1.1                          A bill for an act 
  1.2             relating to agriculture; changing provisions of the 
  1.3             agriculture best management practices loan program; 
  1.4             amending Minnesota Statutes 2000, section 17.117. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  Minnesota Statutes 2000, section 17.117, is 
  1.7   amended to read: 
  1.8      17.117 [AGRICULTURE BEST MANAGEMENT PRACTICES LOAN 
  1.9   PROGRAM.] 
  1.10     Subdivision 1.  [PURPOSE.] The purpose of the agriculture 
  1.11  best management practices loan program is to provide low or no 
  1.12  interest financing to farmers, agriculture supply businesses, 
  1.13  and rural landowners for the implementation of agriculture and 
  1.14  other best management practices that reduce environmental 
  1.15  pollution. 
  1.16     Subd. 2.  [AUTHORITY.] The commissioner shall may develop 
  1.17  administrative guidelines specifying criteria, standards, and 
  1.18  procedures for making loans and establish, adopt rules for, and 
  1.19  implement a program to make loans or otherwise provide funds to 
  1.20  local units of government, federal authorities, lending 
  1.21  institutions, and other appropriate organizations who will in 
  1.22  turn provide loans to landowners and businesses for facilities, 
  1.23  fixtures, equipment, or other sustainable best management 
  1.24  practices that prevent or mitigate sources of nonpoint source 
  1.25  water pollution or other adverse environmental impacts.  The 
  2.1   commissioner shall establish pilot projects to develop 
  2.2   procedures for implementing the program.  The commissioner shall 
  2.3   develop administrative guidelines to implement the pilot 
  2.4   projects specifying criteria, standards, and procedures for 
  2.5   making loans.  The agriculture best management practices loan 
  2.6   program must provide a consistent programmatic framework for the 
  2.7   disbursement and administration of funds available to the 
  2.8   commissioner designated to the program for protection of 
  2.9   environmental quality or remediation or mitigation of adverse 
  2.10  environmental impacts.  The distribution of loans or funds 
  2.11  through the program must comply with all limitations, 
  2.12  provisions, or requirements of the respective funding sources.  
  2.13  Unless otherwise limited by the funding source, the commissioner 
  2.14  shall manage the program using perpetual revolving fund accounts.
  2.15     Subd. 3.  [APPROPRIATIONS.] Up to $140,000,000 of the 
  2.16  balance in the water pollution control revolving fund in section 
  2.17  446A.07, as determined by the public facilities authority, is 
  2.18  appropriated to the commissioner for the establishment of this 
  2.19  program.  In addition, the commissioner may receive 
  2.20  appropriations from the legislature and grants or funds from 
  2.21  other sources for implementation of the program. 
  2.22     Subd. 4.  [DEFINITIONS.] For the purposes of this section, 
  2.23  the terms defined in this subdivision have the meanings given 
  2.24  them. 
  2.25     (a) "Agricultural and environmental revolving accounts" 
  2.26  means accounts in the state treasury, controlled by the 
  2.27  commissioner, which hold funds available to the program. 
  2.28     (b) "Agriculture supply business" means a person, 
  2.29  partnership, joint venture, corporation, limited liability 
  2.30  company, association, firm, public service company, or 
  2.31  cooperative that provides materials, equipment, or services to 
  2.32  farmers or agriculture-related enterprises. 
  2.33     (c) "Allocation" means the funds awarded to an applicant 
  2.34  for implementation of best management practices through a 
  2.35  competitive or noncompetitive application process. 
  2.36     (a) (d) "Applicant" means a county or a local government 
  3.1   unit designated by a county under subdivision 8, paragraph 
  3.2   (a) local unit of government eligible to participate in this 
  3.3   program that requests an allocation of funds as provided in 
  3.4   subdivision 6b. 
  3.5      (b) "Authority" means the Minnesota public facilities 
  3.6   authority as established in section 446A.03. 
  3.7      (c) (e) "Best management practices" has the meaning given 
  3.8   in sections 103F.711, subdivision 3, and 103H.151, subdivision 2 
  3.9   or other practices, techniques, and measures that have been 
  3.10  demonstrated to the satisfaction of the commissioner to prevent 
  3.11  or reduce adverse environmental impacts by using the most 
  3.12  effective and practicable means of achieving environmental goals.
  3.13     (d) "Chair" means the chair of the board of water and soil 
  3.14  resources or the designee of the chair. 
  3.15     (e) (f) "Borrower" means an individual a farmer, an 
  3.16  agriculture supply business, or a rural landowner applying for a 
  3.17  low-interest loan. 
  3.18     (f) (g) "Commissioner" means the commissioner of 
  3.19  agriculture, including when the commissioner is acting in the 
  3.20  capacity of chair of the rural finance authority, or the 
  3.21  designee of the commissioner. 
  3.22     (h) "Committed project" means an eligible project scheduled 
  3.23  to be implemented at a future date:  
  3.24     (1) that has been approved and certified by the local 
  3.25  government unit; and 
  3.26     (2) for which a local lender has obligated itself to offer 
  3.27  a loan. 
