HF 1236

as introduced - 90th Legislature (2017 - 2018) Posted on 02/15/2017 11:38am

A bill for an act
relating to local government financing; expanding the authority to issue capital
notes, certificates of indebtedness, and certain general obligation revenue bonds;
permitting issuance of street reconstruction bonds by majority vote; modifying
publication requirements; making clarifying changes; amending Minnesota Statutes
2016, sections 366.095, subdivision 1; 383B.117, subdivision 2; 410.32; 412.301;
469.034, subdivision 2; 469.101, subdivision 1; 475.58, subdivision 3b; 475.60,
subdivision 2.

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

Section 1.

Minnesota Statutes 2016, section 366.095, subdivision 1, is amended to read:

Subdivision 1.

Certificates of indebtedness.

The town board may issue certificates of
indebtedness within the debt limits for a town purpose otherwise authorized by law. The
certificates shall be payable in not more than ten years and be issued on the terms and in
the manner as the board may determine new text begin , provided that notes issued for projects that eliminate
R-22, as defined in section 240A.09, paragraph (b), clause (2), must be payable in not more
than 20 years new text end . If the amount of the certificates to be issued exceeds 0.25 percent of the
estimated market value of the town, they shall not be issued for at least ten days after
publication in a newspaper of general circulation in the town of the board's resolution
determining to issue them. If within that time, a petition asking for an election on the
proposition signed by voters equal to ten percent of the number of voters at the last regular
town election is filed with the clerk, the certificates shall not be issued until their issuance
has been approved by a majority of the votes cast on the question at a regular or special
election. A tax levy shall be made to pay the principal and interest on the certificates as in
the case of bonds.

Sec. 2.

Minnesota Statutes 2016, section 383B.117, subdivision 2, is amended to read:

Subd. 2.

Equipment acquisition; capital notes.

The board may, by resolution and
without public referendum, issue capital notes within existing debt limits for the purpose
of purchasing ambulance and other medical equipment, road construction or maintenance
equipment, public safety equipment and other capital equipment having an expected useful
life at least equal to the term of the notes issued. The notes shall be payable in not more
than ten years and shall be issued on terms and in a manner as the board determines new text begin , provided
that notes issued for projects that eliminate R-22, as defined in section 240A.09, paragraph
(b), clause (2), must be payable in not more than 20 years new text end . The total principal amount of
the notes issued for any fiscal year shall not exceed one percent of the total annual budget
for that year and shall be issued solely for the purchases authorized in this subdivision. A
tax levy shall be made for the payment of the principal and interest on such notes as in the
case of bonds. For purposes of this subdivision, "equipment" includes computer hardware
and software, whether bundled with machinery or equipment or unbundled. For purposes
of this subdivision, the term "medical equipment" includes computer hardware and software
and other intellectual property for use in medical diagnosis, medical procedures, research,
record keeping, billing, and other hospital applications, together with application development
services and training related to the use of the computer hardware and software and other
intellectual property, all without regard to their useful life. For purposes of determining the
amount of capital notes which the county may issue in any year, the budget of the county
and Hennepin Healthcare System, Inc. shall be combined and the notes issuable under this
subdivision shall be in addition to obligations issuable under section 373.01, subdivision
3.

Sec. 3.

Minnesota Statutes 2016, section 410.32, is amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule charter
city may, by resolution and without public referendum, issue capital notes subject to the
city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware and software.

(c) The equipment or software must have an expected useful life at least as long as the
term of the notes.

(d) The notes shall be payable in not more than ten years and be issued on terms and in
the manner the city determines new text begin , provided that notes issued for projects that eliminate R-22,
as defined in section 240A.09, paragraph (b), clause (2), must be payable in not more than
20 years new text end . The total principal amount of the capital notes issued in a fiscal year shall not
exceed 0.03 percent of the estimated market value of taxable property in the city for that
year.

(e) A tax levy shall be made for the payment of the principal and interest on the notes,
in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of the
governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 4.

Minnesota Statutes 2016, section 412.301, is amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the city
debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road construction
and maintenance equipment, and other capital equipment; and

(2) computer hardware and software, whether bundled with machinery or equipment or
unbundled, together with application development services and training related to the use
of the computer hardware or software.

(c) The equipment or software must have an expected useful life at least as long as the
terms of the certificates or notes.

