By: Duncan, Bernsen S.B. No. 716
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. Subdivisions (1) and (2), Section 44.001,
1-6 Agriculture Code, are amended to read as follows:
1-7 (1) "Eligible lending institution" means a financial
1-8 institution that makes commercial loans, is either a depository of
1-9 state funds or an institution of the Farm Credit System
1-10 headquartered in this state, and agrees to participate in the
1-11 linked deposit program and to provide collateral equal to the
1-12 amount of linked deposits placed with it.
1-13 (2) "Eligible borrower" means a person who is in the
1-14 business or entering the business of:
1-15 (A) processing and marketing agricultural crops
1-16 in this state;
1-17 (B) producing alternative agricultural crops in
1-18 this state;
1-19 (C) producing agricultural crops in this state
1-20 the production of which has declined because of natural disasters;
1-21 [or]
1-22 (D) producing agricultural crops in this state
1-23 using water conservation equipment for agricultural production
1-24 purposes; or
1-25 (E) providing nonagricultural goods or services
2-1 that provide an economic benefit to a municipality or county in a
2-2 rural area.
2-3 SECTION 2. Subsections (a) and (j), Section 44.007,
2-4 Agriculture Code, are amended to read as follows:
2-5 (a) The board shall establish a linked deposit program to:
2-6 (1) encourage commercial lending for the enhanced
2-7 production, processing, and marketing of certain agricultural
2-8 crops;
2-9 (2) encourage the development or expansion of
2-10 businesses in rural areas of this state; and
2-11 (3) finance [for the financing of] water conservation
2-12 projects or equipment for agricultural production purposes.
2-13 (j) If a lending institution holding linked deposits ceases
2-14 to be either a state depository or a Farm Credit System institution
2-15 headquartered in this state, the comptroller may withdraw the
2-16 linked deposits.
2-17 SECTION 3. Subsections (a) and (b), Section 44.010,
2-18 Agriculture Code, are amended to read as follows:
2-19 (a) At any one time, not more than $30 [$25] million, [of
2-20 which] $10 million of which may [only] be used only to finance
2-21 water conservation projects and $5 million of which may be used
2-22 only to finance the economic development of businesses in rural
2-23 areas, may be placed in linked deposits under this chapter.
2-24 (b) The maximum amount of a loan under this chapter to
2-25 process and market Texas agricultural crops is $500,000. The
2-26 maximum amount of a loan under this chapter to produce alternative
3-1 agricultural crops in this state is $250,000. The maximum amount
3-2 of a loan under this chapter to finance water conservation projects
3-3 or equipment for agricultural production purposes is $250,000. The
3-4 maximum amount of a loan under this chapter to finance production
3-5 of a crop declared eligible for natural disaster relief, as defined
3-6 by board rule, is $250,000. The maximum amount of a loan under
3-7 this chapter to finance a business in a rural area is $250,000.
3-8 SECTION 4. Subdivision (1), Section 58.002, Agriculture
3-9 Code, is amended to read as follows:
3-10 (1) "Agricultural business" means:
3-11 (A) a business that is or proposes to be engaged
3-12 in producing, processing, marketing, or exporting an agricultural
3-13 product;
3-14 (B) an eligible applicant as defined in
3-15 Subchapter E;
3-16 (C) the entity designated to carry out boll
3-17 weevil eradication in accordance with Section 74.1011;
3-18 (D) any agriculture-related business in rural
3-19 areas of Texas including a business that provides recreational
3-20 activities, including hiking, fishing, hunting, or any other
3-21 activity associated with the enjoyment of nature or the outdoors on
3-22 agricultural land; [or]
3-23 (E) a state agency or an institution of higher
3-24 education that is engaged in producing an agricultural product; or
3-25 (F) any other business in a rural area of this
3-26 state.
4-1 SECTION 5. Subchapter A, Chapter 58, Agriculture Code, is
4-2 amended by adding Section 58.003 to read as follows:
4-3 Sec. 58.003. VENUE. A suit filed by or on behalf of the
4-4 authority under this chapter may be brought in Travis County.
4-5 SECTION 6. Subsection (b), Section 58.014, Agriculture Code,
4-6 is amended to read as follows:
4-7 (b) A majority of the voting membership of the board
4-8 constitutes a quorum. The board shall act by adopting resolutions.
4-9 Except as otherwise provided by Sections 58.021(c) and 58.0211(a),
4-10 the [The] affirmative vote of a majority of the [at least three]
4-11 directors present is necessary to adopt a resolution.
