HF 2757

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/09/2023 12:49pm

A bill for an act
relating to public finance; modifying local government debt financing; amending
Minnesota Statutes 2022, sections 118A.04, subdivision 5; 123B.61; 366.095,
subdivision 1; 373.01, subdivision 3; 383B.117, subdivision 2; 410.32; 412.301;
469.033, subdivision 6; 469.053, subdivisions 4, 6; 469.107, subdivision 1;
474A.02, subdivisions 22b, 23a; 475.54, subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 118A.04, subdivision 5, is amended to read:

Subd. 5.

Time deposits.

Funds may be invested in time deposits that are fully insured
by the Federal Deposit Insurance Corporation new text begin , the National Association of Credit Unions, new text end
or bankers acceptances of United States banks.

Sec. 2.

Minnesota Statutes 2022, section 123B.61, is amended to read:

123B.61 PURCHASE OF CERTAIN EQUIPMENT.

The board of a district may issue general obligation certificates of indebtedness or capital
notes subject to the district debt limits to: (a) purchase vehicles, computers, telephone
systems, cable equipment, photocopy and office equipment, technological equipment for
instruction, and other capital equipment having an expected useful life at least as long as
the terms of the certificates or notes; (b) purchase computer hardware and software, without
regard to its expected useful life, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer; and (c) prepay special assessments. The certificates or notes must be
payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and must be issued on the terms and in the manner
determined by the board deleted text begin , except that certificates or notes issued to prepay special assessments
must be payable in not more than 20 years deleted text end . The certificates or notes may be issued by
resolution and without the requirement for an election. The certificates or notes are general
obligation bonds for purposes of section 126C.55. A tax levy must be made for the payment
of the principal and interest on the certificates or notes, in accordance with section 475.61,
as in the case of bonds. The sum of the tax levies under this section and section 123B.62
for each year must not exceed the lesser of the amount of the district's total operating capital
revenue or the sum of the district's levy in the general and community service funds excluding
the adjustments under this section for the year preceding the year the initial debt service
levies are certified. The district's general fund levy for each year must be reduced by the
sum of (1) the amount of the tax levies for debt service certified for each year for payment
of the principal and interest on the certificates or notes issued under this section as required
by section 475.61, (2) the amount of the tax levies for debt service certified for each year
for payment of the principal and interest on bonds issued under section 123B.62, and (3)
any excess amount in the debt redemption fund used to retire bonds, certificates, or notes
issued under this section or section 123B.62 after April 1, 1997, other than amounts used
to pay capitalized interest. If the district's general fund levy is less than the amount of the
reduction, the balance shall be deducted first from the district's community service fund
levy, and next from the district's general fund or community service fund levies for the
following year. A district using an excess amount in the debt redemption fund to retire the
certificates or notes shall report the amount used for this purpose to the commissioner by
July 15 of the following fiscal year. A district having an outstanding capital loan under
section 126C.69 must not use an excess amount in the debt redemption fund to retire the
certificates or notes.

Sec. 3.

Minnesota Statutes 2022, section 366.095, subdivision 1, is amended to read:

Subdivision 1.

Certificates of indebtedness.

The town board may issue certificates of
indebtedness within the debt limits for a town purpose otherwise authorized by law new text begin , including
projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause (2) new text end . The
certificates shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and be issued on the terms and
in the manner deleted text begin as deleted text end new text begin determined by new text end the board deleted text begin may determine, provided that notes issued for
projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause (2), must
be payable in not more than 20 years deleted text end . If the amount of the certificates to be issued exceeds
0.25 percent of the estimated market value of the town, they shall not be issued for at least
ten days after publication in a newspaper of general circulation in the town of the board's
resolution determining to issue them. If within that time, a petition asking for an election
on the proposition signed by voters equal to ten percent of the number of voters at the last
regular town election is filed with the clerk, the certificates shall not be issued until their
issuance has been approved by a majority of the votes cast on the question at a regular or
special election. A tax levy shall be made to pay the principal and interest on the certificates
as in the case of bonds.

Sec. 4.

Minnesota Statutes 2022, section 373.01, subdivision 3, is amended to read:

Subd. 3.

Capital notes.

(a) A county board may, by resolution and without referendum,
issue capital notes subject to the county debt limit to purchase capital equipment useful for
county purposes that has an expected useful life at least equal to the term of the notes. The
notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and shall be issued on new text begin the new text end terms and in
deleted text begin a deleted text end new text begin the new text end manner new text begin determined by new text end the board deleted text begin determines deleted text end . A tax levy shall be made for payment of
the principal and interest on the notes, in accordance with section 475.61, as in the case of
bonds.

(b) For purposes of this subdivision, "capital equipment" means:

(1) public safety, ambulance, road construction or maintenance, and medical equipment;
deleted text begin and
deleted text end

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware or software new text begin ; and
new text end

new text begin (3) projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause
(2) new text end .

Sec. 5.

Minnesota Statutes 2022, section 383B.117, subdivision 2, is amended to read:

Subd. 2.

Equipment acquisition; capital notes.

