83R2728 AED-D
By: Ellis S.B. No. 415
A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a community development grocery
store revolving loan fund program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Agriculture Code, is amended by adding
Chapter 26 to read as follows:
CHAPTER 26. TEXAS COMMUNITY DEVELOPMENT GROCERY 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) "Food desert" means a census tract, based on the
most recent information published by the United States Bureau of
the Census, in which:
(A) the poverty rate is 20 percent or higher or
the median family income is at or below 80 percent of the area
median family income; and
(B) at least 500 people or at least 33 percent of
the census area's population reside more than:
(i) one mile from a grocery store, in the
case of a census tract other than a rural census tract; or
(ii) 10 miles from a grocery store, in the
case of a rural census tract.
(3) "Fund" means the community development grocery
store revolving loan fund established by this chapter.
(4) "Program" means the loan program authorized by
this chapter.
(5) "Supplemental nutrition assistance program" means
the nutritional assistance program formerly referred to as the food
stamp program.
(6) "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 revolving loan fund is a trust fund outside the state
treasury held by a community development financial institution and
administered by the department as trustee on behalf of entities
operating grocery stores located in food deserts in this state.
(b) The fund is composed of:
(1) money appropriated to the fund by the legislature;
(2) gifts or grants received from public or private
sources; and
(3) 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 INSTITUTION.
(a) The department shall contract with and award money to a
community development financial institution 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 grocery stores in food deserts;
(2) develop, in consultation with the department, a
scoring system used to score loan applications;
(3) accept gifts and grants; and
(4) seek funding from various government and private
sources.
Sec. 26.004. INVESTMENT COMMITTEE. (a) Before contracting
with a community development financial institution, the department
shall require the financial institution to establish an investment
committee to approve loan requests of entities proposing to operate
grocery stores.
(b) The investment committee may not approve a loan request
of an entity proposing to operate a grocery store unless the
proposed grocery store:
(1) will be located in a food desert; and
(2) will accept benefits under the WIC program and the
supplemental nutrition assistance program.
Sec. 26.005. LOANS TO GROCERY STORES. (a) The community
development financial institution may not make a loan to an entity
proposing to operate a grocery store in a food desert unless the
investment 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 loans shall be made to the
community development financial institution. The community
development financial institution shall use the loan payment money
received from entities operating grocery stores to make new loans
as provided by this chapter.
Sec. 26.006. 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. 26.007. 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. 26.008. 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 a grocery
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 perform annual audits of grocery stores for which loans are made
under the program; and
(5) 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 and state programs.
(b) Under rules adopted by the department, the community
development financial institution may:
(1) make grants to eligible entities proposing to
operate grocery stores from money other than money that is received
from the fund and that was derived from a legislative
appropriation; or
(2) seek funds from state or federal agencies or
private sources to supplement and complement the funds received
under the program.
(c) The department may adopt other rules as necessary to
accomplish the purposes of this chapter.
SECTION 2. Not later than December 1, 2013, the Department
of Agriculture shall adopt rules to administer Chapter 26,
Agriculture Code, as added by this Act.
SECTION 3. Not later than December 15, 2013, the Department
of Agriculture shall designate a community development financial
institution as provided by Section 26.003, Agriculture Code, as
added by this Act.
SECTION 4. Not later than January 15, 2014, the Department
of Agriculture shall transfer money in the community development
grocery store revolving loan fund to the community development
financial institution.
SECTION 5. This Act takes effect September 1, 2013.