By: Miles (Senate Sponsor - Estes) H.B. No. 2996
         (In the Senate - Received from the House May 12, 2011;
  May 12, 2011, read first time and referred to Committee on
  Agriculture and Rural Affairs; May 23, 2011, reported favorably by
  the following vote:  Yeas 4, Nays 1; May 23, 2011, sent to printer.)
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the creation of the Texas Urban Agricultural Innovation
  Authority.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 4, Agriculture Code, is amended by adding
  Chapter 60A to read as follows:
  CHAPTER 60A.  TEXAS URBAN AGRICULTURAL INNOVATION AUTHORITY
  SUBCHAPTER A.  ADMINISTRATION AND POWERS
         Sec. 60A.001.  CREATION OF AUTHORITY; PUBLIC PURPOSE.
  (a)  The Texas Urban Agricultural Innovation Authority is created
  within the Department of Agriculture as a public authority.
         (b)  The authority is created to promote the creation and
  expansion of urban agricultural projects in this state.
         Sec. 60A.002.  DEFINITION.  In this chapter, "authority" 
  means the Texas Urban Agricultural Innovation Authority.
         Sec. 60A.003.  BOARD OF DIRECTORS. (a)  The authority is
  governed by a board of directors composed of the commissioner and
  eight members appointed by the commissioner.  Members of the board
  must be appointed in the numbers specified and from the following
  categories:
               (1)  two persons who are elected or appointed officials
  of a municipality with a population of at least 500,000;
               (2)  three persons who are knowledgeable about
  agricultural lending practices;
               (3)  one person who is a representative of an
  agricultural business, as defined by Section 58.002; and
               (4)  two persons who represent urban farmers and the
  interests of urban 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 four members expiring on
  January 1 of each odd-numbered year.
         (c)  Any vacancy occurring in an appointed position on the
  board shall be filled by the commissioner for the unexpired term.
         (d)  A board member is not entitled to compensation or
  reimbursement for serving as a director.
         (e)  Appointments to the board shall be made without regard
  to the race, color, disability, sex, religion, age, or national
  origin of the appointees.
         Sec. 60A.004.  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 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.
         Sec. 60A.005.  ADMINISTRATION. (a)  The commissioner with
  the assistance of the board shall administer the authority.  The
  commissioner may appoint, employ, contract with, and provide for
  employees, consultants, agents, and experts as the business of the
  authority may require.
         (b)  The board shall hold regular and special meetings at
  times specified by the chairman.
         (c)  The board is subject to Chapter 551, Government Code,
  and Chapter 2001, Government Code.
         Sec. 60A.006.  FISCAL ACCOUNTING OF ADMINISTRATION.
  (a)  All funds acquired under this chapter may be used for
  administration of this chapter.
         (b)  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.
         (c)  The board members, administrator, and staff of the
  authority may not be personally liable for loans issued or
  contracts executed by the authority and shall be exculpated and
  fully indemnified in the documents relating to any loans except in
  the case of fraudulent or wilful misconduct on the part of the
  individual seeking exculpation or indemnification.
         Sec. 60A.007.  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 60A.003;
               (2)  does not maintain during service on the board the
  qualifications required by Section 60A.003; or
               (3)  cannot because of illness or disability discharge
  the member's duties for a substantial part of the term for which the
  member is appointed.
         (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.
  [Sections 60A.008-60A.050 reserved for expansion]
  SUBCHAPTER B.  PURPOSES AND POWERS
         Sec. 60A.051.  PURPOSES OF AUTHORITY. In order to promote
  the creation and expansion of urban agricultural projects in this
  state, the authority shall implement programs under Subchapters C
  and D to:
               (1)  make or acquire loans to eligible persons;
               (2)  make or acquire loans to lenders to enable those
  lenders to make loans to eligible persons;
               (3)  insure, coinsure, and reinsure, wholly or partly,
  loans to eligible persons;
               (4)  guarantee, wholly or partly, loans to eligible
  persons; and
               (5)  make grants to eligible persons.
