1.1                          A bill for an act 
  1.2             relating to agriculture; changing eligibility and 
  1.3             maximum loan amounts for certain rural finance 
  1.4             authority loan programs; amending Minnesota Statutes 
  1.5             1998, sections 41B.03, subdivisions 1 and 2; 41B.039, 
  1.6             subdivision 2; 41B.04, subdivision 8; 41B.042, 
  1.7             subdivision 4; 41B.043, subdivision 2; and 41B.045, 
  1.8             subdivision 2. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 41B.03, 
  1.11  subdivision 1, is amended to read: 
  1.12     Subdivision 1.  [ELIGIBILITY GENERALLY.] To be eligible for 
  1.13  a program in sections 41B.01 to 41B.23: 
  1.14     (1) a borrower must be a resident of Minnesota or a 
  1.15  domestic family farm corporation, as defined in section 500.24, 
  1.16  subdivision 2; and 
  1.17     (2) the borrower or one of the borrowers must be the 
  1.18  principal operator of the farm or, for a prospective homestead 
  1.19  redemption borrower, must have at one time been the principal 
  1.20  operator of a farm~~; and~~ 
  1.21     ~~(3) the borrower must not receive assistance under sections~~ 
  1.22  ~~41B.01 to 41B.23 exceeding an aggregate of $100,000 in loans~~ 
  1.23  ~~during the borrower's lifetime~~. 
  1.24     Sec. 2.  Minnesota Statutes 1998, section 41B.03, 
  1.25  subdivision 2, is amended to read: 
  1.26     Subd. 2.  [ELIGIBILITY FOR RESTRUCTURED LOAN.] In addition 
  1.27  to the eligibility requirements of subdivision 1, a prospective 
  2.1   borrower for a restructured loan must:  
  2.2      (1) have received at least 50 percent of average annual 
  2.3   gross income from farming for the past three years or, for 
  2.4   homesteaded property, received at least 40 percent of average 
  2.5   gross income from farming in the past three years, and farming 
  2.6   must be the principal occupation of the borrower; 
  2.7      (2) have a debt-to-asset ratio equal to or greater than 50 
  2.8   percent and in determining this ratio, the assets must be valued 
  2.9   at their current market value; 
  2.10     (3) have projected annual expenses, including operating 
  2.11  expenses, family living, and interest expenses after the 
  2.12  restructuring, that do not exceed 95 percent of the borrower's 
  2.13  projected annual income considering prior production history and 
  2.14  projected prices for farm production, except that the authority 
  2.15  may reduce the 95 percent requirement if it finds that other 
  2.16  significant factors in the loan application support the making 
  2.17  of the loan; ~~and~~ 
  2.18     (4) demonstrate substantial difficulty in meeting projected 
  2.19  annual expenses without restructuring the loan; and 
  2.20     (5) must have a total net worth, including assets and 
  2.21  liabilities of the borrower's spouse and dependents, of less 
  2.22  than $400,000 in 1999 and an amount in subsequent years which is 
  2.23  adjusted for inflation by multiplying $400,000 by the cumulative 
  2.24  inflation rate as determined by the United States All-Items 
  2.25  Consumer Price Index. 
  2.26     Sec. 3.  Minnesota Statutes 1998, section 41B.039, 
  2.27  subdivision 2, is amended to read: 
  2.28     Subd. 2.  [STATE PARTICIPATION.] The state may participate 
  2.29  in a new real estate loan with an eligible lender to a beginning 
  2.30  farmer to the extent of 45 percent of the principal amount of 
  2.31  the loan or ~~$100,000~~ $125,000, whichever is less.  The interest 
  2.32  rates and repayment terms of the authority's participation 
  2.33  interest may be different than the interest rates and repayment 
  2.34  terms of the lender's retained portion of the loan. 
  2.35     Sec. 4.  Minnesota Statutes 1998, section 41B.04, 
  2.36  subdivision 8, is amended to read: 
  3.1      Subd. 8.  [STATE'S PARTICIPATION.] With respect to loans 
  3.2   that are eligible for restructuring under sections 41B.01 to 
  3.3   41B.23 and upon acceptance by the authority, the authority shall 
  3.4   enter into a participation agreement or other financial 
  3.5   arrangement whereby it shall participate in a restructured loan 
  3.6   to the extent of 45 percent of the primary principal or 
  3.7   ~~$100,000~~ $150,000, whichever is less.  The authority's portion 
  3.8   of the loan must be protected during the authority's 
  3.9   participation by the first mortgage held by the eligible lender 
  3.10  to the extent of its participation in the loan. 
  3.11     Sec. 5.  Minnesota Statutes 1998, section 41B.042, 
  3.12  subdivision 4, is amended to read: 
  3.13     Subd. 4.  [PARTICIPATION LIMIT; INTEREST.] The authority 
  3.14  may participate in new seller-sponsored loans to the extent of 
  3.15  45 percent of the principal amount of the loan or 
  3.16  ~~$100,000~~ $125,000, whichever is less.  The interest rates and 
  3.17  repayment terms of the authority's participation interest may be 
  3.18  different than the interest rates and repayment terms of the 
  3.19  seller's retained portion of the loan. 
  3.20     Sec. 6.  Minnesota Statutes 1998, section 41B.043, 
  3.21  subdivision 2, is amended to read: 
  3.22     Subd. 2.  [SPECIFICATIONS.] No direct loan may exceed 
  3.23  $35,000 or ~~$100,000~~ $125,000 for a loan participation or be made 
  3.24  to refinance an existing debt.  Each direct loan and 
  3.25  participation must be secured by a mortgage on real property and 
  3.26  such other security as the authority may require. 
  3.27     Sec. 7.  Minnesota Statutes 1998, section 41B.045, 
  3.28  subdivision 2, is amended to read: 
  3.29     Subd. 2.  [LOAN PARTICIPATION.] The authority may 
  3.30  participate in a livestock expansion loan with an eligible 
  3.31  lender to a livestock farmer who meets the requirements of 
  3.32  section 41B.03, subdivision 1, clauses (1) and (2), and who are 
  3.33  actively engaged in a livestock operation.  A prospective 
  3.34  borrower must have a total net worth, including assets and 
  3.35  liabilities of the borrower's spouse and dependents, of less 
  3.36  than $400,000 in 1999 and an amount in subsequent years which is 
  4.1   adjusted for inflation by multiplying $400,000 by the cumulative 
  4.2   inflation rate as determined by the United States All-Items 
  4.3   Consumer Price Index. 
  4.4      Participation is limited to 45 percent of the principal 
  4.5   amount of the loan or $250,000, whichever is less.  The interest 
  4.6   rates and repayment terms of the authority's participation 
  4.7   interest may be different from the interest rates and repayment 
  4.8   terms of the lender's retained portion of the loan.  Loans under 
  4.9   this program must not be included in the lifetime limitation 
  4.10  calculated under section 41B.03, subdivision 1.