SF 192

1st Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to agriculture; expanding the definition of a 
  1.3             family farm partnership; removing limitations on 
  1.4             ownership and use of agricultural lands by limited 
  1.5             liability companies; amending Minnesota Statutes 1998, 
  1.6             sections 500.24, subdivisions 3a, 3b, and 4; and 
  1.7             500.245, subdivision 2; Minnesota Statutes 1999 
  1.8             Supplement, sections 500.24, subdivisions 2 and 3; and 
  1.9             500.245, subdivision 1. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.12  500.24, subdivision 2, is amended to read: 
  1.13     Subd. 2.  [DEFINITIONS.] The definitions in this 
  1.14  subdivision apply to this section. 
  1.15     (a) "Farming" means the production of (1) agricultural 
  1.16  products; (2) livestock or livestock products; (3) milk or milk 
  1.17  products; or (4) fruit or other horticultural products.  It does 
  1.18  not include the processing, refining, or packaging of said 
  1.19  products, nor the provision of spraying or harvesting services 
  1.20  by a processor or distributor of farm products.  It does not 
  1.21  include the production of timber or forest products, the 
  1.22  production of poultry or poultry products, or the feeding and 
  1.23  caring for livestock that are delivered to a corporation for 
  1.24  slaughter or processing for up to 20 days before slaughter or 
  1.25  processing. 
  1.26     (b) "Family farm" means an unincorporated farming unit 
  1.27  owned by one or more persons residing on the farm or actively 
  2.1   engaging in farming. 
  2.2      (c) "Family farm corporation" means a corporation founded 
  2.3   for the purpose of farming and the ownership of agricultural 
  2.4   land in which the majority of the voting stock is held by and 
  2.5   the majority of the stockholders are persons or the spouses of 
  2.6   persons related to each other within the third degree of kindred 
  2.7   according to the rules of the civil law, and at least one of 
  2.8   said the related persons is residing on or actively operating 
  2.9   the farm, and none of whose stockholders are corporations; 
  2.10  provided that a family farm corporation shall not cease to 
  2.11  qualify as such hereunder by reason of any devise or bequest of 
  2.12  shares of voting stock. 
  2.13     (d) "Authorized farm corporation" means a corporation 
  2.14  meeting the following standards: 
  2.15     (1) it has no more than five shareholders; 
  2.16     (2) all its shareholders, other than any estate, are 
  2.17  natural persons; 
  2.18     (3) it does not have more than one class of shares; 
  2.19     (4) its revenue from rent, royalties, dividends, interest, 
  2.20  and annuities does not exceed 20 percent of its gross receipts; 
  2.21     (5) shareholders holding 51 percent or more of the interest 
  2.22  in the corporation reside on the farm or are actively engaging 
  2.23  in farming; 
  2.24     (6) it does not, directly or indirectly, own or otherwise 
  2.25  have an interest in any title to more than 1,500 acres of 
  2.26  agricultural land; and 
  2.27     (7) none of its shareholders are shareholders in other 
  2.28  authorized farm corporations that directly or indirectly in 
  2.29  combination with the corporation own more than 1,500 acres of 
  2.30  agricultural land. 
  2.31     (e) "Authorized livestock farm corporation" means a 
  2.32  corporation formed for the production of livestock and meeting 
  2.33  the following standards: 
  2.34     (1) it is engaged in the production of livestock other than 
  2.35  dairy cattle; 
  2.36     (2) all its shareholders, other than any estate, are 
  3.1   natural persons or family farm corporations; 
  3.2      (3) it does not have more than one class of shares; 
  3.3      (4) its revenue from rent, royalties, dividends, interest, 
  3.4   and annuities does not exceed 20 percent of its gross receipts; 
  3.5      (5) shareholders holding 75 percent or more of the control, 
  3.6   financial, and capital investment in the corporation are farmers 
  3.7   residing in Minnesota and at least 51 percent of the required 
  3.8   percentage of farmers are actively engaged in livestock 
  3.9   production; 
  3.10     (6) it does not, directly or indirectly, own or otherwise 
  3.11  have an interest in any title to more than 1,500 acres of 
  3.12  agricultural land; and 
  3.13     (7) none of its shareholders are shareholders in other 
  3.14  authorized farm corporations that directly or indirectly in 
  3.15  combination with the corporation own more than 1,500 acres of 
  3.16  agricultural land. 
  3.17     (f) "Agricultural land" means real estate used for farming 
  3.18  or capable of being used for farming in this state. 
  3.19     (g) "Pension or investment fund" means a pension or 
  3.20  employee welfare benefit fund, however organized, a mutual fund, 
  3.21  a life insurance company separate account, a common trust of a 
  3.22  bank or other trustee established for the investment and 
  3.23  reinvestment of money contributed to it, a real estate 
  3.24  investment trust, or an investment company as defined in United 
  3.25  States Code, title 15, section 80a-3.  
  3.26     (h) "Farm homestead" means a house including adjoining 
  3.27  buildings that has been used as part of a farming operation or 
  3.28  is part of the agricultural land used for a farming operation. 
  3.29     (i) "Family farm partnership" means a limited partnership 
  3.30  formed for the purpose of farming and the ownership of 
  3.31  agricultural land in which the majority of the interests in the 
  3.32  partnership is held by and the majority of the partners are 
  3.33  persons or the spouses of persons related to each other within 
  3.34  the third degree of kindred according to the rules of the civil 
  3.35  law, none of the partners are corporations, and: 
  3.36     (1) at least one of the related persons is residing on or 
  4.1   the farm; 
  4.2      (2) at least one of the related persons is actively 
  4.3   operating the farm, and none of the partners are corporations; 
  4.4   or 
  4.5      (3) the agricultural land owned by the limited partnership 
  4.6   was owned by one or more of the related persons for a period of 
  4.7   five years before its transfer to the limited partnership.  A 
  4.8   family farm partnership does not cease to qualify as a family 
  4.9   farm partnership because of a devise or bequest of interest in 
  4.10  the partnership.  
