Bill Text: MI SB0693 | 2019-2020 | 100th Legislature | Engrossed
Bill Title: Agriculture; other; agricultural disaster loan organization program act; update and modify. Amends secs. 2, 3, 4 & 5 of 2018 PA 111 (MCL 286.432 et seq.).
Spectrum: Moderate Partisan Bill (Republican 7-2)
Status: (Passed) 2020-03-04 - Assigned Pa 0052'20 With Immediate Effect [SB0693 Detail]
Download: Michigan-2019-SB0693-Engrossed.html
SENATE BILL NO. 693
December 11, 2019, Introduced by Senators
LAUWERS, THEIS, BIZON, BARRETT, ANANICH, HORN, OUTMAN, VANDERWALL and
HOLLIER and referred to the Committee on Appropriations.
A bill to amend 2018 PA 111, entitled
"Agricultural disaster loan origination program act,"
by amending sections 2, 3, 4, and 5 (MCL 286.432, 286.433, 286.434, and 286.435).
the people of the state of michigan enact:
(a) "Agricultural
processing" means the enhancement or improvement of the overall value of
an agricultural commodity or of an animal or plant product into a product of
higher value, including, but not limited to, marketing, agricultural processing,
transforming, or packaging.
(b) "Facility"
means a plant designed for receiving or storing farm produce, a plant designed
for value-added agricultural processing, or a retail sales establishment of a
business engaged in making retail sales directly to farmers with 75% or more of
its gross retail sales volume exempted from sales tax under section 4a(1)(e),
(f), (g), and (h) of the general sales tax act, 1933 PA 167, MCL 205.54a.
(c) "Farm"
means that term as it is defined in section 2 of the Michigan right to farm
act, 1981 PA 93, MCL 286.472.
(d) "Financial
institution" means a state or national bank, a state or federally
chartered savings and loan association, a state or federally chartered savings
bank, a state or federally chartered credit union, or other regulated lending
institution that maintains a principal office or branch office in this state
under the laws of this state or the United States, including, but not limited
to, an entity of the federally chartered farm credit system.
(e) "Person"
means an individual, partnership, corporation, association, governmental
entity, or other legal entity.
(f) "Production of
agricultural goods" means commercial farming, including, but not limited
to, cultivation of the soil; growing and harvesting of an agricultural,
horticultural, or floricultural commodity; dairying; raising of livestock,
bees, fish, fur-bearing animals, or poultry; or turf or tree farming.
(g) "Program"
means the qualified agricultural loan origination program established under
this act.
(h) "Qualified
agricultural loan" means a loan that is issued under the program and that
meets all of the following conditions:
(i) The loan is made to 1 of the following:
(A) A person that is engaged in and intending to remain
engaged in this state as an owner or operator of a farm in the production of
agricultural goods that suffered a qualified loss of 25% or more in major
enterprises or production a qualified loss of 50%
or more in production of any
1 crop on a farm located within this state.
(B) A person that is engaged and intending to remain engaged
in this state in an agricultural business of buying, exchanging, processing,
storing, or selling farm produce that suffered a 50% or greater qualified loss in
volume of 1 commodity when compared with the average volume of that commodity
that the business handled in the prior 3 years.
(C) The person is engaged in and intending to remain engaged
in this state in the business of making retail sales directly to farmers with
75% or more of the person's gross retail sales volume exempted from sales tax
under section 4a(1)(e), (f), (g), and (h) of the general sales tax act, 1933 PA
167, MCL 205.54a, that suffered a 50% or greater reduction in gross retail
sales volume subject to the exemption under section 4a(1)(e), (f), (g), and (h)
of the general sales tax act, 1933 PA 167, MCL 205.54a, when compared with the
person's average retail sales volume subject to that exemption in the prior 3
years.
(ii) The loss
described in subparagraph (i) is due to an
agricultural disaster recognized by the governor. , occurring after January 1, 2012.
(iii) The person
receiving the loan under subparagraph (i) certifies in an
affidavit that that person's loss satisfies the relevant requirements of
subparagraph (i).
(i) "Qualified financial institution" means a
financial institution that has a physical location in this state or whose
principal office is located in this state, or both.
(j) "Qualified loss" means a reduction of gross
revenue from any agricultural commodity after receipt of any insurance proceeds
and other reimbursements as a result of the same crop loss.
Sec. 3. (1) The
state treasurer may establish a qualified agricultural loan origination program
as provided in this act.
