1.1                          A bill for an act 
  1.2             relating to public finance; authorizing certain 
  1.3             investments by joint powers investment trusts; 
  1.4             exempting certain airport obligations from the public 
  1.5             sale requirement; providing for state payment of 
  1.6             certain county debt obligations upon potential default 
  1.7             and authorizing means for repayment by the county; 
  1.8             extending sunset for self-executing special service 
  1.9             district laws; authorizing special assessments for 
  1.10            communications facilities; modifying authority to 
  1.11            issue variable rate bonds; providing for replacement 
  1.12            heating systems and related energy conservation 
  1.13            measures in cities discontinuing district heating 
  1.14            systems; making technical changes to description of 
  1.15            area served by nonmetropolitan county economic 
  1.16            development authorities; increasing authority for debt 
  1.17            obligations for the financing of the metropolitan 
  1.18            council's transit capital improvement program; 
  1.19            altering qualifications for residential rental bonds; 
  1.20            providing that the Uniform Commercial Code does not 
  1.21            apply to certain government security interests; 
  1.22            allowing certain cities to be eligible for replacement 
  1.23            transit service; regulating 800 megahertz radio 
  1.24            contract requirements; eliminating a limitation on the 
  1.25            amount of certain grants; funding administration of 
  1.26            Laws 2000, chapter 490, articles 4, 5, and 10; 
  1.27            appropriating money and extending the availability of 
  1.28            an appropriation; amending Minnesota Statutes 1998, 
  1.29            sections 118A.05, subdivision 4; 360.036, subdivision 
  1.30            2; 428A.101; 429.021, subdivision 1; 474A.047, 
  1.31            subdivision 1; and 475.78; Minnesota Statutes 1999 
  1.32            Supplement, sections 473.39, subdivision 1g; and 
  1.33            475.56; Laws 2000, chapter 484, article 1, section 4, 
  1.34            subdivisions 3 and 5; proposing coding for new law in 
  1.35            Minnesota Statutes, chapters 373; and 451; repealing 
  1.36            Minnesota Statutes 1998, section 473.867, subdivision 
  1.37            4. 
  1.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.39     Section 1.  Minnesota Statutes 1998, section 118A.05, 
  1.40  subdivision 4, is amended to read: 
  1.41     Subd. 4.  [MINNESOTA JOINT POWERS INVESTMENT TRUST.] 
  2.1   Government entities may enter into agreements or contracts for: 
  2.2      (1) shares of a Minnesota joint powers investment trust 
  2.3   whose investments are restricted to securities described in this 
  2.4   ~~subdivision, subdivision 2,~~ section and section 118A.04; 
  2.5      (2) units of a short-term investment fund established and 
  2.6   administered pursuant to regulation 9 of the Office of the 
  2.7   Comptroller of the Currency, in which investments are restricted 
  2.8   to securities described in this section and section 118A.04; 
  2.9      (3) shares of an investment company which is registered 
  2.10  under the Federal Investment Company Act of 1940 and which holds 
  2.11  itself out as a money market fund meeting the conditions of rule 
  2.12  2a-7 of the Securities and Exchange Commission and is rated in 
  2.13  one of the two highest rating categories for money market funds 
  2.14  by at least one nationally recognized statistical rating 
  2.15  organization; or 
  2.16     (4) shares of an investment company which is registered 
  2.17  under the Federal Investment Company Act of 1940, and whose 
  2.18  shares are registered under the Federal Securities Act of 1933, 
  2.19  as long as the investment company's fund receives the highest 
  2.20  credit rating and is rated in one of the two highest risk rating 
  2.21  categories by at least one nationally recognized statistical 
  2.22  rating organization and is invested in financial instruments 
  2.23  with a final maturity no longer than 13 months. 
  2.24     Sec. 2.  Minnesota Statutes 1998, section 360.036, 
  2.25  subdivision 2, is amended to read: 
  2.26     Subd. 2.  [ISSUANCE OF BONDS.] (a) Bonds to be issued by a 
  2.27  municipality under sections 360.011 to 360.076, shall be 
  2.28  authorized and issued in the manner and within the limitation 
  2.29  prescribed by laws or the charter of the municipality for the 
  2.30  issuance and authorization of bonds for public purposes 
  2.31  generally, except as provided in paragraphs (b) and (c). 
  2.32     (b) No election is required to authorize the issuance of 
  2.33  the bonds if: 
  2.34     (1) a board organized under section 360.042 recommends by a 
  2.35  resolution adopted by a vote of not less than 60 percent of its 
  2.36  members the issuance of bonds, and ~~(2)~~ the bonds are authorized 
  3.1   by a resolution of the governing body of each of the 
  3.2   municipalities acting jointly pursuant to section 360.042, 
  3.3   adopted by a vote of not less than 60 percent of its members; or 
  3.4      (2) the bonds are being issued for the purpose of financing 
  3.5   the costs of constructing, enlarging, or improving airports and 
  3.6   other air navigation facilities; and 
  3.7      (i) the governing body estimates that passenger facility 
  3.8   charges and other revenues pledged to the payment thereof will 
  3.9   be at least 20 percent of the debt service payable on the bonds 
  3.10  in any year; 
  3.11     (ii) the project will be funded in part by a federal grant 
  3.12  for airport development; and 
  3.13     (iii) the principal amount of the bonds issued under this 
  3.14  clause does not exceed 25 percent of the amount of the federal 
  3.15  grant. 
  3.16     (c) If the bonds are general obligations of the 
  3.17  municipality, the levy of taxes required by section 475.61 to 
  3.18  pay principal and interest on the bonds is not included in 
  3.19  computing or applying any levy limitation applicable to the 
  3.20  municipality. 
  3.21     Sec. 3.  [373.45] [STATE PAYMENT OF DEBT OBLIGATION UPON 
  3.22  POTENTIAL DEFAULT; REPAYMENT; STATE OBLIGATION NOT DEBT.] 
  3.23     Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
  3.24  the following terms have the meanings given. 
