Louisiana Administrative Code
Title 7 - AGRICULTURE AND ANIMALS
Part III - Agricultural Finance
Chapter 1 - General Provisions
Section III-111 - Maximum Amount of Agricultural Loans for Capital Expenditures
Universal Citation: LA Admin Code III-111
Current through Register Vol. 50, No. 9, September 20, 2024
A.Section 103(b)(6) of the code restricts use of tax-exempt bonds to small issues, which thereby limits the principal amount of the corresponding loans. To determine whether a bond is eligible under the established limits, the code requires that certain sums be added to the principal amount of the bond. Therefore, the following amounts must be subtracted from the established limit to determine the maximum principal amount of bonds and corresponding loans:
1. $1,000,000 Limit. If:
a. the facilities to be financed with
proceeds of LAFA bonds are located in the same incorporated municipality or in
unincorporated areas of the same parish (i.e., the same political subdivision);
and
b. the principal
user as defined in
§101 of the property financed by a prior
bond issue was the borrower or a related person, the sum of the following may
not exceed $1,000,000 (but see also
§111. A 2):
i. the face amount of the bond to be issued;
plus
ii. the remaining principal
balance(s) of any loan(s) granted to the borrower or a related person of the
borrower with proceeds of earlier bond issues (regardless of the issuer) which
were exempt from taxation under
Section
103(b)(6) of
the code.
2.
$10,000,000 Limit. If LAFA files the proper election with IRS, the maximum
amount of LAFA bonds and corresponding loans may be increased to $10,000,000.
In such event, the same qualifying factors (i.e., location of the property to
be financed and identity of the principal user of bond proceeds) will apply,
and the sum of the following may not exceed $10,000,000:
a. the face amount of the bond to be issued;
plus
b. the remaining principal
balance(s) of any loan(s) granted to the borrower or a related person of the
borrower with proceeds of earlier bond issues (regardless of the issuer) which
were exempt from taxation under
Section
103(b)(6) of
the code; plus
c. all capital
expenditures on the property to be financed with bond proceeds which were paid
or incurred during the six-year period beginning three years before and ending
three years after the date of issuance of the bond, as follows:
i. capital expenditures which were financed
other than out of the proceeds of a tax-exempt bond; and
ii. capital expenditures which are properly
chargeable to the capital account of any person or state or local government
unit (whether or not such person is the principal user or a related person), in
which event capital expenditures are determined without regard to any rule of
the code which permits expenditures properly chargeable to capital accounts to
be treated as current expenses; plus
d. all other capital expenditures of any
principal user in the political subdivision for which the bonds were
issued.
3. The
requirements of the code, as effective on the date of issuance of the bond
and/or origination of the loan, shall determine the procedures to be followed
with respect to all loans exceeding $1,000,000 in principal amount. If the
requirements of the code are different from the requirements stated in this
rule, the requirements of the code shall supersede this rule.
AUTHORITY NOTE: Promulgated in accordance with R.S. 3:266, R.S. 3:270 and Section 103(b)(6) of the Internal Revenue Code of 1954, as amended.
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