By: Armbrister S.B. No. 377
A BILL TO BE ENTITLED
AN ACT
1-1 relating to state agency loan and loan guarantee programs and the
1-2 creation, administration, and operation of the Texas Development
1-3 Bank to administer state agency loan and loan guarantee programs
1-4 and to engage in capital formation initiatives to further the
1-5 state's economic and community development goals of job creation
1-6 and retention.
1-7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-8 SECTION 1. DEFINITIONS. In this Act:
1-9 (1) "Board" means the board of the development bank.
1-10 (2) "Development bank" means the Texas Development
1-11 Bank.
1-12 SECTION 2. TEXAS DEVELOPMENT BANK. The Texas Development
1-13 Bank is an agency of the state.
1-14 SECTION 3. BOARD MEMBERSHIP. (a) The board is composed of
1-15 11 members as provided by this section.
1-16 (b) The commissioner of agriculture, the commissioner of the
1-17 General Land Office, the comptroller of public accounts, the
1-18 commissioner of higher education, and the chairman of the Texas
1-19 Water Development Board serve as members of the board. Each of
1-20 these officers may designate a person to act on the board on behalf
1-21 of the officer.
1-22 (c) The governor shall appoint four members of the board as
1-23 follows:
1-24 (1) one person who:
2-1 (A) is on a list supplied by the speaker of the
2-2 house of representatives; and
2-3 (B) represents a small, locally owned community
2-4 bank;
2-5 (2) one person who represents a financial institution;
2-6 (3) one person who is:
2-7 (A) on a list supplied by the speaker of the
2-8 house of representatives; and
2-9 (B) an agriculture producer; and
2-10 (4) one person who represents the business community
2-11 in this state.
2-12 (d) The lieutenant governor shall appoint two members of the
2-13 board as follows:
2-14 (1) one person who is a small business owner; and
2-15 (2) one person who is a representative of a
2-16 historically underutilized business.
2-17 (e) An appointed member of the board serves at the pleasure
2-18 of the appointing official.
2-19 SECTION 4. PRESIDING OFFICER; MEETINGS. (a) The governor
2-20 shall select a presiding officer from the governor's appointees.
2-21 (b) The board shall meet at least monthly and at the call of
2-22 the presiding officer or of a majority of the members, as provided
2-23 by board rule.
2-24 SECTION 5. COMPENSATION; EXPENSES. A board member is not
2-25 entitled to receive compensation, but is entitled to reimbursement
2-26 of the member's travel expenses as provided in the General
2-27 Appropriations Act.
3-1 SECTION 6. APPLICATION OF OPEN RECORDS AND OPEN MEETINGS
3-2 LAW. (a) The development bank is subject to the open records law,
3-3 Chapter 552, Government Code, except that the financial records of
3-4 an applicant or borrower are not a public record.
3-5 (b) The board is subject to the open meetings law, Chapter
3-6 551, Government Code, except that the board is not required to
3-7 conduct an open meeting to discuss the financial matters of an
3-8 applicant or borrower.
3-9 SECTION 7. ADVISORY COMMITTEES. (a) The board may appoint
3-10 advisory committees to assist it in determining specific needs to
3-11 be addressed by programs administered by the bank.
3-12 (b) An advisory committee member is not entitled to receive
3-13 compensation but is entitled to reimbursement of travel expenses as
3-14 provided in the General Appropriations Act.
3-15 SECTION 8. EXCLUSIVE AUTHORITY. (a) On full implementation
3-16 of this Act, the development bank has the exclusive authority to
3-17 act as the administrator of state agency loan and loan guarantee
3-18 programs, including approving and servicing loans. Subject to
3-19 Subsection (b) of this section, the powers and duties of an entity
3-20 required by other law to administer a loan or loan guarantee
3-21 program relating to administering the program are transferred to
3-22 the development bank, and the entity shall transfer all records
3-23 relating to the program to the development bank.
3-24 (b) Each entity from which a program is transferred by this
3-25 Act to the development bank shall execute with the bank a
3-26 memorandum of understanding governing the transfer. The transfer
3-27 shall be accomplished in accordance with the memorandum.
4-1 (c) The Texas Development Bank shall serve as the
4-2 administrator of all existing and future state agency loan and loan
4-3 guarantee programs.
4-4 SECTION 9. CHIEF OPERATING OFFICER; EMPLOYEES. (a) The
4-5 board shall employ a chief operating officer of the development
4-6 bank. The board may delegate to the officer any of the board's
4-7 powers and duties.
4-8 (b) The chief operating officer may employ persons necessary
4-9 for the proper management of the development bank.
