Provides a tax incentive to domestic life insurance companies to invest up to 1% of admitted assets in the purchase of agricultural land to be kept in agricultural production for the cultivation of fruit or vegetables, or the processing of fruit products or vegetable products, which land is subject to a conservation easement and receives or is eligible to receive an agricultural assessment; enacts related provision relating to conservation easements.

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S4296-2011 Actions

• Jan 4, 2012: REFERRED TO AGRICULTURE
• Mar 28, 2011: REFERRED TO AGRICULTURE

S4296-2011 Memo

BILL NUMBER:S4296

TITLE OF BILL:

An act
to amend the agriculture and markets law, the county law, the insurance
law and the tax law, in relation to providing an incentive to domestic
life insurance companies to invest in the purchase of agricultural land
to be kept in agricultural production

PURPOSE:

This bill grants to domestic life insurers that lend money to fruit
and vegetable growers who plan to keep acreage in production a 30 %
deduction from their income taxes that portion of the interest that
is earned from the loan issued by such life insurer.

SUMMARY OF PROVISIONS:

Section 1: Amends Agriculture & Markets Law section 16 to authorize
the Ag. & Markets Department to promulgate rules to define existing
or abandoned fruit and vegetable farms that are eligible for the
income tax deduction.

Section 2: Adds a new County Law section 220-b to ensure that lands
that receive an income tax deduction when sold to another farmer
remain in farming by requiring that such lands abide by a
conservation easement.

Section 3: Amends Insurance Law section 1405 (a) (4) to allow
domestic insurers to invest up to one percent of its admitted assets
in obligations used to lend money to fruit growers that purchase land
to grow fruit or fruit products.

Section 4: Adds Tax Law section 1503 (b) (17) that excludes from a
domestic life insurer's net income 30 percent of the interest
received by such insurer that was lent to purchase farm lands as
provided in section 3 of the bill. Qualifying real property must be
no more 50 acres in size (if the parcel is larger than 50 acres, then
a partial exemption shall be granted), it must either be in
agricultural production or planted with fruit that will come into
production, and such land must be subject to a conservation easement.

EXISTING LAW:

This open space investment incentive program does not exist in
New York Law.

JUSTIFICATION:

In the past, in addition to inter-family transfers of land to
succeeding farming generations, commercial bank loans were one of the
primary financing mechanisms used to purchase farm land. Commercial
banks and other lending institutions have generally left the business
of lending money to continue farm operations. This bill encourages
domestic life insurers to in effect become the "bank" by lending or
investing in farms that are cultivated by, presumably, younger
generations of farmers. This bill subsidizes the investment in farm
land by giving the investor a 30 percent income tax exemption for a
portion of the interest received by the domestic life insurer.
This bill creates a new financing mechanism to keep land in agriculture.
Once the income tax exemption has been granted, the land will remain
in agriculture because conservation easements will need to be
executed. In return, local economies will be able to sustain their
agricultural economies because such farm lands will remain in
farming. Such lands that enter such program will be protected by
conservation easements.

LEGISLATIVE HISTORY:

S.6693 of 2005/2006, S.571 of 2007/2008

FISCAL IMPLICATIONS:

To be determined.

LOCAL FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediate, with provisions.

S4296-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    4296

                         2011-2012 Regular Sessions

                              I N  SENATE

                               March 28, 2011
                                 ___________

  Introduced  by Sen. CARLUCCI -- read twice and ordered printed, and when
    printed to be committed to the Committee on Agriculture

  AN ACT to amend the agriculture and markets law,  the  county  law,  the
    insurance  law  and the tax law, in relation to providing an incentive
    to domestic life insurance companies to  invest  in  the  purchase  of
    agricultural land to be kept in agricultural production

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1. Section 16 of the agriculture and markets law is amended by
  adding a new subdivision 45 to read as follows:

    45. IN CONSULTATION WITH THE COMMISSIONER OF TAXATION AND FINANCE, FOR
  THE PURPOSES OF THE ADMINISTRATION OF PARAGRAPH SEVENTEEN OF SUBDIVISION
  (B) OF SECTION FIFTEEN HUNDRED THREE OF THE TAX  LAW,  THE  COMMISSIONER
  SHALL  PROMULGATE REGULATIONS DEFINING "FRUIT", "FRUIT PRODUCTS", "VEGE-
  TABLES" AND "VEGETABLE PRODUCTS".
    S 2. The county law is amended by adding a new section 220-b  to  read
  as follows:

