1.1                          A bill for an act 
  1.2             relating to public finance; modifying provisions 
  1.3             relating to the issuance of debt and the use and 
  1.4             investment of public funds; amending Minnesota 
  1.5             Statutes 1996, sections 118A.04, subdivision 9; 
  1.6             118A.05, subdivision 4; 136A.32, subdivision 7; 
  1.7             373.01, subdivision 3; 373.40, subdivision 7; 410.32; 
  1.8             412.301; 414.067, subdivision 2; 429.021, subdivision 
  1.9             1; 447.45, subdivision 2; 465.71; 469.0171; 469.034, 
  1.10            subdivision 2; 469.059, subdivision 6; 469.101, 
  1.11            subdivision 6; 469.153, subdivision 2; 469.154, 
  1.12            subdivisions 3, and 6; 469.155, by adding a 
  1.13            subdivision; 471.981, by adding a subdivision; 475.61, 
  1.14            subdivision 3; 475.67, subdivision 12; and 641.23; 
  1.15            proposing coding for new law in Minnesota Statutes, 
  1.16            chapters 471; and 475. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  Minnesota Statutes 1996, section 118A.04, 
  1.19  subdivision 9, is amended to read: 
  1.20     Subd. 9.  [BROKER; STATEMENT AND RECEIPT.] (a) For the 
  1.21  purpose of this section and section 118A.05, the term "broker" 
  1.22  means a broker-dealer, broker, investment adviser, or agent of a 
  1.23  government entity, who transfers, purchases, sells, or obtains 
  1.24  securities for, or on behalf of, a government entity. 
  1.25     (b) Prior to completing an initial transaction with a 
  1.26  broker, a government entity shall provide annually to the broker 
  1.27  a written statement of investment restrictions which shall 
  1.28  include a provision that all future investments are to be made 
  1.29  in accordance with Minnesota Statutes governing the investment 
  1.30  of public funds. 
  1.31     (c) A broker must acknowledge annually receipt of the 
  2.1   statement of investment restrictions in writing and agree to 
  2.2   handle the government entity's account in accordance with these 
  2.3   restrictions.  A government entity may not enter into a 
  2.4   transaction with a broker until the broker has provided this 
  2.5   written agreement to the government entity. 
  2.6      (d) The state auditor shall prepare uniform notification 
  2.7   forms which shall be used by the government entities and the 
  2.8   brokers to meet the requirements of this subdivision. 
  2.9      (e) A broker is exempt from the requirements of paragraphs 
  2.10  (b) to (d) when executing securities transactions for or on 
  2.11  behalf of a government entity at the direction of a third-party 
  2.12  investment adviser who is registered under chapter 80A or the 
  2.13  Investment Adviser's Act of 1940. 
  2.14     Sec. 2.  Minnesota Statutes 1996, section 118A.05, 
  2.15  subdivision 4, is amended to read: 
  2.16     Subd. 4.  [MINNESOTA JOINT POWERS INVESTMENT TRUST FUNDS.] 
  2.17  Government entities may enter into agreements or contracts for: 
  2.18     (1) shares of a Minnesota joint powers investment trust 
  2.19  whose investments are restricted to securities described in this 
  2.20  subdivision, subdivision 2, and section 118A.04,; 
  2.21     (2) units of a short-term investment fund established and 
  2.22  administered pursuant to regulation 9 of the Office of the 
  2.23  Comptroller of the Currency, in which investments are restricted 
  2.24  to securities described in subdivision 2 and section 118A.04; or 
  2.25     (3) shares of an investment company which is registered 
  2.26  under the Federal Investment Company Act of 1940, and whose 
  2.27  shares are registered under the Federal Securities Act of 1933, 
  2.28  as long as the investment company's fund receives the highest 
  2.29  credit rating which holds itself out as a money market fund 
  2.30  meeting the conditions of rule 2a-7 of the Securities and 
  2.31  Exchange Commission and is rated in one of the two highest risk 
  2.32  rating categories for money market funds by at least one 
  2.33  nationally recognized statistical rating organization and is 
  2.34  invested in financial instruments with a final maturity no 
  2.35  longer than 13 months. 
  2.36     Sec. 3.  Minnesota Statutes 1996, section 136A.32, 
  3.1   subdivision 7, is amended to read: 
  3.2      Subd. 7.  The authority may invest any bond proceeds, 
  3.3   sinking funds or reserves in any securities authorized for 
  3.4   investment of funds of municipalities pursuant to section 
  3.5   sections 118A.04 and 118A.05, including securities described in 
  3.6   section 475.67, subdivision 8.  In addition, such bond proceeds, 
  3.7   sinking funds and reserves may be 
  3.8      (1) deposited in time deposits of any state or national 
  3.9   bank subject to the limitations and requirements of chapter 118 
  3.10  118A, or 
  3.11     (2) invested in repurchase agreements with, providing for 
  3.12  the repurchase of securities described in the preceding sentence 
  3.13  by, a bank qualified as a depository of money of the authority, 
  3.14  a national or state bank in the United States that is a member 
  3.15  of the federal reserve system and whose combined capital and 
  3.16  surplus equals or exceeds $10,000,000, or a reporting dealer to 
  3.17  the federal reserve bank of New York.  Power to make any such 
  3.18  investment or deposit is subject to the provisions of any 
  3.19  applicable covenant or restriction in a resolution or trust 
  3.20  agreement of the authority. 
  3.21     Sec. 4.  Minnesota Statutes 1996, section 373.01, 
  3.22  subdivision 3, is amended to read: 
  3.23     Subd. 3.  [CAPITAL NOTES.] A county board may, by 
  3.24  resolution and without referendum, issue capital notes subject 
  3.25  to the county debt limit to purchase (1) capital equipment 
  3.26  useful for county purposes that has an expected useful life at 
  3.27  least equal to the term of the notes, and (2) computer hardware 
  3.28  and software, without regard to its expected useful life, 
  3.29  whether bundled with machinery or equipment or unbundled 
  3.30  together with application development services and training 
  3.31  related to the use of the computer.  The notes shall be payable 
  3.32  in not more than five years and shall be issued on terms and in 
  3.33  a manner the board determines.  A tax levy shall be made for 
  3.34  payment of the principal and interest on the notes, in 
  3.35  accordance with section 475.61, as in the case of bonds.  For 
  3.36  purposes of this subdivision, "capital equipment" means public 
  4.1   safety, ambulance, road construction or maintenance, medical, 
  4.2   and data processing equipment. 
