THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY YAW, VOGEL, GORDNER, BRUBAKER, SCHWANK, FONTANA, ALLOWAY, RAFFERTY, ARGALL, SOLOBAY, WAUGH, BREWSTER, MENSCH AND PILEGGI, OCTOBER 31, 2011

SENATOR CORMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED, NOVEMBER 14, 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; 

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and making an appropriation.

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.

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4807.  Interest rate assistance.

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§ 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

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production agriculture. farmers, who have been impacted by a

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disaster and have experienced an eligible loss, with interest

rate assistance for loans or lines of credit issued to aid in

their recovery.

§ 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

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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).

"Commercial lending institution."  A federally chartered or

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State-chartered bank, savings bank, savings or loan association

that:

(1)  Has a satisfactory rating from its primary

regulator.

(2)  Is engaged in commercial lending activities.

(3)  Operates at least one full-service branch for

deposit gathering and lending located within this

Commonwealth.

"Community development financial institution."  A community

development financial institution certified in accordance with

the Federal Community Development Banking and Financial

Institutions Act of 1994 (Public Law 103-325, 108 Stat. 2163).

"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 normal

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agricultural operation 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

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agriculture.

"Farmer."  The operator of a normal agricultural operation.

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"Floodway."  The channel of a watercourse and portions of the

adjoining floodplains which are reasonably required to carry and

discharge the 100-year frequency flood. In an area where the

100-year frequency floodway is not delineated by the Federal

Emergency Management Agency, the floodway is assumed to extend

to 50 feet from the top of the stream bank.

"Floodway restoration."  The removal of obstructions,

consisting of man-made or natural materials such as building

materials, household materials, fuel tanks, hazardous materials

and containers, trees, vegetation, rock, gravel, sand or other

natural materials, deposited within a floodway or stream channel

by a natural flooding event, in order to stabilize and restore

the integrity of the floodway, stream channel and stream bank,

and to prevent any further long-term erosion or deterioration of

the floodway, stream channel or stream bank, and minimize any

further obstruction of water flow in the floodway or stream

channel.

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

preservation of soil against deterioration or erosion.

"Production agriculture."  The management and use of farming

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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.

"Normal agricultural operation."  As defined under section 2

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of the act of June 10, 1982 (P.L.454, No.133), referred to as

the Right-to-Farm Law.

"Program."  The Agriculture Disaster Recovery Program

established under section 4806 (relating to Agriculture Disaster

Recovery Program).

"Working capital."  Funds used for the disposal of

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contaminated material and the acquisition of fertilizer, seed,

livestock feed and other supplies for the purpose of production

agriculture.

"Working capital."  Funds used to support a normal

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agricultural operation, excluding fixed assets and production

machinery and equipment.

§ 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 interest payments providing interest rate

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assistance 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 moneys otherwise made available to the

program shall be deposited in the account and made available for

additional agriculture disaster recovery interest payments rate

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assistance 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 interest rate assistance for a

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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 disaster assistance, an

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applicant must certify to the department that the applicant

meets 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 assistance under

(b)  Eligibility.--To be eligible for interest rate

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assistance, a farmer must certify to the department that the

farmer meets all of the following:

(1)  Suffer an eligible loss.

(2)  Intend to continue in normal agricultural operation.

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

(4)  Be approved for a working capital loan or line of

credit, for eligible losses, from a commercial lending

institution or community development financial institution.

(c)  Procedure.--

(1)  A farmer must apply for interest rate assistance

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

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declaration of disaster to submit an application to the

department.

(2)  A farmer must submit an application to the

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department within 180 days from the date of declaration of

disaster.

(3)  The department shall review the application to

determine eligibility.

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

department shall make an eligibility determination and an

interest rate assistance determination.

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(5)  Within 60 days of receipt of the department's

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approval for interest rate assistance, receive confirmation

from the commercial lending institution or community

development financial institution that the loan or line of

credit for the applicant has closed.

§ 4807.  Loan guarantees and interest payments.

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(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,

floodway 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.

§ 4807.  Interest rate assistance.

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(a)  Minimum amounts.--The minimum loan or line of credit

amount to qualify for interest rate assistance under this act

shall be $10,000 and the amount for which interest rate

assistance can be applied shall not exceed the adjusted loss or

$100,000, whichever is less.

(b)  Use of loan proceeds.--Loan proceeds may be used for

working capital, land restoration, floodway restoration or other

eligible commodity losses, including, but not limited to, milk

loss, as determined by the department, but shall not be used for

land purchases, equipment purchases, refinancing existing debt

or outstanding debt payments.

(c)  Closing.--The loan or line of credit shall be closed

within 60 days of the interest rate assistance approval date.

Failure to close the loan or line of credit within the required

time period may result in the revocation of the interest rate

assistance.

(d)  Review and approval processes.--Interest rate assistance

applications shall be reviewed and approved on a first-come-

first-served basis until available funds are exhausted or the

application period is closed, whichever occurs first.

(e)  Requests.--

(1)  If the department approves an application for

interest rate assistance under the program, the department

may enter into a contract with the commercial lending

institution or community development financial institution to

reduce the interest rate paid by the farmer on the loan by a

maximum of 4%.

(2)  In return, the department shall make payments to the

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

of reducing the farmer'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 and the section is amended by

adding a subsection to read:

§ 1552.  First Industries Program.

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(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.

(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) and

subsection (e.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)  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.

(e.1)  Agriculture disaster loan guarantees.--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). Eligible disaster guarantees shall not be subject to

the 2% fee, and shall have a project minimum of no less than

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$10,000 and a project maximum which shall not exceed $100,000. A

guarantee of 100% shall be available in the event of a disaster.

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Section 3.  The sum of $5,000,000 is hereby appropriated to

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the Department of Agriculture for deposit in the restricted

account established under 3 Pa.C.S. § 4805.

Section 3 4.  This act shall take effect immediately.

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