    S  220-B.  CONSERVATION EASEMENTS IN CONNECTION WITH CERTAIN LAND USED
  IN THE AGRICULTURAL PRODUCTION OF FRUIT, FRUIT PRODUCTS, VEGETABLES  AND
  VEGETABLE  PRODUCTS.   1.  NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION
  (B) OF SECTION TWO OF THIS CHAPTER, THE BOARD OF SUPERVISORS  OR  COUNTY
  LEGISLATURE  OF  EVERY COUNTY SHALL, UPON APPLICATION FOR A CONSERVATION
  EASEMENT FILED WITH SUCH COUNTY, FOR PROPERTY WITHIN  SUCH  COUNTY,  NOT
  MORE  THAN SIX MONTHS PRIOR TO THE CLOSE OF THE TAXABLE YEAR OR THE YEAR
  NEXT SUCCEEDING SUCH YEAR, FOR WHICH A DEDUCTION IS OR WILL BE SOUGHT TO
  BE CLAIMED BY A TAXPAYER PURSUANT TO PARAGRAPH SEVENTEEN OF  SUBDIVISION
  (B)  OF SECTION FIFTEEN HUNDRED THREE OF THE TAX LAW, ACCEPT SUCH APPLI-
  CATION AND OFFER TO PERMIT A NOT-FOR-PROFIT CONSERVATION ORGANIZATION OR
  PUBLIC BODY WITHIN SUCH COUNTY, WITHIN WHOSE TERRITORY THE SUBJECT PROP-
  ERTY IS LOCATED, OTHER THAN THE STATE, TO ACCEPT OR UNDERTAKE TO  ACCEPT
  A  CONSERVATION  EASEMENT IN CONNECTION WITH THE ADMINISTRATION OF PARA-

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD10266-01-1

 S. 4296                             2

  GRAPH SEVENTEEN OF SUBDIVISION (B) OF SECTION FIFTEEN HUNDRED  THREE  OF
  THE TAX LAW, PERTAINING TO FRUIT, FRUIT PRODUCTS, VEGETABLES AND VEGETA-
  BLE  PRODUCTS  PRODUCED  OR PROCESSED ON LAND IN AGRICULTURAL PRODUCTION
  AND RECEIVING OR ELIGIBLE TO RECEIVE AN AGRICULTURAL ASSESSMENT.
    2.  IN  THE  EVENT  THAT AN APPLICATION FOR A CONSERVATION EASEMENT IS
  SUBMITTED TO A COUNTY LESS THAN SIX MONTHS PRIOR TO THE  CLOSE  OF  SUCH
  TAXPAYER'S  TAXABLE  YEAR, THE SIX-MONTH PERIOD PROVIDED FOR IN SUBDIVI-
  SION ONE OF THIS SECTION FOR  THE  COUNTY  TO  SECURE  A  NOT-FOR-PROFIT
  CONSERVATION  ORGANIZATION  OR  PUBLIC  BODY  WITHIN SUCH COUNTY, WITHIN
  WHOSE TERRITORY THE SUBJECT PROPERTY IS LOCATED, OTHER THAN  THE  STATE,
  TO  TAKE  AND ACCEPT SUCH CONSERVATION EASEMENT OR FOR THE COUNTY ITSELF
  TO DO SO, SHALL APPLY AND RUN FROM THE DATE OF THE FILING OF SUCH APPLI-
  CATION, AND THE CONSERVATION EASEMENT, IF TAKEN AND ACCEPTED WITHIN SUCH
  LATTER SIX-MONTH PERIOD, SHALL BE DEEMED TO MEET THE REQUIREMENT FOR TAX
  DEDUCTIBILITY PURSUANT TO SAID PROVISIONS  OF  SECTION  FIFTEEN  HUNDRED
  THREE  OF  THE TAX LAW WITH RESPECT TO THE TIMELINESS OF THE APPLICATION
  FOR AND TAKING AND ACCEPTING OF SUCH CONSERVATION EASEMENT.
    3. FOR THE PURPOSES OF THIS SECTION, THE TERM "CONSERVATION  EASEMENT"
  HAS THE MEANING THEREOF WITHIN THE CONTEMPLATION OF TITLE THREE OF ARTI-
  CLE FORTY-NINE OF THE ENVIRONMENTAL CONSERVATION LAW.
    S  3.  Paragraph  3 of subsection (a) of section 1405 of the insurance
  law is amended to read as follows:

    (3) Obligations secured by real property  or  interests  therein.  (A)
  Obligations, or participations therein, secured by liens on real proper-
  ty  or interests therein located within the United States and not eligi-
  ble under paragraph one or two of  this  subsection,  provided  that  no
  insurer  making  investments  under  the authority of this section shall
  invest in or loan upon the security  of  any  one  property,  under  the
  authority  of  this  paragraph, more than thirty thousand dollars or two
  percent of admitted assets, whichever is the greater.
    (B) NOTWITHSTANDING ANY PROVISION OF SUBPARAGRAPH (A)  OF  THIS  PARA-
  GRAPH  TO  THE  CONTRARY,  A  DOMESTIC LIFE INSURER MAY INVEST UP TO ONE
  PERCENT OF ITS ADMITTED ASSETS IN OBLIGATIONS SUBJECT TO THE  PROVISIONS
  OF  PARAGRAPH  SEVENTEEN  OF  SUBDIVISION (B) OF SECTION FIFTEEN HUNDRED
  THREE OF THE TAX LAW.
    S 4. Subdivision (b) of section 1503 of the  tax  law  is  amended  by
  adding a new paragraph 17 to read as follows:

