LRB-1624/4
RCT/RJM:kmg:jf
2003 - 2004 LEGISLATURE
December 1, 2003 - Introduced by Representatives Ott, Ainsworth, Musser,
Suder, Olsen, Jensen, Plouff, Loeffelholz, Towns, Hahn, Freese, Gielow,
Albers, McCormick, Hines, Bies, Owens, Weber, Vruwink, Lothian, Zepnick,
Hundertmark, Kestell, Gunderson, Balow, Petrowski, Molepske, Hebl, M.
Williams and Miller, cosponsored by Senators Schultz, S. Fitzgerald,
Welch, A. Lasee, Brown, Harsdorf, Roessler and Lassa. Referred to
Committee on Agriculture.
AB684,2,2
1An Act to amend 7.33 (1) (c), 13.172 (1), 13.62 (2), 13.94 (4) (a) 1., 16.002 (2),
216.004 (4), 16.004 (5), 16.01 (1), 16.045 (1) (a), 16.41 (4), 16.417 (1) (b), 16.52 (7),
316.528 (1) (a), 16.53 (2), 16.54 (9) (a) 1., 16.70 (2), 16.75 (1m), 16.838 (1) (b), 16.85
4(2), 16.865 (8), 23.175 (1) (b), 77.54 (9a) (a), 100.45 (1) (dm), 101.177 (1) (d),
5106.16 (2), 106.16 (3), 230.03 (3), 234.66 (2), 234.90 (4), 234.907 (3), 234.91 (5)
6(a), 281.75 (4) (b) 3., 285.59 (1) (b), 560.032 (1) and 706.11 (1) (c) 2.; and
to create
719.42 (10) (q), 40.02 (54) (j), 71.05 (1) (c) 7., 71.26 (1m) (h), 71.45 (1t) (h), 219.09
8(1) (g), chapter 238 and 600.01 (1) (b) 7m. of the statutes;
relating to: creating
9the Wisconsin Rural Finance Authority, authorizing the Wisconsin Rural
10Finance Authority to operate certain agricultural programs, and eliminating
11the authority of the Wisconsin Housing and Economic Development Authority
1to guarantee certain loans made for agricultural purposes and to operate a loan
2program for beginning farmers.
Analysis by the Legislative Reference Bureau
Wisconsin Rural Finance Authority
This bill creates the Wisconsin Rural Finance Authority (WRFA) and
authorizes WRFA to operate certain programs related to agriculture. An authority
is a public body created by state law that is not a state agency. The bill does not
provide any funding for WRFA.
Under this bill, the board of directors of WRFA consists of 11 members. Eight
members of the board are appointed by the governor with the advice and consent of
the senate for four-year terms. Three of those members must be agricultural
producers, three must be commercial lenders, and two must be individuals who are
not agricultural producers or commercial lenders. The other board members are the
secretary of commerce, the secretary of agriculture, trade and consumer protection,
and the executive director of the Wisconsin Housing and Economic Development
Authority (WHEDA), or their designees. The executive director of WRFA is
appointed by the secretary of agriculture, trade and consumer protection.
The bill authorizes WRFA to issue bonds to carry out its functions. WRFA's
bonds are not state debt. The bill authorizes WRFA to have no more than
$26,000,000 in outstanding bonds at any one time, excluding bonds for the Beginning
Farmer Program (described below). The bill creates an individual and corporate
income tax exemption for interest on bonds issued by WRFA.
Because WRFA is not a state agency, numerous laws that apply to state
agencies do not apply to WRFA. However, WRFA is treated like a state agency in the
following respects, among others: 1) it is subject to the open meetings laws; 2) it is
subject to auditing by the Legislative Audit Bureau; 3) it is treated like a state agency
for purposes of the law regulating lobbying; 4) the Code of Ethics for Public Officials
and Employees covers WRFA; and 5) employees of WRFA are considered state
employees for the purposes of state retirement benefits and health insurance
coverage. WRFA is subject to the open records law, except that personal and financial
information provided by a person seeking financial assistance from WRFA is
confidential.
Agricultural loan programs
The bill authorizes WRFA to operate four agricultural loan programs. Under
these programs, WRFA participates in loans made by private lenders to eligible
borrowers. An eligible borrower is a natural person who resides in this state or a
partnership or family farm corporation that operates in this state with a net worth
below amounts specified in the bill. The limits on net worth may be adjusted by a
two-thirds vote of the board. WRFA may establish additional requirements for
eligible borrowers. The interest rate that WRFA charges for its portion of a loan must
be less than the interest rate charged by the private lender. WRFA must ensure that
its interest in the security for a loan has a higher priority than the private lender's
interest.
