Texas 2021 - 87th Regular

Texas Senate Bill SB1465 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	S.B. No. 1465
	1	+	By: Hinojosa S.B. No. 1465
	2	+	(Guillen)
2	3
3	4
	5	+	A BILL TO BE ENTITLED
4	6		AN ACT
5	7		relating to operation of the Texas small and rural community
6	8		success fund program administered by the Texas Economic Development
7	9		Bank as successor to the Texas leverage fund program and to creation
8	10		of the micro-business disaster recovery loan guarantee program.
9	11		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	12		SECTION 1. Chapter 489, Government Code, is amended by
11	13		adding Subchapters E and F to read as follows:
12	14		SUBCHAPTER E. TEXAS SMALL AND RURAL COMMUNITY SUCCESS FUND
13	15		Sec. 489.251. DEFINITION. In this subchapter, "fund" means
14	16		the Texas small and rural community success fund established by
15	17		Section 489.252.
16	18		Sec. 489.252. TEXAS SMALL AND RURAL COMMUNITY SUCCESS FUND.
17	19		(a) The Texas small and rural community success fund is created as
18	20		a trust fund held outside the state treasury by the comptroller as
19	21		trustee. The comptroller shall hold money in the fund in escrow and
20	22		in trust for and on behalf of the bank and the owners of bonds issued
21	23		under Section 489.253.
22	24		(b) The fund consists of:
23	25		(1) proceeds from the issuance of bonds under Section
24	26		489.253;
25	27		(2) payments of principal and interest on loans made
26	28		under this subchapter;
27	29		(3) loan origination fees imposed on loans made under
28	30		this subchapter;
29	31		(4) investment earnings described by Subsection (e);
30	32		and
31	33		(5) any other money received by the bank under this
32	34		subchapter.
33	35		(c) The fund may be used only:
34	36		(1) to make loans to economic development corporations
35	37		for eligible projects as authorized by Chapters 501, 504, and 505,
36	38		Local Government Code;
37	39		(2) to pay the bank's necessary and reasonable costs of
38	40		administering the program established by this subchapter,
39	41		including the payment of letter of credit fees and credit rating
40	42		fees;
41	43		(3) to pay the principal of and interest on bonds
42	44		issued under Section 489.253;
43	45		(4) to pay reasonable fees and other costs incurred by
44	46		the bank in administering the fund; and
45	47		(5) for any other purpose authorized by this
46	48		subchapter.
47	49		(d) The bank, in coordination with the comptroller, may
48	50		provide for the establishment and maintenance of separate accounts
49	51		or sub-accounts in the fund, including interest and sinking
50	52		accounts, reserve accounts, program accounts, or other accounts.
51	53		The accounts and sub-accounts must be kept and held in escrow and in
52	54		trust as provided by Subsection (a).
53	55		(e) Pending use, the comptroller may invest and reinvest the
54	56		money in the fund in investments authorized by law for state funds.
55	57		Earnings on the investments shall be credited to the fund.
56	58		(f) The bank may use money in the fund for the purposes
57	59		specified by and according to the procedures established by this
58	60		subchapter. This state may take action with respect to the fund
59	61		only as specified by this subchapter and only in accordance with the
60	62		resolutions of the executive director of the office adopted under
61	63		Section 489.253.
62	64		Sec. 489.253. REVENUE-BASED BONDS AUTHORIZED. (a) The
63	65		bank, the office, or the office's successor agency may provide for
64	66		the issuance, sale, and retirement of bonds, including obligations
65	67		in the form of commercial paper notes, to provide funding for
66	68		economic development purposes as authorized by Section 52-a,
67	69		Article III, Texas Constitution, and this subchapter.