  4.11     (j) "Authorized farm partnership" means a limited 
  4.12  partnership meeting the following standards:  
  4.13     (1) it has been issued a certificate from the secretary of 
  4.14  state or is registered with the county recorder and farming and 
  4.15  ownership of agricultural land is stated as a purpose or 
  4.16  character of the business; 
  4.17     (2) it has no more than five partners; 
  4.18     (3) all its partners, other than any estate, are natural 
  4.19  persons; 
  4.20     (4) its revenue from rent, royalties, dividends, interest, 
  4.21  and annuities do does not exceed 20 percent of its gross 
  4.22  receipts; 
  4.23     (5) its general partners hold at least 51 percent of the 
  4.24  interest in the land assets of the partnership and reside on the 
  4.25  farm or are actively engaging in farming not more than 1,500 
  4.26  acres as a general partner in an authorized limited partnership; 
  4.27     (6) its limited partners do not participate in the business 
  4.28  of the limited partnership including operating, managing, or 
  4.29  directing management of farming operations; 
  4.30     (7) it does not, directly or indirectly, own or otherwise 
  4.31  have an interest in any title to more than 1,500 acres of 
  4.32  agricultural land; and 
  4.33     (8) none of its limited partners are limited partners in 
  4.34  other authorized farm partnerships that directly or indirectly 
  4.35  in combination with the partnership own more than 1,500 acres of 
  4.36  agricultural land.  
  5.1      (k) "Family farm limited liability company" means a limited 
  5.2   liability company founded for the purpose of farming and the 
  5.3   ownership of agricultural land in which the majority of the 
  5.4   membership interests are held by and the majority of the members 
  5.5   are persons or the spouses of persons related to each other 
  5.6   within the third degree of kindred according to the rules of the 
  5.7   civil law, at least one of the related persons is residing on or 
  5.8   actively operating the farm, and none of the members are 
  5.9   corporations or limited liability companies.  A family farm 
  5.10  limited liability company does not cease to qualify as such 
  5.11  because of a devise or bequest of membership interests. 
  5.12     (l) "Authorized farm limited liability company" means a 
  5.13  limited liability company meeting the following standards: 
  5.14     (1) it has no more than five members; 
  5.15     (2) all its members, other than any estate, are natural 
  5.16  persons; 
  5.17     (3) it does not have more than one class of membership 
  5.18  interests; 
  5.19     (4) its revenue from rent, royalties, dividends, interest, 
  5.20  and annuities does not exceed 20 percent of its gross receipts; 
  5.21     (5) members holding 51 percent or more of both the 
  5.22  governance rights and financial rights in the limited liability 
  5.23  company reside on the farm or are actively engaged in farming; 
  5.24     (6) it does not, directly or indirectly, own or otherwise 
  5.25  have an interest in any title to more than 1,500 acres of 
  5.26  agricultural land; and 
  5.27     (7) none of its members are members in other authorized 
  5.28  farm limited liability companies that directly or indirectly in 
  5.29  combination with the authorized farm limited liability company 
  5.30  own more than 1,500 acres of agricultural land. 
  5.31     (m) "Authorized livestock farm limited liability company" 
  5.32  means a limited liability company formed for the production of 
  5.33  livestock and meeting the following standards: 
  5.34     (1) it is engaged in the production of livestock other than 
  5.35  dairy cattle; 
  5.36     (2) all its members, other than any estate, are natural 
  6.1   persons or family farm corporations; 
  6.2      (3) it does not have more than one class of membership 
  6.3   interests; 
  6.4      (4) its revenue from rent, royalties, dividends, interest, 
  6.5   and annuities does not exceed 20 percent of its gross receipts; 
  6.6      (5) members holding 75 percent or more of both the 
  6.7   governance rights and financial rights in the limited liability 
  6.8   company are farmers residing in Minnesota and at least 51 
  6.9   percent of the required percentage of farmers are actively 
  6.10  engaged in livestock production; 
  6.11     (6) it does not, directly or indirectly, own or otherwise 
  6.12  have an interest in any title to more than 1,500 acres of 
  6.13  agricultural land; and 
  6.14     (7) none of its members are members in other authorized 
  6.15  farm limited liability companies that directly or indirectly in 
  6.16  combination with the authorized livestock farm limited liability 
  6.17  company own more than 1,500 acres of agricultural land. 
  6.18     (k) (n) "Farmer" means a natural person who regularly 
  6.19  participates in physical labor or operations management in the 
  6.20  person's farming operation and files "Schedule F" as part of the 
  6.21  person's annual Form 1040 filing with the United States Internal 
  6.22  Revenue Service. 
  6.23     (l) (o) "Actively engaged in livestock production" means 
  6.24  performing day-to-day physical labor or day-to-day operations 
  6.25  management that significantly contributes to livestock 
  6.26  production and the functioning of a livestock operation. 
  6.27     (m) (p) "Research or experimental farm" means a 
  6.28  corporation, limited partnership, limited liability company, or 
  6.29  pension or investment fund that owns or operates agricultural 
  6.30  land for research or experimental purposes, provided that any 
  6.31  commercial sales from the operation are incidental to the 
  6.32  research or experimental objectives of the corporation.  A 
  6.33  corporation, limited partnership, limited liability company, or 
  6.34  pension or investment fund seeking initial approval by the 
  6.35  commissioner to operate agricultural land for research or 
  6.36  experimental purposes must first submit to the commissioner a 
  7.1   prospectus or proposal of the intended method of operation 
  7.2   containing information required by the commissioner including a 
  7.3   copy of any operational contract with individual participants. 