4-12 SECTION 7. Subsections (a), (c), and (d), Section 58.021,
4-13 Agriculture Code, are amended to read as follows:
4-14 (a) In order to promote the expansion, development, and
4-15 diversification of production, processing, marketing, and export of
4-16 Texas agricultural products and to promote the development of
4-17 [agriculture-related] rural businesses, the authority shall design
4-18 and implement programs to provide financial assistance to eligible
4-19 agricultural businesses, including programs:
4-20 (1) to make or acquire loans to eligible agricultural
4-21 businesses;
4-22 (2) to make or acquire loans to lenders to enable
4-23 those lenders to make loans to eligible agricultural businesses;
4-24 (3) to insure, coinsure, and reinsure, in whole or in
4-25 part, loans to eligible agricultural businesses;
4-26 (4) to guarantee, in whole or in part, loans to
5-1 eligible agricultural businesses; and
5-2 (5) to administer or participate in programs
5-3 established by another person to provide financial assistance to
5-4 eligible agricultural businesses.
5-5 (c) Except as otherwise provided by this subsection, the
5-6 maximum aggregate amount of loans made to or guaranteed, insured,
5-7 coinsured, or reinsured under this subchapter for a single eligible
5-8 agricultural business by the authority from funds provided by the
5-9 authority is $2 million. The authority may make, guarantee,
5-10 insure, coinsure, or reinsure a loan for a single eligible
5-11 agricultural business that results in an aggregate amount exceeding
5-12 $2 million, but not exceeding $5 million, if the action is approved
5-13 by a two-thirds vote of the [membership of the] board members
5-14 present. The authority may make, guarantee, participate in,
5-15 insure, coinsure, or reinsure loans to the entity designated to
5-16 carry out boll weevil eradication in accordance with Section
5-17 74.1011 in an amount approved by the board to enable that entity to
5-18 execute Subchapter D, Chapter 74. The authority may issue an
5-19 obligation on behalf of, or make, guarantee, participate in,
5-20 insure, coinsure, or reinsure loans to, a state agency or an
5-21 institution of higher education for the purpose of the development,
5-22 improvement, or expansion of an agricultural product or an
5-23 agriculture-related business in an amount approved by the board.
5-24 The authority may make, guarantee, participate in, insure,
5-25 coinsure, or reinsure loans to an eligible agricultural business
5-26 from the proceeds of revenue bonds issued in accordance with
6-1 Section 58.033 in an amount approved by the board.
6-2 (d) Notwithstanding any other provision of this section, the
6-3 authority may also design and implement programs to:
6-4 (1) further rural economic development; and
6-5 (2) reduce the amount of interest paid on loans
6-6 approved by the authority.
6-7 SECTION 8. Section 58.023, Agriculture Code, is amended by
6-8 adding Subsection (d) to read as follows:
6-9 (d) The board by rule shall adopt an agreement to be used
6-10 between a lender and an approved applicant under which the
6-11 authority makes a payment from the Texas agricultural fund for the
6-12 purpose of providing a reduced interest rate on a loan guaranteed
6-13 to a borrower under this subchapter. The board shall adopt rules
6-14 to implement this subsection.
6-15 SECTION 9. Subsection (a), Section 58.033, Agriculture Code,
6-16 is amended to read as follows:
6-17 (a) In addition to the authority to issue general obligation
6-18 bonds, the authority may issue not more than $500 million of
6-19 revenue bonds for the purpose of providing money to carry out any
6-20 purpose of the authority under this chapter. The authority shall
6-21 establish and maintain funds and accounts, in accordance with
6-22 Subsection (d) of this section, that the board considers necessary
6-23 to ensure payment of the bonds and to provide for the use of the
6-24 bond proceeds and the implementation of the program financed.
6-25 Proceeds of revenue bonds shall be applied in accordance with the
6-26 resolution authorizing those bonds:
7-1 (1) to provide financial assistance:
7-2 (A) to eligible agricultural businesses; and
7-3 (B) for programs designed to further rural
7-4 economic development;
7-5 (2) to pay costs of issuance of those bonds and the
7-6 administration of any financial assistance program established by
7-7 the authority; and
7-8 (3) together with any other available funds, to pay
7-9 the principal of or interest on or to discharge or redeem, in whole
7-10 or in part, any outstanding bonds issued by the authority.
7-11 SECTION 10. Subsections (a) and (b), Section 58.057,
7-12 Agriculture Code, are amended to read as follows:
7-13 (a) The young farmer loan guarantee account is an account in
7-14 the Texas agricultural fund. Money in this [the] account may be
7-15 used [only by the authority] for purposes authorized by [the
7-16 purpose of making or administering loan guarantees under] this
7-17 subchapter.
7-18 (b) The account consists of funds and transfers made to the
7-19 account, grants and donations made for the purposes of the young
7-20 farmer loan guarantee program, income earned on money in the
7-21 account, and any other money received under this subchapter.