  3.28     (g) (i) "Comprehensive water management plan" means a state 
  3.29  approved and locally adopted plan authorized under section 
  3.30  103B.231, 103B.255, 103B.311, 103C.331, 103D.401, or 103D.405. 
  3.31     (h) "Local allocation request" means a loan allocation 
  3.32  request from an applicant to implement agriculturally related 
  3.33  best management practices defined in paragraph (c). 
  3.34     (j) "Cost incurred" means expenses for implementation of a 
  3.35  project accrued because the borrower has agreed to purchase 
  3.36  equipment or is obligated to pay for services or materials 
  4.1   already provided as a result of implementing a prior approved 
  4.2   eligible project. 
  4.3      (k) "Farmer" means a person, partnership, joint venture, 
  4.4   corporation, limited liability company, association, firm, 
  4.5   public service company, or cooperative who regularly 
  4.6   participates in physical labor or operations management of 
  4.7   farming and files a Schedule F as part of filing United States 
  4.8   Internal Revenue Service Form 1040 or indicates farming as the 
  4.9   primary business activity under Schedule C, K, or S, or any 
  4.10  other applicable report to the United States Internal Revenue 
  4.11  Service. 
  4.12     (i) (l) "Lender agreement" means a loan agreement entered 
  4.13  into between the commissioner, a local lender, and the 
  4.14  applicant, if different from the local lender.  The agreement 
  4.15  will contain terms and conditions of the loan that will include 
  4.16  but need not be limited to general loan provisions, loan 
  4.17  management requirements, application of payments, loan term 
  4.18  limits, allowable expenses, and fee limitations an agreement 
  4.19  entered into between the commissioner and a local lender which 
  4.20  contains terms and conditions of participation in the program. 
  4.21     (j) (m) "Local government unit" means a county, soil and 
  4.22  water conservation district, or an organization formed for the 
  4.23  joint exercise of powers under section 471.59 with the authority 
  4.24  to participate in the program. 
  4.25     (k) (n) "Local lender" means a local government unit as 
  4.26  defined in paragraph (j) (m), a state or federally chartered 
  4.27  bank, a savings association, a state or federal credit 
  4.28  union, Agribank and its affiliated organizations, or a nonprofit 
  4.29  economic development organization or other financial lending 
  4.30  institution approved by the commissioner, or Farm Credit 
  4.31  Services. 
  4.32     (o) "Local revolving loan account" means the account held 
  4.33  by a local government unit and a local lender into which 
  4.34  principal repayments from borrowers are deposited and new loans 
  4.35  are issued in accordance with the requirements of the program 
  4.36  and lender agreements. 
  5.1      (l) (p) "Nonpoint source" has the meaning given in section 
  5.2   103F.711, subdivision 6. 
  5.3      (q) "Program" means the agriculture best management 
  5.4   practices loan program in this section. 
  5.5      (r) "Project" means one or more components or activities 
  5.6   located within Minnesota that are required by the local 
  5.7   government unit to be implemented for satisfactory completion of 
  5.8   an eligible best management practice. 
  5.9      (s) "Rural landowner" means the owner of record of 
  5.10  Minnesota real estate located in an area determined by the local 
  5.11  government unit to be rural after consideration of local land 
  5.12  use patterns, zoning regulations, jurisdictional boundaries, 
  5.13  local community definitions, historical uses, and other 
  5.14  pertinent local factors. 
  5.15     Subd. 5.  [USES OF FUNDS.] Use of funds under this section 
  5.16  must be in compliance with the rules and regulations of the 
  5.17  funding source or appropriation.  Use of funds from the public 
  5.18  facilities authority must comply with the federal Water 
  5.19  Pollution Control Act, section 446A.07, and eligible activities 
  5.20  listed in the intended use plan authorized in section 446A.07, 
  5.21  subdivision 4. 
  5.22     Subd. 5a.  [AGRICULTURAL AND ENVIRONMENTAL REVOLVING 
  5.23  ACCOUNTS.] (a) There shall be established in the state treasury 
  5.24  revolving accounts eligible to receive appropriations, 
  5.25  allocations from the public facilities authority, and money from 
  5.26  other sources.  All repayments of loans granted under this 
  5.27  section, including principal and interest, must be deposited 
  5.28  into the appropriate revolving account.  Interest earned in an 
  5.29  account accrues to that account. 
  5.30     (b) The money in these accounts is appropriated and 
  5.31  allocated to the commissioner for the purposes of this section, 
  5.32  provided the source of funds within the accounts allow for those 
  5.33  expenditures. 
  5.34     Subd. 6.  [APPLICATION.] (a) Only the following local 
  5.35  government units may apply for funds under this program: 
  5.36     (1) counties or their designees; 
  6.1      (2) soil and water conservation districts; and 
  6.2      (3) joint power organizations consisting of counties or 
  6.3   their designees or soil and water conservation districts. 