         Sec. 60A.052.  POWERS OF AUTHORITY. (a)  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 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;
               (4)  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;
               (5)  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 the authority's
  purposes;
               (6)  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;
               (7)  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;
               (8)  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; and
               (9)  to request, accept, and use gifts, loans,
  donations, aid, guaranties, allocations, subsidies, grants, or
  contributions of any item of value for the furtherance of any of its
  purposes.
         (b)  Money acquired under Subsection (a)(9) may be used only
  for a purpose of the authority.  Money from a gift or grant made for
  a purpose of the authority is subject only to limitations contained
  in the gift or grant.
         Sec. 60A.053.  PROGRAMS RULES. (a)  The board shall adopt
  rules to establish criteria for determining which eligible persons
  may participate in programs under this chapter. The board's rules
  must state that the policy of the authority is to provide programs
  for providing financial assistance to eligible persons that the
  board considers to present a reasonable risk and have a sufficient
  likelihood of repayment. 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 commissioner.
         (b)  The board shall also adopt rules to establish criteria
  for lenders that may participate in programs under this chapter.
         (c)  Eligible persons or lenders participating in the
  authority's programs shall pay the costs of applying for,
  participating in, and administering and servicing the program, in
  amounts the board considers reasonable and necessary.  The board
  shall charge an administrative fee for guaranteeing a loan that may
  not be less than one percent of the amount of the guaranteed loan.  
  Any costs not paid by the eligible persons or lenders shall be paid
  from the funds of the authority.
         (d)  The board by rule shall adopt an agreement to be used
  between a lender and an approved applicant under Subchapter C under
  which the authority makes a payment 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.
         Sec. 60A.054.  AUTHORITY EXEMPTION FROM TAXATION. The
  property of the authority, its income, and its 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.
         Sec. 60A.055.  FUNDING.  State money may not be used for
  purposes of the authority.
  [Sections 60A.056-60A.100 reserved for expansion]
  SUBCHAPTER C. URBAN FARMER INTEREST RATE REDUCTION PROGRAM
         Sec. 60A.101.  DEFINITIONS. In this subchapter:
               (1)  "Eligible lending institution" means a financial
  institution that makes commercial loans, is either a depository of
  state funds or an institution of the Farm Credit System
  headquartered in this state, and agrees to participate in the urban
  farmer interest rate reduction program and to provide collateral
  equal to the amount of linked deposits placed with it.
               (2)  "Linked deposit" means a time deposit governed by
  a written deposit agreement between the state and an eligible
  lending institution that provides:
                     (A)  that the eligible lending institution pay
  interest on the deposit at a rate that is not less than the greater
  of:
                           (i)  the current market rate of a United
  States treasury bill or note of comparable maturity minus three
  percent; or
                           (ii)  0.5 percent;
                     (B)  that the state not withdraw any part of the
  deposit before the expiration of a period set by a written advance
  notice of the intention to withdraw; and
                     (C)  that the eligible lending institution agree
  to lend the value of the deposit to an eligible borrower at a
  maximum rate that is the linked deposit rate plus a maximum of four
  percent.
         Sec. 60A.102.  URBAN FARMER INTEREST RATE REDUCTION PROGRAM.
  (a)  The board shall establish an urban farmer interest rate
  reduction program to promote the creation and expansion of urban
  agriculture in this state.
         (b)  To be eligible to participate in the urban farmer
  interest rate reduction program, an applicant must own or lease
  real property for agricultural purposes in a municipality with a
  population of at least 500,000.
         (c)  The board shall approve or disapprove any and all
  applications under this subchapter, provided that the board may
  delegate this authority to the commissioner.
         (d)  The board shall adopt rules for the loan portion of the
  urban farmer interest rate reduction program.
         (e)  In order to participate in the urban farmer interest
  rate reduction program, an eligible lending institution may solicit
  loan applications from eligible applicants.
