By Counts, et al.                                     H.B. No. 1548
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to financial assistance programs administered by the
    1-3  Veterans' Land Board.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5                               ARTICLE 1
    1-6        SECTION 1.01.  Section 161.001, Natural Resources Code, is
    1-7  amended to read as follows:
    1-8        Sec. 161.001.  Definitions.  (a)  In this chapter:
    1-9              (1)  "Board" means the Veterans' <Veterans> Land Board.
   1-10              (2)  "Commissioner" means the Commissioner of the
   1-11  General Land Office.
   1-12              (3)  "Land office" means the General Land Office.
   1-13              (4)  "Program" means the Veterans' <Veterans> Land
   1-14  Program.
   1-15              (5)  "Fund" means the veterans' <veterans> land fund.
   1-16              (6)  "Bonds" means general obligation <veterans land>
   1-17  bonds issued by the board for the purpose of funding the program.
   1-18              (7)  "Veteran" means a person who:
   1-19                    (A)(i)  served not less than 90 continuous days,
   1-20  unless sooner <after September 16, 1940> discharged by reason of a
   1-21  service-connected disability, on active duty in the Army, Navy, Air
   1-22  Force, Coast Guard, United States Public Health Service (as
   1-23  constituted under 42 U.S.C. 201 et seq.),<;> or Marine Corps of the
    2-1  United States after September 16, 1940, and who on <and has not
    2-2  been dishonorably discharged or released from any of those branches
    2-3  as of> the date of filing an application under the program has not
    2-4  been dishonorably discharged from the branch of the service in
    2-5  which such person served; <his application, or who has completed>
    2-6                          (ii)  has at least 20 years of active or
    2-7  reserve military service as computed when determining the person's
    2-8  eligibility to receive retired pay <creditable for retirement>
    2-9  under applicable federal law <laws,>; or
   2-10                          (iii)  has enlisted or received an <who has
   2-11  completed all initial active duty training required as a condition
   2-12  of enlistment or> appointment in the Texas National Guard, who has
   2-13  completed all initial active duty training required as a condition
   2-14  of the enlistment or appointment, and who on the date of filing the
   2-15  person's application has not been dishonorably discharged from the
   2-16  Texas National Guard;
   2-17                    (B)  at the time of such person's <his>
   2-18  enlistment, induction, commissioning, appointment, or drafting was
   2-19  a bona fide resident of this state or has resided in this state at
   2-20  least five years immediately before the date of filing an <his>
   2-21  application under this chapter <for a loan>; and
   2-22                    (C)  at the time of such person's <his>
   2-23  application <for a loan> under this chapter is <a citizen of the
   2-24  United States and> a bona fide resident of this state.  The term
   2-25  includes the unmarried surviving spouse of a veteran who died or
    3-1  who is identified as missing in action if the deceased or missing
    3-2  veteran meets the requirements in this section, with the exception
    3-3  that the deceased or missing veteran need not have served 90
    3-4  continuous days under Paragraph (A)(i) of this subdivision, and if
    3-5  the deceased or missing veteran was a bona fide resident of the <in
    3-6  the line of duty provided the deceased veteran was a bona fide
    3-7  resident of this> state at the time of enlistment, induction,
    3-8  commissioning, appointment or drafting.  <In order for the
    3-9  surviving spouse to qualify, the deceased veteran must meet the
   3-10  requirements in this section with the exception that the deceased
   3-11  veteran need not have served 90 continuous days.>
   3-12        (b)  Notwithstanding Subdivision (7) of Subsection (a) of
   3-13  this section, the board may by rule change the definition of
   3-14  "veteran" as necessary or appropriate to protect the best interests
   3-15  of the program <in response to changes in the laws  of the United
   3-16  States as they may affect the program>.
   3-17        SECTION 1.02.  Section 161.061, Natural Resources Code, is
   3-18  amended to read as follows:
   3-19        Sec. 161.061.  General Duties of Board.  The board <Board>
   3-20  shall:
   3-21              (1)  authorize and execute negotiable bonds as provided
   3-22  by law;
   3-23              (2)  provide by resolution for use of the fund in a
   3-24  manner that will effectuate the intent of the constitution and the
   3-25  law;
    4-1              (3)  prescribe <fix> the interest rates as provided by
    4-2  law;
    4-3              (4)  provide for the forfeiture of contracts of sale
    4-4  and purchase and resale of forfeited land;
    4-5              (5)  conduct investigations it considers necessary; and
    4-6              (6)  formulate policies and rules necessary and not in
    4-7  conflict with the law to ensure the proper administration and to
    4-8  carry out the intent and purposes of the law.
    4-9        SECTION 1.03.  Subchapter C, Chapter 161, Natural Resources
   4-10  Code, is amended by adding Section 161.074 to read as follows:
   4-11        Sec. 161.074.  BOND ENHANCEMENT AGREEMENTS.  The board may,
   4-12  at any time and from to time, enter into one or more bond
   4-13  enhancement agreements which the board deems to be necessary or
   4-14  appropriate to place the obligation of the board, as represented by
   4-15  the bonds, in whole or in part, on the interest rate, currency,
   4-16  cash flow, or other basis desired by the board, including, without
   4-17  limitation, bond enhancement agreements commonly known as interest
   4-18  rate swap agreements, currency swap agreements, forward payment
   4-19  conversion agreements, or agreements providing for payments based
   4-20  on levels of or changes in interest rates or currency exchange
   4-21  rates, or agreements to exchange cash flows or a series of
   4-22  payments, or agreements including, without limitation, options,
   4-23  puts or calls to hedge payment, currency, rate, spread, or other
   4-24  exposure, all upon such terms and conditions as may be approved by
   4-25  the board.  A bond enhancement agreement is an agreement for
    5-1  professional services and shall contain the terms and conditions
    5-2  and be for the period that the board approves.  The fees and
    5-3  expenses of the board in connection with the issuance of bonds and
    5-4  the purchase and sale of land may be paid from moneys in the fund,
    5-5  provided that any payments due from the board under any bond
    5-6  enhancement agreement (other than fees and expenses) which relate
    5-7  to the payment of debt service on any bonds shall constitute, and
    5-8  for all purposes shall be deemed to be, payments of principal of
    5-9  and interest on such bonds.
   5-10        SECTION 1.04.  The subchapter heading of subchapter D,
   5-11  Chapter 161, Natural Resources Code, is amended to read as follows:
   5-12                SUBCHAPTER D. GENERAL OBLIGATION BONDS
   5-13        SECTION 1.05.  Section 161.113, Natural Resources Code, is
   5-14  amended to read as follows:
   5-15        Sec. 161.113.  INTEREST RATE.  <(a)>  The bonds shall bear
   5-16  the rate or rates of interest prescribed by the board.
   5-17        <(b)  The weighted average annual interest rate of the bonds,
   5-18  as that phrase is commonly and ordinarily used and understood in
   5-19  the municipal bond market, may not be more than six percent in each
   5-20  installment.>
   5-21        SECTION 1.06.  Section 161.114, Natural Resources Code, is
   5-22  amended to read as follows:
   5-23        Sec. 161.114.  Payment and Maturity of Bonds.  (a)  The bonds
   5-24  shall be payable as provided by the board and shall mature serially
   5-25  or otherwise <not later than 40 years from their date>.
    6-1        (b)  Bonds previously issued shall mature according to their
    6-2  provisions.
    6-3        (c)  The board shall determine the medium of payment for both
    6-4  principal of and interest on the bonds.
    6-5        (d)  The board at its own option may make the bonds
    6-6  redeemable or subject to tender for purchase before maturity at the
    6-7  price and under the terms and conditions fixed by the board in the
    6-8  resolution providing for the issuance and sale of the bonds.
    6-9        SECTION 1.07.  Section 161.116, Natural Resources Code, is
   6-10  amended to read as follows:
   6-11        Sec. 161.116.  Manner of Execution.  (a)  The bonds shall be
   6-12  executed by and on behalf of the board and the state as obligations
   6-13  of the state in the manner provided in Subsection (b) of this
   6-14  section.
   6-15        (b)  The bonds shall be signed by the chairman and the
   6-16  executive secretary of the board and the seal of the board shall be
   6-17  impressed on the bonds.  In addition, the bonds shall be signed by
   6-18  the governor and attested by the Secretary of State with the seal
   6-19  of the state impressed on the bonds.
   6-20        SECTION 1.08.  Section 161.118, Natural Resources Code, is
   6-21  amended to read as follows:
   6-22        Sec. 161.118.  Approval by Attorney General.  Before bonds
   6-23  are delivered to the purchasers, the record relating to the bonds
   6-24  shall be examined by the attorney general.  If the  record
   6-25  demonstrates that the bonds have been issued in accordance with the
    7-1  constitution and this subchapter, the <and the record and> bonds
    7-2  shall be approved by the attorney general.
    7-3        SECTION 1.09.  Section 161.119, Natural Resources Code, is
    7-4  amended to read as follows:
    7-5        Sec. 161.119.  Registration With Comptroller.  After the
    7-6  bonds are approved by the attorney general, they shall be
    7-7  registered in the office of the <state> comptroller of public
    7-8  accounts.