One type of agricultural loan in which WRFA may participate is a loan for the
purchase of farm property in this state. The seller of the property must partially
finance the purchase by lending the eligible borrower the amount by which the
purchase price exceeds the principal of the farm purchase loan plus any
downpayment. WRFA may not finance more than 45% or $125,000, subject to
adjustment by a two-thirds vote of the board, of the principal of a farm purchase
assistance loan.
Another type of agricultural loan in which WRFA may participate is a loan to
an eligible borrower for agricultural improvements, including the purchase and
construction or installation of improvements to land or buildings and including
facilities for generating energy from wind or animal waste. The collateral for a loan
must include a first mortgage on farm real estate. WRFA may not finance more than
45% or $125,000, subject to adjustment by a two-thirds vote of the board, of the
principal of an agricultural improvement loan.
The bill also authorizes WRFA to participate in a loan to an eligible borrower
for the purchase of stock or other interest in a cooperative that owns and operates,
or proposes to build or purchase and operate, a facility for processing an agricultural
commodity or a byproduct of an agricultural commodity. The eligible borrower must
produce the commodity that will be processed or the byproduct of which will be
processed at the facility. WRFA may not finance more than 45% or $24,000, subject
to adjustment by a two-thirds vote of the board, of the principal of an agricultural
cooperative stock loan.
The final type of loan in which the bill authorizes WRFA to participate is a loan
to an eligible borrower that raises livestock for improvements to land or buildings or
other permanent structures that are useful for the purpose of raising livestock. The
collateral for a loan must include a first mortgage on farm real estate. WRFA may
not finance more than 45% or $250,000, subject to adjustment by a two-thirds vote
of the board, of the principal of a livestock operation modernization loan.
Loan guarantee programs and program for beginning farmers
Current law authorizes the Wisconsin Housing and Economic Development
Authority (WHEDA) to operate three agricultural loan guarantee programs and a
Beginning Farmer Program. Under the loan guarantee programs, WHEDA
guarantees repayment of a percentage of the outstanding principal amounts of loans
made by private lenders to qualified borrowers. This bill eliminates the authority
of WHEDA to make new loan guarantees under these programs and to issue bonds
for the Beginning Farmer Program beginning one year after this bill is enacted. The
bill gives authority to WRFA to operate similar programs.
The bill authorizes WRFA to operate an Agricultural Production Loan
Guarantee Program, which is similar to the program currently operated by WHEDA
that is commonly known as the Credit Relief Outreach Program (CROP). This
program provides guarantees to lenders for loans to farmers to finance the purchase
of seed, feed, tillage services, or other services or consumable goods necessary to
produce an agricultural commodity. Generally, to be eligible for a loan guarantee, a
farmer must not meet the lender's minimum standards of creditworthiness to receive
the loan without the guarantee and the farmer's debts must total at least 40% of the
amount of the farmer's assets. The total outstanding amount of all loans to a
borrower that are guaranteed under the program may not exceed an amount set by
WRFA that may not exceed $100,000 (the maximum is $50,000 under CROP). The
term of a loan may not extend after March 31 of the calendar year following the
calendar year in which the loan was made.
The bill authorizes WRFA to operate a Farm Assets Reinvestment
Management Loan Guarantee Program. This program provides guarantees to
lenders for loans to farmers to finance the acquisition of agricultural assets or the
improvement of facilities or land. To be eligible for a loan guarantee, the amount of
the farmer's debts may not exceed 85% of the farmer's assets. The total outstanding
amount of all loans to a borrower that are guaranteed under the program may not
exceed $300,000, or $150,000 if any of the loans is affected by any other state or
federal credit assistance program. The term of a loan guarantee may not exceed five
years, except that the term of a loan guarantee for the acquisition of land or facilities
may not exceed ten years.
The bill authorizes WRFA to operate an Agricultural Development Loan
Guarantee Program. This program provides guarantees to lenders for loans for
working capital, physical plant, or machinery and equipment used to process or
market a product from a raw agricultural commodity produced in this state. The loan
must result in new or more viable methods for processing or marketing the product
from a raw agricultural commodity. To be eligible for a loan guarantee, a borrower
must not meet the lender's minimum standards of creditworthiness to receive the
loan without the guarantee and the borrower's principal place of operations must be
in a city, village, or town with a population of less than 50,000. The total outstanding
amount of all loans to a borrower that are guaranteed under the program may not
exceed $750,000. The term of a loan guarantee may not exceed 15 years unless the
loan is extended by WRFA.
