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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1991 

                        CHAPTER 332-H.F.No. 702 
           An act relating to agriculture; transferring the rural 
          finance authority to the department of agriculture; 
          changing the makeup and certain duties and procedures 
          of the authority; providing for an agricultural 
          development bond program to finance agricultural 
          business enterprises and beginning farmers; 
          appropriating funds; amending Minnesota Statutes 1990, 
          sections 41B.025, subdivisions 1, 3, and 6; 41B.03, 
          subdivision 3; 41B.211; 474A.02, subdivisions 13a and 
          23a; 474A.03, subdivision 1; 474A.061, subdivisions 1, 
          2b, 3, and 4; 474A.091; 474A.14; proposing coding for 
          new law as Minnesota Statutes, chapter 41C. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
    Section 1.  Minnesota Statutes 1990, section 41B.025, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTABLISHMENT.] There is created a public 
body corporate and politic to be known as the "Minnesota rural 
finance authority," which shall perform the governmental 
functions and exercise the sovereign powers delegated to it in 
sections 41B.01 to 41B.23 and chapter 41C in furtherance of the 
public policies and purposes declared in section 41B.01.  The 
board of the authority consists of the commissioners of 
agriculture, commerce, trade and economic development, and 
finance, the state auditor, and three six public members 
appointed by the governor with the advice and consent of the 
senate.  No public member may reside within the metropolitan 
area, as defined in section 473.121, subdivision 2.  Each member 
shall hold office until a successor has been appointed and has 
qualified.  A certificate of appointment or reappointment of any 
member is conclusive evidence of the proper appointment of the 
member. 
    Sec. 2.  Minnesota Statutes 1990, section 41B.025, 
subdivision 3, is amended to read: 
    Subd. 3.  [CHAIR.] The commissioner of finance agriculture 
is the chair of the board.  The commissioner of agriculture 
finance is the vice-chair of the board.  
    Sec. 3.  Minnesota Statutes 1990, section 41B.025, 
subdivision 6, is amended to read: 
    Subd. 6.  [ADMINISTRATIVE CONTROL.] The authority is under 
the administrative control of the commissioner of finance 
agriculture. 
    Sec. 4.  Minnesota Statutes 1990, section 41B.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [ELIGIBILITY FOR BEGINNING FARMER LOANS.] In 
addition to the requirements under subdivision 1, a prospective 
borrower for a beginning farm loan in which the authority holds 
an interest, must:  
    (1) have sufficient education, training, or experience in 
the type of farming for which the loan is desired; 
    (2) have a total net worth, including assets and 
liabilities of the borrower's spouse and dependents, of less 
than $100,000 $200,000 in 1991 and an amount in subsequent years 
determined by multiplying $200,000 by the cumulative inflation 
rate in years subsequent to 1991 as determined by the United 
States All-Items Consumer Price Index; 
    (3) demonstrate a need for the loan; 
    (4) demonstrate an ability to repay the loan; 
    (5) certify that the agricultural land to be purchased will 
be used by the borrower for agricultural purposes; 
    (6) certify that farming will be the principal occupation 
of the borrower; 
    (7) agree to participate in a farm management program 
approved by the commissioner of agriculture for at least the 
first five years of the loan, if an approved program is 
available within 45 miles from the borrower's residence; and 
    (8) agree to file an approved soil and water conservation 
plan with the soil conservation service office in the county 
where the land is located.  
    Sec. 5.  Minnesota Statutes 1990, section 41B.211, is 
amended to read: 
    41B.211 [DATA PRIVACY.] 
    Financial information, including credit reports, financial 
statements, and net worth calculations, received or prepared by 
the authority regarding any authority loan and the name of each 
individual who is the recipient of a loan are private data on 
individuals, under chapter 13, except that information obtained 
under the agricultural development bond program in sections 6 to 
18 may be released as required by federal tax law. 
    Sec. 6.  [41C.01] [SHORT TITLE.] 
    This chapter shall be called and may be cited as the 
"Minnesota agricultural development act." 
    Sec. 7.  [41C.02] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] The definitions in this section 
apply to this chapter. 
    Subd. 2.  [AGRICULTURAL BUSINESS ENTERPRISE.] "Agricultural 
business enterprise" means an individual or partnership with a 
low or moderate net worth who owns or plans to own properties, 
real or personal, used or useful in connection with the general 
processing of agricultural products or in the manufacturing, 
assembly, or fabrication of agricultural or agriculture-related 
equipment. 
    Subd. 3.  [AGRICULTURAL IMPROVEMENTS.] "Agricultural 
improvements" means improvements, buildings, structures, or 
fixtures suitable for use in farming located on agricultural 
land, including a single-family dwelling located on agricultural 
land that is or will be occupied by a beginning farmer and 
structures attached to or incidental to the use of the dwelling. 
    Subd. 4.  [AGRICULTURAL LAND.] "Agricultural land" means 
land suitable for use in farming. 
    Subd. 5.  [AUTHORITY.] "Authority" means the Minnesota 
rural finance authority established in section 41B.025. 
    Subd. 6.  [BEGINNING FARMER.] "Beginning farmer" means an 
individual or partnership with a low or moderate net worth who 
engages in farming or plans to engage in farming. 
    Subd. 7.  [BONDS.] "Bonds" means bonds, notes, or other 
evidence of indebtedness issued by the authority under this 
chapter. 
    Subd. 8.  [CONSERVATION FARM EQUIPMENT.] "Conservation farm 
equipment" means the specialized planters, cultivators, and 
tillage equipment used for reduced tillage or no-till planting 
of row crops. 
