Agriculture, Forestry & Economic Development- House

Those also represented by you're recognized. Thank you madam chair thank you committee one of those supporting letters is from my daughter of him and very proud so hope you will enjoy seeing and I think it's the last in your packet. Member's house bill seventeen forty three. May not make you a superstar. That if you are a carpenter because mythologist a mill caterer. Someone like a guy in my area that had a rescue boat that so is used in the production of the true detective season three for which he was paid five hundred dollars this bill could help you a lot so let me tell you about it over the past several years Arkansas has seen success in the film and television production shot within the state why is this well it's in large part because of our state's natural beauty and diverse geographical landscapes which make for attractive film backgrounds. These productions not only bring a positive tourism component to the state but also a substantial increase in economic development film production simply mainly in state workers and provide particular economic stimulus to the hospitality industry one example is that previously referenced as the filming of true detective season three which spanned across eight counties created over one thousand jobs and had an estimated financial impact well over one hundred million dollars by the state and some of you were around when god is not dead two was filmed right here in our capital and our former Speaker even had a guest appearance and that is maybe some of you did as well. We had recently Riot act filmed in the city of Van Buren which is part of my community the city of and your input down sawdust over the streets and cooperated in every way and that by a lot of economic development into my area. House bill seventeen forty three seeks to amend the state's current film tax incentive to allow productions the choice to apply for either a tax rebate or transferable tax credit this change provides a state flexibility in the types of incentives we can offer to attract new investments into Arkansas and allows us to attract more protections to Arkansas because of our deal incentive offerings this bill caps the amount of tax credits the state can issue at four million per year which is a historical average annual amount provided by D. FNA for the film incentive program. The incentive remains unchanged the amount of incentive a qualified production concern is still the same but we have included new ways productions to improve their incentive for those who do not know the current rebate allows for a twenty percent incentive on qualified expenditures and up to thirty percent incentives for hiring in state workers this bill expands the ways to under thirty percent production because of high they can hire military veterans board members of the National Guard make expenditures to majority on veteran businesses one PM in rural counties who could really use the tourism boost. This bill was created with the valuable assistance of the FNA and the EDC and I want to thank them for their help in constructing this bill along with the Arkansas cinema society who has shared their experiences as well as industry paid back with film productions in the state and helped form the overall concept for this legislation with the improvements that this bill makes we can continue to build on our success with these types of projects that creating jobs marketing Arkansas and bringing back retaining homegrown talent which my fervent wishes would include my daughter and her husband and most importantly my grandchildren thank you. Would your gas like to introduce herself and make a statement. Hi my name's Nicole Gillam I'm with capital advisors group here in Little Rock and general counsel and we work for the Arkansas cinema society who have been working with representative fight on this piece of legislation so I'm just here to help with any technical questions all right are there any questions. Seeing no questions we have a couple people signed up to speak for it but no one signed up against it so I ask first is there anybody here to speak against the bill. For the bill we have I think it's Graham Grady maybe. Forty. Please state your name and who you're with and then you may proceed Sir. I'm gonna I'm gonna read some things I'm better on the on the please state your name first sorry ma'am Graham Gordy G. O. R. D. Y. I'm a screen writer and a producer for TV shows like rectify Cory in the most recent season of true detective as well as for local independent film antiquities that we made and and North Little Rock in little rock a few years back I was born and raised in Conway my wife and two kids and I now make our home and North Little Rock I'm here to speak in favor of a House bill seventeen forty three for one very important reason and that's not out of a desire for Hollywood to come to Arkansas it's for creating and sustaining Arkansas jobs film and television productions create incredible revenue for the state right now our state is full of kids and young adults who aspire to make films to direct to write produce but our state is also full of kids and young adults and grownups who want to be artists and designers carpenters and electricians costume designers and photographers are status for small business owners who have restaurants and catering services who owned hotels apartment complexes Airbnb used to house and feed cast and crew that's the beauty of film and television production not only is it a collaborative art it helps employee potentially hundreds of people from every walk of life with good wages on every production in other words this isn't about getting Arkansas money to outside projects this is about employing or cans and with money from outside of our state. Our current rebates set up is brought great projects to the state but the issue with the rebate is that it doesn't set Arkansas for consistent production several Studley employee Arkansans also the governor's quick action funds are not necessarily reliable for consistent productions and financial returns a few years ago I helped write was a producer on season three of true detective the creator of the show nic Pizzolatto got is MFA from the university of Arkansas and set the season in northwest Arkansas. we were in the writers room working on the season and he said that while the season was set in Arkansas they were planning to shoot in Georgia because that's where the tax credit is I said what you rather shoot in Arkansas let me make a few calls before you do that I immediately called film commissioner Christopher crane and through his tireless efforts along with the ad advocacy of Mike Preston in ADC an arm of many others in our local film community we met with the governor I got the production here through a rebate and the governor's discretionary fund the result was a sixty million dollar production in over a hundred million dollars in quantifiable economic impact for the state employee hundreds of Arkansans this was a tremendous achievement three years later we now have an opportunity to build on that. When we met with the governor regarding getting the show to Arkansas I made one statement articulating my personal hope for film legislation in the state I said we don't need to become Georgia which had more film starts in California over the past several years we simply need ongoing productions throughout the year here maybe that's a couple of TV series and a film or two or one TV series on four five films but it gives us the opportunity to keep our talent at home. I'm a screen writer I get ninety five percent of my work from Los Angeles and mostly get to write it here in between taking my kids to basketball and volleyball practices which is my primary job while and while I would selfishly love to to shoot all of my projects in Arkansas the reason I'm