74R10355 RJA-D
By Patterson, Black, Giddings, Brimer, H.B. No. 2490
Kubiak, et al.
Substitute the following for H.B. No. 2490:
By Black C.S.H.B. No. 2490
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to state agency loan and loan guarantee programs and the
1-3 creation, administration, and operation of the Texas Development
1-4 Bank to administer state agency loan and loan guarantee programs
1-5 and to engage in capital formation initiatives to further the
1-6 state's economic and community development goals of job creation
1-7 and retention.
1-8 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-9 SECTION 1. DEFINITIONS. In this Act:
1-10 (1) "Board" means the board of the development bank.
1-11 (2) "Development bank" means the Texas Development
1-12 Bank.
1-13 SECTION 2. TEXAS DEVELOPMENT BANK. The Texas Development
1-14 Bank is an agency of the state.
1-15 SECTION 3. BOARD MEMBERSHIP. (a) The board is composed of
1-16 11 members as provided by this section.
1-17 (b) The commissioner of agriculture, the commissioner of the
1-18 General Land Office, the comptroller of public accounts, the
1-19 commissioner of higher education, and the chairman of the Texas
1-20 Water Development Board serve as members of the board. Each of
1-21 these officers may designate a person to act on the board on behalf
1-22 of the officer.
1-23 (c) The governor shall appoint four members of the board as
1-24 follows:
2-1 (1) one person who:
2-2 (A) is on a list supplied by the speaker of the
2-3 house of representatives; and
2-4 (B) represents a small, locally owned community
2-5 bank;
2-6 (2) one person who represents a financial institution;
2-7 (3) one person who is:
2-8 (A) on a list supplied by the speaker of the
2-9 house of representatives; and
2-10 (B) an agriculture producer; and
2-11 (4) one person who represents the business community
2-12 in this state.
2-13 (d) The lieutenant governor shall appoint two members of the
2-14 board as follows:
2-15 (1) one person who is a small business owner; and
2-16 (2) one person who is a representative of a
2-17 historically underutilized business.
2-18 (e) An appointed member of the board serves at the pleasure
2-19 of the appointing official.
2-20 SECTION 4. PRESIDING OFFICER; MEETINGS. (a) The governor
2-21 shall select a presiding officer from the governor's appointees.
2-22 (b) The board shall meet at least monthly and at the call of
2-23 the presiding officer or of a majority of the members, as provided
2-24 by board rule.
2-25 SECTION 5. COMPENSATION; EXPENSES. A board member is not
2-26 entitled to receive compensation, but is entitled to reimbursement
2-27 of the member's travel expenses as provided in the General
3-1 Appropriations Act.
3-2 SECTION 6. APPLICATION OF OPEN RECORDS AND OPEN MEETINGS
3-3 LAW. (a) The development bank is subject to the open records law,
3-4 Chapter 552, Government Code, except that the financial records of
3-5 an applicant or borrower are not a public record.
3-6 (b) The board is subject to the open meetings law, Chapter
3-7 551, Government Code, except that the board is not required to
3-8 conduct an open meeting to discuss the financial matters of an
3-9 applicant or borrower.
3-10 SECTION 7. ADVISORY COMMITTEES. (a) The board may appoint
3-11 advisory committees to assist it in determining specific needs to
3-12 be addressed by programs administered by the bank.
3-13 (b) An advisory committee member is not entitled to receive
3-14 compensation but is entitled to reimbursement of travel expenses as
3-15 provided in the General Appropriations Act.
3-16 SECTION 8. EXCLUSIVE AUTHORITY. (a) On full implementation
3-17 of this Act, the development bank has the exclusive authority to
3-18 act as the administrator of state agency loan and loan guarantee
3-19 programs, including approving and servicing loans. Subject to
3-20 Subsection (b) of this section, the powers and duties of an entity
3-21 required by other law to administer a loan or loan guarantee
3-22 program relating to administering the program are transferred to
3-23 the development bank, and the entity shall transfer all records
3-24 relating to the program to the development bank.
3-25 (b) Each entity from which a program is transferred by this
3-26 Act to the development bank shall execute with the bank a
3-27 memorandum of understanding governing the transfer. The transfer
4-1 shall be accomplished in accordance with the memorandum.
4-2 (c) The Texas Development Bank shall serve as the
4-3 administrator of all existing and future state agency loan and loan
4-4 guarantee programs.
4-5 SECTION 9. CHIEF OPERATING OFFICER; EMPLOYEES. (a) The
4-6 board shall employ a chief operating officer of the development
4-7 bank. The board may delegate to the officer any of the board's
4-8 powers and duties.