68	70		(b) The bonds are special obligations of the bank and the
69	71		principal of and interest on the bonds must be payable solely from
70	72		the revenues derived by the bank under this subchapter, including
71	73		loan repayments secured by a pledge of the local economic
72	74		development sales and use tax revenues imposed by municipalities
73	75		for the benefit of economic development corporations created under
74	76		Chapters 504 and 505, Local Government Code. The bonds do not
75	77		constitute an indebtedness of this state, the office, or the bank in
76	78		the meaning of the Texas Constitution or of any statutory
77	79		limitation. The bonds do not constitute a pecuniary liability of
78	80		this state, the office, or the bank or constitute a charge against
79	81		the general credit of this state, the office, or the bank, or
80	82		against the taxing power of this state. The limitations provided by
81	83		this subsection must be stated plainly on the face of each bond.
82	84		(c) The executive director of the office by resolution may
83	85		provide for the bonds to:
84	86		(1) be executed and delivered at any time in one or
85	87		more series as a single issue or as several issues;
86	88		(2) be in any denomination and form, including
87	89		registered uncertificated bonds not represented by written
88	90		instruments and commonly known as book-entry obligations, the
89	91		registration of ownership and transfer of which the bank shall
90	92		provide for under a system of books and records maintained by a
91	93		financial institution serving as trustee, paying agent, or bond
92	94		registrar;
93	95		(3) be of a term authorized by the executive director,
94	96		not to exceed 40 years from their date;
95	97		(4) be in coupon or registered form;
96	98		(5) be payable in installments and at a time or times
97	99		not exceeding the term authorized by applicable law;
98	100		(6) be subject to terms of redemption;
99	101		(7) be payable at a place or places;
100	102		(8) bear no interest or bear interest at any rate or
101	103		rates, fixed, variable, floating, or otherwise determined by the
102	104		bank or determined under a contractual arrangement approved by the
103	105		executive director, except that the maximum net effective interest
104	106		rate, computed in accordance with Section 1204.005, on the bonds
105	107		may not exceed a rate equal to the maximum annual interest rate
106	108		established by Section 1204.006; and
107	109		(9) contain provisions not inconsistent with this
108	110		subchapter.
109	111		(d) Bonds issued under this section are subject to review
110	112		and approval by the attorney general in the same manner and with the
111	113		same effect as may be required by law, including Chapter 1202 or
112	114		1371, as applicable.
113	115		(e) This state pledges to and agrees with the owners of any
114	116		bonds issued under this section that this state will not limit or
115	117		alter the rights vested in the bank to fulfill the terms of any
116	118		agreements made with an owner or in any way impair the rights and
117	119		remedies of an owner until the bonds, together with any premium and
118	120		the interest on the bonds, with interest on any unpaid premium or
119	121		installments of interest, and all costs and expenses in connection
120	122		with any action or proceeding by or on behalf of the owners, are
121	123		fully met and discharged. The bank may include this pledge and
122	124		agreement of this state in any agreement with the owners of the
123	125		bonds.
124	126		Sec. 489.254. BOND SALE AND ISSUANCE. (a) Bonds issued
125	127		under Section 489.253 may be sold at public or private sale at a
126	128		price and in a manner and from time to time as resolutions of the
127	129		executive director of the office that authorize issuance of the
128	130		bonds provide.
129	131		(b) From the proceeds of the sale of the bonds, the bank may
130	132		pay expenses, premiums, and insurance premiums that the bank
131	133		considers necessary or advantageous in connection with the
132	134		authorization, sale, and issuance of the bonds.
133	135		(c) In connection with the issuance of its bonds, the bank
134	136		may exercise the powers granted to the governing body of an issuer
135	137		in connection with the issuance of obligations under Chapter 1371.
136	138		However, any bonds issued in accordance with this subchapter and
137	139		Chapter 1371 are not subject to the rating requirement for an
138	140		obligation issued under Chapter 1371.
