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1 1 Section 1. NEW SECTION. 175A.1 SHORT TITLE.
1 2 This chapter shall be known and may be cited as the "Iowa
1 3 Family Farm Animal Feeding Operations Preservation Act".
1 4 Sec. 2. NEW SECTION. 175A.2 PURPOSE.
1 5 The purpose of this chapter is to address a grave threat to
1 6 traditional farmers who produce animals in this state and who
1 7 face capitalization barriers and the consolidation of animal
1 8 agriculture, which results in fewer individuals engaged in
1 9 farming. These conditions result in a loss in population,
1 10 unemployment and a movement of persons from rural communities
1 11 to urban areas accompanied by added costs to communities for
1 12 the creation of new public facilities and services. It is
1 13 therefore necessary to assist small and medium sized family
1 14 farm animal feeding operations in order to expand such
1 15 operations and preserve a way of life which has traditionally
1 16 supported Iowa's economy and communities.
1 17 Sec. 3. NEW SECTION. 175A.3 DEFINITIONS.
1 18 1. "Animal feeding operation" means the same as defined in
1 19 section 455B.161.
1 20 2. "Animal feeding operation structure" means the same as
1 21 defined in section 455B.161.
1 22 3. "Animal weight capacity" means the same as defined in
1 23 section 455B.161.
1 24 4. "Authority" means the agricultural development
1 25 authority established pursuant to section 175.3.
1 26 5. "Family farm animal feeding operation" or "operation"
1 27 means an animal feeding operation located on the land where
1 28 the owner of the operation also engages in farming activities
1 29 other than animal feeding operation activities, if all of the
1 30 following criteria are satisfied:
1 31 a. The total animal weight capacity of all animals other
1 32 than bovine owned by the person is two hundred thousand pounds
1 33 or less, and the total animal weight capacity of bovine owned
1 34 by the person is four hundred thousand pounds or less.
1 35 b. A person holding an interest in the animal feeding
2 1 operation owns all animals confined and fed in the animal
2 2 feeding operation.
2 3 c. The person who owns the animal feeding operation raises
2 4 and harvests crops in the same or an adjoining county where
2 5 the animal feeding operation is located.
2 6 d. The person who owns the animal feeding operation is one
2 7 of the following:
2 8 (1) A natural person.
2 9 (2) A general partnership composed exclusively of natural
2 10 persons.
2 11 e. Each person who holds an interest in the animal feeding
2 12 operation resides in this state.
2 13 f. The animal feeding operation is located entirely within
2 14 the state.
2 15 6. "Farming" means the same as defined in section 175.2.
2 16 7. "Lending institution" means a bank, trust company,
2 17 mortgage company, national banking association, savings and
2 18 loan association, life insurance company, any state or federal
2 19 governmental agency or instrumentality, including without
2 20 limitation the federal land bank or any of its local
2 21 associations, or any other financial institution or entity
2 22 authorized to make farm operating loans in this state.
2 23 8. "Low or moderate net worth" means:
2 24 a. For an individual, an aggregate net worth of the
2 25 individual and the individual's spouse and minor children of
2 26 less than two hundred thousand dollars.
2 27 b. For any general partnership, an aggregate net worth of
2 28 all partners, including each partner's net capital in the
2 29 partnership, and of each partner's spouse and minor children
2 30 of less than three hundred thousand dollars. However, the
2 31 aggregate net worth of each partner and that partner's spouse
2 32 and minor children shall not exceed two hundred thousand
2 33 dollars.
2 34 9. "Net worth" means a person's total assets minus total
2 35 liabilities as determined in accordance with generally
3 1 accepted accounting principles with appropriate exceptions and
3 2 exemptions reasonably related to an equitable determination of
3 3 a person's net worth. Assets shall be valued at fair market
3 4 value.
3 5 10. "Note" means a bond anticipation note or other
3 6 obligation or evidence of indebtedness issued by the authority
3 7 pursuant to this chapter.
3 8 11. "Secured loan" means a financial obligation secured by
3 9 a chattel mortgage, security agreement, or other instrument
3 10 creating a lien on an interest in depreciable agricultural
3 11 property.
3 12 Sec. 4. NEW SECTION. 175A.4 ASSISTANCE PROGRAMS.
3 13 1. The authority shall administer programs under this
3 14 section to assist family farm animal feeding operations. The
3 15 department of revenue and finance shall assist the authority
3 16 in administering this section.