  3.25     (b) "Authority" means the Minnesota public facilities 
  3.26  authority. 
  3.27     (c) "Commissioner" means the commissioner of finance. 
  3.28     (d) "Debt obligation" means a general obligation bond 
  3.29  issued by a county to provide funds for the construction of: 
  3.30     (1) jails; 
  3.31     (2) correctional facilities; 
  3.32     (3) law enforcement facilities; 
  3.33     (4) social services and human services facilities; or 
  3.34     (5) solid waste facilities. 
  3.35     Subd. 2.  [APPLICATION.] (a) This section provides a state 
  3.36  guarantee of the payment of principal and interest on debt 
  4.1   obligations if: 
  4.2      (1) the obligations are issued after June 30, 2000; 
  4.3      (2) application to the public facilities authority is made 
  4.4   before issuance; and 
  4.5      (3) the obligations are covered by an agreement meeting the 
  4.6   requirements of subdivision 3. 
  4.7      (b) Applications to be covered by the provisions of this 
  4.8   section must be made in a form and contain the information 
  4.9   prescribed by the authority.  Applications are subject to a fee 
  4.10  of $500 for the first bond issue requested by the county and 
  4.11  $250 for each bond issue thereafter. 
  4.12     (c) Application fees paid under this section must be 
  4.13  deposited in a separate county bond guarantee account in the 
  4.14  general fund.  Money in the county bond guarantee account is 
  4.15  appropriated to the authority for purposes of administering this 
  4.16  section. 
  4.17     (d) Neither the authority nor the commissioner is required 
  4.18  to promulgate administrative rules under this section and the 
  4.19  procedures and requirements established by the authority or 
  4.20  commissioner under this section are not subject to chapter 14. 
  4.21     Subd. 3.  [AGREEMENT.] (a) In order for specified debt 
  4.22  obligations of a county to be covered by the provisions of this 
  4.23  section, the county must enter an agreement with the authority 
  4.24  obligating the county to be bound by the provisions of this 
  4.25  section.  This agreement must be in a form prescribed by the 
  4.26  authority and contain any provisions required by the authority, 
  4.27  including at least an obligation to: 
  4.28     (1) deposit with the paying agent three days before the 
  4.29  date on which the payment is due an amount sufficient to make 
  4.30  that payment; 
  4.31     (2) notify the authority, if the county will be unable to 
  4.32  make all or a portion of the payment; and 
  4.33     (3) include a provision in the bond resolution and county's 
  4.34  agreement with the paying agent for the debt obligation that 
  4.35  requires the paying agent to inform the commissioner if it 
  4.36  becomes aware of a default or potential default in the payment 
  5.1   of principal or interest on that issue or if, on the day two 
  5.2   business days before the date a payment is due on that issue, 
  5.3   there are insufficient funds to make the payment on deposit with 
  5.4   the paying agent.  Funds invested in a refunding escrow account 
  5.5   established under section 475.67 that are to become available to 
  5.6   the paying agent on a principal or interest payment date are 
  5.7   deemed to be on deposit with the paying agent three business 
  5.8   days before the payment date.  
  5.9      (b) The provisions of an agreement under this subdivision 
  5.10  are binding as to an issue as long as any debt obligation of the 
  5.11  issue remains outstanding. 
  5.12     (c) This section is a contract with bondholders and may not 
  5.13  be amended or repealed for the covered bonds so long as the 
  5.14  covered bonds are outstanding. 
  5.15     Subd. 4.  [NOTIFICATIONS; PAYMENT; APPROPRIATION.] (a) 
  5.16  After receipt of a notice of a default or potential default in 
  5.17  payment of principal or interest in debt obligations covered by 
  5.18  this section or an agreement under this section, and after 
  5.19  consultation with the county, the paying agent, and after 
  5.20  verification of the accuracy of the information provided, the 
  5.21  authority shall notify the commissioner of the potential 
  5.22  default.  The notice must include a final figure as to the 
  5.23  amount due that the county will be unable to repay on the date 
  5.24  due.  
  5.25     (b) Upon receipt of this notice from the authority, the 
  5.26  commissioner shall issue a warrant and authorize the authority 
  5.27  to pay to the paying agent for the debt obligation the specified 
  5.28  amount on or before the date due.  The amounts needed for the 
  5.29  purposes of this subdivision are annually appropriated to the 
  5.30  authority from the general fund. 
  5.31     Subd. 5.  [INTEREST ON STATE PAID AMOUNT.] If the state has 
  5.32  paid part or all of the principal or interest due on a county's 
  5.33  debt obligation, the amount paid bears interest from the date 
  5.34  paid by the state until the date of repayment.  The interest 
  5.35  rate is the state treasurer's invested cash rate as it is 
  5.36  certified by the commissioner.  Interest only accrues on the 
  6.1   amounts paid and outstanding less the reduction in aid under 
  6.2   subdivision 7 and other payments received from the county. 
  6.3      Subd. 6.  [PLEDGE OF COUNTY'S FULL FAITH AND CREDIT.] If 
  6.4   the state has paid part or all of the principal or interest due 
  6.5   on a county's debt obligation, the county's pledge of its full 
  6.6   faith and credit and unlimited taxing powers to repay the 
  6.7   principal and interest due on those debt obligations becomes, 
  6.8   without an election or the requirement of a further 
  6.9   authorization, a pledge of the full faith and credit and 
  6.10  unlimited taxing powers of the county to repay to the state the 
  6.11  amount paid, with interest.  Amounts paid by the state must be 
  6.12  repaid in the order in which the state payments were made. 
