state of michigan
100th Legislature
Regular session of 2020
Introduced by Senators
Lauwers, Theis, Bizon, Barrett, Ananich, Horn, Outman, VanderWall and Hollier
ENROLLED SENATE BILL No. 693
AN ACT to amend 2018 PA 111, entitled “An act to establish an agricultural loan origination program; to authorize certain loan guarantees; to prescribe the powers and duties of certain state agencies and officials; and to provide for an appropriation,” 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:
Sec. 2. As used in this
act:
(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 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.
(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 may
be paid by
this state in 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 both
of the
following:
(a) Interest shall be set by the qualified financial
institution at the rate of the 5-year United States treasury note plus 2.0%,
unless otherwise provided in an appropriation act.
(b) The term of the loan shall not be more than 7 years,
unless otherwise provided in an appropriation act.
(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 qualified loss of production. The qualified agricultural loan shall not
exceed the lesser of $400,000.00 or the value of the qualified 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 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)
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 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.
Secretary of the Senate
Clerk of the House of Representatives
Approved___________________________________________
____________________________________________________
Governor