HF 2077

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:58am

A bill for an act
relating to local governments; providing mechanisms for cities to respond to state
aid reductions and other revenue shortfalls; increasing flexibility to spend and
raise revenue; authorizing cities to establish street improvement districts and to
apportion street improvement fees within districts; requiring adoption of street
improvement plans; authorizing cities to issue emergency debt certificates for
unexpected revenue shortfalls; amending Minnesota Statutes 2008, sections
275.065, subdivision 6; 469.176, by adding a subdivision; 475.58, subdivision 1;
proposing coding for new law in Minnesota Statutes, chapters 435; 471; 475.

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

Section 1.

Minnesota Statutes 2008, section 275.065, subdivision 6, is amended to read:

Subd. 6.

Public hearing; adoption of budget and levy.

(a) For purposes of this
section, the following terms shall have the meanings given:

(1) "Initial hearing" means the first and primary hearing held to discuss the taxing
authority's proposed budget and proposed property tax levy for taxes payable in the
following year, or, for school districts, the current budget and the proposed property tax
levy for taxes payable in the following year.

(2) "Continuation hearing" means a hearing held to complete the initial hearing, if
the initial hearing is not completed on its scheduled date.

(3) "Subsequent hearing" means the hearing held to adopt the taxing authority's final
property tax levy, and, in the case of taxing authorities other than school districts, the final
budget, for taxes payable in the following year.

(b) Between November 29 and December 20, the governing bodies of a city that has a
population over 500, county, metropolitan special taxing districts as defined in subdivision
3, paragraph (i), and regional library districts shall each hold an initial public hearing
to discuss and seek public comment on its final budget and property tax levy for taxes
payable in the following year, and the governing body of the school district shall hold an
initial public hearing to review its current budget and proposed property tax levy for taxes
payable in the following year. The metropolitan special taxing districts shall be required to
hold only a single joint initial public hearing, the location of which will be determined by
the affected metropolitan agencies. A city, county, metropolitan special taxing district as
defined in subdivision 3, paragraph (i), regional library district established under section
134.201, or school district is not required to hold a public hearing under this subdivision
unless its proposed property tax levy for taxes payable in the following year, as certified
under subdivision 1, has increased over its final property tax levy for taxes payable in the
current year by a percentage that is greater than the percentage increase in the implicit
price deflator for government consumption expenditures and gross investment for state
and local governments prepared by the Bureau of Economic Analysts of the United States
Department of Commerce for the 12-month period ending March 31 of the current year.

(c) The initial hearing must be held after 5:00 p.m. if scheduled on a day other than
Saturday. No initial hearing may be held on a Sunday.

(d) At the initial hearing under this subdivision, the percentage increase in property
taxes proposed by the taxing authority, if any, and the specific purposes for which property
tax revenues are being increased must be discussed. During the discussion, the governing
body shall hear comments regarding a proposed increase and explain the reasons for the
proposed increase. The public shall be allowed to speak and to ask questions. At the public
hearing, the school district must also provide and discuss information on the distribution
of its revenues by revenue source, and the distribution of its spending by program area.

(e) If the initial hearing is not completed on its scheduled date, the taxing authority
must announce, prior to adjournment of the hearing, the date, time, and place for the
continuation of the hearing. The continuation hearing must be held at least five business
days but no more than 14 business days after the initial hearing. A continuation hearing
may not be held later than December 20 except as provided in paragraphs (f) and (g).
A continuation hearing must be held after 5:00 p.m. if scheduled on a day other than
Saturday. No continuation hearing may be held on a Sunday.

(f) The governing body of a county shall hold its initial hearing on the first Thursday
in December each year, and may hold additional initial hearings on other dates before
December 20 if necessary for the convenience of county residents. If the county needs a
continuation of its hearing, the continuation hearing shall be held on the third Tuesday
in December. If the third Tuesday in December falls on December 21, the county's
continuation hearing shall be held on Monday, December 20.

(g) The metropolitan special taxing districts shall hold a joint initial public hearing
on the first Wednesday of December. A continuation hearing, if necessary, shall be held on
the second Wednesday of December even if that second Wednesday is after December 10.

(h) The county auditor shall provide for the coordination of initial and continuation
hearing dates for all school districts and cities within the county to prevent conflicts under
clauses (i) and (j).

