SRC-CTC H.B. 2816 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2816
77R9615 JSA-FBy: Brown, Fred (Ogden)
Education
5/4/2001
Engrossed


DIGEST AND PURPOSE 

Under current law, qualified scholarship funding corporations are
authorized at the request of a city or cities to issue revenue bonds to
acquire student loan notes guaranteed under the federal education loan
program. In 1996, Congress amended law to authorize these non-profit
corporations to change their tax status to that of a 501(c)(3) corporation,
but retain the original tax exemptions on the bonds by transferring them to
a taxable subsidiary.  To enable a nonprofit corporation to transfer all of
its bond obligations under the federal requirements of these amendments,
current provisions regulating higher education authorities need to be
amended.  H.B. 2816 authorizes a governing body of a city or cities to
create a nonprofit corporation as a higher education authority to issue
revenue bonds and loan the proceeds to an entity that has assumed the
obligations of the nonprofit corporation for the purpose of refunding the
tax-exempt obligations. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 53.47, Education Code, by adding Subsection (h),
to authorize the governing board of a city to authorize by ordinance or
resolution the creation of a nonprofit corporation under this chapter to
act on behalf of and as an instrumentality of the city solely to exercise
the power specifically granted by this subsection.  Authorizes a nonprofit
corporation created under this subsection, on approval by the city, to
issue revenue bonds for the sole purposes of paying the costs of issuing
the bonds and loaning the proceeds of the bonds to an entity that has
assumed the outstanding bond obligations of a nonprofit corporation for the
limited purpose of refunding outstanding bonds originally issued as
qualified scholarship funding bonds by a nonprofit corporation acting under
Subsection (e) that subsequently made the election permitted by Section
150(d)(3), Internal Revenue Code of 1986, as amended, to cease status as a
qualified scholarship funding corporation.  Provides that refunding bonds
issued under this section are solely the obligation of the issuing
nonprofit corporation and are prohibited from constituting a debt or
obligation of the city.  Requires the governing body of the city to approve
the articles of incorporation of the nonprofit corporation in the ordinance
or resolution authorizing the creation of the nonprofit corporation and to
approve any amendments to the articles of incorporation in the same manner.
Authorizes the corporation to be incorporated in the manner provided by the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., V.T.C.S.).
Requires the secretary of state to indicate on the certificate of
incorporation that the nonprofit corporation is created under this chapter.
Requires the board of directors of the nonprofit corporation to be selected
or appointed in the manner specified by the articles of incorporation.
Provides that the nonprofit corporation, in addition to the specific powers
granted by this subsection, has all powers granted under the Texas
Non-Profit Corporation Act that are necessary, incidental, or subordinate
in carrying out the purposes of this subsection.  Defines "qualified
scholarship funding bond." 

SECTION 2.  Effective date: upon passage or September 1, 2001.