By: Montford S.B. No. 1260
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the consolidation of the general obligation bonding
1-2 authority for the farm and ranch finance program fund with the
1-3 general obligation bonding authority for the Texas agricultural
1-4 fund and the rural microenterprise development fund within the
1-5 Texas Agricultural Finance Authority.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Subsections (c) and (e), Section 58.031,
1-8 Agriculture Code, are amended to read as follows:
1-9 (c) The authority may issue and sell general obligation
1-10 bonds of the state as authorized by Section 49-i, Article III,
1-11 Texas Constitution <not to exceed $25 million outstanding at any
1-12 one time> for the purpose of providing money to establish a Texas
1-13 agricultural fund. The authority may issue the bonds in one or
1-14 several installments.
1-15 (e) The authority may issue and sell general obligation
1-16 bonds of the state for the purpose of providing money to establish
1-17 a rural microenterprise development fund as authorized by Section
1-18 49-i, Article III, Texas Constitution <so that the principal amount
1-19 outstanding shall not exceed $5 million at any one time>. The
1-20 authority may issue the bonds in one or several installments.
1-21 SECTION 2. Subdivisions (2) and (3), Section 59.001,
1-22 Agriculture Code, are amended to read as follows:
1-23 (2) "Board" means the board of directors of the
1-24 authority <Veterans Land Board>.
2-1 (3) "Bond" means a general obligation bond,
2-2 certificate, note, or other obligation issued or incurred by the
2-3 authority under this chapter as provided by Article III, Section
2-4 49-i <49-f>, of the Texas Constitution.
2-5 SECTION 3. Subsection (b), Section 59.002, Agriculture Code,
2-6 is amended to read as follows:
2-7 (b) The board shall administer the fund. <At the request of
2-8 the authority, the board shall make available to the authority
2-9 money from the fund to pay debt service on the program's bonds and
2-10 to provide financial assistance to borrowers to purchase farm or
2-11 ranch land as provided by this chapter.>
2-12 SECTION 4. Section 59.003, Agriculture Code, is amended to
2-13 read as follows:
2-14 Sec. 59.003. Limited Immunity From Suit or Liability. A
2-15 <The authority or a> member of the board may be sued and held
2-16 personally liable for damages that result from an official act or
2-17 omission only if the act or omission is corrupt or malicious.
2-18 SECTION 5. Section 59.011, Agriculture Code, is amended to
2-19 read as follows:
2-20 Sec. 59.011. Bonds. (a) The board <authority> may provide
2-21 by order or resolution for the issuance and sale of negotiable
2-22 bonds authorized by Article III, Section 49-i <49-f>, of the Texas
2-23 Constitution. The proceeds from the sale of the bonds constitute
2-24 the fund.
2-25 (b) Subchapter D, Chapter 58, <Agriculture Code,> as it
2-26 relates to the issuance, sale, and refunding of bonds, applies to
2-27 the board's <authority's> issuance, sale, and refunding of bonds
3-1 under this chapter to finance the fund.
3-2 SECTION 6. Subsection (c), Section 59.012, Agriculture Code,
3-3 is amended to read as follows:
3-4 (c) The <At the timely request of the authority, the> board
3-5 may <shall> provide for transferring directly from the proceeds of
3-6 the sale of bonds or from available money in the fund <directly> an
3-7 amount that is <certified by the authority as> reasonable and
3-8 necessary to cover the costs of administering the program. <That
3-9 amount shall be deposited in the state treasury to the credit of a
3-10 special fund to be known as the farm and ranch administrative
3-11 expense fund.>
3-12 SECTION 7. Section 59.013, Agriculture Code, is amended to
3-13 read as follows:
3-14 Sec. 59.013. Payment of Principal and Interest. The board
3-15 <authority> shall arrange for payment of the principal of bonds as
3-16 they mature and the interest on the bonds as it becomes payable.
