Amend CSHB 3442 by adding the following appropriately
numbered SECTION and renumbering SECTIONS of the bill
appropriately:
SECTION ____. WATER POLLUTION AND CONSERVATION PROGRAMS
ADMINISTERED BY THE TEXAS WATER DEVELOPMENT BOARD. (a) Section
15.602, Water Code, is amended by adding Subdivision (5-a) to read
as follows:
(5-a) "Eligible lending institution" means a
financial institution that makes commercial loans, is either a
depository of state funds or an institution of the Farm Credit
System headquartered in this state, agrees to participate in a
linked deposit program established under Section 15.611 and to
provide collateral equal to the amount of linked deposits placed
with it, and meets any other requirements established by board
rule.
(b) Section 15.603, Water Code, is amended by adding
Subsection (i) to read as follows:
(i) In addition to authorized purposes under Subsection
(a), the revolving fund is held by the board to provide linked
deposits to eligible financial institutions for loans to persons
for nonpoint source pollution control projects.
(c) Subsection (a), Section 15.604, Water Code, is amended
to read as follows:
(a) The board may use the revolving fund for financial
assistance only as provided by the federal act:
(1) to make loans, on the conditions that:
(A) those loans are made at or below market
interest rates, including interest-free loans, at terms not to
exceed 20 years;
(B) principal and interest payments will begin
not later than one year after completion of any treatment works and
all loans will be fully amortized not later than 20 years after
completion of the treatment works;
(C) the recipient of a loan will establish a
dedicated source of revenue for repayment of loans; and
(D) the revolving fund will be credited with all
payments of principal of and interest on all loans;
(2) to buy or refinance the debt obligation of
political subdivisions at or below market rates if the debt
obligations were incurred after March 7, 1985;
(3) to guarantee or purchase insurance for political
subdivisions if the guarantee or insurance would improve access to
market credit or reduce interest rates;
(4) as a source of revenue or security for the payment
of principal and interest on bonds issued by the state if the
proceeds of the sale of those bonds will be deposited in the
revolving fund;
(5) to provide loan guarantees to similar revolving
funds established by municipalities or intermunicipal agencies;
(6) to earn interest on revolving fund accounts;
(7) for the reasonable costs of administering the
revolving fund and conducting activities provided for by Title VI
of the federal act, except that those amounts may not exceed the
amount authorized under Title VI of the federal act;
(8) to provide financial assistance to persons for a
nonpoint source pollution control project under Section 319 of the
federal act or for an estuary management project under Section 320
of the federal act; [and]
(9) for other purposes as provided by the federal act;
and
(10) to provide linked deposits to eligible lending
institutions for loans to persons for nonpoint source pollution
control projects.
(d) Subchapter J, Chapter 15, Water Code, is amended by
adding Sections 15.610 through 15.618 to read as follows:
Sec. 15.610. LINKED DEPOSIT. A linked deposit is a deposit
governed by a written deposit agreement between the board and an
eligible lending institution that provides that:
(1) the eligible lending institution pay interest on
the deposit at a rate determined by the board;
(2) the state not withdraw any part of the deposit
before the expiration of a period set by a written advance notice of
the intention to withdraw; and
(3) the eligible lending institution agree to lend the
value of the deposit to a person at a maximum rate that is the rate
paid by the eligible lending institution to the board plus a maximum
of four percent.
Sec. 15.611. LINKED DEPOSIT PROGRAM. (a) The board by
rule may establish a nonpoint source pollution control linked
deposit program in accordance with this subchapter.
(b) An eligible lending institution may participate in the
program established under this section as provided by this
subchapter.
Sec. 15.612. APPLICATION BY ELIGIBLE LENDING INSTITUTIONS
TO PARTICIPATE IN LINKED DEPOSIT PROGRAM. To participate in the
nonpoint source pollution control linked deposit program, an
eligible lending institution must:
(1) solicit loan applications, which must contain a
description of a proposed nonpoint source pollution control
project;
(2) review applications to determine if applicants are
eligible and creditworthy; and
(3) submit the applications of eligible and
creditworthy applicants to the executive administrator with a
certification:
(A) of the interest rate applicable to each
applicant by the eligible lending institution; and
(B) of the proposed project by the appropriate
person as required by Section 15.613.
