THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY YAW, VOGEL, GORDNER, BRUBAKER, SCHWANK, FONTANA, ALLOWAY AND RAFFERTY, OCTOBER 31, 2011

REFERRED TO AGRICULTURE AND RURAL AFFAIRS, OCTOBER 31, 2011  

AN ACT

Amending Titles 3 (Agriculture) and 64 (Public Authorities and

Quasi-Public Corporations) of the Pennsylvania Consolidated

Statutes, providing for the Agriculture Disaster Recovery

Program; and further providing for First Industries Program.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 3 of the Pennsylvania Consolidated Statutes

is amended by adding a chapter to read:

CHAPTER 48

AGRICULTURE DISASTER RECOVERY PROGRAM

Sec.

4801.  Short title of chapter.

4802.  Purpose of chapter.

4803.  Definitions.

4804.  Powers and duties of department.

4805.  Restricted account.

4806.  Agriculture Disaster Recovery Program.

4807.  Loan guarantees and interest payments.

§ 4801.  Short title of chapter.

This chapter shall be known and may be cited as the

Agriculture Disaster Recovery Program Act.

§ 4802.  Purpose of chapter.

The purpose of this chapter is to establish a program within

the Department of Agriculture to provide financial assistance to

production agriculture.

§ 4803.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Adjusted loss."  The difference between:

(1)  eligible loss; and

(2)  covered loss.

"Authority."  The Commonwealth Financing Authority

established in 64 Pa.C.S. § 1511 (relating to authority).

"Board."  The board of the Commonwealth Financing Authority

under 64 Pa.C.S. § 1512 (relating to board).

"Covered loss."  Any amount received by or due the recipient

from Federal insurance, grants and loans and private insurance

on account of an eligible loss. The term does not include an

insurance deductible paid by the recipient.

"Department."  The Department of Agriculture of the

Commonwealth.

"Eligible loss."  Damage to production agriculture caused by

a disaster which results in a county being declared a disaster

area by any of the following:

(1)  A presidential declaration for certain counties or

the State as a whole.

(2)  A United States Department of Agriculture

secretarial declaration for certain counties or the State as

a whole.

(3)  A gubernatorial declaration for certain counties or

the State as a whole.

The term does not include damaged or destroyed farm structures

or equipment.

"Farmer."  A person engaged in the business of production

agriculture.

"Land restoration."  Debris removal, regrading of land and

preservation of soil against deterioration or erosion.

"Production agriculture."  The management and use of farming

resources for any of the following:

(1)  The production of:

(i)  agricultural, horticultural, aquacultural,

vegetable, fruit or floricultural products of the soil;

(ii)  livestock or livestock products;

(iii)  milk or dairy products; or

(iv)  poultry or poultry products.

(2)  Any other practices approved by the Department of

Agriculture.

"Program."  The Agriculture Disaster Recovery Program

established under section 4806 (relating to Agriculture Disaster

Recovery Program).

"Working capital."  Funds used for the disposal of

contaminated material and the acquisition of fertilizer, seed,

livestock feed and other supplies for the purpose of production

agriculture.

§ 4804.  Powers and duties of department.

The department shall adopt regulations to administer the

program.

§ 4805.  Restricted account.

When funds are made available, a restricted revolving account

shall be established in the State Treasury to be known as the

Agriculture Disaster Recovery Account. The account shall be for

the purpose of making loans to eligible farmers for assistance

under the program established in section 4806 (relating to

Agriculture Disaster Recovery Program). Any funds appropriated

to or transferred to fund the program and any moneys received as

loan repayments under the program or moneys otherwise made

available to the program shall be deposited in the account and

made available for additional agriculture disaster recovery

loans for the purposes of the program.

§ 4806.  Agriculture Disaster Recovery Program.

(a)  Establishment.--There is established within the

department the Agriculture Disaster Recovery Program. The

program shall provide financial assistance for a farmer, as

defined in section 4803 (relating to definitions), located

within this Commonwealth, who is eligible for disaster recovery

assistance.

(b)  Eligibility.--To be eligible for a loan, an applicant

must meet all of the following:

(1)  Be located in a county that has been declared a

disaster area by any of the following:

(i)  A presidential declaration for certain counties

or the State as a whole.

(ii)  A United States Department of Agriculture

secretarial declaration for certain counties or the State

as a whole.

(iii)  A gubernatorial declaration for certain

counties or the State as a whole.

(2)  Suffer an eligible loss.

(3)  Meet the definition of farmer in section 4803.

(4)  Be currently engaged in production agriculture and

intend to continue in production agriculture.

(5)  Not be delinquent on any State or local taxes.

(c)  Procedure.--

(1)  An applicant shall apply for a loan under this

section on a form furnished by the department which sets

forth the facts establishing eligibility. An application

under this subsection is subject to 18 Pa.C.S. § 4904

(relating to unsworn falsification to authorities).

(2)  An applicant shall have 180 days from the date of

declaration of disaster to submit an application to the

department.

(3)  The department shall investigate the application to

determine eligibility.

(4)  Within 30 days of receipt of the application, the

department shall make an eligibility determination and a loan

determination.

(d)  Loans.--

(1)  The minimum loan amount to be awarded under the

program is $10,000, and the maximum loan amount to be awarded

under the program is $100,000. The amount of the loan cannot

exceed the adjusted loss, or $100,000, whichever is less.

(2)  Loan proceeds may be used for working capital, land

restoration or other eligible commodity losses as determined

by the department but may not be used for land purchases,

equipment purchases, refinancing existing debt or outstanding

debt payments. Commodity losses shall include, but not be

limited to, milk loss.

