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| [ Introduced ] | [ Senate Amendment 001 ] |
91_HB4404eng HB4404 Engrossed LRB9113130JMdvA 1 AN ACT to amend the Illinois Farm Development Act. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Farm Development Act is amended 5 by changing Sections 7.2, 12.1, and 12.2 and adding Section 6 12.6 as follows: 7 (20 ILCS 3605/7.2) 8 Sec. 7.2. Interest-buy-back program. 9 (a) The Authority shall establish an interest-buy-back 10 program to subsidize the interest cost on certain loans to 11 Illinois farmers. 12 (b) To be eligible an applicant must (i) be a resident 13 of Illinois; (ii) be a principal operator of a farm or land; 14 (iii) derive at least 50% of annual gross income from 15 farming; and (iv) have a net worth of at least $10,000. The 16 Authority shall establish minimum and maximum financial 17 requirements, maximum payment amounts, starting and ending 18 dates for the program, and other criteria. 19 (c) Lenders may apply on behalf of eligible applicants 20 on forms provided by the Authority. Lenders may submit 21 requests for payment on forms provided by the Authority. 22 Lenders and applicants shall be responsible for any fees or 23 charges the Authority may require. 24 (d) The Interest Buy-Back Fund is created as a special 25 fund outside the State treasury. The State Treasurer shall 26 be custodian of the Fund. Unexpended appropriations to the 27 Authority for the purpose of this Section shall be deposited 28 into the Interest Buy-Back Fund. Amounts in the Fund not 29 currently needed to meet the obligations of the Fund shall be 30 invested as provided by law, and all interest earned from 31 those investments shall be deposited into the Fund. The HB4404 Engrossed -2- LRB9113130JMdvA 1 Authority shall make payments to lenders under this Section 2 from the Interest Buy-Back Fund and from available 3 appropriations from the General Revenue Fund. 4 (Source: P.A. 91-281, eff. 7-23-99.) 5 (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1) 6 Sec. 12.1. State Guarantees for existing debt. 7 (a) The Authority is authorized to issue State 8 Guarantees for farmers' existing debts held by a lender. For 9 the purposes of this Section, a farmer shall be a resident of 10 Illinois, who is a principal operator of a farm or land, at 11 least 50% of whose annual gross income is derived from 12 farming and whose debt to asset ratio shall not be less than 13 40%, except in those cases where the applicant has previously 14 used the guarantee program there shall be no debt to asset 15 ratio or income restriction. For the purposes of this 16 Section, debt to asset ratio shall mean the current 17 outstanding liabilities of the farmer divided by the current 18 outstanding assets of the farmer. The Authority shall 19 establish the maximum permissible debt to asset ratio based 20 on criteria established by the Authority. 21 Lenders shall apply for the State Guarantees on forms 22 provided by the Authority and certify that the application 23 and any other documents submitted are true and correct. The 24 lender or borrower, or both in combination, shall pay an 25 administrative fee as determined by the Authority. The 26 applicant shall be responsible for paying any fees or charges 27 involved in recording mortgages, releases, financing 28 statements, insurance for secondary market issues and any 29 other similar fees or charges as the Authority may require. 30 The application shall at a minimum contain the farmer's name, 31 address, present credit and financial information, including 32 cash flow statements, financial statements, balance sheets, 33 and any other information pertinent to the application, and HB4404 Engrossed -3- LRB9113130JMdvA 1 the collateral to be used to secure the State Guarantee. In 2 addition, the lender must agree to bring the farmer's debt to 3 a current status at the time the State Guarantee is provided 4 and must also agree to charge a fixed or adjustable interest 5 rate which the Authority determines to be below the market 6 rate of interest generally available to the borrower. If 7 both the lender and applicant agree, the interest rate on the 8 State Guarantee Loan can be converted to a fixed interest 9 rate at any time during the term of the loan. 10 Any State Guarantees provided under this Section (i) 11 shall not exceed $500,000 per farmer, (ii) shall be set up on 12 a payment schedule not to exceed 30 years, and shall be no 13 longer than 30 years in duration, and (iii) shall be subject 14 to an annual review and renewal by the lender and the 15 Authority; provided that only one such State Guarantee shall 16 be outstanding per farmer at any one time. No State 17 Guarantee shall be revoked by the Authority without a 90 day 18 notice, in writing, to all parties. In those cases were the 19 borrower has not previously used the guarantee program, the 20 lender shall not call due any loan during the first 3 years 21 for any reason except for lack of performance or insufficient 22 collateral. The lender can review and withdraw or continue 23 with the State Guarantee on an annual basis after the first 3 24 years of the loan, provided a 90 day notice, in writing, to 25 all parties has been given. 