HF 2467

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to taxation; eliminating the authority of the Metropolitan Airports
Commission to levy property taxes for nondebt purposes; prohibiting issuance of
new general obligation bonds by the commission; amending Minnesota Statutes
2006, sections 275.066; 473.621, subdivision 5; 473.661, subdivision 3; 473.667,
subdivisions 2, 8a, 9, 10, 11, 12; 473.6671, subdivision 1; 473.671; repealing
Minnesota Statutes 2006, sections 473.627; 473.661, subdivisions 2, 3.

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

Section 1.

Minnesota Statutes 2006, section 275.066, is amended to read:

275.066 SPECIAL TAXING DISTRICTS; DEFINITION.

For the purposes of property taxation and property tax state aids, the term "special
taxing districts" includes the following entities:

(1) watershed districts under chapter 103D;

(2) sanitary districts under sections 115.18 to 115.37;

(3) regional sanitary sewer districts under sections 115.61 to 115.67;

(4) regional public library districts under section 134.201;

(5) park districts under chapter 398;

(6) regional railroad authorities under chapter 398A;

(7) hospital districts under sections 447.31 to 447.38;

(8) St. Cloud Metropolitan Transit Commission under sections 458A.01 to 458A.15;

(9) Duluth Transit Authority under sections 458A.21 to 458A.37;

(10) regional development commissions under sections 462.381 to 462.398;

(11) housing and redevelopment authorities under sections 469.001 to 469.047;

(12) port authorities under sections 469.048 to 469.068;

(13) economic development authorities under sections 469.090 to 469.1081;

(14) Metropolitan Council under sections 473.123 to 473.549;

(15) Metropolitan Airports Commission under sections 473.601 to 473.680 new text begin , subject
to the limitations in section 473.671 new text end ;

(16) Metropolitan Mosquito Control Commission under sections 473.701 to 473.716;

(17) Morrison County Rural Development Financing Authority under Laws 1982,
chapter 437, section 1;

(18) Croft Historical Park District under Laws 1984, chapter 502, article 13, section
6;

(19) East Lake County Medical Clinic District under Laws 1989, chapter 211,
sections 1 to 6;

(20) Floodwood Area Ambulance District under Laws 1993, chapter 375, article
5, section 39;

(21) Middle Mississippi River Watershed Management Organization under sections
103B.211 and 103B.241;

(22) emergency medical services special taxing districts under section 144F.01;

(23) a county levying under the authority of section 103B.241, 103B.245, or
103B.251;

(24) Southern St. Louis County Special Taxing District; Chris Jensen Nursing Home
under Laws 2003, First Special Session chapter 21, article 4, section 12; and

(25) any other political subdivision of the state of Minnesota, excluding counties,
school districts, cities, and towns, that has the power to adopt and certify a property tax
levy to the county auditor, as determined by the commissioner of revenue.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes levied in 2007, payable
in 2008, and thereafter.
new text end

Sec. 2.

Minnesota Statutes 2006, section 473.621, subdivision 5, is amended to read:

Subd. 5.

deleted text begin City cost calculation; deleted text end Land reversion.

deleted text begin The investment of the cities of
Minneapolis and St. Paul in the metropolitan airports system, from the date of the original
enactment of this section to January 1, 1973, includes the land comprising airports owned
by them and taken over pursuant to subdivision 2, and taxes levied on property within
the cities in the years 1944 to 1969, the proceeds of which, together with revenues of the
system and federal funds, were expended for the operation, administration, maintenance,
improvement, and extension of the system and the service of debt incurred for such
improvement and extension, including improvement of the city lands. The aggregate
amount of such taxes was $19,816,873, of which $7,294,022 would have been assessed
and extended against property outside the cities if the entire metropolitan area, which will
be taxable by the corporation in 1974 and subsequent years under section 473.661, had
been within its taxing jurisdiction when those levies were made. If it should become
necessary for the corporation to levy any such taxes for any purpose other than the
payment of bonds and interest, they shall be extended and assessed exclusively against
taxable property outside the cities until the total amount so assessed and extended equals
$7,294,022. deleted text end In the event that the airport land owned by either city should no longer be
used for airport purposes, the corporation's control thereof shall cease, and title to the land
and all improvements shall be and remain in the city, but the city shall become liable to the
corporation for the repayment, without interest, of an amount of the taxes so paid which
is proportionate to its own share of the cities' original investment, being 60 percent for
Minneapolis and 40 percent for St. Paul. In the event that any other land or improvements
owned or controlled by the corporation should ever cease to be used for airport purposes,
all income therefrom and all proceeds received upon disposal thereof shall continue to
be used for purposes of the metropolitan airports system, subject to federal laws and
regulations governing such disposal; or if the operation of the system should ever be
terminated, all such income and proceeds shall be distributed to the seven counties in the
metropolitan area, in amounts proportionate to the net tax capacity of taxable property in
each county at the time of such distribution.