3-17 SECTION 8. Subsections (a) and (b), Section 59.015,
3-18 Agriculture Code, are amended to read as follows:
3-19 (a) The board <authority> may use money in the fund
3-20 attributable to the issuance and sale of bonds to pay:
3-21 (1) legal fees and fees for financial advice the board
3-22 <authority> finds necessary for the sale of bonds;
3-23 (2) the expense of publishing notice of sale of an
3-24 installment of bonds;
3-25 (3) the expense of printing the bonds;
3-26 (4) the expense of issuing the bonds, including the
3-27 actual costs of travel, lodging, and meals of officers, members, or
4-1 employees of the board, directors or employees of the authority,
4-2 the comptroller, the state treasurer, or the attorney general that
4-3 the board <authority> finds necessary to implement the issuance,
4-4 rating, or delivery of the bonds;
4-5 (5) the cost of manually signing the bonds;
4-6 (6) remuneration to any agent employed by the board
4-7 <authority> to pay the principal of and interest on the bonds;
4-8 (7) any amount required to be paid to maintain the
4-9 federal tax exemption of interest on the bonds; or
4-10 (8) any other cost, fee, or expense relating to the
4-11 issuance of the bonds.
4-12 (b) If, during the existence of the fund or during the
4-13 period any bonds are payable from the fund, the board <authority>
4-14 determines that there will not be sufficient money in the fund
4-15 during the following fiscal year to pay the principal of or
4-16 interest on the bonds that is to come due during the following
4-17 fiscal year, the comptroller shall transfer to the fund from the
4-18 first money coming into the state treasury not otherwise
4-19 appropriated by the constitution an amount sufficient to pay the
4-20 obligations.
4-21 SECTION 9. Section 59.016, Agriculture Code, is amended to
4-22 read as follows:
4-23 Sec. 59.016. Investments. <(a)> The board shall invest
4-24 funds as provided under Section 58.022. <authority shall give
4-25 timely instruction to the board of the dates on which principal on
4-26 bonds matures and interest becomes payable. The board shall
4-27 administer the fund accordingly.>
5-1 <(b) Except as provided by Subsection (c) of this section,
5-2 money in the fund that is not immediately committed to paying
5-3 principal of and interest on the bonds or to paying expenses as
5-4 provided by Section 59.015 of this code may be invested by the
5-5 board in:>
5-6 <(1) a direct security repurchase agreement or reverse
5-7 security repurchase agreement made with a state or national bank
5-8 domiciled in this state or with a primary dealer approved by the
5-9 federal reserve system;>
5-10 <(2) a direct obligation of or obligation the
5-11 principal and interest of which are guaranteed by the United States
5-12 government;>
5-13 <(3) a direct obligation of or obligation guaranteed
5-14 by the Federal Home Loan Banks, the Federal National Mortgage
5-15 Association, the Federal Farm Credit System, the Student Loan
5-16 Marketing Association, the Federal Home Loan Mortgage Corporation,
5-17 or a successor to one of those organizations;>
5-18 <(4) a bankers' acceptance that:>
5-19 <(A) is eligible for purchase by a member of the
5-20 federal reserve system;>
5-21 <(B) matures in 270 days or less; and>
5-22 <(C) is issued by a bank that has received the
5-23 highest short-term credit rating by a nationally recognized
5-24 investment rating firm;>
5-25 <(5) commercial paper that:>
5-26 <(A) matures in 270 days or less; and>
5-27 <(B) has received the highest short-term credit
6-1 rating by a nationally recognized investment rating firm;>
6-2 <(6) a contract that is written by the board in which
6-3 the board grants the purchaser the right to purchase securities in
6-4 the board's marketable securities portfolio at a specified price
6-5 over a specified period and for which the board is paid a fee and
6-6 that specifically prohibits naked-option or uncovered option
6-7 trading;>
6-8 <(7) an obligation of a state or of an agency, county,
6-9 city, or other political subdivision of a state or a mutual fund
6-10 composed of those obligations;>
6-11 <(8) an investment instrument, obligation, or other
6-12 evidence of indebtedness the payment of which is directly or
6-13 indirectly guaranteed by the full faith and credit of the United
6-14 States government;>
6-15 <(9) an investment, account, depository receipt, or
6-16 deposit that is fully:>
