CHAPTER 58. AGRICULTURAL FINANCE AUTHORITY
AGRICULTURE CODE
TITLE 4. AGRICULTURAL ORGANIZATIONS
CHAPTER 58. AGRICULTURAL FINANCE AUTHORITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 58.001. SHORT TITLE. This chapter may be cited as the
Texas Agricultural Finance Act.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987.
Sec. 58.002. DEFINITIONS. In this chapter:
(1) "Agricultural business" means:
(A) a business that is or proposes to be engaged in producing,
processing, marketing, or exporting an agricultural product;
(B) an eligible applicant as defined in Subchapter E;
(C) the entity designated to carry out boll weevil eradication
in accordance with Section 74.1011;
(D) any agriculture-related business in rural areas of Texas
including a business that provides recreational activities,
including hiking, fishing, hunting, or any other activity
associated with the enjoyment of nature or the outdoors on
agricultural land;
(E) a state agency or an institution of higher education that is
engaged in producing an agricultural product;
(F) a business that holds a permit under Subchapter L, Chapter
43, Parks and Wildlife Code; or
(G) any other business in a rural area of this state.
(2) "Agricultural product" means an agricultural, horticultural,
viticultural, or vegetable product, bees, honey, fish or other
seafood, planting seed, livestock, a livestock product, a
forestry product, poultry, or a poultry product, either in its
natural or processed state, that has been produced, processed, or
otherwise had value added to it in this state.
(3) "Authority" means the Texas Agricultural Finance Authority.
(4) "Board" means the board of directors of the authority.
(5) "Bond" includes any type of obligation issued under this
Act, including without limitation, any bond, note, draft, bill,
warrant, debenture, interim certificate, revenue of bond
anticipation note, grant, or any other evidence of indebtedness.
(6) "Commissioner" means the commissioner of agriculture.
(7) "Eligible agricultural business" means an agricultural
business having its principal place of business in this state.
(8) "Lender" means a lending institution including a bank, trust
company, banking association, savings and loan association,
mortgage company, investment banker, credit union, life insurance
company, underwriter, or any affiliate of any of those entities,
and also includes any other financial institution or governmental
agency that customarily provides financing of agricultural loans
or mortgages, or any affiliate of such an institution or agency.
(9) "Rural area" means an area which is predominately rural in
character, being one which the board defines and declares to be a
rural area.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1999, 76th Leg., ch. 1459,
Sec. 8, eff. June 19, 1999; Acts 2001, 77th Leg., ch. 26, Sec. 4,
eff. May 2, 2001.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
5, Sec. 1, eff. September 1, 2009.
Sec. 58.003. VENUE. A suit filed by or on behalf of the
authority under this chapter may be brought in Travis County.
Added by Acts 2001, 77th Leg., ch. 26, Sec. 5, eff. May 2, 2001.
SUBCHAPTER B. ADMINISTRATION
Sec. 58.011. CREATION OF AUTHORITY; PUBLIC PURPOSE. (a) The
Texas Agricultural Finance Authority is created within the
Department of Agriculture as a public authority.
(b) The authority is created to provide financial assistance for
the expansion, development, and diversification of production,
processing, marketing, and export of Texas agricultural products.
The exercise by the authority of the powers and duties conferred
by this chapter is an essential public purpose of the state in
promoting the general welfare of the state and all of its
citizens.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987.
Sec. 58.012. BOARD OF DIRECTORS. (a) The authority is governed
by a board of directors composed of the commissioner of
agriculture, the director of the Institute for International
Agribusiness Studies at Prairie View A&M University, and nine
members appointed by the commissioner. Members of the board must
be appointed in the numbers specified and from the following
categories:
(1) one person who is an elected or appointed official of a
municipality or county;
(2) four persons who are knowledgeable about agricultural
lending practices;
(3) one person who is a representative of agricultural
businesses;
(4) one person who is a representative of agriculture related
entities, including rural chambers of commerce, foundations,
trade associations, institutions of higher education, or other
entities involved in agricultural matters; and
(5) two persons who represent young farmers and the interests of
young farmers.
(b) The appointed members of the board serve staggered terms of
two years, with the terms of four members expiring on January 1
of each even-numbered year and the terms of five members expiring
on January 1 of each odd-numbered year.
(c) Any vacancy occurring in an appointed position on the board
shall be filled by the commissioner for the unexpired term.
(d) Repealed by Acts 2003, 78th Leg., ch. 285, Sec. 31(2).
(e) A board member is not entitled to compensation for serving
as a director but is entitled to reimbursement for actual and
necessary expenses incurred in performing the official duties of
office.
(f) Appointments to the board shall be made without regard to
the race, color, disability, sex, religion, age, or national
origin of the appointees.
(g) Notwithstanding Subsection (f), age may be considered by the
commissioner in making appointments under Subsection (a)(5).
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1991, 72nd Leg., ch. 456,
Sec. 1, eff. Sept. 1, 1991; Acts 1993, 73rd Leg., ch. 538, Sec.
1, eff. Jan. 1, 1994; Acts 1995, 74th Leg., ch. 419, Sec. 1.12,
5.11, eff. Sept. 1, 1995; Acts 2003, 78th Leg., ch. 285, Sec.
31(2), eff. Sept. 1, 2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.05, eff. September 1, 2009.
Sec. 58.013. OFFICERS. (a) The commissioner shall designate a
member of the board as the chairman of the board to serve in that
capacity at the pleasure of the commissioner. The board shall
elect a vice-chairman biennially from its members and shall elect
a secretary, a treasurer, and other officers it considers
necessary.
(b) The chairman of the board shall preside at meetings of the
board and perform other duties prescribed by the board.
(c) The vice-chairman shall perform the duties of the chairman
when the chairman is not present or is incapable of performing
his duties of chairman.
(d) The secretary is the custodian of the minutes, books,
records, and seal of the board and shall perform other duties
prescribed by the board.
(e) The treasurer shall perform the duties prescribed by the
board. The offices of secretary and treasurer may be held by the
same individual.
