Bill Text: HI HB1264 | 2014 | Regular Session | Amended
Bill Title: Agricultural Loans
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Enrolled - Dead) 2014-04-25 - Conference Committee Meeting will reconvene on Friday, 04-25-14 at 5:40PM in Conference Room 224. [HB1264 Detail]
Download: Hawaii-2014-HB1264-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1264 |
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TWENTY-SEVENTH LEGISLATURE, 2013 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO AGRICULTURAL LOANS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 155-1, Hawaii Revised Statutes, is amended as follows:
1. By adding a new definition to be appropriately inserted and to read:
""Biosecurity" means a system that serves to protect the health of livestock, poultry, and humans from diseases, pests, and pathogens and measures that prevent disease causing agents from entering, spreading, or leaving the farm premises."
2. By amending the definition of "new farmer program" to read:
""New farmer [program]" means a
new farm enterprise [for qualified new farmers,] or a person, who
by reason of ability, experience, and training [are] is likely to
successfully operate a farm and who otherwise [meet] meets the
eligibility requirements of section 155-10 and includes any of the following:
(1) Persons displaced from employment in an agricultural production enterprise;
(2) College graduates in agriculture;
(3) Community college graduates in agriculture;
(4) Members of the Hawaii Young Farmer Association and National FFA Organization graduates with farming projects;
(5) Persons who have not less than two years' experience as part-time farmers;
(6) Graduates from farm trainee programs designed to provide interns with the necessary hands on skills and management training to be able to successfully operate their own farm;
[(6)] (7) Persons who have been farm
tenants or farm laborers; or
[(7)] (8) Other individuals who have for
the two years last preceding their application obtained the major portion of
their income from farming operations."
SECTION 2. Section 155-3, Hawaii Revised Statutes, is amended to read as follows:
"§155-3 Restriction. Loans provided for by this chapter shall require two credit denials, except for class "F" loans for new farmer and farm innovation programs which shall require one credit denial. New farmer loans for $100,000 or less for farm trainees and recent college graduates with a degree in agriculture shall have this requirement waived. This requirement may also be waived by the board of agriculture for emergency loans. Credit denials may be accepted from any of the following:
(1) Private lenders;
(2) Members of the farm credit system; or
(3) The United States Department of Agriculture."
SECTION 3. Section 155-5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b)
Loans insured under this section shall be limited by the provisions of
sections 155-9 through 155-13 for purposes of class "A" through class
["F";] "I"; provided that class "E"
loans to food manufacturers shall not be subject to section 155-10."
SECTION 4. Section 155-5.5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b)
Loans guaranteed under this section shall be limited by the provisions of
sections 155-9 through 155-13 for purposes of classes "A", "B",
"C", [and "E";] "D", "E",
"F", "G", "H", and "I"; provided
that class "E" loans to food manufacturers shall not be subject to
section 155-10. [No class "D" and "F" loans shall be
made under this section.]"
SECTION 5. Section 155-6, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b)
Participating loans under this section shall be limited by sections 155-9 to
155-13 for purposes of class "A" through class ["F",]
"I", the department's share not to exceed the maximum amounts
specified therefor; provided that class "E" loans to food
manufacturers shall not be subject to section 155-10."
SECTION 6. Section 155-8, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) Loans made under this section shall bear simple interest on the unpaid principal balance, charged on the actual amount disbursed to the borrower. The interest rate on loans of class "A", "B", "C", "E", and "G" shall be at a rate of one per cent below the prime rate or at a rate of seven and one-half per cent a year, whichever is less. For purposes of this subsection, the prime rate shall be determined on January 1 and July 1 of each year, and shall be the prime rate charged by the two largest banks in the State identified by the department of commerce and consumer affairs. If the prime rates of the two largest banks are different, the lower prime rate of the two shall apply. The interest rate of class "F" loans shall be at a rate of one and one-half per cent below the prime rate or at a rate of six per cent a year, whichever is less. The interest rate of class "H" and "I" loans shall be three per cent a year. If the money loaned is borrowed by the department, then the interest on loans of the classes shall be the rate as determined above or one per cent over the cost to the State of borrowing the money, whichever is greater. Interest on loans made under this chapter shall not be less than three per cent a year."
SECTION 7. Section 155-9, Hawaii Revised Statutes, is amended to read as follows:
"§155-9 Classes of loans; purposes,
terms, eligibility. (a) Loans made under this chapter shall be for the
purposes and in accordance with the terms specified in classes "A"
through ["H"] "I" in this section and shall
be made only to applicants who meet the eligibility requirements specified
therein and except as to class "B" loans to associations and class
"E" loans, the eligibility requirements specified in section 155-10.
