75R9569 BEM-F
By Greenberg, Coleman, Giddings, Siebert, H.B. No. 2545
Delisi, et al.
Substitute the following for H.B. No. 2545:
By Keffer C.S.H.B. No. 2545
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to creating a Texas community investment program to assist
1-3 certain businesses in distressed areas of the state.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 2306, Government Code, is amended by
1-6 adding Subchapter AA to read as follows:
1-7 SUBCHAPTER AA. TEXAS COMMUNITY INVESTMENT PROGRAM
1-8 Sec. 2306.621. DEFINITIONS. In this subchapter:
1-9 (1) "Multi-bank community development corporation"
1-10 means a corporation organized to provide community development
1-11 funds to businesses that employ low and moderate income persons by
1-12 investing in and making loans to disadvantaged businesses located
1-13 in distressed areas of the state.
1-14 (2) "Program" means the community investment program
1-15 established under this subchapter.
1-16 Sec. 2306.622. COMMUNITY INVESTMENT PROGRAM. (a)
1-17 Notwithstanding any other law, the department shall establish a
1-18 community investment program in which the department awards grants
1-19 to or purchases stock of certain multi-bank community development
1-20 corporations for use in making loans to or investing in businesses
1-21 in distressed areas of the state that cannot qualify for
1-22 conventional bank loans.
1-23 (b) The department shall determine the eligibility of a
1-24 multi-bank community development corporation to participate in the
2-1 program and may set a limit on the number of eligible multi-bank
2-2 community development corporations that may participate in the
2-3 program.
2-4 (c) A multi-bank community development corporation is
2-5 eligible to participate in the program if the multi-bank community
2-6 development corporation has raised a minimum of $500,000 in private
2-7 investments to make loans to or investments in businesses described
2-8 by Subsection (a).
2-9 (d) To participate in the program, an eligible multi-bank
2-10 community development corporation must enter into a participation
2-11 agreement with the department that sets out the terms and
2-12 conditions under which the department will award a grant to or
2-13 purchase stock of the multi-bank community development corporation.
2-14 Sec. 2306.623. RULE-MAKING AUTHORITY. The department shall
2-15 adopt rules relating to the implementation of the program and any
2-16 other rules necessary to accomplish the purposes of this
2-17 subchapter.
2-18 Sec. 2306.624. GRANT APPLICATION. (a) An eligible
2-19 multi-bank community development corporation may file a grant
2-20 application with the department in a form approved by the board.
2-21 The application must include a plan of investment that includes the
2-22 type and number of businesses to which the multi-bank community
2-23 development corporation plans to make a community investment loan
2-24 or in which the corporation plans to invest using money from the
2-25 program.
2-26 (b) The director shall act on a completed application not
2-27 later than the 30th day after the date on which the application is
3-1 filed with the department.
3-2 Sec. 2306.625. PROVISIONS RELATING TO GRANTS. (a) A grant
3-3 awarded to a multi-bank community development corporation through a
3-4 grant under the program must be used or committed for approved
3-5 loans or investments not later than the 18th month after the date
3-6 on which the grant is received.
3-7 (b) A multi-bank community development corporation shall
3-8 return to the department any amount not invested or committed for
3-9 investment within the period prescribed by Subsection (a) not later
3-10 than the 10th day after the expiration of that period.
3-11 (c) If a multi-bank community development corporation
3-12 experiences losses of more than 25 percent on loans or investments
3-13 made with grants awarded to the corporation under the program, the
3-14 multi-bank community development corporation shall:
3-15 (1) return all unencumbered money to the department;
3-16 and
3-17 (2) deliver to the director all of the documentation
3-18 and related instruments concerning investments made with money
3-19 awarded under the program.
3-20 Sec. 2306.626. ELIGIBLE LOANS. (a) Each multi-bank
3-21 community development corporation participating in the program
3-22 shall establish an investment committee to approve loan requests
3-23 made by businesses. Each investment committee must have at least
3-24 five members at least 50 percent of whom must be bankers and at
3-25 least 30 percent of whom must be representatives of the community.
3-26 (b) A multi-bank community development corporation may use
3-27 money awarded under the program to make a community investment
4-1 loan only if the loan is approved by the appropriate investment
4-2 committee.
4-3 (c) A community investment loan may be in the form of debt,
4-4 subordinated debt, or an equity investment.
4-5 Sec. 2306.627. LIMITATION ON USE OF GRANT. A multi-bank
4-6 community development corporation shall invest at least 60 percent
4-7 of the amounts received under the program in businesses that have
4-8 been in existence for at least one year before the date on which
4-9 the investment is made.
4-10 Sec. 2306.628. COLLABORATIVE EFFORT. A multi-bank community
4-11 development corporation may make a loan or investment under the
4-12 program in conjunction with one or more financial institutions
4-13 through partnerships or joint investments.
4-14 Sec. 2306.629. PROVISIONS RELATING TO LOANS. (a) The
4-15 maximum amount that may be loaned to a business by a multi-bank
4-16 community development corporation under the program is:
4-17 (1) $200,000 if all of the loan to the business is
4-18 direct; or
4-19 (2) $100,000 if any of the business's debt to the
4-20 multi-bank community development corporation is subordinated to a
4-21 bank or other entity.
4-22 (b) The maximum term of a loan made using amounts awarded
4-23 under the program is 15 years.
4-24 Sec. 2306.630. PROVISIONS RELATING TO EQUITY INVESTMENTS.
4-25 (a) The maximum equity investment that may be made by a multi-bank
4-26 community development corporation in one business using amounts
4-27 awarded under the program is $50,000 for a maximum term of seven
5-1 years.
5-2 (b) The maximum amount of ownership that a multi-bank
5-3 community development corporation may acquire in a business is 50
5-4 percent of the business's equity.
5-5 Sec. 2306.631. INTEREST INCOME. All income received on an
5-6 investment or loan made with amounts awarded under the program is
5-7 the property of the multi-bank community development corporation
5-8 that makes the investment or loan.
5-9 Sec. 2306.632. SEMI-ANNUAL REPORT. (a) Not later than the
5-10 30th day after the expiration of each six-month period for which
5-11 there is a participation agreement in effect between the department
5-12 and a multi-bank community development corporation, the multi-bank
5-13 community development corporation shall submit a report to the
5-14 director that details the status of each investment or loan made
5-15 under the program.
5-16 (b) The report must be in a form prescribed by the board and
5-17 must contain all information required by the department as part of
5-18 the multi-bank community development corporation's participation
5-19 agreement.
5-20 Sec. 2306.633. ANNUAL AUDIT. The participation agreement
5-21 entered into between the multi-bank community development
5-22 corporation and the department must provide for an annual audit of
5-23 all amounts awarded to the multi-bank community development
5-24 corporation under the program. The board shall adopt rules
5-25 relating to the format of the audit.
5-26 SECTION 2. This Act takes effect September 1, 1997.
5-27 SECTION 3. The importance of this legislation and the
6-1 crowded condition of the calendars in both houses create an
6-2 emergency and an imperative public necessity that the
6-3 constitutional rule requiring bills to be read on three several
6-4 days in each house be suspended, and this rule is hereby suspended.