4-10 SECTION 10. LENDING AUTHORITY. (a) The board by rule shall
4-11 establish a breakdown of lending authority within the development
4-12 bank.
4-13 (b) The chief operating officer shall establish the loan
4-14 authority of the development bank's employees within board rules.
4-15 SECTION 11. COST-BENEFIT ANALYSIS. Every second year, the
4-16 board in conjunction with the comptroller shall conduct a
4-17 cost-benefit analysis of the state agency loan and loan guarantee
4-18 programs and shall report to the legislature at the regular session
4-19 convening in 1999 and every second year thereafter on the
4-20 effectiveness of the programs.
4-21 SECTION 12. FINANCIAL CONDITION AUDIT; RULES ASSESSMENT.
4-22 (a) The auditor, in conjunction with the comptroller and the Texas
4-23 Department of Banking, shall audit each agency and program
4-24 transferred to the development bank by this Act to determine:
4-25 (1) the financial condition of the transferred
4-26 program;
4-27 (2) the statutory rules and federal regulations that
5-1 relate to the program; and
5-2 (3) the administrative costs of the program to the
5-3 agency from which the program is transferred.
5-4 (b) The agency from which the program is transferred shall
5-5 pay the costs of the audit under this section.
5-6 (c) The auditor shall complete each audit before the program
5-7 is transferred to the development bank by this Act.
5-8 SECTION 13. SECONDARY MARKET PARTICIPATION. The development
5-9 bank may enter into participations to develop a securitization
5-10 program to sell into secondary markets.
5-11 SECTION 14. DEVELOPMENT BANK AUDIT. The development bank
5-12 shall provide for an annual audit of the financial condition of the
5-13 bank by:
5-14 (1) the state auditor; or
5-15 (2) a private auditing firm.
5-16 SECTION 15. PROGRAM MARKETING. The development bank may
5-17 adopt a policy to market the programs administered by the bank.
5-18 SECTION 16. VALUATION OF LOAN PORTFOLIO; UNDERWRITING
5-19 STANDARDS. (a) The Texas Department of Banking shall examine
5-20 loans in programs administered by the development bank at least
5-21 annually to determine the credit quality and value of the loans.
5-22 (b) The Texas Department of Banking shall recommend
5-23 appropriate loan underwriting standards consistent with the
5-24 development bank's mission and programs.
5-25 SECTION 17. MEMORANDUM OF UNDERSTANDING. The development
5-26 bank and the Texas Public Finance Authority shall jointly execute a
5-27 memorandum of understanding relating to the bank retaining earnings
6-1 that exceed the costs of bond retirement and costs of the Texas
6-2 Public Finance Authority.
6-3 SECTION 18. SUBSIDIARY. The development bank may form a
6-4 subsidiary as determined necessary by the bank.
6-5 SECTION 19. CASH MANAGEMENT. The board shall adopt a
6-6 written cash management policy and review it annually.
6-7 SECTION 20. TECHNICAL SERVICES. (a) An agency from which a
6-8 program is transferred by this Act shall perform, on request of the
6-9 development bank, technical services related to programs and
6-10 projects transferred from the agency to the bank by this Act.
6-11 (b) The development bank may contract with other entities to
6-12 perform the technical services.
6-13 SECTION 21. GIFTS AND GRANTS. The development bank may
6-14 accept gifts and grants from any private or public source.
6-15 SECTION 22. EARNINGS. The earnings from programs
6-16 administered by the development bank may be pooled and used for any
6-17 program administered by the bank.
6-18 SECTION 23. STATEWIDE NEEDS APPRAISAL PROJECT. (a) The
6-19 development bank shall biennially implement a statewide needs
6-20 appraisal project to obtain economic data concerning capital access
6-21 and availability.
6-22 (b) The data shall be made available for use in planning and
6-23 budgeting for programmatic activities by the development bank.
6-24 (c) The bank shall coordinate its activities in relation to
6-25 this project with the appropriate public and private financial
6-26 service organizations.
