1-1 By: Fraser S.B. No. 1555
1-2 (In the Senate - Filed March 12, 1999; March 15, 1999, read
1-3 first time and referred to Committee on Natural Resources;
1-4 April 6, 1999, reported favorably by the following vote: Yeas 6,
1-5 Nays 0; April 6, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to administration of bond and other programs by the
1-9 Veterans' Land Board.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 161.074, Natural Resources Code, is
1-12 amended to read as follows:
1-13 Sec. 161.074. BOND ENHANCEMENT AGREEMENTS. (a) The board
1-14 may at any time and from time to time enter into one or more bond
1-15 enhancement agreements that the board determines to be necessary or
1-16 appropriate to place the obligation of the board, as represented by
1-17 the bonds, in whole or in part, on the interest rate, currency,
1-18 cash flow, or other basis desired by the board. Bond enhancement
1-19 agreements may include, on terms and conditions approved by the
1-20 board, interest rate swap agreements, currency swap agreements,
1-21 forward payment conversion agreements, agreements providing for
1-22 payments based on levels of or changes in interest rates or
1-23 currency exchange rates, agreements to exchange cash flows or a
1-24 series of payments, or agreements, including options, puts, or
1-25 calls, to hedge payment, currency, rate, spread, or other exposure.
1-26 A bond enhancement agreement is an agreement for professional
1-27 services and shall contain the terms and conditions and be for the
1-28 period that the board approves. The fees and expenses of the board
1-29 in connection with the issuance of bonds and the purchase and sale
1-30 of land may be paid from money in the fund, provided that payments
1-31 due from the board under a bond enhancement agreement, other than
1-32 fees and expenses, that relate to the payment of debt service on
1-33 bonds constitute payments of principal of and interest on the
1-34 bonds.
1-35 (b) The resolution of the board authorizing a bond
1-36 enhancement agreement may authorize one or more designated officers
1-37 or employees of the board to act on behalf of the board in entering
1-38 into and delivering the bond enhancement agreement and in
1-39 determining or setting the counterparty and terms of the bond
1-40 enhancement agreement specified in the resolution, except that the
1-41 resolution must set the maximum amount and term for the bond
1-42 enhancement agreement.
1-43 (c) Unless the board elects otherwise in its approval of a
1-44 bond enhancement agreement, the bond enhancement agreement is not a
1-45 credit agreement for purposes of Chapter 656, Acts of the 68th
1-46 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
1-47 Civil Statutes), regardless of whether the bonds relating to the
1-48 bond enhancement agreement were issued in part under that law.
1-49 SECTION 2. Subsection (b), Section 161.1732, Natural
1-50 Resources Code, is amended to read as follows:
1-51 (b) To be eligible to lend securities under this section, a
1-52 custodian selected by the board under Subsection (a) must be
1-53 experienced in the operation of a fully secured securities loan
1-54 program and must:
1-55 (1) maintain adequate capital in the prudent judgment
1-56 of the board to assure the safety of the securities;
1-57 (2) execute an indemnification agreement satisfactory
1-58 in form and content to the board fully indemnifying the board
1-59 against loss resulting from the custodian's operation of a
1-60 securities loan program for the fund's securities; and
1-61 (3) require any securities broker or dealer to whom it
1-62 lends securities of the fund to deliver to, and maintain with, the
1-63 custodian collateral in the form of cash, [or] United States
1-64 government securities, or letters of credit that are issued by
2-1 banks and rated as to investment quality not less than A or its
2-2 equivalent by a nationally recognized investment rating firm in an
2-3 amount equal to at least 100 percent of the market value, from time
2-4 to time, of the loaned securities.
2-5 SECTION 3. Subsection (b), Section 161.312, Natural
2-6 Resources Code, is amended to read as follows:
2-7 (b) The notice shall state the reason why the contract of
2-8 sale and purchase is subject to forfeiture and is sufficient if
2-9 given by certified [registered] mail to the last known address of
2-10 the original purchaser and his vendees.
2-11 SECTION 4. Subsection (b), Section 162.0042, Natural
2-12 Resources Code, is amended to read as follows:
2-13 (b) To be eligible to lend securities under this section, a
2-14 custodian selected by the board under Subsection (a) must be
2-15 experienced in the operation of a fully secured securities loan
2-16 program and must:
2-17 (1) maintain adequate capital in the prudent judgment
2-18 of the board to assure the safety of the securities;
2-19 (2) execute an indemnification agreement satisfactory
2-20 in form and content to the board fully indemnifying the board
2-21 against loss resulting from the custodian's operation of a
2-22 securities loan program for the fund's securities; and
2-23 (3) require any securities broker or dealer to whom it
2-24 lends securities of the fund to deliver to, and maintain with, the
2-25 custodian collateral in the form of cash, [or] United States
2-26 government securities, or letters of credit that are issued by
2-27 banks and rated as to investment quality not less than A or its
2-28 equivalent by a nationally recognized investment rating firm in an
2-29 amount equal to at least 100 percent of the market value, from time
2-30 to time, of the loaned securities.