139	141		Sec. 489.255. AGREEMENTS IN BONDS. (a) A resolution of the
140	142		executive director of the office that authorizes bonds to be issued
141	143		under Section 489.253 or a security agreement, including a related
142	144		indenture or trust indenture, may contain any agreements and
143	145		provisions customarily contained in instruments securing bonds,
144	146		including provisions respecting the fixing and collection of
145	147		obligations, the creation and maintenance of special funds, and the
146	148		rights and remedies available, in the event of default to the
147	149		holders of the bonds or to the trustee under the security agreement,
148	150		all as the bank considers advisable and consistent with this
149	151		subchapter. However, in making such an agreement or provision, the
150	152		bank may not incur:
151	153		(1) a pecuniary liability of this state, the office,
152	154		or the bank; or
153	155		(2) a charge against the general credit of this state,
154	156		the office, or the bank, or against the taxing powers of this state.
155	157		(b) The resolution of the executive director of the office
156	158		authorizing the issuance of the bonds and a security agreement
157	159		securing the bonds may provide that, in the event of default in
158	160		payment of the principal of or interest on the bonds or in the
159	161		performance of an agreement contained in the proceedings or
160	162		security agreement, the payment and performance may be enforced as
161	163		provided by Sections 403.055 and 403.0551, by mandamus, or by the
162	164		appointment of a receiver in equity with power to charge and collect
163	165		bonds and to apply revenues pledged according to the proceedings or
164	166		the provisions of the security agreement. A security agreement may
165	167		provide that, in the event of default in payment or the violation of
166	168		an agreement contained in the security agreement, a trustee under
167	169		the security agreement may enforce the bondholder's rights by
168	170		mandamus or other proceedings at law or in equity to obtain any
169	171		relief permitted by law, including the right to collect and receive
170	172		any revenue used to secure the bonds.
171	173		(c) A breach of a resolution of the executive director of
172	174		the office adopted under Section 489.253, a breach of an agreement
173	175		made under this section, or a default under bonds issued under this
174	176		subchapter does not constitute:
175	177		(1) a pecuniary liability of this state, the office,
176	178		or the bank; or
177	179		(2) a charge against the general credit of this state,
178	180		the office, or the bank, or against the taxing power of this state.
179	181		(d) The trustee or trustees under a security agreement or a
180	182		depository specified by the security agreement may be any person
181	183		that the bank designates, regardless of whether the person is a
182	184		resident of this state or incorporated under the laws of the United
183	185		States or any state.
184	186		Sec. 489.256. REFUNDING BONDS. (a) Bonds issued under
185	187		Section 489.253 may be refunded by the bank by the issuance of the
186	188		bank's refunding bonds in the amount that the bank considers
187	189		necessary to refund the unpaid principal of the refunded bonds,
188	190		together with any unpaid interest, premiums, expenses, and
189	191		commissions required to be paid in connection with the refunded
190	192		bonds. Refunding may be effected whether the refunded bonds have
191	193		matured or are to mature later, either by sale of the refunding
192	194		bonds or by exchange of the refunding bonds for the refunded bonds.
193	195		(b) A holder of refunded bonds may not be compelled to
194	196		surrender the bonds for payment or exchange before the date on which
195	197		the bonds are payable, or, if the bonds are called for redemption,
196	198		before the date on which they are by their terms subject to
197	199		redemption.
198	200		(c) Refunding bonds having a final maturity not to exceed
199	201		that permitted for other bonds issued under Section 489.253 may be
200	202		issued under the same terms and conditions provided by this
201	203		subchapter for the issuance of bonds or may be issued in the manner
202	204		provided by statute, including Chapters 1207 and 1371.
203	205		Sec. 489.257. USE OF BOND PROCEEDS. The proceeds from the
204	206		sale of bonds issued under this subchapter may be applied only for a
205	207		purpose for which the bonds were issued, except that:
206	208		(1) any secured interest received in the sale shall be
207	209		applied to the payment of the principal of or interest on the bonds
208	210		sold and, if a portion of the proceeds is not needed for a purpose
209	211		for which the bonds were issued, that portion shall be applied to
210	212		the payment of the principal of or interest on the bonds; and
211	213		(2) any premium received in the sale of the bonds shall
212	214		be applied in accordance with Section 1201.042(d).
