CHAPTER 58. AGRICULTURAL FINANCE AUTHORITY

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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;

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.

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.

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.

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.

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.

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.

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

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.

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

(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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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