4-9 (b) The chief operating officer may employ persons necessary
4-10 for the proper management of the development bank.
4-11 SECTION 10. LENDING AUTHORITY. (a) The board by rule shall
4-12 establish a breakdown of lending authority within the development
4-13 bank.
4-14 (b) The chief operating officer shall establish the loan
4-15 authority of the development bank's employees within board rules.
4-16 SECTION 11. COST-BENEFIT ANALYSIS. Every second year, the
4-17 board in conjunction with the comptroller shall conduct a
4-18 cost-benefit analysis of the state agency loan and loan guarantee
4-19 programs and shall report to the legislature at the regular session
4-20 convening in 1999 and every second year thereafter on the
4-21 effectiveness of the programs.
4-22 SECTION 12. FINANCIAL CONDITION AUDIT; RULES ASSESSMENT.
4-23 (a) The auditor, in conjunction with the comptroller and the Texas
4-24 Department of Banking, shall audit each agency and program
4-25 transferred to the development bank by this Act to determine:
4-26 (1) the financial condition of the transferred
4-27 program;
5-1 (2) the statutory rules and federal regulations that
5-2 relate to the program; and
5-3 (3) the administrative costs of the program to the
5-4 agency from which the program is transferred.
5-5 (b) The agency from which the program is transferred shall
5-6 pay the costs of the audit under this section.
5-7 (c) The auditor shall complete each audit before the program
5-8 is transferred to the development bank by this Act.
5-9 SECTION 13. SECONDARY MARKET PARTICIPATION. The development
5-10 bank may enter into participations to develop a securitization
5-11 program to sell into secondary markets.
5-12 SECTION 14. DEVELOPMENT BANK AUDIT. The development bank
5-13 shall provide for an annual audit of the financial condition of the
5-14 bank by:
5-15 (1) the state auditor; or
5-16 (2) a private auditing firm.
5-17 SECTION 15. PROGRAM MARKETING. The development bank may
5-18 adopt a policy to market the programs administered by the bank.
5-19 SECTION 16. VALUATION OF LOAN PORTFOLIO; UNDERWRITING
5-20 STANDARDS. (a) The Texas Department of Banking shall examine
5-21 loans in programs administered by the development bank at least
5-22 annually to determine the credit quality and value of the loans.
5-23 (b) The Texas Department of Banking shall recommend
5-24 appropriate loan underwriting standards consistent with the
5-25 development bank's mission and programs.
5-26 SECTION 17. MEMORANDUM OF UNDERSTANDING. The development
5-27 bank and the Texas Public Finance Authority shall jointly execute a
6-1 memorandum of understanding relating to the bank retaining earnings
6-2 that exceed the costs of bond retirement and costs of the Texas
6-3 Public Finance Authority.
6-4 SECTION 18. SUBSIDIARY. The development bank may form a
6-5 subsidiary as determined necessary by the bank.
6-6 SECTION 19. CASH MANAGEMENT. The board shall adopt a
6-7 written cash management policy and review it annually.
6-8 SECTION 20. TECHNICAL SERVICES. (a) An agency from which a
6-9 program is transferred by this Act shall perform, on request of the
6-10 development bank, technical services related to programs and
6-11 projects transferred from the agency to the bank by this Act.
6-12 (b) The development bank may contract with other entities to
6-13 perform the technical services.
6-14 SECTION 21. GIFTS AND GRANTS. The development bank may
6-15 accept gifts and grants from any private or public source.
6-16 SECTION 22. EARNINGS. The earnings from programs
6-17 administered by the development bank may be pooled and used for any
6-18 program administered by the bank.
6-19 SECTION 23. STATEWIDE NEEDS APPRAISAL PROJECT. (a) The
6-20 development bank shall biennially implement a statewide needs
6-21 appraisal project to obtain economic data concerning capital access
6-22 and availability.
6-23 (b) The data shall be made available for use in planning and
6-24 budgeting for programmatic activities by the development bank.
6-25 (c) The bank shall coordinate its activities in relation to
6-26 this project with the appropriate public and private financial
6-27 service organizations.