The bill authorizes WRFA to operate a Nutrient Technology Loan Guarantee
Program. There is no similar program under current law. Under this program,
WRFA would provide guarantees to lenders for loans for nutrient management or
odor mitigation technology on farms. The bill authorizes WRFA to establish
maximum terms for loans that are guaranteed and other eligibility requirements for
the program.
The bill provides for a Wisconsin agricultural reserve fund which would consist
of funds to guarantee loans, but the bill does not provide funding for the reserve fund.
The bill authorizes WRFA to guarantee loans up to a total principal amount of
$25,000,000, but this amount may be increased or decreased by the Joint Committee
on Finance. The bill requires WRFA to ensure that the cash balance in the reserve
fund is sufficient to maintain a ratio of $1 of reserve funding to $4.50 of total
outstanding principal of loans guaranteed.
The bill authorizes WRFA to administer a program to assist beginning farmers
to purchase agricultural land. The program provides below-market interest rate
financing to new farmers through the use of a federal tax exemption provided to
lenders. The bill authorizes WRFA to issue up to $17,500,000 in bonds for this
program. Beginning farmer bonds are limited obligations of WRFA, payable solely
out of the revenue derived from loan agreements. The lender assumes all risk of
default on a loan under this program.
Additional powers
The bill authorizes WRFA, in consultation with the Department of Commerce,
to implement the following programs for the purpose of promoting the development
of agricultural business:
1. A revolving loan fund program for loans to finance agricultural businesses.
2. An equity financing program under which WRFA acts as an intermediary to
facilitate investments in agricultural businesses.
3. A conservation trading program under which WRFA acts as an intermediary
in the aggregation and trading of environmental credits related to agricultural
production.
This bill will be referred to the Joint Survey Committee on Tax Exemptions for
a detailed analysis, which will be printed as an appendix to this bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB684, s. 1
1Section
1. 7.33 (1) (c) of the statutes is amended to read:
AB684,5,32
7.33
(1) (c) "State agency" has the meaning given under s. 20.001 (1) and
3includes an authority created under ch. 231, 232, 233, 234,
or 237
, or 238.
AB684, s. 2
4Section
2. 13.172 (1) of the statutes is amended to read:
AB684,5,95
13.172
(1) In this section, "agency" means an office, department, agency,
6institution of higher education, association, society or other body in state
7government created or authorized to be created by the constitution or any law, which
8is entitled to expend moneys appropriated by law, including the legislature and the
9courts, and any authority created in ch. 231, 233
or, 234
, or 238.
AB684, s. 3
10Section
3. 13.62 (2) of the statutes is amended to read:
AB684,6,211
13.62
(2) "Agency" means any board, commission, department, office, society,
12institution of higher education, council or committee in the state government, or any
1authority created in ch. 231, 232, 233, 234,
or 237
, or 238, except that the term does
2not include a council or committee of the legislature.
AB684, s. 4
3Section
4. 13.94 (4) (a) 1. of the statutes is amended to read:
AB684,6,184
13.94
(4) (a) 1. Every state department, board, examining board, affiliated
5credentialing board, commission, independent agency, council or office in the
6executive branch of state government; all bodies created by the legislature in the
7legislative or judicial branch of state government; any public body corporate and
8politic created by the legislature including specifically the Fox River Navigational
9System Authority
and the Wisconsin Rural Finance Authority, a professional
10baseball park district, a local professional football stadium district, a local cultural
11arts district and a family care district under s. 46.2895; every Wisconsin works
12agency under subch. III of ch. 49; every provider of medical assistance under subch.
13IV of ch. 49; technical college district boards; development zones designated under
14s. 560.71; every county department under s. 51.42 or 51.437; every nonprofit
15corporation or cooperative to which moneys are specifically appropriated by state
16law; and every corporation, institution, association or other organization which
17receives more than 50% of its annual budget from appropriations made by state law,
18including subgrantee or subcontractor recipients of such funds.
AB684, s. 5
19Section
5. 16.002 (2) of the statutes is amended to read:
AB684,6,2320
16.002
(2) "Departments" means constitutional offices, departments and
21independent agencies and includes all societies, associations and other agencies of
22state government for which appropriations are made by law, but not including
23authorities created in chs. 231, 232, 233, 234, 235,
and 237
, and 238.