Sec. 15.613. CERTIFICATION OF PROJECT. (a) An eligible
lending institution must obtain from a director of a soil and water
conservation district certification of an agricultural or
silvicultural nonpoint source pollution control project proposed
for the district. The certification must state that:
(1) the applicant of the proposed project has a water
quality management plan certified by the State Soil and Water
Conservation Board; and
(2) the project furthers or implements the plan.
(b) An eligible lending institution must obtain from the
executive director certification of a proposed nonpoint source
pollution control project that is not an agricultural or
silvicultural nonpoint source pollution control project. The
certification must state that the applicant's proposed project
implements the state's nonpoint source pollution management plan.
Sec. 15.614. APPROVAL OR REJECTION OF APPLICATION. The
board may approve or reject an application of an eligible lending
institution to participate in the program. The board may delegate
its authority to approve or reject an application to the executive
administrator.
Sec. 15.615. DEPOSIT AGREEMENT. If the board approves an
application of an eligible lending institution, the board and the
eligible lending institution shall enter into a written deposit
agreement. The agreement shall contain the conditions on which the
linked deposit is made. On execution of the agreement, the board
shall place a linked deposit from the revolving fund with the
eligible lending institution in accordance with the agreement. A
delay in payment or a default on a loan by an applicant does not
affect the validity of the deposit agreement.
Sec. 15.616. COMPLIANCE. (a) On accepting a linked
deposit, an eligible lending institution must lend money to an
approved applicant in accordance with the deposit agreement and
this subchapter. The eligible lending institution shall forward a
compliance report to the board in accordance with board rules. The
board shall adopt rules regarding the compliance report.
(b) The board shall monitor compliance with this subchapter
and inform the comptroller of noncompliance on the part of an
eligible lending institution.
Sec. 15.617. STATE LIABILITY PROHIBITED. The state is not
liable to an eligible lending institution for payment of the
principal, interest, or any late charges on a loan made to an
approved applicant. A linked deposit is not an extension of the
state's credit within the meaning of any state constitutional
prohibition.
Sec. 15.618. LIMITATIONS ON PROGRAM. (a) The maximum
amount of a loan under the linked deposit program is $250,000.
(b) The board may withdraw linked deposits from an eligible
lending institution if the institution ceases to be either a state
depository or a Farm Credit System institution headquartered in
this state.
(e) Subdivisions (3) through (6), Section 17.871, Water
Code, are amended to read as follows:
(3) "Eligible lending institution" means a financial
institution that makes commercial loans, is either a depository of
state funds or an institution of the Farm Credit System
headquartered in this state, agrees to participate in a linked
deposit program established under Section 17.905 and to provide
collateral equal to the amount of linked deposits placed with it,
and meets any other requirements established by board rule
["Conservation loan" means a loan from the board to a borrower
district or from a lender district to an individual borrower].
(4) "Fund" means the agricultural water conservation
fund authorized by Section 50-d, Article III, of the Texas
Constitution.
(5) "Person" means an individual, corporation,
partnership, association, or other legal entity that is not a
political subdivision ["Individual borrower" means a person who
receives or is eligible to receive a conservation loan from a lender
district].
(6) "Political subdivision" includes a district or
authority created under Section 52, Article III, or Section 59,
Article XVI, of the Texas Constitution, a municipality, a county,
an institution of higher education as defined by Section 61.003,
Education Code, any interstate compact commission to which the
state is a party, and any nonprofit water supply corporation
created and operating under Chapter 67 ["Lender district" means a
political subdivision, including a soil and water conservation
district under Chapter 201, Agriculture Code, a groundwater
conservation district created under Article XVI, Section 59, of the
Texas Constitution, or a district or authority created under
Article III, Section 52(b)(1), or Article XVI, Section 59, of the
Texas Constitution authorized to supply water for irrigation
purposes, that is eligible to receive or that receives a loan from
the board for the purpose of making conservation loans to
individual borrowers].
(f) Subsections (c) and (d), Section 17.879, Water Code, are
amended to read as follows:
(c) By rule or in the resolution or order authorizing
issuance of bonds or other resolution or order of the board, the
board may establish an interest and sinking fund and may establish
accounts in the funds, including an interest and sinking account,
and may transfer money among the funds and accounts [fund].