6-17 <(A) insured by the Federal Deposit Insurance
6-18 Corporation or a successor to that organization; or>
6-19 <(B) secured by a security described by
6-20 Subdivision (2), (3), or (8) of this subsection;>
6-21 <(10) a collateralized mortgage obligation fully
6-22 secured by securities or mortgages issued or guaranteed by the
6-23 Government National Mortgage Association (GNMA) or any entity
6-24 identified by Subdivision (3) of this subsection;>
6-25 <(11) a security or evidence of indebtedness issued by
6-26 the Farm Credit System Financial Assistance Corporation, the
6-27 Private Export Funding Corporation, or the Export-Import Bank; and>
7-1 <(12) any other investment authorized for investment
7-2 of state funds by the state treasurer under Section 404.024,
7-3 Government Code.>
7-4 <(c) The board may not invest in or purchase obligations of
7-5 a private corporation or other private business entity doing
7-6 business in the Republic of South Africa unless the corporation or
7-7 other entity:>
7-8 <(1) has:>
7-9 <(A) adopted the Statement of Principles for
7-10 South Africa as they existed in 1987, as described in the >þLReport on
7-11 the Signatory Companies to the Statement of Principles for South
7-12 Africaää< published by Arthur D. Little, Inc., Cambridge,
7-13 Massachusetts, and has obtained a performance rating in Category 1
7-14 or 2 of the Statement of Principles for South Africa rating system
7-15 as determined by Arthur D. Little, Inc.; or>
7-16 <(B) agreed to the Code of Conduct that is
7-17 enforced by the United States Department of State under Section
7-18 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
7-19 and has received a rating of "Making Satisfactory Progress"; and>
7-20 <(2) does not supply strategic products or services
7-21 for use by the government, military, or police of the Republic of
7-22 South Africa.>
7-23 <(d) In this section:>
7-24 <(1) "Direct security repurchase agreement" means an
7-25 agreement under which the board buys, holds for a specified time,
7-26 and then sells back any of the following securities, obligations,
7-27 or participation certificates:>
8-1 <(A) a United States government security;>
8-2 <(B) a direct obligation of or an obligation the
8-3 principal and interest of which are guaranteed by the United States
8-4 government;>
8-5 <(C) a direct obligation of or an obligation
8-6 guaranteed by the Federal Home Loan Banks, the Federal National
8-7 Mortgage Association, the Federal Farm Credit System, the Student
8-8 Loan Marketing Association, the Federal Home Loan Mortgage
8-9 Corporation, or a successor to one of those organizations; or>
8-10 <(D) any other investment instrument,
8-11 obligation, or other evidence of indebtedness the payment of which
8-12 is directly or indirectly guaranteed by the full faith and credit
8-13 of the United States government.>
8-14 <(2) "Doing business in the Republic of South Africa"
8-15 means conducting or performing manufacturing, assembly, or
8-16 warehousing operations in the Republic of South Africa or, in the
8-17 case of a bank or other financial institution, lending money to the
8-18 government of the Republic of South Africa or any of its agencies
8-19 or instrumentalities.>
8-20 <(3) "Market value" means the fair and reasonable
8-21 prevailing price at which a security is being sold on the open
8-22 market at the time of the appraisement of the security by the
8-23 board.>
8-24 <(4) "Reverse security repurchase agreement" means an
8-25 agreement under which the board sells and after a specified time
8-26 buys back any of the securities, obligations, or participation
8-27 certificates listed by Subdivision (1) of this subsection.>
9-1 <(5) "Strategic products or services" means articles
9-2 designated as arms, ammunition, or implements of war as provided by
9-3 22 C.F.R. Part 121 or data processing equipment or computers sold
9-4 for military or police use or for use in connection with
9-5 restriction on travel in the Republic of South Africa by residents
9-6 of that country.>
9-7 SECTION 10. Section 59.021, Agriculture Code, is amended by
9-8 amending Subsections (b), (c), (d), (e), and (h) and by adding
9-9 Subsection (i) to read as follows:
9-10 (b) At the direction of the board <authority>, money
9-11 received from the state or federal government or from any other
9-12 person, in addition to proceeds from bonds issued under this
9-13 chapter, may be deposited to the credit of the fund.
