Part I.
Texas Department of Agriculture
Chapter 3.
Boll Weevil Eradication Program
Subchapter D. Requirements for Participation in the Eradication Program and Administrative Penalty Enforcement
4 TAC §3.80, §3.81
(Editor's note: The text of the following sections proposed
for repeal will not be published. The sections may be examined in the offices
of the Texas Department of Agriculture or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Agriculture (the Department) proposes
the repeal of §3.80 and §3.81, concerning procedures for placing
and perfecting liens on harvested cotton under the boll weevil eradication
program. The sections are proposed for repeal in order for the department
to adopt new lien procedures and other related requirements in accordance
with statutory changes made to the Texas Agriculture Code, §74.115 by
Senate Bill 631, 76th Legislature, 1999. The new lien procedures are being
filed in a separate submission, as proposed new Chapter 3, Subchapter I.
Glenna Rhea, Director of Budget and Planning, has determined that for
the first five-year period the sections are in effect, there will be no fiscal
implications for state or local government as a result of enforcing or administering
the repeal.
D. Matt Brockman, special assistant for producer relations also has determined
that for each year of the first five years the repeal is in effect the public
benefit anticipated as a result of enforcing the repeal will be to allow
for the department to develop a more efficient and timely process for the
enforcement of liens for nonpayment of assessments under the boll weevil
eradication program. There will be no effect on small businesses or to persons
who are required to comply with the repeal.
Comments on the proposal may be submitted to Matt Brockman, Special Assistant
for Producer Relations, Texas Department of Agriculture, P.O. Box 12847,
and Austin, Texas 78711. Comments must be received no later than 30 days
from the date of publication of the proposal in the
Texas Register
.
The repeal is proposed under the Texas Agriculture Code, §74.120,
which provides the Commissioner of the Texas Department of Agriculture with
the authority to adopt rules necessary to carry out the purposes of the Code,
Chapter 74, Subchapter D.
The code that will be affected by the proposal is the Texas Agriculture
Code, Chapter 74, Subchapter D.
§3.80.Placing Lien on Harvested Cotton.
§3.81.Judicial Action and Foreclosure of Lien.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
July 12, 1999.
TRD-9904180
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: August 22, 1999
For further information, please call: (512) 463-7541
4 TAC §§3.500-3.509
The Texas Department of Agriculture (the department) proposes
new Chapter 3, Subchapter I, §§3.500-3.509, concerning compliance
certificate program rules for the boll weevil eradication program. The new
sections establish compliance certificate program rules in accordance with
the Texas Agriculture Code, §74.115, as amended by Senate Bill 631,
76th Legislature, 1999 (Senate Bill 631). Senate Bill 631 provides that
the Texas Boll Weevil Eradication Foundation Inc.(the foundation) may develop
a compliance certificate program, subject to department rules, to manage
the payment and collection of assessments levied on cotton growers under
the Code, Chapter 74, Subchapter D. In addition, Senate Bill, 631 provides
for an assessment lien in favor of the foundation in the amount of an assessment
that is due and unpaid. The new sections, as proposed, provide definitions;
provide for notice of the assessment to growers and notice of the lien to
buyers of cotton; provide for payment of the assessment, including incentives
for early payment and payment of a late fee for late payment; establish the
obligation of buyers of cotton and growers in relation to the lien, including
provisions for when first purchasers/buyers of cotton take free of the lien,
and the status of the lien as to subsequent buyers; establish priorities
of liens and provide for release of the liens.
Glenna Rhea, Chief Financial Officer, has determined that for the first
five-year period the sections are in effect, there will be no fiscal implications
for state or local government as a result of enforcing or administering the
sections. The department anticipates that there will be some costs associated
with implementing the compliance certificate program, however, those costs
will be borne by the Texas Boll Weevil Eradication Foundation, Inc., not
the department.
D. Matt Brockman, special assistant for producer relations, has determined
that for each year of the first five years the sections are in effect the
public benefit anticipated as a result of enforcing the sections will be
to assure the financial support for boll weevil eradication programs in Texas
by cotton growers who are most affected by the eradication of the boll weevil
and to help protect the public's investment in boll weevil eradication by
ensuring that cotton growers within each active program honor, in a timely
manner, their financial commitments to the program and the foundation. Moreover,
cotton growers in eight cotton-growing regions of the state of Texas have
determined that eradication of the boll weevil will have a positive impact
on the cotton industry in Texas. Therefore, effective collection procedures
are necessary to help ensure success of the program. There will be an effect
on small businesses and to persons who are required to comply with the rule
as proposed. It is anticipated that there will be some minimal administrative
costs to buyers, and possibly to lenders of cotton growers, primarily in
the verification of payment by a grower and/or, in the case of lenders, with
the documentation of the existence of a priority lien. The department believes
that those costs will be minimal, primarily because the type of verification/documentation
required by these sections is already kept as a regular practice by most
buyers and lenders. There will also be an anticipated cost to growers who
will be issued checks that are made out to the department as a joint payee.
This cost should primarily be related to additional effort and time taken
by growers to seek endorsement of a check by the department or release of
the lien by the foundation. It is not possible to determine the amount of
this cost, however, the department and the foundation are making every effort
to establish procedures that minimize this cost to growers.
Comments on the proposal may be submitted to D. Matt Brockman, Special
Assistant for Producer Relations, Texas Department of Agriculture, P.O. Box
12847, Austin, Texas 78711. Comments must be received no later than 30 days
from the date of publication of the proposal in the
Texas Register
.
The new sections are proposed under the Texas Agriculture Code
(the Code), §74.115, as amended by Senate Bill 631, 76th Legislature,
1999, which provides the Texas Department of Agriculture with the authority
to adopt rules for implementation of a compliance certificate program to
manage the payment and collection of an assessment paid by cotton growers
in active eradication zones including: rules that establish and relate to
the obligations of growers, buyers and others involved in the purchase of
cotton produced in an active eradication zone; rules allowing incentives
in the form of discounts for growers who pay assessments within a prescribed
period of time; rules establishing penalties and interest against growers
who pay assessments after a prescribed time period; and other provisions
the Commissioner of Agriculture may determine are proper; and the Code,
§74.120, which provides the Commissioner of Agriculture with the authority
to adopt rules necessary to carry out the purposes of the Code, Chapter 74,
Subchapter D.
The code that will be affected by the proposal is the Texas Agriculture
Code, Chapter 74, Subchapter D.
§3.500.Statement of Purpose/Authority.
The Texas Agriculture Code (the Code), Chapter 74, Subchapter D,
74.115, as amended by Senate Bill 631, enacted by the 76th Legislature, 1999
(Senate Bill 631), provides that the Texas Boll Weevil Eradication Foundation,
Inc. (the foundation) may develop a compliance certificate program to manage
the payment and collection of an assessment levied under the Code, Chapter
74, Subchapter D, and, subject to rules adopted by the Texas Department
of Agriculture ( the department) and the Commissioner of Agriculture (the
commissioner), may issue a compliance certificate for cotton for which an
assessment has been paid. In addition, 74.115(d), as amended, provides for
an assessment lien in favor of the foundation in the amount of an assessment
that is due and unpaid. A cotton buyer takes free of the assessment lien
if the buyer receives a compliance certificate issued by the foundation that
certifies that the assessment has been paid to the foundation or if the buyer
pays for the cotton by a check on which the department is named as a joint
payee.
