House File 607 - Introduced HOUSE FILE 607 BY COMMITTEE ON AGRICULTURE (SUCCESSOR TO HSB 162) A BILL FOR An Act relating to the state government, by providing for 1 the transfer of powers and duties from the agricultural 2 development authority to the Iowa finance authority, 3 the composition of the Iowa finance authority board of 4 directors, the administration of programs by the board, the 5 implementation of law by the board, and including effective 6 date provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 2145HV (4) 85 da/rj

H.F. 607 DIVISION I 1 GENERAL PROVISIONS 2 Section 1. Section 16.1, subsection 1, Code 2013, is amended 3 by adding the following new paragraphs: 4 NEW PARAGRAPH . 0c. “Board” means the Iowa finance authority 5 board of directors created pursuant to section 16.2. 6 NEW PARAGRAPH . 0j. “Executive director” means the executive 7 director of the Iowa finance authority as appointed pursuant to 8 section 16.6. 9 Sec. 2. NEW SECTION . 16.1A Creation —— administration of 10 programs. 11 1. The Iowa finance authority is created, and constitutes 12 a public instrumentality and agency of the state exercising 13 public and essential governmental functions. 14 2. The authority shall undertake and administer the 15 following: 16 a. Programs established under this chapter to assist in 17 attainment of adequate housing for low-or moderate-income 18 families, elderly families, and families which include one or 19 more persons with disabilities, and to undertake the various 20 finance programs under this chapter. 21 b. Programs which assist qualified farmers or agricultural 22 producers, including beginning farmers, as provided in chapter 23 175. 24 3. The Iowa finance authority board of directors shall have 25 general control, supervision, and regulation of all authority 26 programs established under this chapter and chapter 175. The 27 authority is charged with the broad administrative authority 28 to make, administer, interpret, construe, repeal, and execute 29 the rules, and to administer, interpret, construe, and execute 30 the laws of this state relating to such programs. The board 31 may, by resolution, delegate to the executive director or other 32 authority employee such of its powers, under such terms and 33 conditions, as it deems appropriate. 34 4. At least two of the authority’s full-time equivalent 35 -1- LSB 2145HV (4) 85 da/rj 1/ 13

H.F. 607 positions, as defined in section 8.36A, shall be entirely 1 dedicated to administering programs established pursuant to 2 chapter 175. One of those full-time equivalent positions 3 shall be dedicated to overseeing the administration of those 4 programs, and to the extent that the programs are affected, the 5 full-time equivalent position shall be provided the powers and 6 duties necessary to do all of the following: 7 a. Participate in making managerial decisions. 8 b. Provide for outreach and promotion. 9 c. Improve delivery of services. 10 d. Participate in any rulemaking. 11 e. Represent the authority when communicating with members 12 of the general assembly. 13 5. A program established in this chapter may be combined 14 with any other program authorized in this chapter, under 15 chapter 175, or under a federal program, in order to 16 facilitate, as far as practical, the types of assistance 17 provided to persons described in section 175.3. 18 Sec. 3. Section 16.2, subsection 1, Code 2013, is amended 19 to read as follows: 20 1. The Iowa finance authority is established, and 21 constituted a public instrumentality and agency of the state 22 exercising public and essential governmental functions, to 23 undertake programs which assist in attainment of adequate 24 housing for low or moderate income families, elderly 25 families, and families which include one or more persons with 26 disabilities, and to undertake the various finance programs. 27 The powers of the authority are vested in and shall be 28 exercised by a an Iowa finance authority board of directors. 29 The board shall be composed of nine members appointed by the 30 governor subject to confirmation by the senate. 31 a. No Not more than five members shall belong to the same 32 political party. 33 b. As far as possible, the governor shall include within 34 the membership persons who represent community and housing 35 -2- LSB 2145HV (4) 85 da/rj 2/ 13

