2007 Minnesota Statutes

CHAPTER 116R. AIRCRAFT FACILITIES; STATE FINANCING

116R.01 DEFINITIONS.
    Subdivision 1. Application. The definitions in this section apply to sections 116R.01 to
116R.15.
    Subd. 2. Bonds. "Bonds" means the bonds authorized under section 116R.02, subdivision 1,
or bonds issued to refund these bonds, except for deficiency bonds.
    Subd. 3. Commissioner. "Commissioner" means the commissioner of finance.
    Subd. 4. Corporate headquarters. "Corporate headquarters" means the principal office
from which the business of the corporation is conducted and the principal office of the chief
executive officer of the corporation.
    Subd. 5. Deficiency bonds. "Deficiency bonds" means the bonds authorized under section
116R.13, subdivision 3, or bonds issued to refund these bonds.
    Subd. 6. Project. "Project" means the facilities or any property described in section 116R.02,
subdivision 5 .
    Subd. 7. Related person. "Related person" means any guarantor of the obligations of the
lessee under the lease of a project and any other person whose relation to the lessee or the
guarantor is that of a related person as defined in section 147 (a)(2) of the Internal Revenue
Code of 1986, as amended through December 31, 1990, and whose financial condition the
commissioner determines to be material for the purposes of carrying out the due diligence duties
under section 116R.02.
    Subd. 8. State guaranteed bonds. "State guaranteed bonds" means all outstanding bonds
secured as provided in section 116R.02, subdivision 4, paragraph (a).
    Subd. 9. Cash collateral. "Cash collateral" means cash or securities issued or unconditionally
guaranteed as to payment of principal and interest by the United States of America and maturing
or callable at the option of the holder within two years.
History: 1991 c 350 art 1 s 1; 1993 c 13 art 1 s 24; 2007 c 138 s 1,16

