U.S. Reps. Darin LaHood (R-IL) and Randy Feenstra (R-IA) on June 2 unveiled a bipartisan bill to reform outdated federal rules that they say have made it difficult for small manufacturers and farmers to access financing.
Rep. LaHood sponsored the Modernizing Agricultural and Manufacturing Bonds Act, H.R. 9100, alongside three original cosponsors, including Rep. Feenstra and U.S. Rep. Dwight Evans (D-PA), to update the federal rules for manufacturing and agricultural bonds, which are exempt from federal tax and are important tools used by state and local agencies to support small manufacturers and farmers and spur economic development.
“The Modernizing Agricultural and Manufacturing Bonds Act will provide entrepreneurs and first-time farmers with the financing tools they need to expand their operations, create good-paying jobs, and strengthen our local economies,” Rep. LaHood said. “I am proud to lead this bipartisan effort to ensure farmers and manufacturers have the resources they need to be successful and support our region.”
If enacted, H.R. 9100 would raise the maximum manufacturing bond size from $10 million to $30 million to account for inflation and economic changes. Additionally, the bill ties future bond size increases to inflation.
H.R. 9100 also would modernize the definition of a “manufacturing facility” to include high-tech manufacturing processes, including bio-technology, design and formula development, according to a bill summary provided by the lawmakers.
Among other provisions, the bill would eliminate restrictions that prevent bond proceeds from being used toward offices space, locker rooms, and cafeterias at small manufacturing facilities, and increase the amount of bond proceeds that can go to first-time farmers from $450,000 to $1 million.
At the same time, new farmers would be permitted to use bond proceeds to upgrade existing agricultural buildings and property and purchase farm equipment, the summary says.
“The Industrial Development Bonds (DBS) and First Time Farmer (Aggie Bonds) are a key component to economic growth, manufacturing, supporting the next generation of farmers, and our farm economy here in rural Iowa,” said Rep. Feenstra. “However, outdated rules and regulations created unnecessary barriers for our domestic manufacturers and generational family farmers from utilizing these bonds.”
The congressman added that he remains “committed to supporting policies that have not only worked, but continue to grow our manufacturing capabilities, generate robust economic activity, and help our beginning farmers thrive.”
The Council of Development Finance Agencies endorsed H.R. 9100, which has been referred for consideration to the U.S. House Ways and Means Committee.