HF 666

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to agriculture; establishing a dairy animal revolving loan program;
appropriating money; amending Minnesota Statutes 2006, section 41B.06;
proposing coding for new law in Minnesota Statutes, chapter 41B.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [41B.056] DAIRY ANIMAL REVOLVING LOAN PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin Upon receipt by the authority of at least $2,000,000
in matching contributions from private, federal, or other nonstate sources for the purposes
of this program, the authority must establish and implement a dairy animal revolving loan
program to help Minnesota dairy producers purchase additional dairy animals.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility. new text end

new text begin Notwithstanding section 41B.03, to be eligible for this program
a borrower must:
new text end

new text begin (1) be a resident of Minnesota or any entity eligible to own farm land under section
500.24, subdivision 2;
new text end

new text begin (2) be a producer who has not received payments from a dairy cooperative or other
consortium of dairy producers in exchange for participating in a milk supply management
program;
new text end

new text begin (3) demonstrate that the loan will be used to finance the purchase of dairy heifers
and cows, resulting in an increase in the borrower's annual level of milk production; and
new text end

new text begin (4) demonstrate an ability to repay the loan.
new text end

new text begin Subd. 3. new text end

new text begin Loans. new text end

new text begin (a) The authority may participate in a loan with an eligible lender
to a borrower who is eligible under subdivision 2. The authority's participation interest in
a loan from an eligible lender must be no more than 45 percent of the principal amount of
the loan, up to a maximum of $500 per dairy heifer or cow for up to 200 dairy heifers or
cows, or $100,000 per borrower. Repayment terms of the authority's participation interest
may differ from repayment terms of the lender's retained portion of the loan. The authority
must make a good faith effort to award at least 60 percent of the loan participations in any
calendar year to eligible borrowers demonstrating a total net worth, including assets and
liabilities of the borrower's spouse and dependents, of less than $382,000 in 2007 and an
amount in subsequent years which is adjusted for inflation by multiplying that amount by
the cumulative inflation rate as determined by the Consumer Price Index.
new text end

new text begin (b) The authority's participation interest in a loan from an eligible lender must be for
a term of seven years. Borrowers must not be required to make any payment of principal
or interest in the first year of the loan. In the second year, the borrower must be required to
pay only any accrued interest. The authority must amortize the loan over the remaining
five years so that the borrower is required to make equal payments, including principal
and interest, in each of the final five years.
new text end

new text begin (c) The authority must establish an appropriate interest rate for the initial dairy
animal loans and may review and adjust the interest rate annually as necessary. The
authority must make a good faith effort to set the interest rate at no more than three percent.
new text end

new text begin (d) Refinancing of existing debt is not an eligible purpose.
new text end

new text begin (e) A loan participation under this program must be made using money in the
revolving loan account established in section 41B.06.
new text end

new text begin (f) Security for the loans must be a personal note executed by the borrower and
whatever other security is required by the authority.
new text end

new text begin (g) The authority may impose a reasonable, nonrefundable application fee for a
dairy animal loan. The authority may review the fee annually and make adjustments as
necessary. The initial application fee is $50. Application fees received by the authority
must be deposited in the revolving loan account established in section 41B.06.
new text end

new text begin (h) Should the authority find that there is a persistent lack of interest in the dairy
animal revolving loan program as evidenced by a dearth of new applicants, the authority
shall terminate the program and refund any contribution paid by private persons for use in
the dairy animal revolving loan program. When loan proceeds are not sufficient to repay
in full all private persons that contributed, the authority shall make prorated payments to
the private persons proportionate to each person's contribution to all program funds raised
from private sources. The total amount paid by the authority to a private person may not
exceed the amount the person contributed to the authority for the dairy animal revolving
loan program and shall not include any interest paid by a borrower on a dairy animal
loan or any interest earned by the authority while private funds are deposited in the rural
finance authority revolving loan account. For the purposes of this section, "private person"
means any individual, firm, corporation, company, association, cooperative, or partnership
and includes any trustee, receiver, assignee, or other similar representative thereof.
new text end

new text begin Subd. 4. new text end

new text begin Deposit of repayments. new text end

new text begin All repayments of financial assistance granted
under this section, including principal and interest, must be deposited into the revolving
loan account established in section 41B.06.
new text end

Sec. 2.

Minnesota Statutes 2006, section 41B.06, is amended to read:

41B.06 RURAL FINANCE AUTHORITY REVOLVING LOAN ACCOUNT.

There is established in the rural finance administration fund a Rural Finance
Authority revolving loan account that is eligible to receive appropriations and the transfer
of loan funds from other programs. All repayments of financial assistance granted
from this account, including principal and interest, must be deposited into this account.
Interest earned on money in the account accrues to the account, and the money in the
account is appropriated to the commissioner of agriculture for purposes of the Rural
Finance Authority new text begin dairy animal, new text end livestock equipment, methane digester, and value-added
agricultural product loan programs, including costs incurred by the authority to establish
and administer the programs.

Sec. 3. new text begin APPROPRIATION.
new text end

new text begin $2,000,000 is appropriated in fiscal year 2007 from the general fund to the
commissioner of agriculture to administer the loan program in section 1. If $2,000,000 in
nonstate funds have not been contributed by June 30, 2009, the commissioner shall remit
the $2,000,000 appropriated under this section, plus any accumulated interest, to the
commissioner of finance for deposit in the general fund.
new text end

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective the day following final enactment.
new text end