By Montford                                           S.B. No. 1260
       74R6980 MWV-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the consolidation of the general obligation bonding
    1-3  authority for the farm and ranch finance program fund with the
    1-4  general obligation bonding authority for the Texas agricultural
    1-5  fund and the rural microenterprise development fund within the
    1-6  Texas Agricultural Finance Authority.
    1-8        SECTION 1.  Sections 58.031(c) and (e), Agriculture Code, are
    1-9  amended to read as follows:
   1-10        (c)  The authority may issue and sell general obligation
   1-11  bonds of the state as authorized by Section 49-i, Article III,
   1-12  Texas Constitution <not to exceed $25 million outstanding at any
   1-13  one time> for the purpose of providing money to establish a Texas
   1-14  agricultural fund.  The authority may issue the bonds in one or
   1-15  several installments.
   1-16        (e)  The authority may issue and sell general obligation
   1-17  bonds of the state for the purpose of providing money to establish
   1-18  a rural microenterprise development fund as authorized by Section
   1-19  49-i, Article III, Texas Constitution <so that the principal amount
   1-20  outstanding shall not exceed $5 million at any one time>.  The
   1-21  authority may issue the bonds in one or several installments.
   1-22        SECTION 2.  Sections 59.001(2) and (3), Agriculture Code, are
   1-23  amended to read as follows:
   1-24              (2)  "Board" means the board of directors of the
    2-1  authority <Veterans Land Board>.
    2-2              (3)  "Bond" means a general obligation bond,
    2-3  certificate, note, or other obligation issued or incurred by the
    2-4  authority under this chapter as provided by Article III, Section
    2-5  49-i  <49-f>, of the Texas Constitution.
    2-6        SECTION 3.  Section 59.002(b), Agriculture Code, is amended
    2-7  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 4.  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 5.  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-i <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 6.  Section 59.012(c), Agriculture Code, is amended
    3-4  to read as follows:
    3-5        (c)  The <At the timely request of the authority, the> board
    3-6  may <shall> provide for transferring directly from the proceeds of
    3-7  the sale of bonds or from available money in the fund <directly> an
    3-8  amount that is <certified by the authority as> reasonable and
    3-9  necessary to cover the costs of administering the program.  <That
   3-10  amount shall be deposited in the state treasury to the credit of a
   3-11  special fund to be known as the farm and ranch administrative
   3-12  expense fund.>
   3-13        SECTION 7.  Section 59.013, Agriculture Code, is amended to
   3-14  read as follows:
   3-15        Sec. 59.013.  Payment of Principal and Interest.  The board
   3-16  <authority> shall arrange for payment of the principal of bonds as
   3-17  they mature and the interest on the bonds as it becomes payable.
   3-18        SECTION 8.  Sections 59.015(a) and (b), Agriculture Code, are
   3-19  amended to read as follows:
   3-20        (a)  The board <authority> may use money in the fund
   3-21  attributable to the issuance and sale of bonds to pay:
   3-22              (1)  legal fees and fees for financial advice the board
   3-23  <authority> finds necessary for the sale of bonds;
   3-24              (2)  the expense of publishing notice of sale of an
   3-25  installment of bonds;
   3-26              (3)  the expense of printing the bonds;
   3-27              (4)  the expense of issuing the bonds, including the
    4-1  actual costs of travel, lodging, and meals of officers, members, or
    4-2  employees of the board, directors or employees of the authority,
    4-3  the comptroller, the state treasurer, or the attorney general that
    4-4  the board <authority> finds necessary to implement the issuance,
    4-5  rating, or delivery of the bonds;
    4-6              (5)  the cost of manually signing the bonds;
    4-7              (6)  remuneration to any agent employed by the board
    4-8  <authority> to pay the principal of and interest on the bonds;
    4-9              (7)  any amount required to be paid to maintain the
   4-10  federal tax exemption of interest on the bonds; or
   4-11              (8)  any other cost, fee, or expense relating to the
   4-12  issuance of the bonds.
   4-13        (b)  If, during the existence of the fund or during the
   4-14  period any bonds are payable from the fund, the board <authority>
   4-15  determines that there will not be sufficient money in the fund
   4-16  during the following fiscal year to pay the principal of or
   4-17  interest on the bonds that is to come due during the following
   4-18  fiscal year, the comptroller shall transfer to the fund from the
   4-19  first money coming into the state treasury not otherwise
   4-20  appropriated by the constitution an amount sufficient to pay the
   4-21  obligations.
