CHAPTER 59. FARM AND RANCH FINANCE PROGRAM
AGRICULTURE CODE
TITLE 4. AGRICULTURAL ORGANIZATIONS
CHAPTER 59. FARM AND RANCH FINANCE PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 59.001. DEFINITIONS. In this chapter:
(1) "Authority" means the Texas Agricultural Finance Authority
created by Chapter 58 of this code.
(2) "Board" means the board of directors of the authority.
(3) "Bond" means a general obligation bond, certificate, note,
or other obligation issued or incurred by the authority under
this chapter as provided by Article III, Section 49-f, of the
Texas Constitution.
(4) "Commissioner" means the commissioner of agriculture.
(5) "Fund" means the farm and ranch finance program fund.
(6) "Program" means the farm and ranch finance program.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 3, eff.
Jan. 1, 1996.
Sec. 59.002. DUTIES. (a) The authority shall administer the
program.
(b) The board shall administer the fund.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 4, eff.
Jan. 1, 1996.
Sec. 59.003. LIMITED IMMUNITY FROM SUIT OR LIABILITY. A member
of the board may be sued and held personally liable for damages
that result from an official act or omission only if the act or
omission is corrupt or malicious.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 5, eff.
Jan. 1, 1996.
SUBCHAPTER B. BONDS
Sec. 59.011. BONDS. (a) The board may provide by order or
resolution for the issuance and sale of negotiable bonds
authorized by Article III, Section 49-f, of the Texas
Constitution. The proceeds from the sale of the bonds constitute
the fund.
(b) Subchapter D, Chapter 58, as it relates to the issuance,
sale, and refunding of bonds, applies to the board's issuance,
sale, and refunding of bonds under this chapter to finance the
fund.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 6, eff.
Jan. 1, 1996.
Sec. 59.012. DISPOSITION OF BOND PROCEEDS.
Text of subsec. (a) as amended by Acts 1995, 74th Leg., ch. 858,
Sec. 1
(a) Except as provided by Subsection (b) of this section,
proceeds from the sale of the bonds, other than refunding bonds,
shall be deposited in the state treasury to the credit of the
fund.
Text of subsec. (a) as amended by Acts 1995, 74th Leg., ch. 1014,
Sec. 7
(a) Except as provided by Subsections (b), (c), and (d) of this
section, proceeds from the sale of the bonds, other than
refunding bonds, shall be deposited in the state treasury to the
credit of the fund.
(b) The board may provide for transferring to the interest and
sinking account from the proceeds of the sale of bonds or from
the available money in the fund directly an amount that, together
with the accrued interest received, is sufficient to pay interest
becoming due during the fiscal year in which the bonds are sold
and to establish appropriate reserves.
(c) The board may provide from the proceeds of the sale of bonds
or from available money in the fund an amount that is reasonable
and necessary to cover the costs of administering the program.
(d) The board shall deposit the proceeds from the sale of bonds,
as authorized by the Texas Constitution, into the Texas
agricultural fund, to be administered as provided by Chapter 58
of this code.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 858, Sec. 1, eff.
Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1014, Sec. 7, eff. Jan.
1, 1996.
Sec. 59.013. PAYMENT OF PRINCIPAL AND INTEREST. The board shall
arrange for payment of the principal of bonds as they mature and
the interest on the bonds as it becomes payable.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 8, eff.
Jan. 1, 1996.
Sec. 59.014. APPROVAL BY ATTORNEY GENERAL. Before the bonds are
delivered to the purchasers, the attorney general shall examine
the record relating to the bonds. If the record demonstrates that
the bonds have been issued in accordance with the Texas
Constitution and this chapter, the attorney general shall approve
the bonds.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993.
Sec. 59.015. USE OF FUND TO PAY COSTS OF ISSUANCE AND DEBT
SERVICE. (a) The board may use money in the fund attributable
to the issuance and sale of bonds to pay:
(1) legal fees and fees for financial advice the board finds
necessary for the sale of bonds;
(2) the expense of publishing notice of sale of an installment
of bonds;
(3) the expense of printing the bonds;
(4) the expense of issuing the bonds, including the actual costs
of travel, lodging, and meals of officers, members, or employees
of the board, directors or employees of the authority, the
comptroller, or the attorney general that the board finds
necessary to implement the issuance, rating, or delivery of the
bonds;
(5) the cost of manually signing the bonds;
(6) remuneration to any agent employed by the board to pay the
principal of and interest on the bonds;
(7) any amount required to be paid to maintain the federal tax
exemption of interest on the bonds; or
(8) any other cost, fee, or expense relating to the issuance of
the bonds.
