74R13611 MWV-F
By Montford S.B. No. 1260
Substitute the following for S.B. No. 1260:
By Marchant C.S.S.B. No. 1260
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the use of the general obligation bonding authority of
1-3 the farm and ranch finance program fund for the Texas agricultural
1-4 fund within the Texas Agricultural Finance Authority.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 58.021, Agriculture Code, is amended by
1-7 adding Subsection (e) to read as follows:
1-8 (e) Notwithstanding any other provision of this section, the
1-9 authority may also design and implement programs to further rural
1-10 economic development.
1-11 SECTION 2. Sections 58.031(a), (c), and (e), Agriculture
1-12 Code, are amended to read as follows:
1-13 (a) The board by resolution may periodically provide for the
1-14 issuance of general obligation bonds as authorized by the Texas
1-15 Constitution for the establishment of the Texas agricultural fund
1-16 and the rural microenterprise fund.
1-17 (c) The authority may issue and sell general obligation
1-18 bonds of the state <not to exceed $25 million outstanding at any
1-19 one time> for the purpose of providing money to establish a Texas
1-20 agricultural fund. The authority may issue the bonds in one or
1-21 several installments.
1-22 (e) The authority may issue and sell general obligation
1-23 bonds of the state for the purpose of providing money to establish
1-24 a rural microenterprise development fund <so that the principal
2-1 amount outstanding shall not exceed $5 million at any one time>.
2-2 The authority may issue the bonds in one or several installments.
2-3 SECTION 3. Section 59.001(2), Agriculture Code, is amended
2-4 to read as follows:
2-5 (2) "Board" means the board of directors of the
2-6 authority <Veterans Land Board>.
2-7 SECTION 4. Section 59.002(b), Agriculture Code, is amended
2-8 to read as follows:
2-9 (b) The board shall administer the fund. <At the request of
2-10 the authority, the board shall make available to the authority
2-11 money from the fund to pay debt service on the program's bonds and
2-12 to provide financial assistance to borrowers to purchase farm or
2-13 ranch land as provided by this chapter.>
2-14 SECTION 5. Section 59.003, Agriculture Code, is amended to
2-15 read as follows:
2-16 Sec. 59.003. Limited Immunity From Suit or Liability. A
2-17 <The authority or a> member of the board may be sued and held
2-18 personally liable for damages that result from an official act or
2-19 omission only if the act or omission is corrupt or malicious.
2-20 SECTION 6. Section 59.011, Agriculture Code, is amended to
2-21 read as follows:
2-22 Sec. 59.011. Bonds. (a) The board <authority> may provide
2-23 by order or resolution for the issuance and sale of negotiable
2-24 bonds authorized by Article III, Section 49-f, of the Texas
2-25 Constitution. The proceeds from the sale of the bonds constitute
2-26 the fund.
2-27 (b) Subchapter D, Chapter 58, <Agriculture Code,> as it
3-1 relates to the issuance, sale, and refunding of bonds, applies to
3-2 the board's <authority's> issuance, sale, and refunding of bonds
3-3 under this chapter to finance the fund.
3-4 SECTION 7. Section 59.012, Agriculture Code, is amended by
3-5 amending Subsections (a) and (c) and adding Subsection (d) to read
3-6 as follows:
3-7 (a) Except as provided by Subsections (b), <and> (c), and
3-8 (d) of this section, proceeds from the sale of the bonds, other
3-9 than refunding bonds, shall be deposited in the state treasury to
3-10 the credit of the fund.
3-11 (c) The <At the timely request of the authority, the> board
3-12 may <shall> provide <for transferring> from the proceeds of the
3-13 sale of bonds or from available money in the fund <directly> an
3-14 amount that is <certified by the authority as> reasonable and
3-15 necessary to cover the costs of administering the program. <That
3-16 amount shall be deposited in the state treasury to the credit of a
3-17 special fund to be known as the farm and ranch administrative
3-18 expense fund.>
3-19 (d) The board shall deposit the proceeds from the sale of
3-20 bonds, as authorized by the Texas Constitution, into the Texas
3-21 agricultural fund, to be administered as provided by Chapter 58 of
3-22 this code.