213	215		Sec. 489.258. BONDS AS LEGAL INVESTMENTS FOR FIDUCIARIES
214	216		AND OTHER PERSONS. (a) Bonds of the bank issued under this
215	217		subchapter are securities in which all public officers and bodies
216	218		of this state; municipalities; municipal subdivisions; insurance
217	219		companies and associations and other persons carrying on an
218	220		insurance business; banks, bankers, trust companies, savings and
219	221		loan associations, investment companies, and other persons
220	222		carrying on a banking business; administrators, guardians,
221	223		executors, trustees, and other fiduciaries; and other persons
222	224		authorized to invest in other obligations of this state may invest
223	225		funds, including capital, in their control or belonging to them.
224	226		(b) Notwithstanding any other provision of law, the bonds of
225	227		the bank issued under this subchapter are also securities that may
226	228		be deposited with and received by public officers and bodies of this
227	229		state and municipalities and municipal subdivisions for any purpose
228	230		for which the deposit of other obligations of the state are
229	231		authorized.
230	232		Sec. 489.259. ADMINISTRATION OF FUND. The bank shall
231	233		administer the fund. In administering the fund and this
232	234		subchapter, the bank has the powers necessary to carry out the
233	235		purposes of this subchapter, including the power to:
234	236		(1) make, execute, and deliver contracts,
235	237		conveyances, and other instruments; and
236	238		(2) impose charges and provide for reasonable
237	239		penalties for delinquent payments or performance in connection with
238	240		any transaction.
239	241		SUBCHAPTER F. MICRO-BUSINESS DISASTER RECOVERY LOAN GUARANTEE
240	242		PROGRAM
241	243		Sec. 489.301. DEFINITIONS. In this subchapter:
242	244		(1) "Declared disaster" means a state of disaster
243	245		declared by the governor under Chapter 418.
244	246		(2) "Financial institution" includes a bank, trust
245	247		company, banking association, savings and loan association,
246	248		mortgage company, investment bank, credit union, and
247	249		nontraditional financial institution.
248	250		(3) "Micro-business" means a corporation,
249	251		partnership, sole proprietorship, or other legal entity that:
250	252		(A) is domiciled in this state and has at least 95
251	253		percent of its employees located in this state;
252	254		(B) is formed to make a profit; and
253	255		(C) employs not more than 20 employees.
254	256		(4) "Participating financial institution" means a
255	257		financial institution participating in the program.
256	258		(5) "Program" means the micro-business disaster
257	259		recovery loan guarantee program.
258	260		Sec. 489.302. MICRO-BUSINESS DISASTER RECOVERY FUND. (a)
259	261		The micro-business disaster recovery fund is a dedicated account in
260	262		the general revenue fund.
261	263		(b) The micro-business disaster recovery fund is composed
262	264		of:
263	265		(1) money appropriated by the legislature for the
264	266		implementation and administration of this subchapter;
265	267		(2) amounts received by the state from federal grants
266	268		or other sources;
267	269		(3) interest earned on the investment of money in the
268	270		micro-business disaster recovery fund;
269	271		(4) amounts transferred from the Texas economic
270	272		development bank fund; and
271	273		(5) any other amounts received under this subchapter
272	274		and required by the bank to be deposited in the micro-business
273	275		disaster recovery fund.
274	276		(c) Money in the micro-business disaster recovery fund may
275	277		be appropriated only to the bank for use in carrying out the
276	278		purposes of this subchapter.
277	279		Sec. 489.303. POWERS OF BANK IN ADMINISTERING
278	280		MICRO-BUSINESS DISASTER RECOVERY FUND. In administering the
279	281		micro-business disaster recovery fund, the bank has the powers
280	282		necessary to carry out the purposes of this subchapter, including
281	283		the power to invest money at the bank's discretion in obligations
282	284		determined proper by the bank.
