2006 Louisiana Laws - RS 3:407 — Authority of the commission; loans and guarantees; definitions

§407.  Authority of the commission; loans and guarantees; definitions

A.  To facilitate the processing, storage, and marketing of farm products in Louisiana, the commission shall encourage and assist in the construction, purchase, or necessary improvement of any agricultural plant that processes, stores, or markets Louisiana farm products, and that in the judgment of the commission will provide necessary additional or improved facilities.

B.  As used in this Part, the terms herein defined have the meanings given to them, except where the context expressly indicates otherwise:

(1)  "Commission" means the State Market Commission.

(2)  "Farm products" means any agronomic, horticultural, silvicultural, or aquacultural crop; any seafood product, any commercially raised livestock or raw product derived therefrom, or any final derivative resulting from a combination or breakdown of raw farm products.

(3)  "Agricultural plant" means any agricultural processing facility, any agricultural storage facility, or any agricultural marketing facility.

(4)  "Agricultural processing facility" means any person, firm, corporation, partnership, or association of this state which receives raw farm products for the purpose of rendering them suitable for wholesale or retail marketing.

(5)  "Agricultural storage facility" means any person, firm, corporation, partnership, or association of this state which stores raw farm products without altering their form as received for the purpose of buying, selling, holding, drying, or shipping.

(6)  "Processing or process" means any action that will enhance any raw farm product's value or render a raw farm product suitable for further refinement or introduction at a marketing level.

(7)  "Necessary improvement" means an improvement to existing agricultural plant operations mandated by local, state, or federal law, or an improvement thereto which will, from an economically justifiable basis and in the judgment of the commission, improve the quality and/or quantity of service provided.

(8)  "Encourage and assist" means any professional or financial assistance that the commission, within its power, may render to any qualified applicant.

(9)  "Final derivative" means any farm product that is ready to be passed on to a marketing level.

(10)  "Container" means any receptacle or flexible covering or binding to be used in the handling of farm products.

(11)  "Aquaculture" means the commercial practice of producing catfish or crayfish from a defined acreage to which a recognized form of habitat control has been injected.

(12)  "Agricultural marketing facility" means any person, firm, corporation, partnership, or association in this state who markets farm products for a producer in this state or who purchases farm products from a producer in this state.

(13)  "Seafood product" means any type of seafood species caught in privately owned waters or public waters, including streams or lakes, or any final derivative resulting from a combination or breakdown of raw seafood products.

C.  Pursuant to the authority hereby vested in the commission, consistent with all other provisions of this Section and Part, and as shall be provided for by regulations of the commission promulgated in accordance with law, the commission may:

(1)  Loan to any qualified person, firm, corporation, partnership, or association of this state a sum not in excess of seventy-five percent of the value of the property offered as security pursuant to a first mortgage, or a sum not in excess of fifty percent of the value of the property offered as security pursuant to a second mortgage, solely for the purchase, construction, or necessary improvement of any agricultural plant.  Any such loan shall be made pursuant to duly promulgated regulations of the commission, which at a minimum shall require the borrower to execute a note secured by a first or second mortgage payable to the commission within such time and on such terms together with such endorsements and additional security as the commission may require.

(2)  Participate in any loan made by any bank, financial institution or federal agency to any qualified person, firm, corporation, partnership, or association of this state for the purchase, construction, or necessary improvement of any agricultural plant, which in the judgment of the commission will provide additional or improved facilities for the processing or storing of farm products.  Participation on the part of the commission shall not exceed seventy-five percent of the total amount required by the borrower for any purpose herein authorized, and participation shall be in accordance with duly promulgated regulations, which at a minimum shall require the following:

(i)  When the commission's participation is paid directly to the borrower, it shall be evidenced by a note properly executed by the borrower, payable to the commission within such time and on such terms together with such security as the commission may require, consistent with the requirements set forth in Paragraph (1) of this Subsection.

(ii)  When the commission's participation is paid directly to the bank, financial institution, or federal agency through which the loan was negotiated, it shall be evidenced by a participation certificate, properly executed by the bank, financial institution, or federal agency, payable to the commission, setting forth the terms and conditions under which the commission agrees to participate, the amount of the participation, the security pledged for repayment, and the time within which such loan shall be liquidated.

(3)  Lend up to seventy-five percent of the amount expended for the purchase, construction, or necessary improvement of facilities that manufacture containers for farm products.  Prior to exercising said authority the commission shall promulgate regulations thereon which at a minimum shall require the borrower to execute a note secured by a first mortgage if the amount loaned is in excess of fifty percent of the value of the property, and secured by a second mortgage if the amount loaned is fifty percent or less than the value of the property, payable to the commission within such time and on such terms, together with such endorsement and additional security as the commission may require.

(4)  Underwrite and guarantee payment not in excess of seventy-five percent of any loan made by any bank, financial institution, or federal agency to any qualified person, firm, corporation, partnership, or association for the purchase, construction, or necessary improvement of any agricultural plant which in the judgment of the commission will provide additional or improved facilities for the processing or storing of farm products.  The commission shall promulgate regulations thereon which at a minimum shall require that when any portion of any loan is underwritten and guaranteed by the commission, an agreement shall be executed in the form of a commitment setting forth the terms and conditions under which the commission is obligated and the extent to which repayment of the loan is guaranteed and secured.

D.  Loans guaranteed by the commission shall not exceed three million dollars in the aggregate, and on any such guarantees the commission shall impose and collect a charge equal to one percent of the amount of the commission's participation.  After compliance with Article VII, Section 9 of the Louisiana Constitution and R.S. 3:409, an amount equivalent to such charges shall be credited to the commission and placed in a special fund designated as the Marketing Loss Fund, to be used to cover losses the commission may incur.

E.  The commission may take such steps as it deems necessary or as required by this Part and the regulations applicable thereto to protect the state's interest in any property mortgaged to secure loans or guarantees made under the provisions of this Part, including paying off the mortgage or the interest of a lending agency and being subrogated to the lending agency's interest in the property mortgaged.

F.  The commission shall make no loans, nor shall it participate in, underwrite, or guarantee the repayment of any portion of any loan made for any purpose authorized in this Part which will result in the property offered as security thereunder being burdened with an outstanding indebtedness in excess of seventy-five percent of the value of such property.

G.  The commission shall make no loan nor shall it participate in, underwrite, or guarantee the repayment of any portion of any loan for any authorized purpose for a period of more than five years.  However, the commission may, from time to time, renew, extend, or agree to the renewal or extension of any loan made, underwritten, or guaranteed for such additional time as may be deemed advisable, but in no event shall renewals or extensions, in the aggregate, exceed a total of fifteen years. All balloon notes shall be renewed at the prevailing interest rate at the time of renewal.

H.  The commission shall fix the rate of interest to be charged on every loan, including participation loans.  The rate shall be fixed at not more than two percentage points above the average percentage rate paid on state general obligation bonds for bonds sold at the three preceding bond sales.  The commission shall fix the interest rate at the first quarterly meeting of each year.

I.  Loans made, underwritten, or guaranteed by the commission shall not exceed five hundred thousand dollars.

Acts 1978, No. 242, §1; Acts 1983, No. 345, §1; Acts 1985, No. 45, §1; Acts 1986, No. 576, §1.