    Subd. 9.  [DEPRECIABLE AGRICULTURAL PROPERTY.] "Depreciable 
agricultural property" means personal property suitable for use 
in farming for which an income tax deduction for depreciation is 
allowable in computing federal income tax under the Internal 
Revenue Code of 1986, as amended. 
    Subd. 10.  [FARMING.] "Farming" means the cultivation of 
land for the production of agricultural crops, the raising of 
poultry, the production of eggs, the production of milk, the 
production of fruit or other horticultural crops, grazing, the 
production of livestock, aquaculture, hydroponics, the 
production of forest products, or other activities designated by 
the authority by rules. 
    Subd. 11.  [LENDING INSTITUTION.] "Lending institution" 
includes "eligible lender" as defined in section 41B.02 and 
individuals.  
    Subd. 12.  [LOW OR MODERATE NET WORTH.] "Low or moderate 
net worth" means: 
    (1) for an individual, an aggregate net worth of the 
individual and the individual's spouse and minor children of 
less than $200,000; or 
    (2) for a partnership, an aggregate net worth of all 
partners, including each partner's net capital in the 
partnership, and each partner's spouse and minor children of 
less than $400,000.  However, the aggregate net worth of each 
partner and that partner's spouse and minor children may not 
exceed $200,000. 
    Sec. 8.  [41C.03] [GUIDING PRINCIPLES.] 
    (a) In the performance of its duties, implementation of its 
powers, and selection of specific programs and projects to 
receive its assistance under this chapter, the authority must be 
guided by the principles in paragraphs (b) to (e). 
    (b) The authority shall not become an owner of real or 
depreciable property, except on a temporary basis if it is 
necessary in order to implement its programs, to protect its 
investments by means of foreclosure or other means, or to 
facilitate transfer of real or depreciable property for the use 
of beginning farmers. 
    (c) The authority shall exercise diligence and care in 
selection of projects to receive its assistance and shall apply 
customary and acceptable business and lending standards in 
selection and subsequent implementation of the projects.  The 
authority may delegate primary responsibility for determination 
and implementation of the projects to any federal governmental 
agency that assumes any obligation to repay the loan, either 
directly or by insurance or guarantee. 
    (d) The authority shall establish a beginning farmer and 
agricultural business enterprise loan program to aid in the 
acquisition of agricultural land and improvements and 
depreciable agricultural property by beginning farmers and real 
and personal property for an agricultural business enterprise. 
    (e) The authority shall develop programs for providing 
financial assistance to agricultural producers in this state. 
    Sec. 9.  [41C.04] [COMBINATION PROGRAMS.] 
    Programs authorized in this chapter may be combined with 
any other programs authorized in this chapter or under another 
state or federal program in order to facilitate as far as 
practicable the acquisition of agricultural land and property by 
beginning farmers, to facilitate the implementation of permanent 
soil and water conservation practices and the acquisition of 
conservation farm equipment, and to encourage the development of 
agricultural business enterprises. 
    Sec. 10.  [41C.05] [AGRICULTURAL DEVELOPMENT BOND BEGINNING 
FARMER AND AGRICULTURAL BUSINESS ENTERPRISE LOAN PROGRAM.] 
    Subdivision 1.  [DEVELOPMENT OF PROGRAM.] The authority 
shall develop an agricultural development bond beginning farmer 
and agricultural business enterprise loan program to facilitate 
the acquisition of agricultural land and improvements and 
depreciable agricultural property by beginning farmers and real 
and personal property by an agricultural business enterprise.  
The authority shall exercise the powers granted to it in this 
chapter in order to fulfill the goal of providing financial 
assistance to beginning farmers and agricultural business 
enterprises in the acquisition of agricultural land, 
agricultural improvements, depreciable agricultural property, 
and real and personal property for an agricultural business 
enterprise.  The authority may participate in and cooperate with 
programs of the farmers home administration, federal land bank, 
or any other agency or instrumentality of the federal government 
or with any program of any other state agency in the 
administration of the agricultural development bond beginning 
farmer and agricultural business enterprise loan program and in 
the making or purchasing of mortgage or secured loans under this 
chapter. 
    Subd. 2.  [ELIGIBILITY; BEGINNING FARMERS.] The authority 
shall provide in the agricultural development bond beginning 
farmer and agricultural business enterprise loan program that a 
mortgage or a contract on behalf of a beginning farmer may be 
provided if the borrower qualifies under section 41B.03 and 
authority rules and under federal tax law governing qualified 
small issue bonds. 
    Subd. 3.  [ELIGIBILITY; AGRICULTURAL BUSINESS ENTERPRISES.] 
(a) The authority shall provide in the agricultural development 
bond beginning farmer and agricultural business enterprise loan 
program that a mortgage or contract on behalf of an agricultural 
business enterprise may be provided if the borrower qualifies 
under this chapter and rules of the authority and under federal 
tax law governing qualified small issue bonds. 
    (b) An agricultural business enterprise is eligible for a 
program loan in an aggregate amount not exceeding $250,000. 
     (c) An agricultural business enterprise is eligible for 
program loans only for new or expanded operations located in a 
community with a population of 5,000 or less.  
    Subd. 4.  [LOANS AND CONTRACTS FOR BEGINNING FARMERS AND 
AGRICULTURAL BUSINESS ENTERPRISES.] (a) The authority may: 
    (1) make loans to qualified beginning farmers for the 
acquisition of agricultural land, agricultural improvements, 
depreciable agricultural property, and real and personal 
property for an agricultural business enterprise.  Each loan 
made by the authority under this program and all collateral 
securing the loan may be assigned as security for the 
authority's bond. 
