Texas 2013 - 83rd Regular

Texas Senate Bill SB403 Compare Versions

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1	1	By: Zaffirini, et al. S.B. No. 403
2	2	(In the Senate - Filed February 5, 2013; February 13, 2013,
3	3	read first time and referred to Committee on Agriculture, Rural
4	4	Affairs, and Homeland Security; April 24, 2013, rereferred to
5	5	Committee on Government Organization; April 29, 2013, reported
6	6	adversely, with favorable Committee Substitute by the following
7	7	vote: Yeas 4, Nays 2; April 29, 2013, sent to printer.)
8	8	COMMITTEE SUBSTITUTE FOR S.B. No. 403 By: Garcia
9	9
10	10
11	11	A BILL TO BE ENTITLED
12	12	AN ACT
13	13	relating to the establishment of a community development grocery
14	14	store and healthy corner store revolving loan fund program.
15	15	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
16	16	SECTION 1. It is the intent of the legislature to support
17	17	revitalization in food deserts, reduce the cost of financing
18	18	agricultural development projects, and increase the number of food
19	19	markets providing affordable and nutritious foods in underserved
20	20	areas.
21	21	SECTION 2. Title 2, Agriculture Code, is amended by adding
22	22	Chapter 26 to read as follows:
23	23	CHAPTER 26. TEXAS COMMUNITY DEVELOPMENT GROCERY STORE AND HEALTHY
24	24	CORNER STORE REVOLVING LOAN FUND
25	25	Sec. 26.001. DEFINITIONS. In this chapter:
26	26	(1) "Community development financial institution" has
27	27	the meaning assigned by 12 U.S.C. Section 4702.
28	28	(2) "Corner store" means a store that has less than
29	29	2,000 square feet of retail space.
30	30	(3) "Food desert" means a geographic area determined
31	31	by the department to be an area that:
32	32	(A) has limited access to healthy food retailers
33	33	and is located in a lower-income or high-poverty area; or
34	34	(B) otherwise has serious healthy food access
35	35	limitations.
36	36	(4) "Fund" means the community development grocery
37	37	store and healthy corner store revolving loan fund established by
38	38	this chapter.
39	39	(5) "Grocery store" means a store that has at least:
40	40	(A) 66 percent of the store's retail space
41	41	reserved for the sale of food products;
42	42	(B) 50 percent of the store's food retail space
43	43	reserved for the sale of non-prepared foods or foods intended for
44	44	home preparation and consumption; and
45	45	(C) 30 percent of the store's food retail space
46	46	reserved for the sale of perishable foods, including dairy
47	47	products, fresh produce, fresh meats, poultry, and fish, and frozen
48	48	foods.
49	49	(6) "Healthy corner store" means a corner store that:
50	50	(A) offers a wide variety of fresh produce for
51	51	sale; and
52	52	(B) allocates at least 20 percent of the store's
53	53	retail space to fresh produce and other perishable foods, including
54	54	dairy products.
55	55	(7) "Program" means the loan program authorized by
56	56	this chapter.
57	57	(8) "Supplemental nutrition assistance program" means
58	58	the nutritional assistance program formerly referred to as the food
59	59	stamp program.
60	60	(9) "WIC program" means the federal special
61	61	supplemental nutrition program for women, infants, and children
62	62	authorized by 42 U.S.C. Section 1786.
63	63	Sec. 26.002. TRUST FUND. (a) The community development
64	64	grocery store and healthy corner store revolving loan fund is a
65	65	trust fund outside the state treasury held by a community
66	66	development financial institution and overseen by the department as
67	67	trustee on behalf of entities operating grocery stores or healthy
68	68	corner stores located in food deserts in this state.
69	69	(b) The fund is composed of:
70	70	(1) gifts or grants received from public or private
71	71	sources; and
72	72	(2) income from other money in the fund.
73	73	(c) The department may accept on behalf of the fund gifts
74	74	and grants for the use and benefit of the program.
75	75	Sec. 26.003. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.
76	76	(a) The department shall contract with and award money, if
77	77	available, to not more than five community development financial
78	78	institutions to carry out the purposes of this chapter.