here today isn't for me it's for every kid in Arkansas who is like I was growing up this for every film in mass communication student has graduated from U. C. CA like I did University of Arkansas as a U. UALR AS you etcetera for every student who is about to graduate from those programs and for every kid in Arkansas making films on their owner who aspires to work in this industry if you go through those programs you then have to move to Los Angeles Georgia New Orleans or elsewhere to make a living as an example we did our production of our independent film antiquities in the state and had production assistants and interns from area colleges working for us the next year true detective came to the state and those same young people were hired for true detective and graduated to higher paying positions on this cruise since then almost all of those young people of continued working film I have had to move to California George. And again this isn't just about expiring filmmakers for every writer and director and producer there are dozens of carpenters hired to build sets electricity to light painters to paint CDL drivers to drive all the trucks equipment trailers cast and crew they hire hairstylists makeup artists caterers chefs and even accountants they provide internships to students which lead to jobs in the future this is not about the arts this is about an industry they can have a material impact on our economy and our jobs in the state. I love our state I have a chip on my shoulder when people condescend about it or get it wrong any time I show someone who's never been here a picture of Arkansas they say stunned that's Arkansas. Film and television could be a much bigger drivers of branding and tourism in any multi million dollar advertising campaign ever could and maybe most importantly this isn't just about our cities think about the financial impact might have on star guard and to miss and surrounding areas. From the delta to the Ozarks the washer toss of the Arkansas River valley to our lakes and rivers and farms I would challenge anyone to find me a state with more natural beauty and geographical diversity to put on felt than ours we are currently leaving money and job opportunities on the table this bill can be a tremendous opportunity to help protect us against losing our greatest resource to other states with the skills and talent that Arkansans thank you. Are there any questions sing no question sank you for your statement and next we have for Josh Miller you'll come to the end of the table. State your name and who you're with for the record and then you may proceed. Thank you appreciate of my name is Josh Miller I'm an independent film producer writer and director our Kansan born and raised shot my first film in two thousand five and since Anna produced eleven films of the last sixteen years which I wrote a couple of those to my brother one of which was called all the birds plan south in two thousand fourteen which we shot in central Arkansas I'm here today in support of house bill seventeen forty three which part of a multi pronged approach to attract more investment Arkansas through film and television this legislation aligns incentive Arkansas offers with a majority of states to offer incentives it streamlines some of the process to qualify and apply and provides new ways to earn the incentive we live this legislation will pair with some of the other process improvements through ADC in commerce it's going to that they're gonna make will make Arkansas attractive into investments in film and television and grow our economy and further diversify opportunities in the work force I want to take just a couple minutes to talk about some of the reasons I think house bill seventeen forty three could have a strong positive economic impact on our state and I think it makes sense to kind of look at it from three different angles first first to be outside filmmakers how do we attract business from outside filmmakers which would have an immediate impact on local and state economies that direct spending and sales tax and then home grown talent how do we train our home grown talent but more importantly how do we keep that talent in the state rather than having to leave and find work somewhere else and lastly but certainly not least how this legislation could benefit the state of Arkansas from an overall economic development standpoint first the outside projects come again Arkansas is obviously one the most beautiful states in the country and what we've already said its natural beauty and diverse geographic landscapes make for an attractive backdrop for film production over the past several years while we've seen plenty of Arkansas filmmaker should their content here outside projects. I mean the state have been few they they are growing there is more coming but we've seen a lot of those projects go to Georgia and Louisiana and Texas and other states And. I think the only reason stopping filmmakers from coming to the state is bright it's just it's pretty basic it's a financial decision based on Arkansas not being able to compete with those other states like Georgia Texas and Louisiana and I've got a. There's a filmmaker that I don't know personally but the story is pretty well known it's in Arkansas filmmaker who's going to shoot a film called Arkansas in Arkansas obviously shot at our road it to be shot in Arkansas and ended up having to shoot the licensure that film in Alabama and I mean by understanding of that is that the governor's quick action find been depleted from true detective which was an enormous project that we were very happy to have but the money just wasn't there to get that cash rebate so I mean it so in that situation house bill seventeen forty three which offers a tax credit would make it available for that filmmaker would at least have the choice to come in and shoot here So. in all seven eighty seven still be approving all the projects in retaining control the filmmakers and production will now have the choice course to take a rebate in the form of cash or tax credit so if we ran into that same similar situation that and then they will have opportunity to do something different I think I made the four million dollar cap you know will will definitely limit how many projects we can be approved but it is definitely better than what we currently have and the hybrid model of a cash rebate for taking a tax credit is really the best of both worlds if a production likes the way the old system and nothing will change for them they can continue to apply for rebates and if approved take three finding cash just like they always have however that as we mentioned Arkansas the film Arkansas would be able to take a tax credit secondly house bill seventeen forty three sets up a perfect opportunity to train home grown talent productions need all the help they can get which makes for an ideal opportunity to train interns well interns job is in paid work these young and men and women are getting a valuable education it's essentially a trade school on my film all the birds have flown south that we shot in two thousand fourteen we trained fifteen young men and women some of them right at a high school some from you of a you see a Pulaski tak SA U. tak and I've kept up with those those kids over the years and all of them seem to be working but unfortunately the majority of them are working here they're constantly working in Georgia Louisiana the states where you say most of the production going We can it's and lastly house bill seventeen forty three make it easier for the state with no cash outlay on the tax credits this state can approve more projects which could have a substantial economic impact and may you rest must remember that film productions employ a whole host of people it's not just actors cinematographers and directors we do obviously employ those people but it's also