  4.3      Sec. 5.  Minnesota Statutes 1996, section 373.40, 
  4.4   subdivision 7, is amended to read: 
  4.5      Subd. 7.  [REPEALER.] This section is repealed effective 
  4.6   for bonds issued after July 1, 1998 2002, but continues to apply 
  4.7   to bonds issued before that date. 
  4.8      Sec. 6.  Minnesota Statutes 1996, section 410.32, is 
  4.9   amended to read: 
  4.10     410.32 [CITIES AUTHORIZED TO ISSUE CAPITAL NOTES FOR 
  4.11  CERTAIN EQUIPMENT ACQUISITIONS.] 
  4.12     Notwithstanding any contrary provision of other law or 
  4.13  charter, a home rule charter city may, by resolution and without 
  4.14  public referendum, issue capital notes subject to the city debt 
  4.15  limit to purchase (1) public safety equipment, ambulance and 
  4.16  other medical equipment, road construction and maintenance 
  4.17  equipment, and other capital equipment having an expected useful 
  4.18  life at least as long as the term of the notes, and (2) computer 
  4.19  hardware and software, without regard to its expected useful 
  4.20  life, whether bundled with machinery or equipment or unbundled 
  4.21  together with application development services and training 
  4.22  related to the use of the computer.  The notes shall be payable 
  4.23  in not more than five years and be issued on terms and in the 
  4.24  manner the city determines.  The total principal amount of the 
  4.25  capital notes issued in a fiscal year shall not exceed 0.03 
  4.26  percent of the market value of taxable property in the city for 
  4.27  that year.  A tax levy shall be made for the payment of the 
  4.28  principal and interest on the notes, in accordance with section 
  4.29  475.61, as in the case of bonds.  Notes issued under this 
  4.30  section shall require an affirmative vote of two-thirds of the 
  4.31  governing body of the city.  Notwithstanding a contrary 
  4.32  provision of other law or charter, a home rule charter city may 
  4.33  also issue capital notes subject to its debt limit in the manner 
  4.34  and subject to the limitations applicable to statutory cities 
  4.35  pursuant to section 412.301. 
  4.36     Sec. 7.  Minnesota Statutes 1996, section 412.301, is 
  5.1   amended to read: 
  5.2      412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
  5.3      The council may issue certificates of indebtedness or 
  5.4   capital notes subject to the city debt limits to purchase (1) 
  5.5   public safety equipment, ambulance equipment, road construction 
  5.6   or maintenance equipment, and other capital equipment having an 
  5.7   expected useful life at least as long as the terms of the 
  5.8   certificates or notes, and (2) computer hardware and software, 
  5.9   without regard to its expected useful life, whether bundled with 
  5.10  machinery or equipment or unbundled together with application 
  5.11  development services and training related to the use of the 
  5.12  computer.  Such certificates or notes shall be payable in not 
  5.13  more than five years and shall be issued on such terms and in 
  5.14  such manner as the council may determine.  If the amount of the 
  5.15  certificates or notes to be issued to finance any such purchase 
  5.16  exceeds 0.25 percent of the market value of taxable property in 
  5.17  the city, they shall not be issued for at least ten days after 
  5.18  publication in the official newspaper of a council resolution 
  5.19  determining to issue them; and if before the end of that time, a 
  5.20  petition asking for an election on the proposition signed by 
  5.21  voters equal to ten percent of the number of voters at the last 
  5.22  regular municipal election is filed with the clerk, such 
  5.23  certificates or notes shall not be issued until the proposition 
  5.24  of their issuance has been approved by a majority of the votes 
  5.25  cast on the question at a regular or special election.  A tax 
  5.26  levy shall be made for the payment of the principal and interest 
  5.27  on such certificates or notes, in accordance with section 
  5.28  475.61, as in the case of bonds.  
  5.29     Sec. 8.  Minnesota Statutes 1996, section 414.067, 
  5.30  subdivision 2, is amended to read: 
  5.31     Subd. 2.  [ENTIRE TOWNSHIP OR MUNICIPALITY.] When an entire 
  5.32  township is annexed by an existing municipality, or an entire 
  5.33  township is incorporated into a new municipality, or a 
  5.34  municipality is consolidated into a new municipality, all money, 
  5.35  claims, or properties, including real estate owned, held, or 
  5.36  possessed by the annexed, incorporated township or municipality, 
  6.1   and any proceeds or taxes levied by such town or municipality, 
  6.2   collected or uncollected, shall become and be the property of 
  6.3   the new or annexing municipality with full power and authority 
  6.4   to use and dispose of the same for public purposes as the 
  6.5   council or new annexing municipality may deem best, subject to 
  6.6   the rights of creditors.  Any taxes levied to pay bonded 
  6.7   indebtedness of a town or former municipality annexed to an 
  6.8   existing municipality or incorporated or consolidated into a new 
  6.9   municipality shall be borne only by that taxable property within 
  6.10  the boundaries of the former town or municipality, provided, 
  6.11  however, the units of government concerned may by resolution of 
  6.12  their governing bodies agree that taxes levied to pay the 
  6.13  indebtedness must be levied upon all taxable property within the 
  6.14  boundaries of the new municipality shall assume the bonded 
  6.15  indebtedness of the former units of government existing and 
  6.16  outstanding at the time of annexation, incorporation or 
  6.17  consolidation.  Notwithstanding that the bonded indebtedness may 
  6.18  be payable from taxes levied on only a portion of the taxable 
  6.19  property in the new or surviving municipality, the full faith 
  6.20  and credit of the new or surviving municipality must secure any 
  6.21  outstanding bonded indebtedness to which the full faith and 
  6.22  credit of the annexed or consolidated township or municipality 
  6.23  was pledged.  If any general funds of the new or surviving 
  6.24  municipality are used to pay debt service on the bonded 
  6.25  indebtedness, the general funds must be reimbursed, with or 
  6.26  without interest, from taxes levied on taxable property in the 
  6.27  former township or municipality. 