    7-9        SECTION 1.10.  Section 161.122, Natural Resources Code, is
   7-10  amended to read as follows:
   7-11        Sec. 161.122.  (RESERVED <PREFERENTIAL RIGHT OF PURCHASE>.
   7-12  <Immediately after bonds are offered for sale, written notice shall
   7-13  be given to the proper administrators of the various teacher
   7-14  retirement funds, the permanent university fund, and the permanent
   7-15  free school fund of the preferential right given by the
   7-16  constitution to purchase the bonds offered for sale.>
   7-17        SECTION 1.11.  Section 161.123, Natural Resources Code, is
   7-18  amended to read as follows:
   7-19        Sec. 161.123.  Notice for Bids on Bonds.  <(a)>  If the board
   7-20  authorizes the issuance of a series of bonds and decides to call
   7-21  for bids, it shall publish an appropriate notice at least one time
   7-22  not less than 10 days before the date of the sale in a <daily
   7-23  newspaper of general statewide circulation that is published not
   7-24  less than seven times a week.>
   7-25        <(b)  The notice shall be published for the number of times
    8-1  the board determines in one or more popularly> recognized financial
    8-2  journal <journals> of general circulation.
    8-3        SECTION 1.12.  Section 161.124, Natural Resources Code, is
    8-4  amended to read as follows:
    8-5        Sec. 161.124.  Security for Bid.  The <At its option, the>
    8-6  board may require bidders<, other than administrators of state
    8-7  funds listed in Section 161.122 of this code,> to accompany their
    8-8  bids with exchange or bank cashier's checks in an amount considered
    8-9  adequate by the board to be a forfeit guaranteeing the acceptance
   8-10  and payment for bonds covered by the bids and accepted by the
   8-11  board.
   8-12        SECTION 1.13.  Section 161.125, Natural Resources Code, is
   8-13  amended to read as follows:
   8-14        Sec. 161.125.  Sale of Bonds.  Bonds may be sold (at public
   8-15  or private sale) at a price or prices and on terms determined by
   8-16  the board.  <(a)  No bonds may be sold for less than their face
   8-17  value with accrued interest from their date and shall be sold after
   8-18  competitive bidding to the highest and best bidder.>
   8-19        <(b)  The provisions of Subsection (a) of this section do not
   8-20  apply to administrators of the state funds that are given a
   8-21  priority if they exercise the right of priority to take the bonds
   8-22  at the highest price bid by another within 15 days after notice is
   8-23  given.>
   8-24        <(c)  If two or more administrators of state funds desire to
   8-25  exercise their right of priority to purchase the bonds, the board
    9-1  shall prorate the bonds to the administrators who desire to make
    9-2  the purchase.>
    9-3        SECTION 1.14.  Section 161.128, Natural Resources Code, is
    9-4  amended to read as follows:
    9-5        Sec. 161.128.  Bonds as Investments and Security.  (a)  Bonds
    9-6  issued under <Article III, Section 49-b of the Texas Constitution,
    9-7  and> this chapter are legal and authorized investments for banks,
    9-8  savings banks, trust companies, building and loan associations,
    9-9  insurance companies, fiduciaries, trustees, guardians, and for the
   9-10  sinking funds of cities, towns, villages, counties, school
   9-11  districts, and other political subdivisions and public agencies of
   9-12  the state.
   9-13        (b)  The bonds<, if accompanied by unmatured coupons
   9-14  appurtenant to them,> are legal and sufficient security for the
   9-15  deposits in the amount of the par value of the bonds.
   9-16        SECTION 1.15.  Section 161.129, Natural Resources Code, is
   9-17  amended to read as follows:
   9-18        Sec. 161.129.  Taxation of Bonds.  Bonds <issued under
   9-19  Article III, Section 49-b of the Texas Constitution, and laws
   9-20  implementing that section of the constitution,> are exempt from any
   9-21  tax by the state and by cities, towns, villages, counties, school
   9-22  districts, and other political subdivisions and public agencies of
   9-23  the state.
   9-24        SECTION 1.16.  Subchapter D, Chapter 161, Natural Resources
   9-25  Code, is amended by adding Section 161.130 to read as follows:
   10-1        Sec. 161.130.  CONSTITUTIONAL APPROPRIATIONS.  (a)  If,
   10-2  during the existence of the fund or during the time any general
   10-3  obligation bonds are payable from such fund, the board determines
   10-4  that there will not be sufficient money in such fund during the
   10-5  following biennium available to pay principal of or interest on the
   10-6  bonds or both principal and interest that are to come due and to be
   10-7  paid from such fund during the following biennium, the comptroller
   10-8  of public accounts shall transfer to such fund the first money
   10-9  coming into the State Treasury not otherwise appropriated by the
  10-10  constitution in amounts sufficient to pay the obligations.
  10-11        (b)  The money appropriated shall be used to pay the
  10-12  obligations only if at the time the principal or interest or both
  10-13  actually become due there is not sufficient money in such fund
  10-14  available to pay the amount due.
  10-15        SECTION 1.17.  The subchapter heading of subchapter E,
  10-16  Chapter 161, Natural Resources Code, is amended to read as follows:
  10-17             SUBCHAPTER E.  VETERANS' <VETERANS> LAND FUND
  10-18        SECTION 1.18.  Section 161.171, Natural Resources Code, is
  10-19  amended to read as follows:
  10-20        Sec. 161.171.  MONEY AND LAND INCLUDED IN <VETERANS LAND>
  10-21  FUND.  (a)  The veterans' <veterans> land fund shall include:
  10-22              (1)  land purchased by the board from money in the fund
  10-23  <until the sale price, interest, and penalties due have been
  10-24  received by the board>;
  10-25              (2)  money attributable to general obligation bonds
   11-1  issued and sold by the board, including proceeds from the issuance
   11-2  and sale of such bonds;
   11-3              (3)  money received from the sale or resale of land or
   11-4  rights in land purchased with the proceeds from general obligation
   11-5  bonds;
   11-6              (4)  money received from the sale or resale of land or
   11-7  rights in land purchased with other money attributable to general
   11-8  obligation bonds;
   11-9              (5)  proceeds derived from the sale or other
  11-10  disposition of the board's interest in contracts for the sale of
  11-11  any such land or rights in land;
  11-12              (6) <(5)>  interest and penalties received from the
  11-13  sale or resale of such land or rights in the land;
  11-14              (7) <(6)>  bonuses, income, rents, royalties, and any
  11-15  other pecuniary benefit received by the board from such land;
  11-16              (8) <(7)>  money received as indemnity or forfeiture
  11-17  for the failure of any bidder for purchase of general obligation
  11-18  bonds to comply with such person's <his> bid and accept and pay for
  11-19  the bonds or for the failure of a bidder for purchase of land
  11-20  comprising a part of the fund to comply with such person's <his>
  11-21  bid and accept and pay for the land; and amounts received by the
  11-22  board under any bond enhancement agreements with respect to any
  11-23  such bonds; and
  11-24              (9) <(8)>  interest received from investments of this
  11-25  money.
   12-1        (b)  Money in the fund shall be deposited in the State
   12-2  Treasury to the credit of the fund.
   12-3        <(c)  The provisions of this section may not be construed to
   12-4  prevent the board from accepting  for a portion of a tract of
   12-5  land.>
   12-6        SECTION 1.19.  Section 161.172, Natural Resources Code, is
   12-7  amended to read as follows:
   12-8        Sec. 161.172.  (RESERVED <DEPOSIT AND USE OF BOND MONEY>.