  6.4      (b) A county may submit an application for an allocation.  
  6.5   A county or a group of counties may designate another local 
  6.6   government unit to submit a local allocation request on their 
  6.7   behalf.  If a county does not submit an application, and does 
  6.8   not designate another local government unit, a soil and water 
  6.9   conservation district may submit an application for an 
  6.10  allocation.  If the local soil and water conservation district 
  6.11  does not submit an application, then an eligible joint powers 
  6.12  organization may submit an application for an allocation.  In 
  6.13  all instances, there may be only one application representing 
  6.14  any geographic area.  The applicant must coordinate and submit 
  6.15  requests on behalf of other units of government within the 
  6.16  geographic jurisdiction of the applicant. 
  6.17     (a) (c) The commissioner must prescribe forms and establish 
  6.18  an application process for applicants to apply for a local an 
  6.19  allocation request of funds.  The application must include but 
  6.20  need not be limited to (1) the geographic area served; (2) the 
  6.21  type and estimated cost of activities or projects for which they 
  6.22  are seeking a loan an allocation; and (3) a ranking 
  6.23  prioritization or targeting of proposed activities or projects; 
  6.24  and (4) the designation of the local lender and lending 
  6.25  practices the local lender intends to use to issue the loans to 
  6.26  the borrowers, if a local lender other than the applicant is to 
  6.27  be used. 
  6.28     (b) (d) If a local allocation request an application is 
  6.29  rejected, the applicant must be notified in writing as to the 
  6.30  reasons for the rejection and given 30 days to submit a revised 
  6.31  application.  The revised application shall be reviewed 
  6.32  according to the same procedure used to review the initial 
  6.33  application.  Failure of an applicant to be awarded funds does 
  6.34  not constitute a rejection of the application. 
  6.35     Subd. 6a.  [REVIEW AND RANKING OF APPLICATIONS.] (a) The 
  6.36  commissioner shall chair the subcommittee established in section 
  7.1   103F.761, subdivision 2, paragraph (b), for purposes of 
  7.2   reviewing and ranking applications and recommending to the 
  7.3   commissioner allocation amounts.  The subcommittee consists of 
  7.4   representatives of the departments of agriculture, natural 
  7.5   resources, and health; the pollution control agency; the board 
  7.6   of water and soil resources; the Farm Service Agency and the 
  7.7   Natural Resource Conservation Service of the United States 
  7.8   Department of Agriculture; the Association of Minnesota 
  7.9   Counties; the Minnesota Association of Soil and Water 
  7.10  Conservation Districts; and other agencies or associations the 
  7.11  commissioner determines are appropriate. 
  7.12     (b) The subcommittee must use the criteria in clauses (1) 
  7.13  to (9) as well as other criteria it determines appropriate in 
  7.14  carrying out the review and ranking: 
  7.15     (1) whether the proposed activities are identified in a 
  7.16  comprehensive water management plan or other appropriate local 
  7.17  planning documents as priorities; 
  7.18     (2) the potential that the proposed activities have for 
  7.19  improving or protecting environmental quality; 
  7.20     (3) the extent that the proposed activities support 
  7.21  areawide or multijurisdictional approaches to protecting 
  7.22  environmental quality based on defined watershed or similar 
  7.23  geographic areas; 
  7.24     (4) whether the activities are needed for compliance with 
  7.25  existing environmental laws or rules; 
  7.26     (5) whether the proposed activities demonstrate 
  7.27  participation, coordination, and cooperation between local units 
  7.28  of government and other public agencies; 
  7.29     (6) whether there is coordination with other public and 
  7.30  private funding sources and programs; 
  7.31     (7) whether the applicant has targeted specific best 
  7.32  management practices to resolve specific environmental problems; 
  7.33     (8) past performance of the applicant in completing 
  7.34  projects identified in prior applications and allocation 
  7.35  agreements; and 
  7.36     (9) whether there are off-site public benefits. 
  8.1      Subd. 6b.  [ALLOCATION AMOUNT.] (a) The subcommittee 
  8.2   created in subdivision 6a shall recommend to the commissioner 
  8.3   the amount of allocation for each applicant.  This allocation 
  8.4   must include: 
  8.5      (1) the amount of repayments received by the commissioner 
  8.6   during the previous year from prior completed projects approved 
  8.7   by the local government unit; and 
  8.8      (2) the amount of funds previously designated to committed 
  8.9   projects. 
  8.10     (b) Within the limits of the funds available to the 
  8.11  commissioner, the subcommittee may recommend an increased 
  8.12  allocation award to the applicant based on: 
  8.13     (1) the ranking of the local government unit application 
  8.14  under subdivision 6a; and 
  8.15     (2) the amount of unallocated or uncommitted funds in, or 
  8.16  that will be received by, the agricultural and environmental 
  8.17  revolving accounts within one year. 