AB684, s. 6
24Section
6. 16.004 (4) of the statutes is amended to read:
AB684,7,6
116.004
(4) Freedom of access. The secretary and such employees of the
2department as the secretary designates may enter into the offices of state agencies
3and authorities created under chs. 231, 233, 234,
and 237
, and 238, and may examine
4their books and accounts and any other matter which in the secretary's judgment
5should be examined and may interrogate the agency's employees publicly or
6privately relative thereto.
AB684, s. 7
7Section
7. 16.004 (5) of the statutes is amended to read:
AB684,7,118
16.004
(5) Agencies and employees to cooperate. All state agencies and
9authorities created under chs. 231, 233, 234,
and 237
, and 238, and their officers and
10employees, shall cooperate with the secretary and shall comply with every request
11of the secretary relating to his or her functions.
AB684, s. 8
12Section
8. 16.01 (1) of the statutes is amended to read:
AB684,7,1713
16.01
(1) In this section, "agency" means any office, department, agency,
14institution of higher education, association, society or other body in state
15government created or authorized to be created by the constitution or any law which
16is entitled to expend moneys appropriated by law, including the legislature and the
17courts, and any authority created under ch. 231, 233
or
, 234
, or 238.
AB684, s. 9
18Section
9. 16.045 (1) (a) of the statutes is amended to read:
AB684,7,2419
16.045
(1) (a) "Agency" means an office, department, independent agency,
20institution of higher education, association, society or other body in state
21government created or authorized to be created by the constitution or any law, which
22is entitled to expend moneys appropriated by law, including the legislature and the
23courts, but not including an authority created in ch. 231, 232, 233, 234, 235,
or 237
,
24or 238.
AB684, s. 10
25Section
10. 16.41 (4) of the statutes is amended to read:
AB684,8,2
116.41
(4) In this section, "authority" means a body created under ch. 231, 233,
2234,
or 237
, or 238.
AB684, s. 11
3Section
11. 16.417 (1) (b) of the statutes is amended to read:
AB684,8,54
16.417
(1) (b) "Authority" means a body created under ch. 231, 232, 233, 234,
5235
or, 237
, or 238.
AB684, s. 12
6Section
12. 16.52 (7) of the statutes is amended to read:
AB684,8,167
16.52
(7) Petty cash account. With the approval of the secretary, each agency
8which is authorized to maintain a contingent fund under s. 20.920 may establish a
9petty cash account from its contingent fund. The procedure for operation and
10maintenance of petty cash accounts and the character of expenditures therefrom
11shall be prescribed by the secretary. In this subsection, "agency" means an office,
12department, independent agency, institution of higher education, association,
13society or other body in state government created or authorized to be created by the
14constitution or any law, which is entitled to expend moneys appropriated by law,
15including the legislature and the courts, but not including an authority created in
16ch. 231, 233, 234,
or 237
, or 238.
AB684, s. 13
17Section
13. 16.528 (1) (a) of the statutes is amended to read:
AB684,8,2218
16.528
(1) (a) "Agency" means an office, department, independent agency,
19institution of higher education, association, society or other body in state
20government created or authorized to be created by the constitution or any law, which
21is entitled to expend moneys appropriated by law, including the legislature and the
22courts, but not including an authority created in ch. 231, 233, 234,
or 237
, or 238.
AB684, s. 14
23Section
14. 16.53 (2) of the statutes is amended to read:
AB684,9,624
16.53
(2) Improper invoices. If an agency receives an improperly completed
25invoice, the agency shall notify the sender of the invoice within 10 working days after
1it receives the invoice of the reason it is improperly completed. In this subsection,
2"agency" means an office, department, independent agency, institution of higher
3education, association, society or other body in state government created or
4authorized to be created by the constitution or any law, which is entitled to expend
5moneys appropriated by law, including the legislature and the courts, but not
6including an authority created in ch. 231, 233, 234,
or 237
, or 238.
AB684, s. 15
7Section
15. 16.54 (9) (a) 1. of the statutes is amended to read:
AB684,9,128
16.54
(9) (a) 1. "Agency" means an office, department, independent agency,
9institution of higher education, association, society or other body in state
10government created or authorized to be created by the constitution or any law, which
11is entitled to expend moneys appropriated by law, including the legislature and the
12courts, but not including an authority created in ch. 231, 233, 234,
or 237
, or 238.