Rural Credit and Development Act of 1994

Summary: TABLE OF CONTENTS: 
     Title I:  Credit for Rural Business Enterprises 
     Title II:  Credit for Rural Infrastructure 
     Title III:  Credit for Rural Housing 
Rural Credit and Development Act of 1994 - 
Title I:  Credit for Rural Business Enterprises
 - Amends the Farm Credit Act of 1971 to permit farm credit banks and production credit associations to purchase loans and loan interests from non-Farm Credit System institutions. 
Enlarges the scope of farm-related business for credit availability purposes. 
Authorizes banks for cooperatives to provide loans and other financial services to entities providing certain farm-related services or products under specified conditions. 
Title II:  Credit for Rural Infrastructure
 - Authorizes Farm Credit banks to make community facility loans. 
Authorizes banks for cooperatives to finance utility-related services. 
Title III:  Credit for Rural Housing
 - Enlarges rural housing credit availability by:  (1) increasing eligible population areas; (2) increasing farm credit bank and production credit association loan portfolios for non-farmer rural housing loans; and (3) authorizing loans to rural residents for personal, family, or household needs other than housing finance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural Credit and Development Act of 
1994''.

SEC. 2. REFERENCES TO THE FARM CREDIT ACT OF 1971.

    Whenever in this Act an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other 
provision of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), 
except to the extent otherwise provided.

             TITLE I--CREDIT FOR RURAL BUSINESS ENTERPRISES

SEC. 101. PURCHASES OF LOANS FROM NON-SYSTEM LENDERS.

    (a) Farm Credit Banks.--Section 1.5(16) U.S.C. 2013(16)) is amended 
by--
            (1) striking out ``sell to lenders that are not Farm Credit 
        System institutions interests in loans'' and inserting in lieu 
        thereof ``buy from and sell to entities that are not Farm 
        Credit System institutions loans and interests in loans that 
        the bank or the associations in its district are authorized to 
        make under this Act''; and
            (2) inserting before the semicolon at the end the 
        following: ``: Provided, That the provisions of section 4.36 
        and part C of title IV shall not apply to loans and interests 
        in loans purchased from entities that are not Farm Credit 
        System institutions''.
    (b) Production Credit Associations.--Section 2.2(11) (12 U.S.C. 
2073(11)) is amended by--
            (1) inserting ``and buy from entities that are not Farm 
        Credit System institutions loans and interests in loans that 
        the association is authorized to make under this title,'' after 
        ``and nonvoting stock,''; and
            (2) inserting before the semicolon at the end thereof the 
        following: ``: Provided, That the provisions of section 4.36 
        and part C of title IV shall not apply to loans and interests 
        in loans purchased from entities that are not Farm Credit 
        System institutions''.
    (c) Exception to Stock Purchase Requirement.--Section 
4.3A(c)(1)(E)(i) (12 U.S.C. 2154a(c)(1)(E)(i)) is amended by inserting 
before the semicolon at the end thereof the following: ``: Provided, 
That no voting stock or participation certificates shall be required 
for loans or interests in loans purchased by the institution from 
entities that are not Farm Credit System institutions''.

SEC. 102. IMPROVING THE AVAILABILITY OF CREDIT FOR FARM-RELATED 
              BUSINESSES.

    (a) In General.--
            (1) FCB borrower eligibility.--Section 1.9(2) (12 U.S.C. 
        2017(2)) is amended by striking out ``directly related to their 
        on-farm operating needs'' and by inserting ``goods and'' 
        immediately before ``services''.
            (2) FCB loan purchases.--Section 1.11(c) (12 U.S.C. 
        2019(c)) is amended by--
                    (A) in paragraph (1), striking out ``directly 
                related to their on-farm operating needs'' and by 
                inserting ``goods and'' immediately before ``services'' 
                each place it appears; and
                    (2) in the title, inserting ``Goods and'' before 
                ``Services.''.
            (3) Production credit associations.--Section 2.4(a)(3) (12 
        U.S.C. 2075(a)(3)) is amended by striking out ``directly 
        related to their on-farm operating needs'' and by inserting 
        ``goods and'' immediately before ``services''.
    (b) Related Services.--
            (1) Farm credit banks.--Section 1.12(a) (12 U.S.C. 2020(a)) 
        is amended by striking out ``appropriate to their on-farm and 
        aquatic operations''.
            (2) Production credit associations.--Section 2.5 (12 U.S.C. 
        2076) is amended by striking out ``appropriate to their on-farm 
        and aquatic operations''.

