HF 4144

as introduced - 91st Legislature (2019 - 2020) Posted on 03/12/2020 04:09pm

A bill for an act
relating to public finance; modifying local government debt financing; amending
Minnesota Statutes 2018, sections 465.71; 475.56; 475.58, subdivision 3b; 475.60,
subdivision 1; Minnesota Statutes 2019 Supplement, section 297A.993, subdivision
2; repealing Minnesota Statutes 2018, section 469.055, subdivision 7.

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

Section 1.

Minnesota Statutes 2019 Supplement, section 297A.993, subdivision 2, is
amended to read:

Subd. 2.

Allocation; termination.

The proceeds of the taxes must be dedicated
exclusively to: (1) payment of the capital cost of a specific transportation project or
improvement; (2) payment of the costs, which may include both capital and operating costs,
of a specific transit project or improvement; (3) payment of the capital costs of a safe routes
to school program under section 174.40; deleted text begin or deleted text end (4) payment of transit operating costs new text begin ; or (5)
payment of the capital cost of constructing buildings and other facilities for maintaining
transportation or transit projects or improvements new text end . The transportation or transit project or
improvement must be designated by the board of the county, or more than one county acting
under a joint powers agreement. Except for taxes for operating costs of a transit project or
improvement, or for transit operations, the taxes must terminate when revenues raised are
sufficient to finance the project. Nothing in this subdivision prohibits the exclusive dedication
of the proceeds of the taxes to payments for more than one project or improvement. After
a public hearing a county may, by resolution, dedicate the proceeds of the tax for a new
enumerated project.

Sec. 2.

Minnesota Statutes 2018, section 465.71, is amended to read:

465.71 INSTALLMENT, LEASE PURCHASE; CITY, COUNTY, TOWN,
SCHOOL.

A home rule charter city, statutory city, county, town, or school district may purchase
personal property under an installment contract, or lease real or personal property with an
option to purchase under a lease-purchase agreement, by which contract or agreement title
is retained by the seller or vendor or assigned to a third party as security for the purchase
price, including interest, if any, but such purchases are subject to statutory and charter
provisions applicable to the purchase of real or personal property. For purposes of the bid
requirements contained in section 471.345, "the amount of the contract" shall include the
total of all lease payments for the entire term of the lease under a lease-purchase agreement.
The obligation created by new text begin an installment contract or new text end a lease-purchase agreement for personal
property new text begin , new text end or new text begin an installment contract or new text end a lease-purchase agreement for real property if the
amount of the contract for purchase of the real property is less than $1,000,000 new text begin , new text end shall not
be included in the calculation of net debt for purposes of section 475.53, and shall not
constitute debt under any other statutory provision. No election shall be required in
connection with the execution of new text begin an installment contract or new text end a lease-purchase agreement
authorized by this section. The city, county, town, or school district must have the right to
terminate a lease-purchase agreement at the end of any fiscal year during its term.

Sec. 3.

Minnesota Statutes 2018, section 475.56, is amended to read:

475.56 INTEREST RATE.

(a) Any municipality issuing obligations under any law may issue obligations bearing
interest at a single rate or at rates varying from year to year which may be lower or higher
in later years than in earlier years. deleted text begin Such higher rate for any period prior to maturity may be
represented in part by separate coupons designated as additional coupons, extra coupons,
or B coupons, but deleted text end The highest aggregate rate of interest contracted to be so paid for any
period shall not exceed the maximum rate authorized by law. Such higher rate may also be
represented in part by the issuance of additional obligations of the same series, over and
above deleted text begin but not exceeding two percent of deleted text end the amount otherwise authorized to be issued, and
the amount of such additional obligations shall not be included in the amount required by
section 475.59 to be stated in any bond resolution, notice, or ballot, or in the sale price
required by section 475.60 or any other law to be paid; but if the principal amount of the
entire series exceeds its cash sale price, such excess shall not, when added to the total amount
of interest payable on all obligations of the series to their stated maturity dates, cause the
average annual rate of such interest to exceed the maximum rate authorized by law. This
section does not authorize a provision in any such obligations for the payment of a higher
rate of interest after maturity than before.

(b) Any municipality issuing obligations under any law may sell original issue discount
new text begin or premium new text end obligations deleted text begin having a stated principal amount in excess of the authorized amount
and the sale price, provided that: deleted text end new text begin .
new text end

deleted text begin (1) the sale price does not exceed by more than two percent the amount of obligations
otherwise authorized to be issued;
deleted text end

deleted text begin (2) the underwriting fee, discount, or other sales or underwriting commission does not
exceed two percent of the sale price; and
deleted text end

deleted text begin (3) the discount rate necessary to present value total principal and interest payments
over the term of the issue to the sale price does not exceed the lesser of the maximum rate
permitted by law for municipal obligations or ten percent.
deleted text end