§3.501.Definitions.
In addition to the definitions set out in the Texas Agriculture Code,
Chapter 74, Subchapter D, the following words and terms when used in this
subchapter shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Active eradication zone - A boll weevil eradication zone
established under the Texas Agriculture Code, Chapter 74, Subchapter D,
in which cotton growers by referendum have approved their participation in
a boll weevil or pink bollworm eradication or suppression program and have
approved an assessment to fund costs of implementing the program, and in
which the Foundation has begun operations.
(2)
First buyer of cotton - A buyer who buys cotton from
a cotton grower and disburses funds to the grower for the purchase of cotton.
(3)
Department - Texas Department of Agriculture
(4)
Due and unpaid- An assessment is due and unpaid if
it has not been paid after the due date set by the commissioner for payment,
and no written agreement has been made with the foundation to pay the assessment.
(5)
FSA - The Farm Service Agency of the United States
Department of Agriculture
§3.502.Approval of Assessment Rates and Collection Dates.
(a)
Each year, the foundation shall recommend assessment rates,
the date a notice of assessment will be sent, and assessment due dates for
each active eradication zone to the department for consideration by the commissioner.
(b)
The Commissioner will review these proposals and determine
the assessment rates and due dates for each zone.
§3.503.Notice of Assessment to Grower.
(a)
The Foundation shall send notice of assessments to each
cotton grower in each active zone who has certified cotton acreage with
the FSA or has reported cotton acreage to the foundation. Notice shall be
sent at least 30 days before the date set by the commissioner as the due
date for assessments in that zone.
(b)
If special circumstances prevent the Foundation from meeting
this deadline, the foundation must receive a written waiver from the Commissioner.
(c)
The notice of assessment shall include the grower's farm
number(s) or the foundation's field ID number if the acreage has not been
certified with the FSA, counties in which farms are located and identification
number (such as social security number or taxpayer identification number)
and shall inform the grower of the following:
(1)
the date the assessment is due;
(2)
the full amount of their assessment;
(3)
information relating to an early payment discount;
(4)
information relating to payment after the due date;
and
(5)
that an automatic lien will attach to the cotton grown
on the acreage which is the subject of the assessment and perfect 60 days
after the date of the notice of assessment unless the assessment is paid
by that date, or written arrangements are made with the foundation by that
date to pay the assessments.
§3.504.Payment of Assessments, Incentives for Early Payment; Penalties for Late Payment; Website.
(a)
All assessments are due in full, postmarked to the foundation
on or before the due date set by the commissioner each year.
(b)
Any grower who pays the full amount of the assessment 15
or more days before the due date will be entitled to a reduction in the
total amount of their assessment of not less than 2.0%.
(c)
Any grower who has not paid the amount of the assessment
by the due date will be charged a late fee not to exceed 1.5% per month
of the total amount due to the foundation.
(d)
Assessments not paid 30 days or more after the due date
may be referred to the department for assessment of administrative penalties
in accordance with the Texas Agriculture Code§74.115, as amended by
Senate Bill 631 and §3.74 of this title (relating to Penalties for Non-payment
of Assessment and Failure to Timely Report Acreage).
(e)
The foundation shall maintain a limited-access website
that is Y2K compliant. This website shall list by zone growers whose assessments
are due and unpaid beginning the date that the assessment lien established
by the Code, §74.115 attaches and is perfected. Any grower whose name
does not appear on this listing on the date the first buyer of cotton disburses
funds to the grower, shall be considered as having paid the assessment in
full. The specific information on this website shall include all of the
information required to be included on a compliance certificate as described
in §3.505 of this title (relating to Compliance Certificates) and any
other information deemed necessary by the department. The website shall be
updated as information is received by the Foundation, but at least daily
during normal business hours. Access to the website shall be provided to
known first buyers of cotton including cotton merchants, cotton marketing
cooperatives, cotton gins and lenders. Access to the website may also be
provided to others, as appropriate..
§3.505.Compliance Certificates.
(a)
When a grower has paid all assessments in full for the
current crop year, the foundation shall issue a compliance certificate to
that grower.
(b)
This compliance certificate shall include the following
information:
(1)
The name of the grower;
(2)
The grower's identification number. This shall be
either a social security number or tax identification number;
(3)
All farm numbers on which the grower has an interest
in cotton and the full assessment has been paid. This shall include a listing
of the county and the farm number as certified by the FSA, or the foundation's
identification number for that farm in the event that the farm is not certified
with FSA.
(c)
A compliance certificate shall be issued and mailed by
the foundation within 5 working days of the date the full amount of assessment
is received by the foundation.
(d)
In addition to the document described in subsection (b)
of this section, the following shall also serve the same purpose as a compliance
certificate and shall be accepted by first buyers of cotton as proof of payment
of an assessment, in the same manner as a compliance certificate:
(1)
payment information obtained from the foundation's limited
access website including a download or printout of payment information relating
to individual growers;
(2)
a receipt issued by the foundation evidencing payment
of the assessment on the acreage on which the cotton was grown as long as
the receipt contains the same information required to be included on the
compliance certificate; or
(3)
a faxed copy of the compliance records of the foundation.
§3.506. Attachment of Lien on Harvested Cotton.
(a)
An assessment lien established under the Texas Agriculture
Code, §74.115, as amended by Senate Bill 631 (assessment lien) attaches
and is perfected 60 days after the date the foundation mails notice of an
assessment due and owing by a cotton grower certifying or reporting cotton
production within an active eradication zone.
(b)
The assessment lien attaches to cotton produced and harvested
from acreage subject to the assessment that assessment year for the amount
of the assessment which is due and unpaid, as defined by §3.501 of this
title (relating to Definitions), for that assessment year.
(c)
The assessment lien attaches only as to the first buyer
of cotton and subsequent buyers take the cotton free of the assessment lien.
(d)
A first buyer of cotton takes free of the assessment lien
if the buyer receives a compliance certificate or other acceptable documentation
as described in §3.505 of this title (relating to Compliance Certificates).
(e)
A first buyer of cotton also takes free of the assessment
lien if the buyer pays for the cotton with a check naming the department
as a joint payee, or writes a separate check for the full amount of the unpaid
assessment naming the department as the sole payee.
(f)
In the event a check is issued naming the department as
a joint payee:
(1)
The grower may contact the department or the foundation
for instructions on how to proceed to obtain an endorsement of the check
and a release of lien.
(2)
If a check is issued to a lender or other entity as
well as the department and the grower, and the lender or other entity is
entitled to all or a portion of the proceeds from the sale resulting in
only a partial or no payment of the assessment, the grower must provide documentation
adequate to establish the amount of the lien owed to the lender or other
entity, prior to endorsement of the check by the department and release of
the assessment lien by the Foundation.
