Brief⁽¹⁾

H.B. 2554, as amended, establishes the Kansas Agricultural Linked Deposit Program, a three-year program of low interest loans made to qualified Kansas farm operations for the exclusive purpose of constructing new or used grain storage facilities.

The bill:

• authorizes the State Treasurer to administer the Program, adopt rules and regulations necessary to implement the Program, report annually to the Governor and the Legislature outlining the status of the Program, disseminate information, and provide loan packages to the lending institutions (banks) participating in the Program;



• defines "farm operations," the borrower, as an individual or organization involved in farming but not a corporation other than a family farm corporation;



• requires the borrower to complete the loan package, return it to the bank which is to use all usual lending standards to determine the credit worthiness of the farm operation;



• limits the size of the Program to $7,000,000 of state moneys in any one year (for a total of $21,000,000 over three years);



• limits the size of any loan to $50,000 to any one borrower and permits only one outstanding loan at any one time to that borrower;



• directs banks to forward approved applications to the State Treasurer along with a certification by the applicant that the applicant is an eligible farm operation;



• places final approval authority for the loan with the State Treasurer who, upon acceptance of the loan application, certifies to the Director of Investments of the Pooled Money Investment Board the amount required for the loan and the Director will place the agricultural linked deposit in the bank at a zero interest rate;



• requires the bank to lend the amount deposited at an interest rate not to exceed 4 percent for an amortization period of not more than eight years;



• declares that neither the state nor the State Treasurer will be liable to any bank for the payment of the principal or interest on any loan made under the Program; and



• establishes July 1, 2002 as the expiration date of the Kansas Agricultural Linked Deposit Program.

Background

H.B. 2554, as amended, was supported by Representative Flora and representatives of the Kansas Ag Bankers, Kansas Organic Producers Association, National Farmers Organization, Kansas Seed Industry Association, American White Wheat Producers Association, the Kansas Bankers Association, Kansas Farm Bureau, Department of Grain Science-Kansas State University, and a producer. The Kansas Grain and Feed Association opposed the bill.

The fiscal note indicates that, assuming the Pooled Money Investment Board invests $7,000,000 of idle funds in FY 2000 through FY 2002 at a rate of return of 5.5 percent on state funds and a loan repayment schedule of not longer than eight years, State General Fund revenues would be reduced by $5,521,154.

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/bill_search.html