Minnesota Session Laws - 1984, Regular Session

  

                         Laws of Minnesota 1984 

                        CHAPTER 584-H.F.No. 2051 
           An act relating to agriculture; authorizing the energy 
          and economic development authority to purchase, make, 
          or participate in farm loans and to issue bonds or 
          notes for this purpose; authorizing a loan-to-lender 
          program; allocating bonding authority pursuant to a 
          federal limitation act; amending Minnesota Statutes 
          1982, sections 116J.88, by adding subdivisions; 
          116J.90, by adding subdivisions; Minnesota Statutes 
          1983 Supplement, sections 116J.88, subdivisions 7 and 
          7a; and 116J.90, subdivisions 1 and 3; proposing new 
          law coded in Minnesota Statutes, chapter 474. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 116J.88, is 
amended by adding a subdivision to read: 
    Subd. 4b.  [LENDER.] "Lender" means a financial institution 
that participates in a loan-to-lender program of the authority.  
    Sec. 2.  Minnesota Statutes 1982, section 116J.88, is 
amended by adding a subdivision to read: 
    Subd. 4c.  [LOAN-TO-LENDER.] "Loan-to-lender" means a loan 
of money to a financial institution.  
    Sec. 3.  Minnesota Statutes 1983 Supplement, section 
116J.90, subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] The authority may make or 
purchase or participate with financial institutions in making or 
purchasing business loans, small business loans, energy loans, 
pollution control loans, and farm loans upon the conditions 
described in this section, and may enter into commitments 
therefor.  In addition, the authority may engage in loans-to 
lenders programs with respect to farm loans to the extent set 
forth in this section.  
    Sec. 4.  Minnesota Statutes 1983 Supplement, section 
116J.88, subdivision 7, is amended to read: 
    Subd. 7.  [BUSINESS LOAN.] "Business loan" means a loan, 
other than a pollution control loan or farm loan, to the owner 
of an eligible small business for the financing of (a) capital 
expenditures, on an interim or long-term basis, for the 
acquisition or improvement of land, acquisition, construction, 
removal, or improvement of buildings, or acquisition and 
installation of fixtures and equipment useful for the conduct of 
the business; or (b) short-term costs of conducting an eligible 
small business. 
    Sec. 5.  Minnesota Statutes 1983 Supplement, section 
116J.88, subdivision 7a, is amended to read: 
    Subd. 7a.  [FARM LOAN.] "Farm loan" means a loan to a farm 
business for the acquisition, installation, improvement, 
construction, rehabilitation, or removal of buildings, or 
acquisition and installation of fixtures or equipment, useful 
for the conduct of a farm business, or for the acquisition of 
livestock for breeding purposes. 
    Sec. 6.  Minnesota Statutes 1982, section 116J.88, is 
amended by adding a subdivision to read: 
    Subd. 7b.  [FARM BUSINESS.] "Farm business" means a person, 
partnership, corporation, or other entity that is engaged or 
will engage in farming or livestock or agricultural production 
which qualifies as an eligible small business.  
    Sec. 7.  Minnesota Statutes 1983 Supplement, section 
116J.90, subdivision 3, is amended to read: 
    Subd. 3.  [DIRECT BUSINESS AND FARM LOANS; LIMITATIONS.] 
The authority may make business loans or farm loans not 
exceeding $100,000 in principal amount, at interest rates and 
subject to terms determined by the authority, provided that each 
loan shall be made only from the proceeds of a bond or note 
payable in whole or part from the repayments of principal and 
interest on the loan.  The loans may also be guaranteed or 
insured by money on deposit in the economic development fund or 
any special account of it, and may be secured by reserve funds 
and other collateral and available money as determined by the 
authority.  The authority may enter into all necessary contracts 
and security instruments in connection with them.  The 
limitation on loan amounts in this subdivision does not apply to 
energy loans and loans insured under sections 93 and 94. 
    Sec. 8.  Minnesota Statutes 1982, section 116J.90, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [FARM LOANS; PUBLIC PURPOSE.] The encouragement 
of the investment of private capital in the agricultural sector 
through the use of financing to provide farm loans at interest 
rates lower than those available in conventional farm credit 
markets is a public purpose and is necessary to protect the 
health, safety, and general welfare of the people of this state. 
    Sec. 9.  Minnesota Statutes 1982, section 116J.90, is 
amended by adding a subdivision to read: 
    Subd. 3b.  [FARM LOANS; AUTHORITY.] The authority may make 
or purchase or participate with financial institutions in making 
or purchasing farm loans not exceeding $100,000 in principal 
amount, upon the conditions described in this section, and may 
enter into commitments for farm loans, on the terms and 
conditions and with the security determined by the authority. 
