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CHAPTER 41A. AGRICULTURAL RESOURCE LOAN AND ETHANOL DEVELOPMENT PROGRAMS

Table of Sections
SectionHeadnote
41A.01PURPOSE.
41A.02DEFINITIONS; ACTIONS BY THE STATE.
41A.021SUCCESSOR STATUS.
41A.022MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY; SUCCESSOR STATUS.
41A.023POWERS.
41A.0235BOARD MEETINGS BY TELEPHONE OR OTHER ELECTRONIC MEANS.
41A.03LOAN GUARANTIES.
41A.035AGRICULTURAL RESOURCES LOAN PARTICIPATION.
41A.036SMALL BUSINESS DEVELOPMENT LOANS.
41A.04APPLICATION AND APPROVAL.
41A.05MINNESOTA AGRICULTURAL AND ECONOMIC DEVELOPMENT ACCOUNT AND BONDS.
41A.051Repealed, 1992 c 513 art 4 s 60
41A.06PROJECT TAXES AND OTHER CHARGES.
41A.065Repealed, 1993 c 177 s 15
41A.066Repealed, 2001 c 200 s 4
41A.07Repealed, 1993 c 337 s 20
41A.08STAFF.
41A.09ETHANOL DEVELOPMENT.
41A.01 PURPOSE.
Sections 41A.01 to 41A.08 provide for agricultural and economic development in the state.
All credit advanced pursuant to loan guaranty commitments is to be secured by subrogation of the
state to mortgage security and other security interests granted to the private lender, in proportion
to the amount advanced by the state. A board is established to investigate the feasibility of each
project, its conformity to public policy and to environmental standards, the qualifications of the
owners, operators, and lenders, and the nature and extent of the security, prior to commitment.
The board shall also seek to secure financial participation by private persons not supported by the
guaranty, to assure that in these respects each project satisfies and will continue to satisfy criteria
which are adequate in the judgment of the board.
History: 1984 c 502 art 10 s 1; 1Sp1985 c 13 s 145; 1987 c 386 art 9 s 1
41A.02 DEFINITIONS; ACTIONS BY THE STATE.
    Subdivision 1. Scope. The definition of each term given in this section applies whenever the
term is used in sections 41A.01 to 41A.09.
    Subd. 2. Agricultural resource. "Agricultural resource" means any organic matter which is
available on a renewable basis from agricultural processes, including agricultural crop, animal,
and wood production, waste, and residues.
    Subd. 3. Minnesota Agricultural and Economic Development Board; board. "Minnesota
Agricultural and Economic Development Board" or "board" consists of the commissioner of
finance as chair, the commissioner of agriculture, the commissioner of employment and economic
development, the commissioner of the Pollution Control Agency, the president of Minnesota
Technology, Inc. or the president's designee, and two public members with experience in finance,
appointed by Minnesota Technology, Inc. The membership terms, compensation, removal, and
filling of vacancies of public members of the board are as provided in section 15.0575.
    Subd. 4. Minnesota agricultural and economic development account; development
account. "Minnesota agricultural and economic development account" or "development account"
means the account created by section 41A.05.
    Subd. 5. Agricultural resource loan guaranty program; program. "Agricultural resource
loan guaranty program" or "program" includes all projects, loan guaranties and bonds approved
or issued pursuant to this chapter.
    Subd. 6. Agricultural resource project; project. "Agricultural resource project" or
"project" means (1) any facility, or portion of a facility, located in the state which is operated or to
be operated primarily for the production from agricultural resources of marketable products, (2)
buildings, equipment, and land used for the commercial production of turkeys or turkey products,
(3) a facility or portion of a facility used for the commercial production of fish or of products made
from commercially-produced fish or rough fish, as defined in section 97A.015, subdivision 43, that
are not commercially produced, or (4) real or personal property used or useful in connection with
a revenue-producing enterprise, or a combination of two or more revenue-producing enterprises
engaged in a business, that is not used for the production of livestock, other than poultry, or for the
production of crops, plants, or milk. The land in clause (2) is limited to land on which buildings
and equipment are situated and immediately surrounding land used for storage, waste disposal, or
other functions directly related to the commercial production of turkeys or turkey products at
that project site. The land in clause (2) does not include land used for the growing or raising of
crops or the grazing of livestock other than poultry. A project includes a facility or portion of a
facility for mixing or producing substances to be mixed with other substances for use as a fuel
or as a substitute for petroleum or petrochemical feedstocks.
    Subd. 7. Applicant. "Applicant" means any borrower or lender acting on behalf of a
borrower or any rural development finance authority organized, or any county exercising the
powers of such an authority, pursuant to chapter 362A, which applies to the state for approval of a
guaranty of a loan to a borrower or issuance of bonds for a project.
    Subd. 7a. Bonds. "Bonds" means bonds, notes, or other obligations issued by the board
pursuant to this chapter.
    Subd. 8. Borrower. "Borrower" means any private individual, company, cooperative,
partnership, corporation, association, consortium, or other entity organized for a common
business purpose, which is obligated or to be obligated to pay a guaranteed loan or receives a
loan of bond proceeds.
    Subd. 9. Construction. "Construction" means construction of a new agricultural resource
project, or conversion of a facility to such a project, or expansion or improvement of a project
to increase its capacity or efficiency. "Construction" includes acquisition of land, easements,
buildings, structures, improvements, and equipment and machinery for use in or at the site of a
project or on easements adjacent to the project site.
    Subd. 10. Cost. "Cost" of a project means the sum of all obligations paid or to be paid or
incurred by the borrower which are reasonably required for the construction and completion of
the project, including but not limited to (i) surveys, estimates, plans, specifications, supervision of
construction, and other engineering and architectural service; (ii) payments under construction
contracts and for payment and performance bonds; (iii) purchase and installation of equipment and
machinery; (iv) recording, filing, permit, legal, financial, underwriting, placement, commitment,
publication, advertising, and other charges, fees, and expenses incurred for establishing title,
mortgage liens, and security interests with respect to the project, for securing permits for
construction and approval of the loan guaranty, for establishing the terms of the loan and
underlying security agreements, and for offering, selling, or placing with investors and printing
and delivering the obligations evidencing the loan; and (v) interest, discount, fees, and expenses
accruing with respect to the loan, and taxes and other government charges payable with respect
to the project, during construction.
