1-1 By: Montford S.B. No. 1260
1-2 (In the Senate - Filed March 10, 1995; March 16, 1995, read
1-3 first time and referred to Committee on Natural Resources;
1-4 March 28, 1995, rereferred to Committee on Finance; April 20, 1995,
1-5 reported favorably, as amended, by the following vote: Yeas 11,
1-6 Nays 0; April 20, 1995, sent to printer.)
1-7 COMMITTEE AMENDMENT NO. 1 By: Montford
1-8 Amend S.B. No. 1260 as follows:
1-9 (1) On page 10, between lines 4 and 5 (committee printing
1-10 page 4, between lines 54 and 55), add a new Subsection (i) to read
1-11 as follows:
1-12 (i) The board may use money in the fund to pay the
1-13 reasonable and necessary costs and expenses of administering the
1-14 program.
1-15 (2) On page 10, lines 23 and 24 (committee printing page 5,
1-16 lines 3 and 4), following "ranch" strike through "administrative
1-17 expense" and insert "finance program".
1-18 A BILL TO BE ENTITLED
1-19 AN ACT
1-20 relating to the consolidation of the general obligation bonding
1-21 authority for the farm and ranch finance program fund with the
1-22 general obligation bonding authority for the Texas agricultural
1-23 fund and the rural microenterprise development fund within the
1-24 Texas Agricultural Finance Authority.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Subsections (c) and (e), Section 58.031,
1-27 Agriculture Code, are amended to read as follows:
1-28 (c) The authority may issue and sell general obligation
1-29 bonds of the state as authorized by Section 49-i, Article III,
1-30 Texas Constitution <not to exceed $25 million outstanding at any
1-31 one time> for the purpose of providing money to establish a Texas
1-32 agricultural fund. The authority may issue the bonds in one or
1-33 several installments.
1-34 (e) The authority may issue and sell general obligation
1-35 bonds of the state for the purpose of providing money to establish
1-36 a rural microenterprise development fund as authorized by Section
1-37 49-i, Article III, Texas Constitution <so that the principal amount
1-38 outstanding shall not exceed $5 million at any one time>. The
1-39 authority may issue the bonds in one or several installments.
1-40 SECTION 2. Subdivisions (2) and (3), Section 59.001,
1-41 Agriculture Code, are amended to read as follows:
1-42 (2) "Board" means the board of directors of the
1-43 authority <Veterans Land Board>.
1-44 (3) "Bond" means a general obligation bond,
1-45 certificate, note, or other obligation issued or incurred by the
1-46 authority under this chapter as provided by Article III, Section
1-47 49-i <49-f>, of the Texas Constitution.
1-48 SECTION 3. Subsection (b), Section 59.002, Agriculture Code,
1-49 is amended to read as follows:
1-50 (b) The board shall administer the fund. <At the request of
1-51 the authority, the board shall make available to the authority
1-52 money from the fund to pay debt service on the program's bonds and
1-53 to provide financial assistance to borrowers to purchase farm or
1-54 ranch land as provided by this chapter.>
1-55 SECTION 4. Section 59.003, Agriculture Code, is amended to
1-56 read as follows:
1-57 Sec. 59.003. Limited Immunity From Suit or Liability. A
1-58 <The authority or a> member of the board may be sued and held
1-59 personally liable for damages that result from an official act or
1-60 omission only if the act or omission is corrupt or malicious.
1-61 SECTION 5. Section 59.011, Agriculture Code, is amended to
1-62 read as follows:
1-63 Sec. 59.011. Bonds. (a) The board <authority> may provide
1-64 by order or resolution for the issuance and sale of negotiable
1-65 bonds authorized by Article III, Section 49-i <49-f>, of the Texas
1-66 Constitution. The proceeds from the sale of the bonds constitute
1-67 the fund.
1-68 (b) Subchapter D, Chapter 58, <Agriculture Code,> as it
2-1 relates to the issuance, sale, and refunding of bonds, applies to
2-2 the board's <authority's> issuance, sale, and refunding of bonds
2-3 under this chapter to finance the fund.