The maximum amount of a loan for class "A", "C", "D",
and "F" loans to an individual applicant shall also apply to any loan
application submitted by a partnership, corporation, or other entity, and for
the purpose of determining whether the maximum loan amount to any individual
will be exceeded, outstanding loans to any partnership, corporation, or other
entity that the individual has a legal or equitable interest in excess of
twenty per cent shall be taken into account.
(b) Class A: Farm ownership and improvement loans shall provide for:
[(1) The purchase or improvement of farm
land;
(2) The] (1) Infrastructure
improvements, including the purchase, construction, or improvement of farm
land, adequate farm dwellings, and other essential farm buildings; and
[(3)] (2) The liquidation of
indebtedness incurred for any of the foregoing purposes.
The loans shall be for an amount not to exceed $800,000 and for a term not to exceed forty years. To be eligible, the applicant shall:
[(A) derive,] (1) Derive,
or present an acceptable plan to derive, a major portion of the applicant's
income from and devote, or intend to devote, most of the applicant's time to
farming operations; and
[(B) have] (2) Have or
be able to obtain the operating capital, including livestock and equipment,
needed to successfully operate the applicant's farm.
(c) Class B: Soil and water conservation loans shall provide for:
(1) Soil conservation practices;
(2) Water development, conservation, and use;
(3) Drainage; and
(4) The liquidation of indebtedness incurred for any of the foregoing purposes.
The loans shall be for an amount not to exceed $35,000 to an individual or $200,000 to an association and shall be for a term not to exceed twenty years for a loan to an individual and forty years to an association. To be eligible, an individual applicant shall have sufficient farm and other income to pay for farm operating and living expenses and to meet payments on the applicant's existing debts, including the proposed soil and water conservation loan. An association, to be eligible, shall be a nonprofit organization primarily engaged in extending services directly related to the purposes of the loan to its members, and at least sixty per cent of its membership shall meet the eligibility requirements specified in section 155-10.
(d) Class C: Farm operating loans shall be for the purpose of carrying on and improving a farming operation, including:
(1) The purchase of [farm equipment and]
livestock;
(2) The payment of production and marketing expenses, including materials, labor, and services;
(3) The payment of living expenses;
(4) Infrastructure and infrastructure improvements, including the purchase of farm equipment;
[(4)] (5) The liquidation of
indebtedness incurred for any of the foregoing purposes; and
[(5)] (6) The exportation of crops and
livestock.
The loans shall be for an amount not to exceed $800,000 and for a term not to exceed ten years. To be eligible, an applicant shall derive, or present an acceptable plan to derive, a major portion of the applicant's income from and devote, or intend to devote, most of the applicant's time to farming operations.
Qualified farmers affected by state eradication programs may also be eligible for loans under this subsection. Loans made for rehabilitation from eradication programs shall be subject to the terms of class "C" loans; provided that the interest rate shall be three per cent a year and the requirements in section 155-3 shall be waived and paragraph (4) shall not apply.
(e) Class D: Emergency loans shall be for the purpose of providing relief and rehabilitation to qualified farmers without limit as to purpose:
(1) In areas stricken by extraordinary rainstorms, windstorms, droughts, tidal waves, earthquakes, volcanic eruptions, and other natural catastrophes;
(2) On farms stricken by livestock disease epidemics and crop blights;
(3) On farms seriously affected by prolonged shipping and dock strikes;
(4) During economic emergencies caused by overproduction, excessive imports, and the like; and
(5) During other emergencies as determined by the board of agriculture.
The maximum amounts and period for the loans shall be determined by the board of agriculture; provided that the board shall require that any settlement or moneys received by qualified farmers as a result of an emergency declared under this section shall first be applied to the repayment of an emergency loan made under this chapter.
(f) Class E: Loans to farmers' cooperatives, corporations, and food manufacturers shall provide credit to entities engaged in marketing, purchasing, and processing, and providing farm business services, including:
(1) Facility loans for infrastructure and
infrastructure improvements. This includes loans to purchase or improve
land, [building,] buildings, and equipment for an amount not to
exceed $500,000 and a term not to exceed twenty years;
(2) Operating loans to finance inventories of supplies and materials, warehousing, and shipping commodities, extension of consumer credit to justified farmer-members, and other normal operating expenses for an amount not to exceed $300,000 and a term not to exceed seven years; and
(3) The exportation of crops and livestock.
