NO. 7.  AN ACT RELATING TO AN AGRICULTURAL LOAN GUARANTEE PROGRAM AND A FARM OPERATING LOAN PROGRAM.

(H.476)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  LEGISLATIVE FINDINGS AND INTENT

     (a)  The legislature finds that the financial viability of many otherwise efficient and productive Vermont farms, most particularly dairy and milk‑producing farm units, is severely threatened by the continued suppression of farm milk prices, and that financial assistance should be made available to them to provide short‑term cash flow and capital to meet annual operating and related needs.

     (b)  To meet these immediate needs, the legislature in this act authorizes and establishes an Agricultural Loan Payment Guarantee Program and a Farm Operating Loan Program.

* * * Agricultural Loan Payment Guarantee Program * * *

Sec. 2.  AGRICULTURAL LOAN PAYMENT GUARANTEE PROGRAM;

             AUTHORIZATION AND REQUIREMENTS

     (a)  Immediately on the effective date of this act, the Vermont Agricultural Credit Corporation (VACC) shall establish and implement an Agricultural Loan Payment Guarantee Program to provide immediate cash flow relief to eligible farmers through the issuance of mortgage insurance pursuant to 10 V.S.A. chapter 12, subchapter 2.

     (b)  The Agricultural Loan Payment Guarantee Program shall insure not more than nine months of deferred installment payments of principal and interest granted by a financial institution to a borrower on an eligible agricultural loan, up to a maximum of $100,000.00 per borrower.  Financial institutions may apply for insurance on eligible agricultural loans for a period of nine months from the effective date of this act.  VACC may establish other policies and procedures for the program pursuant to 10 V.S.A. § 374d(17).

Sec. 3.  CREDIT OF STATE PLEDGED

     An amount not to exceed $2,500,000.00 of the full faith and credit of the state pledged for the support of the activities of the Vermont Economic Development Authority under 10 V.S.A. § 223 is authorized to be used by the Vermont Agricultural Credit Corporation for the purpose of insuring deferred loan installment payments under the Agricultural Loan Payment Guarantee Program established by Sec. 2 of this act.

* * *  Farm Operating Loan Program * * *

Sec. 4.  FARM OPERATING LOAN PROGRAM; AUTHORIZATION AND

             REQUIREMENTS

     (a)  Immediately on the effective date of this act, the Vermont Agricultural Credit Corporation (VACC) shall establish and implement a Farm Operating Loan Program to provide capital for annual operating and related needs to those borrowers who qualify and are eligible pursuant to the provisions of 10 V.S.A. § 374h.

     (b)  Under this program the VACC shall provide up to $20,000,000.00 in direct loans to farmers, at a subsidized below‑market interest rate.  The program shall utilize guarantee authority of the federal Farm Service Agency to the maximum extent possible.

     (c)  Loans made under this program shall not exceed $100,000.00 to any borrower, and VACC may establish other policies and procedures for the program pursuant to 10 V.S.A. § 374d(17).

     (d)  The VACC directors may delegate to loan officers the power to review, approve, and make and disburse loans under this program subject to the approval of the manager of the Vermont Economic Development Authority. 

Sec. 5.  VERMONT ECONOMIC DEVELOPMENT AUTHORITY;

             VERMONT AGRICULTURAL CREDIT CORPORATION; MORAL

             OBLIGATION LIMIT

     In addition to the purposes set forth in 10 V.S.A. § 219, the Vermont Economic Development Authority may establish one or more debt service reserve funds under 10 V.S.A. § 219(d) for the purpose of securing bonds, notes, loans, lines of credit, or other forms of indebtedness of the authority or the Vermont Agricultural Credit Corporation (VACC) established pursuant to chapter 16A of Title 10, provided that such indebtedness shall not exceed $30,000,000.00 outstanding at any one time for the purpose of supporting the VACC, and further provided that the limitation of total indebtedness secured by the debt service reserve funds under 10 V.S.A. § 219(d) is increased to a maximum of $70,000,000.00.

Sec. 6.  10 V.S.A. § 374d(7) is amended to read:

          (7)  borrow money and issue notes and other evidences of indebtedness for lending and administrative and other expenses.  The corporation may sell, transfer, pledge, mortgage, hypothecate or otherwise dispose of loans under its management.  Neither the full faith and credit nor the moral obligation of the state of Vermont nor any of the assets of the authority are pledged to secure repayment of the indebtedness of the corporation;

Sec. 7.  FARM OPERATING LOANS; SECURITY

     For the purpose of providing interest rate subsidies of farm operating loans authorized under Sec. 4 of this act, the Secretary of Administration is authorized to commit the amount of $1,500,000.00 of general funds, or so much thereof as is necessary.  These funds shall be transferred by the Secretary to the Vermont Agricultural Credit Corporation (VACC) in such amounts and at such times during fiscal years 2004 through 2006 as provided in a written agreement between the Secretary and the VACC.

Sec. 8.  10 V.S.A. § 234(c) is added to read:

§ 234.  The Vermont jobs fund

* * *

(c)  Monies in the fund may be loaned at interest rates and on terms and conditions to be set by the authority to establish a line of credit in an amount not to exceed $30,000,000.00 to be advanced to the Vermont agricultural credit program to support its lending operations as established in chapter 16A of this title.

Sec. 9.  EFFECTIVE DATE

     This act shall take effect from passage.

Approved:  April 25, 2003