(a) In this section:
(1) “Governmental entity” means this state, a political subdivision of this state, or an agency of this state or a political subdivision of this state.
(2) “Local mental health authority” has the meaning assigned by § 531.002, Health and Safety Code.
(3) “Nonprofit organization” means an organization that is exempt from federal income taxation under Section 501(a), Internal Revenue Code of 1986, by being listed as an exempt entity under Section 501(c)(3) of that code.
(b) To the extent money is appropriated to the commission for that purpose, the commission, in cooperation with local mental health authorities located primarily in rural areas of this state, shall contract with nonprofit organizations or governmental entities to establish or expand behavioral health centers or jail diversion centers in the authorities’ local service areas to:
(1) provide additional forensic hospital beds and competency restoration services;
(2) provide inpatient and outpatient mental health services to adults and children; and
(3) provide services to reduce recidivism and the frequency of arrest, incarceration, and emergency detentions among persons with mental illness in the service areas.

(c) The executive commissioner shall develop criteria for the evaluation of applications or proposals submitted by a nonprofit organization or governmental entity seeking to contract with the commission under this section.
(d) This section may not be construed to affect a grant program established by the commission under this code.