    (2) enter into contracts to purchase agricultural land, 
agricultural improvements, depreciable agricultural property, 
and real and personal property for an agricultural business 
enterprise.  Each contract entered into by the authority under 
this program and all obligations of the authority under the 
contract shall be assigned to the beginning farmer or 
agricultural business enterprise without recourse. 
    (b) Loan documents and contracts entered into by the 
authority shall contain such terms and conditions of repayment 
as may be agreed to between the beginning farmer or agricultural 
business enterprise and the individual or agricultural lender 
involved, and such terms and conditions as the authority may 
deem necessary. 
    (c) Each individual or agricultural lender purchasing a 
bond from the authority under this program is responsible for 
making their own independent credit evaluation of the beginning 
farmer or the agricultural business enterprise involved, and for 
the creation and perfection of any security interest which they 
deem necessary for the loan or contract to be made on behalf of 
the beginning farmer or the agricultural business enterprise. 
    (d) The authority shall bear no continuing responsibility 
for repayment of any bond issued under the program other than 
the assignment of its interests under the loan document made 
with the proceeds of the bond or the contract entered into in 
connection with the bond. 
    Subd. 5.  [OTHER TERMS.] The authority may provide that 
loans and contracts made under this program may not be assumed 
or any interest in the agricultural land or improvements or 
depreciable agricultural property or real or personal property 
of an agricultural business enterprise may not be leased, sold, 
or otherwise conveyed without its prior written consent and may 
provide a due-on-sale clause with respect to the occurrence of 
any of the foregoing events without its prior written consent.  
The authority may provide by rule the grounds for permitted 
assumptions of loans and contracts or for the leasing, sale, or 
other conveyance of any interest in the agricultural land or 
improvements or real or personal property of an agricultural 
business enterprise.  However, the authority shall provide and 
state in its loan documents and contracts that the interest rate 
of the loan or contracts shall increase to the then prevailing 
market rate if the loan or contract is assumed by anyone other 
than a qualified beginning farmer or agricultural business 
enterprise.  This subdivision controls with respect to a loan or 
contract made under this program, notwithstanding other law. 
    Sec. 11.  [41C.06] [LOAN ALLOCATION.] 
    Not more than 25 percent of the total bond allocation 
available for beginning farmer and agricultural business 
enterprise loans may be used for agricultural business 
enterprise loans.  However, any portion of the bond allocation 
that remains unencumbered on November 1 of each year may be made 
available for agricultural business enterprise loans. 
    Sec. 12.  [41C.07] [BONDS.] 
    Subdivision 1.  [AUTHORITY.] The authority may issue its 
negotiable bonds in principal amounts which, in the opinion of 
the authority, are necessary to provide sufficient funds for 
achievement of its corporate purposes, the payment of interest 
on its bonds, the establishment of reserves to secure its bonds, 
and all other expenditures of the authority incident to and 
necessary or convenient to carry out its purposes and powers.  
The bonds are investment securities and negotiable instruments 
within the meaning of and for all purposes of the Uniform 
Commercial Code. 
    Subd. 2.  [PAYMENT OF BONDS.] Bonds are payable solely and 
only out of the money, assets, or revenues of the authority and 
as provided in the agreement with bondholders pledging any 
particular money, assets, or revenues.  Bonds are not an 
obligation of this state or any political subdivision of this 
state other than the authority within the meaning of any 
constitutional or statutory debt limitations, but are special 
obligations of the authority payable solely and only from the 
sources provided in this chapter, and the authority shall not 
pledge the credit or taxing power of this state or any political 
subdivision of this state other than the authority or make its 
debts payable out of any money except that of the authority. 
    Subd. 3.  [RESOLUTION OF AUTHORITY.] Bonds must be 
authorized by a resolution of the authority.  However, a 
resolution authorizing the issuance of bonds may delegate to an 
officer of the authority the power to negotiate and fix the 
details of an issue of bonds by an appropriate certificate of 
the authorized officer. 
     Subd. 4.  [REQUIREMENTS.] Bonds must: 
    (1) state the date and series of the issue, be 
consecutively numbered and state on their face that they are 
payable both as to principal and interest solely out of the 
assets of the authority and do not constitute an indebtedness of 
this state or any political subdivision of this state other than 
the authority within the meaning of any constitutional or 
statutory debt limit; and 
    (2) be either registered, registered as to principal only, 
issued in denominations as the authority prescribes, fully 
negotiable instruments under the laws of this state, signed on 
behalf of the authority with the manual or facsimile signature 
of the chair or vice-chair, attested by the manual or facsimile 
signature of the secretary, have impressed or imprinted on them 
the seal of the authority or a facsimile of it, be payable as to 
interest at rates and at times as the authority determines, be 
payable as to principal at times over a period not to exceed 50 
years from the date of issuance, at places and with reserved 
rights of prior redemption as the authority prescribes, be sold 
at prices, at public or private sale, and in a manner as the 
authority prescribes, and the authority may pay all expenses, 
premiums, and commissions that it considers necessary or 
advantageous in connection with the issuance and sale, and be 
issued under and subject to the terms, conditions, and covenants 
providing for the payment of the principal, redemption premiums, 
if any, interest and other terms, conditions, covenants, and 
protective provisions safeguarding payment, not inconsistent 
with this chapter, as are found to be necessary by the authority 
for the most advantageous sale. 