H.F. 607 development industries, housing finance industries, the real 1 estate sales industry, elderly families, minorities, lower 2 income families, very low income families, families which 3 include persons with disabilities, average taxpayers, local 4 government, business interests, and any other person specially 5 interested in community housing, finance, or small business. 6 c. At least two members shall be individuals who have 7 been associated with a financial institution and who have had 8 substantial experience in making loans to beginning farmers or 9 agricultural producers as defined in section 175.2. 10 Sec. 4. Section 16.103, subsection 1, Code 2013, is amended 11 to read as follows: 12 1. Make secured and unsecured loans for both the acquisition 13 and the construction of projects on terms the authority 14 determines. Any loan made with respect to any project for 15 which a loan may be made pursuant to chapter 175 shall be made 16 only upon the request and with the consent of the agricultural 17 development authority. The loans A loan may be made to any 18 person or entity including, but not limited to, a city , a or 19 county , and the agricultural development authority for projects 20 a project approved by the Iowa finance authority. The Iowa 21 finance authority may take any action which is reasonable and 22 lawful to protect its security and to avoid losses from its 23 loans. 24 Sec. 5. Section 175.2, subsection 1, paragraph e, Code 2013, 25 is amended to read as follows: 26 e. “Authority” means the agricultural development Iowa 27 finance authority established created in section 175.3 16.1A . 28 Sec. 6. Section 175.2, subsection 1, Code 2013, is amended 29 by adding the following new paragraphs: 30 NEW PARAGRAPH . 0h. “Board” means the Iowa finance authority 31 board of directors created pursuant to section 16.2. 32 NEW PARAGRAPH . 0k. “Executive director” means the executive 33 director of the Iowa finance authority appointed pursuant to 34 section 16.6. 35 -3- LSB 2145HV (4) 85 da/rj 3/ 13

H.F. 607 Sec. 7. Section 175.3, Code 2013, is amended by striking the 1 section and inserting in lieu thereof the following: 2 175.3 Authority —— administration of this chapter. 3 1. The authority shall administer this chapter in addition 4 to its administration of chapter 16. 5 2. In administering this chapter, the authority shall 6 provide assistance to persons qualifying as beginning farmers, 7 agricultural producers, or displaced farmers as provided in 8 this chapter. The authority shall, to every extent practical, 9 assist such persons to do all of the following: 10 a. Acquire agricultural land, agricultural improvements, 11 or depreciable agricultural property, including as provided in 12 section 175.12 or 175.33. 13 b. Implement the installation of permanent soil and water 14 conservation practices and the acquisition of conservation 15 farm equipment for agricultural land, including as provided in 16 section 175.34. 17 c. Obtain affordable operating capital, including as 18 provided by section 175.35. 19 d. Begin or expand beef cattle operations, including as 20 provided in section 175.36. 21 e. Obtain agricultural assets transfer tax credits, 22 including by issuing tax credit certificates pursuant to 23 section 175.37. 24 3. The authority shall also develop programs to assist 25 qualified agricultural producers within the state with 26 financing other capital requirements or operating expenses. 27 4. A program established in this chapter may be combined 28 with any other program established in this chapter, chapter 29 16, or a federal program, in order to facilitate, as far as 30 practical, the types of assistance described in this section. 31 5. The board shall have general control, supervision, 32 and regulation of all authority programs established under 33 this chapter in the same manner as provided for in chapter 16 34 pursuant to section 16.1A. 35 -4- LSB 2145HV (4) 85 da/rj 4/ 13