(b) If, during the existence of the fund or during the period
any bonds are payable from the fund, the board determines that
there will not be sufficient money in the fund during the
following fiscal year to pay the principal of or interest on the
bonds that is to come due during the following fiscal year, the
comptroller shall transfer to the fund from the first money
coming into the state treasury not otherwise appropriated by the
constitution an amount sufficient to pay the obligations.
(c) The money transferred to the fund under Subsection (b) of
this section shall be used to pay the obligations only if at the
time the principal or interest becomes due there is not
sufficient money in the fund to pay the amount due.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 9, eff.
Jan. 1, 1996; Acts 1997, 75th Leg., ch. 1423, Sec. 2.08, eff.
Sept. 1, 1997.
Text of section as amended by Acts 1995, 74th Leg., ch. 265, Sec.
3
Sec. 59.016. INVESTMENTS. (a) The authority shall give timely
instruction to the board of the dates on which principal on bonds
matures and interest becomes payable. The board shall administer
the fund accordingly.
(b) Money in the fund that is not immediately committed to
paying principal of and interest on the bonds or to paying
expenses as provided by Section 59.015 of this code may be
invested by the board in:
(1) a direct security repurchase agreement or reverse security
repurchase agreement made with a state or national bank domiciled
in this state or with a primary dealer approved by the federal
reserve system;
(2) a direct obligation of or obligation the principal and
interest of which are guaranteed by the United States government;
(3) a direct obligation of or obligation guaranteed by the
Federal Home Loan Banks, the Federal National Mortgage
Association, the Federal Farm Credit System, the Student Loan
Marketing Association, the Federal Home Loan Mortgage
Corporation, or a successor to one of those organizations;
(4) a bankers' acceptance that:
(A) is eligible for purchase by a member of the federal reserve
system;
(B) matures in 270 days or less; and
(C) is issued by a bank that has received the highest short-term
credit rating by a nationally recognized investment rating firm;
(5) commercial paper that:
(A) matures in 270 days or less; and
(B) has received the highest short-term credit rating by a
nationally recognized investment rating firm;
(6) a contract that is written by the board in which the board
grants the purchaser the right to purchase securities in the
board's marketable securities portfolio at a specified price over
a specified period and for which the board is paid a fee and that
specifically prohibits naked-option or uncovered option trading;
(7) an obligation of a state or of an agency, county, city, or
other political subdivision of a state or a mutual fund composed
of those obligations;
(8) an investment instrument, obligation, or other evidence of
indebtedness the payment of which is directly or indirectly
guaranteed by the full faith and credit of the United States
government;
(9) an investment, account, depository receipt, or deposit that
is fully:
(A) insured by the Federal Deposit Insurance Corporation or a
successor to that organization; or
(B) secured by a security described by Subdivision (2), (3), or
(8) of this subsection;
(10) a collateralized mortgage obligation fully secured by
securities or mortgages issued or guaranteed by the Government
National Mortgage Association (GNMA) or any entity identified by
Subdivision (3) of this subsection;
(11) a security or evidence of indebtedness issued by the Farm
Credit System Financial Assistance Corporation, the Private
Export Funding Corporation, or the Export-Import Bank; and
(12) any other investment authorized for investment of state
funds by the comptroller under Section 404.024, Government Code.
(c) In this section:
(1) "Direct security repurchase agreement" means an agreement
under which the board buys, holds for a specified time, and then
sells back any of the following securities, obligations, or
participation certificates:
(A) a United States government security;
(B) a direct obligation of or an obligation the principal and
interest of which are guaranteed by the United States government;
(C) a direct obligation of or an obligation guaranteed by the
Federal Home Loan Banks, the Federal National Mortgage
Association, the Federal Farm Credit System, the Student Loan
Marketing Association, the Federal Home Loan Mortgage
Corporation, or a successor to one of those organizations; or
(D) any other investment instrument, obligation, or other
evidence of indebtedness the payment of which is directly or
indirectly guaranteed by the full faith and credit of the United
States government.
