BILL ANALYSIS C.S.S.B. 699 By: Sims Natural Resources 03-1-95 Committee Report (Substituted) BACKGROUND The purpose of the Farm and Ranch Finance Program is to provide affordable financing to eligible farmers and ranchers in order to purchase land for a base of operation. Borrowers are required to make a down payment of at least five percent, and may not have a net worth of more than $250,000. These two factors make the program available to young farmers who have few years of experience. A borrower is required to have earned at least 25 percent of gross income from farming or ranching in the last three years. These applicants create a higher credit risk than other producers with more experience and accumulated capital. PURPOSE As proposed, C.S.S.B. 699 amends the application and eligibility requirements for receiving a loan from the farm and ranch finance fund. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 59.024, Agriculture Code, as follows: Sec. 59.024. New heading: APPLICATION; ELIGIBILITY. (a) Requires a person to submit an application to the Texas Agricultural Finance Authority (authority), in order to borrow money from the farm and ranch finance program fund (fund) that contains an acceptable agricultural business plan for the land proposed to be purchased that assures the authority the applicant intends to use the land primarily for farming or ranching. (b) Requires the person applying to be eligible to borrow money from the fund to provide evidence to the authority that demonstrates that the person has at least three years of experience relevant to the person's agricultural business plan for the proposed land and has a net worth of less than $500,000. Deletes existing Subdivisions (1) and (2). SECTION 2. Amends Section 59.025, Agriculture Code, as follows: Sec. 59.025. New heading: MAXIMUM AMOUNT OF LOAN. Prohibits a loan under this chapter from exceeding the lesser of $150,000 or an amount equal to 95 percent of the lesser of the purchase of the land or the land's appraised value under Section 59.028. Deletes existing Subsections (a)-(c). SECTION 3. (a) Makes application of this Act prospective. (b) Requires the authority to refund a down payment paid before the effective date of this Act if the sale is not consummated. SECTION 4. Effective date: September 1, 1995. SECTION 5. Emergency clause.