    Subd. 11. Lender. "Lender" means a corporation or any investment or commercial banking
institution, savings and loan institution, insurance company, investment company, other financial
institution or institutional investor making, purchasing, or participating in a loan or any part of a
loan, or a public entity authorized to make agricultural loans.
    Subd. 12. Loan. "Loan" means any obligation to repay money borrowed to finance the
construction of a project or to refund or refinance such an obligation.
    Subd. 13. Loan agreement. "Loan agreement" means a written agreement or agreements
setting forth the terms and conditions of the obligation of the borrower to the lender and the
pledges and covenants made and mortgage lien and other security interests granted for the security
of the obligations, including a mortgage, note, indenture, or other agreement however designated.
    Subd. 14. Loan guaranty. "Loan guaranty" means a written agreement executed on behalf of
the state that guarantees, in accordance with the terms and conditions contained in the agreement
or in a loan agreement, the payment of sums of money owing by a borrower to a lender.
    Subd. 15. State. "State" actions contemplated in sections 41A.01 to 41A.06 may be taken
on behalf of the state by resolutions of the Minnesota Agricultural and Economic Development
Board, subject to approval by the governor if required by the governor, or by a member of the
board or another state officer in the department headed by the member, pursuant to authority
delegated by resolution of the board. Resolutions of the board are effective when approved by the
vote of a majority of its members.
    Subd. 16. Eligible small business. "Eligible small business" means:
(1) an enterprise determined by the board to constitute a small business concern as defined in
regulations of the United States Small Business Administration under United States Code, title
15, sections 631 to 647; or
(2) an enterprise eligible to receive assistance under section 41A.036.
    Subd. 17. Small business development loan. "Small business development loan" means a
loan to a business that is an "eligible small business" to finance capital expenditures on an interim
or long-term basis to acquire or improve land, acquire, construct, rehabilitate, remove, or improve
buildings, or to acquire and install fixtures and equipment useful to conduct a small business,
including facilities of a capital nature useful or suitable for a business engaged in an enterprise
promoting employment including, without limitation, facilities included within the meaning of
the term "project" as defined in sections 469.153, subdivision 2, and 469.155, subdivision 4.
History: 1984 c 502 art 10 s 2; 1Sp1985 c 13 s 146-150; 1986 c 444; 1987 c 186 s 15; 1987
c 312 art 1 s 26 subd 2; 1987 c 386 art 9 s 2-7,20; 1988 c 615 s 1,2; 1989 c 209 art 2 s 1; 1989 c
335 art 4 s 12; 1991 c 322 s 19; 1993 c 337 s 3; 2001 c 200 s 3; 1Sp2003 c 4 s 1
41A.021 SUCCESSOR STATUS.
The board is the legal successor in all respects of the Minnesota Agricultural and Economic
Development Board established by Laws 1984, chapter 502, article 10, and all bonds, resolutions,
contracts, and liabilities of the Minnesota Agricultural and Economic Development Board
are the bonds, resolutions, contracts, and liabilities of the board as renamed and reconstituted
by section 41A.02, subdivision 3.
History: 1987 c 386 art 9 s 8,20
41A.022 MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY;
SUCCESSOR STATUS.
The board is the legal successor in all respects of the Minnesota Energy and Economic
Development Authority under the general bond resolution for the Minnesota small business
development loan program, as amended and restated by the authority on September 24, 1986. All
bonds, resolutions, contracts, and liabilities of the Minnesota Energy and Economic Development
Authority relating to the Minnesota small business development loan program are the bonds,
resolutions, contracts, and liabilities of the Minnesota Agricultural and Economic Development
Board.
History: 1987 c 386 art 9 s 9
41A.023 POWERS.
In addition to other powers granted by this chapter, the board may:
(1) sue and be sued;
(2) acquire, hold, lease, and transfer any interest in real and personal property for its
corporate purposes;
(3) sell at public or private sale, at the price or prices determined by the board, any note,
mortgage, lease, sublease, lease purchase, or other instrument or obligation evidencing or
securing a loan made for the purpose of economic development, job creation, redevelopment, or
community revitalization by a public agency to a business, for-profit or nonprofit organization,
or an individual;
(4) obtain insurance on its property;
(5) obtain municipal bond insurance, letters of credit, surety obligations, or similar
agreements from financial institutions;
(6) enter into other agreements or transactions, without regard to chapter 16B or 16C, that
the board considers necessary or appropriate to carry out the purposes of this chapter with federal
or state agencies, political subdivisions of the state, or other persons, firms, or corporations;
(7) establish and collect fees without regard to chapter 14 and section 16A.1285;
(8) accept appropriations, gifts, grants, and bequests;
(9) use money received from any source for any legal purpose or program of the board;
(10) participate in loans for agricultural resource projects in accordance with section
41A.035;
(11) provide small business development loans in accordance with section 41A.036; and
(12) guarantee or insure bonds or notes issued by the board.
History: 1987 c 386 art 9 s 10; 1988 c 580 s 1; 1996 c 305 art 3 s 6; 1998 c 386 art 2 s 18
41A.0235 BOARD MEETINGS BY TELEPHONE OR OTHER ELECTRONIC MEANS.
(a) If compliance with section 13D.02 is impractical, the Minnesota Agricultural and
Economic Development Board may conduct a meeting of its members by telephone or other
electronic means so long as the following conditions are met:
(1) all members of the board participating in the meeting, wherever their physical location,
can hear one another and can hear all discussion and testimony;
(2) members of the public present at the regular meeting location of the board can hear
clearly all discussion and testimony and all votes of members of the board and, if needed, receive
those services required by sections 15.44 and 15.441;
(3) at least one member of the board is physically present at the regular meeting location; and
(4) all votes are conducted by roll call, so each member's vote on each issue can be identified
and recorded.