(i) By August 10, each school board and the board of the regional library district
shall certify to the county auditors of the counties in which the school district or regional
library district is located the dates on which it elects to hold its initial hearing and any
continuation hearing. If a school board or regional library district does not certify these
dates by August 10, the auditor will assign the initial and continuation hearing dates. The
dates elected or assigned must not conflict with the initial and continuation hearing dates
of the county or the metropolitan special taxing districts.

(j) By August 20, the county auditor shall notify the clerks of the cities within the
county of the dates on which school districts and regional library districts have elected to
hold their initial and continuation hearings. At the time a city certifies its proposed levy
under subdivision 1 it shall certify the dates on which it elects to hold its initial hearing and
any continuation hearing. Until September 15, the first and second Mondays of December
are reserved for the use of the cities. If a city does not certify its hearing dates by
September 15, the auditor shall assign the initial and continuation hearing dates. The dates
elected or assigned for the initial hearing must not conflict with the initial hearing dates
of the county, metropolitan special taxing districts, regional library districts, or school
districts within which the city is located. To the extent possible, the dates of the city's
continuation hearing should not conflict with the continuation hearing dates of the county,
metropolitan special taxing districts, regional library districts, or school districts within
which the city is located. This paragraph does not apply to cities of 500 population or less.

(k) The county initial hearing date and the city, metropolitan special taxing district,
regional library district, and school district initial hearing dates must be designated on
the notices required under subdivision 3. The continuation hearing dates need not be
stated on the notices.

(l) At a subsequent hearing, each county, school district, city over 500 population,
and metropolitan special taxing district may amend its proposed property tax levy
and must adopt a final property tax levy. Each county, city over 500 population, and
metropolitan special taxing district may also amend its proposed budget and must adopt a
final budget at the subsequent hearing. The final property tax levy must be adopted prior
to adopting the final budget. A school district is not required to adopt its final budget at the
subsequent hearing. The subsequent hearing of a taxing authority must be held on a date
subsequent to the date of the taxing authority's initial public hearing. If a continuation
hearing is held, the subsequent hearing must be held either immediately following the
continuation hearing or on a date subsequent to the continuation hearing. The subsequent
hearing may be held at a regularly scheduled board or council meeting or at a special
meeting scheduled for the purposes of the subsequent hearing. The subsequent hearing
of a taxing authority does not have to be coordinated by the county auditor to prevent a
conflict with an initial hearing, a continuation hearing, or a subsequent hearing of any
other taxing authority. All subsequent hearings must be held prior to five working days
after December 20 of the levy year. The date, time, and place of the subsequent hearing
must be announced at the initial public hearing or at the continuation hearing.

(m) The property tax levy certified under section 275.07 by a city of any population,
county, metropolitan special taxing district, regional library district, or school district
must not exceed the proposed levy determined under subdivision 1, except by an amount
up to the sum of the following amounts:

(1) the amount of a school district levy whose voters approved a referendum to
increase taxes under section 123B.63, subdivision 3, or 126C.17, subdivision 9, after
the proposed levy was certified;

(2) the amount of a city or county levy approved by the voters after the proposed
levy was certified;

(3) the amount of a levy to pay principal and interest on bonds approved by the
voters under section 475.58 after the proposed levy was certified;

(4) the amount of a levy to pay costs due to a natural disaster occurring after the
proposed levy was certified, if that amount is approved by the commissioner of revenue
under subdivision 6a;

(5) the amount of a levy to pay tort judgments against a taxing authority that become
final after the proposed levy was certified, if the amount is approved by the commissioner
of revenue under subdivision 6a;

(6) the amount of an increase in levy limits certified to the taxing authority by the
commissioner of education or the commissioner of revenue after the proposed levy was
certified; deleted text begin and
deleted text end

(7) the amount required under section 126C.55 new text begin ; and
new text end

new text begin (8) the levy to pay emergency debt certificates under section 475.755 authorized and
issued after the proposed levy was certified new text end .

(n) This subdivision does not apply to towns and special taxing districts other than
regional library districts and metropolitan special taxing districts.