9-14 (c) The board <authority> may provide for establishing and
9-15 maintaining separate accounts in the fund, including program
9-16 accounts, an interest and sinking account, a reserve account, and
9-17 any other accounts provided for by resolution of the board
9-18 <authority>.
9-19 (d) Money received as repayment of financial assistance
9-20 shall be deposited first in the interest and sinking account as
9-21 provided by resolution of the board <authority> authorizing its
9-22 bonds until that account is fully funded as provided by resolution
9-23 of the board <authority>.
9-24 (e) The fund and each account in the fund shall be kept and
9-25 maintained at the direction of the board <authority> and held in
9-26 trust by the state treasurer for and on behalf of the board
9-27 <authority> and the owners of the bonds issued under this chapter.
10-1 (h) The board <authority> may receive, and shall deposit in
10-2 the fund, appropriations, grants, donations, earned federal funds,
10-3 and the proceeds of any investment pools operated by the state
10-4 treasurer.
10-5 (i) The board may use money in the fund to pay the
10-6 reasonable and necessary costs and expenses of administering the
10-7 program.
10-8 SECTION 11. Subsections (a) and (c), Section 59.022,
10-9 Agriculture Code, are amended to read as follows:
10-10 (a) The board <authority> shall adopt rules governing
10-11 application for financial assistance under this chapter. The board
10-12 <authority> may adopt rules it considers necessary to administer
10-13 the program or considers in the best interest of the program. The
10-14 board <authority> may adopt rules concerning the sale of land
10-15 acquired by the board <authority> under this chapter by default,
10-16 foreclosure, forfeiture, or any other means. The board <authority>
10-17 shall adopt collateral or security requirements to ensure the full
10-18 repayment of financial assistance granted under this chapter. The
10-19 board <authority> may approve any extension of financial assistance
10-20 under this chapter or may delegate that approval authority to the
10-21 commissioner.
10-22 (c) The board <authority> may set and collect fees the board
10-23 <authority> considers reasonable and necessary to cover the
10-24 expenses of administering the program or considers in the best
10-25 interest of the program. Those fees shall be deposited in the
10-26 state treasury to the credit of the farm and ranch finance program
10-27 <administrative expense> fund. An applicant for financial
11-1 assistance participating in the program shall pay the costs of
11-2 applying for, participating in, and administering and servicing the
11-3 program, in amounts the board <authority> considers reasonable and
11-4 necessary. Any cost not paid by an applicant shall be paid from
11-5 the fund.