116R.02 BOND ISSUE; SALE AUTHORIZATION.
    Subdivision 1. Sale authorization. The commissioner of finance, upon the request of the
governor, may issue and sell revenue bonds as provided under sections 116R.01 to 116R.15 in one
or more series or issues for the purposes provided in this section in the aggregate principal amount
of up to $350,000,000, except for refunding bonds. Proceeds of the bonds and investment income
on the proceeds are appropriated in the amounts and for the purposes specified in subdivisions 2
and 5 and section 116R.04.
    Subd. 2. Loan, lease, and revenue agreements. (a) The commissioner may loan the proceeds
of the bonds, make other loans or enter into lease agreements or other revenue agreements for the
project described in subdivision 5. The commissioner may provide for servicing of the loans and
agreements, the times they are payable and the amounts of payments, the amount of the loans and
agreements, their security, and other terms, conditions, and provisions necessary or convenient
in connection with them and may enter into all necessary contracts and security instruments
in connection with them. The commissioner shall seek to obtain the best available terms and
security for the loans or agreements. The terms and security must be reasonably determined by
the commissioner to be adequate and of the kind and degree which would be required by an
investment banking or other financial institution. The facilities described in subdivision 5 must be
pledged as collateral for the loans made and bonds issued under sections 116R.01 to 116R.15.
    (b) To reduce the risk that state general funds will be needed to pay debt service on the
state guaranteed bonds, the commissioner must require that the financing arrangements include
a coverage test satisfactory to the commissioner so that the sum of the value of the assets and
other security pledged to the payment of bonds or the rent due under any lease of the project and
taken into account by the commissioner is no less than 125 percent of the difference between the
outstanding state guaranteed bonds, and any cash collateral held in a debt service reserve account
and pledged to the payment of principal and interest for the state guaranteed bonds and no other
bonds. Assets and other security that may be taken into account include (1) net unencumbered
value of the project and any collateral or third party guaranty, including a letter of credit, pledged
or otherwise furnished by a user of the project or by a benefited airline company as security for
the payment of rent, (2) bond proceeds, including earnings thereon, and (3) prepayments of rent,
after making such adjustments the commissioner determines to be appropriate to take into account
any outstanding bonds secured by a lien on the project or rent that is prior to the lien securing the
state guaranteed bonds, but excluding any cash collateral deducted from the outstanding state
guaranteed bonds in applying the coverage test. The commissioner may adopt the method of
valuing the assets and other security as the commissioner determines to be appropriate, including
valuation of the project at its original cost less depreciation.
    Subd. 3.[Repealed, 2007 c 138 s 17]
    Subd. 4. Security. (a) If so provided in the commissioner's order or any indenture authorizing
the applicable series of bonds, up to $125,000,000 principal amount of bonds for the facility
described in subdivision 5, and any bonds issued to refund these bonds may be secured by either
of the following methods:
    (1) upon the occurrence of any deficiency in a debt service reserve fund for a series of bonds
as provided in section 116R.13, subdivision 3, the commissioner shall issue and sell deficiency
bonds in a principal amount not to exceed $125,000,000 for facilities described in subdivision 5; or
    (2) the bonds may be directly secured by a pledge of the full faith, credit, and taxing power
of the state and issued as general obligation revenue bonds of the state in accordance with the
Minnesota Constitution, article XI, sections 4 to 7. In no event may the security provided by this
paragraph extend in whole or part to any series of bonds other than the initial series of bonds so
secured and any series of bonds issued to refund these bonds.
    Deficiency bonds and bonds issued under clause (2) must be issued in accordance with
and subject to sections 16A.641, 16A.66, 16A.672, and 16A.675, except for section 16A.641,
subdivision 5 , except as otherwise provided in Laws 1991, chapter 350, article 1, and except that
the bonds may be sold at public or private sale at a price or prices determined by the commissioner
as provided in section 116R.13, subdivision 3.
    (b) The commissioner may request St. Louis County to pay or secure payment of principal
and interest due on up to $12,600,000 principal amount of revenue bonds for the facility described
in subdivision 5. At the request of the commissioner, St. Louis County shall, by resolution of
its county board, unconditionally and irrevocably pledge as a general obligation, its full faith,
credit, and taxing power to pay or secure payment of principal and interest due on the principal
amount or amounts requested by the commissioner. The general obligation and pledge of St.
Louis County are not subject to and shall not be taken into account for purposes of any debt
limitation. A levy of taxes for the St. Louis County general obligation is not subject to and shall
not be taken into account for purposes of any levy limitations. The general obligation and the
bonds secured by the general obligation may be issued without an election. Except for sections
475.61 and 475.64, chapter 475 does not apply to the general obligation or to the bonds secured
by the general obligation.
    (c) The commissioner may request the city of Duluth to pay or secure payment of principal
and interest due on up to $47,600,000 principal amount of revenue bonds for the facility described
in subdivision 5. At the request of the commissioner, the city of Duluth shall pledge specified
revenues of the city, as provided in Laws 1991, chapter 350, article 1, section 24, to pay principal
and interest due on the principal amount requested by the commissioner.
    (d) Bonds and deficiency bonds issued under sections 116R.01 to 116R.15 and any indenture
entered into in connection with the issuance of the bonds are not subject to section 16B.06.
    Subd. 5. Use of proceeds; aircraft maintenance facility. The proceeds of the bonds issued
in a principal amount not to exceed $250,000,000 may be used to finance the costs related to the
planning, construction, improvement, or equipping of a heavy maintenance facility for aircraft and
facilities subordinate and related to the facility to be located at the Duluth International Airport
and any costs of issuance, reserves, credit enhancement, or an initial period of interest payments
related to the bonds or the facility. The bond proceeds are appropriated to the commissioner for
the purposes specified in this subdivision. With the approval of the commissioner, the owner of
the facility may place a mortgage or security interest lien on the facility or any interest in or part
of the facility. The mortgage is exempt from the mortgage registry tax imposed under chapter 287.
In the event of a default under the loan, lease agreement, or other revenue agreement, the facility,
or any part of the facility, may be leased or sold to another person for any lawful purpose, subject
to the approval of the commissioner. The approval of the commissioner is not required if the bond
trustee has taken control of the facility as a result of a default.
The ownership of the facility by the owner may create no liability of the owner for payment
of the debt service on the bonds if so determined by the commissioner. The owner may require as
a condition of entering into the lease of the facility that the lessee or other party pay all costs,
expenses, or any other obligations of ownership of the facility.
No revenues derived from the lease of the project may be used other than for a purpose related
to the project, including its operation, administration, maintenance, improvement, or financing.
    Subd. 6.[Repealed, 2007 c 138 s 17]
    Subd. 7.[Repealed, 2007 c 138 s 17]
    Subd. 8. Environmental assessment. Notwithstanding any other law or rule, no
environmental review must be completed prior to the approval of an application and the issuance
of a conditional commitment for the loan, or the taking of any other action permitted by Laws
1991, chapter 350, article 1, including the issuance of bonds, unless considered necessary or
desirable by the commissioner to prepare for a final commitment and to make it effective.
Environmental review, to the extent required by law, shall be made in conjunction with the
issuance by state agencies of environmental permits for the project. Permits may be applied for
prior to the issuance of a conditional commitment. Action shall be taken as expeditiously as
possible on environmental review and all permits required.
    Subd. 9.[Repealed, 2007 c 138 s 17]
History: 1991 c 350 art 1 s 2; 1Sp2003 c 4 s 1; 2007 c 138 s 2-5

