By:  Lucio                                                        S.B. No. 1520

A BILL TO BE ENTITLED
AN ACT
relating to the Texas Housing Finance Corporations Act. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subsection (a), Section 394.011, Local Government Code, is amended to read as follows: (a) The governing body of a local government shall consider a written application for the incorporation of a housing finance corporation filed with the governing body by one or more [at least three] residents of the local government who are citizens of this state and at least 18 years of age. SECTION 2. Subsection (a), Section 394.012, Local Government Code, is amended to read as follows: (a) The governing bodies of more than one local government may consider a written application for the incorporation of a joint housing finance corporation to act on behalf of the local governments filed by one or more [at least three] residents of each sponsoring local government who are citizens of this state and at least 18 years of age. SECTION 3. Section 394.013, Local Government Code, is amended to read as follows: Sec. 394.013. INCORPORATORS. One [Three] or more residents of the local government who are at least 18 years of age may act as incorporators of the housing finance corporation by signing, verifying, and delivering in duplicate to the secretary of state the articles of incorporation for the corporation. An incorporator may be a member of the governing body, an officer, or an employee of the local government. SECTION 4. Section 394.032, Local Government Code, is amended by amending Subsection (a) and adding Subsection (f) to read as follows: (a) A housing finance corporation may: (1) make contracts and other instruments as necessary or convenient to the exercise of powers under this chapter including entering partnership agreements; (2) incur liabilities; (3) borrow money at rates determined by the corporation; (4) issue notes, bonds, and other obligations; and (5) secure any of its obligations by the mortgage or pledge of all or part of the corporation's property, franchises, and income. (f) A housing finance corporation may be a partner in a general or limited partnership. SECTION 5. Subsection (b), Section 394.033, Local Government Code, is amended to read as follows: (b) A housing finance corporation may but is not required to have a corporate seal, which may be altered at will, and may but is not required to use the seal by causing it, or a facsimile of it, to be impressed on, affixed to, or otherwise reproduced on any instrument required to be executed by the corporation's officers including, but not limited to, its bonds. SECTION 6. Section 394.051, Local Government Code, is amended to read as follows: Sec. 394.051. BONDS; INVESTMENT. (a) A housing finance corporation may issue its bonds by resolution of the board of directors for the purposes prescribed by this chapter. The resolution takes effect immediately on adoption. The bonds bear interest at a rate authorized by Chapter 1204, Government Code, and are subject to the following terms provided by the resolution: (1) the time at which the bonds are payable; (2) the number of series in which the bonds are issued; (3) the dates that the bonds bear; (4) the time of maturity of the bonds; (5) the medium of payment and the place of payment of the bonds; (6) any registration privileges; (7) terms of redemption at certain premiums; (8) manner of execution of the bonds; (9) covenants and other terms of the bonds; and (10) the form of the bonds, either coupon or registered. (b) The bonds may be sold at public or private sale in the manner and on the terms provided by the resolution. Pending the preparation of definitive bonds, any interim receipts or certificates in the form and with the provisions provided by the resolution may be issued to the purchasers of bonds sold under this chapter. (c) [The aggregate principal amount of bonds that a housing finance corporation may issue in a calendar year to defray costs described by Section 394.037(a)(2) may not exceed the total of: [(1) the cost of issuance of the bonds, any reserves or capitalized interest required by the resolutions authorizing the bonds, plus any bond discounts; and [(2) the largest of: [(A) $20 million; [(B) the product of $150 and the population of the local government as determined by the corporation's rules, resolutions relating to the issuance of bonds, or financing documents relating to the issuance of the bonds; or [(C) an amount equal to 25 percent of the total dollar amount of the market demand for home mortgages during that calendar year as determined by the corporation's rules, resolutions relating to the issuance of bonds, or financing documents relating to the issuance of the bonds. [(d) A determination made under Subsection (c)(2)(B) or (c)(2)(C) is conclusive. [(e)] The housing finance corporation shall notify the Texas Department on Aging of each bond issuance for multifamily projects and shall deliver to the department a copy of each certificate of resolution authorizing the issuance and any other information required by the department. (d) [(f)] The housing finance corporation, or any trustee or custodian on behalf of the corporation, may invest any funds held by it as provided by the resolution authorizing the issuance of the bonds. (e) [(g)] The housing finance corporation is not required to acquire or hold title to a residential development, a home mortgage, or any interest in the development or mortgage. (f) [(h)] The housing finance corporation is not required to sell commitments to lenders to originate home mortgages. A housing financing corporation may establish a program so that lenders will utilize the proceeds of the bonds to originate home mortgages on a first-come, first-served basis. SECTION 7. Subsection (a), Section 394.053, Local Government Code, is amended to read as follows: (a) Bonds issued under this chapter must bear the actual or facsimile signature of the housing finance corporation's officers designated in the resolution authorizing the bonds. The validity of a signature of an officer of the corporation is not affected by the fact that before the delivery of the bond or its payment, a person whose signature appears on the bond ceases to be an officer. The corporation's seal need not be impressed on, applied to, or otherwise reproduced on the bonds for the bonds to be valid obligations of the corporation. SECTION 8. This Act takes effect immediately if it receives a vote of two-thirds of all members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2003.