By Patterson S.B. No. 1060
75R7836 RJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the management of certain funds by the Veterans Land
1-3 Board, to the creation of veterans assistance centers, and to the
1-4 Veterans Land Board's entering into bond enhancement agreements
1-5 for certain bonds.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 161.171(b), Natural Resources Code, is
1-8 amended to read as follows:
1-9 (b) Except as otherwise provided by law, money [Money] in
1-10 the fund shall be deposited in the State Treasury to the credit of
1-11 the fund.
1-12 SECTION 2. Subchapter E, Chapter 161, Natural Resources
1-13 Code, is amended by adding Sections 161.1731 and 161.1732 to read
1-14 as follows:
1-15 Sec. 161.1731. CUSTODY AND INVESTMENT OF ASSETS PENDING
1-16 TRANSACTIONS. The board, in managing the assets of the fund,
1-17 pending the completion of an 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
1-24 assets of the fund, the board may:
2-1 (1) select one or more commercial banks, depository
2-2 trust companies, or other entities to serve as a custodian of the
2-3 securities of the fund; and
2-4 (2) authorize the custodian to lend the securities
2-5 held under Subdivision (1) as provided by this section and by rules
2-6 adopted by the board.
2-7 (b) To be eligible to lend securities under this section, a
2-8 custodian selected by the board under Subsection (a) must be
2-9 experienced in the operation of a fully secured securities loan
2-10 program and must:
2-11 (1) maintain adequate capital in the prudent judgment
2-12 of the board to assure the safety of the securities;
2-13 (2) execute an indemnification agreement satisfactory
2-14 in form and content to the board fully indemnifying the board
2-15 against loss resulting from the custodian's operation of a
2-16 securities loan program for the fund's securities; and
2-17 (3) require any securities broker or dealer to whom it
2-18 lends securities of the fund to deliver to, and maintain with, the
2-19 custodian collateral in the form of cash or United States
2-20 government securities in an amount equal to at least 100 percent of
2-21 the market value, from time to time, of the loaned securities.
2-22 SECTION 3. Section 162.002(b), Natural Resources Code, is
2-23 amended to read as follows:
2-24 (b) Except as otherwise provided by law, money [Money] in
2-25 the fund shall be deposited in the State Treasury to the credit of
2-26 the fund.
2-27 SECTION 4. Subchapter A, Chapter 162, Natural Resources
3-1 Code, is amended by adding Sections 162.0041 and 162.0042 to read
3-2 as follows:
3-3 Sec. 162.0041. CUSTODY AND INVESTMENT OF ASSETS PENDING
3-4 TRANSACTIONS. The board, in managing the assets of the fund,
3-5 pending the completion of an investment transaction, may:
3-6 (1) select one or more commercial banks, depository
3-7 trust companies, or other entities to serve as a custodian of the
3-8 cash or securities of the fund; and
3-9 (2) authorize the custodian to invest cash held under
3-10 Subdivision (1) in the investments determined by the board.
3-11 Sec. 162.0042. LENDING SECURITIES. (a) In managing the
3-12 assets of the fund, the board may:
3-13 (1) select one or more commercial banks, depository
3-14 trust companies, or other entities to serve as a custodian of the
3-15 securities of the fund; and
3-16 (2) authorize the custodian to lend the securities
3-17 held under Subdivision (1) as provided by this section and by rules
3-18 adopted by the board.
3-19 (b) To be eligible to lend securities under this section, a
3-20 custodian selected by the board under Subsection (a) must be
3-21 experienced in the operation of a fully secured securities loan
3-22 program and must:
3-23 (1) maintain adequate capital in the prudent judgment
3-24 of the board to assure the safety of the securities;
3-25 (2) execute an indemnification agreement satisfactory
3-26 in form and content to the board fully indemnifying the board
3-27 against loss resulting from the custodian's operation of a
4-1 securities loan program for the fund's securities; and
4-2 (3) require any securities broker or dealer to whom it
4-3 lends securities of the fund to deliver to, and maintain with, the
4-4 custodian collateral in the form of cash or United States
4-5 government securities in an amount equal to at least 100 percent of
4-6 the market value, from time to time, of the loaned securities.
4-7 SECTION 5. Section 164.002, Natural Resources Code, is
4-8 amended by adding Subdivision (7) to read as follows:
4-9 (7) "Veterans assistance center" means a life care
4-10 facility, retirement home, retirement village, home for the aging,
4-11 or other facility that furnishes shelter, food, medical attention,
4-12 nursing services, medical services, social activities, or other
4-13 personal services or attention to veterans.
