By Giddings H.B. No. 1997
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the guarantee of certain loans by the Texas Department
1-3 of Commerce.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 481.191, Subchapter N, Government Code is
1-6 amended by adding Subsections 4 and 5 to read as follows:
1-7 (5) "Private lender" means a bank, savings bank,
1-8 savings and loan association, trust company, municipal corporation
1-9 or insurance company, or an individual that the department
1-10 determines is a state depository and an experienced and
1-11 sophisticated investor.
1-12 (6) "Project" means land, equipment, or a building,
1-13 facility, or improvement and working capital determined by the
1-14 department to be required or suitable for the promotion of and for
1-15 use by enterprise, regardless of whether the land, equipment,
1-16 building, facility, or improvement existed before the department's
1-17 determination or was acquired or constructed after that
1-18 determination.
1-19 SECTION 2. Section 481, Subchapter N, Government Code, is
1-20 amended by adding the following sections to read as follows:
1-21 SECTION 481.198. PURPOSE. The legislature finds that:
1-22 (a) the health, safety, right to gainful employment, and
1-23 general welfare of the people of the state require as a public
2-1 purpose the promotion and development of new and expanded
2-2 enterprises; and
2-3 (b) communities in this state are at a critical disadvantage
2-4 in competing with communities in other states for location or
2-5 expansion of enterprises because of the availability in other
2-6 states of financing and other special incentives.
2-7 Sec. 481.199. LOAN GUARANTEES. (a) The Department may
2-8 guarantee not more than 50 percent of a loan made by a private
2-9 lender or to make loans to fund a project. For each guarantee the
2-10 department shall determine:
2-11 (1) that the project is sponsored by a historically
2-12 underutilized business or a small business located in a distressed
2-13 community;
2-14 (2) the amount of equity the user must pledge or apply
2-15 to the establishment of the project;
2-16 (3) the fees charged by the department, including
2-17 guarantee fees, application fees, annual fees, and any other costs
2-18 associated with the loan guarantee or loan, as necessary to fund
2-19 the administration of this subchapter;
2-20 (4) the maximum and minimum guarantee or loan amounts,
2-21 if applicable;
2-22 (5) the permissible interest rates and amortization
2-23 requirements for a guaranteed loan, as agreed on by the private
2-24 lender, the user, and the department;
2-25 (6) the acceptable security of the department's
3-1 participation in a project; and
3-2 (7) any other terms or conditions relating to a
3-3 guarantee.
3-4 (b) The department may not make a loan guarantee, except on
3-5 approval of a qualified application submitted by a user or private
3-6 lender for a project.
3-7 (c) On approval of a qualified application, the department
3-8 may provide a loan guarantee of not more than 50 percent of the
3-9 cost of the project to a participating lender, if the user holds
3-10 funds or property in an amount or value equal to not less than 10
3-11 percent of the cost of the project and those funds or property are
3-12 then available for and are pledged to be applied to the
3-13 establishment of the project.
3-14 (d) Before making a loan guarantee, the department must have
3-15 determined that the user has obtained from other independent and
3-16 responsible financial sources a firm commitment for all other funds
3-17 in excess of the loan guaranteed by the department, and that the
3-18 sum of those funds and the equity to be provided by the user are
3-19 adequate for the completion and operation of the project.
3-20 (e) This chapter does not prohibit the use of money in the
3-21 Texas Historically Underutilized Business Linked Deposit Program
3-22 fund in conjunction with any other money available for the purposes
3-23 of this chapter.
3-24 (f) The department shall report to the comptroller the name
3-25 of any user who is in default on a loan guaranteed or loan made
4-1 under this subchapter and with respect to which the department has
4-2 been required to honor a guarantee. The comptroller may not issue
4-3 a warrant to the user while the user is in default.
4-4 SECTION 481.200. PAYMENTS NOT TO BE MADE TO DEFAULTING
4-5 USERS. (a) The department shall report to the comptroller the
4-6 name of any user who is in default on a loan guaranteed under this
4-7 subchapter and with respect to which the department has been
4-8 required to honor a guarantee. The comptroller may not issue a
4-9 warrant or initiate an electronic funds transfer to the user while
4-10 the user is in default.
4-11 (b) The comptroller may issue a warrant to the assignee of a
4-12 user who is in default only if the assignment became effective
4-13 before the user defaulted.
4-14 (c) This section does not prohibit the comptroller from
4-15 issuing a warrant or initiating an electronic funds transfer to pay
4-16 the compensation of a state officer or employee.