11-6 SECTION 12. Section 59.023, Agriculture Code, is amended to
11-7 read as follows:
11-8 Sec. 59.023. POWERS OF BOARD <AUTHORITY>. The board <In
11-9 addition to the powers granted to the authority under Section
11-10 58.022 of this code, the authority> has the power necessary to
11-11 accomplish the purposes and carry out the programs provided by this
11-12 chapter, including the power:
11-13 (1) to adopt and enforce bylaws, rules, and procedures
11-14 necessary to carry out this chapter;
11-15 (2) to establish, charge, and collect a fee, charge,
11-16 or penalty in connection with a program, service, or activity
11-17 provided by the board <authority> under this chapter;
11-18 (3) to issue bonds, provide for and secure the payment
11-19 of the bonds, and provide for the rights of the owners of the
11-20 bonds, in the manner and to the extent permitted by this chapter;
11-21 (4) to purchase, hold, cancel, or resell or otherwise
11-22 dispose of its bonds, subject to any restrictions and any
11-23 resolution authorizing the issuance of its bonds;
11-24 (5) to own, rent, lease, or otherwise acquire, accept,
11-25 or hold any interest in real, personal, or mixed property, by
11-26 purchase, exchange, gift, assignment, transfer, foreclosure,
11-27 mortgage, sale, lease, or otherwise;
12-1 (6) to hold, manage, operate, or improve real,
12-2 personal, or mixed property;
12-3 (7) to sell, lease, encumber, mortgage, exchange,
12-4 donate, convey, or otherwise dispose of any of its property or any
12-5 interest in its property, deed of trust, or mortgage lien owned by
12-6 it, under its control or custody, or in its possession and to
12-7 release or relinquish any right, title, claim, lien, interest,
12-8 easement, or demand, including any equity or right of redemption in
12-9 property foreclosed by it, by public or private sale, with or
12-10 without public bidding;
12-11 (8) to lease or rent any improvement, land, or
12-12 facility from any person;
12-13 (9) to make a secured or unsecured loan to provide
12-14 financial assistance as provided by this chapter, including the
12-15 refunding of an outstanding obligation, mortgage, or advance used
12-16 for those purposes, and to charge and collect interest on those
12-17 loans for loan payments and on terms and conditions the board
12-18 <authority> considers advisable that are not in conflict with this
12-19 chapter;
12-20 (10) to purchase or acquire, sell, discount, assign,
12-21 negotiate, or otherwise dispose of notes or other evidence of
12-22 indebtedness of eligible applicants as the board determines or
12-23 portions or portfolios of or participations in those evidences of
12-24 indebtedness; and
12-25 (11) to sell and guarantee securities, whether taxable
12-26 or tax exempt under federal law, in primary and secondary markets.
12-27 SECTION 13. Subsections (b) and (c), Section 59.025,
13-1 Agriculture Code, are amended to read as follows:
13-2 (b) The board <authority> shall provide by rule for the
13-3 period during which and the manner in which the down payment
13-4 provided for under Subsection (a) of this section shall be paid to
13-5 the board <authority>.
13-6 (c) If the sale is not consummated, the board <authority>
13-7 shall refund the down payment to the borrower.
13-8 SECTION 14. Section 59.026, Agriculture Code, is amended to
13-9 read as follows:
13-10 Sec. 59.026. Transfer of Borrower's Interest. (a) The
13-11 contract for a loan under this chapter must provide that transfer
13-12 of ownership of the land without the board's <authority's> express
13-13 written permission before the entire principal and interest due
13-14 have been paid constitutes default under the contract.
13-15 (b) If the borrower dies or becomes financially
13-16 incapacitated or if the borrower's interest in land is
13-17 involuntarily transferred by court order or other proceedings,
13-18 including bankruptcy, sheriff or trustee sale, or divorce, the land
13-19 may be conveyed by the borrower or the borrower's heirs,
13-20 administrators, executors, or successors in interest by complying
13-21 with the rules adopted by the board <authority> and obtaining the
13-22 board's <authority's> written permission.
13-23 SECTION 15. Section 59.027, Agriculture Code, is amended to
13-24 read as follows:
13-25 Sec. 59.027. Changes in use. (a) Before a borrower may use
13-26 land acquired with financial assistance under this chapter for a
13-27 primary purpose other than farming or ranching, the borrower must
14-1 submit to the board <authority> an application for approval of the
14-2 change of use.
14-3 (b) As soon as practicable after an application for a change
14-4 of use is received, the board <authority> shall approve or deny the
14-5 application and shall notify the borrower of the board's
14-6 <authority's> decision.
14-7 (c) The loan contract must provide that using land acquired
14-8 under this chapter for a purpose other than farming or ranching
14-9 without the approval of the board <authority> constitutes default
14-10 under the contract.