283	285		Sec. 489.304. MICRO-BUSINESS DISASTER RECOVERY LOAN
284	286		GUARANTEE PROGRAM. (a) The bank shall establish and administer a
285	287		micro-business disaster recovery loan guarantee program in which
286	288		money in the micro-business disaster recovery fund is used to
287	289		guarantee loans made by participating financial institutions to
288	290		micro-businesses that have suffered economic injury as a result of
289	291		a declared disaster.
290	292		(b) The bank shall determine the eligibility of a financial
291	293		institution to participate in the program and may set a limit on the
292	294		number of eligible financial institutions that may participate in
293	295		the program.
294	296		(c) To participate in the program, an eligible financial
295	297		institution must enter into a participation agreement with the bank
296	298		that sets out the terms and conditions under which loans made to
297	299		micro-businesses recovering from a declared disaster will be
298	300		guaranteed.
299	301		(d) To qualify for a loan guarantee under the program, a
300	302		micro-business:
301	303		(1) must:
302	304		(A) be in good standing under the laws of this
303	305		state; and
304	306		(B) not owe delinquent taxes to a taxing unit of
305	307		this state before the date of the initial issuance of the disaster
306	308		declaration; and
307	309		(2) may not:
308	310		(A) have total revenue that exceeds the amount
309	311		for which no franchise tax is due under Section 171.002(d)(2), Tax
310	312		Code; or
311	313		(B) be a franchise, a national chain with
312	314		operations in this state, a lobbying firm, or a private equity firm
313	315		or backed by a private equity firm.
314	316		(e) A micro-business that receives a loan guarantee shall
315	317		apply the loan to working capital or to the purchase, construction,
316	318		or lease of capital assets damaged, reduced, or lost as a result of
317	319		the declared disaster.
318	320		Sec. 489.305. RULEMAKING AUTHORITY. The executive director
319	321		of the office shall adopt rules relating to the implementation of
320	322		the program and any other rules necessary to accomplish the
321	323		purposes of this subchapter.
322	324		Sec. 489.306. ANNUAL REPORT BY PARTICIPATING FINANCIAL
323	325		INSTITUTION. A participating financial institution shall submit an
324	326		annual report to the bank. The report must:
325	327		(1) provide information regarding outstanding loan
326	328		guarantees, loan guarantee losses, and any other information on
327	329		loan guarantees under the program the bank considers appropriate;
328	330		(2) state the total amount of loans that the bank has
329	331		guaranteed under this subchapter;
330	332		(3) include a copy of the financial institution's most
331	333		recent financial statement; and
332	334		(4) include information regarding the type and size of
333	335		micro-businesses with loan guarantees.
334	336		Sec. 489.307. ANNUAL REPORT TO LEGISLATURE. The bank shall
335	337		submit to the legislature an annual status report on the program's
336	338		activities.
337	339		SECTION 2. Section 501.008, Local Government Code, is
338	340		amended to read as follows:
339	341		Sec. 501.008. LIMITATION ON FINANCIAL OBLIGATION. (a)
340	342		Except as provided by Subsection (b), a [A] corporation may not
341	343		incur a financial obligation that cannot be paid from:
342	344		(1) bond proceeds;
343	345		(2) revenue realized from the lease or sale of a
344	346		project;
345	347		(3) revenue realized from a loan made by the
346	348		corporation to wholly or partly finance or refinance a project; or
347	349		(4) money granted under a contract with a municipality
348	350		under Section 380.002.
349	351		(b) A Type A or Type B corporation may obtain a loan from the
350	352		Texas small and rural community success fund program under
351	353		Subchapter E, Chapter 489, Government Code, for eligible projects
352	354		as authorized by this subtitle. To secure the loan, the Type A or
353	355		Type B corporation may pledge revenue from the sales and use tax
354	356		imposed by the corporation's authorizing municipality under
355	357		Chapter 504 or 505, as applicable, for the benefit of the
356	358		corporation.