(f) The board may appoint one or more individuals who are not
board members to perform any duty of the secretary or treasurer.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1995, 74th Leg., ch. 419,
Sec. 1.13, eff. Sept. 1, 1995.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.06, eff. September 1, 2009.
Sec. 58.014. MEETINGS; ADMINISTRATIVE PROCEDURE. (a) The board
shall hold regular and special meetings at times specified by the
chairman.
(b) A majority of the voting membership of the board constitutes
a quorum. The board shall act by adopting resolutions. Except as
otherwise provided by Sections 58.021(c) and 58.0211(a), the
affirmative vote of a majority of the directors present is
necessary to adopt a resolution.
(c) The board shall develop and implement policies that provide
the public with a reasonable opportunity to appear before the
board and to speak on any issue under the jurisdiction of the
board.
(d) The board is subject to Chapter 551, Government Code, and
Chapter 2001, Government Code.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1995, 74th Leg., ch. 419,
Sec. 1.14, 1.15, eff. Sept. 1, 1995; Acts 2001, 77th Leg., ch.
26, Sec. 6, eff. May 2, 2001.
Sec. 58.015. ADMINISTRATION. (a) The commissioner with the
assistance of the board shall administer the Texas Agricultural
Finance Authority. The board shall reimburse the Department of
Agriculture for expenses incurred as required by the business of
the authority with the approval of the board.
(b) The commissioner may, with the approval of the board,
appoint, employ, contract with, and provide for the compensation
of employees, consultants, and agents including engineers,
attorneys, management consultants, financial advisors, indexing
agents, placement agents, and other experts as the business of
the authority may require.
(c) The commissioner may, with the approval of the board, employ
an administrator of the authority. The administrator may attend
all meetings and participate, but not vote, in all proceedings of
the authority.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1.
Amended by Acts 1995, 74th Leg., ch. 419, Sec. 5.12, eff. Sept.
1, 1995.
Sec. 58.016. FISCAL ACCOUNTING OF ADMINISTRATION. (a) All
funds acquired under this chapter may be used for administration
of this chapter, except that funds representing the proceeds of
bonds issued by the authority or pledged to the payment of the
bonds of the authority shall be held and used as provided in the
resolution or indenture authorizing the bonds.
(b) On or before August 1 of each year, the administrator shall
file with the board the proposed annual budgets for the young
farmer loan guarantee program under Subchapter E, the farm and
ranch finance program under Chapter 59, and the programs
administered by the board under this chapter for the succeeding
fiscal year. If there is no administrator, the commissioner shall
assume the duties of the administrator in connection with
preparation of the budget. The budget must set forth the general
categories of expected expenditures out of revenues and income of
the funds administered by the authority and the amount on account
of each. On or before September 1 of each year, the board shall
consider the proposed annual budget and may approve it or amend
it. Copies of the annual budget certified by the chairman of the
board shall be promptly filed with the governor and the
legislature. The annual budget is not effective until it is
filed. If for any reason the authority does not adopt an annual
budget before September 2, no expenditures may be made from the
funds until the board approves the annual budget. The authority
may adopt an amended annual budget for the current fiscal year,
but the amended annual budget may not supersede a prior budget
until it is filed with the governor and the legislature.
(c) The authority shall have an audit of its books and accounts
for each fiscal year by a certified public accountant. The cost
of the audit is an expense of the authority. A copy of the audit
shall be filed with the governor and the legislature on or before
January 1 of each year.
(d) On or before January 1 of each year, the authority shall
prepare a report of its activities for the preceding fiscal year.
The report must set forth a complete operating and financial
statement. The authority shall file copies of the report with the
governor and the legislature as soon as practicable.
(e) The board members, administrator, and staff of the authority
may not be personally liable for bonds issued or contracts
executed by the authority and shall be exculpated and fully
indemnified in the documents relating to any bonds except in the
case of fraudulent or wilful misconduct on the part of the
individual seeking exculpation or indemnification.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1989, 71st Leg., ch. 584,
Sec. 67, eff. Sept. 1, 1989; Acts 1995, 74th Leg., ch. 419, Sec.
5.13, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1459, Sec. 9,
eff. June 19, 1999.
Sec. 58.017. PERFORMANCE MEASURES. The Board, in conjunction
with the Legislative Budget Board and the Office of the Governor,
shall develop a minimum of two performance measures that provide
information on the benefits of the authority's loan programs. The
performance measures shall be included in the report required
under Section 58.016(d) of this code or as a component of the
measures incorporated into the General Appropriations Act.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 5.14, eff. Sept. 1,
1995. Amended by Acts 1997, 75th Leg., ch. 1065, Sec. 1, eff.
Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1122, Sec. 17, eff.
Sept. 1, 1997; Acts 2003, 78th Leg., ch. 785, Sec. 71, eff. Sept.
1, 2003.
Sec. 58.0171. REVIEW OF DEPARTMENT PLANS AND BUDGET REQUEST.
The department shall provide the board with sufficient
opportunity to review and comment on the finance program-related
portions of the department strategic plan and the department
biennial appropriation request, and any revision of a finance
program-related portion of the plan or request, before submission
to the legislature.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 5.15, eff. Sept. 1,
1995.
Sec. 58.0172. BOARD CONFLICT OF INTEREST. (a) An officer,
employee, or paid consultant of a Texas trade association in the
field of agriculture may not be a member of the board.
(b) A person who is the spouse of an officer, manager, or paid
consultant of a Texas trade association in the field of
agriculture may not be a member of the board.
(c) For the purposes of this section, a Texas trade association
is a nonprofit, cooperative, and voluntarily joined association
of business or professional competitors in this state designed to
assist its members and its industry or profession in dealing with
mutual business or professional problems and in promoting their
common interest.
(d) A person may not serve as a member of the board or act as
the general counsel to the board if the person is required to
register as a lobbyist under Chapter 305, Government Code,
because of the person's activities for compensation on behalf of
a profession related to the operation of the board.