  6.28     Sec. 9.  Minnesota Statutes 1996, section 429.021, 
  6.29  subdivision 1, is amended to read: 
  6.30     Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
  6.31  municipality shall have power to make the following improvements:
  6.32     (1) To acquire, open, and widen any street, and to improve 
  6.33  the same by constructing, reconstructing, and maintaining 
  6.34  sidewalks, pavement, gutters, curbs, and vehicle parking strips 
  6.35  of any material, or by grading, graveling, oiling, or otherwise 
  6.36  improving the same, including the beautification thereof and 
  7.1   including storm sewers or other street drainage and connections 
  7.2   from sewer, water, or similar mains to curb lines. 
  7.3      (2) To acquire, develop, construct, reconstruct, extend, 
  7.4   and maintain storm and sanitary sewers and systems, including 
  7.5   outlets, holding areas and ponds, treatment plants, pumps, lift 
  7.6   stations, service connections, and other appurtenances of a 
  7.7   sewer system, within and without the corporate limits. 
  7.8      (3) To construct, reconstruct, extend, and maintain steam 
  7.9   heating mains. 
  7.10     (4) To install, replace, extend, and maintain street lights 
  7.11  and street lighting systems and special lighting systems. 
  7.12     (5) To acquire, improve, construct, reconstruct, extend, 
  7.13  and maintain water works systems, including mains, valves, 
  7.14  hydrants, service connections, wells, pumps, reservoirs, tanks, 
  7.15  treatment plants, and other appurtenances of a water works 
  7.16  system, within and without the corporate limits. 
  7.17     (6) To acquire, improve and equip parks, open space areas, 
  7.18  playgrounds, and recreational facilities within or without the 
  7.19  corporate limits. 
  7.20     (7) To plant trees on streets and provide for their 
  7.21  trimming, care, and removal. 
  7.22     (8) To abate nuisances and to drain swamps, marshes, and 
  7.23  ponds on public or private property and to fill the same. 
  7.24     (9) To construct, reconstruct, extend, and maintain dikes 
  7.25  and other flood control works. 
  7.26     (10) To construct, reconstruct, extend, and maintain 
  7.27  retaining walls and area walls. 
  7.28     (11) To acquire, construct, reconstruct, improve, alter, 
  7.29  extend, operate, maintain, and promote a pedestrian skyway 
  7.30  system.  Such improvement may be made upon a petition pursuant 
  7.31  to section 429.031, subdivision 3.  
  7.32     (12) To acquire, construct, reconstruct, extend, operate, 
  7.33  maintain, and promote underground pedestrian concourses. 
  7.34     (13) To acquire, construct, improve, alter, extend, 
  7.35  operate, maintain, and promote public malls, plazas or 
  7.36  courtyards. 
  8.1      (14) To construct, reconstruct, extend, and maintain 
  8.2   district heating systems.  
  8.3      (15) To construct, reconstruct, alter, extend, operate, 
  8.4   maintain, and promote fire protection systems in existing 
  8.5   buildings, but only upon a petition pursuant to section 429.031, 
  8.6   subdivision 3.  
  8.7      (16) To acquire, construct, reconstruct, improve, alter, 
  8.8   extend, and maintain highway sound barriers. 
  8.9      (17) To acquire, improve, construct, reconstruct, extend, 
  8.10  and maintain gas and electric distribution facilities owned by a 
  8.11  municipal gas or electric utility. 
  8.12     Sec. 10.  Minnesota Statutes 1996, section 447.45, 
  8.13  subdivision 2, is amended to read: 
  8.14     Subd. 2.  [POWERS OVER SPECIAL FACILITIES.] With respect to 
  8.15  facilities for the care, treatment, and training of persons with 
  8.16  mental retardation or related conditions, and facilities 
  8.17  attached or related to a nursing home providing supportive 
  8.18  services to elderly persons who are not yet in need of nursing 
  8.19  home care, including congregate housing, adult day care and 
  8.20  respite care services, a hospital district, county, or city may 
  8.21  exercise the powers in sections 447.45 to 447.50 as if these 
  8.22  facilities were hospital or nursing home facilities within the 
  8.23  meaning of sections 447.45 to 447.50.  "County or city" includes 
  8.24  cities of the first class and counties containing them.  
  8.25  "Related conditions" is defined in section 252.27, subdivision 
  8.26  1a. 
  8.27     Sec. 11.  Minnesota Statutes 1996, section 465.71, is 
  8.28  amended to read: 
  8.29     465.71 [INSTALLMENT AND LEASE PURCHASES; CITIES; COUNTIES; 
  8.30  SCHOOL DISTRICTS.] 
  8.31     A home rule charter city, statutory city, county, town, or 
  8.32  school district may purchase personal property under an 
  8.33  installment contract, or lease real or personal property with an 
  8.34  option to purchase under a lease purchase agreement, by which 
  8.35  contract or agreement title is retained by the seller or vendor 
  8.36  or assigned to a third party as security for the purchase price, 
  9.1   including interest, if any, but such purchases are subject to 
  9.2   statutory and charter provisions applicable to the purchase of 
  9.3   real or personal property.  For purposes of the bid requirements 
  9.4   contained in section 471.345, "the amount of the contract" shall 
  9.5   include the total of all lease payments for the entire term of 
  9.6   the lease under a lease-purchase agreement.  The obligation 
  9.7   created by a lease purchase agreement shall not be included in 
  9.8   the calculation of net debt for purposes of section 475.53, and 
  9.9   shall not constitute debt under any other statutory provision.  
