AN ACT
1-1 relating to the management of certain funds by the Veterans' Land
1-2 Board, to the creation of veterans homes, and to the Veterans' Land
1-3 Board's entering into bond enhancement agreements for certain
1-4 bonds.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subsection (b), Section 161.171, Natural
1-7 Resources Code, is amended to read as follows:
1-8 (b) Except as otherwise provided by law, money [Money] in
1-9 the fund shall be deposited in the State Treasury to the credit of
1-10 the fund.
1-11 SECTION 2. Subchapter E, Chapter 161, Natural Resources
1-12 Code, is amended by adding Sections 161.1731 and 161.1732 to read
1-13 as follows:
1-14 Sec. 161.1731. CUSTODY AND INVESTMENT OF ASSETS PENDING
1-15 TRANSACTIONS. With the approval of the comptroller, the board, in
1-16 managing the assets of the fund, pending the completion of an
1-17 investment transaction, may:
1-18 (1) select one or more commercial banks, depository
1-19 trust companies, or other entities to serve as a custodian of the
1-20 cash or securities of the fund; and
1-21 (2) authorize the custodian to invest cash held under
1-22 Subdivision (1) in the investments determined by the board.
1-23 Sec. 161.1732. LENDING SECURITIES. (a) In managing the
2-1 assets of the fund, the board may:
2-2 (1) select one or more commercial banks, depository
2-3 trust companies, or other entities to serve as a custodian of the
2-4 securities of the fund; and
2-5 (2) authorize the custodian to lend the securities
2-6 held under Subdivision (1) as provided by this section and by rules
2-7 adopted by the board.
2-8 (b) To be eligible to lend securities under this section, a
2-9 custodian selected by the board under Subsection (a) must be
2-10 experienced in the operation of a fully secured securities loan
2-11 program and must:
2-12 (1) maintain adequate capital in the prudent judgment
2-13 of the board to assure the safety of the securities;
2-14 (2) execute an indemnification agreement satisfactory
2-15 in form and content to the board fully indemnifying the board
2-16 against loss resulting from the custodian's operation of a
2-17 securities loan program for the fund's securities; and
2-18 (3) require any securities broker or dealer to whom it
2-19 lends securities of the fund to deliver to, and maintain with, the
2-20 custodian collateral in the form of cash or United States
2-21 government securities in an amount equal to at least 100 percent of
2-22 the market value, from time to time, of the loaned securities.
2-23 SECTION 3. Subsection (b), Section 162.002, Natural
2-24 Resources Code, is amended to read as follows:
2-25 (b) Except as otherwise provided by law, money [Money] in
3-1 the fund shall be deposited in the State Treasury to the credit of
3-2 the fund.
3-3 SECTION 4. Subchapter A, Chapter 162, Natural Resources
3-4 Code, is amended by adding Sections 162.0041 and 162.0042 to read
3-5 as follows:
3-6 Sec. 162.0041. CUSTODY AND INVESTMENT OF ASSETS PENDING
3-7 TRANSACTIONS. With the approval of the comptroller, the board, in
3-8 managing the assets of the fund, pending the completion of an
3-9 investment transaction, may:
3-10 (1) select one or more commercial banks, depository
3-11 trust companies, or other entities to serve as a custodian of the
3-12 cash or securities of the fund; and
3-13 (2) authorize the custodian to invest cash held under
3-14 Subdivision (1) in the investments determined by the board.
3-15 Sec. 162.0042. LENDING SECURITIES. (a) In managing the
3-16 assets of the fund, the board may:
3-17 (1) select one or more commercial banks, depository
3-18 trust companies, or other entities to serve as a custodian of the
3-19 securities of the fund; and
3-20 (2) authorize the custodian to lend the securities
3-21 held under Subdivision (1) as provided by this section and by rules
3-22 adopted by the board.