(b) Each member of the board participating in a meeting by telephone or other electronic
means is considered present at the meeting for purposes of determining a quorum and participating
in all proceedings.
(c) If telephone or other electronic means is used to conduct a meeting, the board, to the
extent practical, shall allow a person to monitor the meeting electronically from a remote location.
The board may require the person making such a connection to pay for documented marginal
costs that the board incurs as a result of the additional connection.
(d) If telephone or other electronic means is used to conduct a regular, special, or emergency
meeting, the board shall provide notice of the regular meeting location, of the fact that some
members may participate by telephone or other electronic means, and of the provisions of
paragraph (c). The timing and method of providing notice is governed by section 13D.04.
History: 2005 c 163 s 52
41A.03 LOAN GUARANTIES.
    Subdivision 1. Authority for and limitation of guaranty. Subject to the provisions of
sections 41A.01 to 41A.06 and upon determination that a loan will serve the public purposes and
satisfy the conditions set forth in sections 41A.01 to 41A.06, the state may guarantee and commit
to guarantee against loss an amount not exceeding 90 percent, exclusive of accrued interest, of a
loan for the cost of an agricultural resource project or the refunding or refinancing of a loan. The
loan must be secured by the best available collateral including but not limited to a mortgage on
and security interest in all real and personal property comprising the project and other collateral
as provided in the loan agreement.
    Subd. 2. Limitation of loan amount. The total principal amount of any guaranteed loan
may not exceed 80 percent of the total cost of the related project as estimated by the state at the
time the commitment to guarantee is made or, in the case of a refunding or refinancing loan, 80
percent of the aggregate amount of principal and interest refunded or refinanced. If the actual
cost exceeds the estimate the state may, upon request of the borrower and the lender, consent to
an increase of the loan by a principal amount not greater than 80 percent of the excess cost, and
may increase the guaranteed amount by not more than 90 percent of the increase in the principal
amount, and accrued interest on that amount.
    Subd. 3. Required provisions. A loan guaranty or loan agreement pertaining to any loan
guaranteed by the state may provide that:
(a) Payments of principal and interest made by the borrower under the loan shall be applied
by the lender to reduce the guaranteed and nonguaranteed portion of the loan on a proportionate
basis, and the nonguaranteed portion shall not in any event receive preferential treatment over the
guaranteed portion.
(b) A period of grace shall be allowed of not less than 60 days from a date a principal or
interest payment is due, prior to the making of demand for payment pursuant to the loan guaranty,
to permit adequate time for a decision on behalf of the state regarding principal and interest
assistance in accordance with subdivision 4. Payment as required by the loan guaranty shall be
made within 60 days after receipt by the state of written demand complying with the terms and
conditions of the guaranty.
(c) The lender may not accelerate repayment of the loan or exercise other remedies available
to the lender if the borrower defaults, unless (i) the borrower fails to pay a required payment of
principal or interest, or (ii) the state consents in writing, or (iii) as otherwise permitted in the loan
guaranty. In the event of a default, the lender may not make demand for payment pursuant to the
guaranty unless the state agrees in writing that such default has materially affected the rights or
security of the parties, and finds that the lender should be entitled to receive payment pursuant
to the loan guaranty.
(d) If a payment of principal or interest is made by the state upon default of the borrower, the
state shall be subrogated to the rights of the lender with respect to the payment.
(e) The borrower shall have promptly prepared and delivered to the state annual audited or
reviewed financial statements of the project prepared by a certified public accountant according
to generally accepted accounting principles.
(f) Duly authorized representatives of the state shall have access to the project site at
reasonable times during construction and operation of the project.
(g) The borrower shall maintain adequate records and documents concerning the construction
and operation of the project in order that representatives of the state may determine its technical
and financial conditions and its compliance with environmental requirements. The records shall
include the amounts of all sales and use taxes paid on personal property and services purchased
for the construction and operation of the project, with tax receipts furnished by the sellers or other
supporting documentation determined by the board to be satisfactory. The amounts of those taxes
shall be reported to the board in the manner and at the times required by the board.
(h) The borrower shall protect and preserve at all times the project assets and other collateral
securing the loan and shall assist in liquidation of collateral to minimize loss in the event of default.
(i) Orderly liquidation of assets of the project shall be provided for in the event of default,
with an option on the part of the state to acquire from the lender the lender's interest in the assets
pursuant to the nonguaranteed portion of the loan.
(j) The state shall be paid at or prior to the closing of the guaranteed loan a fee or fees for the
loan guaranty or the commitment to guarantee the loan. The aggregate fee may not exceed one
percent of the total principal amount of the guaranteed portion of the loan.
(k) The lender shall perfect and maintain the mortgage lien on the real estate and the security
interest in personal property and collateral granted as security for the loan, and shall cause all
other loan servicing functions to be performed which are normally required or performed by a
reasonable and prudent lender with respect to a loan without a guaranty.
(l) The state shall be notified in writing without delay of (i) the date and amount of and basis
for each disbursement of loan proceeds; (ii) any nonpayment of principal or interest due; (iii) any
failure to honor a commitment by any person of an intended source of capital for the project; and
(iv) any significant adverse changes from original cash flow projections as evidenced by reports
from the borrower, or any other known evidence that the borrower might be unable to meet a
future scheduled payment of principal or interest.
(m) The loan agreement shall require the borrower to establish a reserve, from the proceeds
of the loan or otherwise, to be maintained with the lender or with a trustee for the holders of the
borrower's obligations in cash or securities of a specified market value not less than one-half of
the annual amount which would be required to amortize the entire amount of the loan over the
term and at the interest rate (or at the rate of yield resulting from the interest rates) provided in
the loan agreement.
