"Farmland Purchase and Preservation Loan Program Procedures and Guidelines" - Delaware

This Delaware-specific "Farmland Purchase and Preservation Loan Program Procedures and Guidelines" is a document released by the Delaware Department of Agriculture.

Download the fillable PDF by clicking the link below and use it according to the applicable legal guidelines.

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Download "Farmland Purchase and Preservation Loan Program Procedures and Guidelines" - Delaware

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2320 South duPont Highway
Tel: 302-698-4530
Dover, Delaware 19901
Toll Free: 800-282-8685 (DE only)
Fax: 302-677-7093
Dear Potential Young Farmer:
The Delaware Department of Agriculture and the Delaware Agricultural Lands Preservation Foundation
are pleased that you have an interest in the Young Farmers’ Loan Program. As you previously requested,
enclosed is information concerning this Program. Included in this packet are:
1. Copy of Senate Bill No. 117, which establishes the Young Farmers program.
2. Copy of the Young Farmers Farmland Purchase and Preservation Loan Program Procedures and
Guidelines.
3. Prequalification Application (Form A).
4. Loan Application (Form B).
5. Sample Young Farmers Agricultural Lands Preservation Easement (Form C).
Also enclosed is a two-page summary of programs that are available from the USDA Farm Services
Agency (FSA) and Rural Development Program that may offer additional funding for young farmers. We
encourage you to contact these agencies to learn more about their programs.
Please note that you may submit a Prequalification Application (Form A) at any time; however, you only
submit the Loan Application (Form B) once you have a property ready for acquisition (with a fully
executed Agreement of Sale or Option Agreement) and an eligibility/commitment letter from your lender
if you will use a loan to finance the remainder of the purchase. Additionally, the Foundation Board
establishes times when they will accept Loan Applications based on available funding. The current
application period (Round 8) for Young Farmer loan applications is August 1 through December
31, 2018.
The Agricultural Lands Preservation Easement (Form C) provided is a sample of the easement agreement
that you would sign upon the purchase of the farm and the receipt of the loan from this program. This is a
sample only and you do not need to complete it at this time.
If you have any questions concerning the above, please do not hesitate to contact our office. We are here
to answer your questions.
Sincerely,
E. Austin Short
Deputy Secretary of Agriculture
Enclosures
.
2320 South duPont Highway
Tel: 302-698-4530
Dover, Delaware 19901
Toll Free: 800-282-8685 (DE only)
Fax: 302-677-7093
Dear Potential Young Farmer:
The Delaware Department of Agriculture and the Delaware Agricultural Lands Preservation Foundation
are pleased that you have an interest in the Young Farmers’ Loan Program. As you previously requested,
enclosed is information concerning this Program. Included in this packet are:
1. Copy of Senate Bill No. 117, which establishes the Young Farmers program.
2. Copy of the Young Farmers Farmland Purchase and Preservation Loan Program Procedures and
Guidelines.
3. Prequalification Application (Form A).
4. Loan Application (Form B).
5. Sample Young Farmers Agricultural Lands Preservation Easement (Form C).
Also enclosed is a two-page summary of programs that are available from the USDA Farm Services
Agency (FSA) and Rural Development Program that may offer additional funding for young farmers. We
encourage you to contact these agencies to learn more about their programs.
Please note that you may submit a Prequalification Application (Form A) at any time; however, you only
submit the Loan Application (Form B) once you have a property ready for acquisition (with a fully
executed Agreement of Sale or Option Agreement) and an eligibility/commitment letter from your lender
if you will use a loan to finance the remainder of the purchase. Additionally, the Foundation Board
establishes times when they will accept Loan Applications based on available funding. The current
application period (Round 8) for Young Farmer loan applications is August 1 through December
31, 2018.
The Agricultural Lands Preservation Easement (Form C) provided is a sample of the easement agreement
that you would sign upon the purchase of the farm and the receipt of the loan from this program. This is a
sample only and you do not need to complete it at this time.
If you have any questions concerning the above, please do not hesitate to contact our office. We are here
to answer your questions.
Sincerely,
E. Austin Short
Deputy Secretary of Agriculture
Enclosures
.
FARMLAND PURCHASE AND PRESERVATION LOAN
PROGRAM
PROCEDURES AND GUIDELINES
The following Procedures and Guidelines are designed for use in connection with the administration of the
Farmland Purchase and Preservation Loan Program (herein the “Program”).
