Bill Text: OR HB2700 | 2013 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to the Beginning and Expanding Farmer Loan Program; appropriating money; and prescribing an effective date.

Spectrum: Bipartisan Bill

Status: (Passed) 2013-08-14 - Chapter 742, (2013 Laws): Effective date October 7, 2013. [HB2700 Detail]

Download: Oregon-2013-HB2700-Introduced.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 2663

                         House Bill 2700

Sponsored by Representatives CLEM, ESQUIVEL, BUCKLEY;
  Representatives BOONE, GELSER, GILLIAM, JENSON, Senators
  BOQUIST, OLSEN, PROZANSKI, ROBLAN (Presession filed.)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Directs Oregon Business Development Department to develop and
implement Beginning and Expanding Farmer Loan Program to assist
beginning farmers with acquisition of agricultural land,
agricultural improvements and depreciable agricultural property.
Requires use of private activity bonds on which interest is
exempt from federal taxation for loans made by private lenders
and sellers to beginning farmers. Requires department to adopt
rules for operation of program and to establish definitions,
eligibility requirements, criteria and standards in compliance
with Internal Revenue Code.
  Takes effect on 91st day following adjournment sine die.

                        A BILL FOR AN ACT
Relating to the Beginning and Expanding Farmer Loan Program; and
  prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + (1) The Legislative Assembly finds that the
demand in Oregon for local food is surging, that the interest in
farming among younger generations is on the rise and that access
to capital is one of the most important factors contributing to
the development and success of a local market agricultural sector
in the Oregon economy.
  (2) The Legislative Assembly also finds that the establishment
and implementation of a federal-state, public-private partnership
program to assist beginning farmers is a cost-effective way for
Oregon to support beginning farmers and the growth of the local
market agricultural sector across this state. Such a program
would represent no cost or risk to the state and would allow
private lenders to earn federally tax exempt interest income on
loans to eligible beginning farmers. + }
  SECTION 2.  { + As used in this section and section 3 of this
2013 Act:
  (1) 'Agricultural improvements' means any improvements,
buildings, structures or fixtures suitable for use in farming
that are located on agricultural land.
  (2) 'Agricultural land' means land located in this state that
is suitable for use in farming and that is or will be operated as
a farm.

  (3) 'Beginning farmer' means a person as defined by the Oregon
Business Development Department by rule. The rule, at a minimum,
must define beginning farmer in compliance with definitions in
section 147 of the Internal Revenue Code.
  (4) 'Depreciable agricultural property' means personal property
suitable for use in farming for which an income tax deduction for
depreciation is allowable in computing federal income tax under
the Internal Revenue Code, including but not limited to farm
machinery and trucks but not including feeder livestock, seed,
feed, fertilizer and other types of inventory or supplies.
  (5) 'Lender' means either of the following that has entered
into an agreement with the department to originate, service and
administer loans to beginning farmers in the manner authorized by
section 3 of this 2013 Act:
  (a) An insured institution as defined in ORS 706.008 that is
authorized to do business in Oregon.
  (b) A private person or entity that has entered into a written
contract to sell agricultural land, agricultural improvements or
depreciable agricultural property to a beginning farmer. + }
  SECTION 3.  { + (1) The Oregon Business Development Department
shall develop and implement the Beginning and Expanding Farmer
Loan Program. To facilitate the making of loans to beginning
farmers by lenders for the purpose of acquiring agricultural
land, agricultural improvements or depreciable agricultural
property, the department shall use private activity bonds,
allocated under ORS 286A.605 to 286A.625, on which the interest
is exempt from federal taxation. The department may not guarantee
the payment of a loan made under this section. The department
shall bear no continuing responsibility for repayment of any bond
allocated under this section other than the assignment to lenders
of the department's interests, if any, in loans made to beginning
farmers with the proceeds of bonds allocated under this section.
  (2) The department shall adopt rules for the operation of the
program and to establish definitions, eligibility requirements,
criteria and standards in compliance with sections 144 and 147 of
the Internal Revenue Code. The program must require that loans
made to beginning farmers be approved by the department in
advance and made only if all of the following are satisfied:
  (a) The lender has a current agreement with the department to
participate in the program.
  (b) The beginning farmer is a resident of this state.
  (c) The agricultural land, agricultural improvements or
depreciable agricultural property that is the subject of the loan
is located or will be used in this state.
  (d) The beginning farmer has sufficient education, training and
experience to do the type of farming for which the loan is
sought.
  (e) The maximum loan amount for acquisition of agricultural
land and agricultural improvements by a beginning farmer does not
exceed $501,100, or the amount specified under 26
U.S.C. 147(c)(2)(A) as adjusted for inflation under 26
U.S.C. 147(c)(2)(H).
  (f) The maximum loan amount for the acquisition of new
depreciable agricultural property by a beginning farmer does not
exceed $250,000.
  (g) The maximum loan amount for the acquisition of used
depreciable agricultural property by a beginning farmer does not
exceed $62,500.
  (h) The beginning farmer will materially and substantially
participate in the farming for which the loan is sought for the
duration of the loan.
  (i) The agricultural land, agricultural improvements and
depreciable agricultural property will only be used for farming
by the beginning farmer or by the beginning farmer and the
beginning farmer's family for the duration of the loan.

  (j) The beginning farmer has not previously received financing
under the program, unless the amount previously received plus the
amount of the loan sought does not exceed the amount specified in
paragraph (e) of this subsection for agricultural land and
agricultural improvements, $250,000 for new depreciable
agricultural property or $62,500 for used depreciable
agricultural property.
  (k) The length of the loan does not exceed 120 percent of the
estimated life of the purchase made with the loan proceeds.
  (L) The beginning farmer and the lender have complied with any
other requirement, criterion or standard prescribed by the
department by rule.
  (3) The department may charge fees to lenders and beginning
farmers as reasonably necessary to administer the program.
Lenders may charge usual and customary fees and points as agreed
to by the beginning farmer and the lender, and as approved by the
department.
  (4) The terms of the loan, including interest rate and length
of loan, shall be as agreed to by the lender and the beginning
farmer, subject to approval by the department. Lenders are
responsible for making independent credit evaluations of a
beginning farmer or the farming enterprise for which the loan is
sought, and for the creation and perfection of security interests
for any loan made to a beginning farmer under the program.
  (5) The department shall prescribe by rule the application
procedure for lenders and beginning farmers to participate in the
program. + }
  SECTION 4.  { + This 2013 Act takes effect on the 91st day
after the date on which the 2013 regular session of the
Seventy-seventh Legislative Assembly adjourns sine die. + }
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