1-1 By: Patterson, et al. S.B. No. 1060
1-2 (In the Senate - Filed March 10, 1997; March 12, 1997, read
1-3 first time and referred to Committee on Veteran Affairs and
1-4 Military Installations; April 9, 1997, reported favorably, as
1-5 amended, by the following vote: Yeas 4, Nays 0; April 9, 1997,
1-6 sent to printer.)
1-7 COMMITTEE AMENDMENT NO. 1 By: Patterson
1-8 Amend S.B. No. 1060 as follows:
1-9 (1) On page 1, line 45, insert "With the approval of the
1-10 state comptroller of public accounts," before "The board".
1-11 (2) On page 1, line 45, change "The board" to "the board".
1-12 (3) On page 2, line 23, insert "With the approval of the
1-13 state comptroller of public accounts," before "The board".
1-14 (4) On page 2, line 23, change "The board" to "the board".
1-15 COMMITTEE AMENDMENT NO. 2 By: Patterson
1-16 Amend S.B. No. 1060 as follows:
1-17 (1) On page 2, line 55 replace "Veterans assistance center"
1-18 with "Veterans home"
1-19 (2) On page 2, line 66-67 replace "veterans assistance
1-20 centers" with "veterans homes"
1-21 (3) On page 3, line 25 replace "veterans assistance centers"
1-22 with "veterans homes"
1-23 (4) On page 3, line 37 replace "veterans assistance centers"
1-24 with "veterans homes"
1-25 (5) On page 3, line 41 replace "veterans assistance centers"
1-26 with "veterans homes"
1-27 (6) On page 3, line 43-44 replace "veterans assistance
1-28 center" with "veterans home"
1-29 A BILL TO BE ENTITLED
1-30 AN ACT
1-31 relating to the management of certain funds by the Veterans' Land
1-32 Board, to the creation of veterans assistance centers, and to the
1-33 Veterans' Land Board's entering into bond enhancement agreements
1-34 for certain bonds.
1-35 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-36 SECTION 1. Subsection (b), Section 161.171, Natural
1-37 Resources Code, is amended to read as follows:
1-38 (b) Except as otherwise provided by law, money [Money] in
1-39 the fund shall be deposited in the State Treasury to the credit of
1-40 the fund.
1-41 SECTION 2. Subchapter E, Chapter 161, Natural Resources
1-42 Code, is amended by adding Sections 161.1731 and 161.1732 to read
1-43 as follows:
1-44 Sec. 161.1731. CUSTODY AND INVESTMENT OF ASSETS PENDING
1-45 TRANSACTIONS. The board, in managing the assets of the fund,
1-46 pending the completion of an investment transaction, may:
1-47 (1) select one or more commercial banks, depository
1-48 trust companies, or other entities to serve as a custodian of the
1-49 cash or securities of the fund; and
1-50 (2) authorize the custodian to invest cash held under
1-51 Subdivision (1) in the investments determined by the board.
1-52 Sec. 161.1732. LENDING SECURITIES. (a) In managing the
1-53 assets of the fund, the board may:
1-54 (1) select one or more commercial banks, depository
1-55 trust companies, or other entities to serve as a custodian of the
1-56 securities of the fund; and
1-57 (2) authorize the custodian to lend the securities
1-58 held under Subdivision (1) as provided by this section and by rules
1-59 adopted by the board.
1-60 (b) To be eligible to lend securities under this section, a
1-61 custodian selected by the board under Subsection (a) must be
1-62 experienced in the operation of a fully secured securities loan
1-63 program and must:
1-64 (1) maintain adequate capital in the prudent judgment
2-1 of the board to assure the safety of the securities;
2-2 (2) execute an indemnification agreement satisfactory
2-3 in form and content to the board fully indemnifying the board
2-4 against loss resulting from the custodian's operation of a
2-5 securities loan program for the fund's securities; and
2-6 (3) require any securities broker or dealer to whom it
2-7 lends securities of the fund to deliver to, and maintain with, the
2-8 custodian collateral in the form of cash or United States
2-9 government securities in an amount equal to at least 100 percent of
2-10 the market value, from time to time, of the loaned securities.
