2019 Legislative Policy Watch Weekly E-Update

Issue No. # 6, February 15, 2019

In This Issue
Private Activity Bonds Overview
Beginning Farmer Loan Program
Industrial Hemp
Legislation Monitored
Hearing Calendar
Legislative Monitoring
Farm Bill Update
CEP Livestreaming Interviews
About Policy Watch

About Policy Watch E-Updates

The Legislative and Policy Watch Weekly E-Update is a project of the Kansas Rural Center.

Editor: Mary Fund
Paul Johnson, Policy Analyst

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The Kansas Rural Center
promotes the health of the land and its people through research, education and advocacy that advance an ecologically sound, economically viable,  and socially just agriculture. For more information about KRC go to  www.kansasruralcenter.org.

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The Kansas Natural Resource Council (KNRC)
promotes environmentally responsible practices and sustainable natural resource policies to ensure the quality and abundance of these resources for future generations. For more information about our organization and programs, or how to become a member, please visit

Kansas Farmers Union is the state's oldest  active farm organization working to protect  and enhance the economic interests & quality of life for family farmers, ranchers & rural communities. For more information go to:

League of Women Voters of Kansas is a grassroots volunteer political organization with nine local chapters across Kansas. For nearly 100 years, LWVK has encouraged the informed and active participation of citizens in government. For  more information, contact  lwvk.org.

Climate and Energy Project  (CEP) is a  Kansas-based non-partisan non-profit working to find practical solutions for a clean energy future. For More information go to:

Audubon of Kansas (AOK)  is a statewide non-profit organization  established to promote appreciation and stewardship of Kansas' natural ecosystems, with special emphasis on conservation of prairies, birds, other wildlife, and habitat. For more information go to  www.audubonofkansas.org .

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works to protect and preserve the Kansas River for present and future generations.

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Contact Information

Sen. Jerry Moran
DC Ofc 202-224-6521

Sen. Pat Roberts
DC Ofc  202-224-4774

Rep. Roger Marshall, 
1st Dist. 
DC Ofc: 202-225-2715

Rep. Steve Watkins
2nd Dist.
DC Ofc: 202-225-6601

Rep. Sharice Davids
3rd Dist.
DC Ofc: 202-225-2865

Rep. Ron Estes
4th Dist.
DC Ofc.: 202-225-6216

    by Paul Johnson

The federal tax code allows state and local governments to use tax-exempt bonds to finance certain eligible projects as determined by Congress. Private Activity Bonds (PAB's) are obligations that benefit nongovernmental persons such as private businesses, charitable organizations or individuals. 

The 27 private activities that may be financed by the Kansas Development Finance Authority (KDFA) or other governmental entities includes tax-exempt financing for affordable housing and assisted living facilities, 501(c) health care facilities, 501 (c) (3) educational and athletic facilities, qualified mortgage bonds (First Time Home Buyer Loans), small manufacturing, and the Beginning Farmer Loan Program. Most PAB's are issued as obligations payable solely from pledged revenues or assets of the private borrower with no recourse to the issuing governmental entity.

The Kansas Department of Commerce administers the allocation of PAB's and for 2019 the total is $316.7 million. Kansas does not have enough projects each year to award the amount the State receives, and for at least the last 20 years Kansas has relinquished unused PAB's back to the federal government at the end of the year.

 Tax-exempt bonds for governmental purposes and for qualified private activities are special because, unlike corporate bonds or U.S. Treasury bonds, the bond buyer does not have to include the interest income from the bond in federal gross taxable income. The bond buyer is therefore willing to accept a lower interest rate because the interest is not subject to federal income taxes. KDFA is one of the most active issuers of private activity obligations in the State, most often facilitating projects on behalf of affordable housing, assisted living borrowers, health care facility borrowers and higher education 501 (c) (3) borrowers.

Kansas legislation allows government units to issue qualified small issue bonds (or industrial revenue bonds) to be used for qualifying industrial or other authorized purposes. These industrial revenue bonds (IRBs) are securities issued by cities, counties or the Kansas Developmental Finance Authority (KDFA) to provide the funds for credit-worthy companies to purchase land, pay the cost of constructing and equipping new facilities or purchase, remodel or expand existing facilities. 

