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; changing certain net worth limits; 
  1.5             amending Minnesota Statutes 2002, sections 41B.03, 
  1.6             subdivision 3; 41B.039, subdivision 2; 41B.04, 
  1.7             subdivision 8; 41B.042, subdivision 4; 41B.043, 
  1.8             subdivision 1b, by adding a subdivision; 41B.045, 
  1.9             subdivision 2; 41B.046, subdivision 5; 41C.02, 
  1.10            subdivision 12. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 2002, section 41B.03, 
  1.13  subdivision 3, is amended to read: 
  1.14     Subd. 3.  [ELIGIBILITY FOR BEGINNING FARMER LOANS.] (a) In 
  1.15  addition to the requirements under subdivision 1, a prospective 
  1.16  borrower for a beginning farm loan in which the authority holds 
  1.17  an interest, must:  
  1.18     (1) have sufficient education, training, or experience in 
  1.19  the type of farming for which the loan is desired; 
  1.20     (2) have a total net worth, including assets and 
  1.21  liabilities of the borrower's spouse and dependents, of less 
  1.22  than ~~$200,000 in 1991~~ $350,000 in 2004 and an amount in 
  1.23  subsequent years which is adjusted for inflation by 
  1.24  multiplying ~~$200,000~~ that amount by the cumulative inflation 
  1.25  rate as determined by the United States All-Items Consumer Price 
  1.26  Index; 
  1.27     (3) demonstrate a need for the loan; 
  1.28     (4) demonstrate an ability to repay the loan; 
  2.1      (5) certify that the agricultural land to be purchased will 
  2.2   be used by the borrower for agricultural purposes; 
  2.3      (6) certify that farming will be the principal occupation 
  2.4   of the borrower; 
  2.5      (7) agree to participate in a farm management program 
  2.6   approved by the commissioner of agriculture for at least the 
  2.7   first three years of the loan, if an approved program is 
  2.8   available within 45 miles from the borrower's residence.  The 
  2.9   commissioner may waive this requirement for any of the programs 
  2.10  administered by the authority if the participant requests a 
  2.11  waiver and has either a four-year degree in an agricultural 
  2.12  program or certification as an adult farm management instructor; 
  2.13  and 
  2.14     (8) agree to file an approved soil and water conservation 
  2.15  plan with the Soil Conservation Service office in the county 
  2.16  where the land is located.  
  2.17     (b) If a borrower fails to participate under paragraph (a), 
  2.18  clause (7), the borrower is subject to penalty as determined by 
  2.19  the authority. 
  2.20     Sec. 2.  Minnesota Statutes 2002, section 41B.039, 
  2.21  subdivision 2, is amended to read: 
  2.22     Subd. 2.  [STATE PARTICIPATION.] The state may participate 
  2.23  in a new real estate loan with an eligible lender to a beginning 
  2.24  farmer to the extent of 45 percent of the principal amount of 
  2.25  the loan or ~~$125,000~~ $200,000, whichever is less.  The interest 
  2.26  rates and repayment terms of the authority's participation 
  2.27  interest may be different than the interest rates and repayment 
  2.28  terms of the lender's retained portion of the loan. 
  2.29     Sec. 3.  Minnesota Statutes 2002, section 41B.04, 
  2.30  subdivision 8, is amended to read: 
  2.31     Subd. 8.  [STATE'S PARTICIPATION.] With respect to loans 
  2.32  that are eligible for restructuring under sections 41B.01 to 
  2.33  41B.23 and upon acceptance by the authority, the authority shall 
  2.34  enter into a participation agreement or other financial 
  2.35  arrangement whereby it shall participate in a restructured loan 
  2.36  to the extent of 45 percent of the primary principal or 
  3.1   ~~$150,000~~ $225,000, whichever is less.  The authority's portion 
  3.2   of the loan must be protected during the authority's 
  3.3   participation by the first mortgage held by the eligible lender 
  3.4   to the extent of its participation in the loan. 
  3.5      Sec. 4.  Minnesota Statutes 2002, section 41B.042, 
  3.6   subdivision 4, is amended to read: 
  3.7      Subd. 4.  [PARTICIPATION LIMIT; INTEREST.] The authority 
  3.8   may participate in new seller-sponsored loans to the extent of 
  3.9   45 percent of the principal amount of the loan or 
  3.10  ~~$125,000~~ $200,000, whichever is less.  The interest rates and 
  3.11  repayment terms of the authority's participation interest may be 
  3.12  different than the interest rates and repayment terms of the 
  3.13  seller's retained portion of the loan. 
  3.14     Sec. 5.  Minnesota Statutes 2002, section 41B.043, 
  3.15  subdivision 1b, is amended to read: 
  3.16     Subd. 1b.  [LOAN PARTICIPATION.] The authority may 
  3.17  participate in an agricultural improvement loan with an eligible 
  3.18  lender to a farmer who meets the requirements of section 41B.03, 
  3.19  subdivision 1, clauses (1) and (2), and who is actively engaged 
  3.20  in farming.  Participation is limited to 45 percent of the 
  3.21  principal amount of the loan or ~~$125,000~~ $200,000, whichever is 
  3.22  less.  The interest rates and repayment terms of the authority's 
  3.23  participation interest may be different than the interest rates 
  3.24  and repayment terms of the lender's retained portion of the loan.
