1-1 By: Duncan S.B. No. 716
1-2 (In the Senate - Filed February 14, 2001; February 19, 2001,
1-3 read first time and referred to Committee on Natural Resources;
1-4 March 1, 2001, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 6, Nays 0; March 1, 2001,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 716 By: Duncan
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to programs to promote agriculture and economic
1-11 development in rural areas of this state.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subdivisions (1) and (2), Section 44.001,
1-14 Agriculture Code, are amended to read as follows:
1-15 (1) "Eligible lending institution" means a financial
1-16 institution that makes commercial loans, is either a depository of
1-17 state funds or an institution of the Farm Credit System
1-18 headquartered in this state, and agrees to participate in the
1-19 linked deposit program and to provide collateral equal to the
1-20 amount of linked deposits placed with it.
1-21 (2) "Eligible borrower" means a person who is in the
1-22 business or entering the business of:
1-23 (A) processing and marketing agricultural crops
1-24 in this state;
1-25 (B) producing alternative agricultural crops in
1-26 this state;
1-27 (C) producing agricultural crops in this state
1-28 the production of which has declined because of natural disasters;
1-29 [or]
1-30 (D) producing agricultural crops in this state
1-31 using water conservation equipment for agricultural production
1-32 purposes; or
1-33 (E) providing nonagricultural goods or services
1-34 that provide an economic benefit to a municipality or county in a
1-35 rural area.
1-36 SECTION 2. Subsections (a) and (j), Section 44.007,
1-37 Agriculture Code, are amended to read as follows:
1-38 (a) The board shall establish a linked deposit program to:
1-39 (1) encourage commercial lending for the enhanced
1-40 production, processing, and marketing of certain agricultural
1-41 crops;
1-42 (2) encourage the development or expansion of
1-43 businesses in rural areas of this state; and
1-44 (3) finance [for the financing of] water conservation
1-45 projects or equipment for agricultural production purposes.
1-46 (j) If a lending institution holding linked deposits ceases
1-47 to be either a state depository or a Farm Credit System institution
1-48 headquartered in this state, the comptroller may withdraw the
1-49 linked deposits.
1-50 SECTION 3. Subsections (a) and (b), Section 44.010,
1-51 Agriculture Code, are amended to read as follows:
1-52 (a) At any one time, not more than $30 [$25] million, [of
1-53 which] $10 million of which may [only] be used only to finance
1-54 water conservation projects and $5 million of which may be used
1-55 only to finance the economic development of businesses in rural
1-56 areas, may be placed in linked deposits under this chapter.
1-57 (b) The maximum amount of a loan under this chapter to
1-58 process and market Texas agricultural crops is $500,000. The
1-59 maximum amount of a loan under this chapter to produce alternative
1-60 agricultural crops in this state is $250,000. The maximum amount
1-61 of a loan under this chapter to finance water conservation projects
1-62 or equipment for agricultural production purposes is $250,000. The
1-63 maximum amount of a loan under this chapter to finance production
1-64 of a crop declared eligible for natural disaster relief, as defined
2-1 by board rule, is $250,000. The maximum amount of a loan under
2-2 this chapter to finance a business in a rural area is $250,000.
2-3 SECTION 4. Subdivision (1), Section 58.002, Agriculture
2-4 Code, is amended to read as follows:
2-5 (1) "Agricultural business" means:
2-6 (A) a business that is or proposes to be engaged
2-7 in producing, processing, marketing, or exporting an agricultural
2-8 product;
2-9 (B) an eligible applicant as defined in
2-10 Subchapter E;
2-11 (C) the entity designated to carry out boll
2-12 weevil eradication in accordance with Section 74.1011;
2-13 (D) any agriculture-related business in rural
2-14 areas of Texas including a business that provides recreational
2-15 activities, including hiking, fishing, hunting, or any other
2-16 activity associated with the enjoyment of nature or the outdoors on
2-17 agricultural land; [or]
2-18 (E) a state agency or an institution of higher
2-19 education that is engaged in producing an agricultural product; or
2-20 (F) any other business in a rural area of this
2-21 state.
2-22 SECTION 5. Subchapter A, Chapter 58, Agriculture Code, is
2-23 amended by adding Section 58.003 to read as follows:
2-24 Sec. 58.003. VENUE. A suit filed by or on behalf of the
2-25 authority under this chapter may be brought in Travis County.
2-26 SECTION 6. Subsection (b), Section 58.014, Agriculture Code,
2-27 is amended to read as follows:
2-28 (b) A majority of the voting membership of the board
2-29 constitutes a quorum. The board shall act by adopting resolutions.
2-30 Except as otherwise provided by Sections 58.021(c) and 58.0211(a),
2-31 the [The] affirmative vote of a majority of the [at least three]
2-32 directors present is necessary to adopt a resolution.
