S.B. No. 1260
AN ACT
1-1 relating to the use of the general obligation bonding authority of
1-2 the farm and ranch finance program fund for the Texas agricultural
1-3 fund within the Texas Agricultural Finance Authority.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 58.021, Agriculture Code, is amended by
1-6 adding Subsection (e) to read as follows:
1-7 (e) Notwithstanding any other provision of this section, the
1-8 authority may also design and implement programs to further rural
1-9 economic development.
1-10 SECTION 2. Subsections (a), (c), and (e), Section 58.031,
1-11 Agriculture Code, are amended to read as follows:
1-12 (a) The board by resolution may periodically provide for the
1-13 issuance of general obligation bonds as authorized by the Texas
1-14 Constitution for the establishment of the Texas agricultural fund
1-15 and the rural microenterprise development fund.
1-16 (c) The authority may issue and sell general obligation
1-17 bonds of the state <not to exceed $25 million outstanding at any
1-18 one time> for the purpose of providing money to establish a Texas
1-19 agricultural fund. The authority may issue the bonds in one or
1-20 several installments.
1-21 (e) The authority may issue and sell general obligation
1-22 bonds of the state for the purpose of providing money to establish
1-23 a rural microenterprise development fund <so that the principal
1-24 amount outstanding shall not exceed $5 million at any one time>.
2-1 The authority may issue the bonds in one or several installments.
2-2 SECTION 3. Subdivision (2), Section 59.001, Agriculture
2-3 Code, is amended to read as follows:
2-4 (2) "Board" means the board of directors of the
2-5 authority <Veterans Land Board>.
2-6 SECTION 4. Subsection (b), Section 59.002, Agriculture Code,
2-7 is amended to read as follows:
2-8 (b) The board shall administer the fund. <At the request of
2-9 the authority, the board shall make available to the authority
2-10 money from the fund to pay debt service on the program's bonds and
2-11 to provide financial assistance to borrowers to purchase farm or
2-12 ranch land as provided by this chapter.>
2-13 SECTION 5. Section 59.003, Agriculture Code, is amended to
2-14 read as follows:
2-15 Sec. 59.003. Limited Immunity From Suit or Liability. A
2-16 <The authority or a> member of the board may be sued and held
2-17 personally liable for damages that result from an official act or
2-18 omission only if the act or omission is corrupt or malicious.
2-19 SECTION 6. Section 59.011, Agriculture Code, is amended to
2-20 read as follows:
2-21 Sec. 59.011. Bonds. (a) The board <authority> may provide
2-22 by order or resolution for the issuance and sale of negotiable
2-23 bonds authorized by Article III, Section 49-f, of the Texas
2-24 Constitution. The proceeds from the sale of the bonds constitute
2-25 the fund.
2-26 (b) Subchapter D, Chapter 58, <Agriculture Code,> as it
2-27 relates to the issuance, sale, and refunding of bonds, applies to
3-1 the board's <authority's> issuance, sale, and refunding of bonds
3-2 under this chapter to finance the fund.
3-3 SECTION 7. Section 59.012, Agriculture Code, is amended by
3-4 amending Subsections (a) and (c) and by adding Subsection (d) to
3-5 read as follows:
3-6 (a) Except as provided by Subsections (b), <and> (c), and
3-7 (d) of this section, proceeds from the sale of the bonds, other
3-8 than refunding bonds, shall be deposited in the state treasury to
3-9 the credit of the fund.
3-10 (c) The <At the timely request of the authority, the> board
3-11 may <shall> provide <for transferring> from the proceeds of the
3-12 sale of bonds or from available money in the fund <directly> an
3-13 amount that is <certified by the authority as> reasonable and
3-14 necessary to cover the costs of administering the program. <That
3-15 amount shall be deposited in the state treasury to the credit of a
3-16 special fund to be known as the farm and ranch administrative
3-17 expense fund.>
3-18 (d) The board shall deposit the proceeds from the sale of
3-19 bonds, as authorized by the Texas Constitution, into the Texas
3-20 agricultural fund, to be administered as provided by Chapter 58 of
3-21 this code.
