Section 1 [Appropriation] appropriates $35,000,000 from the bond proceeds fund to the Rural Finance Authority (RFA) to purchase participation interests in, or to make direct agricultural loans to, farmers under existing programs in statute, including the beginning farmer program, the loan structuring program, the seller-sponsored program, the agricultural improvement loan program, and the livestock expansion loan program.  This section specifies a priority order for funding these programs as follows:  basic beginning farmer loans, seller-sponsored loans, and agricultural improvement loans.

This section requires the RFA to pay the debt service on the bonds and requires the RFA to price loan participations such that the participation interests will pay the interest and principal on the loans and will be sufficient to establish a reserve to cover potential losses.

This section relies on the constitutional authority to issue general obligation bonds “to develop the state’s agricultural resources by extending credit on real estate security in the manner and on the terms and conditions prescribed by law.”  Legislation authorizing debt for this purpose does not require of three-fifths of the members; instead, it can pass with a simple majority vote.

Subd. 2 [Bond sale expenses] appropriates $35,000 to the commissioner of management and budget for bond sale expenses.

Subd. 3 [Bond sale] authorizes the commissioner of management and budget to sell up to $35,035,000 in bonds. 

This section is effective the day after enactment.