Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 332--H.F.No. 851
           An act relating to agriculture; making certain changes 
          in the family farm security loan program; amending 
          Minnesota Statutes 1982, sections 15.38, by adding a 
          subdivision; 16.02, subdivision 14; 41.52, by adding a 
          subdivision; 41.53, subdivision 2; 41.54, subdivision 
          2; 41.55; 41.56, subdivisions 4, 5, and by adding 
          subdivisions; 41.57, subdivision 2; 41.58, subdivision 
          1; 41.59, subdivisions 1, 2, and 3; 41.61, subdivision 
          1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 16.02, 
subdivision 14, is amended to read: 
    Subd. 14.  To rent out, with the approval of the governor, 
any state property, real or personal, not needed for public use, 
the rental of which is not otherwise provided for or prohibited 
by law.  This shall not apply to state trust fund lands, or 
other state lands under the jurisdiction of the department of 
natural resources, or to lands forfeited for delinquent taxes or 
to lands acquired under section 298.22, or lands acquired under 
section 41.56 which are under the jurisdiction of the department 
of agriculture.  No such property shall be rented out for a term 
exceeding two years at a time without the approval of the state 
executive council; and no such property shall ever be rented out 
for more than 25 years. 
    Sec. 2.  Minnesota Statutes 1982, section 41.52, is amended 
by adding a subdivision to read:  
     Subd. 13.  [PARTICIPANT.] "Participant" means an applicant 
who has received final approval for a guarantee which has been 
fully executed by the state.  
    Sec. 3.  Minnesota Statutes 1982, section 41.53, 
subdivision 2, is amended to read: 
    Subd. 2.  The commissioner shall promulgate may adopt 
temporary or permanent rules necessary for the efficient 
administration of sections 41.51 to 41.57; 41.58, subdivisions 1 
and 2; 41.59, subdivision 1; and 41.61.  
    Sec. 4.  Minnesota Statutes 1982, section 41.54, 
subdivision 2, is amended to read: 
    Subd. 2.  [TERMS AND COMPENSATION.] The compensation and 
removal of members of the council shall be governed by section 
15.059.  The council shall meet monthly or more often as needed. 
    The terms of the members serving on January 15, 1981, shall 
end on the first Monday in April in the year indicated as 
follows:  
    (a) The dairy farmer and one officer from a commercial 
lending institution, 1982;  
    (b) The cash grain farmer and the officer from a farm 
credit association, 1983;  
    (c) The livestock farmer and one officer from a commercial 
lending institution, 1984; and 
    (d) The agricultural economist, 1985.  
    After a term expires as provided in clauses (a) to (d), all 
successors shall be appointed for four year terms.  The terms of 
the present officers from a commercial lending institution shall 
be decided by lot subject to clauses (a) and (c).  
    Sec. 5.  Minnesota Statutes 1982, section 41.55, is amended 
to read: 
    41.55 [ELIGIBILITY.] 
    A family farm security loan approval may be granted if the 
following criteria are satisfied: 
    (a) That the applicant is a resident of the state of 
Minnesota, or shows sufficient evidence that he intends to 
become a resident; 
    (b) That the applicant has sufficient education, training, 
or experience in the type of farming for which he wishes the 
loan and continued participation in a farm management program, 
approved by the commissioner, for the duration at least the 
first ten years of the family farm security loan; 
    (c) That the applicant, his dependents and spouse have 
total net worth valued at less than $75,000 and has demonstrated 
a need for the loan; 
    (d) That the applicant intends to purchase farm land to be 
used by the applicant for agricultural purposes; 
    (e) That the applicant is credit worthy according to 
standards prescribed by the commissioner; 
    (f) That the seller has not acquired the farm land for 
purposes of obtaining the income tax exemption allowed by 
sections 41.58 and Laws 1976, chapter 210, section 12.  