The loans may be made or purchased only from the proceeds of 
bonds or notes issued pursuant to subdivision 3c.  For this 
purpose, the authority may exercise all powers conferred on it 
by sections 116J.88 to 116J.91 with respect to business loans. 
Loans and loan commitments must be originated and serviced by 
one or more financial institutions authorized to transact that 
business in this state.  The authority shall make or participate 
in farm loans only when the authority determines that financing 
is not otherwise available, in whole or in part, from private 
lenders on equivalent terms and conditions.  
    Sec. 10.  Minnesota Statutes 1982, section 116J.90, is 
amended by adding a subdivision to read: 
    Subd. 3c.  [FARM LOANS; BONDS AND NOTES.] The authority may 
issue its bonds or notes to provide money for the purposes 
specified in subdivision 3b, which are payable in whole or in 
part from repayments of principal and interest on farm loans. 
For this purpose, the authority may exercise all powers 
conferred upon it by sections 116J.88 to 116J.91 with respect to 
bonds or notes to be issued to provide money for business 
loans.  The principal amount of bonds and notes issued and 
outstanding under this subdivision at any time, computed as 
specified in section 116J.91, subdivision 11, may not exceed 
$30,000,000.  This authorization is in addition to the 
authorization contained in section 116J.91, subdivision 11. 
Sections 116J.88 to 116J.91 are applicable to bonds and notes 
covered by this subdivision and the application of the proceeds 
from the bonds and notes.  
    Sec. 11.  Minnesota Statutes 1982, section 116J.90, is 
amended by adding a subdivision to read: 
    Subd. 7.  [.................] The authority may make to 
financial institutions loans-to-lenders to provide funds to 
lenders to make or participate in making, or to reimburse 
lenders for having made or participating in having made, farm 
loans of a nature and for purposes as may be approved by the 
authority.  In connection with a loan to a lender, the authority 
may adopt a plan for the various loan-to-lender programs it may 
determine to pursue.  In connection with a loan-to-lender 
program, in addition to any other powers the authority has, the 
authority has the following powers:  
    (a) The authority may limit the type of loan to be included 
within a loan-to-lender program and may specify the necessary 
characteristics of loans to be included in the program.  
    (b) The authority may specify the type of lenders that may 
participate in a loan-to-lender program.  
    (c) The authority may invest in, purchase, participate in 
the purchase, make commitments for the purchase or participation 
in the purchase, and take assignments from lenders of loans.  
    (d) The authority may make loans and commitments for 
loans-to-lenders.  
    (e) The authority may require that no loan or interest in a 
loan purchased from a lender is eligible for purchase or 
commitment to purchase by the authority unless, at or before the 
time of transfer of the loan to the authority, the lender 
certifies that in its judgment the loan would in all respects be 
a prudent investment at the purchase price paid.  
    (f) The authority may require, as a condition of a loan to 
a lender, that the lender invests the proceeds of the loan to a 
lender in loans of a given type, nature, and purpose and upon 
the terms and conditions and secured as the authority may 
require. 
     (g) The authority may require, as a condition of purchase 
or commitment to purchase loans or interest in loans, that these 
loans are made upon the terms and conditions and secured as the 
authority may require, and that the proceeds of the purchase, or 
their equivalent, be invested in loans upon the terms and 
conditions and secured as the authority may require.  
    (h) In conjunction with the purchase of these loans or 
interest in these loans from lenders, the authority may require 
the lender to furnish collateral security in an amount as the 
authority shall determine to be necessary to assure the payment 
of these loans and interest in these loans as the loans become 
due.  This collateral security may consist of obligations, 
mortgages, or security interests satisfactory to the authority.  
    (i) The authority may require that each loan to a lender is 
a general obligation of the lender and may be additionally 
secured as to payment of both principal and interest by a pledge 
of and lien upon collateral security in an amount and of the 
types as the authority determines to be necessary to assure the 
payment of these loans and the interest on these loans as the 
loans become due and payable. 
    (j) Subject to any agreement with holders of bonds, the 
authority may collect, enforce the collection of, and foreclose 
on any collateral required by (h) and (i) of this subdivision 
and acquire or take possession of the collateral and sell it at 
public or private sale, with or without public bidding, and 
otherwise deal with the collateral as may be necessary to 
protect the interest of the authority in the collateral. 