3 17 2. In order to assist a family farm animal feeding
3 18 operation in financing the operation, including by assisting
3 19 in whole or in part the acquisition of animals, or the
3 20 purchase of agricultural land, the purchase of agricultural
3 21 improvements or depreciable agricultural property, the
3 22 construction of buildings, facilities, or animal feeding
3 23 operation structures, related to the operation, the authority
3 24 shall do all of the following:
3 25 a. Cooperate with any other state agency or the federal
3 26 government, including supplementing assistance provided by
3 27 another state agency and the federal government.
3 28 b. Administer other programs provided under chapter 175,
3 29 including supplementing assistance provided by other programs.
3 30 c. Provide certification necessary to allow owners of
3 31 operations to claim an income tax credit as provided in
3 32 section 175A.5, and a property tax exemption pursuant to
3 33 section 427.1.
3 34 d. Administer the following programs:
3 35 (1) A loan guarantee program to provide for guaranteeing
4 1 of all or part of a loan made to the operation.
4 2 (2) An interest buy-down program, in which the authority
4 3 contracts with a participating lending institution to reduce
4 4 the interest rate charged on a loan to the operation. The
4 5 authority shall determine the amount that the rate is reduced
4 6 by considering the lending institution's customary loan rate
4 7 for the type of loan sought as certified to the authority by
4 8 the lending institution. As part of the contract, in order to
4 9 reimburse the lending institution for the reduction of the
4 10 interest rate on the loan, the authority may agree to grant
4 11 the lending institution any amount foregone by reducing the
4 12 interest rate on that portion of the loan which is three
4 13 hundred thousand dollars or less. However, the amount
4 14 reimbursed shall not be more than fifty percent of the amount
4 15 of interest foregone by the lending institution on the loan.
4 16 3. The amount of assistance awarded to a family farm
4 17 animal feeding operation shall be based on the extent to which
4 18 the following apply:
4 19 a. The operation has a low or moderate net worth.
4 20 b. The owner of the family farm animal feeding operation
4 21 utilizes a computer system using an application designed to
4 22 monitor herd performance, as approved by Iowa state
4 23 university.
4 24 c. The person managing the operation is actively engaged
4 25 in improving the management of the operation, which may
4 26 include participating in the livestock producers assistance
4 27 program provided pursuant to section 266.39D, or employing a
4 28 person qualified by the American registry of professional
4 29 animal science, who is actively engaged in the profession of
4 30 consulting with livestock producers for the purpose of
4 31 increasing production or enhancing performance of livestock.
4 32 4. In order to participate in a program administered under
4 33 this section, all of the following must apply:
4 34 a. The family farm animal feeding operation or any person
4 35 holding an interest in the operation is not classified as a
5 1 habitual violator as provided in section 455B.191.
5 2 b. The assistance provided by the authority under this
5 3 section is not used to construct, repair, or expand an
5 4 anaerobic lagoon or earthen manure storage basin as defined in
5 5 section 455B.161.
5 6 5. a. The authority shall adopt rules to administer this
5 7 section, including the enforcement of terms of a contract to
5 8 which the authority is a party. The authority may require a
5 9 lending institution or a family farm animal feeding operation
5 10 to submit evidence satisfactory to the authority that the
5 11 lending institution or operation has complied with the
5 12 authority's requirements.
5 13 b. The authority may inspect any records of a lending
5 14 institution or a family farm animal feeding operation which
5 15 are pertinent to the administration of a program. In order to
5 16 assure compliance with this section and rules adopted pursuant
5 17 to this section, the authority may establish by rule
5 18 appropriate enforcement provisions, including but not limited
5 19 to, the payment of civil penalties by a lending institution or
5 20 operation. The authority may also enforce the provisions of
5 21 this section or terms of the contract by bringing an action in
5 22 any court of competent jurisdiction to recover damages.
5 23 6. A lending institution and the borrower participating in
5 24 a program under this section shall each pay to the authority
5 25 one-half of an origination fee which shall not exceed one
5 26 percent of the loan. In addition, the lending institution
5 27 shall pay a fee equal to twenty-five basis points on the loan
5 28 to the authority on an annual basis.
5 29 Sec. 5. NEW SECTION. 175A.5 INCOME TAX CREDIT.
5 30 1. A family farm animal feeding operation which receives
5 31 at least ten thousand dollars in assistance under section
5 32 175A.4 as certified by the authority under section 175A.4
5 33 shall be entitled to receive a tax credit equal to ten percent
5 34 of all new investments made in the operation not later than
5 35 the tax year following the tax year in which the operation
6 1 receives assistance under section 175A.4.
