HF 2730

as introduced - 94th Legislature (2025 - 2026) Posted on 05/07/2025 11:12am

A bill for an act
relating to taxation; public financing; modifying local government debt financing;
amending Minnesota Statutes 2024, sections 373.40, subdivision 2; 446A.086,
subdivisions 1, 2; 462C.04, subdivision 2; 469.104; 469.154, subdivision 4;
474A.091, subdivisions 2, 2a; 475.521, subdivision 2; 641.23.

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

Section 1.

Minnesota Statutes 2024, section 373.40, subdivision 2, is amended to read:

Subd. 2.

Application of election requirement.

(a) Bonds issued by a county to finance
capital improvements under an approved capital improvement plan are not subject to the
election requirements of section 375.18 or 475.58. The bonds must be approved by vote of
at least three-fifths of the members of the county board. In the case of a metropolitan county,
the bonds must be approved by vote of at least two-thirds of the members of the county
board.

(b) Before issuance of bonds qualifying under this section, the county must publish a
notice of its intention to issue the bonds and the date and time of a hearing to obtain public
comment on the matter. The notice must be published in the official newspaper of the county
or in a newspaper of general circulation in the county. The notice must be published at least
deleted text begin 14 deleted text end new text begin ten new text end , but not more than 28, days before the date of the hearing.

(c) A county may issue the bonds only upon obtaining the approval of a majority of the
voters voting on the question of issuing the obligations, if a petition requesting a vote on
the issuance is signed by voters equal to five percent of the votes cast in the county in the
last county general election and is filed with the county auditor within 30 days after the
public hearing. If the county elects not to submit the question to the voters, the county 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.

Sec. 2.

Minnesota Statutes 2024, section 446A.086, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) As used in this section, the following terms have the
meanings given.

(b) "Authority" means the Minnesota Public Facilities Authority.

(c) "Commissioner" means the commissioner of management and budget.

(d) "Debt obligation" means:

(1) a general obligation bond or note issued by a county, a bond or note to which the
general obligation of a county is pledged under section 469.034, subdivision 2, or a bond
or note payable from a county lease obligation under section 641.24, to provide funds for
the construction of:

(i) jails;

(ii) correctional facilities;

(iii) law enforcement facilities;

new text begin (iv) a courthouse or justice center, if connected to a jail, correctional facility, or other
law enforcement facility;
new text end

deleted text begin (iv) deleted text end new text begin (v) new text end social services and human services facilities;

deleted text begin (v) deleted text end new text begin (vi) new text end solid waste facilities; or

deleted text begin (vi) deleted text end new text begin (vii) new text end qualified housing development projects as defined in section 469.034,
subdivision 2; or

(2) a general obligation bond or note issued by a governmental unit to provide funds for
the construction, improvement, or rehabilitation of:

(i) wastewater facilities;

(ii) drinking water facilities;

(iii) stormwater facilities; or

(iv) any publicly owned building or infrastructure improvement that has received partial
funding from grants awarded by the commissioner of employment and economic development
related to redevelopment, contaminated site cleanup, bioscience, small cities development
programs, and rural business infrastructure programs, for which bonds are issued by the
authority under section 446A.087.

(e) "Governmental unit" means a county or a statutory or home rule charter city.

Sec. 3.

Minnesota Statutes 2024, section 446A.086, subdivision 2, is amended to read:

Subd. 2.

Application.

(a) This section provides a state guarantee of the payment of
principal and interest on debt obligations if:

(1) the obligations are issued for new projects new text begin or the refunding at a net present value
savings of debt service costs of obligations that are currently guaranteed pursuant to this
section new text end and are not issued for the purposes of refunding previous obligations new text begin other than as
described in this sentence new text end ;

(2) application to the Public Facilities Authority is made before issuance; and

(3) the obligations are covered by an agreement meeting the requirements of subdivision
3.

(b) Applications to be covered by the provisions of this section must be made in a form
and contain the information prescribed by the authority. Applications are subject to either
a fee of $500 for each bond issue requested by a county or governmental unit or the applicable
fees under section 446A.087.

(c) Application fees paid under this section must be deposited in a separate credit
enhancement bond guarantee account in the special revenue fund. Money in the credit
enhancement bond guarantee account is appropriated to the authority for purposes of
administering this section.

(d) Neither the authority nor the commissioner is required to promulgate administrative
rules under this section and the procedures and requirements established by the authority
or commissioner under this section are not subject to chapter 14.

Sec. 4.

