HF 1639

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to agriculture; changing certain provisions of the best management
practices loan program; amending Minnesota Statutes 2006, section 17.117,
subdivisions 1, 4, 11.

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

Section 1.

Minnesota Statutes 2006, section 17.117, subdivision 1, is amended to read:

Subdivision 1.

Purpose.

The purpose of the agriculture best management practices
loan program is to provide low or no interest financing to farmers, agriculture supply
businesses, deleted text begin and deleted text end rural landowners new text begin , and water-quality cooperatives new text end for the implementation
of agriculture and other best management practices that reduce environmental pollution.

Sec. 2.

Minnesota Statutes 2006, section 17.117, subdivision 4, is amended to read:

Subd. 4.

Definitions.

(a) For the purposes of this section, the terms defined in this
subdivision have the meanings given them.

(b) "Agricultural and environmental revolving accounts" means accounts in the
agricultural fund, controlled by the commissioner, which hold funds available to the
program.

(c) "Agriculture supply business" means a person, partnership, joint venture,
corporation, limited liability company, association, firm, public service company,
or cooperative that provides materials, equipment, or services to farmers or
agriculture-related enterprises.

(d) "Allocation" means the funds awarded to an applicant for implementation of best
management practices through a competitive or noncompetitive application process.

(e) "Applicant" means a local unit of government eligible to participate in this
program that requests an allocation of funds as provided in subdivision 6b.

(f) "Best management practices" has the meaning given in sections 103F.711,
subdivision 3, and 103H.151, subdivision 2, or other practices, techniques, and measures
that have been demonstrated to the satisfaction of the commissioner to prevent or reduce
adverse environmental impacts by using the most effective and practicable means of
achieving environmental goals.

(g) "Borrower" means a farmer, an agriculture supply business, or a rural landowner
applying for a low-interest loan.

(h) "Commissioner" means the commissioner of agriculture, including when the
commissioner is acting in the capacity of chair of the Rural Finance Authority, or the
designee of the commissioner.

(i) "Committed project" means an eligible project scheduled to be implemented at
a future date:

(1) that has been approved and certified by the local government unit; and

(2) for which a local lender has obligated itself to offer a loan.

(j) "Comprehensive water management plan" means a state approved and locally
adopted plan authorized under section 103B.231, 103B.255, 103B.311, 103C.331,
103D.401, or 103D.405.

(k) "Cost incurred" means expenses for implementation of a project accrued because
the borrower has agreed to purchase equipment or is obligated to pay for services or
materials already provided as a result of implementing deleted text begin a prior deleted text end new text begin an new text end approved eligible project.

(l) "Farmer" means a person, partnership, joint venture, corporation, limited liability
company, association, firm, public service company, or cooperative that regularly
participates in physical labor or operations management of farming and files a Schedule F
as part of filing United States Internal Revenue Service Form 1040 or indicates farming as
the primary business activity under Schedule C, K, or S, or any other applicable report to
the United States Internal Revenue Service.

(m) "Lender agreement" means an agreement entered into between the commissioner
and a local lender which contains terms and conditions of participation in the program.

(n) "Local government unit" means a county, soil and water conservation district,
or an organization formed for the joint exercise of powers under section 471.59 with
the authority to participate in the program.

(o) "Local lender" means a local government unit as defined in paragraph (n), a state
or federally chartered bank, a savings association, a state or federal credit union, Agribank
and its affiliated organizations, or a nonprofit economic development organization or other
financial lending institution approved by the commissioner.

(p) "Local revolving loan account" means the account held by a local government
unit and a local lender into which principal repayments from borrowers are deposited and
new loans are issued in accordance with the requirements of the program and lender
agreements.

(q) "Nonpoint source" has the meaning given in section 103F.711, subdivision 6.

(r) "Program" means the agriculture best management practices loan program
in this section.

(s) "Project" means one or more components or activities located within Minnesota
that are required by the local government unit to be implemented for satisfactory
completion of an eligible best management practice.

(t) "Rural landowner" means the owner of record of Minnesota real estate located
in an area determined by the local government unit to be rural after consideration of
local land use patterns, zoning regulations, jurisdictional boundaries, local community
definitions, historical uses, and other pertinent local factors.

new text begin (u) "Water-quality cooperative" has the meaning given in section 115.58, paragraph
(d), except as expressly limited in this section.
new text end

Sec. 3.

Minnesota Statutes 2006, section 17.117, subdivision 11, is amended to read:

Subd. 11.

Loans issued to borrower.

(a) Local lenders may issue loans only for
projects that are approved and certified by the local government unit as meeting priority
needs identified in a comprehensive water management plan or other local planning
documents, are in compliance with accepted practices, standards, specifications, or
criteria, and are eligible for financing under Environmental Protection Agency or other
applicable guidelines.

(b) The local lender may use any additional criteria considered necessary to
determine the eligibility of borrowers for loans.

(c) Local lenders shall set the terms and conditions of loans to borrowers, except that:

(1) no loan to a borrower may exceed deleted text begin $50,000 deleted text end new text begin $100,000 new text end ;

(2) no loan for a project may exceed deleted text begin $50,000 deleted text end new text begin $100,000 new text end ; and

(3) no borrower shall, at any time, have multiple loans from this program with a total
outstanding loan balance of more than deleted text begin $50,000 deleted text end new text begin $100,000 new text end .

(d) deleted text begin The maximum term length for conservation tillage projects is five years. deleted text end The
maximum term length for deleted text begin other deleted text end projects in this paragraph is ten years.

deleted text begin (e) Notwithstanding paragraph (c), a local lender may issue a loan of up to $100,000
for a community sewage treatment system serving two or more households.
deleted text end

deleted text begin (f) deleted text end new text begin (e) new text end Fees charged at the time of closing must:

(1) be in compliance with normal and customary practices of the local lender;

(2) be in accordance with published fee schedules issued by the local lender;

(3) not be based on participation program; and

(4) be consistent with fees charged other similar types of loans offered by the local
lender.

deleted text begin (g) deleted text end new text begin (f) new text end The interest rate assessed to an outstanding loan balance by the local lender
must not exceed three percent per year.