AGRICULTURE CODE
CHAPTER 59. FARM AND RANCH FINANCE PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 3, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 4, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 5, eff. Jan. 1,
1996.
SUBCHAPTER B. BONDS
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 6, eff. Jan. 1,
1996.
§ 59.012. DISPOSITION OF BOND PROCEEDS.
Text of subsec. (a) as amended by Acts 1995, 74th Leg., ch. 858,
§ 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,
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 858, § 1, eff. Sept. 1,
1995; Acts 1995, 74th Leg., ch. 1014, § 7, eff. Jan. 1, 1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 8, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 9, eff. Jan. 1,
1996; Acts 1997, 75th Leg., ch. 1423, § 2.08, eff. Sept. 1,
1997.
§ 59.016. INVESTMENTS.
Text of section as amended by Acts 1995, 74th Leg., ch. 265, § 3
(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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 265, § 3, eff. Aug. 28,
1995; Acts 1997, 75th Leg., ch. 1423, § 2.09, eff. Sept. 1,
1997.
For text of section as amended by Acts 1995, 74th Leg., ch. 1014,
§ 10, see § 59.016, post.
§ 59.016. INVESTMENTS.
Text of section as amended by Acts 1995, 74th Leg., ch. 1014, §
10
The board shall invest funds as provided under Section
58.022.
Added by Acts 1993, 73rd Leg., ch. 542, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 10, eff. Jan. 1,
1996.
For text of section as amended by Acts 1995, 74th Leg., ch. 265,
§ 3, see § 59.016, ante
SUBCHAPTER C. ADMINISTRATION
§ 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, § 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, §
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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 858, § 2, eff. Sept. 1,
1995; Acts 1995, 74th Leg., ch. 1014, § 11, eff. Jan. 1, 1996;
Acts 1997, 75th Leg., ch. 1423, § 2.10, eff. Sept. 1, 1997.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 858, § 3, eff. Sept. 1,
1995; Acts 1995, 74th Leg., ch. 1014, § 12, eff. Jan. 1, 1996;
Acts 2001, 77th Leg., ch. 26, § 11, eff. May 2, 2001.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 13, eff. Jan. 1,
1996; Acts 2001, 77th Leg., ch. 26, § 12, eff. May 2, 2001.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 858, § 4, eff. Sept. 1,
1995; Acts 1997, 75th Leg., ch. 473, § 1, eff. Sept. 1, 1997.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 858, § 5, eff. Sept. 1,
1995; Acts 1995, 74th Leg., ch. 1014, § 14, eff. Jan. 1, 1996;
Acts 1997, 75th Leg., ch. 473, § 2, eff. Sept. 1, 1997; Acts
2001, 77th Leg., ch. 26, § 13, eff. May 2, 2001.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 15, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 16, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 17, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 18, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 19, eff. Jan. 1,
1996.
§ 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, § 1, eff. Sept. 1, 1993.
Amended by Acts 1995, 74th Leg., ch. 1014, § 20, eff. Jan. 1,
1996.
SUBCHAPTER D. OFFENSES; PENALTIES
§ 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, § 1, eff. Sept. 1, 1993.
§ 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, § 1, eff. Sept. 1, 1993.