(3)
In addition to paying the assessment owed in full
or providing documentation that a superior lien holder has claim to all
or a portion of the proceeds from sale of the cotton, before the department
will release an endorsed check to the grower and the foundation issues a
release of lien, the grower shall verify that no other liens exist as to
the cotton which is the subject of the assessment lien by executing an affidavit
to that effect.
§3.507.Notice to Buyers.
Notwithstanding any other provisions of this subchapter:
(1)
Once a lien is perfected and attaches in accordance with
the Texas Agriculture Code, §74.115, as amended by Senate Bill 631,
the lien established will be solely against cotton growers and first buyers
of cotton, as defined by §3.501 of this title (relating to Definitions),
and will be subject to and pre-empted by the Food Security Act of 1985 (7
USCA 1631), and the lien notice provisions thereof to first buyers of cotton,
to be given by the foundation.
(2)
The lien established by § 74.115 is not effective
or enforceable against a first buyer of cotton until the written notice
described in paragraph (1) of this section is received by the buyer.
§3.508.Lien Priority.
An assessment lien placed in accordance with this section is not
a priority lien, and does not have superior status to prior liens on the
harvested cotton to which the lien is attached under this subchapter and
the Texas Agriculture Code, §74.115, as amended by Senate Bill 631.
§3.509.Release of Lien.
The foundation will issue a release of lien to the grower:
(1)
once the assessment has been paid in full, or adequate
documentation has been provided to establish that a prior lienholder is
entitled all or a portion of proceeds of the sale of cotton that would go
towards the assessment; and
(2)
the grower has executed an affidavit verifying that
no other lienholders are entitled to the proceeds of the cotton, which is
subject to the assessment lien.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
July 12, 1999.
TRD-9904181
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: August 22, 1999
For further information, please call: (512) 463-7541
4 TAC §§26.1, 26.3, 26.5-26.10
The Board of Directors (the board) of the Texas Agricultural
Finance Authority (the Authority) of the Texas Department of Agriculture proposes
amendments to §§26.1, 26.3, and 26.5-26.10, concerning the Authority's
Linked Deposit Program.
The amendments are proposed in order to provide an expansion of the linked
deposit program available through the Authority in accordance with statutory
changes made to the Texas Agriculture Code, Chapter 44, by the enactment of
House Bill 3050 by the 76th Texas Legislature, 1999. Other changes are also
made throughout the sections to make them consistent with House Bill 3050.
The proposed amendments to §26.1 add a definition for alternative crops
produced in the state; add a definition for the commissioner of agriculture;
update from 1995 to 1997 the reference to the publication compiled by the
Texas Agricultural Statistics Service providing information on customarily
grown crops; clarify the linked deposit agreement between the state and the
lender in regard to the maximum rate to be charged to the eligible borrower;
and delete the definition of administrator. The proposed amendment to §26.3
expands the purpose of the program to include the creation and enhancement
of value-added businesses and providing assistance for disaster relief projects.
The proposed amendment to §26.5(b) clarifies that the eligible borrower
is to notify the Authority's office in Austin upon the receipt of loan proceeds.
The proposed amendment to §26.6(5) changes the maximum interest rate
to be charged to an eligible borrower by a lender from the current market
rate plus four percent to the linked deposit rate plus four percent. The proposed
amendment to §26.6(6) clarifies that the application may be sent by facsimile
transiever to the Authority in Austin. The proposed amendments to §26.7(a)
and (b) clarify the application review process by stating the staff of the
Authority will review the applications. New subsection (c) provides that the
board will approve or deny any and all applications, provided that such authority
may be delegated to the commissioner by the board. The proposed amendments
to §26.8(b) and (c) clarify the actions of the comptroller regarding
an application. The proposed amendment to §26.9(a) expands the use of
loan proceeds for the program to include any agriculture-related operating
expense, including the purchase or lease of land or fixed asset acquisition
or improvement, as identified in the application and further provides that
a loan under this program may be applied to existing debt for an eligible
applicant. The proposed amendment to §26.10(1) expands the program to
$25 million from $15 million. The proposed amendment to §26.10(3) expands
the eligibility criteria to include the finance of crops declared eligible
for natural disaster relief to $250,000. The proposed amendments to §26.10(11)
update the listing of customarily grown crops that are not eligible for participation
in the program by adding broilers, green peppers, peaches, sunflowers, and
fresh tomatoes, and deleting broccoli and oats. The proposed amendments to
§26.10(12) update the listing of alternative crops eligible for participation
in the program by adding broccoli, farm chickens, and oats, deleting peaches,
and sunflowers. The proposed amendment to §26.10(13) provides criteria
for projects eligible for natural disaster relief under the program and the
term of eligible participation in the program by a disaster relief applicant.
Robert Kennedy, Deputy Assistant Commissioner for Finance, has determined
that for the first five-year period that the proposed amendments are in effect
there will be no anticipated fiscal implication to state or local government
as a result of enforcing or administering the proposal.
Mr. Kennedy has also determined that for each year of the first five years
the amendments are in effect, the public benefit anticipated as a result of
enforcing the amendments will be the provision of financial assistance to
more agricultural businesses in the state and to provide more efficient financial
assistance programs. There is no anticipated effect on small businesses, except
that eligible businesses that are granted financial assistance under the Authority's
programs will benefit from that assistance. There will be no anticipated economic
costs to persons required complying with the proposals other than regular
costs associated with the application process for those seeking financial
assistance from the Authority.
Comments on the proposal may be submitted to Robert Kennedy, Deputy Assistant
Commissioner for Finance, Texas Department of Agriculture, P.O. Box 12847,
Austin, Texas, 78711. Comments must be received no later than 30 days from
the date of publication of the proposal in the
Texas
Register
.
The amendments are proposed under the Texas Agricultural Code
(the Code), §44.007, which provides the Authority with the authority
to promulgate rules for the loan portion of the linked deposit program; the
Code, §58.022, which provides the Authority with authority to adopt rules
and procedures necessary for the administration of its programs including
the setting and collection of fees in connection with the program; and. the
Code, §58.023, which provides the Authority with authority to adopt rules
to establish criteria for eligibility of applicant and lenders under the financial
assistance programs.
The Texas Agriculture Code, Chapters 44 and 58 are affected by the proposal.
§26.1.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Act--The Texas Agriculture Code, §§44.001-44.010.
(2)
Alternative agriculture crops--Crops not customarily
grown in this state but that could feasibly be produced in the state.
[
(3)-(8)
(No change.)
(9)
Commissioner--The Commissioner
of the Texas Department of Agriculture.
(10)
[
(11)
[
(12)
[
(13)
[
(14)
[
(15)
[
(A)
processing and marketing agricultural crops in this state;
(B)
producing alternative agricultural crops in this state;
(C)
producing agricultural crops in this state, the production
of which has declined [
(D)
producing agricultural crops in this state using water
conservation equipment for agricultural production purposes; or
(E)
financing of water conservation projects.
(16)
[
(17)
[
(A)
the lender pay interest on the deposit at a rate that is
not less than the greater of:
(i)
the current market rate minus 2.0%; or
(ii)
1.5%;
(B)
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)
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
[
(18)
[
(19)
[
(20)
[
(21)
[
§26.3.Purpose.
