|BILL AS INTRODUCED||2007-2008|
Introduced by Representatives Potter of Clarendon, Helm of Castleton, Bray of New Haven, Copeland-Hanzas of Bradford, Leriche of Hardwick, Marcotte of Coventry, Botzow of Pownal, Clarkson of Woodstock, Evans of Essex, Fisher of Lincoln, Haas of Rochester, Jewett of Ripton, Malcolm of Pawlet, McCullough of Williston, Mook of Bennington, Peltz of Woodbury, Perry of Richford, Randall of Troy and Stevens of Shoreham
Subject: Conservation; economic development; forestry
Statement of purpose: This bill proposes to amend the Vermont agricultural credit program to provide financial assistance to the forestry and forest products industries in the state.
AN ACT RELATING TO AMENDING THE VERMONT AGRICULTURAL CREDIT PROGRAM TO INCLUDE FORESTRY AND FOREST PRODUCTS MANUFACTURING
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. FINDINGS
The general assembly finds that:
(1) The forests of Vermont are integral to the economy, culture, beauty, and appeal of the state.
(2) The annual contributions of forest-based manufacturing and
forest-related recreation and tourism contribute $1.5 billion to the Vermont economy annually.
(3) Revenues from forest-related recreation and tourism activities totaled $485 million in 2005.
(4) Forest-based manufacturing contributes approximately 10 percent of Vermont’s total manufacturing sales.
(5) The forest-based manufacturing industry provides employment for 6,379 people and generates a payroll of over $207.4 million.
(6) Forest-based recreation and tourism provide employment for over 6,300 people and generate payrolls of $93.0 million.
(7) Each 1,000 acres of forest land in Vermont supports 1.4 forest-based manufacturing, forestry, and logging jobs and 1.4 forest-related tourism and recreation jobs.
(8) Wood provides the energy for approximately six percent of electrical and heating use in Vermont.
(9) The forests of Vermont also help maintain the environment and health of Vermont by aiding the filtering of clean water and clean air and by providing wildlife habitat to a diversity of animals.
(10) Despite the significant, unparalled contributions of the forests, forest-based manufacturing, and forest-related recreation and tourism to the state’s economy, jobs, energy, and environment, the forestry and forest products industries receive considerably less support and financial assistance afforded other Vermont industries, such as agriculture.
(11) Because of the lack of assistance afforded the forestry and forest products industry by the state, timber harvesters and forest products manufacturers have an increasingly difficult time accessing loans, grants, or funding sources necessary to enter the industry or update, repair, or modernize existing facilities and equipment.
(12) The Vermont general assembly should strive to support the forests and forest products industries and to provide additional state funding and assistance to the forests and forest products industries in order to ensure that they remain strong assets to the state.
(13) To support Vermont’s forestry and forest products industries, the general assembly should amend the Vermont agricultural credit program to include the forestry and forest products industries so that these industries can access the assistance they need to remain competitive and to remain a vital part of the Vermont economy and culture.
Sec. 2. 10 V.S.A. chapter 16A is amended to read:
CHAPTER 16A. VERMONT AGRICULTURAL AND FORESTRY CREDIT PROGRAM
§ 374a. CREATION OF THE VERMONT AGRICULTURAL AND
FORESTRY CREDIT PROGRAM
is created the Vermont agricultural and forestry credit program, which
will provide an alternative source of sound and constructive credit to farmers,
timber harvesters, and forest products manufacturers who are not having
their credit needs fully met by conventional
agricultural credit sources
at reasonable rates and terms. The program is intended to meet, either in
whole or in part, the credit needs of eligible agricultural facilities and,
farm operations, timber harvesters, and forest products manufacturers in
fulfillment of one or more of the purposes listed in this subsection by making
direct loans and participating in loans made by other agricultural credit
(1) to encourage diversification, cooperative farming and the development of innovative farming techniques;
(2) to increase energy efficiency and reduce energy consumption in agricultural facilities, including the construction of water pollution control facilities which implement best management practices for farm waste abatement pursuant to chapter 215 of Title 6;
(3) to encourage innovative and diversified processing, marketing and distribution of Vermont agricultural products and forest products;
(4) to assist beginning farmers to start new farms and new agricultural facilities to commence or strengthen their operations;
assist or financially strengthen existing farms, timber harvesting
operations, and forest product manufacturers;
(6) to assist persons entering the timber harvesting industry or the forest products manufacturing industry to start new businesses and new manufacturing facilities or strengthen their operations;
(7) to assist existing timber harvesters and forest products manufacturers to modernize equipment or facilities; and
refinance loans incurred by eligible borrowers for any of the purposes
enumerated in subdivisions (1) through (5)(7) of this subsection.
(b) No borrower shall be approved for a loan from the corporation that would result in the aggregate principal balances outstanding of all loans to that borrower exceeding the then-current maximum Farm Service Agency loan guarantee limits.