(2) The program shall meet all of the following:
(a) A person receiving a qualified agricultural loan shall
pay an interest rate authorized under this act and established by the qualified
financial institution.
(b) This state shall pay loan origination fees for
administrative costs incurred by the qualified financial institution equal to
5% of the original principal amount of the loan. Loan origination fees shall may be paid by this
state in 5 equal
installments over the term of
the work project appropriation or in a lump-sum payment for the entire term of
the work project appropriation.
(3) A qualified agricultural loan shall comply with all both of the following:
(a) Interest shall be set by the qualified financial
institution at a rate of 1%
or at the rate of the 5-year United States treasury note plus 1/4%.2.0%, unless otherwise provided in an
appropriation act.
(b) The term of the loan shall not be more than 5 7 years, unless otherwise provided in an appropriation
act.
(c) The first principal payment required under the loan shall
not occur before 24 months after the issuance of the loan.
(4) A qualified agricultural loan described in section 2(h)(i)(A) shall be equal to not more than the value of the crop
loss as certified by the producer in an affidavit demonstrating an accurate and
valid production qualified loss of production. The
qualified agricultural loan shall not exceed the lesser of $400,000.00 or the
value of the crop qualified loss. minus insurance proceeds received
by the owner or operator as a result of the same crop loss. If crop
insurance was available for a particular crop and the producer did not purchase
the crop insurance for that crop, the amount of the loan shall be reduced by
30% or reduced by $100,000.00,
whichever is less.
(5) A qualified agricultural loan described in section 2(h)(i)(B) or (C) shall not exceed the lesser of the following:
(a) Eight hundred thousand dollars per facility.
(b) One million dollars per person applying for the loan.
(6) From the work project funds appropriated by 2019 PA 45, a
qualified financial institution shall make qualified agricultural loans after
March 1, 2020 and before June 1, 2020. For any additional work project funds subsequently
appropriated for this program, a qualified financial institution shall not make
qualified agricultural loans before March 1 of the immediately succeeding
calendar year or as otherwise provided in an appropriation act.
Sec. 4. (1) The
state treasurer may take any necessary action to ensure the successful
operation of the program, including, but not limited to, entering into
agreements with qualified financial institutions related to the operation of
the program and the issuance of qualified agricultural loans.
(2) The attorney general shall approve, as to legal form, all documents relating to the payment of a
loan origination fee by this state.
(3) Each qualified financial institution participating in the
program shall do both of the following:
(a) Report to the state treasurer the principal amount of
loans made under the program by March 31 June 30, 2020 and June 30 for each year after any subsequent appropriation.
(b) File an affidavit with the state treasurer signed by a
senior executive officer of the qualified financial institution stating that
the qualified financial institution is in compliance with the program and this
act.
(4) Upon request by the state treasurer, a qualified
financial institution shall forward a copy of any affidavits executed by a
person receiving a loan under this act to the state treasurer. The qualified
financial institution and the state treasurer shall destroy the affidavit or
its copy after the qualified agricultural loan is repaid.
(5) The program is found and declared to be for a valid
public purpose.
Sec. 5. (1) An From the work project funds
appropriated by 2019 PA 45, an amount sufficient to pay loan
origination fees under section 3, not to exceed $15,000,000.00, shall be
expended if it is appropriated to the department of treasury. Not more than
$3,000,000.00 of this the amount appropriated by 2019 PA 45 shall
be used for loans offered under section 2(h)(i)(B) or (C). The
appropriation authorized in this subsection is a work project appropriation,
and any unencumbered or unallotted funds are carried forward into the following
fiscal year. The following is in compliance with section 451a(1) of the
management and budget act, 1984 PA 431, MCL 18.1451a:
(a) The purpose of the project is to provide financial
assistance to the agricultural sector of this state's economy and to alleviate
financial distress caused by crop damage and related economic impacts through
the program.
(b) The work project will be accomplished through the use of
payments to qualified financial institutions for qualified agricultural loan
origination fees for administrative costs incurred by qualified financial
institutions.
(c) The total estimated completion cost of the work project
is $15,000,000.00.
(d) The
estimated completion date of the work project is September 30, 2023.
(2)
Subject to appropriation, any subsequent funds appropriated for this program
shall be expended solely to pay loan origination fees under section 3 and
subject to any other limitations as provided in the appropriation. Any subsequent
work project appropriation for this program shall be in compliance with section
451a(1) of the management and budget act, 1984 PA 431, MCL 18.1451a.