3-23 SECTION 8. Section 59.013, Agriculture Code, is amended to
3-24 read as follows:
3-25 Sec. 59.013. Payment of Principal and Interest. The board
3-26 <authority> shall arrange for payment of the principal of bonds as
3-27 they mature and the interest on the bonds as it becomes payable.
4-1 SECTION 9. Sections 59.015(a) and (b), Agriculture Code, are
4-2 amended to read as follows:
4-3 (a) The board <authority> may use money in the fund
4-4 attributable to the issuance and sale of bonds to pay:
4-5 (1) legal fees and fees for financial advice the board
4-6 <authority> finds necessary for the sale of bonds;
4-7 (2) the expense of publishing notice of sale of an
4-8 installment of bonds;
4-9 (3) the expense of printing the bonds;
4-10 (4) the expense of issuing the bonds, including the
4-11 actual costs of travel, lodging, and meals of officers, members, or
4-12 employees of the board, directors or employees of the authority,
4-13 the comptroller, the state treasurer, or the attorney general that
4-14 the board <authority> finds necessary to implement the issuance,
4-15 rating, or delivery of the bonds;
4-16 (5) the cost of manually signing the bonds;
4-17 (6) remuneration to any agent employed by the board
4-18 <authority> to pay the principal of and interest on the bonds;
4-19 (7) any amount required to be paid to maintain the
4-20 federal tax exemption of interest on the bonds; or
4-21 (8) any other cost, fee, or expense relating to the
4-22 issuance of the bonds.
4-23 (b) If, during the existence of the fund or during the
4-24 period any bonds are payable from the fund, the board <authority>
4-25 determines that there will not be sufficient money in the fund
4-26 during the following fiscal year to pay the principal of or
4-27 interest on the bonds that is to come due during the following
5-1 fiscal year, the comptroller shall transfer to the fund from the
5-2 first money coming into the state treasury not otherwise
5-3 appropriated by the constitution an amount sufficient to pay the
5-4 obligations.
5-5 SECTION 10. Section 59.016, Agriculture Code, is amended to
5-6 read as follows:
5-7 Sec. 59.016. Investments. <(a)> The board shall invest
5-8 funds as provided under Section 58.022. <authority shall give
5-9 timely instruction to the board of the dates on which principal on
5-10 bonds matures and interest becomes payable. The board shall
5-11 administer the fund accordingly.>
5-12 <(b) Except as provided by Subsection (c) of this section,
5-13 money in the fund that is not immediately committed to paying
5-14 principal of and interest on the bonds or to paying expenses as
5-15 provided by Section 59.015 of this code may be invested by the
5-16 board in:>
5-17 <(1) a direct security repurchase agreement or reverse
5-18 security repurchase agreement made with a state or national bank
5-19 domiciled in this state or with a primary dealer approved by the
5-20 federal reserve system;>
5-21 <(2) a direct obligation of or obligation the
5-22 principal and interest of which are guaranteed by the United States
5-23 government;>
5-24 <(3) a direct obligation of or obligation guaranteed
5-25 by the Federal Home Loan Banks, the Federal National Mortgage
5-26 Association, the Federal Farm Credit System, the Student Loan
5-27 Marketing Association, the Federal Home Loan Mortgage Corporation,
6-1 or a successor to one of those organizations;>
6-2 <(4) a bankers' acceptance that:>
6-3 <(A) is eligible for purchase by a member of the
6-4 federal reserve system;>
6-5 <(B) matures in 270 days or less; and>
6-6 <(C) is issued by a bank that has received the
6-7 highest short-term credit rating by a nationally recognized
6-8 investment rating firm;>
6-9 <(5) commercial paper that:>
6-10 <(A) matures in 270 days or less; and>
6-11 <(B) has received the highest short-term credit
6-12 rating by a nationally recognized investment rating firm;>
6-13 <(6) a contract that is written by the board in which
6-14 the board grants the purchaser the right to purchase securities in