26 (b) The Authority shall provide or renew a State 27 Guarantee to a lender if: 28 (i) A fee equal to 25 basis points on the loan is 29 paid to the Authority on an annual basis by the lender. 30 (ii) The application provides collateral acceptable 31 to the Authority that is at least equal to the State's 32 portion of the Guarantee to be provided. 33 (iii) The lender assumes all responsibility and 34 costs for pursuing legal action on collecting any loan HB4404 Engrossed -4- LRB9113130JMdvA 1 that is delinquent or in default. 2 (iv) The lender is responsible for the first 15% of 3 the outstanding principal of the note for which the State 4 Guarantee has been applied. 5 (c) There is hereby created outside of the State 6 Treasury a special fund to be known as the Illinois 7 Agricultural Loan Guarantee Fund. The State Treasurer shall 8 be custodian of this Fund. Any amounts in the Illinois 9 Agricultural Loan Guarantee Fund not currently needed to meet 10 the obligations of the Fund shall be invested as provided by 11 law, and all interest earned from these investments shall be 12 deposited into the Fund until the Fund reaches the maximum 13 amount authorized in this Act; thereafter, interest earned 14 shall be deposited into the General Revenue Fund. After 15 September 1, 1989, annual investment earnings equal to 1.5% 16 of the Fund shall remain in the Fund to be used for the 17 purposes established in Section 12.3 of this Act. 18 The Authority is authorized to transfer to the Fund such 19 amounts as are necessary to satisfy claims during the 20 duration of the State Guarantee program to secure State 21 Guarantees issued under this Section. If for any reason the 22 General Assembly fails to make an appropriation sufficient to 23 meet these obligations, this Act shall constitute an 24 irrevocable and continuing appropriation of an amount 25 necessary to secure guarantees as defaults occur and the 26 irrevocable and continuing authority for, and direction to, 27 the State Treasurer and the Comptroller to make the necessary 28 transfers to the Illinois Agricultural Loan Guarantee Fund, 29 as directed by the Governor, out of the General Revenue Fund. 30 Within 30 days after November 15, 1985, the Authority may 31 transfer up to $7,000,000 from available appropriations into 32 the Illinois Agricultural Loan Guarantee Fund for the 33 purposes of this Act. Thereafter, the Authority may transfer 34 additional amounts into the Illinois Agricultural Loan HB4404 Engrossed -5- LRB9113130JMdvA 1 Guarantee Fund to secure guarantees for defaults as defaults 2 occur. 3 In the event of default by the farmer, the lender shall 4 be entitled to, and the Authority shall direct payment on, 5 the State Guarantee after 90 days of delinquency. All 6 payments by the Authority shall be made from the Illinois 7 Agricultural Loan Guarantee Fund to satisfy claims against 8 the State Guarantee. The Illinois Agricultural Loan 9 Guarantee Fund shall guarantee receipt of payment of the 85% 10 of the principal and interest owed on the State Guarantee 11 Loan by the farmer to the guarantee holder. 12 It shall be the responsibility of the lender to proceed 13 with the collecting and disposing of collateral on the State 14 Guarantee within 14 months of the time the State Guarantee is 15 declared delinquent; provided, however, that the lender shall 16 not collect or dispose of collateral on the State Guarantee 17 without the express written prior approval of the Authority. 18 If the lender does not dispose of the collateral within 14 19 months, the lender shall be liable to repay to the State 20 interest on the State Guarantee equal to the same rate which 21 the lender charges on the State Guarantee; provided, however, 22 that the Authority may extend the 14 month period for a 23 lender in the case of bankruptcy or extenuating 24 circumstances. The Fund shall be reimbursed for any amounts 25 paid under this Section upon liquidation of the collateral. 