photographers lawyers cooks accountants like traditions carpenters musicians driver's security so on and so forth and the direct spend from these cruises substantial when we look at a project like true detective season three they created over a thousand jobs in the state and these people need hotel rooms any gas for their cars they need to eat so you see restaurants and grocery stores have an up impact on their business and lastly these films are wonderful marketing tools I mean there's definitely a positive tourism component to shooting films I mean the sh the fell may only take a month or two but those films live on for ever and. And while the substance of in incentive remains and change in the amount of incentive and the amount of the incentive a qualified production get our is still the same there are new ways for production to improve the incentive for those who don't know the current rebate allows twenty percent incentive on qualified expenditures and up to thirty percent incentive for hiring and state workers house bill seventeen forty three is expanded waste earned thirty percent such as hiring military veterans members of National Guard or make expenditures to majority on veteran businesses to wrap up with the improvements with the bill that this bill makes we can create more jobs Arkansas market our state and bring back and retain our homegrown talent for these reasons I strand standing strong support of house bill seventeen forty three thank you thank you are there any questions sing no questions like you for being here bringing your statement today saying no one else signed up for or against would you like to close for your bill representative fight. Yes thank you madam chair a committee I think you have heard all the reasons why this would be good for Arkansas this will bring economic stimulus to our state good marketing for our state so I hope that you will give this a good vote thank you I have a motion do pass from representative Jett is any discussion on the motion. Saying no disk yes Sir representative Bragg. I just wanna confirm with the testimony said about local impact I was fortunate enough to actually be involved in a movie production way back in nineteen ninety nine I think it was called the White River kid I don't think it ever made the Oscar nominations but had Randy Travis and and Antonio Banderas and the opening scene was a festival and the producers were driving around Arkansas looking for a spot in an insured and I noticed this big rural we have on the wall in their timber fest festival we have every year and I was chairman at the time so they they call me and ask me if we could recreate timber fast for the movie I said well I I guess we can never thought of it so I started meeting with producers and directors and art directors and and you know for several weeks ahead of time and I thought they were headquartered in hot springs but it came time to film in Sheridan and we literally shut down downtown shared and for two days to fail and built a lot of uh set props a lot of a lot of labor was was hired to do that and extras and got are lumberjacks and to to recreate the the festival and it was a really I opening experience to see not only how much work went into one of those but what an impact it could have on our community and it was definitely a economic impact and at the end of the filming they just gave us all of the products that they could use because I had no no need for it so we continue to use those about the festival so I just wanna confirm what they said it was a tremendous impact for community just for those two days. Is there any other discussion. Saying no other discussion we have a motion to pass from representative Jett on house bill seventeen forty three all those in favor say aye. Any opposed congratulations represented by you effect passed your bill thank you madam chair thank you Committee. If you have not signed up to speak for or against the bill make sure that you do that before we start the bill and get the name ups appear please Senate bill three twelve representative Lundstrum and Senator Blake Johnson Murdock to. Join us at the end of the table. Please identify yourselves for the record and then you may proceed. Thank you madam chairman Senator Blake Johnson Robin Lundstrum. Members. Ma'am the. This is where our brought three twelve. It was really brought. That was Missouri's bill is what that was and went through the circuit it was brought in that it treated all foreign nations the same and then what allowed due to buy land and and we heard those concerns about that we have allies that we don't mind you know training within and buying things in products from from our nation. And it It impossibly was too broad but but I brought one that had been in place since seventy eight in Missouri and had been amended in two thousand fifteen and there was some issues and it didn't align with with our what we did in nineteen seventy nine was Arkansas foreign investment act and that required reporting. And and it included forest lands and in agricultural lands were Missouri bill was just like your row crop in cotton if you know your your food and fiber and this orders already did the forest lands and the United States about that same time has of a federal agriculture foreign investment disclosure act that reporting. They in our department from the USDA we get. A bunch of a bunch of the from reporting and What in three twelve after amended after those concerns this aligns our Arkansas foreign investment act the lands those definitions with the federal definition so if you're if you're reporting on a federal level you just Report our state also so. That's that was in the amendment. And it also has the prohibited nations and I want what I want to read you a list of those of those nations in this might these are matter of national security we don't want our weapons and our our weapons technology or trade that's sad to our nation's enters emergency declaration nations that are against those for humanitarian reasons and and other reasons that we would these are the bad actors but but here's a list is Afghanistan Angola Belarus Burma China Cyprus Cuba Haiti Iran Iraq Liberia Libya Nigeria North Korea Rwanda Somalia Sudan Syria Vietnam Yemen and Zimbabwe. That's the bad actors. We outsource a lot and we want to sale and free trade. But we get one land. Thank there's ten other states that have protections not even as narrow as this. Yes you know these bad actors. And we're the leading economy in the in the world right now at one point we may not be. We want to in any engagement battle you want to be able to feed yourself. And. We don't want somebody you can't go to these lands. And by property and land. We don't want to be able to allow them to come here. And by what feeds. And houses and closes. We outsource a lot of a lot of things in a lot of. The of Of our. Processing of these of these products. But we don't need to outsource the ability to to take care of herself whenever it's needed and Representative right Lundstrum if you would have anything else. First of all I want to thank Senator Johnson for slowing the bill down and letting us work on the corrections and changes that we needed to have happened those were very important I also want to thank there's there's so many people that stepped up and said we can make this bill a whole lot better feel the slow down for second we did I think it accomplishes protecting Arkansas land from bad actors the definitions were very important I want people to be able so other property for as much as possible to the highest bidder I think that's really important I'm a capitalist but I also think it's important to protect our property from folks like and. China or North Korea or anybody actors that come here but I don't want to block it from other countries that want to invest with us we need good vestment partners and this allows for that and with that I'd open it up to any questions. Are there any questions representative Jett you're recognized for a question. The manager. Sherri Johnson Lundstrum month I have nothing but respect for both because of my issue with this bill is we're telling time or other cultures Arkansas is one third gross gross domestic product so basically what we're doing here is we're Senate today a message to China that we don't do business with you I mean that's what as well as the men were sent Mr will lock not knowing that we send a message to our farmers that that. We're all we're good what time it is telling us that we don't buy your products anymore China's imports more grain than any other country that we deal with the state of Arkansas so how do you reconcile that. So the representative Sir okay representative Jett this is that that's a matter of products. That's you know they make widgets and we by other widgets. We make commodities above what we can we can consume and they by our commodities. We want to be traders. But we don't want them to come and buy our land. And there's almost a million and a half of them. And if we become the second leading economy. They can come and buy this land and are the products will the the the commodities will go there the student to feed our people that the access if we just allow them to buy our land. And. Yes it as a matter of national defense. Our ability to feed herself is is important just like with the technologies that are in the military. When you not agree that unintended consequences of us telling one of these countries that that we do. Arkansas's gross domestic product agriculture is one third of what we sale. Do you would you not agree the attention because of the unintended consequences with boost so severe to the the agriculture Ecosystem if you will in China this is a fine that's fine if you guys will play with us with the start by rain from chickens or poultry or timbre from whoever else whatever else countries out there but then all of a sudden we to shut down or and find new markets would you not agree that that that the agriculture system the financial systems out there is in such disarray the lot of farmers are barely hanging on up and down up and down the first district I mean I've been farmer thirty eight years I guess Benban agriculture farm ground in buying selling ground all my adult life and I've never never once I'm up from two thousand acres of Missouri in plus a ruling that down Arkansas never once have I run into this problem we're there is an issue here of the third world countries or any other countries coming in trying to peak for what I'm trying to buy or sell but that aside that aside appreciate the amendment that that what you're trying to get to the door we are are are friendly countries that can come in about so great but my problem with your bill is the end of the day we're sending a message to these other countries that we do not want to do business with you and so valid got do is come in and just shut down this time's gonna shut down and buy something or sought by something then we got farmers all up and down the first district going out of business are you willing to take that cost take that chance for the consequences of up here don't think it'll happen Joe they've had this in place in Missouri that I mean the wide range since seventy eight and I've been the farm sales up there and there's the farm values the land values of the sign it their products are buying products and then buying commodities should not be. At the at the sale of our land. That part we produce those those but can you can't but Sir can you guarantee that can guarantee the farmers in the timber owners in the poultry farmers up and down the first district can you absolutely Senator today And guarantee these farmers that's not what happens if it hadn't happened in Missouri I'm I mean I they they've had these protections other states have had the potential to Tennessee kind of put this law enacted to they got shot down because of the same issues that I'm raising sewing center all day long to say everyone stays the one state is different from the same as I stated fact matters not Arkansas produces more rice than any other country United States sales of exports more rice in any country in the United States are you prepared and and and far as I know China don't import any rise from savings rates are you prepared to look is rice farmers in the and the I. bill tell them her percent guarantee them that this is not going to happen you cannot do it if it is contingent upon us being able to sell our land to them. Then if our free trade in products is contingent on them being able to buy our land. How many acres of ground it's time to come in and binding Clay County you know of I think there's one there's one person one one investor in Clay County the and and it's not just about China I mean there's a whole list there of the China is Arkansas's number one importer of grain and agriculture and timber products and that's a good thing and we want to continue that what I mean that's a trade that the the free trade that we are a lot more free about than they are. And a lot thank you know we're a lot better actor nationally and internationally than that than they are they are very close country this is not one to be a close country this is want to protect our land well I can argue that what you Sir but but at the end of the day you cannot look any member on this committee in the and guarantee what you're trying to guarantee can be done well that's a possibility but but I will and I mean and I make my living off selling those products but but it's that important for from your grand kids and my grandkids in the future to the to be able to feed and clothe yourself and build a house from the timber products that but we also import my grandkids bill have a market sell into absolutely and that's that you know they they they build things and we buy those things. But this is good you know the land produces a commodities that we've buy and sell this like that and that I mean that's needs to stay you know with with favor ill with. With the. With people from Arkansas and our allies if if we're going to sell those those lands we don't we don't need to sell that land to them I can disagree with that at all but my my point is here's I think you missed my point my point is is we're going to send a message to these countries and send message to the farmers of Arkansas that we're willing to roll the dice here on sending a message to these countries that we don't want you here when at the same time we're trying to keep the markets open and try to keep the quality prices to where these folks of surviving up and down the delta and So I mean that's that's like Senator enough respect for you we're good friends back home and and just interest for disclosure we farm next to each other and probably down the road here pretty pretty soon we're in park pickup truck inside the gravel road here have a good conversation each other smiling joke about it but right now this mask on where I am and I can not hook up on this at all I thank I thank embargoes send a lot stronger message that what you're talking about that and then just you know land protection and for our. Purposeless. Representative Smith you're recognized for a question. Senator Johnson you mentioned the component of this. As being one of national security do you believe that is the case absolutely follow up yes you're recognized I talked for five years at the American military university and taught threat analysis to my students. And. Over those five years I received numerous. Master's-level written work talking about this very issue that you're mentioning and so while it may not be the world that many of us as legislators live in in regard to national security if we pass this bill out today. We're gonna be better position to deal with these aye Thar countries and I believe there's twenty two of them I've I've lived worked and visited in about half of those countries. And they're dangerous places. I don't know how to describe them anymore but would you say that our our bargaining position would be strengthened by this bill and that these are nefarious actors or rogue states that are on the I. tar list would still need to eat and buy grain and commodities from our market. Yes. Can you elaborate sorry. Well I mean. There is there you're going to have a consumption. I mean they're gonna have to to buy from someone and you know. This. I mean I don't want this to be something where you are punishing someone. On trade I just don't want them the ability to come and buy our land and and bring those products back to a foreign land. I mean I want to I want to sell those I want to sell those commodities to on I want to buy other stuff and you know it's that's good for both sides but. My lands there's no way you can go over there and by eighty acres and say I'm going to produce products and sell it back to the United States. I mean I agree with you thank you for your response thank you madam chair madam chair if I can check for just a moment there are plenty of countries to protect their land by saying no foreign ownership and give you a good example Mexico doesn't allow us to land in their country because they want to protect their country's ownership you can buy it for ninety years and then you have to give it back China doesn't allow you to on farm land or any land for that matter private ownership isn't allowed all we're saying is not representative Jett Leding when you're talking about trade you're right we want to trade with China all day long twice on Sunday we're capitalists I just want Americans to have their farmland and trade and make as much money as possible I want every farmer to be as rich as possible. I just want them to be able to sell to as many people as possible but not bad actors not people that don't have are interested heart so that's where this bill is going. Are there any other questions representative going you're recognized for a question. Is there any for anybody who owns land the from from a country that might wish to do ill or do we have any other protections for anything that they might do to try to disrupt our supply or anything like that other than just limiting ownership. Not that I know of. Not that I know of I mean this is our protection for our land for Arkansas. And Health in in this bill it allows those if they own land already from those nations that grandfather some allows them to keep that. The we have to under our constitution we have to treat residents aliens the same as a citizen so that allows a resident alien the even from those primitive nations to be able to buy land so. If they change their status then they have to divest if they get a felony and and they can no longer be illegal aliens. From that prohibited nation then they have to divest from that. I guess I just say if anybody on the committee has an answer to that or anybody else has anything else to provide that comes up let's that stuff toss that out there for the for the taking. Are there any other questions. Seeing a representative berry you're recognized. Thank you madam chair. If you Vester this apologize for the question moved. What percentage of productive role crawl. Of a Christian would you say you will is owned by a foreign countries. I would have to just so probably a hard question well just a percentage of our what you think is that the Arkansas for investment act there's been since nineteen seventy nine there's been a hundred and ninety filings under that but there's a lot more filings under the federal agriculture foreign investment disclosure act that the USDA gives Wes and the Department bag here. So there there's a difference between what is being reported in Arkansas at this time. And what would be reported under this bill and the change in that definition so. I mean even in even in the. I couldn't get a clear number. I would have to go off the USDA numbers to get a clear number hello you were closed of what you would get in the US so. I mean and you know just row crop land is different than than what this bill is also so that you know the row crop land would have been like that first bill it was pretty much. Senator round the row crop in. Cotton and. And just. If a money manager I did I was just interested in. the real crawfish self in the but it does include forestry and and other things to yeah that the the USDA number the USDA accounting does and that's why orders orders was different you know even though what we had seventy nine was different from what the USDA reporting was over that's why we align these. And we hardly got any you know two hundred and. Lesson two hundred and that and that number years so we we we are getting reports very good the just row crop you know with that with that original bill you you would have got there you know but but our definition even that and been aligned with that bill so that that was a problem with that bill usually it is very broad yes yeah thank manager are there any other questions. Seeing no other questions we have one person okay did you have a question okay and we have one person signed up to speak against the bill. In the. No neither neither neither for nor against he just wants to speak on the bill Mr Harrison Pittman would you please come to the in the table state your name and who you're with and then you may proceed Sir. We placed on your mind having. I said this is my first for traveling over here and here we are stuck together for please state your name all right I'm Harrison Pittman I service director of the national agricultural law center which is the unit of the University of Arkansas System Division of agriculture you're correct I'm I'm not here to testify for or against very quickly I can give you a background about what the center is and what we do now to help explain why I'm sitting here. we are research and information center where the only institution of its kind in the country our mission is to serve as the nation's leading source for agricultural and food law research and information so. Whether it's alien ownership of foreign ownership of of land or specifically agricultural land or a host of other issues in agriculture in our staff at the center this is really all we do we work with state departments of agriculture farmers producers of all sizes all shapes all over the country commodity groups you name it legislators in various states at the federal level and their staff and so forth and so I was asked to to come and speak a little bit kind of provide some background context about the issue itself and of course I'm happy to dive into any aspect of three twelve For your protection I made a few notes make sure I don't just. talk you to death so submitted the about that call center what we are if you're curious just get on to to Google and and type anything close to that you'll you'll see you a lot about what we do. the issue that that SP three twelve raises it is fascinating to be candid with you this is U. as been in the United States this been an issue since before we we work country if you trace back to the declaration of independence it was our our fights as colonies with the monarch in England one of the fight was over the inability of people coming to the colonies to purchase land and the monarch of course want to close control who own land in the thirteen colonies so one of the articles of the declaration of independence actually speaks to this exact issue it's been an issue since right before we were even a country. as you come out of that today when we look at what states have any type of law in this arena the core of those are in the midwestern states or what we now call midwestern states but historically the reason they're there because at one point that was the western boundary of the United States and they just simply of all from that era and you have to think back to a time when some of the states were territories had a lot of Europeans of lot of concern over other countries moving and colonizing and so you get the political climate the full and the flavor from that and so that's one of the things are very mind as it relates to Arkansas SP three twelve would be except for one short example or short the side step in our history this will be the first time the laws been amended since it was put in place which was roughly ten years after the end of the civil war so we've had this law in place for nearly a hundred and fifty years and so the example that I mentioned in nineteen twenty five the legislature I did pass a law that would have change law in this arena the Arkansas Supreme Court ruled in a case actually came out of Phillips County Arkansas and declared the that law unconstitutional I don't think that really has any bearing on what we're talking about three twelve but that's just part of that history. The other big picture item that I would mention to you is that you know in in what we do and what I do professionally bag Law Center everything's controversial to somebody so you take an issue that feels kind of fluffy and nice mark agritourism I talk funny so my trusted tourism not terrorism agritourism farm tours believe it or not that's controversial to some people pick some other things that most of us in this room would be familiar with take the dock Campbell issue the dirty word everybody perked up But that's that's controversial that is that's primarily a row crop industry issues not exclusively but primarily and within that that's mainly cotton and soybeans as an over generalization but pales paint a picture another very controversial issue that that has come across in recent years animal cruelty and that's very important thank secretary but that's predominantly a livestock and poultry issue and and horses horse owners not exclusively but primarily. when you deal with this foreign ownership of ag land where the in Arkansas or any other state. You're dealing with that proverbial pair of breeding unicorns in which this is an issue that actually touches every it's one the only thank you can deal with that acted to adjust every aspect of the ag sector you all commodity producers from aquaculture forestry livestock row crop poultry but also get your real estate folks it's an issue that brings in your lenders and so and then the list goes on the only group I can really think of that is it really directly implicated would be input suppliers and then of course with the definition of agricultural land those who own agricultural land inside a corporate municipality they would not be directly impacted. But wrapping up that big picture aspect of it you get the state's several have passed laws I would put the number between eight and eleven depending on how you interpret it you can actually go higher but you end up there's not a uniform set of laws that you that's hard to pull lessons from other states but if we have questions on any of that might be helpful I'm more than happy to entertain those. made a couple notes I think the question was asked about amount of acreage in Arkansas your primary category for or foreign ownership is in the forestry sector and and then beyond beneath that it's our crop land beneath that it's pastor land those are three main categories In Arkansas is forty nine percent force land twenty five percent crop land and then pastor slash other come to twenty four percent and nine ACT is two percent to help you that picture. As far as this B. twelve those three twelve pardon me this really if you think about it keep in mind that does two things it does create what we're talking about with this B. three twelve related to foreign ownership it's also amending existing law specifically the Arkansas foreign investment act which is the state version of the foreign investment reporting act. and so when you think about the parties that are potentially impacted I mentioned several in agriculture but also pulls in the Secretary of State because they have responsibility under that foreign ownership poles and all the circuit courts because that's how that process works in Arkansas for reporting it goes to the circuit court system and they report to the secretary of state it also touches on the secretary of agriculture because three twelve will mandate that the the that the secretary of agriculture issue regulations that promulgate promulgate regulations that implement the act and so you end up pretty much everybody involved in the acceptor it is is impacted in some way or affected. I'm so thirsty almost during the the hand sanitizer Yeah I don't wanna do it again. The General. so when you read three twelve I think it helps a. Then the the latest version the current engrossed version so I mentioned it it demands two things the if you walk through it you start with the very beginning and that's this amending of existing law eighteen eleven one or one a and says except as provided in eighteen eleven seven oh one et seq alien shall be capable of taking all thank you. Ask and you shall receive. And so from that if you want if you have in front of you flip over to seven oh three that some in eighteen eleven seven oh one I'm now for those of you who are reading along here on page six at the top limitations on owning agriculture land it says except as provided in eighteen dash eleven seven oh for a prohibited for party shall not require about grant purchase devise it central any interest in agricultural land regardless of whether that prohibited form party intends to use that land for non farming purpose. So this code seven oh four. and title interest in agricultural land that the same page line fourteen owned by prohibited form parties exceptions penalty the first paragraph is the grandfather clause so you start with that and it's all been mention the universe of I will call on the bad boy countries other prohibited form party list but twenty two on the on the bad boy list. so you start there those that would already be in the system would be grandfathered in but when you go to paragraph be a prohibited form party who is or shall become a resident alien of the United States may on an interest in agricultural land so you have to keep in mind that it does start with prohibited for party but us a person who is from one of these countries if they can establish themselves a resident alien then they would not fall within the orbit of of SP three twelve it as I read it and if you split over very quickly to the on bomb on page five the definition of resident alien resident alien means a person who is not a citizen of the United States and is a resident of a state territory trusteeship or protectorate of the United States and so really That term resident becomes really important and that may be something that I'm what my presumption is that the way it's intended here's to be someone its lawfully in the United States but that's not defined in statute and there are different standards for what constitutes a resident for example the R. S. Code would have a standard like someone has a green card or there's just another standard call the substantial presence test not all states have the similar or or the uniform standards for residents and so forth. Resident I should I'm not going to confuse those terms that something that you might want to to give some thought On that and on that list of of the twenty two countries I did compare that with the USDA data that that we get from the foreign investment act the latest that we have is from December thirty first two thousand nineteen and that's just the latest we have so far. Of those twenty two countries thirteen are