7-1 SECTION 24. TRANSFER OF CERTAIN PROPERTY, RECORDS,
7-2 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
7-3 DEVELOPMENT BANK IN 1996. On September 1, 1996, or an earlier date
7-4 provided by an interagency agreement with the affected agency, the
7-5 following functions, programs, and activities are transferred to
7-6 the development bank:
7-7 (1) from the Texas Agricultural Finance Authority:
7-8 (A) TAFA loan guarantee program;
7-9 (B) linked deposit program;
7-10 (C) microenterprise support program;
7-11 (D) young farmers endowment program; and
7-12 (E) farm and ranch finance program;
7-13 (2) from the Center For Rural Health Initiatives:
7-14 (A) outstanding rural scholar recognition and
7-15 loan program;
7-16 (B) community scholarship program; and
7-17 (C) rural physician assistant loan program;
7-18 (3) from the Texas Department of Commerce:
7-19 (A) Texas Small Business Development
7-20 Corporation;
7-21 (B) Texas capital program;
7-22 (C) Texas leverage fund;
7-23 (D) Texas business enhancement fund;
7-24 (E) Texas exporters loan fund;
7-25 (F) U.S. Small Business Administration 7a
7-26 program;
7-27 (G) U.S. Department of Commerce Exim bank loan
8-1 program;
8-2 (H) U.S. Small Business Administration statewide
8-3 504 program;
8-4 (I) small business incubator fund;
8-5 (J) historically underutilized business and
8-6 small business linked deposit program;
8-7 (K) economically distressed community loan
8-8 program;
8-9 (L) Texas rural economic development loan
8-10 guaranty program;
8-11 (M) Texas product development fund;
8-12 (N) recycling market development loan program;
8-13 and
8-14 (O) Texas product commercialization fund;
8-15 (4) from the Bond Review Board, the public school
8-16 facilities funding program;
8-17 (5) from the Texas Commission on Fire Protection, the
8-18 emergency equipment and facilities revolving fund loan program;
8-19 (6) from the State Medical Education Board, the state
8-20 medical education board loan program;
8-21 (7) from the Employees Retirement System of Texas,
8-22 Teacher Retirement System of Texas, State Board of Education, The
8-23 University of Texas, and Texas A&M University, the Texas growth
8-24 fund;
8-25 (8) from the governor and General Services Commission,
8-26 product commercialization loans under the oil overcharge program;
8-27 (9) from the Alternative Fuels Council and Texas
9-1 Public Finance Authority, the alternative fuels conversion fund;
9-2 (10) from the Texas Department of Transportation, the
9-3 airport development program; and
9-4 (11) from the Texas Historical Commission, the Texas
9-5 preservation trust fund.
9-6 SECTION 25. TRANSFER OF CERTAIN PROPERTY, RECORDS,
9-7 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
9-8 DEVELOPMENT BANK IN 1997. On September 1, 1997, or an earlier date
9-9 provided by an interagency agreement with the affected agency, the
9-10 following functions, programs, and activities are transferred to
9-11 the development bank:
9-12 (1) from the Texas Department of Housing and Community
9-13 Affairs:
9-14 (A) housing rehabilitation loan program;
9-15 (B) housing trust fund;
9-16 (C) single family interim construction program;
9-17 (D) single family mortgage revenue bond
9-18 programs;
9-19 (E) first time home buyer program;
9-20 (F) contract for deed bond program;
9-21 (G) subsidized home purchase loan program;
9-22 (H) down payment assistance program;
9-23 (I) housing construction and acquisition loan
9-24 program;
9-25 (J) home improvement loan program;
9-26 (K) multifamily mortgage revenue bond program;
9-27 (L) risk sharing pilot program;
10-1 (M) home investment partnership program; and
10-2 (N) Texas capital fund; and
10-3 (2) from the Texas Natural Resource Conservation
10-4 Commission, the water quality management planning program.
10-5 SECTION 26. TRANSFER OF CERTAIN PROPERTY, RECORDS,
10-6 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
10-7 DEVELOPMENT BANK IN 1998. On September 1, 1998, or an earlier date
10-8 provided by an interagency agreement with the Texas Water
10-9 Development Board, the following functions, programs, and
10-10 activities are transferred to the development bank from the Texas
10-11 Water Development Board:
10-12 (1) water development bond program for water supply;
10-13 (2) water development bond program for water quality;
10-14 (3) water development bond program for flood control;
10-15 (4) colonia plumbing loan program;
10-16 (5) Texas water resources fund;
10-17 (6) revenue bond program;
10-18 (7) state water pollution control revolving fund;
10-19 (8) water loan assistance program;
10-20 (9) bond insurance program;
10-21 (10) Texas Water Resources Finance Authority;
10-22 (11) pilot loan program; and
10-23 (12) agricultural water conservation bond program.
