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

  
    Laws of Minnesota 1993 

                        CHAPTER 342-H.F.No. 1060 
           An act relating to agriculture; making technical 
          changes in eligibility for certain rural finance 
          authority loan programs; authorizing an ethanol 
          development program; appropriating money; amending 
          Minnesota Statutes 1992, sections 41B.02, subdivisions 
          7, 12, 14, 15, and by adding subdivisions; 41B.03, 
          subdivision 3; 41B.04, subdivision 9, and by adding a 
          subdivision; 41B.14; and 41C.05, subdivision 2; 
          proposing coding for new law in Minnesota Statutes, 
          chapter 41B. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1992, section 41B.02, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [AMORTIZED RESTRUCTURED LOAN.] "Amortized 
restructured loan" means a loan after it has been modified 
pursuant to section 41B.04, subdivision 9, paragraph (d). 
    Sec. 2.  Minnesota Statutes 1992, section 41B.02, 
subdivision 7, is amended to read: 
    Subd. 7.  [DEFERRED INTEREST.] "Deferred interest" means 
that portion of the interest on primary principal and secondary 
principal the payment of which is deferred for the term of 
the deferred restructured loan.  The deferred interest on 
primary principal may accrue at a different rate from the 
deferred interest on secondary principal as described in section 
41B.04. 
    Sec. 3.  Minnesota Statutes 1992, section 41B.02, is 
amended by adding a subdivision to read: 
    Subd. 7b.  [DEFERRED RESTRUCTURED LOAN.] "Deferred 
restructured loan" means a loan after it has been modified 
pursuant to section 41B.04, subdivision 9, paragraph (a). 
    Sec. 4.  Minnesota Statutes 1992, section 41B.02, 
subdivision 12, is amended to read: 
    Subd. 12.  [PRIMARY PRINCIPAL.] "Primary principal" means 
that portion of the outstanding balance on a loan covered by 
section 41B.04 that is equal to the current market value of the 
property secured by the loan or such lesser amount as may be 
established by the authority by rule.  
    Sec. 5.  Minnesota Statutes 1992, section 41B.02, 
subdivision 14, is amended to read: 
    Subd. 14.  [RESTRUCTURED LOAN.] "Restructured loan" 
means both a deferred restructured loan and an amortized 
restructured loan after it is modified pursuant to section 
41B.04.  
    Sec. 6.  Minnesota Statutes 1992, section 41B.02, 
subdivision 15, is amended to read: 
    Subd. 15.  [SECONDARY PRINCIPAL.] "Secondary principal" 
means that portion of the outstanding balance of a deferred 
restructured loan covered by section 41B.04 that is in excess of 
the current market value of the property secured by the 
loan primary principal. 
     Sec. 7.  Minnesota Statutes 1992, section 41B.02, is 
amended by adding a subdivision to read: 
    Subd. 20.  [ETHANOL PRODUCTION FACILITY.] "Ethanol 
production facility" means a facility that ferments, distills, 
dewaters, or otherwise produces ethanol as defined in section 
41A.09, subdivision 2, paragraph (a). 
    Sec. 8.  Minnesota Statutes 1992, 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 $200,000 in 1991 and an amount in subsequent 
years determined which is adjusted for inflation 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.  The 
commissioner may waive this requirement for any of the programs 
administered by the authority if the participant requests a 
waiver and has either a four year degree in an agricultural 
program or certification as an adult farm management instructor; 
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. 9.  Minnesota Statutes 1992, section 41B.04, 
subdivision 9, is amended to read: 
    Subd. 9.  [RESTRUCTURED LOAN AGREEMENT.] (a) For a deferred 
restructured loan, all payments on the primary and secondary 
principal of the restructured loan, all payments of interest on 
the secondary principal, and an agreed portion of the interest 
payable to the eligible agricultural lender on the primary 
principal must be deferred to the end of the term of the loan. 
    (b) A borrower may prepay the restructured loan, with all 
primary and secondary principal and interest and deferred 
interest at any time without prepayment penalty.  
    (c) Interest on secondary principal must accrue at a below 
market interest rate.  
    (d) (c) At the conclusion of the term of the restructured 
loan, the borrower owes primary principal, secondary principal, 
and deferred interest on primary and secondary principal.  
However, part of this balloon payment may be forgiven following 
an appraisal by the lender and the authority to determine the 
current market value of the real estate subject to the 
mortgage.  If the current market value of the land after 
appraisal is less than the amount of debt owed by the borrower 
to the lender and authority on this obligation, that portion of 
the obligation that exceeds the current market value of the real 
property must be forgiven by the lender and the authority in the 
following order:  
    (1) deferred interest on secondary principal; 
    (2) secondary principal; 
    (3) deferred interest on primary principal; 
    (4) primary principal as provided in an agreement between 
the authority and the lender; and 
    (5) accrued but not deferred interest on primary principal. 