3-22 SECTION 8. Section 59.013, Agriculture Code, is amended to
3-23 read as follows:
3-24 Sec. 59.013. Payment of Principal and Interest. The board
3-25 <authority> shall arrange for payment of the principal of bonds as
3-26 they mature and the interest on the bonds as it becomes payable.
3-27 SECTION 9. Subsections (a) and (b), Section 59.015,
4-1 Agriculture Code, are amended to read as follows:
4-2 (a) The board <authority> may use money in the fund
4-3 attributable to the issuance and sale of bonds to pay:
4-4 (1) legal fees and fees for financial advice the board
4-5 <authority> finds necessary for the sale of bonds;
4-6 (2) the expense of publishing notice of sale of an
4-7 installment of bonds;
4-8 (3) the expense of printing the bonds;
4-9 (4) the expense of issuing the bonds, including the
4-10 actual costs of travel, lodging, and meals of officers, members, or
4-11 employees of the board, directors or employees of the authority,
4-12 the comptroller, the state treasurer, or the attorney general that
4-13 the board <authority> finds necessary to implement the issuance,
4-14 rating, or delivery of the bonds;
4-15 (5) the cost of manually signing the bonds;
4-16 (6) remuneration to any agent employed by the board
4-17 <authority> to pay the principal of and interest on the bonds;
4-18 (7) any amount required to be paid to maintain the
4-19 federal tax exemption of interest on the bonds; or
4-20 (8) any other cost, fee, or expense relating to the
4-21 issuance of the bonds.
4-22 (b) If, during the existence of the fund or during the
4-23 period any bonds are payable from the fund, the board <authority>
4-24 determines that there will not be sufficient money in the fund
4-25 during the following fiscal year to pay the principal of or
4-26 interest on the bonds that is to come due during the following
4-27 fiscal year, the comptroller shall transfer to the fund from the
5-1 first money coming into the state treasury not otherwise
5-2 appropriated by the constitution an amount sufficient to pay the
5-3 obligations.
5-4 SECTION 10. Section 59.016, Agriculture Code, is amended to
5-5 read as follows:
5-6 Sec. 59.016. Investments. <(a)> The board shall invest
5-7 funds as provided under Section 58.022. <authority shall give
5-8 timely instruction to the board of the dates on which principal on
5-9 bonds matures and interest becomes payable. The board shall
5-10 administer the fund accordingly.>
5-11 <(b) Except as provided by Subsection (c) of this section,
5-12 money in the fund that is not immediately committed to paying
5-13 principal of and interest on the bonds or to paying expenses as
5-14 provided by Section 59.015 of this code may be invested by the
5-15 board in:>
5-16 <(1) a direct security repurchase agreement or reverse
5-17 security repurchase agreement made with a state or national bank
5-18 domiciled in this state or with a primary dealer approved by the
5-19 federal reserve system;>
5-20 <(2) a direct obligation of or obligation the
5-21 principal and interest of which are guaranteed by the United States
5-22 government;>
5-23 <(3) a direct obligation of or obligation guaranteed
5-24 by the Federal Home Loan Banks, the Federal National Mortgage
5-25 Association, the Federal Farm Credit System, the Student Loan
5-26 Marketing Association, the Federal Home Loan Mortgage Corporation,
5-27 or a successor to one of those organizations;>
6-1 <(4) a bankers' acceptance that:>
6-2 <(A) is eligible for purchase by a member of the
6-3 federal reserve system;>
6-4 <(B) matures in 270 days or less; and>
6-5 <(C) is issued by a bank that has received the
6-6 highest short-term credit rating by a nationally recognized
6-7 investment rating firm;>
6-8 <(5) commercial paper that:>
6-9 <(A) matures in 270 days or less; and>
6-10 <(B) has received the highest short-term credit
6-11 rating by a nationally recognized investment rating firm;>
6-12 <(6) a contract that is written by the board in which
6-13 the board grants the purchaser the right to purchase securities in