(n) The agreement shall contain other terms and conditions that the board in its sole
discretion determines necessary and appropriate to carry out the purposes of this chapter.
    Subd. 4. Principal and interest assistance. The state may at any time enter into a written
contract with the borrower to pay the lender, on behalf of the borrower, an amount not greater
than the amount of principal and interest to become due on one or more subsequent dates, without
acceleration, if the state determines that (i) the borrower is not in default in payment of principal
or interest due more than 60 days prior to the date of the contract; (ii) the borrower is or may
become unable to meet in full principal or interest payments, or both, which are due or to become
due within a specified period; (iii) it is in the public interest to permit the borrower to continue to
pursue the purposes of the project; (iv) the probable net financial loss to the state will be less than
that which would result in the event of a default; (v) the borrower is obligated by the contract
to reimburse the state for all principal or interest advanced, with interest on those amounts,
upon terms and conditions satisfactory to the state; and (vi) funds are available for allocation to
the account established for the project in the guaranty fund, and are continuously allocated to
the account in accordance with the provisions of section 4, subdivision 3, in an amount equal
to the amount of interest on the advances until actually reimbursed to the state by the borrower.
All sums so advanced and interest on those amounts shall be secured by the mortgage lien and
security interest granted by the loan agreement, but none of the advances shall thereafter be repaid
to the state until and unless all principal and interest currently due on the loan has been fully paid.
In the event of subsequent default by the borrower, acceleration by the lender, and payment by
the state of the full amount due under the loan guaranty, the state shall be subrogated to the
rights of the lender with respect to the principal paid by it under the contract. Upon payment of
the loan in full, with accrued interest, the remaining amount of the advances and interest on the
advances may be paid to the state.
    Subd. 5. Limitation on liability. The liability of the state for loan guaranties or bonds
authorized under this chapter is limited to the amount of funds appropriated to the guaranty
fund pursuant to section 41A.06. The legislature intends not to appropriate money from the
general fund to the guaranty fund, other than the sales and use taxes from a project as provided
for in section 41A.06, subdivision 4. The loan guaranties or bonds are not a general obligation
or debt of the state.
History: 1984 c 502 art 10 s 3; 1Sp1985 c 13 s 151-153; 1990 c 610 art 2 s 2
41A.035 AGRICULTURAL RESOURCES LOAN PARTICIPATION.
The board may participate in loans made to finance agricultural resource projects by
purchasing from a lender up to 75 percent of the amount of each eligible loan. If the loan
participated in is for $500,000 or less, the loan may be for 100 percent of the cost of the project.
If the loan participated in exceeds $500,000, the loan may not exceed 80 percent of the cost of
the project. The lender shall service the loan or cause it to be serviced in a manner that equally
protects the lender's and the board's interests.
History: 1987 c 386 art 9 s 11
41A.036 SMALL BUSINESS DEVELOPMENT LOANS.
    Subdivision 1. Loans; limitations. (a) The board may make, purchase, or participate with
financial institutions in making or purchasing small business development loans not exceeding
$1,000,000 in principal amount with respect to small business loans made or purchased by the
board and not exceeding $1,000,000 principal amount with respect to the board's share when the
board participates in making or purchasing small business loans.
(b) With respect to loans that the board makes or purchases or participates in, the board may
determine or provide for their servicing, the percentage of board participation, if any, the times
the loans or participations are payable and the amounts of payment, their amount and interest
rates, their security, if any, and other terms, conditions, and provisions necessary or convenient
in connection with them and may enter into all necessary contracts and security instruments in
connection with them. The board may enter into commitments to purchase or participate with
financial institutions or other persons upon the terms, conditions, and provisions determined by it.
Loans or participations may be serviced by financial institutions or other persons designated by
the board.
(c) The board shall obtain the best available security for all loans. The board may provide for
or require the insurance or guaranteeing of the loans or board participations in whole or in part
by the federal government or a department, agency, or instrumentality of it, by an appropriate
board account, or by a private insurer.
    Subd. 2. Small business development loans; preferences. The following eligible small
businesses have preference among all business applicants for small business development loans:
(1) businesses located in rural areas of the state that are experiencing the most severe
unemployment rates in the state;
(2) businesses that are likely to expand and provide additional permanent employment in
rural areas of the state, or enhance the quality of existing jobs in those areas;
(3) businesses located in border communities that experience a competitive disadvantage
due to location;
(4) businesses that have been unable to obtain traditional financial assistance due to a
disadvantageous location, minority ownership, or other factors rather than due to the business
having been considered a poor financial risk;
(5) businesses that utilize state resources and reduce state dependence on outside resources,
and that produce products or services consistent with the long-term social and economic needs
of the state; and
(6) businesses located in designated enterprise zones, as described in section 469.168.
    Subd. 3. Local governmental unit sponsor; resolution. A business applying for a loan must
be sponsored by a resolution of the governing body of the local governmental unit within whose
jurisdiction the project is located. For purposes of this paragraph, "local governmental unit" means
a home rule charter or statutory city when the project is located in an incorporated area, a county
when the project is located in an unincorporated area, or an American Indian tribal council when
the project is located within a federally recognized American Indian reservation or community.
    Subd. 4. Exemption from limitation. If the board determines that a revenue-producing
enterprise is eligible for special assistance, the $1,000,000 limitation established in subdivision 1
does not apply.
    Subd. 5. Designation; criteria. A revenue-producing enterprise is not eligible to receive
special assistance unless the board has passed a resolution designating the revenue-producing
enterprise as being in need of special assistance. The resolution must include findings that the
designation and receipt of the special assistance will be of exceptional benefit to the state of
Minnesota in that at least three of the following criteria are met:
(1) to expand or remain in Minnesota, the revenue-producing enterprise has demonstrated
that it cannot obtain suitable financing from other sources;
(2) special assistance will enable a revenue-producing enterprise not currently located in
Minnesota to locate a facility in Minnesota that directly increases the number of jobs in the state;
(3) the revenue-producing enterprise will create or retain significant numbers of jobs in a
Minnesota community;
(4) the revenue-producing enterprise has a significant potential for growth in jobs or
economic activities in Minnesota during the ensuing five-year period; and
(5) the revenue-producing enterprise will maintain a significant level of productivity in
Minnesota during the ensuing five-year period.
