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Minnesota Legislature

Office of the Revisor of Statutes

41B.048 AGROFORESTRY LOAN PROGRAM.
    Subdivision 1. Purpose. The purpose of the agroforestry loan program is to provide
low-interest financing to farmers during the growing period required to convert agricultural
land to agroforestry.
    Subd. 2. Establishment. The authority shall establish and implement an agroforestry loan
program to help finance the production of short rotation woody crops. The authority may contract
with a fiscal agent to provide an efficient delivery system for this program.
    Subd. 3. Rules. The authority may adopt rules necessary for administration of the program
established under subdivision 2.
    Subd. 4. Definitions. (a) The definitions in this subdivision apply to this section.
(b) "Fiscal agent" means any lending institution or other organization of a for-profit or
nonprofit nature that is in good standing with the state of Minnesota that has the appropriate
business structure and trained personnel suitable to providing efficient disbursement of loan funds
and the servicing and collection of loans over an extended period of time.
(c) "Growing cycle" means the number of years from planting to harvest.
(d) "Harvest" means the day that the crop arrives at the scale of the buyer of the crop.
(e) "Short rotation woody crops" or "crop" means hybrid poplar and other woody plants that
are harvested for their fiber within 15 years of planting.
    Subd. 5. Eligibility. To be eligible for this program a borrower must:
(1) be a resident of Minnesota or any entity eligible to own farm land under section 500.24;
(2) be or plan to become a grower of short rotation woody crops on agricultural land that is
suitable for the profitable production of short rotation woody crops;
(3) be a member of a producer-owned cooperative that will contract to market the short
rotation woody crop to be planted by the borrower;
(4) demonstrate an ability to repay the loan;
(5) not receive assistance under this program for more than $150,000 in the producer's
lifetime;
(6) agree to work with appropriate local, state, and federal agencies, and the marketing
cooperative, to develop an acceptable establishment and maintenance plan;
(7) agree not to plant short-rotation woody crops within one-quarter of a mile of state or
federally protected prairie; and
(8) meet any other requirements the authority may impose by administrative procedure
or by rule.
    Subd. 6. Loans. (a) The authority may disburse loans through a fiscal agent to farmers
and agricultural landowners who are eligible under subdivision 5. The total accumulative loan
principal must not exceed $75,000 per loan.
(b) The fiscal agent may impose a loan origination fee in the amount of one percent of
the total approved loan. This fee is to be paid by the borrower to the fiscal agent at the time
of loan closing.
(c) The loan may be disbursed over a period not to exceed 12 years.
(d) A borrower may receive loans, depending on the availability of funds, for planted areas
up to 160 acres for up to:
(1) the total amount necessary for establishment of the crop;
(2) the total amount of maintenance costs, including weed control, during the first three
years; and
(3) 70 percent of the estimated value of one year's growth of the crop for years four through
12.
(e) Security for the loan must be the crop, a personal note executed by the borrower, an
interest in the land upon which the crop is growing, and whatever other security is required by the
fiscal agent or the authority. All recording fees must be paid by the borrower.
(f) The authority may prescribe forms and establish an application process for applicants
to apply for a loan.
(g) The authority may impose a reasonable, nonrefundable application fee for each
application for a loan under this program. The application fee is initially $50. Application fees
received by the authority must be deposited in the agroforestry loan program revolving fund
established in subdivision 7.
(h) Loans under the program must be made using money in the agroforestry loan program
revolving fund established in subdivision 7.
(i) The interest payable on loans made by the authority for the agroforestry loan program
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 for the agroforestry loan program funded from sources other than revenue bond
proceeds must be at a rate determined by the authority.
(j) Loan principal balance outstanding plus all assessed interest must be repaid within 120
days of harvest, but no later than 15 years from planting.
    Subd. 7. Revolving fund. There is established in the state treasury an agroforestry loan
program revolving fund that is eligible to receive appropriations or the proceeds of bond sales. All
repayments of financial assistance granted under subdivision 2, including principal and interest,
must be deposited into this fund. Interest earned on money in the fund accrues to the fund, and
money in the fund is appropriated to the commissioner for purposes of the agroforestry loan
program, including costs incurred by the authority to establish and administer the program.
    Subd. 8. Revenue bonds. The authority may issue revenue bonds to finance the agroforestry
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.
History: 2000 c 488 art 3 s 19