§ 374b. DEFINITIONS
As used in this chapter:
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ownership “Ownership loan” means a loan to acquire or enlarge a farm
or, agricultural facility, or forest products manufacturing
facility to make capital improvements including construction, purchase, and
improvement of farm and agricultural facility buildings or buildings at a
forest products manufacturing facility that can be made fixtures to the
real estate, to promote soil and water conservation and protection, and to
refinance indebtedness incurred for farm ownership, ownership of a forest
products manufacturing facility, or operating loan purposes, or both.
(5) “Authority” means the Vermont economic development authority.
(6) “Cash flow” means, on an annual basis, all income, receipts and revenues of the applicant or borrower from all sources and all expenses of the applicant or borrower, including all debt service and other expenses.
(7) “Farmer” means an individual directly engaged in the management or operation of an agricultural facility or farm operation for whom the agricultural facility or farm operation constitutes two or more of the following:
(A) is or is expected to become a significant source of the farmer’s income;
(B) the majority of the farmer’s assets; and
(C) an occupation the farmer is actively engaged in, either on a seasonal or year-round basis.
(8) “Farm operation” shall mean the cultivation of land or other uses of land for the production of food, fiber, horticultural, orchard, maple syrup, Christmas trees, or forest crops; the raising, boarding, and training of equines, and the raising of livestock; or any combination of the foregoing activities. Farm operation also includes the storage, preparation, retail sale, and transportation of agricultural commodities accessory to the cultivation or use of such land.
(9) “Livestock” shall mean cattle, sheep, goats, equines, fallow deer, red deer, reindeer, American bison, swine, poultry, pheasant, chukar partridge, coturnix quail, ferrets, camelids and ratites, cultured trout propagated by commercial trout farms and bees.
means an operating loan or
farm ownership loan, including a financing
lease, provided that such lease transfers the ownership of the leased property
to each lessee following the payment of all required lease payments as
specified in each lease agreement.
loan” means a loan to purchase livestock, farm equipment, or fixtures to pay
annual operating expenses of a farm operation
facility, timber harvester, or forest products manufacturer; to pay loan
closing costs ,; and to refinance indebtedness incurred for farm
ownership or operating loan purposes ,; or both.
(12) “Program” means the Vermont agricultural and forestry credit program established by this chapter.
or “Project,” “agricultural project” project,” “timber
harvesting project,” or “forest products manufacturing project” means the
creation, establishment, acquisition, construction, expansion, improvement,
strengthening, reclamation, operation or renovation of an agricultural facility
or, farm operation, timber harvesting project, or forest
products manufacturing facility.
(14) “Resident” means a person who is or will be domiciled in this state as evidenced by an intent to maintain a principal dwelling place in the state indefinitely and to return there if temporarily absent, coupled with an act or acts consistent with that intent, including but not limited to the filing of a Vermont income tax return within 18 months of the application for a loan under this chapter. In the case of a limited liability company, partnership, corporation or other business entity, resident means a business entity formed under the laws of Vermont, the majority of which is owned and operated by Vermont residents who are natural persons.
(15) “Forest land” means land capable of supporting timber harvesting.
(16) “Forest products manufacturer” means a person engaged in processing, preparing, or producing logs, pulpwood, veneer, bolt wood, wood chips, stud wood, poles, pilings, biomass, fuel wood, Christmas trees, nursery products, furniture, or other finished wood products.
(17) “Timber harvester” means a person engaged in harvesting trees from forest land in the state under a contract or subcontract, directly or indirectly, for a forest landowner or as a forest landowner.
§ 374c. INCORPORATION; BOARD OF DIRECTORS
The Vermont economic development authority shall incorporate a nonprofit corporation to administer the Vermont agricultural and forestry credit program and to fulfill the goals and purposes of this chapter. The board of directors of the authority shall contain members who represent or have knowledge of agriculture, farming, timber harvesting, or forest products manufacturing. The voting members of the authority shall be the board of directors of the corporation, and the manager of the authority shall serve as the president and chief executive officer of the corporation. Such corporation shall be organized and operate under the nonprofit corporation laws of the state of Vermont to the extent not inconsistent herewith. The authority will have the power to contract with the corporation to provide staff and management needs of the corporation.
§ 374d. GENERAL POWERS
The corporation shall have the powers necessary to carry out the purposes and provisions of this chapter, including those general powers provided a business corporation by section 302 of Title 11A. In addition, the corporation shall have the power to:
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title, by foreclosure or other process available under the law, to any real or
personal property where such action is necessary to protect any loan previously
made by the corporation, pay all costs arising out of the legal action and
acquisition from monies held in the fund, and sell or transfer any such
property to any responsible buyer. If the transfer or conveyance of assets acquired
under this subdivision cannot be effected with reasonable promptness, the
corporation may, in order to minimize financial losses and sustain a farm
or, agricultural facility, timber harvesting
operation, or forest products manufacturing facility, lease the assets
owned by it to responsible persons on such terms and conditions as the
corporation deems reasonable;
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(16) sell loans, or portions thereof, in order to provide further funding for lending under this chapter. Proceeds from sales of loans shall be deposited in the agricultural and forestry credit development fund established under section 374e of this title;
(17) establish policies and procedures consistent with the purpose of providing sound and constructive credit to eligible loan applicants; and
(18) do all things necessary to carry out the purposes and provisions of this chapter.