2-11 SECTION 3. Subsection (b), Section 162.002, Natural
2-12 Resources Code, is amended to read as follows:
2-13 (b) Except as otherwise provided by law, money [Money] in
2-14 the fund shall be deposited in the State Treasury to the credit of
2-15 the fund.
2-16 SECTION 4. Subchapter A, Chapter 162, Natural Resources
2-17 Code, is amended by adding Sections 162.0041 and 162.0042 to read
2-18 as follows:
2-19 Sec. 162.0041. CUSTODY AND INVESTMENT OF ASSETS PENDING
2-20 TRANSACTIONS. The board, in managing the assets of the fund,
2-21 pending the completion of an investment transaction, may:
2-22 (1) select one or more commercial banks, depository
2-23 trust companies, or other entities to serve as a custodian of the
2-24 cash or securities of the fund; and
2-25 (2) authorize the custodian to invest cash held under
2-26 Subdivision (1) in the investments determined by the board.
2-27 Sec. 162.0042. LENDING SECURITIES. (a) In managing the
2-28 assets of the fund, the board may:
2-29 (1) select one or more commercial banks, depository
2-30 trust companies, or other entities to serve as a custodian of the
2-31 securities of the fund; and
2-32 (2) authorize the custodian to lend the securities
2-33 held under Subdivision (1) as provided by this section and by rules
2-34 adopted by the board.
2-35 (b) To be eligible to lend securities under this section, a
2-36 custodian selected by the board under Subsection (a) must be
2-37 experienced in the operation of a fully secured securities loan
2-38 program and must:
2-39 (1) maintain adequate capital in the prudent judgment
2-40 of the board to assure the safety of the securities;
2-41 (2) execute an indemnification agreement satisfactory
2-42 in form and content to the board fully indemnifying the board
2-43 against loss resulting from the custodian's operation of a
2-44 securities loan program for the fund's securities; and
2-45 (3) require any securities broker or dealer to whom it
2-46 lends securities of the fund to deliver to, and maintain with, the
2-47 custodian collateral in the form of cash or United States
2-48 government securities in an amount equal to at least 100 percent of
2-49 the market value, from time to time, of the loaned securities.
2-50 SECTION 5. Section 164.002, Natural Resources Code, is
2-51 amended by adding Subdivision (7) to read as follows:
2-52 (7) "Veterans assistance center" means a life care
2-53 facility, retirement home, retirement village, home for the aging,
2-54 or other facility that furnishes shelter, food, medical attention,
2-55 nursing services, medical services, social activities, or other
2-56 personal services or attention to veterans.
2-57 SECTION 6. Section 164.003, Natural Resources Code, is
2-58 amended to read as follows:
2-59 Sec. 164.003. FINANCIAL ASSISTANCE PROGRAMS. The board may
2-60 establish one or more programs for providing financial assistance
2-61 to veterans under this chapter. A program may be limited to the
2-62 purpose of purchasing land, selling land to veterans, [or] making
2-63 home mortgage loans to veterans, or providing one or more veterans
2-64 assistance centers. To the extent a financial assistance program
2-65 is for the purpose of purchasing land or selling land to veterans,
2-66 the program shall be administered, to the extent consistent with
2-67 this chapter and otherwise deemed practicable and desirable by the
2-68 board, in accordance with the board's Veterans' Land Program. To
2-69 the extent a financial assistance program is for the purpose of
3-1 making home mortgage loans to veterans, the program shall be
3-2 administered, to the extent consistent with this chapter and
3-3 otherwise deemed practicable and desirable by the board, in
3-4 accordance with the board's Veterans' Housing Assistance Program.
3-5 SECTION 7. Section 164.004, Natural Resources Code, is
3-6 amended to read as follows:
3-7 Sec. 164.004. RULES. The board shall adopt rules providing
3-8 for the administration of its financial assistance programs
3-9 established under this chapter, including rules concerning:
3-10 (1) the purchasing of land and the selling of land to
3-11 veterans;
3-12 (2) the making of home mortgage loans to veterans;
3-13 (3) the use of insurance on land and homes as deemed
3-14 appropriate by the board, as further security for land sold or home
3-15 mortgage loans made;
3-16 (4) the criteria for approving lending institutions
3-17 participating in programs;
3-18 (5) the terms and conditions of a contract made with a
3-19 lending institution; [and]
3-20 (6) the construction, acquisition, ownership,
3-21 operation, maintenance, enlargement, improvement, or furnishing or
3-22 equipping of veterans assistance centers; and
3-23 (7) other matters as the board deems appropriate.
