Provides a tax incentive to domestic life insurance companies to invest in the purchase of agricultural land to be kept in agricultural production

4 Co-sponsors

• John J. Bonacic
• Thomas P. Morahan
• George Winner
• Catharine Young

Title of bill

An act to amend the agriculture and markets law, the county law, the insurance law and the tax law, in relation to providing an incentive to domestic life insurance companies to invest in the purchase of agricultural land to be kept in agricultural production

Purpose

This bill grants to domestic life insurers that lend money to fruit farmers who plan to keep acreage in production a 30 % deduction from their income taxes that portion of the interest that is earned from the loan issued by such life insurer.

Summary of provisions

Section 1: Amends Agriculture & Markets Law section 16 to authorize the Ag. & Markets Department to promulgate rules to define existing or abandoned fruit farms that are eligible for the income tax deduction.

Section 2: Adds a new County Law section 220-b to ensure that lands that receive an income tax deduction when sold to another farmer remain in farming by requiring that such lands abide by a conservation easement.

Section 3: Amends Insurance Law section 1405 (a) (4) to allow domestic insurers to invest up to one percent of its admitted assets in obligations used to lend money to fruit growers that purchase land to grow fruit or fruit products.

Section 4: Adds Tax Law section 1503 (b) (17) that excludes from a domestic life insurer's net income 30 percent of the interest received by such insurer that was lent to purchase farm lands as provided in section 3 of the bill. Qualifying real property must be no more 50 acres in size (if the parcel is larger than 50 acres, then a partial exemption shall be granted), it must either be in agricultural production or planted with fruit that will come into production, and such land must be subject to a conservation easement.

Existing law

This open space investment incentive program does not exist in New York Law.

Justification

In the past, in addition to inter-family transfers of land to succeeding farming generations, commercial bank loans were one of the primary financing mechanisms used to purchase farm land. Commercial banks and other lending institutions have generally left the business of lending money to continue farm operations. This bill encourages domestic life insurers to in effect become the "bank" by lending or investing in farms that are cultivated by, presumably, younger generations of farmers. This bill subsidizes the investment in farm land by giving the investor a 30 percent income tax exemption for a portion of the interest received by the domestic life insurer.

This bill creates a new financing mechanism to keep land in agriculture. Once the income tax exemption has been granted, the land will remain in agriculture because conservation easements will need to be executed. In return, local economies will be able to sustain their agricultural economies because such farm lands will remain in farming.

Such lands that enter such program will be protected by conservation easements.

Legislative history

S.6693 of 2005/2006, S.571 of 2007/2008

Fiscal implications

To be determined.

Local fiscal implications

None.

Effective date

Immediate.