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

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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-Enrolled.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

                            Enrolled

                         House Bill 2700

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

                     CHAPTER ................

                             AN ACT

Relating to the Beginning and Expanding Farmer Loan Program;
  appropriating money; limiting expenditures; 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 and to stabilize the
agricultural workforce. 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 sections 1 to 6 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) 'Agricultural project' means agricultural improvements,
agricultural land or depreciable agricultural property.
  (4) 'Beginning farmer' means a person, as defined by the Oregon
Business Development Department by rule.
  (5) '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.
  (6) 'Eligible revenue' means the revenue or assets of an
eligible agricultural project that are provided as security for a
loan under sections 1 to 6 of this 2013 Act by a beginning

Enrolled House Bill 2700 (HB 2700-B)                       Page 1

farmer, an agent of the beginning farmer or a related party to
the beginning farmer.
  (7) 'Lender' means an insured institution, as defined in ORS
706.008, that is authorized to do business in Oregon or another
person authorized to make loans to beginning farmers pursuant to
sections 1 to 6 of this 2013 Act. + }
  SECTION 3.  { + (1) The Oregon Business Development Department,
in consultation with the State Department of Agriculture and
potential lenders, shall create the Beginning and Expanding
Farmer Loan Program to facilitate the making of loans to
beginning farmers to finance the acquisition of an approved
agricultural project.
  (2) Before revenue bonds may be issued for the program, an
agricultural project must be determined to be eligible for a loan
under sections 1 to 6 of this 2013 Act and the beginning farmer
must be qualified by the lender to receive the loan.
  (3) The Oregon Business Development Department shall adopt
rules for the operation of the program, to define terms and to
establish an application process and requirements, criteria and
eligibility standards for beginning farmers and lenders to
participate in the program. The department may approve a loan
only if all of the following are satisfied:
  (a) The lender is approved to participate in the program.
  (b) The beginning farmer is a resident of this state.
  (c) The agricultural project that is the subject of the loan is
located, or will be used, in this state.
  (d) The lender acknowledges that the loan to the beginning
farmer is secured only by the eligible revenue of an eligible
agricultural project and not by revenue or assets of the State of
Oregon.
  (e) The beginning farmer will materially and substantially
participate in the farming for which the loan is sought.
  (f) The eligible agricultural project will be used for farming
only by the beginning farmer or by the beginning farmer and the
beginning farmer's family.
  (g) The beginning farmer and the lender have complied with any
other requirement, criterion or standard prescribed by the
department by rule.
  (4)(a) The department may charge fees to lenders and beginning
farmers as necessary:
  (A) To administer the program; and
  (B) To cover the cost of procurement of bond counsel, State
Treasurer fees, department issuance fees and trustee fees.
  (b) Lenders may charge fees and points as agreed to by the
beginning farmer and the lender and as approved by the
department.
  (5) The lender and the beginning farmer shall agree to the
terms of the loan, including interest rate and length of loan.
The lender is responsible for making an independent credit
evaluation of the beginning farmer or the farming enterprise for
which the loan is sought.
  (6) The Oregon Business Development Department may enter into
contracts and agreements as necessary and appropriate to
implement and manage the program. + }
  SECTION 4.  { + (1) At the request of the Oregon Business
Development Department, the State Treasurer may from time to time
issue revenue bonds to:
  (a) Finance agricultural projects determined eligible for
financing under sections 1 to 6 of this 2013 Act;
  (b) Refund bonds issued for the program; or