(e) A lending institution is not ineligible to participate in
the programs administered by the board solely because a member of
the board is also an officer, director, or employee of the
lending institution, provided that a board member shall recuse
himself or herself from any action taken by the board on an
application involving a lending institution by which the board
member is employed or for which the board member serves as an
officer or director.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 1.16, eff. Sept. 1,
1995. Amended by Acts 1999, 76th Leg., ch. 1459, Sec. 10, eff.
June 19, 1999.
Sec. 58.0173. REMOVAL OF BOARD MEMBER. (a) It is a ground for
removal from the board if a member:
(1) does not have at the time of appointment the qualifications
required by Section 58.012;
(2) does not maintain during service on the board the
qualifications required by Section 58.012;
(3) violates a prohibition established by Section 58.0172;
(4) cannot because of illness or disability discharge the
member's duties for a substantial part of the term for which the
member is appointed; or
(5) is absent from more than half of the regularly scheduled
board meetings that the member is eligible to attend during a
calendar year unless the absence is excused by majority vote of
the board.
(b) The validity of an action of the board is not affected by
the fact that it is taken when a ground for removal of a board
member exists.
(c) Repealed by Acts 2009, 81st Leg., R.S., Ch. 506, Sec.
1.21(2), eff. September 1, 2009.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 1.16, eff. Sept. 1,
1995.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.21(2), eff. September 1, 2009.
Sec. 58.0174. STANDARDS OF CONDUCT. The commissioner or the
commissioner's designee shall provide to members of the board, as
often as necessary, information regarding their qualification for
office under this chapter and their responsibilities under
applicable laws relating to standards of conduct for state
officers.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 1.16, eff. Sept. 1,
1995.
Sec. 58.0175. SEPARATION OF RESPONSIBILITIES. The board shall
develop and implement policies that clearly separate the
policymaking responsibilities of the board and the management
responsibilities of the commissioner and the staff of the
department.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 1.16, eff. Sept. 1,
1995.
Sec. 58.0176. BOARD MEMBER TRAINING. (a) Before a member of
the board may assume the member's duties, the member must
complete at least one course of the training program established
under this section.
(b) A training program established under this section shall
provide information to the member regarding:
(1) the enabling legislation that created the board;
(2) the programs operated by the board;
(3) the role and functions of the board;
(4) the rules of the board;
(5) the current budget for funds the board administers;
(6) the results of the most recent formal audit of the board;
(7) the requirements of:
(A) Chapter 551, Government Code;
(B) Chapter 552, Government Code; and
(C) Chapter 2001, Government Code;
(8) the requirements of the conflict of interest laws and other
laws relating to public officials; and
(9) any applicable ethics policies adopted by the department or
the Texas Ethics Commission.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 1.16, eff. Sept. 1,
1995.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.07, eff. September 1, 2009.
Sec. 58.0177. APPOINTED MEMBER PREPARATION PROGRAM. The board
shall provide each appointed member of the board financial
training adequate to prepare the member for the responsibilities
of board membership before the member may begin service.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 5.16, eff. Sept. 1,
1995.
SUBCHAPTER C. PURPOSES AND POWERS
Sec. 58.021. PURPOSES OF AUTHORITY. (a) In order to promote
the expansion, development, and diversification of production,
processing, marketing, and export of Texas agricultural products
and to promote the development of rural businesses, the authority
shall design and implement programs to provide financial
assistance to eligible agricultural businesses, including
programs:
(1) to make or acquire loans to eligible agricultural
businesses;
(2) to make or acquire loans to lenders to enable those lenders
to make loans to eligible agricultural businesses;
(3) to insure, coinsure, and reinsure, in whole or in part,
loans to eligible agricultural businesses;
(4) to guarantee, in whole or in part, loans to eligible
agricultural businesses; and
(5) to administer or participate in programs established by
another person to provide financial assistance to eligible
agricultural businesses.
(b) The authority's programs shall be designed and implemented
to provide financial assistance to enable eligible agricultural
businesses to finance or refinance costs incurred in connection
with the development, increase, improvement, or expansion of
production, processing, marketing, or export of Texas
agricultural products and for the development of rural
agriculture-related businesses, including but not limited to the
costs of:
(1) acquisition of and improvements to land or interests in
land;
(2) acquisition, construction, rehabilitation, operation, and
maintenance of buildings, improvements, and structures;
(3) site preparations;
(4) architectural, engineering, legal, and related services;
(5) acquisition, installation, rehabilitation, operation, and
maintenance of machinery, equipment, furnishings, and facilities;
(6) acquisition, processing, or distribution of inventory;
(7) research and development;
(8) financing fees and charges;
(9) interest during acquisition or construction;
(10) necessary reserve fund;
(11) acquisition of licenses, permits, and approvals from any
governmental entity;
(12) pre-export and export expenses; and
(13) insect eradication and suppression programs.
(c) Except as otherwise provided by this subsection, the maximum
aggregate amount of loans made to or guaranteed, insured,
coinsured, or reinsured under this subchapter for a single
eligible agricultural business by the authority from funds
provided by the authority is $2 million. The authority may make,
guarantee, insure, coinsure, or reinsure a loan for a single
eligible agricultural business that results in an aggregate
amount exceeding $2 million, but not exceeding $5 million, if the
action is approved by a two-thirds vote of the board members
present. The authority may make, guarantee, participate in,
insure, coinsure, or reinsure loans to the entity designated to
carry out boll weevil eradication in accordance with Section
74.1011 in an amount approved by the board to enable that entity
to execute Subchapter D, Chapter 74. The authority may issue an
obligation on behalf of, or make, guarantee, participate in,
insure, coinsure, or reinsure loans to, a state agency or an
institution of higher education for the purpose of the
development, improvement, or expansion of an agricultural product
or an agriculture-related business in an amount approved by the
board. The authority may make, guarantee, participate in, insure,
coinsure, or reinsure loans to an eligible agricultural business
from the proceeds of revenue bonds issued in accordance with
Section 58.033 in an amount approved by the board.
