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HF 1721

1st Unofficial Engrossment - 87th Legislature (2011 - 2012) Posted on 04/30/2012 03:44pm

KEY: stricken = removed, old language.
underscored = added, new language.
1.1A bill for an act
1.2relating to economic development; making changes to joint ventures by utilities;
1.3authorizing redevelopment demolition loans; eliminating a semiannual report;
1.4amending Minnesota Statutes 2010, sections 116J.555, subdivision 2; 116J.571;
1.5116J.572; 116J.575, by adding a subdivision; 452.25, subdivisions 2, 3, 5, 6;
1.6proposing coding for new law in Minnesota Statutes, chapter 116J.

1.8    Section 1. Minnesota Statutes 2010, section 116J.555, subdivision 2, is amended to
1.10    Subd. 2. Application cycles; reporting to legislature. (a) In making grants, the
1.11commissioner shall establish semiannual application deadlines in which grants will be
1.12authorized from all or part of the available appropriations of money in the account.
1.13(b) After each semiannual cycle in which grants are awarded, the commissioner shall
1.14report to the environment and natural resources committees of the senate and house of
1.15representatives, the Finance Division of the senate Committee on Environment and Natural
1.16Resources, and the house of representatives Committee on Environment and Natural
1.17Resources finance the grants awarded and appropriate supporting information describing
1.18each grant made. This report must be made within 30 days after the grants are awarded.
1.19(c) (b) The commissioner shall annually report to the legislative committees in
1.20paragraph (b) committees of the senate and house of representatives with jurisdiction over
1.21environment and natural resources finance on the status of the cleanup projects undertaken
1.22under grants made under the programs. The commissioner shall include in the annual
1.23report information on the cleanup and development activities undertaken for the grants
1.24made in that and previous fiscal years. The commissioner shall make this report no later
1.25than 120 days after the end of the fiscal year.

2.1    Sec. 2. Minnesota Statutes 2010, section 116J.571, is amended to read:
2.3Two redevelopment accounts are created, one in the general fund and one in
2.4the bond proceeds fund. Money in the accounts for the program may be used to make
2.5grants as provided in section 116J.575 and loans as provided in section 116J.5761 and
2.6to pay for the commissioner's costs in reviewing applications and making grants and
2.7loans and is available until spent. The repayment of principal and interest on loans and
2.8investment income earned on money in the account is deposited in the special revenue
2.9fund and may be used for making grants and loans and for administrative costs and are
2.10appropriated for such purposes.

2.11    Sec. 3. Minnesota Statutes 2010, section 116J.572, is amended to read:
2.12116J.572 DEFINITIONS.
2.13    Subdivision 1. Scope of application. For purposes of sections 116J.571 to 116J.575
2.14116J.5765, the terms in this section have the meanings given.
2.15    Subd. 1a. Demolition costs. "Demolition costs" means the costs of demolition,
2.16destruction, removal and clearance of all structures and other improvements on the project
2.17site, including interior remedial activities, and proper disposal thereof. As used in this
2.18subdivision, "structure" has the meaning given it in section 116G.03, subdivision 11.
2.19    Subd. 2. Development authority. "Development authority" includes a statutory
2.20or home rule charter city, county, housing and redevelopment authority, economic
2.21development authority, or port authority.
2.22    Subd. 2a. Metropolitan area. "Metropolitan area" means the seven-county
2.23metropolitan area, as defined in section 473.121, subdivision 2.
2.24    Subd. 2b. Municipality. "Municipality" means the statutory or home rule charter
2.25city, town, or, in the case of unorganized territory, the county in which the redevelopment
2.26or project is located.
2.27    Subd. 3. Redevelopment costs or costs. "Redevelopment costs" or "costs" means
2.28the costs of land acquisition, stabilizing unstable soils when infill is required, demolition,
2.29infrastructure improvements, and ponding or other environmental infrastructure,
2.30demolition costs and costs necessary for adaptive reuse of buildings, including remedial

2.32    Sec. 4. Minnesota Statutes 2010, section 116J.575, is amended by adding a subdivision
2.33to read:
3.1    Subd. 4. Grant repayment. If a project fails to substantially provide the public
3.2benefits listed in the grant application within five years from the date of the grant award,
3.3the commissioner may require that 100 percent of the grant amount be repaid by the
3.4development authority over a term not to exceed ten years. The commissioner may
3.5exercise discretion to require repayment of only a portion of the grant amount taking into
3.6account the public benefits generated by the completed development.