  8.18     (c) Notwithstanding paragraphs (a) and (b), the 
  8.19  commissioner may reserve up to two percent of all funds 
  8.20  appropriated to the agricultural and environmental revolving 
  8.21  accounts to be allocated to applicants that disburse or commit 
  8.22  all of their current allocations or to local lenders who wish to 
  8.23  provide financial assistance.  
  8.24     The commissioner may add, for the purposes of calculating 
  8.25  future allocations under paragraphs (a) and (b), the loan amount 
  8.26  for projects financed from these reserved funds to the 
  8.27  allocation for the respective local government units in which 
  8.28  jurisdiction the project was completed.  
  8.29     Subd. 7.  [PAYMENTS TO LOCAL LENDERS.] (a) Payments made 
  8.30  from the water pollution control revolving fund commissioner to 
  8.31  the local lender must be made in accordance with applicable 
  8.32  state and federal laws and rules governing the payments and the 
  8.33  lender agreement. 
  8.34     (b) Payments from the commissioner to the local lender must 
  8.35  be disbursed on a cost-incurred basis.  Local lenders shall 
  8.36  submit payment requests at least quarterly but not more than 
  9.1   monthly.  Payment requests must be reviewed and approved by the 
  9.2   commissioner.  The payment request form must itemize all costs 
  9.3   by major elements and show eligible and ineligible costs.  The 
  9.4   request must be made in accordance with requirements and 
  9.5   procedures established by the commissioner.  Payment requests 
  9.6   must be reviewed and approved by the commissioner. 
  9.7      (c) The commissioner may initiate recision of an allocation 
  9.8   granted in a lender agreement as provided in subdivision 11, 
  9.9   paragraph (d), if the local lender fails to enter into loans 
  9.10  with borrowers equaling the total allocation granted within one 
  9.11  year from the date of the lender agreement or fails to have the 
  9.12  total amount of allocated funds drawn down through payment 
  9.13  requests within two years.  An additional year to draw down the 
  9.14  undisbursed portion of an allocation may be granted by the 
  9.15  commissioner under extenuating circumstances.  
  9.16     Subd. 8.  [APPLICANT; BORROWERS ALLOCATION AGREEMENT.] (a) 
  9.17  A county may submit a local allocation request.  A county or a 
  9.18  group of counties may designate another local government unit to 
  9.19  submit a local allocation request. 
  9.20     (b) If a county does not submit a local allocation request, 
  9.21  and does not designate another local government unit, a soil and 
  9.22  water conservation district may submit a local allocation 
  9.23  request.  In all instances, there may be only one request from a 
  9.24  county.  The applicant must coordinate and submit requests on 
  9.25  behalf of other units of government within the geographic 
  9.26  jurisdiction of the applicant.  (a) Eligible local government 
  9.27  units with an allocation award may enter into an allocation 
  9.28  agreement with the commissioner and participate in this program. 
  9.29     (b) The allocation agreement must contain terms and 
  9.30  conditions for participation in this program and providing of 
  9.31  funds through this program, including, but not limited to:  
  9.32  program requirements, reporting requirements, project 
  9.33  eligibility and limitations, allowable expenses, limitations, 
  9.34  rescission and cancellation provisions, and the responsibilities 
  9.35  of the commissioner, local government unit, and local lender. 
  9.36     (c) If the commissioner determines that a local government 
 10.1   unit is not in compliance with the terms of the allocation 
 10.2   agreement, the commissioner may rescind all or part of any 
 10.3   allocation awarded through this program. 
 10.4      Subd. 9.  [REVIEW AND RANKING OF ALLOCATION REQUESTS 
 10.5   ALLOCATION RESCISSION.] (a) The commissioner shall chair the 
 10.6   subcommittee established in section 103F.761, subdivision 2, 
 10.7   paragraph (b), for purposes of reviewing and ranking local 
 10.8   allocation requests.  The rankings must be in order of priority 
 10.9   and shall provide financial assistance within the limits of the 
 10.10  funds available.  In carrying out the review and ranking, the 
 10.11  subcommittee must consist of, at a minimum, the chair, 
 10.12  representatives of the pollution control agency, United States 
 10.13  Department of Agricultural Stabilization and Conservation 
 10.14  Service, United States Department of Agriculture Soil 
 10.15  Conservation Service, Association of Minnesota Counties, and 
 10.16  other agencies or associations as the commissioner, the chair, 
 10.17  and agency determine are appropriate.  The review and ranking 
 10.18  shall take into consideration other related state or federal 
 10.19  programs. 