    Subd. 6.[Repealed, 1988 c 615 s 7]
History: 1987 c 386 art 9 s 12; 1988 c 615 s 3-5; 2003 c 128 art 13 s 3
41A.04 APPLICATION AND APPROVAL.
    Subdivision 1. Requirements. (a) Any applicant may file a written application with the state
commissioner of employment and economic development on behalf of the board, to be considered
by the board, for a guaranty by the state of a portion of a loan or for issuance of bonds for an
agricultural resource project. In general, the application must provide information similar to that
required by an investment banking or other financial institution considering such a project for
debt financing. Specifically, each application must include in brief but precise form the following
information, as supplied by the applicant, the borrower, or the lender:
(1) a description of the scope, nature, extent, and location of the proposed project, including
the identity of the borrower and a preliminary or conceptual design of the project;
(2) a description of the technology to be used in the project and the prior construction and
operating experience of the borrower with such projects;
(3) a detailed estimate of the items comprising the total cost of the project, including
escalation and contingencies, with explanation of the assumptions underlying the estimate;
(4) a general description of the financial plan for the project, including the mortgage and
security interests to be granted for the security of the guaranteed loan or the bonds, and all
sources of equity, grants, or contributions or of borrowing the repayment of which is not to be
secured by the mortgage and security interests, or, if so secured, is expressly subordinated to
the guaranteed loan;
(5) an environmental report analyzing potential environmental effects of the project, any
necessary or proposed mitigation measures, and other relevant data available to the applicant to
enable the board to make an environmental assessment;
(6) a list of applications to be filed and estimated dates of approvals of permits required by
federal, state, and local government agencies as conditions for construction and commencement
of operation of the project;
(7) an estimated construction schedule;
(8) an analysis of the estimated cost of production of and market for the product, including
economic factors justifying the analysis and proposed and actual marketing contracts, letters of
intent, and contracts for the supply of feedstock;
(9) a description of the management experience of the borrower in organizing and
undertaking similar projects;
(10) pro forma cash flow statements for the first five years of project operation including
income statements and balance sheets;
(11) a description of the borrower's organization and, where applicable, a copy of its articles
of incorporation or partnership agreement and bylaws;
(12) the estimated amount of the loan or bonds and percentage of the guaranty requested, the
proposed repayment schedule, and other terms and conditions and security provisions of the loan;
(13) an estimate of the amounts and times of receipt of guaranty fees, sales and use taxes,
property tax increments, and any other governmental charges which may be available for the
support of the agricultural development fund as a result of the construction of the project, with
an analysis of the assumptions on which the estimate is based;
(14) a copy of any lending commitment issued by a lender to the borrower;
(15) a statement from the lender, if identified, as to its general experience in financing and
servicing debt incurred for projects of the size and general type of the project, and its proposed
servicing and monitoring plan; and
(16) additional information required by the board.
(b) If the application is made by an applicant other than the county or rural development
finance authority and tax increment financing is to be used for the project, the application must
include a copy of a resolution adopted by the governing body of the county or rural development
finance authority in which the project is located. The resolution must authorize the use of tax
increment financing for the project as required by section 41A.06, subdivision 5.
    Subd. 2. Environmental assessment. Notwithstanding any other law or rule, no
environmental impact statement must be completed prior to the approval of an application and
the issuance of a conditional commitment for the guaranty of a loan for an agricultural resource
project, or the taking of any other action permitted by sections 41A.01 to 41A.09, including the
issuance of bonds, which is considered necessary or desirable by the board to prepare for a final
commitment and to make it effective. Environmental review, to the extent required by law, shall
be made in conjunction with the issuance by state agencies of environmental permits for the
project. Permits may be applied for prior to the issuance of a conditional commitment. Action
shall be taken as expeditiously as possible on environmental review and all permits required.
Environmental review shall be completed within 180 days after the initial filing of an application
to the Pollution Control Agency for the first permit. Final action shall be taken on permits within
90 days after completion of environmental review or, as to any permit requiring a public hearing,
within 90 days after the receipt of the administrative law judge's report.
    Subd. 3. Commitment. The commissioner of employment and economic development on
behalf of the board shall determine as to each project for which an application is submitted
whether it appears in the commissioner's judgment to conform to the requirements of this chapter.
The board may waive any of the application requirements in subdivision 1 if it determines in its
sole discretion that the waiver of the requirements is necessary or appropriate to carry out the
purposes of this chapter. The board may not waive the requirements of subdivision 1, paragraph
(c). In evaluating applications the board shall consider the extent to which the public subsidies
sought by the applicant under the program would provide the project with an unfair advantage in
competing with other products produced or processed in Minnesota. It may but need not adopt
rules setting forth criteria for evaluating applications for loan guaranties. Upon determination by
the board that a project conforms to the requirements of this chapter, it may by resolution make on
behalf of the state a conditional commitment to guarantee a portion of the proposed loan or to
issue bonds as it determines, not exceeding the limitations set forth in section 41A.03. No action
is allowable under section 116B.03, subdivision 1, with respect to acts of any person authorized or
required in order to execute the resolution. The commitment is not binding upon the state unless
the board has executed on behalf of the state a final loan guaranty instrument in conformity with
section 41A.03 or has issued bonds.
    Subd. 4. Rulemaking authority. In order to effectuate the purposes of sections 41A.01 to
41A.09, the board shall adopt rules which are subject to the provisions of chapter 14.
