Iowa Admin. Code r. 265-44.4 - Beginning farmer loan program
(1)
Individual agricultural
development bond program description. This program is intended to
allow BFLP beginning farmers to obtain lower interest rate loans for qualified
purposes by obtaining loan funds from the proceeds of a tax-exempt bond issued
by the authority and purchased by the bond purchaser . The authority will enter
into a loan agreement with the BFLP beginning farmer and assign that BFLP loan
to the bond purchaser . At the same time, the authority will issue a tax-exempt
bond in the amount of the BFLP loan, and the bond purchaser will purchase that
bond, which is used to fund the BFLP loan assigned to the bond purchaser . The
bond which is issued by the authority and purchased by the bond purchaser is a
nonrecourse obligation. The only security for the bond purchaser is the
underlying security on the assigned BFLP loan.
(2)
Application procedures.
The BFLP beginning farmer may apply for a BFLP loan with any bond purchaser .
Any BFLP loan approved will be assigned to that bond purchaser . BFLP loan
eligibility is determined by the requirements of the Act and the rules of the
authority .
a. If a BFLP beginning farmer meets
the BFLP loan eligibility requirements, the decision on whether to enter into
the loan agreement is between the BFLP beginning farmer and the bond purchaser .
The BFLP beginning farmer and bond purchaser must agree on the terms of the
loan, such as interest rates, length of loan, down payment, service fees,
origination charges and repayment schedule. The terms may not be more onerous
than terms charged to similar customers for similar loans, taking into account
the tax-exempt nature of interest on the BFLP loan.
b. Following completion of the BFLP loan
application by the BFLP beginning farmer and approval by the bond purchaser ,
the BFLP loan application must be submitted to the authority for its review and
approval.
c. The authority 's review
will include, but not be limited to, whether:
(1) The BFLP loan applicant is a BFLP
beginning farmer ;
(2) The BFLP loan
proceeds will be used for a qualified purpose under the Act , rules of the
authority , and the Internal Revenue Code and IRS regulations relating to
private activity bonds;
(3) The
terms of the BFLP loan comply with these rules; and
(4) The bond purchaser meets the definition
of a lender or bond purchaser .
d. The authority may require that the bond
purchaser furnish any information which the authority deems necessary to
determine whether the bond purchaser qualifies as either a lender or bond
purchaser . If the authority determines that the bond purchaser does not qualify
as either a lender or bond purchaser , it may deny the application .
e. The authority may charge fees as needed to
defray its costs for processing the BFLP loan and bond.
(3)
Issuance of bond. All
bonds issued by the authority will conform to all applicable requirements of
the United States Internal Revenue Code of 1986 as amended, and its
regulations.
a. Public hearings may be held by
a staff member, board member of the IADD , an appointee or employee of the
authority , or other qualified hearing officer.
b. Following approval of the BFLP loan by the
authority , and upon completion of a public hearing and approval of the bond
issuance by the governor or another elected state official designated by the
governor, the authority will issue a bond, to be purchased by the bond
purchaser , in the amount and fitting the terms of the BFLP loan to the BFLP
beginning farmer . The principal and interest on the bond are a limited
obligation payable solely out of the revenues derived from the BFLP loan to the
BFLP beginning farmer and the underlying collateral or other security furnished
by or on behalf of the BFLP beginning farmer . The bond purchaser shall have no
other recourse against the authority . The principal and interest on the bond do
not constitute an indebtedness of the authority or a charge against its general
credit or general fund.
(4)
Priority of
applications. Applications shall be processed by the authority on a
first-come, first-served basis, based upon the receipt of all completed
documents by the authority .
(5)
Procedures following bond issuance. No bond proceeds may be
used for a nonqualified purpose or by a nonqualified user. Following
disbursement of the bond proceeds, the bond purchaser and BFLP beginning farmer
may be required to certify to the authority that the proceeds were used by the
BFLP beginning farmer for a qualified purpose.
(6)Assignment of BFLP loans by bond purchasers. A
bond purchaser may assign a BFLP loan in whole or in part to any person, as
defined in Iowa Code section
4.1(20).
Servicing of the BFLP loan may also be assigned. The authority must be notified
in writing prior to assignment of the BFLP loan.
(7)
Assumption of BFLP loans,
substitution of collateral and transfer of property. BFLP loans may
not be assumed without the prior approval of the authority , and then only if
the purchaser of the property is a BFLP beginning farmer for a BFLP loan.
Equipment and other depreciable property may be exchanged or traded for similar
property, and other property such as breeding livestock may be added or
substituted as collateral at the discretion of the bond purchaser without the
prior approval of the authority .
(8)
Right to audit. The authority shall have at any time the right
to audit the records of the bond purchaser and the BFLP beginning farmer
relating to the BFLP loan and bond to ensure that bond proceeds were used for a
qualified purpose by a qualified user.
Notes
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