SF 1533

as introduced - 88th Legislature (2013 - 2014) Posted on 04/03/2013 09:29am

A bill for an act
relating to public finance; authorizing certain investments of public funds;
providing for repayment of certain energy improvements; changing certain
requirements for financing capital equipment purchases; capital improvements;
changing certain election requirements for issuance of street reconstruction
bonds; amending Minnesota Statutes 2012, sections 118A.04, subdivision
3; 118A.05, subdivision 5; 216C.436, subdivision 7; 373.01, subdivision 3;
373.40, subdivisions 1, 2; 410.32; 412.301; 473.606, subdivision 3; 475.521,
subdivisions 1, 2; 475.58, subdivision 3b; repealing Minnesota Statutes 2012,
section 428A.101.

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

Section 1.

Minnesota Statutes 2012, section 118A.04, subdivision 3, is amended to read:

Subd. 3.

State and local securities.

Funds may be invested in the following:

(1) any security which is a general obligation of any state or local government with
taxing powers which is rated "A" or better by a national bond rating service;

(2) any security which is a revenue obligation of any state or local government deleted text begin with
taxing powers deleted text end which is rated "AA" or better by a national bond rating service; deleted text begin and
deleted text end

(3) a general obligation of the Minnesota housing finance agency which is a moral
obligation of the state of Minnesota and is rated "A" or better by a national bond rating
agency deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) any security which is an obligation of a school district with an original maturity
not exceeding 13 months and (i) rated in the highest category by a national bond rating
service or (ii) enrolled in the credit enhancement program pursuant to section 126C.55.
new text end

Sec. 2.

Minnesota Statutes 2012, section 118A.05, subdivision 5, is amended to read:

Subd. 5.

Guaranteed investment contracts.

Agreements or contracts for
guaranteed investment contracts may be entered into if they are issued or guaranteed
by United States commercial banks, domestic branches of foreign banks, United States
insurance companies, or their Canadian subsidiaries, or the domestic affiliates of any
of the foregoing. The credit quality of the issuer's or guarantor's short- and long-term
unsecured debt must be rated in one of the two highest categories by a nationally
recognized rating agency. new text begin Agreements or contracts for guaranteed investment contracts
with a term of 18 months or less may be entered into regardless of the credit quality of
the issuer's or guarantor's long-term unsecured debt, provided that the credit quality of
the issuer's short-term unsecured debt is rated in the highest category by a nationally
recognized rating agency. new text end Should the issuer's or guarantor's credit quality be downgraded
below "A", the government entity must have withdrawal rights.

Sec. 3.

Minnesota Statutes 2012, 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 begin benefited deleted text end qualifying real property; and

(2) collect repayments as a special assessment as provided for in section 429.101
or by charter new 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 2012, section 373.01, subdivision 3, is amended to read:

Subd. 3.

Capital notes.

(a) A county board may, by resolution and without
referendum, issue capital notes subject to the county debt limit to purchase capital
equipment useful for county purposes that has an expected useful life at least equal to the
term of the notes. The notes shall be payable in not more than ten years and shall be
issued on terms and in a manner the board determines. A tax levy shall be made for
payment of the principal and interest on the notes, in accordance with section 475.61,
as in the case of bonds.

(b) For purposes of this subdivision, "capital equipment" means:

(1) public safety, ambulance, road construction or maintenance, and medical
equipment; deleted text begin and
deleted text end

(2) computer hardware and software, new text begin without regard to its expected useful life,
new text end whether bundled with machinery or equipment or unbundled deleted text begin . deleted text end new text begin , together with application
development services and training related to the use of the computer hardware or
software; and
new text end

new text begin (3) fiber optic cable, or other means of voice or data transmission, among
governmental facilities.
new text end

Sec. 5.

Minnesota Statutes 2012, 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 begin public works facilities, fairground buildings, and records and data storage
facilities, new text end and 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 a 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 2012, 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 14, 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 begin county new text end general election and is filed with the county auditor 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 end new 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 2012, section 410.32, is amended to read:

410.32 CITIES MAY ISSUE CAPITAL NOTES FOR CAPITAL EQUIPMENT.

(a) Notwithstanding any contrary provision of other law or charter, a home rule
charter city may, by resolution and without public referendum, issue capital notes subject
to the city debt limit to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; deleted text begin and
deleted text end

(2) computer hardware and software, new text begin without regard to its expected useful life,
new text end whether bundled with machinery or equipment or unbundled deleted text begin . deleted text end new text begin , together with application
development services and training related to the use of the computer hardware and
software; and
new text end

new text begin (3) fiber optic cable, or other means of voice or data transmission, among
governmental facilities.
new text end

(c) The equipment or software must have an expected useful life at least as long
as the term of the notes.

(d) The notes shall be payable in not more than ten years and be issued on terms and
in the manner the city determines. The total principal amount of the capital notes issued
in a fiscal year shall not exceed 0.03 percent of the market value of taxable property
in the city for that year.

(e) A tax levy shall be made for the payment of the principal and interest on the
notes, in accordance with section 475.61, as in the case of bonds.

(f) Notes issued under this section shall require an affirmative vote of two-thirds of
the governing body of the city.

(g) Notwithstanding a contrary provision of other law or charter, a home rule charter
city may also issue capital notes subject to its debt limit in the manner and subject to the
limitations applicable to statutory cities pursuant to section 412.301.

Sec. 8.

Minnesota Statutes 2012, section 412.301, is amended to read:

412.301 FINANCING PURCHASE OF CERTAIN EQUIPMENT.

(a) The council may issue certificates of indebtedness or capital notes subject to the
city debt limits to purchase capital equipment.

