Rep. Kildee introduces bill to update financing tool for small manufacturers and farmers
Bipartisan legislation designed to help small to medium manufacturers and farmers was announced Tuesday by U.S. Rep. Dan Kildee (D-Flint).
Kildee, who sits on the powerful House Ways and Means Committee, says the Modernizing Agricultural and Manufacturing Bonds Act updates the federal rules for manufacturing and agricultural bonds. Used by state and local agencies, including the Michigan Economic Development Corporation (MEDC), the bonds are exempt from federal taxes and have been used to spur economic development that supports small manufacturers and farmers.
However, Kildee said in a prepared statement that the use of these types of bonds has declined over the last decade due to outdated rules and regulations.
“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,” Kildee said. “Modernizing these bonds and cutting government red tape will grow our local economy and create more good-paying jobs in mid-Michigan. I’m proud to introduce this bill with Republican and Democratic support.”
Kildee introduced the legislation, H.R. 3787, with U.S. Reps. Darin LaHood (R-IL), Randy Feenstra (R-IA) and Dwight Evans (D-PA).
The legislation will “provide entrepreneurs and first-time farmers with the financing tools they need to grow, creating good-paying jobs, and bolstering our economy,” LaHood said.
If passed, the bill would:
- Raise the maximum manufacturing bond size to $30 million from $10 million and tie the threshold to future increases in inflation.
- Modernize the definition of a “manufacturing facility” to include high-tech manufacturing processes, including bio-technology, design and formula development.
- Eliminate restrictions that prevent bond proceeds from being used towards offices space, locker rooms and cafeterias at small manufacturing facilities.
- Increase the amount of bond proceeds that can go to first-time farmers to $1 million from $450,000 and allow new farmers to use bond proceeds to upgrade existing agricultural buildings and property and purchase farm equipment.
- Align the definition of “substantial farmland” in the federal tax code with existing law.
Tony Stamas, president and CEO of the Midland Business Alliance, said the legislation would update financing options for the state’s agricultural community.
“The legislation will bring pricing models up to current standards and approaches to farming. As operator of our community’s farmers market, we especially appreciate that this bill would alleviate challenges for first-time farmers,” he said.