REPORT TITLE:
Cooperative Agricultural Loans


DESCRIPTION:
Creates a program that enables cooperating lenders to provide
loan funds with the department of agriculture providing
counseling, credit underwriting, collection, and loan servicing.
(HB1628 SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1628
THE SENATE                              H.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO AGRICULTURAL LOANS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that the State's
 
 2 diversified agriculture is at a critical juncture.  Over the
 
 3 years, the State invested public funds for diversified
 
 4 agriculture research and development.  This investment is now
 
 5 coming to fruition.  With the closure of most of the State's
 
 6 sugar plantations, prime agricultural land, water, and an
 
 7 agriculturally oriented labor force are now available for
 
 8 agricultural development and expansion.  One of the factors
 
 9 limiting further growth is the availability of financing at
 
10 reasonable rates and terms.
 
11      The legislature recognizes that during this period of fiscal
 
12 austerity, creativity is needed to provide assistance without
 
13 expending scarce state funds.  In order to achieve this end, new
 
14 funding sources for agricultural loans need to be developed.
 
15 This Act creates a program that enables cooperating lenders to
 
16 provide loan funds with the department of agriculture providing
 
17 counseling, credit underwriting, collection, and loan servicing.
 
18      SECTION 2.  Chapter 155, Hawaii Revised Statutes, is amended
 
19 by adding a new section to be appropriately designated and to
 

 
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 1 read as follows:
 
 2      "155-     Cooperation in loans by the department.  (a)  The
 
 3 department of agriculture, for a fee, may underwrite and service
 
 4 loans for cooperating private lenders and government loan
 
 5 programs providing loan funds to qualified farmers.  All fees
 
 6 shall be deposited into the agricultural loan reserve fund.
 
 7      (b)  Loans made under this section shall not be subject to
 
 8 the restrictions in section 155-3.
 
 9      (c)  Loans made under this section shall be limited by
 
10 sections 155-1 and 155-9 to 155-13.  No class "D" and "F" loans
 
11 shall be made under this section.
 
12      (d)  Loans made under this section shall bear simple
 
13 interest on the unpaid principal balance charged on the actual
 
14 amount disbursed to the borrower.  The interest rate on class
 
15 "A", "B", "C", and "E" loans shall be at a rate of two per cent
 
16 above the prime rate or at a rate of eight and one-half per cent
 
17 a year, whichever is less.  For purposes of this subsection, the
 
18 prime rate shall be determined on January 1 and July 1 of each
 
19 year and shall be the prime rate charged by the two largest banks
 
20 in the State identified by the department of commerce and
 
21 consumer affairs.  If the prime rates of the two largest banks
 
22 are different, the higher prime rate of the two shall apply.
 
23      The director of commerce and consumer affairs shall publish
 

 
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                                     H.B. NO.           S.D. 2
                                                        
                                                        

 
 1 a notice statewide pursuant to section 1-28.5 to specify the
 
 2 prime rate.
 
 3      (e)  For loans made under this section, funds shall be
 
 4 disbursed in accordance with rules adopted by the department
 
 5 pursuant to chapter 91.
 
 6      (f)  The department and the cooperating lender may charge a
 
 7 filing fee for any application made under this section.  However,
 
 8 the applicant shall pay for any actual expenses incurred.
 
 9      (g)  The department and the cooperating lender may mutually
 
10 agree on underwriting criteria, functions, responsibilities, and
 
11 fees for loan underwriting and loan servicing, by way of a
 
12 memorandum of agreement.  The memorandum of agreement shall be
 
13 approved by the chairperson of the board of agriculture."
 
14      SECTION 3.  New statutory material is underscored.
 
15      SECTION 4.  This Act shall take effect upon its approval.