    (d) For an amortized restructured loan, payments must 
include installments on primary principal and interest on the 
primary principal.  An amortized restructured loan must be 
amortized over a time period and upon terms to be established by 
the authority by rule. 
    (e) A borrower may prepay the restructured loan, with all 
primary and secondary principal and interest and deferred 
interest at any time without prepayment penalty. 
    (e) (f) The authority may not participate in refinancing a 
restructured loan at the conclusion of the restructured loan. 
    Sec. 10.  Minnesota Statutes 1992, section 41B.04, is 
amended by adding a subdivision to read: 
    Subd. 17.  [APPLICATION AND ORIGINATION FEE.] The authority 
may impose a reasonable nonrefundable application fee for each 
application and an origination fee for each loan issued under 
the loan restructuring program.  The origination fee is 1.5 
percent of the authority's participation interest in the loan 
and the application fee is $50.  The authority may review the 
fees annually and make adjustments as necessary.  The fees must 
be deposited in the state treasury and credited to an account in 
the special revenue fund.  
     Sec. 11.  [41B.044] [ETHANOL DEVELOPMENT PROGRAM.] 
    Subdivision 1.  [ETHANOL PRODUCTION FACILITY LOAN PROGRAM.] 
The authority may establish, adopt rules for, and implement an 
ethanol production facility loan program to provide capital for 
ethanol production facilities.  The program may provide for 
secured or unsecured loans, loan participations and loan 
guarantees with respect to real or personal property comprising 
all or part of an ethanol production facility, and the payment 
of costs incurred by the authority to establish and administer 
the program. 
    Subd. 2.  [ETHANOL DEVELOPMENT FUND.] There is established 
in the state treasury an ethanol development fund.  Interest 
earned on money in the fund accrues to the fund, and money in 
the fund is appropriated to the commissioner of agriculture for 
purposes of the ethanol production facility loan program, 
including costs incurred by the authority to establish and 
administer the program. 
    Subd. 3.  [REVENUE BONDS.] The authority may issue revenue 
bonds to finance the ethanol production facility loan program in 
accordance with sections 41B.08 to 41B.15, 41B.17, and 41B.18.  
Bonds may be refunded by the issuance of refunding bonds in the 
manner authorized by chapter 475. 
    Subd. 4.  [PROGRAM REQUIREMENTS.] The requirements in this 
subdivision apply to the ethanol production facility loan 
program. 
    (a) Individuals, corporations, cooperatives, partnerships, 
and joint ventures may participate in the program and are not 
required to meet the eligibility requirements of section 41B.03, 
subdivision 1. 
    (b) Program participants may be required to pay reasonable 
nonrefundable application fees and origination fees established 
by the authority by rule under section 41B.07.  Application and 
origination fees received by the authority must be deposited in 
the ethanol development fund. 
    (c) Total assistance provided to an ethanol production 
facility from appropriated funds must not exceed $500,000 or a 
lesser amount as provided by rules relating to the program. 
    (d) The interest payable on loans and loan participations 
made by the authority must, if funded by revenue bond proceeds, 
be at a rate not less than the rate on the revenue bonds, and 
may be established at a higher rate necessary to pay costs 
associated with the issuance of the revenue bonds and a 
proportionate share of the cost of administering the program.  
The interest payable on loans and loan participations funded 
from sources other than revenue bond proceeds must be at a rate 
determined by the authority. 
    Sec. 12.  Minnesota Statutes 1992, section 41B.14, is 
amended to read: 
    41B.14 [REVENUE BONDS; NONLIABILITY OF STATE.] 
    The state of Minnesota is not liable on bonds of the 
authority issued under section sections 41B.08 and 41B.044 and 
those bonds are not a debt of the state.  The bonds must contain 
on their face a statement to that effect. 
    Sec. 13.  Minnesota Statutes 1992, section 41C.05, 
subdivision 2, is amended to read: 
    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. and must: 
    (1) be a resident of Minnesota; 
    (2) have sufficient education, training, or experience in 
the type of farming for which the loan is desired; 
    (3) have a low or moderate net worth, as defined in section 
41C.02, subdivision 12; 
    (4) certify that the agricultural land to be purchased will 
be used by the borrower for agricultural purposes; 
    (5) certify that farming will be the principal occupation 
of an individual borrower; 
    (6) 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.  The 
commissioner may waive this requirement for any of the programs 
administered by the authority if the participant requests a 
waiver and provides justification; and 
    (7) 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. 14.  [APPROPRIATION.] 
    $17,000 in fiscal year 1994 and $17,000 in fiscal year 1995 
is appropriated from the special revenue fund to the 
commissioner of agriculture for administrative expenses for the 
loan restructuring program. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 12:15 p.m.