(d) The board may invest and reinvest money in the fund, the
interest and sinking fund, and any account therein in any
obligations or securities as provided by bond resolutions, [and]
orders of the board, and Section 404.024, Government Code.
(g) Subsection (a), Section 17.880, Water Code, is amended
to read as follows:
(a) Loans, bonds of political subdivisions [borrower
districts or lender districts], and other obligations owned by the
state and deposited in the fund or in the interest and sinking fund
are considered to be securities under this subchapter.
(h) Subsection (b), Section 17.881, Water Code, is amended
to read as follows:
(b) The board shall sell the loans or bonds of political
subdivisions [borrower districts or lender districts] at the price
and under the terms that it determines to be reasonable.
(i) Section 17.883, Water Code, is amended to read as
follows:
Sec. 17.883. BOND REVIEW BOARD. Bonds may not be issued
under this subchapter unless the issuance of the bonds has been
reviewed and approved by the bond review board. Prior to issuance
of bonds, the board shall estimate demand for [agricultural water]
conservation programs or projects [loans] based on a survey of
[districts] eligible participants [to participate] in the program.
A summary of this information shall be furnished to the bond review
board.
(j) Section 17.894, Water Code, is amended to read as
follows:
Sec. 17.894. BOND ENHANCEMENT AGREEMENTS; PAYMENT OF
EXPENSES. (a) The board at any time and from time to time may
enter into one or more bond enhancement agreements that the board
determines to be necessary or appropriate to place the obligation
of the board, as represented by the bonds, in whole or in part, on
the interest rate, currency, cash flow, or other basis desired by
the board. A bond enhancement agreement is an agreement for
professional services and shall contain the terms and conditions
and be for the period that the board approves.
(b) The fees and expenses of the board in connection with
the issuance of the bonds and the providing of financial assistance
to political subdivisions may be paid from money in the fund,
provided that any payments due from the board under a bond
enhancement agreement, other than fees and expenses, that relate to
the payment of debt service on the bonds constitute payments of
principal of and interest on the bonds.
(c) Bond enhancement agreements may include, on terms and
conditions approved by the board, interest rate swap agreements;
currency swap agreements; forward payment conversion agreements;
agreements providing for payments based on levels of or changes in
interest rates or currency exchange rates; agreements to exchange
cash flows or a series of payments; agreements, including options,
puts, or calls, to hedge payment, currency, rate, spread, or other
exposure; or other agreements that further enhance the
marketability, security, or creditworthiness of water financial
assistance bonds [USE OF FUND. (a) The board may use money in the
fund to make conservation loans directly to borrower districts, to
make loans to lender districts, and to pay the cost of bond
issuance.
[(b) The board may use money in the fund:
[(1) to make loans to political subdivisions other
than lender districts for agricultural water conservation
projects;
[(2) to make grants to political subdivisions for
agricultural water conservation projects as provided by
legislative appropriation; or
[(3) to make grants to a state agency for the funding
of any agricultural water conservation program of that agency,
including a program in which the state agency provides funding to a
political subdivision or a person for agricultural water
conservation, as provided by legislative appropriation].
(k) Section 17.895, Water Code, is amended to read as
follows:
Sec. 17.895. SOURCES OF ASSETS. The fund is composed of:
(1) money and assets, including bond proceeds,
attributable to the bonds;
(2) investment income earned on money on deposit in
the fund and depository interest earned on money on deposit in the
state treasury;
(3) money appropriated by the legislature;
(4) repayments of principal and interest on loans made
under this subchapter;
(5) administrative fees charged by the board under the
bond program; and
(6) any other funds, regardless of their source, that
the board directs be deposited to the credit of the fund
[CONSERVATION LOANS. (a) This section applies only to a
conservation loan from a lender district that is:
[(1) a soil and water conservation district under
Chapter 201, Agriculture Code;
[(2) a groundwater conservation district created
under Section 59, Article XVI, Texas Constitution; or
[(3) a district or authority created under Section
52(b)(1), Article III, or Section 59, Article XVI, Texas
Constitution.