(3)  Loan proceeds must be drawn within 60 days of the

loan approval date. Failure to draw funds within the required

time period will result in revocation of the loan.

(4)  Loan applications will be reviewed and loans

approved on a first-come-first-served basis until available

funds are exhausted.

(e)  Loan terms.--A loan shall be made at an interest rate of

0% for the term of the loan. The repayment period shall not

exceed two years.

§ 4807.  Loan guarantees and interest payments.

(a)  Requests.--If the department approves an application for

a loan guarantee under the program, the department may request

that the authority provide the loan guarantee.

(b)  Loan guarantees.--

(1)  An applicant may request a guarantee for a loan to

assist with agriculture disaster recovery to be made by a

commercial lending institution or community development

financial institution for working capital, land restoration

or production agriculture. The applicant may be the farmer or

the commercial lending institution or community development

financial institution applying on behalf of a borrower.

(2)  The application must be on the form required by the

department and provide any information required by the

department.

(3)  Upon the borrower's meeting the eligibility

requirements, the board may approve the guarantee and, if

approved, the authority shall execute a guarantee agreement

in favor of the commercial lending institution or community

development financial institution stating the terms and

amounts of the guarantee within the following limitations:

(i)  The amount of the loan guarantee cannot exceed

the adjusted loss or $100,000, whichever is less.

(ii)  The term of the loan cannot exceed 24 months,

and the interest rate paid by the board cannot exceed 4%.

(4)  Upon approval of the loan guarantee agreement, the

board shall enter into a contract with the commercial lending

institution or community development financial institution to

reduce the interest rate paid by the applicant on the loan by

a maximum of 4%. In return, the board shall make payments to

the lender in an amount equal to not more than 100% of the

cost of reducing the applicant's annual rate of interest

payable on the loan.

Section 2.  Section 1552(e) of Title 64, amended June 30,

2011 (P.L.193, No.27), is amended to read:

§ 1552.  First Industries Program.

* * *

(e)  Loan guarantees.--

(1)  An applicant may request a guarantee for a loan to

be made by a commercial lending institution or community

development financial institution to assist with the

financing of a project related to tourism or agriculture. The

applicant may be the commercial lending institution or

community development financial institution applying on

behalf of a borrower. The application must be on the form

required by the board and must include or demonstrate all of

the following:

(i)  The applicant's name and address. If the

applicant is a commercial lending institution or

community development financial institution, the

borrower's name and address.

(ii)  A description of the project.

(iii)  A statement describing the anticipated

economic impact to the Commonwealth and the host

municipality as a result of the project.

(iv)  A description of the proposed project

financing, including terms, conditions and the collateral

or security required for the loan for which the guarantee

is being requested.

(v)  A copy of the applicant's last two years of

financial statements prepared or reported on by an

independent certified public accountant. If the applicant

is a commercial lending institution or a community

development financial institution, a copy of the

borrower's last two years of financial statements

prepared or reported on by an independent certified

public accountant.

(vi)  The amount of the loan guarantee that is being

requested.

(vii)  The total project cost and the identification

of all sources of capital for the project.

(viii)  Any other information required by the board.

(1.1)  An applicant may request a guarantee for a loan

and paid interest from the authority if the applicant

satisfies the requirements of 3 Pa.C.S. Ch. 48 (relating to

Agriculture Disaster Recovery Program).

(2)  The board shall review the application to determine

all of the following:

(i)  (A)  Except as set forth in clause (B), that the

project has been awarded a planning grant under this

section or that at least $1,000,000 of private funds

are being invested in the project.

(B)  Beginning on the effective date of this

paragraph through July 15, 2015, that the project has

been awarded a planning grant under this section or

that at least $500,000 of private funds are being

invested in the project.

(ii)  That the value of the proposed collateral is

sufficient to cover the full amount of the loan.

(iii)  That the applicant complied with all other

criteria established by the board.

(3)  Upon being satisfied that all requirements have been

met, the board may approve the guarantee, and, if approved,

the authority shall execute a guarantee agreement in favor of

the commercial lending institution or community development

financial institution stating the terms and amounts of the

guarantee. Except as provided in paragraph (3.1), the

guarantee may not exceed 50% of the outstanding principal

amount of the loan or $2,500,000 at any point in time,

whichever is less. In addition to any other terms and

conditions required by the board, the guarantee agreement

shall provide for all of the following:

(i)  The procedure for the submission by the

commercial lending institution or community development

financial institution of a claim for payment. This

procedure shall require that the commercial lending

institution or community development financial

institution demonstrate that it has exhausted all

available remedies against the borrower, other guarantors

and collateral before seeking payment under the

agreement.

(ii)  A requirement that a percentage of any moneys

recovered subsequent to the payment of a claim by the

authority be remitted to the authority.

(iii)  Periodic reporting requirements by the

commercial lending institution or community development

financial institution regarding itself and regarding the

loans which have been awarded guarantees under this

section.

(3.1)  Beginning on the effective date of this paragraph

through July 15, 2015, a guarantee of 51% to 90% of the

principal amount of the loan to assist with the financing of

a project related to agriculture may be awarded by the board.

The guarantee shall be subject to a one-time fee of 2% of the

amount of the loan multiplied by the percentage of the

guarantee.

(3.2)  Eligible disaster guarantees shall not be subject

to the 2% fee. A guarantee of 100% shall be available in the

event of a disaster.

[(3.2)] (3.3)  The amount of a guarantee under this

subsection, if any, shall be set at the discretion of the

board based upon its determination of the potential financial

risk to the Commonwealth.

(4)  The board may establish a subcommittee composed of

one or more board members and department staff to supervise

the progress of projects for which loan guarantees have been

awarded under this section.

* * *

Section 3.  This act shall take effect immediately.