The purpose of the program is to encourage private commercial loans
for the
enhancement of
[
§26.5.Application Procedures for Applicant.
(a)
(No change.)
(b)
The eligible borrower shall notify the
Authority's
office
[
§26.6.Application Procedures for the Lender.
A lender must comply with the following procedures to obtain approval
of an application for participation in the program.
(1)-(4)
(No change.)
(5)
A loan, while under the program, shall be set at a
rate of interest established according to the prescribed linked deposit formula
under the Act. The linked deposit rate will be recalculated at the end of
the fiscal biennium. The eligible borrower's loan rate shall not exceed the
linked deposit
[
(6)
A lender shall forward the original completed and
approved application to the Authority [
(7)-(11)
(No change.)
§26.7.Procedure for Review.
(a)
Upon receipt of the application
,
the Authority
staff
shall review the application and determine:
(1)-(5)
(No change.)
(b)
The Authority
staff
shall notify the applicant
and the lender of any deficiencies in the application within ten business
days after receipt of the application. The applicant and the lender may amend
the application to comply with the Authority's comments or withdraw the application.
(c)
The Board will approve or deny
any and all applications under this chapter, provided that the board may delegate
such authority to the Commissioner.
(d)
[
§26.8.Acceptance and Rejection Procedures.
(a)
(No change.)
(b)
If the comptroller
does not accept
[
(c)
Unless the comptroller
declines to act on the application
[
(d)-(i)
(No change.)
§26.9.Use of the Loan Proceeds.
(a)
Loan proceeds under the program
may
[
(b)-(c)
(No change.)
§26.10.Program Limitations.
In addition to the limitations already set forth in these rules, the
following limitations apply.
(1)
Not more than
$25
[
(2)
(No change.)
(3)
The maximum amount of a loan to
finance production
of a crop declared eligible for natural disaster relief
[
(4)
(No change.)
(5)
The maximum amount of a loan to process
and
[
(6)-(10)
(No change.)
(11)
The following customarily grown crops are not eligible
for participation in the production financing for alternative crops portion
of the program: bell peppers, [
(12)
The following alternative crops that are not customarily
grown in this state are eligible for participation in the production financing
portion of the program: aloe vera, barley, beets other than sugar, blueberries,
broccoli,
buffalo, canola, cashmere goats, catfish, cauliflower, crambe,
crawfish, cut flowers, dairy goats, eggplant, emu, experimental varieties
of customarily grown crops, exotic game species for venison,
farm chickens,
table and wine grapes, greens, herbs, honey, thoroughbred horses, jalapenos,
jojoba, kenaf, llamas, lean and natural beef, lettuce, longhorn cattle, mesquite,
mushrooms, native plants,
oats,
oriental vegetables, [
(13)
A project eligible for natural disaster relief
[
(14)-(15)
(No change.)
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of the Secretary of State, on
July 12, 1999.
TRD-9904179
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: August 22, 1999
For further information, please call: (512) 463-4075
The Board of Directors (the board) of the Texas Agricultural Finance
Authority (the Authority) of the Texas Department of Agriculture proposes
amendments to §§30.1-30.14 of Chapter 30, Subchapter A, §§30.51-30.54
of Chapter 30, Subchapter B, and §30.60, and §§30.62-30.63
of Chapter 30, Subchapter C, concerning the Authority's Young Farmer Loan
Guarantee Program.
The amendments are proposed in order to provide an expansion of the young
farmer loan guarantee program available through the Authority in accordance
with statutory changes made to the Texas Agriculture Code (the Code), Chapter
58, by the enactment of House Bill 3050 by the 76th Texas Legislature, 1999.
The proposed amendment to §30.1 expands authority for the program by
adding the enhancement of a farming or ranching operation or an agricultural-related
business and deleting references to a first independent operation. The proposed
amendment to §30.2 expands the purpose of the program to the enhancement
of a farming or ranching operation and the establishment of an agricultural-related
business. The proposed amendments to §30.3 update the reference to the
authority for the young farmer loan guarantee program from Chapter 253 of
the Code to Chapter 58 of the Code; delete the definition of an agricultural
science teacher, a county agent, a district based agricultural economist,
a first farm or ranch operation, and a lender; add a definition for a commercial
lender to include a chartered state of federal institution, a credit union,
or a Farm Credit System institution, add a definition for the commissioner
to be the commissioner of agriculture; clarify the definition of an eligible
applicant to be a person applying who is at least 18 years of age but less
than 40 years of age and who complies with the application procedures of the
program rules; clarify the definition of interest rate; clarify the definition
of loan as a loan made by a commercial lender and approved for guarantee by
the board or the commissioner in accordance with the program rules; clarify
a lender to be a commercial lender; change the loan guarantee amount for the
program from the lesser of $100,000 or 90% of the total loan to the lesser
of $250,000 or 90% of the total loan; change the definition of plan from a
cash flow, production, or management plan to the documentation submitted to
the lender in support of the application; and clarify the definition of project
from a first farm or ranch operation, which would further the production of
agricultural products, to an enterprise that establishes or enhances a farming
or ranching operation or an agricultural-related business, which furthers
Texas agriculture. The proposed amendment to §30.4 clarifies the application
process and criteria for the applicant to submit the application to the commercial
lender for the program. The proposed amendment to §30.5(a) expands the
eligible cost under the program to include the provision of 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 for the agricultural-related business,
as defined in the plan. The proposed amendment to §30.5(b) clarifies
those costs that are ineligible for the program to be any cost that is not
identified in the plan and the purchase of real estate exclusively for agriculture
production purposes. The proposed amendment to §30.6(a) and (b) changes
the term lender to commercial lender. The proposed amendment to §30.6(c)
clarifies the lender as a commercial lender and deletes the requirement of
any comments from the county agent, agricultural science teacher, or district
based agricultural economist who reviewed the plan. The proposed amendments
to §30.6(d) add the commissioner in the review and approval process,
if such authority is delegated by the board; and change the reference to the
Act from the Code, §253.004 to §58.054 regarding the application
determination criteria used by the board or the commissioner. The proposed
amendment to §30.6(e) clarifies the notification of approval procedure
and changes the term lender to commercial lender. The proposed amendment to
§30.6(f) clarifies the process for denial of an application and changes
the term lender to commercial lender. The proposed amendment to §30.6(h)
clarifies the reporting requirement of staff to the board incorporating any
applications approved by the commissioner, if approval authority is so delegated
by the board. The proposed amendment to §30.7 clarifies the information
to be presented to a commercial lender by an applicant for the program to
be the application form provided by the Authority, the plan submitted to the
lender for the proposed operation, the completed application from a commercial
lender which identifies how the proceeds of the loan will be used to implement
the applicant's plan, and the signed statement of the commercial lender that
a guarantee is required for approval of the application. The proposed amendment
to §30.8(a) clarifies that the board or the commissioner will consider
the application upon completion of the review by staff. The proposed amendment
to §30.8(b) clarifies that the application approval is subject to the
availability of funds in the young farmer loan guarantee account. The proposed
amendment to §30.9(a) changes the limitations for the program from the
lessor of $100,000 or 90% of the total loan to $250,000 or 90% of the total
loan. The proposed amendment to §30.9(b) includes the commissioner, if
delegated by the board, in the decision process. The proposed amendment to
§30.9(c) changes the lender to the commercial lender. The proposed amendment
to §30.9(e) changes the maximum amount of participation by the program
to not exceed the lesser of 90% of the total loan or $100,000 to the lesser
of 90% of the total loan or $250,000. The proposed amendments to §30.9(g)
and §30.10(a) change the term lender to commercial lender. The proposed
amendments to §30.10(b) change the term lender to commercial lender,
add a requirement that the commercial lender notify the Authority of the payment
of all personal property taxes by the borrower, and renumber the paragraph
(3) to (4). The proposed amendment to §30.11 changes the term lender
to commercial lender. The proposed amendment to §30.12(a) clarifies the
approval criteria used by the board or the commissioner when approving an
application for the program. The proposed amendment to §30.12(b) changes
the term lender to commercial lender and clarifies that the commissioner can
decline an application. The proposed amendment to §30.12(c) clarifies
where copies of the credit policy and procedure document may be obtained.
