|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the management of public school land and the investment |
|
of the permanent school fund. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Sections 51.011(a) and (a-1), Natural Resources |
|
Code, are amended to read as follows: |
|
(a) Any land, mineral or royalty interest, real estate |
|
investment, or other interest, including revenue received from |
|
those sources, that is set apart to the permanent school fund under |
|
the constitution and laws of this state together with the mineral |
|
estate in riverbeds, channels, and the tidelands, including |
|
islands, shall be subject to the sole and exclusive management and |
|
control of the school land board and the commissioner under the |
|
provisions of this chapter and other applicable law. |
|
(a-1) The board may acquire, sell, lease, trade, improve, |
|
maintain, protect, or otherwise manage, control, or use land, |
|
mineral and royalty interests, real estate investments, or other |
|
interests, including revenue received from those sources, that are |
|
[is] set apart to the permanent school fund in any manner, at such |
|
prices, and under such terms and conditions as the board finds to be |
|
in the best interest of the fund. |
|
SECTION 2. The heading to Section 51.401, Natural Resources |
|
Code, is amended to read as follows: |
|
Sec. 51.401. REAL ESTATE SPECIAL FUND ACCOUNT. |
|
SECTION 3. Sections 51.401(a) and (b), Natural Resources |
|
Code, are amended to read as follows: |
|
(a) The board may designate funds received from any land, |
|
mineral or royalty interest, real estate investment, or other |
|
interest, including revenue received from those sources, that is |
|
set apart to the permanent school fund under the constitution and |
|
laws of this state together with the mineral estate in riverbeds, |
|
channels, and the tidelands, including islands, [the sale of
|
|
permanent school fund land under this chapter and the proceeds of
|
|
future mineral leases and royalties generated from existing and
|
|
future leases of permanent school fund mineral interests received
|
|
under Chapters 52 and 53] for deposit in the real estate [a] special |
|
fund account of the permanent school fund in the State Treasury to |
|
be used by the board as provided by this subchapter. |
|
(b) The real estate special fund account must be an |
|
interest-bearing account, and the interest received on the account |
|
shall be deposited in the State Treasury to the credit of the real |
|
estate special fund account of the permanent school fund. |
|
SECTION 4. Subchapter I, Chapter 51, Natural Resources |
|
Code, is amended by adding Section 51.4011 to read as follows: |
|
Sec. 51.4011. DESIGNATION OF BOARD AS MANAGER OF REAL |
|
ESTATE SPECIAL FUND ACCOUNT. The board shall manage and control the |
|
real estate special fund account for purposes of Section 4, Article |
|
VII, Texas Constitution. |
|
SECTION 5. Section 51.402, Natural Resources Code, is |
|
amended by amending Subsections (a) and (b) and adding Subsections |
|
(b-1) and (d) to read as follows: |
|
(a) The board may use the money designated under Section |
|
51.401 for any of the following purposes: |
|
(1) to acquire, sell, lease, trade, improve, maintain, |
|
protect, or use land, mineral or royalty interests, or real estate |
|
investments at prices and under terms the board determines to be in |
|
the best interest of the permanent school fund [to add to a tract of
|
|
public school land to form a tract of sufficient size to be
|
|
manageable]; |
|
(2) [to add contiguous land to public school land;
|
|
[(3) to acquire, as public school land, interests in
|
|
real property for biological, commercial, geological, cultural, or
|
|
recreational purposes;
|
|
[(4) to acquire mineral and royalty interests for the
|
|
use and benefit of the permanent school fund;
|
|
[(5) to protect, maintain, or enhance the value of
|
|
public school land;
|
|
[(6)to acquire interests in real estate; or
|
|
[(7)] to pay reasonable fees for professional services |
|
related to a permanent school fund investment; or |
|
(3) to accomplish any other purpose allowed under the |
|
constitution and laws of this state regarding permanent school fund |
|
real estate or interests in real estate. |
|
(b) Before using funds under Subsection (a), the board must |
|
determine, using the prudent investor standard, that the use of the |
|
funds for the intended purpose is authorized by Subsection (a) and |
|
in the best interest of the permanent school fund. A determination |
|
by the board on the use of funds under this section is conclusive |
|
unless the determination was made as a result of fraud or obvious |
|
error. |
|
(b-1) The board may confer with one or more employees of the |
|
board or with a third party regarding an investment or potential |
|
investment in real estate, including the acquisition or potential |
|
acquisition of interests in real estate, to the extent permitted to |
|
the board of trustees of the Texas growth fund under Section |
|
551.075, Government Code. |
|
(d) Notwithstanding Subsection (a), money designated under |
|
Section 51.401 may not be invested in a real estate investment |
|
trust, as defined by Section 200.001, Business Organizations Code, |
|
the interest of which is: |
|
(1) listed on a national securities exchange; |
|
(2) listed on the NASDAQ Stock Market; or |
|
(3) publicly traded on a foreign securities exchange |
|
or listed on a foreign market system. |
|
SECTION 6. Section 51.4021, Natural Resources Code, is |
|
amended to read as follows: |
|
Sec. 51.4021. APPOINTMENT OF REAL ESTATE SPECIAL FUND |
|
MANAGERS, INVESTMENT CONSULTANTS, OR ADVISORS. (a) The board may |
|
appoint investment managers, consultants, or advisors to invest or |
|
assist the board in investing the money designated under Section |
|
51.401 by contracting for professional investment management or |
|
investment advisory services with one or more organizations that |
|
are in the business of managing or advising on the management of |
|
real estate investments. |
|
(b) To be eligible for appointment under this section, an |
|
investment manager, consultant, or advisor shall agree to abide by |
|
the [must be:
|
|
[(1) registered under the Investment Advisers Act of
|
|
1940 (15 U.S.C. Section 80b-1 et seq.);
|
|
[(2)a bank as defined by that Act; or
|
|
[(3) an insurance company qualified to perform real
|
|
estate investment services under the laws of more than one state.
|
|
[(c) In a contract under this section, the board shall
|
|
specify any] policies, requirements, or restrictions, including |
|
ethical standards and disclosure policies and criteria for |
|
determining the quality of investments and for the use of standard |
|
rating services, that the board adopts for real estate investments |
|
of the permanent school fund. [Money designated under Section
|
|
51.401 may not be invested in a real estate investment trust, as
|
|
defined by Section 200.001, Business Organizations Code.] |
|
(c) [(d)] Compensation paid to an investment manager, |
|
consultant, or advisor by the board must be consistent with the |
|
compensation standards of the investment industry and compensation |
|
paid by similarly situated institutional investors. |
|
(d) [(e)] Chapter 2263, Government Code, applies to |
|
investment managers, consultants, or advisors appointed under this |
|
section. The board by rule shall adopt standards of conduct for |
|
investment managers, consultants, or advisors appointed under this |
|
section as required by Section 2263.004, Government Code, and shall |
|
implement the disclosure requirements of Section 2263.005 of that |
|
code. |
|
SECTION 7. Section 51.412(a), Natural Resources Code, is |
|
amended to read as follows: |
|
(a) Not later than September 1 of each even-numbered year, |
|
the board shall submit to the legislature a report that, |
|
specifically and in detail, assesses the direct and indirect |
|
economic impact, as anticipated by the board, of the investment of |
|
funds designated under Section 51.401 for deposit in the real |
|
estate special fund account of the permanent school fund. The board |
|
may not disclose information under this section that is |
|
confidential under applicable state or federal law. The report |
|
must include the following information: |
|
(1) the total amount of money designated by Section |
|
51.401 for deposit in the real estate special fund account of the |
|
permanent school fund that the board intends to invest; |
|
(2) the rate of return the board expects to attain on |
|
the investment; |
|
(3) the amount of money the board expects to |
|
distribute to the permanent school fund after making the |
|
investments; |
|
(4) the distribution of the board's investments by |
|
county; |
|
(5) the effect of the board's investments on the level |
|
of employment, personal income, and capital investment in the |
|
state; and |
|
(6) any other information the board considers |
|
necessary to include in the report. |
|
SECTION 8. Subchapter I, Chapter 51, Natural Resources |
|
Code, is amended by adding Section 51.413 to read as follows: |
|
Sec. 51.413. TRANSFERS FROM REAL ESTATE SPECIAL FUND |
|
ACCOUNT TO AVAILABLE SCHOOL FUND. On the first working day of each |
|
month in a state fiscal year, the comptroller shall transfer from |
|
the real estate special fund account of the permanent school fund to |
|
the available school fund an amount equal to one-twelfth of the |
|
annual distribution from the real estate special fund account of |
|
the permanent school fund to the available school fund as provided |
|
by Section 4, Article VII, Texas Constitution, for the fiscal year. |
|
SECTION 9. Sections 51.401(c) and (d), Natural Resources |
|
Code, are repealed. |
|
SECTION 10. This Act takes effect immediately if this Act |
|
receives a vote of two-thirds of all the 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, 2007. |