(o) Notwithstanding the requirements of this section, the employer is required to
meet and negotiate over employee compensation as provided for in chapter 179A.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

new text begin [435.39] MUNICIPAL STREET IMPROVEMENT DISTRICTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms
have the meanings given them.
new text end

new text begin (b) "Governing body" means the city council of a municipality.
new text end

new text begin (c) "Improvements" means construction, reconstruction, and facility upgrades
involving: right-of-way acquisition; paving; curbs and gutters; bridges and culverts and
their repair; milling; overlaying; drainage and storm sewers; excavation; base work;
subgrade corrections; street lighting; traffic signals; signage; sidewalks; pavement
markings; boulevard and easement restoration; impact mitigation; connection and
reconnection of utilities; turn lanes; medians; street and alley returns; retaining walls;
fences; lane additions; and fixed transit infrastructure, trails, or pathways. "Fixed transit
infrastructure" does not include commuter rail rolling stock, light rail vehicles, or
transit way buses; capital costs for park-and-ride facilities; feasibility studies, planning,
alternative analyses, environmental studies, engineering, or construction of transit ways;
or operating assistance for transit ways.
new text end

new text begin (d) "Maintenance" means striping, seal coating, crack sealing, pavement repair,
sidewalk maintenance, signal maintenance, street light maintenance, and signage.
new text end

new text begin (e) "Municipal street" means a street, alley, or public way in which the municipality
is the road authority with powers conferred by section 429.021.
new text end

new text begin (f) "Municipality" means a home rule charter or statutory city.
new text end

new text begin (g) "Street improvement district" means a geographic area designated by a
municipality within which street improvements and maintenance may be undertaken and
financed according to this section.
new text end

new text begin Subd. 2. new text end

new text begin Authorization. new text end

new text begin A municipality may establish by ordinance municipal
street improvement districts and may defray all or part of the total costs of municipal
street improvements and maintenance by apportioning street improvement fees to all of
the parcels located in the district.
new text end

new text begin Subd. 3. new text end

new text begin Uniformity. new text end

new text begin The total costs of municipal street improvements and
maintenance must be apportioned to all parcels or tracts of land located in the established
street improvement district on a uniform basis within each classification of real estate.
new text end

new text begin Subd. 4. new text end

new text begin Adoption of plan. new text end

new text begin (a) Before establishing a municipal street improvement
district or authorizing a street improvement fee, a municipality must propose and adopt
a street improvement plan that:
new text end

new text begin (1) identifies and estimates the costs of proposed improvements and maintenance for
the following five years;
new text end

new text begin (2) identifies the location of the municipal street improvement district, which must
be limited to parcels that are served by the improvements to be constructed or maintained
by the street improvement district; and
new text end

new text begin (3) specifies the manner in which costs will be apportioned among the parcels in
the district under subdivision 3.
new text end

new text begin (b) Notice of a public hearing on the proposed plan must be given by mail to all
affected landowners at least ten days before the hearing and posted for at least ten days
before the hearing. At the public hearing, the governing body must present the plan and
all affected landowners in attendance must have the opportunity to comment before the
governing body considers adoption of the plan.
new text end

new text begin Subd. 5. new text end

new text begin Use of fees. new text end

new text begin Revenues collected from property in a district from the
fee authorized in this section must be placed in a separate account and be used only
for projects located within that same district and identified in the municipal street
improvement district plan.
new text end

new text begin Subd. 6. new text end

new text begin Collection; up to 20 years. new text end

new text begin (a) The ordinance adopted under this section
must provide for the billing and payment of the fee on a monthly, quarterly, or other basis
as directed by the governing body. The governing body may collect municipal street
improvement fees within a street improvement district for up to a maximum of 20 years.
new text end

new text begin (b) Fees that, as of October 15 of each calendar year, have remained unpaid for at
least 30 days may be certified to the county auditor for collection as property taxes payable
in the following calendar year on the affected property.
new text end

new text begin Subd. 7. new text end

new text begin Notice; hearings. new text end

new text begin (a) A municipality may impose a municipal street
improvement fee provided in this section by ordinance. The ordinance must not be voted
on or adopted until after a public hearing has been held on the question. The effective date
of an ordinance must be at least 45 days after it is adopted.
new text end