2-4 SECTION 6. Subsection (c), Section 59.012, Agriculture Code,
2-5 is amended to read as follows:
2-6 (c) The <At the timely request of the authority, the> board
2-7 may <shall> provide for transferring directly from the proceeds of
2-8 the sale of bonds or from available money in the fund <directly> an
2-9 amount that is <certified by the authority as> reasonable and
2-10 necessary to cover the costs of administering the program. <That
2-11 amount shall be deposited in the state treasury to the credit of a
2-12 special fund to be known as the farm and ranch administrative
2-13 expense fund.>
2-14 SECTION 7. Section 59.013, Agriculture Code, is amended to
2-15 read as follows:
2-16 Sec. 59.013. Payment of Principal and Interest. The board
2-17 <authority> shall arrange for payment of the principal of bonds as
2-18 they mature and the interest on the bonds as it becomes payable.
2-19 SECTION 8. Subsections (a) and (b), Section 59.015,
2-20 Agriculture Code, are amended to read as follows:
2-21 (a) The board <authority> may use money in the fund
2-22 attributable to the issuance and sale of bonds to pay:
2-23 (1) legal fees and fees for financial advice the board
2-24 <authority> finds necessary for the sale of bonds;
2-25 (2) the expense of publishing notice of sale of an
2-26 installment of bonds;
2-27 (3) the expense of printing the bonds;
2-28 (4) the expense of issuing the bonds, including the
2-29 actual costs of travel, lodging, and meals of officers, members, or
2-30 employees of the board, directors or employees of the authority,
2-31 the comptroller, the state treasurer, or the attorney general that
2-32 the board <authority> finds necessary to implement the issuance,
2-33 rating, or delivery of the bonds;
2-34 (5) the cost of manually signing the bonds;
2-35 (6) remuneration to any agent employed by the board
2-36 <authority> to pay the principal of and interest on the bonds;
2-37 (7) any amount required to be paid to maintain the
2-38 federal tax exemption of interest on the bonds; or
2-39 (8) any other cost, fee, or expense relating to the
2-40 issuance of the bonds.
2-41 (b) If, during the existence of the fund or during the
2-42 period any bonds are payable from the fund, the board <authority>
2-43 determines that there will not be sufficient money in the fund
2-44 during the following fiscal year to pay the principal of or
2-45 interest on the bonds that is to come due during the following
2-46 fiscal year, the comptroller shall transfer to the fund from the
2-47 first money coming into the state treasury not otherwise
2-48 appropriated by the constitution an amount sufficient to pay the
2-49 obligations.
2-50 SECTION 9. Section 59.016, Agriculture Code, is amended to
2-51 read as follows:
2-52 Sec. 59.016. Investments. <(a)> The board shall invest
2-53 funds as provided under Section 58.022. <authority shall give
2-54 timely instruction to the board of the dates on which principal on
2-55 bonds matures and interest becomes payable. The board shall
2-56 administer the fund accordingly.>
2-57 <(b) Except as provided by Subsection (c) of this section,
2-58 money in the fund that is not immediately committed to paying
2-59 principal of and interest on the bonds or to paying expenses as
2-60 provided by Section 59.015 of this code may be invested by the
2-61 board in:>
2-62 <(1) a direct security repurchase agreement or reverse
2-63 security repurchase agreement made with a state or national bank
2-64 domiciled in this state or with a primary dealer approved by the
2-65 federal reserve system;>
2-66 <(2) a direct obligation of or obligation the
2-67 principal and interest of which are guaranteed by the United States
2-68 government;>
2-69 <(3) a direct obligation of or obligation guaranteed
2-70 by the Federal Home Loan Banks, the Federal National Mortgage
3-1 Association, the Federal Farm Credit System, the Student Loan
3-2 Marketing Association, the Federal Home Loan Mortgage Corporation,
3-3 or a successor to one of those organizations;>
3-4 <(4) a bankers' acceptance that:>
3-5 <(A) is eligible for purchase by a member of the
3-6 federal reserve system;>
3-7 <(B) matures in 270 days or less; and>
3-8 <(C) is issued by a bank that has received the
3-9 highest short-term credit rating by a nationally recognized
3-10 investment rating firm;>
3-11 <(5) commercial paper that:>
3-12 <(A) matures in 270 days or less; and>
3-13 <(B) has received the highest short-term credit
3-14 rating by a nationally recognized investment rating firm;>
3-15 <(6) a contract that is written by the board in which
3-16 the board grants the purchaser the right to purchase securities in
3-17 the board's marketable securities portfolio at a specified price
3-18 over a specified period and for which the board is paid a fee and
3-19 that specifically prohibits naked-option or uncovered option
3-20 trading;>