10-24 SECTION 27. TRANSFER OF CERTAIN PROPERTY, RECORDS,
10-25 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
10-26 DEVELOPMENT BANK IN 1999. On September 1, 1999, or an earlier date
10-27 provided by an interagency agreement with the affected agencies,
11-1 the following functions, programs, and activities are transferred
11-2 to the development bank:
11-3 (1) from the General Land Office and the Veterans'
11-4 Land Board:
11-5 (A) Texas veterans' land program;
11-6 (B) Texas veterans' housing assistance program;
11-7 and
11-8 (C) Texas veterans' home improvement program;
11-9 (2) from the Texas Higher Education Coordinating
11-10 Board:
11-11 (A) Hinson-Hazelwood college student loan
11-12 program;
11-13 (B) student loan revenue bond program;
11-14 (C) minority doctoral incentive program;
11-15 (D) physician education loan program;
11-16 (E) physical therapist education loan repayment
11-17 assistance program;
11-18 (F) professional nursing student loan repayment
11-19 assistance program;
11-20 (G) vocational nursing student loan repayment
11-21 assistance program; and
11-22 (H) teacher education loan repayment assistance
11-23 program; and
11-24 (3) from institutions of higher education, emergency
11-25 loan programs.
11-26 SECTION 28. AMENDMENT. Section 9B(a), Texas Public Finance
11-27 Authority Act (Article 601d, Vernon's Texas Civil Statutes), is
12-1 amended to read as follows:
12-2 (a) With respect to all bonds authorized to be issued by the
12-3 Texas National Guard Armory Board, Texas National Research
12-4 Laboratory Commission, Parks and Wildlife Department, and all
12-5 institutions of higher education authorized to issue bonds under
12-6 Chapter 55, Education Code, and with respect to all bonds
12-7 authorized to be issued by entities to fund programs administered
12-8 by the Texas Development Bank, the authority has the exclusive
12-9 authority to act on behalf of those entities in issuing bonds on
12-10 their behalf. In connection with those issuances and with the
12-11 issuance of refunding bonds on behalf of those entities, the
12-12 authority is subject to all rights, duties, and conditions
12-13 surrounding issuance previously applicable to the issuing entity
12-14 under the statute authorizing the issuance. All references in an
12-15 authorizing statute to the entity on whose behalf the bonds are
12-16 being issued apply equally to the authority in its capacity as
12-17 issuer on behalf of the entity.
12-18 SECTION 29. LOAN PROGRAM AUDIT. (a) The auditor, in
12-19 conjunction with the comptroller and the Texas Department of
12-20 Banking, shall audit each state agency loan and loan guarantee
12-21 program to determine the:
12-22 (1) cost versus benefit of the program;
12-23 (2) credit quality of loans in the program;
12-24 (3) loan expertise of management in the agency
12-25 administering the program;
12-26 (4) adequacy of program delivery systems;
12-27 (5) privatization of loan systems;
13-1 (6) underwriting standards used for the program;
13-2 (7) geographical distribution of loans in the program;
13-3 (8) degree of participation with financial
13-4 institutions and other lender organizations;
13-5 (9) personnel costs and other administrative costs
13-6 associated with the program;
13-7 (10) demographic distribution of loan recipients; and
13-8 (11) default and past due rates of loans in the
13-9 program.
13-10 (b) The affected agency shall pay the costs of the audit
13-11 required by this section.
13-12 (c) The auditor shall complete the audit not later than
13-13 January 1, 1997.
13-14 SECTION 30. CERTAIN LOAN PROGRAM AUDITS. (a) The auditor,
13-15 in conjunction with the comptroller and the Texas Department of
13-16 Banking, shall audit each state agency loan and loan guarantee
13-17 program to determine the:
13-18 (1) cost versus benefit of the program;
13-19 (2) credit quality of loans in the program;
13-20 (3) loan expertise of management in the agency
13-21 administering the program;
13-22 (4) adequacy of program delivery systems;
13-23 (5) privatization of loan systems;
13-24 (6) underwriting standards used for the program;
13-25 (7) geographical distribution of loans in the program;
13-26 (8) degree of participation with financial
13-27 institutions and other lender organizations;
14-1 (9) personnel costs and other administrative costs
14-2 associated with the program;
14-3 (10) demographic distribution of loan recipients; and
14-4 (11) default and past due rates of loans in the
14-5 program.
14-6 (b) The affected agency shall pay the costs of the audit
14-7 required by this section.
14-8 (c) The auditor shall complete the audit not later than
14-9 January 1, 1997.
