1.1                          A bill for an act 
  1.2             relating to agriculture; modifying provisions relating 
  1.3             to the rural finance authority; amending Minnesota 
  1.4             Statutes 2000, sections 41B.025, subdivision 1; 
  1.5             41B.03, subdivision 2; 41B.043, subdivisions 1b and 2; 
  1.6             and 41B.046, subdivision 2. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2000, section 41B.025, 
  1.9   subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [ESTABLISHMENT.] There is created a public 
  1.11  body corporate and politic to be known as the "Minnesota rural 
  1.12  finance authority," which shall perform the governmental 
  1.13  functions and exercise the sovereign powers delegated to it in 
  1.14  sections 41B.01 to 41B.23 and chapter 41C in furtherance of the 
  1.15  public policies and purposes declared in section 41B.01.  The 
  1.16  board of the authority consists of the commissioners of 
  1.17  agriculture, commerce, trade and economic development, and 
  1.18  finance, the state auditor, and six public members appointed by 
  1.19  the governor with the advice and consent of the senate.  The 
  1.20  state auditor may designate one staff member to serve in the 
  1.21  auditor's place.  No public member may reside within the 
  1.22  metropolitan area, as defined in section 473.121, subdivision 
  1.23  2.  Each member shall hold office until a successor has been 
  1.24  appointed and has qualified.  A certificate of appointment or 
  1.25  reappointment of any member is conclusive evidence of the proper 
  1.26  appointment of the member. 
  2.1      Sec. 2.  Minnesota Statutes 2000, section 41B.03, 
  2.2   subdivision 2, is amended to read: 
  2.3      Subd. 2.  [ELIGIBILITY FOR RESTRUCTURED LOAN.] In addition 
  2.4   to the eligibility requirements of subdivision 1, a prospective 
  2.5   borrower for a restructured loan must:  
  2.6      (1) have received at least 50 percent of average annual 
  2.7   gross income from farming for the past three years or, for 
  2.8   homesteaded property, received at least 40 percent of average 
  2.9   gross income from farming in the past three years, and farming 
  2.10  must be the principal occupation of the borrower; 
  2.11     (2) have a debt-to-asset ratio equal to or greater than 50 
  2.12  percent and in determining this ratio, the assets must be valued 
  2.13  at their current market value; 
  2.14     (3) have projected annual expenses, including operating 
  2.15  expenses, family living, and interest expenses after the 
  2.16  restructuring, that do not exceed 95 percent of the borrower's 
  2.17  projected annual income considering prior production history and 
  2.18  projected prices for farm production, except that the authority 
  2.19  may reduce the 95 percent requirement if it finds that other 
  2.20  significant factors in the loan application support the making 
  2.21  of the loan; 
  2.22     (4) (3) demonstrate substantial difficulty in meeting 
  2.23  projected annual expenses without restructuring the loan; and 
  2.24     (5) (4) must have a total net worth, including assets and 
  2.25  liabilities of the borrower's spouse and dependents, of less 
  2.26  than $400,000 in 1999 and an amount in subsequent years which is 
  2.27  adjusted for inflation by multiplying $400,000 by the cumulative 
  2.28  inflation rate as determined by the United States All-Items 
  2.29  Consumer Price Index. 
  2.30     Sec. 3.  Minnesota Statutes 2000, section 41B.043, 
  2.31  subdivision 1b, is amended to read: 
  2.32     Subd. 1b.  [LOAN PARTICIPATION.] The authority may 
  2.33  participate in an agricultural improvement loan with an eligible 
  2.34  lender to a farmer who meets the requirements of section 41B.03, 
  2.35  subdivision 1, clauses (1) and (2), and who are actively engaged 
  2.36  in farming.  Participation is limited to 45 percent of the 
  3.1   principal amount of the loan or $100,000 $125,000, whichever is 
  3.2   less.  The interest rates and repayment terms of the authority's 
  3.3   participation interest may be different than the interest rates 
  3.4   and repayment terms of the lender's retained portion of the loan.
  3.5      Sec. 4.  Minnesota Statutes 2000, section 41B.043, 
  3.6   subdivision 2, is amended to read: 
  3.7      Subd. 2.  [SPECIFICATIONS.] No direct loan may exceed 
  3.8   $35,000 or $125,000 for a loan participation or be made to 
  3.9   refinance an existing debt.  Each direct loan and participation 
  3.10  must be secured by a mortgage on real property and such other 
  3.11  security as the authority may require. 
  3.12     Sec. 5.  Minnesota Statutes 2000, section 41B.046, 
  3.13  subdivision 2, is amended to read: 
  3.14     Subd. 2.  [ESTABLISHMENT.] The authority shall establish 
  3.15  and implement a value-added agricultural product loan program to 
  3.16  help farmers finance the purchase of stock in a cooperative that 
  3.17  is proposing to build or purchase and operate an agricultural 
  3.18  product processing facility or already owns and operates an 
  3.19  agricultural product processing facility. 
  3.20     Sec. 6.  [EFFECTIVE DATE.] 
  3.21     This act is effective the day following final enactment.