2005 Minnesota Statutes

     429.091 Financing. 

    Subdivision 1.    Authority.  At any time after one or 
 more improvements are ordered as contemplated in section 
 429.031, the council may issue obligations in such amount as it 
 deems necessary to defray in whole or in part the expense 
 incurred and estimated to be incurred in making the improvement 
 or improvements, including every item of cost of the kinds 
 authorized in section 475.65.  In the event of any omission, 
 error, or mistake in any of the proceedings required precedent 
 to the ordering of any improvement, the validity of the 
 obligations shall not be affected thereby.  The council shall 
 cause all further actions and proceedings to be taken with due 
 diligence that are required for the construction of each 
 improvement financed wholly or partly from the proceeds of 
 obligations issued hereunder, and for the final and valid levy 
 of special assessments and the appropriation of any other funds 
 needed to pay the obligations and interest thereon when due. 

    Subd. 2.    Types of obligations permitted.  The council 
 may by resolution adopted prior to the sale of obligations 
 pledge the full faith, credit, and taxing power of the 
 municipality for the payment of the principal and interest.  
 Such obligations shall be called improvement bonds and the 
 council shall pay the principal and interest out of any fund of 
 the municipality when the amount credited to the specified fund 
 is insufficient for the purpose and shall each year levy a 
 sufficient amount to take care of accumulated or anticipated 
 deficiencies, which levy shall not be subject to any statutory 
 or charter tax limitation. Obligations for the payment of which 
 the full faith and credit of the municipality is not pledged 
 shall be called assessment revenue notes or, in the case of 
 bonds for fire protection, revenue bonds and shall contain a 
 promise to pay solely out of the proper special fund or funds 
 pledged to their payment.  It shall be the duty of the municipal 
 treasurer to pay maturing principal and interest on warrants or 
 revenue bonds out of funds on hand in the proper funds and not 
 otherwise. 

    Subd. 3.    Method of issuance.  All obligations shall 
 be issued in accordance with the provisions of chapter 475, 
 except as provided in this subdivision.  

    An election shall be required for bonds if less than 20 
 percent of the cost of the improvement to the municipality is to 
 be assessed against benefited property.  

    If the full faith, credit, and taxing power of the 
 municipality is not pledged and the bonds are issued to finance 
 a fire protection system, a public sale shall not be required 
 and the obligations may 

    (a) mature at any time or times within 30 years from date 
 of issue; or 40 years or the useful life of the asset, whichever 
 is less, for municipal water and wastewater treatment systems 
 and essential community facilities financed or guaranteed by the 
 United States Department of Agriculture; 

    (b) mature in the amount or amounts, 

    (c) be sold at a price equal to the percentage of their par 
 value, plus accrued interest, and 

    (d) bear interest at the rate or rates, 

 as agreed by the purchaser and the municipality, notwithstanding 
 any limitation of interest rate or cost or of the amounts of 
 annual maturities contained in any other law.  

    The maturities shall be such as in the opinion of the 
 council are warranted by the anticipated collections of 
 assessments and ad valorem levies for the municipality's share 
 of the cost; except that the council may in its discretion issue 
 and sell temporary improvement bonds maturing and subject to 
 further conditions as set forth in subdivision 5.  All 
 obligations shall state upon their face the purpose of the issue 
 and the fund from which they are payable.  The amount of any 
 obligations issued hereunder shall not be included in 
 determining the net indebtedness of any municipality under the 
 provisions of any law limiting such indebtedness. 

    Subd. 4.    Funds.  The proceeds from the sale of each 
 issue of obligations and from collections of special assessments 
 levied and other moneys appropriated for each improvement to be 
 financed wholly or partly from such proceeds shall be credited 
 to a separate construction fund which shall be used solely to 
 defray expenses of such improvements and payment of principal 
 and interest due upon the obligations prior to completion and 
 payment of all costs of the improvements so financed.  Any 
 balance of the proceeds of bonds remaining therein may be used 
 to pay the cost, in whole or in part, of any other improvement 
 instituted pursuant to this chapter.  A separate account shall 
 be maintained in the construction fund to record expenditures 
 for each improvement, and when the total cost thereof has been 
 paid all subsequent collections of special assessments levied 
 for the improvement shall be credited and paid into the debt 
 service fund for the obligations issued to finance the 
 improvement, as provided in section 475.61.  Any taxes levied 
 for improvements financed by an issue of obligations shall be 
 credited directly to the debt service fund. 

    Subd. 5.    Temporary improvement bonds.  In 
 anticipation of the issuance of improvement bonds, the council 
 may by resolution issue and sell temporary improvement bonds 
 maturing within not more than three years from their date of 
 issue to pay any part or all of the cost of one or more 
 improvements.  To the extent that the principal of and interest 
 on the temporary improvement bonds cannot be paid when due from 
 receipts of special assessments, taxes, or other funds 
 appropriated for the purpose, they shall be paid from the 
 proceeds of improvement bonds or additional temporary 
 improvement bonds which the council shall offer for sale in 
 advance of their maturity but the indebtedness funded by an 
 issue of temporary improvement bonds shall not be extended by 
 the issue of additional temporary improvement bonds for more 
 than six years from the date of the first issue.  The holders of 
 any temporary improvement bonds shall have and may enforce, by 
 mandamus or other appropriate proceedings, all rights respecting 
 the levy and collection of sufficient special assessments and 
 taxes to pay the cost of the improvements financed by them which 
 are granted by law to holders of improvement bonds, except the 
 right to require the levies to be collected prior to the 
 maturity of the temporary improvement bonds.  If any temporary 
 improvement bonds are not paid in full at maturity, the holders 
 may require the issuance in exchange for them, at par, of new 
 temporary improvement bonds maturing within one year from their 
 date of issue (but not subject to any other maturity 
 limitation), and bearing interest at the maximum rate permitted 
 by law.  

