KRS 248.711: Criteria for application for state funds -- Uses and restrictions on funds in

counties account -- Administration of agricultural development fund --

Applicant's right to appear before oversight committee.

(1) Criteria to be used in considering applications for state funds shall include, but not

be limited to:

(a) Assistance to tobacco farmers and communities in counties most affected by

the loss in tobacco income;

(b) Assistance to communities most dependent on agriculture;

(c) Enhancement and promotion of agriculture in the Commonwealth;

(d) Merits of the proposal in the application;

(e) Compatibility with state and local agriculture-related comprehensive plans;

(f) Documentation of measures likely to ensure soundness of the proposal such as

cash flow, security, market evaluation, and infrastructure considerations;

(g) Promotion of diversification;

(h) Regional orientation;

(i) Cooperation among entities involved in the project and application process;

and

(j) Effect on the economic viability of family farms.

(2) Uses and restrictions on the funds in the counties account shall include, but not be

limited to, the following:

(a) Funds may be used for deferred, no -interest, or low -interest venture capital

loans to enhance farms' revenues by initiating:

1. Current farming techniques or practices improvements; or

2. New farming ventures on the farm;

(b) Funds used for loans shall be administered through a duly licensed or

chartered financial institution organized and regulated:

1. Under the laws of this state in accordance with KRS Chapter 286; or

2. Created by Congress and organized and regulated in accordance with

provisions of federal law;

(c) Terms of the loans may include a limit on deferral of payment of interest or

principal to five (5) years, and a limit on the interest rates. Repaid loans and

interest shall be credited to the appropriate county's allocation within the

counties account;

(d) Funds may be used as grants for local agricultural economic development

projects;

(e) Funds may be used as grants for water line extension to farms or for a fifty

percent (50%) match for water improvements on farms;

(f) Funds may be used for programs to assist farmers in transitioning from one

(1) type of farming to another or from farming to another vocation;

(g) Local governments may apply for funds to clean up environmental problems

created by a farm failure where there is no reasonable prospect that the

problem will be cleaned up by a private individual or entity;

(h) Eligibility for funds in this subsection shall require that:

1. Tobacco farmers be given priority;

2. Applicants have sufficient equity to assure a reasonable chance of

success of the action proposed for funding;

3. Small farmers have as equal access to the funds as large farmers; and

4. Consideration be given to what percent of a county's allocation of

moneys an applicant is requesting; and

(i) Counties may use their funds for multicounty or regional projects. They may

also use their funds to maximize state or federal matching fund programs.

(3) In administering the fund under KRS 248.709(1), the board shall be governed by

the following principles:

(a) Individuals, groups, educational institutions, governmental entities,

cooperatives, including limited cooperati ve associations, and other

agriculturally related entities are eligible to receive moneys from the fund;

and

(b) The board shall receive five hundred thousand dollars ($500,000) for

administrative costs in fiscal year 2001 and six hundred thousand dollars

($600,000) in fiscal year 2002. These amounts shall include any costs

necessary to offset administrative expenses incurred by the county

cooperative extension service offices for providing administrative support to

the agricultural development councils as provided in KRS 248.721.

(4) If the state board recommends that an application not be approved or that it be

changed, the applicant may take the application before the oversight subcommittee

created in KRS 248.723 for discussion and possible resolution of differences.