7-22 Notwithstanding Section 404.071, Government Code, income and
7-23 interest earned on money in the account shall be deposited to the
7-24 credit of the account. At the end of each state fiscal year the
7-25 authority shall transfer to the general credit of the Texas
7-26 agricultural fund any interest earned on the account that remains
8-1 after payment of any administrative expenses of the program. The
8-2 account is exempt from the application of Section 403.095,
8-3 Government Code.
8-4 SECTION 11. Section 59.022, Agriculture Code, is amended by
8-5 adding Subsection (d) to read as follows:
8-6 (d) The board shall adopt rules governing loan guarantees
8-7 provided to lenders by the board in an amount necessary for the
8-8 lender to have a performing loan.
8-9 SECTION 12. Section 59.023, Agriculture Code, is amended to
8-10 read as follows:
8-11 Sec. 59.023. POWERS OF BOARD. The board has the power
8-12 necessary to accomplish the purposes and carry out the programs
8-13 provided by this chapter, including the power:
8-14 (1) to adopt and enforce bylaws, rules, and procedures
8-15 necessary to carry out this chapter;
8-16 (2) to establish, charge, and collect a fee, charge,
8-17 or penalty in connection with a program, service, or activity
8-18 provided by the board under this chapter;
8-19 (3) to issue bonds, provide for and secure the payment
8-20 of the bonds, and provide for the rights of the owners of the
8-21 bonds, in the manner and to the extent permitted by this chapter;
8-22 (4) to purchase, hold, cancel, or resell or otherwise
8-23 dispose of its bonds, subject to any restrictions and any
8-24 resolution authorizing the issuance of its bonds;
8-25 (5) to own, rent, lease, or otherwise acquire, accept,
8-26 or hold any interest in real, personal, or mixed property, by
9-1 purchase, exchange, gift, assignment, transfer, foreclosure,
9-2 mortgage, sale, lease, or otherwise;
9-3 (6) to hold, manage, operate, or improve real,
9-4 personal, or mixed property;
9-5 (7) to sell, lease, encumber, mortgage, exchange,
9-6 donate, convey, or otherwise dispose of any of its property or any
9-7 interest in its property, deed of trust, or mortgage lien owned by
9-8 it, under its control or custody, or in its possession and to
9-9 release or relinquish any right, title, claim, lien, interest,
9-10 easement, or demand, including any equity or right of redemption in
9-11 property foreclosed by it, by public or private sale, with or
9-12 without public bidding;
9-13 (8) to lease or rent any improvement, land, or
9-14 facility from any person;
9-15 (9) to make a secured or unsecured loan to provide
9-16 financial assistance as provided by this chapter, including the
9-17 refunding of an outstanding obligation, mortgage, or advance used
9-18 for those purposes, and to charge and collect interest on those
9-19 loans for loan payments and on terms and conditions the board
9-20 considers advisable that are not in conflict with this chapter;
9-21 (10) to purchase or acquire, sell, discount, assign,
9-22 negotiate, or otherwise dispose of notes or other evidence of
9-23 indebtedness of eligible applicants as the board determines or
9-24 portions or portfolios of or participations in those evidences of
9-25 indebtedness; [and]
9-26 (11) to sell and guarantee securities, whether taxable
10-1 or tax exempt under federal law, in primary and secondary markets;
10-2 and
10-3 (12) to provide to a lender a loan guarantee for the
10-4 purchase of real property by an eligible applicant under Section
10-5 59.024.
10-6 SECTION 13. Section 59.025, Agriculture Code, is amended to
10-7 read as follows:
10-8 Sec. 59.025. MAXIMUM AMOUNT OF LOAN OR GUARANTEE. (a) A
10-9 loan under this chapter may not exceed the lesser of:
10-10 (1) $250,000; or
10-11 (2) an amount equal to 95 percent of the lesser of the
10-12 purchase price of the land or the land's appraised value under
10-13 Section 59.028.
10-14 (b) The board may [shall] provide a guarantee of not more
10-15 than 90 percent of a loan approved under this section [by rule for
10-16 the period during which and the manner in which the down payment
10-17 provided for under Subsection (a) of this section shall be paid to
10-18 the board].
10-19 [(c) If the sale is not consummated, the board shall refund
10-20 the down payment to the borrower.]
10-21 SECTION 14. This Act takes effect immediately if it receives
10-22 a vote of two-thirds of all the members elected to each house, as
10-23 provided by Section 39, Article III, Texas Constitution. If this
10-24 Act does not receive the vote necessary for immediate effect, this
10-25 Act takes effect September 1, 2001.