   4-22        SECTION 9.  Section 59.016, Agriculture Code, is amended to
   4-23  read as follows:
   4-24        Sec. 59.016.  Investments.  <(a)>  The board shall invest
   4-25  funds as provided under Section 58.022.  <authority shall give
   4-26  timely instruction to the board of the dates on which principal on
   4-27  bonds matures and interest becomes payable.  The board shall
    5-1  administer the fund accordingly.>
    5-2        <(b)  Except as provided by Subsection (c) of this section,
    5-3  money in the fund that is not immediately committed to paying
    5-4  principal of and interest on the bonds or to paying expenses as
    5-5  provided by Section 59.015 of this code may be invested by the
    5-6  board in:>
    5-7              <(1)  a direct security repurchase agreement or reverse
    5-8  security repurchase agreement made with a state or national bank
    5-9  domiciled in this state or with a primary dealer approved by the
   5-10  federal reserve system;>
   5-11              <(2)  a direct obligation of or obligation the
   5-12  principal and interest of which are guaranteed by the United States
   5-13  government;>
   5-14              <(3)  a direct obligation of or obligation guaranteed
   5-15  by the Federal Home Loan Banks, the Federal National Mortgage
   5-16  Association, the Federal Farm Credit System, the Student Loan
   5-17  Marketing Association, the Federal Home Loan Mortgage Corporation,
   5-18  or a successor to one of those organizations;>
   5-19              <(4)  a bankers' acceptance that:>
   5-20                    <(A)  is eligible for purchase by a member of the
   5-21  federal reserve system;>
   5-22                    <(B)  matures in 270 days or less; and>
   5-23                    <(C)  is issued by a bank that has received the
   5-24  highest short-term credit rating by a nationally recognized
   5-25  investment rating firm;>
   5-26              <(5)  commercial paper that:>
   5-27                    <(A)  matures in 270 days or less; and>
    6-1                    <(B)  has received the highest short-term credit
    6-2  rating by a nationally recognized investment rating firm;>
    6-3              <(6)  a contract that is written by the board in which
    6-4  the board grants the purchaser the right to purchase securities in
    6-5  the board's marketable securities portfolio at a specified price
    6-6  over a specified period and for which the board is paid a fee and
    6-7  that specifically prohibits naked-option or uncovered option
    6-8  trading;>
    6-9              <(7)  an obligation of a state or of an agency, county,
   6-10  city, or other political subdivision of a state or a mutual fund
   6-11  composed of those obligations;>
   6-12              <(8)  an investment instrument, obligation, or other
   6-13  evidence of indebtedness the payment of which is directly or
   6-14  indirectly guaranteed by the full faith and credit of the United
   6-15  States government;>
   6-16              <(9)  an investment, account, depository receipt, or
   6-17  deposit that is fully:>
   6-18                    <(A)  insured by the Federal Deposit Insurance
   6-19  Corporation or a successor to that organization; or>
   6-20                    <(B)  secured by a security described by
   6-21  Subdivision (2), (3), or (8) of this subsection;>
   6-22              <(10)  a collateralized mortgage obligation fully
   6-23  secured by securities or mortgages issued or guaranteed by the
   6-24  Government National Mortgage Association (GNMA) or any entity
   6-25  identified by Subdivision (3) of this subsection;>
   6-26              <(11)  a security or evidence of indebtedness issued by
   6-27  the Farm Credit System Financial Assistance Corporation, the
    7-1  Private Export Funding Corporation, or the Export-Import Bank; and>
    7-2              <(12)  any other investment authorized for investment
    7-3  of state funds by the state treasurer under Section 404.024,
    7-4  Government Code.>
    7-5        <(c)  The board may not invest in or purchase obligations of
    7-6  a private corporation or other private business entity doing
    7-7  business in the Republic of South Africa unless the corporation or
    7-8  other entity:>
    7-9              <(1)  has:>
   7-10                    <(A)  adopted the Statement of Principles for
   7-11  South Africa as they existed in 1987, as described in the >þLReport on
   7-12  the Signatory Companies to the Statement of Principles for South
   7-13  Africaää< published by Arthur D. Little, Inc., Cambridge,
   7-14  Massachusetts, and has obtained a performance rating in Category 1
   7-15  or 2 of the Statement of Principles for South Africa rating system
   7-16  as determined by Arthur D. Little, Inc.; or>