currently not they're not even listed so we're really dealing with potential of the the remaining nine and as the senator pointed out that would be China Cuba Iran Venezuela Cyprus Lebanon Russia's Amalie Zimbabwe although some to keep in mind the way SP three twelve is worded it could be interpreted in the provision that deals with is based on called bad boy list again is the bad boy list as it existed as of January first twenty twenty just be mindful that Russia was added in March and so they might not necessarily be included it sure the Committee want to make certain that rush is included Of that and I think this relates to the question in a moment ago. of those countries according to the USDA data there's a two hundred and forty four total investors from those countries nationwide and that's for agriculture and non agricultural land. And that equals two hundred and thirty three thousand four hundred and two acres combined of agriculture and non agriculture land in the United States to kind of give you a perspective on on that was placed on the USDA data. I mention resident alien in the term resident I think that something you may want to to to talk about but in within that again I'm on page six a prohibited form party who is or who shall become may want to give some thought and that might be in the regulatory process like when the secretary of agriculture if the bill is passed in the right what does it mean or who shall become for example in some states the way that issue is sometimes states are just silent on how to handle that some of them it's enough for a person to eat to verbalize I intend to become a citizen I intend to apply for citizenship others you actually have to enter that process formally in at least one state the Secretary of agriculture in this state tax the Commissioner actually vested with authority to make the determination as to whether the person is in good faith trying to become a citizen or they just trying to an end run around their law. The this terminology and. Acting in concert pardon me that's in other definition of significant interest or substantial control. a lot of this the current bill it really reflects the language that appears in existing federal law and so even terms like acting in concert they're not defined but to the extent that they're not clear or they are clear to anybody the same lack of clarity or clarity exist at the federal level to I just point that out because that's an area it really makes a big difference in when the significant interest test applies and if that was something that that anyone why I wanted to to vote to have clarified. I personally am not sure what it means but it makes a huge difference in whether it's a ten percent or whether it's a fifty percent threshold and I couldn't find anything in the federal regulations that define it or any case law so I just throw that out there one important aspect that I mentioned that the language largely reflects what's in the federal law. With the definition of agricultural land remember this is not only for three twelve but it's amending the existing reporting law that we already have in Arkansas when I read it I could I I I recognize the least the words one thing to keep in mind my my assumption is that the intent is to have the definitions at the federal level and in the state law be the same thing and the field a little bit of a grammarian you will find the same words in the federal law that are in here but the not in the same order and when you read the federal law it's the same words but it's into three or four maybe five different sentences. And SP three twelve it's trying to say the same thing but it's it it's all one sentence that party will come as and so when you dive down into that it's hard to figure out which clause that comes later is supposed to modify the clauses before and if the intent is to to match those two you know one Dalby just to simply reference the federal citation or copy and paste that definition or it may be that folklore leverage like it is but nine a potential advantage to doing that if the definitions were exactly the same it would allow going forward a better comparison on reporting between what is reported the federal level in which reported at the state level which would still be an improvement but to if that that's the goal they've been improvement over existing law which we have a different definition of agricultural land currently in existing law in our reporting law compared with the federal standard. A day definition of residence I just want to highlight Sorry okay so many marks again from my own way here. I think it's probably a typo in paragraph seven this page five line circle line twenty five. Residents means a person's principal place where the person intends to remain permanently in excess of I suspect it's supposed to say four or for an indefinite period of time. the other definition with residents that I just highlight for just for consideration. The definition that's here is a noun it's a person's principal place of dwelling as it used over on page six. It It read more like a verb continuance of his or her residence in United States and so again it might be a place where we had to work private resident and then I'll make sure the residence is exactly what folks want. I would the final I'm I'm winding down believe or not significant interest or substantial controlled those are new terms proposed in SB three twelve that's on page three this one's pretty and pretty important I point out that in that definition where it changes it to substantial control. That term also appears an existing law which we don't have in front of us because that's an article to that's the reporting statute but in the proposal over on Page five line thirteen is still uses the previous language which is a double negative not insubstantial control which would be a different term of art and so sh the that may be something the folks want to have clarified. some final thoughts server here there is a constitutional provision that that is applies here resident aliens are to be treated no differently than citizens I don't think S. B. three twelve runs counter to anything as far as I can tell their phone in the amendment here eighteen eleven one a one paragraph a is amended. It if you have the statute in front of you of existing law you'll see there's a paragraph B. in a paragraph C. and so just bear in mind we're amending only paragraph a but as I mentioned in the beginning for the last hundred fifty years those three of all in a related those three provisions all going together and so if you only amend paragraph I you can end up with paragraphs in the same statute that acts that contradict each other and so just bear in mind there a different part of the Arkansas Code deals with intestate succession that's twenty eight dash nine to eleven and it specifically relates to aliens and their basically it says that for that aliens can up of inherit and devise property and so. There's a potential if you thrive fact pattern you could have conflicting parts of the Arkansas Code we're someone here it's property in feels like well this part of the state code says I'm not prohibited anyway from from having this and you have a provision over here then SP three twelve that would say differently and so just something to keep in mind there. finally tonight last two things. Then this is getting fired this is that out nobody in their right mind would know but in the tax jobs tax cuts and jobs act which was enacted by the previous Congress under the previous administration under president trump. Congress broadened the ability for non resident aliens to be in effect to be shareholders of an S. corporation it historically FOR if a nonresident alien became a shareholder of an S. corporation that corporation no longer by law be able to continue to exist. There is a special type of trust