6-14 the board's marketable securities portfolio at a specified price
6-15 over a specified period and for which the board is paid a fee and
6-16 that specifically prohibits naked-option or uncovered option
6-17 trading;>
6-18 <(7) an obligation of a state or of an agency, county,
6-19 city, or other political subdivision of a state or a mutual fund
6-20 composed of those obligations;>
6-21 <(8) an investment instrument, obligation, or other
6-22 evidence of indebtedness the payment of which is directly or
6-23 indirectly guaranteed by the full faith and credit of the United
6-24 States government;>
6-25 <(9) an investment, account, depository receipt, or
6-26 deposit that is fully:>
6-27 <(A) insured by the Federal Deposit Insurance
7-1 Corporation or a successor to that organization; or>
7-2 <(B) secured by a security described by
7-3 Subdivision (2), (3), or (8) of this subsection;>
7-4 <(10) a collateralized mortgage obligation fully
7-5 secured by securities or mortgages issued or guaranteed by the
7-6 Government National Mortgage Association (GNMA) or any entity
7-7 identified by Subdivision (3) of this subsection;>
7-8 <(11) a security or evidence of indebtedness issued by
7-9 the Farm Credit System Financial Assistance Corporation, the
7-10 Private Export Funding Corporation, or the Export-Import Bank; and>
7-11 <(12) any other investment authorized for investment
7-12 of state funds by the state treasurer under Section 404.024,
7-13 Government Code.>
7-14 <(c) The board may not invest in or purchase obligations of
7-15 a private corporation or other private business entity doing
7-16 business in the Republic of South Africa unless the corporation or
7-17 other entity:>
7-18 <(1) has:>
7-19 <(A) adopted the Statement of Principles for
7-20 South Africa as they existed in 1987, as described in the >þLReport on
7-21 the Signatory Companies to the Statement of Principles for South
7-22 Africaää< published by Arthur D. Little, Inc., Cambridge,
7-23 Massachusetts, and has obtained a performance rating in Category 1
7-24 or 2 of the Statement of Principles for South Africa rating system
7-25 as determined by Arthur D. Little, Inc.; or>
7-26 <(B) agreed to the Code of Conduct that is
7-27 enforced by the United States Department of State under Section
8-1 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
8-2 and has received a rating of "Making Satisfactory Progress"; and>
8-3 <(2) does not supply strategic products or services
8-4 for use by the government, military, or police of the Republic of
8-5 South Africa.>
8-6 <(d) In this section:>
8-7 <(1) "Direct security repurchase agreement" means an
8-8 agreement under which the board buys, holds for a specified time,
8-9 and then sells back any of the following securities, obligations,
8-10 or participation certificates:>
8-11 <(A) a United States government security;>
8-12 <(B) a direct obligation of or an obligation the
8-13 principal and interest of which are guaranteed by the United States
8-14 government;>
8-15 <(C) a direct obligation of or an obligation
8-16 guaranteed by the Federal Home Loan Banks, the Federal National
8-17 Mortgage Association, the Federal Farm Credit System, the Student
8-18 Loan Marketing Association, the Federal Home Loan Mortgage
8-19 Corporation, or a successor to one of those organizations; or>
8-20 <(D) any other investment instrument,
8-21 obligation, or other evidence of indebtedness the payment of which
8-22 is directly or indirectly guaranteed by the full faith and credit
8-23 of the United States government.>
8-24 <(2) "Doing business in the Republic of South Africa"
8-25 means conducting or performing manufacturing, assembly, or
8-26 warehousing operations in the Republic of South Africa or, in the
8-27 case of a bank or other financial institution, lending money to the
9-1 government of the Republic of South Africa or any of its agencies
9-2 or instrumentalities.>
9-3 <(3) "Market value" means the fair and reasonable