3.7    Sec. 5. [116J.5761] LOANS.
3.8    Subdivision 1. Authority. The commissioner may make loans to development
3.9authorities for projects that meet the criteria under sections 116J.5761 to 116J.5764. The
3.10commissioner may make a loan for up to 100 percent of the estimated land acquisition and
3.11demolition costs of the project. The determination whether to make a loan for a project
3.12is within the discretion of the commissioner, subject to this section, sections 116J.5761
3.13to 116J.5764, and available unencumbered money in the redevelopment accounts. The
3.14commissioner's decisions and application of the priorities under this section are not subject
3.15to judicial review, except for abuse of discretion.
3.16    Subd. 2. Qualifying projects. A project qualifies for a loan under this section,
3.17if the following criteria are met:
3.18(1) the property and structures are owned by the development authority;
3.19(2) the structures on the property have been vacant for at least one year;
3.20(3) the structures constitute a threat to public safety because of inadequate
3.21maintenance, dilapidation, obsolescence, or abandonment;
3.22(4) the structures are not listed on the National Register of Historic Places; and
3.23(5) upon completion of the demolition, the development authority reasonably
3.24expects that the property will be improved and these improvements will result in economic
3.25development benefits to the municipality.

3.26    Sec. 6. [116J.5762] LOAN APPLICATIONS.
3.27    Subdivision 1. Application required. To obtain a demolition loan, a development
3.28authority shall apply to the commissioner. The governing body of the municipality must
3.29approve the application by resolution.
3.30    Subd. 2. Required content. The commissioner shall prescribe and provide the
3.31application form. The application must include at least the following information:
3.32(1) identification of the property;
3.33(2) proof of ownership by the development authority;
4.1(3) a description of how the structures on the property constitute a threat to public
4.2safety, are functionally obsolete, or are economically unfeasible to repair;
4.3(4) length of vacancy;
4.4(5) a detailed estimate, along with supporting evidence, of the total demolition
4.5costs for the project;
4.6(6) evidence that the structures on the property are not listed on the National Register
4.7of Historic Places;
4.8(7) as assessment of the development potential or likely use of the property after
4.9completion of the demolition plan;
4.10(8) the current appraised or assessed value of the property;
4.11(9) financial documentation necessary for loan underwriting;
4.12(10) other sources of funding if the total estimated demolition costs exceed the
4.13loan amount;
4.14(11) the proposed source of funds to be used for repayment of the loan;
4.15(12) information showing the applicant's financial condition and ability to repay
4.16the loan;
4.17(13) the proposed term and principal repayment schedule for the loan;
4.18(14) the statutory authorization for the applicant to issue bonds, together with a
4.19statement that the statutory provision authorizes the use of proceeds of such bonds to pay
4.20demolition costs and secure the loan; and
4.21(15) any additional information the commissioner prescribes.

4.22    Sec. 7. [116J.5763] PRIORITIES.
4.23    Subdivision 1. Priorities. (a) If applications for loans exceed the available
4.24appropriations, loans shall be made for projects that, in the commissioner's judgment,
4.25provide the highest return in public benefits for the public costs incurred. "Public benefits"
4.26include health, safety and other environmental benefits, blight reduction including
4.27the property's potential for improved economic vitality, functionality and aesthetics,
4.28community stabilization, crime reduction, reduced maintenance costs, and the potential
4.29for future development. In making this judgment, the commissioner shall consider the
4.31(1) the extent to which the existing property conditions threaten public safety;
4.32(2) the length of vacancy of the property;
4.33(3) the development potential of the property;
4.34(4) the proximity of the property to existing sufficient public infrastructure;
4.35(5) the applicant's financial condition and ability to repay the loan.
5.1(b) The factors in paragraph (a) are not listed in a rank order or priority; rather, the
5.2commissioner may weigh each factor, depending upon the facts and circumstances, as
5.3the commissioner considers appropriate. The commissioner may consider other factors
5.4that affect the net return of public benefits.
5.5    Subd. 2. Application cycle. The commissioner shall establish semiannual
5.6application deadlines in which loans will be authorized from available money in the

