1.1                          A bill for an act 
  1.2             relating to agriculture; creating the agriculture and 
  1.3             renewable energy loan program; appropriating money; 
  1.4             proposing coding for new law in Minnesota Statutes, 
  1.5             chapter 41B. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [41B.049] [SUSTAINABLE AGRICULTURE AND 
  1.8   RENEWABLE ENERGY LOAN PROGRAM.] 
  1.9      Subdivision 1.  [ESTABLISHMENT.] The authority shall 
  1.10  establish and implement the following loan programs: 
  1.11     (1) a sustainable agriculture loan program that enables 
  1.12  farmers to adopt best management practices that emphasize 
  1.13  sufficiency and self-sufficiency in agricultural inputs, 
  1.14  including energy efficiency, reduction or improved management of 
  1.15  petroleum and chemical inputs, and increasing the energy 
  1.16  self-sufficiency of production by agricultural producers, and 
  1.17  environmental improvements; and 
  1.18     (2) a methane digester loan program to help finance the 
  1.19  purchase of necessary equipment and the construction of a system 
  1.20  that will utilize manure to produce electricity. 
  1.21     Subd. 2.  [REVOLVING FUND.] There is established in the 
  1.22  state treasury a revolving fund, which is eligible to receive 
  1.23  appropriations and the transfer of funds from other services.  
  1.24  All repayments of financial assistance granted under subdivision 
  1.25  1, including principal and interest, must be deposited into this 
  2.1   fund.  Interest earned on money in the fund accrues to the fund, 
  2.2   and money in the fund is appropriated to the commissioner of 
  2.3   agriculture for purposes of the sustainable agriculture and 
  2.4   renewable energy loan program, including costs incurred by the 
  2.5   authority to establish and administer the program.  At least 
  2.6   $750,000 of the total amount loaned or available for loan must 
  2.7   be for the purpose of making loans under subdivision 1, clause 
  2.8   (1). 
  2.9      Subd. 3.  [ELIGIBILITY.] Notwithstanding section 41B.03, to 
  2.10  be eligible for these programs a borrower must: 
  2.11     (1) locate the projects and utilize the equipment and 
  2.12  practices on land located in Minnesota; 
  2.13     (2) provide evidence of financial stability; 
  2.14     (3) demonstrate an ability to repay the loan; and 
  2.15     (4) provide evidence that the practices implemented and 
  2.16  capital assets purchased will be properly managed and maintained.
  2.17     Subd. 4.  [LOANS.] (a) The authority may participate in a 
  2.18  loan with an eligible lender to a farmer who is eligible under 
  2.19  subdivision 3.  The interest rates and repayment terms of the 
  2.20  authority's participation interest may differ from the interest 
  2.21  rates and repayment terms of the lender's retained portion of 
  2.22  the loan, but the authority's interest rate must not exceed four 
  2.23  percent. 
  2.24     (b) Application for loan participation must be made on 
  2.25  forms prescribed by the authority. 
  2.26     (c) Standards for loan amortization shall be set by the 
  2.27  rural finance authority not to exceed ten years. 
  2.28     (d) Security for the loans must be a personal note executed 
  2.29  by the borrower and whatever other security is required by the 
  2.30  eligible lender or the authority. 
  2.31     (e) No loan proceeds may be used to refinance a debt 
  2.32  existing prior to application. 
  2.33     (f) The authority may impose a reasonable nonrefundable 
  2.34  application fee for each application for loan participation.  
  2.35  The authority may review the application fees annually and make 
  2.36  adjustments as necessary.  The application fee is initially set 
  3.1   at $50 for a sustainable agriculture loan, under subdivision 1, 
  3.2   clause (1), and $100 for a methane digester loan, under 
  3.3   subdivision 1, clause (2).  The fees received by the authority 
  3.4   must be deposited in the revolving fund created in subdivision 2.
  3.5      Subd. 5.  [SUSTAINABLE AGRICULTURE LOAN CRITERIA.] (a) To 
  3.6   be eligible, a borrower must be a resident of Minnesota, a 
  3.7   family farm partnership, or a family farm corporation. 
  3.8      (b) Participation is limited to 45 percent of the principal 
  3.9   amount of the loan not to exceed $25,000 to a single individual 
  3.10  or entity and not to exceed $100,000 for loans to four or more 
  3.11  individuals or entities on joint projects. 
  3.12     (c) The application must show that the loan funds will be 
  3.13  used to: 
  3.14     (1) realize savings to the cost of agricultural production; 
  3.15     (2) reduce or make more efficient use of energy or other 
  3.16  inputs; 
  3.17     (3) increase overall farm profitability; and 
  3.18     (4) result in environmental benefits. 
  3.19     (d) A borrower may apply more than one time, however the 
  3.20  cumulative principal balance outstanding at any one time may not 
  3.21  exceed the limits set in paragraph (b). 
  3.22     Subd. 6.  [METHANE DIGESTER LOAN CRITERIA.] (a) To be 
  3.23  eligible, a borrower must be a resident of Minnesota or an 
  3.24  entity that is not prohibited from owning agricultural land 
  3.25  under section 500.24. 
  3.26     (b) Participation is limited to 45 percent of the principal 
  3.27  amount of the loan or $250,000, whichever is less. 
  3.28     (c) Loans under this program may be used as a match for 
  3.29  federal loans or grants. 
  3.30     (d) A borrower who has previously participated in a loan 
  3.31  under subdivision 1, clause (2), is prohibited from 
  3.32  participating in another methane digester loan under subdivision 
  3.33  1, clause (2). 
  3.34     Sec. 2.  [TRANSFER OF FUNDS; DEPOSIT OF REPAYMENTS.] 
  3.35     (a) The remaining balance in the disaster recovery 
  3.36  revolving fund established under Minnesota Statutes, section 
  4.1   41B.047, subdivision 2, is transferred to the revolving fund 
  4.2   established under Minnesota Statutes, section 41B.049, 
  4.3   subdivision 2, on the effective date of this section.  
  4.4   Notwithstanding Minnesota Statutes, section 41B.047, subdivision 
  4.5   2, all future receipts from loans originated under Minnesota 
  4.6   Statutes, section 41B.047, shall be deposited in the revolving 
  4.7   fund established under Minnesota Statutes, section 41B.049, 
  4.8   subdivision 2. 
  4.9      (b) The remaining balance in the revolving account 
  4.10  dedicated to the shared savings loan program established under 
  4.11  Minnesota Statutes, section 17.115, shall be transferred to the 
  4.12  revolving fund established under Minnesota Statutes, section 
  4.13  41B.049, subdivision 2, on the effective date of this section.  
  4.14  Notwithstanding Minnesota Statutes, section 17.115, all future 
  4.15  receipts from loans originated under Minnesota Statutes, section 
  4.16  17.115, shall be deposited in the revolving fund established 
  4.17  under Minnesota Statutes, section 41B.049, subdivision 2. 
  4.18     Sec. 3.  [UNIVERSITY OF MINNESOTA.] 
  4.19     Notwithstanding the restrictions in Minnesota Statutes, 
  4.20  section 41B.049, subdivision 4, the commissioner may participate 
  4.21  in a zero interest loan to the University of Minnesota for up to 
  4.22  $100,000 for purchase of a methane digester under Minnesota 
  4.23  Statutes, section 41B.049, subdivision 1, clause (2).