Minnesota Statutes 2024, section 462C.04, subdivision 2, is amended to read:

Subd. 2.

Program review.

A public hearing shall be held on each program after one
publication of notice in a newspaper circulating generally in the city, at least deleted text begin 15 deleted text end new text begin ten new text end days
before the hearing. On or before the day on which notice of the public hearing is published,
the city shall submit the program to the Metropolitan Council, if the city is located in the
metropolitan area as defined in section 473.121, subdivision 2, or to the regional development
commission for the area in which the city is located, if any, for review and comment. The
appropriate reviewing agency shall comment on:

(a) whether the program furthers local and regional housing policies and is consistent
with the Metropolitan Development Guide, if the city is located in the metropolitan area,
or adopted policies of the regional development commission; and

(b) the compatibility of the program with the housing portion of the comprehensive plan
of the city, if any.

Review of the program may be conducted either by the board of the reviewing agency
or by the staff of the agency. Any comment submitted by the reviewing agency to the city
must be presented to the body considering the proposed program at the public hearing held
on the program.

A member or employee of the reviewing agency shall be permitted to present the
comments of the reviewing agency at the public hearing. After conducting the public hearing,
the program may be adopted with or without amendment, provided that any amendments
must not be inconsistent with the comments, if any, of the reviewing agency and must not
contain any material changes from the program submitted to the reviewing agency other
than changes in the financial aspects of any proposed issue of bonds or obligations. If any
material change other than a change in the financial aspects of a proposed issue of bonds
or obligations, or any change which is inconsistent with the comments of the reviewing
agency is adopted, the amended program shall be resubmitted to the appropriate reviewing
agency for review and comment, and a public hearing shall be held on the amended program
after one publication of notice in a newspaper circulating generally in the city at least deleted text begin 15 deleted text end new text begin
ten new text end days before the hearing. The amended program shall be considered after the public
hearing in the same manner as consideration of the initial program.

Sec. 5.

Minnesota Statutes 2024, section 469.104, is amended to read:

469.104 SECTIONS THAT APPLY IF FEDERAL LIMIT APPLIES.

Sections 474A.01 to 474A.21 apply to obligations issued under sections 469.090 to
469.108 that are deleted text begin limited deleted text end new text begin required new text end by federal tax law as defined in section 474A.02,
subdivision 8 new text begin , to obtain an allocation of volume cap new text end .

Sec. 6.

Minnesota Statutes 2024, section 469.154, subdivision 4, is amended to read:

Subd. 4.

Hearing.

Prior to submitting an application to the department requesting
approval of a project pursuant to subdivision 3, the governing body or a committee of the
governing body of the municipality or redevelopment agency shall conduct a public hearing
on the proposal to undertake and finance the project. Notice of the time and place of hearing,
and stating the general nature of the project and an estimate of the principal amount of bonds
or other obligations to be issued to finance the project, shall be published at least once not
less than deleted text begin 14 deleted text end new text begin ten new text end days nor more than 30 days prior to the date fixed for the hearing, in the
official newspaper and a newspaper of general circulation of the municipality or
redevelopment agency. The notice shall state that a draft copy of the proposed application
to the department, together with all attachments and exhibits, shall be available for public
inspection following the publication of the notice and shall specify the place and times
where and when it will be so available. The governing body of the municipality or the
redevelopment agency shall give all parties who appear at the hearing an opportunity to
express their views with respect to the proposal to undertake and finance the project.
Following the completion of the public hearing, the governing body of the municipality or
redevelopment agency shall adopt a resolution determining whether or not to proceed with
the project and its financing; it may thereafter apply to the department for approval of the
project.

Sec. 7.

Minnesota Statutes 2024, section 474A.091, subdivision 2, is amended to read:

Subd. 2.

Application for residential rental projects.

(a) Issuers may apply for an
allocation for residential rental bonds under this section by submitting to the department an
application on forms provided by the department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) an application deposit in the amount of two percent of the requested allocation;

(4) a sworn statement from the applicant identifying the project as a preservation project,
30 percent AMI residential rental project, 50 percent AMI residential rental project, 100
percent LIHTC project, 20 percent LIHTC project, or any other residential rental project;
and

(5) a certification from the applicant or its accountant stating that the requested allocation
does not exceed the aggregate bond limitation.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for residential rental project bonds
under this section unless it has either permanently issued bonds equal to the amount of its
entitlement allocation for the current year plus any amount carried forward from previous
years or returned for reallocation all of its unused entitlement allocation. For purposes of
this subdivision, its entitlement allocation includes an amount obtained under section
474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of:
(1) new text end 180 days of the allocation new text begin ; or (2) the last business day of December new text end . If an issuer that
receives an allocation under this subdivision does not permanently issue obligations equal
to all or a portion of the allocation received within the time period provided in this paragraph
or returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) The Minnesota Housing Finance Agency may apply for and receive an allocation
under this section without submitting an application deposit.

