HF 2196

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:00am

A bill for an act
relating to state government; authorizing issuance of state appropriation bonds;
proposing coding for new law in Minnesota Statutes, chapter 16A.

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

Section 1.

new text begin [16A.823] STATE APPROPRIATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this
section.
new text end

new text begin (b) "Appropriation bond" means a bond, note, or other evidence of obligation of the
state payable during a biennium from one or more of the following sources:
new text end

new text begin (1) money appropriated by law in any biennium for debt service due with respect
to obligations described in subdivision 2, paragraph (b);
new text end

new text begin (2) proceeds of the sale of obligations described in subdivision 2, paragraph (b);
new text end

new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 2, paragraph (d); and
new text end

new text begin (4) investment earnings on amounts in clauses (1) to (3).
new text end

new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium,
if any, and interest on appropriation bonds.
new text end

new text begin Subd. 2. new text end

new text begin Authority. new text end

new text begin (a) Subject to the limitations of this subdivision, the
commissioner of Minnesota Management and Budget may sell and issue appropriation
bonds of the state under this section for public purposes as authorized by law. The
proceeds of such bonds must be credited to a special appropriation bonds proceeds account
in the state treasury. Net income from investment of the proceeds, as estimated by the
commissioner, must be credited to the special appropriation bonds proceeds account.
new text end

new text begin (b) Appropriation bonds may be sold and issued in amounts that, in the opinion of
the commissioner, are necessary to provide sufficient funds for achieving the purposes
authorized as provided under paragraph (a), and pay debt service, pay costs of issuance,
make deposits to reserve funds, pay accrued interest, pay the costs of credit enhancement,
or make payments under other agreements entered into under paragraph (d); provided,
however, that bonds issued and unpaid shall not exceed $1,085,000,000 in principal
amount, excluding refunding bonds sold and issued under subdivision 4.
new text end

new text begin (c) Appropriation bonds may be issued in one or more series on the terms and
conditions the commissioner determines to be in the best interests of the state, but the term
on any series of bonds may not exceed 20 years.
new text end

new text begin (d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
time thereafter, so long as the appropriation bonds are outstanding, the commissioner
may enter into agreements and ancillary arrangements relating to the appropriation
bonds, including trust indentures, liquidity facilities, remarketing or dealer agreements,
letter of credit agreements, insurance policies, guaranty agreements, reimbursement
agreements, indexing agreements, or interest exchange agreements. Any payments made
or received according to such agreement or ancillary arrangement shall be made from or
deposited as provided in the agreement or ancillary arrangement. The determination of the
commissioner included in an interest exchange agreement that such agreement relates to
an appropriation bond shall be conclusive.
new text end

new text begin Subd. 3. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form
of bonds, notes, or other evidences of obligation, and in the manner provided in section
16A.672. In the event that any provision of section 16A.672 conflicts with this section,
this section shall control.
new text end

new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 6.
new text end

new text begin (c) Appropriation bonds may be sold at either public or private sale and may be sold
at any price or percentage of par value. Any bid received at public sale may be rejected.
new text end

new text begin (d) Appropriation bonds may bear interest at a fixed or variable rate.
new text end

new text begin Subd. 4. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner from time to time may issue
appropriation bonds for the purpose of refunding any appropriation bonds then
outstanding, including the payment of any redemption premiums on the bonds, any
interest accrued or to accrue to the redemption date, and costs related to the issuance
and sale of the refunding bonds. The proceeds of any refunding bonds may, in the
discretion of the commissioner, be applied to the purchase or payment at maturity of the
appropriation bonds to be refunded, to the redemption of the outstanding bonds on any
redemption date, or to pay interest on the refunding bonds and may, pending application,
be placed in escrow to be applied to the purchase, payment, retirement, or redemption.
Any escrowed proceeds, pending such use, may be invested and reinvested in obligations
that are authorized investments under section 11A.24. The income earned or realized on
the investment may also be applied to the payment of the bonds to be refunded, interest
or premiums on the refunded bonds, or to pay interest on the refunding bonds. After
the terms of the escrow have been fully satisfied, any balance of such proceeds and any
investment income may be returned to the general fund or, if applicable, the appropriation
bonds proceeds account, for use in any lawful manner. All refunding bonds issued under
the provisions of this subdivision must be prepared, executed, delivered, and secured by
appropriations in the same manner as the bonds to be refunded.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities
may legally invest any sinking funds, money, or other funds belonging to them or under
their control in any appropriation bonds issued under this section:
new text end

new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
new text end

new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
new text end

new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 6. new text end

new text begin No full faith and credit; state not required to make appropriations.
new text end

new text begin The appropriation bonds are not public debt of the state, and the full faith, credit, and
taxing powers of the state are not pledged to the payment of the appropriation bonds or to
any payment that the state agrees to make under this section. Appropriation bonds shall
not be obligations paid directly, in whole or in part, from a tax of statewide application
on any class of property, income, transaction, or privilege. Appropriation bonds shall be
payable in each fiscal year only from amounts that the legislature may appropriate for debt
service for any fiscal year, provided that nothing in this section shall be construed to
require the state to appropriate funds sufficient to make debt service payments with respect
to the bonds in any fiscal year.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation of proceeds. new text end

new text begin The proceeds of appropriation bonds and
interest credited to the special appropriation bonds proceeds account are appropriated to
the commissioner for payment of nonoperating, capital expenses as permitted by state
and federal law, and nonsalary expenses incurred in conjunction with the sale of the
appropriation bonds.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation for debt service. new text end

new text begin The amount needed to pay principal and
interest on appropriation bonds issued under this section is appropriated each year to the
commissioner from the general fund subject to the repeal, unallotment under section
16A.152, or cancellation otherwise pursuant to subdivision 6.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end