H.F. 607 Sec. 8. Section 175.4, subsection 11, Code 2013, is amended 1 to read as follows: 2 11. It is necessary to create an agricultural development 3 authority to encourage ownership of farms by beginning farmers 4 by providing purchase money loans to beginning farmers who are 5 not able to obtain adequate capital elsewhere to provide such 6 funds and to lower costs through the use of public financing. 7 Sec. 9. Section 175.5, unnumbered paragraph 1, Code 2013, 8 is amended to read as follows: 9 In the performance of its duties, implementation of its 10 powers, selection of specific programs and projects to receive 11 its assistance as provided in section 175.3 , the authority 12 shall be guided by the following principles: 13 Sec. 10. Section 175.6, unnumbered paragraph 1, Code 2013, 14 is amended to read as follows: 15 The authority has all of the general powers needed to carry 16 out its purposes and duties, and to exercise its specific 17 powers , under this chapter including but not limited to the 18 power to do any of the following : 19 Sec. 11. Section 175.8, subsection 1, unnumbered paragraph 20 1, Code 2013, is amended to read as follows: 21 The authority shall submit to the governor and to the members 22 of the general assembly as request it, not later than January 23 15 of each year, a complete and economically designed and 24 reproduced As part of the authority’s report setting forth: 25 required in section 16.7, the authority shall detail its 26 activities under this chapter, which shall include all of the 27 following: 28 Sec. 12. Section 175.8, subsections 3 and 4, Code 2013, are 29 amended to read as follows: 30 3. For fiscal years beginning on or after July 1, 2007, 31 the auditor of state shall conduct an annual audit of the 32 agricultural development authority to be paid from resources 33 of the authority notwithstanding any other audit conducted on 34 behalf of the authority’s board of directors. The auditor of 35 -5- LSB 2145HV (4) 85 da/rj 5/ 13

H.F. 607 state may acquire the services of an outside audit firm, if 1 necessary, to conduct the audit as required in this subsection . 2 4. 3. The authority’s executive director , appointed 3 pursuant to section 175.7 , shall report semiannually to the 4 general assembly’s standing committees on government oversight 5 regarding the operations of the authority. 6 Sec. 13. Section 175.26, Code 2013, is amended by striking 7 the section and inserting in lieu thereof the following: 8 175.26 Conflicts of interest. 9 The requirements and procedures for conflicts of interest 10 by a member or employee of the authority set forth in section 11 16.3A shall also apply to this chapter. 12 Sec. 14. REPEAL. Sections 175.7 and 175.11, Code 2013, are 13 repealed. 14 Sec. 15. EFFECTIVE DATE. This division of this Act takes 15 effect on July 1, 2013. 16 DIVISION II 17 COORDINATING PROVISIONS 18 Sec. 16. Section 7C.4A, subsection 4, Code 2013, is amended 19 to read as follows: 20 4. Twenty-one percent of the state ceiling shall be 21 allocated to qualified small issue bonds issued for first-time 22 farmers under chapter 175 . However, at any time during the 23 calendar year the governor’s designee, with the approval of the 24 Iowa agricultural development finance authority, may determine 25 that a lesser amount need be allocated to qualified small issue 26 bonds for first-time farmers and on that date this lesser 27 amount shall be the amount allocated for those bonds and the 28 excess shall be allocated under subsection 7 . 29 Sec. 17. Section 12.28, subsection 1, paragraph b, Code 30 2013, is amended to read as follows: 31 b. “State agency” means a board, commission, bureau, 32 division, office, department, or branch of state government. 33 However, state agency does not mean the state board of regents, 34 institutions governed by the board of regents, or authorities 35 -6- LSB 2145HV (4) 85 da/rj 6/ 13

