SB 2309: DAB; Agricultural Loan Division; Loan Portfolio; Agricultural Loan Revolving Fund; Expenditure Ceiling; Increase; Appropriation

A BILL FOR AN ACT

RELATING TO AGRICULTURAL LOANS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that the department of agriculture and biosecurity's agricultural loan division has experienced significant demand following the enactment of Act 69, Session Laws of Hawaii 2025 (Act 69), which, among other things, expanded access to farm loans at favorable interest rates.  Within two months of Act 69's implementation, the agricultural loan division approved ten loans totaling nearly $5,000,000 and received an additional $10,000,000 in loan application requests that were not funded due to the existing $5,000,000 annual ceiling on the agricultural loan revolving fund.  Thus, applications have been placed on hold further limiting the department's ability to meet the financing needs of Hawaii farmers and agricultural enterprises.

     The legislature further finds that authorizing the agricultural loan division to sell portions of its loan portfolio, valued at approximately $11,000,000, to permitted third parties would generate additional capital that may be reinvested into the agricultural loan revolving fund.  Increasing the revolving fund ceiling would also expand lending capacity and support the continued implementation of Act 69, strengthening the State's economy and advancing food security and self-sufficiency goals.

     The purpose of this Act is to:

     (1)  Authorize the agricultural loan division to sell portions of its loan portfolio to permitted third parties, with proceeds to be deposited into the agricultural loan revolving fund; and

     (2)  Appropriate funds out of the agricultural loan revolving fund to increase its expenditure ceiling and thereby expand access to agricultural loan financing and support local food production.

     SECTION 2.  The agricultural loan division of the department of agriculture and biosecurity may sell portions of its loan portfolio having an appraised value of approximately $11,000,000 to permitted third parties; provided that the proceeds from the sale shall be reinvested in the agricultural loan revolving fund and made available for loan funding.

     SECTION 3.  There is appropriated out of the agricultural loan revolving fund the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 to increase the expenditure ceiling of the agricultural loan revolving fund and thereby expand access to agricultural loan financing and support local food production pursuant to part I of chapter 155, Hawaii Revised Statutes.

     The sum appropriated shall be expended by the department of agriculture and biosecurity for the purposes of this Act.

     SECTION 4.  This Act shall take effect on July 1, 2050.

Report Title:

DAB; Agricultural Loan Division; Loan Portfolio; Agricultural Loan Revolving Fund; Expenditure Ceiling; Increase; Appropriation

Description:

Authorizes the Agricultural Loan Division of the Department of Agriculture and Biosecurity to sell portions of its loan portfolio to permitted third parties, with proceeds to be deposited into the Agricultural Loan Revolving Fund.  Appropriates funds out of the Agricultural Loan Revolving Fund to increase its expenditure ceiling and thereby expand access to agricultural loan financing and support local food production.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to agricultural loans.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that the department of agriculture and biosecurity's agricultural loan division has experienced significant demand following the enactment of Act 69, Session Laws of Hawaii 2025 (Act 69), which, among other things, expanded access to farm loans at favorable interest rates.  Within two months of Act 69's implementation, the agricultural loan division approved ten loans totaling nearly $5,000,000 and received an additional $10,000,000 in loan application requests that were not funded due to the existing $5,000,000 annual ceiling on the agricultural loan revolving fund.  Thus, applications have been placed on hold further limiting the department's ability to meet the financing needs of Hawaii farmers and agricultural enterprises.

     The legislature further finds that authorizing the agricultural loan division to sell portions of its loan portfolio, valued at approximately $11,000,000, to permitted third parties would generate additional capital that may be reinvested into the agricultural loan revolving fund.  Increasing the revolving fund ceiling would also expand lending capacity and support the continued implementation of Act 69, strengthening the State's economy and advancing food security and self-sufficiency goals.

     The purpose of this Act is to:

     (1)  Require the agricultural loan division to sell portions of its loan portfolio to permitted third parties, with proceeds to be deposited into the agricultural loan revolving fund; and

     (2)  Appropriate funds out of the agricultural loan revolving fund to increase its expenditure ceiling and thereby expand access to agricultural loan financing and support local food production.