6-15 the board's marketable securities portfolio at a specified price
6-16 over a specified period and for which the board is paid a fee and
6-17 that specifically prohibits naked-option or uncovered option
6-18 trading;>
6-19 <(7) an obligation of a state or of an agency, county,
6-20 city, or other political subdivision of a state or a mutual fund
6-21 composed of those obligations;>
6-22 <(8) an investment instrument, obligation, or other
6-23 evidence of indebtedness the payment of which is directly or
6-24 indirectly guaranteed by the full faith and credit of the United
6-25 States government;>
6-26 <(9) an investment, account, depository receipt, or
6-27 deposit that is fully:>
7-1 <(A) insured by the Federal Deposit Insurance
7-2 Corporation or a successor to that organization; or>
7-3 <(B) secured by a security described by
7-4 Subdivision (2), (3), or (8) of this subsection;>
7-5 <(10) a collateralized mortgage obligation fully
7-6 secured by securities or mortgages issued or guaranteed by the
7-7 Government National Mortgage Association (GNMA) or any entity
7-8 identified by Subdivision (3) of this subsection;>
7-9 <(11) a security or evidence of indebtedness issued by
7-10 the Farm Credit System Financial Assistance Corporation, the
7-11 Private Export Funding Corporation, or the Export-Import Bank; and>
7-12 <(12) any other investment authorized for investment
7-13 of state funds by the state treasurer under Section 404.024,
7-14 Government Code.>
7-15 <(c) The board may not invest in or purchase obligations of
7-16 a private corporation or other private business entity doing
7-17 business in the Republic of South Africa unless the corporation or
7-18 other entity:>
7-19 <(1) has:>
7-20 <(A) adopted the Statement of Principles for
7-21 South Africa as they existed in 1987, as described in the >þLReport on
7-22 the Signatory Companies to the Statement of Principles for South
7-23 Africaää< published by Arthur D. Little, Inc., Cambridge,
7-24 Massachusetts, and has obtained a performance rating in Category 1
7-25 or 2 of the Statement of Principles for South Africa rating system
7-26 as determined by Arthur D. Little, Inc.; or>
7-27 <(B) agreed to the Code of Conduct that is
8-1 enforced by the United States Department of State under Section
8-2 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
8-3 and has received a rating of "Making Satisfactory Progress"; and>
8-4 <(2) does not supply strategic products or services
8-5 for use by the government, military, or police of the Republic of
8-6 South Africa.>
8-7 <(d) In this section:>
8-8 <(1) "Direct security repurchase agreement" means an
8-9 agreement under which the board buys, holds for a specified time,
8-10 and then sells back any of the following securities, obligations,
8-11 or participation certificates:>
8-12 <(A) a United States government security;>
8-13 <(B) a direct obligation of or an obligation the
8-14 principal and interest of which are guaranteed by the United States
8-15 government;>
8-16 <(C) a direct obligation of or an obligation
8-17 guaranteed by the Federal Home Loan Banks, the Federal National
8-18 Mortgage Association, the Federal Farm Credit System, the Student
8-19 Loan Marketing Association, the Federal Home Loan Mortgage
8-20 Corporation, or a successor to one of those organizations; or>
8-21 <(D) any other investment instrument,
8-22 obligation, or other evidence of indebtedness the payment of which
8-23 is directly or indirectly guaranteed by the full faith and credit
8-24 of the United States government.>
8-25 <(2) "Doing business in the Republic of South Africa"
8-26 means conducting or performing manufacturing, assembly, or
8-27 warehousing operations in the Republic of South Africa or, in the
9-1 case of a bank or other financial institution, lending money to the
9-2 government of the Republic of South Africa or any of its agencies
9-3 or instrumentalities.>
9-4 <(3) "Market value" means the fair and reasonable