  6.13     Subd. 7.  [AID REDUCTION FOR REPAYMENT.] (a) Except as 
  6.14  provided in paragraph (b), the commissioner may reduce, by the 
  6.15  amount paid by the state under this section on behalf of the 
  6.16  county, plus the interest due on the state payments, the 
  6.17  following aids payable to the county:  
  6.18     (1) homestead and agricultural credit aid and disparity 
  6.19  reduction aid payable under section 273.1398; 
  6.20     (2) county criminal justice aid payable under section 
  6.21  477A.0121; and 
  6.22     (3) family preservation aid payable under section 477A.0122.
  6.23  The amount of any aid reduction reverts from the appropriate 
  6.24  account to the state general fund.  
  6.25     (b) If, after review of the financial situation of the 
  6.26  county, the authority advises the commissioner that a total 
  6.27  reduction of the aids would cause an undue hardship on the 
  6.28  county, the authority, with the approval of the commissioner, 
  6.29  may establish a different schedule for reduction of aids to 
  6.30  repay the state.  The amount of aids to be reduced are decreased 
  6.31  by any amounts repaid to the state by the county from other 
  6.32  revenue sources. 
  6.33     Subd. 8.  [TAX LEVY FOR REPAYMENT.] (a) With the approval 
  6.34  of the authority, a county may levy in the year the state makes 
  6.35  a payment under this section an amount up to the amount 
  6.36  necessary to provide funds for the repayment of the amount paid 
  7.1   by the state plus interest through the date of estimated 
  7.2   repayment by the county.  The proceeds of this levy may be used 
  7.3   only for this purpose unless they exceed the amount actually 
  7.4   due.  Any excess must be used to repay other state payments made 
  7.5   under this section or must be deposited in the debt redemption 
  7.6   fund of the county.  The amount of aids to be reduced to repay 
  7.7   the state are decreased by the amount levied. 
  7.8      (b) If the state is not repaid in full for a payment made 
  7.9   under this section by November 30 of the calendar year following 
  7.10  the year in which the state makes the payment, the authority 
  7.11  shall require the county to certify a property tax levy in an 
  7.12  amount up to the amount necessary to provide funds for repayment 
  7.13  of the amount paid by the state plus interest through the date 
  7.14  of estimated repayment by the county.  To prevent undue 
  7.15  hardship, the authority may allow the county to certify the levy 
  7.16  over a five-year period.  The proceeds of the levy may be used 
  7.17  only for this purpose unless they are in excess of the amount 
  7.18  actually due, in which case the excess must be used to repay 
  7.19  other state payments made under this section or must be 
  7.20  deposited in the debt redemption fund of the county.  If the 
  7.21  authority orders the county to levy, the amount of aids reduced 
  7.22  to repay the state are decreased by the amount levied.  
  7.23     (c) A levy under this subdivision is an increase in the 
  7.24  levy limits of the county for purposes of section 275.065, 
  7.25  subdivision 6, and must be explained as a specific increase at 
  7.26  the meeting required under that provision.  
  7.27     Subd. 9.  [MANDATORY PLAN; TECHNICAL ASSISTANCE.] If the 
  7.28  state makes payments on behalf of a county under this section or 
  7.29  the county defaults in the payment of principal or interest on 
  7.30  an outstanding debt obligation, it must submit a plan to the 
  7.31  authority for approval specifying the measures it intends to 
  7.32  implement to resolve the issues which led to its inability to 
  7.33  make the payment and to prevent further defaults.  If the 
  7.34  authority determines that a county's plan is not adequate, the 
  7.35  authority shall notify the county that the plan has been 
  7.36  disapproved, the reasons for the disapproval, and that the state 
  8.1   will not make future payments under this section for debt 
  8.2   obligations of the affected county issued after the date 
  8.3   specified in that notice until its plan is approved.  The 
  8.4   authority may also notify the county that until its plan is 
  8.5   approved, aids due the county will be withheld after a date 
  8.6   specified in the notice. 
  8.7      Subd. 10.  [CONTINUING DISCLOSURE AGREEMENTS.] The 
  8.8   authority may enter into written agreements or contracts 
  8.9   relating to the continuing disclosure of information needed to 
  8.10  facilitate the ability of counties to issue debt obligations 
  8.11  according to federal securities laws, rules, and regulations, 
  8.12  including securities and exchange commission rules and 
  8.13  regulations, section 240.15c2-12.  The agreements or contracts 
  8.14  may be in any form the authority deems reasonable and in the 
  8.15  state's best interests. 
  8.16     Sec. 4.  Minnesota Statutes 1998, section 428A.101, is 
  8.17  amended to read: 
  8.18     428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 
  8.19  SELF-EXECUTING PROVISIONS.] 
  8.20     The establishment of a new special service district after 
  8.21  June 30, ~~2001, must be made pursuant to enabling legislation~~ 
  8.22  ~~under Minnesota Statutes 1994, sections 428A.01 to 428A.10~~ 2005, 
  8.23  requires enactment of a special law authorizing the 
  8.24  establishment. 
  8.25     Sec. 5.  Minnesota Statutes 1998, section 429.021, 
  8.26  subdivision 1, is amended to read: 
  8.27     Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
  8.28  municipality shall have power to make the following improvements:
  8.29     (1) To acquire, open, and widen any street, and to improve 
  8.30  the same by constructing, reconstructing, and maintaining 
  8.31  sidewalks, pavement, gutters, curbs, and vehicle parking strips 
  8.32  of any material, or by grading, graveling, oiling, or otherwise 
  8.33  improving the same, including the beautification thereof and 
  8.34  including storm sewers or other street drainage and connections 
  8.35  from sewer, water, or similar mains to curb lines. 
  8.36     (2) To acquire, develop, construct, reconstruct, extend, 
  9.1   and maintain storm and sanitary sewers and systems, including 
  9.2   outlets, holding areas and ponds, treatment plants, pumps, lift 
  9.3   stations, service connections, and other appurtenances of a 
  9.4   sewer system, within and without the corporate limits. 
  9.5      (3) To construct, reconstruct, extend, and maintain steam 
  9.6   heating mains. 
  9.7      (4) To install, replace, extend, and maintain street lights 
  9.8   and street lighting systems and special lighting systems. 
  9.9      (5) To acquire, improve, construct, reconstruct, extend, 
  9.10  and maintain water works systems, including mains, valves, 
  9.11  hydrants, service connections, wells, pumps, reservoirs, tanks, 
  9.12  treatment plants, and other appurtenances of a water works 
  9.13  system, within and without the corporate limits. 
  9.14     (6) To acquire, improve and equip parks, open space areas, 
  9.15  playgrounds, and recreational facilities within or without the 
  9.16  corporate limits. 
  9.17     (7) To plant trees on streets and provide for their 
  9.18  trimming, care, and removal. 
  9.19     (8) To abate nuisances and to drain swamps, marshes, and 
  9.20  ponds on public or private property and to fill the same. 
  9.21     (9) To construct, reconstruct, extend, and maintain dikes 
  9.22  and other flood control works. 
  9.23     (10) To construct, reconstruct, extend, and maintain 
  9.24  retaining walls and area walls. 
  9.25     (11) To acquire, construct, reconstruct, improve, alter, 
  9.26  extend, operate, maintain, and promote a pedestrian skyway 
  9.27  system.  Such improvement may be made upon a petition pursuant 
  9.28  to section 429.031, subdivision 3.  
  9.29     (12) To acquire, construct, reconstruct, extend, operate, 
  9.30  maintain, and promote underground pedestrian concourses. 
  9.31     (13) To acquire, construct, improve, alter, extend, 
  9.32  operate, maintain, and promote public malls, plazas or 
  9.33  courtyards. 
  9.34     (14) To construct, reconstruct, extend, and maintain 
  9.35  district heating systems.  
  9.36     (15) To construct, reconstruct, alter, extend, operate, 
 10.1   maintain, and promote fire protection systems in existing 
 10.2   buildings, but only upon a petition pursuant to section 429.031, 
 10.3   subdivision 3.  
 10.4      (16) To acquire, construct, reconstruct, improve, alter, 
 10.5   extend, and maintain highway sound barriers. 
 10.6      (17) To improve, construct, reconstruct, extend, and 
 10.7   maintain gas and electric distribution facilities owned by a 
 10.8   municipal gas or electric utility. 
 10.9      (18) To improve, construct, extend, and maintain facilities 
 10.10  for Internet access and other communications purposes, if the 
 10.11  council finds that: 
 10.12     (i) the facilities are necessary to make available Internet 
 10.13  access or other communications services that are not and will 
 10.14  not be available through other providers or the private market 
 10.15  in the reasonably foreseeable future; and 
 10.16     (ii) the service to be provided by the facilities will not 
 10.17  compete with service provided by private entities. 
 10.18     Sec. 6.  [451.10] [DISTRICT HEATING SYSTEM.] 
 10.19     Subdivision 1.  [APPLICATION.] Sections 451.10 to 451.17 
 10.20  apply to a city that: 
 10.21     (1) owns and operates a district heating system either 
 10.22  directly by the city council or by a utility board or utility 
 10.23  commission of the city; and 
 10.24     (2) has taken action under law or charter to discontinue 
 10.25  the operation of the district heating system in whole or in part.
 10.26     Subd. 2.  [SUPERSEDES OTHER LAW.] Sections 451.10 to 451.17 
 10.27  apply to the cities described in subdivision 1 notwithstanding a 
 10.28  contrary provision in a city charter or in any other law 
 10.29  including section 451.09. 
 10.30     Subd. 3.  [SUPPLEMENTAL TO OTHER LAW.] The powers granted 
 10.31  by sections 451.10 to 451.17 are supplemental and additional to 
 10.32  other powers granted by law or charter. 
 10.33     Sec. 7.  [451.11] [POLICY; PURPOSE.] 
 10.34     Subdivision 1.  [FINDINGS.] The legislature finds that it 
 10.35  is in the public interest that cities owning and operating a 
 10.36  district heating system that have determined to discontinue the 
 11.1   system in whole or in part be authorized to establish and 
 11.2   conduct a program to provide replacement heating and related 
 11.3   equipment to the owners of property whose district heating 
 11.4   service is discontinued.  The legislature also finds that the 
 11.5   cities should be authorized to adopt and implement programs to 
 11.6   provide for the installation of energy conservation equipment 
 11.7   and measures to enhance the efficient and economical use of 
 11.8   energy in buildings and structures served by a district heating 
 11.9   system and in which replacement heating systems are installed 
 11.10  under sections 451.10 to 451.17. 
 11.11     Subd. 2.  [PUBLIC PURPOSE.] The legislature further finds 
 11.12  that expenditures made by cities for a purpose in sections 
 11.13  451.10 to 451.17 are expenditures for a public purpose. 
 11.14     Sec. 8.  [451.12] [DEFINITIONS.] 
 11.15     Subdivision 1.  [APPLICATION.] In sections 451.10 to 451.17 
 11.16  the definitions in this section apply. 
 11.17     Subd. 2.  [CITY.] "City" means a city, however organized, 
 11.18  acting through its city council or through a public utilities 
 11.19  commission duly created by law or charter. 
 11.20     Subd. 3.  [REPLACEMENT HEATING SYSTEM IMPROVEMENT.] 
 11.21  "Replacement heating system improvement" means and includes 
 11.22  furnaces, boilers, and similar heat generating and exchanging 
 11.23  equipment together with related equipment, duct work, and 
 11.24  control mechanisms that are installed to provide heating, 
 11.25  ventilating, and air conditioning services in a building or 
 11.26  structure whose district heating service has been discontinued 
 11.27  by a city. 
 11.28     Subd. 4.  [ENERGY CONSERVATION IMPROVEMENT.] (a) "Energy 
 11.29  conservation improvement" means and includes, but is not limited 
 11.30  to, the following devices, methods, and materials, if 
 11.31  recommended by an energy audit approved in a program and having 
 11.32  a maximum cost of $20,000, that increase the efficiency of the 
 11.33  use of energy in a building or structure: 
 11.34     (1) insulation and ventilation; 
 11.35     (2) storm windows, thermal windows, and storm doors; 
 11.36     (3) caulking and weatherstripping; 
 12.1      (4) heating system modifications; and 
 12.2      (5) thermostats or lighting controls. 
 12.3      (b) The term does not include a device or method that 
 12.4   creates, converts, or actively uses energy from renewable 
 12.5   resources such as wind, solar, or biomass. 
 12.6      Subd. 5.  [PROGRAM.] "Program" means a statement of goals, 
 12.7   procedures, standards of eligibility, and methods of financing 
 12.8   for the installation of heating replacement system improvements 
 12.9   and energy conservation improvements. 
 12.10     Subd. 6.  [IMPROVEMENT.] "Improvement" includes replacement 
 12.11  heating system improvements and energy conservation improvements.
 12.12     Sec. 9.  [451.13] [PROGRAM.] 
 12.13     Subdivision 1.  [AFTER NOTICE AND HEARING.] A program may 
 12.14  be adopted by resolution of the city council of a city after 
 12.15  reasonable notice and hearing provided for by the city council. 
 12.16     Subd. 2.  [ELEMENTS.] The program must contain at least the 
 12.17  following elements: 
 12.18     (1) a description of the kinds of property eligible for 
 12.19  assistance with heating replacement improvements and energy 
 12.20  conservation improvements; 
 12.21     (2) procedures for accomplishing the improvements by the 
 12.22  city or private contractors; 
 12.23     (3) methods of financing the installation of the heating 
 12.24  replacement and energy conservation improvements; and 
 12.25     (4) the administrative agency of the city responsible for 
 12.26  conducting the program. 
 12.27     Subd. 3.  [DELEGATION.] The city council may by resolution 
 12.28  delegate the responsibility for the conduct of the program to a 
 12.29  public utilities commission or public utilities board of the 
 12.30  city. 
 12.31     Sec. 10.  [451.14] [INSTALLING THE IMPROVEMENTS.] 
 12.32     Subdivision 1.  [METHODS.] The program may provide for the 
 12.33  methods of installing the improvements set out in this 
 12.34  subdivision. 
 12.35     (a) The city may contract with one or more contractors to 
 12.36  perform work and furnish materials for the improvements. 
 13.1      (b) The owner of a building or structure eligible for an 
 13.2   improvement may contract for the installation of the 
 13.3   improvement, subject to approval by the city as provided in the 
 13.4   program. 
 13.5      (c) The city may contract with a property owner for the 
 13.6   installation of an improvement by the property owner, but no 
 13.7   payment under section 451.15 may be made for the property 
 13.8   owner's labor. 
 13.9      Subd. 2.  [INSPECTION AND CERTIFICATION.] The program must 
 13.10  provide a method by which a city official or employee may 
 13.11  inspect and is to certify the completed installation of the 
 13.12  improvement to ensure compliance with city codes and ordinances 
 13.13  and other standards specified in the program.  
 13.14     Subd. 3.  [COMPETITIVE BIDS.] Contracts entered into under 
 13.15  subdivision 1, paragraph (a), are subject to competitive bidding 
 13.16  requirements of law. 
 13.17     Sec. 11.  [451.15] [PAYMENTS; FINANCING.] 
 13.18     Subdivision 1.  [FINANCING.] The program may include one or 
 13.19  more of the methods described in this section for financing the 
 13.20  cost of the installation of improvements. 
 13.21     Subd. 2.  [CASH.] The city may contract with a property 
 13.22  owner for the payment in cash of the cost of the installation of 
 13.23  the improvements upon completion of the installation of the 
 13.24  improvements.  The payment must be secured by: 
 13.25     (1) a deposit with the city of 90 percent of the contract 
 13.26  price; or 
 13.27     (2) a written commitment from a bank or other financial 
 13.28  institution approved in the program to lend the property owner 
 13.29  the full amount of the contract price for payment to the city.  
 13.30     Subd. 3.  [PROMISSORY NOTE.] The city may accept payment of 
 13.31  the contract price by a promissory note from the property owner 
 13.32  delivered at the time of entering into the contract payable at 
 13.33  such times, not exceeding ten years, and in the amounts and at 
 13.34  the interest rate specified in the program. 
 13.35     Subd. 4.  [LIEN AS SECURITY.] The balance of payments due 
 13.36  under subdivision 2 and the entire principal of and interest on 
 14.1   a promissory note delivered under subdivision 3 are secured by a 
 14.2   lien created by this subdivision on the real property on which 
 14.3   the improvements are made.  If payment is not made according to 
 14.4   the terms of the program, or the note, the chief financial 
 14.5   officer of the city may certify the entire amount so due to the 
 14.6   county auditor for collection as other taxes are collected. 
 14.7      Subd. 5.  [SPECIAL ASSESSMENTS.] The program may provide 
 14.8   that at the request of the property owner the unpaid cost of the 
 14.9   installation of an improvement is to be specially assessed 
 14.10  against the real property on which the improvement is installed 
 14.11  in the manner provided by section 429.101, except that: 
 14.12     (1) the adoption of an ordinance is not required; and 
 14.13     (2) obligations issued to finance the improvements must 
 14.14  mature not later than ten years from the date of their issuance. 
 14.15     Sec. 12.  [451.16] [FINANCING; OBLIGATIONS.] 
 14.16     Subdivision 1.  [BONDS; OTHER OBLIGATIONS.] In addition to 
 14.17  the authority to issue obligations under section 429.101, a city 
 14.18  may issue its bonds or other obligations to finance the cost of 
 14.19  the installation of improvements as provided in this section. 
 14.20     Subd. 2.  [REVENUE OBLIGATIONS.] A city may issue and sell 
 14.21  its revenue obligations payable solely from the revenues derived 
 14.22  or to be derived from assessments and payments from property 
 14.23  owners under section 451.15, which revenues must be pledged to 
 14.24  the payment of the obligations.  Obligations issued under this 
 14.25  subdivision are considered to be payable wholly from the income 
 14.26  of a revenue producing convenience within the meaning of 
 14.27  sections 475.51 and 475.58. 
 14.28     Subd. 3.  [GENERAL OBLIGATIONS.] A city may issue and sell 
 14.29  its general obligations under chapter 475, payable from the 
 14.30  revenues and assessments derived or to be derived from property 
 14.31  owners under section 451.15, which revenues must be pledged to 
 14.32  the payment of the obligations.  General obligations must not be 
 14.33  issued unless the pledged revenues are estimated to equal at 
 14.34  least 105 percent of the amount necessary to pay when due the 
 14.35  principal of and interest on the obligations.  Obligations 
 14.36  issued under this subdivision are considered to be payable 
 15.1   wholly from the income of a revenue producing convenience within 
 15.2   the meaning of sections 475.51 and 475.58. 
 15.3      Sec. 13.  [451.17] [CITY OF VIRGINIA.] 
 15.4      The city of Virginia is considered to have complied with 
 15.5   section 451.09, notwithstanding section 451.09, subdivision 4. 
 15.6      Sec. 14.  Minnesota Statutes 1999 Supplement, section 
 15.7   473.39, subdivision 1g, is amended to read: 
 15.8      Subd. 1g.  [OBLIGATIONS; 2000-2002.] In addition to the 
 15.9   authority in subdivisions 1a, 1b, 1c, 1d, and 1e, the council 
 15.10  may issue certificates of indebtedness, bonds, or other 
 15.11  obligations under this section in an amount not exceeding 
 15.12  ~~$36,000,000~~ $55,400,000, which may be used for capital 
 15.13  expenditures, other than for construction, maintenance, or 
 15.14  operation of light rail transit, as prescribed in the council's 
 15.15  transit capital improvement program and for related costs, 
 15.16  including the costs of issuance and sale of the obligations.  
 15.17  The funds must be proportionally spent on capital improvement 
 15.18  projects as recommended by the regional transit capital 
 15.19  evaluation committee. 
 15.20     Sec. 15.  Minnesota Statutes 1998, section 474A.047, 
 15.21  subdivision 1, is amended to read: 
 15.22     Subdivision 1.  [ELIGIBILITY.] (a) An issuer may only use 
 15.23  the proceeds from residential rental bonds if the proposed 
 15.24  project meets one of the following: 
 15.25     (1) the proposed project is a single room occupancy project 
 15.26  and all the units of the project will be occupied by individuals 
 15.27  whose incomes at the time of their initial residency in the 
 15.28  project are 50 percent or less of the greater of the statewide 
 15.29  or county median income adjusted for household size as 
 15.30  determined by the federal Department of Housing and Urban 
 15.31  Development; 
 15.32     (2) the proposed project is a multifamily project where at 
 15.33  least 75 percent of the units have two or more bedrooms and at 
 15.34  least one-third of the 75 percent have three or more bedrooms; 
 15.35  or 
 15.36     (3) the proposed project is a multifamily project that 
 16.1   meets the following requirements: 
 16.2      (i) the proposed project is the rehabilitation of an 
 16.3   existing ~~multifamily~~ building which meets the requirements for 
 16.4   minimum rehabilitation expenditures in sections 42(e)(2) and 
 16.5   42(e)(3)(A) of the Internal Revenue Code; 
 16.6      (ii) the proposed project involves participation by the 
 16.7   Minnesota housing finance agency or a local unit of government 
 16.8   in the financing of the acquisition or rehabilitation of the 
 16.9   project.  For purposes of this subdivision, "participation" 
 16.10  means an activity other than the issuance of the bonds; and 
 16.11     (iii) the proposed project must be occupied by individuals 
 16.12  or families whose incomes at the time of their initial residency 
 16.13  in the project meet the requirements of section 42(g) of the 
 16.14  Internal Revenue Code. 
 16.15     (b) The maximum rent for a proposed single room occupancy 
 16.16  unit under paragraph (a), clause (1), is 30 percent of the 
 16.17  amount equal to 30 percent of the greater of the statewide or 
 16.18  county median income for a one-member household as determined by 
 16.19  the federal Department of Housing and Urban Development.  The 
 16.20  maximum rent for at least 75 percent of the units of a 
 16.21  multifamily project under paragraph (a), clause (2), is 30 
 16.22  percent of the amount equal to 50 percent of the greater of the 
 16.23  statewide or county median income as determined by the federal 
 16.24  Department of Housing and Urban Development based on a household 
 16.25  size with 1.5 persons per bedroom. 
 16.26     (c) The proceeds from residential rental bonds may be used 
 16.27  for a project for which project-based federal rental assistance 
 16.28  payments are made only if: 
 16.29     (1) the owner of the project enters into a binding 
 16.30  agreement with the Minnesota housing finance agency under which 
 16.31  the owner is obligated to extend any existing low-income 
 16.32  affordability restrictions and any contract or agreement for 
 16.33  rental assistance payments for the maximum term permitted, 
 16.34  including any renewals thereof; and 
 16.35     (2) the Minnesota housing finance agency certifies that 
 16.36  project reserves will be maintained at closing of the bond issue 
 17.1   and budgeted in future years at the lesser of: 
 17.2      (i) the level described in Minnesota Rules, part 4900.0010, 
 17.3   subpart 7, item A, subitem (2), effective May 1, 1997; or 
 17.4      (ii) the level of project reserves available prior to the 
 17.5   bond issue, provided that additional money is available to 
 17.6   accomplish repairs and replacements needed at the time of bond 
 17.7   issue. 
 17.8      Sec. 16.  Minnesota Statutes 1999 Supplement, section 
 17.9   475.56, is amended to read: 
 17.10     475.56 [INTEREST RATE.] 
 17.11     (a) Any municipality issuing obligations under any law may 
 17.12  issue obligations bearing interest at a single rate or at rates 
 17.13  varying from year to year which may be lower or higher in later 
 17.14  years than in earlier years.  Such higher rate for any period 
 17.15  prior to maturity may be represented in part by separate coupons 
 17.16  designated as additional coupons, extra coupons, or B coupons, 
 17.17  but the highest aggregate rate of interest contracted to be so 
 17.18  paid for any period shall not exceed the maximum rate authorized 
 17.19  by law.  Such higher rate may also be represented in part by the 
 17.20  issuance of additional obligations of the same series, over and 
 17.21  above but not exceeding two percent of the amount otherwise 
 17.22  authorized to be issued, and the amount of such additional 
 17.23  obligations shall not be included in the amount required by 
 17.24  section 475.59 to be stated in any bond resolution, notice, or 
 17.25  ballot, or in the sale price required by section 475.60 or any 
 17.26  other law to be paid; but if the principal amount of the entire 
 17.27  series exceeds its cash sale price, such excess shall not, when 
 17.28  added to the total amount of interest payable on all obligations 
 17.29  of the series to their stated maturity dates, cause the average 
 17.30  annual rate of such interest to exceed the maximum rate 
 17.31  authorized by law.  This section does not authorize a provision 
 17.32  in any such obligations for the payment of a higher rate of 
 17.33  interest after maturity than before. 
 17.34     (b) Any municipality issuing obligations under any law may 
 17.35  sell original issue discount obligations having a stated 
 17.36  principal amount in excess of the authorized amount and the sale 
 18.1   price, provided that: 
 18.2      (1) the sale price does not exceed by more than two percent 
 18.3   the amount of obligations otherwise authorized to be issued; 
 18.4      (2) the underwriting fee, discount, or other sales or 
 18.5   underwriting commission does not exceed two percent of the sale 
 18.6   price; and 
 18.7      (3) the discount rate necessary to present value total 
 18.8   principal and interest payments over the term of the issue to 
 18.9   the sale price does not exceed the lesser of the maximum rate 
 18.10  permitted by law for municipal obligations or ten percent. 
 18.11     (c) Any obligation ~~of an issue of obligations otherwise~~ 
 18.12  ~~subject to section 475.55, subdivision 1,~~ may bear interest at a 
 18.13  rate varying periodically at the time or times and on the terms, 
 18.14  including convertibility to a fixed rate of interest, determined 
 18.15  by the governing body of the municipality, but the rate of 
 18.16  interest for any period shall not exceed ~~the~~ any maximum rate of 
 18.17  interest for the obligations ~~determined in accordance with~~ 
 18.18  ~~section 475.55, subdivision 1~~ established by law.  For purposes 
 18.19  of section 475.61, subdivisions 1 and 3, the interest payable on 
 18.20  variable rate obligations for their term shall be determined as 
 18.21  if their rate of interest is ~~the maximum rate permitted for the~~ 
 18.22  ~~obligations under section 475.55, subdivision 1, or~~ the lesser 
 18.23  of the maximum rate of interest payable on the obligations in 
 18.24  accordance with their terms or the rate estimated for such 
 18.25  purpose by the governing body, but if the interest rate is 
 18.26  subsequently converted to a fixed rate the levy may be modified 
 18.27  to provide at least five percent in excess of amounts necessary 
 18.28  to pay principal of and interest at the fixed rate on the 
 18.29  obligations when due.  For purposes of computing debt service or 
 18.30  interest pursuant to section 475.67, subdivision 12, interest 
 18.31  throughout the term of bonds issued pursuant to this subdivision 
 18.32  is deemed to accrue at the rate of interest first borne by the 
 18.33  bonds.  The provisions of this paragraph do not apply to general 
 18.34  obligations issued by a statutory or home rule charter city with 
 18.35  a population of less than 7,500, as defined in section 477A.011, 
 18.36  subdivision 3, or to general obligations that are not rated A or 
 19.1   better, or an equivalent subsequently established rating, by 
 19.2   Standard and Poor's Corporation, Moody's Investors Service or 
 19.3   other similar nationally recognized rating agency, except that 
 19.4   any statutory or home rule charter city, regardless of 
 19.5   population or bond rating, may issue variable rate obligations 
 19.6   as a participant in a bond pooling program established by the 
 19.7   league of Minnesota cities that meets this bond rating 
 19.8   requirement. 
 19.9      Sec. 17.  Minnesota Statutes 1998, section 475.78, is 
 19.10  amended to read: 
 19.11     475.78 [PERFECTION OF PLEDGE; SECURITY INTERESTS.] 
 19.12     Neither filing nor possession is required to perfect the 
 19.13  security interest created by any pledge or appropriation of 
 19.14  revenues or funds of the municipality, including any of its 
 19.15  investments, to the payment of bonds issued by the municipality. 
 19.16  Notwithstanding any contrary provision of law, article 9 of the 
 19.17  Uniform Commercial Code does not apply to security interests 
 19.18  created by a municipality or the state, except security 
 19.19  interests in equipment and fixtures. 
