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HF 794

as introduced - 87th Legislature (2011 - 2012) Posted on 03/03/2011 10:43am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to public finance; authorizing the issuance of improvement bonds
with certain terms and conditions; modifying definitions; making clarifying,
technical, and other changes relating to the issuance of municipal bonds;
amending Minnesota Statutes 2010, sections 116J.994, subdivision 2; 216C.435,
subdivision 8; 216C.436, subdivisions 7, 8; 373.40, subdivisions 1, 2, 4;
429.101; 474A.02, subdivisions 22b, 23a; 475.521, subdivisions 1, 2, 4; 475.54,
subdivision 1; 475.58, subdivision 3b.

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

Section 1.

Minnesota Statutes 2010, section 116J.994, subdivision 2, is amended to
read:


Subd. 2.

Developing a set of criteria.

A business subsidy may not be granted until
the grantor has adopted criteria after a public hearing for awarding business subsidies
that comply with this section. The criteria may not be adopted on a case-by-case basis.
The criteria must set specific minimum requirements that recipients must meet in order
to be eligible to receive business subsidies. The criteria must include a specific wage
floor for the wages to be paid for the jobs created. The wage floor may be stated as a
specific dollar amount or may be stated as a formula that will generate a specific dollar
amount. A grantor may deviate from its criteria by documenting in writing the reason
for the deviation and attaching a copy of the document to its next annual report to the
department. The commissioner of employment and economic development may assist
local government agencies in developing criteria. A copy of the criteria must be submitted
to the Department of Employment and Economic Development along with the first annual
report following May 15, 2000, or with the first annual report after it has adopted criteria,
whichever is earlier. deleted text beginNotwithstanding section 116J.993, subdivision 3, clauses (1) and
(21), for the purpose of this subdivision, "business subsidies" as defined under section
116J.993 includes the following forms of financial assistance:
deleted text end

deleted text begin (1) a business subsidy of $25,000 or more; and
deleted text end

deleted text begin (2) business loans and guarantees of $75,000 or more.
deleted text end

Sec. 2.

Minnesota Statutes 2010, section 216C.435, subdivision 8, is amended to read:


Subd. 8.

Qualifying real property.

"Qualifying real property" means a
single-family or multifamily residential dwelling, or a commercial or industrial building,
that the implementing entity has determined, after review of an energy audit or renewable
energy system feasibility study, deleted text begincan be benefiteddeleted text end new text beginmay experience increased energy
efficiency
new text endby installation of energy improvements.

Sec. 3.

Minnesota Statutes 2010, section 216C.436, subdivision 7, is amended to read:


Subd. 7.

Repayment.

An implementing entity that finances an energy improvement
under this section must:

(1) secure payment with a lien against the deleted text beginbenefited deleted text endqualifying real property; and

(2) collect repayments as a special assessment as provided for in section 429.101
or by charternew text begin; provided that special assessments may be made payable in up to 20 equal
annual installments
new text end.

If the implementing entity is an authority, the local government that authorized
the authority to act as implementing entity shall impose and collect special assessments
necessary to pay debt service on bonds issued by the implementing entity under
subdivision 8, and shall transfer all collections of the assessments upon receipt to the
authority.

Sec. 4.

Minnesota Statutes 2010, section 216C.436, subdivision 8, is amended to read:


Subd. 8.

Bond issuance; repayment.

(a) An implementing entity may issue
deleted text begin revenuedeleted text endnew text begin improvementnew text end bonds as provided in deleted text beginchapter 475deleted text endnew text begin section 429.101new text end for the purposes
of this sectionnew text begin; provided that such improvement bonds shall be payable not more than 20
years from the date of issuance
new text end.

(b) The deleted text beginbondsdeleted text endnew text begin principal amount of the improvement bondsnew text end must deleted text beginbe payable as to
both principal and interest solely from the revenues from
deleted text endnew text begin not exceed the amount ofnew text end the
assessments established in subdivision 7.

deleted text begin (c) No holder of bonds issued under this subdivision may compel any exercise of the
taxing power of the implementing entity that issued the bonds to pay principal or interest
on the bonds, and if the implementing entity is an authority, no holder of the bonds may
compel any exercise of the taxing power of the local government. Bonds issued under
this subdivision are not a debt or obligation of the issuer or any local government that
issued them, nor is the payment of the bonds enforceable out of any money other than the
revenue pledged to the payment of the bonds.
deleted text end

Sec. 5.

Minnesota Statutes 2010, section 373.40, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

For purposes of this section, the following terms have
the meanings given.