(d) Notwithstanding any other provision of this section, the
authority may also design and implement programs to:
(1) further rural economic development; and
(2) reduce the amount of interest paid on loans approved by the
authority.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1993, 73rd Leg., ch. 538,
Sec. 2, eff. Aug. 30, 1993; Acts 1995, 74th Leg., ch. 419, Sec.
5.17, 10.09(11), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch.
1014, Sec. 1, eff. Jan. 1, 1996; Acts 1999, 76th Leg., ch. 1459,
Sec. 11, eff. June 19, 1999; Acts 2001, 77th Leg., ch. 26, Sec.
7, eff. May 2, 2001.
Sec. 58.0211. LOAN LIMITS. (a) The authority may make,
guarantee, insure, coinsure, or reinsure a loan up to the limits
in this section and Section 58.021 for a single eligible business
which already has an active loan if the action is approved by a
two-thirds vote of the members present.
(b) Repealed by Acts 2009, 81st Leg., R.S., Ch. 506, Sec.
1.21(3), eff. September 1, 2009.
(c) The authority may not guarantee more than 90 percent of a
loan to an eligible agricultural business made by a private
lender.
Added by Acts 1995, 74th Leg., ch. 419, Sec. 5.18, eff. Sept. 1,
1995.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.21(3), eff. September 1, 2009.
Sec. 58.022. POWERS OF AUTHORITY. The authority has all powers
necessary to accomplish the purposes and programs of the
authority, including the power:
(1) to adopt and enforce bylaws, rules, and procedures and
perform all functions necessary for the board to carry out this
chapter;
(2) to sue and be sued, complain, and defend, in its own name;
(3) to adopt and use an official seal and alter it when
considered advisable;
(4) to acquire, hold, invest, use, pledge, and dispose of its
revenues, income, receipts, funds, and money from every source
and to select one or more depositories, inside or outside the
state, subject to this chapter, any resolution, bylaws, or in any
indenture pursuant to which the funds are held;
(5) to establish, charge, and collect fees, charges, and
penalties in connection with the programs, services, and
activities provided by the authority in accordance with this
chapter;
(6) to issue its bonds, to provide for and secure the payment of
the bonds, and provide for the rights of the owners of the bonds,
in the manner and to the extent permitted by this chapter, and to
purchase, hold, cancel, or resell or otherwise dispose of its
bonds, subject to any restrictions in any resolution authorizing
the issuance of its bonds;
(7) to procure insurance and pay premiums on insurance of any
type, in amounts, and from insurers as the board considers
necessary and advisable to accomplish any of its purposes;
(8) to make, enter into, and enforce contracts, agreements,
including management agreements, for the management of any of the
authority's property, leases, indentures, mortgages, deeds of
trust, security agreements, pledge agreements, credit agreements,
and other instruments with any person, including any lender and
any federal, state, or local governmental agency, and to take
other actions as may accomplish any of its purposes;
(9) to own, rent, lease, or otherwise acquire, accept, or hold
real, personal, or mixed property, or any interest in property in
performing its duties and exercising its powers under this
chapter, by purchase, exchange, gift, assignment, transfer,
foreclosure, mortgage, sale, lease, or otherwise and to hold,
manage, operate, or improve real, personal, or mixed property,
wherever situated;
(10) to sell, lease, encumber, mortgage, exchange, donate,
convey, or otherwise dispose of any or all of its properties or
any interest in its properties, deed of trust or mortgage lien
interest owned by it or under its control, custody, or in its
possession, and release or relinquish any right, title, claim,
lien, interest, easement, or demand however acquired, including
any equity or right of redemption in property foreclosed by it,
and to do any of the foregoing by public or private sale, with or
without public bidding, notwithstanding any other law; and to
lease or rent any improvements, lands, or facilities from any
person to effect the purposes of this chapter;
(11) to request, accept, and use gifts, loans, donations, aid,
appropriations, guaranties, allocations, subsidies, grants, or
contributions of any item of value for the furtherance of any of
its purposes;
(12) to make secured or unsecured loans for the purpose of
providing temporary or permanent financing or refinancing for
eligible agricultural businesses for the purposes authorized by
this chapter, including the refunding of outstanding obligations,
mortgages, or advances issued for those purposes, and charge and
collect interest on those loans for such loan payments and on
such terms and conditions as the board may consider advisable and
not in conflict with this chapter;
(13) to secure the payment by the state or the authority on
guarantees and to pay claims from money in the authority's funds
pursuant to the loan guarantee and insurance programs implemented
by the authority;
(14) to purchase or acquire, sell, discount, assign, negotiate,
and otherwise dispose of notes, debentures, bonds, or other
evidences of indebtedness of eligible agricultural businesses,
whether unsecured or secured, as the board may determine, or
portions or portfolios of or participations in those evidences of
indebtedness, and sell and guarantee securities, whether taxable
or tax exempt under federal law in primary and secondary markets
in furtherance of any of the authority's purposes; and
(15) to exercise all powers given to a corporation under the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes), to the extent not inconsistent
with this chapter.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987.
Sec. 58.023. PROGRAMS RULES. (a) The board shall adopt rules
to establish criteria for determining which eligible agricultural
businesses may participate in programs that may be established by
the board. The board's rules must state that the policy of the
authority is to provide programs for providing financial
assistance to eligible agricultural businesses that the board
considers to present a reasonable risk and have a sufficient
likelihood of repayment. In establishing criteria for
participation, the board shall give priority to eligible
agricultural businesses that include producers of Texas
agricultural products in the ownership of the businesses. The
board shall adopt collateral or security requirements to ensure
the full repayment of that financial assistance and the solvency
of any program implemented under this chapter. The board shall
approve any and all extensions of that financial assistance under
this chapter, provided that the board may delegate this approval
authority to the administrator or the commissioner.
(b) The board shall also adopt rules to establish criteria for
lenders that may participate in the programs that may be
established by the board.