Sec. 3.

Minnesota Statutes 2006, section 473.661, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Levy deleted text end new text begin Budget new text end limit.

In any budget certified by the commissioners under
this section, the amount included for operation and maintenance shall not exceed an
amount which deleted text begin , deleted text end deleted text begin when extended against the property taxable therefor under section 473.621,
subdivision 5, will require a levy at a rate of 0.00806 percent of market value. Taxes
levied by the corporation shall not affect the amount or rate of taxes which may be levied
by any other local government unit within the metropolitan area under the provisions of
any charter deleted text end new text begin can be paid from revenue sources other than property taxes new text end .

Sec. 4.

Minnesota Statutes 2006, section 473.667, subdivision 2, is amended to read:

Subd. 2.

Borrowing authorization.

No additional bonds shall be issued under the
provisions of section 473.665, over and above the amount outstanding April 1, 1974.
Except for refunding bonds and certificates of indebtedness, the principal amount of
bonds that may be issued under this section, over and above the amount of bonds of the
commission outstanding January 15, 1988, is limited to $150,000,000 deleted text begin until and unless
this limitation is increased by law deleted text end . new text begin No additional bonds may be issued under this section
after April 30, 2007, except to refund bonds outstanding on that date. new text end The pledge of
revenues of the commission to its debt service fund in lieu of the taxes otherwise required
by section 473.665 to be assessed and extended shall be and remain a first charge on all
current revenues of the commission to the extent required annually to cancel such taxes.

Sec. 5.

Minnesota Statutes 2006, section 473.667, subdivision 8a, is amended to read:

Subd. 8a.

Refunding bonds.

The commission may issue general obligation revenue
refunding bonds to refund bonds issued pursuant to this section new text begin prior to May 1, 2007, new text end in
accordance with section 475.67, subdivisions 1 to 11.

Sec. 6.

Minnesota Statutes 2006, section 473.667, subdivision 9, is amended to read:

Subd. 9.

Additional taxes.

Nothing herein shall prevent the commission from
levying a tax deleted text begin not to exceed 0.00121 percent of market value on taxable property within
its taxing jurisdiction, in addition to any levies found deleted text end necessary for the debt service fund
authorized by section 473.671. Nothing herein shall prevent the levy and appropriation for
purposes of the commission of any other tax deleted text begin on property or deleted text end on any income, transaction, or
privilege, when and if authorized by law. All collections of any taxes so levied shall be
included in the revenues appropriated for the purposes referred to in this section, unless
otherwise provided in the law authorizing the levies; but no covenant as to the continuance
or as to the rate and amount of any such levy shall be made with the holders of the
commission's bonds unless specifically authorized by law.

Sec. 7.

Minnesota Statutes 2006, section 473.667, subdivision 10, is amended to read:

Subd. 10.

Emergency borrowing.

If in any budget year revenue receipts should
from any unforeseen cause become insufficient to pay budgeted current expenses, or if a
public emergency should necessitate expenditures in excess of revenues anticipated to
meet the current budget, the commission may make an emergency appropriation sufficient
to meet the deficiency and may authorize the issuance and sale of deleted text begin general obligation deleted text end
certificates of indebtedness in this amount, maturing not later than October 10 in the
following budget year, at public or private sale and upon such other terms and conditions
as the commission may determine. The principal of and interest on such certificates of
indebtedness, unless paid from other revenues, shall be payable from the debt service
fund. new text begin The principal of and interest on certificates of indebtedness issued after April 30,
2007, may not be paid from revenues derived from a property tax levy.
new text end

Sec. 8.

Minnesota Statutes 2006, section 473.667, subdivision 11, is amended to read:

Subd. 11.

Additional bonds.

(a) new text begin Prior to May 1, 2007, new text end the commission may issue
general obligation revenue bonds under this section for the purposes of:

(1) acquiring by purchase real and personal properties located within the
metropolitan area that are related to airline operations to be leased to airline corporations,
or to other corporations affiliated by common ownership with airline corporations, for use
in connection with their airline operations, including real and personal properties for use
as flight training facilities; and

(2) financing or refinancing real and personal properties owned by the commission
which may include discharging a leasehold interest on the properties to be leased to airline
corporations and used in connection with the operations of the airline corporations at
airports under the commission's jurisdiction.

Prior to the issuance of the general obligation revenue bonds, the commission shall
enter into a lease with the airline corporations, or with other corporations affiliated by
common ownership with airline corporations, for the use of the acquired real and personal
properties referenced in clause (1), and shall enter into a revenue agreement with the
airline corporation for the use of the properties financed or refinanced referenced in clause
(2). The commission shall seek to obtain the best available terms and security for the lease
and agreement. The terms and security must be reasonably determined by the commission
to be adequate and of the kind and degree which would be required by an investment
banking or other financial institution. All such properties are airport facilities for purposes
of complying with the provisions of subdivisions 3 and 5.