6-27 SECTION 24. TRANSFER OF CERTAIN PROPERTY, RECORDS,
7-1 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
7-2 DEVELOPMENT BANK IN 1996. On September 1, 1996, or an earlier date
7-3 provided by an interagency agreement with the affected agency, the
7-4 following functions, programs, and activities are transferred to
7-5 the development bank:
7-6 (1) from the Texas Agricultural Finance Authority:
7-7 (A) TAFA loan guarantee program;
7-8 (B) linked deposit program;
7-9 (C) microenterprise support program;
7-10 (D) young farmers endowment program; and
7-11 (E) farm and ranch finance program;
7-12 (2) from the Center For Rural Health Initiatives:
7-13 (A) outstanding rural scholar recognition and
7-14 loan program;
7-15 (B) community scholarship program; and
7-16 (C) rural physician assistant loan program;
7-17 (3) from the Texas Department of Commerce:
7-18 (A) Texas Small Business Development
7-19 Corporation;
7-20 (B) Texas capital program;
7-21 (C) Texas leverage fund;
7-22 (D) Texas business enhancement fund;
7-23 (E) Texas exporters loan fund;
7-24 (F) U.S. Small Business Administration 7a
7-25 program;
7-26 (G) U.S. Department of Commerce Exim bank loan
7-27 program;
8-1 (H) U.S. Small Business Administration statewide
8-2 504 program;
8-3 (I) small business incubator fund;
8-4 (J) historically underutilized business and
8-5 small business linked deposit program;
8-6 (K) economically distressed community loan
8-7 program;
8-8 (L) Texas rural economic development loan
8-9 guaranty program;
8-10 (M) Texas product development fund;
8-11 (N) recycling market development loan program;
8-12 and
8-13 (O) Texas product commercialization fund;
8-14 (4) from the Bond Review Board, the public school
8-15 facilities funding program;
8-16 (5) from the Texas Commission on Fire Protection, the
8-17 emergency equipment and facilities revolving fund loan program;
8-18 (6) from the State Medical Education Board, the state
8-19 medical education board loan program;
8-20 (7) from the Employees Retirement System of Texas,
8-21 Teacher Retirement System of Texas, State Board of Education, The
8-22 University of Texas, and Texas A&M University, the Texas growth
8-23 fund;
8-24 (8) from the governor and General Services Commission,
8-25 product commercialization loans under the oil overcharge program;
8-26 (9) from the Alternative Fuels Council and Texas
8-27 Public Finance Authority, the alternative fuels conversion fund;
9-1 (10) from the Texas Department of Transportation, the
9-2 airport development program; and
9-3 (11) from the Texas Historical Commission, the Texas
9-4 preservation trust fund.
9-5 SECTION 25. TRANSFER OF CERTAIN PROPERTY, RECORDS,
9-6 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
9-7 DEVELOPMENT BANK IN 1997. On September 1, 1997, or an earlier date
9-8 provided by an interagency agreement with the affected agency, the
9-9 following functions, programs, and activities are transferred to
9-10 the development bank:
9-11 (1) from the Texas Department of Housing and Community
9-12 Affairs:
9-13 (A) housing rehabilitation loan program;
9-14 (B) housing trust fund;
9-15 (C) single family interim construction program;
9-16 (D) single family mortgage revenue bond
9-17 programs;
9-18 (E) first time home buyer program;
9-19 (F) contract for deed bond program;
9-20 (G) subsidized home purchase loan program;
9-21 (H) down payment assistance program;
9-22 (I) housing construction and acquisition loan
9-23 program;
9-24 (J) home improvement loan program;
9-25 (K) multifamily mortgage revenue bond program;
9-26 (L) risk sharing pilot program;
9-27 (M) home investment partnership program; and
10-1 (N) Texas capital fund; and
10-2 (2) from the Texas Natural Resource Conservation
10-3 Commission, the water quality management planning program.
10-4 SECTION 26. TRANSFER OF CERTAIN PROPERTY, RECORDS,
10-5 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
10-6 DEVELOPMENT BANK IN 1998. On September 1, 1998, or an earlier date
10-7 provided by an interagency agreement with the Texas Water
10-8 Development Board, the following functions, programs, and
10-9 activities are transferred to the development bank from the Texas
10-10 Water Development Board:
10-11 (1) water development bond program for water supply;
10-12 (2) water development bond program for water quality;
10-13 (3) water development bond program for flood control;
10-14 (4) colonia plumbing loan program;
10-15 (5) Texas water resources fund;
10-16 (6) revenue bond program;
10-17 (7) state water pollution control revolving fund;
10-18 (8) water loan assistance program;
10-19 (9) bond insurance program;
10-20 (10) Texas Water Resources Finance Authority;
10-21 (11) pilot loan program; and
10-22 (12) agricultural water conservation bond program.