9-5 prevailing price at which a security is being sold on the open
9-6 market at the time of the appraisement of the security by the
9-7 board.>
9-8 <(4) "Reverse security repurchase agreement" means an
9-9 agreement under which the board sells and after a specified time
9-10 buys back any of the securities, obligations, or participation
9-11 certificates listed by Subdivision (1) of this subsection.>
9-12 <(5) "Strategic products or services" means articles
9-13 designated as arms, ammunition, or implements of war as provided by
9-14 22 C.F.R. Part 121 or data processing equipment or computers sold
9-15 for military or police use or for use in connection with
9-16 restriction on travel in the Republic of South Africa by residents
9-17 of that country.>
9-18 SECTION 11. Section 59.021, Agriculture Code, is amended by
9-19 amending Subsections (b), (c), (d), (e), and (h) and by adding
9-20 Subsection (i) to read as follows:
9-21 (b) At the direction of the board <authority>, money
9-22 received from the state or federal government or from any other
9-23 person, in addition to proceeds from bonds issued under this
9-24 chapter, may be deposited to the credit of the fund.
9-25 (c) The board <authority> may provide for establishing and
9-26 maintaining separate accounts in the fund, including program
9-27 accounts, an interest and sinking account, a reserve account, and
10-1 any other accounts provided for by resolution of the board
10-2 <authority>.
10-3 (d) Money received as repayment of financial assistance
10-4 shall be deposited first in the interest and sinking account as
10-5 provided by resolution of the board <authority> authorizing its
10-6 bonds until that account is fully funded as provided by resolution
10-7 of the board <authority>.
10-8 (e) The fund and each account in the fund shall be kept and
10-9 maintained at the direction of the board <authority> and held in
10-10 trust by the state treasurer for and on behalf of the board
10-11 <authority> and the owners of the bonds issued under this chapter.
10-12 (h) The board <authority> may receive, and shall deposit in
10-13 the fund, appropriations, grants, donations, earned federal funds,
10-14 and the proceeds of any investment pools operated by the state
10-15 treasurer.
10-16 (i) The board may use money in the fund to pay the costs and
10-17 expenses of administering the program.
10-18 SECTION 12. Sections 59.022(a) and (c), Agriculture Code,
10-19 are amended to read as follows:
10-20 (a) The board <authority> shall adopt rules governing
10-21 application for financial assistance under this chapter. The board
10-22 <authority> may adopt rules it considers necessary to administer
10-23 the program or considers in the best interest of the program. The
10-24 board <authority> may adopt rules concerning the sale of land
10-25 acquired by the board <authority> under this chapter by default,
10-26 foreclosure, forfeiture, or any other means. The board <authority>
10-27 shall adopt collateral or security requirements to ensure the full
11-1 repayment of financial assistance granted under this chapter. The
11-2 board <authority> may approve any extension of financial assistance
11-3 under this chapter or may delegate that approval authority to the
11-4 commissioner.
11-5 (c) The board <authority> may set and collect fees the board
11-6 <authority> considers reasonable and necessary to cover the
11-7 expenses of administering the program or considers in the best
11-8 interest of the program. Those fees shall be deposited in the
11-9 state treasury to the credit of the farm and ranch finance program
11-10 <administrative expense> fund. An applicant for financial
11-11 assistance participating in the program shall pay the costs of
11-12 applying for, participating in, and administering and servicing the
11-13 program, in amounts the board <authority> considers reasonable and
11-14 necessary. Any cost not paid by an applicant shall be paid from
11-15 the fund.