new text begin (b) Within five days after adoption of the ordinance, a summary of the ordinance
must be mailed to the owner of each parcel included in the street improvement district.
The mailing must include a notice that owners subject to a fee under the ordinance have a
right to petition for a referendum vote on the ordinance by filing the required number of
objections with the city clerk before the effective date of the ordinance and that a copy of
the ordinance is on file with the city clerk for public inspection.
new text end

new text begin Subd. 8. new text end

new text begin Reverse referendum. new text end

new text begin (a) If owners of 35 percent or more of the net tax
capacity in the district subject to the fees under the ordinance file an objection to the
ordinance with the city clerk before the effective date of the ordinance, the ordinance does
not become effective unless it is approved as provided in paragraph (b).
new text end

new text begin (b) If an ordinance does not become effective as a result of the filing of objections
under paragraph (a), the city may submit the ordinance to the property owners in the
street improvement district that would be subject to the fee imposed by the ordinance for
approval. The election must be conducted by mail. Notice of the election and the mail
procedure must be given at least six weeks prior to the election. No earlier than 20 days or
later than 14 days before the date set for the election, the city clerk shall mail ballots by
nonforwardable mail to the owners, as recorded on the property tax records, of each parcel
of property subject to the fee under the ordinance. Each parcel of property is entitled to
one vote. Ballots may be returned to the city clerk by mail or in person by the date set for
the election. If a majority of the owners voting in the election approve the ordinance, it
becomes effective 30 days after the date of the election.
new text end

new text begin Subd. 9. new text end

new text begin Not exclusive means of financing improvements. new text end

new text begin The use of the
municipal street improvement fee by a municipality does not restrict the municipality from
imposing other measures to pay the costs of local street improvements or maintenance,
except that a municipality must not impose special assessments for projects funded with
street improvement fees.
new text end

Sec. 3.

Minnesota Statutes 2008, section 469.176, is amended by adding a subdivision
to read:

new text begin Subd. 4m. new text end

new text begin Use to offset state aid reductions. new text end

new text begin (a) Notwithstanding any other
provision of this section, section 469.1763, or a special law, upon the request of the
municipality, the authority may elect, by resolution, to transfer increments from a district
to the municipality for deposit in its general fund. The permitted transfer for a calendar
year is limited to the amount allowed under paragraph (b). Following the election,
expenditure of increments from the district are limited by the conditions in paragraph (c).
The transferred increments may be expended for any purpose the municipality's general
fund permits.
new text end

new text begin (b) For each calendar year for which transfers are permitted under this section,
the maximum transfer equals the lesser of:
new text end

new text begin (1) the excess of the district's available increment over the sum of:
new text end

new text begin (i) required payments of obligations that will come due during the calendar year or
the first six months of the following calendar year on outstanding bonds and binding
contracts to which the district's increments are pledged; plus
new text end

new text begin (ii) transfers of increments from the district to offset deficits in other districts to be
made during the calendar year under section 469.1763, subdivision 6; or
new text end

new text begin (2) the sum of the following amounts (limited to the relevant amounts that are
effective through the calendar year in which the transfer is to be made):
new text end

new text begin (i) unallotment of aid payments previously certified by the state to be paid to the
municipality during calendar years 2008 through 2012;
new text end

new text begin (ii) reductions in state reimbursement payments for property tax credits to be paid to
the municipality in calendar years 2008 through 2012; and
new text end

new text begin (iii) reductions in local government aids to be paid to the municipality resulting from
reductions in the appropriation or changes in the formula, enacted by the legislature,
for calendar years 2009 through 2012; less
new text end

new text begin (iv) any special levy made by the municipality under section 275.70, subdivision
5, clause (22).
new text end

new text begin (c) Following an election under this subdivision, an authority may expend
increments from the district for only the following purposes:
new text end

new text begin (1) payment of bonds and binding contracts with an entity not under the control of
the municipality or authority to which the district's increments were pledged that were
outstanding when the election was made;
new text end

new text begin (2) transfers to offset deficits in other districts as permitted under section 469.1763,
subdivision 6;
new text end

new text begin (3) administrative expenses of the district; and
new text end

new text begin (4) transfers permitted under this subdivision.
new text end

new text begin (d) The commissioner of revenue shall calculate and certify the amount, if any, of
the reduction under paragraph (b), clause (2), item (iii), for a city, upon request of the city.
new text end

new text begin (e) The authority to transfer increments under this section expires on December
31, 2012.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment
and applies to increments from any district, regardless of when the request for certification
was made.
new text end