10-23 SECTION 27. TRANSFER OF CERTAIN PROPERTY, RECORDS,
10-24 OBLIGATIONS, FUNDS, FUNCTIONS, PROGRAMS, AND ACTIVITIES TO
10-25 DEVELOPMENT BANK IN 1999. On September 1, 1999, or an earlier date
10-26 provided by an interagency agreement with the affected agencies,
10-27 the following functions, programs, and activities are transferred
11-1 to the development bank:
11-2 (1) from the General Land Office and the Veterans'
11-3 Land Board:
11-4 (A) Texas veterans' land program;
11-5 (B) Texas veterans' housing assistance program;
11-6 and
11-7 (C) Texas veterans' home improvement program;
11-8 (2) from the Texas Higher Education Coordinating
11-9 Board:
11-10 (A) Hinson-Hazelwood college student loan
11-11 program;
11-12 (B) student loan revenue bond program;
11-13 (C) minority doctoral incentive program;
11-14 (D) physician education loan program;
11-15 (E) physical therapist education loan repayment
11-16 assistance program;
11-17 (F) professional nursing student loan repayment
11-18 assistance program;
11-19 (G) vocational nursing student loan repayment
11-20 assistance program; and
11-21 (H) teacher education loan repayment assistance
11-22 program; and
11-23 (3) from institutions of higher education, emergency
11-24 loan programs.
11-25 SECTION 28. AMENDMENT. Section 9B(a), Texas Public Finance
11-26 Authority Act (Article 601d, Vernon's Texas Civil Statutes), is
11-27 amended to read as follows:
12-1 (a) With respect to all bonds authorized to be issued by the
12-2 Texas National Guard Armory Board, Texas National Research
12-3 Laboratory Commission, Parks and Wildlife Department, and all
12-4 institutions of higher education authorized to issue bonds under
12-5 Chapter 55, Education Code, and with respect to all bonds
12-6 authorized to be issued by entities to fund programs administered
12-7 by the Texas Development Bank, the authority has the exclusive
12-8 authority to act on behalf of those entities in issuing bonds on
12-9 their behalf. In connection with those issuances and with the
12-10 issuance of refunding bonds on behalf of those entities, the
12-11 authority is subject to all rights, duties, and conditions
12-12 surrounding issuance previously applicable to the issuing entity
12-13 under the statute authorizing the issuance. All references in an
12-14 authorizing statute to the entity on whose behalf the bonds are
12-15 being issued apply equally to the authority in its capacity as
12-16 issuer on behalf of the entity.
12-17 SECTION 29. LOAN PROGRAM AUDIT. (a) The auditor, in
12-18 conjunction with the comptroller and the Texas Department of
12-19 Banking, shall audit each state agency loan and loan guarantee
12-20 program to determine the:
12-21 (1) cost versus benefit of the program;
12-22 (2) credit quality of loans in the program;
12-23 (3) loan expertise of management in the agency
12-24 administering the program;
12-25 (4) adequacy of program delivery systems;
12-26 (5) privatization of loan systems;
12-27 (6) underwriting standards used for the program;
13-1 (7) geographical distribution of loans in the program;
13-2 (8) degree of participation with financial
13-3 institutions and other lender organizations;
13-4 (9) personnel costs and other administrative costs
13-5 associated with the program;
13-6 (10) demographic distribution of loan recipients; and
13-7 (11) default and past due rates of loans in the
13-8 program.
13-9 (b) The affected agency shall pay the costs of the audit
13-10 required by this section.
13-11 (c) The auditor shall complete the audit not later than
13-12 January 1, 1997.
13-13 SECTION 30. CERTAIN LOAN PROGRAM AUDITS. (a) The auditor,
13-14 in conjunction with the comptroller and the Texas Department of
13-15 Banking, shall audit each state agency loan and loan guarantee
13-16 program to determine the:
13-17 (1) cost versus benefit of the program;
13-18 (2) credit quality of loans in the program;
13-19 (3) loan expertise of management in the agency
13-20 administering the program;
13-21 (4) adequacy of program delivery systems;
13-22 (5) privatization of loan systems;
13-23 (6) underwriting standards used for the program;
13-24 (7) geographical distribution of loans in the program;
13-25 (8) degree of participation with financial
13-26 institutions and other lender organizations;
13-27 (9) personnel costs and other administrative costs
14-1 associated with the program;
14-2 (10) demographic distribution of loan recipients; and
14-3 (11) default and past due rates of loans in the
14-4 program.
14-5 (b) The affected agency shall pay the costs of the audit
14-6 required by this section.
14-7 (c) The auditor shall complete the audit not later than
14-8 January 1, 1997.