    (17) ENTIRE NET INCOME SHALL NOT INCLUDE:

    (A)  THIRTY  PERCENT  OF INTEREST RECEIVED BY A TAXPAYER AS PAYMENT TO
  THE TAXPAYER ON ACCOUNT OF INDEBTEDNESS INCURRED TO THE TAXPAYER FOR THE
  PURCHASE OF, AND BY A PERSON WHO HAS PURCHASED:

    (I) FOR NOT MORE THAN FIFTY ACRES OF ONE OR MORE CONTIGUOUS PARCELS OF
  LAND, WHICH LAND IS USED IN AGRICULTURAL PRODUCTION OR HAS BEEN IN AGRI-
  CULTURAL PRODUCTION WITHIN THE PAST FIVE YEARS IN THE TAXPAYER'S TAXABLE
  YEAR OF THE INCURRENCE OF SUCH INDEBTEDNESS OR THE YEAR NEXT  SUCCEEDING
  SUCH YEAR.  IN THE EVENT SUCH INTEREST PAID IS FOR MORE THAN FIFTY ACRES
  OF LAND, THE PROVISIONS OF THIS PARAGRAPH SHALL APPLY ONLY TO THAT RATIO
  OF THE INTEREST PAID WHICH IS EQUAL TO THE RATIO BETWEEN FIFTY ACRES AND
  THE TOTAL AREA OF LAND UPON WHICH THE INTEREST IS PAID;
    (II)  WHICH LAND HAS OR IS ELIGIBLE TO HAVE AN AGRICULTURAL ASSESSMENT
  IN THE TAXPAYER'S TAXABLE YEAR OF THE INCURRENCE OF SUCH INDEBTEDNESS OR
  THE YEAR NEXT SUCCEEDING SUCH YEAR;
    (III) WHICH LAND IS USED OR HAS BEEN USED IN THE PAST FIVE  YEARS  FOR
  THE  CULTIVATION  OF  FRUIT,  FRUIT  PRODUCTS,  VEGETABLES  OR VEGETABLE
  PRODUCTS IN THE TAXPAYER'S  TAXABLE  YEAR  OF  THE  INCURRENCE  OF  SUCH
  INDEBTEDNESS OR THE YEAR NEXT SUCCEEDING SUCH YEAR; AND

 S. 4296                             3

    (IV)  WHICH LAND IS SUBJECT TO A CONSERVATION EASEMENT THAT LIMITS THE
  USE OF SUCH LAND TO AGRICULTURAL PRODUCTION, WHICH CONSERVATION EASEMENT
  IS IN COMPLIANCE WITH TITLE THREE OF ARTICLE FORTY-NINE OF THE  ENVIRON-
  MENTAL  CONSERVATION  LAW AND SECTION TWO HUNDRED TWENTY-B OF THE COUNTY
  LAW  IN  THE  TAXPAYER'S  TAXABLE YEAR OF THE INCURRENCE OF SUCH INDEBT-
  EDNESS OR THE YEAR NEXT SUCCEEDING SUCH YEAR.
    (B) FOR THE PURPOSES OF THIS PARAGRAPH, THE FOLLOWING TERMS  HAVE  THE
  FOLLOWING MEANINGS:

    (I)  "AGRICULTURAL  ASSESSMENT"  HAS  THE  MEANING THAT IT HAS FOR THE
  PURPOSES OF ARTICLE TWENTY-FIVE-AA OF THE AGRICULTURE AND MARKETS LAW.
    (II) "FRUIT", "FRUIT PRODUCTS", "VEGETABLES" AND "VEGETABLE  PRODUCTS"
  HAVE  THE  MEANINGS  DEFINED THEREFOR BY THE COMMISSIONER OF AGRICULTURE
  AND MARKETS IN REGULATIONS PROMULGATED FOR THE PURPOSES  OF  THIS  PARA-
  GRAPH.
    (III)  "LAND  USED IN AGRICULTURAL PRODUCTION" HAS THE MEANING DEFINED
  THEREFOR IN ARTICLE TWENTY-FIVE-AA OF THE AGRICULTURE AND MARKETS LAW.
    S 5. This act shall take effect immediately and shall apply to taxable
  years beginning on or after January first of the year in which it  shall
  have  become  a law; provided that any and all rules and regulations and
  any other measures necessary to implement  any  provision  of  this  act
  shall be promulgated and taken, respectively, immediately and, if deemed
  necessary, on an emergency basis.