  9.10  No election shall be required in connection with the execution 
  9.11  of a lease purchase agreement authorized by this section.  The 
  9.12  city, county, town, or school district must have the right to 
  9.13  terminate a lease purchase agreement at the end of any fiscal 
  9.14  year during its term.  The city, county, town, or school 
  9.15  district may convey or lease interests in real property to the 
  9.16  lessor for nominal consideration, including existing facilities 
  9.17  that are to be improved under the lease purchase agreement.  
  9.18  Conveyances made as permitted by this section before December 1, 
  9.19  1996, are valid.  The validity of any lease purchase agreement 
  9.20  entered into under this section prior to December 1, 1996, and 
  9.21  subsequent refinancings shall not be affected by either the 
  9.22  amount of consideration paid by a lessor for an interest in real 
  9.23  property or, in the case of lessors organized by or on behalf of 
  9.24  the city, county, town, or school district, any defect in or 
  9.25  lack of authority to organize such entity.  In the case of a 
  9.26  lessor organized by a city, town, or school district for the 
  9.27  purpose of a lease and leaseback agreement before or after the 
  9.28  date of enactment of this act the lessor is a public corporation 
  9.29  for purposes of section 465.035 and is subject to all laws as if 
  9.30  it were a part of the county, city, or school district. 
  9.31     Sec. 12.  Minnesota Statutes 1996, section 469.0171, is 
  9.32  amended to read: 
  9.33     469.0171 [HOUSING PLAN, PROGRAM, AND REVIEW.] 
  9.34     Prior to the issuance of bonds or obligations for a housing 
  9.35  development project proposed by an authority under section 
  9.36  469.017, the authority shall: 
 10.1      (1) prepare a plan meeting the requirements of section 
 10.2   462C.03, subdivision 1, paragraphs (a) to (d); 
 10.3      (2) obtain review of the plan in the manner provided in 
 10.4   section 462C.04, subdivision 1; and 
 10.5      (3) prepare and submit for review a program as defined in 
 10.6   section 462C.02, subdivision 3, in the manner provided in 
 10.7   section 462C.04, subdivision 2, and section 462C.05, subdivision 
 10.8   5, for the making or purchasing of loans by cities. 
 10.9      The authority shall prepare and submit the report required 
 10.10  under section 462C.04, subdivision 3. 
 10.11     Sec. 13.  Minnesota Statutes 1996, section 469.034, 
 10.12  subdivision 2, is amended to read: 
 10.13     Subd. 2.  [GENERAL OBLIGATION REVENUE BONDS.] (a) An 
 10.14  authority may pledge the general obligation of the general 
 10.15  jurisdiction governmental unit as additional security for bonds 
 10.16  payable from income or revenues of the project or the 
 10.17  authority.  The authority must find that the pledged revenues 
 10.18  will equal or exceed 110 percent of the principal and interest 
 10.19  due on the bonds for each year.  The proceeds of the bonds must 
 10.20  be used for a qualified housing development project or 
 10.21  projects.  The obligations must be issued and sold in the manner 
 10.22  and following the procedures provided by chapter 475, except the 
 10.23  obligations are not subject to approval by the electors.  The 
 10.24  authority is the municipality for purposes of chapter 475.  
 10.25     (b) The principal amount of the issue must be approved by 
 10.26  the governing body of the general jurisdiction governmental unit 
 10.27  whose general obligation is pledged.  Public hearings must be 
 10.28  held on issuance of the obligations by both the authority and 
 10.29  the general jurisdiction governmental unit.  The hearings must 
 10.30  be held at least 15 days, but not more than 120 days, before the 
 10.31  sale of the obligations. 
 10.32     (c) The maximum amount of general obligation bonds that may 
 10.33  be issued and outstanding under this section equals the greater 
 10.34  of: 
 10.35     (1) one-half of one percent of the taxable market value of 
 10.36  the general jurisdiction governmental unit whose general 
 11.1   obligation which includes a tax on property is pledged, or; 
 11.2      (2) $3,000,000; or 
 11.3      (3) in the case of obligations for a qualified refunded 
 11.4   project, in aggregate, $6,000,000. 
 11.5      In the case of county or multicounty general obligation 
 11.6   bonds, the outstanding general obligation bonds of all cities in 
 11.7   the county or counties issued under this subdivision must be 
 11.8   added in calculating the limit under clause (1). 
 11.9      (d) "General jurisdiction governmental unit" means the city 
 11.10  in which the housing development project is located.  In the 
 11.11  case of a county or multicounty authority, the county or 
 11.12  counties may act as the general jurisdiction governmental unit.  
 11.13  In the case of a multicounty authority, the pledge of the 
 11.14  general obligation is a pledge of a tax on the taxable property 
 11.15  in each of the counties. 
 11.16     (e) "Qualified housing development project" means: 
 11.17     (1) a housing development project providing housing either 
 11.18  for the elderly or for individuals and families with incomes not 
 11.19  greater than 80 percent of the median family income as estimated 
 11.20  by the United States Department of Housing and Urban Development 
 11.21  for the standard metropolitan statistical area or the 
 11.22  nonmetropolitan county in which the project is located, and will 
 11.23  be owned by the authority for the term of the bonds; or 
 11.24     (2) a qualified refunded project. 
 11.25     A qualified housing development project may admit 
 11.26  nonelderly individuals and families with higher incomes if: 
 11.27     (1) three years have passed since initial occupancy; 
 11.28     (2) the authority finds the project is experiencing 
 11.29  unanticipated vacancies resulting in insufficient revenues, 
 11.30  because of changes in population or other unforeseen 
 11.31  circumstances that occurred after the initial finding of 
 11.32  adequate revenues; and 
 11.33     (3) the authority finds a tax levy or payment from general 
 11.34  assets of the general jurisdiction governmental unit will be 
 11.35  necessary to pay debt service on the bonds if higher income 
 11.36  individuals or families are not admitted. 
 12.1      (f) "Qualified refunded project" means a project financed 
 12.2   with obligations issued by a multicounty authority prior to 
 12.3   December 31, 1994, for which revenues pledged by an authority 
 12.4   have not been sufficient on a current basis to pay all principal 
 12.5   and interest due on the obligations in the last preceding fiscal 
 12.6   year of the authority. 
