SF 1876

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to public finance; imposing and modifying 
  1.3             conditions and limitations on the use of public debt; 
  1.4             amending Minnesota Statutes 1998, sections 126C.55, 
  1.5             subdivision 7; 272.02, by adding a subdivision; 
  1.6             373.01, subdivision 3; 410.32; 412.301; 469.155, 
  1.7             subdivision 4; 474A.04, subdivision 1a; 475.56; 
  1.8             475.58, subdivision 1; and 475.60, subdivisions 1 and 
  1.9             3. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 1998, section 126C.55, 
  1.12  subdivision 7, is amended to read: 
  1.13     Subd. 7.  [ELECTION AS TO MANDATORY APPLICATION.] A 
  1.14  district may covenant and obligate itself, prior to the issuance 
  1.15  of an issue of debt obligations, to notify the commissioner of a 
  1.16  potential default and to use the provisions of this section to 
  1.17  guarantee payment of the principal and interest on those debt 
  1.18  obligations when due.  If the district obligates itself to be 
  1.19  bound by this section, it must covenant in the resolution that 
  1.20  authorizes the issuance of the debt obligations to deposit with 
  1.21  the paying agent three business days prior to the date on which 
  1.22  a payment is due an amount sufficient to make that payment or to 
  1.23  notify the commissioner under subdivision 1 that it will be 
  1.24  unable to make all or a portion of that payment.  A district 
  1.25  that has obligated itself must include a provision in its 
  1.26  agreement with the paying agent for that issue that requires the 
  1.27  paying agent to inform the commissioner if it becomes aware of a 
  2.1   potential default in the payment of principal or interest on 
  2.2   that issue or if, on the day two business days prior to the date 
  2.3   a payment is due on that issue, there are insufficient funds to 
  2.4   make the payment on deposit with the paying agent.  Funds 
  2.5   invested in a refunding escrow account established under section 
  2.6   475.67 that are to become available to the paying agent on a 
  2.7   principal or interest payment date are deemed to be on deposit 
  2.8   with the paying agent three business days before the payment 
  2.9   date.  If a district either covenants to be bound by this 
  2.10  section or accepts state payments under this section to prevent 
  2.11  a default of a particular issue of debt obligations, the 
  2.12  provisions of this section shall be binding as to that issue as 
  2.13  long as any debt obligation of that issue remain outstanding.  
  2.14  If the provisions of this section are or become binding for more 
  2.15  than one issue of debt obligations and a district is unable to 
  2.16  make payments on one or more of those issues, the district must 
  2.17  continue to make payments on the remaining issues.  
  2.18     Sec. 2.  Minnesota Statutes 1998, section 272.02, is 
  2.19  amended by adding a subdivision to read: 
  2.20     Subd. 1b.  [TREATMENT OF PROPERTY OF CERTAIN LIMITED 
  2.21  LIABILITY COMPANIES.] For purposes of the exemptions granted by 
  2.22  subdivision 1, property owned or operated by a limited liability 
  2.23  company consisting of a sole member shall be treated as if owned 
  2.24  or operated by that member. 
  2.25     Sec. 3.  Minnesota Statutes 1998, section 373.01, 
  2.26  subdivision 3, is amended to read: 
  2.27     Subd. 3.  [CAPITAL NOTES.] A county board may, by 
  2.28  resolution and without referendum, issue capital notes subject 
  2.29  to the county debt limit to purchase capital equipment useful 
  2.30  for county purposes that has an expected useful life at least 
  2.31  equal to the term of the notes.  The notes shall be payable in 
  2.32  not more than five years and shall be issued on terms and in a 
  2.33  manner the board determines.  A tax levy shall be made for 
  2.34  payment of the principal and interest on the notes, in 
  2.35  accordance with section 475.61, as in the case of bonds.  For 
  2.36  purposes of this subdivision, "capital equipment" means public 
  3.1   safety, ambulance, road construction or maintenance, medical, 
  3.2   and data processing equipment and computer hardware and 
  3.3   software, together with related application development services 
  3.4   and training. 