    Sec. 6.  Minnesota Statutes 1982, section 41.56, 
subdivision 4, is amended to read: 
    Subd. 4.  [SALE OF DEFAULTED PROPERTY.] In the event that 
title to the any property is acquired by the state, upon 
conveyance of title to the state and expiration of the period of 
redemption, the commissioner shall, within 15 days of the 
expiration of such the period of redemption, undertake to sell 
the property by publishing a notice of the impending sale at 
least once each week for four successive weeks in a legal 
newspaper and also in a newspaper of general distribution in the 
county in which the property to be sold is situated.  Such The 
notice shall specify the time and place in the county at which 
the sale will commence, a description of must describe the lots 
or tracts to be offered, and a general statement of the terms of 
sale.  Except as further provided in this subdivision, the terms 
and method of sale shall be determined by the commissioner.  The 
commissioner shall sell the property to the highest bidder as 
determined by taking sealed bids or by public auction, provided 
that in either event he shall select the successful bidder 
within 15 days of the date of the last published notice of 
sale.  Bidders shall submit bid security in the form of a 
certified check or bid bond in the amount of two percent of 
their bid price and the successful bidder shall remit the 
balance of the purchase price to the commissioner within 90 days 
of the date of sale.  Upon remittance of such balance within 90 
days of the date of sale, the commissioner shall transfer title 
to the property, including any acquired mineral rights, to the 
purchaser by quitclaim deed.  In the event that the purchaser 
fails to remit any part of such balance within 90 days of the 
date of sale, the purchaser shall forfeit all rights to the 
property and any moneys paid thereon and the state shall 
recommence the sale process as specified in this subdivision. 
Proceeds from the sale of a parcel of property obtained by the 
state pursuant to this section shall be paid into the special 
account authorized in section 41.61, subdivision 1, to the 
extent that funds from the special account were disbursed 
according to the terms of the family farm security loan 
guarantee and into the general fund to the extent that funds 
were disbursed as payment adjustments by the commissioner. 
Proceeds in excess of these amounts shall be paid to the lender 
to the extent that payment to the lender pursuant to the loan 
guarantee was less than the money due and payable to the lender 
under the family farm security loan.  Proceeds in excess of 
these amounts shall be paid to cooperating agencies according to 
the terms of the family farm security memorandum of 
understanding.  Additional proceeds, if any, shall be paid into 
the general fund.  
     The commissioner shall first attempt to sell the property 
to a person who is eligible for a family farm security loan.  If 
the commissioner is unable to effect a sale to an eligible 
person, the commissioner shall attempt to sell the property for 
cash as provided in subdivision 4a.  If the commissioner is 
unable to effect a sale to an eligible person or for cash, or if 
the commissioner finds that sale to an eligible person or for 
cash would not best protect the interests of the state, the 
commissioner may sell the property on terms which the 
commissioner finds will best protect the interests of the state. 
The commissioner may lease any real property which he is unable 
to sell with reasonable promptness.  In any event, any acquired 
farm property must be sold within two years after the conveyance 
of title to the state or after the expiration of the period of 
redemption.  The commissioner may contract for the services of a 
licensed real estate agent or broker to assist in selling any 
property acquired under this section and may pay for the 
services from the proceeds of the sale before proceeds are 
distributed under section 8.  
    Sec. 7.  Minnesota Statutes 1982, section 41.56, is amended 
by adding a subdivision to read: 
    Subd. 4a.  [SALE FOR CASH.] When the commissioner sells any 
farm property for cash, he shall follow the procedures provided 
in this subdivision.  If the sale will be completed more than 15 
days after the last published notice of sale as provided in 
subdivision 4, the commissioner shall publish another notice as 
provided in that subdivision.  The commissioner shall sell the 
property to the highest bidder by taking sealed bids or by bids 
at public auction.  The commissioner may refuse to accept any or 
all bids.  If a bid is accepted, the successful bidder shall be 
selected within 15 days of the date of the last published notice 
of sale.  The successful bidder shall submit bid security in the 
form of a certified check or bid bond in the amount of two 
percent of the bid price on the day of selection and shall remit 
the balance of the purchase price within 90 days of the date of 
sale.  Upon remittance by the purchaser of the balance within 90 
days of the date of sale, the commissioner shall transfer title 
to the property, including any acquired mineral rights, to the 
purchaser by quitclaim deed.  In the event that the purchaser 
fails to remit all of the balance within 90 days of the date of 
sale, the purchaser forfeits all rights to the property and any 
money paid for the property and the commissioner shall 
recommence the sale process specified in this subdivision.  