 12.7      Sec. 14.  Minnesota Statutes 1996, section 469.059, 
 12.8   subdivision 6, is amended to read: 
 12.9      Subd. 6.  [PARTNER, MEMBER, OR SHAREHOLDER.] The port 
 12.10  authority may be a limited partner, a member of a limited 
 12.11  liability company, or a shareholder of a corporation, but only 
 12.12  if the limited partnership, limited liability company, or 
 12.13  corporation owns or operates a facility that is located within 
 12.14  an industrial development district and the investment is in 
 12.15  furtherance of the port authority's governmental purpose.  
 12.16     Sec. 15.  Minnesota Statutes 1996, section 469.101, 
 12.17  subdivision 6, is amended to read: 
 12.18     Subd. 6.  [LIMITED PARTNER, MEMBER, OR SHAREHOLDER.] The 
 12.19  economic development authority may be a limited partner in a 
 12.20  partnership whose purpose is consistent with the authority's 
 12.21  purpose, a member of a limited liability company, or a 
 12.22  shareholder of a corporation, but only if the limited 
 12.23  partnership, limited liability company, or corporation owns or 
 12.24  operates a facility that is located within an economic 
 12.25  development district and the investment is in furtherance of the 
 12.26  authority's governmental purpose.  
 12.27     Sec. 16.  Minnesota Statutes 1996, section 469.153, 
 12.28  subdivision 2, is amended to read: 
 12.29     Subd. 2.  [PROJECT.] (a) "Project" means (1) any 
 12.30  properties, real or personal, used or useful in connection with 
 12.31  a revenue producing enterprise, or any combination of two or 
 12.32  more such enterprises engaged or to be engaged in generating, 
 12.33  transmitting, or distributing electricity, assembling, 
 12.34  fabricating, manufacturing, mixing, processing, storing, 
 12.35  warehousing, or distributing any products of agriculture, 
 12.36  forestry, mining, or manufacture, or in research and development 
 13.1   activity in this field; (2) any properties, real or personal, 
 13.2   used or useful in the abatement or control of noise, air, or 
 13.3   water pollution, or in the disposal of solid wastes, in 
 13.4   connection with a revenue producing enterprise, or any 
 13.5   combination of two or more such enterprises engaged or to be 
 13.6   engaged in any business or industry; (3) any properties, real or 
 13.7   personal, used or useful in connection with the business of 
 13.8   telephonic communications, conducted or to be conducted by a 
 13.9   telephone company, including toll lines, poles, cables, 
 13.10  switching, and other electronic equipment and administrative, 
 13.11  data processing, garage, and research and development 
 13.12  facilities; (4) any properties, real or personal, used or useful 
 13.13  in connection with a district heating system, consisting of the 
 13.14  use of one or more energy conversion facilities to produce hot 
 13.15  water or steam for distribution to homes and businesses, 
 13.16  including cogeneration facilities, distribution lines, service 
 13.17  facilities, and retrofit facilities for modifying the user's 
 13.18  heating or water system to use the heat energy converted from 
 13.19  the steam or hot water.  
 13.20     (b) "Project" also includes any properties, real or 
 13.21  personal, used or useful in connection with a revenue producing 
 13.22  enterprise, or any combination of two or more such enterprises 
 13.23  engaged in any business. 
 13.24     (c) "Project" also includes any properties, real or 
 13.25  personal, used or useful for the promotion of tourism in the 
 13.26  state.  Properties may include hotels, motels, lodges, resorts, 
 13.27  recreational facilities of the type that may be acquired under 
 13.28  section 471.191, and related facilities.  
 13.29     (d) "Project" also includes any properties, real or 
 13.30  personal, used or useful in connection with a revenue producing 
 13.31  enterprise, whether or not operated for profit, engaged in 
 13.32  providing health care services, including hospitals, nursing 
 13.33  homes, and related medical facilities, including facilities for 
 13.34  the care, treatment, and training of persons with mental 
 13.35  retardation or related conditions, and facilities attached or 
 13.36  related to a nursing home providing supportive services to 
 14.1   elderly persons who are not yet in need of nursing home care, 
 14.2   including congregate housing, adult day care, and respite care 
 14.3   services. 
 14.4      (e) "Project" does not include any property to be sold or 
 14.5   to be affixed to or consumed in the production of property for 
 14.6   sale, and does not include any housing facility to be rented or 
 14.7   used as a permanent residence except as otherwise permitted by 
 14.8   paragraph (d).  
 14.9      (f) "Project" also means the activities of any revenue 
 14.10  producing enterprise involving the construction, fabrication, 
 14.11  sale, or leasing of equipment or products to be used in 
 14.12  gathering, processing, generating, transmitting, or distributing 
 14.13  solar, wind, geothermal, biomass, agricultural or forestry 
 14.14  energy crops, or other alternative energy sources for use by any 
 14.15  person or any residential, commercial, industrial, or 
 14.16  governmental entity in heating, cooling, or otherwise providing 
 14.17  energy for a facility owned or operated by that person or entity.
 14.18     (g) "Project" also includes any properties, real or 
 14.19  personal, used or useful in connection with a county jail, 
 14.20  county regional jail, community corrections facilities 
 14.21  authorized by chapter 401, or other law enforcement facilities, 
 14.22  the plans for which are approved by the commissioner of 
 14.23  corrections; provided that the provisions of section 469.155, 
 14.24  subdivisions 7 and 13, do not apply to those projects. 
 14.25     (h) "Project" also includes any real properties used or 
 14.26  useful in furtherance of the purposes and policies of sections 
 14.27  469.135 to 469.141.  
 14.28     (i) "Project" also includes related facilities as defined 
 14.29  by section 471A.02, subdivision 11. 
 14.30     (j) "Project" also includes an undertaking to purchase the 
 14.31  obligations of local governments located in whole or in part 
 14.32  within the boundaries of the municipality that are issued or to 
 14.33  be issued for public purposes.  