         (f)  After reviewing an application and determining that the
  applicant is eligible and creditworthy, the eligible lending
  institution shall send the application for a linked deposit loan to
  the authority.
         (g)  The eligible lending institution shall certify the
  interest rate applicable to the specific eligible applicant and
  attach it to the application sent to the authority.
         (h)  After reviewing each loan application under this
  subchapter, the board or the commissioner shall recommend to the
  comptroller the acceptance or rejection of the application.
         (i)  After acceptance of the application, the comptroller
  shall place a linked deposit with the applicable eligible lending
  institution for the period the comptroller considers appropriate.  
  The comptroller may not place a deposit for a period extending
  beyond the state fiscal biennium in which it is placed.  Subject to
  the limitations described by Section 60A.105, the comptroller may
  place time deposits at an interest rate described by Section
  60A.101(2).
         (j)  Before the placing of a linked deposit, the eligible
  lending institution and the state, represented by the comptroller,
  shall enter into a written deposit agreement containing the
  conditions on which the linked deposit is made.
         (k)  If a lending institution holding linked deposits ceases
  to be either a state depository or a Farm Credit System institution
  headquartered in this state, the comptroller may withdraw the
  linked deposits.
         (l)  The board may adopt rules that create a procedure for
  determining priorities for loans granted under this subchapter.  
  Each rule adopted must state the policy objective of the rule.
         (m)  A lending institution is not ineligible to participate
  in the urban farmer interest rate reduction program 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.
         Sec. 60A.103.  COMPLIANCE. (a)  On accepting a linked
  deposit, an eligible lending institution must loan money to
  eligible applicants in accordance with the deposit agreement and
  this subchapter.  The eligible lending institution shall forward a
  compliance report to the board.
         (b)  The board shall monitor compliance with this subchapter
  and inform the comptroller of noncompliance on the part of an
  eligible lending institution.
         Sec. 60A.104.  STATE LIABILITY PROHIBITED. The state is not
  liable to an eligible lending institution for payment of the
  principal, interest, or any late charges on a loan made under this
  subchapter.  A delay in payment or default on a loan by a borrower
  does not affect the validity of the deposit agreement.  Linked
  deposits are not an extension of the state's credit within the
  meaning of any state constitutional prohibition.
         Sec. 60A.105.  LIMITATIONS IN PROGRAM. (a)  The maximum
  amount of a loan under this subchapter is $500,000.
         (b)  A loan granted under this subchapter may be used for any
  agriculture-related operating expense, including the purchase or
  lease of land or fixed assets acquisition or improvement, as
  identified in the application.
  [Sections 60A.106-60A.150 reserved for expansion]
  SUBCHAPTER D.  URBAN FARMER GRANT PROGRAM
         Sec. 60A.151.  GRANT PROGRAM. (a)  The authority shall
  administer an urban farmer grant program.  A grant must be for the
  purpose of fostering the creation and expansion of urban
  agricultural projects in this state.
         (b)  The board shall adopt rules governing the operation of
  the program and selection criteria for grant recipients.
         (c)  The board shall select grant recipients.
         Sec. 60A.152.  ELIGIBILITY. To be eligible to receive a
  grant under this subchapter, a person must:
               (1)  be an agricultural producer;
               (2)  own or lease real property for agricultural
  purposes in a municipality with a population of at least 500,000;
  and
               (3)  provide matching funds in the amount of not less
  than one dollar for each dollar of grant money received.
         Sec. 60A.153.  AMOUNT OF GRANTS. A grant under the urban
  farmer grant program may not be less than $5,000 or more than
  $20,000.
         SECTION 2.  As soon as practicable after the effective date
  of this Act, the commissioner of agriculture shall appoint the
  members of the Texas Urban Agricultural Innovation Authority
  created by Section 60A.001, Agriculture Code, as added by this Act.
         SECTION 3.  This Act takes effect September 1, 2011.
 
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