14-9 (d) This section applies only to an agency and each of the
14-10 agency's loan and loan guarantee programs that administers one of
14-11 the following listed programs if the listed program is not
14-12 transferred to the development bank by this Act:
14-13 (1) TAFA loan guarantee program;
14-14 (2) linked deposit program;
14-15 (3) microenterprise support program;
14-16 (4) young farmers endowment program;
14-17 (5) farm and ranch finance program;
14-18 (6) outstanding rural scholar recognition and loan
14-19 program;
14-20 (7) community scholarship program;
14-21 (8) rural physician assistant loan program;
14-22 (9) Texas Small Business Development Corporation;
14-23 (10) Texas capital program;
14-24 (11) Texas leverage fund;
14-25 (12) Texas business enhancement fund;
14-26 (13) Texas exporters loan fund;
14-27 (14) U.S. Small Business Administration 7a program;
15-1 (15) U.S. Department of Commerce Exim bank loan
15-2 program;
15-3 (16) U.S. Small Business Administration statewide 504
15-4 program;
15-5 (17) small business incubator fund;
15-6 (18) historically underutilized business and small
15-7 business linked deposit program;
15-8 (19) economically distressed community loan program;
15-9 (20) Texas rural economic development loan guaranty
15-10 program;
15-11 (21) Texas product development fund;
15-12 (22) recycling market development loan program;
15-13 (23) Texas product commercialization fund;
15-14 (24) public school facilities funding program;
15-15 (25) emergency equipment and facilities revolving fund
15-16 loan program;
15-17 (26) state medical education board loan program;
15-18 (27) Texas growth fund;
15-19 (28) product commercialization loans under the oil
15-20 overcharge program;
15-21 (29) alternative fuels conversion fund;
15-22 (30) airport development program;
15-23 (31) Texas preservation trust fund;
15-24 (32) housing rehabilitation loan program;
15-25 (33) housing trust fund;
15-26 (34) single family interim construction program;
15-27 (35) single family mortgage revenue bond programs;
16-1 (36) first time home buyer program;
16-2 (37) contract for deed bond program;
16-3 (38) subsidized home purchase loan program;
16-4 (39) down payment assistance program;
16-5 (40) housing construction and acquisition loan
16-6 program;
16-7 (41) home improvement loan program;
16-8 (42) multifamily mortgage revenue bond program;
16-9 (43) risk sharing pilot program;
16-10 (44) home investment partnership program;
16-11 (45) Texas capital fund;
16-12 (46) water development bond program for water supply;
16-13 (47) water development bond program for water quality;
16-14 (48) water quality management planning program;
16-15 (49) water development bond program for flood control;
16-16 (50) colonia plumbing loan program;
16-17 (51) Texas water resources fund;
16-18 (52) revenue bond program;
16-19 (53) state water pollution control revolving fund;
16-20 (54) water loan assistance program;
16-21 (55) bond insurance program;
16-22 (56) Texas Water Resources Finance Authority;
16-23 (57) pilot loan program;
16-24 (58) agricultural water conservation bond program;
16-25 (59) Texas veterans' land program;
16-26 (60) Texas veterans' housing assistance program;
16-27 (61) Texas veterans' home improvement program;
17-1 (62) Hinson-Hazelwood college student loan program;
17-2 (63) student loan revenue bond program;
17-3 (64) minority doctoral incentive program;
17-4 (65) physician education loan program;
17-5 (66) physical therapist education loan repayment
17-6 assistance program;
17-7 (67) professional nursing student loan repayment
17-8 assistance program;
17-9 (68) vocational nursing student loan repayment
17-10 assistance program;
17-11 (69) teacher education loan repayment assistance
17-12 program; and
17-13 (70) emergency loan programs of institutions of higher
17-14 education.
17-15 SECTION 31. EFFECTIVE DATE. Except as provided by Section
17-16 32 of this Act, this Act takes effect January 1, 1996.
17-17 SECTION 32. CERTAIN SECTIONS CONTINGENT ON ADOPTION OF
17-18 CONSTITUTIONAL AMENDMENT. (a) Sections 1-28 and 30 of this Act
17-19 take effect only if the constitutional amendment proposed by House
17-20 Joint Resolution No. 98 is approved by the voters. If that
17-21 constitutional amendment is not approved by the voters, those
17-22 sections have no effect.
17-23 (b) Section 29 of this Act takes effect only if the
17-24 constitutional amendment proposed by House Joint Resolution No. 98
17-25 is not approved by the voters. If that constitutional amendment is
17-26 approved by the voters that section has no effect.
17-27 SECTION 33. The importance of this legislation and the
18-1 crowded condition of the calendars in both houses create an
18-2 emergency and an imperative public necessity that the
18-3 constitutional rule requiring bills to be read on three several
18-4 days in each house be suspended, and this rule is hereby suspended.