9-4 prevailing price at which a security is being sold on the open
9-5 market at the time of the appraisement of the security by the
9-6 board.>
9-7 <(4) "Reverse security repurchase agreement" means an
9-8 agreement under which the board sells and after a specified time
9-9 buys back any of the securities, obligations, or participation
9-10 certificates listed by Subdivision (1) of this subsection.>
9-11 <(5) "Strategic products or services" means articles
9-12 designated as arms, ammunition, or implements of war as provided by
9-13 22 C.F.R. Part 121 or data processing equipment or computers sold
9-14 for military or police use or for use in connection with
9-15 restriction on travel in the Republic of South Africa by residents
9-16 of that country.>
9-17 SECTION 11. Section 59.021, Agriculture Code, is amended by
9-18 amending Subsections (b), (c), (d), (e), and (h) and by adding
9-19 Subsection (i) to read as follows:
9-20 (b) At the direction of the board <authority>, money
9-21 received from the state or federal government or from any other
9-22 person, in addition to proceeds from bonds issued under this
9-23 chapter, may be deposited to the credit of the fund.
9-24 (c) The board <authority> may provide for establishing and
9-25 maintaining separate accounts in the fund, including program
9-26 accounts, an interest and sinking account, a reserve account, and
9-27 any other accounts provided for by resolution of the board
10-1 <authority>.
10-2 (d) Money received as repayment of financial assistance
10-3 shall be deposited first in the interest and sinking account as
10-4 provided by resolution of the board <authority> authorizing its
10-5 bonds until that account is fully funded as provided by resolution
10-6 of the board <authority>.
10-7 (e) The fund and each account in the fund shall be kept and
10-8 maintained at the direction of the board <authority> and held in
10-9 trust by the state treasurer for and on behalf of the board
10-10 <authority> and the owners of the bonds issued under this chapter.
10-11 (h) The board <authority> may receive, and shall deposit in
10-12 the fund, appropriations, grants, donations, earned federal funds,
10-13 and the proceeds of any investment pools operated by the state
10-14 treasurer.
10-15 (i) The board may use money in the fund to pay the costs and
10-16 expenses of administering the program.
10-17 SECTION 12. Subsections (a) and (c), Section 59.022,
10-18 Agriculture Code, are amended to read as follows:
10-19 (a) The board <authority> shall adopt rules governing
10-20 application for financial assistance under this chapter. The board
10-21 <authority> may adopt rules it considers necessary to administer
10-22 the program or considers in the best interest of the program. The
10-23 board <authority> may adopt rules concerning the sale of land
10-24 acquired by the board <authority> under this chapter by default,
10-25 foreclosure, forfeiture, or any other means. The board <authority>
10-26 shall adopt collateral or security requirements to ensure the full
10-27 repayment of financial assistance granted under this chapter. The
11-1 board <authority> may approve any extension of financial assistance
11-2 under this chapter or may delegate that approval authority to the
11-3 commissioner.
11-4 (c) The board <authority> may set and collect fees the board
11-5 <authority> considers reasonable and necessary to cover the
11-6 expenses of administering the program or considers in the best
11-7 interest of the program. Those fees shall be deposited in the
11-8 state treasury to the credit of the farm and ranch finance program
11-9 <administrative expense> fund. An applicant for financial
11-10 assistance participating in the program shall pay the costs of
11-11 applying for, participating in, and administering and servicing the
11-12 program, in amounts the board <authority> considers reasonable and
11-13 necessary. Any cost not paid by an applicant shall be paid from
11-14 the fund.
