HBA-JLV, EDN H.B. 1054 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1054
By: Coleman
Financial Institutions
2/16/2001
Introduced



BACKGROUND AND PURPOSE 

Community Development Financial Institutions (CDFIs) are certified by the
United States Department of Treasury and are financial institutions that
specialize in serving underserved communities and low-income individuals.
CDFIs include community development banks, credit unions, loan funds,
venture capital funds, and multi-bank community development corporations.
House Bill 1054 requires The Texas Department of Banking to create a
community investment program to make grants or interest-free loans to
eligible institutions that make community development loans in distressed
or low-income areas. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Finance Commission of Texas in
SECTION 1 (Sections 12.205 and 12.209, Finance Code) of this bill.  

ANALYSIS

House Bill 1054 amends the Finance Code to require the Texas Department of
Banking (department) to establish a community investment program (program)
in which the department makes grants or interest-free loans to eligible
institutions that use the money to make community development loans in
distressed areas of the state or to assist low-income areas by providing
basic consumer financial services.  The bill sets forth eligibility
requirements for institutions.  The bill authorizes the department to make
a grant to an institution or nonprofit organization to assist the
institution or organization in becoming eligible to participate in the
program.  The bill also authorizes the department to make a grant to an
appropriate nonprofit organization to provide the organization operating
support, technical assistance, and training assistance.   

H.B. 1054 sets forth procedures for filing an application for the program.
The bill provides that all income received on a loan or investment made
with money received under the program is the property of the institution
that makes the loan or investment.  The bill also requires an institution
to submit to the department a semi-annual report, in a form prescribed by
the department, detailing the status of each investment or loan and
containing all information required as part of the institution's
participation agreement.  The participation agreement entered into between
the eligible  institution and the department must provide for an annual
audit. The bill requires the Finance Commission of  Texas to adopt rules
relating to the implementation of the program and the format of the audit,
including any other rules necessary to accomplish the purposes of these
provisions. 
             
EFFECTIVE DATE

September 1, 2001.