1.1                          A bill for an act 
  1.2             relating to agriculture; increasing maximum state 
  1.3             participation limits for certain rural finance 
  1.4             authority programs; amending Minnesota Statutes 2002, 
  1.5             sections 41B.039, subdivision 2; 41B.04, subdivision 
  1.6             8; 41B.042, subdivision 4; 41B.043, subdivision 1b; 
  1.7             41B.045, subdivision 2; 41B.046, subdivision 5; 
  1.8             41B.047, subdivision 4; 41B.049, subdivision 5.  
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2002, section 41B.039, 
  1.11  subdivision 2, is amended to read: 
  1.12     Subd. 2.  [STATE PARTICIPATION.] The state may participate 
  1.13  in a new real estate loan with an eligible lender to a beginning 
  1.14  farmer to the extent of ~~45~~ 67 percent of the principal amount of 
  1.15  the loan or ~~$125,000~~ $190,000, whichever is less.  The interest 
  1.16  rates and repayment terms of the authority's participation 
  1.17  interest may be different than the interest rates and repayment 
  1.18  terms of the lender's retained portion of the loan. 
  1.19     Sec. 2.  Minnesota Statutes 2002, section 41B.04, 
  1.20  subdivision 8, is amended to read: 
  1.21     Subd. 8.  [STATE'S PARTICIPATION.] With respect to loans 
  1.22  that are eligible for restructuring under sections 41B.01 to 
  1.23  41B.23 and upon acceptance by the authority, the authority shall 
  1.24  enter into a participation agreement or other financial 
  1.25  arrangement whereby it shall participate in a restructured loan 
  1.26  to the extent of ~~45~~ 67 percent of the primary principal or 
  1.27  ~~$150,000~~ $225,000, whichever is less.  The authority's portion 
  2.1   of the loan must be protected during the authority's 
  2.2   participation by the first mortgage held by the eligible lender 
  2.3   to the extent of its participation in the loan. 
  2.4      Sec. 3.  Minnesota Statutes 2002, section 41B.042, 
  2.5   subdivision 4, is amended to read: 
  2.6      Subd. 4.  [PARTICIPATION LIMIT; INTEREST.] The authority 
  2.7   may participate in new seller-sponsored loans to the extent 
  2.8   of ~~45~~ 67 percent of the principal amount of the loan or 
  2.9   ~~$125,000~~ $190,000, whichever is less.  The interest rates and 
  2.10  repayment terms of the authority's participation interest may be 
  2.11  different than the interest rates and repayment terms of the 
  2.12  seller's retained portion of the loan. 
  2.13     Sec. 4.  Minnesota Statutes 2002, section 41B.043, 
  2.14  subdivision 1b, is amended to read: 
  2.15     Subd. 1b.  [LOAN PARTICIPATION.] The authority may 
  2.16  participate in an agricultural improvement loan with an eligible 
  2.17  lender to a farmer who meets the requirements of section 41B.03, 
  2.18  subdivision 1, clauses (1) and (2), and who is actively engaged 
  2.19  in farming.  Participation is limited to ~~45~~ 67 percent of the 
  2.20  principal amount of the loan or ~~$125,000~~ $190,000, whichever is 
  2.21  less.  The interest rates and repayment terms of the authority's 
  2.22  participation interest may be different than the interest rates 
  2.23  and repayment terms of the lender's retained portion of the loan.
  2.24     Sec. 5.  Minnesota Statutes 2002, section 41B.045, 
  2.25  subdivision 2, is amended to read: 
  2.26     Subd. 2.  [LOAN PARTICIPATION.] The authority may 
  2.27  participate in a livestock expansion loan with an eligible 
  2.28  lender to a livestock farmer who meets the requirements of 
  2.29  section 41B.03, subdivision 1, clauses (1) and (2), and who are 
  2.30  actively engaged in a livestock operation.  A prospective 
  2.31  borrower must have a total net worth, including assets and 
  2.32  liabilities of the borrower's spouse and dependents, of less 
  2.33  than $400,000 in 1999 and an amount in subsequent years which is 
  2.34  adjusted for inflation by multiplying $400,000 by the cumulative 
  2.35  inflation rate as determined by the United States All-Items 
  2.36  Consumer Price Index. 
  3.1      Participation is limited to ~~45~~ 67 percent of the principal 
  3.2   amount of the loan or ~~$250,000~~ $375,000, whichever is less.  The 
  3.3   interest rates and repayment terms of the authority's 
  3.4   participation interest may be different from the interest rates 
  3.5   and repayment terms of the lender's retained portion of the loan.