  7.4      (n) (q) "Breeding stock farm" means a corporation or, 
  7.5   limited partnership, or limited liability company that owns land 
  7.6   for the purpose of raising breeding stock, including embryos, 
  7.7   for resale to farmers or for the purpose of growing seed, wild 
  7.8   rice, nursery plants, or sod.  An entity that is organized to 
  7.9   raise livestock other than dairy cattle under this paragraph 
  7.10  that does not qualify as an authorized farm corporation must:  
  7.11     (1) sell all castrated animals to be fed out or finished to 
  7.12  farming operations that are neither directly nor indirectly 
  7.13  owned by the business entity operating the breeding stock 
  7.14  operation; and 
  7.15     (2) report its total production and sales annually to the 
  7.16  commissioner.  
  7.17     (o) (r) "Aquatic farm" means a corporation or, limited 
  7.18  partnership, or limited liability company that owns or leases 
  7.19  agricultural land as a necessary part of an aquatic farm as 
  7.20  defined in section 17.47, subdivision 3.  
  7.21     (p) (s) "Religious farm" means a corporation formed 
  7.22  primarily for religious purposes whose sole income is derived 
  7.23  from agriculture.  
  7.24     (q) (t) "Utility corporation" means a corporation regulated 
  7.25  under Minnesota Statutes 1974, chapter 216B, that owns 
  7.26  agricultural land for purposes described in that chapter, or an 
  7.27  electric generation or transmission cooperative that owns 
  7.28  agricultural land for use in its business if the land is not 
  7.29  used for farming except under lease to a family farm unit, a 
  7.30  family farm corporation, or a family farm partnership, or a 
  7.31  family farm limited liability company.  
  7.32     (r) (u) "Benevolent trust" means a pension fund or family 
  7.33  trust established by the owners of a family farm, authorized 
  7.34  farm corporation, authorized livestock farm corporation, or 
  7.35  family farm corporation, family farm limited liability company, 
  7.36  authorized farm limited liability company, or authorized 
  8.1   livestock farm limited liability company that holds an interest 
  8.2   in title to agricultural land on which one or more of those 
  8.3   owners or, shareholders, or members have resided or have been 
  8.4   actively engaged in farming as required by paragraph (b), (c), 
  8.5   (d), or (e), (k), (l), or (m). 
  8.6      (s) (v) "Development organization" means a corporation, 
  8.7   limited partnership, limited liability company, or pension or 
  8.8   investment fund that owns agricultural land for which 
  8.9   the corporation, limited partnership, or pension or 
  8.10  investment organization or fund has documented plans to use and 
  8.11  subsequently uses the land within six years from the date of 
  8.12  purchase for a specific nonfarming purpose, or if the land is 
  8.13  zoned nonagricultural, or if the land is located within an 
  8.14  incorporated area.  A corporation, limited partnership, limited 
  8.15  liability company, or pension or investment fund may hold 
  8.16  agricultural land in the amount necessary for its nonfarm 
  8.17  business operation; provided, however, that pending the 
  8.18  development of agricultural land for nonfarm purposes, the land 
  8.19  may not be used for farming except under lease to a family farm 
  8.20  unit, a family farm corporation, an authorized farm corporation, 
  8.21  an authorized livestock farm corporation, a family farm 
  8.22  partnership, or an authorized farm partnership, a family farm 
  8.23  limited liability company, an authorized farm limited liability 
  8.24  company, or an authorized livestock farm limited liability 
  8.25  company, or except when controlled through ownership, options, 
  8.26  leaseholds, or other agreements by a corporation that has 
  8.27  entered into an agreement with the United States under the New 
  8.28  Community Act of 1968 (Title IV of the Housing and Urban 
  8.29  Development Act of 1968, United States Code, title 42, sections 
  8.30  3901 to 3914) as amended, or a subsidiary or assign of such a 
  8.31  corporation.  
  8.32     (t) (w) "Exempt land" means agricultural land owned or 
  8.33  leased by a corporation as of May 20, 1973, agricultural land 
  8.34  owned or leased by a pension or investment fund as of May 12, 
  8.35  1981, or agricultural land owned or leased by a limited 
  8.36  partnership as of May 1, 1988, including the normal expansion of 
  9.1   that ownership at a rate not to exceed 20 percent of the amount 
  9.2   of land owned as of May 20, 1973, for a corporation; May 12, 
  9.3   1981, for a pension or investment fund; or May 1, 1988, for a 
  9.4   limited partnership, measured in acres, in any five-year period, 
  9.5   and including additional ownership reasonably necessary to meet 
  9.6   the requirements of pollution control rules.  A corporation, 
  9.7   limited partnership, or pension or investment fund that is 
  9.8   eligible to own or lease agricultural land under this section 
  9.9   prior to May 1997 may continue to own or lease agricultural land 
  9.10  subject to the same conditions and limitations as previously 
  9.11  allowed.  
  9.12     (u) (x) "Gifted land" means agricultural land acquired as a 
  9.13  gift, either by grant or devise, by an educational, religious, 
  9.14  or charitable nonprofit corporation, limited 
  9.15  partnership, limited liability company, or pension or investment 
  9.16  fund if all land so acquired is disposed of within ten years 
  9.17  after acquiring the title.  