357	359		SECTION 3. The Texas small and rural community success fund
358	360		program authorizes the continued operation, under a new name and
359	361		with new provisions, as added by this Act, of the Texas leverage
360	362		fund program that was established by the September 9, 1992, master
361	363		resolution of the Texas Department of Commerce under Chapter 4
362	364		(S.B. 223), Acts of the 71st Legislature, Regular Session, 1989
363	365		(codifying authority of the former Texas Department of Commerce to
364	366		issue revenue bonds under former Sections 481.052 through 481.058,
365	367		Government Code), as amended by Chapter 1041 (S.B. 932), Acts of the
366	368		75th Legislature, Regular Session, 1997, and by Chapter 814 (S.B.
367	369		275), Acts of the 78th Legislature, Regular Session, 2003.
368	370		SECTION 4. (a) Except as provided by Subsection (b) of this
369	371		section, the governmental acts and proceedings of the comptroller,
370	372		the Texas Economic Development and Tourism Office, and the Texas
371	373		Economic Development Bank relating to the administration of the
372	374		Texas leverage fund program that occurred before the effective date
373	375		of this Act are validated as if the acts had occurred as authorized
374	376		by law.
375	377		(b) This section does not validate:
376	378		(1) an act that, under the law of this state at the
377	379		time the act occurred, was a misdemeanor or felony; or
378	380		(2) a matter that on the effective date of this Act:
379	381		(A) is involved in litigation if the litigation
380	382		ultimately results in the matter being held invalid by a final
381	383		judgment of a court; or
382	384		(B) has been held invalid by a final judgment of a
383	385		court.
384	386		SECTION 5. The comptroller of public accounts is required
385	387		to implement a provision of this Act only if the legislature
386	388		appropriates money specifically for that purpose. If the
387	389		legislature does not appropriate money specifically for that
388	390		purpose, the comptroller may, but is not required to, implement a
389	391		provision of this Act using other appropriations available for that
390	392		purpose.
391	393		SECTION 6. The Texas Economic Development and Tourism
392	394		Office is required to implement a provision of this Act only if the
393	395		legislature appropriates money specifically for that purpose. If
394	396		the legislature does not appropriate money specifically for that
395	397		purpose, the office may, but is not required to, implement a
396	398		provision of this Act using other appropriations available for that
397	399		purpose.
398	400		SECTION 7. The Texas Economic Development Bank is required
399	401		to implement a provision of this Act only if the legislature
400	402		appropriates money specifically for that purpose. If the
401	403		legislature does not appropriate money specifically for that
402	404		purpose, the bank may, but is not required to, implement a provision
403	405		of this Act using other appropriations available for that purpose.
404	406		SECTION 8. The attorney general is required to implement a
405	407		provision of this Act only if the legislature appropriates money
406	408		specifically for that purpose. If the legislature does not
407	409		appropriate money specifically for that purpose, the attorney
408	410		general may, but is not required to, implement a provision of this
409	411		Act using other appropriations available for that purpose.
410	412		SECTION 9. This Act takes effect immediately if it receives
411	413		a vote of two-thirds of all the members elected to each house, as
412	414		provided by Section 39, Article III, Texas Constitution. If this
413	415		Act does not receive the vote necessary for immediate effect, this
414	416		Act takes effect September 1, 2021.
415		-	______________________________ ______________________________
416		-	President of the Senate Speaker of the House
417		-	I hereby certify that S.B. No. 1465 passed the Senate on
418		-	May 5, 2021, by the following vote: Yeas 30, Nays 1.
419		-	______________________________
420		-	Secretary of the Senate
421		-	I hereby certify that S.B. No. 1465 passed the House on
422		-	May 26, 2021, by the following vote: Yeas 111, Nays 36, two
423		-	present not voting.
424		-	______________________________
425		-	Chief Clerk of the House
426		-	Approved:
427		-	______________________________
428		-	Date
429		-	______________________________
430		-	Governor