    Subd. 5.  [REFUNDING.] The authority may issue its bonds 
for the purpose of refunding any bonds of the authority then 
outstanding, including the payment of any redemption premiums 
and any interest accrued or to accrue to the date of redemption 
of the outstanding bonds.  Until the proceeds of bonds issued 
for the purpose of refunding outstanding bonds are applied to 
the purchase or retirement of outstanding bonds or the 
redemption of outstanding bonds, the proceeds may be placed in 
escrow and be invested and reinvested in accordance with the 
provisions of this chapter.  The interest, income, and profits 
earned or realized on an investment may also be applied to the 
payment of the outstanding bonds to be refunded by purchase, 
retirement, or redemption.  After the terms of the escrow have 
been fully satisfied and carried out, any balance of proceeds 
and interest earned or realized on the investments may be 
returned to the authority for use by it in any lawful manner.  
All refunding bonds shall be issued and secured and are subject 
to the provisions of this chapter in the same manner and to the 
same extent as other bonds. 
    Subd. 6.  [ANTICIPATION NOTES.] The authority may issue 
negotiable bond anticipation notes and may renew them from time 
to time, but the maximum maturity of the notes, including 
renewals, must not exceed ten years from the date of issue of 
the original notes.  Notes are payable from any available money 
of the authority not otherwise pledged or from the proceeds of 
the sale of bonds in anticipation of which the notes were 
issued.  Notes may be issued for any corporate purpose of the 
authority.  Notes must be issued in the same manner as bonds and 
notes and the resolution authorizing them may contain any 
provisions, conditions, or limitations, not inconsistent with 
the provisions of this subdivision, which the bonds or a bond 
resolution of the authority may contain.  Notes may be sold at 
public or private sale.  In case of default on its notes or 
violation of any obligations of the authority to the 
noteholders, the noteholders have all the remedies provided in 
this chapter for bondholders.  Notes are as fully negotiable as 
bonds of the authority. 
    Subd. 7.  [FILING.] A copy of each pledge agreement by or 
to the authority, including without limitation each bond 
resolution, indenture of trust or similar agreement, or any 
revisions or supplements to it must be filed with the secretary 
of state and no further filing or other action under article 9 
of the Uniform Commercial Code or any other law of the state is 
required to perfect the security interest in the collateral or 
any additions to it or substitutions for it and the lien and 
trust so created are binding from and after the time made 
against all parties having claims of any kind in tort, contract, 
or otherwise against the pledgor. 
    Subd. 8.  [PERSONAL LIABILITY LIMITED.] Members of the 
authority and any person executing its bonds are not liable 
personally on the bonds or subject to personal liability or 
accountability by reason of the issuance of the authority's 
bonds. 
    Subd. 9.  [NOTICE.] The authority shall publish a notice of 
intention to issue bonds in a newspaper published and of general 
circulation in the state.  The notice shall include a statement 
of the maximum amount of bonds proposed to be issued and, in 
general, what net revenues will be pledged to pay the bonds and 
interest on them.  An action may not be brought questioning the 
legality of the bonds or the power of the authority to issue the 
bonds or the legality of any proceedings in connection with the 
authorization or issuance of the bonds after 60 days from the 
date of publication of the notice. 
    Sec. 13.  [41C.08] [RESERVE FUNDS AND APPROPRIATIONS.] 
    Subdivision 1.  [AUTHORITY.] The authority may create and 
establish one or more special funds, each to be known as a "bond 
reserve fund" and shall pay into each bond reserve fund any 
money appropriated and made available by the state for the 
purpose of the fund, any proceeds of sale of bonds to the extent 
provided in the resolutions of the authority authorizing their 
issuance, and any other money that is available to the authority 
for the purpose of the fund from any other sources.  Money held 
in a bond reserve fund, except as otherwise provided in this 
chapter, must be used as required solely for the payment of the 
principal of bonds secured in whole or in part by the fund or of 
the sinking fund payments with respect to the bonds, the 
purchase or redemption of the bonds, the payment of interest on 
the bonds, or the payments of any redemption premium required to 
be paid when the bonds are redeemed prior to maturity. 
    Subd. 2.  [WITHDRAWALS.] Money in a bond reserve fund may 
not be withdrawn from it in an amount that will reduce the 
amount of the fund to less than the bond reserve fund 
requirement established for the fund, as provided in this 
section, except for the purpose of making payment when due of 
principal, interest, redemption premiums, and the sinking fund 
payments with respect to the bonds for the payment of which 
other money of the authority is not available.  Any income or 
interest earned by, or incremental to, a bond reserve fund due 
to the investment of it may be transferred by the authority to 
other funds or accounts of the authority to the extent the 
transfer does not reduce the amount of that bond reserve fund 
below the bond reserve fund requirement for it. 
     Subd. 3.  [ISSUANCE OF SECURED BONDS.] The authority may 
not at any time issue bonds, secured in whole or in part by a 
bond reserve fund if, upon the issuance of the bonds, the amount 
in the bond reserve fund will be less than the bond reserve fund 
requirement for the fund, unless the authority at the time of 
issuance of the bonds deposits in the fund from the proceeds of 
the bonds issued or from other sources an amount which, together 
with the amount then in the fund will not be less than the bond 
reserve fund requirement for the fund.  For the purposes of this 
section, the term "bond reserve fund requirement" means, as of 
any particular date of computation, an amount of money required 
to be on deposit therein in the bond reserve fund, as provided 
in the resolutions of the authority authorizing the bonds with 
respect to which the fund is established. 
    Subd. 4.  [REPAYMENT.] Amounts paid over to the authority 
by the state under this section constitute and must be accounted 
for as advances by the state to the authority and, subject to 
the rights of the holders of any bonds of the authority, must be 
repaid to the state without interest from all available 
operating revenues of the authority in excess of amounts 
required for the payment of bonds, the bond reserve fund, and 
operating expenses. 