[(b) The board or a lender district may make conservation
loans for capital equipment or materials, labor, preparation costs,
and installation costs:
[(1) to improve water use efficiency of water delivery
and application on existing irrigation systems;
[(2) for preparing irrigated land to be converted to
dryland conditions; and
[(3) for preparing dryland for more efficient use of
natural precipitation.
[(c) Conservation loans for the purposes listed in
Subsection (b) may be made by lender districts to individual
borrowers for use on private property or by the board to borrower
districts.
[(d) The board may make conservation loans to borrower
districts for the cost of purchasing and installing devices, on
public or private property, designed to indicate the amount of
water withdrawn for irrigation purposes.
[(e) For purposes of this section, the board or lender
districts may seek the advice of the Department of Agriculture
regarding the feasibility of a project for which a conservation
loan is sought].
(l) Section 17.896, Water Code, is amended to read as
follows:
Sec. 17.896. REPAYMENT PROCEEDS. The board shall designate
a transfer of repayment of principal and interest on a loan made
under this subchapter to the fund, the interest and sinking fund, or
any account in the funds [INTEREST RATES AND FEES. (a) The board
shall establish the rate of interest it charges for loans to lender
districts or for conservation loans to borrower districts.
[(b) A lender district may charge individual borrowers an
interest rate not to exceed the interest rate the lender district is
charged by the board, plus one percent for administrative expenses.
[(c) A lender district may charge individual borrowers a
one-time application fee in an amount determined by the board to
cover costs of processing loan applications].
(m) Section 17.897, Water Code, is amended to read as
follows:
Sec. 17.897. CONSERVATION PROGRAM. (a) A conservation
program is:
(1) an agricultural water conservation technical
assistance program, including a program for an on-farm soil and
water conservation plan developed jointly by a landowner, an
operator, and a local soil and water conservation district as
provided by Subchapter H, Chapter 201, Agriculture Code;
(2) a research, demonstration, technology transfer,
or educational program relating to agricultural water use and
conservation;
(3) a precipitation enhancement program in an area of
the state where the program, in the board's judgment, would be most
effective; and
(4) any other agricultural water conservation program
defined by board rule.
(b) The costs of a conservation program eligible for
financial assistance under Section 17.899 are the costs of the
capital equipment, materials, labor, preparation, installation, or
administration directly associated with implementing and
completing the program [APPLICATION. A lender district that
desires to obtain loans or a borrower district that desires to
obtain conservation loans under this subchapter shall file with the
executive administrator an application in the manner and in the
form provided by board rules].
(n) Section 17.898, Water Code, is amended to read as
follows:
Sec. 17.898. CONSERVATION PROJECT. (a) A conservation
project is a project that:
(1) improves water use efficiency of water delivery
and application on existing irrigation systems;
(2) prepares irrigated land for conversion to dryland
conditions;
(3) prepares dryland for more efficient use of natural
precipitation;
(4) purchases and installs on public or private
property devices designed to indicate the amount of water withdrawn
for irrigation purposes;
(5) prepares and maintains land to be used for brush
control activities in areas of the state where those activities in
the board's judgment would be most effective, including activities
conducted under Chapter 203, Agriculture Code; or
(6) implements any other agricultural water
conservation project defined by board rule.
(b) The costs of a conservation project eligible for
financial assistance under Section 17.899 are the costs of the
capital equipment, materials, labor, preparation, installation, or
administration directly associated with implementing and
completing the project [CONSIDERATIONS IN PASSING ON AN
APPLICATION. (a) In passing on an application from a lender
district, the board shall consider the lender district's ability to
manage a loan program, ability to repay any loan defaults, and
overall conservation program.
[(b) In passing on an application from a borrower district,
the board shall consider the ability of the borrower district to
repay the conservation loan and whether the conservation loan will
further water conservation].