(c) Eligible agricultural businesses or lenders participating in
the authority's programs shall pay the costs of applying for,
participating in, and administering and servicing the program, in
amounts the board considers reasonable and necessary. The board
shall charge an administrative fee for guaranteeing a loan under
Subchapter E that may not be less than one percent of the amount
of the guaranteed loan. Any costs not paid by the eligible
agricultural businesses or lenders shall be paid from the funds
of the authority, including those funds established from bond
proceeds.
(d) The board by rule shall adopt an agreement to be used
between a lender and an approved applicant under which the
authority makes a payment from the Texas agricultural fund for
the purpose of providing a reduced interest rate on a loan
guaranteed to a borrower. The agreement must require the
borrower to use the proceeds of the loan for the purposes of the
program under which the payment is made. The board shall adopt
rules to implement this subsection.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1999, 76th Leg., ch. 1459,
Sec. 12, eff. June 19, 1999; Acts 2001, 77th Leg., ch. 26, Sec.
8, eff. May 2, 2001.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.08, eff. September 1, 2009.
Sec. 58.024. AUTHORITY EXEMPTION FROM TAXATION. The property of
the authority, its income, and operations are exempt from all
taxes and assessments imposed by the state and all public
agencies and political subdivisions on property acquired or used
by the authority under this chapter.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987.
Sec. 58.025. PUBLIC HEARINGS. The administrator, the
commissioner, or an individual designated by the commissioner may
conduct public hearings relating to issuance of the authority's
bonds or the implementation of financial assistance, and the
commissioner may act as the applicable elected representative for
purposes of approving any bonds or financial assistance required
to be approved, including any approval required under Section
147(f) of the Internal Revenue Code of 1986.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987.
Sec. 58.026. LIMITATION OF LIABILITY FOR CERTAIN RECREATIONAL
ACTIVITIES. Nothing in this chapter shall affect the
applicability of Chapter 75, Civil Practice and Remedies Code.
Added by Acts 1999, 76th Leg., ch. 1459, Sec. 13, eff. June 19,
1999.
SUBCHAPTER D. BONDS
Sec. 58.031. ISSUANCE OF GENERAL OBLIGATION BONDS. (a) The
board by resolution may periodically provide for the issuance of
general obligation bonds as authorized by the Texas Constitution
for the establishment of the Texas agricultural fund and the
rural microenterprise development fund.
(b) Before authorizing the issuance of any general obligation
bonds, the board must determine that the issuance of revenue
bonds is not an economically advisable alternative for carrying
out the purposes of this chapter.
(c) The authority may issue and sell general obligation bonds of
the state for the purpose of providing money to establish a Texas
agricultural fund. The authority may issue the bonds in one or
several installments.
(d) Proceeds of the bonds issued under Subsection (c) of this
section shall be deposited in the Texas agricultural fund and
applied in accordance with the resolution authorizing the bonds:
(1) to provide financial assistance to eligible agricultural
businesses;
(2) to pay costs of issuance of those bonds and the
administration of any financial assistance program established
with money in the Texas agricultural fund; and
(3) together with any other available funds, to pay the
principal of or interest on or to discharge or redeem, in whole
or in part, any outstanding bonds issued by the authority.
(e) The authority may issue and sell general obligation bonds of
the state for the purpose of providing money to establish a rural
microenterprise development fund. The authority may issue the
bonds in one or several installments.
(f) Proceeds of the bonds issued under Subsection (e) of this
section shall be deposited in the rural microenterprise
development fund, which is created in Section 44.013.
Added by Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff. Nov. 7,
1989. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 2, eff.
Jan. 1, 1996.
Sec. 58.032. TEXAS AGRICULTURAL FUND. (a) The Texas
agricultural fund is a fund in the state treasury.
(b) The Texas agricultural fund may, at the direction of the
board, receive from the state or federal government or from any
other person, money that is to be administered by the authority
in connection with the provision of financial assistance to
eligible agricultural businesses under any program funded in
whole or in part with the proceeds of general obligation bonds
issued to carry out the purpose of this chapter.
(c) The board may provide for the establishment and maintenance
of separate accounts within the Texas agricultural fund,
including program accounts as prescribed by the board, an
interest and sinking account, a reserve account, and other
accounts provided for by the board in its resolutions. Repayments
of financial assistance under any program funded in whole or in
part with the proceeds of any series of general obligation bonds
shall be deposited first in the interest and sinking account as
prescribed by the board's resolutions authorizing such series of
general obligation bonds, and second in the reserve account in
respect of such series of general obligation bonds until that
account is fully funded as prescribed by the board's resolutions.
The fund and all accounts within it shall be kept and maintained
at the direction of the board and held in trust by the
comptroller for and on behalf of the authority and the owners of
the general obligation bonds issued in accordance with this
chapter, and may be used only as provided by this chapter.
Pending its use, money in the fund shall be invested as
prescribed by the resolution by which the bonds were issued.
(d) To the extent the board determines that any money credited
to the Texas agricultural fund from repayments of financial
assistance is not required by Subsection (c) of this section and
the resolutions of the board to be held in the interest and
sinking account or reserve account to provide for the payment of
the principal of and interest on the outstanding general
obligation bonds issued by the authority, that money may be used
by the authority to pay the principal of and interest on revenue
bonds issued by the authority or for any other authorized purpose
of the authority, in accordance with this chapter and the
authority's resolutions authorizing general obligation bonds.
(e) If during the existence of the Texas agricultural fund or
during the time any general obligation bonds are payable from the
fund the board determines that there will not be sufficient money
in the interest and sinking account during the following fiscal
year to pay the principal of or interest on the general
obligation bonds or both the principal and interest that are to
come due during the following fiscal year, the comptroller of
public accounts shall transfer to the fund the first money coming
into the state treasury not otherwise appropriated by the
constitution in an amount sufficient to pay the obligations.
(f) The department may receive, and shall deposit in the Texas
agricultural fund, appropriations, grants, donations, earned
federal funds, and the proceeds of any investment pools operated
by the comptroller.
(g) The fund includes grants and donations made for the purposes
of the programs administered by the Texas Agricultural Finance
Authority and any other money received under this chapter.