    Subd. 5.  [ANNUAL REPORT.] The authority shall cause to be 
delivered to the finance committees in the legislature within 90 
days of the close of its fiscal year its annual report certified 
by an independent certified public accountant, who may be the 
accountant or a member of the firm of accountants who regularly 
audits the books and accounts of the authority selected by the 
authority.  In the event that the principal amount of any bonds 
deposited in a bond reserve fund is withdrawn for payment of 
principal or interest thereby reducing the amount of that fund 
to less than the bond reserve fund requirement, the authority 
shall immediately notify the legislature of this event and take 
steps to restore the fund to its bond reserve fund requirement 
from any amounts available, other than principal of a bond 
issue, that are not pledged to the payment of other bonds. 
    Sec. 14.  [41C.09] [REMEDIES OF BONDHOLDERS.] 
    Subdivision 1.  [DEFAULT.] If the authority defaults in the 
payment of principal or interest on an issue of bonds at 
maturity or upon call for redemption and the default continues 
for a period of 30 days or if the authority fails or refuses to 
comply with the provisions of this chapter, or defaults in an 
agreement made with the holders of an issue of bonds, the 
holders of 25 percent in aggregate principal amount of bonds of 
the issue then outstanding, by instrument filed in the office of 
the clerk of the county in which the principal office of the 
authority is located and proved or acknowledged in the same 
manner as a deed to be recorded, may appoint a trustee to 
represent the holders of the bonds for the purposes provided in 
this section. 
    Subd. 2.  [ACTIONS.] The authority or any trustee appointed 
under the indenture under which the bonds are issued may, but 
upon written request of the holders of 25 percent in aggregate 
principal amount of the issue of bonds then outstanding shall: 
    (1) enforce all rights of the bondholders including the 
right to require the authority to carry out its agreements with 
the holders and to perform its duties under this chapter; 
    (2) bring suit upon the bonds; 
    (3) by action require the authority to account as if it 
were the trustee of an express trust for the holders; 
    (4) by action enjoin any acts or things which are unlawful 
or in violation of the rights of the holders; and 
    (5) declare all the bonds due and payable and, if all 
defaults are made good, with the consent of the holders of 25 
percent of the aggregate principal amount of the issue of bonds 
then outstanding, annul the declaration and its consequences. 
    Subd. 3.  [TRUSTEE'S POWERS.] The trustees may exercise 
functions specifically set forth or incident to the general 
representation of bondholders in the enforcement and protection 
of their rights. 
    Subd. 4.  [NOTICE.] Before declaring the principal of bonds 
due and payable, the trustee shall first give 30 days' notice in 
writing to the governor, to the authority, and to the attorney 
general of the state. 
    Subd. 5.  [JURISDICTION.] The district court has 
jurisdiction of any action by the trustee on behalf of 
bondholders.  The venue of the action is in the county in which 
the principal office of the authority is located. 
    The bondholders may, to the extent provided in the 
resolution to which the bonds were issued or in its agreement 
with the authority, enforce any of the remedies in subdivision 
2, clauses (1) to (5), or the remedies provided in the 
proceedings or agreements for and on their own behalf. 
    Sec. 15.  [41C.10] [BONDS AS LEGAL INVESTMENTS.] 
    Bonds are securities in which public officers, state 
departments and agencies, political subdivisions, insurance 
companies, and other persons carrying on an insurance business, 
banks, trust companies, savings and loan associations, 
investment companies, and other persons carrying on a banking 
business, administrators, executors, guardians, conservators, 
trustees, and other fiduciaries and other persons authorized to 
invest in bonds or other obligations of this state may properly 
and legally invest funds including capital in their control or 
belonging to them.  The bonds are also securities which may be 
deposited with and may be received by public officers, state 
departments and agencies, and political subdivisions for any 
purpose for which the deposit of bonds or other obligations of 
this state is authorized. 
    Sec. 16.  [41C.11] [CONFLICTS OF INTEREST.] 
    Subdivision 1.  [DISCLOSURE; PROHIBITIONS.] If a member or 
employee of the authority has an interest, either direct or 
indirect, in a contract to which the authority is or is to be a 
party or in a mortgage lender requesting a loan from or offering 
to sell mortgage or secured loans to the authority, the interest 
must be disclosed to the authority in writing and must be set 
forth in the minutes of the authority.  The member or employee 
having the interest may not participate in action by the 
authority with respect to that contract or mortgage lender. 
    Subd. 2.  [CERTAIN INTERESTS.] This section does not limit 
the right of a member, officer, or employee of the authority to 
acquire an interest in bonds or notes or to limit the right of a 
member or employee other than the executive director to have an 
interest in a bank or other financial institution in which the 
funds of the authority are deposited or which is acting as 
trustee or paying agent under a trust indenture to which the 
authority is a party. 
    Subd. 3.  [EXECUTIVE DIRECTOR'S INTEREST.] The executive 
director may not have an interest in a bank or other financial 
institution in which the funds of the authority are deposited or 
which is acting as trustee or paying agent under a trust 
indenture to which the authority is a party.  The executive 
director may not receive, in addition to fixed salary or 
compensation, any money or valuable thing, either directly or 
indirectly, or through any substantial interest in any other 
corporation or business unit, for negotiating, procuring, 
recommending, or aiding in any purchase or sale of property or 
loan made by the authority, nor shall the executive director be 
pecuniarily interested, either as principal, co-principal, 
agent, or beneficiary, either directly, indirectly, or through 
any substantial interest in any other corporation or business 
unit, in any purchase, sale, or loan. 
    Sec. 17.  [41C.12] [APPLICATION AND ORIGINATION FEE.] 
    The authority may impose a reasonable application and 
origination fee for each loan issued under the beginning farmer 
and agricultural business enterprise loan program.  The 
origination fee initially shall be set at 1.5 percent and the 
application fee at $50.  The authority shall review the fees 
annually and make adjustments as necessary.  The fees must be 
deposited in the state treasury and credited to the general fund.
