Office of House Bill AnalysisH.B. 2574
By: Solis, Jim
Public Health
Committee Report (Amended)


Community health centers, often funded by public and private grants,
provide health care services to uninsured and underinsured residents.
These centers may find it difficult to acquire commercial loans, because
their revenue source is not stable and consistent.  A precarious financial
situation  contributes to the centers neglect of  building repairs and
other nonmedical services, including meeting building code and Americans
with Disabilities Act requirements.   House Bill 2574 establishes the
community health center revolving loan fund to be administered by a
development corporation on behalf of the Health and Human Services
Commission to increase community health centers' access to loan money. 


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated  to the Health and Human Service
Commission in SECTION 1 (Section 136.009, Human Resources Code) and SECTION
3 of this bill. 


House Bill 2574 amends the Human Resources Code to establish the community
health center revolving loan fund (fund) composed of money appropriated to
the fund by the legislature, gifts or grants received from public or
private sources, and income from other money in the fund.  The bill
provides that the fund is a trust fund outside the state treasury held by a
financial institution and administered by the Health and Human Services
Commission (HHSC) as trustee on behalf of community health centers in this
state.  The bill authorizes HHSC to accept gifts and grants on behalf of
the fund for the use and benefit of the loan program for community health
centers (program). 

The bill requires HHSC to contract with and award money to a development
corporation to assist in financing the needs of community health centers.
Before contracting with a development corporation, the bill requires HHSC
to require the development corporation to establish an investment committee
(committee) to approve loan requests of community health centers and
provides for the composition of the committee.    

The bill authorizes a development corporation to make a loan to a community
health center only with the approval of the committee, and requires the
development corporation to use at least 60 percent of the money received
under the program for loans to community health centers in existence for at
least one year before  the loan date.  The bill authorizes a loan made by
the development corporation to be subordinated debt, and authorizes the
development corporation to make a loan under the program through a
partnership or joint investment with one or more financial institutions or
federal or state programs.  The bill requires payments on community health
center loans to be made to the development corporation, and requires the
development corporation to use the loan payment money received from
community health centers to make new loans.  All income received on a  loan
made with money received under the program is the property of the
development corporation, including the payment of interest by a borrower
and the administrative fees assessed by the development corporation. 

 The bill requires HHSC to develop the program as a revolving loan fund
that will become self-funding over the life of the program. The bill
requires HHSC to adopt rules, no later than December 1, 2001, to administer
these provisions and specifies certain rules.  Under rules adopted by HHSC,
the bill authorizes the development corporation to make grants to eligible
community health centers from money other than money that is received from
the fund and that was derived from a legislative appropriation or to seek
funds from state or federal agencies or private sources to supplement and
complement program funds. The bill authorizes HHSC to adopt other rules as
necessary to accomplish the purposes of the program. 


September 1, 2001.


Committee Amendment No. 1 specifies that a development corporation require,
rather than perform, annual audits of community health centers.