Notwithstanding Section 404.071, Government Code, income and
interest earned on money in the fund shall be deposited to the
credit of the fund. The fund is exempt from the application of
Section 403.095, Government Code.
(h) The board shall attempt to administer the fund in a manner
that makes private donations to the fund an eligible itemized
deduction for federal income taxation purposes.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989. Amended by Acts 1989, 71st Leg., ch. 455, Sec. 9,
eff. Aug. 28, 1989; Acts 1997, 75th Leg., ch. 1423, Sec. 2.04,
eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.15, eff. September 1, 2009.
Sec. 58.033. ISSUANCE OF REVENUE BONDS. (a) In addition to the
authority to issue general obligation bonds, the authority may
issue not more than $500 million of revenue bonds for the purpose
of providing money to carry out any purpose of the authority
under this chapter. The authority shall establish and maintain
funds and accounts, in accordance with Subsection (d) of this
section, that the board considers necessary to ensure payment of
the bonds and to provide for the use of the bond proceeds and the
implementation of the program financed. Proceeds of revenue bonds
shall be applied in accordance with the resolution authorizing
those bonds:
(1) to provide financial assistance:
(A) to eligible agricultural businesses; and
(B) for programs designed to further rural economic development;
(2) to pay costs of issuance of those bonds and the
administration of any financial assistance program established by
the authority; and
(3) together with any other available funds, to pay the
principal of or interest on or to discharge or redeem, in whole
or in part, any outstanding bonds issued by the authority.
(b) The authority's revenue bonds are obligations solely of the
authority and are payable solely from funds of the authority that
are pledged to the repayment of the revenue bonds. The authority
may not use, except as provided in Section 58.032, or pledge
money in the Texas agricultural fund to repayment of its revenue
bonds. The authority's bonds are not and do not create or
constitute a pledge, giving, or lending of the faith or credit or
taxing power of the state. Each bond of the authority issued
under this section must contain a statement to the effect that
the state is not obligated to pay the principal of or any premium
or interest on the bond, and that neither the faith or credit nor
the taxing power of the state is pledged, given, or loaned to
such a payment.
(c) Revenue bonds of the authority shall be payable as to
principal, interest, and redemption premium, if any, from and
secured by a first lien or a subordinate lien on and pledge of
all or any part of the property, revenues, income, or other
resources of the authority, as specified in the board's
resolution authorizing issuance of those bonds, including
mortgages or other interests in property financed, with the
proceeds of such bonds, repayments of financial assistance,
earnings from investments or deposits of the funds of the
authority, fees, charges, and any other amounts or payments
received pursuant to this chapter, and any appropriations,
grants, allocations, subsidies, supplements, guaranties, aid,
contribution, or donations from the state or federal government
or any other person.
(d) The board may make additional covenants with respect to the
bonds and the pledged revenues and may provide for the flow of
funds, the establishment and maintenance and investment of funds,
which may include interest and sinking funds, reserve funds,
program funds, and other funds. Those funds shall be kept and
maintained in escrow and in trust by the comptroller for and on
behalf of the authority and the owners of its revenue bonds, in
funds held outside the treasury pursuant to Chapter 404,
Government Code. Those funds shall be used only as provided by
this chapter, and pending their use shall be invested as provided
by any resolution of the authority. Legal title to those funds
shall be in the authority unless or until paid out as provided by
this chapter or by the resolutions authorizing the authority's
bonds. The comptroller, as custodian, shall administer those
funds strictly and only as provided by this chapter and in those
resolutions. The comptroller shall invest the funds in
investments authorized by law for state funds. The state shall
take no action with respect to those funds other than that
specified in this chapter and in those resolutions.
(e) The board may provide in the resolution authorizing any
revenue bonds for the issuance of additional bonds to be equally
and ratably secured by lien on the revenues and receipts, or for
the issuance of subordinate lien bonds.
(f) Revenues of the authority that may be used as a source of
payment for the bonds or to establish a reserve fund to secure
the payment of debt service on the bonds or related obligations
of the authority include repayments of financial assistance,
money appropriated by the legislature to the authority for the
purpose of paying or securing the payment of debt service on the
authority's revenue bonds or related obligations, federal or
private money allocated to financial assistance programs
established under this chapter, amounts paid under any credit
agreement for those purposes, or any other money that the
authority pledges or otherwise commits for those purposes. To the
extent that pledged revenues include amounts appropriated by the
legislature, the revenue bonds must state on their face that
those revenues are available to pay debt service only if
appropriated by the legislature for that purpose.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989. Amended by Acts 1997, 75th Leg., ch. 1423, Sec.
2.05, eff. Sept. 1, 1997; Acts 2001, 77th Leg., ch. 26, Sec. 9,
eff. May 2, 2001.
Sec. 58.034. GENERAL PROVISIONS RELATING TO BONDS. (a) The
authority's bonds may be issued from time to time in one or more
series or issues, in bearer, registered, or any other form, which
may include registered uncertified obligations not represented by
written instruments and commonly known as book-entry obligations,
the registration of ownership and transfer of which shall be
provided for by the authority under a system of books and records
maintained by the authority or by an agent appointed by the
authority in resolution providing for issuance of its bonds.
Bonds may mature serially or otherwise not more than 40 years
from their date. Bonds may bear no interest or may bear interest
at any rate or rates, fixed, variable, floating, or otherwise,
determined by the board or determined pursuant to any contractual
arrangements approved by the board, not to exceed the maximum net
effective interest rate allowed by Chapter 1204, Government Code.
Interest on the bonds may be payable at any time, and the rate of
interest on the bonds may be adjusted at such time as may be
determined by the board or as may be determined pursuant to any
contractual arrangement approved by the board. In connection with
the issuance of its bonds, the board may exercise the powers
granted to the governing body of an issuer in connection with the
issuance of obligations under Chapter 1371, Government Code, to
the extent not inconsistent with this chapter.