3-24 SECTION 8. Section 164.005, Natural Resources Code, is
3-25 amended to read as follows:
3-26 Sec. 164.005. RIGHTS AND POWERS OF BOARD. (a) In
3-27 connection with the administration of its financial assistance
3-28 programs under this chapter, the board has and may exercise, to the
3-29 extent not inconsistent with this chapter, all the rights and
3-30 powers granted to it by Chapters 161 and 162 of this code relating
3-31 to the administration of the board's Veterans' Land Program and
3-32 Veterans' Housing Assistance Program.
3-33 (b) In administering any of the board's financial assistance
3-34 programs relating to veterans assistance centers, the board, or the
3-35 board in conjunction with other state or federal agencies, may
3-36 acquire by purchase, gift, devise, lease, or a combination of those
3-37 methods, construct, operate, enlarge, improve, furnish, or equip
3-38 one or more veterans assistance centers.
3-39 (c) The board may enter into an agreement with any person
3-40 for the management or operation of all or part of a veterans
3-41 assistance center. The board may delegate to the manager the
3-42 authority to manage the center and to employ and discharge
3-43 employees.
3-44 SECTION 9. Section 164.009, Natural Resources Code, is
3-45 amended to read as follows:
3-46 Sec. 164.009. SECURITY FOR THE BONDS. (a) The bonds issued
3-47 under this chapter shall be special obligations of the board. As
3-48 security for the payment of the bonds, the board may provide for a
3-49 pledge of and lien on:
3-50 (1) the receipts of all kinds of the veterans' land
3-51 fund, the veterans' housing assistance fund, and the veterans'
3-52 housing assistance fund II determined by the board, on the basis of
3-53 facts, circumstances, and expectations at the time of issuance of
3-54 the bonds, not to be required for the payment of principal of or
3-55 interest on the general obligation bonds issued under Article III,
3-56 Sections 49-b, 49-b-1, and 49-b-2, of the Texas Constitution or
3-57 to make payments with respect to principal or interest under a bond
3-58 enhancement agreement with respect to the general obligation bonds
3-59 if the bonds are issued to provide funds to purchase land and sell
3-60 land to veterans or to make home mortgage loans to veterans;
3-61 (2) the assets of the veterans' land fund, the
3-62 veterans' housing assistance fund, or the veterans' housing
3-63 assistance fund II determined by the board on the basis of facts,
3-64 circumstances, and expectations at the time of issuance of the
3-65 bonds not to be required for the purposes of the fund if the bonds
3-66 are issued to provide funds to purchase land and sell land to
3-67 veterans or to make home mortgage loans to veterans;
3-68 (3) the payments and repayments received by the board
3-69 from the board's financial assistance provided under this chapter;
4-1 (4) other program revenues; and
4-2 (5) other available revenues of the board.
4-3 (b) The pledge and lien are to be provided for and
4-4 determined in accordance with the resolution of the board providing
4-5 for the issuance and sale of the bonds.
4-6 SECTION 10. Section 164.010, Natural Resources Code, is
4-7 amended to read as follows:
4-8 Sec. 164.010. BOND ENHANCEMENT AGREEMENTS. (a) The board
4-9 may at any time and from time to time enter into one or more bond
4-10 enhancement agreements that the board deems to be necessary or
4-11 appropriate to place the obligation of the board, as represented by
4-12 the bonds, in whole or in part, on the interest rate, currency,
4-13 cash flow, or other basis desired by the board. Bond enhancement
4-14 agreements may include, on terms and conditions approved by the
4-15 board, interest rate swap agreements, currency swap agreements,
4-16 forward payment conversion agreements, agreements providing for
4-17 payments based on levels of or changes in interest rates or
4-18 currency exchange rates, agreements to exchange cash flows or a
4-19 series of payments, or agreements including options, puts, or
4-20 calls, to hedge payment, currency, rate, spread, or other exposure.