116R.03 GENERAL POWERS.
For the purpose of exercising the specific powers authorized under sections 116R.01 to
116R.15 and effectuating the other purposes of sections 116R.01 to 116R.15, the commissioner
may:
(1) acquire, hold, pledge, assign, lease, or dispose of real or personal property or any interest
in property, including a mortgage or security interest in a facility described in section 116R.02,
subdivision 5 ;
(2) enter into agreements, contracts, or other transactions with any federal or state agency,
any person and any domestic or foreign partnership, corporation, association, or organization,
including contracts or agreements for administration and implementation of all or part of sections
116R.01 to 116R.15;
(3) acquire real property, or an interest therein, by purchase or foreclosure, where the
acquisition is necessary or appropriate;
(4) enter into agreements with lenders, borrowers, or the issuers of securities for the purpose
of regulating the development and management of any facility financed in whole or in part by the
proceeds of bonds or loans;
(5) enter into agreements with other appropriate federal, state, or local governmental units;
(6) contract with, use, or employ any federal, state, regional, or local public or private
agency or organization, legal counsel, financial advisors, investment bankers or others, upon
terms the commissioner considers necessary or desirable, to assist in the exercise of any of the
powers authorized under sections 116R.01 to 116R.15 and to carry out the objectives of sections
116R.01 to 116R.15 and may pay for the services from bond proceeds or otherwise available
department money; and
(7) in the event of a default under the loan, lease agreement, or other revenue agreement, the
facility, or any part of the facility, may be leased or sold to another person for any lawful purpose.
The lease or sale is subject to the approval of the commissioner if there are bonds outstanding for
financing the facility. The approval of the commissioner is not required if the bond trustee has
taken control of the facility as a result of a default.
History: 1991 c 350 art 1 s 3; 2007 c 138 s 6

116R.04 REVENUE BONDS; PURPOSES, TERMS, APPROVAL.
    Subdivision 1. Bonds. The commissioner from time to time may issue negotiable bonds in
one or more series or issues in a principal amount which, in the opinion of the commissioner of
employment and economic development, is necessary to provide sufficient funds for achieving
the purposes of sections 116R.01 to 116R.15, which may include the construction of a heavy
maintenance facility for aircraft to be located at the Duluth International Airport, the financing of
an aircraft engine repair facility in the city of Hibbing, the payment of interest on bonds of the
commissioner, the establishment of reserves to secure the bonds, and the payment of all other
expenditures of the commissioner and the owner of a financed facility incident to and necessary
or convenient to carry out the purposes and powers of sections 116R.01 to 116R.15. The bonds
may be issued as bonds or notes or in any other form authorized by law. Except as provided in
subdivision 3, section 116R.02, subdivision 4, paragraph (a), or an order of the commissioner
or indenture authorizing the bonds, sections 16A.631 to 16A.675 do not apply to the bonds
authorized under section 116R.02.
    Subd. 2. Refunding of bonds. The commissioner from time to time may issue bonds for
the purpose of refunding any bonds then outstanding, including the payment of any redemption
premiums thereon, any interest accrued or to accrue to the redemption date, and costs related to
the issuance and sale of the 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 bonds to be refunded,
to the redemption of such outstanding bonds on any redemption date, or to pay interest on the
refunding bonds and may, pending such application, be placed in escrow to be applied to such
purchase, payment, retirement, or redemption. Any such 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 any such 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
state bond fund, for use in any lawful manner. All refunding bonds issued under the provisions of
this subdivision must be issued and secured in the manner provided by order of the commissioner,
provided that any refunding bonds may be secured in any manner by which the refunded bonds
were secured and payable from any source from which the refunded bonds were payable.
    Subd. 3. Kind of bonds. All bonds issued under this section must be issued in the form
and manner and information in a bond register is subject to the limitations provided in section
16A.672.
    Subd. 4. Compliance with federal law. The commissioner may covenant and agree with
the holders of the bonds that the state will comply, insofar as possible, with the provisions of
the United States Internal Revenue Code now or hereafter enacted that are applicable to the
bonds and that establish conditions under which the interest to be paid on the bonds will not be
includable in gross income for federal tax purposes.
    Subd. 5. Taxability of interest. The bonds may be issued without regard to whether the
interest to be paid on them is includable in gross income for federal tax purposes.
History: 1991 c 350 art 1 s 4; 1Sp2003 c 4 s 1; 2007 c 138 s 16