   12-9  <(a)  Money attributable to bonds issued and sold under this
  12-10  chapter shall be credited to the fund and shall be used to retire
  12-11  the bonds and to pay interest on them.>
  12-12        <(b)  At the time there is sufficient money to retire the
  12-13  bonds, money remaining in the fund over this amount or coming into
  12-14  the fund at a later time shall be governed as provided in this
  12-15  chapter.>
  12-16        SECTION 1.20.  Section 161.173, Natural Resources Code, is
  12-17  amended to read as follows:
  12-18        Sec. 161.173.  INVESTMENT OF MONEY IN FUND <PAYMENT OF
  12-19  PRINCIPAL AND INTEREST; INVESTMENTS>.  (a)  <The principal and
  12-20  interest on bonds issued by the board shall be paid from money in
  12-21  the fund as provided in the constitutional provision authorizing
  12-22  the bonds.>
  12-23        <(b)>  Except as limited by Subsection (b) <(c)> of this
  12-24  section, money in the fund that is not immediately committed to
  12-25  paying principal of and interest on the bonds, to the purchase of
   13-1  land, or to the payment of expenses as provided in this chapter may
   13-2  be invested in:
   13-3              (1)  direct security repurchase agreements and reverse
   13-4  security repurchase agreements made with state or national banks
   13-5  domiciled in this state or with primary dealers as approved by the
   13-6  Federal Reserve System;
   13-7              (2)  direct obligations of or obligations the principal
   13-8  and interest of which are guaranteed by the United States;
   13-9              (3)  direct obligations of or obligations guaranteed by
  13-10  the Federal Home Loan Banks, the Federal National Mortgage
  13-11  Association, the Federal Farm Credit System, the Student Loan
  13-12  Marketing Association, the Federal Home Loan Mortgage Corporation,
  13-13  or a successor organization to one of those organizations;
  13-14              (4)  bankers' acceptances that:
  13-15                    (A)  are eligible for purchase by members of the
  13-16  Federal Reserve System;
  13-17                    (B)  do not exceed 270 days to maturity; and
  13-18                    (C)  are issued by a bank that has received the
  13-19  highest short-term credit rating by a nationally recognized
  13-20  investment rating firm;
  13-21              (5)  commercial paper that:
  13-22                    (A)  does not exceed 270 days to maturity; and
  13-23                    (B)  has received the highest short-term credit
  13-24  rating by a nationally recognized investment rating firm;
  13-25              (6)  contracts written by the board in which the board
   14-1  grants the purchaser the right to purchase securities in the
   14-2  board's marketable securities portfolio at a specified price over a
   14-3  specified period and for which the board is paid a fee and
   14-4  specifically prohibits naked-option or uncovered option trading;
   14-5              (7)  obligations of a state or an agency, county, city,
   14-6  or other political subdivision of a state and mutual funds composed
   14-7  of these obligations;
   14-8              (8)  an investment instrument, obligation, or other
   14-9  evidence of indebtedness the payment of which is directly or
  14-10  indirectly guaranteed by the full faith and credit of the United
  14-11  States;
  14-12              (9)  an investment, account, depository receipt, or
  14-13  deposit that is fully:
  14-14                    (A)  insured by the Federal Deposit Insurance
  14-15  Corporation, the Federal Savings and Loan Insurance Corporation, or
  14-16  a successor organization to one of those organizations; or
  14-17                    (B)  secured by securities described by
  14-18  Subdivision (2), (3), or (8) of this subsection;
  14-19              (10)  a collateralized mortgage obligation fully
  14-20  secured by securities or mortgages issued or guaranteed by the
  14-21  Government National Mortgage Association (GNMA) or any entity
  14-22  described by Subdivision (3) of this subsection;
  14-23              (11)  a security or evidence of indebtedness issued by
  14-24  the Farm Credit System Financial Assistance Corporation, the
  14-25  Private Export Funding Corporation, or the Export-Import Bank; and
   15-1              (12)  any other investment authorized for investment of
   15-2  state funds by the treasurer under Section 404.024, Government
   15-3  Code.
   15-4        (b) <(c)>  The board may not invest in or purchase
   15-5  obligations of a private corporation or other private business
   15-6  entity doing business in the Republic of South Africa unless the
   15-7  corporation or other entity:
   15-8              (1)  has:
   15-9                    (A)  adopted the Statement of Principles for
  15-10  South Africa as they existed in 1987, as described in the Report on
  15-11  the Signatory Companies to the Statement of Principles for South
  15-12  Africa published by Arthur D. Little, Inc., Cambridge,
  15-13  Massachusetts, and has obtained a performance rating in Category 1
  15-14  or 2 of the Statement of Principles for South Africa rating system
  15-15  as determined by Arthur D. Little, Inc.; or
  15-16                    (B)  agreed to the Code of Conduct that is
  15-17  enforced by the United States Department of State under Section
  15-18  208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
  15-19  and has received a rating of "Making Satisfactory Progress"; and
  15-20              (2)  does not supply strategic products or services for
  15-21  use by the government, military, or police of the Republic of South
  15-22  Africa.
  15-23        (c) <(d)>  In this section:
  15-24              (1)  "Direct security repurchase agreement" means an
  15-25  agreement under which the board buys, holds for a specified time,
   16-1  and then sells back any of the following securities, obligations,
   16-2  or participation certificates:
   16-3                    (A)  United States government securities;
   16-4                    (B)  direct obligations of or obligations the
   16-5  principal and interest of which are guaranteed by the United
   16-6  States;
   16-7                    (C)  direct obligations of or obligations
   16-8  guaranteed by the Federal Home Loan Banks, the Federal National
   16-9  Mortgage Association, the Federal Farm Credit System, the Student
  16-10  Loan Marketing Association, the Federal Home Loan Mortgage
  16-11  Corporation, or a successor organization to one of those
  16-12  organizations; or
  16-13                    (D)  any other investment instrument, obligation,
  16-14  or other evidence of indebtedness the payment of which is directly
  16-15  or indirectly guaranteed by the full faith and credit of the United
  16-16  States.
  16-17              (2)  "Doing business in the Republic of South Africa"
  16-18  means conducting or performing manufacturing, assembly, or
  16-19  warehousing operations within the Republic of South Africa and for
  16-20  a bank or other financial institution, lending money to the
  16-21  government of the Republic of South Africa or any of its agencies
  16-22  or instrumentalities.
  16-23              (3)  "Market value" means the fair and reasonable
  16-24  prevailing price at which a security is being sold on the open
  16-25  market at the time of the appraisement of the security by the
   17-1  board.
   17-2              (4)  "Reverse security repurchase agreement" means an
   17-3  agreement under which the board sells and after a specified time
   17-4  buys back any of the securities, obligations, or participation
   17-5  certificates listed in Paragraphs (A) through (D) of Subdivision
   17-6  (1) of this subsection.
   17-7              (5)  "Strategic products or services" means articles
   17-8  designated as arms, ammunition, or implements of war as provided by
   17-9  22 Code of Federal Regulations Part 121 or data processing
  17-10  equipment or computers sold for military or police use or for use
  17-11  in connection with restriction on travel within the Republic of
  17-12  South Africa by residents of that country.
  17-13        SECTION 1.21.  Section 161.174, Natural Resources Code, is
  17-14  amended to read as follows:
  17-15        Sec. 161.174.  USE OF FUND TO PAY PRINCIPAL AND INTEREST.
  17-16  <DIVISIONS; USE OF MONEY IN DIVISIONS TO PAY FOR VARIOUS BOND
  17-17  ISSUES.>  The principal of and interest on bonds issued by the
  17-18  board shall be paid from money in the fund as provided in the
  17-19  constitutional provision authorizing the bonds.  <(a)  A division
  17-20  consists of money attributable to bonds issued and sold under a
  17-21  single constitutional authorization and land purchased with money
  17-22  from that issue.>
  17-23        <(b)  If a division of the fund contains sufficient money to
  17-24  retire bonds secured by the division, the money attributable to
  17-25  that division, except that portion necessary to retire bonds in
   18-1  that division, may be used at the discretion and direction of the
   18-2  board to pay principal of and interest on and authorized expenses
   18-3  for other bonds issued and sold by the board.  However, the amount
   18-4  of money necessary to retire bonds in the division shall be set
   18-5  aside and shall remain a part of that division for the purpose of
   18-6  retiring those bonds.>
   18-7        <(c)  No use of money as provided in Subsection (b) of this
   18-8  section may be made contrary to the rights of a holder of bonds
   18-9  issued and sold by the board or violative of a contract to which
  18-10  the board is a party.>
  18-11        SECTION 1.22.  Section 161.175, Natural Resources Code, is
  18-12  amended to read as follows:
  18-13        Sec. 161.175.  USE OF FUND TO PAY <FOR> EXPENSES RELATED TO
  18-14  THE LAND.  (a)  The board may use money in the fund attributable to
  18-15  bonds that have been issued and sold to pay:
  18-16              (1)  expenses of surveying and monumenting the land and
  18-17  the tracts of land;
  18-18              (2)  the cost of constructing roads on the land or the
  18-19  tracts of land;
  18-20              (3)  legal fees, recordation fees, and advertising
  18-21  costs arising from the purchase and sale or resale of the land and
  18-22  the tracts of land; and
  18-23              (4)  other similar costs necessary or incidental to the
  18-24  purchase and sale of land acquired by the board.
  18-25        (b)  These expenses shall be added to the price of the land
   19-1  when sold or resold by the board.
   19-2        (c)  The board, at its discretion, may purchase supplies,
   19-3  materials, services, and equipment for use by the board in
   19-4  connection with improvements, repairs to, or maintenance of land,
   19-5  and roadways and improvements located on land, undertaken by the
   19-6  board under this Chapter to make the land more marketable or
   19-7  useable, without the necessity of soliciting or obtaining
   19-8  competitive bids.  <No money in the fund before November 11, 1967,
   19-9  may be used to pay the expenses listed in Subsection (a) of this
  19-10  section until there is sufficient money in the division to retire
  19-11  all bonds secured by the division, at which time, all money except
  19-12  that needed to retire the bonds secured by the division, which
  19-13  shall be retained in the division to retire the bonds, may be used
  19-14  to pay the expenses as fully as the money attributable to bonds.>
  19-15        SECTION 1.23.  Section 161.176, Natural Resources Code, is
  19-16  amended to read as follows:
  19-17        Sec. 161.176.  USE OF FUND TO PAY BOND EXPENSES.  <(a)>  The
  19-18  board may use money in the fund attributable to bonds issued and
  19-19  sold to pay:
  19-20              (1)  legal fees and fees for financial advice necessary
  19-21  in the opinion of the board to the sale of bonds;
  19-22              (2)  the expense of publishing notice of sale of an
  19-23  installment of bonds;
  19-24              (3)  the expense of printing the bonds;
  19-25              (4)  the expenses of issuance of the bonds, including
   20-1  the actual costs of travel, lodging, and meals of board members,
   20-2  officers or employees of the board, the <state> comptroller of
   20-3  public accounts, the State Treasurer, and the attorney general that
   20-4  are necessary in the opinion of the board to effectuate the
   20-5  issuance, rating, and delivery of the bonds;
   20-6              (5)  the cost of manually signing the bonds;
   20-7              (6)  remuneration to any agent employed by the board to
   20-8  pay the principal of and interest on the bonds;
   20-9              (7)  any amounts required to be paid to maintain the
  20-10  federal tax exemption of interest on the bonds; and
  20-11              (8)  all other costs, fees, and expenses relating to
  20-12  the issuance of the bonds.