To be eligible, a farmers' cooperative or corporation shall have a majority of its board of directors and a majority of its membership as shareholders who meet the eligibility requirements of section 155-10 and who devote most of their time to farming operations, and the facility loans shall be for an amount not to exceed $500,000 or eighty per cent of the cost of the project, whichever is less.
To be eligible, a food manufacturer shall be licensed to do business in the State, and the controlling interest of the entity shall possess a minimum of two years of relevant processing or manufacturing experience as acceptable to the department of agriculture. The entity shall process Hawaii-grown agricultural products or use Hawaii-grown agricultural products as an ingredient in the manufacturing process. Facility loans shall be for an amount not to exceed $500,000 or eighty per cent of the cost of the project, whichever is less. The requirements in section 155-10 shall be waived for food manufacturing loans; however, the entity shall be a sound credit risk with the ability to repay the money borrowed.
(g) Class F: [Loans for new farmer
programs shall provide for costs of a new farm enterprise for qualified new
farmers:] New farmer and farm innovation loan programs shall provide
for:
(1) [Initial] New farmer loans made
under this class shall be for purposes and in accordance with the terms
specified in class "A" and "C" only, and shall be made only
for full-time farming. The loans shall be made for an amount not to exceed $250,000
or eighty-five per cent of the cost of the project, whichever is less[;].
Farm trainees and recent graduates with a degree in agriculture with smaller
projects requiring loans of $100,000 or less shall have a minimum five per cent
equity contribution towards the cost of the project;
(2) Farm innovation loans are for qualified farmers to perform practical research in crop development, innovative production techniques, new technologies, and production of new crops that are not typically grown in the State. Farm innovation loans shall be limited to a maximum of $75,000;
[(2)] (3) Any subsequent loan shall be
made from classes "A" to "D", respectively, depending upon
the purpose for which the loan funds are used; and
[(3)] (4) Borrowers shall comply with
special term loan agreements as may be required by the department and shall
take special training courses as the department deems necessary.
(h) Class G: Loans to part-time farmers shall be for farm improvement and operating purposes for carrying on and improving farming operations, including loans for:
(1) [The] Infrastructure and infrastructure
improvements, including the purchase, construction, and improvement of farm
production and growing structures[;] and equipment;
(2) The purchase of [farm equipment or]
livestock; and
(3) The payment of production and marketing expenses, including materials, labor, and services.
The liquidation of indebtedness incurred for any of the purposes under this subsection and for living expenses shall not be authorized purposes. Each loan shall be for an amount not to exceed $25,000 and for a term not to exceed ten years.
(i) Class H: Farm sustainable project loans shall provide for:
(1) The purchase, construction, or improvement of essential farm buildings, including the improvement of existing farm buildings related to the project;
(2) The improvement of land that may be required by the project;
(3) The purchase of equipment and payment of any related expenses, including materials, labor, and services;
(4) Operating expenses associated with the project; or
(5) The liquidation of indebtedness incurred for any of the foregoing purposes.
The loans shall be for an amount not to exceed $1,500,000 or eighty-five per cent of the project cost, whichever is less, and for a term not to exceed forty years.
To be eligible, the applicant shall be a qualified farmer of sound credit rating with the ability to repay the money borrowed, as determined by the department. Income from the applicant's farming activities and any supplemental income that may be generated from the project shall be the sole criterion for the department's determination of the applicant's ability to repay the money borrowed. The department's determination may be based on projections of income and expenses.
(j) Class I: Biosecurity project loans shall provide for:
(1) The purchase, construction, or improvement of essential farm buildings, including the improvement of existing farm buildings related to the project;
(2) The improvement of land that may be required by the project;
(3) The purchase of equipment and payment of any related expenses, including materials, labor, signage, training, and services;
(4) Operating expenses associated with the project; or
(5) The liquidation of indebtedness incurred for any of the foregoing purposes.
The loans shall be for an amount not to exceed $1,000,000 or eighty-five per cent of the project cost, whichever is less, and for a term not to exceed twenty-five years.
To be eligible, the applicant shall be a qualified farmer of sound credit rating with the ability to repay the money borrowed, as determined by the department. Income from the applicant's farming activities and any supplemental income that may be generated from the project shall be the sole criterion for the department's determination of the applicant's ability to repay the money borrowed. The department's determination may be based on projections of income and expenses."
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on July 1, 2050.
Report Title:
Agricultural Loans
Description:
Expands the Department of Agriculture Agricultural Loan Program to provide loans for infrastructure, infrastructure improvements, the implementation of new farming techniques, and biosecurity projects. Effective July 1, 2050. (HB1264 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