The Kansas Department of Commerce along with the former Governor authorized $500 million in industrial revenue bonds for Leavenworth County to bring the billion dollar corporation Tyson to Tonganoxie (a move that due to citizen reaction ultimately failed.) By law, public approval of bonds, either through public hearing and notice or voter referendum is required for PAB's (26 U.S.C. 147(f)).

At the end of the year, whatever PAB allocation - not used for industrial revenue bonds, qualified residential rental projects, solid waste disposal facilities or the Beginning Farmer Loan Program - are converted into qualified mortgage revenue bonds intended for the statewide First Time Home Buyer Loan Program administered by Sedgwick and Shawnee Counties.

 In 2018, Sedgwick and Shawnee Counties were each allocated $130.8 million in qualified mortgage bonds. Kansas is the only state in the country that runs a statewide First Time Home Buyer Loan Program - intended for the other 103 counties - through two counties. Legislation was passed in the early 1990's prohibiting the Kansas Housing Resources Corporation - Kansas' statewide housing agency - from issuing First Time Home Buyer Loans. There has not been one First Time Home Buyer Loan from these allocations to Sedgwick and Shawnee County made in the last five years.

The debate is starting in the Capitol to review this process and recommend possible changes. Affordable housing is critical across the State from depressed rural counties to inner city blight to developing workforce housing in Johnson County. Hopefully the Kansas Legislature will form an interim study committee on housing this summer and the Governor's new Office of Rural Prosperity will take the lead on promoting the First Time Home Buyer Loan program statewide.
 statewide. Read  more HERE
 Contact Paul Johnson at  pdjohnson@centurylink.net


The Kansas Beginning Farmer/Rancher Loan program is housed at the Kansas Development Finance Authority (KDFA) and is allocated Private Activity Bonds from the Kansas Department of Commerce. The last two years the allocation has been $10 million. The program averages 26 beginning farmer loans a year and the average loan amount is just over $205,000. The 2019 loan limit is $543,800. 

Since program inception in 1987, $95 million in loans have been made. Top counties for loans are Marshall, Nemaha, McPherson, Cloud and Harvey. This KDFA Beginning Farmer Loan Program is frequently used in conjunction with the USDA FSA Beginning Farmer Loan Program.

This program allows 'Beginning Farmers' to acquire and finance myriad agricultural activities, including agricultural property, facilities, livestock, and depreciable agricultural property (new and used) at lower federally subsidized interest rates by enabling lenders, individuals, partnerships, corporations and other entities (Bond Purchasers) to receive state and federally tax-exempt interest with respect to a loan or contract sale made to a Beginning Farmer.
The basic program finance structure looks just like an ordinary bank loan. The lender (bond purchaser) and the Beginning Farmer work out the terms of the loan, the collateral, and the repayment provisions and source of revenue to be pledged to debt service the loan. Once the basic terms are agreed upon, they submit a Beginning Farmer application to KDFA for bond counsel review. There is no recourse on the loan to KDFA or the State of Kansas.

The applicant may not have previously owned any substantial amount of farmland. The term 'farm" is broadly defined to encompass activities such as dairy, poultry, fruit/orchards, truck farms, fish farms, nurseries, and greenhouses. There is no minimum loan amount. The Beginning Farmer must affirm he/she plans to provide the substantial majority of management of the agricultural project. 

The Beginning Farmer must be an individual at least 18 years of age. Loans to corporations, LLC's, etc. are not eligible under the Federal Tax Code. Purchases from close relatives are allowed so long as the purchase price is fair market value. Less than 5% of the loan may be used towards the purchase of a dwelling on the project. The Beginning Farmer must demonstrate he/she has the requisite qualifications to undertake the proposed agricultural project. See more at:


House Bill 2173  is the next step in establishing a commercial, industrial hemp program in Kansas. Last year the Kansas Legislature passed a commercial hemp research program that was allowed by the 2014 Farm Bill. The Kansas Department of Agriculture (KDA) has administered this program with Kansas State University and some 75 farmers have expressed interest in being registered. Those applications are now being processed and this program will continue for 2019.

