Bill Text: TX HB4418 | 2023-2024 | 88th Legislature | Introduced

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Bill Title: Relating to the creation of a revolving loan program to fund the purchase by historically underutilized businesses of certain bonds required for public work contracts.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2023-03-21 - Referred to State Affairs [HB4418 Detail]

Download: Texas-2023-HB4418-Introduced.html

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88R2836 MCK-D
By: Anchía H.B. No. 4418

A BILL TO BE ENTITLED
AN ACT
relating to the creation of a revolving loan program to fund the
purchase by historically underutilized businesses of certain bonds
required for public work contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2253, Government Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. REVOLVING LOAN PROGRAM FOR BOND ASSISTANCE
Sec. 2253.101. DEFINITIONS. In this subchapter:
(1) "Historically underutilized business" has the
meaning assigned by Section 2161.001.
(2) "Revolving loan program" means the program
established by the comptroller under this subchapter.
Sec. 2253.102. REVOLVING LOAN PROGRAM. (a) The
comptroller by rule shall establish a revolving loan program to
provide loans to historically underutilized businesses to assist
the businesses in the purchase of performance and payment bonds
required by this chapter for public work contracts with a
governmental entity. The comptroller may not charge interest on a
loan provided under the program.
(b) The comptroller by rule shall set the terms and other
requirements for a loan made under the revolving loan program,
including guidelines for the repayment of the loans.
(c) The comptroller may not contract with another entity to
manage the revolving loan program.
Sec. 2253.103. ELIGIBILITY FOR LOANS. (a) To be eligible
for a loan under the revolving loan program, an applicant must:
(1) be a historically underutilized business
operating in the construction business or a building trade;
(2) have been in business at least one year before
applying for the loan;
(3) have its principal place of business in this
state; and
(4) demonstrate the ability to meet all experience and
financial standards required for the contract for which the
business is seeking the bond assistance.
(b) A historically underutilized business that has not
previously replied to a solicitation for a public work contract as a
prime contractor or subcontractor may apply for a loan under the
revolving loan program. A historically underutilized business that
has previously entered into a public work contract with a
governmental entity and paid for its own bonds required under the
contract is not precluded from applying for a loan under the
revolving loan program.
(c) The comptroller may by rule adopt additional
eligibility requirements for participation in the revolving loan
program.
Sec. 2253.104. INELIGIBILITY FOR LOAN. (a) A historically
underutilized business that has defaulted on a performance or
payment bond required under a public work contract is not eligible
to receive a loan under the revolving loan program before the fifth
anniversary of the date the historically underutilized business
defaulted on the bond.
(b) A historically underutilized business that has filed
for bankruptcy is not eligible to receive a loan under the revolving
loan program before the seventh anniversary of the date the
historically underutilized business filed for bankruptcy.
Sec. 2253.105. SUBCONTRACTING. A historically
underutilized business that receives a loan under the revolving
loan program for bond assistance for a public work contract with a
governmental entity and who is a prime contractor:
(1) may not subcontract more than 75 percent of the
contract; and
(2) shall use the historically underutilized business
guidelines under Chapter 2161, the governmental entity's
guidelines, or the guidelines specified in the contract in awarding
any subcontracts under the contract.
Sec. 2253.106. LOAN AMOUNTS. (a) A historically
underutilized business that has not previously entered into a
public work contract with a governmental entity may receive a loan
under the revolving loan program in an amount up to $100,000.
(b) A historically underutilized business that has
completed at least one public work contract with a governmental
entity may receive a loan under the revolving loan program in an
amount up to $200,000.
(c) A historically underutilized business that has
completed two or more public work contracts with a governmental
entity may receive a loan under the revolving loan program in an
amount up to:
(1) $250,000 if the business is a subcontractor except
as provided by Subdivision (2)(B); or
(2) $500,000 if the business is:
(A) a prime contractor; or
(B) a subcontractor:
(i) on a public work contract in which the
value of the subcontract is greater than $10 million; or
(ii) that can demonstrate an inability to
secure a bond under normal market conditions.
Sec. 2253.107. PAYMENT TO SURETY. The comptroller shall
pay the proceeds of a loan made under the revolving loan program
under this subchapter directly to the surety company issuing the
bond.
Sec. 2253.108. DEFAULT. (a) If a historically
underutilized business that receives a loan under the revolving
loan program defaults on a performance or payment bond for which the
loan was provided, the comptroller and the attorney general shall
institute appropriate proceedings for any available legal remedy to
recover the amount of the loan.
(b) The comptroller may withhold any state money owed to a
historically underutilized business described by Subsection (a)
for other contracts or business with the state conducted by the
historically underutilized business.
(c) A historically underutilized business described by
Subsection (a) may not contract with a governmental entity until
the business has repaid at least one-half of the loan amount
received by the business under the revolving loan program for
purchase of the performance or payment bond subject to the default.
Sec. 2253.109. TEXAS HISTORICALLY UNDERUTILIZED BUSINESS
BOND ASSISTANCE REVOLVING LOAN ACCOUNT. (a) The Texas
historically underutilized business bond assistance revolving loan
account is an account in the general revenue fund administered by
the comptroller.
(b) Money in the account may be used only for loans made
under this subchapter.
(c) The comptroller shall deposit to the credit of the
account:
(1) money appropriated to the comptroller for the
purpose of this subchapter;
(2) money the comptroller receives as a gift, grant,
or donation for the purpose of this subchapter;
(3) money received by the comptroller for the
repayment of a loan made under the revolving loan program, and any
fee charged to make the loan; and
(4) notwithstanding Section 404.071, all interest
attributable to money held in the account.
(d) Money in the account may be appropriated only to the
comptroller for the purposes of administering the account.
(e) The comptroller may not contract with another entity to
administer the account.
Sec. 2253.110. GIFTS AND GRANTS. The comptroller may
solicit and accept gifts and grants from any public or private
source for the purposes of this subchapter.
Sec. 2253.111. RULEMAKING AUTHORITY. The comptroller shall
adopt rules to implement this subchapter.
Sec. 2253.112. REPORTING REQUIREMENTS. Not later than
January 15 of each year, the comptroller shall report to the
legislature:
(1) the total dollar amount of assistance provided in
the preceding year;
(2) the total number of businesses to which assistance
was provided in the preceding year;
(3) the total number of state contracts secured by
businesses to which assistance was provided in the preceding year;
(4) the total number of applications for assistance in
the preceding year; and
(5) the remaining dollar balance in the Texas
historically underutilized business bond assistance revolving loan
account as of December 31 of the preceding year.
Sec. 2253.113. AUDIT BY STATE AUDITOR. (a) The state
auditor shall conduct a biennial financial audit and effectiveness
audit of the revolving loan program to evaluate the program's
performance.
(b) The state auditor shall report the results of the audits
to the legislature not later than January 8 of each odd-numbered
year.
SECTION 2. This Act takes effect September 1, 2023.