1.1                          A bill for an act 
  1.2             relating to agriculture; establishing an agroforestry 
  1.3             loan program; appropriating money; proposing coding 
  1.4             for new law in Minnesota Statutes, chapter 17. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6                      AGROFORESTRY LOAN PROGRAM 
  1.7      Section 1.  [17.118] [AGROFORESTRY LOAN PROGRAM.] 
  1.8      Subdivision 1.  [PURPOSE.] The purpose of the agroforestry 
  1.9   loan program is to provide interest-free financing during the 
  1.10  growing period to farmers converting land to agroforestry. 
  1.11     Subd. 2.  [AUTHORITY.] The commissioner shall establish, 
  1.12  adopt rules for, and implement a program to make loans to 
  1.13  cooperatives who will in turn provide loans to farmers based on 
  1.14  the development of agroforestry plots and the annual growth of 
  1.15  the trees. 
  1.16     Subd. 3.  [DEFINITIONS.] (a) The definitions in this 
  1.17  subdivision apply to this section. 
  1.18     (b) "Agroforestry cooperative" means a cooperative 
  1.19  established under chapter 308A with the purpose of working with 
  1.20  farmers to encourage the development of agroforestry in 
  1.21  Minnesota. 
  1.22     (c) "Borrower" means an individual resident farmer applying 
  1.23  for a loan. 
  1.24     (d) "Commissioner" means the commissioner of agriculture or 
  1.25  the commissioner's designee. 
  2.1      (e) "Lender agreement" means a loan agreement entered into 
  2.2   between the commissioner and a cooperative.  The agreement must 
  2.3   contain terms and conditions of the loan that include, but are 
  2.4   not limited to, general loan provisions, loan management 
  2.5   requirements, application of payments, loan term limits, 
  2.6   allowable expenses, and fee limitations. 
  2.7      Subd. 4.  [APPLICATION.] The commissioner shall prescribe 
  2.8   forms and establish an application process for applicants to 
  2.9   apply for cooperatives. 
  2.10     Subd. 5.  [PAYMENTS.] (a) Payments from the commissioner to 
  2.11  an agroforestry cooperative must be disbursed on a cost-incurred 
  2.12  basis and must be matched by an equal amount of nonstate money.  
  2.13  Cooperatives shall submit payment requests at least quarterly 
  2.14  but not more than monthly.  Payment requests must be reviewed 
  2.15  and approved by the commissioner.  The payment request form must 
  2.16  itemize all costs by major elements and show eligible and 
  2.17  ineligible costs. 
  2.18     (b) The commissioner may initiate rescission of an 
  2.19  allocation granted in the lender agreement as provided in 
  2.20  subdivision 11, paragraph (d), if the agroforestry cooperative 
  2.21  fails to enter into loans with borrowers equaling the total 
  2.22  allocation granted within one year from the date of the lender 
  2.23  agreement or fails to have the total amount of allocated funds 
  2.24  drawn down through payment requests within two years.  An 
  2.25  additional year to draw down the undisbursed portion of an 
  2.26  allocation may be granted by the commissioner under extenuating 
  2.27  circumstances. 
  2.28     Subd. 6.  [LOAN AMOUNTS.] Borrowers may receive loans for 
  2.29  planted areas up to 40 acres for: 
  2.30     (1) the total amount necessary for establishment of the 
  2.31  trees; 
  2.32     (2) the total amount of maintenance costs, including weed 
  2.33  control, during the first three years; and 
  2.34     (3) 70 percent of the value of the growth for the first ten 
  2.35  years. 
  2.36     Subd. 7.  [AUTHORITY OF AGROFORESTRY COOPERATIVES.] (a) 
  3.1   Agroforestry cooperatives may enter into lender agreements with 
  3.2   the commissioner. 
  3.3      (b) Agroforestry cooperatives may enter into loan 
  3.4   agreements with borrowers to finance projects under this section.
  3.5      (c) Agroforestry cooperatives may establish revolving loan 
  3.6   programs to finance projects under this section. 
  3.7      (d) Agroforestry cooperatives may enter into participation 
  3.8   agreements with other lenders, including contracts with other 
  3.9   lenders for the limited purposes of loan review, processing, and 
  3.10  servicing or contracts to enter into loan agreements with 
  3.11  borrowers to finance projects under this section.  Other lenders 
  3.12  entering into contracts with agroforestry cooperatives under 
  3.13  this section must meet the definition of agroforestry 
  3.14  cooperative in subdivision 4, must comply with all provisions of 
  3.15  the lender agreement and this section, and must guarantee 
  3.16  repayment of the loan funds to the cooperative. 