The board may, by resolution and
without public referendum, issue capital notes within existing debt limits for the purpose
of purchasing ambulance and other medical equipment, road construction or maintenance
equipment, public safety equipment new text begin , including projects that eliminate R-22, as defined in
section 240A.09, paragraph (b), clause (2), new text end and other capital equipment having an expected
useful life at least equal to the term of the notes issued. The notes shall be payable in not
more than deleted text begin ten deleted text end new text begin 20 new text end years and shall be issued on new text begin the new text end terms and in deleted text begin a deleted text end new text begin the new text end manner deleted text begin as deleted text end new text begin determined
by new text end the board deleted text begin determines, provided that notes issued for projects that eliminate R-22, as
defined in section 240A.09, paragraph (b), clause (2), must be payable in not more than 20
years deleted text end . The total principal amount of the notes issued for any fiscal year shall not exceed
one percent of the total annual budget for that year and shall be issued solely for the purchases
authorized in this subdivision. A tax levy shall be made for the payment of the principal
and interest on such notes as in the case of bonds. For purposes of this subdivision,
"equipment" includes computer hardware and software, whether bundled with machinery
or equipment or unbundled. For purposes of this subdivision, the term "medical equipment"
includes computer hardware and software and other intellectual property for use in medical
diagnosis, medical procedures, research, record keeping, billing, and other hospital
applications, together with application development services and training related to the use
of the computer hardware and software and other intellectual property, all without regard
to their useful life. For purposes of determining the amount of capital notes which the county
may issue in any year, the budget of the county and Hennepin Healthcare System, Inc. shall
be combined and the notes issuable under this subdivision shall be in addition to obligations
issuable under section 373.01, subdivision 3.

Sec. 6.

Minnesota Statutes 2022, section 410.32, is amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule charter
city may, by resolution and without public referendum, issue capital notes subject to the
city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; deleted text begin and
deleted text end

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware and software new text begin ; and
new text end

new text begin (3) projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause
(2) new text end .

(c) The equipment or software must have an expected useful life at least as long as the
term of the notes.

(d) The notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and be issued on new text begin the new text end terms
and in the manner new text begin determined by new text end the city deleted text begin determines, provided that notes issued for projects
that eliminate R-22, as defined in section 240A.09, paragraph (b), clause (2), must be payable
in not more than 20 years deleted text end . The total principal amount of the capital notes issued in a fiscal
year shall not exceed 0.03 percent of the estimated market value of taxable property in the
city for that year.

(e) A tax levy shall be made for the payment of the principal and interest on the notes,
in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of the
governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 7.

Minnesota Statutes 2022, section 412.301, is amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the city
debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; deleted text begin and
deleted text end

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware or software new text begin ; and
new text end

new text begin (3) projects that eliminate R-22, as defined in section 240A.09, paragraph (b), clause
(2) new text end .

(c) The equipment or software must have an expected useful life at least as long as the
terms of the certificates or notes.

(d) Such certificates or notes shall be payable in not more than deleted text begin ten deleted text end new text begin 20 new text end years and shall
be issued on deleted text begin such deleted text end new text begin the new text end terms and in deleted text begin such deleted text end new text begin the new text end manner deleted text begin as deleted text end new text begin determined by new text end the council deleted text begin may
determine, provided, however, that notes issued for projects that eliminate R-22, as defined
in section 240A.09, paragraph (b), clause (2), must be payable in not more than 20 years deleted text end .

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the estimated market value of taxable property in the city, they shall
not be issued for at least ten days after publication in the official newspaper of a council
resolution determining to issue them; and if before the end of that time, a petition asking
for an election on the proposition signed by voters equal to ten percent of the number of
voters at the last regular municipal election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has been approved by a majority
of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

Sec. 8.

Minnesota Statutes 2022, section 469.033, subdivision 6, is amended to read:

Subd. 6.

Operation area as taxing district, special tax.

All of the territory included
within the area of operation of any authority shall constitute a taxing district for the purpose
of levying and collecting special benefit taxes as provided in this subdivision. All of the
taxable property, both real and personal, within that taxing district shall be deemed to be
benefited by projects to the extent of the special taxes levied under this subdivision. Subject
to the consent by resolution of the governing body of the city in and for which it was created,
an authority may levy a tax upon all taxable property within that taxing district. The tax
shall be extended, spread, and included with and as a part of the general taxes for state,
county, and municipal purposes by the county auditor, to be collected and enforced therewith,
together with the penalty, interest, and costs. As the tax, including any penalties, interest,
and costs, is collected by the county treasurer it shall be accumulated and kept in a separate
fund to be known as the "housing and redevelopment project fund." The money in the fund
shall be turned over to the authority at the same time and in the same manner that the tax
collections for the city are turned over to the city, and shall be expended only for the purposes
of sections 469.001 to 469.047. It shall be paid out upon vouchers signed by the chair of
the authority or an authorized representative. The amount of the levy shall be an amount
approved by the governing body of the city, but shall not exceed 0.0185 percent of estimated
market value. The authority shall each year formulate and file a budget in accordance with
the budget procedure of the city in the same manner as required of executive departments
of the city or, if no budgets are required to be filed, by August 1. The amount of the tax
levy for the following year shall be based on that budget. new text begin The requirements of section
275.067 apply to a port authority that has not previously certified a levy.
new text end

Sec. 9.

