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By: Villarreal H.B. No. 727
A BILL TO BE ENTITLED
AN ACT
relating to a program of grants and loans to provide capital for
community development and economic development institutions in
economically distressed and low-income areas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 12, Finance Code, is amended by adding
Subchapter C to read as follows:
SUBCHAPTER C. TEXAS COMMUNITY DEVELOPMENT INVESTMENT PROGRAM
Sec. 12.201. DEFINITIONS. In this subchapter:
(1) "Community development financial institution" has
the meaning assigned by 12 U.S.C. Section 4702, as amended.
(2) "Community development investment" means a loan or
grant made to a community development financial institution for the
purpose of enhancing the provision of basic consumer financial
services.
(3) "Community development loan" means a loan from a
community development financial institution to a low-income
business or nonprofit organization for the purpose of revitalizing
a distressed community.
(4) "Eligible institution" means a community
development financial institution meeting the minimum selection
criteria described by 12 U.S.C. Section 4704, as amended.
(5) "Program" means the community investment program
established under this subchapter.
Sec. 12.202. COMMUNITY INVESTMENT PROGRAM. Notwithstanding
any other law, the department shall establish a community
investment program in which the department makes grants or
interest-free loans to eligible institutions that use the money to
make community development loans in distressed areas of the state
or to assist low-income areas by providing basic consumer financial
services.
Sec. 12.203. ELIGIBILITY. (a) The department shall
determine the eligibility of an institution by verifying that the
institution meets the minimum selection criteria described by 12
U.S.C. Section 4704, as amended.
(b) The department may set a limit on the number of eligible
institutions that may participate in the program.
(c) To participate in the program, an eligible institution
must enter into a participation agreement with the department that
sets out the terms and conditions under which the department will
make a grant or loan to the eligible institution.
Sec. 12.204. CAPACITY BUILDING. (a) The department may
make a grant to an institution or nonprofit organization to assist
the institution or organization to:
(1) meet the minimum selection criteria described by
12 U.S.C. Section 4704, as amended, or to otherwise obtain
assistance under 12 U.S.C. 4701 et seq., as amended; and
(2) become an eligible institution and participate in
the program.
(b) The department may make a grant to a nonprofit
organization the department determines is performing activities
consistent with the goals of this subchapter to provide the
organization operating support, technical assistance, and training
assistance.
Sec. 12.205. RULEMAKING AUTHORITY. The finance commission
shall adopt rules relating to the implementation of the program and
any other rules necessary to accomplish the purposes of this
subchapter.
Sec. 12.206. APPLICATION. (a) An eligible institution may
file a grant or loan application with the department. The
application must be in a form approved by the department and include
a plan of investment that includes the type and number of community
development loans or investments that the institution plans to make
using money from the program.
(b) The department shall act on a completed application not
later than the 30th day after the date on which the application is
filed with the department.
Sec. 12.207. OWNERSHIP OF INCOME. All income received on a
loan or investment made with money received under the program is the
property of the eligible institution that makes the loan or
investment.
Sec. 12.208. SEMIANNUAL REPORT. (a) Not later than the 30th
day after the expiration of each six-month period for which there is
a participation agreement in effect between the department and an
eligible institution, the eligible institution shall submit a
report to the department that states in detail the status of each
investment or loan made under the program.
(b) The report must be in a form prescribed by the
department and must contain all information required by the
department as part of the institution's participation agreement.
Sec. 12.209. ANNUAL AUDIT. The participation agreement
entered into between the eligible institution and the department
must provide for an annual audit. The finance commission shall
adopt rules relating to the format of the audit, including rules
allowing not more than $5,000 of the amount received by the eligible
institution under the program to be used to finance the audit.
SECTION 2. This Act takes effect September 1, 2005.