  3.5      Sec. 4.  Minnesota Statutes 1998, section 410.32, is 
  3.6   amended to read: 
  3.7      410.32 [CITIES AUTHORIZED TO ISSUE CAPITAL NOTES FOR 
  3.8   CERTAIN EQUIPMENT ACQUISITIONS.] 
  3.9      Notwithstanding any contrary provision of other law or 
  3.10  charter, a home rule charter city may, by resolution and without 
  3.11  public referendum, issue capital notes subject to the city debt 
  3.12  limit to purchase public safety equipment, ambulance and other 
  3.13  medical equipment, road construction and maintenance equipment, 
  3.14  and other capital equipment having, as well as computer 
  3.15  software, together with related application and development 
  3.16  services and training, provided the equipment or software has an 
  3.17  expected useful life at least as long as the term of the notes.  
  3.18  The notes shall be payable in not more than five years and be 
  3.19  issued on terms and in the manner the city determines.  The 
  3.20  total principal amount of the capital notes issued in a fiscal 
  3.21  year shall not exceed 0.03 percent of the market value of 
  3.22  taxable property in the city for that year.  A tax levy shall be 
  3.23  made for the payment of the principal and interest on the notes, 
  3.24  in accordance with section 475.61, as in the case of bonds.  
  3.25  Notes issued under this section shall require an affirmative 
  3.26  vote of two-thirds of the governing body of the city.  
  3.27  Notwithstanding a contrary provision of other law or charter, a 
  3.28  home rule charter city may also issue capital notes subject to 
  3.29  its debt limit in the manner and subject to the limitations 
  3.30  applicable to statutory cities pursuant to section 412.301. 
  3.31     Sec. 5.  Minnesota Statutes 1998, section 412.301, is 
  3.32  amended to read: 
  3.33     412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
  3.34     The council may issue certificates of indebtedness or 
  3.35  capital notes subject to the city debt limits to purchase public 
  3.36  safety equipment, ambulance equipment, road construction or 
  4.1   maintenance equipment, and other capital equipment having, as 
  4.2   well as computer software, together with related application 
  4.3   development services and training, and provided the equipment or 
  4.4   software has an expected useful life at least as long as the 
  4.5   terms of the certificates or notes.  Such certificates or notes 
  4.6   shall be payable in not more than five years and shall be issued 
  4.7   on such terms and in such manner as the council may determine.  
  4.8   If the amount of the certificates or notes to be issued to 
  4.9   finance any such purchase exceeds 0.25 percent of the market 
  4.10  value of taxable property in the city, they shall not be issued 
  4.11  for at least ten days after publication in the official 
  4.12  newspaper of a council resolution determining to issue them; and 
  4.13  if before the end of that time, a petition asking for an 
  4.14  election on the proposition signed by voters equal to ten 
  4.15  percent of the number of voters at the last regular municipal 
  4.16  election is filed with the clerk, such certificates or notes 
  4.17  shall not be issued until the proposition of their issuance has 
  4.18  been approved by a majority of the votes cast on the question at 
  4.19  a regular or special election.  A tax levy shall be made for the 
  4.20  payment of the principal and interest on such certificates or 
  4.21  notes, in accordance with section 475.61, as in the case of 
  4.22  bonds.  
  4.23     Sec. 6.  Minnesota Statutes 1998, section 469.155, 
  4.24  subdivision 4, is amended to read: 
  4.25     Subd. 4.  [REFINANCING HEALTH NONPROFIT FACILITIES.] It may 
  4.26  issue revenue bonds to pay, purchase, or discharge all or any 
  4.27  part of the outstanding indebtedness of a contracting party that 
  4.28  is an organization described in section 501(c)(3) of the 
  4.29  Internal Revenue Code or that is engaged primarily in the 
  4.30  operation of one or more nonprofit hospitals or nursing homes 
  4.31  previously incurred in the acquisition or betterment of its 
  4.32  existing hospital or nursing home facilities to the extent 
  4.33  deemed necessary by the governing body of the municipality or 
  4.34  redevelopment agency; this may include any unpaid interest on 
  4.35  the indebtedness accrued or to accrue to the date on which the 
  4.36  indebtedness is finally paid, and any premium the governing body 
  5.1   of the municipality or redevelopment agency determines to be 
  5.2   necessary to be paid to pay, purchase, or defease the 
  5.3   outstanding indebtedness.  If revenue bonds are issued for this 
  5.4   purpose, the refinancing and the existing properties of the 
  5.5   contracting party shall be deemed to constitute a project under 
  5.6   section 469.153, subdivision 2, clause (b), (c), or (d).  