To the extent that any of the following Procedures and Guidelines are inconsistent with the statutory provisions
of the Program (3 Del. Code Sections 942 through and including 948), the statute shall control.
1. Eligibility Criteria. In order to receive loan monies from the Foundation under the Program, the
successful applicant must meet all of the following eligibility criteria:
a. Applicant must be at least 18 years of age and no older than 40 years of age at the time the Loan
Application is submitted to the Foundation.
b. Applicant must be a resident of the State of Delaware and have at least three (3) years of farming
experience.
c. Applicant must have a net worth of no more than $300,000.
d. The farmland to be purchased must be located in Delaware and contain at least 15 tillable acres, and
the Applicant must not own (or have an ownership interest in) more than twice the tillable acres
subject to purchase with Program funds.
e. The farmland being purchased may be comprised of tillable acres, forestlands, or wetlands, provided
the tillable acres comprise at least 15 acres, but must be zoned for agricultural usage.
f. The farmland being purchased must not be subject to an existing Preservation Easement,
conservation easement, or similar limitation which restricts residential or commercial development.
g. Applicant must commit that he/she will remain actively engaged in agricultural usage of the
farmland during the term of the Program loan.
h. At the time a Loan Application is submitted, the Applicant must have a fully executed Agreement of
Sale or Option to Purchase the eligible property. It is not necessary to have an Agreement of Sale or
Option to Purchase in order for an Applicant to submit a Prequalification Application.
2. Prequalification. Any individual may seek a predetermination from the Foundation Staff that he/she
meets the eligibility requirements of the Program by submitting a signed Prequalification Application in
the form attached hereto as FORM A. Upon receipt of a properly executed FORM A, the Foundation
Staff shall review the information set forth therein, and promptly advise the Applicant, in writing,
whether or not the Applicant satisfies the minimum eligibility requirements of the Program. Any such
determination shall be based solely upon the accuracy of the information contained in FORM A, and
shall not constitute a guarantee that the Applicant will be awarded any loan under the Program.
3. Loan Application Process and Timeline. Any individual seeking a loan under the Program must first
submit a signed Loan Application in the form attached hereto as FORM B. The Loan Application must
be accompanied by a fully executed Agreement of Sale or Option to Purchase the eligible property.
Loan Applications shall be reviewed and processed as follows:
a. Loan Applications received before December 31, 2011 shall be processed during the period January
1, 2012 through March 31, 2012, with the goal of issuing approval letters in the form of a loan
commitment issued by the Foundation on or before March 31, 2012.
b. For Loan Applications submitted after December 31, 2011, the Loan Application shall be processed
during the calendar quarter following the date of receipt of the Loan Application by the Foundation,
and the Foundation shall endeavor to issue loan commitments to successful applicants before the
expiration of the calendar quarter following the date of receipt of the Loan Application.
c. Any approvals shall be subject to the availability of funding.
d. The Foundation shall schedule settlements on approved loans simultaneously with the purchase of
the designated farmland and coinciding with the closing on any private loans utilized by the
successful applicant for the purchase of the farmland. Settlements shall occur within six (6) months
of approval of the Foundation loan, unless extended by the Foundation.
4. Appraisal Process. Upon receipt of a properly executed Loan Application, the Foundation’s Staff shall
review the Loan Application to determine if the Loan Application is complete and the Applicant meets
the eligibility requirements of the Program. For each properly completed Loan Application by applicants
meeting the eligibility requirements of the Program, the Foundation shall obtain, at its expense, an
appraisal of the eligible farmland property for purposes of determining the fair market value of the
proposed Preservation Easement. The appraisal methodology shall be consistent with the methodology
used by the Foundation in the purchase of preservation easements pursuant to 3 Del. Code Section 913.
For each Loan Application, the Staff shall determine the loan to value ratio for the amount of the loan
requested, by dividing the amount of the loan by the appraised value of the Preservation Easement.
5. Selection Process. The approval of any loan under the Program is subject to the discretion of the
Foundation. If more than one Loan Application is under review, the Board shall endeavor to give
priority to the Loan Application that has the lowest loan to value ratio. If there are competing
applications with equal Loan to Value ratios and all of the competing applications cannot be funded, the
Foundation shall use the highest LESA score for the Preservation Easement area as the basis for making
the selection. The Foundation’s selection for applications under review for each quarter shall be made at
the regularly scheduled Board meeting of the Foundation held during the last month of the calendar
quarter following the date of receipt of the Loan Application. The Foundation is under no obligation to
provide a loan to any applicant. Any loan application approved by the Foundation is nevertheless subject
to veto by the Delaware Secretary of Agriculture pursuant to 3 Del. Code Section 949. If the Secretary
fails to exercise his or her veto power at the meeting at which the loan is approved, the Secretary’s veto
power shall be deemed waived.