   7-17                    <(B)  agreed to the Code of Conduct that is
   7-18  enforced by the United States Department of State under Section
   7-19  208, Comprehensive Anti-Apartheid Act of 1986 (Pub.  L. No. 99-440)
   7-20  and has received a rating of "Making Satisfactory Progress"; and>
   7-21              <(2)  does not supply strategic products or services
   7-22  for use by the government, military, or police of the Republic of
   7-23  South Africa.>
   7-24        <(d)  In this section:>
   7-25              <(1)  "Direct security repurchase agreement" means an
   7-26  agreement under which the board buys, holds for a specified time,
   7-27  and then sells back any of the following securities, obligations,
    8-1  or participation certificates:>
    8-2                    <(A)  a United States government security;>
    8-3                    <(B)  a direct obligation of or an obligation the
    8-4  principal and interest of which are guaranteed by the United States
    8-5  government;>
    8-6                    <(C)  a direct obligation of or an obligation
    8-7  guaranteed by the Federal Home Loan Banks, the Federal National
    8-8  Mortgage Association, the Federal Farm Credit System, the Student
    8-9  Loan Marketing Association, the Federal Home Loan Mortgage
   8-10  Corporation, or a successor to one of those organizations; or>
   8-11                    <(D)  any other investment instrument,
   8-12  obligation, or other evidence of indebtedness the payment of which
   8-13  is directly or indirectly guaranteed by the full faith and credit
   8-14  of the United States government.>
   8-15              <(2)  "Doing business in the Republic of South Africa"
   8-16  means conducting or performing manufacturing, assembly, or
   8-17  warehousing operations in the Republic of South Africa or, in the
   8-18  case of a bank or other financial institution, lending money to the
   8-19  government of the Republic of South Africa or any of its agencies
   8-20  or instrumentalities.>
   8-21              <(3)  "Market value" means the fair and reasonable
   8-22  prevailing price at which a security is being sold on the open
   8-23  market at the time of the appraisement of the security by the
   8-24  board.>
   8-25              <(4)  "Reverse security repurchase agreement" means an
   8-26  agreement under which the board sells and after a specified time
   8-27  buys back any of the securities, obligations, or participation
    9-1  certificates listed by Subdivision (1) of this subsection.>
    9-2              <(5)  "Strategic products or services" means articles
    9-3  designated as arms, ammunition, or implements of war as provided by
    9-4  22 C.F.R. Part 121 or data processing equipment or computers sold
    9-5  for military or police use or for use in connection with
    9-6  restriction on travel in the Republic of South Africa by residents
    9-7  of that country.>
    9-8        SECTION 10.  Sections 59.021(b), (c), (d), (e), and (h),
    9-9  Agriculture Code, are amended 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        SECTION 11.  Sections 59.022(a) and (c), Agriculture Code,
   10-6  are amended to read as follows:
   10-7        (a)  The board <authority> shall adopt rules governing
   10-8  application for financial assistance under this chapter.  The board
   10-9  <authority> may adopt rules it considers necessary to administer
  10-10  the program or considers in the best interest of the program.  The
  10-11  board <authority> may adopt rules concerning the sale of land
  10-12  acquired by the board <authority> under this chapter by default,
  10-13  foreclosure, forfeiture, or any other means.  The board <authority>
  10-14  shall adopt collateral or security requirements to ensure the full
  10-15  repayment of financial assistance granted under this chapter.  The
  10-16  board <authority> may approve any extension of financial assistance
  10-17  under this chapter or may delegate that approval authority to the
  10-18  commissioner.
  10-19        (c)  The board <authority> may set and collect fees the board
  10-20  <authority> considers reasonable and necessary to cover the
  10-21  expenses of administering the program or considers in the best
  10-22  interest of the program.  Those fees shall be deposited in the
  10-23  state treasury to the credit of the farm and ranch administrative
  10-24  expense fund.  An applicant for financial assistance participating
  10-25  in the program shall pay the costs of applying for, participating
  10-26  in, and administering and servicing the program, in amounts the
  10-27  board <authority> considers reasonable and necessary.  Any cost not
   11-1  paid by an applicant shall be paid from the fund.