(a) "Bonds" means an obligation as defined under section 475.51.

(b) "Capital improvement" means acquisition or betterment of public lands,
buildings, or other improvements within the county for the purpose of a county
courthouse, administrative building, health or social service facility, correctional facility,
jail, law enforcement center, hospital, morgue, library, park, qualified indoor ice arena,
roads and bridges, new text beginpublic works facilities, fairgrounds buildings, and records and data
storage facilities
new text endand the acquisition of development rights in the form of conservation
easements under chapter 84C. An improvement must have an expected useful life of five
years or more to qualify. "Capital improvement" does not include new text beginlight rail transit or any
activity related to it or
new text enda recreation or sports facility building (such as, but not limited to, a
gymnasium, ice arena, racquet sports facility, swimming pool, exercise room or health
spa), unless the building is part of an outdoor park facility and is incidental to the primary
purpose of outdoor recreation.new text begin For purposes of this section, "capital improvement"
includes expenditures for purposes described in this paragraph that have been incurred by
a county before approval of a capital improvement plan, if such expenditures are included
in a capital improvement plan approved on or before the date of the public hearing under
subdivision 2 regarding issuance of bonds for such expenditures.
new text end

(c) "Metropolitan county" means a county located in the seven-county metropolitan
area as defined in section 473.121 or a county with a population of 90,000 or more.

(d) "Population" means the population established by the most recent of the
following (determined as of the date the resolution authorizing the bonds was adopted):

(1) the federal decennial census,

(2) a special census conducted under contract by the United States Bureau of the
Census, or

(3) a population estimate made either by the Metropolitan Council or by the state
demographer under section 4A.02.

(e) "Qualified indoor ice arena" means a facility that meets the requirements of
section 373.43.

(f) "Tax capacity" means total taxable market value, but does not include captured
market value.

Sec. 6.

Minnesota Statutes 2010, 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 begin14deleted text endnew text begin tennew 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 new text begincounty new text endgeneral election and is filed with the county auditor within 30 days after
the public hearing. deleted text beginThe commissioner of revenue shall prepare a suggested form of the
question to be presented at the election.
deleted text endnew text begin 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.
new text end

Sec. 7.

Minnesota Statutes 2010, section 373.40, subdivision 4, is amended to read:


Subd. 4.

Limitations on amount.

A county may not issue bonds under this section
if the maximum amount of principal and interest to become due in any year on all the
outstanding bonds issued pursuant to this section (including the bonds to be issued) will
equal or exceed 0.12 percent of taxable market value of property in the county. Calculation
of the limit must be made using the taxable market value for the taxes payable year in
which the obligations are issued and solddeleted text begin.deleted text endnew text begin, provided that, for purposes of determining
the principal and interest due in any year, the county may deduct the amount of interest
expected to be paid or reimbursed to the county by the federal government in such year on
any outstanding bonds or the bonds to be issued.
new text end This section does not limit the authority
to issue bonds under any other special or general law.

Sec. 8.

Minnesota Statutes 2010, section 429.101, is amended to read:


429.101 UNPAID SPECIAL CHARGES MAY BE SPECIAL ASSESSMENTS.

Subdivision 1.

Ordinances.

(a) In addition to any other method authorized by
law or charter, the governing body of any municipality may provide for the collection
of unpaid special charges as a special assessment against the property deleted text beginbenefited deleted text endfor all
or any part of the cost of:

(1) snow, ice, or rubbish removal from sidewalks;

(2) weed elimination from streets or private property;

(3) removal or elimination of public health or safety hazards from private property,
excluding any structure included under the provisions of sections 463.15 to 463.26;

(4) installation or repair of water service lines, street sprinkling or other dust
treatment of streets;

(5) the trimming and care of trees and the removal of unsound trees from any street;

(6) the treatment and removal of insect infested or diseased trees on private property,
the repair of sidewalks and alleys;

(7) the operation of a street lighting system;

(8) the operation and maintenance of a fire protection or a pedestrian skyway system;

(9) inspections relating to a municipal housing maintenance code violation;

(10) the recovery of any disbursements under section 504B.445, subdivision 4,
clause (5), including disbursements for payment of utility bills and other services, even if
provided by a third party, necessary to remedy violations as described in section 504B.445,
subdivision 4
, clause (2); or

(11) [Repealed, 2004 c 275 s 5]

(12) the recovery of delinquent vacant building registration fees under a municipal
program designed to identify and register vacant buildings.