 14.34     Sec. 17.  Minnesota Statutes 1996, section 469.154, 
 14.35  subdivision 3, is amended to read: 
 14.36     Subd. 3.  [CONDITIONS; APPROVAL.] No municipality or 
 15.1   redevelopment agency shall undertake any project authorized by 
 15.2   sections 469.152 to 469.165 469.1651, except a project referred 
 15.3   to in section 469.153, subdivision 2, paragraph (g) or (j), 
 15.4   unless its governing body finds that the project furthers the 
 15.5   purposes stated in section 469.152, nor until and the 
 15.6   commissioner has approved the project, on the basis of 
 15.7   preliminary information the commissioner requires, as tending to 
 15.8   further the purposes and policies of sections 469.152 
 15.9   to 469.165.  The commissioner may not approve any projects 
 15.10  relating to health care facilities except as permitted under 
 15.11  subdivision 6 469.1651, except that with respect to a project 
 15.12  financed with "qualified 501(c)(3) bonds" within the meaning of 
 15.13  section 145 of the Internal Revenue Code of 1986, as amended 
 15.14  through December 31, 1996, no approval by the commissioner is 
 15.15  required unless the project is subject to subdivision 6.  
 15.16  Approval shall not be deemed to be an approval by the 
 15.17  commissioner or the state of the feasibility of the project or 
 15.18  the terms of the revenue agreement to be executed or the bonds 
 15.19  to be issued therefor, and the commissioner shall state this in 
 15.20  communicating approval. 
 15.21     Sec. 18.  Minnesota Statutes 1996, section 469.154, 
 15.22  subdivision 6, is amended to read: 
 15.23     Subd. 6.  [HEALTH CARE FACILITIES.] The commissioner of 
 15.24  trade and economic development shall forward to the commissioner 
 15.25  of human services and the commissioner of health for review, all 
 15.26  applications for projects relating to nursing homes licensed by 
 15.27  the commissioner of health under chapter 144A.  This review 
 15.28  process does not apply to projects approved by the housing 
 15.29  finance agency involving residences for the elderly, the costs 
 15.30  of which will not be reimbursed under the medical assistance 
 15.31  program.  The commissioner of human services and the 
 15.32  commissioner of health must return the applications to the 
 15.33  commissioner of trade and economic development with a 
 15.34  recommendation within 30 days of receipt.  The commissioner of 
 15.35  trade and economic development may not approve an application 
 15.36  unless the project has been determined by both the commissioner 
 16.1   of human services and the commissioner of health to be 
 16.2   consistent with policies of the state as reflected in a statute 
 16.3   or rule.  The following projects shall not be approved: 
 16.4      (1) projects that will result in an increase in the number 
 16.5   of nursing home or boarding care beds in the state, unless the 
 16.6   increase is authorized under section 144A.071; 
 16.7      (2) projects involving refinancing, unless the refinancing 
 16.8   will result in a reduction in debt service charges that, and, 
 16.9   except with respect to projects participating in the contractual 
 16.10  alternative payment demonstration project under section 
 16.11  256B.434, such reduction will be reflected in charges to 
 16.12  patients and third-party payors; and 
 16.13     (3) projects that are inconsistent with the established 
 16.14  policies of the state as reflected in a statute or rule. 
 16.15     Sec. 19.  Minnesota Statutes 1996, section 469.155, is 
 16.16  amended by adding a subdivision to read: 
 16.17     Subd. 4a.  [REFINANCING FACILITIES.] It may issue revenue 
 16.18  bonds to pay, purchase, or discharge all or any part of the 
 16.19  outstanding indebtedness of a contracting party that is an 
 16.20  organization described in section 501(c)(3) of the Internal 
 16.21  Revenue Code of 1986, as amended through December 31, 1996, 
 16.22  previously incurred in the acquisition or betterment of its 
 16.23  existing facilities, other than hospital or nursing home 
 16.24  facilities, to the extent deemed necessary by the governing body 
 16.25  of the municipality or redevelopment agency.  This financing may 
 16.26  include any unpaid interest on the indebtedness accrued or to 
 16.27  accrue to the date on which the indebtedness is finally paid and 
 16.28  any premium the governing body of the municipality or 
 16.29  redevelopment agency determines to be necessary to be paid to 
 16.30  pay, purchase, or defease the outstanding indebtedness.  If 
 16.31  revenue bonds are issued for this purpose, the refinancing and 
 16.32  the existing properties of the contracting party shall be deemed 
 16.33  to constitute a project under section 469.153, subdivision 2, 
 16.34  clause (b). 
 16.35     Sec. 20.  [471.831] [POLITICAL SUBDIVISION BONDS FOR ENERGY 
 16.36  AND COMMODITY PROCUREMENT.] 
 17.1      Subdivision 1.  [BONDS TO FINANCE SUPPLY 
 17.2   CONTRACTS.] Notwithstanding any limitations set forth under 
 17.3   section 475.52, or any other general or special law or charter 
 17.4   to the contrary, a political subdivision may issue bonds or 
 17.5   other obligations to provide funds to purchase or prepay 
 17.6   contracts from existing suppliers for the supply of electricity, 
 17.7   gas, water, and other commodities.  The obligations shall be 
 17.8   issued as provided in chapter 475, except that no election is 
 17.9   required to authorize the issuance of the obligations, and the 
 17.10  obligations are not included for purposes of computing the net 
 17.11  debt of a political subdivision.  The obligations must mature in 
 17.12  the years and amounts determined by the governing body, not 
 17.13  exceeding the term of the supply contract purchased or prepaid 
 17.14  with the proceeds of the obligations.  Proceeds of obligations 
 17.15  issued pursuant to this subdivision may also be used to 
 17.16  establish a debt service reserve for the obligations, pay costs 
 17.17  of issuing the obligations, or to refund obligations previously 
 17.18  issued under this subdivision.  An issuer of obligations 
 17.19  authorized under this subdivision may designate a bank or trust 
 17.20  company authorized to exercise trust powers in this state as 
 17.21  trustee for the holders of obligations issued under this 
 17.22  subdivision and may create funds and accounts necessary to 
 17.23  secure payment of the obligations.  Electricity and gas 
 17.24  contracted for under this section may not be resold to retail 
 17.25  utility customers except as provided in chapter 216B.  