(2) "Market value" means the fair and reasonable prevailing
price at which a security is being sold on the open market at the
time of the appraisement of the security by the board.
(3) "Reverse security repurchase agreement" means an agreement
under which the board sells and after a specified time buys back
any of the securities, obligations, or participation certificates
listed by Subdivision (1) of this subsection.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 265, Sec. 3, eff. Aug.
28, 1995; Acts 1997, 75th Leg., ch. 1423, Sec. 2.09, eff. Sept.
1, 1997.
Text of section as amended by Acts 1995, 74th Leg., ch. 1014,
Sec. 10
Sec. 59.016. INVESTMENTS. The board shall invest funds as
provided under Section 58.022.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 10, eff.
Jan. 1, 1996.
SUBCHAPTER C. ADMINISTRATION
Sec. 59.021. FUND. (a) The farm and ranch finance program fund
is a fund in the state treasury.
(b) At the direction of the board, money received from the state
or federal government or from any other person, in addition to
proceeds from bonds issued under this chapter, may be deposited
to the credit of the fund.
(c) The board may provide for establishing and maintaining
separate accounts in the fund, including program accounts, an
interest and sinking account, a reserve account, and any other
accounts provided for by resolution of the board.
(d) Money received as repayment of financial assistance shall be
deposited first in the interest and sinking account as provided
by resolution of the board authorizing its bonds until that
account is fully funded as provided by resolution of the board.
(e) The fund and each account in the fund shall be kept and
maintained at the direction of the board and held in trust by the
comptroller for and on behalf of the board and the owners of the
bonds issued under this chapter.
(f) The fund may be used only as provided by this chapter.
(g) Pending its use, money in the fund shall be invested as
provided by the resolution authorizing issuance of the bonds.
(h) The board may receive, and shall deposit in the fund,
appropriations, grants, donations, earned federal funds, and the
proceeds of any investment pools operated by the comptroller.
Text of subsec. (i) as added by Acts 1995, 74th Leg., ch. 858,
Sec. 2
(i) In addition to other uses provided by this chapter, the
authority may use money in the fund to pay costs and expenses of
administering the program.
Text of subsec. (i) as added by Acts 1995, 74th Leg., ch. 1014,
Sec. 11
(i) The board may use money in the fund to pay the costs and
expenses of administering the program.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 858, Sec. 2, eff.
Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1014, Sec. 11, eff. Jan.
1, 1996; Acts 1997, 75th Leg., ch. 1423, Sec. 2.10, eff. Sept. 1,
1997.
Sec. 59.022. RULES. (a) The board shall adopt rules governing
application for financial assistance under this chapter. The
board may adopt rules it considers necessary to administer the
program or considers in the best interest of the program. The
board may adopt rules concerning the sale of land acquired by the
board under this chapter by default, foreclosure, forfeiture, or
any other means. The board shall adopt collateral or security
requirements to ensure the full repayment of financial assistance
granted under this chapter. The board may approve any extension
of financial assistance under this chapter or may delegate that
approval authority to the commissioner.
(b) The board may adopt rules it considers necessary to
administer the fund or considers in the best interest of the
fund, including rules on the investment of the fund.
(c) The board may set and collect fees the board considers
reasonable and necessary to cover the expenses of administering
the program or considers in the best interest of the program.
Those fees shall be deposited in the state treasury to the credit
of the farm and ranch finance program fund. An applicant for
financial assistance participating in the program shall pay the
costs of applying for, participating in, and administering and
servicing the program, in amounts the board considers reasonable
and necessary. Any cost not paid by an applicant shall be paid
from the fund.
(d) The board shall adopt rules governing loan guarantees
provided to lenders by the board in an amount necessary for the
lender to have a performing loan.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 858, Sec. 3, eff.
Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1014, Sec. 12, eff. Jan.
1, 1996; Acts 2001, 77th Leg., ch. 26, Sec. 11, eff. May 2, 2001.
