By Counts                                             H.B. No. 1596
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to programs to promote agriculture and economic
 1-3     development in rural areas of this state.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subdivision (2), Section 44.001, Agriculture
 1-6     Code, is amended to read as follows:
 1-7                 (2)  "Eligible borrower" means a person who is in the
 1-8     business or entering the business of:
 1-9                       (A)  processing and marketing agricultural crops
1-10     in this state;
1-11                       (B)  producing alternative agricultural crops in
1-12     this state;
1-13                       (C)  producing agricultural crops in this state
1-14     the production of which has declined because of natural disasters;
1-15     [or]
1-16                       (D)  producing agricultural crops in this state
1-17     using water conservation equipment for agricultural production
1-18     purposes; or
1-19                       (E)  providing nonagricultural goods or services
1-20     that provide an economic benefit to a municipality or county in a
1-21     rural area.
1-22           SECTION 2.  Subsection (a), Section 44.007, Agricultural
 2-1     Code, is amended to read as follows:
 2-2           (a)  The board shall establish a linked deposit program to:
 2-3                 (1)  encourage commercial lending for the enhanced
 2-4     production, processing, and marketing of certain agricultural
 2-5     crops;
 2-6                 (2)  encourage the development or expansion of
 2-7     businesses in rural areas of this state; and
 2-8                 (3)  finance [for the financing of] water conservation
 2-9     projects or equipment for agricultural production purposes.
2-10           SECTION 3.  Subsections (a) and (b), Section 44.010,
2-11     Agriculture Code, are amended to read as follows:
2-12           (a)  At any one time, not more than $30 [$25] million, [of
2-13     which] $10 million of which may [only] be used only to finance
2-14     water conservation projects and $5 million of which may be used
2-15     only to finance the economic development of businesses in rural
2-16     areas, may be placed in linked deposits under this chapter.
2-17           (b)  The maximum amount of a loan under this chapter to
2-18     process and market Texas agricultural crops is $500,000.  The
2-19     maximum amount of a loan under this chapter to produce alternative
2-20     agricultural crops in this state is $250,000.  The maximum amount
2-21     of a loan under this chapter to finance water conservation projects
2-22     or equipment for agricultural production purposes is $250,000.  The
2-23     maximum amount of a loan under this chapter to finance production
2-24     of a crop declared eligible for natural disaster relief, as defined
2-25     by board rule, is $250,000.  The maximum amount of a loan under
2-26     this chapter to finance a business in a rural area is $250,000.
 3-1           SECTION 4.  Subdivision (1), Section 58.002, Agriculture
 3-2     Code, is amended to read as follows:
 3-3                 (1)  "Agricultural business" means:
 3-4                       (A)  a business that is or proposes to be engaged
 3-5     in producing, processing, marketing, or exporting an agricultural
 3-6     product;
 3-7                       (B)  an eligible applicant as defined in
 3-8     Subchapter E;
 3-9                       (C)  the entity designated to carry out boll
3-10     weevil eradication in accordance with Section 74.1011;
3-11                       (D)  any agriculture-related business in rural
3-12     areas of Texas including a business that provides recreational
3-13     activities, including hiking, fishing, hunting, or any other
3-14     activity associated with the enjoyment of nature or the outdoors on
3-15     agricultural land; [or]
3-16                       (E)  a state agency or an institution of higher
3-17     education that is engaged in producing an agricultural product; or
3-18                       (F)  any other business in a rural area of this
3-19     state.
3-20           SECTION 5.  Subchapter A, Chapter 58, Agriculture Code, is
3-21     amended by adding Section 58.003 to read as follows:
3-22           Sec. 58.003.  VENUE.  A suit filed by or on behalf of the
3-23     authority under this chapter may be brought in Travis County.
3-24           SECTION 6.  Subsection (b), Section 58.014, Agriculture Code,
3-25     is amended to read as follows:
3-26           (b)  A majority of the voting membership of the board
 4-1     constitutes a quorum.  The board shall act by adopting resolutions.
 4-2     Except as otherwise provided by Sections 58.021(c) and 58.0211(a),
 4-3     the [The] affirmative vote of a majority of the [at least three]
 4-4     directors present is necessary to adopt a resolution.
