Bill Text: TX SB1465 | 2021-2022 | 87th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
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 and to creation of the micro-business disaster recovery loan guarantee program.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2021-06-18 - Effective immediately [SB1465 Detail]

Download: Texas-2021-SB1465-Introduced.html
  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.
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