  20-13        <(b)  No money in a division of the fund created before
  20-14  November 11, 1967, may be used to pay the expenses listed in
  20-15  Subsection (a) of this section until there is sufficient money for
  20-16  the division to retire all bonds secured by the division, at which
  20-17  time all money, except that which may be needed to retire the
  20-18  bonds, may be used to pay the expenses under Subsection (a) of this
  20-19  section as fully as money attributable to bonds issued and sold in
  20-20  the future.  The money in the division needed to retire the bonds
  20-21  shall remain in the division.>
  20-22        SECTION 1.24.  Section 161.179, Natural Resources Code, is
  20-23  amended to read as follows:
  20-24        Sec. 161.179.  SALE OF LAND AND LAND CONTRACTS <LEGISLATIVE
  20-25  APPROPRIATIONS>.  Notwithstanding any other provision of this
   21-1  chapter, the board may sell, at public or private sale, with or
   21-2  without public bidding, any or all of the land contracts and
   21-3  related land.  Proceeds from the sale shall be deposited in the
   21-4  fund or account from which such contracts or related land were sold
   21-5  and otherwise applied in the manner set forth in this chapter,
   21-6  except that at the direction of the board such sale proceeds may be
   21-7  used by the board, together with other available money, to
   21-8  discharge, pay, or redeem in whole or in part, outstanding bonds
   21-9  issued by the board.  <To the extent not otherwise appropriated by
  21-10  the constitution:>
  21-11        <(a)  During the existence of the fund, if the board
  21-12  determines that there will not be sufficient money in the fund
  21-13  during the following biennium to pay principal of or interest on
  21-14  the bonds or both principal and interest that are to come due
  21-15  during the following biennium, the legislature shall appropriate
  21-16  from the General Revenue Fund sufficient money to pay the
  21-17  obligations.>
  21-18        <(b)  The money appropriated shall be used to pay the
  21-19  obligations only if at the time the principal or interest or both
  21-20  actually become due there is not sufficient money in the fund to
  21-21  pay the amount due.>
  21-22        SECTION 1.25.  Subchapter E, Chapter 161, Natural Resources
  21-23  Code, is amended by adding Section 161.180 to read as follows:
  21-24        Sec. 161.180.  TEMPORARY TRANSFERS.  Amounts temporarily
  21-25  transferred from the fund to the veterans' housing assistance fund
   22-1  or the veterans' housing assistance fund II pursuant to the Texas
   22-2  Constitution shall be returned to the fund as soon as practicable.
   22-3  Investment earnings allocated by the board to the transferred
   22-4  amounts shall be credited to the fund as if the transfer had not
   22-5  been made.
   22-6        SECTION 1.26.  Section 161.211, Natural Resources Code, is
   22-7  amended to read as follows:
   22-8        Sec. 161.211.  (RESERVED <PURCHASE OF LAND AND PAYMENT OF
   22-9  BONDS>.  <(a)  A series of bonds is all bonds issued and sold in a
  22-10  single transaction as a single installment of bonds.>
  22-11        <(b)  To the extent not inconsistent with the constitution,
  22-12  money attributable to any series of bonds issued and sold by the
  22-13  board may be used for the purchase of land that is likewise located
  22-14  and owned, if the land is sold as provided in this chapter, for a
  22-15  period ending eight years after the date of sale of the series of
  22-16  bonds.>
  22-17        <(c)  As much of the money as is necessary to pay interest on
  22-18  the bonds issued and sold shall be set aside for that purpose in
  22-19  accordance with the resolution adopted by the board authorizing the
  22-20  issuance and sale of the series of bonds.>
  22-21        <(d)  At the end of the eight-year period, and until there is
  22-22  sufficient money to retire all the bonds, the money shall be set
  22-23  aside to retire the bonds issued and sold and to pay interest on
  22-24  them, together with any expenses, in accordance with the resolution
  22-25  authorizing the issuance and sale of the additional bonds.  Money
   23-1  coming into the fund not necessary to retire the bonds and pay
   23-2  interest on them shall be governed as provided in this chapter, to
   23-3  the extent not inconsistent with the constitution.>
   23-4        SECTION 1.27.  Section 161.216, Natural Resources Code, is
   23-5  amended to read as follows:
   23-6        Sec. 161.216.  Cost of Land to Board.  Except for forfeited
   23-7  land that may be resold by <to> the board at less than actual cost
   23-8  under Section 161.319 of this code, land shall not be sold by <to>
   23-9  the board at less than its actual cost.
  23-10        SECTION 1.28.  Section 161.222, Natural Resources Code, is
  23-11  amended to read as follows:
  23-12        Sec. 161.222.  Purchase Payments.  (a)  The purchaser shall
  23-13  make an initial payment in an amount set by the board's rules for
  23-14  land sold under this chapter.  <In no event shall the payment be
  23-15  more than $1,000 together with an additional down payment as
  23-16  provided in Sections 161.175 and 161.231 through 161.234 of this
  23-17  code or Subchapter G of this chapter>.
  23-18        (b)  The balance of the selling price shall be amortized over
  23-19  a period determined by the board not to exceed 40 years together
  23-20  with interest at a rate or rates (fixed, variable, floating or
  23-21  otherwise) as determined by the board.
  23-22        SECTION 1.29.  Section 161.319, subchapter H of Chapter 161,
  23-23  Natural Resources Code, is amended to read as follows:
  23-24        Sec. 161.319.  Resale of Forfeited Land.  (a)  Resale of
  23-25  forfeited land under this chapter may be made to the highest
   24-1  bidder, <but the sale shall be made only to a qualified purchaser
   24-2  under Article III, Section 49-b of the Texas Constitution,> and
   24-3  under terms and conditions and at the time and in the manner
   24-4  prescribed by the board in its rules, the provisions of this
   24-5  chapter notwithstanding.
   24-6        (b)  The board may reject any and all bids.
   24-7        (c)  If the successful bidder refuses to execute a contract
   24-8  of sale and purchase, the money submitted with such person's <his>
   24-9  bid is forfeited and shall be deposited in the State Treasury and
  24-10  credited to the fund.
  24-11                               ARTICLE 2
  24-12        SECTION 2.01.  Section 162.001, Natural Resources Code, is
  24-13  amended to read as follows:
  24-14        Sec. 162.001.  Definitions.  (a)  In this chapter:
  24-15              (1)  "Board" means the Veterans' Land Board.
  24-16              (2)  "Fund" means the veterans' housing assistance
  24-17  fund.
  24-18              (3)  "Home" means a dwelling within this state in which
  24-19  a veteran intends to reside as such veteran's <his> principal
  24-20  residence.
  24-21              (4)  "Lending institution" means a bank, trust company,
  24-22  savings bank, national banking association, savings and loan
  24-23  association, building and loan association, mortgage banker,
  24-24  mortgage company, credit union, life insurance company, or other
  24-25  financial institution that customarily provides service or aids in
   25-1  the financing of mortgages on single-family residential housing
   25-2  which has been approved for participation in the program by the
   25-3  board.  The term includes a holding company for any of the
   25-4  foregoing.
   25-5              (5)  "Loan" means a veterans' housing assistance loan
   25-6  made or acquired by the board under this chapter secured by a
   25-7  mortgage on a veteran's home.
   25-8              (6)  "Program" means the Veterans' Housing Assistance
   25-9  Program.
  25-10              (7)  "Commission" means the Texas Veterans Commission.
  25-11              (8)  "Veteran" means a person who:
  25-12                    (A)(i)  served not less than 90 continuous days,
  25-13  unless sooner discharged by reason of a service-connected
  25-14  disability, on active duty in the Army, Navy, Air Force, Coast
  25-15  Guard, United States Public Health Service (as constituted under 42
  25-16  U.S.C. 201 et seq.), or Marine Corps of the United States after
  25-17  September 16, 1940, and who on the date of filing a <his> loan
  25-18  application has not been dishonorably discharged from the branch of
  25-19  the service in which such person <he> served;
  25-20                          (ii)  has at least 20 years of active or
  25-21  reserve military service as computed when determining the person's
  25-22  eligibility to receive retired pay under applicable federal law; or
  25-23                          (iii)  has enlisted or received an
  25-24  appointment in the Texas National Guard, who has completed all
  25-25  initial active duty training required as a condition of the
   26-1  enlistment or appointment, and who on the date of filing the
   26-2  person's loan application has not been dishonorably discharged from
   26-3  the Texas National Guard;
   26-4                    (B)  at the time of such person's <his>
   26-5  enlistment, induction, commissioning, appointment, or drafting was
   26-6  a bona fide resident of this state or has resided in this state at
   26-7  least five years immediately before the date of filing an <his>
   26-8  application for a loan; and
   26-9                    (C)  at the time of such person's <his>
  26-10  application for a loan under this chapter is <a citizen of the
  26-11  United States and> a bona fide resident of this state.  The term
  26-12  includes the unmarried surviving spouse of a veteran who died or
  26-13  who is identified as missing in action <in the line of duty> if the
  26-14  deceased or missing veteran meets the requirements in this section,
  26-15  with the exception that the deceased or missing veteran need not
  26-16  have served 90 continuous days under Paragraph (A)(i) of this
  26-17  subdivision, and if the deceased or missing veteran was a bona fide
  26-18  resident of the state at time of enlistment, induction,
  26-19  commissioning, appointment, or drafting.
