85R1796 DDT-D     By: Thierry H.B. No. 1047       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.