HF 1074

as introduced - 89th Legislature (2015 - 2016) Posted on 02/19/2015 01:44pm

A bill for an act
relating to agriculture; extending the Agricultural Growth, Research, and
Investment (AGRI) program for ten years; dedicating a portion of annual AGRI
spending to farm business management scholarships; providing income tax
credits to encourage beginning farmers; appropriating money for beginning
farmer individual development accounts and supplemental farm business
management program funding; amending Minnesota Statutes 2014, sections
41A.12, subdivisions 2, 4; 290.06, by adding subdivisions; proposing coding for
new law in Minnesota Statutes, chapter 41B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 41A.12, subdivision 2, is amended to read:

Subd. 2.

Activities authorized.

new text begin (a) new text end For the purposes of this program, the
commissioner may issue grants, loans, or other forms of financial assistance. Eligible
activities include, but are not limited to, grants to livestock producers under the livestock
investment grant program under section 17.118, bioenergy awards made by the NextGen
Energy Board under section 41A.105, cost-share grants for the installation of biofuel
blender pumps, and financial assistance to support other rural economic infrastructure
activities.

new text begin (b) The commissioner must allocate $500,000 each fiscal year for need-based farm
business management tuition scholarships.
new text end

Sec. 2.

Minnesota Statutes 2014, section 41A.12, subdivision 4, is amended to read:

Subd. 4.

Sunset.

This section expires on June 30, deleted text begin 2015 deleted text end new text begin 2025 new text end .

Sec. 3.

new text begin [41B.0391] BEGINNING FARMER TAX CREDIT PROGRAM;
ADMINISTRATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms
have the meanings given.
new text end

new text begin (b) "Agricultural asset" means agricultural land, livestock, crop or livestock
production facilities or buildings, and machinery used to farm in Minnesota.
new text end

new text begin (c) "Beginning farmer" means a resident of Minnesota who:
new text end

new text begin (1) is seeking entry or has entered within the last ten years into farming;
new text end

new text begin (2) farms or intends to farm land located within Minnesota;
new text end

new text begin (3) is not related by blood or marriage to the owner of the agricultural assets from
whom the beginning farmer is seeking to purchase or rent agricultural assets;
new text end

new text begin (4) is not related by blood or marriage to a partner, member, shareholder, or trustee
of the owner of agricultural assets from whom the beginning farmer is seeking to purchase
or rent agricultural assets; and
new text end

new text begin (5) meets the following eligibility requirements as determined by the authority:
new text end

new text begin (i) has a net worth that does not exceed the limit provided under section 41B.03,
subdivision 3, paragraph (a), clause (2);
new text end

new text begin (ii) is or will be the principal operator of the farm and certifies that farming is or
will be the applicant's principal occupation;
new text end

new text begin (iii) has or is actively acquiring sufficient education, training, or experience in
farming;
new text end

new text begin (iv) demonstrates to the authority a profit potential by submitting projected earnings
statements;
new text end

new text begin (v) satisfies the farm management program requirement under section 41B.03,
subdivision 3, paragraph (a), clause (7); and
new text end

new text begin (vi) agrees to file a soil and water conservation plan as provided under section
41B.03, subdivision 3, paragraph (a), clause (8).
new text end

new text begin (d) "Farming" has the meaning given in Minnesota Rules, part 1650.0021, subpart 2.
new text end

new text begin (e) "Owner of agricultural assets" means a person who is the owner in fee of
agricultural land or who has legal title to any other agricultural asset.
new text end

new text begin (f) "Share-rent agreement" means a rental agreement in which the principal
consideration given to the owner of agricultural assets is a predetermined portion of the
production of farm products produced from the rented agricultural assets and which
provides for sharing production costs or risk of loss, or both.
new text end

new text begin Subd. 2. new text end

new text begin Tax credit for owners of agricultural assets. new text end

new text begin (a) An owner of agricultural
assets may take a credit against the tax due under chapter 290 for the sale or rental of
agricultural assets to a beginning farmer. An owner of agricultural assets may take a
credit equal to:
new text end

new text begin (1) five percent of the sale price of the agricultural asset;
new text end

new text begin (2) ten percent of the gross rental income in each of the first, second, and third year
of a rental agreement; or
new text end

new text begin (3) 15 percent of the cash equivalent of the gross rental income in each of the first,
second, and third year of a share-rent agreement.
new text end

new text begin (b) A qualifying rental agreement includes cash rent of agricultural assets or a
share-rent agreement. The agricultural asset must be rented at prevailing community
rates as determined by the authority. The credit may be claimed only after approval and
certification by the authority.
new text end

new text begin (c) An owner of agricultural assets or a beginning farmer may terminate a rental
agreement, including a share-rent agreement, for reasonable cause. If a rental agreement is
terminated without the fault of the owner of agricultural assets, the tax credits shall not
be retroactively disallowed. If an agreement is terminated with fault by the owner of
agricultural assets, any prior tax credits claimed under this subdivision by the owner of
agricultural assets shall be disallowed and must be repaid to the commissioner of revenue.
new text end

new text begin (d) The credit is limited to the liability for tax, as computed under chapter 290, for
the taxable year. If the amount of the credit determined under this section for any taxable
year exceeds this limitation, the excess is a beginning farmer incentive credit carryover
according to section 290.06, subdivision 37.
new text end