11-15 SECTION 13. Section 59.023, Agriculture Code, is amended to
11-16 read as follows:
11-17 Sec. 59.023. POWERS OF BOARD <AUTHORITY>. The board <In
11-18 addition to the powers granted to the authority under Section
11-19 58.022 of this code, the authority> has the power necessary to
11-20 accomplish the purposes and carry out the programs provided by this
11-21 chapter, including the power:
11-22 (1) to adopt and enforce bylaws, rules, and procedures
11-23 necessary to carry out this chapter;
11-24 (2) to establish, charge, and collect a fee, charge,
11-25 or penalty in connection with a program, service, or activity
11-26 provided by the board <authority> under this chapter;
11-27 (3) to issue bonds, provide for and secure the payment
12-1 of the bonds, and provide for the rights of the owners of the
12-2 bonds, in the manner and to the extent permitted by this chapter;
12-3 (4) to purchase, hold, cancel, or resell or otherwise
12-4 dispose of its bonds, subject to any restrictions and any
12-5 resolution authorizing the issuance of its bonds;
12-6 (5) to own, rent, lease, or otherwise acquire, accept,
12-7 or hold any interest in real, personal, or mixed property, by
12-8 purchase, exchange, gift, assignment, transfer, foreclosure,
12-9 mortgage, sale, lease, or otherwise;
12-10 (6) to hold, manage, operate, or improve real,
12-11 personal, or mixed property;
12-12 (7) to sell, lease, encumber, mortgage, exchange,
12-13 donate, convey, or otherwise dispose of any of its property or any
12-14 interest in its property, deed of trust, or mortgage lien owned by
12-15 it, under its control or custody, or in its possession and to
12-16 release or relinquish any right, title, claim, lien, interest,
12-17 easement, or demand, including any equity or right of redemption in
12-18 property foreclosed by it, by public or private sale, with or
12-19 without public bidding;
12-20 (8) to lease or rent any improvement, land, or
12-21 facility from any person;
12-22 (9) to make a secured or unsecured loan to provide
12-23 financial assistance as provided by this chapter, including the
12-24 refunding of an outstanding obligation, mortgage, or advance used
12-25 for those purposes, and to charge and collect interest on those
12-26 loans for loan payments and on terms and conditions the board
12-27 <authority> considers advisable that are not in conflict with this
13-1 chapter;
13-2 (10) to purchase or acquire, sell, discount, assign,
13-3 negotiate, or otherwise dispose of notes or other evidence of
13-4 indebtedness of eligible applicants as the board determines or
13-5 portions or portfolios of or participations in those evidences of
13-6 indebtedness; and
13-7 (11) to sell and guarantee securities, whether taxable
13-8 or tax exempt under federal law, in primary and secondary markets.
13-9 SECTION 14. Subsections (b) and (c), Section 59.025,
13-10 Agriculture Code, are amended to read as follows:
13-11 (b) The board <authority> shall provide by rule for the
13-12 period during which and the manner in which the down payment
13-13 provided for under Subsection (a) of this section shall be paid to
13-14 the board <authority>.
13-15 (c) If the sale is not consummated, the board <authority>
13-16 shall refund the down payment to the borrower.
13-17 SECTION 15. Section 59.026, Agriculture Code, is amended to
13-18 read as follows:
13-19 Sec. 59.026. Transfer of Borrower's Interest. (a) The
13-20 contract for a loan under this chapter must provide that transfer
13-21 of ownership of the land without the board's <authority's> express
13-22 written permission before the entire principal and interest due
13-23 have been paid constitutes default under the contract.
13-24 (b) If the borrower dies or becomes financially
13-25 incapacitated or if the borrower's interest in land is
13-26 involuntarily transferred by court order or other proceedings,
13-27 including bankruptcy, sheriff or trustee sale, or divorce, the land
14-1 may be conveyed by the borrower or the borrower's heirs,
14-2 administrators, executors, or successors in interest by complying
14-3 with the rules adopted by the board <authority> and obtaining the
14-4 board's <authority's> written permission.