2-33 SECTION 7. Subsections (a), (c), and (d), Section 58.021,
2-34 Agriculture Code, are amended to read as follows:
2-35 (a) In order to promote the expansion, development, and
2-36 diversification of production, processing, marketing, and export of
2-37 Texas agricultural products and to promote the development of
2-38 [agriculture-related] rural businesses, the authority shall design
2-39 and implement programs to provide financial assistance to eligible
2-40 agricultural businesses, including programs:
2-41 (1) to make or acquire loans to eligible agricultural
2-42 businesses;
2-43 (2) to make or acquire loans to lenders to enable
2-44 those lenders to make loans to eligible agricultural businesses;
2-45 (3) to insure, coinsure, and reinsure, in whole or in
2-46 part, loans to eligible agricultural businesses;
2-47 (4) to guarantee, in whole or in part, loans to
2-48 eligible agricultural businesses; and
2-49 (5) to administer or participate in programs
2-50 established by another person to provide financial assistance to
2-51 eligible agricultural businesses.
2-52 (c) Except as otherwise provided by this subsection, the
2-53 maximum aggregate amount of loans made to or guaranteed, insured,
2-54 coinsured, or reinsured under this subchapter for a single eligible
2-55 agricultural business by the authority from funds provided by the
2-56 authority is $2 million. The authority may make, guarantee,
2-57 insure, coinsure, or reinsure a loan for a single eligible
2-58 agricultural business that results in an aggregate amount exceeding
2-59 $2 million, but not exceeding $5 million, if the action is approved
2-60 by a two-thirds vote of the [membership of the] board members
2-61 present. The authority may make, guarantee, participate in,
2-62 insure, coinsure, or reinsure loans to the entity designated to
2-63 carry out boll weevil eradication in accordance with Section
2-64 74.1011 in an amount approved by the board to enable that entity to
2-65 execute Subchapter D, Chapter 74. The authority may issue an
2-66 obligation on behalf of, or make, guarantee, participate in,
2-67 insure, coinsure, or reinsure loans to, a state agency or an
2-68 institution of higher education for the purpose of the development,
2-69 improvement, or expansion of an agricultural product or an
3-1 agriculture-related business in an amount approved by the board.
3-2 The authority may make, guarantee, participate in, insure,
3-3 coinsure, or reinsure loans to an eligible agricultural business
3-4 from the proceeds of revenue bonds issued in accordance with
3-5 Section 58.033 in an amount approved by the board.
3-6 (d) Notwithstanding any other provision of this section, the
3-7 authority may also design and implement programs to:
3-8 (1) further rural economic development; and
3-9 (2) reduce the amount of interest paid on loans
3-10 approved by the authority.
3-11 SECTION 8. Section 58.023, Agriculture Code, is amended by
3-12 adding Subsection (d) to read as follows:
3-13 (d) The board by rule shall adopt an agreement to be used
3-14 between a lender and an approved applicant under which the
3-15 authority makes a payment from the Texas agricultural fund for the
3-16 purpose of providing a reduced interest rate on a loan guaranteed
3-17 to a borrower under this subchapter. The board shall adopt rules
3-18 to implement this subsection.
3-19 SECTION 9. Subsection (a), Section 58.033, Agriculture Code,
3-20 is amended to read as follows:
3-21 (a) In addition to the authority to issue general obligation
3-22 bonds, the authority may issue not more than $500 million of
3-23 revenue bonds for the purpose of providing money to carry out any
3-24 purpose of the authority under this chapter. The authority shall
3-25 establish and maintain funds and accounts, in accordance with
3-26 Subsection (d) of this section, that the board considers necessary
3-27 to ensure payment of the bonds and to provide for the use of the
3-28 bond proceeds and the implementation of the program financed.
3-29 Proceeds of revenue bonds shall be applied in accordance with the
3-30 resolution authorizing those bonds:
3-31 (1) to provide financial assistance:
3-32 (A) to eligible agricultural businesses; and
3-33 (B) for programs designed to further rural
3-34 economic development;
3-35 (2) to pay costs of issuance of those bonds and the
3-36 administration of any financial assistance program established by
3-37 the authority; and
3-38 (3) together with any other available funds, to pay
3-39 the principal of or interest on or to discharge or redeem, in whole
3-40 or in part, any outstanding bonds issued by the authority.
3-41 SECTION 10. Subsections (a) and (b), Section 58.057,
3-42 Agriculture Code, are amended to read as follows:
3-43 (a) The young farmer loan guarantee account is an account in
3-44 the Texas agricultural fund. Money in this [the] account may be
3-45 used [only by the authority] for purposes authorized by [the
3-46 purpose of making or administering loan guarantees under] this
3-47 subchapter.