116R.05 BONDS; ORDERS AUTHORIZING, ADDITIONAL TERMS, SALE.
    Subdivision 1. Terms. The bonds must be authorized by an order or orders of the
commissioner, bear such date or dates, mature at such time or times, bear interest at such rate or
rates, be in such denominations, be in such form, carry such registration privileges, be executed in
such manner, be payable in lawful money of the United States, at such place or places within or
without the state, and be subject to such terms of redemption or purchase prior to maturity as
the order or orders may provide, or as may be provided in any indenture or indentures of trust.
If, for any reason, whether existing at the date of issue of any bonds or at the date of making or
purchasing any loan or securities from the proceeds or after that date, the interest on any bonds
is or becomes subject to federal income taxation, this shall not impair or affect the validity of
the provisions made for the security of the bonds. The bonds may be sold at public or private
sale at a price or prices determined by the commissioner. The underwriting discount, spread, or
commission paid or allowed to the underwriters of the bonds, however, must be an amount not
in excess of the amount determined by the commissioner to be reasonable in the light of the
risk assumed and the expenses of issuance, if any, required to be paid by the underwriters or
prevailing market conditions and practices.
    Subd. 2. Sources of payment. Except as otherwise provided for bonds issued under section
116R.02, subdivision 4, paragraph (a), the bonds and interest payable thereon are payable solely
from the following sources and are irrevocably appropriated for that purpose, but only to the
extent provided in the order or indenture authorizing or securing the bonds:
    (1) revenues of any nature derived from the ownership, lease, operation, sale, foreclosure, or
refinancing of a project described in section 116R.02, subdivision 5;
    (2) repayments of any loans made under sections 116R.01 to 116R.15;
    (3) proceeds of any bonds or deficiency bonds;
    (4) amounts in any account or accounts authorized by section 116R.11 or 116R.12;
    (5) amounts paid by St. Louis County under its obligations referred to in section 116R.02,
subdivision 4 , and amounts paid under Laws 1991, chapter 350, article 1, section 24 or 25, for the
payment of bonds or interest thereon;
    (6) amounts payable under any insurance policy, guaranty, letter of credit, or other instrument
securing the bonds;
    (7) any other revenues which the commissioner may pledge but excluding state
appropriations unless the appropriation was specifically designated for that purpose; and
    (8) investment income on any of the sources specified in clauses (1) to (7).
    Subd. 3. Not a state debt. Except as provided in section 116R.02, subdivision 4, paragraph
(a), no bond shall constitute a debt of the state within the meaning of any statutory or constitutional
limitation or pledge the full faith and credit of the state and no holder of any bonds may compel
any exercise of the taxing power of the state to pay principal, premiums, or interest for the bonds,
nor to enforce payment of principal, premiums, or interest against any property of the state, except
for property expressly pledged, mortgaged, encumbered, or appropriated for this purpose.
History: 1991 c 350 art 1 s 5; 2007 c 138 s 7