   11-2        SECTION 12.  Section 59.023, Agriculture Code, is amended to
   11-3  read as follows:
   11-4        Sec. 59.023.  POWERS OF BOARD <AUTHORITY>.  The board <In
   11-5  addition to the powers granted to the authority under Section
   11-6  58.022 of this code, the authority> has the power necessary to
   11-7  accomplish the purposes and carry out the programs provided by this
   11-8  chapter, including the power:
   11-9              (1)  to adopt and enforce bylaws, rules, and procedures
  11-10  necessary to carry out this chapter;
  11-11              (2)  to establish, charge, and collect a fee, charge,
  11-12  or penalty in connection with a program, service, or activity
  11-13  provided by the board <authority> under this chapter;
  11-14              (3)  to issue bonds, provide for and secure the payment
  11-15  of the bonds, and provide for the rights of the owners of the
  11-16  bonds, in the manner and to the extent permitted by this chapter;
  11-17              (4)  to purchase, hold, cancel, or resell or otherwise
  11-18  dispose of its bonds, subject to any restrictions and any
  11-19  resolution authorizing the issuance of its bonds;
  11-20              (5)  to own, rent, lease, or otherwise acquire, accept,
  11-21  or hold any interest in real, personal, or mixed property, by
  11-22  purchase, exchange, gift, assignment, transfer, foreclosure,
  11-23  mortgage, sale, lease, or otherwise;
  11-24              (6)  to hold, manage, operate, or improve real,
  11-25  personal, or mixed property;
  11-26              (7)  to sell, lease, encumber, mortgage, exchange,
  11-27  donate, convey, or otherwise dispose of any of its property or any
   12-1  interest in its property, deed of trust, or mortgage lien owned by
   12-2  it, under its control or custody, or in its possession and to
   12-3  release or relinquish any right, title, claim, lien, interest,
   12-4  easement, or demand, including any equity or right of redemption in
   12-5  property foreclosed by it, by public or private sale, with or
   12-6  without public bidding;
   12-7              (8)  to lease or rent any improvement, land, or
   12-8  facility from any person;
   12-9              (9)  to make a secured or unsecured loan to provide
  12-10  financial assistance as provided by this chapter, including the
  12-11  refunding of an outstanding obligation, mortgage, or advance used
  12-12  for those purposes, and to charge and collect interest on those
  12-13  loans for loan payments and on terms and conditions the board
  12-14  <authority> considers advisable that are not in conflict with this
  12-15  chapter;
  12-16              (10)  to purchase or acquire, sell, discount, assign,
  12-17  negotiate, or otherwise dispose of notes or other evidence of
  12-18  indebtedness of eligible applicants as the board determines or
  12-19  portions or portfolios of or participations in those evidences of
  12-20  indebtedness; and
  12-21              (11)  to sell and guarantee securities, whether taxable
  12-22  or tax exempt under federal law, in primary and secondary markets.
  12-23        SECTION 13.  Sections 59.025(b) and (c), Agriculture Code,
  12-24  are amended to read as follows:
  12-25        (b)  The board <authority> shall provide by rule for the
  12-26  period during which and the manner in which the down payment
  12-27  provided for under Subsection (a) of this section shall be paid to
   13-1  the board <authority>.
   13-2        (c)  If the sale is not consummated, the board <authority>
   13-3  shall refund the down payment to the borrower.
   13-4        SECTION 14.  Section 59.026, Agriculture Code, is amended to
   13-5  read as follows:
   13-6        Sec. 59.026.  Transfer of Borrower's Interest.  (a)  The
   13-7  contract for a loan under this chapter must provide that transfer
   13-8  of ownership of the land without the board's <authority's> express
   13-9  written permission before the entire principal and interest due
  13-10  have been paid constitutes default under the contract.
  13-11        (b)  If the borrower dies or becomes financially
  13-12  incapacitated or if the borrower's interest in land is
  13-13  involuntarily transferred by court order or other proceedings,
  13-14  including bankruptcy, sheriff or trustee sale, or divorce, the land
  13-15  may be conveyed by the borrower or the borrower's heirs,
  13-16  administrators, executors, or successors in interest by complying
  13-17  with the rules adopted by the board <authority> and obtaining the
  13-18  board's <authority's> written permission.