  3.25     Sec. 6.  Minnesota Statutes 2002, section 41B.043, is 
  3.26  amended by adding a subdivision to read: 
  3.27     Subd. 5.  [TOTAL NET WORTH LIMIT.] A prospective borrower 
  3.28  for an agricultural improvement loan in which the authority 
  3.29  holds an interest must have a total net worth, including assets 
  3.30  and liabilities of the borrower's spouse and dependents, of less 
  3.31  than $350,000 in 2004 and an amount in subsequent years which is 
  3.32  adjusted for inflation by multiplying that amount by the 
  3.33  cumulative inflation rate as determined by the United States 
  3.34  All-Items Consumer Price Index. 
  3.35     Sec. 7.  Minnesota Statutes 2002, section 41B.045, 
  3.36  subdivision 2, is amended to read: 
  4.1      Subd. 2.  [LOAN PARTICIPATION.] The authority may 
  4.2   participate in a livestock expansion loan with an eligible 
  4.3   lender to a livestock farmer who meets the requirements of 
  4.4   section 41B.03, subdivision 1, clauses (1) and (2), and who are 
  4.5   actively engaged in a livestock operation.  A prospective 
  4.6   borrower must have a total net worth, including assets and 
  4.7   liabilities of the borrower's spouse and dependents, of less 
  4.8   than $400,000 in 1999 and an amount in subsequent years which is 
  4.9   adjusted for inflation by multiplying $400,000 by the cumulative 
  4.10  inflation rate as determined by the United States All-Items 
  4.11  Consumer Price Index. 
  4.12     Participation is limited to 45 percent of the principal 
  4.13  amount of the loan or ~~$250,000~~ $275,000, whichever is less.  The 
  4.14  interest rates and repayment terms of the authority's 
  4.15  participation interest may be different from the interest rates 
  4.16  and repayment terms of the lender's retained portion of the loan.
  4.17     Sec. 8.  Minnesota Statutes 2002, section 41B.046, 
  4.18  subdivision 5, is amended to read: 
  4.19     Subd. 5.  [LOANS.] (a) The authority may participate in a 
  4.20  stock loan with an eligible lender to a farmer who is eligible 
  4.21  under subdivision 4.  Participation is limited to 45 percent of 
  4.22  the principal amount of the loan or ~~$24,000~~ $40,000, whichever 
  4.23  is less.  The interest rates and repayment terms of the 
  4.24  authority's participation interest may differ from the interest 
  4.25  rates and repayment terms of the lender's retained portion of 
  4.26  the loan, but the authority's interest rate must not exceed 50 
  4.27  percent of the lender's interest rate. 
  4.28     (b) No more than 95 percent of the purchase price of the 
  4.29  stock may be financed under this program. 
  4.30     (c) Security for stock loans must be the stock purchased, a 
  4.31  personal note executed by the borrower, and whatever other 
  4.32  security is required by the eligible lender or the authority. 
  4.33     (d) The authority may impose a reasonable nonrefundable 
  4.34  application fee for each application for a stock loan.  The 
  4.35  authority may review the fee annually and make adjustments as 
  4.36  necessary.  The application fee is initially $50.  Application 
  5.1   fees received by the authority must be deposited in the 
  5.2   value-added agricultural product revolving fund. 
  5.3      (e) Stock loans under this program will be made using money 
  5.4   in the value-added agricultural product revolving fund 
  5.5   established under subdivision 3. 
  5.6      (f) The authority may not grant stock loans in a cumulative 
  5.7   amount exceeding $2,000,000 for the financing of stock purchases 
  5.8   in any one cooperative. 
  5.9      Sec. 9.  Minnesota Statutes 2002, section 41C.02, 
  5.10  subdivision 12, is amended to read: 
  5.11     Subd. 12.  [LOW OR MODERATE NET WORTH.] "Low or moderate 
  5.12  net worth" means: 
  5.13     (1) for an individual, an aggregate net worth of the 
  5.14  individual and the individual's spouse and minor children of 
  5.15  less than ~~$200,000 in 1991~~ $350,000 in 2004 and an amount in 
  5.16  subsequent years which is adjusted for inflation by 
  5.17  multiplying ~~$200,000~~ that amount by the cumulative inflation 
  5.18  rate as determined by the United States All-Items Consumer Price 
  5.19  Index; or 
  5.20     (2) for a partnership, an aggregate net worth of all 
  5.21  partners, including each partner's net capital in the 
  5.22  partnership, and each partner's spouse and minor children of 
  5.23  less than ~~$400,000 in 1991 and an amount in subsequent years~~ 
  5.24  ~~which is adjusted for inflation by multiplying $400,000 by the~~ 
  5.25  ~~cumulative inflation rate as determined by the United States~~ 
  5.26  ~~All-Items Consumer Price Index~~ twice the amount set for an 
  5.27  individual in clause (1).  However, the aggregate net worth of 
  5.28  each partner and that partner's spouse and minor children may 
  5.29  not exceed ~~$200,000 in 1991 and an amount in subsequent years~~ 
  5.30  ~~which is adjusted for inflation by multiplying $200,000 by the~~ 
  5.31  ~~cumulative inflation rate as determined by the United States~~ 
  5.32  ~~All-Items Consumer Price Index~~ the amount set for an individual 
  5.33  in clause (1).