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  85R1796 DDT-D
 
  By: Miles S.B. No. 723
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the establishment of a community development grocery
  store and healthy corner store revolving loan fund program.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  It is the intent of the legislature to support
  revitalization in food deserts, reduce the cost of financing
  agricultural development projects, and increase the number of food
  markets providing affordable and nutritious foods in underserved
  areas.
         SECTION 2.  Title 2, Agriculture Code, is amended by adding
  Chapter 26 to read as follows:
  CHAPTER 26. TEXAS COMMUNITY DEVELOPMENT GROCERY STORE AND HEALTHY
  CORNER STORE REVOLVING LOAN FUND
         Sec. 26.001.  DEFINITIONS. In this chapter:
               (1)  "Community development financial institution" has
  the meaning assigned by 12 U.S.C. Section 4702.
               (2)  "Corner store" means a store that has less than
  2,000 square feet of retail space.
               (3)  "Food desert" means a geographic area determined
  by the department to be an area that:
                     (A)  has limited access to healthy food retailers
  and is located in a lower-income or high-poverty area; or
                     (B)  otherwise has serious healthy food access
  limitations.
               (4)  "Fund" means the community development grocery
  store and healthy corner store revolving loan fund established by
  this chapter.
               (5)  "Grocery store" means a store that has at least:
                     (A)  66 percent of the store's retail space
  reserved for the sale of food products;
                     (B)  50 percent of the store's food retail space
  reserved for the sale of non-prepared foods or foods intended for
  home preparation and consumption; and
                     (C)  30 percent of the store's food retail space
  reserved for the sale of perishable foods, including dairy
  products, fresh produce, fresh meats, poultry, and fish, and frozen
  foods.
               (6)  "Healthy corner store" means a corner store that:
                     (A)  offers a wide variety of fresh produce for
  sale; and
                     (B)  allocates at least 20 percent of the store's
  retail space to fresh produce and other perishable foods, including
  dairy products.
               (7)  "Program" means the loan program authorized by
  this chapter.
               (8)  "Supplemental nutrition assistance program" means
  the nutritional assistance program formerly referred to as the food
  stamp program.
               (9)  "WIC program" means the federal special
  supplemental nutrition program for women, infants, and children
  authorized by 42 U.S.C. Section 1786.
         Sec. 26.002.  TRUST FUND. (a)  The community development
  grocery store and healthy corner store revolving loan fund is a
  trust fund outside the state treasury held by a community
  development financial institution and overseen by the department as
  trustee on behalf of entities operating grocery stores or healthy
  corner stores located in food deserts in this state.
         (b)  The fund is composed of:
               (1)  gifts or grants received from public or private
  sources; and
               (2)  income from other money in the fund.
         (c)  The department may accept on behalf of the fund gifts
  and grants for the use and benefit of the program.
         Sec. 26.003.  COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.
  (a)  The department shall contract with and award money, if
  available, to not more than five community development financial
  institutions to carry out the purposes of this chapter.
         (b)  In selecting a community development financial
  institution, the department shall consider the financial
  institution's:
               (1)  demonstrated success in implementing similar
  economic development projects;
               (2)  ability to raise additional capital; and
               (3)  solvency.
         (c)  The community development financial institution shall:
               (1)  provide revolving loan funds to entities proposing
  to operate or operating grocery stores or healthy corner stores in
  food deserts;
               (2)  develop, in consultation with the department, a
  system used to underwrite loan applications;
               (3)  provide training on business management and the
  profitable sale of healthy foods to corner store owners receiving a
  loan or grant money from the program;
               (4)  accept gifts and grants; and
               (5)  seek funding from various government and private
  sources.
         Sec. 26.004.  LOAN REVIEW COMMITTEE. (a) Before
  contracting with a community development financial institution,
  the department shall require the financial institution to establish
  or make use of an existing loan review committee to approve loan
  requests of entities proposing to operate or operating grocery
  stores or healthy corner stores.
         (b)  The loan review committee may not approve a loan request
  of an entity proposing to operate or operating a grocery store or
  healthy corner store unless the grocery store or healthy corner
  store:
               (1)  will be or currently is located in a food desert;
               (2)  will be or currently is located in a low and
  moderate income area, as determined by the United States Department
  of Housing and Urban Development, or will serve or currently is
  serving a customer base living in a low and moderate income area;
               (3)  will accept benefits under the WIC program and the
  supplemental nutrition assistance program not later than the 90th
  day after the date the store opens, or currently accepts benefits
  under those programs; and
               (4)  will be or currently is open year-round.
         Sec. 26.005.  CONSIDERATION OF OTHER RESOURCES. The loan
  review committee in approving a loan request shall give preference
  to an entity proposing to operate or operating a grocery store or
  healthy corner store that uses additional public and private
  resources to fund the grocery store or healthy corner store,
  including cash or in-kind matches.