(o) Section 17.899, Water Code, is amended to read as
follows:
Sec. 17.899. ELIGIBLE FUND USES. (a) Money in the fund,
excluding money in the interest and sinking fund, may be used by the
board to:
(1) provide a grant to a state agency to fund a
conservation program or conservation project, including a
conservation program that provides funding to a political
subdivision or person for a conservation project;
(2) provide a grant or loan to a political subdivision
for a conservation program or conservation project;
(3) provide a linked deposit to an eligible financial
institution for a loan to a person for a conservation project;
(4) pay for a board conservation program;
(5) make a transfer to the interest and sinking fund;
(6) pay the costs of a bond issuance; and
(7) pay for a board expense in administering the
agricultural water conservation program under this subchapter.
(b) Money in the interest and sinking fund may be used for
the payment of bonds or, to the extent there are funds in excess of
bond payment requirements, for transfers to the fund, or any other
account in the funds [APPROVAL OF APPLICATIONS. (a) The board may
approve an application if, after considering the factors in Section
17.898 and other relevant factors, the board finds that:
[(1) the public interest would be served in granting
the application;
[(2) a lender district has the ability to make
conservation loans, manage a conservation loan program, and repay
the loan to the board;
[(3) a borrower district has the ability to repay the
conservation loan; and
[(4) granting the application will further water
conservation in the state.
[(b) The board by rule may delegate to the executive
administrator the authority to approve an application based on the
considerations in Section 17.898 and on the findings in Subsection
(a)].
(p) Section 17.900, Water Code, is amended to read as
follows:
Sec. 17.900. GRANT TO STATE AGENCY. (a) A state agency
seeking a grant for a conservation program or conservation project
must file an application with the board.
(b) In reviewing an application for a grant, the board shall
consider:
(1) the commitment of the state agency to water
conservation; and
(2) the benefits that will be gained by making the
grant.
(c) To approve the grant, the board must find that:
(1) the grant funds will supplement rather than
replace money of the state agency;
(2) the public interest is served by providing the
grant; and
(3) the grant will further water conservation in the
state.
(d) If a state agency is applying for funds that have been
provided by legislative appropriation for that state agency, the
board shall review the application according to the terms of the
legislative appropriation. To approve the grant, the board must
make the determination required by the legislative language.
(e) The board may make money available to a state agency in
any manner that it considers feasible, including a grant agreement
with the state agency [METHODS OF MAKING LOANS AND ENFORCING
OBLIGATIONS. (a) The board may make financial assistance
available to lender or borrower districts in any manner that it
considers economically feasible, including purchase of bonds or
securities of the lender or borrower district, or by entering into a
contract with the lender or borrower district. The board shall not
purchase bonds or securities that have not been approved by the
attorney general and registered by the comptroller.
[(b) In the event of default in payment of the principal of
or interest on bonds or securities purchased by the board or any
other default as defined in the proceedings or indentures
authorizing the issuance of the bonds or the default of any of the
terms of a contract, the attorney general shall institute legal
proceedings by mandamus or other legal remedies to compel the
lender or borrower district or its officers, agents, and employees
to cure the default by performing those duties which they are
legally obligated to perform. These proceedings shall be brought
and venue shall be in a district court in Travis County.
[(c) This section is cumulative of any other rights or
remedies to which the board may be entitled].
(q) Section 17.901, Water Code, is amended to read as
follows:
Sec. 17.901. GRANT OR LOAN TO POLITICAL SUBDIVISION. The
board may make a grant or loan to a political subdivision for a
conservation program or conservation project. A political
subdivision seeking a grant or loan must file an application with
the board [DEFAULT AND FORECLOSURE BY LENDER DISTRICTS. (a) In
the event of a default in payment of a conservation loan made by a
lender district or the failure of an individual borrower to perform
any of the terms or conditions of the conservation loan agreement,
the lender district shall pursue all remedies available under law,
including without limitation foreclosure under the conservation
loan agreement and liquidation of any collateral provided under the
conservation loan agreement. The lender district shall sell the
collateral on terms and subject to procedures that it follows in
liquidating other collateral.
[(b) Foreclosure under a conservation loan agreement shall
be accomplished in the manner provided by law for foreclosure of
similar loan agreements made by private lending institutions and by
the conservation loan agreement.
[(c) The state guarantees to each lender district that in
the event an individual borrower defaults on a conservation loan
made by the lender district with money from this program, the state
will assume 50 percent of the amount that remains due and payable
under the default after all collateral for the conservation loan is
liquidated.