    Sec. 18.  [41C.13] [RULES.] 
    The authority may adopt rules for the efficient 
administration of this chapter.  The rules need not be adopted 
in compliance with chapter 14. 
    Sec. 19.  Minnesota Statutes 1990, section 474A.02, 
subdivision 13a, is amended to read: 
    Subd. 13a.  [MANUFACTURING SMALL ISSUE POOL.] 
"Manufacturing Small issue pool" means the amount of the annual 
volume cap allocated under section 474A.061, that is available 
for the issuance of small issue bonds to finance manufacturing 
projects, and the agricultural development bond beginning farmer 
and agricultural business enterprise loan program authorized in 
sections 6 to 18. 
    Sec. 20.  Minnesota Statutes 1990, section 474A.02, 
subdivision 23a, is amended to read: 
    Subd. 23a.  [QUALIFIED BONDS.] "Qualified bonds" means the 
specific type or types of obligations that are subject to the 
annual volume cap.  Qualified bonds include the following types 
of obligations as defined in federal tax law: 
    (a) "public facility bonds" means "exempt facility bonds" 
as defined in federal tax law, except for residential rental 
project bonds, which are those obligations issued to finance 
airports, docks and wharves, mass commuting facilities, 
facilities for the furnishing of water, sewage facilities, solid 
waste disposal facilities, facilities for the local furnishing 
of electric energy or gas, local district heating or cooling 
facilities, and qualified hazardous waste facilities; 
    (b) "residential rental project bonds" which are those 
obligations issued to finance qualified residential rental 
projects; 
    (c) "mortgage bonds"; 
    (d) "small issue bonds" issued to finance manufacturing 
projects and the acquisition or improvement of agricultural real 
or personal property under sections 6 to 18; 
    (e) "student loan bonds"; 
    (f) "redevelopment bonds"; and 
    (g) "governmental bonds" with a nonqualified amount in 
excess of $15,000,000 as set forth in section 141(b)5 of federal 
tax law. 
    Sec. 21.  Minnesota Statutes 1990, section 474A.03, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ANNUAL VOLUME CAP UNDER FEDERAL TAX LAW; 
POOL ALLOCATIONS.] At the beginning of each calendar year after 
December 31, 1990 1991, the commissioner shall determine the 
aggregate dollar amount of the annual volume cap under federal 
tax law for the calendar year, and of this amount the 
commissioner shall make the following allocation:  
    (1) $75,000,000 to the manufacturing small issue pool; 
    (2) $46,000,000 to the housing pool; 
    (3) $10,000,000 to the public facilities pool; and 
    (4) amounts to be allocated as provided in subdivision 2a.  
    If the annual volume cap is greater or less than the amount 
of bonding authority allocated under clauses (1) to (4) and 
subdivision 2a, paragraph (a), clauses (1) to (3), the 
allocation must be adjusted so that each adjusted allocation is 
the same percentage of the annual volume cap as each original 
allocation is of the total bonding authority originally 
allocated. 
    Sec. 22.  Minnesota Statutes 1990, section 474A.061, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION.] (a) An issuer may apply for 
an allocation under this section by submitting to the department 
an application on forms provided by the department, accompanied 
by (1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, (4) an application deposit in the amount of one percent 
of the requested allocation before the last Monday in August, or 
in the amount of two percent of the requested allocation on or 
after the last Monday in August, and (5) a public purpose 
scoring worksheet for small issue manufacturing project 
applications.  The issuer must pay the application deposit by 
check.  The Minnesota housing finance agency and the Minnesota 
rural finance authority may apply for and receive an allocation 
under this section without submitting an application deposit. 
    (b) An entitlement issuer may not apply for an allocation 
from the housing pool or from the public facilities pool unless 
it has either permanently issued bonds equal to the amount of 
its entitlement allocation for the current year plus any amount 
of bonding authority carried forward from previous years or 
returned for reallocation all of its unused entitlement 
allocation.  For purposes of this subdivision, its entitlement 
allocation includes an amount obtained under section 474A.04, 
subdivision 6. 
    (c) If an application is rejected under this section, the 
commissioner must notify the applicant and return the 
application deposit to the applicant within 30 days unless the 
applicant requests in writing that the application be 
resubmitted.  The granting of an allocation of bonding authority 
under this section must be evidenced by a certificate of 
allocation. 
    Sec. 23.  Minnesota Statutes 1990, section 474A.061, 
subdivision 2b, is amended to read: 
    Subd. 2b.  [MANUFACTURING SMALL ISSUE POOL ALLOCATION.] 
From the beginning of the calendar year until the last Monday in 
August, the commissioner shall allocate available bonding 
authority from the manufacturing small issue pool on Monday of 
each week to applications received on or before the Monday of 
the preceding week.  The amount of allocation provided to an 
issuer for a specific manufacturing project will be based on the 
number of points received for the proposed project under the 
scoring system under section 474A.045.  Proposed projects that 
receive 50 points or more are eligible for all of the proposed 
allocation.  Proposed projects that receive less than 50 points 
are eligible to receive a proportionally reduced share of the 
proposed authority. 
    If there are two or more applications for manufacturing 
projects from the manufacturing small issue pool and there is 
insufficient bonding authority to provide allocations for all 
projects in any one week after all eligible bonding authority 
has been transferred as provided in section 474A.081, the 
available bonding authority shall be awarded by lot unless 
otherwise agreed to by the respective issuers. 