116R.06 BONDS; OPTIONAL ORDER AND CONTRACT PROVISIONS.
Any order authorizing any bonds or any issue of bonds or any indenture may contain
provisions, which may be a part of the contract with the holders of the bonds, as to the matters
referred to in this section.
(a) It may pledge or create a lien on money or property and any money held in trust or
otherwise by others to secure the payment of the bonds or of any series or issue of bonds and
interest thereon and of any sums due to the trustee under the indenture, and may grant different
priorities in the lien for different series of bonds, subject to any agreements with bondholders
which exist.
(b) It may provide for the custody, collection, securing, investment, and payment of money.
(c) It may set aside reserves or sinking funds and provide for their regulation and disposition
and may create other special funds into which money may be deposited.
(d) It may limit the loans and securities to which the proceeds of sale of bonds may be
applied and may pledge repayments thereon to secure the payment of the bonds or of any series or
issue of bonds.
(e) It may limit the issuance of additional bonds, the terms upon which additional bonds may
be issued and secured, and the refunding of outstanding or other bonds.
(f) It may prescribe the procedure, if any, by which the terms of any contract with
bondholders may be amended or abrogated, the amount of bonds the holders of which must
consent to the amendment or abrogation, and the manner in which that consent may be given.
(g) It may vest in a trustee or trustees property, rights, powers, and duties in trust determined
by the commissioner, which may include any or all of the rights, powers, and duties of the
bondholders, or may limit the rights, powers, and duties of the trustee. It may make contracts
with a trustee or trustees authorizing the trustee or trustees to invest in investments that may be
invested in by the state Board of Investment under section 11A.24, and apply, or dispose of and
use money in any account.
(h) It may define the acts or omissions to act which constitute a default in the obligations and
duties of the commissioner and may provide for the rights and remedies of the holders of bonds in
the event of a default, and provide any other matters of like or different character, consistent with
the general laws of the state and other provisions of sections 116R.01 to 116R.15, which in any
way affect the security or protection of the bonds and the rights of the bondholders.
(i) It may incur obligations under the indenture or under any paying agency, bond registrar
agreement or escrow agreement to pay the compensation and expenses of the trustee, paying
agent, bond registrar or escrow agent for the bonds and to pay any sums required to be rebated
to the United States to comply with applicable tax laws; and a sum sufficient to satisfy these
obligations is annually appropriated to the commissioner from the general fund to the extent other
revenues available for that purpose are insufficient.
History: 1991 c 350 art 1 s 6; 2007 c 138 s 16

116R.07 PLEDGES.
Any pledge made by the commissioner is valid and binding from the time the pledge is
made. The money or property pledged and later received by the commissioner is immediately
subject to the lien of the pledge without any physical delivery of the property or money or further
act, and the lien of any pledge is valid and binding as against all parties having claims of any
kind in tort, contract, or otherwise against the commissioner, whether or not those parties have
notice of the lien or pledge. Neither the order nor any other instrument by which a pledge is
created need be recorded.
History: 1991 c 350 art 1 s 7

116R.08 BONDS; NONLIABILITY OF INDIVIDUALS.
The commissioner and the commissioner's staff and any person executing the bonds are not
personally liable on the bonds or subject to any personal liability or accountability by reason of
their issuance.
History: 1991 c 350 art 1 s 8

116R.09 BONDS; PURCHASE AND CANCELLATION.
The commissioner, subject to agreements with bondholders which may then exist, has power
out of any funds available for the purpose to purchase bonds of the commissioner at a price not
exceeding (a) if the bonds are then redeemable, the redemption price then applicable plus accrued
interest to the next interest payment date thereon, or (b) if the bonds are not redeemable, the
redemption price applicable on the first date after the purchase upon which the bonds become
subject to redemption plus accrued interest to that date.
History: 1991 c 350 art 1 s 9

116R.10 STATE PLEDGE AGAINST IMPAIRMENT OF CONTRACTS.
The state pledges and agrees with the holders of any bonds that the state will not limit or
alter the rights vested in the commissioner to fulfill the terms of any agreements made with the
bondholders, or in any way impair the rights and remedies of the holders until the bonds, together
with interest on them, with interest on any unpaid installments of interest, and all costs and
expenses in connection with any action or proceeding by or on behalf of the bondholders, are
fully met and discharged. The commissioner may include this pledge and agreement of the state
in any agreement with the holders of bonds issued under sections 116R.01 to 116R.15.
History: 1991 c 350 art 1 s 10; 2007 c 138 s 16

116R.11 AIRCRAFT FACILITIES FUNDS AND DEBT SERVICE ACCOUNTS.
    Subdivision 1. Funds. The commissioner or any trustee appointed by the commissioner
under sections 116R.01 to 116R.15 shall establish and maintain an aircraft facilities fund
for the project described in section 116R.02, subdivision 5. Except for amounts required by
the commissioner to be deposited in a debt service account, proceeds of each issue of bonds
authorized under section 116R.02, subdivision 1, must be deposited in a separate account,
debt service reserve, or other account designated by the commissioner. Money in the account
is appropriated to the commissioner. The commissioner or the owner of the project described
in section 116R.02, subdivision 5, may withdraw proceeds of bonds for application to the
appropriated purposes in the manner provided by order of the commissioner or in any indenture
authorized by order of the commissioner. The commissioner may establish whatever accounts
might be necessary to carry out sections 116R.01 to 116R.15. All deposits into and disbursements
from accounts for the purposes and from the sources of revenue authorized by sections 116R.01
to 116R.15 and provided in an order of the commissioner or an indenture or other agreement
authorized by the commissioner are appropriated for that purpose.
    Subd. 2. Accounts. The commissioner of finance or any trustee appointed by the
commissioner under sections 116R.01 to 116R.15 shall maintain permanently on official books
and records debt service accounts separate from all other funds and accounts, to record all receipts
and disbursements of money for principal and interest payments on each series of bonds. No
later than the due date of each principal and interest payment on the bonds, the commissioner
shall withdraw from the proceeds of the bonds, or from revenues on hand and available for the
purpose, and shall deposit in the debt service accounts the amount, if any, required to be deposited
in the account by the order of the commissioner or any indenture authorized by an order of the
commissioner. All amounts in any debt service account are appropriated for the payment of
principal, premiums, and interest for the bonds to which the account relates. If the Minnesota
Constitution, article XI, section 7, applies to any series of bonds, amounts in the debt service
account and any debt service reserve account established under section 116R.13 for the bonds,
regardless of who holds or invests the amounts, must be special accounts of the state bond fund,
for which the commissioner of finance shall maintain records. Amounts in the accounts must
reduce any levy otherwise required by the Minnesota Constitution for payment of principal or
interest on the bonds.
History: 1991 c 350 art 1 s 11; 2003 c 112 art 2 s 50; 2007 c 138 s 8,16

116R.12 POWERS AND DUTIES OF TRUSTEE.
    Subdivision 1. General. The trustee, if any, designated in any indenture or order securing an
issue of bonds may, in the trustee's own name, if so provided in the indenture or order:
(1) enforce all rights of the bondholders, including the right to require the commissioner
to collect fees, charges, interest, and payments on leases, loans, or interests therein held by the
commissioner and eligible securities purchased by it adequate to carry out any agreement as to, or
pledge of, those fees, charges, and payments, and to require the commissioner to carry out any
other agreements with the holders of the bonds and to perform the duties required under sections
116R.01 to 116R.15;
(2) bring suit upon the bonds;
(3) require the commissioner to account as if it were the trustee of any express trust for the
holders of the bonds;
(4) enjoin any acts or things which may be unlawful or in violation of the rights of holders
of the bonds; or
(5) upon a default as defined in any bond, order, or indenture, declare all the bonds due and
payable, enforce any remedy available under law, and if all defaults are made good, the trustee
may annul the declaration and consequences.
    Subd. 2. Additional powers. In addition to the powers in subdivision 1, the trustee has all
of the powers necessary or appropriate for the exercise of any functions specifically set forth in
this section or incident to the general representation of bondholders in the enforcement and
protection of their rights.
    Subd. 3. Venue. The venue of any action or proceedings brought by a trustee is in Ramsey
County.
    Subd. 4. Approval. The approval of the commissioner is not required if the bond trustee has
taken control of the facility as a result of a default.
History: 1991 c 350 art 1 s 12; 2007 c 138 s 9,16