  26-20        (b)  Notwithstanding Subdivision (8) of Subsection (a) of
  26-21  this section, the board may by rule change the definition of
  26-22  "veteran" as necessary or appropriate to protect the best interests
  26-23  of the program <in response to changes in the laws of the United
  26-24  States as they may affect the program>.
  26-25        SECTION 2.02.  Section 162.001(a), Natural Resources Code, is
   27-1  amended by adding subdivision (9) to read as follows:
   27-2              (9)  "Veterans' housing assistance fund" means the
   27-3  Veterans' Housing Assistance Fund established pursuant to Article
   27-4  III, Section 49-b-1 of the Texas Constitution.
   27-5        SECTION 2.03.  Section 162.001(a), Natural Resources Code, is
   27-6  amended by adding subdivision (9) to read as follows:
   27-7              (9)  "Veterans' housing assistance fund" means the
   27-8  Veterans' Housing Assistance Fund established pursuant to Article
   27-9  III, Section 49-b-1 of the Texas Constitution or the Veterans'
  27-10  Housing Assistance Fund II established pursuant to Article III,
  27-11  Section 49-b-2 of the Texas Constitution; provided that each such
  27-12  fund shall be separate and distinct from the other such fund and
  27-13  the provisions of this chapter dealing with the fund shall relate
  27-14  to each such fund separately and to the assets, liabilities and
  27-15  administration of that fund.
  27-16        SECTION 2.04.  Section 162.002, Natural Resources Code, is
  27-17  amended to read as follows:
  27-18        Sec. 162.002.  Money and Interests Included in the Veterans'
  27-19  Housing Assistance Fund.  (a)  The veterans' housing assistance
  27-20  fund shall include:
  27-21              (1)  any interest of the board in <all> home mortgage
  27-22  loans made from money in such fund to veterans pursuant to this
  27-23  chapter including any insurance thereon or on the homes<, until the
  27-24  principal amount together with any interest and penalties due have
  27-25  been received by the board>;
   28-1              (2)  the proceeds derived from the sale or other
   28-2  disposition of the board's interest in such home mortgage loans;
   28-3              (3) <(2)>  the money attributable to any bonds issued
   28-4  and sold by the board to provide money for such <the> fund which
   28-5  shall include but shall not be limited to the proceeds from the
   28-6  issuance and sale of such bonds;
   28-7              (4) <(3)>  income, rents, and any other pecuniary
   28-8  benefit received by the board as a result of making these loans;
   28-9              (5) <(4)>  sums received by way of indemnity or
  28-10  forfeiture for the failure of any bidder for the purchase of any
  28-11  such bonds to comply with such person's <his> bid and accept and
  28-12  pay for such bonds; and amounts received by the board under any
  28-13  bond enhancement agreements with respect to any such bonds;
  28-14              (6) <(5)>  interest received from investments of any
  28-15  such money; and
  28-16              (7) <(6)>  any equitable interest in properties
  28-17  encumbered under this program and attributable to such fund.
  28-18        (b)  Money in the fund shall be deposited in the State
  28-19  Treasury to the credit of such <the> fund.
  28-20        SECTION 2.05.  Subchapter A, Chapter 162, Natural Resources
  28-21  Code, is amended by adding Section 162.005 to read as follows:
  28-22        Sec. 162.005.  SALE OF LOANS.  Notwithstanding any other
  28-23  provision of this chapter, the board may sell, at public or private
  28-24  sale, with or without public bidding, any or all of the loans in
  28-25  the fund.  Proceeds from the sale shall be deposited in such fund
   29-1  and otherwise applied in the manner set forth in this chapter,
   29-2  except that at the direction of the board such sale proceeds may be
   29-3  used by the board, together with other available money, to
   29-4  discharge, pay, or redeem, in whole or in part, outstanding bonds
   29-5  issued by the board under this chapter.
   29-6        SECTION 2.06.  Subchapter A, Chapter 162, Natural Resources
   29-7  Code, is amended by adding Section 162.006 to read as follows:
   29-8        Sec. 162.006.  TEMPORARY TRANSFERS.  Amounts temporarily
   29-9  transferred from either veterans' housing assistance fund to the
  29-10  veterans' land fund or to the other veterans' housing assistance
  29-11  fund pursuant to the Texas Constitution shall be returned to such
  29-12  fund as soon as practicable.  Investment earnings allocated by the
  29-13  board to the transferred amounts shall be credited to such fund as
  29-14  if the transfer had not been made.
  29-15        SECTION 2.07.  Section 162.011, Natural Resources Code, is
  29-16  amended to read as follows:
  29-17        Sec. 162.011.  Loans.  (a)  The board shall make or acquire
  29-18  loans with money from the veterans' housing assistance fund in
  29-19  accordance with this chapter and the rules adopted by the board.
  29-20        (b)  To qualify for a loan under this chapter, a person must
  29-21  be a veteran at the time such person <he> applies for the loan.  If
  29-22  an eligible veteran dies after filing an application, the surviving
  29-23  spouse may complete the transaction.
  29-24        (c)  The <A loan under this chapter may not exceed $45,000
  29-25  and the> final principal payment on any <the> loan under this
   30-1  chapter shall be made not later than 40 years after the date of the
   30-2  loan.  The Board shall determine the maximum principal amount of
   30-3  loans to any veteran that may be outstanding at any time; provided
   30-4  that a loan under this chapter to a veteran to finance the
   30-5  acquisition of a home may not exceed $45,000.<, and such a loan may
   30-6  not previously have been granted to the same veteran under this
   30-7  chapter.  The board in its discretion may waive this requirement
   30-8  for circumstances the board deems appropriate, including but not
   30-9  limited to veterans who financed homes with a loan under this
  30-10  chapter who are forced to move due to a change in employment or
  30-11  because their homes are condemned through no fault of the veteran>.
  30-12        (d)  The board shall obtain insurance covering at least 50
  30-13  percent of all losses anticipated in connection with veteran
  30-14  payment defaults on loans secured by first or second mortgages,
  30-15  based upon the advice of one or more qualified consultants to the
  30-16  board as to potential losses which may be reasonably expected on
  30-17  the loans as determined by analysis, including but not limited to
  30-18  actual experience in the residential mortgage lending industry on
  30-19  similar types of mortgage loans, or, in the alternative, the board
  30-20  shall obtain insurance which shall insure repayment of at least 50
  30-21  percent of the outstanding principal amount of all loans in the
  30-22  event of the nonpayment of the loans by the veterans.
  30-23        (e)  <Funds approved for disbursement under this chapter
  30-24  shall be forwarded directly to a lending institution.>
  30-25        <(f)>  All fees to be charged to a veteran receiving a loan
   31-1  under this chapter must be approved by the board.  The board may
   31-2  enter into contracts with lending institutions to assist in
   31-3  processing, originating, servicing, or administering loans under
   31-4  this chapter.  Any fees and expenses incurred in connection with a
   31-5  loan, including the cost of insurance, may be charged to the
   31-6  veteran and made a part of the veteran's payments.
   31-7        SECTION 2.08.  Section 162.013, Natural Resources Code, is
   31-8  amended to read as follows:
   31-9        Sec. 162.013.  Interest Rate.  A loan under this chapter
  31-10  shall bear a <an interest> rate or rates of interest (fixed,
  31-11  variable, floating or otherwise) as determined <fixed> by the
  31-12  board.  The board may set the interest rate or rates to provide a
  31-13  margin over the rate paid by the board on its bonds issued under
  31-14  this chapter.  The difference between the cost of the money to the
  31-15  board and the interest rate or rates charged to a veteran may be
  31-16  used in whole or in part to defray the expense of administering the
  31-17  program.   To assure the maximum benefit of the program to the
  31-18  veteran, the board shall adopt rules relative to the fees, charges,
  31-19  and interest rates charged by the lending institutions on the
  31-20  financing of the home with money other than from the fund and shall
  31-21  limit to the maximum extent practical such fees, charges, and
  31-22  interest rates to those which would be collected by the lending
  31-23  institution in the normal course of its residential mortgage
  31-24  lending business.
  31-25        SECTION 2.09.  Section 162.015, Natural Resources Code, is
   32-1  amended to read as follows:
   32-2        Sec. 162.015.  Initial Payment or Equity.  The board may
   32-3  require an initial payment on a loan <of not more than five percent
   32-4  of the loan> or may require an investment in the home by the
   32-5  veteran in an amount or amounts set by the board's rules under this
   32-6  chapter <not to exceed five percent of the amount of the loan>.