6. Loan Terms and Conditions. Any Loan approved by the Foundation must comply with the following
conditions:
a. The maximum amount of loans provided to any individual recipient (including any prior loans
approved and consummated under the Program) shall not exceed $500,000. Loan proceeds may only
be used for the purchase of qualified farmland and farmland improvements, and shall not be used, or
secured by a lien on, the purchase of residential dwellings.
b. At the loan closing, the successful applicant shall execute a Preservation Easement in the form
attached hereto as FORM C.
c. The Loan amount shall not exceed seventy (70%) of the appraised value of the Preservation
Easement to be placed on the farmland to be purchased.
d. The Preservation Easement shall not be subordinated to any liens or encumbrances.
e. The successful Applicant shall execute a Promissory Note (the “Note”) which shall be secured by a
Mortgage on the purchased farmland. The Note and Mortgage shall:
(i)
Be subordinated to any other loans provided to the successful Applicant by a third party for
use in the purchase of the farmland;
(ii)
Not be subordinated to the Preservation Easement;
(iii)
Be without interest with a payback period not to exceed thirty (30) years, with the first
payment due within thirty (30) days after any other Mortgage on the farmland has been paid
and satisfied.
(iv)
Provide that upon the sale or transfer of the farmland, the entire amount due under the Note
and Mortgage shall be paid in full, unless the Foundation, in its sole discretion, consents to
the assumption of the Note and Mortgage by a purchaser of the farmland who satisfies the
loan eligibility requirements of the Program in effect at the time of the transfer.
f. The farmland to be purchased, including any residential area, shall be surveyed at the expense of the
Foundation. The survey shall identify the farmland and the residential areas located within the
property to be purchased, and shall be used to determine the value of the Preservation Easement.
g. The Applicant shall be responsible for payment of all closing costs associated with any commercial
or private financing required to complete the purchase.
h. At the time of submission of a Loan Application, the Applicant shall identify the source of any
commercial or private financing needed to complete the purchase, and provide the Foundation with
documentation from such source confirming that the Applicant is eligible to seek such financing.
i. The Applicant must take title to the farmland in Applicant’s individual name.
Potential USDA Programs for Young Farmers
(PLEASE NOTE: These are federal programs and are not related to Delaware’s Young Farmers
Program – please contact these agencies for more information)
Farm Service Agency Loan Programs for Beginning Farmers & Ranchers
The Farm Service Agency (FSA) provides direct and guaranteed loans to beginning farmers and ranchers who
are unable to obtain financing from commercial credit sources. Each fiscal year, the Agency targets a portion of
its direct and guaranteed farm ownership (FO) and operating loan (OL) funds to beginning farmers and
ranchers.
A beginning farmer or rancher is an individual or entity who (1) has not operated a farm or ranch for more than
10 years; (2) meets the loan eligibility requirements of the program to which he/she is applying; (3)
substantially participates in the operation; and, (4) for FO loan purposes, does not own a farm greater than 30
percent of the median size farm in the county. (Note: all applicants for direct FO loans must have participated in
business operation of a farm for at least 3 years.) If the applicant is an entity, all members must be related by
blood or marriage, and all stockholders in a corporation must be eligible beginning farmers.
Beginning farmers may choose to participate in a joint financing arrangement. With this arrangement, FSA
lends up to 50 percent of the amount financed, and another lender provides 50 percent or more. The interest
rates can be obtained from your local FSA office and the term of the loan will not exceed 40 years or the useful
life of the security
Where to Apply
Applications for FSA direct loan assistance in Delaware may be submitted to the FSA Farm Loan team based in
the USDA Service Center at 21315 Berlin Rd, Georgetown, De. For guaranteed loans, applicants must apply to
a commercial lender who participates in the Guaranteed Loan Program. Contact the FSA office for a list of
participating lenders.
For More Information
In Delaware for further information, or to make an appointment to learn more about FSA Farm Loan Programs
call 302-856-3990 extension 2. Additional information is also available on the FSA website at:
www.fsa.usda.gov.
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