4-21 A bond enhancement agreement is an agreement for professional
4-22 services and shall contain the terms and conditions and be for the
4-23 period that the board approves. The cost to the board of the bond
4-24 enhancement agreement may be paid from the proceeds of the sale of
4-25 the bonds to which the bond enhancement agreement relates or from
4-26 any other source, including the revenues of the board that are
4-27 available for the purpose of paying the bonds or that may otherwise
4-28 be available to make those payments.
4-29 (b) The resolution of the board authorizing a bond
4-30 enhancement agreement may authorize one or more designated officers
4-31 or employees of the board to act on behalf of the board in entering
4-32 into and delivering the bond enhancement agreement and in
4-33 determining or setting the counterparty and terms of the bond
4-34 enhancement agreement specified in the resolution, except that the
4-35 resolution must set the maximum amount and term for the bond
4-36 enhancement agreement.
4-37 (c) Unless the board elects otherwise in its approval of a
4-38 bond enhancement agreement, the bond enhancement agreement is not a
4-39 credit agreement for purposes of Chapter 656, Acts of the 68th
4-40 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
4-41 Civil Statutes), regardless of whether the bonds relating to the
4-42 bond enhancement agreement were issued in part under that law.
4-43 SECTION 11. Section 164.011, Natural Resources Code, is
4-44 amended to read as follows:
4-45 Sec. 164.011. FUNDS. (a) In the resolution authorizing the
4-46 issuance of bonds, the board may make additional covenants with
4-47 respect to the bonds and the pledged revenues and may provide for
4-48 the flow of funds and the establishment, maintenance, and
4-49 investment of funds.
4-50 (b) The funds established may include an interest and
4-51 sinking fund, a reserve fund, and other funds that will be kept and
4-52 maintained by or under the direction of the board.
4-53 (c) Funds established by the board under this chapter are
4-54 not to be part of the State Treasury but, at the direction of the
4-55 board, may be kept and held in escrow and in trust by the state
4-56 treasurer on behalf of the board and the owners of the bonds and
4-57 used only as provided by this chapter.
4-58 (d) Money in a fund shall be invested in authorized
4-59 investments as provided by a bond resolution or order of the board.
4-60 (e) Legal title to money in a fund is in the board unless or
4-61 until paid from the fund as provided by this chapter or the
4-62 resolution authorizing the issuance of the bonds.
4-63 (f) The board shall select the comptroller or one or more
4-64 commercial banks, depository trust companies, or other entities to
4-65 serve as custodian of the cash or securities of the fund and may
4-66 authorize the custodian to invest the cash in investments as
4-67 determined by the board.
4-68 (g) In managing the assets of a fund, the board may permit
4-69 the custodian of the fund's securities to lend the securities as
5-1 provided by this section and by rules adopted by the board.
5-2 (h) To be eligible to lend securities under this section, a
5-3 custodian selected under Subsection (f) must be experienced in the
5-4 operation of a fully secured securities loan program and must:
5-5 (1) maintain adequate capital in the prudent judgment
5-6 of the board to assure the safety of the securities;
5-7 (2) execute an indemnification agreement satisfactory
5-8 in form and content to the board fully indemnifying the board
5-9 against loss resulting from the custodian's operation of a
5-10 securities loan program for the fund's securities; and
5-11 (3) require any securities broker or dealer to whom it
5-12 lends securities of the fund to deliver and maintain with the
5-13 custodian collateral in the form of cash or United States
5-14 government securities in an amount equal to at least 100 percent of
5-15 the market value, from time to time, of the loaned securities.
5-16 (i) The board shall require the [state treasurer, as]
5-17 custodian or custodians of the fund to[, shall] administer the fund
5-18 solely and strictly as provided by this chapter and the resolution
5-19 authorizing the issuance of the bonds, and the state may not take
5-20 any other action relating to the fund except those specified in
5-21 this chapter and the resolution authorizing the issuance of the
5-22 bonds.
5-23 SECTION 12. This Act takes effect September 1, 1997.
5-24 SECTION 13. The importance of this legislation and the
5-25 crowded condition of the calendars in both houses create an
5-26 emergency and an imperative public necessity that the
5-27 constitutional rule requiring bills to be read on three several
5-28 days in each house be suspended, and this rule is hereby suspended.
5-29 * * * * *