By:  Duncan                                            S.B. No. 716
         2001S0438/1                            
                                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
1-23     Code, is amended to read as follows:
1-24           (a)  The board shall establish a linked deposit program to:
1-25                 (1)  encourage commercial lending for the enhanced
 2-1     production, processing, and marketing of certain agricultural
 2-2     crops;
 2-3                 (2)  encourage the development or expansion of
 2-4     businesses in rural areas of this state; and
 2-5                 (3)  finance [for the financing of] water conservation
 2-6     projects or equipment for agricultural production purposes.
 2-7           SECTION 3.  Subsections (a) and (b), Section 44.010,
 2-8     Agriculture Code, are amended to read as follows:
 2-9           (a)  At any one time, not more than $30 [$25] million, [of
2-10     which] $10 million of which may [only] be used only to finance
2-11     water conservation projects and $5 million of which may be used
2-12     only to finance the economic development of businesses in rural
2-13     areas, may be placed in linked deposits under this chapter.
2-14           (b)  The maximum amount of a loan under this chapter to
2-15     process and market Texas agricultural crops is $500,000.  The
2-16     maximum amount of a loan under this chapter to produce alternative
2-17     agricultural crops in this state is $250,000.  The maximum amount
2-18     of a loan under this chapter to finance water conservation projects
2-19     or equipment for agricultural production purposes is $250,000.  The
2-20     maximum amount of a loan under this chapter to finance production
2-21     of a crop declared eligible for natural disaster relief, as defined
2-22     by board rule, is $250,000.  The maximum amount of a loan under
2-23     this chapter to finance a business in a rural area is $250,000.
2-24           SECTION 4.  Subdivision (1), Section 58.002, Agriculture
2-25     Code, is amended to read as follows:
2-26                 (1)  "Agricultural business" means:
 3-1                       (A)  a business that is or proposes to be engaged
 3-2     in producing, processing, marketing, or exporting an agricultural
 3-3     product;
 3-4                       (B)  an eligible applicant as defined in
 3-5     Subchapter E;
 3-6                       (C)  the entity designated to carry out boll
 3-7     weevil eradication in accordance with Section 74.1011;
 3-8                       (D)  any agriculture-related business in rural
 3-9     areas of Texas including a business that provides recreational
3-10     activities, including hiking, fishing, hunting, or any other
3-11     activity associated with the enjoyment of nature or the outdoors on
3-12     agricultural land; [or]
3-13                       (E)  a state agency or an institution of higher
3-14     education that is engaged in producing an agricultural product; or
3-15                       (F)  any other business in a rural area of this
3-16     state.
3-17           SECTION 5.  Subchapter A, Chapter 58, Agriculture Code, is
3-18     amended by adding Section 58.003 to read as follows:
3-19           Sec. 58.003.  VENUE.  A suit filed by or on behalf of the
3-20     authority under this chapter may be brought in Travis County.
3-21           SECTION 6.  Subsection (b), Section 58.014, Agriculture Code,
3-22     is amended to read as follows:
3-23           (b)  A majority of the voting membership of the board
3-24     constitutes a quorum.  The board shall act by adopting resolutions.
3-25     Except as otherwise provided by Sections 58.021(c) and 58.0211(a),
3-26     the [The] affirmative vote of a majority of the [at least three]
 4-1     directors present is necessary to adopt a resolution.
 4-2           SECTION 7.  Subsections (a), (c), and (d), Section 58.021,
 4-3     Agriculture Code, are amended to read as follows:
 4-4           (a)  In order to promote the expansion, development, and
 4-5     diversification of production, processing, marketing, and export of
 4-6     Texas agricultural products and to promote the development of
 4-7     [agriculture-related] rural businesses, the authority shall design
 4-8     and implement programs to provide financial assistance to eligible
 4-9     agricultural businesses, including programs:
4-10                 (1)  to make or acquire loans to eligible agricultural
4-11     businesses;
4-12                 (2)  to make or acquire loans to lenders to enable
4-13     those lenders to make loans to eligible agricultural businesses;
4-14                 (3)  to insure, coinsure, and reinsure, in whole or in
4-15     part, loans to eligible agricultural businesses;
4-16                 (4)  to guarantee, in whole or in part, loans to
4-17     eligible agricultural businesses; and
4-18                 (5)  to administer or participate in programs
4-19     established by another person to provide financial assistance to
4-20     eligible agricultural businesses.
