1.1                          A bill for an act 
  1.2             relating to agriculture; providing for a dairy upgrade 
  1.3             pilot loan program; establishing an account; 
  1.4             transferring balances; appropriating money; amending 
  1.5             Minnesota Statutes 2002, sections 41B.036; 41B.046, 
  1.6             subdivision 5; 41B.049, subdivision 2; proposing 
  1.7             coding for new law in Minnesota Statutes, chapter 41B; 
  1.8             repealing Minnesota Statutes 2002, section 41B.046, 
  1.9             subdivision 3. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 41B.036, is 
  1.12  amended to read: 
  1.13     41B.036 [GENERAL POWERS OF THE AUTHORITY.] 
  1.14     For the purpose of exercising the specific powers granted 
  1.15  in section 41B.04 and effectuating the other purposes of 
  1.16  sections 41B.01 to 41B.23 the authority has the general powers 
  1.17  granted in this section. 
  1.18     (a) It may sue and be sued. 
  1.19     (b) It may have a seal and alter the seal. 
  1.20     (c) It may make, and from time to time, amend and repeal 
  1.21  rules consistent with sections 41B.01 to 41B.23. 
  1.22     (d) It may acquire, hold, and dispose of real or personal 
  1.23  property for its corporate purposes. 
  1.24     (e) It may enter into agreements, contracts, or other 
  1.25  transactions with any federal or state agency, any person and 
  1.26  any domestic or foreign partnership, corporation, association, 
  1.27  or organization, including contracts or agreements for 
  2.1   administration and implementation of all or part of sections 
  2.2   41B.01 to 41B.23. 
  2.3      (f) It may acquire real property, or an interest therein, 
  2.4   in its own name, by purchase or foreclosure, where such 
  2.5   acquisition is necessary or appropriate. 
  2.6      (g) It may provide general technical services related to 
  2.7   rural finance. 
  2.8      (h) It may provide general consultative assistance services 
  2.9   related to rural finance. 
  2.10     (i) It may promote research and development in matters 
  2.11  related to rural finance. 
  2.12     (j) It may enter into agreements with lenders, borrowers, 
  2.13  or the issuers of securities for the purpose of regulating the 
  2.14  development and management of farms financed in whole or in part 
  2.15  by the proceeds of qualified agricultural loans. 
  2.16     (k) It may enter into agreements with other appropriate 
  2.17  federal, state, or local governmental units to foster rural 
  2.18  finance.  It may give advance reservations of loan financing as 
  2.19  part of the agreements, with the understanding that the 
  2.20  authority will only approve the loans pursuant to normal 
  2.21  procedures, and may adopt special procedures designed to meet 
  2.22  problems inherent in such programs. 
  2.23     (l) It may undertake and carry out studies and analyses of 
  2.24  rural financing needs within the state and ways of meeting such 
  2.25  needs including:  data with respect to geographical 
  2.26  distribution; farm size; the distribution of farm credit needs 
  2.27  according to debt ratios and similar factors; the amount and 
  2.28  quality of available financing and its distribution according to 
  2.29  factors affecting rural financing needs and the meeting thereof; 
  2.30  and may make the results of such studies and analyses available 
  2.31  to the public and may engage in research and disseminate 
  2.32  information on rural finance. 
  2.33     (m) It may survey and investigate the rural financing needs 
  2.34  throughout the state and make recommendations to the governor 
  2.35  and the legislature as to legislation and other measures 
  2.36  necessary or advisable to alleviate any existing shortage in the 
  3.1   state. 
  3.2      (n) It may establish cooperative relationships with such 
  3.3   county and multicounty authorities as may be established and may 
  3.4   develop priorities for the utilization of authority resources 
  3.5   and assistance within a region in cooperation with county and 
  3.6   multicounty authorities. 
  3.7      (o) It may contract with, use, or employ any federal, 
  3.8   state, regional, or local public or private agency or 
  3.9   organization, legal counsel, financial advisors, investment 
  3.10  bankers or others, upon terms it deems necessary or desirable, 
  3.11  to assist in the exercise of any of the powers granted in 
  3.12  sections 41B.01 to 41B.23 and to carry out the objectives of 
  3.13  sections 41B.01 to 41B.23 and may pay for the services from 
  3.14  authority funds. 
  3.15     (p) It may establish cooperative relationships with 
  3.16  counties to develop priorities for the use of authority 
  3.17  resources and assistance within counties and to consider county 
  3.18  plans and programs in the process of setting the priorities. 