Sec. 8.

Minnesota Statutes 2024, section 474A.091, subdivision 2a, is amended to read:

Subd. 2a.

Application for all other types of qualified bonds.

(a) Issuers may apply
for an allocation for all types of qualified bonds other than residential rental bonds under
this section by submitting to the department an application on forms provided by the
department accompanied by:

(1) a preliminary resolution;

(2) a statement of bond counsel that the proposed issue of obligations requires an
allocation under this chapter and the Internal Revenue Code;

(3) the type of qualified bonds to be issued;

(4) an application deposit in the amount of two percent of the requested allocation; and

(5) a public purpose scoring worksheet for manufacturing and enterprise zone
applications.

The issuer must pay the application deposit to the Department of Management and Budget.
An entitlement issuer may not apply for an allocation for public facility bonds or mortgage
bonds under this section unless it has either permanently issued bonds equal to the amount
of its entitlement allocation for the current year plus any amount carried forward from
previous years or returned for reallocation all of its unused entitlement allocation. For
purposes of this subdivision, an entitlement allocation includes an amount obtained under
section 474A.04, subdivision 6.

(b) An issuer that receives an allocation under this subdivision must permanently issue
obligations equal to all or a portion of the allocation received on or before new text begin the earlier of:
(1) new text end 120 days of the allocation new text begin ; or (2) the last business day of December new text end . If an issuer that
receives an allocation under this subdivision does not permanently issue obligations equal
to all or a portion of the allocation received within the time period provided in this paragraph
or returns the allocation to the commissioner, the amount of the allocation is canceled and
returned for reallocation through the unified pool.

(c) Notwithstanding the restrictions imposed on entitlement issuers under this subdivision,
the Minnesota Housing Finance Agency may not receive an allocation for mortgage bonds
under this section prior to the first Monday in October, but may be awarded allocations for
mortgage bonds from the unified pool on or after the first Monday in October. The Minnesota
Housing Finance Agency, the Minnesota Office of Higher Education, and the Minnesota
Rural Finance Authority may apply for and receive an allocation under this section without
submitting an application deposit.

Sec. 9.

Minnesota Statutes 2024, section 475.521, subdivision 2, is amended to read:

Subd. 2.

Election requirement.

(a) Bonds issued by a municipality to finance capital
improvements under an approved capital improvements plan are not subject to the election
requirements of section 475.58. The bonds must be approved by an affirmative vote of
three-fifths of the members of a five-member governing body. In the case of a governing
body having more or less than five members, the bonds must be approved by a vote of at
least two-thirds of the members of the governing body.

(b) Before the issuance of bonds qualifying under this section, the municipality must
publish a notice of its intention to issue the bonds and the date and time of the hearing to
obtain public comment on the matter. The notice must be published in the official newspaper
of the municipality or in a newspaper of general circulation in the municipality. Additionally,
the notice may be posted on the official website, if any, of the municipality. The notice must
be published at least deleted text begin 14 deleted text end new text begin ten new text end but not more than 28 days before the date of the hearing.

(c) A municipality may issue the bonds only after obtaining the approval of a majority
of the voters voting on the question of issuing the obligations, if a petition requesting a vote
on the issuance is signed by voters equal to five percent of the votes cast in the municipality
in the last municipal general election and is filed with the clerk within 30 days after the
public hearing. 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.

Sec. 10.

Minnesota Statutes 2024, section 641.23, is amended to read:

641.23 FUNDS; HOW PROVIDED.

Before any contract is made for the erection of a county jail, sheriff's residence, deleted text begin or both deleted text end new text begin
sheriff's offices, law enforcement center, or courthouse or justice center attached to a county
jail new text end , the county board shall either levy a sufficient tax to provide the necessary funds, or
issue county bonds therefor in accordance with the provisions of chapter 475, provided that
no election is required if the amount of all bonds issued for this purpose and interest on
them which are due and payable in any year does not exceed an amount equal to 0.09671
percent of estimated market value of taxable property within the county, as last determined
before the bonds are issued.