14-5 SECTION 16. Section 59.027, Agriculture Code, is amended to
14-6 read as follows:
14-7 Sec. 59.027. Changes in use. (a) Before a borrower may use
14-8 land acquired with financial assistance under this chapter for a
14-9 primary purpose other than farming or ranching, the borrower must
14-10 submit to the board <authority> an application for approval of the
14-11 change of use.
14-12 (b) As soon as practicable after an application for a change
14-13 of use is received, the board <authority> shall approve or deny the
14-14 application and shall notify the borrower of the board's
14-15 <authority's> decision.
14-16 (c) The loan contract must provide that using land acquired
14-17 under this chapter for a purpose other than farming or ranching
14-18 without the approval of the board <authority> constitutes default
14-19 under the contract.
14-20 SECTION 17. Section 59.028, Agriculture Code, is amended to
14-21 read as follows:
14-22 Sec. 59.028. Appraisal. (a) Before the board <authority>
14-23 may loan money for the purchase of land under this chapter, the
14-24 board <authority> must have an appraisal of the property made to
14-25 determine its value.
14-26 (b) An appraiser representing the board <authority> must be
14-27 qualified to give competent appraisals of land. The board
15-1 <authority> may <contract with the board to> use appraisers
15-2 employed by the board.
15-3 SECTION 18. Section 59.029, Agriculture Code, is amended to
15-4 read as follows:
15-5 Sec. 59.029. PAYMENTS TO BOARD <AUTHORITY> UNDER CERTAIN
15-6 LEASES. If, during a period a person is indebted to the board
15-7 <authority> for land purchased with financial assistance under this
15-8 chapter, the person executes or there exists a lease or contract of
15-9 sale of oil, gas, or other minerals, chemicals, hard metals,
15-10 timber, sand, gravel, or other material that covers the land
15-11 purchased from the board <authority> that would result in the
15-12 depletion of the corpus of the land, not less than one-half of all
15-13 bonus money, delay rentals, or royalties received as consideration
15-14 for or payment under the oil, gas, or mineral lease and not less
15-15 than one-half of all money received under a lease or contract of
15-16 sale of other minerals, chemicals, hard metals, timber, sand,
15-17 gravel, or other material shall be paid to the board <authority> by
15-18 the lessee under the lease or the buyer under the contract of sale.
15-19 The board <authority> shall apply those payments to the
15-20 satisfaction of the indebtedness.
15-21 SECTION 19. Section 59.031, Agriculture Code, is amended to
15-22 read as follows:
15-23 Sec. 59.031. Death of a Borrower. (a) If a borrower
15-24 receiving financial assistance under this chapter dies while
15-25 indebted to the state under a contract, the borrower's rights under
15-26 this chapter and the contract devolve on the borrower's heirs,
15-27 devisees, or personal representatives under the laws of this state,
16-1 subject to all rights, claims, and charges of the board
16-2 <authority>.
16-3 (b) Default by an heir, devisee, or personal representative
16-4 with respect to a right, claim, or charge of the board <authority>
16-5 has the same effect as default by the borrower before the
16-6 borrower's death.
16-7 SECTION 20. Section 59.032, Agriculture Code, is amended to
16-8 read as follows:
16-9 Sec. 59.032. Unencumbered Title. The board <authority> may
16-10 establish a procedure by which a borrower acquiring land with a
16-11 loan under this chapter may obtain title to a portion of the tract
16-12 clear of encumbrances.
16-13 SECTION 21. This Act takes effect January 1, 1996, but only
16-14 if the constitutional amendment proposed by the 74th Legislature,
16-15 Regular Session, 1995, relating to the use of proceeds of bonds
16-16 issued for financing of farm and ranch land is approved by the
16-17 voters. If that amendment is not approved by the voters, this Act
16-18 has no effect.
16-19 SECTION 22. The importance of this legislation and the
16-20 crowded condition of the calendars in both houses create an
16-21 emergency and an imperative public necessity that the
16-22 constitutional rule requiring bills to be read on three several
16-23 days in each house be suspended, and this rule is hereby suspended.