SEC. 103. COOPERATIVE-RELATED BUSINESS FINANCING.

    Section 3.7(b) (12 U.S.C. 2128(b)) is amended by--
            (1) redesignating paragraphs (2) and (3) as paragraphs (3) 
        and (4), respectively;
            (2) inserting after paragraph (1) a new paragraph (2) as 
        follows:
    ``(2)(A) A bank for cooperatives is authorized to make or 
participate in loans and commitment to, and extend other technical and 
financial assistance to, any legal entity providing any of the farm-
related services or products of the type described in subparagraph (B) 
when such loan, commitment, or assistance will provide a direct and 
material benefit to an association that is an eligible cooperative 
association under section 3.8(a): Provided, That any such loan or 
commitment may be made, or assistance extended, to a legal entity only 
if--
            ``(i) the eligible cooperative association certifies to the 
        satisfaction of the bank for cooperatives that a material 
        business relationship exists between it and the legal entity 
        and that it receives a direct and material benefit as a result 
        of that relationship; and
            ``(ii) the cumulative amount of all such loans, 
        commitments, and assistance to the legal entity do not exceed 
        10 percent of the bank's total capital,
    ``(B) The services or products provided by a legal entity that 
shall enable such legal entity to be eligible for financing under 
subparagraph (A) are those services or products involved in the 
processing, preparing for market, handling, or marketing of farm or 
aquatic products, or in the purchasing, testing, grading, process, 
distributing, or furnishing of farm or aquatic supplies, or in the 
furnishing of farm or aquatic business services to, or in other ways 
adding value to the products or services of, eligible cooperative 
associations.''; and
            (3) in paragraph (4), as redesignated by paragraph (1), 
        striking out ``paragraphs (1) and (2)'' and inserting in lieu 
        thereof ``paragraphs (1) and (3)''.

               TITLE II--CREDIT FOR RURAL INFRASTRUCTURE

SEC. 201. RURAL COMMUNITY FACILITY LENDING BY FARM CREDIT BANKS AND 
              DIRECT LONG-TERM LENDING ASSOCIATIONS.

    (a) Lending Authority.--Section 1.7 (12 U.S.C. 2015) is amended by 
adding at the end a new subsection as follows:
    ``(c) Community Facility Loans.--In order to facilitate needed 
improvements in the infrastructure of rural United States, the Farm 
Credit Banks may make and participate with other lenders in community 
facility loans as described in section 1.11(d).''.
    (b) Eligible Borrowers.--Section 1.9 (12 U.S.C. 2017), as amended 
by section 102(a)(1) of this Act, is further amended by--
            (1) striking out ``or'' at the end of paragraph (2);
            (2) striking out the period at the end of paragraph (3) and 
        inserting in lieu thereof ``; or''; and
            (3) adding at the end the following new paragraph:
            ``(4) persons or public and quasi-public agencies and 
        bodies, and other public and private entities, that, under 
        authority of State or local law, establish or operate water or 
        waste disposal facilities, pollution abatement and control 
        facilities and programs, or other essential community 
        facilities in rural areas.''.
    (c) Loan Terms and Security.--Section 1.10 (12 U.S.C. 2018) is 
amended by--
            (1) in subsection (a)(2), striking out ``this section'' and 
        inserting in lieu thereof ``section 1.7(a)'';
            (2) in subsection (b), inserting ``and loans made under the 
        authority of section 1.7(c)'' after ``other than real estate 
        loans''; and
            (3) adding at the end a new subsection as follows:
    ``(c) Community Facility Loans.--Loans made under the authority of 
section 1.7(c) shall be for such terms and on such security (if any) as 
made be prescribed by policies adopted by the board of directors of the 
bank.''.
    (d) Purposes for Extension of Credit.--Section 1.11 (12 U.S.C. 
2019) is amended by--
            (1) in subsection (a)(1), inserting ``, other than loans 
        under section 1.7(c),'' after ``Loans'';
            (2) in subsection (b)(2), striking out ``this title'' and 
        inserting in lieu thereof ``section 1.7(a)''; and
            (3) adding at the end a new subsection as follows:
    ``(d) Community Facilities.--The Farm Credit Banks may make and 
participate with other lenders in loans for the purpose of 
constructing, installing, maintaining, expanding, improving, or 
operating water or waste disposal facilities, pollution abatement and 
control facilities and programs, or other essential community 
facilities, including necessary related equipment, in rural areas: 
Provided, That, for purposes of this subsection, the term ``rural 
area'' means all territory of a State that is not within the outer 
boundary of any city or town having a population of more than 20,000 
based on the latest decennial census of the United States.''.
    (e) Conforming Amendments.--Section 7.6 (12 U.S.C. 2279b) is 
amended by--
            (1) in the material preceding paragraph (1) of subsection 
        (a), inserting ``direct lending'' before ``authority'', and 
        striking out ``, to make and participate in long-term real 
        estate mortgage loans'';
            (2) in paragraph (1) of subsection (b)--
                    (A) striking out ``long-term real estate mortgage 
                loan authority,'' and inserting in lieu thereof 
                ``lending authority''; and
                    (B) inserting after ``transferring bank,'' the 
                following: ``and shall possess the powers described in 
                paragraphs (12) and (16) of section 1.5 in connection 
                with such lending authority,''; and
            (3) adding at the end the following new subsection as 
        follows:
    ``(e) Transfers of Additional Authorities.--Whenever a transfer of 
direct lending authority under subsection (a) or (d) has occurred prior 
to the date of enactment of this subsection, including a transfer of 
direct lending authority to an association resulting from a merger 
under section 411 of the Agricultural Credit Act of 1987, any direct 
lending authority conferred on any bank described in subsection (a) or 
(d) on or after the date of enactment of this subsection shall 
automatically transfer to the transferee association at the time the 
authority is conferred on the bank.''.