79	79	(b) In selecting a community development financial
80	80	institution, the department shall consider the financial
81	81	institution's:
82	82	(1) demonstrated success in implementing similar
83	83	economic development projects;
84	84	(2) ability to raise additional capital; and
85	85	(3) solvency.
86	86	(c) The community development financial institution shall:
87	87	(1) provide revolving loan funds to entities proposing
88	88	to operate or operating grocery stores or healthy corner stores in
89	89	food deserts;
90	90	(2) develop, in consultation with the department, a
91	91	system used to underwrite loan applications;
92	92	(3) provide training on business management and the
93	93	profitable sale of healthy foods to corner store owners receiving a
94	94	loan or grant money from the program;
95	95	(4) accept gifts and grants; and
96	96	(5) seek funding from various government and private
97	97	sources.
98	98	Sec. 26.004. LOAN REVIEW COMMITTEE. (a) Before
99	99	contracting with a community development financial institution,
100	100	the department shall require the financial institution to establish
101	101	or make use of an existing loan review committee to approve loan
102	102	requests of entities proposing to operate or operating grocery
103	103	stores or healthy corner stores.
104	104	(b) The loan review committee may not approve a loan request
105	105	of an entity proposing to operate or operating a grocery store or
106	106	healthy corner store unless the grocery store or healthy corner
107	107	store:
108	108	(1) will be or currently is located in a food desert;
109	109	(2) will be or currently is located in a low and
110	110	moderate income area, as determined by the United States Department
111	111	of Housing and Urban Development, or will serve or currently is
112	112	serving a customer base living in a low and moderate income area;
113	113	(3) will accept benefits under the WIC program and the
114	114	supplemental nutrition assistance program not later than the 90th
115	115	day after the date the store opens, or currently accepts benefits
116	116	under those programs; and
117	117	(4) will be or currently is open year-round.
118	118	Sec. 26.005. CONSIDERATION OF OTHER RESOURCES. The loan
119	119	review committee in approving a loan request shall give preference
120	120	to an entity proposing to operate or operating a grocery store or
121	121	healthy corner store that uses additional public and private
122	122	resources to fund the grocery store or healthy corner store,
123	123	including cash or in-kind matches.
124	124	Sec. 26.006. LOANS TO GROCERY STORES OR CORNER STORES.
125	125	(a) The community development financial institution may not make a
126	126	loan to an entity proposing to operate or operating a grocery store
127	127	or healthy corner store in a food desert unless the loan review
128	128	committee has approved the loan.
129	129	(b) A loan made by the community development financial
130	130	institution may be subordinated debt.
131	131	(c) The community development financial institution may
132	132	make a loan under the program through a partnership or joint
133	133	investment with one or more financial institutions or federal or
134	134	state programs.
135	135	(d) Payments on grocery store or healthy corner store loans
136	136	shall be made to the community development financial institution.
137	137	The community development financial institution shall use the
138	138	repayments of loan principal by entities operating grocery stores
139	139	or healthy corner stores to make new loans as provided by this
140	140	chapter.
141	141	(e) The community development financial institution may
142	142	make a forgivable loan at a zero percent interest rate for a period
143	143	of five years to an entity proposing to operate or operating a
144	144	grocery store or healthy corner store in a food desert. The
145	145	community development financial institution that makes a
146	146	forgivable loan under this subsection:
147	147	(1) may not make a forgivable loan to an entity that
148	148	exceeds $500,000;
149	149	(2) may not forgive an amount greater than one-fifth
150	150	of the forgivable loan amount each year;
151	151	(3) shall annually evaluate an entity that receives a
152	152	forgivable loan under this subsection to ensure that the entity is
153	153	in compliance with the requirements of this chapter; and
154	154	(4) if the community development financial
155	155	institution determines that the entity is not in compliance with
156	156	the requirements of this chapter, shall require the entity to repay
157	157	the remaining balance of the forgivable loan.
158	158	(f) A loan provided under this chapter must be made from
159	159	available funds that must be used for that purpose.
160	160	Sec. 26.007. INCREASE IN INTEREST RATE; ACCELERATED
161	161	REPAYMENT. If a recipient of a loan does not comply with the
162	162	requirements of this chapter, the community development financial
163	163	institution that made the loan, as provided by department rule,
164	164	may:
165	165	(1) increase the interest rate on the loan;
166	166	(2) accelerate repayment of the principal of and
167	167	interest on the loan; or
168	168	(3) take any other remedy permitted by department rule
169	169	that the institution considers appropriate.
170	170	Sec. 26.008. SELF-FUNDING. The department shall develop
171	171	the fund program as a revolving loan fund that will become
172	172	self-funding over the life of the program.
173	173	Sec. 26.009. INCOME FROM LOAN. All income received on a
174	174	loan made with money received under the program is the property of
175	175	the community development financial institution. Income received
176	176	on a loan includes the payment of interest by a borrower and the
177	177	administrative fees assessed by the community development
178	178	financial institution.
179	179	Sec. 26.010. RULES. (a) The department shall adopt rules
180	180	to administer this chapter, including rules that require:
181	181	(1) the department to review the lending and servicing
182	182	practices of a community development financial institution to
183	183	ensure the practices conform to generally accepted accounting
184	184	principles;
185	185	(2) an eligible entity proposing to operate or
186	186	operating a grocery store or healthy corner store to enter into an
187	187	agreement with the community development financial institution
188	188	that states the terms of the loan made to the entity;
189	189	(3) the community development financial institution
190	190	to provide to the department semiannual reports giving details of
191	191	the status of each loan made under the program;
192	192	(4) the community development financial institution
193	193	to develop rules to regulate financial monitoring and inventory;
194	194	(5) a third-party certified public accountant to
195	195	perform biennial audits of grocery stores for which loans are made
196	196	under the program; and
197	197	(6) the department to provide oversight of the
198	198	community development financial institution as necessary to
199	199	qualify the community development financial institution for loan
200	200	guarantees from federal or state programs.
201	201	(b) Under rules adopted by the department, the community
202	202	development financial institution may:
203	203	(1) make grants to eligible entities proposing to
204	204	operate or operating grocery stores or healthy corner stores from
205	205	money other than money that may be received from the fund; or
206	206	(2) seek funds from state or federal agencies or
207	207	private sources to supplement and complement any funds received
208	208	under the program.
209	209	(c) The department may adopt other rules as necessary to
210	210	accomplish the purposes of this chapter.
211	211	Sec. 26.011. ANNUAL REPORT. (a) Not later than December 1
212	212	of each even-numbered year, the department, in coordination with
213	213	the community development financial institution, shall submit a
214	214	report to the House Appropriations Committee, the Senate Finance
215	215	Committee, the governor, and the Legislative Budget Board.
216	216	(b) The report must include for the preceding two state
217	217	fiscal years:
218	218	(1) the number of entities receiving loans or grants
219	219	under this chapter;
220	220	(2) repayment rates on loans;
221	221	(3) the total amount of money loaned or awarded by
222	222	grants;
223	223	(4) the amount of square footage of commercial space
224	224	created;
225	225	(5) the number of jobs created or retained;
226	226	(6) the average wages of the jobs created or retained;
227	227	and
228	228	(7) the additional property tax revenue gained by
229	229	local entities.
230	230	SECTION 3. Not later than November 15, 2013, the Department
231	231	of Agriculture shall adopt rules to administer Chapter 26,
232	232	Agriculture Code, as added by this Act.
233	233	SECTION 4. Not later than January 15, 2014, the Department
234	234	of Agriculture shall designate community development financial
235	235	institutions as provided by Section 26.003, Agriculture Code, as
236	236	added by this Act, to carry out the purposes of Chapter 26,
237	237	Agriculture Code, as added by this Act.
238	238	SECTION 5. Not later than February 15, 2014, the Department
239	239	of Agriculture shall transfer money in the community development
240	240	grocery store and healthy corner store revolving loan fund to a
241	241	community development financial institution.
242	242	SECTION 6. This Act takes effect September 1, 2013.
243	243	* * * * *