14-11 SECTION 16. Section 59.028, Agriculture Code, is amended to
14-12 read as follows:
14-13 Sec. 59.028. Appraisal. (a) Before the board <authority>
14-14 may loan money for the purchase of land under this chapter, the
14-15 board <authority> must have an appraisal of the property made to
14-16 determine its value.
14-17 (b) An appraiser representing the board <authority> must be
14-18 qualified to give competent appraisals of land. The board
14-19 <authority> may <contract with the board to> use appraisers
14-20 employed by the board.
14-21 SECTION 17. Section 59.029, Agriculture Code, is amended to
14-22 read as follows:
14-23 Sec. 59.029. PAYMENTS TO BOARD <AUTHORITY> UNDER CERTAIN
14-24 LEASES. If, during a period a person is indebted to the board
14-25 <authority> for land purchased with financial assistance under this
14-26 chapter, the person executes or there exists a lease or contract of
14-27 sale of oil, gas, or other minerals, chemicals, hard metals,
15-1 timber, sand, gravel, or other material that covers the land
15-2 purchased from the board <authority> that would result in the
15-3 depletion of the corpus of the land, not less than one-half of all
15-4 bonus money, delay rentals, or royalties received as consideration
15-5 for or payment under the oil, gas, or mineral lease and not less
15-6 than one-half of all money received under a lease or contract of
15-7 sale of other minerals, chemicals, hard metals, timber, sand,
15-8 gravel, or other material shall be paid to the board <authority> by
15-9 the lessee under the lease or the buyer under the contract of sale.
15-10 The board <authority> shall apply those payments to the
15-11 satisfaction of the indebtedness.
15-12 SECTION 18. Section 59.031, Agriculture Code, is amended to
15-13 read as follows:
15-14 Sec. 59.031. Death of a Borrower. (a) If a borrower
15-15 receiving financial assistance under this chapter dies while
15-16 indebted to the state under a contract, the borrower's rights under
15-17 this chapter and the contract devolve on the borrower's heirs,
15-18 devisees, or personal representatives under the laws of this state,
15-19 subject to all rights, claims, and charges of the board
15-20 <authority>.
15-21 (b) Default by an heir, devisee, or personal representative
15-22 with respect to a right, claim, or charge of the board <authority>
15-23 has the same effect as default by the borrower before the
15-24 borrower's death.
15-25 SECTION 19. Section 59.032, Agriculture Code, is amended to
15-26 read as follows:
15-27 Sec. 59.032. Unencumbered Title. The board <authority> may
16-1 establish a procedure by which a borrower acquiring land with a
16-2 loan under this chapter may obtain title to a portion of the tract
16-3 clear of encumbrances.
16-4 SECTION 20. Section 44.013, Agriculture Code, is amended to
16-5 read as follows:
16-6 Sec. 44.013. Rural Microenterprise Development Fund. The
16-7 rural microenterprise development fund is a fund in the state
16-8 treasury. Money appropriated to the department <Agricultural
16-9 Diversification Board> for use in making loans under the rural
16-10 microenterprise support program, proceeds from bonds issued under
16-11 Section 58.031(e), other amounts received by the state for loans
16-12 made under the program, and other money received by the board for
16-13 the program and required by the board to be deposited in the fund
16-14 shall be deposited to the credit of the fund. The fund shall
16-15 operate as a revolving fund, the contents of which shall be applied
16-16 and reapplied for the purposes of the rural microenterprise support
16-17 program.
16-18 SECTION 21. This Act takes effect January 1, 1996, but only
16-19 if the constitutional amendment proposed by the 74th Legislature,
16-20 Regular Session, 1995, relating to the consolidation of general
16-21 obligation bonding authority for certain agricultural funds, is
16-22 approved by the voters. If that amendment is not approved by the
16-23 voters, this Act has no effect.
16-24 SECTION 22. The importance of this legislation and the
16-25 crowded condition of the calendars in both houses create an
16-26 emergency and an imperative public necessity that the
16-27 constitutional rule requiring bills to be read on three several
17-1 days in each house be suspended, and this rule is hereby suspended.