3-21 <(7) an obligation of a state or of an agency, county,
3-22 city, or other political subdivision of a state or a mutual fund
3-23 composed of those obligations;>
3-24 <(8) an investment instrument, obligation, or other
3-25 evidence of indebtedness the payment of which is directly or
3-26 indirectly guaranteed by the full faith and credit of the United
3-27 States government;>
3-28 <(9) an investment, account, depository receipt, or
3-29 deposit that is fully:>
3-30 <(A) insured by the Federal Deposit Insurance
3-31 Corporation or a successor to that organization; or>
3-32 <(B) secured by a security described by
3-33 Subdivision (2), (3), or (8) of this subsection;>
3-34 <(10) a collateralized mortgage obligation fully
3-35 secured by securities or mortgages issued or guaranteed by the
3-36 Government National Mortgage Association (GNMA) or any entity
3-37 identified by Subdivision (3) of this subsection;>
3-38 <(11) a security or evidence of indebtedness issued by
3-39 the Farm Credit System Financial Assistance Corporation, the
3-40 Private Export Funding Corporation, or the Export-Import Bank; and>
3-41 <(12) any other investment authorized for investment
3-42 of state funds by the state treasurer under Section 404.024,
3-43 Government Code.>
3-44 <(c) The board may not invest in or purchase obligations of
3-45 a private corporation or other private business entity doing
3-46 business in the Republic of South Africa unless the corporation or
3-47 other entity:>
3-48 <(1) has:>
3-49 <(A) adopted the Statement of Principles for
3-50 South Africa as they existed in 1987, as described in the >þLReport on
3-51 the Signatory Companies to the Statement of Principles for South
3-52 Africaää< published by Arthur D. Little, Inc., Cambridge,
3-53 Massachusetts, and has obtained a performance rating in Category 1
3-54 or 2 of the Statement of Principles for South Africa rating system
3-55 as determined by Arthur D. Little, Inc.; or>
3-56 <(B) agreed to the Code of Conduct that is
3-57 enforced by the United States Department of State under Section
3-58 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
3-59 and has received a rating of "Making Satisfactory Progress"; and>
3-60 <(2) does not supply strategic products or services
3-61 for use by the government, military, or police of the Republic of
3-62 South Africa.>
3-63 <(d) In this section:>
3-64 <(1) "Direct security repurchase agreement" means an
3-65 agreement under which the board buys, holds for a specified time,
3-66 and then sells back any of the following securities, obligations,
3-67 or participation certificates:>
3-68 <(A) a United States government security;>
3-69 <(B) a direct obligation of or an obligation the
3-70 principal and interest of which are guaranteed by the United States
4-1 government;>
4-2 <(C) a direct obligation of or an obligation
4-3 guaranteed by the Federal Home Loan Banks, the Federal National
4-4 Mortgage Association, the Federal Farm Credit System, the Student
4-5 Loan Marketing Association, the Federal Home Loan Mortgage
4-6 Corporation, or a successor to one of those organizations; or>
4-7 <(D) any other investment instrument,
4-8 obligation, or other evidence of indebtedness the payment of which
4-9 is directly or indirectly guaranteed by the full faith and credit
4-10 of the United States government.>
4-11 <(2) "Doing business in the Republic of South Africa"
4-12 means conducting or performing manufacturing, assembly, or
4-13 warehousing operations in the Republic of South Africa or, in the
4-14 case of a bank or other financial institution, lending money to the
4-15 government of the Republic of South Africa or any of its agencies
4-16 or instrumentalities.>
4-17 <(3) "Market value" means the fair and reasonable
4-18 prevailing price at which a security is being sold on the open
4-19 market at the time of the appraisement of the security by the
4-20 board.>
4-21 <(4) "Reverse security repurchase agreement" means an
4-22 agreement under which the board sells and after a specified time
4-23 buys back any of the securities, obligations, or participation
4-24 certificates listed by Subdivision (1) of this subsection.>
4-25 <(5) "Strategic products or services" means articles
4-26 designated as arms, ammunition, or implements of war as provided by
4-27 22 C.F.R. Part 121 or data processing equipment or computers sold
4-28 for military or police use or for use in connection with
4-29 restriction on travel in the Republic of South Africa by residents
4-30 of that country.>
4-31 SECTION 10. Subsections (b), (c), (d), (e), and (h), Section
4-32 59.021, Agriculture Code, are amended to read as follows:
4-33 (b) At the direction of the board <authority>, money
4-34 received from the state or federal government or from any other
4-35 person, in addition to proceeds from bonds issued under this
4-36 chapter, may be deposited to the credit of the fund.