2-31 SECTION 5. Section 162.052, Natural Resources Code, is
2-32 amended to read as follows:
2-33 Sec. 162.052. BOND ENHANCEMENT AGREEMENTS. (a) The board
2-34 may at any time and from time to time enter into one or more bond
2-35 enhancement agreements that the board determines to be necessary or
2-36 appropriate to place the obligation of the board, as represented by
2-37 the bonds, in whole or in part, on the interest rate, currency,
2-38 cash flow, or other basis desired by the board. Bond enhancement
2-39 agreements may include, on terms and conditions approved by the
2-40 board, interest rate swap agreements, currency swap agreements,
2-41 forward payment conversion agreements, agreements providing for
2-42 payments based on levels of or changes in interest rates or
2-43 currency exchange rates, agreements to exchange cash flows or a
2-44 series of payments, or agreements, including options, puts, or
2-45 calls, to hedge payment, currency, rate, spread, or other exposure.
2-46 A bond enhancement agreement is an agreement for professional
2-47 services and shall contain the terms and conditions and be for the
2-48 period that the board approves. The fees and expenses of the board
2-49 in connection with the issuance of bonds and the making of loans
2-50 may be paid from money in the related fund, provided that any
2-51 payments due from the board under a bond enhancement agreement,
2-52 other than fees and expenses, that relate to the payment of debt
2-53 service on bonds constitute payments of principal of and interest
2-54 on the bonds.
2-55 (b) The resolution of the board authorizing a bond
2-56 enhancement agreement may authorize one or more designated officers
2-57 or employees of the board to act on behalf of the board in entering
2-58 into and delivering the bond enhancement agreement and in
2-59 determining or setting the counterparty and terms of the bond
2-60 enhancement agreement specified in the resolution, except that the
2-61 resolution must set the maximum amount and term for the bond
2-62 enhancement agreement.
2-63 (c) Unless the board elects otherwise in its approval of a
2-64 bond enhancement agreement, the bond enhancement agreement is not a
2-65 credit agreement for purposes of Chapter 656, Acts of the 68th
2-66 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
2-67 Civil Statutes), regardless of whether the bonds relating to the
2-68 bond enhancement agreement were issued in part under that law.
2-69 SECTION 6. Section 164.005, Natural Resources Code, is
3-1 amended by adding Subsections (d) and (e) to read as follows:
3-2 (d) The board may not authorize the use of any veterans home
3-3 in a manner that would entitle the United States to recover any
3-4 amounts pursuant to 38 U.S.C. Section 8136, as amended, or any
3-5 successor statute.
3-6 (e) On terms and conditions acceptable to it, the board may
3-7 accept and administer gifts, grants, or donations for the support,
3-8 acquisition, construction, operation, enlargement, improvement,
3-9 furnishing, or equipping of veterans homes and may enter into
3-10 agreements with a nonprofit corporation for the solicitation,
3-11 receipt, and disbursement of the gifts, grants, or donations.
3-12 SECTION 7. Section 164.009, Natural Resources Code, is
3-13 amended to read as follows:
3-14 Sec. 164.009. SECURITY FOR THE BONDS. (a) The bonds issued
3-15 under this chapter shall be special obligations of the board. As
3-16 security for the payment of the bonds, the board may provide for a
3-17 pledge of and lien or mortgage on:
3-18 (1) the receipts of all kinds of the veterans' land
3-19 fund, the veterans' housing assistance fund, and the veterans'
3-20 housing assistance fund II determined by the board, on the basis of
3-21 facts, circumstances, and expectations at the time of issuance of
3-22 the bonds, not to be required for the payment of principal of or
3-23 interest on the general obligation bonds issued under Article III,
3-24 Sections 49-b, 49-b-1, and 49-b-2, of the Texas Constitution or to
3-25 make payments with respect to principal or interest under a bond
3-26 enhancement agreement with respect to the general obligation bonds
3-27 if the bonds are issued to provide funds to purchase land and sell
3-28 land to veterans or to make home mortgage loans to veterans;
3-29 (2) the assets of the veterans' land fund, the
3-30 veterans' housing assistance fund, or the veterans' housing
3-31 assistance fund II determined by the board on the basis of facts,
3-32 circumstances, and expectations at the time of issuance of the
3-33 bonds not to be required for the purposes of the fund if the bonds
3-34 are issued to provide funds to purchase land and sell land to
3-35 veterans or to make home mortgage loans to veterans;
3-36 (3) the payments and repayments received by the board
3-37 from the board's financial assistance provided under this chapter;
3-38 (4) other program revenues; [and]
3-39 (5) other available revenues of the board; and
3-40 (6) one or more veterans homes.