Minnesota Statutes 2022, section 469.053, subdivision 4, is amended to read:

Subd. 4.

Mandatory city levy.

A city shall, at the request of the port authority, levy a
tax in any year for the benefit of the port authority. The tax must not exceed 0.01813 percent
of estimated market value. The amount levied must be paid by the city treasurer to the
treasurer of the port authority, to be spent by the authority. new text begin The requirements of section
275.067 apply to a port authority that has not previously certified a levy.
new text end

Sec. 10.

Minnesota Statutes 2022, section 469.053, subdivision 6, is amended to read:

Subd. 6.

Discretionary city levy.

Upon request of a port authority, the port authority's
city may levy a tax to be spent by and for its port authority. The tax must enable the port
authority to carry out efficiently and in the public interest sections 469.048 to 469.068 to
create and develop industrial development districts. The levy must not be more than 0.00282
percent of estimated market value. The county treasurer shall pay the proceeds of the tax
to the port authority treasurer. The money may be spent by the authority in performance of
its duties to create and develop industrial development districts. In spending the money the
authority must judge what best serves the public interest. The levy in this subdivision is in
addition to the levy in subdivision 4. new text begin The requirements of section 275.067 apply to a port
authority that has not previously certified a levy.
new text end

Sec. 11.

Minnesota Statutes 2022, section 469.107, subdivision 1, is amended to read:

Subdivision 1.

City tax levy.

A city may, at the request of the authority, levy a tax in
any year for the benefit of the authority. The tax must be not more than 0.01813 percent of
estimated market value. The amount levied must be paid by the city treasurer to the treasurer
of the authority, to be spent by the authority. new text begin The requirements of section 275.067 apply to
an economic development authority that has not previously certified a levy.
new text end

Sec. 12.

Minnesota Statutes 2022, section 474A.02, subdivision 22b, is amended to read:

Subd. 22b.

Public facilities project.

"Public facilities project" means deleted text begin any publicly owned
facility, or deleted text end a facility deleted text begin that is used for district heating or cooling deleted text end , whether publicly or privately
owned, that is eligible to be financed with the proceeds of public facilities bonds as defined
under section 474A.02, subdivision 23a.

Sec. 13.

Minnesota Statutes 2022, section 474A.02, subdivision 23a, is amended to read:

Subd. 23a.

Qualified bonds.

"Qualified bonds" means the specific type or types of
obligations that are subject to the annual volume cap. Qualified bonds include the following
types of obligations as defined in federal tax law:

(a) "public facility bonds" means "exempt facility bonds" as defined in federal tax law,
except for residential rental project bonds deleted text begin , which are those obligations issued to finance
airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water,
sewage facilities, solid waste disposal facilities, facilities for the local furnishing of electric
energy or gas, local district heating or cooling facilities, and qualified hazardous waste
facilities deleted text end . New bonds and other obligations are ineligible to receive state allocations or
entitlement authority for public facility projects under this section if they have been issued:

(1) for the purpose of refinancing, refunding, or otherwise defeasing existing debt; and

(2) more than one calendar year prior to the date of application;

(b) "residential rental project bonds" which are those obligations issued to finance
qualified residential rental projects;

(c) "mortgage bonds";

(d) "small issue bonds" issued to finance manufacturing projects and the acquisition or
improvement of agricultural real or personal property under sections 41C.01 to 41C.13;

(e) "student loan bonds" issued by or on behalf of the Minnesota Office of Higher
Education;

(f) "redevelopment bonds";

(g) "governmental bonds" with a nonqualified amount in excess of $15,000,000 as set
forth in section 141(b)5 of federal tax law; and

(h) "enterprise zone facility bonds" issued to finance facilities located within
empowerment zones or enterprise communities, as authorized under Public Law 103-66,
section 13301.

Sec. 14.

Minnesota Statutes 2022, section 475.54, subdivision 1, is amended to read:

Subdivision 1.

In installments; exception; annual limit.

Except as provided in
subdivision 3, 5a, 15, or 17, or as expressly authorized in another law, all obligations of
each issue shall mature or be subject to mandatory sinking fund redemption in installments,
the first not later than three years and the last not later than 30 years from the date of the
issue; or 40 years or the useful life of the asset, whichever is less, for deleted text begin municipal water and
wastewater treatment systems and deleted text end essential community facilities financed or guaranteed by
the United States Department of Agriculture new text begin and municipal water and wastewater treatment
systems new text end . No amount of principal of the issue payable in any calendar year shall exceed an
amount equal to the smallest amount payable in any preceding calendar year ending three
years or more after the issue date multiplied:

(1) by five, in the case of obligations maturing not later than 25 years from the date of
issue; and

(2) by six, in the case of obligations maturing 25 years or later from the date of issue.