(b) The bonds issued under this chapter and interest coupons, if
any, are investment securities under the terms of Chapter 8,
Business & Commerce Code. The bonds are exempt securities
under The Securities Act (Article 581-1 et seq., Vernon's Texas
Civil Statutes), and unless specifically provided otherwise,
under any subsequently enacted securities act. Any contract,
guaranty, or any other document executed in connection with the
issuance of bonds pursuant to this chapter is not a security
under The Securities Act (Article 581-1 et seq., Vernon's Texas
Civil Statutes), and, unless specifically provided otherwise, any
subsequently enacted securities act. The board is authorized to
do all things necessary to qualify the bonds for offer and sale
under the securities laws and regulations of the United States
and of the states and other jurisdictions in the United States as
the board shall determine.
(c) The bonds may be issued in the form and denominations and
executed in the manner and under the terms, conditions, and
details determined as provided by the board in the resolution
authorizing their issuance. If any officer whose manual or
facsimile signature appears on the bonds ceases to be an officer,
the signature is still valid and sufficient for all purposes as
if the officer had remained in office.
(d) All bonds issued by the authority are subject to review and
approval by the attorney general in the same manner and with the
same effect as is provided by Chapter 1371, Government Code.
(e) No fee may be charged by any other agency of this state in
connection with the issuance of the bonds or the allocation of a
portion of the state volume limitation on private activity bonds
either under executive order or legislative enactment. No
proceeding, notice, or approval is required for the issuance of
any bonds or any instrument as security except as provided by
this Act. Nothing in this subsection may be constituted to
deprive the state and its governmental subdivisions of their
respective police powers or to impair any police power of any
official or agency of the state or its subdivisions as may be
provided by law.
(f) The state pledges to and agrees with the owners of any bonds
issued in accordance with this chapter that the state will not
limit or alter the rights vested in the authority to fulfill the
terms of any agreements made with the owners of the bonds or in
any way impair the rights and remedies of those owners until
those bonds, together with any premium and the interest on the
bonds and all costs and expenses in connection with any action or
proceeding by or on behalf of those owners, are fully met and
discharged. The authority is authorized to include this pledge
and agreement of the state in any agreement with the owners of
those bonds.
(g) The bonds may be sold at public or private sale with or
without public bidding in the manner, at such rate or rates,
price or prices, and on such terms as may be determined by the
board or determined as provided in any contractual arrangement
approved by the board. The board also may enter into any
contractual arrangement under which the bonds are to be sold from
time to time, or subject to purchase, at such prices and rates,
interest rate or payment periods, and terms as determined
pursuant to that contractual arrangement approved by the board.
(h) Pending the preparation of definitive bonds, interim
receipts or certificates in the form and with the provisions that
are provided in the resolution may be issued to the purchaser or
purchasers of bonds sold under this chapter.
(i) The board may provide procedures for the replacement of a
mutilated, lost, stolen, or destroyed bond or interest coupon.
(j) The resolutions of the board issuing bonds may contain other
provisions and covenants as the board may determine.
(k) The board may adopt and have executed any other proceedings
or instruments necessary and convenient in the issuance of bonds.
(l) Repealed by Acts 1993, 73rd Leg., ch. 433, Sec. 1, eff. Aug.
30, 1993.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989. Amended by Acts 1993, 73rd Leg., ch. 433, Sec. 1,
eff. Aug. 30, 1993; Acts 2001, 77th Leg., ch. 1420, Sec. 8.202,
eff. Sept. 1, 2001.
Sec. 58.035. REFUNDING BONDS. The authority may issue, sell,
and deliver bonds to refund all or any part of its outstanding
bonds, including the payment of any redemption premium and
interest accrued, under such terms, conditions, and details as
determined by the board. Bonds issued by the authority may be
refunded in the manner provided by any other applicable statute,
including Chapter 1207, Government Code. Bonds, the provision for
the payment of all interest and applicable premiums on which and
the principal of which has been made through the irrevocable
deposit of money with the comptroller in accordance with the
provisions of such an applicable statute, shall no longer be
charged against the issuing authority of the authority, and on
the making of such provision such issuing authority shall, to the
extent of the principal amount of such bonds, be restored.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989. Amended by Acts 1997, 75th Leg., ch. 1423, Sec.
2.06, eff. Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1420, Sec.
8.203, eff. Sept. 1, 2001.
Sec. 58.036. PAYMENT ENFORCEABLE BY MANDAMUS. Payment of the
bonds and performance by the authority or the commissioner of its
or his functions and duties under this chapter and the Texas
Constitution may be enforced in the state supreme court by
mandamus or other appropriate proceeding.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989.
Sec. 58.037. BONDS AS INVESTMENTS. (a) The bonds are legal and
authorized investments for:
(1) banks;
(2) trust companies;
(3) savings and loan associations;
(4) insurance companies of all kinds and types;
(5) fiduciaries;
(6) trustees;
(7) guardians; and
(8) sinking and other public funds of the state, municipalities,
counties, school districts, and other political subdivisions of
the state.
(b) The bonds are eligible to secure the deposit of any public
funds of the state, municipalities, counties, school districts,
or other political subdivisions of the state, and the bonds shall
be lawful and sufficient security for the deposits to the extent
of their face value when accompanied by all unmatured coupons
attached to the bonds.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989.
Sec. 58.038. TAX STATUS OF BONDS. The bonds issued by the
authority, any transaction relating to the bonds, and any profits
made in the sale of the bonds are free from taxation by the state
or by any city, county, special district, or other political
subdivision of the state; provided that this section does not
exempt the owner of any property financed under this chapter from
any ad valorem, sales, use, excise, or other tax levied by the
state or any political corporation of this state.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff.
Sept. 1, 1989.
Sec. 58.039. REVIEW BOARD. (a) The bond review board is
composed of:
(1) the governor;
(2) the lieutenant governor;
(3) the speaker of the house of representatives; and
(4) the comptroller of public accounts.
(b) The governor is chairman of the review board.
(c) Bonds may not be issued under this chapter, and proceeds of
bonds under this chapter may not be used to finance a program
unless the issuance or program, as applicable, has been reviewed
and approved by the review board.