  5.7      Sec. 7.  Minnesota Statutes 1998, section 474A.04, 
  5.8   subdivision 1a, is amended to read: 
  5.9      Subd. 1a.  [ENTITLEMENT RESERVATIONS; CARRYFORWARD; 
  5.10  DEDUCTION.] Any amount returned by an entitlement issuer before 
  5.11  July 15 shall be reallocated through the housing pool.  Any 
  5.12  amount returned on or after July 15 shall be reallocated through 
  5.13  the unified pool.  An amount returned after the last Monday in 
  5.14  November shall be reallocated to the Minnesota housing finance 
  5.15  agency.  Any amount of bonding authority that an entitlement 
  5.16  issuer carries forward under federal tax law that is not 
  5.17  permanently issued or for which the governing body of the 
  5.18  entitlement issuer has not enacted a resolution electing to use 
  5.19  the authority for mortgage credit certificates by July 15 of the 
  5.20  succeeding calendar year shall be deducted from the entitlement 
  5.21  allocation for that entitlement issuer for the current calendar 
  5.22  year.  Any amount deducted from an entitlement issuer's 
  5.23  allocation under this subdivision shall be reallocated through 
  5.24  the unified pool.  An entitlement issuer must permanently issue 
  5.25  all carryforward authority or enact a resolution electing to use 
  5.26  all carryforward authority for mortgage credit certificates 
  5.27  prior to issuing any current year authority of that entitlement 
  5.28  issuer.  Until the earlier of: 
  5.29     (1) the date by which an entitlement issuer has permanently 
  5.30  issued or enacted a resolution electing to use for mortgage 
  5.31  credit certificates all carryforward authority; or 
  5.32     (2) July 15, an entitlement issuer may issue bonds from its 
  5.33  current year authority only to the extent that the principal 
  5.34  amount of the bonds does not exceed the difference between its 
  5.35  remaining current year entitlement and the amount of 
  5.36  carryforward that has not been permanently issued or for which a 
  6.1   resolution has not been enacted electing to use the carryforward 
  6.2   authority for mortgage credit certificates. 
  6.3      Sec. 8.  Minnesota Statutes 1998, section 475.56, is 
  6.4   amended to read: 
  6.5      475.56 [INTEREST RATE.] 
  6.6      (a) Any municipality issuing obligations under any law may 
  6.7   issue obligations bearing interest at a single rate or at rates 
  6.8   varying from year to year which may be lower or higher in later 
  6.9   years than in earlier years.  Such higher rate for any period 
  6.10  prior to maturity may be represented in part by separate coupons 
  6.11  designated as additional coupons, extra coupons, or B coupons, 
  6.12  but the highest aggregate rate of interest contracted to be so 
  6.13  paid for any period shall not exceed the maximum rate authorized 
  6.14  by law.  Such higher rate may also be represented in part by the 
  6.15  issuance of additional obligations of the same series, over and 
  6.16  above but not exceeding two percent of the amount otherwise 
  6.17  authorized to be issued, and the amount of such additional 
  6.18  obligations shall not be included in the amount required by 
  6.19  section 475.59 to be stated in any bond resolution, notice, or 
  6.20  ballot, or in the sale price required by section 475.60 or any 
  6.21  other law to be paid; but if the principal amount of the entire 
  6.22  series exceeds its cash sale price, such excess shall not, when 
  6.23  added to the total amount of interest payable on all obligations 
  6.24  of the series to their stated maturity dates, cause the average 
  6.25  annual rate of such interest to exceed the maximum rate 
  6.26  authorized by law.  This section does not authorize a provision 
  6.27  in any such obligations for the payment of a higher rate of 
  6.28  interest after maturity than before. 
  6.29     (b) Any municipality issuing obligations under any law may 
  6.30  sell original issue discount obligations having a stated 
  6.31  principal amount in excess of the authorized amount and the sale 
  6.32  price, provided that: 
  6.33     (1) the sale price does not exceed by more than two percent 
  6.34  the amount of obligations otherwise authorized to be issued; 
  6.35     (2) the underwriting fee, discount, or other sales or 
  6.36  underwriting commission does not exceed two percent of the sale 
  7.1   price; and 
  7.2      (3) the discount rate necessary to present value total 
  7.3   principal and interest payments over the term of the issue to 
  7.4   the sale price does not exceed the lesser of the maximum rate 
  7.5   permitted by law for municipal obligations or ten percent. 
