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Minnesota Legislature

Office of the Revisor of Statutes

HF 310

as introduced - 90th Legislature (2017 - 2018) Posted on 02/01/2017 03:45pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to capital investment; authorizing the sale and issuance of state
appropriation bonds; appropriating money for the Duluth steam plant; proposing
coding for new law in Minnesota Statutes, chapter 16A.

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

Section 1.

new text begin [16A.968] APPROPRIATION BONDS; GENERAL TERMS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this section.
new text end

new text begin (b) "Appropriation bond" or "bond" means a bond, note, or other similar instrument of
the state payable during a biennium from one or more of the following sources:
new text end

new text begin (1) money appropriated by law from the general fund in any biennium for debt service
due with respect to obligations described in subdivision 2, paragraph (c);
new text end

new text begin (2) proceeds of the sale of obligations described in subdivision 2, paragraph (c);
new text end

new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 2, paragraph (d); and
new text end

new text begin (4) investment earnings on amounts in clauses (1) to (3).
new text end

new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium, if
any, and interest on appropriation bonds.
new text end

new text begin Subd. 2. new text end

new text begin Authority to issue appropriation bonds. new text end

new text begin (a) Subject to the limitations of this
subdivision, the commissioner shall sell and issue appropriation bonds of the state for public
purposes as provided by law. The decision of the commissioner on when to sell bonds must
be based on the funding needs of the capital projects, the timing of the bond issue to achieve
favorable interest rates, managing cash flow requirements for debt service, other state debt
management considerations, and legal factors.
new text end

new text begin (b) Proceeds of the appropriation bonds must be credited to an account in a special
appropriation bond proceeds fund in the state treasury for each project or purpose authorized
in law for which the bonds are to be sold. All income from investment of the bond proceeds,
as estimated by the commissioner, is appropriated to the commissioner for the payment of
principal and interest on the appropriation bonds.
new text end

new text begin (c) Appropriation bonds authorized in a law may be issued in one or more issues or
series on the terms and conditions the commissioner determines to be in the best interests
of the state, but the term on any series of appropriation bonds may not exceed 25 years. The
appropriation bonds of each issue and series thereof shall be dated and bear interest, and
may be includable in or excludable from the gross income of the owners for federal income
tax purposes.
new text end

new text begin (d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any time
thereafter, so long as the appropriation bonds are outstanding, the commissioner may enter
into agreements and ancillary arrangements relating to the appropriation bonds, including
but not limited to trust indentures, grant agreements, lease or use agreements, operating
agreements, management agreements, liquidity facilities, remarketing or dealer agreements,
letter of credit agreements, insurance policies, guaranty agreements, reimbursement
agreements, indexing agreements, or interest exchange agreements. Any payments made
or received according to the agreement or ancillary arrangement shall be made from or
deposited as provided in the agreement or ancillary arrangement. The determination of the
commissioner included in an interest exchange agreement that the agreement relates to an
appropriation bond shall be conclusive.
new text end

new text begin (e) The commissioner may enter into written agreements or contracts relating to the
continuing disclosure of information necessary to comply with or facilitate the issuance of
appropriation bonds in accordance with federal securities laws, rules, and regulations,
including Securities and Exchange Commission rules and regulations in Code of Federal
Regulations, title 17, section 240.15c 2-12. An agreement may be in the form of covenants
with purchasers and holders of appropriation bonds set forth in the order or resolution
authorizing the issuance of the appropriation bonds, or a separate document authorized by
the order or resolution.
new text end

new text begin (f) The appropriation bonds are not subject to chapter 16C.
new text end

new text begin Subd. 3. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form of bonds,
notes, or other similar instruments, and in the manner provided in section 16A.672. In the
event that any provision of section 16A.672 conflicts with this section, this section shall
control.
new text end

new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 6.
new text end

new text begin (c) Appropriation bonds may be sold at either public or private sale upon such terms as
the commissioner shall determine are not inconsistent with this section and may be sold at
any price or percentage of par value. Any bid received may be rejected.
new text end

new text begin (d) Appropriation bonds must bear interest at a fixed or variable rate.
new text end

new text begin (e) Notwithstanding any other law, appropriation bonds issued under this section shall
be fully negotiable.
new text end

