15E.208 - QUALIFIED CORPORATIONS -- IOWA AGRICULTURAL INDUSTRY FINANCE LOANS.
15E.208 QUALIFIED CORPORATIONS -- IOWA AGRICULTURAL
INDUSTRY FINANCE LOANS.
1. The department may award an Iowa agricultural industry finance
loan to an Iowa agricultural industry finance corporation if the
department in its discretion determines that the corporation is
qualified under this section.
2. The corporation must apply for an Iowa agricultural industry
finance loan on forms and according to procedures required by the
department.
3. The department shall loan all of the amounts available to the
department pursuant to this division to a qualified corporation with
provisions and restrictions as determined by the department and
contained in a loan agreement executed between the department and the
qualified corporation.
a. The department may attach conditions to the granting of
the loan as it deems desirable, including any restrictions on the
subordination of the moneys loaned. The attorney general shall
assist the department in drafting loan agreements and in collecting
on the loan agreement.
b. The Iowa agricultural industry finance loan shall be
repayable upon terms and conditions negotiated by the parties.
(1) The repayment period shall begin six years following the date
when the Iowa agricultural industry finance loan is awarded and end
twenty-five years after the date that the repayment period begins.
(2) At least four percent of the amount of the Iowa agricultural
industry finance loan due shall be paid each year to the department.
However, the department may accept an assignment of a loan made by
the corporation providing financing to an eligible person pursuant to
section 15E.209. The assigned loan shall grant to the department the
corporation's right to payment under the loan. Any such assignment
shall be made by an agreement executed by the department and the
corporation. The assignment agreement shall be subject to all of the
following:
(a) The period of assignment may be for any number of years. The
department shall apply to the amounts due under the Iowa agricultural
industry finance loan the principal, interest, and fees which the
eligible person is obligated to pay under the assigned loan. The
total amount of the principal, interest, and fees that the eligible
person is obligated to pay to the department during the period of
assignment plus any other repayment of the Iowa agricultural industry
finance loan made by the corporation to the department must equal the
amount of the Iowa agricultural industry finance loan that the
corporation would otherwise be obligated to repay the department
during that same period. However, the agreement may provide that
during any year of the assignment period the eligible person may pay
more or less than four percent of the amount of the Iowa agricultural
industry finance loan that the corporation would otherwise be
obligated to repay during that year.
(b) The assignment agreement shall contain conditions relating to
the right of payment assigned to the department which may include
securing the payment obligation in any manner that allows the
department to enforce a debt against the property of the eligible
person. The department shall not have a right of recourse against
the corporation for any amount required to be applied from the
assigned loan to the Iowa agricultural industry finance loan.
(c) Notwithstanding any provision of this division to the
contrary, payments on the principal balance of the loan granted by
the corporation to an eligible person and assigned to the department
pursuant to this subparagraph during calendar year 2003 shall be
deferred until October 1, 2007. The eligible person shall make
principal payments to the department in the amount of one million
dollars for each year on October 1, 2007, October 1, 2008, and
October 1, 2009. The eligible person shall pay the department four
hundred eighty-two thousand seven hundred sixty-one dollars in
interest, which shall be deemed to be the total amount of interest
accruing on the principal amount of the loan. The eligible person
shall pay the interest amount on October 1, 2010. Upon the payment
of the principal balance of the loan and the accrued interest, the
debt shall be retired.
(d) Notwithstanding any provision of this division to the
contrary, the corporation shall repay the department the principal
balance of the Iowa agricultural industry finance loan beginning on
October 1, 2007. The principal balance of the loan equals twenty-one
million five hundred seventeen thousand two hundred thirty-nine
dollars. The corporation shall repay the department five hundred
seventeen thousand two hundred thirty-nine dollars by October 1,
2007, and for each subsequent year the corporation shall repay the
department at least one million dollars by October 1 until the total
principal balance of the loan is repaid. This subparagraph division
shall not be construed to limit the department's authority to
negotiate the payment of interest accruing on the principal balance
which shall be paid to the department as provided by an agreement
executed by the department and the corporation.
(e) Notwithstanding any provision of this division to the
contrary, payments of principal and interest of the loan granted by
the corporation to an eligible person and assigned to the department
pursuant to this subparagraph during calendar year 2003 which were
deferred pursuant to subparagraph division (c) shall be forgiven and
the total debt, including interest, shall be retired.
(3) The corporation shall not be subject to a prepayment penalty.
c. The corporation shall not expend moneys originating from
the state, including moneys loaned under this section, on political
activity or on any attempt to influence legislation.
4. A corporation shall not provide financing to support a person
who is any of the following:
a. An agricultural producer, if any of the following applies:
(1) The agricultural producer is a party to a pending action for
a violation of chapter 455B or 459, subchapters II and III,
concerning a confinement feeding operation in which the person has a
controlling interest and the action is commenced in district court by
the attorney general.
(2) The agricultural producer or a confinement feeding operation
in which the agricultural producer holds a controlling interest is
classified as a habitual violator under section 459.604.
b. An agricultural products processor, if the processor or a
person owning a controlling interest in the processor has
demonstrated, within the most recent consecutive three-year period
prior to the application for financing, a continuous and flagrant
disregard for the health and safety of its employees or the quality
of the environment. Violations of environmental protection statutes,
rules, or regulations shall be reported for the most recent five-year
period prior to application. Evidence of such disregard shall
include a history of serious or uncorrected violations of state or
federal law protecting occupational health and safety or the
environment, including but not limited to serious or uncorrected
violations of occupational safety and health standards enforced by
the division of labor services of the department of workforce
development pursuant to chapter 84A, or rules enforced by the
department of natural resources pursuant to chapter 455B or 459,
subchapters II and III.
c. A member of the economic development board, an employee of
the department of economic development, an elected state official, or
any director or other officer or an employee of the corporation.