4-37 (c) The board <authority> may provide for establishing and
4-38 maintaining separate accounts in the fund, including program
4-39 accounts, an interest and sinking account, a reserve account, and
4-40 any other accounts provided for by resolution of the board
4-41 <authority>.
4-42 (d) Money received as repayment of financial assistance
4-43 shall be deposited first in the interest and sinking account as
4-44 provided by resolution of the board <authority> authorizing its
4-45 bonds until that account is fully funded as provided by resolution
4-46 of the board <authority>.
4-47 (e) The fund and each account in the fund shall be kept and
4-48 maintained at the direction of the board <authority> and held in
4-49 trust by the state treasurer for and on behalf of the board
4-50 <authority> and the owners of the bonds issued under this chapter.
4-51 (h) The board <authority> may receive, and shall deposit in
4-52 the fund, appropriations, grants, donations, earned federal funds,
4-53 and the proceeds of any investment pools operated by the state
4-54 treasurer.
4-55 SECTION 11. Subsections (a) and (c), Section 59.022,
4-56 Agriculture Code, are amended to read as follows:
4-57 (a) The board <authority> shall adopt rules governing
4-58 application for financial assistance under this chapter. The board
4-59 <authority> may adopt rules it considers necessary to administer
4-60 the program or considers in the best interest of the program. The
4-61 board <authority> may adopt rules concerning the sale of land
4-62 acquired by the board <authority> under this chapter by default,
4-63 foreclosure, forfeiture, or any other means. The board <authority>
4-64 shall adopt collateral or security requirements to ensure the full
4-65 repayment of financial assistance granted under this chapter. The
4-66 board <authority> may approve any extension of financial assistance
4-67 under this chapter or may delegate that approval authority to the
4-68 commissioner.
4-69 (c) The board <authority> may set and collect fees the board
4-70 <authority> considers reasonable and necessary to cover the
5-1 expenses of administering the program or considers in the best
5-2 interest of the program. Those fees shall be deposited in the
5-3 state treasury to the credit of the farm and ranch administrative
5-4 expense fund. An applicant for financial assistance participating
5-5 in the program shall pay the costs of applying for, participating
5-6 in, and administering and servicing the program, in amounts the
5-7 board <authority> considers reasonable and necessary. Any cost not
5-8 paid by an applicant shall be paid from the fund.