new text begin Subd. 3. new text end

new text begin Beginning farmer management tax credit. new text end

new text begin (a) A beginning farmer
may take a credit against the tax due under chapter 290 for participating in a financial
management program approved by the authority. The credit is equal to 100 percent of the
cost of participating in the program or $700, whichever is less. The credit is available
for up to three years while the farmer is in the program. The authority shall maintain a
list of approved financial management programs and establish a procedure for approving
equivalent programs that are not on the list.
new text end

new text begin (b) The credit is limited to the liability for tax, as computed under chapter 290, for
the taxable year. If the amount of the credit determined under this section for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
according to section 290.06, subdivision 37.
new text end

new text begin Subd. 4. new text end

new text begin Authority's duties. new text end

new text begin The authority shall:
new text end

new text begin (1) approve and certify beginning farmers as eligible for the program under this
section;
new text end

new text begin (2) approve and certify owners of agricultural assets as eligible for the tax credit
under subdivision 2;
new text end

new text begin (3) provide necessary and reasonable assistance and support to beginning farmers
for qualification and participation in financial management programs approved by the
authority; and
new text end

new text begin (4) refer beginning farmers to agencies and organizations that may provide
additional pertinent information and assistance.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 4.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 37. new text end

new text begin Beginning farmer incentive credit. new text end

new text begin (a) A beginning farmer incentive
credit is allowed against the tax due under this chapter for the sale or rental of agricultural
assets to a beginning farmer under section 41B.0391, subdivision 2.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural
Finance Authority under section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
each of the 15 succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this paragraph must not exceed the
taxpayer's liability for tax less the beginning farmer incentive credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 5.

Minnesota Statutes 2014, section 290.06, is amended by adding a subdivision
to read:

new text begin Subd. 38. new text end

new text begin Beginning farmer management credit. new text end

new text begin (a) A taxpayer who is a
beginning farmer may take a credit against the tax due under this chapter for participation
in a financial management program under section 41B.0391, subdivision 3.
new text end

new text begin (b) The credit may be claimed only after approval and certification by the Rural
Finance Authority under section 41B.0391.
new text end

new text begin (c) The credit is limited to the liability for tax, as computed under this chapter, for the
taxable year. If the amount of the credit determined under this subdivision for any taxable
year exceeds this limitation, the excess is a beginning farmer management credit carryover
to each of the three succeeding taxable years. The entire amount of the excess unused credit
for the taxable year is carried first to the earliest of the taxable years to which the credit
may be carried and then to each successive year to which the credit may be carried. The
amount of the unused credit which may be added under this paragraph must not exceed the
taxpayer's liability for tax less the beginning farmer management credit for the taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2014.
new text end

Sec. 6. new text begin APPROPRIATION; BEGINNING FARMER INDIVIDUAL
DEVELOPMENT ACCOUNT MATCHING GRANTS.
new text end

new text begin (a) $100,000 in fiscal year 2016 and $100,000 in fiscal year 2017 are appropriated
from the general fund to the commissioner of human services for grants to fiduciary
organizations under the family assets for independence initiative in Minnesota Statutes,
section 256E.35. These appropriations must be matched by a like amount of federal funds.
Grant funds are available to fiduciary organizations to match savings under a new matched
savings program for beginning farmers.
new text end

new text begin (b) Before the commissioner of human services may award funds under this section,
a statewide organization representing participating fiduciary organizations must submit a
beginning farmer program and fund distribution plan to the commissioner of human
services. The plan must include at least the following elements:
new text end

new text begin (1) a participant must be a beginning farmer, as defined in Minnesota Statutes,
section 41B.0391, subdivision 1, paragraph (c); and
new text end

new text begin (2) a participant who satisfies all program requirements must receive a one-to-one
match on their savings of up to $3,500 over a two-year period. Permissible uses of
matching funds include the purchase of agricultural land, equipment, animals, or supplies.
new text end

new text begin (c) Up to $25,000 of the appropriation each year is reserved to match the savings of
beginning farmers who are members of a protected group, as defined under Minnesota
Statutes, section 43A.02, subdivision 33. Any portion of this set-aside that is not spent or
encumbered for beginning farmers who are members of a protected group by January 31
of each fiscal year may be reallocated to match the savings of other eligible participants.
new text end

Sec. 7. new text begin APPROPRIATION; FARM BUSINESS MANAGEMENT SUPPLEMENT.
new text end

new text begin (a) $2,400,000 in fiscal year 2016 and $2,400,000 in fiscal year 2017 are
appropriated from the general fund to the commissioner of agriculture for grants to the
Board of Trustees of the Minnesota State Colleges and Universities system for additional
farm business management programming. Before receiving a grant, the Board of Trustees
must certify that the board will maintain total funding for the farm business management
program at no less than fiscal year 2015 levels and that the grant will supplement, not
supplant, existing sources of farm business management funding.
new text end

new text begin (b) The Board of Trustees must allocate a portion of grant funding received under
this section to outreach to, and farm business management programming for, beginning
farmers, urban farmers, recent immigrant farmers, and farmers who are members of a
protected group as defined under Minnesota Statutes, section 43A.02, subdivision 33.
new text end