(c) Any obligation may bear interest at a rate varying periodically at the time or times
and on the terms, including convertibility to a fixed rate of interest, determined by the
governing body of the municipality, but the rate of interest for any period shall not exceed
any maximum rate of interest for the obligations established by law. For purposes of section
475.61, subdivisions 1 and 3, the interest payable on variable rate obligations for their term
shall be determined as if their rate of interest is the lesser of the maximum rate of interest
payable on the obligations in accordance with their terms or the rate estimated for such
purpose by the governing body, but if the interest rate is subsequently converted to a fixed
rate the levy may be modified to provide at least five percent in excess of amounts necessary
to pay principal of and interest at the fixed rate on the obligations when due. For purposes
of computing debt service or interest pursuant to section 475.67, subdivision 12, interest
throughout the term of bonds issued pursuant to this subdivision is deemed to accrue at the
rate of interest first borne by the bonds. The provisions of this paragraph do not apply to
general obligations issued by a statutory or home rule charter city with a population of less
than 7,500, as defined in section 477A.011, subdivision 3, or to general obligations that are
not rated A or better, or an equivalent subsequently established rating, by Standard and
Poor's Corporation, Moody's Investors Service or other similar nationally recognized rating
agency, except that any statutory or home rule charter city, regardless of population or bond
rating, may issue variable rate obligations as a participant in a bond pooling program
established by the League of Minnesota Cities that meets this bond rating requirement.

Sec. 4.

Minnesota Statutes 2018, section 475.58, subdivision 3b, is amended to read:

Subd. 3b.

Street reconstruction and bituminous overlays.

(a) A municipality may,
without regard to the election requirement under subdivision 1, issue and sell obligations
for street reconstruction or bituminous overlays, if the following conditions are met:

(1) the streets are reconstructed or overlaid under a street reconstruction or overlay plan
that describes the street reconstruction or overlay to be financed, the estimated costs, and
any planned reconstruction or overlay of other streets in the municipality over the next five
years, and the plan and issuance of the obligations has been approved by a vote of a two-thirds
majority of the members of the governing body present at the meeting following a public
hearing for which notice has been published in the official newspaper at least ten days but
not more than 28 days prior to the hearing; and

(2) if a petition requesting a vote on the issuance is signed by voters equal to five percent
of the votes cast in the last municipal general election and is filed with the municipal clerk
within 30 days of the public hearing, the municipality may issue the bonds only after
obtaining the approval of a majority of the voters voting on the question of the issuance of
the obligations. If the municipality elects not to submit the question to the voters, the
municipality shall not propose the issuance of bonds under this section for the same purpose
and in the same amount for a period of 365 days from the date of receipt of the petition. If
the question of issuing the bonds is submitted and not approved by the voters, the provisions
of section 475.58, subdivision 1a, shall apply.

(b) Obligations issued under this subdivision are subject to the debt limit of the
municipality and are not excluded from net debt under section 475.51, subdivision 4.

(c) For purposes of this subdivision, street reconstruction and bituminous overlays
deleted text begin includes deleted text end new text begin include but are not limited to: new text end utility replacement and relocation and other activities
incidental to the street reconstruction deleted text begin , deleted text end new text begin ; the addition or reconstruction of new text end turn lanes new text begin , bicycle
lanes, sidewalks, paths, new text end and other improvements having a substantial public safety function deleted text begin , deleted text end new text begin ; new text end
realignments deleted text begin , deleted text end new text begin and new text end other modifications to intersect with state and county roads deleted text begin , deleted text end new text begin ; new text end and the local
share of state and county road projects. For purposes of this subdivision, "street
reconstruction" includes expenditures for street reconstruction that have been incurred by
a municipality before approval of a street reconstruction plan, if such expenditures are
included in a street reconstruction plan approved on or before the date of the public hearing
under paragraph (a), clause (1), regarding issuance of bonds for such expenditures.

(d) Except in the case of turn lanes, new text begin bicycle lanes, sidewalks, paths, and other new text end safety
improvements deleted text begin , deleted text end new text begin ; new text end realignments deleted text begin , deleted text end new text begin ; new text end intersection modifications deleted text begin , deleted text end new text begin ; new text end and the local share of state and
county road projects, street reconstruction and bituminous overlays does not include the
portion of project cost allocable to widening a street or adding curbs and gutters where none
previously existed.

Sec. 5.

Minnesota Statutes 2018, section 475.60, subdivision 1, is amended to read:

Subdivision 1.

Advertisement.

All obligations shall be negotiated and sold by the
governing body, except when authority therefor is delegated by the governing body or by
the charter of the municipality to a board, department, or officers of the municipality. deleted text begin Except
as provided in section 475.56, obligations shall be sold at not less than par value plus accrued
interest to date of delivery and not greater than two percent greater than the amount
authorized to be issued plus accrued interest. deleted text end Except as provided in subdivision 2 all
obligations shall be sold at competitive sale after notice given as provided in subdivision
3.

Sec. 6. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2018, section 469.055, subdivision 7, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: 20-7167

469.055 POWERS AND DUTIES.

Subd. 7.

Sale of realty.

The authority may sell, convey, and exchange any real or personal property owned or held by it in any manner and on any terms it wishes. Real property owned by the authority must not be sold, be exchanged, or have its title transferred without approval of two-thirds of the commissioners. All commissioners must have ten days' written notice of a regular or special meeting at which a sale, conveyance, exchange, or transfer of property is to be voted on. The notice must contain a complete description of the affected real estate. The resolution authorizing the real estate transaction is not effective unless a quorum is present.