  9.18     (v) (y) "Repossessed land" means agricultural land acquired 
  9.19  by a corporation, limited partnership, limited liability 
  9.20  company, or pension or investment fund by process of law in the 
  9.21  collection of debts, or by any procedure for the enforcement of 
  9.22  a lien or claim on the land, whether created by mortgage or 
  9.23  otherwise if all land so acquired is disposed of within five 
  9.24  years after acquiring the title.  The five-year limitation is a 
  9.25  covenant running with the title to the land against any grantee, 
  9.26  assignee, or successor of the pension or investment fund, 
  9.27  corporation, or limited partnership, or limited liability 
  9.28  company.  The land so acquired must not be used for farming 
  9.29  during the five-year period, except under a lease to a family 
  9.30  farm unit, a family farm corporation, an authorized farm 
  9.31  corporation, an authorized livestock farm corporation, a family 
  9.32  farm partnership, or an authorized farm partnership, a family 
  9.33  farm limited liability company, an authorized farm limited 
  9.34  liability company, or an authorized livestock farm limited 
  9.35  liability company.  Notwithstanding the five-year divestiture 
  9.36  requirement under this paragraph, a financial institution may 
 10.1   continue to own the agricultural land if the agricultural land 
 10.2   is leased to the immediately preceding former owner, but must 
 10.3   dispose of the agricultural land within ten years of acquiring 
 10.4   the title.  Livestock acquired by a pension or investment fund, 
 10.5   corporation, or limited partnership, or limited liability 
 10.6   company, in the collection of debts, or by a procedure for the 
 10.7   enforcement of lien or claim on the livestock whether created by 
 10.8   security agreement or otherwise after August 1, 1994, must be 
 10.9   sold or disposed of within one full production cycle for the 
 10.10  type of livestock acquired or 18 months after the livestock is 
 10.11  acquired, whichever is later.  
 10.12     (w) (z) "Commissioner" means the commissioner of 
 10.13  agriculture.  
 10.14     (x) (aa) "Demonstration corporation" means a nonprofit 
 10.15  corporation organized under state nonprofit corporation law and 
 10.16  primarily for the purpose of demonstrating historical farming 
 10.17  practices. 
 10.18     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
 10.19  500.24, subdivision 3, is amended to read: 
 10.20     Subd. 3.  [FARMING AND OWNERSHIP OF AGRICULTURAL LAND BY 
 10.21  CORPORATIONS RESTRICTED.] No corporation, limited liability 
 10.22  company, pension or investment fund, or limited partnership 
 10.23  shall engage in farming; nor shall any corporation, limited 
 10.24  liability company, pension or investment fund, or limited 
 10.25  partnership, directly or indirectly, own, acquire, or otherwise 
 10.26  obtain any interest, in agricultural land other than a bona fide 
 10.27  encumbrance taken for purposes of security.  This subdivision 
 10.28  does not apply to general partnerships.  This subdivision does 
 10.29  not apply to any agricultural land, corporation, limited 
 10.30  partnership, or pension or investment fund, or limited liability 
 10.31  company that meet meets any of the definitions in subdivision 2, 
 10.32  paragraphs (b) to (e), (i), (j), to (m), and (m) (p) to 
 10.33  (v) (y), and (x) (aa), has a conservation plan prepared for the 
 10.34  agricultural land, and reports as required under subdivision 4. 
 10.35     Sec. 3.  Minnesota Statutes 1998, section 500.24, 
 10.36  subdivision 3a, is amended to read: 
 11.1      Subd. 3a.  [LEASE AGREEMENT; CONSERVATION PRACTICE 
 11.2   PROTECTION CLAUSE.] A corporation, pension or investment fund, 
 11.3   or limited partnership, or limited liability company other than 
 11.4   a family farm corporation, an authorized farm corporation, an 
 11.5   authorized livestock farm corporation, a family farm 
 11.6   partnership, or an authorized farm partnership those meeting any 
 11.7   of the definitions in subdivision 2, paragraphs (c) to (e) or 
 11.8   (i) to (m), when leasing farm land to a family farm unit, a 
 11.9   family farm corporation, an authorized farm corporation, an 
 11.10  authorized livestock farm corporation, a family farm 
 11.11  partnership, or an authorized farm partnership, a family farm 
 11.12  limited liability company, an authorized farm limited liability 
 11.13  company, or an authorized livestock farm limited liability 
 11.14  company, under provisions of subdivision 2, paragraph (v) (y), 
 11.15  must include within the lease agreement a provision prohibiting 
 11.16  intentional damage or destruction to a conservation practice on 
 11.17  the agricultural land. 
 11.18     Sec. 4.  Minnesota Statutes 1998, section 500.24, 
 11.19  subdivision 3b, is amended to read: 
 11.20     Subd. 3b.  [PROTECTION OF CONSERVATION PRACTICES.] A 
 11.21  corporation, pension or investment fund, or limited partnership, 
 11.22  or limited liability company other than a family farm 
 11.23  corporation, an authorized farm corporation, an authorized 
 11.24  livestock farm corporation, a family farm partnership, or 
 11.25  authorized farm partnership those meeting any of the definitions 
 11.26  in subdivision 2, paragraphs (c) to (e) or (i) to (m), which, 
 11.27  during the period of time it holds agricultural land under 
 11.28  subdivision 2, paragraph (v) (y), intentionally destroys a 
 11.29  conservation practice as defined in section 103F.401, 
 11.30  subdivision 3, to which the state has made a financial 
 11.31  contribution, must pay the commissioner, for deposit in the 
 11.32  general fund, an amount equal to the state's total contributions 
 11.33  to that conservation practice plus interest from the time of 
 11.34  investment in the conservation practice.  Interest must be 
 11.35  calculated at an annual percentage rate of 12 percent. 