Enrolled House Bill 2700 (HB 2700-B)                       Page 2

  (c) Pay bond-related costs and other costs related to loans
approved under sections 1 to 6 of this 2013 Act.
  (2) If the State Treasurer issues the revenue bonds pursuant to
this section:
  (a) The State Treasurer shall:
  (A) Issue the revenue bonds in the name of the State of Oregon
in the manner provided by ORS chapter 286A; and
  (B) Identify the revenue bonds to the agricultural projects
financed by the revenue bonds.
  (b) The State Treasurer or the department shall designate the
trustee, financial advisor and bond counsel, if any, and enter
into appropriate agreements with each to carry out sections 1 to
6 of this 2013 Act. The powers conferred on a related agency
under ORS chapter 286A with respect to the designation of
trustee, financial advisor and bond counsel do not apply to
revenue bonds issued under this section.
  (3) A trustee designated to carry out provisions of sections 1
to 6 of this 2013 Act must agree to make reports as required by
the State Treasurer or the department.
  (4) The State Treasurer may charge administrative expenses of
the State Treasurer against proceeds of the revenue bonds or
eligible revenues of agricultural projects.
  (5) The State Treasurer is the elected representative for
purposes of approving the issuance of revenue bonds under
sections 1 to 6 of 2013 Act to the extent that approval is
required under section 147(f) of the Internal Revenue Code.
  (6) The validity of revenue bonds authorized by sections 1 to 6
of this 2013 Act is not dependent on or affected by the validity
or regularity of proceedings relating to the acquisition,
purchase, construction, reconstruction, installation,
improvement, betterment, extension, management, operation or
funding of the agricultural project for which revenues bonds are
issued. The revenues bonds must contain a recital that the bonds
are issued pursuant to this section and the recital is conclusive
evidence of the validity and the regularity of the issuance of
the bonds.
  (7) Revenue bonds issued under this section are not:
  (a) Secured by, payable from and chargeable to moneys other
than the eligible revenue of agricultural projects that are
pledged to pay the revenue bonds.
  (b) A liability of the State of Oregon. A holder or owner of
the revenue bonds may not compel an exercise of the taxing power
of the state to pay the revenue bonds or the interest on the
revenue bonds or enforce payment of the revenue bonds against
property of the state except the eligible revenue of an
agricultural project.
  (c) A charge lien or encumbrance, legal or equitable, upon
property of the state, except the eligible revenue of an
agricultural project.
  (8) Bonds issued under this section must contain a recital
that:
  (a) The revenue bonds and interest on the revenue bonds are
payable solely from the eligible revenue of an agricultural
project.
  (b) The revenue bonds do not constitute a debt of the state or
a lending of the credit of the state within the meaning of any
constitutional or statutory limitation.
  (9) The holders or owners of revenue bonds issued under this
section, or a trustee, may, if permitted by the documents
associated with the revenue bonds:

Enrolled House Bill 2700 (HB 2700-B)                       Page 3

  (a) By action or proceeding for legal or equitable remedies,
enforce rights granted against, and compel the performance of
duties and obligations of, the State of Oregon or its officers,
agents or employees.
  (b) By action require the state to account as if it were the
trustee of an express trust.
  (c) By action enjoin any acts or things that are unlawful or in
violation of a right of the bondholders.
  (d) Bring action upon the revenue bonds.
  (e) Exercise rights or remedies conferred by sections 1 to 6 of
this 2013 Act in addition to and not in lieu of any other right
or remedy conferred by sections 1 to 6 of this 2013 Act or any
other law of this state. + }
  SECTION 5.  { + (1) The Oregon Business Development Department
may:
  (a) Lend the proceeds of revenue bonds authorized by sections 1
to 6 of this 2013 Act for approved agricultural projects.
  (b) Make contracts, execute instruments and do what is
necessary or appropriate to carry out sections 1 to 6 of this
2013 Act.
  (2) The documents associated with revenue bonds or loans
authorized by sections 1 to 6 of this 2013 Act may specify:
  (a) The use and disposition of the revenues of an eligible
agricultural project.
  (b) The creation and maintenance of sinking funds and the
regulation, disposition and use of moneys in the sinking funds.
  (c) The creation and maintenance of funds to provide for
maintaining the eligible agricultural project and replacement of
properties depreciated, damaged, destroyed or condemned.
  (d) The disposition and use of the proceeds of revenue bonds.
  (e) The nature of mortgages or other encumbrances on the
eligible agricultural project made in favor of the holder or
owners of revenue bonds or in favor of an escrow agent, vendor,
lender, other financing party or trustee.
  (f) The events of default, the rights and liabilities and the
terms and conditions upon which the holders or owners of revenue
bonds issued under section 4 of this 2013 Act may bring an action
or proceeding on the revenue bonds.
  (g) The conditions under which additional revenue bonds or
other obligations may be issued that are payable from eligible
revenue of an eligible agricultural project.
  (h) The insurance to be carried on an eligible agricultural
project and the disposition and use of insurance moneys.
  (i) The keeping of books of account and the inspection and
audit of the books.
  (j) The terms and conditions upon which all or part of the
revenue bonds become, or may be declared, due before maturity and
the terms and conditions upon which a declaration and the
consequences of the declaration may be waived.
  (k) The rights, liabilities, powers and duties arising upon the
breach by a beginning farmer, a lender or a related party.
  (L) The appointing of and vesting in a trustee of the right to
enforce covenants made to secure or to pay the revenue bonds, the
powers and duties of the trustee and the limitation of the
liability of the trustee.
  (m) The terms and conditions upon which holders or owners of
the revenue bonds may enforce covenants made by beginning
farmers, trustees and other parties to the bond documents.
  (n) The subordination of the security of revenue bonds
authorized by sections 1 to 6 of this 2013 Act, and the payment

