SF 1320

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to public administration; modifying 
  1.3             provisions concerning the lease or other disposition 
  1.4             of property acquired with bond funds; amending 
  1.5             Minnesota Statutes 1994, section 16A.695, subdivisions 
  1.6             1, 2, 3, and by adding a subdivision. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 16A.695, 
  1.9   subdivision 1, is amended to read: 
  1.10     Subdivision 1.  [DEFINITIONS.] (a) The definitions in this 
  1.11  subdivision apply to this section.  
  1.12     (b) "State bond financed property" means property acquired 
  1.13  or bettered in whole or in part with the proceeds of state 
  1.14  general obligation bonds authorized to be issued under article 
  1.15  XI, section 5, clause (a), of the Minnesota Constitution. 
  1.16     (c) "Public officer or agency" means a state officer or 
  1.17  agency, the University of Minnesota, the Minnesota historical 
  1.18  society, and any county, home rule charter or statutory city, 
  1.19  school district, special purpose district, or other public 
  1.20  entity, or any officer or employee thereof. 
  1.21     (d) "Fair market value" means, with respect to the sale of 
  1.22  state bond financed property, the price that would be paid by a 
  1.23  willing and qualified buyer to a willing and qualified seller as 
  1.24  determined by an appraisal of the property, or the price bid by 
  1.25  a purchaser under a public bid procedure after reasonable public 
  1.26  notice. 
  2.1      (e) "Outstanding state bonds" means the dollar amount 
  2.2   certified by the commissioner, upon the request of a public 
  2.3   officer or agency, to be the principal amount of state bonds, 
  2.4   including any refunding bonds, issued with respect to the state 
  2.5   bond financed property, less the principal amount of state bonds 
  2.6   paid or defeased before the date of the request. 
  2.7      Sec. 2.  Minnesota Statutes 1994, section 16A.695, 
  2.8   subdivision 2, is amended to read: 
  2.9      Subd. 2.  [LEASES AND MANAGEMENT CONTRACTS.] (a) A public 
  2.10  officer or agency that is authorized by law to lease or enter 
  2.11  into a management contract with respect to state bond financed 
  2.12  property shall comply with this subdivision. 
  2.13     (b) The lease or management contract may be entered into 
  2.14  for the express purpose of carrying out a governmental program 
  2.15  established or authorized by law and established by official 
  2.16  action of the contracting public officer or agency, in 
  2.17  accordance with orders of the commissioner intended to ensure 
  2.18  the legality and tax-exempt status of bonds issued to finance 
  2.19  the property, and with the approval of the commissioner.  A 
  2.20  lease or management contract, including any renewals that are 
  2.21  solely at the option of the lessee, must be for a term 
  2.22  substantially less than the useful life of the property, but may 
  2.23  allow renewal beyond that term upon a determination by the 
  2.24  lessor that the use continues to carry out the governmental 
  2.25  program.  A lease or management contract must be terminable by 
  2.26  the contracting public officer or agency if the other 
  2.27  contracting party defaults under the contract or if the 
  2.28  governmental program is terminated or changed, and must provide 
  2.29  for program oversight by the contracting public officer or 
  2.30  agency.  Money received by the public officer or agency under 
  2.31  the lease or management contract that is not needed to pay and 
  2.32  not authorized to be used to pay operating costs of the 
  2.33  property, or to pay the principal, interest, redemption 
  2.34  premiums, and other expenses when due on debt related to the 
  2.35  property other than state bonds, must be paid to the 
  2.36  commissioner in the same proportion as the state bond financing 
  3.1   is to the total public financing for of the sources of funds 
  3.2   used to finance the property, deposited in the state bond fund, 
  3.3   and used to pay or redeem or defease bonds issued to finance the 
  3.4   property in accordance with the commissioner's order authorizing 
  3.5   their issuance; the money paid to the commissioner is 
  3.6   appropriated for this purpose. 
