Bill Text: TX SB723 | 2017-2018 | 85th Legislature | Introduced

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Bill Title: Relating to the establishment of a community development grocery store and healthy corner store revolving loan fund program.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2017-02-21 - Referred to Agriculture, Water, & Rural Affairs [SB723 Detail]

Download: Texas-2017-SB723-Introduced.html

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85R1796 DDT-D
By: Miles S.B. No. 723

A BILL TO BE ENTITLED
AN ACT
relating to the establishment of a community development grocery
store and healthy corner store revolving loan fund program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. It is the intent of the legislature to support
revitalization in food deserts, reduce the cost of financing
agricultural development projects, and increase the number of food
markets providing affordable and nutritious foods in underserved
areas.
SECTION 2. Title 2, Agriculture Code, is amended by adding
Chapter 26 to read as follows:
CHAPTER 26. TEXAS COMMUNITY DEVELOPMENT GROCERY STORE AND HEALTHY
CORNER STORE REVOLVING LOAN FUND
Sec. 26.001. DEFINITIONS. In this chapter:
(1) "Community development financial institution" has
the meaning assigned by 12 U.S.C. Section 4702.
(2) "Corner store" means a store that has less than
2,000 square feet of retail space.
(3) "Food desert" means a geographic area determined
by the department to be an area that:
(A) has limited access to healthy food retailers
and is located in a lower-income or high-poverty area; or
(B) otherwise has serious healthy food access
limitations.
(4) "Fund" means the community development grocery
store and healthy corner store revolving loan fund established by
this chapter.
(5) "Grocery store" means a store that has at least:
(A) 66 percent of the store's retail space
reserved for the sale of food products;
(B) 50 percent of the store's food retail space
reserved for the sale of non-prepared foods or foods intended for
home preparation and consumption; and
(C) 30 percent of the store's food retail space
reserved for the sale of perishable foods, including dairy
products, fresh produce, fresh meats, poultry, and fish, and frozen
foods.
(6) "Healthy corner store" means a corner store that:
(A) offers a wide variety of fresh produce for
sale; and
(B) allocates at least 20 percent of the store's
retail space to fresh produce and other perishable foods, including
dairy products.
(7) "Program" means the loan program authorized by
this chapter.
(8) "Supplemental nutrition assistance program" means
the nutritional assistance program formerly referred to as the food
stamp program.
(9) "WIC program" means the federal special
supplemental nutrition program for women, infants, and children
authorized by 42 U.S.C. Section 1786.
Sec. 26.002. TRUST FUND. (a) The community development
grocery store and healthy corner store revolving loan fund is a
trust fund outside the state treasury held by a community
development financial institution and overseen by the department as
trustee on behalf of entities operating grocery stores or healthy
corner stores located in food deserts in this state.
(b) The fund is composed of:
(1) gifts or grants received from public or private
sources; and
(2) income from other money in the fund.
(c) The department may accept on behalf of the fund gifts
and grants for the use and benefit of the program.
Sec. 26.003. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS.
(a) The department shall contract with and award money, if
available, to not more than five community development financial
institutions to carry out the purposes of this chapter.
(b) In selecting a community development financial
institution, the department shall consider the financial
institution's:
(1) demonstrated success in implementing similar
economic development projects;
(2) ability to raise additional capital; and
(3) solvency.
(c) The community development financial institution shall:
(1) provide revolving loan funds to entities proposing
to operate or operating grocery stores or healthy corner stores in
food deserts;
(2) develop, in consultation with the department, a
system used to underwrite loan applications;
(3) provide training on business management and the
profitable sale of healthy foods to corner store owners receiving a
loan or grant money from the program;
(4) accept gifts and grants; and
(5) seek funding from various government and private
sources.
Sec. 26.004. LOAN REVIEW COMMITTEE. (a) Before
contracting with a community development financial institution,
the department shall require the financial institution to establish
or make use of an existing loan review committee to approve loan
requests of entities proposing to operate or operating grocery
stores or healthy corner stores.
(b) The loan review committee may not approve a loan request
of an entity proposing to operate or operating a grocery store or
healthy corner store unless the grocery store or healthy corner
store:
(1) will be or currently is located in a food desert;
(2) will be or currently is located in a low and
moderate income area, as determined by the United States Department
of Housing and Urban Development, or will serve or currently is
serving a customer base living in a low and moderate income area;
(3) will accept benefits under the WIC program and the
supplemental nutrition assistance program not later than the 90th
day after the date the store opens, or currently accepts benefits
under those programs; and
(4) will be or currently is open year-round.
Sec. 26.005. CONSIDERATION OF OTHER RESOURCES. The loan
review committee in approving a loan request shall give preference
to an entity proposing to operate or operating a grocery store or
healthy corner store that uses additional public and private
resources to fund the grocery store or healthy corner store,
including cash or in-kind matches.
Sec. 26.006. LOANS TO GROCERY STORES OR CORNER STORES. (a)