  7.6      (c) Any obligation of an issue of obligations otherwise 
  7.7   subject to section 475.55, subdivision 1, may bear interest at a 
  7.8   rate varying periodically at the time or times and on the terms, 
  7.9   including convertibility to a fixed rate of interest, determined 
  7.10  by the governing body of the municipality, but the rate of 
  7.11  interest for any period shall not exceed the maximum rate of 
  7.12  interest for the obligations determined in accordance with 
  7.13  section 475.55, subdivision 1.  For purposes of section 475.61, 
  7.14  subdivisions 1 and 3, the interest payable on variable rate 
  7.15  obligations for their term shall be determined as if their rate 
  7.16  of interest is the maximum rate permitted for the obligations 
  7.17  under section 475.55, subdivision 1, or the lesser maximum rate 
  7.18  of interest payable on the obligations in accordance with their 
  7.19  terms, but if the interest rate is subsequently converted to a 
  7.20  fixed rate the levy may be modified to provide at least five 
  7.21  percent in excess of amounts necessary to pay principal of and 
  7.22  interest at the fixed rate on the obligations when due.  For 
  7.23  purposes of computing debt service or interest pursuant to 
  7.24  section 475.67, subdivision 12, interest throughout the term of 
  7.25  bonds issued pursuant to this subdivision is deemed to accrue at 
  7.26  the rate of interest first borne by the bonds.  The provisions 
  7.27  of this paragraph do not apply to obligations issued by a 
  7.28  statutory or home rule charter city with a population of less 
  7.29  than 7,500, as defined in section 477A.011, subdivision 3, or to 
  7.30  obligations that are not rated A or better, or an equivalent 
  7.31  subsequently established rating, by Standard and Poor's 
  7.32  Corporation, Moody's Investors Service or other similar 
  7.33  nationally recognized rating agency, except that any statutory 
  7.34  or home rule charter city, regardless of population or bond 
  7.35  rating, may issue variable rate obligations as a participant in 
  7.36  a bond pooling program established by the league of Minnesota 
  8.1   cities that meets this bond rating requirement. 
  8.2      Sec. 9.  Minnesota Statutes 1998, section 475.58, 
  8.3   subdivision 1, is amended to read: 
  8.4      Subdivision 1.  [APPROVAL BY ELECTORS; EXCEPTIONS.] 
  8.5   Obligations authorized by law or charter may be issued by any 
  8.6   municipality upon obtaining the approval of a majority of the 
  8.7   electors voting on the question of issuing the obligations, but 
  8.8   an election shall not be required to authorize obligations 
  8.9   issued: 
  8.10     (1) to pay any unpaid judgment against the municipality; 
  8.11     (2) for refunding obligations; 
  8.12     (3) for an improvement or improvement program, which 
  8.13  obligation is payable wholly or partly from the proceeds of 
  8.14  special assessments levied upon property specially benefited by 
  8.15  the improvement or by an improvement within the improvement 
  8.16  program, or of taxes levied upon the increased value of property 
  8.17  within a district for the development of which the improvement 
  8.18  is undertaken, including obligations which are the general 
  8.19  obligations of the municipality, if the municipality is entitled 
  8.20  to reimbursement in whole or in part from the proceeds of such 
  8.21  special assessments or taxes and not less than 20 percent of the 
  8.22  cost of the improvement or the improvement program is to be 
  8.23  assessed against benefited property or is to be paid from the 
  8.24  proceeds of federal grant funds or a combination thereof, or is 
  8.25  estimated to be received from such taxes within the district; 
  8.26     (4) payable wholly from the income of revenue producing 
  8.27  conveniences; 
  8.28     (5) under the provisions of a home rule charter which 
  8.29  permits the issuance of obligations of the municipality without 
  8.30  election; 
  8.31     (6) under the provisions of a law which permits the 
  8.32  issuance of obligations of a municipality without an election; 
  8.33     (7) to fund pension or retirement fund liabilities pursuant 
  8.34  to section 475.52, subdivision 6; 
  8.35     (8) under a capital improvement plan under section 373.40; 
  8.36     (9) to fund facilities as provided in subdivision 3 the 
  9.1   costs of reconstruction or repaving of existing paved streets; 
  9.2   and 
  9.3      (10) under sections 469.1813 to 469.1815 (property tax 
  9.4   abatement authority bonds). 
