HBA-JEK H.B. 3589 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3589 By: Hunter State, Federal & International Relations 6/14/2001 Enrolled BACKGROUND AND PURPOSE In 1999, the legislature established the Texas Film Industry Development Loan Guarantee Program and the Texas Film Industry Administrative Fund to assist film makers in borrowing money to make films. The application for a loan guarantee requires a film producer to provide to the comptroller an indemnity against loss that equals the amount guaranteed by the state. Prior to the 77th Legislature, the indemnity had to be issued by a Texas-licensed insurance company, surety company, or financial institution. House Bill 3589 adds a surplus lines insurance company to this list and sets forth provisions regarding a loan guarantee. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the comptroller of public accounts in SECTION 3 (Section 403.332, Government Code) of this bill. ANALYSIS House Bill 3589 amends the Government Code to add a surplus lines insurer to the entities that are authorized to issue an indemnity against loss (indemnity) to a film producer who is producing the film with the proceeds from a loan guaranteed under the loan guarantee indemnity program (program). The bill provides that a surplus lines insurer must meet the requirements and rules for surplus lines insurance adopted by the commissioner of insurance. The bill authorizes the comptroller to require the payment of a guarantee fee for approval of the issuance of a loan guarantee and to set the guarantee fee in an amount sufficient to fund the administration of the program. The bill authorizes the comptroller by rule to adopt a guarantee-to-reserve ratio that determines the amount of loan guarantees that may be made to exceed the amount available in the Texas Film Industry Administrative Fund (fund). The bill prohibits the ratio of guarantees to the amount of money available in the fund from exceeding five to one, and requires the comptroller to review and adjust the guarantee-toreserve ratio annually. EFFECTIVE DATE September 1, 2001.