5.8    Sec. 8. [116J.5764] LOAN TERMS AND CONDITIONS.
5.9    Subdivision 1. Terms. Loans to development authorities for demolition costs may
5.10be made by the commissioner subject to the following terms and conditions:
5.11(1) the agreement to repay the loan must be a general obligation of the development
5.12authority, payable primarily from a dedicated source of revenue, and the development
5.13authority must deliver its bond or note to the commissioner to secure the loan;
5.14(2) the term of the loan may not exceed 15 years;
5.15(3) the loan shall bear interest at a rate equal to two percent, but interest will not
5.16accrue during the first two years of the loan term;
5.17(4) the development authority shall make semiannual interest payments and annual
5.18principal payments beginning in the third year of the loan until the end of the term;
5.19(5) the principal amount of a loan may not exceed $1,000,000;
5.20(6) loan proceeds shall be disbursed for eligible demolition costs as incurred or
5.21paid by borrower and upon submission of invoices and other supporting documentation
5.22satisfactory to the commissioner;
5.23(7) an eligible borrower shall establish a dedicated source of revenue for repayment
5.24of the loan.
5.25    Subd. 2. Modification of loan terms. The commissioner has the discretion to
5.26consent to the modification of the rate of interest, time of payment, installment of principal
5.27or interest, or other term of a loan made under sections 116J.5761 to 116J.5764.
5.28    Subd. 3. Forgiveness. The commissioner may forgive principal of the loan and
5.29interest accrued but unpaid thereon, if any, up to 50 percent of the original loan amount,
5.30not to exceed the costs of demolition, upon completion of the redevelopment plan, if the
5.31project would otherwise have received grant funding in the most recent semiannual grant
5.32round, based on the priorities in section 116J.575.

5.33    Sec. 9. [116J.5765] NONLIABILITY.
6.1The state shall have no responsibility or liability relating to or arising out of
6.2activities at the site of a project solely by reason of the making of a grant or loan by the
6.3commissioner under sections 116J.5761 to 116J.5764.

6.4    Sec. 10. Minnesota Statutes 2010, section 452.25, subdivision 2, is amended to read:
6.5    Subd. 2. Definitions. For purposes of this section:
6.6(a) "City" means a statutory or home rule charter city, section 410.015 to the
6.7contrary notwithstanding.
6.8(b) "Cooperative association" means a cooperative association organized under
6.9chapter 308A.
6.10(c) "Governing body" means (1) the city council in a city that operates a municipal
6.11utility, or (2) a board, commission, or body empowered by law, city charter, or ordinance
6.12or resolution of the city council to control and operate the municipal utility.
6.13(d) "Investor-owned utility" means an entity that provides utility services to the
6.14public under chapter 216B and that is owned by private persons.
6.15(e) "Municipal power agency" means an organization created under sections 453.51
6.16to 453.62.
6.17(f) "Municipal utility" means a utility owned, operated, or controlled by a city to
6.18provide utility services.
6.19(g) "Public utility" or "utility" means a provider of electric, gas, or water facilities
6.20or services or an entity engaged in other similar or related operations authorized by law
6.21or charter.

6.22    Sec. 11. Minnesota Statutes 2010, section 452.25, subdivision 3, is amended to read:
6.23    Subd. 3. Authority. (a) Upon the approval of its elected utilities commission or, if
6.24there be none, its city council, a municipal utility may enter into a joint venture with other
6.25municipal utilities, municipal power agencies, cooperative associations, or investor-owned
6.26utilities, or federally recognized Indian tribes to provide utility services. Retail electric
6.27utility services provided by a joint venture must be within the boundaries of each utility's
6.28exclusive electric service territory as shown on the map of service territories maintained
6.29by the department of commerce. The terms and conditions of the joint venture are
6.30subject to ratification by the governing bodies of the respective utilities and may include
6.31the formation of a corporate or other separate legal entity with an administrative and
6.32governance structure independent of the respective utilities.
6.33(b) A corporate or other separate legal entity, if formed:
7.1(1) has the authority and legal capacity and, in the exercise of the joint venture, the
7.2powers, privileges, responsibilities, and duties authorized by this section;
7.3(2) is subject to the laws and rules applicable to the organization, internal
7.4governance, and activities of the entity;
7.5(3) in connection with its property and affairs and in connection with property within
7.6its control, may exercise any and all powers that may be exercised by a natural person
7.7or a private corporation or other private legal entity in connection with similar property
7.8and affairs;
7.9(4) a joint venture that does not include an investor-owned utility may elect to be
7.10deemed a municipal utility or a cooperative association for purposes of chapter 216B or
7.11other federal or state law regulating utility operations; and
7.12(5) for a joint venture that includes an investor-owned utility, the commission has
7.13authority over the activities, services, and rates of the joint venture, and may exercise that
7.14authority, to the same extent the commission has authority over the activities, services,
7.15and rates of the investor-owned utility itself.
7.16(c) Any corporation, if formed, must comply with section 465.719, subdivisions 9,
7.1710, 11, 12, 13, and 14
. The term "political subdivision," as it is used in section 465.719,
7.18shall refer to the city council of a city.