that's recognized and so nonresident aliens can actually through this trust can in effect be shareholders in an S. corporation and so that's something outside the direct parameters of SB three twelve but in terms of thinking through the broader image and it's complicated area of of of foreign investment it's important to keep that one in mind and then finally believe it or not there to finally I would say make certain that. And now I'm on I'm in the definition of prohibited form party. which is a the most operative part of the of SP three twelve Make certain that each of the says what what you wanted to say and and here's what I mean by that So you the definition prohibited for party is really broken the five parts in the fifth paragraph basically said it's any combination of the four that came before okay. Six a is a citizen or resident of a country that's on the list of bad boy countries. Paragraph B. is any foreign government formed within one of the bad boy countries. grassy any party other than an individual or government which in effect as a business entity of any kind that's on the list of bad boy countries okay that listed twenty two. If you go to paragraph D. it's any party other than an individual or government so again that's would be a business entity. And little I says which is created or organized under the laws of any state. I'm interpreting state to mean fifty states of the United States if that's the case then that only applies to a US corporation okay. That's important because we go to paragraph two beneath it it says in which a significant interested directly or indirectly held or which not insubstantial control that's the part I point out earlier that there may be and that doesn't the intent might be to have that say substantial control is directly or indirectly held. That means that the significant interest test would only apply to U. S. corporation. So if you assume a significant interest test is the ten percent threshold if you could have a U. S. company that that eleven percent you have a Canadian company that's it twenty one percent the Canadian company on the way is the way I read it currently Would because it's not on the bad boy this is not a prohibited form party it would be able to make a purchase but the US company US based company if it had the same exact. DNA or same investors same quantity would not be able to purchase and that may be the intent but I just that so I just want to make certain that that was out in front of everybody time with that I will. Be happy to answer any questions that I can answer representative Jett you're recognized for a question thank you ma'am do you have any any idea or any thoughts to this bill the value land use you see. Was the issue that as the side your expertise. You know it I wouldn't consider it to be in within my expertise and I have thought about it and I don't I'm not going to pretend that I have the answer but there are states like Iowa that have these laws and have for a long time and land values there if. Continued nurse study states like Oklahoma that have the provision in law not only in its acts in the constitution. and I'm not sure how they do it it's it's a fairly strict law but it between twenty eighteen and twenty nineteen. there were three states that together comprise forty percent of all increase in foreign ownership in that one year period in Oklahoma was one of them and so it makes no sense to me that's my answer I don't know what how it relates to the land value and I don't know how it relates to in leased in those states I don't know how you explain having the law in place and it still you still have a pretty significant amount of foreign ownership like I mentioned to you earlier all these laws the U. each state has been looked at in in its own has its own species and trying to figure out you know how that how that happens but I don't have a direct. Knowledge on the in actuality on land values. Are there any other questions. Saying no other questions thank you Sir thank you we don't have anyone speak a signed up to speak for against is there anyone in the audience would like to speak for the bill. Against the bill. Which I like to close for your bill. Thank the lord I'm a farmer. guys I'm running on about a quarter of a tank of planted about five hundred fifty acres in the last two and a half days in the. I appreciate chose attention to this and and it's important to me and the our land and that can go to our our future generations this represent a luncheon wants to follow. I appreciate everybody's input and the time that. A lot of people of but and that this behind the scenes to make this bill better it does go to January twenty twenty one I want to make sure that you understand that that's covered I'm god's not making any more land and I'd like for Arkansas to be able to protect our farmland from bad actors but also be able to sell land and invest with those that do want to do business in the state and so with that I would appreciate a good vote. I have a motion do pass on house bill thirteen twelve from representative Smith is there any discussion on the motion representative Jett you're recognized thank you Committee I'll just tell you all that the General just testified. Two thousand acres of farm around these countries but at home across the whole United States we're looking at two hundred thousand acres of literally hundreds of thousand acres this problem does not exist in the State of Arkansas we're playing Russian roulette with with farmers livelihoods up and down adult all across the state of Arkansas and that's that's something I can not hook up on and that Blake Johnson down as one of the best friends I got. Hamina Senators shook Brady's longtime he's Farman Farman and I will go home this week animal crawling across the desk and I'm gonna fertilizers rice crop but not fiction District the hell out of it over this bill. But but in a in a notice seriousness notice seriousness this this is an issue here that is bigger than what we're discussing here and I don't know if if if my colleagues here understands the ramifications of what we're really looking at doing even if we need the value ground if it the farmer for example goes in the bars are farm roll back over Blake and I format is five to six thousand dollars maker mostly farmers are leveraged mostly farmers probably know five thousand dollars an acre for this groundfish ground for some reason this would devalue the farm ground bank regulators come in at the end of the day to lose banks I start cleaning your loans up that means farmers cannot get up get cannot get a crop loan here in the issue about we're sending a message to time and I'm all for that I'm all for that but China is our number one importer of our grain commodities and timber products in a message that we're sending here is not only that you came background here which is I'm I'm I'm good with that but also the message that they're going to receive is we don't do business with with you and I would I would I would ask anybody that sits on this committee if you go into business and they say they don't want to deal with you on your tires but you can deal with with us on our terms everybody in this room would walk out of the store that business we would do business with them and that's what that's what we're telling John here today to do today and I just I just I will vote no when I'd ask you guys vote no as well and and respect represents me for making this motion thank you sarsen replaced but also he's in agriculture territory as well and and I think our farmers or landowners don't want this bill. Is there any other discussion. Okay we have a motion do pass from senator right from representative Brandt Smith all those in favor say aye. Those against narrow. I'm so sorry your bill has failed. Thank you colleagues I appreciate your time and what that were adjourned.