5-9 SECTION 12. Section 59.023, Agriculture Code, is amended to
5-10 read as follows:
5-11 Sec. 59.023. POWERS OF BOARD <AUTHORITY>. The board <In
5-12 addition to the powers granted to the authority under Section
5-13 58.022 of this code, the authority> has the power necessary to
5-14 accomplish the purposes and carry out the programs provided by this
5-15 chapter, including the power:
5-16 (1) to adopt and enforce bylaws, rules, and procedures
5-17 necessary to carry out this chapter;
5-18 (2) to establish, charge, and collect a fee, charge,
5-19 or penalty in connection with a program, service, or activity
5-20 provided by the board <authority> under this chapter;
5-21 (3) to issue bonds, provide for and secure the payment
5-22 of the bonds, and provide for the rights of the owners of the
5-23 bonds, in the manner and to the extent permitted by this chapter;
5-24 (4) to purchase, hold, cancel, or resell or otherwise
5-25 dispose of its bonds, subject to any restrictions and any
5-26 resolution authorizing the issuance of its bonds;
5-27 (5) to own, rent, lease, or otherwise acquire, accept,
5-28 or hold any interest in real, personal, or mixed property, by
5-29 purchase, exchange, gift, assignment, transfer, foreclosure,
5-30 mortgage, sale, lease, or otherwise;
5-31 (6) to hold, manage, operate, or improve real,
5-32 personal, or mixed property;
5-33 (7) to sell, lease, encumber, mortgage, exchange,
5-34 donate, convey, or otherwise dispose of any of its property or any
5-35 interest in its property, deed of trust, or mortgage lien owned by
5-36 it, under its control or custody, or in its possession and to
5-37 release or relinquish any right, title, claim, lien, interest,
5-38 easement, or demand, including any equity or right of redemption in
5-39 property foreclosed by it, by public or private sale, with or
5-40 without public bidding;
5-41 (8) to lease or rent any improvement, land, or
5-42 facility from any person;
5-43 (9) to make a secured or unsecured loan to provide
5-44 financial assistance as provided by this chapter, including the
5-45 refunding of an outstanding obligation, mortgage, or advance used
5-46 for those purposes, and to charge and collect interest on those
5-47 loans for loan payments and on terms and conditions the board
5-48 <authority> considers advisable that are not in conflict with this
5-49 chapter;
5-50 (10) to purchase or acquire, sell, discount, assign,
5-51 negotiate, or otherwise dispose of notes or other evidence of
5-52 indebtedness of eligible applicants as the board determines or
5-53 portions or portfolios of or participations in those evidences of
5-54 indebtedness; and
5-55 (11) to sell and guarantee securities, whether taxable
5-56 or tax exempt under federal law, in primary and secondary markets.
5-57 SECTION 13. Subsections (b) and (c), Section 59.025,
5-58 Agriculture Code, are amended to read as follows:
5-59 (b) The board <authority> shall provide by rule for the
5-60 period during which and the manner in which the down payment
5-61 provided for under Subsection (a) of this section shall be paid to
5-62 the board <authority>.
5-63 (c) If the sale is not consummated, the board <authority>
5-64 shall refund the down payment to the borrower.
5-65 SECTION 14. Section 59.026, Agriculture Code, is amended to
5-66 read as follows:
5-67 Sec. 59.026. Transfer of Borrower's Interest. (a) The
5-68 contract for a loan under this chapter must provide that transfer
5-69 of ownership of the land without the board's <authority's> express
5-70 written permission before the entire principal and interest due
6-1 have been paid constitutes default under the contract.
6-2 (b) If the borrower dies or becomes financially
6-3 incapacitated or if the borrower's interest in land is
6-4 involuntarily transferred by court order or other proceedings,
6-5 including bankruptcy, sheriff or trustee sale, or divorce, the land
6-6 may be conveyed by the borrower or the borrower's heirs,
6-7 administrators, executors, or successors in interest by complying
6-8 with the rules adopted by the board <authority> and obtaining the
6-9 board's <authority's> written permission.
6-10 SECTION 15. Section 59.027, Agriculture Code, is amended to
6-11 read as follows:
6-12 Sec. 59.027. Changes in use. (a) Before a borrower may use
6-13 land acquired with financial assistance under this chapter for a
6-14 primary purpose other than farming or ranching, the borrower must
6-15 submit to the board <authority> an application for approval of the
6-16 change of use.
6-17 (b) As soon as practicable after an application for a change
6-18 of use is received, the board <authority> shall approve or deny the
6-19 application and shall notify the borrower of the board's
6-20 <authority's> decision.
6-21 (c) The loan contract must provide that using land acquired
6-22 under this chapter for a purpose other than farming or ranching
6-23 without the approval of the board <authority> constitutes default
6-24 under the contract.