SEC. 202. BANK FOR COOPERATIVE FINANCING OF UTILITY-RELATED SERVICES.

    Section 3.7(a) (12 U.S.C. 2128(a)) is amended by adding before the 
period at the end of the third sentence the following: ``; and each 
bank may make or participate in loans or commitments and extend other 
technical and financial assistance to other parties for electric power 
generation and transmission operations and projects that provide, to 
entities eligible to borrow from the bank under section 3.8, power, 
power generation byproducts, or other related benefits or services that 
are of material economic benefit to such eligible entities''.

                  TITLE III--CREDIT FOR RURAL HOUSING

SEC. 301. IMPROVING THE AVAILABILITY OF CREDIT FOR RURAL HOME BUYERS.

    (a) Population Limitations.--
            (1) Farm credit banks.--Section 1.11(b)(3) (12 U.S.C. 
        2019(b)(3)) is amended by striking out ``2,500 inhabitants'' 
        and inserting in lieu thereof ``20,000 inhabitants''.
            (2) Production credit associations.--Section 2.4(b)(3) (12 
        U.S.C. 2075(b)(3)) is amended by striking out ``2,500 
        inhabitants'' and inserting in lieu thereof ``20,000 
        inhabitants''.
            (3) Conforming change.--Section 8.0(1)(B)(i) (12 U.S.C. 
        2279aa(1)(B)(i)) is amended by striking out ``2,500 
        inhabitants'' and inserting in lieu thereof ``20,000 
        inhabitants''.
    (b) Percentage of Loan Portfolio.--
            (1) Farm credit banks.--Section 1.11(b)(2) (12 U.S.C. 
        2019(b)(2)) is amended by striking out ``15 percent'' and 
        inserting in lieu thereof ``20 percent''.
            (2) Production credit associations.--Section 2.4(b)(2) (12 
        U.S.C. 2075(b)(2)) is amended by striking out ``15 percent'' 
        each place it appears and inserting in lieu thereof ``20 
        percent''.
    (c) Home Equity Financing.--
            (1) Farm credit banks.--
                    (A) First lien requirement.--Section 1.10(a)(2) (12 
                U.S.C. 2018(a)(2)), as amended by section 201(c)(1) of 
                this Act, is further amended by striking out ``All'' 
                and inserting in lieu thereof ``Except with respect to 
                loans made to rural residents for personal, family, or 
                household needs other than rural housing financing, 
                all''.
                    (B) Lending authority.--Section 1.11(b)(1) (12 
                U.S.C. 2019(b)(1)) is amended by inserting ``and other 
                personal, family, or household needs'' after ``housing 
                financing''.
            (2) Production credit associations.--Section 2.4(a)(2) (12 
        U.S.C. 2075(a)(2)) is amended by inserting ``and other 
        personal, family, or household needs'' after ``housing 
        financing''.