  3.6      Sec. 6.  Minnesota Statutes 2002, section 41B.046, 
  3.7   subdivision 5, is amended to read: 
  3.8      Subd. 5.  [LOANS.] (a) The authority may participate in a 
  3.9   stock loan with an eligible lender to a farmer who is eligible 
  3.10  under subdivision 4.  Participation is limited to ~~45~~ 67 percent 
  3.11  of the principal amount of the loan or ~~$24,000~~ $40,000, 
  3.12  whichever is less.  The interest rates and repayment terms of 
  3.13  the authority's participation interest may differ from the 
  3.14  interest rates and repayment terms of the lender's retained 
  3.15  portion of the loan, but the authority's interest rate must not 
  3.16  exceed 50 percent of the lender's interest rate. 
  3.17     (b) No more than 95 percent of the purchase price of the 
  3.18  stock may be financed under this program. 
  3.19     (c) Security for stock loans must be the stock purchased, a 
  3.20  personal note executed by the borrower, and whatever other 
  3.21  security is required by the eligible lender or the authority. 
  3.22     (d) The authority may impose a reasonable nonrefundable 
  3.23  application fee for each application for a stock loan.  The 
  3.24  authority may review the fee annually and make adjustments as 
  3.25  necessary.  The application fee is initially $50.  Application 
  3.26  fees received by the authority must be deposited in the 
  3.27  value-added agricultural product revolving fund. 
  3.28     (e) Stock loans under this program will be made using money 
  3.29  in the value-added agricultural product revolving fund 
  3.30  established under subdivision 3. 
  3.31     (f) The authority may not grant stock loans in a cumulative 
  3.32  amount exceeding $2,000,000 for the financing of stock purchases 
  3.33  in any one cooperative. 
  3.34     Sec. 7.  Minnesota Statutes 2002, section 41B.047, 
  3.35  subdivision 4, is amended to read: 
  3.36     Subd. 4.  [LOANS.] (a) The authority may participate in a 
  4.1   disaster recovery loan with an eligible lender to a farmer who 
  4.2   is eligible under subdivision 3.  Participation is limited to ~~45~~ 
  4.3   67 percent of the principal amount of the loan 
  4.4   or ~~$50,000~~ $75,000, whichever is less.  The interest rates and 
  4.5   repayment terms of the authority's participation interest may 
  4.6   differ from the interest rates and repayment terms of the 
  4.7   lender's retained portion of the loan, but the authority's 
  4.8   interest rate must not exceed four percent. 
  4.9      (b) Standards for loan amortization shall be set by the 
  4.10  Rural Finance Authority not to exceed ten years. 
  4.11     (c) Security for the disaster recovery loans must be a 
  4.12  personal note executed by the borrower and whatever other 
  4.13  security is required by the eligible lender or the authority. 
  4.14     (d) The authority may impose a reasonable nonrefundable 
  4.15  application fee for a disaster recovery loan.  The authority may 
  4.16  review the fee annually and make adjustments as necessary.  The 
  4.17  application fee is initially $50.  Application fees received by 
  4.18  the authority must be deposited in the disaster recovery 
  4.19  revolving fund. 
  4.20     (e) Disaster recovery loans under this program will be made 
  4.21  using money in the disaster recovery revolving fund established 
  4.22  under subdivision 2. 
  4.23     Sec. 8.  Minnesota Statutes 2002, section 41B.049, 
  4.24  subdivision 5, is amended to read: 
  4.25     Subd. 5.  [LOAN CRITERIA.] (a) To be eligible, a borrower 
  4.26  must be a resident of Minnesota or an entity that is not 
  4.27  prohibited from owning agricultural land under section 500.24. 
  4.28     (b) State participation in a participation loan is limited 
  4.29  to ~~45~~ 67 percent of the principal amount of the loan.  A direct 
  4.30  loan or loan participation may not exceed ~~$250,000~~ $375,000.  
  4.31     (c) Loans under this program may be used as a match for 
  4.32  federal loans or grants. 
  4.33     (d) A borrower who has previously received a loan under 
  4.34  subdivision 1 is prohibited from receiving another methane 
  4.35  digester loan under subdivision 1.