         Sec. 26.006.  LOANS TO GROCERY STORES OR CORNER STORES. (a)
  The community development financial institution may not make a loan
  to an entity proposing to operate or operating a grocery store or
  healthy corner store in a food desert unless the loan review
  committee has approved the loan.
         (b)  A loan made by the community development financial
  institution may be subordinated debt.
         (c)  The community development financial institution may
  make a loan under the program through a partnership or joint
  investment with one or more financial institutions or federal or
  state programs.
         (d)  Payments on grocery store or healthy corner store loans
  shall be made to the community development financial institution.
  The community development financial institution shall use the
  repayments of loan principal by entities operating grocery stores
  or healthy corner stores to make new loans as provided by this
  chapter.
         (e)  The community development financial institution may
  make a forgivable loan at a zero percent interest rate for a period
  of five years to an entity proposing to operate or operating a
  grocery store or healthy corner store in a food desert. The
  community development financial institution that makes a
  forgivable loan under this subsection:
               (1)  may not make a forgivable loan to an entity that
  exceeds $500,000;
               (2)  may not forgive an amount greater than one-fifth
  of the forgivable loan amount each year;
               (3)  shall annually evaluate an entity that receives a
  forgivable loan under this subsection to ensure that the entity is
  in compliance with the requirements of this chapter; and
               (4)  if the community development financial
  institution determines that the entity is not in compliance with
  the requirements of this chapter, shall require the entity to repay
  the remaining balance of the forgivable loan.
         (f)  A loan provided under this chapter must be made from
  available funds that must be used for that purpose.
         Sec. 26.007.  INCREASE IN INTEREST RATE; ACCELERATED
  REPAYMENT.  If a recipient of a loan does not comply with the
  requirements of this chapter, the community development financial
  institution that made the loan, as provided by department rule,
  may:
               (1)  increase the interest rate on the loan;
               (2)  accelerate repayment of the principal of and
  interest on the loan; or
               (3)  take any other remedy permitted by department rule
  that the institution considers appropriate.
         Sec. 26.008.  SELF-FUNDING.  The department shall develop
  the fund program as a revolving loan fund that will become
  self-funding over the life of the program.
         Sec. 26.009.  INCOME FROM LOAN. All income received on a
  loan made with money received under the program is the property of
  the community development financial institution. Income received
  on a loan includes the payment of interest by a borrower and the
  administrative fees assessed by the community development
  financial institution.
         Sec. 26.010.  RULES. (a) The department shall adopt rules
  to administer this chapter, including rules that require:
               (1)  the department to review the lending and servicing
  practices of a community development financial institution to
  ensure the practices conform to generally accepted accounting
  principles;
               (2)  an eligible entity proposing to operate or
  operating a grocery store or healthy corner store to enter into an
  agreement with the community development financial institution
  that states the terms of the loan made to the entity;
               (3)  the community development financial institution
  to provide to the department semiannual reports giving details of
  the status of each loan made under the program;
               (4)  the community development financial institution
  to develop rules to regulate financial monitoring and inventory;
               (5)  a third-party certified public accountant to
  perform biennial audits of grocery stores for which loans are made
  under the program; and
               (6)  the department to provide oversight of the
  community development financial institution as necessary to
  qualify the community development financial institution for loan
  guarantees from federal or state programs.
         (b)  Under rules adopted by the department, the community
  development financial institution may:
               (1)  make grants to eligible entities proposing to
  operate or operating grocery stores or healthy corner stores from
  money other than money that may be received from the fund; or
               (2)  seek funds from state or federal agencies or
  private sources to supplement and complement any funds received
  under the program.
         (c)  The department may adopt other rules as necessary to
  accomplish the purposes of this chapter.
         Sec. 26.011.  BIENNIAL REPORT.  (a)  Not later than December
  1 of each even-numbered year, the department, in coordination with
  the community development financial institution, shall submit a
  report to the House Appropriations Committee, the Senate Finance
  Committee, the governor, and the Legislative Budget Board.
         (b)  The report must include for the preceding two state
  fiscal years:
               (1)  the number of entities receiving loans or grants
  under this chapter;
               (2)  repayment rates on loans;
               (3)  the total amount of money loaned or awarded by
  grants;
               (4)  the amount of square footage of commercial space
  created;
               (5)  the number of jobs created or retained;
               (6)  the average wages of the jobs created or retained;
  and
               (7)  the additional property tax revenue gained by
  local entities.
         SECTION 3.  Not later than November 15, 2017, the Department
  of Agriculture shall adopt rules to administer Chapter 26,
  Agriculture Code, as added by this Act.
         SECTION 4.  Not later than January 15, 2018, the Department
  of Agriculture shall designate community development financial
  institutions as provided by Section 26.003, Agriculture Code, as
  added by this Act, to carry out the purposes of Chapter 26,
  Agriculture Code, as added by this Act.
         SECTION 5.  Not later than February 15, 2018, the Department
  of Agriculture shall transfer money in the community development
  grocery store and healthy corner store revolving loan fund to a
  community development financial institution.
         SECTION 6.  This Act takes effect September 1, 2017.