4-14 SECTION 6. Section 164.003, Natural Resources Code, is
4-15 amended to read as follows:
4-16 Sec. 164.003. FINANCIAL ASSISTANCE PROGRAMS. The board may
4-17 establish one or more programs for providing financial assistance
4-18 to veterans under this chapter. A program may be limited to the
4-19 purpose of purchasing land, selling land to veterans, [or] making
4-20 home mortgage loans to veterans, or providing one or more veterans
4-21 assistance centers. To the extent a financial assistance program
4-22 is for the purpose of purchasing land or selling land to veterans,
4-23 the program shall be administered, to the extent consistent with
4-24 this chapter and otherwise deemed practicable and desirable by the
4-25 board, in accordance with the board's Veterans' Land Program. To
4-26 the extent a financial assistance program is for the purpose of
4-27 making home mortgage loans to veterans, the program shall be
5-1 administered, to the extent consistent with this chapter and
5-2 otherwise deemed practicable and desirable by the board, in
5-3 accordance with the board's Veterans' Housing Assistance Program.
5-4 SECTION 7. Section 164.004, Natural Resources Code, is
5-5 amended to read as follows:
5-6 Sec. 164.004. RULES. The board shall adopt rules providing
5-7 for the administration of its financial assistance programs
5-8 established under this chapter, including rules concerning:
5-9 (1) the purchasing of land and the selling of land to
5-10 veterans;
5-11 (2) the making of home mortgage loans to veterans;
5-12 (3) the use of insurance on land and homes as deemed
5-13 appropriate by the board, as further security for land sold or home
5-14 mortgage loans made;
5-15 (4) the criteria for approving lending institutions
5-16 participating in programs;
5-17 (5) the terms and conditions of a contract made with a
5-18 lending institution; [and]
5-19 (6) the construction, acquisition, ownership,
5-20 operation, maintenance, enlargement, improvement, or furnishing or
5-21 equipping of veterans assistance centers; and
5-22 (7) other matters as the board deems appropriate.
5-23 SECTION 8. Section 164.005, Natural Resources Code, is
5-24 amended to read as follows:
5-25 Sec. 164.005. RIGHTS AND POWERS OF BOARD. (a) In
5-26 connection with the administration of its financial assistance
5-27 programs under this chapter, the board has and may exercise, to
6-1 the extent not inconsistent with this chapter, all the rights and
6-2 powers granted to it by Chapters 161 and 162 of this code relating
6-3 to the administration of the board's Veterans' Land Program and
6-4 Veterans' Housing Assistance Program.
6-5 (b) In administering any of the board's financial assistance
6-6 programs relating to veterans assistance centers, the board, or the
6-7 board in conjunction with other state or federal agencies, may
6-8 acquire by purchase, gift, devise, lease, or a combination of those
6-9 methods, construct, operate, enlarge, improve, furnish, or equip
6-10 one or more veterans assistance centers.
6-11 (c) The board may enter into an agreement with any person
6-12 for the management or operation of all or part of a veterans
6-13 assistance center. The board may delegate to the manager the
6-14 authority to manage the center and to employ and discharge
6-15 employees.
6-16 SECTION 9. Section 164.009, Natural Resources Code, is
6-17 amended to read as follows:
6-18 Sec. 164.009. SECURITY FOR THE BONDS. (a) The bonds issued
6-19 under this chapter shall be special obligations of the board. As
6-20 security for the payment of the bonds, the board may provide for a
6-21 pledge of and lien on:
6-22 (1) the receipts of all kinds of the veterans' land
6-23 fund, the veterans' housing assistance fund, and the veterans'
6-24 housing assistance fund II determined by the board, on the basis of
6-25 facts, circumstances, and expectations at the time of issuance of
6-26 the bonds, not to be required for the payment of principal of or
6-27 interest on the general obligation bonds issued under Article III,
7-1 Sections 49-b, 49-b-1, and 49-b-2, of the Texas Constitution or
7-2 to make payments with respect to principal or interest under a bond
7-3 enhancement agreement with respect to the general obligation bonds
7-4 if the bonds are issued to provide funds to purchase land and sell
7-5 land to veterans or to make home mortgage loans to veterans;
7-6 (2) the assets of the veterans' land fund, the
7-7 veterans' housing assistance fund, or the veterans' housing
7-8 assistance fund II determined by the board on the basis of facts,
7-9 circumstances, and expectations at the time of issuance of the
7-10 bonds not to be required for the purposes of the fund if the bonds
7-11 are issued to provide funds to purchase land and sell land to
7-12 veterans or to make home mortgage loans to veterans;
7-13 (3) the payments and repayments received by the board
7-14 from the board's financial assistance provided under this chapter;
7-15 (4) other program revenues; and
7-16 (5) other available revenues of the board.
7-17 (b) The pledge and lien are to be provided for and
7-18 determined in accordance with the resolution of the board providing
7-19 for the issuance and sale of the bonds.