  3.7      (c) With the approval of the commissioner, a lease or 
  3.8   management contract between a city and a nonprofit corporation 
  3.9   under section 471.191, subdivision 1, need not require the 
  3.10  lessee to pay rentals sufficient to pay the principal, interest, 
  3.11  redemption premiums, and other expenses when due with respect to 
  3.12  state bonds issued to acquire and better the facilities. 
  3.13     Sec. 3.  Minnesota Statutes 1994, section 16A.695, 
  3.14  subdivision 3, is amended to read: 
  3.15     Subd. 3.  [VOLUNTARY SALE OF PROPERTY.] A public officer or 
  3.16  agency shall not sell any state bond financed property unless 
  3.17  the public officer or agency determines by official action that 
  3.18  the property is no longer usable or needed by the public officer 
  3.19  or agency to carry out the governmental program for which it was 
  3.20  acquired or constructed, the sale is made as authorized by law, 
  3.21  the sale is made for fair market value, and the sale is approved 
  3.22  by the commissioner.  If any state bonds issued to purchase or 
  3.23  better the state bond financed property that is sold remain 
  3.24  outstanding on the date of sale, the net proceeds of sale must 
  3.25  be applied as follows: 
  3.26     (1) if the state bond financed property was acquired and 
  3.27  bettered solely with state bond proceeds, the net proceeds of 
  3.28  sale must be paid to the commissioner, deposited in the state 
  3.29  bond fund, and used to pay or redeem or defease the outstanding 
  3.30  state bonds in accordance with the commissioner's order 
  3.31  authorizing their issuance, and the proceeds are appropriated 
  3.32  for this purpose; or 
  3.33     (2) if the state bond financed property was acquired or 
  3.34  bettered partly with state bond proceeds and partly with other 
  3.35  money, the net proceeds of sale must first be used to pay or 
  3.36  redeem or defease the state bonds as provided in clause (1), and 
  4.1   any excess over the amount needed for that purpose must be 
  4.2   divided in proportion to the shares contributed to its 
  4.3   acquisition or betterment and paid to the interested public and 
  4.4   private entities, and the proceeds are appropriated for this 
  4.5   purpose. 
  4.6      Sec. 4.  Minnesota Statutes 1994, section 16A.695, is 
  4.7   amended by adding a subdivision to read: 
  4.8      Subd. 3a.  [INVOLUNTARY SALE OF PROPERTY.] Notwithstanding 
  4.9   subdivision 3, this subdivision applies to the sale of state 
  4.10  bond financed property by a lender which has provided funds to 
  4.11  acquire or better the property.  Purchase by the lender in a 
  4.12  foreclosure sale, acceptance of a deed in lieu of foreclosure, 
  4.13  or enforcement of a security interest in personal property, by 
  4.14  the lender, is not a sale.  A sale by the lender must be made as 
  4.15  authorized by law and must be made for fair market value.  If 
  4.16  the state bond financed property was acquired or bettered partly 
  4.17  with state bond proceeds and partly with debt from public or 
  4.18  private sources secured by an interest in the real estate, 
  4.19  improvements, or personal property comprising the project, then 
  4.20  the net proceeds from the sale must first be used, pro rata, to 
  4.21  pay the debt and to redeem or defease the outstanding state 
  4.22  bonds as provided in subdivision 3, clause (1).  Any excess over 
  4.23  the amount needed for those purposes must be divided in 
  4.24  proportion to the shares contributed to acquisition or 
  4.25  betterment of the project and be paid to the interested public 
  4.26  and private entities, and the proceeds are appropriated for this 
  4.27  purpose.  When all of the net proceeds of sale have been applied 
  4.28  as provided in this subdivision, the provisions of this section 
  4.29  no longer apply to the property. 
  4.30     Sec. 5.  [EFFECTIVE DATE.] 
  4.31     Sections 1 to 3 are effective the day after final enactment.