26 The Authority, by resolution of the Board, may borrow sums 27 from the Fund and provide for repayment as soon as may be 28 practical upon receipt of payments of principal and interest 29 by a farmer. Money may be borrowed from the Fund by the 30 Authority for thesolepurpose of paying certain interest 31 costs for farmers associated with selling a loan subject to a 32 State Guarantee in a secondary market as may be deemed 33 reasonable and necessary by the Authority. Money may be 34 borrowed from the Fund by the Authority in accordance with HB4404 Engrossed -6- LRB9113130JMdvA 1 subsection (d) of Section 12.6. 2 (d) Notwithstanding the provisions of this Section 12.1 3 with respect to the farmers and lenders who may obtain State 4 Guarantees, the Authority may promulgate rules establishing 5 the eligibility of farmers and lenders to participate in the 6 State guarantee program and the terms, standards, and 7 procedures that will apply, when the Authority finds that 8 emergency conditions in Illinois agriculture have created the 9 need for State Guarantees pursuant to terms, standards, and 10 procedures other than those specified in this Section. 11 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.) 12 (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2) 13 Sec. 12.2. State Guarantees for loans to farmers and 14 agribusiness; eligibility. 15 (a) The Authority is authorized to issue State 16 Guarantees to lenders for loans to eligible farmers and 17 agribusinesses for purposes set forth in this Section. For 18 purposes of this Section, an eligible farmer shall be a 19 resident of Illinois (i) who is principal operator of a farm 20 or land, at least 50% of whose annual gross income is derived 21 from farming, (ii) whose annual total sales of agricultural 22 products, commodities, or livestock exceeds $20,000, and 23 (iii) whose net worth does not exceed $500,000. An eligible 24 agribusiness shall be that as defined in Section 2 of this 25 Act. 26 The Authority may approve applications by farmers and 27 agribusinesses that promote diversification of the farm 28 economy of this State through the growth and development of 29 new crops or livestock not customarily grown or produced in 30 this State or that emphasize a vertical integration of grain 31 or livestock produced or raised in this State into a finished 32 agricultural product for consumption or use. "New crops or 33 livestock not customarily grown or produced in this State" HB4404 Engrossed -7- LRB9113130JMdvA 1 shall not include corn, soybeans, wheat, swine, or beef or 2 dairy cattle. "Vertical integration of grain or livestock 3 produced or raised in this State" shall include any new or 4 existing grain or livestock grown or produced in this State. 5 Lenders shall apply for the State Guarantees on forms 6 provided by the Authority, certify that the application and 7 any other documents submitted are true and correct, and pay 8 an administrative fee as determined by the Authority. The 9 applicant shall be responsible for paying any fees or charges 10 involved in recording mortgages, releases, financing 11 statements, insurance for secondary market issues and any 12 other similar fees or charges as the Authority may require. 13 The application shall at a minimum contain the farmer's or 14 agribusiness' name, address, present credit and financial 15 information, including cash flow statements, financial 16 statements, balance sheets, and any other information 17 pertinent to the application, and the collateral to be used 18 to secure the State Guarantee. In addition, the lender must 19 agree to charge an interest rate, which may vary, on the loan 20 that the Authority determines to be below the market rate of 21 interest generally available to the borrower. If both the 22 lender and applicant agree, the interest rate on the State 23 Guarantee Loan can be converted to a fixed interest rate at 24 any time during the term of the loan. 25 Any State Guarantees provided under this Section (i) 26 shall not exceed $500,000 per farmer or an amount as 27 determined by the Authority on a case-by-case basis for an 28 agribusiness, (ii) shall not exceed a term of 15 years, and 29 (iii) shall be subject to an annual review and renewal by the 30 lender and the Authority; provided that only one such State 31 Guarantee shall be made per farmer or agribusiness, except 32 that additional State Guarantees may be made for purposes of 33 expansion of projects financed in part by a previously issued 34 State Guarantee. No State Guarantee shall be revoked by the HB4404 Engrossed -8- LRB9113130JMdvA 1 Authority without a 90 day notice, in writing, to all 2 parties. The lender shall not call due any loan for any 3 reason except for lack of performance, insufficient 4 collateral, or maturity. A lender may review and withdraw or 5 continue with a State Guarantee on an annual basis after the 6 first 5 years following closing of the loan application if 7 the loan contract provides for an interest rate that shall 8 not vary. A lender shall not withdraw a State Guarantee if 9 the loan contract provides for an interest rate that may 10 vary, except for reasons set forth herein. 