   32-7        SECTION 2.10.  Section 162.031, Natural Resources Code, is
   32-8  amended to read as follows:
   32-9        Sec. 162.031.  Issuance and Sale of Bonds; Disposition of
  32-10  Proceeds.  (a) By appropriate action, the board may provide by
  32-11  resolution for the issuance and sale of negotiable bonds authorized
  32-12  by the constitution, and the proceeds shall be a part of the fund;
  32-13  provided that the proceeds of bonds issued pursuant to the
  32-14  authority of Article III, Section 49-b-1 for the purpose of making
  32-15  loans to veterans shall be a part of the veterans' housing
  32-16  assistance fund established by that constitutional provision and
  32-17  the proceeds of bonds issued pursuant to the authority of Article
  32-18  III, Section 49-b-2 for the purpose of making loans to veterans
  32-19  shall be a part of the veterans' housing assistance fund
  32-20  established by that constitutional provision.
  32-21        (b)  The board may use money in the fund attributable to
  32-22  bonds issued to provide money for such fund to pay all costs of
  32-23  issuance of such <the> bonds, including costs, fees, and expenses
  32-24  of the sort the board is authorized to pay from the veterans' land
  32-25  fund in connection with the issuance of the veterans' land bonds.
   33-1        SECTION 2.11.  Section 162.034, Natural Resources Code, is
   33-2  amended to read as follows:
   33-3        Sec. 162.034.  Payment and Maturity of Bonds.  (a)  The bonds
   33-4  shall be payable as provided by the board and shall mature serially
   33-5  or otherwise <not later than 40 years from the date of their
   33-6  issuance>.
   33-7        (b)  The board may make the bonds redeemable or subject to
   33-8  tender for purchase before maturity at the price and under the
   33-9  terms and conditions fixed by the board in the resolution providing
  33-10  for the issuance and sale of the bonds.
  33-11        SECTION 2.12.  Section 162.036, Natural Resources Code, is
  33-12  amended to read as follows:
  33-13        Sec. 162.036.  Manner of Execution.  (a)  The bonds shall be
  33-14  executed by and on behalf of the board and the state as obligations
  33-15  of the state in the manner provided in Subsection (b) of this
  33-16  section.
  33-17        (b)  The bonds shall be signed by the chairman and the
  33-18  executive secretary of the board and the seal of the board shall be
  33-19  impressed on the bonds.  In addition, the bonds shall be signed by
  33-20  the governor and attested by the secretary of state with the seal
  33-21  of the state impressed on the bonds.
  33-22        SECTION 2.13.  Section 162.044, Natural Resources Code, is
  33-23  amended to read as follows:
  33-24        Sec. 162.044.  Sale of Bonds.  Bonds <The bonds> may be sold
  33-25  (at public or private sale) at a price or prices and on terms
   34-1  determined by the board <after competitive bidding to the highest
   34-2  and best bidder provided the bonds are sold for not less than par
   34-3  value and accrued interest>.
   34-4        SECTION 2.14.  Section 162.047, Natural Resources Code, is
   34-5  amended to read as follows:
   34-6        Sec. 162.047.  Bonds as Investments and Security.  (a)  Bonds
   34-7  issued under <Article III, Section 49-b-1, of the Texas
   34-8  Constitution and> this chapter are legal and authorized investments
   34-9  for banks, savings banks, trust companies, building and loan
  34-10  associations, insurance companies, fiduciaries, trustees,
  34-11  guardians, and the sinking funds of cities, towns, villages,
  34-12  counties, school districts, and other political subdivisions and
  34-13  public agencies of the state.
  34-14        (b)  The bonds are legal and sufficient security for the
  34-15  deposits in the amount of the par value of the bonds.
  34-16        SECTION 2.15.  Section 162.050, Natural Resources Code, is
  34-17  amended to read as follows:
  34-18        Sec. 162.050.  Constitutional Appropriations.  (a)  If,
  34-19  during the existence of the fund or during the time any general
  34-20  obligation bonds are payable from such <the> fund, the board
  34-21  determines that there will not be sufficient money in such <the>
  34-22  fund during the following biennium available to pay principal of or
  34-23  interest on the bonds or both principal and interest that are to
  34-24  come due and to be paid from such fund during the following
  34-25  biennium, the comptroller of public accounts shall transfer to such
   35-1  <the> fund the first money coming into the State Treasury not
   35-2  otherwise appropriated by the constitution in amounts sufficient to
   35-3  pay the obligations.
   35-4        (b)  The money appropriated shall be used to pay the
   35-5  obligations only if at the time the principal or interest or both
   35-6  actually become due there is not sufficient money in such <the>
   35-7  fund available to pay the amount due.
   35-8        SECTION 2.16.  Subchapter C, Chapter 162, Natural Resources
   35-9  Code, is amended by adding Section 162.051 to read as follows:
  35-10        Sec. 162.051.  PURCHASE AND DESTRUCTION OF BONDS.  (a)  The
  35-11  board may use money in the fund to purchase on the open market any
  35-12  bonds it has issued and sold to provide money for such fund, and
  35-13  the debt represented by these bonds when purchased is considered
  35-14  canceled.
  35-15        (b)  Bonds purchased by the board under Subsection (a) of
  35-16  this section shall be mutilated, burned or otherwise destroyed by
  35-17  the State Treasurer, who shall certify this fact to the board under
  35-18  the seal of office.
  35-19        (c)  No further interest shall be paid on these bonds.
  35-20        SECTION 2.17.  Subchapter C, Chapter 162, Natural Resources
  35-21  Code, is amended by adding Section 162.052 to read as follows:
  35-22        Sec. 162.052.  BOND ENHANCEMENT AGREEMENTS.  The board may,
  35-23  at any time and from to time, enter into one or more bond
  35-24  enhancement agreements which the board deems to be necessary or
  35-25  appropriate to place the obligation of the board, as represented by
   36-1  the bonds, in whole or in part, on the interest rate, currency,
   36-2  cash flow, or other basis desired by the board, including, without
   36-3  limitation, bond enhancement agreements commonly known as interest
   36-4  rate swap agreements, currency swap agreements, forward payment
   36-5  conversion agreements, or agreements providing for payments based
   36-6  on levels of or changes in interest rates or currency exchange
   36-7  rates, or agreements to exchange cash flows or a series of
   36-8  payments, or agreements including, without limitation, options,
   36-9  puts or calls to hedge payment, currency, rate, spread, or other
  36-10  exposure, all upon such terms and conditions as may be approved by
  36-11  the board.  A bond enhancement agreement is an agreement for
  36-12  professional services and shall contain the terms and conditions
  36-13  and be for the period that the board approves.  The fees and
  36-14  expenses of the board in connection with the issuance of bonds and
  36-15  the making of loans may be paid from moneys in the related fund,
  36-16  provided that any payments due from the board under any bond
  36-17  enhancement agreement (other than fees and expenses) which relate
  36-18  to the payment of debt service on any bonds shall constitute, and
  36-19  for all purposes shall be deemed to be, payments of principal of
  36-20  and interest on such bonds.
  36-21                               ARTICLE 3
  36-22        SECTION 3.01.  The Natural Resources Code is amended by
  36-23  adding chapter 164, to read as follows:
  36-24         CHAPTER 164.  VETERANS' FINANCIAL ASSISTANCE PROGRAM
  36-25        Sec. 164.001.  PURPOSE AND POLICY.  (a)  The legislature
   37-1  declares that it is the policy of the state to provide financial
   37-2  assistance to veterans of the state in recognition of their service
   37-3  to their state and the United States of America.
   37-4        (b)  The legislature declares that existing mechanisms for
   37-5  implementing the policy stated in subsection (a) of this section
   37-6  may be enhanced by adoption of this chapter and implementation of
   37-7  the financial assistance programs authorized hereby.
   37-8        (c)  The legislature finds that this chapter and the
   37-9  financial assistance programs authorized hereby are in furtherance
  37-10  of a public purpose.
  37-11        Sec. 164.002.  DEFINITIONS.  (a)  In this chapter:
  37-12              (1)  "Board" means the Veterans' Land Board.
  37-13              (2)  "Bonds" means the revenue bonds issued by the
  37-14  board pursuant to this chapter.
  37-15              (3)  "Financial assistance" means the purchase of land
  37-16  and the sale thereof to veterans and the making of home mortgage
  37-17  loans to veterans, all as provided for in this chapter.
  37-18              (4)  "Home" means a dwelling within this state in which
  37-19  a veteran intends to reside as such veteran's principal residence.
  37-20              (5)  "Lending institution" means a bank, trust company,
  37-21  savings bank, national banking association, savings and loan
  37-22  association, building and loan association, mortgage banker,
  37-23  mortgage company, credit union, life insurance company, or other
  37-24  financial institution that customarily provides service or aids in
  37-25  the financing of mortgages on single-family residential housing
   38-1  which has been approved for participation by the board.  This
   38-2  includes a holding company for any of the foregoing.
