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.