Purpose

• The bill directs the state to use bond proceeds to support Rural Finance Authority (RFA) lending to farmers. It funds loan purchases or direct loans under specific agricultural loan programs, using authority from the Minnesota Constitution.

Main Provisions

• Appropriation and programs
  • Provides an appropriation of 50,000,000 from the bond proceeds fund to the Rural Finance Authority.
  • Funds may be used to buy loan participations or to make direct agricultural loans to farmers under Minnesota Statutes chapter 41B, including:
  • 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)
• Debt service and loan terms
  • All debt service on bonds used to finance this appropriation must be repaid by the Rural Finance Authority.
  • Loan participations must be priced to provide full interest and principal coverage and maintain a reserve for potential losses.
• Loan priorities
  • Priority for loans is: first basic beginning farmer loans, second seller-sponsored loans, and third agricultural improvement loans.

Bond Issuance and Administration

• Bond sale
  • The Commissioner of Management and Budget must sell and issue state bonds up to 50,050,000 (50.05 million) to fund the appropriation.
  • Bond terms follow Minnesota Statutes sections 16A.631 to 16A.675 and the Minnesota Constitution Article XI, sections 4 to 7.
• Bond sale expenses
  • 50,000 from the bond proceeds fund is appropriated to the Commissioner of Management and Budget for bond sale expenses under Minnesota Statutes section 16A.641, subdivision 8.

Significant Changes to Existing Law

• Creates a targeted capital investment appropriation to the Rural Finance Authority for specific agricultural loan programs.
• Establishes a formal debt-financed funding mechanism using state bonds to support agricultural lending and loan participation.
• Sets explicit loan pricing requirements (full interest/principal coverage and a reserve for losses) and a defined loan priority sequence.
• Ties debt repayment to the Rural Finance Authority and references existing statutes and constitutional provisions governing bond issuance and loan programs.

Practical Effect

• The state will raise and spend bond funds to support multiple farm loan programs through the Rural Finance Authority.
• This move aims to expand access to loans for new and improving farms while ensuring bonds are repaid and losses are guarded against.

Changes in Oversight and Compliance

• Bond issuance is governed by established statutory processes and constitutional requirements.
• The Rural Finance Authority is tasked with managing debt service and ensuring loan pricing and reserves meet stated standards.

Relevant Terms - Rural Finance Authority - bond proceeds fund - appropriation - debt service - loan participations - beginning farmer program (41B.039) - loan restructuring program (41B.04) - sellersponsored program (41B.042) - agricultural improvement loan program (41B.043) - livestock expansion and modernization loan program (41B.045) - basic beginning farmer loans - seller-sponsored loans - agricultural improvement loans - Minnesota Constitution article XI (sections 4-7, and 5(h)) - Minnesota Statutes chapter 41B (sections 039, 04, 042, 043, 045) - price for full interest and principal coverage - reserve for potential losses - bond sale expenses - 16A.631 to 16A.675 - 16A.643 - 16A.641 subdivision 8