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An Act To Amend the Law Regarding the Interest Rate for State Loans under the Potato Marketing Improvement Fund
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 7 MRSA §974-A, sub-§1, ¶C, as enacted by PL 1987, c. 319, §4, is amended to read:
 
C. State loans shallmust be at the interest rate established pursuant to subsection 22-A.
Sec. 2. 7 MRSA §974-A, sub-§2, as amended by PL 2013, c. 403, §7, is repealed.
Sec. 3.  7 MRSA §974-A, sub-§2-A  is enacted to read:
 
2-A.  State loan interest rate.     The interest rate for state loans is the prime rate on the date of loan closing but may not be greater than 5%. Loans current on the effective date of this subsection may be renegotiated at the borrower's request to an interest rate of the prime rate on the date of loan closing but not greater than 5%.
 
A fee for administrative costs, which must be at a rate set by rule by the board but may not exceed 1% of the loan, must be charged on a loan made for a project the total cost of which exceeds $50,000. This fee must be deposited in the fund.
Sec. 4. 10 MRSA §1023-N, first ¶, as amended by PL 2013, c. 403, §11, is further amended to read:
There is created a fund known as the Potato Marketing Improvement Fund, referred to in this section as "the fund." The fund must be deposited with and maintained by the authority to be used solely for investment in the Maine potato industry. The fund must be administered by the Maine Potato Board, established in Title 36, section 4603 and referred to in this section as "the board," and the Potato Marketing Improvement Fund Committee, established in Title 5, section 12004-H, subsection 10-A. All money received by the authority from any source for the development and implementation of improved storage, packing and marketing and programs and activities that improve the economic viability of the potato industry must be credited to the fund. Any money credited to the fund from the issuance of bonds on behalf of the State for agricultural development may be used only for the purposes of state loans as prescribed by Title 7, section 974-A to provide assistance to potato farmers for the design, construction, improvement, support and operation of storage, packing and marketing facilities; for programs and activities that improve the economic viability of the potato industry; and to pay the administrative costs of processing loan applications and servicing and administering the fund and loans and grants made therein, to the extent that the costs exceed the fee for administrative costs established by Title 7, section 974-A, subsection 22-A. At the discretion of the Commissioner of Agriculture, Conservation and Forestry, the authority shall make payments directly to the board, which shall use those payments to implement the requirements of this section. During any period that the commissioner has authorized direct payments from the authority to the board, the authority shall make written annual reports to the commissioner and the joint standing committee of the Legislature having jurisdiction over agriculture, conservation and forestry matters detailing the amounts of payments to the board and the dates payments were made and detailing the expenditure of those payments. Repayment of the loans and interest on the loans must be credited to the fund to be available for making additional state loans for the same purposes, except that any interest earned on the cash balance of the fund may be used for the grants authorized by Title 7, section 975-A. In order to provide additional amounts for loans, the commissioner, upon consultation with the board, may take such actions and enter into such agreements as may be necessary to sell or assign up to $2,000,000 in the aggregate principal amount of loans and undivided interests in a pool of loans and assign or pledge any mortgage or other security to the authority, under the terms and conditions the commissioner considers advisable upon consultation with the board. The assignment and related transactions may not result in indebtedness of the State. The proceeds of the sale or assignment must be credited to the fund and used for the purposes authorized in this section.
 
SUMMARY
This bill changes the interest rate on loans made through the Potato Marketing Improvement Fund from a fixed rate of 5% to the federal prime rate at the time of loan closing or up to a maximum of 5%.