6 2 2. For purposes of this section, "new investment" means
6 3 the capitalized cost of all real and personal property related
6 4 to the family farm animal feeding operation, including
6 5 animals; buildings and animal feeding operation structures
6 6 qualifying under this section; equipment; and other
6 7 improvements to the operation, purchased or otherwise acquired
6 8 or relocated to the operation. "New investment" does not
6 9 include intangible property, or furniture and furnishings.
6 10 For the purposes of this section, capitalized cost of property
6 11 shall be determined in accordance with accounting methods used
6 12 by the taxpayer in determining the taxpayer's income for state
6 13 tax purposes.
6 14 3. Any credit in excess of the tax liability for the tax
6 15 year may be applied to the tax liability for the following ten
6 16 years or until depleted, whichever occurs first.
6 17 4. The department of revenue and finance shall adopt any
6 18 rules necessary to administer this section.
6 19 Sec. 6. NEW SECTION. 175A.6 FAMILY FARM ANIMAL FEEDING
6 20 OPERATION FUND.
6 21 1. A family farm animal feeding operation fund is created
6 22 within the state treasury under the control of the authority.
6 23 The fund shall consist of any moneys appropriated by the
6 24 general assembly, fees paid to the authority, and any other
6 25 moneys available to and obtained or accepted by the authority
6 26 from the federal government or private sources for placement
6 27 in the fund. Moneys shall be deposited in the fund as
6 28 provided in section 175A.7. Not more than one hundred fifty
6 29 thousand dollars shall be available annually from the fund for
6 30 administration of section 175A.4 and this section. The assets
6 31 of the fund shall be used by the authority only for carrying
6 32 out the purposes of section 175A.1 and section 427.1,
6 33 subsection 28.
6 34 2. In administering the fund the authority may do all of
6 35 the following:
7 1 a. Contract, sue and be sued, and adopt administrative
7 2 rules necessary to administer this section. However, the
7 3 authority shall not in any manner directly or indirectly
7 4 pledge the credit of the state.
7 5 b. Authorize payment from the fund for costs, commissions,
7 6 attorney fees, and other reasonable expenses, including
7 7 expenses related to carrying out duties necessary for
7 8 administering programs provided for under section 175A.4,
7 9 including for guaranteeing loans, and for the recovery of loan
7 10 moneys guaranteed or the management of property acquired in
7 11 connection with such loans.
7 12 3. Payments of interest, recaptures of awards, or
7 13 repayments of moneys provided in assistance under section
7 14 175A.4 shall be deposited into the fund. Section 8.33 does
7 15 not apply to any moneys in the fund until June 30, 2001.
7 16 Notwithstanding section 12C.7, interest or earnings on
7 17 investments or time deposits of the moneys in the fund shall
7 18 be credited to the fund.
7 19 4. The fund is subject to an annual audit as provided by
7 20 the authority. Moneys in the fund, which may be subject to
7 21 warrants written by the director of revenue and finance, shall
7 22 be drawn upon the written requisition of the authority's
7 23 executive director.
7 24 Sec. 7. NEW SECTION. 175A.7 STANDING APPROPRIATION.
7 25 For each fiscal year of the fiscal period beginning July 1,
7 26 1996, and ending June 30, 2002, there is appropriated fifteen
7 27 million dollars from the general fund of the state to the
7 28 family farm animal feeding operation fund created in section
7 29 175A.6.
7 30 Sec. 8. Section 427.1, Code Supplement 1995, is amended by
7 31 adding the following new subsection:
7 32 NEW SUBSECTION. 28. The property of a family farm animal
7 33 feeding operation as defined in section 175A.3, which receives
7 34 at least ten thousand dollars in assistance awarded and
7 35 certified by the agricultural development authority under
8 1 section 175A.4 shall be exempt from taxation for a period of
8 2 five years, to the extent provided in this subsection.
8 3 a. The exemption shall apply as follows:
8 4 (1) It begins on January 1 of the year following the year
8 5 in which the family farm animal feeding operation receives
8 6 assistance under section 175A.4.
8 7 (2) It is limited to the market value, as defined in
8 8 section 441.21, of the property of the family farm animal
8 9 feeding operation. If the property of the family farm animal
8 10 feeding operation is assessed with other property as a unit,
8 11 the exemption shall be limited to the net market value of the
8 12 property of the family farm animal feeding operation
8 13 determined as of the assessment date.
8 14 b. In order to receive the exemption, the owner of the
8 15 operation must file for the exemption with the assessing
8 16 authority not later than the first of February of the first
8 17 year for which the exemption applies, on forms provided by the
8 18 agricultural development authority. The application shall
8 19 provide a description of the family farm animal feeding
8 20 operation subject to the exemption. The application shall be
8 21 accompanied by a certificate of assistance provided by the
8 22 agricultural development authority.
