Establishes the AgJobs NY program to provide low interest loans to finance certain costs of agribusinesses; appropriates $50,000,000

* upgrade and/or acquire new or used machinery and equipment directly related to business operations, including associated engineering and installation expenses;

* renovate and/or acquire a facility directly related to business operations;

* diversify farm operations through crop diversification, such as: -- transitioning from Concord or other native grapes to vinifera and other hybrid grapes; -- adding cellulosic feedstock for ethanol production, (i.e. willow and grasses) into crop rotation.

* convert or expand farm operations from "traditional" to more profitable niche markets;

* purchase other services or consumable goods needed to produce an agricultural commodity including, but not limited to, land rent, equipment rental, wages for labor, plant material, pesticides/herbicides, etc.

All applicants and its principals must be current in payment of all applicable state and local taxes unless they have entered into a agreement satisfactory to the respective taxing authority and are fully in compliance with the terms of that agreement.

LOAN AMOUNT

The maximum loan amount for land, buildings, machinery and equipment is $300,000 or 50% of the total eligible project cost, whichever is less.

For capital purposes, an application may not receive more than $300,000 in new financing in any 12 month period.

For purchase of services or consumable goods necessary to produce an agricultural commodity, an application may not receive more than $50,000 in any 12 month period.

PRIVATE INVESTMENT REQUIREMENT

For capital purposes, loans must be made with another source or sources of financing for the eligible costs incurred, such as an other lender or equity from the owners or investors. Funds from other sources must equal at least 50% of eligible project costs and must have either equivalent or longer terms than the awarded loan.

Land and building and machinery and equipment purchases made within a 12 month period prior to the filing of an application may be eligible as a private match towards a loan project.

ELIGIBLE USE OF FUNDS

Machinery and equipment costs may include, but are not limited to, costs of acquisition, delivery, and installation. Such costs are eligible if associated with acquisition of machinery and equipment

that the applicant has newly purchased, even if such machinery had previously been in service with another user. Costs of mobile equipment are eligible if, and only if, such equipment is not titled or registered for highway use. Land and building/construction costs directly associated with:

* the purchase, renovation, or installation of equipment/machinery or

* building/construction directly related to business operations may include, but are not limited to, acquisition, site preparation and testing, utilities, site mapping, rehabilitation, architectural, landscaping, legal, and other related costs, Costs associated with crop transition or diversification. Also, costs associated with transitioning from a traditional to organic operation, land rent, equipment rental, wages for labor, plant material, pesticides/ herbicides and other services or consumable goods needed to produce an agricultural commodity.

REPAYMENT TERMS

Loans used for real estate may have a repayment period of up to 15 years. Loans used for machinery and equipment may have a repayment period of up to 10 years, depending upon the useful life of the machinery being financed. Loans used for purchase of services and consumable goods may have a repayment period of up to one year with the exception of transition expenses which will reflect the term needed for crop maturation in order to have a marketable commodity, such as:

* for transition from Concord or other native grapes to vinifera or hybrid grapes. the repayment period may be up to six years.

* for transition to cellulois feedstock for ethanol production, such as willow and grasses, the repayment period may be up to three years.

* for transition from a traditional to organic operation the repayment period may be up to three years. Loans may be prepaid anytime without financial penalty.

INTEREST RATES

For capital purposes, interest rates shall be at a fixed rate of 3%. For purchase of services or consumable goods necessary to produce am agricultural commodity, interest rates shall be at a fixed rate of 5%. The Commissioner may reduce the annual interest rate if the area where the project is located has been included within a natural disaster declaration.

Justification

AgJobs NY is a progressive, self-sustaining, low interest revolving loan program which is exclusive to the agriculture community. This $50 million program is uniquely suited to help producers and agribusinesses gain access to the capital needed to begin, continue or expand their business. AgJobs NY also answers the critical need for accessible, low-cost financing which the agriculture community lacks in the traditional finance industry. Farming is the pillar of New York's rural communities, generating hundreds of thousands of jobs both on and off farms, and productively employing millions of acres of farmland. Any investment in New York agriculture is multiplied through its impact on the many businesses in our rural communities that support the farm industry. For this reason, New York's 36,000 farms, which occupy seven million acres of farmland, generate over one million farm and farm-related jobs in New York State (NASS 2002).

Legislative history

New Bill.

Fiscal implications

Undetermined at this time.

Effective date

Effective immediately.