   38-3              (6)  "Veteran" means a person who:
   38-4                    (A)(i)  served not less than 90 continuous days,
   38-5  unless sooner discharged by reason of a service-connected
   38-6  disability, on active duty in the Army, Navy, Air Force, Coast
   38-7  Guard, United States Public Health Service (as constituted under 42
   38-8  U.S.C. 201 et seq.), or Marine Corps of the United States after
   38-9  September 16, 1940, and who on the date of filing an application
  38-10  for financial assistance under this chapter has not been
  38-11  dishonorably discharged from the branch of the service in which
  38-12  such person served;
  38-13                          (ii)  has at least 20 years of active or
  38-14  reserve military service as computed when determining the person's
  38-15  eligibility to receive retired pay under applicable federal law; or
  38-16                          (iii)  has enlisted or received an
  38-17  appointment in the Texas National Guard, who has completed all
  38-18  initial active duty training required as a condition of the
  38-19  enlistment or appointment, and who on the date of filing the
  38-20  person's application has not been dishonorably discharged from the
  38-21  Texas National Guard;
  38-22                    (B)  at the time of such person's enlistment,
  38-23  induction, commissioning, appointment, or drafting was a bona fide
  38-24  resident of this state or has resided in this state at least one
  38-25  year immediately before the date of filing an application; and
   39-1                    (C)  at the time of such person's application
   39-2  under this chapter is a bona fide resident of this state.  The term
   39-3  includes the unmarried surviving spouse of a veteran who died or
   39-4  who is identified as missing in action if the deceased or missing
   39-5  veteran meets the requirements in this section, with the exception
   39-6  that the deceased or missing veteran need not have served 90
   39-7  continuous days under Paragraph (A)(i) of this subdivision, and if
   39-8  the deceased or missing veteran was a bona fide resident of the
   39-9  state at the time of enlistment, induction, commissioning,
  39-10  appointment or drafting.
  39-11        (b)  Notwithstanding Subdivision (6) of Subsection (a) of
  39-12  this section, the board may by rule change the definition of
  39-13  "veteran" as necessary or appropriate to protect the best interests
  39-14  of the program.
  39-15        Sec. 164.003.  FINANCIAL ASSISTANCE PROGRAMS.  The board may
  39-16  establish one or more programs for providing financial assistance
  39-17  to veterans under this chapter.  Any such program may be limited to
  39-18  the purpose of purchasing land and making the sale thereof to
  39-19  veterans or the purpose of making home mortgage loans to veterans,
  39-20  or may be for both such purposes.  To the extent any such financial
  39-21  assistance program is for the purpose of purchasing land and making
  39-22  the sale thereof to veterans, such program shall be administered,
  39-23  to the extent consistent with this chapter and otherwise deemed
  39-24  practicable and desirable by the board, in accordance with the
  39-25  board's Veterans' Land Program, and to the extent any such
   40-1  financial assistance program is for the purpose of making home
   40-2  mortgage loans to veterans, such program shall be administered, to
   40-3  the extent consistent with this chapter and otherwise deemed
   40-4  practicable and desirable by the board, in accordance with the
   40-5  board's Veterans' Housing Assistance Program.
   40-6        Sec. 164.004.  RULES.  The board shall adopt rules providing
   40-7  for the administration of its financial assistance programs
   40-8  established pursuant to this chapter, including rules concerning
   40-9  the purchasing of land and making the sale thereof to veterans, the
  40-10  making of home mortgage loans to veterans, the use of insurance on
  40-11  such land and homes as deemed appropriate by the board, as further
  40-12  security for land sold or home mortgage loans made, the criteria
  40-13  for approving lending institutions participating in such programs,
  40-14  the terms and conditions of any contract made with any such lending
  40-15  institution, and such other matters as the board deems appropriate.
  40-16        Sec. 164.005.  RIGHTS AND POWERS OF BOARD.  In connection
  40-17  with the administration of its financial assistance programs under
  40-18  this chapter, the board shall have and may exercise, to the extent
  40-19  not inconsistent with this chapter, all the rights and powers
  40-20  granted to it by chapters 161 and 162 of this code relating to the
  40-21  administration of the board's Veterans' Land Program and Veterans'
  40-22  Housing Assistance Program.
  40-23        Sec. 164.006.  ISSUANCE OF BONDS.  For the issuance of bonds
  40-24  under this chapter, the board may exercise the authority granted to
  40-25  the governing body of an issuer with regard to issuance of
   41-1  obligations under Chapter 656, Acts of the 68th Legislature,
   41-2  Regular Session, 1983 (Article 717q, Vernon's Texas Civil
   41-3  Statutes), to the extent that it is not inconsistent with this
   41-4  chapter.
   41-5        Sec. 164.007.  CONDITIONS FOR ISSUANCE OF BONDS.  (a)  Bonds
   41-6  may be issued in various series and issues.
   41-7        (b)  Bonds shall be payable as provided by the board and may
   41-8  mature serially or otherwise.
   41-9        (c)  Bonds shall be redeemable before maturity or subject to
  41-10  tender for purchase at the price or prices and under the terms and
  41-11  conditions fixed by the board in the resolution providing for the
  41-12  issuance and sale of the bonds.
  41-13        (d)  Bonds may bear the rate or rates of interest (fixed,
  41-14  variable, floating or otherwise), or may bear no interest, as
  41-15  determined by the board.
  41-16        (e)  Bonds may be sold (at public or private sale) at a price
  41-17  or prices and on terms determined by the board.
  41-18        Sec. 164.008.  FORM OF BONDS.  (a)  The bonds may be issued
  41-19  in the form, denominations, and manner and under the terms,
  41-20  conditions, and details as provided by the board in the resolution
  41-21  authorizing their existence.
  41-22        (b)  The bonds shall be signed and executed as provided by
  41-23  the board's resolution or order authorizing the issuance of the
  41-24  bonds.
  41-25        Sec. 164.009.  SECURITY FOR THE BONDS.  The bonds issued
   42-1  under this chapter shall be special obligations of the board.   As
   42-2  security for the payment of the bonds, the board may provide for a
   42-3  pledge of and lien on (i) the receipts of all kinds of the
   42-4  veterans' land fund and the veterans' housing assistance fund
   42-5  determined by the board (on the basis of facts, circumstances and
   42-6  expectations at the time of issuance of such bonds) not to be
   42-7  required to pay the principal of or interest on the general
   42-8  obligation bonds issued pursuant to Article III, Sections 49-b and
   42-9  49-b-1 of the Texas Constitution (or to make payments with respect
  42-10  to principal or interest under any bond enhancement agreement with
  42-11  respect to such general obligation bonds), (ii) the assets of the
  42-12  veterans' land fund or the veterans' housing assistance fund
  42-13  determined by the board (on the basis of facts, circumstances and
  42-14  expectations at the time of issuance of such bonds) not to be
  42-15  required for the purposes thereof, (iii) the repayments received by
  42-16  the board from financial assistance provided under this chapter,
  42-17  (iv) other program revenues, and (v) other lawfully available
  42-18  revenues of the board, such pledge and lien to be provided for, and
  42-19  determined in accordance with, the resolution of the board
  42-20  providing for the issuance and sale of the bonds.
  42-21        Sec. 164.010.  BOND ENHANCEMENT AGREEMENTS.  The board may,
  42-22  at any time and from to time, enter into one or more bond
  42-23  enhancement agreements which the board deems to be necessary or
  42-24  appropriate to place the obligation of the board, as represented by
  42-25  the bonds, in whole or in part, on the interest rate, currency,
   43-1  cash flow, or other basis desired by the board, including, without
   43-2  limitation, bond enhancement agreements commonly known as interest
   43-3  rate swap agreements, currency swap agreements, forward payment
   43-4  conversion agreements, or agreements providing for payments based
   43-5  on levels of or changes in interest rates or currency exchange
   43-6  rates, or agreements to exchange cash flows or a series of
   43-7  payments, or agreements including, without limitation, options,
   43-8  puts or calls to hedge payment, currency, rate, spread, or other
   43-9  exposure, all upon such terms and conditions as may be approved by
  43-10  the board.  A bond enhancement agreement is an agreement for
  43-11  professional services and shall contain the terms and conditions
  43-12  and be for the period that the board approves.  The cost to the
  43-13  board of the bond enhancement agreement may be paid from the
  43-14  proceeds of the sale of the bonds to which the bond enhancement
  43-15  agreement relates or from any other source, including the revenues
  43-16  of the board that are available for the purpose of paying the bonds
  43-17  or that may otherwise be legally available to make those payments.
  43-18        Sec. 164.011.  FUNDS.  (a)  In the resolution authorizing the
  43-19  issuance of bonds, the board may make additional covenants with
  43-20  respect to the bonds and the pledged revenues and may provide for
  43-21  the flow of funds and the establishment, maintenance, and
  43-22  investment of funds.
  43-23        (b)  The funds established may include an interest and
  43-24  sinking fund, a reserve fund, and other funds that will be kept and
  43-25  maintained by or under the direction of the board.
   44-1        (c)  Any funds established by the board pursuant to this
   44-2  chapter are not to be part of the state treasury but, at the
   44-3  direction of the board, may be kept and held in escrow and in trust
   44-4  by the state treasury on behalf of the board and the owners of the
   44-5  bonds and used only as provided by this chapter.
   44-6        (d)  Money in the funds shall be invested in authorized
   44-7  investments as provided by any bond resolutions and orders of the
   44-8  board.
   44-9        (e)  Legal title to money in any fund is in the board unless
  44-10  or until paid from the fund as provided by this chapter or the
  44-11  resolutions authorizing the issuance of the bonds.