    Sec. 8.  Minnesota Statutes 1982, section 41.56, is amended 
by adding a subdivision to read: 
     Subd. 4b.  [PROCEEDS OF SALE.] Proceeds from the sale of a 
parcel of property obtained by the state pursuant to this 
section shall be paid into the general fund to the extent that 
funds were disbursed as payment adjustments by the commissioner 
and into the special account authorized in section 41.61, 
subdivision 1, to the extent that funds from the special account 
were disbursed according to the terms of the family farm 
security loan guarantee and for any insurance premiums or taxes 
paid on the property.  Proceeds in excess of these amounts shall 
be paid to the lender to the extent that payment to the lender 
pursuant to the loan guarantee was less than the money due and 
payable to the lender under the family farm security loan. 
Proceeds in excess of these amounts shall be paid to cooperating 
agencies according to the terms of the family farm memorandum of 
understanding.  Additional proceeds, if any, shall be paid into 
the special account authorized in section 41.61, subdivision 1.  
    Sec. 9.  Minnesota Statutes 1982, section 41.56, 
subdivision 5, is amended to read: 
    Subd. 5.  [GUARANTEE VOID.] The loan guarantee shall be is 
void only if the guaranteed loan was obtained or retained by 
fraud or material misrepresentation of which the original lender 
or subsequent holder had actual knowledge.  
    Sec. 10.  Minnesota Statutes 1982, section 41.56, is 
amended by adding a subdivision to read: 
    Subd. 7.  [INSURANCE.] The commissioner may insure the 
state against loss to farm properties acquired under this 
section by fire, lightning, windstorm, tornado, flood, or hail, 
using any insurance company licensed to do business in 
Minnesota.  The insurance may be in an amount the commissioner 
determines and the commissioner may pay the premiums from the 
special account created in section 41.61, subdivision 1.  
    Sec. 11.  Minnesota Statutes 1982, section 41.57, 
subdivision 2, is amended to read: 
    Subd. 2.  [PAYMENT ADJUSTMENT.] To be eligible for payment 
adjustment a family farm security loan shall have a maximum term 
of 20 years and shall provide for payments at least annually so 
that the loan shall be amortized over its term with equal annual 
payments of principal and interest, adjusted for variable 
interest rates, except that a loan to be amortized over a term 
of ten years or less need not provide for equal annual payments 
of principal and interest.  During the first ten years of a 
family farm security loan, the commissioner shall annually pay 
to the lender four percent of the outstanding balance due at the 
beginning of that year and the applicant shall pay the remainder 
of the payment due.  After the tenth year, the applicant shall 
make payments according to the stated interest rate.  The 
applicant may petition the commissioner for one ten year renewal 
of the payment adjustment.  If a renewal is granted, in the 21st 
year the applicant shall reimburse the commissioner for the sums 
paid on the applicant's behalf under this subdivision.  If no 
renewal is granted, the applicant shall reimburse the 
commissioner in the 11th year for the sums paid on the 
applicant's behalf under this subdivision.  The obligation to 
repay the payment adjustment shall be is a lien against the 
property.  If the applicant does not reimburse the state within 
the required time period, the commissioner may charge interest 
at the rate of two percent above the prevailing rate charged by 
the Federal Land Bank of St. Paul on the net amount owed for the 
period of delinquency.  To recover the adjustment payment due in 
delinquency cases, the commissioner may proceed to foreclose by 
advertisement on the lien as if it were a real estate mortgage 
following the procedures in chapter 580.  
    Sec. 12.  Minnesota Statutes 1982, section 41.58, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AUTHORIZATION.] The commissioner may 
provide a guarantee to the lenders on seller-sponsored loans 
when the buyer satisfies the eligibility criteria in section 
41.55.  The commissioner may also provide a payment adjustment 
on behalf of the applicant participant in the case of 
seller-sponsored loans.  