 4-5           SECTION 7.  Subsections (a), (c), and (d), Section 58.021,
 4-6     Agriculture Code, are amended to read as follows:
 4-7           (a)  In order to promote the expansion, development, and
 4-8     diversification of production, processing, marketing, and export of
 4-9     Texas agricultural products and to promote the development of
4-10     [agriculture-related] rural businesses, the authority shall design
4-11     and implement programs to provide financial assistance to eligible
4-12     agricultural businesses, including programs:
4-13                 (1)  to make or acquire loans to eligible agricultural
4-14     businesses;
4-15                 (2)  to make or acquire loans to lenders to enable
4-16     those lenders to make loans to eligible agricultural businesses;
4-17                 (3)  to insure, coinsure, and reinsure, in whole or in
4-18     part, loans to eligible agricultural businesses;
4-19                 (4)  to guarantee, in whole or in part, loans to
4-20     eligible agricultural businesses; and
4-21                 (5)  to administer or participate in programs
4-22     established by another person to provide financial assistance to
4-23     eligible agricultural businesses.
4-24           (c)  Except as otherwise provided by this subsection, the
4-25     maximum aggregate amount of loans made to or guaranteed, insured,
4-26     coinsured, or reinsured under this subchapter for a single eligible
 5-1     agricultural business by the authority from funds provided by the
 5-2     authority is $2 million.  The authority may make, guarantee,
 5-3     insure, coinsure, or reinsure a loan for a single eligible
 5-4     agricultural business that results in an aggregate amount exceeding
 5-5     $2 million, but not exceeding $5 million, if the action is approved
 5-6     by a two-thirds vote of the [membership of the] board members
 5-7     present.  The authority may make, guarantee, participate in,
 5-8     insure, coinsure, or reinsure loans to the entity designated to
 5-9     carry out boll weevil eradication in accordance with Section
5-10     74.1011 in an amount approved by the board to enable that entity to
5-11     execute Subchapter D, Chapter 74.  The authority may issue an
5-12     obligation on behalf of, or make, guarantee, participate in,
5-13     insure, coinsure, or reinsure loans to, a state agency or an
5-14     institution of higher education for the purpose of the development,
5-15     improvement, or expansion of an agricultural product or an
5-16     agriculture-related business in an amount approved by the board.
5-17     The authority may make, guarantee, participate in, insure,
5-18     coinsure, or reinsure loans to an eligible agricultural business
5-19     from the proceeds of revenue bonds issued in accordance with
5-20     Section 58.033 in an amount approved by the board.
5-21           (d)  Notwithstanding any other provision of this section, the
5-22     authority may also design and implement programs to:
5-23                 (1)  further rural economic development; and
5-24                 (2)  reduce the amount of interest paid on loans
5-25     approved by the authority.
5-26           SECTION 8.  Section 58.023, Agriculture Code, is amended by
 6-1     adding Subsection (d) to read as follows:
 6-2           (d)  The board by rule shall adopt an agreement to be used
 6-3     between a lender an an approved applicant under which the authority
 6-4     makes a payment from the Texas agricultural fund for the purpose of
 6-5     providing a reduced interest rate on a loan guaranteed to a
 6-6     borrower under this subchapter.  The board shall adopt rules to
 6-7     implement this subsection.
 6-8           SECTION 9.  Subsection (a), Section 58.033, Agriculture Code,
 6-9     is amended to read as follows:
6-10           (a)  In addition to the authority to issue general obligation
6-11     bonds, the authority may issue not more than $500 million of
6-12     revenue bonds for the purpose of providing money to carry out any
6-13     purpose of the authority under this chapter.  The authority shall
6-14     establish and maintain funds and accounts, in accordance with
6-15     Subsection (d) of this section, that the board considers necessary
6-16     to ensure payment of the bonds and to provide for the use of the
6-17     bond proceeds and the implementation of the program financed.
6-18     Proceeds of revenue bonds shall be applied in accordance with the
6-19     resolution authorizing those bonds:
6-20                 (1)  to provide financial assistance:
6-21                       (A)  to eligible agricultural businesses; and
6-22                       (B)  for programs designed to further rural
6-23     economic development;
6-24                 (2)  to pay costs of issuance of those bonds and the
6-25     administration of any financial assistance program established by
6-26     the authority; and
 7-1                 (3)  together with any other available funds, to pay
 7-2     the principal of or interest on or to discharge or redeem, in whole
 7-3     or in part, any outstanding bonds issued by the authority.
 7-4           SECTION 10.  Subsections (a) and (b), Section 58.057,
 7-5     Agriculture Code, are amended to read as follows:
 7-6           (a)  The young farmer loan guarantee account is an account in
 7-7     the Texas agricultural fund.  Money in this [the] account may be
 7-8     used [only by the authority] for purposes authorized by [the
 7-9     purpose of making or administering loan guarantees under] this
7-10     subchapter.
7-11           (b)  The account consists of funds and transfers made to the
7-12     account, grants and donations made for the purposes of the young
7-13     farmer loan guarantee program, income earned on money in the
7-14     account, and any other money received under this subchapter.