[(d) The state is entitled to recover its pro rata share of
any money recovered on a defaulted conservation loan on which the
state has assumed liability under Subsection (c)].
(r) Section 17.902, Water Code, is amended to read as
follows:
Sec. 17.902. REVIEW OF APPLICATION FOR AND APPROVAL OF
GRANT. (a) In reviewing an application by a political subdivision
for a grant, the board shall consider:
(1) the degree to which the political subdivision has
used other available resources to finance the use for which the
application is being made;
(2) the willingness and ability of the political
subdivision to raise revenue;
(3) the commitment of the political subdivision to
water conservation; and
(4) the benefits that will be gained by making the
grant.
(b) To approve a grant to a political subdivision, the board
must find that:
(1) the grant funds will supplement rather than
replace money of the political subdivision;
(2) the public interest is served by providing the
grant; and
(3) the grant will further water conservation in the
state [AUTHORITY OF DISTRICTS. A lender or borrower district may
borrow and lend money for the purposes of this subchapter and may
adopt necessary rules to carry out this subchapter].
(s) Subchapter J, Chapter 17, Water Code, is amended by
adding Sections 17.9021 and 17.9022 to read as follows:
Sec. 17.9021. APPLICATION FOR AND APPROVAL OF LOAN.
(a) In reviewing an application by a political subdivision for a
loan, the board shall consider the ability of the political
subdivision to repay the loan and whether the loan will further
water conservation in this state.
(b) To approve a loan to a political subdivision, the board
must determine that:
(1) the public interest is served by providing the
loan;
(2) the political subdivision has the ability to repay
the loan; and
(3) the loan will further water conservation in the
state.
(c) The board by rule shall establish the rate of interest
it charges for a loan to a political subdivision.
Sec. 17.9022. FINANCING OF GRANT OR LOAN FOR POLITICAL
SUBDIVISION; DEFAULT; VENUE. (a) The board may make a loan or
grant available to a political subdivision in any manner the board
considers economically feasible, including purchase of bonds or
securities of the political subdivision or execution of a loan or
grant agreement with the political subdivision. The board may not
purchase bonds or securities that have not been approved by the
attorney general and registered by the comptroller.
(b) In the event of a default in payment of the principal of
or interest on bonds or securities purchased by the board, or any
other default as defined in the proceedings or indentures
authorizing the issuance of bonds, or a default of any of the terms
of a loan agreement, the attorney general shall seek a writ of
mandamus or other legal remedy to compel the political subdivision
or its officers, agents, and employees to cure the default by
performing the duties they are legally obligated to perform. The
proceedings shall be brought and venue is in a district court in
Travis County. This subsection is cumulative of any other rights or
remedies to which the board may be entitled.
(t) Section 17.903, Water Code, is amended to read as
follows:
Sec. 17.903. CONTRACT AUTHORITY. (a) A political
subdivision may borrow money for the purposes of this subchapter
and may adopt necessary rules to carry out this subchapter [RULES
AND CONTRACTS. (a) The board shall adopt rules necessary to carry
out this subchapter. The board by rule shall identify methods to be
used by lender districts to ensure the financial integrity of a loan
to an individual borrower, including an irrevocable letter of
credit or a lien on property in excess of value of improvements].
(b) [The board by rule may establish:
[(1) procedures for applying for a loan or grant under
Section 17.894(b);
[(2) procedures for considering and approving
applications and for making loans or grants under Section
17.894(b); and
[(3) the rate of interest the board charges, if any,
for loans under Section 17.894(b).
[(c)] The board shall have the power to enter into any
contracts to carry out the provisions of this subchapter.
(u) Subchapter J, Chapter 17, Water Code, is amended by
adding Sections 17.904 through 17.912 to read as follows:
Sec. 17.904. LINKED DEPOSIT. A linked deposit is a deposit
governed by a written deposit agreement between the board and an
eligible lending institution that provides that:
(1) the eligible lending institution pay interest on
the deposit at a rate determined by the board;
(2) the state not withdraw any part of the deposit
before the expiration of a period set by a written advance notice of
the intention to withdraw; and
(3) the eligible lending institution agree to lend the
value of the deposit to a person at a maximum rate that is the rate
paid by the eligible lending institution to the board plus a maximum
of four percent.