 11.36     Sec. 5.  Minnesota Statutes 1998, section 500.24, 
 12.1   subdivision 4, is amended to read: 
 12.2      Subd. 4.  [REPORTS.] (a) The chief executive officer of 
 12.3   every pension or investment fund, corporation, or limited 
 12.4   partnership, or limited liability company that holds any 
 12.5   interest in agricultural land or land used for the breeding, 
 12.6   feeding, pasturing, growing, or raising of livestock, dairy or 
 12.7   poultry, or products thereof, or land used for the production of 
 12.8   agricultural crops or fruit or other horticultural products, 
 12.9   other than a bona fide encumbrance taken for purposes of 
 12.10  security, or which is engaged in farming or proposing to 
 12.11  commence farming in this state after May 20, 1973, shall file 
 12.12  with the commissioner a report containing the following 
 12.13  information and documents: 
 12.14     (1) the name of the pension or investment fund, 
 12.15  corporation, or limited partnership, or limited liability 
 12.16  company and its place of incorporation, certification, or 
 12.17  registration; 
 12.18     (2) the address of the pension or investment plan 
 12.19  headquarters or of the registered office of the corporation in 
 12.20  this state, the name and address of its registered agent in this 
 12.21  state and, in the case of a foreign corporation or, limited 
 12.22  partnership, or limited liability company, the address of its 
 12.23  principal office in its place of incorporation, certification, 
 12.24  or registration; 
 12.25     (3) the acreage and location listed by quarter-quarter 
 12.26  section, township, and county of each lot or parcel of 
 12.27  agricultural land or land used for the keeping or feeding of 
 12.28  poultry in this state owned or leased by the pension or 
 12.29  investment fund, limited partnership, or corporation, or limited 
 12.30  liability company; 
 12.31     (4) the names and addresses of the officers, 
 12.32  administrators, directors, or trustees of the pension or 
 12.33  investment fund, or of the officers, and shareholders owning 
 12.34  more than ten percent of the stock, including the percent of 
 12.35  stock owned by each such shareholder, and the members of the 
 12.36  board of directors of the corporation, the members of the 
 13.1   limited liability company, and the general and limited partners 
 13.2   and the percentage of interest in the partnership by each 
 13.3   partner; 
 13.4      (5) the farm products which the pension or investment fund, 
 13.5   limited partnership, or corporation, or limited liability 
 13.6   company produces or intends to produce on its agricultural land; 
 13.7      (6) with the first report, a copy of the title to the 
 13.8   property where the farming operations are or will occur 
 13.9   indicating the particular exception claimed under subdivision 3; 
 13.10  and 
 13.11     (7) with the first or second report, a copy of the 
 13.12  conservation plan proposed by the soil and water conservation 
 13.13  district, and with subsequent reports a statement of whether the 
 13.14  conservation plan was implemented. 
 13.15     The report of a corporation an organization seeking to 
 13.16  qualify hereunder as a family farm corporation, an authorized 
 13.17  farm corporation, an authorized livestock farm corporation, a 
 13.18  family farm partnership, or an authorized farm partnership, a 
 13.19  family farm limited liability company, an authorized farm 
 13.20  limited liability company, or an authorized livestock farm 
 13.21  limited liability company shall contain the following additional 
 13.22  information:  the number of shares or the, partnership 
 13.23  interests, or governance and financial rights owned by persons 
 13.24  residing on the farm or actively engaged in farming, or their 
 13.25  relatives within the third degree of kindred according to the 
 13.26  rules of the civil law or their spouses; the name, address, and 
 13.27  number of shares owned by each shareholder or, partnership 
 13.28  interests owned by each partner;, or governance and financial 
 13.29  rights owned by each member, and a statement as to percentage of 
 13.30  gross receipts of the corporation derived from rent, royalties, 
 13.31  dividends, interest, and annuities.  No pension or investment 
 13.32  fund, limited partnership, or corporation, or limited liability 
 13.33  company shall commence farming in this state until the 
 13.34  commissioner has inspected the report and certified that its 
 13.35  proposed operations comply with the provisions of this section. 
 13.36     (b) Every pension or investment fund, limited partnership, 
 14.1   or corporation, or limited liability company as described in 
 14.2   paragraph (a) shall, prior to April 15 of each year, file with 
 14.3   the commissioner a report containing the information required in 
 14.4   paragraph (a), based on its operations in the preceding calendar 
 14.5   year and its status at the end of the year.  A pension or 
 14.6   investment fund, limited partnership, or corporation, or limited 
 14.7   liability company that does not file the report by April 15 must 
 14.8   pay a $500 civil penalty.  The penalty is a lien on the land 
 14.9   being farmed under subdivision 3 until the penalty is paid. 
 14.10     (c) The commissioner may, for good cause shown, issue a 
 14.11  written waiver or reduction of the civil penalty for failure to 
 14.12  make a timely filing of the annual report required by this 
 14.13  subdivision.  The waiver or reduction is final and conclusive 
 14.14  with respect to the civil penalty, and may not be reopened or 
 14.15  modified by an officer, employee, or agent of the state, except 
 14.16  upon a showing of fraud or malfeasance or misrepresentation of a 
 14.17  material fact.  The report required under paragraph (b) must be 
 14.18  completed prior to a reduction or waiver under this paragraph.  
 14.19  The commissioner may enter into an agreement under this 
 14.20  paragraph only once for each corporation or partnership. 
 14.21     (d) Failure to file a required report or the willful filing 
 14.22  of false information is a gross misdemeanor. 
 14.23     Sec. 6.  Minnesota Statutes 1999 Supplement, section 
 14.24  500.245, subdivision 1, is amended to read: 
 14.25     Subdivision 1.  [DISPOSAL OF LAND.] (a) A state or federal 
 14.26  agency, limited partnership, or a corporation, or limited 
 14.27  liability company may not lease or sell agricultural land or a 
 14.28  farm homestead before offering or making a good faith effort to 
 14.29  offer the land for sale or lease to the immediately preceding 
 14.30  former owner at a price no higher than the highest price offered 
 14.31  by a third party that is acceptable to the seller or lessor.  
 14.32  The offer must be made on the notice to offer form under 
 14.33  subdivision 2.  The requirements of this subdivision do not 
 14.34  apply to a sale or lease by a corporation that is a family farm 
 14.35  corporation or an authorized farm corporation or to a sale or 
 14.36  lease by the commissioner of agriculture of property acquired by 
 15.1   the state under the family farm security program under chapter 
 15.2   41.  This subdivision applies only to a sale or lease when the 
 15.3   seller or lessor acquired the property by enforcing a debt 
 15.4   against the agricultural land or farm homestead, including 
 15.5   foreclosure of a mortgage, accepting a deed in lieu of 
 15.6   foreclosure, terminating a contract for deed, or accepting a 
 15.7   deed in lieu of terminating a contract for deed.  Selling or 
 15.8   leasing property to a third party at a price is prima facie 
 15.9   evidence that the price is acceptable to the seller or lessor.  