7-15     Notwithstanding Section 404.071, Government Code, income and
7-16     interest earned on money in the account shall be deposited to the
7-17     credit of the account.  At the end of each state fiscal year the
7-18     authority shall transfer to the general credit of the Texas
7-19     agricultural fund any interest earned on the account that remains
7-20     after payment of any administrative expenses of the program.  The
7-21     account is exempt from the application of Section 403.095,
7-22     Government Code.
7-23           SECTION 11.  Section 59.022, Agriculture Code, is amended by
7-24     adding Subsection (d) to read as follows:
7-25           (d)  The board shall adopt rules governing loan guarantees
7-26     provided to lenders by the board in an amount necessary for the
 8-1     lender to have a performing loan.
 8-2           SECTION 12.  Section 59.023, Agriculture Code, is amended to
 8-3     read as follows:
 8-4           Sec. 59.023.  POWERS OF BOARD.  The board has the power
 8-5     necessary to accomplish the purposes and carry out the programs
 8-6     provided by this chapter, including the power:
 8-7                 (1)  to adopt and enforce bylaws, rules, and procedures
 8-8     necessary to carry out this chapter;
 8-9                 (2)  to establish, charge, and collect a fee, charge,
8-10     or penalty in connection with a program, service, or activity
8-11     provided by the board under this chapter;
8-12                 (3)  to issue bonds, provide for and secure the payment
8-13     of the bonds, and provide for the rights of the owners of the
8-14     bonds, in the manner and to the extent permitted by this chapter;
8-15                 (4)  to purchase, hold, cancel, or resell or otherwise
8-16     dispose of its bonds, subject to any restrictions and any
8-17     resolution authorizing the issuance of its bonds;
8-18                 (5)  to own, rent, lease, or otherwise acquire, accept,
8-19     or hold any interest in real, personal, or mixed property, by
8-20     purchase, exchange, gift, assignment, transfer, foreclosure,
8-21     mortgage, sale, lease, or otherwise;
8-22                 (6)  to hold, manage, operate, or improve real,
8-23     personal, or mixed property;
8-24                 (7)  to sell, lease, encumber, mortgage, exchange,
8-25     donate, convey, or otherwise dispose of any of its property or any
8-26     interest in its property, deed of trust, or mortgage lien owned by
 9-1     it, under its control or custody, or in its possession and to
 9-2     release or relinquish any right, title, claim, lien, interest,
 9-3     easement, or demand, including any equity or right of redemption in
 9-4     property foreclosed by it, by public or private sale, with or
 9-5     without public bidding;
 9-6                 (8)  to lease or rent any improvement, land, or
 9-7     facility from any person;
 9-8                 (9)  to make a secured or unsecured loan to provide
 9-9     financial assistance as provided by this chapter, including the
9-10     refunding of an outstanding obligation, mortgage, or advance used
9-11     for those purposes, and to charge and collect interest on those
9-12     loans for loan payments and on terms and conditions the board
9-13     considers advisable that are not in conflict with this chapter;
9-14                 (10)  to purchase or acquire, sell, discount, assign,
9-15     negotiate, or otherwise dispose of notes or other evidence of
9-16     indebtedness of eligible applicants as the board determines or
9-17     portions or portfolios of or participations in those evidences of
9-18     indebtedness; [and]
9-19                 (11)  to sell and guarantee securities, whether taxable
9-20     or tax exempt under federal law, in primary and secondary markets;
9-21     and
9-22                 (12)  to provide to a lender a loan guarantee for the
9-23     purchase of real property by an eligible applicant under Section
9-24     59.024.
9-25           SECTION 13.  Section 59.025, Agriculture Code, is amended to
9-26     read as follows:
 10-1          Sec. 59.025.  MAXIMUM AMOUNT OF LOAN OR GUARANTEE. (a)  A
 10-2    loan under this chapter may not exceed the lesser of:
 10-3                (1)  $250,000; or
 10-4                (2)  an amount equal to 95 percent of the lesser of the
 10-5    purchase price of the land or the land's appraised value under
 10-6    Section 59.028.
 10-7          (b)  The board may [shall] provide a guarantee of not more
 10-8    than 90 percent of a loan approved under this section [by rule for
 10-9    the period during which and the manner in which the down payment
10-10    provided for under Subsection (a) of this section shall be paid to
10-11    the board].
10-12          [(c)  If the sale is not consummated, the board shall refund
10-13    the down payment to the borrower.]
10-14          SECTION 14.  This Act takes effect immediately if it receives
10-15    a vote of two-thirds of all the members elected to each house, as
10-16    provided by Section 39, Article III, Texas Constitution.  If this
10-17    Act does not receive the vote necessary for immediate effect, this
10-18    Act takes effect September 1, 2001.