 17.26     Subd. 2.  [POLITICAL SUBDIVISION; DEFINITION.] For purposes 
 17.27  of this section, "political subdivision" means a statutory or 
 17.28  home rule charter city, a county, a school district, a town, a 
 17.29  metropolitan agency, a public utilities commission, a municipal 
 17.30  gas agency, a municipal power agency, or any instrumentality of 
 17.31  any of them. 
 17.32     Subd. 3.  [LIMITATION.] Bonds issued by a municipal gas 
 17.33  agency, a municipal power agency, or any instrumentality of a 
 17.34  political subdivision shall not pledge any taxing powers to the 
 17.35  payment of obligations issued by the agency or instrumentality 
 17.36  under this section. 
 18.1      Sec. 21.  [471.832] [POLITICAL SUBDIVISION LEASES AND 
 18.2   SUBLEASES.] 
 18.3      Subdivision 1.  [PROPERTY LEASES AUTHORIZED.] (a) A 
 18.4   political subdivision may lease any of its real or personal 
 18.5   property, including property used or useful for the governmental 
 18.6   purposes of the political subdivision, to any entity, but only 
 18.7   if the political subdivision subleases the property back from 
 18.8   the lessee and the conditions in clauses (1) to (4) are met: 
 18.9      (1) the sublease has a term of at least eight years; 
 18.10     (2) the sublease provides that the political subdivision 
 18.11  may purchase the lessee's remaining interest in the lease at the 
 18.12  end of the sublease term; 
 18.13     (3) the political subdivision enters into a guaranteed 
 18.14  investment contract meeting the requirements of section 118A.05, 
 18.15  subdivision 5, which provides for payments at least sufficient 
 18.16  to meet all scheduled sublease payments; and 
 18.17     (4) the lease payments scheduled to be received by the 
 18.18  political subdivision are at least sufficient to pay the cost of 
 18.19  the investment contract required under clause (3). 
 18.20     (b) A sublease entered into under this section is not an 
 18.21  obligation for purposes of chapter 475. 
 18.22     Subd. 2.  [POLITICAL SUBDIVISION; DEFINITION.] For purposes 
 18.23  of this section, the term "political subdivision" means a 
 18.24  statutory or home rule charter city, a county, a school 
 18.25  district, a town, a metropolitan agency, a public utilities 
 18.26  commission, a municipal gas agency, a municipal power agency, or 
 18.27  any instrumentality of the foregoing. 
 18.28     Subd. 3.  [POWERS ADDITIONAL.] The powers provided by this 
 18.29  section are in addition to the powers of political subdivisions 
 18.30  to lease property as provided by other laws, including the power 
 18.31  to lease property in furtherance of their governmental purposes 
 18.32  and to lease property not used for governmental purposes. 
 18.33     Sec. 22.  Minnesota Statutes 1996, section 471.981, is 
 18.34  amended by adding a subdivision to read: 
 18.35     Subd. 4d.  [POLITICAL SUBDIVISION BONDS FOR INSURANCE 
 18.36  PROCUREMENT.] (a) Notwithstanding any limitations set forth 
 19.1   under section 475.52, or any other general or special law or 
 19.2   charter to the contrary, a political subdivision may issue bonds 
 19.3   or other obligations to provide funds to purchase insurance 
 19.4   coverage for employee health benefits, all or any part of the 
 19.5   risks enumerated in subdivision 1, and any risk which the 
 19.6   political subdivision is authorized to insure under section 
 19.7   176.181, subdivision 1.  The obligations must be issued pursuant 
 19.8   to chapter 475, except that no election is required to authorize 
 19.9   the issuance of the obligations, and the obligations are not 
 19.10  included for purposes of computing the net debt of a political 
 19.11  subdivision.  The obligations must mature in the years and 
 19.12  amounts determined by the governing body, not exceeding the term 
 19.13  of the insurance contract purchased with the proceeds of the 
 19.14  obligations.  
 19.15     (b) In addition to permitted uses described in paragraph 
 19.16  (a), proceeds of obligations issued pursuant to this subdivision 
 19.17  may be used to establish a debt service reserve for the 
 19.18  obligations, to pay costs of issuing the obligations, or to 
 19.19  refund obligations previously issued pursuant to this 
 19.20  subdivision. 
 19.21     (c) An issuer of obligations authorized under this 
 19.22  subdivision may designate a bank or trust company authorized to 
 19.23  exercise trust powers in this state as trustee for the holders 
 19.24  of obligations issued pursuant to this subdivision and may 
 19.25  create funds and accounts necessary to secure payment of the 
 19.26  obligations. 
 19.27     Sec. 23.  Minnesota Statutes 1996, section 475.61, 
 19.28  subdivision 3, is amended to read: 
 19.29     Subd. 3.  [IRREVOCABILITY.] Tax levies so made and filed 
 19.30  shall be irrevocable, except as provided in this subdivision. 
 19.31     In each year when there is on hand any excess amount in the 
 19.32  debt redemption fund of a school district at the time the 
 19.33  district makes its property tax levies, the amount of the excess 
 19.34  shall be certified by the school board to the commissioner.  The 
 19.35  commissioner shall report the amount of the excess to the county 
 19.36  auditor and the auditor shall reduce the tax levy otherwise to 
 20.1   be included in the rolls next prepared by the amount certified.  
 20.2   The commissioner shall prescribe the form and calculation to be 
 20.3   used in computing the excess amount.  The school board may, with 
 20.4   the approval of the commissioner, retain the excess amount if it 
 20.5   is necessary to ensure the prompt and full payment of the 
 20.6   obligations and any call premium on the obligations, or will be 
 20.7   used for redemption of the obligations in accordance with their 
 20.8   terms.  The school board may, with the approval of the 
 20.9   commissioner, specify a tax levy in a higher amount if necessary 
 20.10  because of anticipated tax delinquency or for cash flow needs to 
 20.11  meet the required payments from the debt redemption fund.  
