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 CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1628
HOUSE OF REPRESENTATIVES                H.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                C.D. 1
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
 
20 read as follows:
 

 
Page 2                                                     1628
                                     H.B. NO.           S.D. 2
                                                        C.D. 1
                                                        

 
 1      "�155-     Cooperation in loans by the department.  (a)  The
 
 2 department of agriculture, for a fee, may underwrite and service
 
 3 loans for cooperating private lenders and government loan
 
 4 programs providing loan funds to qualified farmers.  All fees
 
 5 shall be deposited into the agricultural loan reserve fund.
 
 6      (b)  Loans underwritten or serviced under this section shall
 
 7 not be subject to the restrictions in section 155-3.
 
 8      (c)  Loans underwritten or serviced under this section shall
 
 9 be limited by sections 155-1 and 155-9 to 155-12.  No class "D"
 
10 and "F" loans shall be underwritten or serviced under this
 
11 section.
 
12      (d)  Loans underwritten or serviced under this section shall
 
13 bear simple interest on the unpaid principal balance charged on
 
14 the actual amount disbursed to the borrower.  The interest rate
 
15 on class "A", "B", "C", and "E" loans shall be at a rate of two
 
16 per cent above the prime rate or at a rate of eight and one-half
 
17 per cent a year, whichever is less.  For purposes of this
 
18 subsection, the prime rate shall be determined on January 1 and
 
19 July 1 of each year and shall be the prime rate charged by the
 
20 two largest banks in the State identified by the department of
 
21 commerce and consumer affairs.  If the prime rates of the two
 
22 largest banks are different, the higher prime rate of the two
 
23 shall apply.
 
24      The director of commerce and consumer affairs shall publish
 
25 a notice statewide pursuant to section 1-28.5 to specify the
 
26 prime rate.
 
Page 3                                                     1628
                                     H.B. NO.           S.D. 2
                                                        C.D. 1
                                                        

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