1.1.................... moves to amend H. F. No. 666 as follows:
1.2Delete everything after the enacting clause and insert:

1.3    ""Section 1. [41B.056] DAIRY ANIMAL REVOLVING LOAN PROGRAM.
1.4    Subdivision 1. Establishment. Upon receipt by the authority of at least $2,000,000
1.5in matching contributions from private, federal, or other nonstate sources for the purposes
1.6of this program, the authority must establish and implement a dairy animal revolving loan
1.7program to help Minnesota dairy producers purchase additional dairy animals.
1.8    Subd. 2. Eligibility. Notwithstanding section 41B.03, to be eligible for this program
1.9a borrower must:
1.10(1) be a resident of Minnesota or any entity eligible to own farm land under section
1.11500.24, subdivision 2;
1.12(2) be a producer who has not received payments from a dairy cooperative or other
1.13consortium of dairy producers in exchange for participating in a milk supply management
1.14program;
1.15(3) demonstrate that the loan will be used to finance the purchase of dairy heifers
1.16and cows, resulting in an increase in the borrower's annual level of milk production; and
1.17(4) demonstrate an ability to repay the loan.
1.18    Subd. 3. Loans. (a) The authority may participate in a loan with an eligible lender
1.19to a borrower who is eligible under subdivision 2. The authority's participation interest in
1.20a loan from an eligible lender must be no more than 45 percent of the principal amount of
1.21the loan, up to a maximum of $500 per dairy heifer or cow for up to 200 dairy heifers or
1.22cows, or $100,000 per borrower. Repayment terms of the authority's participation interest
1.23may differ from repayment terms of the lender's retained portion of the loan. The authority
1.24must make a good faith effort to award at least 60 percent of the loan participations in any
1.25calendar year to eligible borrowers demonstrating a total net worth, including assets and
1.26liabilities of the borrower's spouse and dependents, of less than $382,000 in 2007 and an
2.1amount in subsequent years which is adjusted for inflation by multiplying that amount
2.2by the cumulative inflation rate as determined by the United States All-Items Consumer
2.3Price Index.
2.4(b) The authority's participation interest in a loan from an eligible lender must be for
2.5a term of seven years. Borrowers must not be required to make any payment of principal
2.6or interest in the first year of the loan. In the second year, the borrower must be required to
2.7pay only any accrued interest. The authority must amortize the loan over the remaining
2.8five years so that the borrower is required to make equal payments, including principal
2.9and interest, in each of the final five years.
2.10(c) The authority must establish an appropriate interest rate for the initial dairy
2.11animal loans and may review and adjust the interest rate annually as necessary. The
2.12authority must make a good faith effort to set the interest rate at no more than three percent.
2.13(d) Refinancing of existing debt is not an eligible purpose.
2.14(e) A loan participation under this program must be made using money in the
2.15revolving loan account established in section 41B.06.
2.16(f) Security for the loans must be a personal note executed by the borrower and
2.17whatever other security is required by the authority.
2.18(g) The authority may impose a reasonable, nonrefundable application fee for a
2.19dairy animal loan. The authority may review the fee annually and make adjustments as
2.20necessary. The initial application fee is $50. Application fees received by the authority
2.21must be deposited in the revolving loan account established in section 41B.06.
2.22(h) Should the authority find that there is a persistent lack of interest in the dairy
2.23animal revolving loan program as evidenced by a dearth of new applicants, the authority
2.24shall terminate the program and refund any contribution paid by private persons for use in
2.25the dairy animal revolving loan program. When loan proceeds are not sufficient to repay
2.26in full all private persons that contributed, the authority shall make prorated payments to
2.27the private persons proportionate to each person's contribution to all program funds raised
2.28from private sources. The total amount paid by the authority to a private person may not
2.29exceed the amount the person contributed to the authority for the dairy animal revolving
2.30loan program and shall not include any interest paid by a borrower on a dairy animal
2.31loan or any interest earned by the authority while private funds are deposited in the rural
2.32finance authority revolving loan account. For the purposes of this section, "private person"
2.33means any individual, firm, corporation, company, association, cooperative, or partnership
2.34and includes any trustee, receiver, assignee, or other similar representative thereof.
3.1    Subd. 4. Deposit of repayments. All repayments of financial assistance granted
3.2under this section, including principal and interest, must be deposited into the revolving
3.3loan account established in section 41B.06.

3.4    Sec. 2. Minnesota Statutes 2006, section 41B.06, is amended to read:
3.541B.06 RURAL FINANCE AUTHORITY REVOLVING LOAN ACCOUNT.
3.6There is established in the rural finance administration fund a Rural Finance
3.7Authority revolving loan account that is eligible to receive appropriations and the transfer
3.8of loan funds from other programs. All repayments of financial assistance granted
3.9from this account, including principal and interest, must be deposited into this account.
3.10Interest earned on money in the account accrues to the account, and the money in the
3.11account is appropriated to the commissioner of agriculture for purposes of the Rural
3.12Finance Authority dairy animal, livestock equipment, methane digester, and value-added
3.13agricultural product loan programs, including costs incurred by the authority to establish
3.14and administer the programs.

3.15    Sec. 3. [APPROPRIATION.]
3.16$2,000,000 is appropriated in fiscal year 2007 from the general fund to the
3.17commissioner of agriculture to administer the loan program in section 1. If $2,000,000 in
3.18nonstate funds have not been contributed by June 30, 2009, the commissioner shall remit
3.19the $2,000,000 appropriated under this section, plus any accumulated interest, to the
3.20commissioner of finance for deposit in the general fund.

3.21    Sec. 4. EFFECTIVE DATE.
3.22Sections 1 through 3 are effective the day following final enactment.""