6-25 SECTION 16. Section 59.028, Agriculture Code, is amended to
6-26 read as follows:
6-27 Sec. 59.028. Appraisal. (a) Before the board <authority>
6-28 may loan money for the purchase of land under this chapter, the
6-29 board <authority> must have an appraisal of the property made to
6-30 determine its value.
6-31 (b) An appraiser representing the board <authority> must be
6-32 qualified to give competent appraisals of land. The board
6-33 <authority> may <contract with the board to> use appraisers
6-34 employed by the board.
6-35 SECTION 17. Section 59.029, Agriculture Code, is amended to
6-36 read as follows:
6-37 Sec. 59.029. PAYMENTS TO BOARD <AUTHORITY> UNDER CERTAIN
6-38 LEASES. If, during a period a person is indebted to the board
6-39 <authority> for land purchased with financial assistance under this
6-40 chapter, the person executes or there exists a lease or contract of
6-41 sale of oil, gas, or other minerals, chemicals, hard metals,
6-42 timber, sand, gravel, or other material that covers the land
6-43 purchased from the board <authority> that would result in the
6-44 depletion of the corpus of the land, not less than one-half of all
6-45 bonus money, delay rentals, or royalties received as consideration
6-46 for or payment under the oil, gas, or mineral lease and not less
6-47 than one-half of all money received under a lease or contract of
6-48 sale of other minerals, chemicals, hard metals, timber, sand,
6-49 gravel, or other material shall be paid to the board <authority> by
6-50 the lessee under the lease or the buyer under the contract of sale.
6-51 The board <authority> shall apply those payments to the
6-52 satisfaction of the indebtedness.
6-53 SECTION 18. Section 59.031, Agriculture Code, is amended to
6-54 read as follows:
6-55 Sec. 59.031. Death of a Borrower. (a) If a borrower
6-56 receiving financial assistance under this chapter dies while
6-57 indebted to the state under a contract, the borrower's rights under
6-58 this chapter and the contract devolve on the borrower's heirs,
6-59 devisees, or personal representatives under the laws of this state,
6-60 subject to all rights, claims, and charges of the board
6-61 <authority>.
6-62 (b) Default by an heir, devisee, or personal representative
6-63 with respect to a right, claim, or charge of the board <authority>
6-64 has the same effect as default by the borrower before the
6-65 borrower's death.
6-66 SECTION 19. Section 59.032, Agriculture Code, is amended to
6-67 read as follows:
6-68 Sec. 59.032. Unencumbered Title. The board <authority> may
6-69 establish a procedure by which a borrower acquiring land with a
6-70 loan under this chapter may obtain title to a portion of the tract
7-1 clear of encumbrances.
7-2 SECTION 20. Section 44.013, Agriculture Code, is amended to
7-3 read as follows:
7-4 Sec. 44.013. Rural Microenterprise Development Fund. The
7-5 rural microenterprise development fund is a fund in the state
7-6 treasury. Money appropriated to the department <Agricultural
7-7 Diversification Board> for use in making loans under the rural
7-8 microenterprise support program, proceeds from bonds issued under
7-9 Section 58.031(e), other amounts received by the state for loans
7-10 made under the program, and other money received by the board for
7-11 the program and required by the board to be deposited in the fund
7-12 shall be deposited to the credit of the fund. The fund shall
7-13 operate as a revolving fund, the contents of which shall be applied
7-14 and reapplied for the purposes of the rural microenterprise support
7-15 program.
7-16 SECTION 21. This Act takes effect January 1, 1996, but only
7-17 if the constitutional amendment proposed by the 74th Legislature,
7-18 Regular Session, 1995, relating to the consolidation of general
7-19 obligation bonding authority for certain agricultural funds, is
7-20 approved by the voters. If that amendment is not approved by the
7-21 voters, this Act has no effect.
7-22 SECTION 22. The importance of this legislation and the
7-23 crowded condition of the calendars in both houses create an
7-24 emergency and an imperative public necessity that the
7-25 constitutional rule requiring bills to be read on three several
7-26 days in each house be suspended, and this rule is hereby suspended.
7-27 * * * * *