116R.13 DEBT SERVICE RESERVE ACCOUNT.
    Subdivision 1. Authority. The commissioner or a trustee appointed by the commissioner
may create, maintain, and establish a special account or accounts for the security of one or more
or all series of the bonds, which accounts are known as debt service reserve accounts. The
commissioner may pay into each debt service reserve account:
(1) any money appropriated by the state only for the purposes of that account;
(2) any proceeds of sale of bonds to the extent provided in the order or indenture authorizing
their issuance;
(3) any money directed to be transferred by the commissioner to that debt service reserve
account; and
(4) any other money made available to the commissioner for the purpose of that account
from any other source.
    Subd. 2. Use of money. The money held in or credited to each debt service reserve account,
except as provided in this section, must be used solely for the payment of the principal of bonds
of the commissioner as the bonds mature or otherwise become due, the purchase of the bonds,
the payment of interest on the bonds, the payment of any premium required when the bonds
are redeemed before maturity, the payment of trustee or paying agency or registrar fees and
expenses, the reimbursement of any advance made from another fund or account, or the payment
of any rebate amounts owing to the United States government in accordance with any applicable
covenant to comply with federal tax laws; provided, that money in a debt service reserve account
may not be withdrawn at any time in an amount which would reduce the amount of the account
to less than any amount which the commissioner determines to be reasonably necessary for the
purposes of the account, except for the purpose of paying principal, premium, or interest due on
bonds secured by the account, for the payment of which other money is not available.
    Subd. 3. General obligation bonds. (a) If the amount in any debt service reserve account
falls below the minimum required in an order of the commissioner or indenture for the applicable
series of bonds and the order or indenture so provides and subject to the limitations in section
116R.02, subdivision 4, paragraph (a), clause (1), the commissioner shall issue as promptly as
practicable, but in no event later than six months after the occurrence of the deficiency, general
obligation bonds in accordance with the Minnesota Constitution, article XI, section 7, and
sections 16A.641, subdivisions 1 to 4 and 6 to 13; 16A.66; 16A.672; 16A.675; and 116R.02,
subdivision 4 , except as otherwise provided in this section and unless provision is made for
restoring the deficiency from other sources. Section 16A.641, subdivision 5, does not apply to
the issuance of bonds authorized under this subdivision. Amounts sufficient to pay the costs of
issuance of the deficiency bonds are appropriated to the commissioner from the general fund to
the extent other available money is insufficient. Proceeds of the deficiency bonds may be used to
pay costs related to the issuance of the deficiency bonds and interest due on the deficiency bonds
and to establish a debt service reserve for the deficiency bonds. Any remaining proceeds must be
deposited in the debt service reserve account, except that accrued interest must be deposited as
provided in section 16A.641, subdivision 7, paragraph (b). The proceeds of the deficiency bonds
and any investment income are appropriated for these purposes. In any event, the proceeds of
the deficiency bonds deposited in the debt service reserve account must be an amount not less
than the commissioner determines is required to pay principal and interest on the state guaranteed
bonds secured by the debt service reserve account.
(b) The underwriting discount, spread, or commission paid or allowed to the underwriters or
placement agents of deficiency bonds and bonds described in section 116R.02, subdivision 4,
paragraph (a), must be an amount not in excess of the amount determined by the commissioner to
be reasonable in light of the risk assumed and the expense of issuance, if any, required to be paid
by the underwriters, placement agents, or prevailing market conditions and practices.
    Subd. 4. Limitation. If the commissioner creates a debt service reserve account for the
security of any series of bonds, the commissioner may not issue any additional bonds which are
similarly secured if the amount of any of the debt service reserve accounts at the time of issuance
does not equal or exceed the minimum amount, if any, required by the resolution creating that
account, unless the commissioner deposits in each account at the time of issuance, from the
proceeds of the bonds or otherwise, an amount which, together with the amount then in the
account, will not be less than the minimum amount required.
    Subd. 5. Excess money. To the extent consistent with the orders and indentures securing
outstanding bonds, the commissioner may, at the close of any fiscal year, transfer to any other
account from any debt service reserve account, any excess in that account over the amount
considered by the commissioner to be reasonably necessary for the purpose of the account.
    Subd. 6. Construction. Nothing in this section may be construed to limit the right of the
commissioner to create and establish by order or indenture other accounts or security in addition
to debt service reserve accounts which are necessary or desirable in connection with any bonds.
History: 1991 c 350 art 1 s 13

116R.14 CONSTRUCTION.
Sections 116R.01 to 116R.15 are necessary for the welfare of the state of Minnesota and its
inhabitants; therefore, they shall be liberally construed to effect their purpose.
History: 1991 c 350 art 1 s 14; 2007 c 138 s 16

116R.15 SEVERABILITY; ACTIONS.
Each of the provisions of sections 116R.01 to 116R.15, and each application thereof
to particular circumstances, is severable. If any provision or application is found to be
unconstitutional and void, it is the intention that the remaining provisions and applications shall
be valid and enforceable to the full extent possible under section 645.20.
History: 1991 c 350 art 1 s 15; 2007 c 138 s 16

116R.16 [Repealed, 2007 c 138 s 17]