LaHood, Feenstra propose bill to update manufacturing, agricultural bonds

The federal rules for manufacturing and agricultural bonds would be updated under a bipartisan bill introduced on June 1 by U.S. Reps. Darin LaHood (R-IL) and Randy Feenstra (R-IA).

“I am proud to join this bipartisan effort and I will continue to work in Congress to ensure farmers and manufacturers have the necessary tools to be successful in our 21st-century economy,” said Rep. LaHood.

“I will continue to support policies that grow our manufacturing capabilities, generate robust economic activity, and help our beginning farmers thrive,” Rep. Feenstra added.

Over the last decade, outdated rules and regulations have forced a decline in the use of these bonds, which are exempt from federal tax and are used by state and local agencies to support small manufacturers and farmers and to spur economic development.

Specifically, the Modernizing Manufacturing and Agricultural Bonds Act, H.R. 3787, which Rep. LaHood sponsored with three original cosponsors, including Rep. Feenstra and U.S. Rep. Dan Kildee (D-MI), would amend the Internal Revenue Code of 1986 to modify certain rules applicable to qualified small issue manufacturing bonds and to expand certain exceptions to the private activity bond rules for first-time farmers, according to the congressional record bill summary.

“When farmers and manufacturers succeed, our communities thrive in central and northwestern Illinois,” Rep. LaHood said. “The Modernizing Agricultural and Manufacturing Bonds Act will provide entrepreneurs and first-time farmers with the financing tools they need to grow, creating good-paying jobs, and bolstering our economy.”

If enacted, H.R. 3787 would raise the maximum manufacturing bond size from $10 million to $30 million; update the definition of a “manufacturing facility” to include high-tech manufacturing processes, including bio-technology, design and formula development; and eliminate restrictions that prevent bond proceeds from being used for office space, locker rooms, and cafeterias at small manufacturing facilities, according to a summary provided by the lawmakers.

Additionally, H.R. 3787 would increase the amount of bond proceeds that can go to first-time farmers from $450,000 to $1 million and allow new farmers to use bond proceeds to upgrade existing agricultural buildings and property and purchase farm equipment, the summary says.

“Industrial Development Bonds and First-Time Farmer Bonds are vital to economic development, manufacturing, and our farm economy in rural Iowa,” said Rep. Feenstra. “However, outdated rules and regulations have hindered our domestic manufacturers and family farmers from utilizing these bonds.

The Council of Development Finance Agencies supports the bill, which has been referred for consideration to the U.S. House Ways and Means Committee.

“Manufacturing and agricultural bonds can be powerful economic development tools to support farmers and small manufacturing businesses, but the bond programs need to better work for small businesses and farmers,” said Rep. Kildee. “Modernizing these bonds and cutting government red tape will grow our local economy and create more good-paying jobs in mid-Michigan.”