History: 1984 c 502 art 10 s 4; 1984 c 640 s 32; 1Sp1985 c 13 s 154-156; 1987 c 312
art 1 s 26 subd 2; 1987 c 386 art 9 s 13; 1993 c 337 s 4,5; 1996 c 305 art 2 s 5; 2001 c 200
s 3; 1Sp2003 c 4 s 1
41A.05 MINNESOTA AGRICULTURAL AND ECONOMIC DEVELOPMENT
ACCOUNT AND BONDS.
    Subdivision 1. Establishment of account. The Minnesota agricultural and economic
development account is established in the special revenue fund and may be invested by the
state Board of Investment. All money appropriated to the account, and all guaranty fees, retail
sales taxes, property tax increments, and other money from any source may be credited to the
account and are appropriated to the board to carry out the purposes of this chapter. The board
may maintain or establish within the Minnesota agricultural and economic development account
reserve accounts, project accounts, trustee accounts, special guaranty fund accounts, or other
restrictions it determines necessary or appropriate. The board may enter into pledge and escrow
agreements or indentures of trust with a trustee for the purpose of maintaining the accounts.
    Subd. 2. Issuance of bonds. (a) The board by resolution may exercise the powers of a rural
development authority under sections 469.142 to 469.151 and the powers of a municipality under
sections 469.152 to 469.165 for the purposes of financing one or more projects, including the
issuance of bonds and the application of the bond proceeds and investment income pursuant to a
lease, loan, loan guaranty, loan participation, or other agreement. The bonds must be issued, sold,
and secured on the terms and conditions and in the manner determined by resolution of the board.
Notwithstanding subdivision 1, a reserve established for the bonds provided by the borrower,
including out of bond proceeds, may be deposited and held in a separate account in the Minnesota
agricultural and economic development account and applied to the last installments of principal
or interest on the bonds, subject to the reserves being withdrawn for any purpose permitted by
subdivision 1. The board may by resolution or indenture pledge any or all amounts in the fund,
including any reserves and investment income on amounts in the fund, to secure the payment of
principal and interest on any or all series of bonds, upon the terms and conditions as provided
in the resolution or indenture. To the extent the board deems necessary or desirable to prevent
interest on bonds from becoming subject to federal income taxation, (1) the amounts in the
fund shall be invested in obligations or securities with restricted yields; and (2) the investment
income on the amounts are released from the pledge securing the bonds or loan guaranty and
appropriately applied to prevent taxation.
(b) Bonds issued pursuant to this chapter are not general obligations of the state or the board.
The full faith and credit and taxing powers of the state and the board are not and may not be
pledged for the payment of the bonds. No person may compel the levy of a tax for the payment
or compel the appropriation of money of the state or the board for the payment of the bonds,
except as specifically provided in this chapter.
(c) For purposes of sections 474A.01 to 474A.21, the board is a local issuer and may apply
for allocations of authority to issue private activity obligations and may enter into an agreement
for the issuance of obligations by another issuer.
    Subd. 3. Covenant. In fulfillment of the state's covenant with the beneficiary of each loan
guaranty executed by the board on behalf of the state pursuant to the agricultural resource loan
guaranty program, in accordance with section 41A.04, subdivision 3, the state will not limit or
alter the rights vested in the board to comply with the terms of the loan guaranties.
    Subd. 4. Income tax exemption. In the issuance of state bonds and the making of loan
guaranties for the purposes of the program, the commissioner of finance and the board may
and shall make all provisions and do or cause to be done all acts and things, consistent with
sections 41A.01 to 41A.06, which are or may be effective under federal laws and regulations
to comply with conditions for the exemption of interest on such bonds from federal income
taxation. However, if for any reason, whether existing at the date of issue of any bonds or the
date of execution of any loan guaranty or thereafter, the interest on any such bonds shall be or
become subject to federal income taxes, this shall not impair or affect the validity of the bonds
or of any loan guaranty or the provisions made for the security thereof, and shall not impair or
affect the covenant made by the state in subdivision 3. Nothing herein affects the federal or state
income tax treatment of interest on obligations of a borrower other than the state, whether or
not guaranteed by the state.
    Subd. 5. Guaranty fund; reduction. Amounts in the guaranty fund may be transferred to
the general fund if the remaining amount in the fund exceeds the principal amount and one year's
interest on the outstanding bonds and the guaranteed portion of outstanding guaranteed loans.
History: 1984 c 502 art 10 s 5; 1Sp1985 c 13 s 157-160; 1987 c 291 s 193; 1987 c 384 art
2 s 9; art 3 s 23; 1987 c 386 art 9 s 14,15; 1989 c 335 art 4 s 13,106; 1990 c 594 art 3 s 2;
1994 c 465 art 2 s 4
41A.051 [Repealed, 1992 c 513 art 4 s 60]
41A.06 PROJECT TAXES AND OTHER CHARGES.
    Subdivision 1. Appropriation. The payments, taxes, and governmental charges described in
this section which are received as a consequence of the undertaking, completion, and operation
of each agricultural resource loan project for which a loan guaranty is made by the state are
appropriated to the loan guaranty fund. This appropriation shall not lapse at the close of any fiscal
year under the provisions of section 16A.28, and the receipts from the appropriation shall remain
available as provided in section 41A.05, subdivision 1. The state is not obligated, however,
to continue the appropriation with respect to charges not yet collected, except to the extent
determined to be necessary for compliance with the terms of the loan guaranty agreement.
    Subd. 2. Allocation to project accounts. Receipts of charges related to a particular project
shall be deposited and recorded in its project account in the guaranty fund; but the board may
reallocate receipts in any project account which cause the amount held in the account to exceed
the minimum balance established initially pursuant to section 41A.04, subdivision 3, clause (2).
The reallocation may be made to another project account for the purpose of maintaining the
minimum balance in the account.