    Sec. 24.  Minnesota Statutes 1990, section 474A.061, 
subdivision 3, is amended to read: 
    Subd. 3.  [ADDITIONAL DEPOSIT.] An issuer which has 
received an allocation under this section may retain any unused 
portion of the allocation after the first Tuesday in September 
only if the issuer has submitted to the department before the 
first Tuesday in September a letter stating its intent to issue 
obligations pursuant to the allocation before the end of the 
calendar year or within the time period permitted by federal tax 
law and a deposit in addition to that provided under subdivision 
1, equal to one percent of the amount of allocation to be 
retained.  The Minnesota housing finance agency and the 
Minnesota rural finance authority may retain an unused portion 
of an allocation after the first Tuesday in September without 
submitting an additional deposit. 
    Sec. 25.  Minnesota Statutes 1990, section 474A.061, 
subdivision 4, is amended to read: 
    Subd. 4.  [RETURN OF ALLOCATION; DEPOSIT REFUND.] (a) If an 
issuer that receives an allocation under this section determines 
that it will not issue obligations equal to all or a portion of 
the allocation received under this section within 90 days of 
allocation or within the time period permitted by federal tax 
law, whichever is less, the issuer must notify the department.  
If the issuer notifies the department or the 90-day period since 
allocation has expired prior to the last Monday in August, the 
amount of allocation is canceled and returned for reallocation 
through the pool from which it was originally allocated.  If the 
issuer notifies the department or the 90-day period since 
allocation has expired on or after the last Monday in August, 
the amount of allocation is canceled and returned for 
reallocation through the unified pool.  If the issuer notifies 
the department after the last Monday in November, the amount of 
allocation is canceled and returned for reallocation to the 
Minnesota housing finance agency. 
    (b) An issuer that returns for reallocation all or a 
portion of an allocation received under this section within 90 
days of allocation shall receive within 30 days a refund equal 
to:  
    (1) one-half of the application deposit for the amount of 
bonding authority returned within 30 days of receiving 
allocation; 
    (2) one-fourth of the application deposit for the amount of 
bonding authority returned between 31 and 60 days of receiving 
allocation; and 
    (3) one-eighth of the application deposit for the amount of 
bonding authority returned between 61 and 90 days of receiving 
allocation. 
    No refund shall be available for allocations returned 90 or 
more days after receiving the allocation.  This subdivision does 
not apply to the Minnesota housing finance agency or the 
Minnesota rural finance authority. 
    Sec. 26.  Minnesota Statutes 1990, section 474A.091, is 
amended to read: 
    474A.091 [ALLOCATION OF UNIFIED POOL.] 
    Subdivision 1.  [UNIFIED POOL AMOUNT.] On the day after the 
last Monday in August any bonding authority remaining 
unallocated from the manufacturing small issue pool, the housing 
pool, and the public facilities pool is transferred to the 
unified pool and must be reallocated as provided in this section.
    Subd. 2.  [APPLICATION.] An issuer Issuers other than the 
Minnesota rural finance authority may apply for an allocation 
under this section by submitting to the department an 
application on forms provided by the department accompanied by 
(1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, (4) an application deposit in the amount of two percent 
of the requested allocation, and (5) a public purpose scoring 
worksheet for small issue manufacturing applications.  The 
issuer must pay the application deposit by check.  An 
entitlement issuer may not apply for an allocation for public 
facility bonds, residential rental project bonds, or mortgage 
bonds under this section unless it has either permanently issued 
bonds equal to the amount of its entitlement allocation for the 
current year plus any amount carried forward from previous years 
or returned for reallocation all of its unused entitlement 
allocation.  For purposes of this subdivision, its entitlement 
allocation includes an amount obtained under section 474A.04, 
subdivision 6. 
    The Minnesota housing finance agency may not apply for an 
allocation for mortgage bonds under this section until after the 
last Monday in September.  Notwithstanding the restrictions 
imposed on unified pool allocations after October 1 under 
subdivision 3, paragraph (c)(2), the Minnesota housing finance 
agency may be awarded allocations for mortgage bonds from the 
unified pool after October 1.  The Minnesota housing finance 
agency may apply for and receive an allocation under this 
section without submitting an application deposit. 
    Subd. 3.  [ALLOCATION PROCEDURE.] (a) The commissioner 
shall allocate available bonding authority under this section on 
the Monday of every other week beginning with the first Monday 
in September through and on the last Monday in November.  
Applications for allocations must be received by the department 
by the Monday preceding the Monday on which allocations are to 
be made.  If a Monday falls on a holiday, the allocation will be 
made or the applications must be received by the next business 
day after the holiday.  
     (b) On or before October 1, allocations shall be awarded 
from the unified pool in the following order of priority: 
     (1) applications for small issue bonds; 
     (2) applications for residential rental project bonds; 
     (3) applications for public facility projects funded by 
public facility bonds; 
     (4) applications for redevelopment bonds; 
    (5) applications for mortgage bonds; and 
    (6) applications for governmental bonds. 
    Allocations for residential rental projects may only be 
made during the first allocation in September.  The amount of 
allocation provided to an issuer for a specific manufacturing 
project will be based on the number of points received for the 
proposed project under the scoring system under section 474A.045.
Proposed manufacturing projects that receive 50 points or more 
are eligible for all of the proposed allocation.  Proposed 
manufacturing projects that receive less than 50 points under 
section 474A.045 are only eligible to receive a proportionally 
reduced share of the proposed authority.  If there are two or 
more applications for manufacturing projects from the unified 
pool and there is insufficient bonding authority to provide 
allocations for all manufacturing projects in any one allocation 
period, the available bonding authority shall be awarded based 
on the number of points awarded a project under section 474A.045 
with those projects receiving the greatest number of points 
receiving allocation first. 
