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Texas Governor Signs Several Bills Benefitting Credit Unions, Vetoes One
Tuesday, June 23, 2015 7:00 AM

Gov. Greg Abbott signed HB 1626 into law authorizing the creation of credit union and bank development districts on Friday. HB 1626 goes into effect on Sept. 1, 2015. The Credit Union Commission is required to promulgate rules to implement the bill by Jan. 1, 2016.

The bill allows credit unions to work with local governments to create credit union development districts. A state or federal credit union interested in establishing branches in low income areas or in neighborhoods a local government is interested in developing may work with the local government to establish a credit union development district. The local government can offer incentives to a credit union to locate a branch in a credit union development district including deposit of public funds, tax abatements, or other incentives permissible by law to encourage credit unions to participate in and locate branches in a CU development district.

On Saturday, the governor vetoed HB 1628, which would have authorized prize-linked saving accounts for credit unions and other financial institutions. The governor’s veto message indicated that the bill would have violated the constitutional prohibition on raffles for any purpose other than for charitable purposes. The governor stated that to make this change in the law would have required a constitutional amendment being adopted by the Legislature and the voters in Texas. A copy of the governor’s veto message is below.

"Pursuant to Article IV, Section 14, of the Texas Constitution, I, Greg Abbott, Governor of Texas, do hereby disapprove of and veto House Bill No. 1628 as passed by the Eighty-Fourth Texas Legislature, Regular Session, because of the following objections:

"The Texas Constitution authorizes raffles to be conducted only for charitable purposes. When non-charitable businesses conduct drawings, they typically allow entry with "no purchase necessary," which generally exempts the drawing from the constitutional restrictions on raffles or lotteries. House Bill 1628 authorizes banks and credit unions to conduct raffles in which raffle tickets are offered only in exchange for opening a savings account. Opening an account and paying any customary fees associated with the account amounts to consideration paid for the raffle ticket and places such a raffle squarely within the gambling prohibitions of the Texas Constitution and Penal Code. The bill would therefore require a conforming constitutional amendment in order to be effective. No such constitutional amendment was proposed by the Legislature.

"Since the Eighty-Fourth Texas Legislature, Regular Session, by its adjournment has prevented the return of this bill, I am filing these objections in the office of the Secretary of State and giving notice thereof by this public proclamation according to the aforementioned constitutional provision."

The Governor of Texas also signed HB 1733 which addresses insurance for drivers of transportation network companies (TNC) such as Uber and Lyft. The bill sets out insurance requirements for vehicles used in a TNC and requires claims payments for repairs of vehicles used in a TNC operation be paid to the repair facility directly or to the owner and lienholder jointly. HB 1733 goes into effect on Jan. 1, 2016.

Gov. Abbott also signed HB 2076 which adds protections for primary lienholders of vehicles, motorboats, vessels, and outboard motors when there is a foreclosure sale relating to a mechanics lien. It improves the disclosures to the primary lienholder, clarifies when a mechanics lien is extinguished, and prohibits the sale of the mechanics lien to investors. HB 2076 is effective June 19, 2015.

Contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop for more information.