11 (b) The Authority shall provide or renew a State 12 Guarantee to a lender if: 13 i. A fee equal to 25 basis points on the loan is 14 paid to the Authority on an annual basis by the lender. 15 ii. The application provides collateral acceptable 16 to the Authority that is at least equal to the State's 17 portion of the Guarantee to be provided. 18 iii. The lender assumes all responsibility and 19 costs for pursuing legal action on collecting any loan 20 that is delinquent or in default. 21 iv. The lender is responsible for the first 15% of 22 the outstanding principal of the note for which the State 23 Guarantee has been applied. 24 (c) There is hereby created outside of the State 25 Treasury a special fund to be known as the Illinois Farmer 26 and Agribusiness Loan Guarantee Fund. The State Treasurer 27 shall be custodian of this Fund. Any amounts in the Fund not 28 currently needed to meet the obligations of the Fund shall be 29 invested as provided by law, and all interest earned from 30 these investments shall be deposited into the Fund until the 31 Fund reaches the maximum amounts authorized in this Act; 32 thereafter, interest earned shall be deposited into the 33 General Revenue Fund. After September 1, 1989, annual 34 investment earnings equal to 1.5% of the Fund shall remain in HB4404 Engrossed -9- LRB9113130JMdvA 1 the Fund to be used for the purposes established in Section 2 12.3 of this Act. 3 The Authority is authorized to transfer such amounts as 4 are necessary to satisfy claims from available appropriations 5 and from fund balances of the Farm Emergency Assistance Fund 6 as of June 30 of each year to the Illinois Farmer and 7 Agribusiness Loan Guarantee Fund to secure State Guarantees 8 issued under this Section and Sections 12.4 and 12.5. If for 9 any reason the General Assembly fails to make an 10 appropriation sufficient to meet these obligations, this Act 11 shall constitute an irrevocable and continuing appropriation 12 of an amount necessary to secure guarantees as defaults occur 13 and the irrevocable and continuing authority for, and 14 direction to, the State Treasurer and the Comptroller to make 15 the necessary transfers to the Illinois Farmer and 16 Agribusiness Loan Guarantee Fund, as directed by the 17 Governor, out of the General Revenue Fund. 18 In the event of default by the borrower on State 19 Guarantee Loans under this Section, Section 12.4, or Section 20 12.5, the lender shall be entitled to, and the Authority 21 shall direct payment on, the State Guarantee after 90 days of 22 delinquency. All payments by the Authority shall be made 23 from the Illinois Farmer and Agribusiness Loan Guarantee Fund 24 to satisfy claims against the State Guarantee. 25 It shall be the responsibility of the lender to proceed 26 with the collecting and disposing of collateral on the State 27 Guarantee under this Section, Section 12.4, or Section 12.5 28 within 14 months of the time the State Guarantee is declared 29 delinquent. If the lender does not dispose of the collateral 30 within 14 months, the lender shall be liable to repay to the 31 State interest on the State Guarantee equal to the same rate 32 that the lender charges on the State Guarantee, provided that 33 the Authority shall have the authority to extend the 14 month 34 period for a lender in the case of bankruptcy or extenuating HB4404 Engrossed -10- LRB9113130JMdvA 1 circumstances. The Fund shall be reimbursed for any amounts 2 paid under this Section, Section 12.4, or Section 12.5 upon 3 liquidation of the collateral. 4 The Authority, by resolution of the Board, may borrow 5 sums from the Fund and provide for repayment as soon as may 6 be practical upon receipt of payments of principal and 7 interest by a borrower on State Guarantee Loans under this 8 Section, Section 12.4, or Section 12.5. Money may be borrowed 9 from the Fund by the Authority for thesolepurpose of paying 10 certain interest costs for borrowers associated with selling 11 a loan subject to a State Guarantee under this Section, 12 Section 12.4, or Section 12.5 in a secondary market as may be 13 deemed reasonable and necessary by the Authority. Money may 14 be borrowed from the Fund by the Authority in accordance with 15 subsection (d) of Section 12.6. 