Bill Text: TX HB4119 | 2021-2022 | 87th Legislature | Comm Sub
Bill Title: 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.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2021-05-12 - Placed on General State Calendar [HB4119 Detail]
Download: Texas-2021-HB4119-Comm_Sub.html
87R19927 CLG-D | |||
By: Guillen | H.B. No. 4119 | ||
Substitute the following for H.B. No. 4119: | |||
By: Button | C.S.H.B. No. 4119 |
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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 [ |
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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. 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 4. (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 5. 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 6. 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 7. 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 8. 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 9. 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. |