The community development financial institution may not make a loan
to an entity proposing to operate or operating a grocery store or
healthy corner store in a food desert unless the loan review
committee has approved the loan.
(b) A loan made by the community development financial
institution may be subordinated debt.
(c) The community development financial institution may
make a loan under the program through a partnership or joint
investment with one or more financial institutions or federal or
state programs.
(d) Payments on grocery store or healthy corner store loans
shall be made to the community development financial institution.
The community development financial institution shall use the
repayments of loan principal by entities operating grocery stores
or healthy corner stores to make new loans as provided by this
chapter.
(e) The community development financial institution may
make a forgivable loan at a zero percent interest rate for a period
of five years to an entity proposing to operate or operating a
grocery store or healthy corner store in a food desert. The
community development financial institution that makes a
forgivable loan under this subsection:
(1) may not make a forgivable loan to an entity that
exceeds $500,000;
(2) may not forgive an amount greater than one-fifth
of the forgivable loan amount each year;
(3) shall annually evaluate an entity that receives a
forgivable loan under this subsection to ensure that the entity is
in compliance with the requirements of this chapter; and
(4) if the community development financial
institution determines that the entity is not in compliance with
the requirements of this chapter, shall require the entity to repay
the remaining balance of the forgivable loan.
(f) A loan provided under this chapter must be made from
available funds that must be used for that purpose.
Sec. 26.007. INCREASE IN INTEREST RATE; ACCELERATED
REPAYMENT. If a recipient of a loan does not comply with the
requirements of this chapter, the community development financial
institution that made the loan, as provided by department rule,
may:
(1) increase the interest rate on the loan;
(2) accelerate repayment of the principal of and
interest on the loan; or
(3) take any other remedy permitted by department rule
that the institution considers appropriate.
Sec. 26.008. SELF-FUNDING. The department shall develop
the fund program as a revolving loan fund that will become
self-funding over the life of the program.
Sec. 26.009. INCOME FROM LOAN. All income received on a
loan made with money received under the program is the property of
the community development financial institution. Income received
on a loan includes the payment of interest by a borrower and the
administrative fees assessed by the community development
financial institution.
Sec. 26.010. RULES. (a) The department shall adopt rules
to administer this chapter, including rules that require:
(1) the department to review the lending and servicing
practices of a community development financial institution to
ensure the practices conform to generally accepted accounting
principles;
(2) an eligible entity proposing to operate or
operating a grocery store or healthy corner store to enter into an
agreement with the community development financial institution
that states the terms of the loan made to the entity;
(3) the community development financial institution
to provide to the department semiannual reports giving details of
the status of each loan made under the program;
(4) the community development financial institution
to develop rules to regulate financial monitoring and inventory;
(5) a third-party certified public accountant to
perform biennial audits of grocery stores for which loans are made
under the program; and
(6) the department to provide oversight of the
community development financial institution as necessary to
qualify the community development financial institution for loan
guarantees from federal or state programs.
(b) Under rules adopted by the department, the community
development financial institution may:
(1) make grants to eligible entities proposing to
operate or operating grocery stores or healthy corner stores from
money other than money that may be received from the fund; or
(2) seek funds from state or federal agencies or
private sources to supplement and complement any funds received
under the program.
(c) The department may adopt other rules as necessary to
accomplish the purposes of this chapter.
Sec. 26.011. BIENNIAL REPORT. (a) Not later than December
1 of each even-numbered year, the department, in coordination with
the community development financial institution, shall submit a
report to the House Appropriations Committee, the Senate Finance
Committee, the governor, and the Legislative Budget Board.
(b) The report must include for the preceding two state
fiscal years:
(1) the number of entities receiving loans or grants
under this chapter;
(2) repayment rates on loans;
(3) the total amount of money loaned or awarded by
grants;
(4) the amount of square footage of commercial space
created;
(5) the number of jobs created or retained;
(6) the average wages of the jobs created or retained;
and
(7) the additional property tax revenue gained by
local entities.
SECTION 3. Not later than November 15, 2017, the Department
of Agriculture shall adopt rules to administer Chapter 26,
Agriculture Code, as added by this Act.
SECTION 4. Not later than January 15, 2018, the Department
of Agriculture shall designate community development financial
institutions as provided by Section 26.003, Agriculture Code, as
added by this Act, to carry out the purposes of Chapter 26,
Agriculture Code, as added by this Act.
SECTION 5. Not later than February 15, 2018, the Department
of Agriculture shall transfer money in the community development
grocery store and healthy corner store revolving loan fund to a
community development financial institution.
SECTION 6. This Act takes effect September 1, 2017.