8 23 c. The assessing authority shall retain a permanent file
8 24 of current exemptions filed in the assessing authority's
8 25 office. Not later than July 6 of each year, the assessing
8 26 authority shall remit a statement certifying the total amount
8 27 of exemptions allowed under this subsection. After receiving
8 28 the certification, the agricultural development authority
8 29 shall draw warrants on the family farm animal feeding
8 30 operation fund created in section 175A.6 which shall be
8 31 payable to the assessing authority in the amount certified by
8 32 the assessing authority, and shall mail the warrants to the
8 33 assessing authorities on August 15 of each year. However, if
8 34 the family farm animal feeding operation fund does not have
8 35 sufficient moneys available to pay in full the total of the
9 1 amounts certified to the agricultural development authority,
9 2 the authority shall prorate unobligated and unencumbered
9 3 moneys in the fund to the assessing authorities.
9 4 Sec. 9. FUTURE REPEAL.
9 5 1. Sections 175A.5 and 175A.7 are repealed.
9 6 2. Section 427.1, subsection 28, is amended by striking
9 7 the subsection.
9 8 3. This section takes effect on July 1, 2002.
9 9 4. Notwithstanding this section, an income tax credit
9 10 granted pursuant to section 175A.5, or a property tax
9 11 exemption provided under section 427.1, subsection 28, shall
9 12 continue in effect and shall be administered and enforced
9 13 until its expiration as provided in this Act.
9 14 EXPLANATION
9 15 This bill creates a new chapter entitled the "Iowa Family
9 16 Farm Animal Feeding Preservation Act". The bill provides that
9 17 the purpose of the chapter is to assist traditional farmers
9 18 who produce animals in this state and who face capitalization
9 19 barriers and the consolidation of animal agriculture. A
9 20 family farm animal feeding operation is defined to mean a
9 21 natural person or a general partnership composed exclusively
9 22 of natural persons which owns an animal feeding operation
9 23 located on the land where the person or partnership engages in
9 24 other farming activities. Additional requirements relate to
9 25 the operation's animal weight capacity, the extent to which
9 26 the owner of the operation is a party to a contract feeding
9 27 arrangement, whether the owner of the operation raises and
9 28 harvests crops on land where the animal feeding operation is
9 29 located, and the manner in which the operation is organized.
9 30 The bill provides for the administration of programs by the
9 31 agricultural development authority to assist family farm
9 32 animal feeding operations, including a loan guarantee program,
9 33 and an interest buy-down program. The authority must award
9 34 assistance based on whether an operation has a low or moderate
9 35 net worth, utilizes an approved computer system for monitoring
10 1 herd performance, and benefits from programs designed to
10 2 improve the management of the operation. In order to
10 3 participate in a program, the operation cannot be owned by a
10 4 person classified as a habitual violator under section
10 5 455B.191. The bill prohibits assistance being used to
10 6 construct, repair, or expand an anaerobic lagoon or earthen
10 7 manure storage basin. The bill requires the authority to
10 8 adopt rules to administer the programs, including the payment
10 9 of civil penalties by persons violating agreements with the
10 10 authority.
10 11 The bill establishes a family farm animal feeding operation
10 12 fund in order to support the assistance programs. Not more
10 13 than $150,000 available from the fund may be used annually by
10 14 the authority for administration. The bill provides a
10 15 standing appropriation of $15 million for each year until June
10 16 30, 2002.
10 17 The bill provides for an income tax credit for an operation
10 18 which receives assistance from the authority. The tax credit
10 19 is equal to a maximum of 10 percent of all new investment made
10 20 by the operation not later than one year following the year in
10 21 which the operation received assistance. The new investment
10 22 includes the capitalized cost of all real and personal
10 23 property related to the operation. Any credit in excess of
10 24 the tax liability for the tax year may be applied to the tax
10 25 liability for the following 10 years or until depleted,
10 26 whichever occurs first.
10 27 Finally, the bill provides that a family farm animal
10 28 feeding operation which qualifies for assistance is exempt
10 29 from property taxes for five years. The bill provides
10 30 procedures for filing for the exemption with the assessing
10 31 authority on a form provided by the department of revenue and
10 32 finance. The bill provides for reimbursing counties for
10 33 amounts lost by allowing property tax exemptions.
10 34 The bill provides that the income tax credit and
10 35 appropriation provisions of the bill are repealed on July 1,
11 1 2002.
11 2 LSB 3639SS 76
11 3 da/sc/14.3
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