    Sec. 13.  Minnesota Statutes 1982, section 41.59, 
subdivision 1, is amended to read: 
    Subdivision 1.  [IMMEDIATE REPAYMENT OF LOAN.] Any 
applicant who sells or conveys the property for which a family 
farm security loan was issued shall immediately retire the 
entire indebtedness still owed to the lender and the 
commissioner.  The new owner may negotiate a family farm 
security loan in his own right, but under no circumstances may 
the original loan be assumed by the new owner.  If the new owner 
is granted a family farm security loan, the new owner may agree 
to assume the original applicant's responsibility to reimburse 
the commissioner for a payment adjustment received, as a portion 
of the total purchase price.  That portion of the purchase price 
may not be included under the guarantee or considered when 
calculating the payment adjustment for the new owner.  This 
subdivision is not intended to prohibit the applicant from 
granting a security interest in the property for the purposes of 
securing an additional loan. 
    Any applicant who fails to personally maintain the land 
covered by a family farm security loan in active agricultural 
production for a period of time longer than one year shall be is 
in default.  Such a The default may be waived by the 
commissioner in the event of a physical disability or other 
extenuating circumstances.  
    Sec. 14.  Minnesota Statutes 1982, section 41.59, 
subdivision 2, is amended to read: 
    Subd. 2.  [TAX PENALTY ON CAPITAL GAIN.] Chapter 290 shall 
apply to determine the amount of the gain realized on the sale 
of property for which a family farm security loan has been 
issued.  The tax imposed by chapter 290 shall be imposed on the 
following percentages of any gain realized on the sale of the 
property: 
      Time lapsed from issuance of loan         
              At least      but less than      Percent 
   (a)                         1 year            100 
   (b)         1 year          3 years            90 
   (c)         3 years         5 years            80 
   (d)         5 years         7 years            70 
   (e)         7 years         9 years            60 
   (f)         9 years        10 years            50 
    This tax shall no longer be applicable and the tax imposed 
by chapter 290 shall apply when the property for which a family 
farm security loan was issued has been held by the applicant 
participant for more than ten years after the issuance of the 
loan.  Chapter 290 shall apply when the applicant participant 
has realized a loss on the sale of the property.  
    Sec. 15.  Minnesota Statutes 1982, section 41.59, 
subdivision 3, is amended to read: 
    Subd. 3.  [WAIVER OF TAX PENALTY.] The commissioner of 
revenue shall waive the additional tax imposed in subdivision 2 
if the applicant participant has died or suffered a total 
disability, and the tax imposed in chapter 290 shall apply. 
    For the purposes of this section, "total disability" means 
the total and permanent loss of sight of both eyes, the loss of 
both arms at the shoulder, the loss of both legs so close to the 
hips that no effective artificial members can be used, complete 
and permanent paralysis, total and permanent loss of mental 
faculties, or any other injury which totally incapacitates the 
applicant participant from working his farm.  
    Sec. 16.  Minnesota Statutes 1982, section 41.61, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SPECIAL ACCOUNT; STANDING APPROPRIATION.] 
There is appropriated from the general fund to a special account 
in the state treasury the sum of $10,000,000 to be invested by 
the state board of investment in such securities as authorized 
by law. 
    Such sums as may be The amount needed from time to time to 
pay lenders for defaulted loans and to pay insurance premiums 
and taxes on defaulted farms is appropriated from the special 
account to the commissioner.  Money is also appropriated to the 
commissioner from the special account so that the commissioner 
may purchase the rights of first lienholders at mortgage 
foreclosure sales.  The sum of all outstanding family farm 
security loans guaranteed by the commissioner at any time shall 
may not exceed ten times the amount of money in the special 
account created in this subdivision.  
    Sec. 17.  Minnesota Statutes 1982, section 15.38, is 
amended by adding a subdivision to read: 
    Subd. 5.  [FAMILY FARM SECURITY PROGRAM.] The commissioner 
of agriculture may purchase insurance as authorized in section 
41.56, subdivision 7.  
    Sec. 18.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment. 
    Approved June 14, 1983