new text begin Subd. 4. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner may issue appropriation bonds for the
purpose of refunding any appropriation bonds then outstanding, including the payment of
any redemption premiums on the bonds, any interest accrued or to accrue to the redemption
date, and costs related to the issuance and sale of the refunding 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 appropriation bonds to be refunded, to the redemption of the
outstanding appropriation bonds on any redemption date, or to pay interest on the refunding
bonds and may, pending application, be placed in escrow to be applied to the purchase,
payment, retirement, or redemption. Any 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 the investment may also be applied to the payment of the
appropriation bonds to be refunded or interest or premiums on the refunded appropriation
bonds, or to pay interest on the refunding bonds. After the terms of the escrow have been
fully satisfied, any balance of the proceeds and any investment income may be returned to
the general fund or, if applicable, the special appropriation bond proceeds fund for use in
any lawful manner. All refunding bonds issued under this subdivision must be prepared,
executed, delivered, and secured by appropriations in the same manner as the appropriation
bonds to be refunded.
new text end

new text begin Subd. 5. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities may
legally invest any sinking funds, money, or other funds belonging to them or under their
control in any appropriation bonds issued under this section:
new text end

new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
new text end

new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
new text end

new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 6. new text end

new text begin No full faith and credit; state not required to make appropriations.
new text end

new text begin Appropriation bonds are not public debt of the state, and the full faith, credit, and taxing
powers of the state are not pledged to the payment of the appropriation bonds or to any
payment that the state agrees to make under this section. Appropriation bonds shall not be
obligations paid directly, in whole or in part, from a tax of statewide application on any
class of property, income, transaction, or privilege. Appropriation bonds shall be payable
in each fiscal year only from amounts that the legislature may appropriate for debt service
for any fiscal year, provided that nothing in this section shall be construed to require the
state to appropriate money sufficient to make debt service payments with respect to the
appropriation bonds in any fiscal year. Appropriation bonds shall be canceled and shall no
longer be outstanding on the earlier of (1) the first day of a fiscal year for which the
legislature shall not have appropriated amounts sufficient for debt service, or (2) the date
of final payment of the principal of and interest on the appropriation bonds.
new text end

new text begin Subd. 7. new text end

new text begin Appropriation for debt service and other purposes. new text end

new text begin An amount needed to
pay principal and interest on appropriation bonds issued under this section is appropriated
each fiscal year from the general fund to the commissioner, subject to repeal, unallotment
under section 16A.152, or cancellation, and otherwise pursuant to subdivision 6, for deposit
into the bond payments account established for each purpose authorized in law.
new text end

new text begin Subd. 8. new text end

new text begin Waiver of immunity. new text end

new text begin The waiver of immunity by the state provided for by
section 3.751, subdivision 1, shall be applicable to the appropriation bonds and any ancillary
contracts to which the commissioner is a party.
new text end

Sec. 2. new text beginDULUTH STEAM PLANT; APPROPRIATION BONDS AUTHORIZED.
new text end

new text begin Subdivision 1. new text end

new text begin Duluth steam plant. new text end

new text begin $21,000,000 is appropriated from the appropriation
bond proceeds fund to the commissioner of employment and economic development for a
grant to the city of Duluth to upgrade the municipal district heating facility and systems,
including conversion of the distribution system along Superior Street from steam with no
condensate return, to closed-loop hot water. This appropriation is for one or more of the
project elements or phases: predesign, design, engineering, renovation, construction,
furnishing, and equipping the facility, systems, and infrastructure. This appropriation is not
available until the commissioner of management and budget determines that an amount
sufficient to complete the project, or one or more of the distinct elements or phases of the
project, is committed to it from nonstate sources.
new text end

new text begin Subd. 2. new text end

new text begin Appropriation bonds; authorization. new text end

new text begin To provide the money appropriated in
this act from the state appropriation bond proceeds fund, the commissioner of management
and budget shall sell and issue state appropriation bonds in an amount up to $21,000,000,
plus an amount to pay the costs of issuance, debt service including capitalized interest, costs
of credit enhancement, or to make payments under other agreements entered into under
Minnesota Statutes, section 16A.968. The commissioner shall sell and issue the state
appropriation bonds in the manner, upon the terms, and with the effect prescribed in
Minnesota Statutes, section 16A.968.
new text end

new text begin Subd. 3. new text end

new text begin Annual general fund appropriation for debt service. new text end

new text begin An amount necessary
to pay principal and interest on appropriation bonds issued under this section is appropriated
each fiscal year, beginning in fiscal year 2017 and through fiscal year 2038, from the general
fund to the commissioner of management and budget, subject to repeal, unallotment under
section 16A.152, or cancellation, and otherwise pursuant to Minnesota Statutes, section
16A.968, for deposit into the appropriation bond payments account established for such
purpose.
new text end