3-48 (b) The account consists of funds and transfers made to the
3-49 account, grants and donations made for the purposes of the young
3-50 farmer loan guarantee program, income earned on money in the
3-51 account, and any other money received under this subchapter.
3-52 Notwithstanding Section 404.071, Government Code, income and
3-53 interest earned on money in the account shall be deposited to the
3-54 credit of the account. At the end of each state fiscal year the
3-55 authority shall transfer to the general credit of the Texas
3-56 agricultural fund any interest earned on the account that remains
3-57 after payment of any administrative expenses of the program. The
3-58 account is exempt from the application of Section 403.095,
3-59 Government Code.
3-60 SECTION 11. Section 59.022, Agriculture Code, is amended by
3-61 adding Subsection (d) to read as follows:
3-62 (d) The board shall adopt rules governing loan guarantees
3-63 provided to lenders by the board in an amount necessary for the
3-64 lender to have a performing loan.
3-65 SECTION 12. Section 59.023, Agriculture Code, is amended to
3-66 read as follows:
3-67 Sec. 59.023. POWERS OF BOARD. The board has the power
3-68 necessary to accomplish the purposes and carry out the programs
3-69 provided by this chapter, including the power:
4-1 (1) to adopt and enforce bylaws, rules, and procedures
4-2 necessary to carry out this chapter;
4-3 (2) to establish, charge, and collect a fee, charge,
4-4 or penalty in connection with a program, service, or activity
4-5 provided by the board under this chapter;
4-6 (3) to issue bonds, provide for and secure the payment
4-7 of the bonds, and provide for the rights of the owners of the
4-8 bonds, in the manner and to the extent permitted by this chapter;
4-9 (4) to purchase, hold, cancel, or resell or otherwise
4-10 dispose of its bonds, subject to any restrictions and any
4-11 resolution authorizing the issuance of its bonds;
4-12 (5) to own, rent, lease, or otherwise acquire, accept,
4-13 or hold any interest in real, personal, or mixed property, by
4-14 purchase, exchange, gift, assignment, transfer, foreclosure,
4-15 mortgage, sale, lease, or otherwise;
4-16 (6) to hold, manage, operate, or improve real,
4-17 personal, or mixed property;
4-18 (7) to sell, lease, encumber, mortgage, exchange,
4-19 donate, convey, or otherwise dispose of any of its property or any
4-20 interest in its property, deed of trust, or mortgage lien owned by
4-21 it, under its control or custody, or in its possession and to
4-22 release or relinquish any right, title, claim, lien, interest,
4-23 easement, or demand, including any equity or right of redemption in
4-24 property foreclosed by it, by public or private sale, with or
4-25 without public bidding;
4-26 (8) to lease or rent any improvement, land, or
4-27 facility from any person;
4-28 (9) to make a secured or unsecured loan to provide
4-29 financial assistance as provided by this chapter, including the
4-30 refunding of an outstanding obligation, mortgage, or advance used
4-31 for those purposes, and to charge and collect interest on those
4-32 loans for loan payments and on terms and conditions the board
4-33 considers advisable that are not in conflict with this chapter;
4-34 (10) to purchase or acquire, sell, discount, assign,
4-35 negotiate, or otherwise dispose of notes or other evidence of
4-36 indebtedness of eligible applicants as the board determines or
4-37 portions or portfolios of or participations in those evidences of
4-38 indebtedness; [and]
4-39 (11) to sell and guarantee securities, whether taxable
4-40 or tax exempt under federal law, in primary and secondary markets;
4-41 and
4-42 (12) to provide to a lender a loan guarantee for the
4-43 purchase of real property by an eligible applicant under Section
4-44 59.024.
4-45 SECTION 13. Section 59.025, Agriculture Code, is amended to
4-46 read as follows:
4-47 Sec. 59.025. MAXIMUM AMOUNT OF LOAN OR GUARANTEE. (a) A
4-48 loan under this chapter may not exceed the lesser of:
4-49 (1) $250,000; or
4-50 (2) an amount equal to 95 percent of the lesser of the
4-51 purchase price of the land or the land's appraised value under
4-52 Section 59.028.
4-53 (b) The board may [shall] provide a guarantee of not more
4-54 than 90 percent of a loan approved under this section [by rule for
4-55 the period during which and the manner in which the down payment
4-56 provided for under Subsection (a) of this section shall be paid to
4-57 the board].
4-58 [(c) If the sale is not consummated, the board shall refund
4-59 the down payment to the borrower.]
4-60 SECTION 14. This Act takes effect immediately if it receives
4-61 a vote of two-thirds of all the members elected to each house, as
4-62 provided by Section 39, Article III, Texas Constitution. If this
4-63 Act does not receive the vote necessary for immediate effect, this
4-64 Act takes effect September 1, 2001.
4-65 * * * * *