3-41 (b) The pledge and lien or mortgage are to be provided for
3-42 and determined in accordance with the resolution of the board
3-43 providing for the issuance and sale of the bonds.
3-44 SECTION 8. Section 164.011, Natural Resources Code, is
3-45 amended to read as follows:
3-46 Sec. 164.011. FUNDS. (a) In the resolution authorizing the
3-47 issuance of bonds, the board may make additional covenants with
3-48 respect to the bonds and the pledged revenues and may provide for
3-49 the flow of funds and the establishment, maintenance, and
3-50 investment of funds.
3-51 [(b)] The funds established may include an interest and
3-52 sinking fund, a reserve fund, and other funds that will be kept and
3-53 maintained by or under the direction of the board.
3-54 (b) The board may by resolution provide for the
3-55 establishment, maintenance, and investment of additional funds into
3-56 which the board may deposit revenues from any financial assistance
3-57 program under this chapter that are not pledged to bonds, including
3-58 any gifts, grants, or donations accepted by the board for the
3-59 support, acquisition, construction, operation, enlargement,
3-60 improvement, furnishing, or equipping of veterans homes.
3-61 (c) Funds established by the board under this chapter are
3-62 not to be part of the State Treasury and are not subject to
3-63 Subchapter F, Chapter 404, Government Code. Any provision of this
3-64 chapter or other law that provides for the deposit of money or
3-65 another thing of value into the funds prevails over the
3-66 requirements of Subchapter F, Chapter 404, Government Code. The
3-67 funds shall remain under the control of the board but, at the
3-68 direction of the board, may be kept and held in escrow and in trust
3-69 by the comptroller on behalf of the board and the owners of the
4-1 bonds and used only as provided by this chapter.
4-2 (d) Money in a fund shall be invested in [authorized]
4-3 investments authorized as provided by a [bond] resolution or order
4-4 of the board.
4-5 (e) Legal title to money in a fund is in the board unless or
4-6 until paid from the fund as provided by this chapter or the
4-7 resolution authorizing the issuance of the bonds or the
4-8 establishment of the fund.
4-9 (f) The board shall select the comptroller or one or more
4-10 commercial banks, depository trust companies, or other entities to
4-11 serve as custodian of the cash or securities of a [the] fund and
4-12 may authorize the custodian to invest the cash in investments as
4-13 determined by the board.
4-14 (g) In managing the assets of a fund, the board may permit
4-15 the custodian of the fund's securities to lend the securities as
4-16 provided by this section and by rules adopted by the board.
4-17 (h) To be eligible to lend securities under this section, a
4-18 custodian selected under Subsection (f) must be experienced in the
4-19 operation of a fully secured securities loan program and must:
4-20 (1) maintain adequate capital in the prudent judgment
4-21 of the board to assure the safety of the securities;
4-22 (2) execute an indemnification agreement satisfactory
4-23 in form and content to the board fully indemnifying the board
4-24 against loss resulting from the custodian's operation of a
4-25 securities loan program for the fund's securities; and
4-26 (3) require any securities broker or dealer to whom it
4-27 lends securities of the fund to deliver and maintain with the
4-28 custodian collateral in the form of cash, [or] United States
4-29 government securities, or letters of credit that are issued by
4-30 banks and rated as to investment quality not less than A or its
4-31 equivalent by a nationally recognized investment rating firm in an
4-32 amount equal to at least 100 percent of the market value, from time
4-33 to time, of the loaned securities.
4-34 (i) The board shall require the custodian or custodians of a
4-35 [the] fund to administer the fund solely and strictly as provided
4-36 by this chapter and the resolution authorizing the issuance of the
4-37 bonds, and the state may not take any other action relating to the
4-38 fund except those specified in this chapter and the resolution
4-39 authorizing the issuance of the bonds or the establishment of the
4-40 fund.
4-41 SECTION 9. The importance of this legislation and the
4-42 crowded condition of the calendars in both houses create an
4-43 emergency and an imperative public necessity that the
4-44 constitutional rule requiring bills to be read on three several
4-45 days in each house be suspended, and this rule is hereby suspended,
4-46 and that this Act take effect and be in force from and after its
4-47 passage, and it is so enacted.
4-48 * * * * *