The proposed amendments to §30.13 and §30.14 change the term lender
to commercial lender.
The proposed amendment to §30.51 clarifies that voluntary assessments
will be remitted to the comptroller for deposit in the Texas agricultural
fund for the purpose of making loan guarantees under the young farmer loan
guarantee program. The proposed amendments to §30.52 change the Fund
to the Account identified as the Young Farmer Loan Guarantee Account within
the Texas Agricultural Fund and correct the reference to the statutory authority
for the assessments. The proposed amendment to §30.53(c) corrects the
identity of the state treasury to the comptroller. Other proposed amendments
to §30.53 correct the identity of the state treasury to the comptroller,
change the general revenue fund to the Texas agricultural fund, and correct
the reference to the statutory authority for the assessments. The proposed
amendment to §30.54(c) deletes the subsection, as it is no longer needed.
The proposed amendments to §30.60 update the reference to the authority
for the young farmer loan guarantee program from Chapter 253 of the Code to
Chapter 58 of the Code, add the establishment of an agricultural-related business
as criteria for assistance under the Young farmer program, and delete the
first farm or ranch requirement. The proposed amendment to §30.62 changes
the definition of the young farmer loan guarantee account from an account
in the general revenue of the state to an account within the Texas Agricultural
Fund. The proposed amendment to §30.63(a) clarifies that the interest
rate established under the interest reduction program is to be fixed rate
for the term of the guarantee. The proposed amendment to §30.63(b) clarifies
the calculation of the interest reduction payment to the borrower under the
interest reduction program. The proposed amendment to §30.63(d) changes
the term lender to commercial lender for consistency with other sections.
The proposed amendments to §30.63(e) and (h) change the term lender to
commercial lender for consistency with other sections.
Robert Kennedy, Deputy Assistant Commissioner for Finance, has determined
that for the first five-year period that the proposed amendments are in effect
there will be no anticipated fiscal implication to state or local government
as a result of enforcing or administering the proposed amendments.
Mr. Kennedy has also determined that for each year of the first five years
the amendments are in effect, the public benefit anticipated as a result of
enforcing the amendments will be the provision of financial assistance to
more agricultural businesses in the state and to provide more efficient financial
assistance programs. There is no anticipated effect on small businesses, except
that eligible businesses that are granted financial assistance under the Authority's
programs will benefit from that assistance. There will be no anticipated economic
costs to persons required to comply with the proposals other than regular
costs associated with the application process for those seeking financial
assistance from the Authority.
Comments on the proposal may be submitted to Robert Kennedy, Deputy Assistant
Commissioner for Finance, Texas Department of Agriculture, P. O. Box 12847,
Austin, Texas 78711. Comments must be received no later than 30 days from
the date of publication of the proposal in the
Texas
Register
.
Subchapter A. General Procedures
4 TAC §§30.1-30.14
The amendments to §§30.1-30.14 are proposed under
the Texas Agricultural Code (the Code), §58.022, which provides the Authority
with authority to adopt rules and procedures necessary for the administration
of its programs including the setting and collection of fees in connection
with the program; and the Code, §58.023, which provides the Authority
with authority to adopt rules to establish criteria for eligibility of applicants
and lenders under the financial assistance programs.
The code affected by the proposal is the Texas Agriculture Code, Chapter
58.
§30.1.Authority.
Through action of the Texas Legislature, the Texas Agricultural Finance
Authority is authorized to establish the Young Farmer Loan Guarantee Program
to provide financial assistance to eligible applicants who are establishing
or enhancing
their
farming
[
§30.2.Purpose.
The Young Farmer Loan Guarantee Program is to provide financial assistance
in the form of loan guarantees to eligible applicants who desire to establish
or enhance
their [
§30.3.Definitions.
In addition to the definitions set out in the Texas Agriculture Code,
Chapter
58
[
(1)
Act--Texas Agriculture Code, Chapter
58, Subchapter
E
[
[
Agricultural science
teacher--An individual employed by a Texas school district for the purpose
of teaching agricultural science and technology. ]
(2)
[
(3)
[
(4)
[
(5)
[
(6)
[
(7)
[
(8)
Commercial lender--A commercial lending
institution chartered by the state or federal government, including a savings
bank, a credit union, or a Farm Credit System institution.
(9)
Commissioner--The Commissioner of
the Texas Department of Agriculture.
(10)
[
[(10)
District-based agricultural economist--A
district agricultural economist employed by the Texas Agricultural Extension
Service.]
(11)
Eligible applicant--A person applying for a loan
guarantee who:
(A)
is at least 18 years of age but younger than 40 years of
age;
[
(B)
[
(12)
Equity--The applicant's contribution to a project
in the form of cash, land, or other depreciable property which is unencumbered
[
[(13)
First farm or ranch operation--An
independent operation: ]
[(A)
in which the applicant as owner/operator provides substantially
all of the management and labor for the operation; and ]
[(B)
in which the applicant as owner/operator provides or directly
arranges for the financing of the operation.]
(13)
[
[(15)
Lender--A state or nationally chartered
commercial lending institution, savings and loan association, credit union,
or Farm Credit System institution in the state.]
(14)
[
(15)
[
(16)
[
(17)
[
(18)
[
(19)
[
(20)
[
(21)
[
(22)
[
§30.4.Applicant Requirements.
An applicant may submit an application to the
commercial lender
for the program
[
(1)
[
(2)
[
[(3)
applicant provides evidence that
the proposed project is his or her first farm or ranch operation;]
(3)
[
(4)
[
§30.5.Project Costs.
(a)
Eligible costs. Financing received under this program may
be used [
(b)
Ineligible costs. Use of financing received under this
Program for any costs other than
those identified in the plan
[
§30.6.Filing Requirements and Consideration of Applications.
(a)
Application forms.
A
[
(b)
Submission of application. All applicants are required
to obtain a preliminary commitment from a
commercial
lender before
applications will be accepted by the Authority. Staff will be available prior
to submission of the qualified application to assist applicants and
commercial
lenders in determining project eligibility.