    Subd. 3. Payments by borrowers. Guaranty and commitment fees paid by borrowers
pursuant to the loan guaranty provision required by section 41A.03, subdivision 3, clause (j), and
repayments by borrowers of amounts advanced by the state under contracts referred to in section
41A.03, subdivision 4, shall be deposited in the project account for the borrower's project and
shall not be disbursed or transferred for any purpose other than the fulfillment of the state's
obligations under the loan guaranty for that project. Funds may be transferred out of the account if
the minimum required balance in the project account is maintained and exceeds the aggregate
amount of fees and payments previously received from the borrower plus interest received from
the investment thereof.
    Subd. 4. Sales and use taxes. All collections of the excise taxes imposed by chapter 297A
upon retail sales, and upon the privilege of use, storage, or consumption in Minnesota, of personal
property and services purchased for the construction or operation of any project for which a loan
guaranty has been made or conditionally committed, less any refunds required by law and a
proportionate share of the cost of administration and enforcement of the assessment and collection
of the taxes, are appropriated and shall be deposited from the general fund into the project account
in the guaranty fund at least once each year from and after the date of the conditional commitment.
The commissioner of finance shall secure from each borrower the amount of taxes so imposed and
from the commissioner of revenue the amount of refunds or costs to be deducted from them.
    Subd. 5. Property tax increments. If tax increment financing is to be used for the project,
the applicant for a loan guaranty or bonds for any project, and the county in which the project is
situated, shall do all acts and things necessary for the computation and segregation of property
tax increments resulting from the construction of the project in accordance with the provisions
of section 469.149, and for the remittance to the commissioner of finance, for deposit in the
loan guaranty fund, of all tax increments received from and after the date of the conditional
commitment for the loan guaranty. If the project account contains an amount equal to the
average annual payment of principal and interest on the bonds or for the guaranteed portion of
a guaranteed loan, the board must annually return the excess tax increment to be distributed as
provided by section 469.176, subdivision 2, clause (4), until the increment has been discharged
under the agreement or section 469.149.
History: 1984 c 502 art 10 s 6; 1Sp1985 c 13 s 161,162; 1987 c 291 s 194
41A.065 [Repealed, 1993 c 177 s 15]
41A.066 [Repealed, 2001 c 200 s 4]
41A.07 [Repealed, 1993 c 337 s 20]
41A.08 STAFF.
    Subdivision 1. Employees. Subject to all other applicable laws governing employees of
or employment by a department or agency of the state, the commissioner of employment and
economic development, on behalf of the board, may retain or employ the officers, employees,
agents, contractors, and consultants the commissioner determines necessary or appropriate to
discharge the functions of the board in respect to the agricultural resource loan program. The
commissioner shall define their duties and responsibilities.
    Subd. 2. Executive director. The commissioner shall employ, with the concurrence of the
board, an executive director. The executive director shall perform the duties that the board may
require in carrying out its responsibilities. The executive director's position is in the unclassified
service.
History: 1Sp1985 c 13 s 163; 1987 c 312 art 1 s 26 subd 2; 1987 c 386 art 9 s 17; 1Sp2003 c
4 s 1
41A.09 ETHANOL DEVELOPMENT.
    Subdivision 1.[Repealed, 2003 c 128 art 3 s 47]
    Subd. 1a. Ethanol production goal. It is a goal of the state that ethanol production plants in
the state attain a total annual production level of:
(1) 240,000,000 gallons in 2003;
(2) 300,000,000 gallons in 2004;
(3) 360,000,000 gallons in 2005 and 2006;
(4) 420,000,000 gallons in 2007; and
(5) 480,000,000 gallons in 2008 and subsequent years.
    Subd. 2.[Repealed, 1995 c 220 s 141]
    Subd. 2a. Definitions. For the purposes of this section, the terms defined in this subdivision
have the meanings given them.
(a) "Ethanol" means fermentation ethyl alcohol derived from agricultural products, including
potatoes, cereal grains, cheese whey, and sugar beets; forest products; or other renewable
resources, including residue and waste generated from the production, processing, and marketing
of agricultural products, forest products, and other renewable resources, that:
(1) meets all of the specifications in ASTM specification D4806-04a; and
(2) is denatured as specified in Code of Federal Regulations, title 27, parts 20 and 21.
(b) "Ethanol plant" means a plant at which ethanol is produced.
(c) "Commissioner" means the commissioner of agriculture.
(d) "Rural economic infrastructure" means the development of activities that will enhance
the value of agricultural crop or livestock commodities or by-products or waste from farming
operations through new and improved value-added conversion processes and technologies, the
development of more timely and efficient infrastructure delivery systems, and the enhancement of
marketing opportunities. "Rural economic infrastructure" also means land, buildings, structures,
fixtures, and improvements located or to be located in Minnesota and used or operated primarily
for the processing or the support of production of marketable products from agricultural
commodities or wind energy produced in Minnesota.
    Subd. 3.[Repealed, 1995 c 220 s 141]
    Subd. 3a. Ethanol producer payments. (a) The commissioner shall make cash payments
to producers of ethanol located in the state that have begun production at a specific location by
June 30, 2000. For the purpose of this subdivision, an entity that holds a controlling interest in
more than one ethanol plant is considered a single producer. The amount of the payment for
each producer's annual production, except as provided in paragraph (c), is 20 cents per gallon
for each gallon of ethanol produced at a specific location on or before June 30, 2000, or ten
years after the start of production, whichever is later. Annually, within 90 days of the end of its
fiscal year, an ethanol producer receiving payments under this subdivision must file a disclosure
statement on a form provided by the commissioner. The initial disclosure statement must include
a summary description of the organization of the business structure of the claimant, a listing of
the percentages of ownership by any person or other entity with an ownership interest of five
percent or greater, and a copy of its annual audited financial statements, including the auditor's
report and footnotes. The disclosure statement must include information demonstrating what
percentage of the entity receiving payments under this section is owned by farmers or other
entities eligible to farm or own agricultural land in Minnesota under the provisions of section
500.24. Subsequent annual reports must reflect noncumulative changes in ownership of ten
percent or more of the entity. The report need not disclose the identity of the persons or entities
eligible to farm or own agricultural land with ownership interests, individuals residing within 30
miles of the plant, or of any other entity with less than ten percent ownership interest, but the
claimant must retain information within its files confirming the accuracy of the data provided.
