senate Bill S4296

2011-2012 Legislative Session

Provides a tax incentive to domestic life insurance companies to invest in the purchase of agricultural land to be kept in agricultural production

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 04, 2012 referred to agriculture
Mar 28, 2011 referred to agriculture

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S4296 - Bill Details

See Assembly Version of this Bill:
A7970
Current Committee:
Law Section:
Agriculture and Markets Law
Laws Affected:
Amd §16, Ag & Mkts L; add §220-b, County L; amd §1405, Ins L; amd §1503, Tax L
Versions Introduced in 2009-2010 Legislative Session:
S667, A3648

S4296 - Bill Texts

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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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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.

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

                                  4296

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             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.

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