  3.19     (q) It may delegate any of its powers to its officers or 
  3.20  staff. 
  3.21     (r) It may enter into agreements with qualified 
  3.22  agricultural lenders or others insuring or guaranteeing to the 
  3.23  state the payment of all or a portion of qualified agricultural 
  3.24  loans. 
  3.25     (s) It may enter into agreements with eligible agricultural 
  3.26  lenders providing for advance reservations of purchases of 
  3.27  participation interests in restructuring loans, if the 
  3.28  agreements provide that the authority may only purchase 
  3.29  participation interests in restructuring loans under the normal 
  3.30  procedure.  The authority may provide in an agreement for 
  3.31  special procedures or requirements designed to meet specific 
  3.32  conditions or requirements. 
  3.33     (t) It may allow farmers who are natural persons to combine 
  3.34  programs of the federal Agriculture Credit Act of 1987 with 
  3.35  programs of the Rural Finance Authority. 
  3.36     (u) It, after providing notice to the State Board of 
  4.1   Investment, may transfer funds from the security account created 
  4.2   under section 41B.19, subdivision 5, in such amounts and for 
  4.3   such time as funds may be available, to a special revenue 
  4.4   account for qualified agricultural loans or for participation in 
  4.5   qualified agricultural loans created through agreements under 
  4.6   paragraph (k). 
  4.7      (v) From within available funds generated by program fees, 
  4.8   it may provide partial or full tuition assistance for farm 
  4.9   management programs required under section 41B.03, subdivision 
  4.10  3, clause (7). 
  4.11     Sec. 2.  [41B.041] [DAIRY UPGRADE PILOT LOAN PROGRAM.] 
  4.12     Subdivision 1.  [ESTABLISHMENT.] The authority shall 
  4.13  establish and implement a dairy upgrade pilot loan program to 
  4.14  help finance the purchase of breeding stock, meet feedlot and 
  4.15  other environmental regulations, purchase dairy-related 
  4.16  equipment, and make dairy facilities improvements. 
  4.17     Subd. 2.  [ELIGIBILITY.] Notwithstanding section 41B.03, to 
  4.18  be eligible for this program, a borrower must: 
  4.19     (1) be a resident of Minnesota or general partnership or a 
  4.20  family farm corporation, authorized farm corporation, family 
  4.21  farm partnership, or authorized farm partnership as defined in 
  4.22  section 500.24, subdivision 2; 
  4.23     (2) be the principal operator of a dairy farm; 
  4.24     (3) have a total net worth, including assets and 
  4.25  liabilities of the borrower's spouse and dependents, no greater 
  4.26  than the amount stipulated in section 41B.03, subdivision 3; 
  4.27     (4) demonstrate an ability to repay the loan; and 
  4.28     (5) hold an appropriate feedlot registration or be using 
  4.29  the loan under this program to meet registration requirements. 
  4.30     Subd. 3.  [LOANS.] (a) The authority may participate in a 
  4.31  dairy upgrade loan with an eligible lender to a farmer who is 
  4.32  eligible under subdivision 2.  Participation is limited to 45 
  4.33  percent of the principal amount of the loan or $50,000, 
  4.34  whichever is less.  The interest rates and repayment terms of 
  4.35  the authority's participation interest may differ from the 
  4.36  interest rates and repayment terms of the lender's retained 
  5.1   portion of the loan.  The authority may review the interest 
  5.2   annually and make adjustments as necessary.  Participation 
  5.3   interest on loans made under this section before July 1, 2006, 
  5.4   must not exceed four percent. 
  5.5      (b) Standards for loan amortization must be set by the 
  5.6   rural finance authority and must not exceed ten years. 
  5.7      (c) Security for the dairy upgrade loans must be a personal 
  5.8   note executed by the borrower and whatever other security is 
  5.9   required by the eligible lender or the authority. 
  5.10     (d) Refinancing of existing debt is not an eligible purpose.
  5.11     (e) The authority may impose a reasonable, nonrefundable 
  5.12  application fee for a dairy upgrade loan.  The authority may 
  5.13  review the fee annually and make adjustments as necessary.  The 
  5.14  initial application fee is $50.  Application fees received by 
  5.15  the authority must be deposited in the revolving loan account 
  5.16  established in section 41B.06. 
  5.17     (f) Dairy upgrade loans under this program must be made 
  5.18  using money in the revolving loan account established in section 
  5.19  41B.06. 
  5.20     Sec. 3.  Minnesota Statutes 2002, section 41B.046, 
  5.21  subdivision 5, is amended to read: 
  5.22     Subd. 5.  [LOANS.] (a) The authority may participate in a 
  5.23  stock loan with an eligible lender to a farmer who is eligible 
  5.24  under subdivision 4.  Participation is limited to 45 percent of 
  5.25  the principal amount of the loan or $24,000, whichever is less.  
  5.26  The interest rates and repayment terms of the authority's 
  5.27  participation interest may differ from the interest rates and 
  5.28  repayment terms of the lender's retained portion of the loan, 
  5.29  but the authority's interest rate must not exceed 50 percent of 
  5.30  the lender's interest rate. 
  5.31     (b) No more than 95 percent of the purchase price of the 
  5.32  stock may be financed under this program. 
  5.33     (c) Security for stock loans must be the stock purchased, a 
  5.34  personal note executed by the borrower, and whatever other 
  5.35  security is required by the eligible lender or the authority. 
  5.36     (d) The authority may impose a reasonable nonrefundable 
  6.1   application fee for each application for a stock loan.  The 
  6.2   authority may review the fee annually and make adjustments as 
  6.3   necessary.  The application fee is initially $50.  Application 
  6.4   fees received by the authority must be deposited in the 
  6.5   value-added agricultural product revolving fund. 
  6.6      (e) Stock loans under this program will be made using money 
  6.7   in the value-added agricultural product revolving fund loan 
  6.8   account established under subdivision 3 in section 41B.06. 
  6.9      (f) The authority may not grant stock loans in a cumulative 
  6.10  amount exceeding $2,000,000 for the financing of stock purchases 
  6.11  in any one cooperative. 
  6.12     (g) Repayments of financial assistance under this section, 
  6.13  including principal and interest, must be deposited into the 
  6.14  revolving loan account established in section 41B.06. 
  6.15     Sec. 4.  Minnesota Statutes 2002, section 41B.049, 
  6.16  subdivision 2, is amended to read: 
  6.17     Subd. 2.  [REVOLVING FUND DEPOSIT OF REPAYMENTS.] There is 
  6.18  established in the state treasury a revolving fund, which is 
  6.19  eligible to receive appropriations and the transfer of funds 
  6.20  from other services.  All repayments of financial assistance 
  6.21  granted under subdivision 1, including principal and interest, 
  6.22  must be deposited into this fund.  Interest earned on money in 
  6.23  the fund accrues to the fund, and money in the fund is 
  6.24  appropriated to the commissioner of agriculture for purposes of 
  6.25  the manure digester loan program, including costs incurred by 
  6.26  the authority to establish and administer the program the 
  6.27  revolving loan account established in section 41B.06. 
  6.28     Sec. 5.  [41B.06] [RURAL FINANCE AUTHORITY REVOLVING LOAN 
  6.29  ACCOUNT.] 
  6.30     There is established in the rural finance administration 
  6.31  fund a rural finance authority revolving loan account that is 
  6.32  eligible to receive appropriations and the transfer of loan 
  6.33  funds from other programs.  All repayments of financial 
  6.34  assistance granted from this account, including principal and 
  6.35  interest, must be deposited into this account.  Interest earned 
  6.36  on money in the account accrues to the account, and the money in 
  7.1   the account is appropriated to the commissioner of agriculture 
  7.2   for purposes of the rural finance authority dairy upgrade, 
  7.3   methane digester, and value-added agricultural product loan 
  7.4   programs, including costs incurred by the authority to establish 
  7.5   and administer the programs. 
  7.6      Sec. 6.  [TRANSFER OF FUNDS; DEPOSIT OF REPAYMENTS.] 
  7.7      The remaining balances in the revolving accounts in 
  7.8   Minnesota Statutes, sections 41B.046 and 41B.049, that are 
  7.9   dedicated to rural finance authority loan programs under those 
  7.10  sections, are transferred to the revolving loan account 
  7.11  established in Minnesota Statutes, section 41B.06, on the 
  7.12  effective date of this section.  All future receipts from 
  7.13  value-added agricultural product loans and methane digester 
  7.14  loans originated under Minnesota Statutes, sections 41B.046 and 
  7.15  41B.049, must be deposited in the revolving loan account 
  7.16  established in Minnesota Statutes, section 41B.06. 
  7.17     Sec. 7.  [REPEALER.] 
  7.18     Minnesota Statutes 2002, section 41B.046, subdivision 3, is 
  7.19  repealed. 
  7.20     Sec. 8.  [EFFECTIVE DATE.] 
  7.21     This act is effective the day following final enactment.