76R10113 E
By Greenberg, Coleman, Giddings, Siebert, H.B. No. 64
Solis of Cameron, et al.
Substitute the following for H.B. No. 64:
By Solis of Cameron C.S.H.B. No. 64
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a Texas community investment program to assist certain
1-3 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 481, Government Code, is amended by
1-6 adding Subchapter Q to read as follows:
1-7 SUBCHAPTER Q. TEXAS COMMUNITY INVESTMENT PROGRAM
1-8 Sec. 481.221. DEFINITIONS. In this subchapter:
1-9 (1) "Community development investor" means a federally
1-10 certified community development financial institution or multibank
1-11 community development corporation.
1-12 (2) "Multibank community development corporation"
1-13 means a corporation organized to provide community development
1-14 funds to businesses that employ low and moderate income persons by
1-15 investing in and making loans to disadvantaged businesses located
1-16 in distressed areas of the state.
1-17 (3) "Program" means the community investment program
1-18 established under this subchapter.
1-19 Sec. 481.222. COMMUNITY INVESTMENT PROGRAM. (a)
1-20 Notwithstanding any other law, the department shall establish a
1-21 community investment program in which the department makes grants
1-22 or interest-free loans to or purchases stock of community
1-23 development investors that use the money to make loans to or invest
1-24 in businesses that are located in distressed areas of the state and
2-1 that cannot qualify for conventional bank loans.
2-2 (b) The department shall determine the eligibility of a
2-3 community development investor to participate in the program and
2-4 may set a limit on the number of eligible community development
2-5 investors that may participate in the program.
2-6 (c) A community development investor is eligible to
2-7 participate in the program if the community development investor
2-8 has raised at least $400,000 in private investments to make loans
2-9 or investments described by Subsection (a).
2-10 (d) To participate in the program, an eligible community
2-11 development investor must enter into a participation agreement with
2-12 the department that sets out the terms and conditions under which
2-13 the department will make a grant or loan to or purchase stock of
2-14 the community development investor.
2-15 Sec. 481.223. RULEMAKING AUTHORITY. The governing board
2-16 shall adopt rules relating to the implementation of the program and
2-17 any other rules necessary to accomplish the purposes of this
2-18 subchapter.
2-19 Sec. 481.224. APPLICATION. (a) An eligible community
2-20 development investor may file a grant or loan application with the
2-21 department in a form approved by the department. The application
2-22 must include a plan of investment that includes the type and number
2-23 of businesses to which the community development investor plans to
2-24 make a loan or in which the community development investor plans to
2-25 invest using money from the program.
2-26 (b) The executive director shall act on a completed
2-27 application not later than the 30th day after the date on which the
3-1 application is filed with the department.
3-2 Sec. 481.225. USE OF MONEY. (a) Not later than the last
3-3 day of the 18th month after the month in which a community
3-4 development investor receives a grant or loan from the department,
3-5 the community development investor shall use the money, or commit
3-6 the money to be used, to make loans to or equity investments in
3-7 businesses that are located in distressed areas of the state and
3-8 that cannot qualify for conventional loans. Not later than the
3-9 10th day after the expiration of this 18-month period, the
3-10 community development investor shall return to the department any
3-11 amount of the grant or loan from the department not used as
3-12 required by this subsection.
3-13 (b) A community development investor that has losses of more
3-14 than 25 percent on loans or investments made with money received
3-15 under the program shall:
3-16 (1) return all unencumbered money received under the
3-17 program to the department; and
3-18 (2) deliver to the executive director all of the
3-19 documentation and related instruments concerning loans and
3-20 investments made with money received under the program.
3-21 Sec. 481.226. ELIGIBLE INVESTMENTS. (a) Each community
3-22 development investor participating in the program shall establish
3-23 an investment committee to approve loan or investment requests made
3-24 by businesses. Each investment committee must have at least five
3-25 members, at least 30 percent of whom must be bankers and at least
3-26 30 percent of whom must be representatives of the community.
3-27 (b) A community development investor may use money received
4-1 under the program to make a loan or investment only if the loan or
4-2 investment is approved by the investment committee.
4-3 (c) A loan made by a community development investor may be a
4-4 subordinated debt.
4-5 (d) A community development investor shall use at least 60
4-6 percent of the amounts received under the program for loans to or
4-7 investments in businesses that have existed for at least one year
4-8 before the date on which the loan or investment is made.
4-9 Sec. 481.227. COLLABORATIVE EFFORT. A community development
4-10 investor may make a loan or investment under the program with one
4-11 or more financial institutions through partnerships or joint
4-12 investments.
4-13 Sec. 481.228. LIMITATIONS RELATING TO LOANS. (a) The
4-14 maximum amount that a community development investor may loan to a
4-15 single business under the program is:
4-16 (1) $200,000 if all of the loan to the business is
4-17 direct; or
4-18 (2) $100,000 if any of the business's debt to the
4-19 community development investor is subordinated to a bank or other
4-20 entity.
4-21 (b) The maximum term of the loan is 15 years.
4-22 Sec. 481.229. LIMITATIONS RELATING TO EQUITY INVESTMENTS.
4-23 (a) The maximum equity investment that a community development
4-24 investor may make in a single business under the program is
4-25 $50,000.
4-26 (b) The maximum term of the investment is seven years.
4-27 (c) The maximum amount of ownership that a community
5-1 development investor may acquire in a business is 50 percent of the
5-2 business's equity.
5-3 Sec. 481.230. OWNERSHIP OF INCOME. All income received on a
5-4 loan or investment made with money received under the program is
5-5 the property of the community development investor that makes the
5-6 loan or investment.
5-7 Sec. 481.231. SEMIANNUAL REPORT. (a) Not later than the
5-8 30th day after the expiration of each six-month period for which
5-9 there is a participation agreement in effect between the department
5-10 and a community development investor, the community development
5-11 investor shall submit a report to the executive director that
5-12 states in detail the status of each investment or loan made under
5-13 the program.
5-14 (b) The report must be in a form prescribed by the
5-15 department and must contain all information required by the
5-16 department as part of the community development investor's
5-17 participation agreement.
5-18 Sec. 481.232. ANNUAL AUDIT. The participation agreement
5-19 entered into between the community development investor and the
5-20 department must provide for an annual audit of all money received
5-21 by the community development investor under the program. The
5-22 governing board shall adopt rules relating to the format of the
5-23 audit, including rules allowing not more than $5,000 of the amount
5-24 received by the community development investor under the program to
5-25 be used to finance the audit.
5-26 SECTION 2. This Act does not make an appropriation. The
5-27 Texas Department of Economic Development must establish the
6-1 community investment program under Subchapter Q, Chapter 481,
6-2 Government Code, if money is specifically appropriated to fund that
6-3 program.
6-4 SECTION 3. This Act takes effect September 1, 1999.
6-5 SECTION 4. The importance of this legislation and the
6-6 crowded condition of the calendars in both houses create an
6-7 emergency and an imperative public necessity that the
6-8 constitutional rule requiring bills to be read on three several
6-9 days in each house be suspended, and this rule is hereby suspended.