4-21           (c)  Except as otherwise provided by this subsection, the
4-22     maximum aggregate amount of loans made to or guaranteed, insured,
4-23     coinsured, or reinsured under this subchapter for a single eligible
4-24     agricultural business by the authority from funds provided by the
4-25     authority is $2 million.  The authority may make, guarantee,
4-26     insure, coinsure, or reinsure a loan for a single eligible
 5-1     agricultural business that results in an aggregate amount exceeding
 5-2     $2 million, but not exceeding $5 million, if the action is approved
 5-3     by a two-thirds vote of the [membership of the] board members
 5-4     present.  The authority may make, guarantee, participate in,
 5-5     insure, coinsure, or reinsure loans to the entity designated to
 5-6     carry out boll weevil eradication in accordance with Section
 5-7     74.1011 in an amount approved by the board to enable that entity to
 5-8     execute Subchapter D, Chapter 74.  The authority may issue an
 5-9     obligation on behalf of, or make, guarantee, participate in,
5-10     insure, coinsure, or reinsure loans to, a state agency or an
5-11     institution of higher education for the purpose of the development,
5-12     improvement, or expansion of an agricultural product or an
5-13     agriculture-related business in an amount approved by the board.
5-14     The authority may make, guarantee, participate in, insure,
5-15     coinsure, or reinsure loans to an eligible agricultural business
5-16     from the proceeds of revenue bonds issued in accordance with
5-17     Section 58.033 in an amount approved by the board.
5-18           (d)  Notwithstanding any other provision of this section, the
5-19     authority may also design and implement programs to:
5-20                 (1)  further rural economic development; and
5-21                 (2)  reduce the amount of interest paid on loans
5-22     approved by the authority.
5-23           SECTION 8.  Section 58.023, Agriculture Code, is amended by
5-24     adding Subsection (d) to read as follows:
5-25           (d)  The board by rule shall adopt an agreement to be used
5-26     between a lender an an approved applicant under which the authority
 6-1     makes a payment from the Texas agricultural fund for the purpose of
 6-2     providing a reduced interest rate on a loan guaranteed to a
 6-3     borrower under this subchapter.  The board shall adopt rules to
 6-4     implement this subsection.
 6-5           SECTION 9.  Subsection (a), Section 58.033, Agriculture Code,
 6-6     is amended to read as follows:
 6-7           (a)  In addition to the authority to issue general obligation
 6-8     bonds, the authority may issue not more than $500 million of
 6-9     revenue bonds for the purpose of providing money to carry out any
6-10     purpose of the authority under this chapter.  The authority shall
6-11     establish and maintain funds and accounts, in accordance with
6-12     Subsection (d) of this section, that the board considers necessary
6-13     to ensure payment of the bonds and to provide for the use of the
6-14     bond proceeds and the implementation of the program financed.
6-15     Proceeds of revenue bonds shall be applied in accordance with the
6-16     resolution authorizing those bonds:
6-17                 (1)  to provide financial assistance:
6-18                       (A)  to eligible agricultural businesses; and
6-19                       (B)  for programs designed to further rural
6-20     economic development;
6-21                 (2)  to pay costs of issuance of those bonds and the
6-22     administration of any financial assistance program established by
6-23     the authority; and
6-24                 (3)  together with any other available funds, to pay
6-25     the principal of or interest on or to discharge or redeem, in whole
6-26     or in part, any outstanding bonds issued by the authority.
 7-1           SECTION 10.  Subsections (a) and (b), Section 58.057,
 7-2     Agriculture Code, are amended to read as follows:
 7-3           (a)  The young farmer loan guarantee account is an account in
 7-4     the Texas agricultural fund.  Money in this [the] account may be
 7-5     used [only by the authority] for purposes authorized by [the
 7-6     purpose of making or administering loan guarantees under] this
 7-7     subchapter.
 7-8           (b)  The account consists of funds and transfers made to the
 7-9     account, grants and donations made for the purposes of the young
7-10     farmer loan guarantee program, income earned on money in the
7-11     account, and any other money received under this subchapter.
7-12     Notwithstanding Section 404.071, Government Code, income and
7-13     interest earned on money in the account shall be deposited to the
7-14     credit of the account.  At the end of each state fiscal year the
7-15     authority shall transfer to the general credit of the Texas
7-16     agricultural fund any interest earned on the account that remains
7-17     after payment of any administrative expenses of the program.  The
7-18     account is exempt from the application of Section 403.095,
7-19     Government Code.