(c)
Staff review. Staff will review the application for completeness
and will notify the
commercial
lender of any additional information
required. When all required information has been received, staff will conduct
a credit review, evaluate the project, and examine its benefits for Texas
agriculture, economic growth and job creation in the state. [
(d)
Board
or commissioner
review. The staff shall
submit a credit memorandum to the board
or the commissioner,
which
shall include a recommendation for approval or denial for each qualified application
received by the program. The board
, or the commissioner upon delegation
of authority by the board,
will approve or deny the qualified application
.
[
(e)
Notification of approval. Upon conditional approval of
the qualified application [
(f)
Denial of application. If the [
(g)
(No change.)
(h)
Reporting to the board. Staff shall report to the board
at each board meeting the status of loans [
§30.7.Contents of the Application.
[
(1)
the
[
[(A)
the applicants name and address;]
[(B)
the applicant's current valid driver's
license number;]
[(C)
the applicant's resume which identifies
the agricultural experience of the applicant;]
[(D)
two credit references and two unrelated
personal references;]
[(E)
information and/or letters of commitment
regarding other funding sources, if applicable;]
[(F)
disclosure of any and all business affiliations
of the applicant with members of the board, employees of the department, the
staff and/or lender which could present a conflict of interest;]
[(G)
any other information which the applicant,
the lender or the Authority decide may be useful in the determination of the
applicant's eligibility and/or creditworthiness; and,]
[(H)
financial statements provided in accordance
with generally accepted accounting principles. They should be typed or written
in ink, dated (no more than three months old) and signed by the applicant
and spouse, if applicable. Printed forms of other lending institutions will
be accepted. A financial statement will be required from each person/entity
who will become personally liable on the loan.]
(2)
the plan, as submitted to the lender, for
the applicant's proposed farm or a ranch operation or agriculture-related
business to be financed that includes a budget for the proposed operation
[
(3)
a completed application for a loan from a commercial
lender on which an eligible applicant has indicated how the loan proceeds
will be used to implement the applicant's plan
[
(4)
the
[
[(5)
a completed application for a loan
from a commercial lender, including all attachments and other supporting documentation,
on which the applicant has indicated that the loan proceeds will be used to
implement the applicant's plan. If available, the loan application must include
four years of historical financial statements of any previous farming or ranching
activity of the applicant, including balance sheets, income statements and
cash flow statements, and applicant's complete federal income tax returns
for the four years preceding the date of the application.]
§30.8.Application Process.
(a)
A qualified application will be considered by the board
or the commissioner
at the first available meeting of the Authority
[
(b)
Approval
[
(c)-(d)
(No change.)
§30.9.General Terms and Conditions of Authority's Financial Commitment.
(a)
Maximum amount of loan guarantee. The Authority shall not
provide a loan guarantee to borrower, including its affiliates, that at any
one time exceeds the lesser of
$250,000
[
(b)
Security. Financial commitments approved under this program
must be secured by a first lien on collateral of a type and value which, when
considered with other criteria, in the judgment of the board
or the commissioner
affords reasonable assurance of repayment of the loan.
(c)
Closing of the loan. The commissioner of agriculture or
her
[
(d)
(No change.)
(e)
Co-participation. An applicant may seek co-participation
in financial assistance from other private and governmental sources. In any
event, the Authority's maximum guarantee in the credit may not exceed the
lesser of 90% of the loan or
$250,000
[
(f)
(No change.)
(g)
Interest rate. The interest rate on the guaranteed loan
(not including guarantee fees) shall be the rate charged by the
commercial
lender and approved by the Authority.
§30.10.Reporting Requirements.
(a)
Each recipient of a loan under this program shall provide
financial and cash flow statements as required by the
commercial
lender and approved by the Authority, no less frequently than annually.
(b)
Each
commercial
lender shall report in writing
to the Authority as follows:
(1)
(No change.)
(2)
quarterly monitoring reports indicating loan balance,
repayment status, and any credit changes reported to the
commercial
lender as indicated on the prescribed form to be supplied by the Authority;
[
(3)
notification to the Authority
of the payment of all personal property taxes; and
(4)
[
(c)
(No change.)
§30.11.Repayment Schedule.
The
commercial
lender shall establish a repayment schedule
for each approved loan taking into consideration the repayment schedule submitted
by the borrower in the qualified application and the reasonableness of the
projected financial information. Failure to make any payment as scheduled
shall be considered an event of default on the loan and shall constitute grounds
for demand for full and immediate repayment of the loan, with approval of
the
commercial
lender and the Authority.
§30.12.Criteria for Approval of a Loan Guarantee.
(a)
Criteria for an eligible applicant. The board
or the
commissioner
shall consider the following factors in deciding whether
to approve an application for a loan guarantee:
(1)
(No change.)
(2)
the eligible applicant's qualifications [
[(A)
credit history and financial condition
of the eligible applicant;]
[(B)
historical financial statements of the
eligible applicant;]
[(C)
the management experience and ability
of the eligible applicant];
(3)
the feasibility of the eligible applicant's plans
[
[(A)
evidence of the manner, means, and security
for repayment of the loan by the eligible applicant;]
[(B)
the reasonableness and completeness of
the plan;]
[(C)
the projected cash flow of the project;]
[(D)
the collateral and other sources of guaranty
or insurance securing the loan; and]
[(E)
the existence of crop insurance and life
insurance on the eligible applicant];
(4)
other funding sources available to the eligible
applicant [
(5)
(No change.)
(b)
Eligibility of the
commercial
lender. The
commercial
lender originating a loan must have a continuing ability
to evaluate, perform, and service the loan; to make the necessary reports
as identified in the rules of the program; and to collect the loan, if requested
by the Authority, upon default. The
commercial
lender must agree
to exercise due diligence in the servicing, maintenance, review, and evaluation
of performance without regard to the existence of participation by the Authority
or any other limitation of risk. The
board or the commissioner
[
(c)
The Authority has adopted a Credit Policy and Procedures
document which contains additional criteria and guidelines used by the Authority
in the loan guarantee review and approval process. The Credit Policy and Procedure
document is adopted by reference herein. Copies may be obtained from the Finance
and Agribusiness
Division
[
§30.13.Loan Administration.
The
commercial
lender shall service the loan and receive
all payments of principal and interest, including assessment of any late charges,
if applicable, in accordance with its loan guarantee agreement with the Authority,
which agreement shall, among other things, obligate the lender to service
the loan even after an event of default.
§30.14 .Eligible Commercial Lender.
(a)
Letter of request. Each
commercial
lender is
required to qualify [
(b)
Investigation. As a condition to participation, a
commercial
lender must agree to make such investigation as it considers
necessary to determine the applicant's viability, the economic benefits to
be derived, the prospects for repayment, and other factors that it considers
necessary to determine whether participation by the applicant is within the
purposes of the program.
(c)
Commitment letter. A
commercial
lender interested
in making a loan guaranteed under the program must submit a qualified application
along with a commitment letter to the Authority outlining the terms and conditions
of the proposed loan. The letter will show the name of the eligible applicant,
purpose of the loan, amount and use of the funds, proposed closing date, and
collateral for the loan.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
July 12, 1999.