(b) The council may by ordinance adopt regulations consistent with this section to
make this authority effective, including, at the option of the council, provisions for placing
primary responsibility upon the property owner or occupant to do the work personally
(except in the case of street sprinkling or other dust treatment, alley repair, tree trimming,
care, and removal, or the operation of a street lighting system) upon notice before the work
is undertaken, and for collection from the property owner or other person served of the
charges when due before unpaid charges are made a special assessment.

(c) A home rule charter city, statutory city, county, or town operating an energy
improvements financing program under section 216C.436 has the authority granted to a
municipality under paragraph (a) with respect to energy improvements financed under
that section.

Subd. 2.

Procedure for assessment.

Any special assessment levied under
subdivision 1 shall be payable in a single installment, or by up to ten equal annual
installments as the council may provide. With this exception, sections 429.061, 429.071,
and 429.081 shall apply to assessments made under this section.new text begin For special assessments
levied under subdivision 1, the municipality shall not be required to demonstrate that
the value of the property is increased or that the property is otherwise benefited by the
special charges described in subdivision 1.
new text end

Subd. 3.

Issuance of obligations.

(a) After a contract for any of the work
enumerated in subdivision 1 has been let, or the work commenced, the council may
issue deleted text beginobligationsdeleted text endnew text begin improvement bondsnew text end to defray the expense of any such work financed
in whole or in part by special charges and assessments imposed upon deleted text beginbenefiteddeleted text end property
under this section.

(b) Section 429.091 shall apply to such deleted text beginobligationsdeleted text endnew text begin improvement bondsnew text end with the
following modifications:

(1) such deleted text beginobligationsdeleted text endnew text begin improvement bondsnew text end shall be payable not more than deleted text begintwodeleted text endnew text begin tennew text end
years from the date of issuancenew text begin, or six months following the last installment of the special
assessments levied as provided in subdivisions 1 and 2, whichever is later
new text end;

(2) the amount of such deleted text beginobligationsdeleted text endnew text begin improvement bonds, other than improvement
bonds for energy improvements described in subdivision 1, paragraph (c), which are
limited by section 216C.436,
new text end issued at one time in a municipality shall not exceed the cost
of such work during the ensuing six months as estimated by the council;

(3) a separate improvement fund shall be set up for each of the enumerated services
referred to in subdivision 1 and financed under this section.

(c) Proceeds of special charges as well as special assessments and taxes shall be
credited to such improvement fund.

Sec. 9.

Minnesota Statutes 2010, section 474A.02, subdivision 22b, is amended to read:


Subd. 22b.

Public facilities project.

"Public facilities project" means any deleted text beginpublicly
owned
deleted text end facilitydeleted text begin, or facility owned by a nonprofit organization that is used for district
heating or cooling,
deleted text end that is eligible to be financed with the proceeds of public facilities
bonds as defined under deleted text beginsection deleted text enddeleted text begin474A.02,deleted text end subdivision 23a.

Sec. 10.

Minnesota Statutes 2010, section 474A.02, subdivision 23a, is amended to
read:


Subd. 23a.

Qualified bonds.

"Qualified bonds" means the specific type or types
of obligations that are subject to the annual volume cap. Qualified bonds include the
following types of obligations as defined in federal tax law:

(a) "public facility bonds" means "exempt facility bonds" as defined in federal
tax law, except for residential rental project bondsdeleted text begin, which are those obligations issued
to finance airports, docks and wharves, mass commuting facilities, facilities for the
furnishing of water, sewage facilities, solid waste disposal facilities, facilities for the
local furnishing of electric energy or gas, local district heating or cooling facilities, and
qualified hazardous waste facilities
deleted text end. New bonds and other obligations are ineligible to
receive state allocations or entitlement authority for public facility projects under this
section if they have been issued:

(1) for the purpose of refinancing, refunding, or otherwise defeasing existing debt;
and

(2) more than one calendar year prior to the date of application;

(b) "residential rental project bonds" which are those obligations issued to finance
qualified residential rental projects;

(c) "mortgage bonds";

(d) "small issue bonds" issued to finance manufacturing projects and the acquisition
or improvement of agricultural real or personal property under sections 41C.01 to 41C.13;

(e) "student loan bonds" issued by or on behalf of the Minnesota Office of Higher
Education;

(f) "redevelopment bonds";

(g) "governmental bonds" with a nonqualified amount in excess of $15,000,000 as
set forth in section 141(b)5 of federal tax law; and

(h) "enterprise zone facility bonds" issued to finance facilities located within
empowerment zones or enterprise communities, as authorized under deleted text beginPublic Law 103-66,
section 13301
deleted text endnew text begin section 1394 of the Internal Revenue Codenew text end.