Sec. 59.023. POWERS OF BOARD. The board has the power necessary
to accomplish the purposes and carry out the programs provided by
this chapter, including the power:
(1) to adopt and enforce bylaws, rules, and procedures necessary
to carry out this chapter;
(2) to establish, charge, and collect a fee, charge, or penalty
in connection with a program, service, or activity provided by
the board under this chapter;
(3) to issue bonds, 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;
(4) to purchase, hold, cancel, or resell or otherwise dispose of
its bonds, subject to any restrictions and any resolution
authorizing the issuance of its bonds;
(5) to own, rent, lease, or otherwise acquire, accept, or hold
any interest in real, personal, or mixed property, by purchase,
exchange, gift, assignment, transfer, foreclosure, mortgage,
sale, lease, or otherwise;
(6) to hold, manage, operate, or improve real, personal, or
mixed property;
(7) to sell, lease, encumber, mortgage, exchange, donate,
convey, or otherwise dispose of any of its property or any
interest in its property, deed of trust, or mortgage lien owned
by it, under its control or custody, or in its possession and to
release or relinquish any right, title, claim, lien, interest,
easement, or demand, including any equity or right of redemption
in property foreclosed by it, by public or private sale, with or
without public bidding;
(8) to lease or rent any improvement, land, or facility from any
person;
(9) to make a secured or unsecured loan to provide financial
assistance as provided by this chapter, including the refunding
of an outstanding obligation, mortgage, or advance used for those
purposes, and to charge and collect interest on those loans for
loan payments and on terms and conditions the board considers
advisable that are not in conflict with this chapter;
(10) to purchase or acquire, sell, discount, assign, negotiate,
or otherwise dispose of notes or other evidence of indebtedness
of eligible applicants as the board determines or portions or
portfolios of or participations in those evidences of
indebtedness;
(11) to sell and guarantee securities, whether taxable or tax
exempt under federal law, in primary and secondary markets; and
(12) to provide to a lender a loan guarantee for the purchase of
real property by an eligible applicant under Section 59.024.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 13, eff.
Jan. 1, 1996; Acts 2001, 77th Leg., ch. 26, Sec. 12, eff. May 2,
2001.
Sec. 59.024. APPLICATION; ELIGIBILITY. (a) To borrow money
from the fund, a person must submit an application to the
authority that contains an acceptable agricultural business plan
for the land proposed to be purchased that assures the authority
the applicant intends to use the land for the primary purpose of
farming or ranching.
(b) To be eligible to borrow money from the fund, a person, at
the time of application, must:
(1) provide evidence to the authority that demonstrates that the
person has at least three years of experience relevant to the
person's agricultural business plan for the land proposed to be
purchased; and
(2) have a net worth of less than $400,000.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 858, Sec. 4, eff.
Sept. 1, 1995; Acts 1997, 75th Leg., ch. 473, Sec. 1, eff. Sept.
1, 1997.
Sec. 59.025. MAXIMUM AMOUNT OF LOAN OR GUARANTEE. (a) A loan
under this chapter may not exceed the lesser of:
(1) $250,000; or
(2) an amount equal to 95 percent of the lesser of the purchase
price of the land or the land's appraised value under Section
59.028.
(b) The board may provide a guarantee of not more than 90
percent of a loan approved under this section.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 858, Sec. 5, eff.
Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1014, Sec. 14, eff. Jan.
1, 1996; Acts 1997, 75th Leg., ch. 473, Sec. 2, eff. Sept. 1,
1997; Acts 2001, 77th Leg., ch. 26, Sec. 13, eff. May 2, 2001.
Sec. 59.026. TRANSFER OF BORROWER'S INTEREST. (a) The contract
for a loan under this chapter must provide that transfer of
ownership of the land without the board's express written
permission before the entire principal and interest due have been
paid constitutes default under the contract.
(b) If the borrower dies or becomes financially incapacitated or
if the borrower's interest in land is involuntarily transferred
by court order or other proceedings, including bankruptcy,
sheriff or trustee sale, or divorce, the land may be conveyed by
the borrower or the borrower's heirs, administrators, executors,
or successors in interest by complying with the rules adopted by
the board and obtaining the board's written permission.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 15, eff.
Jan. 1, 1996.