Enrolled House Bill 2700 (HB 2700-B)                       Page 4

of principal and interest on the revenue bonds, to other bonds or
obligations of the State of Oregon that:
  (A) Are issued to finance the approved agricultural project; or
  (B) That are outstanding when the subordinated revenue bonds
are issued and delivered.
  (o) Other terms approved by the department that are consistent
with sections 1 to 6 of this 2013 Act.
  (3) The State of Oregon:
  (a) May not acquire an ownership or leasehold interest in an
approved agricultural project in connection with the financing of
the agricultural project.
  (b) May not operate an approved agricultural project as a
business or in any manner whatsoever.
  (c) May not expend moneys on an eligible agricultural project,
other than eligible revenue of the eligible agricultural project,
the proceeds of revenue bonds issued under section 4 of this 2013
Act or other moneys received by the state as grants or gifts with
which to make payments for an eligible agricultural project. + }
  SECTION 6.  { + (1) There is created the Beginning and
Expanding Farmer Loan Program Fund, separate and distinct from
the General Fund. Interest earned by the Beginning and Expanding
Farmer Loan Program Fund shall be credited to the fund. All
moneys credited to the fund are continuously appropriated to the
Oregon Business Development Department for the purpose of
implementing and operating the Beginning and Expanding Farmer
Loan Program under sections 1 to 6 of this 2013 Act.
  (2) The fund shall consist of all moneys credited to the fund,
including:
  (a) Moneys appropriated to the fund by the Legislative Assembly
or transferred to the fund by the Oregon Business Development
Department;
  (b) Earnings on moneys in the fund;
  (c) Fees paid to the department by beginning farmers and
lenders; and
  (d) Moneys from any other source, including but not limited to
grants and gifts.
  (3) Moneys in the fund may be invested as provided by ORS
293.701 to 293.820 and the earnings from investments shall be
credited to the fund.
  (4) The department may establish accounts within the fund to
carry out sections 1 to 6 of this 2013 Act. + }
  SECTION 7.  { + Notwithstanding any other law limiting
expenditures, the limitation on expenditures established by
section 3 (1), chapter ___, Oregon Laws 2013 (Enrolled House Bill
5028), for the biennium beginning July 1, 2013, as the maximum
limit for payment of expenses from lottery moneys allocated from
the Administrative Services Economic Development Fund to the
Oregon Business Development Department, is increased by $227,607
for the Beginning and Expanding Farmer Loan Program. + }
  SECTION 8.  { + 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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Enrolled House Bill 2700 (HB 2700-B)                       Page 5

Passed by House July 1, 2013

    .............................................................
                             Ramona J. Line, Chief Clerk of House

    .............................................................
                                     Tina Kotek, Speaker of House

Passed by Senate July 6, 2013

    .............................................................
                              Peter Courtney, President of Senate

Enrolled House Bill 2700 (HB 2700-B)                       Page 6

Received by Governor:

......M.,............., 2013

Approved:

......M.,............., 2013

    .............................................................
                                         John Kitzhaber, Governor

Filed in Office of Secretary of State:

......M.,............., 2013

    .............................................................
                                   Kate Brown, Secretary of State

Enrolled House Bill 2700 (HB 2700-B)                       Page 7