3-23 (b) To be eligible to lend securities under this section, a
3-24 custodian selected by the board under Subsection (a) must be
3-25 experienced in the operation of a fully secured securities loan
4-1 program and must:
4-2 (1) maintain adequate capital in the prudent judgment
4-3 of the board to assure the safety of the securities;
4-4 (2) execute an indemnification agreement satisfactory
4-5 in form and content to the board fully indemnifying the board
4-6 against loss resulting from the custodian's operation of a
4-7 securities loan program for the fund's securities; and
4-8 (3) require any securities broker or dealer to whom it
4-9 lends securities of the fund to deliver to, and maintain with, the
4-10 custodian collateral in the form of cash or United States
4-11 government securities in an amount equal to at least 100 percent of
4-12 the market value, from time to time, of the loaned securities.
4-13 SECTION 5. Section 164.002, Natural Resources Code, is
4-14 amended by adding Subdivision (7) to read as follows:
4-15 (7) "Veterans home" means a life care facility,
4-16 retirement home, retirement village, home for the aging, or other
4-17 facility that furnishes shelter, food, medical attention, nursing
4-18 services, medical services, social activities, or other personal
4-19 services or attention to veterans.
4-20 SECTION 6. Section 164.003, Natural Resources Code, is
4-21 amended to read as follows:
4-22 Sec. 164.003. FINANCIAL ASSISTANCE PROGRAMS. The board may
4-23 establish one or more programs for providing financial assistance
4-24 to veterans under this chapter. A program may be limited to the
4-25 purpose of purchasing land, selling land to veterans, [or] making
5-1 home mortgage loans to veterans, or providing one or more veterans
5-2 homes. To the extent a financial assistance program is for the
5-3 purpose of purchasing land or selling land to veterans, the program
5-4 shall be administered, to the extent consistent with this chapter
5-5 and otherwise deemed practicable and desirable by the board, in
5-6 accordance with the board's Veterans' Land Program. To the extent
5-7 a financial assistance program is for the purpose of making home
5-8 mortgage loans to veterans, the program shall be administered, to
5-9 the extent consistent with this chapter and otherwise deemed
5-10 practicable and desirable by the board, in accordance with the
5-11 board's Veterans' Housing Assistance Program.
5-12 SECTION 7. Section 164.004, Natural Resources Code, is
5-13 amended to read as follows:
5-14 Sec. 164.004. RULES. The board shall adopt rules providing
5-15 for the administration of its financial assistance programs
5-16 established under this chapter, including rules concerning:
5-17 (1) the purchasing of land and the selling of land to
5-18 veterans;
5-19 (2) the making of home mortgage loans to veterans;
5-20 (3) the use of insurance on land and homes as deemed
5-21 appropriate by the board, as further security for land sold or home
5-22 mortgage loans made;
5-23 (4) the criteria for approving lending institutions
5-24 participating in programs;
5-25 (5) the terms and conditions of a contract made with a
6-1 lending institution; [and]
6-2 (6) the construction, acquisition, ownership,
6-3 operation, maintenance, enlargement, improvement, or furnishing or
6-4 equipping of veterans homes; and
6-5 (7) other matters as the board deems appropriate.
6-6 SECTION 8. Section 164.005, Natural Resources Code, is
6-7 amended to read as follows:
6-8 Sec. 164.005. RIGHTS AND POWERS OF BOARD. (a) In
6-9 connection with the administration of its financial assistance
6-10 programs under this chapter, the board has and may exercise, to the
6-11 extent not inconsistent with this chapter, all the rights and
6-12 powers granted to it by Chapters 161 and 162 of this code relating
6-13 to the administration of the board's Veterans' Land Program and
6-14 Veterans' Housing Assistance Program.
6-15 (b) In administering any of the board's financial assistance
6-16 programs relating to veterans homes, the board, or the board in
6-17 conjunction with other state or federal agencies, may acquire by
6-18 purchase, gift, devise, lease, or a combination of those methods,
6-19 construct, operate, enlarge, improve, furnish, or equip one or more
6-20 veterans homes.
