00 SENATE BILL NO. 146                                                                                                     
01 "An Act amending the maximum interest rate on loans made under the Alaska                                               
02 Agricultural Loan Act."                                                                                                 
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1.  AS 03.10.030(a) is amended to read:                                                                    
05  (a)  The farm development, chattel, or irrigation loan made under this chapter                                        
06   (1)  may not exceed a term of 30 years, except that a chattel loan may                                               
07 not exceed a term of seven years;                                                                                       
08   (2)  may not, when added to the outstanding balance of other loans                                                   
09 made under this chapter, exceed a total outstanding balance of $1,000,000;                                              
10   (3)  shall be secured by a real estate or chattel mortgage of any priority,                                          
11 except that the portion of a loan that exceeds $500,000, when added to prior                                            
12 indebtedness that is secured by the same property, must be secured by a first mortgage;                                 
13   (4)  shall bear interest at a rate that may not be less than six [EIGHT]                                           
14 percent or more than the commercial rate, unless the commercial rate is six [EIGHT]                                   
01 percent or less; in this paragraph, "commercial rate" means the prevailing rate of                                    
02 interest at private lending institutions in the state for loans similar to those referred to                            
03 in this subsection.                                                                                                     
04    * Sec. 2.  AS 03.10.030(f) is amended to read:                                                                       
05  (f)  A farm product processing loan may not exceed $250,000.  A mortgage                                              
06 that [WHICH] secures a farm product processing loan may be of any priority if the                                     
07 total indebtedness on the real estate, including the secured farm product processing                                    
08 loan, does not exceed $250,000.  A farm product processing loan that [WHICH], if                                      
09 made, would raise the existing indebtedness on the real estate securing the loan above                                  
10 $250,000, or a farm product processing loan on real estate that [WHICH] has a prior                                   
11 indebtedness of $250,000 or more, may be made only if all prior mortgagees agree to                                     
12 subordinate their mortgages to that of the state for the amount of the farm product                                     
13 processing loan that [WHICH] exceeds the $250,000 indebtedness limit on the real                                      
14 estate.  A farm product processing loan may not exceed a term of 30 years or bear                                       
15 interest that is less than six [EIGHT] percent a year and shall be secured by a real                                  
16 estate or chattel mortgage or both.                                                                                     
17    * Sec. 3.  AS 03.10.030(g) is amended to read:                                                                       
18  (g)  A loan for clearing land may not                                                                                 
19   (1)  exceed $250,000;                                                                                                
20   (2)  bear interest that is less than six [EIGHT] percent;                                                          
21   (3)  have a term in excess of 20 years; or                                                                           
22   (4)  be made for clearing land other than land that has been classified                                              
23 by the United States Department of Agriculture, Soil Conservation Service under the                                     
24 Land Capability Classification System as having agricultural potential for the                                          
25 production of annual crops, hay, or for pasture.                                                                        
26    * Sec. 4.  APPLICABILITY.  The amendments made by this Act to the interest rates on                                  
27 loans made under the Alaska Agricultural Loan Act apply to loans made under AS 03.10 on                                 
28 and after the effective date of this Act.