Sec. 17.905. LINKED DEPOSIT PROGRAM. (a) The board by
rule may establish an agricultural water conservation linked
deposit program in accordance with this subchapter.
(b) An eligible lending institution may participate in the
program established under this section as provided by this
subchapter.
Sec. 17.906. APPLICATION BY ELIGIBLE LENDING INSTITUTIONS
TO PARTICIPATE IN LINKED DEPOSIT PROGRAM. To participate in the
agricultural water conservation linked deposit program, an
eligible lending institution must:
(1) solicit loan applications, which must contain a
description of an agricultural water conservation project;
(2) review applications to determine if applicants are
eligible and creditworthy; and
(3) submit the applications of eligible and
creditworthy applicants to the executive administrator with a
certification:
(A) of the interest rate applicable to each
applicant by the eligible lending institution; and
(B) of the soil and water conservation district
in which an applicant is located by a director of the district that
states that:
(i) the applicant of the proposed project
has a soil and water conservation plan approved by the district; and
(ii) the project furthers or implements the
plan.
Sec. 17.907. APPROVAL OR REJECTION OF APPLICATION. The
board may approve or reject an application of an eligible lending
institution to participate in the program. The board may delegate
its authority to approve or reject applications to the executive
administrator.
Sec. 17.908. DEPOSIT AGREEMENT. If the board approves an
application of an eligible lending institution, the board and the
eligible lending institution shall enter into a written deposit
agreement. The agreement shall contain the conditions on which the
linked deposit is made. On execution of the agreement, the board
shall place a linked deposit from the fund with the eligible lending
institution in accordance with the agreement. A delay in payment or
a default on a loan by an applicant does not affect the validity of
the deposit agreement.
Sec. 17.909. COMPLIANCE. (a) On accepting a linked
deposit, an eligible lending institution must lend money to an
approved applicant in accordance with the deposit agreement and
this subchapter. The eligible lending institution shall forward a
compliance report to the board in accordance with board rules. The
board shall adopt rules regarding the compliance report.
(b) The board shall monitor compliance with this subchapter
and inform the comptroller of noncompliance on the part of an
eligible lending institution.
Sec. 17.910. STATE LIABILITY PROHIBITED. The state is not
liable to an eligible lending institution for payment of the
principal, interest, or any late charges on a loan made to an
approved applicant. A linked deposit is not an extension of the
state's credit within the meaning of any state constitutional
prohibition.
Sec. 17.911. LIMITATIONS ON PROGRAM. (a) The maximum
amount of a loan under the linked deposit program is $250,000.
(b) The board may withdraw linked deposits from an eligible
lending institution if the institution ceases to be either a state
depository or a Farm Credit System institution headquartered in
this state.
Sec. 17.912. RULES. The board shall adopt rules necessary
to carry out this subchapter. Applications shall be in the form and
manner as provided by board rules.
(v) The agricultural trust fund and the agricultural soil
and water conservation fund are abolished and all assets of those
funds are transferred to the agricultural water conservation fund.
(w) The following provisions of the Water Code are repealed:
(1) Subchapters G, H, and I, Chapter 15; and
(2) Subdivision (2), Section 17.871, Subdivision (7),
Section 17.871, and Section 17.8955.
(x) The Texas Water Development Board shall continue to
administer a loan made before September 1, 2003, under the pilot
program for low-interest loans for agricultural water conservation
equipment until the loan is fully repaid. Subchapter I, Chapter 15,
Water Code, is continued in effect for the limited purpose of
allowing the board to administer those loans and to pursue remedies
if a loan recipient defaults on a loan or otherwise violates the
terms of the loan or of any loan guarantee instrument.
(y) The Texas Water Development Board shall continue to
administer a conservation loan made before September 1, 2003, under
Subchapter J, Chapter 17, Water Code. Subchapter J, Chapter 17,
Water Code, as it existed immediately before September 1, 2003, is
continued in effect for the limited purpose of allowing the board to
administer those loans and to pursue remedies if a loan recipient
defaults on a loan or otherwise violates the terms of the loan or of
any loan guarantee.
(z) This section takes effect September 1, 2003.