H.B. No. 2996

	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.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 2996 was passed by the House on May
	11, 2011, by the following vote:  Yeas 110, Nays 39, 1 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 2996 was passed by the Senate on May
	25, 2011, by the following vote:  Yeas 25, Nays 5.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor