HF 5248

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/02/2024 11:52am

A bill for an act
relating to taxation; public financing; modifying local government debt financing;
amending Minnesota Statutes 2022, sections 123B.71, subdivision 8; 446A.086,
subdivision 1; 469.104; 474A.091, subdivisions 2, 2a; Minnesota Statutes 2023
Supplement, sections 123B.71, subdivision 12; 126C.40, subdivision 6.

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

Section 1.

Minnesota Statutes 2022, section 123B.71, subdivision 8, is amended to read:

Subd. 8.

Review and comment.

A school district, a special education cooperative, or
a cooperative unit of government, as defined in section 123A.24, subdivision 2, must not
deleted text begin initiate deleted text end new text begin enter into new text end an installment contract for purchase or a lease agreement, hold a referendum
for bonds, nor solicit bids for new construction, expansion, or remodeling of an educational
facility that requires an expenditure in excess of $500,000 per school site if it has a capital
loan outstanding, or $2,000,000 per school site if it does not have a capital loan outstanding,
prior to review and comment by the commissioner. deleted text begin A facility addition, maintenance project,
or remodeling project deleted text end new text begin New construction, expansion, or remodeling of an educational facility new text end
funded only with general education revenue, lease levy proceeds new text begin from an additional capital
expenditure levy under section 126C.40, subdivision 1 new text end , capital facilities bond proceeds, or
long-term facilities maintenance revenue is exempt from this provision. A capital project
under section 123B.63 addressing only technology is exempt from this provision if the
district submits a school board resolution stating that funds approved by the voters will be
used only as authorized in section 126C.10, subdivision 14. A school board shall not separate
portions of a single project into components to avoid the requirements of this subdivision.

Sec. 2.

Minnesota Statutes 2023 Supplement, section 123B.71, subdivision 12, is amended
to read:

Subd. 12.

Publication.

(a) At least 48 days but not more than deleted text begin 60 deleted text end new text begin 88 new text end days before a
referendum for bonds new text begin under chapter 475 new text end or solicitation of bids for a project that has received
a positive or unfavorable review and comment under section 123B.70, the school board
shall publish a summary of the commissioner's review and comment of that project in the
legal newspaper of the district. The school board must hold a public meeting to discuss the
commissioner's review and comment before deleted text begin the deleted text end new text begin such a new text end referendum for bonds. Supplementary
information shall be available to the public. new text begin Where no such referendum for bonds is required,
the publication and public meeting requirements of this subdivision shall not apply.
new text end

(b) The publication requirement in paragraph (a) does not apply to alternative facilities
projects approved under section 123B.595.

Sec. 3.

Minnesota Statutes 2023 Supplement, section 126C.40, subdivision 6, is amended
to read:

Subd. 6.

Lease purchase; installment buys.

(a) Upon application to, and approval by,
the commissioner in accordance with the procedures and limits in subdivision 1, paragraphs
(a) and (b), a district, as defined in this subdivision, may:

(1) purchase real or personal property under an installment contract or may lease real
or personal property with an option to purchase under a lease purchase agreement, by which
installment contract or lease purchase agreement title is kept by the seller or vendor or
assigned to a third party as security for the purchase price, including interest, if any; and

(2) annually levy the amounts necessary to pay the district's obligations under the
installment contract or lease purchase agreement.

(b) The obligation created by the installment contract or the lease purchase agreement
must not be included in the calculation of net debt for purposes of section 475.53, and does
not constitute debt under other law. An election is not required in connection with the
execution of the installment contract or the lease purchase agreement.

(c) The proceeds of the levy authorized by this subdivision must not be used to acquire
a facility to be primarily used for athletic or school administration purposes.

(d) For the purposes of this subdivision, "district" means:

(1) Special School District No. 1, Minneapolis, Independent School District No. 625,
St. Paul, Independent School District No. 709, Duluth, or Independent School District No.
535, Rochester, if the district's desegregation plan has been determined by the commissioner
to be in compliance with Department of Education rules relating to equality of educational
opportunity and where the acquisition of property under this subdivision is determined by
the commissioner to contribute to the implementation of the desegregation plan; or

(2) other districts eligible for revenue under section 124D.862 if the facility acquired
under this subdivision is to be primarily used for a joint program for interdistrict
desegregation and the commissioner determines that the joint programs are being undertaken
to implement the districts' desegregation plan.

(e) Notwithstanding subdivision 1, the prohibition against a levy by a district to lease
or rent a district-owned building to itself does not apply to levies otherwise authorized by
this subdivision.

(f) For the purposes of this subdivision, any references in subdivision 1 to building or
land shall include personal property.

(g) Projects funded under this subdivision new text begin that require an expenditure in excess of
$500,000 per school site if the school district has a capital loan outstanding, or $2,000,000
per school site if the school district does not have a capital loan outstanding, new text end are subject to
review and comment under section 123B.71, subdivision 8, in the same manner as other
school construction projects.

Sec. 4.

Minnesota Statutes 2022, section 446A.086, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) As used in this section, the following terms have the
meanings given.

(b) "Authority" means the Minnesota Public Facilities Authority.

(c) "Commissioner" means the commissioner of management and budget.

(d) "Debt obligation" means:

(1) a general obligation bond or note issued by a county, a bond or note to which the
general obligation of a county is pledged under section 469.034, subdivision 2, or a bond
or note payable from a county lease obligation under section 641.24, to provide funds for
the construction of:

(i) jails;

(ii) correctional facilities;

(iii) law enforcement facilities;

new text begin (iv) a court house or justice center, if connected to a jail, correctional facility, or other
law enforcement facility;
new text end

deleted text begin (iv) deleted text end new text begin (v) new text end social services and human services facilities;

deleted text begin (v) deleted text end new text begin (vi) new text end solid waste facilities; or

deleted text begin (vi) deleted text end new text begin (vii) new text end qualified housing development projects as defined in section 469.034,
subdivision 2; or

(2) a general obligation bond or note issued by a governmental unit to provide funds for
the construction, improvement, or rehabilitation of:

(i) wastewater facilities;

(ii) drinking water facilities;

(iii) stormwater facilities; or

(iv) any publicly owned building or infrastructure improvement that has received partial
funding from grants awarded by the commissioner of employment and economic development
related to redevelopment, contaminated site cleanup, bioscience, small cities development
programs, and rural business infrastructure programs, for which bonds are issued by the
authority under section 446A.087.

(e) "Governmental unit" means a county or a statutory or home rule charter city.

Sec. 5.

Minnesota Statutes 2022, section 469.104, is amended to read:

469.104 SECTIONS THAT APPLY IF FEDERAL LIMIT APPLIES.

Sections 474A.01 to 474A.21 apply to obligations issued under sections 469.090 to
469.108 that are deleted text begin limited deleted text end new text begin required new text end by federal tax law as defined in section 474A.02,
subdivision 8 new text begin , to obtain an allocation of volume cap new text end .

Sec. 6.

Minnesota Statutes 2022, section 474A.091, subdivision 2, is amended to read:

Subd. 2.

Application for residential rental projects.

(a) Issuers may apply for an
allocation for residential rental bonds under this section by submitting to the department an
application on forms provided by the department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) an application deposit in the amount of two percent of the requested allocation;

(4) a sworn statement from the applicant identifying the project as a preservation project,
30 percent AMI residential rental project, 50 percent AMI residential rental project, 100
percent LIHTC project, 20 percent LIHTC project, or any other residential rental project;
and

(5) a certification from the applicant or its accountant stating that the requested allocation
does not exceed the aggregate bond limitation.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for residential rental project bonds
under this section unless it has either permanently issued bonds equal to the amount of its
entitlement allocation for the current year plus any amount carried forward from previous
years or returned for reallocation all of its unused entitlement allocation. For purposes of
this subdivision, its entitlement allocation includes an amount obtained under section
474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of:
(1) new text end 180 days of the allocation new text begin ; or (2) the last business day of December new text end . If an issuer that
receives an allocation under this subdivision does not permanently issue obligations equal
to all or a portion of the allocation received within the time period provided in this paragraph
or returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) The Minnesota Housing Finance Agency may apply for and receive an allocation
under this section without submitting an application deposit.

Sec. 7.

Minnesota Statutes 2022, section 474A.091, subdivision 2a, is amended to read:

Subd. 2a.

Application for all other types of qualified bonds.

(a) Issuers may apply
for an allocation for all types of qualified bonds other than residential rental bonds under
this section by submitting to the department an application on forms provided by the
department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) the type of qualified bonds to be issued;

(4) an application deposit in the amount of two percent of the requested allocation; and

(5) a public purpose scoring worksheet for manufacturing and enterprise zone
applications.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for public facility bonds or mortgage
bonds under this section unless it has either permanently issued bonds equal to the amount
of its entitlement allocation for the current year plus any amount carried forward from
previous years or returned for reallocation all of its unused entitlement allocation. For
purposes of this subdivision, an entitlement allocation includes an amount obtained under
section 474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of:
(1) new text end 120 days of the allocation new text begin ; or (2) the last business day of December new text end . If an issuer that
receives an allocation under this subdivision does not permanently issue obligations equal
to all or a portion of the allocation received within the time period provided in this paragraph
or returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) Notwithstanding the restrictions imposed on entitlement issuers under this subdivision,
the Minnesota Housing Finance Agency may not receive an allocation for mortgage bonds
under this section prior to the first Monday in October, but may be awarded allocations for
mortgage bonds from the unified pool on or after the first Monday in October. The Minnesota
Housing Finance Agency, the Minnesota Office of Higher Education, and the Minnesota
Rural Finance Authority may apply for and receive an allocation under this section without
submitting an application deposit.