 15.10  The seller must provide written notice to the immediately 
 15.11  preceding former owner that the agricultural land or farm 
 15.12  homestead will be offered for sale at least 14 days before the 
 15.13  agricultural land or farm homestead is offered for sale.  
 15.14     (b) An immediately preceding former owner is the entity 
 15.15  with record legal title to the agricultural land or farm 
 15.16  homestead before acquisition by the state or federal agency or 
 15.17  corporation except:  if the immediately preceding former owner 
 15.18  is a bankruptcy estate, the debtor in bankruptcy is the 
 15.19  immediately preceding former owner; and if the agricultural land 
 15.20  or farm homestead was acquired by termination of a contract for 
 15.21  deed or deed in lieu of termination of a contract for deed, the 
 15.22  immediately preceding former owner is the purchaser under the 
 15.23  contract for deed.  For purposes of this subdivision, only a 
 15.24  family farm, family farm corporation, or family farm partnership 
 15.25  or family farm limited liability company can be an immediately 
 15.26  preceding former owner. 
 15.27     (c) An immediately preceding former owner may elect to 
 15.28  purchase or lease the entire property or an agreed to portion of 
 15.29  the property.  If the immediately preceding former owner elects 
 15.30  to purchase or lease a portion of the property, the election 
 15.31  must be reported in writing to the seller or lessor prior to the 
 15.32  time the property is first offered for sale or lease.  If 
 15.33  election is made to purchase or lease a portion of the property, 
 15.34  the portion must be contiguous and compact so that it does not 
 15.35  unreasonably reduce access to or the value of the remaining 
 15.36  property. 
 16.1      (d) For purposes of this subdivision, the term "a price no 
 16.2   higher than the highest price offered by a third party" means 
 16.3   the acceptable cash price offered by a third party or the 
 16.4   acceptable time-price offer made by a third party.  A cash price 
 16.5   offer is one that involves simultaneous transfer of title for 
 16.6   payment of the entire amount of the offer.  If the acceptable 
 16.7   offer made by a third party is a time-price offer, the seller or 
 16.8   lessor must make the same time-price offer or an equivalent cash 
 16.9   offer to the immediately preceding former owner.  An equivalent 
 16.10  cash offer is equal to the total of the payments made over a 
 16.11  period of the time-price offer discounted by yield curve of the 
 16.12  United States treasury notes and bonds of similar maturity on 
 16.13  the first business day of the month in which the offer is 
 16.14  personally delivered or mailed for time periods similar to the 
 16.15  time period covered by the time-price offer, plus 2.0 percent.  
 16.16  A time-price offer is an offer that is financed entirely or 
 16.17  partially by the seller and includes an offer to purchase under 
 16.18  a contract for deed or mortgage.  An equivalent cash offer is 
 16.19  not required to be made if the state participates in an offer to 
 16.20  a third party through the rural finance authority. 
 16.21     (e) This subdivision applies to a seller when the property 
 16.22  is sold and to a lessor each time the property is leased, for 
 16.23  the time period specified in section 500.24, subdivision 2, 
 16.24  paragraph (v), after the agricultural land is acquired except:  
 16.25     (1) an offer to lease to the immediately preceding former 
 16.26  owner is required only until the immediately preceding owner 
 16.27  fails to accept an offer to lease the property or the property 
 16.28  is sold; 
 16.29     (2) an offer to sell to the immediately preceding former 
 16.30  owner is required until the property is sold; and 
 16.31     (3) if the immediately preceding former owner elects to 
 16.32  lease or purchase a portion of the property, this subdivision 
 16.33  does not apply to the seller with regard to the balance of the 
 16.34  property after the election is made under paragraph (c).  
 16.35     (f) The notice of an offer under subdivision 2 that is 
 16.36  personally delivered with a signed receipt or sent by certified 
 17.1   mail with a receipt of mailing to the immediately preceding 
 17.2   former owner's last known address is a good faith offer.  
 17.3      (g) This subdivision does not apply to a sale or lease that 
 17.4   occurs after the seller or lessor has held the property for the 
 17.5   time period specified in section 500.24, subdivision 2, 
 17.6   paragraph (v).  
 17.7      (h) For purposes of this subdivision, if the immediately 
 17.8   preceding former owner is a bankruptcy estate the debtor in the 
 17.9   bankruptcy is the immediately preceding owner.  
 17.10     (i) The immediately preceding former owner must exercise 
 17.11  the right to lease all or a portion of the agricultural land or 
 17.12  a homestead located on agricultural land in writing within 15 
 17.13  days after an offer to lease under this subdivision is mailed 
 17.14  with a receipt of mailing or personally delivered.  If election 
 17.15  is made to lease only the homestead or a portion of the 
 17.16  agricultural land, the portion to be leased must be clearly 
 17.17  identified in writing.  The immediately preceding former owner 
 17.18  must exercise the right to buy the agricultural land, a portion 
 17.19  of the agricultural land, or a farm homestead located on 
 17.20  agricultural land, in writing, within 65 days after an offer to 
 17.21  buy under this subdivision is mailed with a receipt of mailing 
 17.22  or is personally delivered.  Within ten days after exercising 
 17.23  the right to lease or buy by accepting the offer, the 
 17.24  immediately preceding owner must fully perform according to the 
 17.25  terms of the offer including paying the amounts due.  A seller 
 17.26  may sell and a lessor may lease the agricultural land or farm 
 17.27  homestead subject to this subdivision to the third party in 
 17.28  accordance with their lease or purchase agreement if: 
 17.29     (1) the immediately preceding former owner does not accept 
 17.30  an offer to lease or buy before the offer terminates; or 
 17.31     (2) the immediately preceding former owner does not perform 
 17.32  the obligations of the offer, including paying the amounts due, 
 17.33  within ten days after accepting the offer. 