Sec. 4.

new text begin [471.691] TEMPORARY AUTHORITY TO USE LODGING TAX
REVENUES.
new text end

new text begin (a) A city, county, or town may use or spend the proceeds or revenues of a tax
or fee on lodging for any permitted municipal purpose. For purposes of this section,
"lodging" means the furnishing for consideration of lodging at a hotel, motel, rooming
house, tourist court, or resort, other than the renting or leasing of lodging for a continuous
period of 30 days or more.
new text end

new text begin (b) This section preempts the provisions of section 469.190, subdivision 3, or any
other law, including special laws, ordinances, and charter provisions, that dedicate or limit
the purposes for which the proceeds or revenues derived from a tax or fee imposed on
lodging may be used or spent. It does not apply to:
new text end

new text begin (1) lodging tax proceeds that are pledged to pay bonds or other debt; or
new text end

new text begin (2) any of the proceeds of a general sales or use tax.
new text end

new text begin (c) This section expires on December 31, 2012.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2008, section 475.58, subdivision 1, is amended to read:

Subdivision 1.

Approval by electors; exceptions.

Obligations authorized by law or
charter may be issued by any municipality upon obtaining the approval of a majority of
the electors voting on the question of issuing the obligations, but an election shall not be
required to authorize obligations issued:

(1) to pay any unpaid judgment against the municipality;

(2) for refunding obligations;

(3) for an improvement or improvement program, which obligation is payable wholly
or partly from the proceeds of special assessments levied upon property specially benefited
by the improvement or by an improvement within the improvement program, or from tax
increments, as defined in section 469.174, subdivision 25, including obligations which are
the general obligations of the municipality, if the municipality is entitled to reimbursement
in whole or in part from the proceeds of such special assessments or tax increments and
not less than 20 percent of the cost of the improvement or the improvement program is to
be assessed against benefited property or is to be paid from the proceeds of federal grant
funds or a combination thereof, or is estimated to be received from tax increments;

(4) payable wholly from the income of revenue producing conveniences;

(5) under the provisions of a home rule charter which permits the issuance of
obligations of the municipality without election;

(6) under the provisions of a law which permits the issuance of obligations of a
municipality without an election;

(7) to fund pension or retirement fund or postemployment benefit liabilities pursuant
to section 475.52, subdivision 6;

(8) under a capital improvement plan under section 373.40; deleted text begin and deleted text end

(9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if
the proceeds of the bonds are not used for a purpose prohibited under section 469.176,
subdivision 4g, paragraph (b) new text begin ; and
new text end

new text begin (10) under section 475.755 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6.

new text begin [475.755] EMERGENCY DEBT CERTIFICATES.
new text end

new text begin (a) If at any time during a fiscal year the receipts of a local government are
reasonably expected to be reduced below the amount provided in the local government's
budget when the final property tax levy to be collected during the fiscal year was certified
and the receipts are insufficient to meet the expenses incurred or to be incurred during the
fiscal year, the governing body of the local government may authorize and sell certificates
of indebtedness to mature within two years or less from the end of the fiscal year in which
the certificates are issued. The maximum principal amount of the certificates that it may
issue in a fiscal year is limited to the expected reduction in receipts plus the cost of
issuance. The certificates may be issued in the manner and on the terms the governing
body determines by resolution.
new text end

new text begin (b) The governing body of the local government shall levy taxes for the payment of
principal and interest on the certificates in accordance with section 475.61.
new text end

new text begin (c) The certificates are not to be included in the net debt of the issuing local
government.
new text end

new text begin (d) For purposes of this section, the following terms have the meanings given.
new text end

new text begin (1) "Local government" means a statutory or home rule charter city, a town, or
a county.
new text end

new text begin (2) "Receipts" includes the following amounts scheduled to be received by the
local government for the fiscal year from:
new text end

new text begin (i) taxes;
new text end

new text begin (ii) aid payments previously certified by the state to be paid to the local government;
new text end

new text begin (iii) state reimbursement payments for property tax credits; and
new text end

new text begin (iv) any other source.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end