89R1345 CXP-D     By: West S.B. No. 222       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, 2025.