This data must be made available to the commissioner upon request. Not later than the 15th day of
February in each year the commissioner shall deliver to the chairs of the standing committees
of the senate and the house of representatives that deal with agricultural policy and agricultural
finance issues an annual report summarizing aggregated data from plants receiving payments
under this section during the preceding calendar year. Audited financial statements and notes and
disclosure statements submitted to the commissioner are nonpublic data under section 13.02,
subdivision 9
. Notwithstanding the provisions of chapter 13 relating to nonpublic data, summaries
of the submitted audited financial reports and notes and disclosure statements will be contained
in the report to the committee chairs and will be public data.
(b) No payments shall be made for ethanol production that occurs after June 30, 2010. A
producer of ethanol shall not transfer the producer's eligibility for payments under this section to
an ethanol plant at a different location.
(c) If the level of production at an ethanol plant increases due to an increase in the production
capacity of the plant, the payment under paragraph (a) applies to the additional increment of
production until ten years after the increased production began. Once a plant's production capacity
reaches 15,000,000 gallons per year, no additional increment will qualify for the payment.
(d) Total payments under paragraphs (a) and (c) to a producer in a fiscal year may not
exceed $3,000,000.
(e) By the last day of October, January, April, and July, each producer shall file a claim
for payment for ethanol production during the preceding three calendar months. A producer
that files a claim under this subdivision shall include a statement of the producer's total ethanol
production in Minnesota during the quarter covered by the claim. For each claim and statement of
total ethanol production filed under this subdivision, the volume of ethanol production must be
examined by an independent certified public accountant in accordance with standards established
by the American Institute of Certified Public Accountants.
(f) Payments shall be made November 15, February 15, May 15, and August 15. A separate
payment shall be made for each claim filed. Except as provided in paragraph (g), the total
quarterly payment to a producer under this paragraph may not exceed $750,000.
(g) Notwithstanding the quarterly payment limits of paragraph (f), the commissioner shall
make an additional payment in the fourth quarter of each fiscal year to ethanol producers for the
lesser of: (1) 20 cents per gallon of production in the fourth quarter of the year that is greater than
3,750,000 gallons; or (2) the total amount of payments lost during the first three quarters of the
fiscal year due to plant outages, repair, or major maintenance. Total payments to an ethanol
producer in a fiscal year, including any payment under this paragraph, must not exceed the total
amount the producer is eligible to receive based on the producer's approved production capacity.
The provisions of this paragraph apply only to production losses that occur in quarters beginning
after December 31, 1999.
(h) The commissioner shall reimburse ethanol producers for any deficiency in payments
during earlier quarters if the deficiency occurred because of unallotment or because appropriated
money was insufficient to make timely payments in the full amount provided in paragraph (a).
Notwithstanding the quarterly or annual payment limitations in this subdivision, the commissioner
shall begin making payments for earlier deficiencies in each fiscal year that appropriations for
ethanol payments exceed the amount required to make eligible scheduled payments. Payments for
earlier deficiencies must continue until the deficiencies for each producer are paid in full.
(i) The commissioner may make direct payments to producers of rural economic
infrastructure with any amount of the annual appropriation for ethanol producer payments and
rural economic infrastructure that is in excess of the amount required to make scheduled ethanol
producer payments and deficiency payments under paragraphs (a) to (h).
    Subd. 4. Rulemaking authority. The commissioner shall adopt rules to implement this
section.
    Subd. 5.[Repealed, 1995 c 220 s 141]
    Subd. 5a.[Repealed, 2003 c 128 art 3 s 47]
    Subd. 6.[Repealed, 2003 c 128 art 3 s 47]
    Subd. 7.[Repealed, 2003 c 128 art 3 s 47]
    Subd. 8.[Repealed, 2003 c 128 art 3 s 47]
    Subd. 9. Motor vehicles; ethanol combustion efficiency grants. From within the
appropriation for each fiscal year to the ethanol development program under this section, or from
other appropriated money, the commissioner shall make up to two grants, each in an amount
not exceeding $50,000, to qualified applicants proposing to do research on, but not limited to,
ethanol's effect on fuel system materials compatibility and ways to improve the energy efficiency
of ethanol fuel blends in motor vehicles while meeting all requirements for control of tailpipe
emissions. A grant recipient may receive funding for no more than two consecutive years. A
research project must be matched by $2 of nonstate money for each $3 of state grant money.
    Subd. 10. Guidelines. The commissioner shall establish guidelines not subject to chapter 14
for the submission and review of applications and the awarding of grants under subdivision 9.
History: 1Sp1986 c 1 art 8 s 1; 1987 c 390 s 1,2; 1988 c 688 art 18 s 1; 1989 c 257 s 1,2;
1989 c 269 s 37; 1989 c 277 art 1 s 2; 1989 c 335 art 4 s 106; 1991 c 254 art 3 s 21; 1991 c 302 s
1; 1992 c 513 art 2 s 18; 1992 c 575 s 1,2; 1993 c 13 art 1 s 52; 1993 c 172 s 30,31; 1993 c 366 s
2; 1994 c 632 art 2 s 15-17; 1995 c 220 s 45-48; 1996 c 471 art 5 s 1; 1997 c 7 art 5 s 8; 1997 c
216 s 57; 1998 c 299 s 30; 1998 c 401 s 19,20; 2000 c 488 art 3 s 11; 1Sp2001 c 4 art 6 s 77;
2002 c 220 art 9 s 6; 2002 c 379 art 1 s 14; 2003 c 107 s 26; 2003 c 128 art 3 s 37,38; 1Sp2003 c
14 art 7 s 1; 2004 c 254 s 13; 1Sp2005 c 1 art 1 s 69-72; art 4 s 2

Official Publication of the State of Minnesota
Revisor of Statutes