CHAPTER 180 HOUSE BILL No. 2103 An  Act concerning the Kansas agricultural production loan deposit program; amending
K.S.A. 2000 Supp. 75-4271 and 75-4272 and repealing the existing sections. Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 2000 Supp. 75-4271 is hereby amended to read as
follows: 75-4271. (a) The state treasurer is hereby authorized to dissem-
inate information and to provide agricultural production loan deposit loan
packages to the lending institutions eligible for participation in this act.

      (b) The agricultural production loan deposit loan package shall be
completed by the borrower before being forwarded to the lending insti-
tution for consideration.

      (c)  (1) An eligible lending institution that agrees to receive an agri-
cultural production loan deposit shall accept and review applications for
loans from eligible agricultural borrowers. The lending institution shall
apply all usual lending standards to determine the credit worthiness of
eligible agricultural borrowers. No single agricultural production loan de-
posit loan shall exceed $250,000. The total aggregate amount of agricul-
tural production loan deposit loans under this program shall not exceed
$50,000,000 $55,000,000 of unencumbered funds pursuant to article 42
of chapter 75 of the Kansas Statutes Annotated, and amendments thereto.

      (2) To be eligible to obtain an agricultural production loan, an eligible
agricultural borrower must have a debt-to-asset ratio of 40% or greater.

      (3) Only one agricultural production loan deposit loan shall be made
and be outstanding at any one time to any agricultural borrower.

      (4) No loan shall be amortized for a period of more than eight years.

      (d) An eligible agricultural borrower shall certify on its loan applica-
tion that the reduced rate loan will be used exclusively for the operating
expenses involved in farming.

      (e) The eligible lending institution may approve or reject an agricul-
tural production loan deposit loan package based on the lending institu-
tion's evaluation of the eligible agricultural borrowers included in the
package, the amount of the individual loan in the package and other
appropriate considerations.

      (f) The eligible lending institution shall forward to the state treasurer,
an approved agricultural production loan deposit loan package, in the
form and manner prescribed and approved by the state treasurer. The
package shall include information regarding the amount of the loan re-
quested by each eligible agricultural borrower and such other information
regarding each eligible agricultural borrower the state treasurer requires,
including a certification by the applicant that such applicant is an eligible
agricultural borrower.

      Sec.  2. K.S.A. 2000 Supp. 75-4272 is hereby amended to read as
follows: 75-4272. (a) The state treasurer may accept or reject an agricul-
tural production loan deposit loan package based on the state treasurer's
evaluation of whether the loan to the eligible agricultural borrower meets
the purposes of this act. If sufficient funds are not available for an agri-
cultural production loan deposit, then the applications may be considered
in the order received when funds are once again available subject to a
review by the lending institution.

      (b) Upon acceptance, the state treasurer shall certify to the director
of investments the amount required for such agricultural production loan
deposit loan package and the director of investments shall place an ag-
ricultural production loan deposit in the amount certified by the state
treasurer with the eligible lending institution at an interest rate, which is
2% below the market rate provided in K.S.A. 75-4237, and amendments
thereto, and which shall be recalculated on the first business day of Jan-
uary and July of each calendar year using the market rate then in effect.
When necessary, the state treasurer may request the director of invest-
ments to place such agricultural production loan deposit prior to accep-
tance of an agricultural production loan deposit loan package.

      (c) The eligible lending institution shall enter into an agricultural pro-
duction loan deposit agreement with the state treasurer, which shall in-
clude requirements necessary to implement the purposes of the Kansas
agricultural production loan deposit program. Such requirements shall
include an agreement by the eligible lending institution to lend an amount
equal to the agricultural production loan deposit to eligible agricultural
borrowers at an interest rate which is not more than 2% above the market
rate as determined under K.S.A. 75-4237, and amendments thereto, and
which shall be recalculated on the first business day of January and July
of each calendar year using the market rate then in effect. The agreement
shall include provisions for the agricultural production loan deposit to be
placed for a maturity considered appropriate in coordination with the
underlying agricultural production loan. The agreement shall include pro-
visions for the reduction of the agricultural production loan deposit in an
amount equal to any payment of loan principal by the eligible agricultural
borrower.

 Sec.  3. K.S.A. 2000 Supp. 75-4271 and 75-4272 are hereby repealed.

 Sec.  4. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 21, 2001.
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