  44-12        (f)  The state treasurer, as custodian of any of the funds,
  44-13  shall administer the funds solely and strictly as provided by this
  44-14  chapter and the resolutions authorizing the issuance of the bonds,
  44-15  and the state may not take any other action relating to any of
  44-16  those funds except those specified in this chapter and the
  44-17  resolutions authorizing the issuance of the bonds.
  44-18        Sec. 164.012.  RESOLUTIONS, ORDERS, ETC.  (a)  The
  44-19  resolutions authorizing the issuance of the bonds may prohibit the
  44-20  further issuance of bonds or other obligations payable from the
  44-21  pledged revenues or may reserve the right to issue additional bonds
  44-22  to be secured by a pledge of and payable from the revenue on a
  44-23  parity with or subordinate to the lien and pledge in support of the
  44-24  bonds being issued.
  44-25        (b)  The resolutions of the board authorizing the issuance of
   45-1  the bonds may include other provisions and covenants that the board
   45-2  determines necessary.
   45-3        (c)  In a resolution authorizing the issuance of the bonds,
   45-4  the board may prescribe systems, methods, routines, and procedures
   45-5  under which the board will function.
   45-6        (d)  The board may adopt and have executed any other
   45-7  proceedings or instruments necessary and convenient in the issuance
   45-8  of bonds.
   45-9        Sec. 164.013.  INVESTMENT SECURITIES.  The bonds and any
  45-10  interest coupons are investment securities under Chapter 8,
  45-11  Business & Commerce Code, and may be issued registrable as to
  45-12  principal or as to both principal and interest or may be made
  45-13  redeemable before maturity at the option of the authority or may
  45-14  contain a mandatory redemption provision.
  45-15        Sec. 164.014.  APPROVAL OF THE ATTORNEY GENERAL.  The bonds
  45-16  issued under this chapter are subject to review and approval by the
  45-17  attorney general in the same manner and with the same effect as
  45-18  provided by Chapter 656, Acts of the 68th Legislature, Regular
  45-19  Session, 1983 (Article 717q, Vernon's Texas Civil Statutes).
  45-20        Sec. 164.015.  REFUNDING BONDS.  (a)  The board may issue
  45-21  refunding bonds to refund all or part of its outstanding bonds
  45-22  issued under this chapter, including matured but unpaid interest.
  45-23        (b)  The board may refund bonds in the manner provided by
  45-24  general law for revenue bonds.
  45-25        Sec. 164.016.  BONDS AS INVESTMENTS AND SECURITY.  (a)  The
   46-1  bonds are legal and authorized investments for banks, savings
   46-2  banks, trust companies, savings and loan companies, insurance
   46-3  companies, fiduciaries, trustees, guardians, and the sinking funds
   46-4  of cities, towns, villages, counties, school districts, and other
   46-5  political subdivisions of the state and other public funds of the
   46-6  state and its agencies.
   46-7        (b)  The bonds are eligible to secure deposits of public
   46-8  funds of the state and cities, counties, school districts, and
   46-9  other political subdivisions of the state.  The bonds are lawful
  46-10  and sufficient security for deposits to the extent of their par
  46-11  value.
  46-12        Sec. 164.017.  TAX EXEMPT.  Since the board is performing an
  46-13  essential governmental function in the exercise of the powers
  46-14  conferred on it by this chapter, the bonds issued under this
  46-15  chapter, and the interest and income from the bonds, including any
  46-16  profit made on the sale of bonds, and all fees, charges, gifts,
  46-17  grants, revenues, receipts, and other money received or pledged to
  46-18  pay or secure the payment of bonds are free from taxation and
  46-19  assessments of every kind by this state and any city, county,
  46-20  district, authority, or other political subdivision of this state.
  46-21        Sec. 164.018.  NO PLEDGE OF STATE FAITH AND CREDIT; COVENANT
  46-22  WITH OWNERS OF BONDS.  (a)  The bonds issued under this chapter are
  46-23  special obligations of the board and are payable only from and
  46-24  secured only by the revenues and assets pledged to secure payment
  46-25  of such bonds pursuant to the Texas Constitution and this chapter
   47-1  and such bonds are not and do not create or constitute a pledge,
   47-2  giving, or lending of the faith or credit or taxing authority of
   47-3  the state.
   47-4        (b)  Each bond must include a statement that the faith or
   47-5  credit and the taxing authority of the state is not pledged, given,
   47-6  or loaned to secure payment of the principal of, premium or
   47-7  interest on the bonds.
   47-8        (c)  The state pledges to and agrees with the owners of any
   47-9  bonds issued in accordance with this chapter that the state will
  47-10  not limit or alter the rights vested in the board to fulfill the
  47-11  terms of any agreements made with the owners of the bonds or, in
  47-12  any way, impair the rights and remedies of those owners until the
  47-13  bonds, together with any premium and interest, interest on any
  47-14  unpaid premium or installments of interest, and all costs and
  47-15  expenses in connection with any action or proceeding by or on
  47-16  behalf of those owners, are fully met and discharged.  The board
  47-17  may include this pledge and agreement of the state in any agreement
  47-18  with the owners of bonds.
  47-19        Sec. 164.019.  ENFORCEMENT BY MANDAMUS.  A writ of mandamus
  47-20  and all other legal and equitable remedies are available to any
  47-21  party in interest to require the board and any other party to carry
  47-22  out agreements and to perform functions and duties under this
  47-23  chapter, the Texas Constitution, or the board's bond resolutions
  47-24  and orders.
  47-25        SECTION 3.02.  Upon the adoption by the voters of the
   48-1  constitutional amendment proposed by ___J.R. No.____ 73rd
   48-2  Legislature, Regular Session 1993, Section 164.009, Natural
   48-3  Resources Code, as added by SECTION 3.01 of this Act is amended to
   48-4  read as follows:
   48-5        Sec. 164.009.  SECURITY FOR THE BONDS.  The bonds issued
   48-6  under this chapter shall be special obligations of the board.   As
   48-7  security for the payment of the bonds, the board may provide for a
   48-8  pledge of and lien on (i)  the receipts of all kinds of the
   48-9  veterans' land fund, the veterans' housing assistance fund and the
  48-10  veterans' housing assistance fund II determined by the board (on
  48-11  the basis of facts, circumstances and expectations at the time of
  48-12  issuance of such bonds) not to be required to pay the principal of
  48-13  or interest on the general obligation bonds issued pursuant to
  48-14  Article III, Sections 49-b, 49-b-1 and 49-b-2 of the Texas
  48-15  Constitution (or to make payments with respect to principal or
  48-16  interest under any bond enhancement agreement with respect to such
  48-17  general obligation bonds), (ii)  the assets of the veterans' land
  48-18  fund, the veterans' housing assistance fund or the veterans'
  48-19  housing assistance fund II determined by the board (on the basis of
  48-20  facts, circumstances and expectations at the time of issuance of
  48-21  such bonds) not to be required for the purposes thereof, (iii)  the
  48-22  repayments received by the board from financial assistance provided
  48-23  under this chapter, (iv)  other program revenues, and (v)  other
  48-24  lawfully available revenues of the board, such pledge and lien to
  48-25  be provided for, and determined in accordance with, the resolution
   49-1  of the board providing for the issuance and sale of the bonds.
   49-2                               ARTICLE 4
   49-3        SECTION 4.01.  The State Purchasing and General Services Act,
   49-4  Art. 601b V.T.C.S., is amended by adding Section 3.052, to read as
   49-5  follows:
   49-6        Sec. 3.052.  PURCHASES BY THE VETERANS' LAND BOARD.  (a)
   49-7  This Act, including without limitation Articles 5 and 9 of this
   49-8  Act, does not apply to purchases of supplies, materials, services,
   49-9  or equipment for use by the Veterans' Land Board in connection with
  49-10  improvements or repairs to, or maintenance of, land, or other
  49-11  activities undertaken by the Veterans' Land Board with respect to
  49-12  land under the provisions of Section 161.175, Natural Resources
  49-13  Code.
  49-14                               ARTICLE 5
  49-15        SECTION 5.01.  SEVERABILITY.  If any provision of this Act or
  49-16  its application to any person or circumstance is held invalid, the
  49-17  invalidity does not affect other provisions or applications of this
  49-18  Act that can be given effect without the invalid provision or
  49-19  application, and to this end the provisions of this Act are
  49-20  declared to be severable.
  49-21        SECTION 5.02.  EMERGENCY.  The importance of this legislation
  49-22  and the crowded condition of the calendars in both houses create an
  49-23  emergency and an imperative public necessity that the
  49-24  constitutional rule requiring bills to be read on three several
  49-25  days in each house be suspended, and this rule is hereby suspended
   50-1  and that this Act take effect and be in force from and after its
   50-2  passage, except SECTIONS 1.25, 2.03, 2.06, 2.10 and 3.02, which
   50-3  shall take effect on the adoption by the voters of the
   50-4  constitutional amendment proposed by ___J.R.  No.____, 73rd
   50-5  Legislature, Regular Session, 1993 and it is intended that on the
   50-6  adoption of such constitutional amendment SECTION 2.03 shall
   50-7  supersede and replace SECTION 2.02 of this Act and that SECTION
   50-8  2.02 shall have no further effect.  If that amendment is not
   50-9  approved, SECTIONS 1.25, 2.03, 2.06, 2.10 and 3.02 of this Act have
  50-10  no effect.  It is so enacted.