Senate File 322 SENATE FILE BY HOUSER Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to providing financing to agricultural 2 processors, providing for bonding authority, and providing an 3 appropriation. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1302XS 80 6 da/sh/8 PAG LIN 1 1 Section 1. Section 15E.208, subsection 3, paragraph b, 1 2 Code 2003, is amended to read as follows: 1 3 b. The loan shall be repayable upon terms and conditions 1 4 negotiated by the parties. The repayment period shall begin 1 5 six years following the date when the loan is awarded and end 1 6 twenty=five years after the date that the repayment period 1 7 begins. At least four percent of the amount due shall be paid 1 8 each year to the department. The corporation shall not be 1 9 subject to a prepayment penalty. The department shall deposit 1 10 moneys from the repaid loan to the agricultural processors 1 11 financing fund as established pursuant to section 175.18A 1 12 according to requirements established by the agricultural 1 13 development authority. 1 14 Sec. 2. Section 175.2, Code 2003, is amended by adding the 1 15 following new subsection: 1 16 NEW SUBSECTION. 2A. "Agricultural processor" means a 1 17 person actively engaged in turning an agricultural commodity 1 18 into a product by physical, chemical, or genetic modification. 1 19 An "agricultural processor" includes a person actively engaged 1 20 in any of the following: 1 21 a. The production of biorenewable fuels, including 1 22 ethanol=blended or soydiesel fuel. 1 23 b. The manufacturing or preparation for sale of beef, 1 24 pork, or poultry products, including the slaughtering of 1 25 cattle, swine, or fowl or the manufacturing or preparation of 1 26 carcasses or goods originating from the carcasses. 1 27 c. The production of a life science product as defined in 1 28 section 10C.1. 1 29 Sec. 3. Section 15E.208, subsection 8, is amended by 1 30 striking the subsection. 1 31 Sec. 4. NEW SECTION. 175.18A AGRICULTURAL PROCESSORS 1 32 FINANCING FUND == BONDING == APPROPRIATIONS. 1 33 1. An agricultural processors financing fund is created 1 34 and established as a separate and distinct fund in the state 1 35 treasury. 2 1 2. The authority may issue bonds as provided in this 2 2 chapter which are necessary in the opinion of the authority to 2 3 provide sufficient moneys to the agricultural processors 2 4 financing fund, to provide for expenditures provided in 2 5 section 175.17, and to provide for other expenditures which 2 6 are necessary or convenient to carry out a bond issue for the 2 7 fund and for the administration of the fund. 2 8 3. The moneys in the fund are appropriated to the 2 9 authority for purposes of administering the agricultural 2 10 processors financing program as provided in section 175.37. 2 11 Moneys in the fund shall not be subject to an appropriation 2 12 for any other purpose by the general assembly, but shall be 2 13 used only for the purposes of supporting the program. The 2 14 authority shall act as custodian of the fund and disburse 2 15 moneys contained in the fund as directed by the authority. 2 16 4. The authority may create and establish one or more bond 2 17 reserve funds pursuant to section 175.18, to secure one or 2 18 more issues of bonds issued for the purposes described in this 2 19 section. 2 20 5. Revenue for the agricultural processors financing fund 2 21 shall include, but is not limited to, the following: 2 22 a. Moneys deposited into the fund by the department of 2 23 economic development from the repayment of an Iowa 2 24 agricultural industry finance loan as provided in section 2 25 15E.208. 2 26 b. Moneys repaid to the fund by persons who receive 2 27 financing under the agricultural processors financing program 2 28 provided in section 175.37. 2 29 c. The proceeds of bonds and notes issued to capitalize 2 30 and pay the costs of the fund and investment earnings on the 2 31 proceeds. 2 32 d. Interest attributable to investment of money in the 2 33 fund or an account of the fund. 2 34 e. Moneys in the form of a devise, gift, bequest, 2 35 donation, federal or other grant, reimbursement, repayment, 3 1 judgment, transfer, payment, or appropriation from any source 3 2 intended to be used for the purposes of the fund. 3 3 6. Moneys deposited into the fund are not subject to 3 4 section 8.33. Notwithstanding section 12C.7, subsection 2, 3 5 interest or earnings on moneys in the fund shall be credited 3 6 to the fund. 3 7 Sec. 5. NEW SECTION. 175.37 AGRICULTURAL PROCESSORS 3 8 FINANCING PROGRAM. 3 9 An agricultural processors financing program is 3 10 established. The program shall be administered by the 3 11 authority. The authority shall administer the program to 3 12 finance the acquisition of land and improvements and 3 13 depreciable property by agricultural processors. 3 14 1. An agricultural processor who is eligible for 3 15 assistance under this program is limited to a business 3 16 association as defined in section 9H.1 which meets all of the 3 17 following: 3 18 a. The principal business operations of the business 3 19 association are located in this state. 3 20 b. The business association has been in operation for ten 3 21 years or less. 3 22 c. The business association has a net worth of less than 3 23 one hundred million dollars. 3 24 2. The authority may provide financing by providing for 3 25 secured or unsecured direct loans; loan guarantees; interest 3 26 buy=downs; and secondary market purchases of loans or 3 27 mortgages, loans to mortgage lenders, lending institutions, or 3 28 other lenders, as designated by rule of the authority. 3 29 EXPLANATION 3 30 PROVISIONS OF THE BILL. This bill amends Code chapter 175, 3 31 the "Iowa Agricultural Development Act". The Code chapter is 3 32 administered by the agricultural development authority, which 3 33 is empowered to issue bonds in order to support programs to 3 34 assist agricultural producers, including the beginning farmers 3 35 program. 4 1 The bill provides that the agricultural development 4 2 authority may also assist agricultural processors by financing 4 3 the acquisition of land and improvements and depreciable 4 4 property by agricultural processors. Under the bill, a 4 5 processor is a person actively engaged in turning an 4 6 agricultural commodity into a product by physical, chemical, 4 7 or genetic modification. The bill establishes an agricultural 4 8 processors financing fund as a separate and distinct fund in 4 9 the state treasury. According to the bill the authority may 4 10 issue bonds which are to provide sufficient moneys to the fund 4 11 to support the program. 4 12 The fund is largely supported from moneys required to be 4 13 repaid to the department of economic development by an Iowa 4 14 agricultural industry finance corporation that receives an 4 15 agricultural industry finance loan. 4 16 BACKGROUND == IOWA AGRICULTURAL INDUSTRY FINANCE 4 17 CORPORATIONS. Under Division XIX of Code chapter 15E, an Iowa 4 18 agricultural industry finance corporation is a private 4 19 business which is recognized by the state to provide financing 4 20 to eligible persons who are engaging in specific agricultural 4 21 industrial ventures (an agricultural products processor or an 4 22 agricultural biotechnology enterprise). There is one such 4 23 corporation currently organized that has received an Iowa 4 24 agricultural industry finance loan from the department of 4 25 economic development. The general assembly has appropriated 4 26 moneys to the department, subject to repayment, for purposes 4 27 of awarding such a loan to an eligible corporation in order to 4 28 finance these ventures (see 1998 Acts, chapter 1207). Under 4 29 current law, the repayment moneys are required to be deposited 4 30 in the road use tax fund. 4 31 LSB 1302XS 80 4 32 da/sh/8