 19.20     Sec. 18.  Laws 2000, chapter 484, article 1, section 4, 
 19.21  subdivision 3, is amended to read: 
 19.22     Subd. 3.  [COMMITTEE REPORT.] The committee shall issue its 
 19.23  report within 90 days of its initial meeting.  The committee may 
 19.24  request one 60-day extension from the county board.  The report 
 19.25  must contain the committee's recommendation for the preferred 
 19.26  organizational option for a county economic development service 
 19.27  provider, including the distance ~~of the radius of the~~ 
 19.28  ~~extraterritorial parcel~~ from the boundary of the city that may 
 19.29  be controlled by each affected city in subdivision 5.  ~~This~~ 
 19.30  ~~extraterritorial parcel~~ The distance may not exceed two miles 
 19.31  from the city boundary.  The report must contain written 
 19.32  findings on issues considered by the committee including, but 
 19.33  not limited to, the following: 
 19.34     (1) identification of the current level of economic 
 19.35  development, housing, and community development programs and 
 19.36  services provided by existing agencies, any existing gaps in 
 20.1   programs and services, and the capacity and ability of those 
 20.2   agencies to expand their activities; and 
 20.3      (2) the recommended organizational option for providing 
 20.4   needed economic development, housing, and community development 
 20.5   services in the most efficient, effective manner. 
 20.6      Sec. 19.  Laws 2000, chapter 484, article 1, section 4, 
 20.7   subdivision 5, is amended to read: 
 20.8      Subd. 5.  [AREA OF OPERATION.] The area of operation of a 
 20.9   county economic development service provider created under this 
 20.10  section shall include all cities within a county that have 
 20.11  adopted resolutions electing to participate.  A city may adopt a 
 20.12  resolution electing to withdraw participation.  The withdrawal 
 20.13  election may be made every fifth year following adoption of the 
 20.14  resolution electing participation.  The withdrawal election is 
 20.15  effective on the anniversary date of the original resolution 
 20.16  provided notice is given to the county economic development 
 20.17  authority not less than 90 nor more than 180 days prior to that 
 20.18  anniversary date.  The city electing to withdraw retains any 
 20.19  rights, obligations, and liabilities it obtained or incurred 
 20.20  during its participation.  Any city within the county shall have 
 20.21  the option to adopt a resolution to prohibit the county economic 
 20.22  development service provider created under this section from 
 20.23  operating within its boundaries and (1) within an agreed upon 
 20.24  urban service area, or (2) within the ~~boundary~~ distance approved 
 20.25  in the committee report referenced in subdivision 3.  If a city 
 20.26  prohibits a county economic development service provider created 
 20.27  under this section from operating within its boundaries, the 
 20.28  city's property taxpayers shall not be subject to the property 
 20.29  tax levied for the county economic development service provider. 
 20.30     Sec. 20.  [APPROPRIATION AVAILABILITY EXTENDED.] 
 20.31     The appropriation in Laws 1995, chapter 220, section 19, 
 20.32  subdivision 4, paragraph (g), clause (2), as amended by Laws 
 20.33  1996, chapter 407, section 50, is available until June 30, 2001. 
 20.34     Sec. 21.  [REPLACEMENT TRANSIT SERVICE; ELIGIBILITY.] 
 20.35     (a) Notwithstanding the eligibility requirements in 
 20.36  Minnesota Statutes, section 473.388, subdivision 2, the city of 
 21.1   Minnetonka is eligible for the replacement service program under 
 21.2   Minnesota Statutes, section 473.388, if the city first applies 
 21.3   for assistance or exercises the local levy option under 
 21.4   Minnesota Statutes, section 473.388, before June 30, 2003. 
 21.5      (b) Notwithstanding the eligibility requirements in 
 21.6   Minnesota Statutes, section 473.388, subdivision 2, the city of 
 21.7   Shorewood is eligible for the replacement service program under 
 21.8   Minnesota Statutes, section 473.388, if the city first applies 
 21.9   for assistance or exercises the local levy option under 
 21.10  Minnesota Statutes, section 473.388, before June 30, 2003. 
 21.11     Sec. 22.  [PUBLIC SAFETY RADIO SYSTEM CONTRACTS.] 
 21.12     Any contracts relating to an 800 megahertz trunked radio 
 21.13  network for service shall be let for bid only on a competitive 
 21.14  basis. 
 21.15     The trunked backbone network and 800 megahertz radios used 
 21.16  on it must include at a minimum features that meet open 
 21.17  standards of interoperability.  The contracting government 
 21.18  authority may not accept any feature enhancement that would 
 21.19  interfere with or impede the interoperability of the network as 
 21.20  a whole or with any radios regardless of manufacturer. 
 21.21     Sec. 23.  [NO LOCAL APPROVAL; EFFECTIVE DATE.] 
 21.22     Sections 6 to 13 do not require local approval as they fit 
 21.23  within the exception in Minnesota Statutes, section 645.023, 
 21.24  subdivision 1, clause (a).  Sections 6 to 13 are effective the 
 21.25  day after final enactment. 
 21.26     Sec. 24.  [APPLICATION.] 
 21.27     Sections 14 and 25 apply in the counties of Anoka, Carver, 
 21.28  Dakota, Hennepin, Ramsey, Scott, and Washington. 
 21.29     Sec. 25.  [REPEALER.] 
 21.30     Minnesota Statutes 1998, section 473.867, subdivision 4, is 
 21.31  repealed. 
 21.32     Sec. 26.  [APPROPRIATION.] 
 21.33     $354,000 is appropriated from the general fund to the 
 21.34  commissioner of revenue for fiscal year 2001 to administer the 
 21.35  provisions of Laws 2000, chapter 490, articles 4, 5, and 10. 
 21.36     Sec. 27.  [EFFECTIVE DATE.] 
 22.1      Sections 1, 22, and 25 are effective the day following 
 22.2   final enactment.  Section 3 is effective the day following final 
 22.3   enactment and applies to bonds issued after a rating has been 
 22.4   obtained for the program from a national rating agency.  Section 
 22.5   20 is effective retroactively from December 31, 1999.