7.19    Sec. 12. Minnesota Statutes 2010, section 452.25, subdivision 5, is amended to read:
7.20    Subd. 5. Powers. (a) A joint venture under this section has the powers, privileges,
7.21responsibilities, and duties of the separate utilities entering into the joint venture as the
7.22joint venture agreement may provide, including the powers under paragraph (c), except
7.24(1) with respect to retail electric utility services, a joint venture shall not enlarge or
7.25extend the service territory served by the joint venture by virtue of the authority granted in
7.26sections 216B.44, 216B.45, and 216B.47;
7.27(2) a joint venture may extend service to an existing connected load of 2,000
7.28kilowatts or more, pursuant to section 216B.42, when the load is outside of the assigned
7.29service area of the joint venture, or of the electric utilities party to the joint venture, only if
7.30the load is already being served by one of the electric utilities party to the joint venture; and
7.31(3) a privately owned utility, as defined in section 216B.02, may extend service
7.32to an existing connected load of 2,000 kilowatts or more, pursuant to section 216B.42,
7.33when the load is located within the assigned service territory of the joint venture, or of
7.34the electric utilities party to the joint venture, only if the load is already being served
7.35by that privately owned utility.
8.1(b) The limitations of paragraph (a), clauses (1) to (3), do not apply if written
8.2consent to the action is obtained from the electric utility assigned to and serving the
8.3affected service territory or connected load.
8.4(c) Joint venture powers include, but are not limited to, the authority to:
8.5(1) finance, own, acquire, construct, and operate facilities necessary to provide
8.6utility services to retail customers of the joint venture, including generation, transmission,
8.7storage and distribution facilities, and like facilities used in other utility services;
8.8(2) combine assigned service territories, in whole or in part, upon notice to, hearing
8.9by, and approval of the public utilities commission;
8.10(3) serve customers in the utilities' service territories or in the combined service
8.12(4) combine, share, or employ administrative, managerial, operational, or other staff
8.13if combining or sharing will not degrade safety, reliability, or customer service standards;
8.14(5) provide for joint administrative functions, such as meter reading and billings;
8.15(6) purchase or sell utility services at wholesale for resale to customers;
8.16(7) provide conservation programs, other utility programs, and public interest
8.17programs, such as cold weather shutoff protection and conservation spending programs,
8.18as required by law and rule; and
8.19(8) participate as the parties deem necessary in providing utility services with other
8.20municipal utilities, cooperative utilities, investor-owned utilities, federally recognized
8.21Indian tribes, or other entities, public or private.
8.22(d) Notwithstanding any contrary provision within this section, a joint venture
8.23formed under this section may engage in wholesale utility services unless the municipal
8.24utility, municipal power agency, cooperative association, or investor-owned utility, or
8.25federally recognized Indian tribe party to the joint venture is prohibited under current law
8.26from conducting that activity; but, in any case, the joint venture may provide wholesale
8.27services to a municipal utility, a cooperative association, or an investor-owned utility, or a
8.28federally recognized Indian tribe that is party to the joint venture.
8.29(e) This subdivision does not limit the authority of a joint venture to exercise powers
8.30of eminent domain for other utility purposes to the same extent as is permitted of those
8.31utilities party to the joint venture.

8.32    Sec. 13. Minnesota Statutes 2010, section 452.25, subdivision 6, is amended to read:
8.33    Subd. 6. Construction. (a) The powers conferred by this section are in addition
8.34to the powers conferred by other law or charter. A joint venture under this section, and
8.35a municipal utility with respect to any joint venture under this section, have the powers
9.1necessary to effect the intent and purpose of this section, including, but not limited to, the
9.2expenditure of public funds and the transfer of real or personal property in accordance
9.3with the terms and conditions of the joint venture and the joint venture agreement. This
9.4section is complete in itself with respect to the formation and operation of a joint venture
9.5under this section and with respect to a municipal utility, a cooperative association, or an
9.6investor-owned utility party to a joint venture related to their creation of and dealings
9.7with the joint venture, without regard to other laws or city charter provisions that do not
9.8specifically address or refer to this section or a joint venture created under this section.
9.9(b) This section must not be construed to supersede or modify:
9.10(1) the power of a city council conferred by charter to overrule or override any action
9.11of a governing body other than the actions of the joint venture;
9.12(2) chapter 216B;
9.13(3) any referendum requirements applicable to the creation of a new electric utility
9.14by a municipality under section 216B.46 or 216B.465; or
9.15(4) any powers, privileges, or authority or any duties or obligations of a municipal
9.16utility, municipal power agency, or cooperative association, or federally recognized
9.17Indian tribe acting as a separate legal entity without reference to a joint venture created
9.18under this section.