By Giddings H.B. No. 3503
75R8730 CLG-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the guarantee of certain loans under the linked deposit
1-3 program.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 481.196, Government Code, is amended to
1-6 read as follows:
1-7 Sec. 481.196. State Liability Prohibited. Except as
1-8 provided by Section 481.198, the [The] state is not liable to an
1-9 eligible lending institution for payment of the principal,
1-10 interest, or any late charges on a loan made to an eligible
1-11 borrower. [Linked deposits are not an extension of the state's
1-12 credit within the meaning of any state constitutional prohibition.]
1-13 SECTION 2. Subchapter N, Government Code, is amended by
1-14 adding Sections 481.198-481.202 to read as follows:
1-15 Sec. 481.198. LOAN GUARANTEES. (a) Subject to the
1-16 availability of appropriations, the department may guarantee not
1-17 more than 50 percent of a loan made by an eligible lending
1-18 institution under this subchapter. The percentage of a loan
1-19 guarantee made by the department is reduced annually by 10
1-20 percentage points regardless of the term of the loan. For each
1-21 guarantee the department shall determine:
1-22 (1) the amount of equity the eligible borrower must
1-23 pledge to construct or purchase the capital assets;
1-24 (2) the fees charged by the department, including
2-1 guarantee fees, application fees, annual fees, and any other costs
2-2 associated with the loan guarantee, as necessary to fund the
2-3 administration of this section;
2-4 (3) the maximum and minimum guarantee amounts; and
2-5 (4) any other terms or conditions relating to a
2-6 guarantee.
2-7 (b) The department may not make a loan guarantee, except on
2-8 approval of a qualified application submitted by a borrower or
2-9 eligible lending institution.
2-10 (c) On approval of a qualified application, the department
2-11 may provide a loan guarantee of not more than 50 percent of the
2-12 cost of the capital assets the eligible borrower is to purchase or
2-13 construct with the proceeds of the loan to an eligible lending
2-14 institution, if the eligible borrower holds money or other property
2-15 in an amount or value equal to not less than 10 percent of the cost
2-16 of those capital assets and that money or property is then
2-17 available for and is pledged to be applied to the purchase or
2-18 construction of those capital assets.
2-19 (d) Before making a loan guarantee, the department must have
2-20 determined that the eligible borrower has obtained from other
2-21 independent and responsible financial sources a firm commitment for
2-22 any other money in excess of the loan guaranteed by the department,
2-23 and that the sum of the money and the equity to be provided by the
2-24 eligible borrower is adequate for the purchase or construction of
2-25 the capital assets.
2-26 Sec. 481.199. PAYMENTS NOT TO BE MADE TO DEFAULTING USERS.
2-27 (a) The department shall report to the comptroller the name of any
3-1 eligible borrower who is in default on a loan guaranteed under this
3-2 subchapter and with respect to which the department has been
3-3 required to honor a guarantee. The comptroller may not issue a
3-4 warrant or initiate an electronic funds transfer to the eligible
3-5 borrower while the eligible borrower is in default.
3-6 (b) The comptroller may issue a warrant to the assignee of
3-7 an eligible borrower who is in default only if the assignment
3-8 became effective before the eligible borrower defaulted.
3-9 (c) This section does not prohibit the comptroller from
3-10 issuing a warrant or initiating an electronic funds transfer to pay
3-11 the compensation of a state officer or employee.
3-12 (d) A state agency may not use funds inside or outside the
3-13 state treasury to pay an eligible borrower if the agency knows that
3-14 the eligible borrower is in default on a loan guaranteed under this
3-15 subchapter and with respect to which the department has been
3-16 required to honor a guarantee. This subsection does not prohibit a
3-17 state agency from paying:
3-18 (1) the assignee of an eligible borrower who is in
3-19 default if the assignment became effective before the eligible
3-20 borrower defaulted; or
3-21 (2) the compensation of a state officer or employee.
3-22 (e) The comptroller may not reimburse a state agency for a
3-23 payment that is made in violation of Subsection (d).
3-24 (f) In this section:
3-25 (1) "Compensation" includes wages, salaries, longevity
3-26 pay, hazardous duty pay, and emoluments that are provided in lieu
3-27 of wages or salaries. The term does not include expense
4-1 reimbursements.
4-2 (2) "State agency" means a board, commission, council,
4-3 committee, department, office, agency, or other governmental entity
4-4 in the executive, legislative, or judicial branch of state
4-5 government. The term includes an institution of higher education
4-6 as defined by Section 61.003, Education Code.
4-7 (3) "State officer or employee" means an officer or
4-8 employee of a state agency.
4-9 Sec. 481.200. GUARANTEE-TO-RESERVE RATIO. (a) The
4-10 department may guarantee loans as provided by Section 481.198 in an
4-11 amount that exceeds the amount available in the program but does
4-12 not exceed the amount determined under the guarantee-to-reserve
4-13 ratio set by the policy board under this section.
4-14 (b) The policy board by rule shall adopt a
4-15 guarantee-to-reserve ratio that determines the amount of loan
4-16 guarantees that may be made that exceed the amount available in the
4-17 program. The ratio of guarantees to the amount of money available
4-18 may not exceed five to one.
4-19 (c) The policy board shall review the guarantee-to-reserve
4-20 ratio annually and adjust the ratio as appropriate. In reviewing
4-21 the guarantee-to-reserve ratio, the policy board shall consider the
4-22 payment experience of the loans and any recommendations of the
4-23 state auditor as provided by Subsection (d).
4-24 (d) The state auditor shall review the loan guarantee
4-25 program and payment activity. Based on that review, the state
4-26 auditor shall make to the policy board not later than September 1
4-27 of each year recommendations about the program and the
5-1 guarantee-to-reserve ratio.
5-2 (e) The department may not make a loan guarantee if the
5-3 department has more than $1,000,000 in outstanding loan guarantees
5-4 under this section.
5-5 Sec. 481.201. PENALTY FOR FALSE INFORMATION ON APPLICATION.
5-6 An applicant who knowingly provides false information in an
5-7 application under this subchapter:
5-8 (1) may not submit another application under this
5-9 subchapter at any time; and
5-10 (2) is liable to the state and any eligible lending
5-11 institution involved for any expense incurred by the state or
5-12 eligible lending institution, respectively, that would not have
5-13 been incurred if the applicant had not provided the false
5-14 information.
5-15 Sec. 481.202. GIFTS AND GRANTS. The department may accept
5-16 gifts, grants, and donations from any source for the purposes of
5-17 this subchapter.
5-18 SECTION 3. This Act takes effect September 1, 1997.
5-19 SECTION 4. The importance of this legislation and the
5-20 crowded condition of the calendars in both houses create an
5-21 emergency and an imperative public necessity that the
5-22 constitutional rule requiring bills to be read on three several
5-23 days in each house be suspended, and this rule is hereby suspended.