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.