  3.17     Subd. 8.  [BORROWER ELIGIBILITY; TERMS; REPAYMENT; 
  3.18  RESCISSION.] (a) An agroforestry cooperative is responsible for 
  3.19  repaying the principal of a loan to the commissioner.  The terms 
  3.20  of repayment must be identified in the lender agreement.  If 
  3.21  defaults occur, it is the responsibility of the agroforestry 
  3.22  cooperative to obtain repayment from the borrower.  Default on 
  3.23  the part of individual borrowers does not affect the 
  3.24  agroforestry cooperative's responsibility to repay its loan from 
  3.25  the commissioner whether or not the agroforestry cooperative 
  3.26  fully recovers defaulted amounts from individual borrowers.  For 
  3.27  revolving loan programs established under subdivision 10, 
  3.28  paragraph (c), the lender agreement must provide that: 
  3.29     (1) repayment of principal to the commissioner must begin 
  3.30  no later than ten years after the date of the lender agreement 
  3.31  and must be repaid in full no later than 20 years after the date 
  3.32  of the lender agreement; 
  3.33     (2) after the initial ten-year period, the agroforestry 
  3.34  cooperative shall not write any additional loans and any 
  3.35  existing principal balance held by the agroforestry cooperative 
  3.36  must be immediately repaid to the commissioner; 
  4.1      (3) after the initial ten-year period, all principal 
  4.2   received by the agroforestry cooperative from borrowers must be 
  4.3   repaid to the commissioner as it is received; and 
  4.4      (4) the applicant shall report to the commissioner annually 
  4.5   regarding the past and intended uses of the money in the 
  4.6   revolving loan program. 
  4.7      (b) Continued availability of the allocation granted in the 
  4.8   lender agreement is contingent upon commissioner approval of the 
  4.9   annual report.  The commissioner shall review the annual report 
  4.10  to ensure that the past and future uses of the funds are 
  4.11  consistent with the comprehensive water management plan and the 
  4.12  lender agreement.  If the commissioner concludes that the past 
  4.13  or intended uses of the money are not consistent with the 
  4.14  comprehensive water management plan or the lender agreement, the 
  4.15  commissioner shall rescind the allocation granted under the 
  4.16  lender agreement.  The rescission results in termination of the 
  4.17  available allocation, the immediate repayment of any 
  4.18  unencumbered funds held by the agroforestry cooperative in a 
  4.19  revolving loan fund, and the repayment of the principal portion 
  4.20  of loan repayments to the commissioner as they are received.  
  4.21  The lender agreement must reflect the commissioner's rights 
  4.22  under this paragraph. 
  4.23     Subd. 9.  [DATA PRIVACY.] The following data on applicants 
  4.24  or borrowers collected by the commissioner under this section 
  4.25  are private for data on individuals as provided in section 
  4.26  13.02, subdivision 12, or nonpublic for data not on individuals 
  4.27  as provided in section 13.02, subdivision 9:  financial 
  4.28  information, including, but not limited to, credit reports, 
  4.29  financial statements, tax returns, and net worth calculations 
  4.30  received or prepared by the commissioner. 
  4.31     Subd. 10.  [ESTABLISHMENT OF ACCOUNT.] An account must be 
  4.32  established in the state treasury called the agroforestry 
  4.33  revolving fund.  Money in the account, including interest 
  4.34  earned, is appropriated to the commissioner for payments under 
  4.35  subdivision 5.  The fund must be credited with repayments. 
  4.36     Subd. 11.  [FEES AND INTEREST.] (a) The agroforestry 
  5.1   cooperative must not assess fees or interest on loan repayments. 
  5.2      (b) The agroforestry cooperative shall create a principal 
  5.3   account to which the principal portions of individual borrower 
  5.4   loan repayments must be credited. 
  5.5      (c) Any interest earned on outstanding loan balances not 
  5.6   separated as the repayments are received and before the 
  5.7   principal amounts are deposited in the principal account must be 
  5.8   added to the principal portion of the loan to the agroforestry 
  5.9   cooperative and must be paid to the commissioner when the 
  5.10  principal is due under the lender agreement. 
  5.11     (d) Any interest earned on the principal account must be 
  5.12  added to the principal portion of the loan to the agroforestry 
  5.13  cooperative and must be paid to the commissioner when the 
  5.14  principal is due under the lender agreement. 
  5.15     Subd. 12.  [REPORT.] (a) The commissioner shall prepare and 
  5.16  submit a report to the legislature by October 15 of each 
  5.17  odd-numbered year. 
  5.18     (b) The report must include, but need not be limited to, 
  5.19  matters such as loan allocations and uses, the extent to which 
  5.20  the financial assistance is helping to convert land to 
  5.21  agroforestry, and other matters pertinent to the implementation 
  5.22  of the program. 
  5.23     Subd. 13.  [LIENS AGAINST PROPERTY.] (a) Unless an 
  5.24  agroforestry cooperative determines otherwise, at the time of 
  5.25  the disbursement of funds on a loan to a borrower under this 
  5.26  section, the principal balance due plus accrued interest on the 
  5.27  principal balance as provided by this section becomes a lien in 
  5.28  favor of the agroforestry cooperative making the loan upon the 
  5.29  real property on which the project is located.  This lien and 
  5.30  subordination agreement must be recorded against the real estate 
  5.31  in the county recorder's office or filed with the registrar of 
  5.32  titles for the county or counties in which the property is 
  5.33  located. 
  5.34     (b) An agroforestry cooperative may also secure amounts due 
  5.35  on a loan under this section by taking a purchase money security 
  5.36  interest in equipment in accordance with chapter 336, article 9, 
  6.1   and may enforce the purchase money security interest in 
  6.2   accordance with chapters 336, article 9; and 565. 
  6.3      Sec. 2.  [APPROPRIATION; AGROFORESTRY.] 
  6.4      $5,000,000 is appropriated from the general fund to the 
  6.5   agroforestry revolving loan account created in section 1, 
  6.6   subdivision 10, for the purposes of section 1.