 10.20     (b) The subcommittee shall use the criteria listed below in 
 10.21  carrying out the review and ranking: 
 10.22     (1) whether the proposed activities are identified in a 
 10.23  comprehensive water management plan as priorities; 
 10.24     (2) whether the applicant intends to establish a revolving 
 10.25  loan program under subdivision 10, paragraph (b); 
 10.26     (3) the potential that the proposed activities have for 
 10.27  improving or protecting surface and groundwater quality; 
 10.28     (4) the extent that the proposed activities support 
 10.29  areawide or multijurisdictional approaches to protecting water 
 10.30  quality based on defined watershed; 
 10.31     (5) whether the activities are needed for compliance with 
 10.32  existing water related laws or rules; 
 10.33     (6) whether the proposed activities demonstrate 
 10.34  participation, coordination, and cooperation between local units 
 10.35  of government and other public agencies; 
 10.36     (7) whether there is coordination with other public and 
 11.1   private funding sources and programs; 
 11.2      (8) whether there are off-site public benefits such as 
 11.3   preventing downstream degradation and siltation; and 
 11.4      (9) the proposed interest rate.  (a) Continued availability 
 11.5   of allocations granted to a local government unit is contingent 
 11.6   upon the commissioner's approval of the local government unit's 
 11.7   annual report.  The commissioner shall review this annual report 
 11.8   to ensure that the past and future uses of the funds are 
 11.9   consistent with the comprehensive water management plan, other 
 11.10  local planning documents, the requirements of the funding 
 11.11  source, and compliance to program requirements.  If the 
 11.12  commissioner concludes the past or intended uses of the money 
 11.13  are not consistent with these requirements, the commissioner 
 11.14  shall rescind all or part of the allocation awarded to a local 
 11.15  government unit. 
 11.16     (b) The commissioner may rescind funds allocated to the 
 11.17  local government unit that are not designated to committed 
 11.18  projects or disbursed within one year from the date of the 
 11.19  allocation agreement. 
 11.20     (c) An additional year to use the undisbursed portion of an 
 11.21  allocation may be granted by the commissioner under extenuating 
 11.22  circumstances. 
 11.23     Subd. 9a.  [AUTHORITY AND RESPONSIBILITIES OF APPLICANTS 
 11.24  THE LOCAL GOVERNMENT UNITS.] Applicants may enter into a lender 
 11.25  agreement designating a local lender.  Applicants designating 
 11.26  themselves as the local lender may enter into contracts for loan 
 11.27  review, processing, and servicing. (a) A local government unit 
 11.28  that enters into an allocation agreement with the commissioner: 
 11.29     (1) is responsible for the local administration and 
 11.30  implementation of the program in accordance with this section; 
 11.31     (2) may submit applications for allocations to the 
 11.32  commissioner; 
 11.33     (3) shall identify, develop, determine eligibility, define 
 11.34  and approve projects, designate maximum loan amounts for 
 11.35  projects, and certify completion of projects implemented under 
 11.36  this program.  In areas where no local government unit has 
 12.1   applied for funds under this program, the commissioner may 
 12.2   appoint a local government unit to review and certify projects 
 12.3   or the commissioner may assume the authority and responsibility 
 12.4   of the local government unit; 
 12.5      (4) shall certify as eligible only projects that are within 
 12.6   its geographic jurisdiction or within the geographic area 
 12.7   identified in its local comprehensive water management plans or 
 12.8   other local planning documents; 
 12.9      (5) may require withholding by the local lender of all or a 
 12.10  portion of the loan to the borrower until satisfactory 
 12.11  completion of all required components of a certified project; 
 12.12     (6) must identify which account is used to finance an 
 12.13  approved project if the local government unit has allocations 
 12.14  from multiple accounts in the agricultural and environmental 
 12.15  revolving accounts; 
 12.16     (7) shall report to the commissioner annually the past and 
 12.17  intended uses of allocations awarded; and 
 12.18     (8) may request additional funds in excess of their 
 12.19  allocation when funds are available in the agricultural and 
 12.20  environmental revolving accounts, as long as all other 
 12.21  allocation awards to the local government unit have been used or 
 12.22  committed; 
 12.23     (b) If a local government unit withdraws from participation 
 12.24  in this program, the local government unit, or the commissioner 
 12.25  in accordance with the priorities established under subdivision 
 12.26  6a, may designate another local government unit that is eligible 
 12.27  under subdivision 6, as the new local government unit 
 12.28  responsible for local administration of this program.  This 
 12.29  designated local government unit may accept responsibility and 
 12.30  administration of allocations awarded to the former responsible 
 12.31  local government unit. 
 12.32     Subd. 9b.  [LENDER AGREEMENT.] (a) Any local lender 
 12.33  entering into a lender agreement with the commissioner may 
 12.34  participate in this program. 
 12.35     (b) The lender agreement will contain terms and conditions 
 12.36  for participation in this program and providing funds to the 
 13.1   local lenders, including but not limited to, program 
 13.2   requirements, loan and account management requirements, 
 13.3   payments, repayments, term limits, allowable expenses, fee 
 13.4   limitations, rescission and cancellation provisions, collateral 
 13.5   and security requirements, reporting requirements, review and 
 13.6   appeal procedure for cancellation of the loan agreement or 
 13.7   disqualification as a local lender, and the responsibilities of 
 13.8   the commissioner, local government unit, and local lender. 
