Part 1.
TEXAS DEPARTMENT OF AGRICULTURE
Chapter 24.
TEXAS AGRICULTURAL FINANCE AUTHORITY: FARM AND RANCH FINANCE PROGRAM
4 TAC §§24.3, 24.9, 24.10, 24.12, 24.15
The Board of Directors of the Texas Agricultural Finance
Authority (TAFA) of the Texas Department of Agriculture (the department) proposes
amendments to §§24.3, 24.9, 24.10, 24.12 and 24.15, concerning the
Farm and Ranch Finance Program. The amendments are proposed in order to make
the sections consistent with changes made to the Texas Agriculture Code, Chapters
58 and 59 by the enactment of Senate Bill 716 (SB 716), 77th Legislature (2001).
SB 716 provides authority for TAFA to provide loan guarantees to lenders for
the purchase of farm and ranch real estate. The amendments to §24.3,
concerning Definitions, add the definitions of "Commissioner" and "Guarantee
Amount". The amendment to §24.9, concerning Filing Requirements and Consideration
of Application, amends subsection (d) to provide for review and approval of
applications by the commissioner if the lender had been approved through TAFA's
Preferred Lender Program. The amendment to §24.10, concerning Contents
of the Application, amends paragraph (a)(3) to eliminate the resume requirement
and provide that the applicant must provide information regarding agricultural
experience and deletes subsection (f), regarding the requirement for an earnest
money contract. The amendment to §24.12, concerning General Terms and
Conditions of Authority's Financial Committment, amends subsection (c) to
change the ratio of pledged collateral required and provides for TAFA to provide
a lender a guarantee on the lender committement in an amount not to exceed
15% of the lender's total committment. The amendment to §24.15, concerning
Default Proceedings amends subsections (g) to change the ratio for sharing
of net proceeds by the lender and TAFA after a default occurs.
Mr. Robert Kennedy, deputy assistant commissioner for agricultural finance,
has determined that for the first-five year period the amended sections are
in effect, there will be no fiscal implications for state or local government
as a result of enforcing or administering the amended sections. It is anticipated
that the revenue generated by the program from application fees and interest
income will be adequate to cover cost of administration of amendments to the
program.
Mr. Kennedy also has determined that for each year of the first five years
the amended sections are in effect, the public benefit anticipated as a result
of enforcing the amended sections will be the potential to generate greater
number of approved commitments for agricultural entities under the Farm and
Ranch Finance Program. There will be no effect on microbusinesses or small
businesses. There will be no anticipated economic cost to persons who are
required to comply with the sections as amended.
Comments on the proposal may be submitted to Mr. 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 this proposal in the
Texas Register
.
The amendments are proposed under the Texas Agriculture Code, §58.022
and §59.022, which provide the TAFA board with the authority to adopt
rules and procedures for administration of the programs of TAFA, including
the Farm and Ranch Finance Program.
The code affected by the proposal is the Texas Agriculture Code, Chapters
58 and 59.
§24.3.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1) - (5)
(No Change.)
(6)
Commissioner-The Commissioner of the Texas
Department of Agriculture.
(7)
[
(8)
[
(9)
[
(10)
Guarantee Amount--With respect to a loan
made by a lender, a sum measured in terms of United States dollars tha the
Authority agrees to pay in the case of default by the borrower, not to exceed
the percentage and amount as stated in the guaranty agreement.
(11)
[
(12)
[
(13)
[
(14)
[
(15)
[
(16)
[
§24.9.Filing Requirements and Consideration of Application.
(a) - (c)
(No Change.)
(d)
Board
or commissioner
review. Staff will submit
a credit memorandum to the Authority which shall include a recommendation
for approval or denial for each application received by the program. The Authority
will approve or deny each application by a majority vote of a quorum of members.
The Authority may conditionally approve the application by imposing additional
requirements.
Should an application be received from a lender approved
through the Preferred Lender Program, the Authority hereby delegates the approval
or denial of any application received to the commissioner with such approvals
or denials being presented to the Authority for affirmation at the next regularly
scheduled meeting.
(e) - (h)
(No Change.)
§24.10.Contents of the Application.
(a)
Required information.
(1) - (2)
(No Change.)
(3)
the applicant's [
(4) - (8)
(No Change.)
(b) - (e)
(No Change.)
[(f)
Earnest money contract. The seller of
the farm or ranch land to be acquired and the applicant must enter into a
binding earnest money contract. The earnest money contract must contain all
terms and conditions agreed to by the parties thereto.]
§24.12.General Terms and Conditions of the Authority's Financial Committment.
(a) - (b)
(No Change.)
(c)
The Authority and the lender will share the pledged collateral
in a ratio of
50%
[
(d) - (k)
(No Change.)
§24.15.Default Proceedings.
(a) - (f)
(No Change.)
(g)
Net proceeds from the foreclosure sale or the ultimate
final sale of the property by the lender, whichever is greater, and any net
proceeds resulting from the collection under a deficiency judgment, shall
be shared by the lender and the Authority in the ratio of
50%
[
(h)
Upon receipt of any net proceeds which the lender and the
Authority mutually agree are the final net proceeds to be realized, the lender
shall prepare a final accounting as to the loan so that the transaction may
be closed out on the records of the lender and the Authority. Such final accounting
shall be filed with and approved by the Authority.
Should the final accounting
not represent a complete repayment to the lender, the lender may file a demand
to the Authority for the payment of the guarantee in the amount and percentage
stated in the guarantee agreement.
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 June 11, 2001.
TRD-200103276
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: July 22, 2001
For further information, please call: (512) 463-4075
Subchapter A. GENERAL PROCEDURES
(6)
] Department--The Texas Department
of Agriculture.
(7)
] Financial statements--Financial
statements submitted by the applicant, which shall include a balance sheet,
income statement, cash flow statement and owners equity reconciliation, if
applicable.
(8)
] Fund--The Farm and Ranch Finance
Program Fund.
(9)
] Interest rate--The interest
rate on a loan as determined and approved by the Authority and the lender
on a case- by-case basis.
(10)
] Lender--A lender shall be
a state or nationally chartered commercial lending institution, savings and
loan association, credit union, any member of the Farm Credit System in the
state, or any institution that the Authority determines is an experienced
and sophisticated lender.
(11)
] Loan--A loan approved by
the Authority in accordance with the requirements and criteria set forth in
the Act and in this chapter.
(12)
] Program--The Farm and Ranch
Finance Program.
(13)
] Staff--The staff of the
Department performing work for the Authority.
(14)
] State--The State of Texas.
resume which
] identifies the
agricultural experience [
of the applicant
];
44%
] to the Authority and
50%
[
56%
] to the lender
and the Authority will provide
a lender a guarantee on the lender commitment in a percentage not to exceed
15% of the lender's total commitment.
56%
] to the lender, and
50%
[
44%
] to the Authority.
Net proceeds shall mean that amount received from the foreclosure sale less
expenses attributable to the foreclosure. All expenses must be approved by
the lender and the Authority.
Chapter 30.
TEXAS AGRICULTURAL FINANCE AUTHORITY: YOUNG FARMER LOAN GUARANTEE PROGRAM