The 2018 Farm Bill designated industrial hemp as a commodity crop eligible for crop insurance. States such as Kansas can write their own state plan consistent with federal requirements or wait for USDA to write national standards. With HB 2173, KDA is requesting legislative authority for Kansas to write our own plan for USDA approval. Without USDA approval, commercial hemp production is not allowed. There are several federal requirements in the 2018 Farm Bill. This state plan must be developed in consultation with the Governor and the Attorney General and then submitted to USDA for approval.   

HB 2173 was introduced on January 31  by KDA and is the only piece of KDA legislation this year. This legislation requires KDA to develop a state plan that meets minimum federal standards to develop a commercial hemp program in regards to licenses, location, testing, inspections and penalties. It includes flexibility to develop anything else that USDA might enact through their own regulations or other requirements. The 2018 Farm Bill repeals the federal law that enables the commercial hemp research program one year after USDA develops a plan for states that do not adopt a state plan. HB 2173 allows KDA to discontinue the Kansas commercial hemp research program once a commercial hemp production program is in place.

 See the Legislative Research Department briefing on HB 2173   Here

See Zack Pistora (Kansas Sierra Club) testimony  Here
To this point there have been 180 Senate bills filed and 324 House bills filed. The vast majority of these bills will never get a hearing but these bills are alive through the 2020 session so could be debated next year. Legislative leadership and committee chairs have tremendous control on which bills and issues will get a hearing let alone pass. This has been a very slow session for scheduling bill hearings in committee and slow to have any floor debates. 

Today  is the 23rd day of the session and the House is having its first meaningful floor debate on House Bill 2197 that sets a new 30 year amortization schedule for the Kansas Public Employee Retirement System (KPERS) as requested by the Governor. If bills have not been blessed by being sent to certain select committees like Taxation or Federal & State Affairs or Appropriations, the deadline to move a 'non-exempt' bill from one chamber to the next is February 28 .

House Bill 2195  enacts a sales tax exemption of farm products sold at farmer's markets. It has been referred to House Taxation and is exempt from deadlines. The fiscal note for this bill has yet to be developed by the Governor's Budget office. If there is a larger tax bill developed this year, HB 2195 could well be considered.

House Bill 2261 decreases the sales and use tax rate on food and food ingredients to 5.5% (from 6.5% today ). The bill was introduced on February 12  and set for hearing on February 18  before the House Committee on Taxation at 3:30 pm in Room 112-N. A fiscal note will have to be developed.

Senate Bill 110 requires the Kansas Department of Health and Environment along with the Kansas Department of Agriculture to conduct a health impact assessment of confined animal feeding operations for chickens.

Senate Bill 111  requires counties to approve the establishment of a poultry confinement facility and establishing the procedures therefor.

Senate Bill 112  requires counties to approve the establishment of a poultry production or poultry slaughter facility and establishing the procedures therefor.

SCR 1605  Constitutional amendment; reapportionment; deleting requirement for adjustment of census data for military personnel and students. Kansas is the only state that takes the U.S. Census and requires the Secretary of State to contact military personnel and students to see if they want to be counted in their home county or the county they are residing in. This impacts drawing legislative districts and costs on the order of $840,000.

House Bill 2092  allows voter registration on election day. It will be heard before the House Elections committee on Tuesday - February 19  - at 3:30 pm in Room 212-N.

Senate Bill 43  Elections; registration; election day registration. It will be heard before the Senate Ethics, Elections and Local Government committee on Tuesday - February 19  - at 9:30 am in Room 142-S.

Senate Bill 76  Sales tax rate on food and food ingredients. It lowers the sales tax to 5.5% in 2019, 4.5% in 2020, 3.5% in 2021. The hearing will be Thursday - February 21  - before the Senate Assessment and Taxation committee at 9:30 am in Room 548-S.

Senate Bill 69  Requiring the Kansas Corporation Commission to study electric rates and consider certain factors in establishing just and reasonable electric rates. Opponents will testify on Tuesday - February 19 - and proponents on Wednesday - February 20 - before the Senate Utilities committee at 1:30 pm in Room 548-S.     