     SECTION 2.  The agricultural loan division of the department of agriculture and biosecurity shall sell portions of its loan portfolio having an appraised value of approximately $11,000,000 to permitted third parties; provided that the proceeds from the sale shall be reinvested in the agricultural loan revolving fund and made available for loan funding.

     SECTION 3.  There is appropriated out of the agricultural loan revolving fund the sum of $10,000,000 or so much thereof as may be necessary for fiscal year 2026-2027 to increase the expenditure ceiling of the revolving fund and thereby expand access to agricultural loan financing and support local food production pursuant to part I of chapter 155, Hawaii Revised Statutes.

     The sum appropriated shall be expended by the department of agriculture and biosecurity for the purposes of this Act.

     SECTION 4.  This Act shall take effect on July 1, 2026.

Report Title:

Agricultural Loan Division; DAB; Agricultural Loan Revolving Fund; Loan Portfolio; Increase Ceiling; Appropriation

Description:

Requires the Agricultural Loan Division to sell portions of its loan portfolio to permitted third parties, with proceeds to be deposited into the agricultural loan revolving fund.  Appropriates funds out of the Agricultural Loan Revolving Fund to increase its expenditure ceiling and thereby expand access to agricultural loan financing and support local food production.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 2184

Honolulu, Hawaii

RE:     S.B. No. 2309

        S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

     Your Committee on Agriculture and Environment, to which was referred S.B. No. 2309 entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURAL LOANS,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Require the Agricultural Loan Division of the Department of Agriculture and Biosecurity to sell portions of its loan portfolio to permitted third parties, with proceeds to be deposited into the Agricultural Loan Revolving Fund; and

     (2)  Appropriate funds out of the Agricultural Loan Revolving Fund to increase its expenditure ceiling and thereby expand access to agricultural loan financing and support local food production.

     Your Committee received testimony in support of this measure from the Department of Agriculture and Biosecurity, Department of Research and Development of the County of Hawaiʻi, Hawaiʻi Farm Bureau, Agriculture Stewardship Hawaiʻi, Ulupono Initiative, Hawaii Floriculture and Nursery Association, and two individuals.

     Your Committee finds that there is an urgent need to expand financing options for agricultural producers in the State.  While approving nearly $5,000,000 in loans in 2025, the Agricultural Loan Division of the Department of Agriculture and Biosecurity has exceeded its available funds because of the Agricultural Loan Revolving Fund's annual expenditure ceiling.  Your Committee believes it is critical for the Agricultural Loan Division to have reliable access to capital due to recent increased demand for agricultural loans.  This measure will help farmers and ranchers invest in land preparation, equipment, and infrastructure necessary for their long-term productivity by granting the Agricultural Loan Division flexibility regarding its loan portfolio and appropriating further funds out of the Agricultural Loan Revolving Fund.

     Your Committee acknowledges the concerns raised in testimony by the Department of Agriculture and Biosecurity and Department of Research and Development of the County of Hawaii regarding the requirement for the Agricultural Loan Division to sell a specified amount of its loan portfolio, as this could result in inequitable terms for the State and limits its negotiating power with potential buyers.  Therefore, amendments to this measure are necessary to provide greater flexibility for the Division to meet the needs of the State's farmers.

     Accordingly, your Committee has amended this measure by:

     (1)  Clarifying that the Agricultural Loan Division of the Department of Agriculture and Biosecurity is authorized, but not required, to sell portions of its loan portfolio;

     (2)  Inserting a blank appropriation amount;

     (3)  Amending section 1 to reflect its amended purpose;

     (4)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     Your Committee notes that this measure, as amended, contains an unspecified appropriation amount.  Should your Committee on Ways and Means choose to deliberate on this measure, your Committee respectfully requests that it consider inserting an appropriation amount of $10,000,000 to increase the expenditure ceiling of the Agricultural Loan Revolving Fund.

     As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2309, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2309, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,