By Shapleigh                                           S.B. No. 838
         77R3483 DWS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to a program of grants and loans to provide capital for
 1-3     community development and economic development institutions in
 1-4     economically distressed and low-income areas.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Chapter 12, Finance Code, is amended by adding
 1-7     Subchapter C to read as follows:
 1-8        SUBCHAPTER C. TEXAS COMMUNITY DEVELOPMENT INVESTMENT PROGRAM
 1-9           Sec. 12.201.  DEFINITIONS.  In this subchapter:
1-10                 (1)  "Community development financial institution" has
1-11     the meaning assigned by 12 U.S.C. Section 4702, as amended.
1-12                 (2)  "Community development investment" means a loan or
1-13     grant made to a community development financial institution for the
1-14     purpose of enhancing the provision of basic consumer financial
1-15     services.
1-16                 (3)  "Community development loan" means a loan from a
1-17     community development financial institution to a low-income
1-18     business or nonprofit organization for the purpose of revitalizing
1-19     a distressed community.
1-20                 (4)  "Eligible institution" means a community
1-21     development financial institution meeting the minimum selection
1-22     criteria described by 12 U.S.C. Section 4704, as amended.
1-23                 (5)  "Program" means the community investment program
1-24     established under this subchapter.
 2-1           Sec. 12.202.  COMMUNITY INVESTMENT PROGRAM.  Notwithstanding
 2-2     any other law, the department shall establish a community
 2-3     investment program in which the department makes grants or
 2-4     interest-free loans to eligible institutions that use the money to
 2-5     make community development loans in distressed areas of the state
 2-6     or to assist low-income areas by providing basic consumer financial
 2-7     services.
 2-8           Sec. 12.203.  ELIGIBILITY.  (a)  The department shall
 2-9     determine the eligibility of an institution by verifying that the
2-10     institution meets the minimum selection criteria described by 12
2-11     U.S.C. Section 4704, as amended.
2-12           (b)  The department may set a limit on the number of eligible
2-13     institutions that may participate in the program.
2-14           (c)  To participate in the program, an eligible institution
2-15     must enter into a participation agreement with the department that
2-16     sets out the terms and conditions under which the department will
2-17     make a grant or loan to the eligible institution.
2-18           Sec. 12.204.  CAPACITY BUILDING.  (a)  The department may
2-19     make a grant to an institution or nonprofit organization to assist
2-20     the institution or organization to:
2-21                 (1)  meet the minimum selection criteria described by
2-22     12 U.S.C. Section 4704, as amended, or to otherwise obtain
2-23     assistance under 12 U.S.C. 4701 et seq., as amended; and
2-24                 (2)  become an eligible institution and participate in
2-25     the program.
2-26           (b)  The department may make a grant to a nonprofit
2-27     organization the department determines is performing activities
 3-1     consistent with the goals of this subchapter to provide the
 3-2     organization operating support, technical assistance, and training
 3-3     assistance.
 3-4           Sec. 12.205.  RULEMAKING AUTHORITY.  The finance commission
 3-5     shall adopt rules relating to the implementation of the program and
 3-6     any other rules necessary to accomplish the purposes of this
 3-7     subchapter.
 3-8           Sec. 12.206.  APPLICATION.  (a)  An eligible institution may
 3-9     file a grant or loan application with the department.  The
3-10     application must be in a form approved by the department and
3-11     include a plan of investment that includes the type and number of
3-12     community development loans or investments that the institution
3-13     plans to make using money from the program.
3-14           (b)  The department shall act on a completed application not
3-15     later than the 30th day after the date on which the application is
3-16     filed with the department.
3-17           Sec. 12.207.  OWNERSHIP OF INCOME.  All income received on a
3-18     loan or investment made with money received under the program is
3-19     the property of the eligible institution that makes the loan or
3-20     investment.
3-21           Sec. 12.208.  SEMIANNUAL REPORT.  (a)  Not later than the
3-22     30th day after the expiration of each six-month period for which
3-23     there is a participation agreement in effect between the department
3-24     and an eligible institution, the eligible institution shall submit
3-25     a report to the department that states in detail the status of each
3-26     investment or loan made under the program.
3-27           (b)  The report must be in a form prescribed by the
 4-1     department and must contain all information required by the
 4-2     department as part of the institution's participation agreement.
 4-3           Sec. 12.209.  ANNUAL AUDIT.  The participation agreement
 4-4     entered into between the eligible institution and the department
 4-5     must provide for an annual audit.  The finance commission shall
 4-6     adopt rules relating to the format of the audit, including rules
 4-7     allowing not more than $5,000 of the amount received by the
 4-8     eligible institution under the program to be used to finance the
 4-9     audit.
4-10           SECTION 2.  This Act takes effect September 1, 2001.