7-20           SECTION 11.  Section 59.022, Agriculture Code, is amended by
7-21     adding Subsection (d) to read as follows:
7-22           (d)  The board shall adopt rules governing loan guarantees
7-23     provided to lenders by the board in an amount necessary for the
7-24     lender to have a performing loan.
7-25           SECTION 12.  Section 59.023, Agriculture Code, is amended to
7-26     read as follows:
 8-1           Sec. 59.023.  POWERS OF BOARD.  The board has the power
 8-2     necessary to accomplish the purposes and carry out the programs
 8-3     provided by this chapter, including the power:
 8-4                 (1)  to adopt and enforce bylaws, rules, and procedures
 8-5     necessary to carry out this chapter;
 8-6                 (2)  to establish, charge, and collect a fee, charge,
 8-7     or penalty in connection with a program, service, or activity
 8-8     provided by the board under this chapter;
 8-9                 (3)  to issue bonds, provide for and secure the payment
8-10     of the bonds, and provide for the rights of the owners of the
8-11     bonds, in the manner and to the extent permitted by this chapter;
8-12                 (4)  to purchase, hold, cancel, or resell or otherwise
8-13     dispose of its bonds, subject to any restrictions and any
8-14     resolution authorizing the issuance of its bonds;
8-15                 (5)  to own, rent, lease, or otherwise acquire, accept,
8-16     or hold any interest in real, personal, or mixed property, by
8-17     purchase, exchange, gift, assignment, transfer, foreclosure,
8-18     mortgage, sale, lease, or otherwise;
8-19                 (6)  to hold, manage, operate, or improve real,
8-20     personal, or mixed property;
8-21                 (7)  to sell, lease, encumber, mortgage, exchange,
8-22     donate, convey, or otherwise dispose of any of its property or any
8-23     interest in its property, deed of trust, or mortgage lien owned by
8-24     it, under its control or custody, or in its possession and to
8-25     release or relinquish any right, title, claim, lien, interest,
8-26     easement, or demand, including any equity or right of redemption in
 9-1     property foreclosed by it, by public or private sale, with or
 9-2     without public bidding;
 9-3                 (8)  to lease or rent any improvement, land, or
 9-4     facility from any person;
 9-5                 (9)  to make a secured or unsecured loan to provide
 9-6     financial assistance as provided by this chapter, including the
 9-7     refunding of an outstanding obligation, mortgage, or advance used
 9-8     for those purposes, and to charge and collect interest on those
 9-9     loans for loan payments and on terms and conditions the board
9-10     considers advisable that are not in conflict with this chapter;
9-11                 (10)  to purchase or acquire, sell, discount, assign,
9-12     negotiate, or otherwise dispose of notes or other evidence of
9-13     indebtedness of eligible applicants as the board determines or
9-14     portions or portfolios of or participations in those evidences of
9-15     indebtedness; [and]
9-16                 (11)  to sell and guarantee securities, whether taxable
9-17     or tax exempt under federal law, in primary and secondary markets;
9-18     and
9-19                 (12)  to provide to a lender a loan guarantee for the
9-20     purchase of real property by an eligible applicant under Section
9-21     59.024.
9-22           SECTION 13.  Section 59.025, Agriculture Code, is amended to
9-23     read as follows:
9-24           Sec. 59.025.  MAXIMUM AMOUNT OF LOAN OR GUARANTEE. (a)  A
9-25     loan under this chapter may not exceed the lesser of:
9-26                 (1)  $250,000; or
 10-1                (2)  an amount equal to 95 percent of the lesser of the
 10-2    purchase price of the land or the land's appraised value under
 10-3    Section 59.028.
 10-4          (b)  The board may [shall] provide a guarantee of not more
 10-5    than 90 percent of a loan approved under this section [by rule for
 10-6    the period during which and the manner in which the down payment
 10-7    provided for under Subsection (a) of this section shall be paid to
 10-8    the board].
 10-9          [(c)  If the sale is not consummated, the board shall refund
10-10    the down payment to the borrower.]
10-11          SECTION 14.  This Act takes effect immediately if it receives
10-12    a vote of two-thirds of all the members elected to each house, as
10-13    provided by Section 39, Article III, Texas Constitution.  If this
10-14    Act does not receive the vote necessary for immediate effect, this
10-15    Act takes effect September 1, 2001.