7-20 SECTION 10. Section 164.010, Natural Resources Code, is
7-21 amended to read as follows:
7-22 Sec. 164.010. BOND ENHANCEMENT AGREEMENTS. (a) The board
7-23 may at any time and from time to time enter into one or more bond
7-24 enhancement agreements that the board deems to be necessary or
7-25 appropriate to place the obligation of the board, as represented by
7-26 the bonds, in whole or in part, on the interest rate, currency,
7-27 cash flow, or other basis desired by the board. Bond enhancement
8-1 agreements may include, on terms and conditions approved by the
8-2 board, interest rate swap agreements, currency swap agreements,
8-3 forward payment conversion agreements, agreements providing for
8-4 payments based on levels of or changes in interest rates or
8-5 currency exchange rates, agreements to exchange cash flows or a
8-6 series of payments, or agreements including options, puts, or
8-7 calls, to hedge payment, currency, rate, spread, or other exposure.
8-8 A bond enhancement agreement is an agreement for professional
8-9 services and shall contain the terms and conditions and be for the
8-10 period that the board approves. The cost to the board of the bond
8-11 enhancement agreement may be paid from the proceeds of the sale of
8-12 the bonds to which the bond enhancement agreement relates or from
8-13 any other source, including the revenues of the board that are
8-14 available for the purpose of paying the bonds or that may otherwise
8-15 be available to make those payments.
8-16 (b) The resolution of the board authorizing a bond
8-17 enhancement agreement may authorize one or more designated officers
8-18 or employees of the board to act on behalf of the board in
8-19 entering into and delivering the bond enhancement agreement and in
8-20 determining or setting the counterparty and terms of the bond
8-21 enhancement agreement specified in the resolution, except that the
8-22 resolution must set the maximum amount and term for the bond
8-23 enhancement agreement.
8-24 (c) Unless the board elects otherwise in its approval of a
8-25 bond enhancement agreement, the bond enhancement agreement is not a
8-26 credit agreement for purposes of Chapter 656, Acts of the 68th
8-27 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
9-1 Civil Statutes), regardless of whether the bonds relating to the
9-2 bond enhancement agreement were issued in part under that law.
9-3 SECTION 11. Section 164.011, Natural Resources Code, is
9-4 amended to read as follows:
9-5 Sec. 164.011. FUNDS. (a) In the resolution authorizing the
9-6 issuance of bonds, the board may make additional covenants with
9-7 respect to the bonds and the pledged revenues and may provide for
9-8 the flow of funds and the establishment, maintenance, and
9-9 investment of funds.
9-10 (b) The funds established may include an interest and
9-11 sinking fund, a reserve fund, and other funds that will be kept and
9-12 maintained by or under the direction of the board.
9-13 (c) Funds established by the board under this chapter are
9-14 not to be part of the State Treasury but, at the direction of the
9-15 board, may be kept and held in escrow and in trust by the state
9-16 treasurer on behalf of the board and the owners of the bonds and
9-17 used only as provided by this chapter.
9-18 (d) Money in a fund shall be invested in authorized
9-19 investments as provided by a bond resolution or order of the board.
9-20 (e) Legal title to money in a fund is in the board unless or
9-21 until paid from the fund as provided by this chapter or the
9-22 resolution authorizing the issuance of the bonds.
9-23 (f) The board shall select the comptroller or one or more
9-24 commercial banks, depository trust companies, or other entities to
9-25 serve as custodian of the cash or securities of the fund and may
9-26 authorize the custodian to invest the cash in investments as
9-27 determined by the board.
10-1 (g) In managing the assets of a fund, the board may permit
10-2 the custodian of the fund's securities to lend the securities as
10-3 provided by this section and by rules adopted by the board.
10-4 (h) To be eligible to lend securities under this section, a
10-5 custodian selected under Subsection (f) must be experienced in the
10-6 operation of a fully secured securities loan program and must:
10-7 (1) maintain adequate capital in the prudent judgment
10-8 of the board to assure the safety of the securities;
10-9 (2) execute an indemnification agreement satisfactory
10-10 in form and content to the board fully indemnifying the board
10-11 against loss resulting from the custodian's operation of a
10-12 securities loan program for the fund's securities; and
10-13 (3) require any securities broker or dealer to whom it
10-14 lends securities of the fund to deliver and maintain with the
10-15 custodian collateral in the form of cash or United States
10-16 government securities in an amount equal to at least 100 percent of
10-17 the market value, from time to time, of the loaned securities.
10-18 (i) The board shall require the [state treasurer, as]
10-19 custodian or custodians of the fund to[, shall] administer the fund
10-20 solely and strictly as provided by this chapter and the resolution
10-21 authorizing the issuance of the bonds, and the state may not take
10-22 any other action relating to the fund except those specified in
10-23 this chapter and the resolution authorizing the issuance of the
10-24 bonds.
10-25 SECTION 12. This Act takes effect September 1, 1997.
10-26 SECTION 13. The importance of this legislation and the
10-27 crowded condition of the calendars in both houses create an
11-1 emergency and an imperative public necessity that the
11-2 constitutional rule requiring bills to be read on three several
11-3 days in each house be suspended, and this rule is hereby suspended.