Sec. 59.027. CHANGES IN USE. (a) Before a borrower may use
land acquired with financial assistance under this chapter for a
primary purpose other than farming or ranching, the borrower must
submit to the board an application for approval of the change of
use.
(b) As soon as practicable after an application for a change of
use is received, the board shall approve or deny the application
and shall notify the borrower of the board's decision.
(c) The loan contract must provide that using land acquired
under this chapter for a purpose other than farming or ranching
without the approval of the board constitutes default under the
contract.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 16, eff.
Jan. 1, 1996.
Sec. 59.028. APPRAISAL. (a) Before the board may loan money
for the purchase of land under this chapter, the board must have
an appraisal of the property made to determine its value.
(b) An appraiser representing the board must be qualified to
give competent appraisals of land. The board may use appraisers
employed by the board.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 17, eff.
Jan. 1, 1996.
Sec. 59.029. PAYMENTS TO BOARD UNDER CERTAIN LEASES. If, during
a period a person is indebted to the board for land purchased
with financial assistance under this chapter, the person executes
or there exists a lease or contract of sale of oil, gas, or other
minerals, chemicals, hard metals, timber, sand, gravel, or other
material that covers the land purchased from the board that would
result in the depletion of the corpus of the land, not less than
one-half of all bonus money, delay rentals, or royalties received
as consideration for or payment under the oil, gas, or mineral
lease and not less than one-half of all money received under a
lease or contract of sale of other minerals, chemicals, hard
metals, timber, sand, gravel, or other material shall be paid to
the board by the lessee under the lease or the buyer under the
contract of sale. The board shall apply those payments to the
satisfaction of the indebtedness.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 18, eff.
Jan. 1, 1996.
Sec. 59.030. TERM OF LEASES. (a) A purchaser may not lease
land purchased with financial assistance under this chapter for a
term longer than 10 years, except:
(1) a lease for oil, gas, or other minerals may be for a term of
not longer than 10 years, and as long thereafter as oil, gas, or
other minerals are produced from the land in commercial
quantities; and
(2) a lease for coal and lignite may be for a term of not longer
than 40 years, and as long thereafter as coal and lignite are
produced from the land in commercial quantities.
(b) A lease or a separate instrument to take effect in the
future may not contain a provision for option or renewal of the
lease or re-lease of the property for any term that would result
in a fixed term of the lease that exceeds the maximum fixed term
authorized under Subsection (a) of this section. A lease or
instrument that contains an option renewal or re-lease agreement
in violation of this section is void.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993.
Sec. 59.031. DEATH OF A BORROWER. (a) If a borrower receiving
financial assistance under this chapter dies while indebted to
the state under a contract, the borrower's rights under this
chapter and the contract devolve on the borrower's heirs,
devisees, or personal representatives under the laws of this
state, subject to all rights, claims, and charges of the board.
(b) Default by an heir, devisee, or personal representative with
respect to a right, claim, or charge of the board has the same
effect as default by the borrower before the borrower's death.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 19, eff.
Jan. 1, 1996.
Sec. 59.032. UNENCUMBERED TITLE. The board may establish a
procedure by which a borrower acquiring land with a loan under
this chapter may obtain title to a portion of the tract clear of
encumbrances.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993. Amended by Acts 1995, 74th Leg., ch. 1014, Sec. 20, eff.
Jan. 1, 1996.
SUBCHAPTER D. OFFENSES; PENALTIES
Sec. 59.046. FALSE OR FICTITIOUS WRITTEN STATEMENT. (a) A
person commits an offense if the person knowingly or
intentionally makes, publishes, passes, files, or uses any false,
fictitious, or forged paper, document, contract, affidavit,
application, assignment, or other written instrument relating to
the procurement of financial assistance under this chapter or to
the purchase, sale, or resale of land under this chapter or in
connection with any transaction under this chapter.
(b) An offense under this section is a felony of the third
degree.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993.
Sec. 59.047. FRAUD. (a) A person commits an offense if the
person defrauds a person of rights or benefits under this chapter
or uses this chapter to defraud the state by an act of fraud,
duress, deceit, coercion, or misrepresentation.
(b) An offense under this section is a felony of the third
degree.
Added by Acts 1993, 73rd Leg., ch. 542, Sec. 1, eff. Sept. 1,
1993.