 17.34     (j) A certificate indicating whether or not the property 
 17.35  contains agricultural land or a farm homestead that is signed by 
 17.36  the county assessor where the property is located and recorded 
 18.1   in the office of the county recorder or the registrar of titles 
 18.2   where the property is located is prima facie evidence of whether 
 18.3   the property is agricultural land or a farm homestead. 
 18.4      (k) As prima facie evidence that an offer to sell or lease 
 18.5   agricultural land or a farm homestead has terminated, a receipt 
 18.6   of mailing the notice under subdivision 2 and an affidavit, 
 18.7   signed by a person authorized to act on behalf of a state, 
 18.8   federal agency, or corporation selling or leasing the 
 18.9   agricultural land or a farm homestead may be filed in the office 
 18.10  of the county recorder or registrar of titles of the county 
 18.11  where the agricultural land or farm homestead is located.  The 
 18.12  affidavit must state that: 
 18.13     (1) notice of an offer to buy or lease the agricultural 
 18.14  land or farm homestead was provided to the immediately preceding 
 18.15  former owner at a price not higher than the highest price 
 18.16  offered by a third party that is acceptable; 
 18.17     (2) the time during which the immediately preceding former 
 18.18  owner is required to exercise the right to buy or lease the 
 18.19  agricultural land or farm homestead has expired; 
 18.20     (3) the immediately preceding former owner has not 
 18.21  exercised the right to buy or lease the agricultural land or 
 18.22  farm homestead as provided in this subdivision or has accepted 
 18.23  an offer and has not fully performed according to the terms of 
 18.24  the offer; and 
 18.25     (4) the offer to the immediately preceding former owner has 
 18.26  terminated. 
 18.27     (l) The right of an immediately preceding former owner to 
 18.28  receive an offer to lease or purchase agricultural land under 
 18.29  this subdivision or to lease or purchase at a price no higher 
 18.30  than the highest price offered by a third party that is 
 18.31  acceptable to the seller or lessor may be extinguished or 
 18.32  limited by an express statement signed by the immediately 
 18.33  preceding owner that complies with the plain language 
 18.34  requirements of section 325G.31.  The right may not be 
 18.35  extinguished or limited except by: 
 18.36     (1) an express statement in a deed in lieu of foreclosure 
 19.1   of the agricultural land; 
 19.2      (2) an express statement in a deed in lieu of a termination 
 19.3   of a contract for deed for the agricultural land; 
 19.4      (3) an express statement conveying the right to the state 
 19.5   or federal agency or corporation owning the agricultural land 
 19.6   that is required to make an offer under this subdivision; 
 19.7   however, the preceding former owner may rescind the conveyance 
 19.8   by notifying the state or federal agency or corporation in 
 19.9   writing within 20 calendar days after signing the express 
 19.10  statement; 
 19.11     (4) to cure a title defect, an express statement conveying 
 19.12  the right may be made to a person to whom the agricultural land 
 19.13  has been transferred by the state or federal agency or 
 19.14  corporation; or 
 19.15     (5) an express statement conveying the right to a contract 
 19.16  for deed vendee to whom the agricultural land or farm homestead 
 19.17  was sold under a contract for deed by the immediately preceding 
 19.18  former owner if the express statement and the contract for deed 
 19.19  are recorded. 
 19.20     (m) The right of an immediately preceding former owner to 
 19.21  receive an offer to lease or purchase agricultural land under 
 19.22  this subdivision may not be assigned or transferred except as 
 19.23  provided in paragraph (l), but may be inherited.  
 19.24     (n) An immediately preceding former owner, except a former 
 19.25  owner who is actively engaged in farming as defined in section 
 19.26  500.24, subdivision 2, paragraph (a), and who agrees to remain 
 19.27  actively engaged in farming on a portion of the agricultural 
 19.28  land or farm homestead for at least one year after accepting an 
 19.29  offer under this subdivision, may not sell agricultural land 
 19.30  acquired by accepting an offer under this subdivision if the 
 19.31  arrangement of the sale was negotiated or agreed to prior to the 
 19.32  former owner accepting the offer under this subdivision.  A 
 19.33  person who sells property in violation of this paragraph is 
 19.34  liable for damages plus reasonable attorney fees to a person who 
 19.35  is damaged by a sale in violation of this paragraph.  There is a 
 19.36  rebuttable presumption that a sale by an immediately preceding 
 20.1   former owner is in violation of this paragraph if the sale takes 
 20.2   place within 270 days of the former owner accepting the offer 
 20.3   under this subdivision.  This paragraph does not apply to a sale 
 20.4   by an immediately preceding former owner to the owner's spouse, 
 20.5   the owner's parents, the owner's sisters and brothers, the 
 20.6   owner's spouse's sisters and brothers, or the owner's children. 
 20.7      Sec. 7.  Minnesota Statutes 1998, section 500.245, 
 20.8   subdivision 2, is amended to read: 
 20.9      Subd. 2.  [NOTICE OF OFFER.] (a) The state, a federal 
 20.10  agency, limited partnership, or a corporation, or limited 
 20.11  liability company subject to subdivision 1 must provide a notice 
 20.12  of an offer to sell or lease agricultural land substantially as 
 20.13  follows, after inserting the appropriate terms within the 
 20.14  parentheses: 
 20.15         "NOTICE OF OFFER TO (LEASE, BUY) AGRICULTURAL LAND
 20.16  TO:       (...Immediately preceding former owner...)
 20.17  FROM:     (...The state, federal agency, limited
 20.18            partnership, or corporation, or limited
 20.19            liability company subject to
 20.20            subdivision 1...)
 20.21  DATE:     (...date notice is mailed or personally
 20.22            delivered...)