16 (d) Notwithstanding the provisions of this Section 12.2 17 with respect to the farmers, agribusinesses, and lenders who 18 may obtain State Guarantees, the Authority may promulgate 19 rules establishing the eligibility of farmers, 20 agribusinesses, and lenders to participate in the State 21 Guarantee program and the terms, standards, and procedures 22 that will apply, when the Authority finds that emergency 23 conditions in Illinois agriculture have created the need for 24 State Guarantees pursuant to terms, standards, and procedures 25 other than those specified in this Section. 26 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.) 27 (20 ILCS 3605/12.6 new) 28 Sec. 12.6. Value-added virtual equity program. 29 (a) The Authority shall develop and administer a 30 value-added virtual equity program for the purpose of 31 promoting the value-added processing of Illinois farm 32 products and by-products through loans to current and 33 potential processors. Qualifying processing facilities must HB4404 Engrossed -11- LRB9113130JMdvA 1 be located in Illinois and must process, package, or 2 otherwise enhance the value of farm products or by-products 3 produced in Illinois. Loans may be used for the costs of 4 establishing and operating a value-added processing facility, 5 including, but not limited to, (i) purchasing land, (ii) 6 purchasing, constructing, or refurbishing buildings, (iii) 7 purchasing or refurbishing machinery or equipment, (iv) 8 installation, (v) repairs, (vi) labor, and (vii) working 9 capital. 10 (b) The recipient of a loan under this Section must 11 provide a minimum percentage, as determined by the Authority, 12 of the total cost of the processing project, with the balance 13 of the project's total cost available from other sources. 14 Other sources include, but are not limited to, commercial and 15 private lenders, leasing companies, and grants. The 16 recipient's match may be in cash, cash-equivalent 17 investments, or both. A loan under this Section may not 18 exceed 50% of the recipient's match or 17% of the processing 19 project's total cost, whichever is less. No loan under this 20 Section may exceed $1,700,000. A loan under this Section 21 must be secured in accordance with Authority rule, may be 22 disbursed only after funds from the project's other sources 23 have been disbursed, and may be subordinate to that of any 24 primary lender. Interest on a loan during the first 7 years 25 shall accrue and compound at a rate determined by the 26 Authority to be below market. Any portion of a loan, 27 including principal and accrued and compounded interest, 28 unpaid after 7 years may accrue and compound at the 29 then-current market rate of interest. 30 (c) Loan applications must be made on forms provided by 31 and in accordance with procedures established by the 32 Authority. At a minimum, an applicant must be an Illinois 33 resident, as defined by Authority rule, and shall be required 34 to provide the names, addresses, and occupations of all HB4404 Engrossed -12- LRB9113130JMdvA 1 project owners, the project address, and any relevant credit 2 and financial information. 3 The Authority may charge an application fee, an annual 4 administrative fee, or both in connection with a loan, for 5 which the recipient or the recipient's primary lender shall 6 be responsible. Any fees or charges involved in recording 7 mortgages, releasing financing statements, or other 8 loan-related activity, as the Authority may determine, shall 9 be the responsibility of the loan recipient. 10 (d) The Virtual Equity Fund is created as a special fund 11 outside the State treasury for which the State Treasurer 12 shall serve as custodian. 13 The Fund may accept appropriations and moneys from any 14 public or private sources. Amounts in the Fund not currently 15 needed to meet the obligations of the Fund shall be invested 16 as permitted by law. All interest earned from those 17 investments shall be deposited into the Fund, except that 1% 18 of annual investment earnings may be used by the Authority 19 for expenses. The Fund shall be used to make loans under this 20 Section. Repayments of loans made under this Section shall 21 be deposited into the Fund. 22 The Authority may periodically borrow money from the 23 Illinois Agricultural Loan Guarantee Fund, the Illinois 24 Farmer and Agribusiness Loan Guarantee Fund, or both funds 25 for the purpose of this Section pending the deposit of 26 appropriations into the Virtual Equity Fund. Money borrowed 27 from those funds must be repaid as expeditiously as possible. 28 (e) The Authority shall adopt rules necessary for the 29 implementation of this Section. 30 Section 99. Effective date. This Act takes effect upon 31 becoming law.