87R7141 CLG-D
By: Hinojosa S.B. No. 1465
A BILL TO BE ENTITLED
AN ACT
relating to operation of the Texas small and rural community
success fund program administered by the Texas Economic Development
Bank as successor to the Texas leverage fund program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 489, Government Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. TEXAS SMALL AND RURAL COMMUNITY SUCCESS FUND
Sec. 489.251. DEFINITION. In this subchapter, "fund" means
the Texas small and rural community success fund established by
Section 489.252.
Sec. 489.252. TEXAS SMALL AND RURAL COMMUNITY SUCCESS FUND.
(a) The Texas small and rural community success fund is created as
a trust fund held outside the state treasury by the comptroller as
trustee. The comptroller shall hold money in the fund in escrow and
in trust for and on behalf of the bank and the owners of bonds issued
under Section 489.253.
(b) The fund consists of:
(1) proceeds from the issuance of bonds under Section
489.253;
(2) payments of principal and interest on loans made
under this subchapter;
(3) loan origination fees imposed on loans made under
this subchapter;
(4) investment earnings described by Subsection (e);
and
(5) any other money received by the bank under this
subchapter.
(c) The fund may be used only:
(1) to make loans to economic development corporations
for eligible projects as authorized by Chapters 501, 504, and 505,
Local Government Code;
(2) to pay the bank's necessary and reasonable costs of
administering the program established by this subchapter,
including the payment of letter of credit fees and credit rating
fees;
(3) to pay the principal of and interest on bonds
issued under Section 489.253;
(4) to pay reasonable fees and other costs incurred by
the bank in administering the fund; and
(5) for any other purpose authorized by this
subchapter.
(d) The bank, in coordination with the comptroller, may
provide for the establishment and maintenance of separate accounts
or sub-accounts in the fund, including interest and sinking
accounts, reserve accounts, program accounts, or other accounts.
The accounts and sub-accounts must be kept and held in escrow and in
trust as provided by Subsection (a).
(e) Pending use, the comptroller may invest and reinvest the
money in the fund in investments authorized by law for state funds.
Earnings on the investments shall be credited to the fund.
(f) The bank may use money in the fund for the purposes
specified by and according to the procedures established by this
subchapter. This state may take action with respect to the fund
only as specified by this subchapter and only in accordance with the
resolutions of the executive director of the office adopted under
Section 489.253.
Sec. 489.253. REVENUE-BASED BONDS AUTHORIZED. (a) The
bank, the office, or the office's successor agency may provide for
the issuance, sale, and retirement of bonds, including obligations
in the form of commercial paper notes, to provide funding for
economic development purposes as authorized by Section 52-a,
Article III, Texas Constitution, and this subchapter.
(b) The bonds are special obligations of the bank and the
principal of and interest on the bonds must be payable solely from
the revenues derived by the bank under this subchapter, including
loan repayments secured by a pledge of the local economic
development sales and use tax revenues imposed by municipalities
for the benefit of economic development corporations created under
Chapters 504 and 505, Local Government Code. The bonds do not
constitute an indebtedness of this state, the office, or the bank in
the meaning of the Texas Constitution or of any statutory
limitation. The bonds do not constitute a pecuniary liability of
this state, the office, or the bank or constitute a charge against
the general credit of this state, the office, or the bank, or
against the taxing power of this state. The limitations provided by
this subsection must be stated plainly on the face of each bond.
(c) The executive director of the office by resolution may
provide for the bonds to:
(1) be executed and delivered at any time in one or
more series as a single issue or as several issues;
(2) be in any denomination and form, including
registered uncertificated bonds not represented by written
instruments and commonly known as book-entry obligations, the
registration of ownership and transfer of which the bank shall
provide for under a system of books and records maintained by a
financial institution serving as trustee, paying agent, or bond
registrar;
(3) be of a term authorized by the executive director,
not to exceed 40 years from their date;
(4) be in coupon or registered form;
(5) be payable in installments and at a time or times
not exceeding the term authorized by applicable law;
(6) be subject to terms of redemption;
(7) be payable at a place or places;
(8) bear no interest or bear interest at any rate or
rates, fixed, variable, floating, or otherwise determined by the
bank or determined under a contractual arrangement approved by the
executive director, except that the maximum net effective interest
rate, computed in accordance with Section 1204.005, on the bonds
may not exceed a rate equal to the maximum annual interest rate
established by Section 1204.006; and
(9) contain provisions not inconsistent with this
subchapter.
(d) Bonds issued under this section are subject to review
and approval by the attorney general in the same manner and with the
same effect as may be required by law, including Chapter 1202 or
1371, as applicable.
(e) This state pledges to and agrees with the owners of any
bonds issued under this section that this state will not limit or
alter the rights vested in the bank to fulfill the terms of any
agreements made with an owner or in any way impair the rights and
remedies of an owner until the bonds, together with any premium and
the interest on the bonds, with interest on any unpaid premium or
installments of interest, and all costs and expenses in connection
with any action or proceeding by or on behalf of the owners, are
fully met and discharged. The bank may include this pledge and
agreement of this state in any agreement with the owners of the
bonds.