H.F. 607 created under chapter 16 , 175 , 257C , or 261A . 1 Sec. 18. Section 12.30, subsection 1, paragraph a, Code 2 2013, is amended to read as follows: 3 a. “Authority” means a department, or public or quasi-public 4 instrumentality of the state including but not limited to the 5 authority created under chapter 12E , 16 , 175 , 257C , 261A , or 6 463C , which has the power to issue obligations, except that 7 “authority” does not include the state board of regents or 8 the Iowa finance authority to the extent it acts pursuant to 9 chapter 260C . “Authority” also includes a port authority created 10 under chapter 28J . 11 Sec. 19. Section 16.1, subsection 1, paragraph b, Code 2013, 12 is amended to read as follows: 13 b. “Authority” means the Iowa finance authority established 14 created in section 16.2 16.1A . 15 Sec. 20. Section 159.18, subsection 1, Code 2013, is amended 16 to read as follows: 17 1. As used in this section , “farm programs” includes, but 18 is not limited to, financial incentive programs established 19 within the division of soil conservation of the department of 20 agriculture and land stewardship as provided in section 161A.70 21 and the beginning farmer loan program administered by the 22 agricultural development Iowa finance authority as provided in 23 section 175.12 . 24 Sec. 21. Section 422.7, subsection 19, Code 2013, is amended 25 to read as follows: 26 19. Subtract interest earned on bonds and notes issued by 27 the agricultural development Iowa finance authority as provided 28 in section 175.17, subsection 10 . 29 Sec. 22. Section 422.35, subsection 13, Code 2013, is 30 amended to read as follows: 31 13. Subtract the interest earned from bonds and notes issued 32 by the agricultural development Iowa finance authority as 33 provided in section 175.17, subsection 10 . 34 Sec. 23. Section 455B.291, subsection 2, Code 2013, is 35 -7- LSB 2145HV (4) 85 da/rj 7/ 13

H.F. 607 amended to read as follows: 1 2. “Authority” means the Iowa finance authority established 2 created in section 16.2 16.1A . 3 Sec. 24. Section 502.201, subsection 9B, Code 2013, is 4 amended to read as follows: 5 9B. Agricultural development Iowa finance authority. Any 6 security issued by the agricultural development Iowa finance 7 authority under chapter 175 . 8 Sec. 25. EFFECTIVE DATE. This division of this Act takes 9 effect on July 1, 2013. 10 DIVISION III 11 TRANSITIONAL PROVISIONS —— GENERAL 12 Sec. 26. ADMINISTRATIVE RULES AND OTHER ACTIONS AND 13 DOCUMENTS. Any rule, regulation, form, order, or directive 14 promulgated by agricultural development authority under the 15 umbrella of the department of agriculture and land stewardship 16 pursuant to section 175.3, Code 2013, as required to administer 17 and enforce the provisions of chapter 175 shall continue in 18 full force and effect until amended, repealed, or supplemented 19 by affirmative action of the Iowa finance authority. 20 Sec. 27. PENDING ADMINISTRATIVE OR JUDICIAL PROCEEDINGS. 21 1. An administrative or judicial proceeding arising under 22 chapter 175 pending on the effective date of this division of 23 this Act shall not be affected due to this Act. 24 2. Any cause of action or statute of limitation relating to 25 an action taken by a party in a matter arising under chapter 26 175 shall not be affected by this Act, except that the Iowa 27 finance authority shall replace the agricultural development 28 authority as a party. 29 3. The department of agriculture and land stewardship 30 or the office of attorney general acting on behalf of the 31 agricultural development authority in an administrative or 32 judicial proceeding shall not be affected as result of this 33 Act. Any statue of limitation shall apply to the parties as if 34 this Act had not been enacted. 35 -8- LSB 2145HV (4) 85 da/rj 8/ 13