  13-19        SECTION 15.  Section 59.027, Agriculture Code, is amended to
  13-20  read as follows:
  13-21        Sec. 59.027.  Changes in use.  (a)  Before a borrower may use
  13-22  land acquired with financial assistance under this chapter for a
  13-23  primary purpose other than farming or ranching, the borrower must
  13-24  submit to the board <authority> an application for approval of the
  13-25  change of use.
  13-26        (b)  As soon as practicable after an application for a change
  13-27  of use is received, the board <authority> shall approve or deny the
   14-1  application and shall notify the borrower of the board's
   14-2  <authority's> decision.
   14-3        (c)  The loan contract must provide that using land acquired
   14-4  under this chapter for a purpose other than farming or ranching
   14-5  without the approval of the board <authority> constitutes default
   14-6  under the contract.
   14-7        SECTION 16.  Section 59.028, Agriculture Code, is amended to
   14-8  read as follows:
   14-9        Sec. 59.028.  Appraisal.  (a)  Before the board <authority>
  14-10  may loan money for the purchase of land under this chapter, the
  14-11  board <authority> must have an appraisal of the property made to
  14-12  determine its value.
  14-13        (b)  An appraiser representing the board <authority> must be
  14-14  qualified to give competent appraisals of land.  The board
  14-15  <authority> may  <contract with the board to> use appraisers
  14-16  employed by the board.
  14-17        SECTION 17.  Section 59.029, Agriculture Code, is amended to
  14-18  read as follows:
  14-20  LEASES.  If, during a period a person is indebted to the board
  14-21  <authority> for land purchased with financial assistance under this
  14-22  chapter, the person executes or there exists a lease or contract of
  14-23  sale of oil, gas, or other minerals, chemicals, hard metals,
  14-24  timber, sand, gravel, or other material that covers the land
  14-25  purchased from the board <authority> that would result in the
  14-26  depletion of the corpus of the land, not less than one-half of all
  14-27  bonus money, delay rentals, or royalties received as consideration
   15-1  for or payment under the oil, gas, or mineral lease and not less
   15-2  than one-half of all money received under a lease or contract of
   15-3  sale of other minerals, chemicals, hard metals, timber, sand,
   15-4  gravel, or other material shall be paid to the board <authority> by
   15-5  the lessee under the lease or the buyer under the contract of sale.
   15-6  The board <authority> shall apply those payments to the
   15-7  satisfaction of the indebtedness.
   15-8        SECTION 18.  Section 59.031, Agriculture Code, is amended to
   15-9  read as follows:
  15-10        Sec. 59.031.  Death of a Borrower.  (a)  If a borrower
  15-11  receiving financial assistance under this chapter dies while
  15-12  indebted to the state under a contract, the borrower's rights under
  15-13  this chapter and the contract devolve on the borrower's heirs,
  15-14  devisees, or personal representatives under the laws of this state,
  15-15  subject to all rights, claims, and charges of the board
  15-16  <authority>.
  15-17        (b)  Default by an heir, devisee, or personal representative
  15-18  with respect to a right, claim, or charge of the board <authority>
  15-19  has the same effect as default by the borrower before the
  15-20  borrower's death.
  15-21        SECTION 19.  Section 59.032, Agriculture Code, is amended to
  15-22  read as follows:
  15-23        Sec. 59.032.  Unencumbered Title.  The board <authority> may
  15-24  establish a procedure by which a borrower acquiring land with a
  15-25  loan under this chapter may obtain title to a portion of the tract
  15-26  clear of encumbrances.
  15-27        SECTION 20.  Section 44.013, Agriculture Code, is amended to
   16-1  read as follows:
   16-2        Sec. 44.013.  Rural Microenterprise Development Fund.  The
   16-3  rural microenterprise development fund is a fund in the state
   16-4  treasury.  Money appropriated to the department <Agricultural
   16-5  Diversification Board> for use in making loans under the rural
   16-6  microenterprise support program,  proceeds from bonds issued under
   16-7  Section 58.031(e), other amounts received by the state for loans
   16-8  made under the program, and other money received by the board for
   16-9  the program and required by the board to be deposited in the fund
  16-10  shall be deposited to the credit of the fund.  The fund shall
  16-11  operate as a revolving fund, the contents of which shall be applied
  16-12  and reapplied for the purposes of the rural microenterprise support
  16-13  program.
  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 consolidation of general
  16-17  obligation bonding authority for certain agricultural funds, is
  16-18  approved by the voters.  If that amendment is not approved by the
  16-19  voters, this Act 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.