(b) In addition to the covenants and agreements otherwise required or negotiated
by the commission, the leases and revenue agreements for the properties must contain
covenants and agreements by the airline corporation, and if the user is not the airline
corporation, also by the airline corporation, satisfactory to the commission providing for:

(1) the payment of rents in amounts and at times adequate to pay the principal and
interest as due on the general obligation revenue bonds issued to acquire, finance, or
refinance the properties and to pay the commission's costs and expenses of issuing the
bonds and acquiring and owning the properties, and otherwise satisfying the requirements
of section 469.155, subdivision 5;

(2) the adequate security for payment of rents so that the net unencumbered value of
the leased property described in paragraph (a), clause (1), and other collateral pledged to
the commission from time to time by the airline corporation, as independently appraised at
the time of issuance and periodically to the satisfaction of the commission during the term
of the general obligation revenue bonds, is a percentage of the principal amount of the
outstanding general obligation revenue bonds under this subdivision as determined by
the commission; provided that the percentage determined by the commission must not
be less than 125 percent;

(3) the retention and location of operations and facilities, including headquarters,
of the airline corporation in the metropolitan area and the state for the term of the lease
and aircraft noise abatement; and

(4) early repayment, or the establishment of a defeasance account to provide for
timely repayment, of the general obligation revenue bonds upon the occurrence of events
and upon terms and conditions as are satisfactory to the commission, together with
financial requirements and covenants satisfactory to the commission.

(c) The purchase price of the acquired properties described in paragraph (a), clause
(1), must be in an amount equivalent to a percentage of its then fair market value as
determined by the commission; provided that the percentage shall not exceed 85 percent.
The portion of the general obligation revenue bonds attributable to the financing or
refinancing of the property described in paragraph (a), clause (2), must be in an amount
equivalent to a percentage of its then fair market value as determined by the commission;
provided that the percentage shall not exceed 85 percent. The principal amount of the
general obligation revenue bonds issued under this subdivision is limited to $270,000,000
in excess of the amount authorized by subdivision 2; provided that the sum of the original
principal amounts of the general obligation revenue bonds issued under this subdivision,
and the revenue bonds issued under section 473.6671, shall not exceed $390,000,000.
Before the commission may issue the general obligation revenue bonds described in this
subdivision, the commission shall have received, in form and substance satisfactory to
the commission, reports described in section 473.6671, subdivision 3, relating to the
general obligation revenue bonds.

(d) In addition to other purposes authorized by law, the proceeds of the general
obligation revenue bonds may be used to fund a debt service reserve account or other
reserve account.

Sec. 9.

Minnesota Statutes 2006, section 473.667, subdivision 12, is amended to read:

Subd. 12.

Bonds for heavy maintenance facility.

(a) new text begin Prior to May 1, 2007, new text end the
commission may issue general obligation revenue bonds under this section for the purpose
of acquisition and betterment of a heavy maintenance facility for aircraft to be located
at Minneapolis-St. Paul International Airport. The heavy maintenance facility must
be owned by the commission and leased to and operated by airline corporations, for
use by airline corporations in connection with their airline operations. The principal
amount of the general obligation revenue bonds issued under this subdivision is limited to
$230,000,000 in excess of the amount authorized by subdivision 2.

(b) To reduce the risk that commission money, including a property tax levy, will
be needed to pay debt service on the general obligation revenue bonds, the commission
must require that the financing arrangements include a coverage test satisfactory to the
commission, so that the sum of the value of the assets and other security pledged to
the payment of the general obligation revenue bonds or the rent due under any lease
of the facility and taken into account by the commission is no less than 125 percent of
the difference between the outstanding general obligation revenue bonds and any cash
collateral held in a debt service reserve fund and pledged to the payment of principal
and interest for the general obligation revenue bonds and no other bonds. Assets and
other security that may be taken into account include (1) the net unencumbered value
of the facility and any collateral or third party guaranty, including a letter of credit,
pledged or otherwise furnished by a user of the facility or by a benefited airline company
as security for the payment of rent, (2) the general obligation revenue bond proceeds,
including earnings thereon, and (3) prepayments of rent, after making such adjustments
the commission determines to be appropriate to take into account any outstanding bonds
secured by a lien on the facility or rent that is prior to the lien thereon that is securing
the general obligation revenue bonds, but excluding any cash collateral deducted from
the outstanding general obligation revenue bonds in applying the coverage test. The
commission may adopt the method of valuing the assets and other security it determines to
be appropriate, including valuation of the facility as its original cost less depreciation.
Cash collateral means cash or securities issued or unconditionally guaranteed as to
payment of principal and interest by the United States of America and maturing or callable
at the option of the holder within two years.