§ 374e. AGRICULTURAL AND FORESTRY CREDIT DEVELOPMENT
The agricultural and forestry credit development fund is created and shall be used by the corporation for the purposes of this chapter. All reasonable administrative expenses of the corporation shall be paid from the fund. The fund shall be credited with any appropriations made by the general assembly, all payments of principal and interest received from loans transferred or assigned to or made by the corporation, any available grants or gifts made to the corporation, the proceeds of any sale, transfer, pledge, mortgage, hypothecation or other disposition of loans transferred or assigned to the corporation by the authority and loans made by the corporation pursuant to this chapter, and any funds borrowed by the corporation. Monies in the fund may, after payment of reasonable administrative expenses and debt service on the indebtedness of the corporation incurred in furtherance of its purposes under this chapter, be loaned by the corporation directly to eligible borrowers, used to purchase or acquire portions of loans made by unrelated third party lenders to eligible borrowers, or to subsidize the payment of interest on the debt of the corporation so as to lower the interest rate on loans made by the corporation to eligible borrowers.
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§ 374h. LOAN ELIGIBILITY STANDARDS
farmer, timber harvester, forest products manufacturer, or a limited
liability company, partnership, corporation or other business entity,
the majority ownership of which is vested in one or more farmers, timber
harvesters, or forest products manufacturers shall be eligible to apply for
a farm an ownership or operating loan, provided the applicant is:
(1) a resident of this state and will help to expand the agricultural, forestry, or forest products economy of the state;
(2) an owner, prospective purchaser, or lessee of agricultural or forested land in the state or of depreciable machinery, equipment, or livestock to be used in the state;
a person of sufficient education, training, or experience in the
operation and management of an agricultural facility
operation, timber harvesting operation, or forest products manufacturing
facility of the type for which the applicant requests the loan;
an operator or proposed operator of an agricultural facility
farm operation, timber harvesting operation, or forest products
manufacturing facility for whom the loan reduces investment costs to an
extent that offers the applicant a reasonable chance to succeed in the
operation and management of an agricultural facility or, farm
operation, timber harvesting operation, or forest products manufacturing
(5) a creditworthy person under such standards as the corporation may establish;
(6) able to provide and maintain adequate security for the loan by a mortgage on real property or a security agreement and perfected financing statement on personal property;
able to demonstrate that the applicant is responsible and able to manage
responsibilities as owner or operator of the farm operation
or , agricultural
facility, timber harvesting operation, or forest products manufacturing
(8) able to demonstrate that the applicant has made adequate provision for insurance protection of the mortgaged or secured property while the loan is outstanding;
(9) a person who possesses the legal capacity to incur loan obligations;
(10) in compliance with such other reasonable eligibility standards as the corporation may establish;
(11) able to demonstrate that the project plans comply with all regulations of the municipality where it is to be located and of the state of Vermont;
(12) able to demonstrate that the making of the loan will be of public use and benefit;
(13) able to demonstrate that the proposed loan will be adequately secured by a mortgage on real property with a satisfactory maturity date in no event later than 20 years from the date of inception of the mortgage, or by a security agreement on personal property with a satisfactory maturity date in no event longer than the average remaining useful life of the assets in which the security interest is being taken; and
(14) there will be sufficient projected cash flow to service a reasonable level of debt, including the loan or loans, being considered by the corporation.
Sec. 3. VERMONT ECONOMIC DEVELOPMENT AUTHORITY
On or before January 15, 2010, the Vermont economic development authority shall report to the house and senate committees on agriculture, the house and senate committees on natural resources and energy, the house committee on commerce, and the senate committee on finance regarding assistance provided to the forestry and forest products industries from the Vermont agricultural and forestry credit fund. The report shall include:
(1) An accounting of the applications received from and the assistance granted to the forestry and forest products manufacturing industries from the agricultural and forestry credit fund;
(2) A summary of why any applications for assistance received from the forestry and forest products manufacturing industry were denied;
(3) A recommended program for providing assistance to members of the forestry and forest products manufacturing industries that would otherwise not qualify for assistance from the agricultural and forestry credit fund. The recommended program shall include the proposed funding that would be available for assistance, the eligibility requirements for loans under the program, and any security that the program would require, such as a cash reserve to address delinquent loans.
Sec. 4. APPROPRIATIONS
There is appropriated from the general fund $2,000,000.00 to the agricultural and forestry credit development fund under 10 V.S.A. § 374e for the sole use of providing assistance to eligible timber harvesters and forest products manufacturers.
The Vermont General Assembly
115 State Street