TRD-9904176
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: August 22, 1999
For further information, please call: (512) 463-4075
Subchapter I. Compliance Certificate Program Rules
Chapter 26.
Texas Agricultural Finance Authority: Linked Deposit Program
Administrator--The person employed by the Texas Department of Agriculture
designated by the commissioner of agriculture to administer the linked deposit
program.
]
(9)
] Crop--A product or derivative
of any product that is produced or bred on a farm or ranch including: agricultural,
arboricultural, floricultural, horticultural, viticultural, apicultural, aquacultural,
livestock, maricultural, poultry, wild game, or other animal products or derivatives.
(10)
] Current market rate--The
rate of interest on a United States treasury bill or note, the maturity date
of which most closely matches the maturity date of the loan, or the end of
the next biennium of the state, whichever is sooner, as determined by reference
to the United States treasury bill or note section of the Wall Street Journal
published on the day the loan is priced.
(11)
] Customarily grown--Crops
produced in this state that utilize conventional management systems, and have
cash receipts equal to or exceeding $5 million as listed in the
1997
[
1995
] Texas Agricultural Cash Receipts by Commodity, compiled
by the Texas Agricultural Statistics Service for the period ending December
1997
[
1995
], except for experimental varieties of these crops.
(12)
] Default--The failure
to perform an obligation established by the loan agreement, these rules or
agreement.
(13)
] Department--The Texas
Department of Agriculture and the Texas Agriculture Commissioner.
(14)
] Eligible borrower--A
person who is in the business or entering the business of:
markedly
] because of natural disasters;
(15)
] Lender--A financial
institution that makes commercial loans, agrees to participate in the linked
deposit program and is certified as a state depository by the Comptroller.
(16)
] Linked deposit--A time
deposit governed by a written deposit agreement between the state and the
lender that provides that:
current market
] rate plus
a maximum
of
4.0%.
(17)
] Loan--The note
or other evidence of indebtedness entered into between the eligible borrower
and the lender under the program.
(18)
] Person--An individual,
corporation, co-operative, organization, government or a governmental subdivision
or agency, business trust, trust, partnership, association, or any other legal
entity.
(19)
] Program--The Linked
Deposit Program authorized by the Act, §44.007.
(20)
] Staff--The staff of
the department designated by the commissioner of agriculture as performing
duties for the Authority.
enhanced
] production, processing,
and marketing of certain agricultural crops
, the creation and enhancement
of value- added businesses, providing assistance for disaster relief projects,
and for the financing of water conservation projects or equipment for
agricultural production purposes. These sections are adopted to provide standards
of eligibility and procedures for obtaining financial assistance under the
Act.
Authority
] in Austin in writing upon receipt of the
loan proceeds indicating the amount received, date received, and the total
amount of loan drawn to date.
current market
] rate plus 4.0%.
or the administrator
]. The
application may be sent by facsimile transceiver (FAX) to the [
Texas
Agricultural Finance
] Authority [
or the administrator
] in
Austin upon review and approval by the lender with the original remitted by
next day United States mail.
(c)
] The Authority
staff
shall retain a copy of the application and forward a duplicate copy of the
application with the Authority's recommendation to the comptroller.
disagrees
with
] the Authority's recommendation, the comptroller and the Authority
shall meet to resolve the disagreement.
disagrees with the Authority
], upon receipt of the completed
application, 105% collateralization of the linked deposit by the lender, and
written notice of funding of the loan from the Authority, the comptroller
will wire the linked deposit to the lender in immediately available funds
the same day, provided written notice that funding of the loan is received
by noon. The comptroller will then provide the Authority confirmation of the
linked deposit.
shall
] be used for
any agriculture-related operating expense, including
the purchase or lease of land or fixed asset acquisition or improvement, as
identified in the application. A loan under this program may be applied to
existing debt for applicants eligible to participate under this program.
[
the purchase or lease of land, equipment, seed, fertilizer, direct marketing
facilities, processing facilities, payment of professional services and for
financing of water conservation projects or equipment for agricultural production
purposes. No other use of proceeds is permitted. Professional services may
include but are not limited to legal, accounting, marketing, production or
pest management, or engineering services. Financing provided for eligible
water conservation projects or equipment may be applied to existing debt resulting
from the financing of water conservation projects or equipment for agricultural
purposes.
]
$15
] million,
of which $10 million may only be used to finance water conservation projects,
may be placed concurrently in linked deposits under the Act.
produce
crops which have declined markedly because of a natural disaster
] is
$250,000.
or
] market agricultural crops is $500,000.
brocolli
,]
broilers,
cabbage, cantaloupe, carrots, cattle, celery, corn, cotton, cottonseed, cucumbers,
eggs, grapefruit,
green peppers,
certain greenhouse or nursery
products, hay, hogs, honeydew melons, lambs, cow's milk, mohair, [
oats
,] spring and summer onions,
peaches,
peanuts, pecans, potatoes,
poultry, quarter horses, rice, sheep, soybeans, sorghum grain, spinach, sugarbeets,
sugarcane,
sunflowers,
sweet potatoes,
fresh tomatoes,
turkeys, watermelons, wheat, and wool.
peaches,
] oranges, ostrich, pinto beans, pistachios, pumpkins, quail, rabbits,
redfish, rhea, rye, shrimp, snap beans, squash, strawberries, [
sunflowers,
] sweet corn, tilapia, turnips, Christmas trees, wildflowers, and
any
other crops not currently produced in the state. The Authority may,
on a case by case basis, approve for program participation crops which are
not listed in this paragraph.
An agricultural crop produced
] in this state [
, the
production of which
]
is a project that resides in an area of the
state that
has declined [
markedly
] because of a natural disaster,
and [
which shall be eligible for participation in the production financing
portion of the program, is any crop produced in the state which
] has
been declared in a state of disaster by the United States Department of Agriculture
or the President of the United States
.
[
, with
]
The
[
the
] term of eligibility for participation
in the
program is
[
being
] dependent upon [
the maturity or growing
cycle of the type of crop
]
the effect of the
[
being
declared eligible for
]
natural
disaster [
assistance
]
and the asset being financed
.
Chapter 30.
Texas Agricultural Finance Authority: Young Farmer Loan Guarantee Program
first farm
] or
ranching
[
ranch
] operation
or an agricultural- related
business
.
first
] farm or ranch operation
or
establish an agricultural-related business,
when the board considers
such financial assistance presents a reasonable risk and has a sufficient
likelihood of repayment. These rules establish standards of eligibility and
application procedures for the program.
253
], as amended, the following words and
terms, when used in this chapter, shall have the following meanings unless
the context clearly indicates otherwise:
253
], as
enacted with the passage of House Bill 3050
by the 76th Texas Legislature, 1999
[
amended
], the Young Farmer
Loan Guarantee Program.
(2)
(3)
] Applicant--A young farmer
or rancher who is applying for assistance under the Act and this chapter.