11-16 SECTION 13. Section 59.023, Agriculture Code, is amended to
11-17 read as follows:
11-18 Sec. 59.023. POWERS OF BOARD <AUTHORITY>. The board <In
11-19 addition to the powers granted to the authority under Section
11-20 58.022 of this code, the authority> has the power necessary to
11-21 accomplish the purposes and carry out the programs provided by this
11-22 chapter, including the power:
11-23 (1) to adopt and enforce bylaws, rules, and procedures
11-24 necessary to carry out this chapter;
11-25 (2) to establish, charge, and collect a fee, charge,
11-26 or penalty in connection with a program, service, or activity
11-27 provided by the board <authority> under this chapter;
12-1 (3) to issue bonds, provide for and secure the payment
12-2 of the bonds, and provide for the rights of the owners of the
12-3 bonds, in the manner and to the extent permitted by this chapter;
12-4 (4) to purchase, hold, cancel, or resell or otherwise
12-5 dispose of its bonds, subject to any restrictions and any
12-6 resolution authorizing the issuance of its bonds;
12-7 (5) to own, rent, lease, or otherwise acquire, accept,
12-8 or hold any interest in real, personal, or mixed property, by
12-9 purchase, exchange, gift, assignment, transfer, foreclosure,
12-10 mortgage, sale, lease, or otherwise;
12-11 (6) to hold, manage, operate, or improve real,
12-12 personal, or mixed property;
12-13 (7) to sell, lease, encumber, mortgage, exchange,
12-14 donate, convey, or otherwise dispose of any of its property or any
12-15 interest in its property, deed of trust, or mortgage lien owned by
12-16 it, under its control or custody, or in its possession and to
12-17 release or relinquish any right, title, claim, lien, interest,
12-18 easement, or demand, including any equity or right of redemption in
12-19 property foreclosed by it, by public or private sale, with or
12-20 without public bidding;
12-21 (8) to lease or rent any improvement, land, or
12-22 facility from any person;
12-23 (9) to make a secured or unsecured loan to provide
12-24 financial assistance as provided by this chapter, including the
12-25 refunding of an outstanding obligation, mortgage, or advance used
12-26 for those purposes, and to charge and collect interest on those
12-27 loans for loan payments and on terms and conditions the board
13-1 <authority> considers advisable that are not in conflict with this
13-2 chapter;
13-3 (10) to purchase or acquire, sell, discount, assign,
13-4 negotiate, or otherwise dispose of notes or other evidence of
13-5 indebtedness of eligible applicants as the board determines or
13-6 portions or portfolios of or participations in those evidences of
13-7 indebtedness; and
13-8 (11) to sell and guarantee securities, whether taxable
13-9 or tax exempt under federal law, in primary and secondary markets.
13-10 SECTION 14. Sections 59.025(b) and (c), Agriculture Code,
13-11 are amended to read as follows:
13-12 (b) The board <authority> shall provide by rule for the
13-13 period during which and the manner in which the down payment
13-14 provided for under Subsection (a) of this section shall be paid to
13-15 the board <authority>.
13-16 (c) If the sale is not consummated, the board <authority>
13-17 shall refund the down payment to the borrower.
13-18 SECTION 15. Section 59.026, Agriculture Code, is amended to
13-19 read as follows:
13-20 Sec. 59.026. Transfer of Borrower's Interest. (a) The
13-21 contract for a loan under this chapter must provide that transfer
13-22 of ownership of the land without the board's <authority's> express
13-23 written permission before the entire principal and interest due
13-24 have been paid constitutes default under the contract.
13-25 (b) If the borrower dies or becomes financially
13-26 incapacitated or if the borrower's interest in land is
13-27 involuntarily transferred by court order or other proceedings,
14-1 including bankruptcy, sheriff or trustee sale, or divorce, the land
14-2 may be conveyed by the borrower or the borrower's heirs,
14-3 administrators, executors, or successors in interest by complying
14-4 with the rules adopted by the board <authority> and obtaining the
14-5 board's <authority's> written permission.