Sec. 489.254. BOND SALE AND ISSUANCE. (a) Bonds issued
under Section 489.253 may be sold at public or private sale at a
price and in a manner and from time to time as resolutions of the
executive director of the office that authorize issuance of the
bonds provide.
(b) From the proceeds of the sale of the bonds, the bank may
pay expenses, premiums, and insurance premiums that the bank
considers necessary or advantageous in connection with the
authorization, sale, and issuance of the bonds.
(c) In connection with the issuance of its bonds, the bank
may exercise the powers granted to the governing body of an issuer
in connection with the issuance of obligations under Chapter 1371.
However, any bonds issued in accordance with this subchapter and
Chapter 1371 are not subject to the rating requirement for an
obligation issued under Chapter 1371.
Sec. 489.255. AGREEMENTS IN BONDS. (a) A resolution of the
executive director of the office that authorizes bonds to be issued
under Section 489.253 or a security agreement, including a related
indenture or trust indenture, may contain any agreements and
provisions customarily contained in instruments securing bonds,
including provisions respecting the fixing and collection of
obligations, the creation and maintenance of special funds, and the
rights and remedies available, in the event of default to the
holders of the bonds or to the trustee under the security agreement,
all as the bank considers advisable and consistent with this
subchapter. However, in making such an agreement or provision, the
bank may not incur:
(1) a pecuniary liability of this state, the office,
or the bank; or
(2) a charge against the general credit of this state,
the office, or the bank, or against the taxing powers of this state.
(b) The resolution of the executive director of the office
authorizing the issuance of the bonds and a security agreement
securing the bonds may provide that, in the event of default in
payment of the principal of or interest on the bonds or in the
performance of an agreement contained in the proceedings or
security agreement, the payment and performance may be enforced as
provided by Sections 403.055 and 403.0551, by mandamus, or by the
appointment of a receiver in equity with power to charge and collect
bonds and to apply revenues pledged according to the proceedings or
the provisions of the security agreement. A security agreement may
provide that, in the event of default in payment or the violation of
an agreement contained in the security agreement, a trustee under
the security agreement may enforce the bondholder's rights by
mandamus or other proceedings at law or in equity to obtain any
relief permitted by law, including the right to collect and receive
any revenue used to secure the bonds.
(c) A breach of a resolution of the executive director of
the office adopted under Section 489.253, a breach of an agreement
made under this section, or a default under bonds issued under this
subchapter does not constitute:
(1) a pecuniary liability of this state, the office,
or the bank; or
(2) a charge against the general credit of this state,
the office, or the bank, or against the taxing power of this state.
(d) The trustee or trustees under a security agreement or a
depository specified by the security agreement may be any person
that the bank designates, regardless of whether the person is a
resident of this state or incorporated under the laws of the United
States or any state.
Sec. 489.256. REFUNDING BONDS. (a) Bonds issued under
Section 489.253 may be refunded by the bank by the issuance of the
bank's refunding bonds in the amount that the bank considers
necessary to refund the unpaid principal of the refunded bonds,
together with any unpaid interest, premiums, expenses, and
commissions required to be paid in connection with the refunded
bonds. Refunding may be effected whether the refunded bonds have
matured or are to mature later, either by sale of the refunding
bonds or by exchange of the refunding bonds for the refunded bonds.
(b) A holder of refunded bonds may not be compelled to
surrender the bonds for payment or exchange before the date on which
the bonds are payable, or, if the bonds are called for redemption,
before the date on which they are by their terms subject to
redemption.
(c) Refunding bonds having a final maturity not to exceed
that permitted for other bonds issued under Section 489.253 may be
issued under the same terms and conditions provided by this
subchapter for the issuance of bonds or may be issued in the manner
provided by statute, including Chapters 1207 and 1371.
Sec. 489.257. USE OF BOND PROCEEDS. The proceeds from the
sale of bonds issued under this subchapter may be applied only for a
purpose for which the bonds were issued, except that:
(1) any secured interest received in the sale shall be
applied to the payment of the principal of or interest on the bonds
sold and, if a portion of the proceeds is not needed for a purpose
for which the bonds were issued, that portion shall be applied to
the payment of the principal of or interest on the bonds; and
(2) any premium received in the sale of the bonds shall
be applied in accordance with Section 1201.042(d).
Sec. 489.258. BONDS AS LEGAL INVESTMENTS FOR FIDUCIARIES
AND OTHER PERSONS. (a) Bonds of the bank issued under this
subchapter are securities in which all public officers and bodies
of this state; municipalities; municipal subdivisions; insurance
companies and associations and other persons carrying on an
insurance business; banks, bankers, trust companies, savings and
loan associations, investment companies, and other persons
carrying on a banking business; administrators, guardians,
executors, trustees, and other fiduciaries; and other persons
authorized to invest in other obligations of this state may invest
funds, including capital, in their control or belonging to them.
