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.046, subdivision 
  1.6             5; 41B.049, subdivision 2; proposing coding for new 
  1.7             law in Minnesota Statutes, chapter 41B; repealing 
  1.8             Minnesota Statutes 2002, section 41B.046, subdivision 
  1.9             3. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  [41B.041] [DAIRY UPGRADE PILOT LOAN PROGRAM.] 
  1.12     Subdivision 1.  [ESTABLISHMENT.] The authority shall 
  1.13  establish and implement a dairy upgrade pilot loan program to 
  1.14  help finance the purchase of breeding stock, meet feedlot and 
  1.15  other environmental regulations, purchase dairy-related 
  1.16  equipment, and make dairy facilities improvements. 
  1.17     Subd. 2.  [ELIGIBILITY.] Notwithstanding section 41B.03, to 
  1.18  be eligible for this program, a borrower must: 
  1.19     (1) be a resident of Minnesota or general partnership or a 
  1.20  family farm corporation, authorized farm corporation, family 
  1.21  farm partnership, or authorized farm partnership as defined in 
  1.22  section 500.24, subdivision 2; 
  1.23     (2) be the principal operator of a dairy farm; 
  1.24     (3) have a total net worth, including assets and 
  1.25  liabilities of the borrower's spouse and dependents, no greater 
  1.26  than the amount stipulated in section 41B.03, subdivision 3; 
  1.27     (4) demonstrate an ability to repay the loan; and 
  2.1      (5) hold an appropriate feedlot registration or be using 
  2.2   the loan under this program to meet registration requirements. 
  2.3      Subd. 3.  [LOANS.] (a) The authority may participate in a 
  2.4   dairy upgrade loan with an eligible lender to a farmer who is 
  2.5   eligible under subdivision 2.  Participation is limited to 45 
  2.6   percent of the principal amount of the loan or $50,000, 
  2.7   whichever is less.  The interest rates and repayment terms of 
  2.8   the authority's participation interest may differ from the 
  2.9   interest rates and repayment terms of the lender's retained 
  2.10  portion of the loan.  The authority may review the interest 
  2.11  annually and make adjustments as necessary.  Participation 
  2.12  interest on loans made under this section before July 1, 2006, 
  2.13  must not exceed four percent. 
  2.14     (b) Standards for loan amortization must be set by the 
  2.15  rural finance authority and must not exceed ten years. 
  2.16     (c) Security for the dairy upgrade loans must be a personal 
  2.17  note executed by the borrower and whatever other security is 
  2.18  required by the eligible lender or the authority. 
  2.19     (d) Refinancing of existing debt is not an eligible purpose.
  2.20     (e) The authority may impose a reasonable, nonrefundable 
  2.21  application fee for a dairy upgrade loan.  The authority may 
  2.22  review the fee annually and make adjustments as necessary.  The 
  2.23  initial application fee is $50.  Application fees received by 
  2.24  the authority must be deposited in the revolving loan account 
  2.25  established in section 41B.06. 
  2.26     (f) Dairy upgrade loans under this program must be made 
  2.27  using money in the revolving loan account established in section 
  2.28  41B.06. 
  2.29     Sec. 2.  Minnesota Statutes 2002, section 41B.046, 
  2.30  subdivision 5, is amended to read: 
  2.31     Subd. 5.  [LOANS.] (a) The authority may participate in a 
  2.32  stock loan with an eligible lender to a farmer who is eligible 
  2.33  under subdivision 4.  Participation is limited to 45 percent of 
  2.34  the principal amount of the loan or $24,000, whichever is less.  
  2.35  The interest rates and repayment terms of the authority's 
  2.36  participation interest may differ from the interest rates and 
  3.1   repayment terms of the lender's retained portion of the loan, 
  3.2   but the authority's interest rate must not exceed 50 percent of 
  3.3   the lender's interest rate. 
  3.4      (b) No more than 95 percent of the purchase price of the 
  3.5   stock may be financed under this program. 
  3.6      (c) Security for stock loans must be the stock purchased, a 
  3.7   personal note executed by the borrower, and whatever other 
  3.8   security is required by the eligible lender or the authority. 
  3.9      (d) The authority may impose a reasonable nonrefundable 
  3.10  application fee for each application for a stock loan.  The 
  3.11  authority may review the fee annually and make adjustments as 
  3.12  necessary.  The application fee is initially $50.  Application 
  3.13  fees received by the authority must be deposited in the 
  3.14  value-added agricultural product revolving fund. 
  3.15     (e) Stock loans under this program will be made using money 
  3.16  in the value-added agricultural product revolving fund loan 
  3.17  account established under subdivision 3 in section 41B.06. 
  3.18     (f) The authority may not grant stock loans in a cumulative 
  3.19  amount exceeding $2,000,000 for the financing of stock purchases 
  3.20  in any one cooperative. 
  3.21     (g) Repayments of financial assistance under this section, 
  3.22  including principal and interest, must be deposited into the 
  3.23  revolving loan account established in section 41B.06. 
  3.24     Sec. 3.  Minnesota Statutes 2002, section 41B.049, 
  3.25  subdivision 2, is amended to read: 
  3.26     Subd. 2.  [REVOLVING FUND DEPOSIT OF REPAYMENTS.] There is 
  3.27  established in the state treasury a revolving fund, which is 
  3.28  eligible to receive appropriations and the transfer of funds 
  3.29  from other services.  All repayments of financial assistance 
  3.30  granted under subdivision 1, including principal and interest, 
  3.31  must be deposited into this fund.  Interest earned on money in 
  3.32  the fund accrues to the fund, and money in the fund is 
  3.33  appropriated to the commissioner of agriculture for purposes of 
  3.34  the manure digester loan program, including costs incurred by 
  3.35  the authority to establish and administer the program the 
  3.36  revolving loan account established in section 41B.06. 
  4.1      Sec. 4.  [41B.06] [RURAL FINANCE AUTHORITY REVOLVING LOAN 
  4.2   ACCOUNT.] 
  4.3      There is established in the rural finance administration 
  4.4   fund a rural finance authority revolving loan account that is 
  4.5   eligible to receive appropriations and the transfer of loan 
  4.6   funds from other programs.  All repayments of financial 
  4.7   assistance granted from this account, including principal and 
  4.8   interest, must be deposited into this account.  Interest earned 
  4.9   on money in the account accrues to the account, and the money in 
  4.10  the account is appropriated to the commissioner of agriculture 
  4.11  for purposes of the rural finance authority dairy upgrade, 
  4.12  methane digester, and value-added agricultural product loan 
  4.13  programs, including costs incurred by the authority to establish 
  4.14  and administer the programs. 
  4.15     Sec. 5.  [TRANSFER OF FUNDS; DEPOSIT OF REPAYMENTS.] 
  4.16     The remaining balances in the revolving accounts in 
  4.17  Minnesota Statutes, sections 41B.046 and 41B.049, that are 
  4.18  dedicated to rural finance authority loan programs under those 
  4.19  sections, are transferred to the revolving loan account 
  4.20  established in Minnesota Statutes, section 41B.06, on the 
  4.21  effective date of this section.  All future receipts from 
  4.22  value-added agricultural product loans and methane digester 
  4.23  loans originated under Minnesota Statutes, sections 41B.046 and 
  4.24  41B.049, must be deposited in the revolving loan account 
  4.25  established in Minnesota Statutes, section 41B.06. 
  4.26     Sec. 6.  [REPEALER.] 
  4.27     Minnesota Statutes 2002, section 41B.046, subdivision 3, is 
  4.28  repealed. 
  4.29     Sec. 7.  [EFFECTIVE DATE.] 
  4.30     This act is effective the day following final enactment.