Sec. 11.

Minnesota Statutes 2010, section 475.521, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

For purposes of this section, the following terms have
the meanings given.

(a) "Bonds" mean an obligation defined under section 475.51.

(b) "Capital improvement" means acquisition or betterment of public lands,
buildings or other improvements for the purpose of a city hall, town hall, library, public
safety facility, and public works facility. An improvement must have an expected useful
life of five years or more to qualify. Capital improvement does not include light rail transit
or any activity related to it, or a park, road, bridge, administrative building other than a
city or town hall, or land for any of those facilities.new text begin For purposes of this section, "capital
improvement" includes expenditures for purposes described in this paragraph that have
been incurred by a municipality before approval of a capital improvement plan, if such
expenditures are included in a capital improvement plan approved on or before the date of
the public hearing under subdivision 2 regarding issuance of bonds for such expenditures.
new text end

(c) "Municipality" means a home rule charter or statutory city or a town described in
section 368.01, subdivision 1 or 1a.

Sec. 12.

Minnesota Statutes 2010, 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 Web site, if any, of the municipality.
The notice must be published at least deleted text begin14deleted text endnew text begin tennew 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 new text beginmunicipal new text endgeneral election and is filed with the clerk within
30 days after the public hearing.deleted text begin The commissioner of revenue shall prepare a suggested
form of the question to be presented at the election.
deleted text endnew text begin 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.
new text end

Sec. 13.

Minnesota Statutes 2010, section 475.521, subdivision 4, is amended to read:


Subd. 4.

Limitations on amount.

A municipality may not issue bonds under this
section if the maximum amount of principal and interest to become due in any year on
all the outstanding bonds issued under this section, including the bonds to be issued, will
equal or exceed 0.16 percent of the taxable market value of property in the municipality.
Calculation of the limit must be made using the taxable market value for the taxes
payable year in which the obligations are issued and soldnew text begin, provided that, for purposes of
determining the principle and interest due in any year, the municipality may deduct the
amount of interest expected to be paid or reimbursed to the municipality by the federal
government in such year on any outstanding bonds or the bonds to be issued
new text end. In the
case of a municipality with a population of 2,500 or more, the bonds are subject to the
net debt limits under section 475.53. In the case of a shared facility in which more than
one municipality participates, upon compliance by each participating municipality with
the requirements of subdivision 2, the limitations in this subdivision and the net debt
represented by the bonds shall be allocated to each participating municipality in proportion
to its required financial contribution to the financing of the shared facility, as set forth in
the joint powers agreement relating to the shared facility. This section does not limit the
authority to issue bonds under any other special or general law.

Sec. 14.

Minnesota Statutes 2010, section 475.54, subdivision 1, is amended to read:


Subdivision 1.

In installments; exception; annual limit.

Except as provided in
subdivision 3, 5a, 15, or 17, or as expressly authorized in another law, all obligations of
each issue shall mature or deleted text beginbe subject todeleted text end new text beginrequire deposits in a new text endmandatory sinking fund
deleted text begin redemptiondeleted text end in installmentsnew text begin of principalnew text end, the first not later than three years and the last
not later than 30 years from the date of the issue; or 40 years or the useful life of the
asset, whichever is less, for municipal water and wastewater treatment systems and
essential community facilities financed or guaranteed by the United States Department of
Agriculture. No amount of principal of the issue deleted text beginpayabledeleted text endnew text begin due or required to be depositednew text end
in any calendar year shall exceed an amount equal to the smallest amount deleted text beginpayabledeleted text endnew text begin due or
required to be deposited
new text end in any preceding calendar year ending three years or more after
the issue date multiplied:

(1) by five, in the case of obligations maturing not later than 25 years from the
date of issue; and

(2) by six, in the case of obligations maturing 25 years or later from the date of issue.

Sec. 15.

Minnesota Statutes 2010, section 475.58, subdivision 3b, is amended to read:


Subd. 3b.

Street reconstruction.

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

(1) the streets are reconstructed under a street reconstruction plan that describes the
street reconstruction to be financed, the estimated costs, and any planned reconstruction
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 all 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.new text begin 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 subdivision 1a, shall apply.
new text end

(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 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.new text begin 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.
new text end

(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
does not include the portion of project cost allocable to widening a street or adding curbs
and gutters where none previously existed.