(b) For purposes of this section, "capital equipment" means:

(1) public safety equipment, ambulance and other medical equipment, road
construction and maintenance equipment, and other capital equipment; deleted text begin and
deleted text end

(2) computer hardware and software, new text begin without regard to its expected useful life,
new text end whether bundled with machinery or equipment or unbundled deleted text begin . deleted text end new text begin , together with application
development services and training related to the use of the computer hardware or
software; and
new text end

new text begin (3) fiber optic cable, or other means of voice or data transmission, among
governmental facilities.
new text end

(c) The equipment or software must have an expected useful life at least as long as
the terms of the certificates or notes.

(d) Such certificates or notes shall be payable in not more than ten years and shall be
issued on such terms and in such manner as the council may determine.

(e) If the amount of the certificates or notes to be issued to finance any such purchase
exceeds 0.25 percent of the market value of taxable property in the city, they shall not
be issued for at least ten days after publication in the official newspaper of a council
resolution determining to issue them; and if before the end of that time, a petition asking
for an election on the proposition signed by voters equal to ten percent of the number of
voters at the last regular municipal election is filed with the clerk, such certificates or notes
shall not be issued until the proposition of their issuance has been approved by a majority
of the votes cast on the question at a regular or special election.

(f) A tax levy shall be made for the payment of the principal and interest on such
certificates or notes, in accordance with section 475.61, as in the case of bonds.

Sec. 9.

Minnesota Statutes 2012, section 473.606, subdivision 3, is amended to read:

Subd. 3.

Treasurer; investments.

The treasurer shall receive and be responsible
for all moneys of the corporation, from whatever source derived, and the same shall be
considered public funds. The treasurer shall disburse the moneys of the corporation only
on orders made by the executive and operating officer, herein provided for, countersigned
by such other officer or such employee of the corporation as may be authorized and
directed so to do by the corporation, showing the name of the claimant and the nature of
the claim. No disbursement shall be certified by such officers until the same have been
approved by said commissioners at a meeting thereof. Whenever the executive director of
the corporation shall certify, pursuant to action taken by the commissioners at a meeting
thereof, that there are moneys and the amount thereof in the possession of the treasurer not
currently needed, then the treasurer may invest said amount or any part thereof in deleted text begin :
deleted text end

deleted text begin (a) Treasury bonds, certificates of indebtedness, bonds or notes of the United States
of America, or bonds, notes or certificates of indebtedness of the state of Minnesota, all of
which must mature not later than three years from the date of purchase.
deleted text end

deleted text begin (b) Bonds, notes, debentures or other obligations issued by any agency or
instrumentality of the United States or any securities guaranteed by the United States
government, or for which the credit of the United States is pledged for the payment of
the principal and interest thereof, all of which must mature not later than three years
from date of purchase.
deleted text end

deleted text begin (c) Commercial paper of prime quality, or rated among the top third of the quality
categories, not applicable to defaulted paper, as defined by a nationally recognized
organization which rates such securities as eligible for investment in the state employees
retirement fund except that any nonbanking issuing corporation, or parent company in the
case of paper issued by operating utility or finance subsidiaries, must have total assets
exceeding $500,000,000. Such commercial paper may constitute no more than 30 percent
of the book value of the fund at the time of purchase, and the commercial paper of any
one corporation shall not constitute more than four percent of the book value of the fund
at the time of such investment.
deleted text end

deleted text begin (d) Any securities eligible under the preceding provisions, purchased with
simultaneous repurchase agreement under which the securities will be sold to the particular
dealer on a specified date at a predetermined price. In such instances, all maturities of
United States government securities, or securities issued or guaranteed by the United
States government or an agency thereof, may be purchased so long as any such securities
which mature later than three years from the date of purchase have a current market
value exceeding the purchase price by at least five percent on the date of purchase, and
so long as such repurchase agreement involving securities extending beyond three years
in maturity be limited to a period not exceeding 45 days.
deleted text end

deleted text begin (e) Certificates of deposit issued by any official depository of the commission. The
commission may purchase certificates of deposit from a depository bank in an amount
exceeding that insured by federal depository insurance to the extent that those certificates
are secured by collateral maintained by the bank in a manner as prescribed for investments
of the State Board of Investment.
deleted text end

deleted text begin (f) deleted text end securities approved for investment under section 118A.04.

Whenever it shall appear to the commissioners that any invested funds are needed
for current purposes before the maturity dates of the securities held, they shall cause the
executive director to so certify to the treasurer and it shall then be the duty of the treasurer
to order the sale or conversion into cash of the securities in the amount so certified. All
interest and profit on said investments shall be credited to and constitute a part of the
funds of the commission. The treasurer shall keep an account of all moneys received
and disbursed, and at least once a year, at times to be designated by the corporation, file
with the secretary a financial statement of the corporation, showing in appropriate and
identifiable groupings the receipts and disbursements since the last approved statements;
moneys on hand and the purposes for which the same are appropriated; and shall keep an
account of all securities purchased as herein provided, the funds from which purchased
and the interest and profit which may have accrued thereon, and shall accompany the
financial statement aforesaid with a statement setting forth such account. The corporation
may pay to the treasurer from time to time compensation in such amount as it may
determine to cover clerk hire to enable the treasurer to carry out duties and those required
in connection with bonds issued by the corporation as in this act authorized.

Sec. 10.

Minnesota Statutes 2012, 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. 11.

Minnesota Statutes 2012, 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 14 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 begin municipal new text end general 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 end 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 section 475.58, subdivision 1a, shall apply.
new text end

Sec. 12.

Minnesota Statutes 2012, 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 section 475.58, 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.

Sec. 13. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2012, section 428A.101, new text end new text begin is repealed.
new text end