(c) In addition to other purposes authorized by law, the proceeds of the general
obligation revenue bonds may be used to fund a debt service reserve account or other
reserve account.

(d) For purposes of this subdivision, the commission may exercise any powers
vested in a redevelopment agency under sections 469.152 to 469.165. Any deed granted or
received by the commission and any mortgage granted by the commission in connection
with the issuance of the general obligation revenue bonds is exempt from deed tax and
mortgage registry tax imposed under chapter 287. The lease must contain covenants and
agreements by the airline corporation and any successor in interest providing for: (1)
the retention and location of existing employees, operations, and facilities, including
headquarters, of the airline corporation in the state until the principal and interest on the
last series of bonds are paid; and (2) aircraft noise abatement.

Sec. 10.

Minnesota Statutes 2006, section 473.6671, subdivision 1, is amended to read:

Subdivision 1.

Authorization.

(a) The commission may issue revenue bonds for
the purpose of:

(1) acquiring by purchase real and personal properties located within the
metropolitan area that are related to airline operations to be leased to airline corporations,
or to other corporations affiliated by common ownership with airline corporations, for use
in connection with their airline operations, including real and personal properties for use
as flight training facilities; deleted text begin and
deleted text end

(2) financing or refinancing real and personal properties owned by the commission to
be leased to airline corporations and used in connection with the operations of the airline
corporations at airports under the commission's jurisdiction new text begin ; and
new text end

new text begin (3) any other purposes for which general obligation revenue bonds could have been
issued under section 473.667 prior to May 1, 2007 new text end .

Prior to the issuance of the revenue bonds, the commission shall enter into a lease
with the airline corporations, or with other corporations affiliated by common ownership
with airline corporations, for the use of such acquired real and personal properties
referenced in clause (1), and shall enter into a revenue agreement with the airline
corporation for the use of the properties financed or refinanced referenced in clause (2).
The commission shall seek to obtain the best available terms and security for the lease and
agreement. The terms and security must be reasonably determined by the commission
to be adequate and of the kind and degree which would be required by an investment
banking or other financial institution.

(b) In addition to the covenants and agreements otherwise required or negotiated
by the commission, the leases and revenue agreements for the properties must contain
covenants and agreements by the airline corporation, and if the user is not the airline
corporation, also by the airline corporation, satisfactory to the commission providing for:

(1) the payment of rents in amounts and at times adequate to pay the principal and
interest as due on the revenue bonds issued to acquire, finance, or refinance the properties
and to pay the commission's costs and expenses of issuing the bonds and acquiring and
owning the properties, and otherwise satisfying the requirements of section 469.155,
subdivision 5;

(2) the retention and location of operations and facilities, including headquarters, of
the airline corporation in the metropolitan area and the state for the term of the lease;

(3) aircraft noise abatement; and

(4) early repayment, or the establishment of a defeasance account to provide for
timely repayment, of the general obligation revenue bonds upon the occurrence of events
and upon terms and conditions as are satisfactory to the commission, together with
financial requirements and covenants satisfactory to the commission.

(c) The sum of the original principal amounts of the revenue bonds issued under
this subdivision, and the general obligation revenue bonds issued under section 473.667,
subdivision 11, shall not exceed $390,000,000. Except as provided in this section, the
revenue bonds must be issued in the manner and are subject to the requirements of chapter
475. Compliance with the requirements of section 475.60 is at the discretion of the
commission. For purposes of this subdivision, the commission may exercise any powers
vested in a redevelopment agency under sections 469.152 to 469.165.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective May 1, 2007.
new text end

Sec. 11.

Minnesota Statutes 2006, section 473.671, is amended to read:

473.671 LIMIT OF TAX LEVY.

new text begin For taxes levied in 2007, payable in 2008, and thereafter, the Metropolitan Airports
Commission may not levy property taxes for any purpose other than to pay debt service on
obligations issued before May 1, 2007, for which the taxing authority of the commission
was pledged. new text end The taxes levied against the property of the metropolitan area in any one
year shall not exceed 0.00806 percent of taxable market value, exclusive of taxes levied
to pay the principal or interest on any bonds or indebtedness of the city issued under
Laws 1943, chapter 500, and exclusive of any taxes levied to pay the share of the city for
payments on bonded indebtedness of the corporation provided for in Laws 1943, chapter
500. The levy of taxes authorized in Laws 1943, chapter 500, shall be in addition to the
maximum rate allowed to be levied to defray the cost of government under the provisions
of the charter of any city affected by Laws 1943, chapter 500.

Sec. 12. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 473.627; and 473.661, subdivisions 2 and 3, new text end new text begin are
repealed.
new text end