14-6 SECTION 16. Section 59.027, Agriculture Code, is amended to
14-7 read as follows:
14-8 Sec. 59.027. Changes in use. (a) Before a borrower may use
14-9 land acquired with financial assistance under this chapter for a
14-10 primary purpose other than farming or ranching, the borrower must
14-11 submit to the board <authority> an application for approval of the
14-12 change of use.
14-13 (b) As soon as practicable after an application for a change
14-14 of use is received, the board <authority> shall approve or deny the
14-15 application and shall notify the borrower of the board's
14-16 <authority's> decision.
14-17 (c) The loan contract must provide that using land acquired
14-18 under this chapter for a purpose other than farming or ranching
14-19 without the approval of the board <authority> constitutes default
14-20 under the contract.
14-21 SECTION 17. Section 59.028, Agriculture Code, is amended to
14-22 read as follows:
14-23 Sec. 59.028. Appraisal. (a) Before the board <authority>
14-24 may loan money for the purchase of land under this chapter, the
14-25 board <authority> must have an appraisal of the property made to
14-26 determine its value.
14-27 (b) An appraiser representing the board <authority> must be
15-1 qualified to give competent appraisals of land. The board
15-2 <authority> may <contract with the board to> use appraisers
15-3 employed by the board.
15-4 SECTION 18. Section 59.029, Agriculture Code, is amended to
15-5 read as follows:
15-6 Sec. 59.029. PAYMENTS TO BOARD <AUTHORITY> UNDER CERTAIN
15-7 LEASES. If, during a period a person is indebted to the board
15-8 <authority> for land purchased with financial assistance under this
15-9 chapter, the person executes or there exists a lease or contract of
15-10 sale of oil, gas, or other minerals, chemicals, hard metals,
15-11 timber, sand, gravel, or other material that covers the land
15-12 purchased from the board <authority> that would result in the
15-13 depletion of the corpus of the land, not less than one-half of all
15-14 bonus money, delay rentals, or royalties received as consideration
15-15 for or payment under the oil, gas, or mineral lease and not less
15-16 than one-half of all money received under a lease or contract of
15-17 sale of other minerals, chemicals, hard metals, timber, sand,
15-18 gravel, or other material shall be paid to the board <authority> by
15-19 the lessee under the lease or the buyer under the contract of sale.
15-20 The board <authority> shall apply those payments to the
15-21 satisfaction of the indebtedness.
15-22 SECTION 19. Section 59.031, Agriculture Code, is amended to
15-23 read as follows:
15-24 Sec. 59.031. Death of a Borrower. (a) If a borrower
15-25 receiving financial assistance under this chapter dies while
15-26 indebted to the state under a contract, the borrower's rights under
15-27 this chapter and the contract devolve on the borrower's heirs,
16-1 devisees, or personal representatives under the laws of this state,
16-2 subject to all rights, claims, and charges of the board
16-3 <authority>.
16-4 (b) Default by an heir, devisee, or personal representative
16-5 with respect to a right, claim, or charge of the board <authority>
16-6 has the same effect as default by the borrower before the
16-7 borrower's death.
16-8 SECTION 20. Section 59.032, Agriculture Code, is amended to
16-9 read as follows:
16-10 Sec. 59.032. Unencumbered Title. The board <authority> may
16-11 establish a procedure by which a borrower acquiring land with a
16-12 loan under this chapter may obtain title to a portion of the tract
16-13 clear of encumbrances.
16-14 SECTION 21. This Act takes effect January 1, 1996, but only
16-15 if the constitutional amendment proposed by the 74th Legislature,
16-16 Regular Session, 1995, relating to the use of proceeds of bonds
16-17 issued for financing of farm and ranch land is approved by the
16-18 voters. If that amendment is not approved by the voters, this Act
16-19 has no effect.
16-20 SECTION 22. The importance of this legislation and the
16-21 crowded condition of the calendars in both houses create an
16-22 emergency and an imperative public necessity that the
16-23 constitutional rule requiring bills to be read on three several
16-24 days in each house be suspended, and this rule is hereby suspended.