(d) The review board may adopt rules governing application for
review, the review process, and reporting requirements.
(e) A member of the review board may not be held liable for
damages resulting from the performance of the members' functions
under this chapter.
Added by Acts 1987, 70th Leg., 2nd C.S., ch. 32, art. 2, Sec. 1,
eff. Oct. 20, 1987. Amended by Acts 1997, 75th Leg., ch. 1423,
Sec. 2.07, eff. Sept. 1, 1997.
Added by Acts 1989, 71st Leg., ch. 1247, Sec. 1, eff. Sept. 1,
1989.
Reenacted and amended by Acts 2009, 81st Leg., R.S., Ch.
87, Sec. 2.002, eff. September 1, 2009.
Sec. 58.040. CONSIDERATIONS IN FINANCING. In determining
whether to provide financing under this chapter, the board shall
consider the likelihood of success of the applicant and the
effect of the financing on job creation and retention in the
state. The board shall give preference to applicants who are
Texas residents doing business in the state, and then to
applicants who can demonstrate that the financed activities will
take place predominantly in this state.
Added by Acts 1989, 71st Leg., ch. 455, Sec. 10, eff. Aug. 28,
1989.
Sec. 58.041. ISSUANCE OF DEBT BY TEXAS PUBLIC FINANCE AUTHORITY.
(a) In this section, "debt instrument" means a note, debenture,
bond, or other evidence of indebtedness.
(b) The Texas Public Finance Authority has the exclusive
authority to act on behalf of the authority in issuing debt
instruments authorized to be issued by the authority. A
reference in law to a debt instrument issued by the authority, in
the context of a debt instrument issued on or after September 1,
2009, means a debt instrument issued by the Texas Public Finance
Authority on behalf of the authority.
(c) Notwithstanding Section 58.034(e), the authority shall pay
all costs incurred by the Texas Public Finance Authority for
issuing debt instruments on behalf of the authority and
associated fees and expenses.
(d) When the board authorizes the issuance of debt instruments
to fund a loan, the authority shall notify the Texas Public
Finance Authority of the amount of the loan and the recipient of
the loan and request the Texas Public Finance Authority to issue
debt instruments in an amount necessary to fund the loan. The
authority and the Texas Public Finance Authority shall determine
the amount and time of a debt instrument issue to best provide
funds for one or multiple loans.
(e) The Texas Public Finance Authority, at the request of the
authority, may issue debt instruments to provide money to the
Texas agricultural fund.
(f) The Texas Public Finance Authority may sell debt instruments
in any manner it determines to be in the best interest of the
authority, except that it may not sell a debt instrument that has
not been approved by the attorney general and registered with the
comptroller.
(g) The board, in consultation with the Texas Public Finance
Authority, shall adopt rules containing criteria for evaluating
the creditworthiness of loan applicants and the financial
feasibility of projects to be funded with debt instruments issued
by the Texas Public Finance Authority on behalf of the authority.
(h) The Texas Public Finance Authority may enter into a credit
agreement for a debt instrument issued by the Texas Public
Finance Authority on behalf of the authority for a period and on
conditions approved by the Texas Public Finance Authority.
(i) This subsection applies only in relation to general
obligation debt instruments. To the extent other sources of
revenue available for payment of the authority's debts are
insufficient and in accordance with the Texas Constitution,
general revenue is to be appropriated to the Texas Public Finance
Authority in an amount determined by the Texas Public Finance
Authority to be necessary to pay the principal, premium if any,
and interest on general obligation debt instruments issued by the
Texas Public Finance Authority on behalf of the authority, and
that amount shall be specified in the biennial appropriations
acts.
Added by Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.09, eff. September 1, 2009.
SUBCHAPTER E. AGRICULTURAL LOAN GUARANTEE PROGRAM
Sec. 58.051. DEFINITIONS. In this subchapter:
(1) "Commercial lender" means a commercial lending institution
chartered by the state or federal government, including a savings
and loan association, a credit union, or a Farm Credit System
institution.
(2) "Eligible applicant" means a person applying for a loan
guarantee under this subchapter who complies with the
application procedures prescribed by this subchapter.
(3) "Plan" means the documentation submitted to the lender in
support of the application.
Added by Acts 1999, 76th Leg., ch. 1459, Sec. 14, eff. June 19,
1999.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
506, Sec. 1.11, eff. September 1, 2009.
Sec. 58.052. AGRICULTURAL LOAN GUARANTEE PROGRAM. (a) The
board shall administer a loan guarantee program that benefits
eligible applicants who desire to establish or enhance a farming
or ranching operation or an agriculture-related business.
(b) The board, either directly or through authority delegated to
the commissioner, may grant to an eligible applicant a guarantee
of a loan made by a commercial lender for the purposes prescribed
by this subchapter. The board by rule shall establish tiered
loan guarantee limits. To be eligible to be guaranteed under
this subchapter, a loan with a term of more than one year must
have a fixed interest rate.
(c) The amount that may be used to guarantee loans under this
subchapter may not exceed three-fourths of the amount contained
in the Texas agricultural fund.
(d) A loan guarantee recipient may use proceeds from the loan
for working capital for operating a farm or ranch, including the
lease of facilities and the purchase of machinery and equipment,
or for any agriculture-related business purpose, including the
purchase of real estate, as identified in the plan. A loan
guarantee is voidable by the board if the recipient uses loan
proceeds for any purposes other than those identified in the
plan. The board shall include this restriction as a condition in
each loan guarantee instrument executed under this subchapter.
(e) The board shall adopt an agreement, to be used between a
commercial lender and an approved eligible applicant, under which
the program provides a payment from money in the Texas
agricultural fund for the purpose of providing a reduced interest
rate on a loan guaranteed to a borrower under this subchapter.
The board shall adopt rules to implement this subsection. The
maximum rate reduction under this subsection per year for each
borrower may not exceed three percentage points or an amount that
results in $10,000 in interest savings for the borrower for the
year.
(f) The board by rule shall establish a certified lender program
under which the boa