5. In order to be eligible as a qualified Iowa agricultural
industry finance corporation, all of the following conditions must be
satisfied:
a. The corporation must only provide financing to persons and
ventures eligible under section 15E.209.
b. The corporation must demonstrate that it complies with
guiding principles for the corporation as provided in section
15E.207.
c. The corporation must adopt policies and procedures which
maximize public oversight into the affairs of the corporation, by
providing a forum for public comment, an opportunity for public
review of the corporation's actions, and methods to ensure
accountability for the expenditure of public moneys loaned to the
corporation.
d. The corporation's articles of incorporation must comply
with requirements established by the department relating to the
capacity and integrity of the corporation to carry out the purposes
of this division, including but not limited to all of the following:
(1) The capitalization of the corporation.
(2) The manner in which financing is provided by the corporation,
including the manner in which an Iowa agricultural industry finance
loan can be used by the corporation.
(3) The composition of the corporation's board of directors. The
board must be composed of persons knowledgeable in Iowa agricultural
industries including a representative number of individuals
experienced and knowledgeable in financing new agricultural
industries.
(4) The manner of oversight required by the department or the
auditor of state. The articles must provide that the corporation
shall submit a report to the governor, the general assembly, and the
department. The report shall provide a description of the
corporation's activities and a summary of its finances, including
financial awards. The report shall be submitted not later than
January 10 of each year. The articles shall provide that an audit of
the corporation must be conducted each year for the preceding year by
a certified public accountant licensed pursuant to chapter 542. The
auditor of state may audit the books and accounts of the corporation
at any time. The results of the annual audit and any audit for the
current year conducted by the auditor of state shall be included as
part of the report.
(5) The execution of an agreement between the corporation and an
eligible recipient as required by the department as a condition of
providing financing, in which the eligible recipient agrees to become
a shareholder in the corporation. If the eligible recipient is an
agricultural producer as provided in section 15E.209, the agreement
shall provide that the agricultural producer becomes a shareholder of
voting common stock in the corporation equal to at least five percent
of the financing provided to the agricultural producer pursuant to
the agreement. The agreement shall be for a period of not less than
ten years. An agreement shall at least provide all of the following:
(a) The establishment of a common stock pricing system. The
stock shall be frozen against price appreciation for the first five
years of the life of the corporation. The articles shall contain
waivers for death and disability.
(b) The maintenance of stock ownership by an eligible recipient
until a financial assistance obligation due the corporation is
satisfied.
(c) A requirement that the par value of participating common
stock be established prior to providing financial assistance to an
eligible recipient.
e. To the extent feasible and fiscally prudent, the
corporation must maintain a portfolio which is diversified among the
various types of agricultural commodities and agribusiness.
f. Not more than seventy-five percent of moneys originating
from the state, including moneys loaned to the corporation pursuant
to this section, may be used to finance any one Iowa agricultural
industry venture.
g. The corporation may only be terminated by the following
methods, unless approved by the department:
(1) Merger or share exchange under chapter 490, division XI.
(2) Dissolution as provided in chapter 490, division XIV, part A.
(3) A sale, lease, exchange, mortgage, pledge, transfer, or other
disposition, in one or more transactions of assets of the corporation
which has an aggregate market value equal to fifty percent or more of
either the aggregate market value of all of the assets of the
corporation determined on a consolidated basis, or the aggregate
market value of all the outstanding stock of the corporation.
6. The department shall provide for the default of the loan if
the qualified corporation does any of the following:
a. Violates a provision of the articles of incorporation or
an amendment to the articles of incorporation that is required by
this division which violation is not approved by the department.
b. Violates the terms of the loan agreement executed between
the department and the corporation, which violation is not approved
by the department.
c. Fails to comply with the requirements of section 15E.205.
d. Completes a transaction, if all of the following apply:
(1) The transaction involves any of the following:
(a) A merger or share exchange under chapter 490, division XI.
(b) The sale, lease, exchange, mortgage, pledge, transfer, or
other disposition, in one or more transactions of assets of the
corporation which has an aggregate market value equal to fifty
percent or more of either the aggregate market value of all of the
assets of the corporation determined on a consolidated basis, or the
aggregate market value of all the outstanding stock of the
corporation.
(2) The surviving entity of a merger or share exchange, or the
entity acquiring the assets of the corporation fails to meet the
requirements of section 15E.205.
7. In an action to enforce a judgment against a qualified
corporation, the interest of the state shall be subrogated to the
interests of holders of bonds issued by the corporation.
8. Moneys repaid or collected by the department under this
section shall be deposited into the road use tax fund created
pursuant to section 312.1. Section History: Recent Form
98 Acts, ch 1207, §9; 99 Acts, ch 66, §2; 2000 Acts, ch 1058, §6;
2001 Acts, ch 55, §20, 38; 2002 Acts, ch 1162, §29; 2003 Acts, ch
122, §1, 2; 2004 Acts, ch 1175, §324; 2006 Acts, ch 1185, §55; 2009
Acts, ch 41, §263
Referred to in §15E.202, 15E.204