4-17 (d)(1) This subsection applies when a payment is made to a
4-18 user other than through the comptroller's issuance of a warrant or
4-19 the comptroller's use of an electronic funds transfer system.
4-20 (2) A state agency may not use funds inside or outside
4-21 the state treasury to pay a user if the agency knows that the user
4-22 is in default on a loan guaranteed under this subchapter and with
4-23 respect to which the department has been required to honor a
4-24 guarantee.
4-25 (3) This subsection does not prohibit a state agency
5-1 from paying the assignee of a user who is in default if the
5-2 assignment became effective before the user defaulted.
5-3 (4) This subsection does not prohibit a state agency
5-4 from paying the compensation of a state officer or employee.
5-5 (5) The comptroller may not reimburse a state agency
5-6 for a payment that is made in violation of this subsection.
5-7 (e) In this section:
5-8 (1) "Compensation" includes wages, salaries, longevity
5-9 pay, hazardous duty pay, and emoluments that are provided in lieu
5-10 of wages or salaries. The term does not include expense
5-11 reimbursements.
5-12 (2) "State agency" means a board, commission, council,
5-13 committee, department, office, agency, or other governmental entity
5-14 in the executive, legislative, or judicial branch of state
5-15 government. The term includes an institution of higher education
5-16 as defined by Section 61.008, Education Code.
5-17 (3) "State officer or employee" means an officer or
5-18 employee of a state agency.
5-19 SECTION 481.201. GUARANTEE-TO-RESERVE RATIO. (a) The
5-20 department may guarantee loans as provided by Section 481.084 in an
5-21 amount that exceeds the amount available in the fund. Loan
5-22 guarantees may not exceed the guarantee-to-reserve ratio set by
5-23 the policy board under Subsection (b).
5-24 (b) The policy board by rule shall adopt a
5-25 guarantee-to-reserve ratio that determines the amount of loan
6-1 guarantees that may be made that exceed the amount available in the
6-2 fund. The ratio of guarantees to the amount of money available in
6-3 the fund may not exceed five to one.
6-4 (c) The policy board shall review the guarantee-to-reserve
6-5 ratio annually and adjust the ratio as appropriate. In reviewing
6-6 the guarantee-to-reserve ratio, the policy board shall consider the
6-7 payment experience of the loans and any recommendations of the
6-8 state auditor as provided by Subsection (d).
6-9 (d) The state auditor shall review the loan guarantee
6-10 program and payment activity and make recommendations based on that
6-11 review to the policy board about the program and the
6-12 guarantee-to-reserve ratio. A recommendation to the policy board
6-13 shall be made not later than September 1 of each year.
6-14 SECTION 481.202. PENALTY FOR FALSE INFORMATION ON
6-15 APPLICATION. An applicant who knowingly provides false information
6-16 in an application under this chapter:
6-17 (1) may not submit an application under this chapter
6-18 before two years after the date that the application containing the
6-19 false information was submitted; and
6-20 (2) is liable to the state and any private lender
6-21 involved for any expense incurred by the state or private lender
6-22 that would have not been incurred if the applicant had not provided
6-23 the false information.
6-24 SECTION 481.203. ADDITIONAL POWERS AND DUTIES. (a) The
6-25 department shall:
7-1 (1) cooperate with industrial and economic development
7-2 agencies, users, and private lenders to promote development
7-3 activity by Historically underutilized businesses and small
7-4 businesses in distressed communities;
7-5 (2) determine, on proper request by a user or private
7-6 lender, whether the public purpose of this subchapter has been
7-7 accomplished or will be accomplished by the establishment of a
7-8 project;
7-9 (3) accept grants from and enter into contracts with a
7-10 federal agency to accomplish the purposes of this subchapter; and
7-11 (4) provide staff to carry out this subchapter. The
7-12 staff shall act as liaison among the department, users, private
7-13 lenders, and industrial and economic development agencies,
7-14 organizations related to industrial development agencies, and other
7-15 state agencies whose facilities and services are useful to the
7-16 department in carrying out its functions under this subchapter.
7-17 SECTION 481.204. GIFTS AND GRANTS. The department may
7-18 accept gifts, grants, and donations from any source for the
7-19 purposes of this subchapter.
7-20 SECTION 3. This Act takes effect September 1, 1995.
7-21 SECTION 4. The importance of this legislation and the
7-22 crowded condition of the calendars in both houses create an
7-23 emergency and an imperative public necessity that the
7-24 constitutional rule requiring bills to be read on three several
7-25 days in each house be suspended, and this rule is hereby suspended.