(d) Such certificates or notes shall be payable in not more than ten years and shall be
issued on such terms and in such manner as the council may determine new text begin , provided, however,
that notes issued for projects that eliminate R-22, as defined in section 240A.09, paragraph
(b), clause (2), must be payable in not more than 20 years new text end .

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the estimated market value of taxable property in the city, they shall
not be issued for at least ten days after publication in the official newspaper of a council
resolution determining to issue them; and if before the end of that time, a petition asking
for an election on the proposition signed by voters equal to ten percent of the number of
voters at the last regular municipal election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has been approved by a majority
of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

Sec. 5.

Minnesota Statutes 2016, section 469.034, subdivision 2, is amended to read:

Subd. 2.

General obligation revenue bonds.

(a) An authority may pledge the general
obligation of the general jurisdiction governmental unit as additional security for bonds
payable from income or revenues of the project or the authority. The authority must find
that the pledged revenues will equal or exceed 110 percent of the principal and interest due
on the bonds for each year. The proceeds of the bonds must be used for a qualified housing
development project or projects. The obligations must be issued and sold in the manner and
following the procedures provided by chapter 475, except the obligations are not subject to
approval by the electors, and the maturities may extend to not more than 35 years for
obligations sold to finance housing for the elderly and 40 years for other obligations issued
under this subdivision. The authority is the municipality for purposes of chapter 475.

(b) The principal amount of the issue must be approved by the governing body of the
general jurisdiction governmental unit whose general obligation is pledged. Public hearings
must be held on issuance of the obligations by both the authority and the general jurisdiction
governmental unit. The hearings must be held at least 15 days, but not more than 120 days,
before the sale of the obligations.

(c) The maximum amount of general obligation bonds that may be issued and outstanding
under this section equals the greater of (1) one-half of one percent of the estimated market
value of the general jurisdiction governmental unit whose general obligation is pledged, or
(2) deleted text begin $3,000,000 deleted text end new text begin $5,000,000 new text end . In the case of county or multicounty general obligation bonds,
the outstanding general obligation bonds of all cities in the county or counties issued under
this subdivision must be added in calculating the limit under clause (1).

(d) "General jurisdiction governmental unit" means the city in which the housing
development project is located. In the case of a county or multicounty authority, the county
or counties may act as the general jurisdiction governmental unit. In the case of a multicounty
authority, the pledge of the general obligation is a pledge of a tax on the taxable property
in each of the counties.

(e) "Qualified housing development project" means a housing development project
providing housing either for the elderly or for individuals and families with incomes not
greater than 80 percent of the median family income as estimated by the United States
Department of Housing and Urban Development for the standard metropolitan statistical
area or the nonmetropolitan county in which the project is located. The project must be
owned for the term of the bonds either by the authority or by a limited partnership or other
entity in which the authority or another entity under the sole control of the authority is the
sole general partner and the partnership or other entity must receive (1) an allocation from
the Department of Management and Budget or an entitlement issuer of tax-exempt bonding
authority for the project and a preliminary determination by the Minnesota Housing Finance
Agency or the applicable suballocator of tax credits that the project will qualify for four
percent low-income housing tax credits or (2) a reservation of nine percent low-income
housing tax credits from the Minnesota Housing Finance Agency or a suballocator of tax
credits for the project. A qualified housing development project may admit nonelderly
individuals and families with higher incomes if:

(1) three years have passed since initial occupancy;

(2) the authority finds the project is experiencing unanticipated vacancies resulting in
insufficient revenues, because of changes in population or other unforeseen circumstances
that occurred after the initial finding of adequate revenues; and

(3) the authority finds a tax levy or payment from general assets of the general jurisdiction
governmental unit will be necessary to pay debt service on the bonds if higher income
individuals or families are not admitted.

(f) The authority may issue bonds to refund bonds issued under this subdivision in
accordance with section 475.67. The finding of the adequacy of pledged revenues required
by paragraph (a) and the public hearing required by paragraph (b) shall not apply to the
issuance of refunding bonds. This paragraph applies to refunding bonds issued on and after
July 1, 1992.

Sec. 6.

Minnesota Statutes 2016, section 469.101, subdivision 1, is amended to read:

Subdivision 1.

Establishment.

An economic development authority may create and
define the boundaries of economic development districts at any place or places within the
city, except that the district boundaries must be contiguous, and may use the powers granted
in sections 469.090 to 469.108 to carry out its purposes. First the authority must hold a
public hearing on the matter. At least ten days before the hearing, the authority shall publish
notice of the hearing in a deleted text begin daily deleted text end newspaper of general circulation in the city. Also, the authority
shall find that an economic development district is proper and desirable to establish and
develop within the city.