6-21 (c) The board may enter into an agreement with any person
6-22 for the management or operation of all or part of a veterans home.
6-23 The board may delegate to the manager the authority to manage the
6-24 center and to employ and discharge employees.
6-25 SECTION 9. Section 164.009, Natural Resources Code, is
7-1 amended to read as follows:
7-2 Sec. 164.009. SECURITY FOR THE BONDS. (a) The bonds issued
7-3 under this chapter shall be special obligations of the board. As
7-4 security for the payment of the bonds, the board may provide for a
7-5 pledge of and lien on:
7-6 (1) the receipts of all kinds of the veterans' land
7-7 fund, the veterans' housing assistance fund, and the veterans'
7-8 housing assistance fund II determined by the board, on the basis of
7-9 facts, circumstances, and expectations at the time of issuance of
7-10 the bonds, not to be required for the payment of principal of or
7-11 interest on the general obligation bonds issued under Article III,
7-12 Sections 49-b, 49-b-1, and 49-b-2, of the Texas Constitution or
7-13 to make payments with respect to principal or interest under a bond
7-14 enhancement agreement with respect to the general obligation bonds
7-15 if the bonds are issued to provide funds to purchase land and sell
7-16 land to veterans or to make home mortgage loans to veterans;
7-17 (2) the assets of the veterans' land fund, the
7-18 veterans' housing assistance fund, or the veterans' housing
7-19 assistance fund II determined by the board on the basis of facts,
7-20 circumstances, and expectations at the time of issuance of the
7-21 bonds not to be required for the purposes of the fund if the bonds
7-22 are issued to provide funds to purchase land and sell land to
7-23 veterans or to make home mortgage loans to veterans;
7-24 (3) the payments and repayments received by the board
7-25 from the board's financial assistance provided under this chapter;
8-1 (4) other program revenues; and
8-2 (5) other available revenues of the board.
8-3 (b) The pledge and lien are to be provided for and
8-4 determined in accordance with the resolution of the board providing
8-5 for the issuance and sale of the bonds.
8-6 SECTION 10. Section 164.010, Natural Resources Code, is
8-7 amended to read as follows:
8-8 Sec. 164.010. BOND ENHANCEMENT AGREEMENTS. (a) The board
8-9 may at any time and from time to time enter into one or more bond
8-10 enhancement agreements that the board deems to be necessary or
8-11 appropriate to place the obligation of the board, as represented by
8-12 the bonds, in whole or in part, on the interest rate, currency,
8-13 cash flow, or other basis desired by the board. Bond enhancement
8-14 agreements may include, on terms and conditions approved by the
8-15 board, interest rate swap agreements, currency swap agreements,
8-16 forward payment conversion agreements, agreements providing for
8-17 payments based on levels of or changes in interest rates or
8-18 currency exchange rates, agreements to exchange cash flows or a
8-19 series of payments, or agreements including options, puts, or
8-20 calls, to hedge payment, currency, rate, spread, or other exposure.
8-21 A bond enhancement agreement is an agreement for professional
8-22 services and shall contain the terms and conditions and be for the
8-23 period that the board approves. The cost to the board of the bond
8-24 enhancement agreement may be paid from the proceeds of the sale of
8-25 the bonds to which the bond enhancement agreement relates or from
9-1 any other source, including the revenues of the board that are
9-2 available for the purpose of paying the bonds or that may otherwise
9-3 be available to make those payments.
9-4 (b) The resolution of the board authorizing a bond
9-5 enhancement agreement may authorize one or more designated officers
9-6 or employees of the board to act on behalf of the board in entering
9-7 into and delivering the bond enhancement agreement and in
9-8 determining or setting the counterparty and terms of the bond
9-9 enhancement agreement specified in the resolution, except that the
9-10 resolution must set the maximum amount and term for the bond
9-11 enhancement agreement.