Calendar Week of February 18
Several important House hearings happen next week:

Monday Feb. House Taxation Committee 3:30 p.m. 112-N
HB 2261  Decreasing the sale and use tax rate on food and food ingredients to 5.5%

Tuesday Feb. 19 House Energy, Utilities, and Telecommunications  8:30 a.m. (Note Special Time!) 281-N
HB2273 Establishing general permit and property protection act . (Adds prohibitive set backs for commercial wind turbines, which would effectively shut down future wind energy in Kansas.)

Thursday Feb. 21 House Energy Utilities, and Telecommunications 8:30 a.m.  281-N    Possible carryover from Tuesday's hearing on HB2273

T hursday Feb. 21  House  3:30 p.m.  582-N Agriculture Committee
  HB 2173 Establishing commercial hemp program

By looking at the Kansas Legislature's website at http://www.kslegislature.org/li/ you can track the planned committee meetings for next week by looking at the 'Calendars' tab for the House and Senate that are released on Thursday and Friday. 

Informational hearings continue along with introduction of bills , and the start of a few actual hearings on bills. You can find bills filed by going to the "Bills and Laws" tab on the website;  click on either House or Senate bills. You can read through the title of each bill and click on the bill that interests you. By clicking on "Legislators" you can click on a given House or Senate member and it will list under 'Bills and Resolutions' on their site the legislation sponsored by that lawmaker.

Long  Awaited Wins for Sustainable Agriculture Finally Delivered in FY 2019 Appropriations Bill 
   February 14, 2019  ( From the NationalSustainable Agriculture Coalition)

"Minibus" increases funding for core sustainable agriculture programs, rejects Administration's planned relocation of USDA research agencies 
Washington, DC, February 14, 2019-  After months of suffering through the longest government shutdown in history, America's family farmers and ranchers are finally seeing movement on a new agriculture spending bill.

 Today, the House and Senate reached an agreement on a fiscal year (FY) 2019 spending package for the seven appropriations bills not yet signed into law. 
The bill makes historic investments in sustainable agriculture research, prioritizes funding for farmer food safety training, value-added agriculture, military veterans and farmers of color, and protects essential conservation programs. Given the 2018 Farm Bill's passage at the end of last year, this funding is particularly critical in order to begin implementation of numerous new or modified programs and policies. Read more at

Kansas WEALTH Policy,  Civic Engagement and YOU
Throughout the 2019 Kansas legislative session, Climate and Energy Project (CEP) will host live interviews with organizations whose mission includes one of the  WEALTH  topic areas: Water, Energy, Air, Land, Transportation, and Health.  Leading advocacy organizations will provide updates on current WEALTH policy priorities, offer tips for civic engagement in Kansas, and answer all of your pressing questions!

On Tuesday, February 18 at 2PM CST Climate and Energy Project will talk with Shaun Rojas, Kansas Leadership Center on civic engagement. If you miss it, check back on CEP's Facebook event page for a link to the recording. Here are links for the previous broadcasts:
CEP Live with Mary Fund, Kansas Rural Center https://www.facebook.com/CEPheartland/videos/258035308442575/ 

CEP Live with Zack Pistora, Kansas Chapter of the Sierra Club. 

CEP Live with with Moti Reiber, Kansas Interfaith Action
Part 1
Part 2 with Moti Reiber

CEP Live with Cille King of League of Women Voters KS https://www.facebook.com/CEPheartland/videos/237109557191264/

CEP Live with Jessica Lucas of Clean Energy Business Council https://www.facebook.com/CEPheartland/videos/978651145663277/

Jessica Lucas
Clean Energy Business Council
1 / 22
Cille King &
Teresa Briggs
League of Women Voters
Voter Engagement
1 / 29
Moti Rieber
Kansas Interfaith Action
Social Justice & Health
2 / 5
Zack Pistora
Kansas Sierra Club
Mary Fund
Kansas Rural Center
Shaun Rojas
Kansas Leadership Center
Civic Engagement
Christie Appelhanz
Children's Alliance of Kansas
Health & Children
Dawn Buehler
Friends of the Kaw


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