HF4218

Purpose

The bill authorizes the state to borrow money and provide funding to the Rural Finance Authority (RFA) to support specific farm loan programs. It aims to use bond proceeds to make or participate in agricultural loans to farmers, focusing on beginning farmers and related programs.

Main Provisions

• Appropriation from bond proceeds fund

  • Allocates 50,000,000 from the bond proceeds fund to the Rural Finance Authority.
  • Uses: to purchase loan participations or make direct agricultural loans under the programs listed below, through the RFA.

• Programs funded

  • Beginning farmer program (41B.039)
  • Loan restructuring program (41B.04)
  • Seller-sponsored program (41B.042)
  • Agricultural improvement loan program (41B.043)
  • Livestock expansion and modernization loan program (41B.045)

• Financing and repayment requirements

  • All debt service on bond proceeds used to finance this appropriation must be repaid by the Rural Finance Authority (per Minnesota law 16A.643).
  • Loan participations must be priced to provide full interest and principal coverage and to maintain a reserve for potential losses.

• Loan priority

  • Priority order for loans established: first to basic ending (basic) beginning farmer loans, second to seller-sponsored loans, third to agricultural improvement loans.

• Bond sale and expenses

  • Bond sale expenses: 50,000 is appropriated from the bond proceeds fund to the commissioner of management and budget for bond sale expenses (per 16A.641, subd. 8).

• Bond issuance

  • The commissioner of management and budget must sell and issue bonds of the state in an amount up to 50,050,000 to fund this appropriation.
  • The bond sale must follow the procedures in Minnesota Statutes sections 16A.631 to 16A.675 and the Minnesota Constitution (Article XI, Sections 4 to 7).

Effects on Law and Public Impact

• Creates a new funding mechanism to support targeted farm loan programs by the Rural Finance Authority.
• Expands the state’s use of bond proceeds to back agricultural loans, with debt service obligations borne by the RFA.
• Establishes a specific loan priority order to guide which loans are funded first.

Who Is Affected

• Farmers in Minnesota, especially beginning farmers seeking loans or loan participation through the RFA.
• Rural Finance Authority, which administers the loan programs and handles debt service.
• Lenders and participants involved in the listed loan programs.

Relevant Terms Rural Finance Authority bond proceeds fund Minnesota Constitution article XI 16A.643 16A.641 16A.631-16A.675 beginning farmer program loan restructuring program seller-sponsored program agricultural improvement loan program livestock expansion and modernization loan program debt service loan participations full interest and principal coverage reserve for potential losses funded programs priority for loans basic beginning farmer loans bond sale expenses bond issuance