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.
1-7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
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:
14-19 Sec. 59.029. PAYMENTS TO BOARD <AUTHORITY> UNDER CERTAIN
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.