 20.12     Any excess amount on hand in the debt service fund may be 
 20.13  used to pay any arbitrage rebate described in section 475.561, 
 20.14  subdivision 2, or any costs relating to any continuing 
 20.15  disclosure agreement described in section 475.60, subdivision 
 20.16  8.  If the governing body, including the governing body of a 
 20.17  school district, in any year makes an irrevocable appropriation 
 20.18  to the debt service fund of money actually on hand or if there 
 20.19  is on hand any excess amount in the debt service fund, the 
 20.20  recording officer may certify to the county auditor the fact and 
 20.21  amount thereof and the auditor shall reduce by the amount so 
 20.22  certified the amount otherwise to be included in the rolls next 
 20.23  thereafter prepared. 
 20.24     Sec. 24.  Minnesota Statutes 1996, section 475.67, 
 20.25  subdivision 12, is amended to read: 
 20.26     Subd. 12.  [ADDITIONAL CONDITIONS.] In the refunding of 
 20.27  general obligations, for which the full faith and credit of the 
 20.28  issuing municipality has been pledged, the following additional 
 20.29  conditions shall be observed:  each such obligation, if 
 20.30  repayable, shall be called for redemption prior to its maturity 
 20.31  in accordance with its terms no later than either (i) the 
 20.32  earliest date on which it may be redeemed without payment of any 
 20.33  premium, or (ii) if the obligation is only prepayable with 
 20.34  payment of a premium, on the earliest date on which it may be 
 20.35  redeemed with payment of the least premium required by its 
 20.36  terms.  No refunding obligations shall be issued and sold more 
 21.1   than six months before the refunded obligations mature or are 
 21.2   called for redemption in accordance with their terms, unless 
 21.3   either (i) as a result of the refunding the average life of the 
 21.4   maturities is extended at least three years or (ii) as of the 
 21.5   nominal date of the refunding obligations the present value of 
 21.6   the dollar amount of the debt service on the refunding 
 21.7   obligations, computed to their stated maturity dates, after 
 21.8   deducting any premium, is lower by at least three percent than 
 21.9   the present value of the dollar amount of debt service, on all 
 21.10  general obligations refunded, exclusive of any premium, computed 
 21.11  to their stated maturity dates; provided that in computing the 
 21.12  dollar amount of debt service on the refunding obligations, any 
 21.13  expenses of the refunding payable from a source other than the 
 21.14  proceeds of the refunding obligations or the interest derived 
 21.15  from the investment thereof shall be added to the dollar amount 
 21.16  of debt service on the refunding obligations.  For purposes of 
 21.17  this subdivision, the present value of the dollar amount of debt 
 21.18  service means the dollar amount of debt service to be paid, 
 21.19  discounted to the nominal date of the refunding obligations at a 
 21.20  rate equal to the yield on the refunding obligations.  Expenses 
 21.21  of the refunding include the amount, if any, in excess of the 
 21.22  proceeds of the refunding obligations or the principal amount of 
 21.23  obligations to be refunded, whichever is the greater, which is 
 21.24  required to be deposited in escrow to provide cash and purchase 
 21.25  securities sufficient to retire the refunded obligations and 
 21.26  unaccrued interest thereon in accordance with subdivision 6; 
 21.27  charges of the escrow agent and of the paying agent for the 
 21.28  refunding obligations; and expenses of printing and publications 
 21.29  and of fiscal, legal, or other professional service necessarily 
 21.30  incurred in the issuance of the refunding obligations.  This 
 21.31  subdivision does not apply if the purpose of the refunding is to 
 21.32  eliminate or reduce a reserve fund for the refunded obligations 
 21.33  or to eliminate a material restriction imposed by a covenant 
 21.34  relating to the refunded obligations. 
 21.35     Sec. 25.  [475.80] [PLEDGE ON ATTACHMENT, ANNEXATION, 
 21.36  COMBINATION, CONSOLIDATION, OR INCORPORATION.] 
 22.1      When all or a part of a municipality is attached, annexed, 
 22.2   combined, consolidated, or incorporated into another 
 22.3   municipality, the full faith and credit of the surviving or new 
 22.4   municipality must secure any general obligation bonds which the 
 22.5   surviving or new municipality has assumed or which are payable 
 22.6   from property taxes levied on all or any portion of its taxable 
 22.7   property, notwithstanding that the bonds may be payable from 
 22.8   taxes levied on taxable property in only a portion of the new or 
 22.9   surviving municipality.  If any general funds of the 
 22.10  municipality are used to pay debt service on general obligation 
 22.11  bonds payable from taxes levied on taxable property in only a 
 22.12  portion of the new or surviving municipality, the general funds 
 22.13  must be reimbursed, with or without interest, from taxes levied 
 22.14  on the taxable property in that portion of the new or surviving 
 22.15  municipality which was primarily responsible for the general 
 22.16  obligation bonds. 
 22.17     Sec. 26.  Minnesota Statutes 1996, section 641.23, is 
 22.18  amended to read: 
 22.19     641.23 [FUNDS, HOW PROVIDED.] 
 22.20     Before any contract is made for the erection of a county 
 22.21  jail, sheriff's residence, or both, the county board shall 
 22.22  either levy a sufficient tax to provide the necessary funds, or 
 22.23  issue county bonds therefor in accordance with the provisions of 
 22.24  chapter 475, provided that, unless the issuance of the bonds is 
 22.25  approved by the majority of voters voting on the questions of 
 22.26  their issuance, the amount of all bonds issued for this purpose 
 22.27  and interest on them which are due and payable in any year shall 
 22.28  not exceed an amount equal to 0.09671 percent of market value of 
 22.29  taxable property within the county, as last determined before 
 22.30  the bonds are issued.  
 22.31     Sec. 27.  [EFFECTIVE DATE.] 
 22.32     This act is effective the day following final enactment.