 13.9      (c) If the commissioner determines that a local lender is 
 13.10  not in compliance with the terms of the lender agreement, the 
 13.11  commissioner may take the following actions: 
 13.12     (1) disqualifying the local lender as a participating 
 13.13  lender in this program for a period of up to five years from the 
 13.14  date that the commissioner determines noncompliance to the 
 13.15  lender agreement; and 
 13.16     (2) requiring immediate or accelerated repayment of all or 
 13.17  part of all funds provided to the local lender. 
 13.18     (d) Existing lender agreements, executed prior to July 1, 
 13.19  2001, may be amended by mutual consent of all signatory parties, 
 13.20  to comply with this section, to establish a single allocation 
 13.21  agreement that includes the amount of prior allocation awards 
 13.22  and defines the terms and conditions required under subdivision 
 13.23  8, or to modify the amount of allocation awarded. 
 13.24     Subd. 10.  [AUTHORITY AND RESPONSIBILITIES OF LOCAL 
 13.25  LENDERS.] (a) Local lenders may enter into lender agreements 
 13.26  with the commissioner. 
 13.27     (b) Local lenders may enter into loan agreements with 
 13.28  borrowers to finance eligible projects under this section. 
 13.29     (c) Local lenders may establish revolving loan programs to 
 13.30  finance projects under this section The local lender shall 
 13.31  notify the local government unit of the loan amount issued to 
 13.32  the borrower after the closing of each loan. 
 13.33     (d) Local lenders with local revolving loan accounts 
 13.34  created before July 1, 2001, may continue to retain and use 
 13.35  those accounts in accordance with their lending agreements for 
 13.36  the full term of those agreements. 
 14.1      (e) Local lenders, including applicants local government 
 14.2   units designating themselves as the local lender, may enter into 
 14.3   participation agreements with other lenders. 
 14.4      (f) Local lenders may also enter into contracts with other 
 14.5   lenders for the limited purposes of loan review, processing and 
 14.6   servicing, or to enter into loan agreements with borrowers to 
 14.7   finance projects under this section.  Other lenders entering 
 14.8   into contracts with local lenders under this section must meet 
 14.9   the definition of local lender in subdivision 4, must comply 
 14.10  with all provisions of the lender agreement and this section, 
 14.11  and must guarantee repayment of the loan funds to the local 
 14.12  lender.  In no case may there be more than one local lender per 
 14.13  county or more than one revolving fund per county. 
 14.14     (g) When required by the local government unit, a local 
 14.15  lender must withhold all or a portion of the loan disbursement 
 14.16  for a project until notified by the local government unit that 
 14.17  the project has been satisfactorily completed. 
 14.18     (h) The local lender is responsible for repaying all funds 
 14.19  provided by the commissioner to the local lender. 
 14.20     (i) The local lender is responsible for collecting 
 14.21  repayments from borrowers.  If a borrower defaults on a loan 
 14.22  issued by the local lender, it is the responsibility of the 
 14.23  local lender to obtain repayment from the borrower.  Default on 
 14.24  the part of borrowers shall have no effect on the local lender's 
 14.25  responsibility to repay its obligations to the commissioner 
 14.26  whether or not the local lender fully recovers defaulted amounts 
 14.27  from borrowers. 
 14.28     (j) The local lender shall provide sufficient collateral or 
 14.29  protection to the commissioner for the funds provided to the 
 14.30  local lender.  The commissioner must approve the collateral or 
 14.31  protection provided. 
 14.32     Subd. 11.  [LOANS ISSUED TO BORROWER ELIGIBILITY; TERMS; 
 14.33  REPAYMENT; RECISION.] (a) Local lenders shall use the following 
 14.34  criteria in addition to other criteria they deem necessary in 
 14.35  determining the eligibility of borrowers for loans: 
 14.36     (1) whether the activity is certified by a local unit of 
 15.1   government may issue loans only for projects that are approved 
 15.2   and certified by the local government unit as meeting priority 
 15.3   needs identified in a comprehensive water management plan and is 
 15.4   or other local planning documents, are in compliance with 
 15.5   accepted practices, standards, specifications, or criteria; 
 15.6      (2) whether the activity is certified as, and are eligible 
 15.7   for financing under Environmental Protection Agency or other 
 15.8   applicable guidelines; and 
 15.9      (3) whether the repayment is assured from the borrower. 
 15.10     (b) The local lender may use any additional criteria 
 15.11  considered necessary to determine the eligibility of borrowers 
 15.12  for loans. 
 15.13     (c) Local lenders shall set the terms and conditions of 
 15.14  loans to borrowers, except that: 
 15.15     (1) no loan to an individual a borrower may exceed $50,000; 
 15.16     (2) no loan for a project may exceed $50,000; and 
 15.17     (3) no borrower shall, at any time, have multiple loans 
 15.18  from this program with a total outstanding loan balance of more 
 15.19  than $50,000.  In all instances, local lenders must provide for 
 15.20  sufficient collateral or protection for the loan principal.  
 15.21  They are responsible for collecting repayments by borrowers.  
 15.22     (c) The local lender is responsible for repaying the 
 15.23  principal of a loan to the commissioner.  The terms of repayment 
 15.24  will be identified in the lender agreement.  If defaults occur, 
 15.25  it is the responsibility of the local lender to obtain repayment 
 15.26  from the borrower.  Default on the part of individual borrowers 
 15.27  shall have no effect on the local lender's responsibility to 
 15.28  repay its loan from the commissioner whether or not the local 
 15.29  lender fully recovers defaulted amounts from individual 
 15.30  borrowers.  For revolving loan programs established under 
 15.31  subdivision 10, paragraph (c), the lender agreement must provide 
 15.32  that: 
 15.33     (1) repayment of principal to the commissioner must begin 
 15.34  no later than ten years after the date of the lender agreement 
 15.35  and must be repaid in full no later than 20 years after the date 
 15.36  of the lender agreement; 
 16.1      (2) after the initial ten-year period, the local lender 
 16.2   shall not write any additional loans, and any existing principal 
 16.3   balance held by the local lender shall be immediately repaid to 
 16.4   the commissioner; 
 16.5      (3) after the initial ten-year period, all principal 
 16.6   received by the local lender from borrowers shall be repaid to 
 16.7   the commissioner as it is received; and 
 16.8      (4) the applicant shall report to the commissioner annually 
 16.9   regarding the past and intended uses of the money in the 
 16.10  revolving loan program. 
 16.11     (d) Continued availability of the allocation granted in the 
 16.12  lender agreement is contingent upon commissioner approval of the 
 16.13  annual report.  The commissioner shall review the annual report 
 16.14  to ensure the past and future uses of the funds are consistent 
 16.15  with the comprehensive water management plan and the lender 
 16.16  agreement.  If the commissioner concludes the past or intended 
 16.17  uses of the money are not consistent with the comprehensive 
 16.18  water management plan or the lender agreement, the commissioner 
 16.19  shall rescind the allocation granted under the lender agreement. 
 16.20  Such recision shall result in termination of available 
 16.21  allocation, the immediate repayment of any unencumbered funds 
 16.22  held by the local lender in a revolving loan fund, and the 
 16.23  repayment of the principal portion of loan repayments to the 
 16.24  commissioner as they are received.  The lender agreement shall 
 16.25  reflect the commissioner's rights under this paragraph. 
 16.26     (e) A local lender shall receive certification from local 
 16.27  government unit staff that a project has been satisfactorily 
 16.28  completed prior to releasing the final loan disbursement. 
 16.29     (d) The maximum term length for conservation tillage and 
 16.30  individual sewage treatment system projects is five years.  The 
 16.31  maximum term length for other projects in this paragraph is ten 
 16.32  years. 
 16.33     (e) Fees charged at the time of closing must: 
 16.34     (1) be in compliance with normal and customary practices of 
 16.35  the local lender; 
 16.36     (2) be in accordance with published fee schedules issued by 
 17.1   the local lender; 
 17.2      (3) not be based on participation program; and 
 17.3      (4) be consistent with fees charged other similar types of 
 17.4   loans offered by the local lender. 
 17.5      (f) The interest rate assessed to outstanding loan balance 
 17.6   by the local lender must not exceed three percent per year. 
 17.7      Subd. 11a.  [ELIGIBLE PROJECTS.] All projects that 
 17.8   remediate or mitigate adverse environmental impacts are eligible 
 17.9   if: 
 17.10     (1) the project is eligible under the allocation agreement 
 17.11  and provisions of the originating appropriation or funding 
 17.12  sources designated by the local government unit to finance the 
 17.13  project; and 
 17.14     (2) manure management projects remediate or mitigate 
 17.15  impacts from facilities with less than 1,000 animal units as 
 17.16  defined in Minnesota Rules, chapter 7020. 
 17.17     Subd. 12.  [DATA PRIVACY.] The following data on applicants 
 17.18  local government units, local lenders, or borrowers collected by 
 17.19  the commissioner under this section are private for data on 
 17.20  individuals as provided in section 13.02, subdivision 12, or 
 17.21  nonpublic for data not on individuals as provided in section 
 17.22  13.02, subdivision 9:  financial information, including, but not 
 17.23  limited to, credit reports, financial statements, tax returns 
 17.24  and net worth calculations received or prepared by the 
 17.25  commissioner. 
 17.26     Subd. 13.  [ESTABLISHMENT OF ACCOUNT.] The authority shall 
 17.27  establish an account called the agriculture best management 
 17.28  practices revolving fund to provide loans and other forms of 
 17.29  financial assistance authorized under section 446A.07.  The fund 
 17.30  must be credited with repayments. 
 17.31     Subd. 14.  [FEES AND INTEREST.] (a) Origination fees 
 17.32  charged directly to borrowers by local lenders upon executing a 
 17.33  loan shall not exceed one-half of one percent of the loan 
 17.34  amount.  Interest assessed to loan repayments by the local 
 17.35  lender must not exceed three percent.  
 17.36     (b) The local lender shall create a principal account to 
 18.1   which the principal portions of individual borrower loan 
 18.2   repayments will be credited. 
 18.3      (c) Any interest earned on outstanding loan balances not 
 18.4   separated as repayments are received and before the principal 
 18.5   amounts are deposited in the principal account shall be added to 
 18.6   the principal portion of the loan to the local lender and must 
 18.7   be paid to the commissioner when the principal is due under the 
 18.8   lender agreement. 
 18.9      (d) Any interest earned on the principal account must be 
 18.10  added to the principal portion of the loan to the local lender 
 18.11  and must be paid to the commissioner when the principal is due 
 18.12  under the lender agreement. 
 18.13     Subd. 15.  [COMMISSIONER'S REPORT.] (a) The commissioner 
 18.14  and chair shall prepare and submit a report to the house of 
 18.15  representatives and senate committees with jurisdiction over the 
 18.16  environment, natural resources, and agriculture by October 15 of 
 18.17  each odd-numbered year. 
 18.18     (b) The report shall include, but need not be limited to, 
 18.19  matters such as loan allocations and uses, the extent to which 
 18.20  the financial assistance is helping implement local water and 
 18.21  other environmental planning priorities, the integration or 
 18.22  coordination that has occurred with related programs, and other 
 18.23  matters deemed pertinent to the implementation of the program. 
 18.24     Subd. 16.  [LIENS AGAINST PROPERTY.] (a) Unless a county 
 18.25  determines otherwise, at the time of the disbursement of funds 
 18.26  on a loan to a borrower under this section, the principal 
 18.27  balance due plus accrued interest on the principal balance as 
 18.28  provided by this section becomes a lien in favor of the county 
 18.29  making the loan upon the real property on which the project is 
 18.30  located.  The lien must be first and prior to all other liens 
 18.31  against the property, including state tax liens, whether filed 
 18.32  before or after the placing of a lien under this subdivision, 
 18.33  except liens for special assessments by the county under 
 18.34  applicable special assessments laws, which liens shall be of 
 18.35  equal rank with the lien created under this subdivision.  A lien 
 18.36  in favor of the county shall be first and prior as provided in 
 19.1   this subdivision only if the county making the loan gives 
 19.2   written notice of the intent to make the loan under this 
 19.3   subdivision to all other persons having a recorded interest in 
 19.4   the real property subject to the lien, no less than 30 days 
 19.5   prior to the disbursement of the funds, and receives an 
 19.6   agreement to subordinate superior lien positions held by all 
 19.7   other lenders having a recorded interest in the real property 
 19.8   subject to the lien.  This lien and subordination agreement must 
 19.9   be recorded against the real estate in the county recorder's 
 19.10  office or filed with the registrar of titles for the county or 
 19.11  counties in which the property is located.  The county may bill 
 19.12  amounts due on the loan on the tax statement for the property.  
 19.13  Enforcement of the lien created by this subdivision shall, at 
 19.14  the county's option, be in the manner set forth in chapter 580 
 19.15  or 581.  When the amount due plus interest has been paid, the 
 19.16  county shall file a satisfaction of the lien created under this 
 19.17  subdivision.  The amount of loans and accruing interest made by 
 19.18  counties acting as local lenders under this section is a lien 
 19.19  against the real property for which the improvement was made and 
 19.20  must be assessed against the property or properties benefited 
 19.21  unless the amount is prepaid.  An amount loaned under the 
 19.22  program and its accruing interest assessed against the property 
 19.23  is a priority lien only against subsequent liens. 
 19.24     (b) The county may bill amounts due on the loan on the tax 
 19.25  statement for the property.  Enforcement of the lien created by 
 19.26  this subdivision must, at the county's option, be in the manner 
 19.27  set forth in chapter 580 or 581.  When the amount due and all 
 19.28  interest has been paid, the county shall file a satisfaction of 
 19.29  the lien created under this subdivision. 
 19.30     (b) (c) A county may also secure amounts due on a loan 
 19.31  under this section by taking a purchase money security interest 
 19.32  in equipment in accordance with chapter 336, article 9, and may 
 19.33  enforce the purchase money security interest in accordance with 
 19.34  chapters 336, article 9, and 565. 
 19.35     Subd. 17.  [REFERENDUM EXEMPTION.] For the purpose of 
 19.36  obtaining a loan from the commissioner, a local government unit 
 20.1   acting as a local lender may provide to the commissioner its 
 20.2   general obligation note.  All obligations incurred by a local 
 20.3   government unit in obtaining a loan from the commissioner must 
 20.4   be in accordance with chapter 475, except that so long as the 
 20.5   obligations are issued to evidence a loan from the commissioner 
 20.6   to the local government unit, an election is not required to 
 20.7   authorize the obligations issued, and the amount of the 
 20.8   obligations shall not be included in determining the net 
 20.9   indebtedness of the local government unit under the provisions 
 20.10  of any law or chapter limiting the indebtedness.