    (c)(1) On the first Monday in October, $20,000,000 of 
bonding authority or an amount equal to the total annual amount 
of bonding authority allocated to the manufacturing small issue 
pool under section 474A.03, subdivision 1, less the amount 
allocated to issuers from the manufacturing small issue pool for 
that year, whichever is less, is reserved within the unified 
pool for small issue bonds.  On the first Monday in October, 
$2,500,000 of bonding authority or an amount equal to the total 
annual amount of bonding authority allocated to the public 
facilities pool under section 474A.03, subdivision 1, less the 
amount allocated to issuers from the public facilities pool for 
that year, whichever is less, is reserved within the unified 
pool for public facility bonds.  If sufficient bonding authority 
is not available to reserve the required amounts for both small 
issue bonds and public facility bonds, seven-eighths of the 
remaining available bonding authority is reserved for small 
issue bonds and one-eighth of the remaining available bonding 
authority is reserved for public facility bonds. 
     (2) The total amount of allocations for mortgage bonds from 
the housing pool and the unified pool may not exceed: 
     (i) $10,000,000 for any one city; or 
     (ii) $20,000,000 for any number of cities in any one county.
     An allocation for mortgage bonds may be used for mortgage 
credit certificates. 
     After October 1, allocations shall be awarded from the 
unified pool only for the following types of qualified bonds:  
small issue bonds, public facility bonds, and residential rental 
project bonds. 
     (d) If there is insufficient bonding authority to fund all 
projects within any qualified bond category, allocations shall 
be awarded by lot unless otherwise agreed to by the respective 
issuers.  If an application is rejected, the commissioner must 
notify the applicant and return the application deposit to the 
applicant within 30 days unless the applicant requests in 
writing that the application be resubmitted.  The granting of an 
allocation of bonding authority under this section must be 
evidenced by issuance of a certificate of allocation. 
    Subd. 4.  [MORTGAGE BONDS.] All remaining bonding authority 
available for allocation under this section on December 1, is 
allocated to the Minnesota housing finance agency. 
    Subd. 5.  [RETURN OF ALLOCATION; DEPOSIT REFUND.] (a) If an 
issuer that receives an allocation under this section determines 
that it will not issue obligations equal to all or a portion of 
the allocation received under this section within 90 days of the 
allocation or within the time period permitted by federal tax 
law, whichever is less, the issuer must notify the department.  
If the issuer notifies the department or the 90-day period since 
allocation has expired prior to the last Monday in November, the 
amount of allocation is canceled and returned for reallocation 
through the unified pool. 
     (b) An issuer that returns for reallocation all or a 
portion of an allocation received under this section within 90 
days of the allocation shall receive within 30 days a refund 
equal to:  
    (1) one-half of the application deposit for the amount of 
bonding authority returned within 30 days of receiving the 
allocation; 
    (2) one-fourth of the application deposit for the amount of 
bonding authority returned between 31 and 60 days of receiving 
the allocation; and 
    (3) one-eighth of the application deposit for the amount of 
bonding authority returned between 61 and 90 days of receiving 
the allocation. 
    No refund of the application deposit shall be available for 
allocations returned on or after the last Monday in November.  
This subdivision does not apply to the Minnesota housing finance 
agency, or the Minnesota rural finance authority. 
    Subd. 6.  [FINAL ALLOCATION; CARRYFORWARD.] Any bonding 
authority remaining unissued by the Minnesota housing finance 
agency after the last Monday in December is allocated to the 
department of finance for reallocation for qualified bonds 
eligible to be carried forward under federal tax law. 
    Sec. 27.  Minnesota Statutes 1990, section 474A.14, is 
amended to read: 
    474A.14 [NOTICE OF AVAILABLE AUTHORITY.] 
    The department shall publish in the State Register a notice 
of the amount of bonding authority in the housing, manufacturing 
small issue, and public facilities pools as soon after January 1 
as possible.  The department shall publish in the State Register 
a notice of the amount of bonding authority available for 
allocation in the unified pool as soon after September 1 as 
possible. 
    Sec. 28.  [APPROPRIATION.] 
    (a) $300,000 is appropriated from the general fund to the 
commissioner of agriculture for developing and promoting the 
agricultural development bond program.  $150,000 is for fiscal 
year 1992 and $150,000 is for fiscal year 1993.  
    (b) The approved complement of the department of 
agriculture is increased by five general fund positions. 
    (c) The appropriations to the department of agriculture are 
increased by $330,000 for fiscal years 1992 and 1993 for 
operation of existing programs of the rural finance authority. 
    (d) The appropriations to the department of finance are 
reduced by $330,000 for fiscal years 1992 and 1993. 
    (e) The approved complement of the department of finance is 
reduced by three positions. 
    Sec. 29.  [AGRICULTURAL DEVELOPMENT BONDS.] 
    Subdivision 1.  [1991 UNIFIED POOL 
RESERVATION.] Notwithstanding Minnesota Statutes, section 
474A.091, for calendar year 1991, $5,000,000 must be reserved 
upon creation of the unified pool for use by the Minnesota rural 
finance authority for the agricultural development bond 
beginning farmer and agricultural business enterprise loan 
program.  This reservation remains in effect until the last 
Monday in November. 
    Subd. 2.  [1992 SMALL ISSUE POOL 
RESERVATION.] Notwithstanding Minnesota Statutes, section 
474A.03, for calendar year 1992, $10,000,000 must be reserved 
from the small issue pool for use by the Minnesota rural finance 
authority for the agricultural development bond beginning farmer 
and agricultural business enterprise loan program. 
    Presented to the governor May 31, 1991 
    Signed by the governor June 4, 1991, 8:57 p.m.