     (k) In addition to the other powers granted by (j), the 
authority may, with respect to loan purchases and 
loans-to-lenders, collect and pay reasonable fees and charges 
and establish the terms and conditions of loan purchases and 
loans-to-lenders, including, without limitation, terms and 
conditions as to:  
    (1) reinvestment and commitments to reinvest by lenders of 
the proceeds of loan purchase or loans;  
    (2) the type, term, interest rate, purchase price, and 
conditions of loans to be purchased by the authority and of 
loans to be made by lenders;  
    (3) the warranties, representations, and services of 
lenders;  
    (4) restrictions as to the interest rates of loans or the 
return realized from loans to protect against the realization by 
lenders of excessive financial returns or benefits as determined 
by prevailing market conditions;  
    (5) consent to the modification of the rate of interest, 
time of payment of an installment of principal or interest, or 
other terms of a loan, loan-to-lender, or agreement of any kind 
to which the authority is a party;  
    (6) include in a loan or loan-to-lender the amounts 
necessary to pay financing charges, consultant, advisory, and 
legal fees, and other expenses, including interest charges, as 
are necessary or incidental to the loan or loan-to-lender;  
    (7) make and execute agreements, contracts, and other 
instruments necesssary or convenient in accordance with the 
provisions of this subdivison, including contracts with any 
person, firm, public corporation, governmental agency, or other 
entity; and 
    (8) other matters related to the purchases of loans and 
loans-to-lenders deemed necessary by the authority to accomplish 
the purposes of this subdivision.  
    (l) The authority may require in the case of a lender that 
any required collateral is lodged with a bank or trust company, 
located either within or outside the state, designated by the 
authority as custodian for the collateral.  In the absence of 
this requirement, the authority may require that each lender 
enters into an agreement with the authority, that contains 
provisions as the authority deems necessary to identify, 
maintain, and service the collateral, and that provides that the 
lender holds the collateral as trustee for the benefit of the 
authority and is held accountable as the trustee of an express 
trust for the application and disposition of the collateral, 
including the income and proceeds from the collateral, solely 
for the uses and purposes as provided in the agreement. A copy 
of the agreement and any revisions or supplements to it, which 
revisions or supplements may, among other things, add to, delete 
from, or substitute items of collateral pledged by the 
agreement, must be filed with the secretary of state to perfect 
the security interest of the authority in the collateral.  No 
filing, recording, possession, or other action under article 9 
of the uniform commercial code, or any other law of this state 
may be required to perfect the security interest of the 
authority in the collateral.  The security interest of the 
authority in the collateral is deemed perfected, and the trust 
for the benefit of the authority so created is binding on and 
after the time of the filing with the secretary of state against 
all parties having prior unperfected or subsequent security 
interests or claims of any kind in tort, in contract, or 
otherwise against the lender.  The authority may also establish 
additional requirements as it deems necessary with respect to 
the pledging, assigning, setting aside, or holding of collateral 
and the making of substitutions for the collateral or additions 
to the collateral and the disposition of income and receipts 
from the collateral.  
    Sec. 12.  [474.25] [FEDERAL LIMITATION ACT.] 
    The allocation of bonding authority provided by chapter 474 
to the iron range resources and rehabilitation commissioner with 
respect to a federal limitation act is reduced by $1,250,000 for 
calendar year 1984 and is reduced by $500,000 for calendar year 
1985.  The allocation of bonding authority provided by chapter 
474 for entitlement issuers with respect to a federal limitation 
act is reduced by $1,250,000 for calendar year 1984 and is 
reduced by $500,000 for calendar year 1985.  The allocation of 
bonding authority provided by chapter 474 to local issuers who 
are not entitlement issuers with respect to a federal limitation 
act is reduced by $1,250,000 for calendar year 1984 and is 
reduced by $500,000 for calendar year 1985.  The allocation of 
bonding authority provided by chapter 474 to the department of 
energy and economic development with respect to a federal 
limitation act is increased by $3,750,000 for calendar year 1984 
and $1,500,000 for calendar year 1985. Until August 31 the 
department of energy and economic development shall make 
available at least $5,000,000 for 1984 and $6,000,000 for 1985 
of its allocation of bonding authority for farm loans authorized 
by section 116J.90.  For the November allocation in each year 
the commissioner shall approve applications from the department 
for farm loans to be made pursuant to section 116J.90 in an 
amount up to $1,000,000 or the amount remaining to be allocated, 
whichever is less, prior to approving other applications. 
    Approved April 26, 1984