9-12 (c) Unless the board elects otherwise in its approval of a
9-13 bond enhancement agreement, the bond enhancement agreement is not a
9-14 credit agreement for purposes of Chapter 656, Acts of the 68th
9-15 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
9-16 Civil Statutes), regardless of whether the bonds relating to the
9-17 bond enhancement agreement were issued in part under that law.
9-18 SECTION 11. Section 164.011, Natural Resources Code, is
9-19 amended to read as follows:
9-20 Sec. 164.011. FUNDS. (a) In the resolution authorizing the
9-21 issuance of bonds, the board may make additional covenants with
9-22 respect to the bonds and the pledged revenues and may provide for
9-23 the flow of funds and the establishment, maintenance, and
9-24 investment of funds.
9-25 (b) The funds established may include an interest and
10-1 sinking fund, a reserve fund, and other funds that will be kept and
10-2 maintained by or under the direction of the board.
10-3 (c) Funds established by the board under this chapter are
10-4 not to be part of the State Treasury but, at the direction of the
10-5 board, may be kept and held in escrow and in trust by the state
10-6 treasurer on behalf of the board and the owners of the bonds and
10-7 used only as provided by this chapter.
10-8 (d) Money in a fund shall be invested in authorized
10-9 investments as provided by a bond resolution or order of the board.
10-10 (e) Legal title to money in a fund is in the board unless or
10-11 until paid from the fund as provided by this chapter or the
10-12 resolution authorizing the issuance of the bonds.
10-13 (f) The board shall select the comptroller or one or more
10-14 commercial banks, depository trust companies, or other entities to
10-15 serve as custodian of the cash or securities of the fund and may
10-16 authorize the custodian to invest the cash in investments as
10-17 determined by the board.
10-18 (g) In managing the assets of a fund, the board may permit
10-19 the custodian of the fund's securities to lend the securities as
10-20 provided by this section and by rules adopted by the board.
10-21 (h) To be eligible to lend securities under this section, a
10-22 custodian selected under Subsection (f) must be experienced in the
10-23 operation of a fully secured securities loan program and must:
10-24 (1) maintain adequate capital in the prudent judgment
10-25 of the board to assure the safety of the securities;
11-1 (2) execute an indemnification agreement satisfactory
11-2 in form and content to the board fully indemnifying the board
11-3 against loss resulting from the custodian's operation of a
11-4 securities loan program for the fund's securities; and
11-5 (3) require any securities broker or dealer to whom it
11-6 lends securities of the fund to deliver and maintain with the
11-7 custodian collateral in the form of cash or United States
11-8 government securities in an amount equal to at least 100 percent of
11-9 the market value, from time to time, of the loaned securities.
11-10 (i) The board shall require the [state treasurer, as]
11-11 custodian or custodians of the fund to[, shall] administer the fund
11-12 solely and strictly as provided by this chapter and the resolution
11-13 authorizing the issuance of the bonds, and the state may not take
11-14 any other action relating to the fund except those specified in
11-15 this chapter and the resolution authorizing the issuance of the
11-16 bonds.
11-17 SECTION 12. The importance of this legislation and the
11-18 crowded condition of the calendars in both houses create an
11-19 emergency and an imperative public necessity that the
11-20 constitutional rule requiring bills to be read on three several
11-21 days in each house be suspended, and this rule is hereby suspended,
11-22 and that this Act take effect and be in force from and after its
11-23 passage, and it is so enacted.
S.B. No. 1060
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1060 passed the Senate on
April 14, 1997, by the following vote: Yeas 30, Nays 0; and that
the Senate concurred in House amendment on April 24, 1997, by the
following vote: Yeas 29, Nays 0.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1060 passed the House, with
amendment, on April 22, 1997, by the following vote: Yeas 143,
Nays 0, two present not voting.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor