HF 666

as introduced - 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 The authority must establish and implement
a dairy animal revolving loan program to help Minnesota dairy producers purchase
additional dairy animals, thereby increasing the level of milk production in the state. State
appropriations for the program must be matched dollar for dollar by private, federal,
or other nonstate funds.
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 general partnership or a family farm corporation,
authorized farm corporation, family farm partnership, or authorized farm partnership as
defined in 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 make a direct loan or participate in a loan
with an eligible lender to a borrower who is eligible under subdivision 2. A direct loan or
the authority's participation interest in a loan from an eligible lender must be no more than
$500 per each dairy heifer or cow the borrower commits to purchase, up to a maximum of
200 eligible 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.
new text end

new text begin (b) A direct loan or 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 direct loan or 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
direct loan or a loan participation. 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

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 for deposit in the Rural Finance Authority revolving loan
account established in Minnesota Statutes, section 41B.06, to fund the loan program in
section 1.
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