H.F. 607 Sec. 28. PERSONNEL. Any personnel in the state merit system 1 of employment who are transferred due to the effect of this Act 2 shall be so transferred without any loss in salary, benefits, 3 or accrued years of service. 4 Sec. 29. REPLACEMENT ITEMS. Any replacement of signs, 5 logos, stationery, insignia, uniforms, and related items that 6 are made due to the effect of this Act shall be done as part of 7 the normal replacement cycle for such items. 8 Sec. 30. IOWA FINANCE AUTHORITY BOARD OF DIRECTORS. Nothing 9 in this Act requires that a member serving on the Iowa finance 10 authority board of directors serve for less than a term of 11 office specified in section 16.2. However, two directors whose 12 terms end after the effective date of this division of this Act 13 shall be replaced by two individuals who are engaged in actual 14 farming operations as required in section 16.2, as amended by 15 this Act. 16 Sec. 31. OUTSTANDING LEGAL OBLIGATIONS AND RIGHTS. Any 17 interest in real property, tangible personal property, 18 or intangible personal property held by the agricultural 19 development authority shall be transferred to the Iowa finance 20 authority. Any property right, security interest, or lien 21 held by the agricultural development authority shall vest in 22 the Iowa finance authority without an instrument of transfer 23 including but not limited to a deed, contract, or endorsement. 24 However, nothing in this section prohibits the execution of 25 such instrument if the Iowa finance authority determines it 26 is necessary or prudent. Any debt, obligation, or liability 27 incurred by the agricultural development authority shall be 28 assumed by the Iowa finance authority, and shall continue 29 according to the same terms and conditions as applied to the 30 agricultural development authority. Any right or benefit 31 arising from a legal instrument in which the agricultural 32 development authority was a party shall be transferred to the 33 Iowa finance authority and shall continue as if the transfer 34 had not occurred. 35 -9- LSB 2145HV (4) 85 da/rj 9/ 13

H.F. 607 Sec. 32. ADMINISTRATION OF ONGOING PROGRAMS. The Iowa 1 finance authority shall complete the administration of ongoing 2 programs of the agricultural development authority as provided 3 in chapter 175, to the extent that the administration of 4 those programs are in progress on the effective date of this 5 Act. The Iowa finance authority shall assume all rights 6 and obligations of the agricultural development authority 7 to the extent that moneys have been committed, obligations 8 incurred, or rights accrued prior to the effective date of 9 this Act. Moneys owing due to the rights and obligations of 10 the agricultural development authority and assumed by the Iowa 11 finance authority shall be paid as directed by the Iowa finance 12 authority. 13 Sec. 33. IOWA RURAL REHABILITATION CORPORATION. 14 1. The assets and liabilities of the former Iowa rural 15 rehabilitation corporation assumed by the agricultural 16 development authority pursuant to section 175.28 shall be 17 transferred to the Iowa finance authority on the effective 18 date of this Act. On such effective date, the Iowa finance 19 authority shall be the successor in interest to the agreements 20 in effect between the United States government and the 21 agricultural development authority on behalf of this state. 22 2. The United States, acting through the United States 23 department of agriculture, and its officials, shall be held 24 harmless against any liability arising out of the transfer of 25 assets from the agricultural development authority to the Iowa 26 finance authority, or from the Iowa finance authority carrying 27 out the provisions of any agreement relating to the use by 28 this state of the Iowa rural rehabilitation corporation assets 29 under the management of agricultural development authority as 30 contained in the Iowa rural rehabilitation corporation trust 31 liquidation. 32 Sec. 34. EFFECTIVE DATE. This division of this Act takes 33 effect July 1, 2013. 34 DIVISION IV 35 -10- LSB 2145HV (4) 85 da/rj 10/ 13