(b) Notwithstanding any other provision of law, the bonds of
the bank issued under this subchapter are also securities that may
be deposited with and received by public officers and bodies of this
state and municipalities and municipal subdivisions for any purpose
for which the deposit of other obligations of the state are
authorized.
Sec. 489.259. ADMINISTRATION OF FUND. The bank shall
administer the fund. In administering the fund and this
subchapter, the bank has the powers necessary to carry out the
purposes of this subchapter, including the power to:
(1) make, execute, and deliver contracts,
conveyances, and other instruments; and
(2) impose charges and provide for reasonable
penalties for delinquent payments or performance in connection with
any transaction.
SECTION 2. Section 501.008, Local Government Code, is
amended to read as follows:
Sec. 501.008. LIMITATION ON FINANCIAL OBLIGATION. (a)
Except as provided by Subsection (b), a [A] corporation may not
incur a financial obligation that cannot be paid from:
(1) bond proceeds;
(2) revenue realized from the lease or sale of a
project;
(3) revenue realized from a loan made by the
corporation to wholly or partly finance or refinance a project; or
(4) money granted under a contract with a municipality
under Section 380.002.
(b) A Type A or Type B corporation may obtain a loan from the
Texas small and rural community success fund program under
Subchapter E, Chapter 489, Government Code, for eligible projects
as authorized by this subtitle. To secure the loan, the Type A or
Type B corporation may pledge revenue from the sales and use tax
imposed by the corporation's authorizing municipality under
Chapter 504 or 505, as applicable, for the benefit of the
corporation.
SECTION 3. Subchapter C, Chapter 501, Local Government
Code, is amended by adding Sections 501.108 and 501.109 to read as
follows:
Sec. 501.108. PROJECTS RELATED TO BROADBAND NETWORK
INFRASTRUCTURE EXPANSION. In this subtitle, "project" includes the
land, equipment, expenditures, and improvements that are found by
the board of directors to be suitable for the expansion of broadband
network infrastructure.
Sec. 501.109. PROJECTS RELATED TO ASSISTANCE FOR SMALL
BUSINESSES AFFECTED BY DECLARED DISASTER. (a) For the purposes of
Subsection (b), "small business" means a corporation, partnership,
sole proprietorship, or other legal entity that:
(1) is formed for the purpose of making a profit;
(2) is independently owned and operated; and
(3) has fewer than 100 employees residing in this
state.
(b) In this subtitle, "project" includes expenditures that
are found by the board of directors to be suitable to assist the
economic recovery of small businesses whose operation was
restricted by an order, proclamation, or regulation issued by the
governor or the governing body of a political subdivision during a
declared state of disaster under Chapter 418, Government Code.
SECTION 4. The Texas small and rural community success fund
program authorizes the continued operation, under a new name and
with new provisions, as added by this Act, of the Texas leverage
fund program that was established by the September 9, 1992, master
resolution of the Texas Department of Commerce under Chapter 4
(S.B. 223), Acts of the 71st Legislature, Regular Session, 1989
(codifying authority of the former Texas Department of Commerce to
issue revenue bonds under former Sections 481.052 through 481.058,
Government Code), as amended by Chapter 1041 (S.B. 932), Acts of the
75th Legislature, Regular Session, 1997, and by Chapter 814 (S.B.
275), Acts of the 78th Legislature, Regular Session, 2003.
SECTION 5. (a) Except as provided by Subsection (b) of this
section, the governmental acts and proceedings of the comptroller,
the Texas Economic Development and Tourism Office, and the Texas
Economic Development Bank relating to the administration of the
Texas leverage fund program that occurred before the effective date
of this Act are validated as if the acts had occurred as authorized
by law.
(b) This section does not validate:
(1) an act that, under the law of this state at the
time the act occurred, was a misdemeanor or felony; or
(2) a matter that on the effective date of this Act:
(A) is involved in litigation if the litigation
ultimately results in the matter being held invalid by a final
judgment of a court; or
(B) has been held invalid by a final judgment of a
court.
SECTION 6. The comptroller of public accounts is required
to implement a provision of this Act only if the legislature
appropriates money specifically for that purpose. If the
legislature does not appropriate money specifically for that
purpose, the comptroller may, but is not required to, implement a
provision of this Act using other appropriations available for that
purpose.
SECTION 7. The Texas Economic Development and Tourism
Office is required to implement a provision of this Act only if the
legislature appropriates money specifically for that purpose. If
the legislature does not appropriate money specifically for that
purpose, the office may, but is not required to, implement a
provision of this Act using other appropriations available for that
purpose.
SECTION 8. The Texas Economic Development Bank is required
to implement a provision of this Act only if the legislature
appropriates money specifically for that purpose. If the
legislature does not appropriate money specifically for that
purpose, the bank may, but is not required to, implement a provision
of this Act using other appropriations available for that purpose.
SECTION 9. The attorney general is required to implement a
provision of this Act only if the legislature appropriates money
specifically for that purpose. If the legislature does not
appropriate money specifically for that purpose, the attorney
general may, but is not required to, implement a provision of this
Act using other appropriations available for that purpose.
SECTION 10. This Act takes effect immediately if it
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, 2021.