Sec. 7.

Minnesota Statutes 2016, section 475.58, subdivision 3b, is amended to read:

Subd. 3b.

Street reconstruction and bituminous overlays.

(a) A municipality may,
without regard to the election requirement under subdivision 1, issue and sell obligations
for street reconstruction or bituminous overlays, if the following conditions are met:

(1) the streets are reconstructed or overlaid under a street reconstruction or overlay plan
that describes the street reconstruction or overlay to be financed, the estimated costs, and
any planned reconstruction or overlay of other streets in the municipality over the next five
years, and the plan and issuance of the obligations has been approved by a vote of deleted text begin all deleted text end new text begin a
majority new text end of the members of the governing body present at the meeting following a public
hearing for which notice has been published in the official newspaper at least ten days but
not more than 28 days prior to the hearing; and

(2) if a petition requesting a vote on the issuance is signed by voters equal to five percent
of the votes cast in the last municipal general election and is filed with the municipal clerk
within 30 days of the public hearing, the municipality may issue the bonds only after
obtaining the approval of a majority of the voters voting on the question of the issuance of
the obligations. If the municipality elects not to submit the question to the voters, the
municipality shall not propose the issuance of bonds under this section for the same purpose
and in the same amount for a period of 365 days from the date of receipt of the petition. If
the question of issuing the bonds is submitted and not approved by the voters, the provisions
of section 475.58, subdivision 1a, shall apply.

(b) Obligations issued under this subdivision are subject to the debt limit of the
municipality and are not excluded from net debt under section 475.51, subdivision 4.

(c) For purposes of this subdivision, street reconstruction and bituminous overlays
includes utility replacement and relocation and other activities incidental to the street
reconstruction, turn lanes and other improvements having a substantial public safety function,
realignments, other modifications to intersect with state and county roads, and the local
share of state and county road projects. For purposes of this subdivision, "street
reconstruction" includes expenditures for street reconstruction that have been incurred by
a municipality before approval of a street reconstruction plan, if such expenditures are
included in a street reconstruction plan approved on or before the date of the public hearing
under paragraph (a), clause (1), regarding issuance of bonds for such expenditures.

(d) Except in the case of turn lanes, safety improvements, realignments, intersection
modifications, and the local share of state and county road projects, street reconstruction
and bituminous overlays does not include the portion of project cost allocable to widening
a street or adding curbs and gutters where none previously existed.

Sec. 8.

Minnesota Statutes 2016, section 475.60, subdivision 2, is amended to read:

Subd. 2.

Requirements waived.

The requirements as to public sale shall not apply:

(1) to obligations issued under the provisions of a home rule charter or of a law
specifically authorizing a different method of sale, or authorizing them to be issued in such
manner or on such terms and conditions as the governing body may determine;

(2) to obligations sold by an issuer in an amount not exceeding the total sum of
$1,200,000 in any 12-month period;

(3) to obligations issued by a governing body other than a school board in anticipation
of the collection of taxes or other revenues appropriated for expenditure in a single year, if
sold in accordance with the most favorable of two or more proposals solicited privately;

(4) to obligations sold to any board, department, or agency of the United States of
America or of the state of Minnesota, in accordance with rules or regulations promulgated
by such board, department, or agency;

(5) to obligations issued to fund pension and retirement fund liabilities under section
475.52, subdivision 6, obligations issued with tender options under section 475.54,
subdivision 5a, crossover refunding obligations referred to in section 475.67, subdivision
13, and any issue of obligations comprised in whole or in part of obligations bearing interest
at a rate or rates which vary periodically referred to in section 475.56;

(6) to obligations to be issued for a purpose, in a manner, and upon terms and conditions
authorized by law, if the governing body of the municipality, on the advice of bond counsel
or special tax counsel, determines that interest on the obligations cannot be represented to
be excluded from gross income for purposes of federal income taxation;

(7) to obligations issued in the form of an installment purchase contract, lease purchase
agreement, or other similar agreement;

(8) to obligations sold under a bond reinvestment program; and

(9) if the municipality has retained an independent deleted text begin financial advisor deleted text end new text begin municipal adviser new text end ,
obligations which the governing body determines shall be sold by private negotiation.