H.F. 607 TRANSITIONAL PROVISIONS —— REQUIREMENTS OF THE IOWA FINANCE 1 AUTHORITY AND THE AGRICULTURAL DEVELOPMENT AUTHORITY 2 Sec. 35. GENERAL. The Iowa finance authority shall provide 3 for the implementation of this Act according to a schedule 4 approved by the Iowa finance authority’s board of directors 5 which is consistent with this Act. 6 Sec. 36. EMERGENCY RULEMAKING. The Iowa finance authority 7 may adopt emergency rules under section 17A.4, subsection 3, 8 and section 17A.5, subsection 2, paragraph “b”, to implement 9 the provisions of this Act, and the rules shall be effective 10 July 1, 2013, unless a later date is specified in the rules. 11 Any rules adopted in accordance with this section shall also be 12 published as a notice of intended action as provided in section 13 17A.4. 14 Sec. 37. INTERAUTHORITY COOPERATION. The agricultural 15 development authority shall assist the Iowa finance authority 16 in implementing this Act by providing for an effective 17 transition of powers and duties from one authority to the other 18 authority under chapter 175 and related administrative rules. 19 Sec. 38. EFFECTIVE UPON ENACTMENT. This division of this 20 Act, being deemed of immediate importance, takes effect upon 21 enactment. 22 EXPLANATION 23 GENERAL. This bill provides that the powers and duties 24 of the agricultural development authority are transferred to 25 the Iowa finance authority. The agricultural development 26 authority administers programs under Code chapter 175 to assist 27 farmers, including beginning farmers, to start or expand their 28 operations. The Iowa finance authority administers programs 29 under Code chapter 16 to assist low-or moderate-income families 30 in attaining housing. 31 ADMINISTRATION. The agricultural development authority 32 is currently housed in the department of agriculture and 33 land stewardship. The Iowa finance authority and the 34 agricultural development authority are each headed by a board 35 -11- LSB 2145HV (4) 85 da/rj 11/ 13

H.F. 607 of directors and each authority is supervised by an executive 1 director. Each authority is required to cooperate with lending 2 institutions in providing for affordable credit; and each may 3 issue bonds and notes in order to finance its programs. 4 OTHER SUBSTANTIVE CHANGES. The bill makes several 5 substantive changes. It provides that the Iowa finance 6 authority board of directors has broad administrative authority 7 to make, interpret and construe its rules, and interpret and 8 construe the laws of this state relating to such programs. It 9 dedicates two full-time equivalent positions to administer 10 programs previously performed by the agricultural development 11 authority. The bill requires that two members of the board be 12 involved in agricultural lending. It eliminates a provision 13 which requires the state auditor to perform an annual audit of 14 the agricultural development authority. Currently, the state 15 auditor may periodically perform audits of the Iowa finance 16 authority. 17 TRANSITIONAL PROVISIONS —— GENERAL. The bill includes a 18 number of transitional provisions to assist the Iowa finance 19 authority in accomplishing the transfer and to effectuate the 20 transfer of legal rights and obligations. 21 The transitional provisions relate to the validity of 22 existing rules, regulations, forms, orders, and directives; 23 pending legal actions; the transfer of personnel; and the 24 replacement of items bearing the name of the agricultural 25 development authority. The bill provides for the transfer of 26 interests in real property, tangible personal property, and 27 intangible personal property as well as debts, obligations, 28 or liabilities incurred by the agricultural development 29 authority and any right or benefit obtained by the agricultural 30 development authority (e.g., through outstanding contracts). 31 The bill also provides that two members of the Iowa finance 32 authority’s board of directors may serve out their terms 33 before being replaced by persons involved in farming. The 34 bill authorizes the Iowa finance authority to complete 35 -12- LSB 2145HV (4) 85 da/rj 12/ 13

H.F. 607 the administration of ongoing programs in progress on the 1 effective date of the bill. It specifically provides for the 2 assumption of assets and liabilities of the former Iowa rural 3 rehabilitation corporation that had been administered by the 4 agricultural development authority (Code section 175.28). The 5 bill holds the United States department of agriculture harmless 6 against liability arising from the assumption and transfer of 7 assets. 8 TRANSFER PROVISIONS —— IMPLEMENTATION. Finally, the 9 bill authorizes the Iowa fiance authority to provide for the 10 implementation of the bill according to a schedule adopted by 11 its board of directors, provides the authority with emergency 12 rulemaking authority, and requires that the two authorities 13 cooperate in implementing the transition. 14 Generally, the bill takes effect on July 1. However, 15 provisions which authorize the Iowa development authority to 16 implement the bill take effect upon enactment. 17 -13- LSB 2145HV (4) 85 da/rj 13/ 13