(4)
] Application--An application,
including supporting documentation and schedules as required by the Authority,
that must be completed by an applicant and submitted by the applicant's lender
to staff in order to seek participation in the program and to determine an
applicant's eligibility.
(5)
] Authority--The Texas Agricultural
Finance Authority.
(6)
] Board--The board of directors
of the Texas Agricultural Finance Authority.
(7)
] Borrower--An eligible
applicant approved for a loan guarantee by the board.
(8)
] Business day--A day on
which the department is open for business. The term shall not include Saturday,
Sunday, or a traditional holiday officially observed by the state. The department's
normal business hours are from 8:00 a.m. to 5:00 p.m. each business day.
(9)
] Department--The Texas
Department of Agriculture.
(B)
has a minimum of four years of practical
farm or ranch experience, with not more than two years of participation in
a 4-H or vocational agriculture program counting as practical farm or ranch
experience;
] and
(C)
] complies with the application
procedures prescribed by these rules.
by debt, mortgage, pledge, or any other security interest
].
(14)
] Interest rate--The
interest rate on a guaranteed loan as determined by the participating lender
and approved by the board on a project-by-project basis.
(16)
] Loan--A loan
made
by a commercial lender and
approved
for a guarantee
by the
board
or the commissioner
in accordance with the requirements and
criteria set forth in the Act and in this chapter.
(17)
] Loan guarantee agreement--An
agreement between the Authority and the
commercial
lender which
defines the responsibilities of the parties.
(18)
] Loan guarantee amount--With
respect to a loan made by a lender, a sum measured in terms of United States
dollars that the Authority agrees to pay in the case of default by the borrower,
not to exceed the lesser of
$250,000
[
$100,000
] or 90%
of the total loan.
(19)
] Plan--
The documentation
submitted to the lender in support of the application.
[
A cash
flow, production, or management plan.
]
(20)
] Program--The Young Farmer
Loan Guarantee Program.
(21)
] Project--
An enterprise
that establishes or enhances a farming or ranching operation or an agriculture-related
business, which furthers Texas agriculture.
[
A first farm or ranch
operation which would further the production of Texas agricultural products.
]
(22)
] Qualified application--A
completed application, including all documentation and information required
by the Authority, submitted by the applicant and
the commercial
lender for a project.
(23)
] Staff--The staff of
the department assigned to the Authority.
(24)
] State--The State of
Texas.
Authority
] if the applicant meets the following
requirements:
applicant
] is a United States citizen and a
resident of the State of Texas;
applicant
] provides evidence of the fact
that the applicant's farm or ranch operation will be located within the state;
(4) applicant
] provides evidence
of a minimum [
of 5.0%
] equity in the [
first
] farm or
ranch operation; and
(5) applicant
] is an eligible
applicant as set forth in the Act and this chapter.
only
] to provide working capital for operating
a
[
the
] 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 for the agricultural-related
business, as defined in the plan
[
identified in the application
].
working capital for the farm or ranch operation
] shall be considered
ineligible costs.
The purchase of real estate exclusively for agriculture
production purposes is an ineligible cost for this program.
A loan guarantee
is voidable by the board
or the commissioner
if the borrower uses
loan proceeds for
any
[
ineligible
] costs
not identified
in the plan
.
An applicant or
]
commercial
lender seeking a loan guarantee from the Authority must use
the application forms provided by the Authority and must include all information
requested.
The staff
may request and consider comments of the county agent or the agricultural
science teacher who reviewed the Plan. A district-based agricultural economist
may be requested to provide assistance in reviewing the plan.
]
by a majority vote of a quorum of the board,
]
The
determination for the application will be
based upon the information
presented in accordance with the Act and this chapter, the credit memorandum,
and the factors set forth in
§58.054
[
§253.004
]
of the Act, as implemented by this chapter. The board
or the commissioner
may impose additional terms and conditions as part of its approval.
by the board
], staff will notify the
commercial
lender and the applicant in writing identifying the terms
and conditions of the loan guarantee. [
The board may set certain
]
Certain
time limits
will be set
regarding the acceptance
of loan commitments by the applicant and
the commercial
lender;
however, in no event shall the time period exceed 30 days from date of notification
unless
previously
approved [
by the board
]. The
commercial
lender will prepare the written agreements and documents
necessary to close the loan in accordance with the terms and conditions set
forth in the notice of conditional approval. The Authority
staff
will send the
commercial
lender and the applicant final notice
of guarantee approval after review of the closing documents. The
commercial
lender will disburse the loan according to the terms and conditions
of the note and/or loan agreement.
qualified
] application
is denied [
by the board
], the Authority
staff
will notify
the eligible applicant and the
commercial
lender in writing, identifying
the reasons for denial. Applicants who have been denied may re-apply to the
loan guarantee program.
and current financial commitments
] of the Authority
and any applications approved by the commissioner
under the program
since the last meeting of the board
.
Required information.
] The applicant must present
to the commercial lender the
information necessary to determine if
the applicant is an eligible applicant and is qualified to receive a loan
guarantee under the program. Such information will include [
, at least,
] the following:
an
] application form [
,
]
of the program
provided by the Authority
;
[
, which shall include the following information and attachments:
a cash flow, production, or management plan for the period comparable
to the term of the guarantee not to exceed three years
];
a letter from an
agricultural science teacher in the applicant's school district, or the county
extension agent in the area where the farm or ranch is located, stating that
he/she has reviewed and approved the plan
];
and
a
] signed statement of
a loan officer of the
commercial
[
participating
] lender
that a loan guarantee is required for approval of the loan
application.
[
;
]
,
]
or when the
[
provided that
] staff has
had sufficient time to complete its review of the qualified application.
Authority approval
] of
qualified applications will be subject to the availability of funds in the
young farmer loan guarantee account.
$100,000
] or
90% of the total loan. A loan guarantee is voidable by the board if the borrower
uses loan proceeds for any use other than those allowed under the Act and
this chapter. The total loan guarantees authorized at any one time are limited
to two times the amount available in the young farmer loan guarantee account.
his
] designee may attend the verification and signing
of such closing documents at the time, date, and location determined by the
commercial
lender.
$100,000
] with
the
commercial
lender remaining at risk for at least 10% of the
loan.
and
]
(3)
] notification in the event
of any breaches or defaults in the terms, conditions, or covenants of the
note, loan agreement, or other loan documents.
, including:
]
, including:
. The Authority shall consider whether the desired project
financing appears to be available to the eligible applicant on reasonable
terms from other lenders. The Authority may direct the eligible applicant
to other sources for co-particiaption in the credit
]; and
Authority
] reserves the right to decline a loan guarantee to a
commercial
lender which [
, in the judgement of the Authority,
]
does not
present sufficient evidence that they
have the capacity
or interest to appropriately make and service the loan.
Development Program
], Texas
Department of Agriculture, P.O. Box 12847, Austin, Texas 78711, (512) 475-1619.
itself
] for participation in the program by
submitting a letter of request, accompanied by its most recent audited financial
statements, if available, and the designation of the individual(s) within
the lender who will be responsible for working with the Authority.
Subchapter B. Rules for Deposition and Refund of Assessment Fees