    Subd. 6.    Investment of other municipal funds.  Funds 
 of a municipality may be invested in its temporary improvement 
 bonds in accordance with the provisions of section 118A.04, and 
 may be purchased upon their initial issue, but shall be 
 purchased only from funds which the council determines will not 
 be required for other purposes before the maturity date, and 
 shall be resold before maturity only in case of emergency.  If 
 purchased from a debt service fund securing other bonds, the 
 holders of those bonds may enforce the municipality's 
 obligations on the temporary improvement bonds in the same 
 manner as if they held the temporary improvement bonds.  

    Subd. 7.    General obligation temporary improvement 
 bonds.  The council may by resolution adopted prior to the 
 sale of any temporary improvement bonds pledge the full faith, 
 credit, and taxing power of the municipality for the payment of 
 the principal and interest, in addition to all provisions made 
 for their security in subdivision 5.  In this event the bonds 
 shall be designated as general obligation temporary improvement 
 bonds, and the council shall levy taxes for their payment in 
 accordance with section 475.61.  Proceeds of improvement bonds 
 or temporary improvement bonds not yet sold may be treated as 
 pledged revenues, in reduction of the tax otherwise required by 
 section 475.61 to be levied prior to delivery of the obligations.

    Subd. 7a.    Revolving fund bonds.  The council may by 
 resolution establish a revolving fund for the payment of the 
 costs of any improvement or any waterworks systems, sewer 
 systems, or storm sewer systems described in section 444.075, 
 the costs of facilities to maintain streets and water, sewer, 
 and storm sewer systems and for the payment of any obligations 
 issued to pay the costs of the facilities and systems referred 
 to in this subdivision or to refund obligations issued for those 
 purposes.  The council may create within the revolving fund a 
 separate construction account into which the municipality may 
 deposit the proceeds of any obligations payable from the fund, 
 the proceeds of any special assessments collected with respect 
 to any improvement, any net revenues of a waterworks, sewer 
 system, or storm sewer system described in section 444.075 or 
 any other available funds of the municipality appropriated to 
 it.  Amounts on deposit in the construction account may be used 
 to pay the costs of any improvement or any waterworks, sewer 
 system, or storm sewer system described in section 444.075 or 
 any street or water, sewer, or storm sewer maintenance 
 facilities.  No funds may be expended for an improvement unless 
 at least 20 percent of the costs of each such improvement is to 
 be assessed against benefited property.  No funds may be 
 expended for a waterworks, sewer system, or storm sewer system, 
 other than a sewer system described in section 115.46, or 
 maintenance facilities unless the council estimates that the 
 costs will be recovered from the net revenues of the system or 
 any combined waterworks, sewer systems, or storm sewer systems 
 operated by the municipality.  The council may also create a 
 separate debt service account within the revolving fund for the 
 payment of principal of and interest on any obligations payable 
 therefrom.  Notwithstanding subdivision 4, the council is not 
 required to pledge any particular assessments or other revenues 
 to the payment of the obligations.  Collections of special 
 assessments or net revenues may be deposited in either the 
 construction account or the debt service account as the council 
 or an officer designated by the council may determine, having 
 due regard for anticipated collections of special assessments 
 and net revenues from improvements or waterworks, sewer systems, 
 or storm sewer systems financed in whole or in part from the 
 construction account, and taxes levied for the payment of the 
 obligations.  The council may issue obligations that are payable 
 primarily from the debt service account for the purpose of 
 providing funds to defray in whole or in part any expenses 
 incurred or estimated to be incurred in making the improvement 
 or improvements or in constructing the waterworks, sewer system, 
 or storm sewer system, including every item of cost of the kinds 
 authorized by section 475.65, and street and water, sewer, and 
 storm sewer maintenance facilities or to refund obligations 
 previously issued under this section or section 115.46 or 
 444.075.  The obligations may be general obligations to which 
 the full faith and credit of the municipality are pledged.  If 
 the special assessments to be levied and net revenues estimated 
 to be available for their payment are estimated to be at least 
 20 percent of the principal amount of the obligations, the 
 obligations may be issued without an election and shall not be 
 included in determining the net indebtedness of the municipality 
 under the provisions of any law limiting net indebtedness.  The 
 cost of a maintenance facility that may be financed under this 
 subdivision is limited only to the portion of the facility that 
 is fairly allocable to the maintenance of streets and water, 
 sewer, and storm sewer systems. 

    Subd. 8.    When Bond Allocation Act applies.  Sections 
 474A.01 to 474A.21 apply to any issuance of obligations under 
 this section which are subject to limitation under a federal tax 
 law as defined in section 474A.02, subdivision 8. 

    HIST: 1953 c 398 s 9; 1955 c 811 s 3-5; 1957 c 385 s 1; 1965 c 
 877 s 5; 1976 c 324 s 19-21; 1981 c 171 s 1-4; 1984 c 548 s 6; 
 1984 c 582 s 5,6,23; 1984 c 591 s 4,5; 1984 c 633 s 4; 1Sp1985 c 
 14 art 8 s 63; 1986 c 465 art 1 s 3; 1987 c 344 s 4,5; 1992 c 
 545 art 2 s 4; 1996 c 297 s 1; 1996 c 399 art 2 s 12; 2000 c 260 
 s 57; 2001 c 214 s 11