The comptroller of public accounts shall provide an
	initial application date under Section 231.101(b), Insurance Code,
	as added by this Act, of October 2, 2017.
	SECTION 3.  Subchapter B, Chapter 231, Insurance Code, as
	added by this Act, applies only to a tax report originally due on or
	after January 1, 2018.
	SECTION 4.  This Act takes effect September 1, 2017.