14-10 (d) This section applies only to an agency and each of the
14-11 agency's loan and loan guarantee programs that administers one of
14-12 the following listed programs if the listed program is not
14-13 transferred to the development bank by this Act:
14-14 (1) TAFA loan guarantee program;
14-15 (2) linked deposit program;
14-16 (3) microenterprise support program;
14-17 (4) young farmers endowment program;
14-18 (5) farm and ranch finance program;
14-19 (6) outstanding rural scholar recognition and loan
14-20 program;
14-21 (7) community scholarship program;
14-22 (8) rural physician assistant loan program;
14-23 (9) Texas Small Business Development Corporation;
14-24 (10) Texas capital program;
14-25 (11) Texas leverage fund;
14-26 (12) Texas business enhancement fund;
14-27 (13) Texas exporters loan fund;
15-1 (14) U.S. Small Business Administration 7a program;
15-2 (15) U.S. Department of Commerce Exim bank loan
15-3 program;
15-4 (16) U.S. Small Business Administration statewide 504
15-5 program;
15-6 (17) small business incubator fund;
15-7 (18) historically underutilized business and small
15-8 business linked deposit program;
15-9 (19) economically distressed community loan program;
15-10 (20) Texas rural economic development loan guaranty
15-11 program;
15-12 (21) Texas product development fund;
15-13 (22) recycling market development loan program;
15-14 (23) Texas product commercialization fund;
15-15 (24) public school facilities funding program;
15-16 (25) emergency equipment and facilities revolving fund
15-17 loan program;
15-18 (26) state medical education board loan program;
15-19 (27) Texas growth fund;
15-20 (28) product commercialization loans under the oil
15-21 overcharge program;
15-22 (29) alternative fuels conversion fund;
15-23 (30) airport development program;
15-24 (31) Texas preservation trust fund;
15-25 (32) housing rehabilitation loan program;
15-26 (33) housing trust fund;
15-27 (34) single family interim construction program;
16-1 (35) single family mortgage revenue bond programs;
16-2 (36) first time home buyer program;
16-3 (37) contract for deed bond program;
16-4 (38) subsidized home purchase loan program;
16-5 (39) down payment assistance program;
16-6 (40) housing construction and acquisition loan
16-7 program;
16-8 (41) home improvement loan program;
16-9 (42) multifamily mortgage revenue bond program;
16-10 (43) risk sharing pilot program;
16-11 (44) home investment partnership program;
16-12 (45) Texas capital fund;
16-13 (46) water development bond program for water supply;
16-14 (47) water development bond program for water quality;
16-15 (48) water quality management planning program;
16-16 (49) water development bond program for flood control;
16-17 (50) colonia plumbing loan program;
16-18 (51) Texas water resources fund;
16-19 (52) revenue bond program;
16-20 (53) state water pollution control revolving fund;
16-21 (54) water loan assistance program;
16-22 (55) bond insurance program;
16-23 (56) Texas Water Resources Finance Authority;
16-24 (57) pilot loan program;
16-25 (58) agricultural water conservation bond program;
16-26 (59) Texas veterans' land program;
16-27 (60) Texas veterans' housing assistance program;
17-1 (61) Texas veterans' home improvement program;
17-2 (62) Hinson-Hazelwood college student loan program;
17-3 (63) student loan revenue bond program;
17-4 (64) minority doctoral incentive program;
17-5 (65) physician education loan program;
17-6 (66) physical therapist education loan repayment
17-7 assistance program;
17-8 (67) professional nursing student loan repayment
17-9 assistance program;
17-10 (68) vocational nursing student loan repayment
17-11 assistance program;
17-12 (69) teacher education loan repayment assistance
17-13 program; and
17-14 (70) emergency loan programs of institutions of higher
17-15 education.
17-16 SECTION 31. EFFECTIVE DATE. Except as provided by Section
17-17 32 of this Act, this Act takes effect January 1, 1996.
17-18 SECTION 32. CERTAIN SECTIONS CONTINGENT ON ADOPTION OF
17-19 CONSTITUTIONAL AMENDMENT. (a) Sections 1-28 and 30 of this Act
17-20 take effect only if the constitutional amendment proposed by House
17-21 Joint Resolution No. 98 is approved by the voters. If that
17-22 constitutional amendment is not approved by the voters, those
17-23 sections have no effect.
17-24 (b) Section 29 of this Act takes effect only if the
17-25 constitutional amendment proposed by House Joint Resolution No. 98
17-26 is not approved by the voters. If that constitutional amendment is
17-27 approved by the voters that section has no effect.
18-1 SECTION 33. The importance of this legislation and the
18-2 crowded condition of the calendars in both houses create an
18-3 emergency and an imperative public necessity that the
18-4 constitutional rule requiring bills to be read on three several
18-5 days in each house be suspended, and this rule is hereby suspended.