 20.23     (...The state, federal agency, limited partnership, or 
 20.24  corporation, or limited liability company...) HAS ACQUIRED THE 
 20.25  AGRICULTURAL LAND DESCRIBED BELOW AND HAS RECEIVED AN ACCEPTABLE 
 20.26  OFFER TO (LEASE, SELL) THE AGRICULTURAL LAND FROM ANOTHER 
 20.27  PARTY.  UNDER MINNESOTA STATUTES, SECTION 500.245, SUBDIVISION 
 20.28  1, AN OFFER FROM (...the state, federal agency, limited 
 20.29  partnership, or corporation, or limited liability company...) 
 20.30  MUST BE MADE TO YOU AT A PRICE NO HIGHER THAN THE HIGHEST OFFER 
 20.31  MADE BY ANOTHER PARTY. 
 20.32     THE AGRICULTURAL LAND BEING OFFERED CONTAINS APPROXIMATELY 
 20.33  (...approximate number of acres...) ACRES AND IS INFORMALLY 
 20.34  DESCRIBED AS FOLLOWS: 
 20.35     (Informal description of the agricultural land being 
 20.36  offered that reasonably describes the land.  This description 
 21.1   does not need to be a legal description.) 
 21.2      (...The state, federal agency, limited partnership, or 
 21.3   corporation, or limited liability company...) OFFERS TO (SELL, 
 21.4   LEASE) THE AGRICULTURAL LAND DESCRIBED ABOVE FOR A CASH PRICE OF 
 21.5   $(...cash price or equivalent cash price for lease and lease 
 21.6   period, or cash price or equivalent cash price for sale of 
 21.7   land...), WHICH IS NOT HIGHER THAN THE PRICE OFFERED BY ANOTHER 
 21.8   PARTY.  THE PRICE IS OFFERED ON THE FOLLOWING TERMS: 
 21.9                 (Terms, if any, of acceptable offer)
 21.10     IF YOU WANT TO ACCEPT THIS OFFER YOU MUST NOTIFY (...the 
 21.11  state, federal agency, limited partnership, or corporation, or 
 21.12  limited liability company...) IN WRITING THAT YOU ACCEPT THE 
 21.13  OFFER OR SIGN UNDERNEATH THE FOLLOWING PARAGRAPH AND RETURN A 
 21.14  COPY OF THIS NOTICE BY (15 for a lease, 65 for a sale) DAYS 
 21.15  AFTER THIS NOTICE IS PERSONALLY DELIVERED OR MAILED TO YOU.  THE 
 21.16  OFFER IN THIS NOTICE TERMINATES ON (...date of termination - 15 
 21.17  days for lease and 65 days for sale after date of mailing or 
 21.18  personal delivery...) 
 21.19                        ACCEPTANCE OF OFFER 
 21.20     I ACCEPT THE OFFER TO (BUY, LEASE) THE AGRICULTURAL LAND 
 21.21  DESCRIBED ABOVE AT THE PRICE OFFERED TO ME IN THIS NOTICE.  AS 
 21.22  PART OF ACCEPTING THIS OFFER I WILL PERFORM ACCORDING TO THE 
 21.23  TERMS OF THE OFFER, INCLUDING MAKING PAYMENTS DUE UNDER THE 
 21.24  OFFER, WITHIN TEN DAYS AFTER THE DATE I ACCEPT THIS OFFER.  I 
 21.25  UNDERSTAND THAT NEGOTIATING OR AGREEING TO AN ARRANGEMENT TO 
 21.26  SELL THE AGRICULTURAL LAND TO ANOTHER PERSON PRIOR TO ACCEPTING 
 21.27  THIS OFFER MAY BE A VIOLATION OF LAW AND I MAY BE LIABLE TO A 
 21.28  PERSON DAMAGED BY THE SALE. 
 21.29  
 21.30       .........................................
 21.31       Signature of Former Owner Accepting Offer 
 21.32  
 21.33       .........................................
 21.34       Date" 
 21.35                          IMPORTANT NOTICE
 21.36     ANY ACTION FOR THE RECOVERY OF THE AGRICULTURAL LAND 
 21.37  DESCRIBED ABOVE OR ANY ACTION FOR DAMAGES, EXCEPT FOR DAMAGES 
 22.1   FOR FRAUD, REGARDING THIS OFFER MUST BE COMMENCED BY A LAWSUIT 
 22.2   BEFORE THE EXPIRATION OF THREE YEARS AFTER THIS LAND IS SOLD TO 
 22.3   ANOTHER PARTY.  UPON FILING A LAWSUIT, YOU MUST ALSO FILE A 
 22.4   NOTICE OF LIS PENDENS WITH THE COUNTY RECORDER OR REGISTRAR OF 
 22.5   TITLES IN THE COUNTY WHERE THE LAND IS LOCATED. 
 22.6      (b) For an offer to sell, a copy of the purchase agreement 
 22.7   containing the price and terms of the highest offer made by a 
 22.8   third party that is acceptable to the seller and a signed 
 22.9   affidavit by the seller affirming that the purchase agreement is 
 22.10  true, accurate, and made in good faith must be included with the 
 22.11  notice under this subdivision.  At the seller's discretion, 
 22.12  reference to the third party's identity may be deleted from the 
 22.13  copy of the purchase agreement. 
 22.14     (c) For an offer to lease, a copy of the lease containing 
 22.15  the price and terms of the highest offer made by a third party 
 22.16  that is acceptable to the lessor and a signed affidavit by the 
 22.17  lessor affirming that the lease is true, accurate, and made in 
 22.18  good faith must be included with the notice under this 
 22.19  subdivision.  At the lessor's discretion, reference to the third 
 22.20  party's identity may be deleted from the copy of the lease 
 22.21  agreement. 
 22.22     (d) The affidavit under paragraphs (b) and (c) is subject 
 22.23  to section 609.48.