  9.5      Sec. 10.  Minnesota Statutes 1998, section 475.60, 
  9.6   subdivision 1, is amended to read: 
  9.7      Subdivision 1.  [ADVERTISEMENT.] All obligations shall be 
  9.8   negotiated and sold by the governing body, except when authority 
  9.9   therefor is delegated by the governing body or by the charter of 
  9.10  the municipality to a board, department, or officers of the 
  9.11  municipality.  Except as provided in section 475.56, obligations 
  9.12  shall be sold at not less than par value plus accrued interest 
  9.13  to date of delivery and not greater than two percent greater 
  9.14  than the amount authorized to be issued plus accrued interest.  
  9.15  Except as provided in subdivision 2 all obligations shall be 
  9.16  sold at public competitive sale after notice given at least ten 
  9.17  days in advance by publication in a legal newspaper having 
  9.18  general circulation in the municipality and ten days in advance 
  9.19  by publication in a daily or weekly periodical published in a 
  9.20  Minnesota city of the first class, or its metropolitan area, 
  9.21  which circulates throughout the state and furnishes financial 
  9.22  news as a part of its service as provided in subdivision 3. 
  9.23     Sec. 11.  Minnesota Statutes 1998, section 475.60, 
  9.24  subdivision 3, is amended to read: 
  9.25     Subd. 3.  [PUBLISHED NOTICE.] Published notice The notice 
  9.26  of sale to prospective bidders, where required, shall specify 
  9.27  the maximum principal amount of the obligations, the place of 
  9.28  receipt and consideration of bids and such other details as to 
  9.29  the obligations and terms of sale as the governing body or the 
  9.30  municipality's authorized financial consultant deems suitable.  
  9.31  The published notice shall either specify the date and time for 
  9.32  receipt of bids or provide that the bids will be received at a 
  9.33  date and time not less than ten nor more than 60 days after the 
  9.34  date of publication.  If the published notice does not state the 
  9.35  specific date or amount for the sale, it shall specify the 
  9.36  manner in which notice of the date or amount of the sale will be 
 10.1   given to prospective bidders.  Notification of prospective 
 10.2   bidders shall be given by mail, facsimile, electronic data 
 10.3   transmission or other form of communication common to the 
 10.4   municipal bond trade at least four two days (omitting Saturdays, 
 10.5   Sundays, and legal holidays) before the date for receipt of bids 
 10.6   to at least five firms determined by the governing body or its 
 10.7   financial consultant to be prospective bidders, or shall be 
 10.8   published in a newspaper or other periodical which circulates 
 10.9   throughout the state and furnishes financial news as part of its 
 10.10  service.  If within five days after the date of publication a 
 10.11  prospective bidder requests in writing to be notified by mail, 
 10.12  the municipality shall do so.  Failure to give the notice as 
 10.13  described in the preceding sentence to a bidder this subdivision 
 10.14  shall not affect the validity of the sale or of the 
 10.15  obligations.  Bids may be accepted by facsimile or other 
 10.16  electronic transmission or in writing as specified by the 
 10.17  governing body or its financial consultant.  The governing body 
 10.18  may employ an agent to receive and open the bids at any place 
 10.19  within or outside the corporate limits of the municipality, in 
 10.20  the presence of an officer of the municipality or the officer's 
 10.21  designee, but the obligations shall not be sold except by action 
 10.22  of the governing body or authorized officers of the municipality 
 10.23  after communication of the bids to them.  Additional notice may 
 10.24  be given for such time and in such manner as the governing body 
 10.25  deems suitable.  At the time and place so fixed, the bids shall 
 10.26  be opened considered and the offer complying with the terms of 
 10.27  sale and deemed most favorable shall be accepted, but the 
 10.28  governing body may reject any and all such offers, in which 
 10.29  event, or if no offers have been received, it may award the 
 10.30  obligations to any person who within 30 days thereafter presents 
 10.31  an offer complying with the terms of sale and deemed more 
 10.32  favorable than any received previously, or upon like notice the 
 10.33  governing body may invite other bids upon the same or different 
 10.34  terms and conditions, except that if the original published 
 10.35  notice does not state the specific date or amount for the sale 
 10.36  and if the material terms and conditions of the sale remain the 
 11.1   same, except for the date and amount, notice of the date or 
 11.2   amount may be given in the manner provided above. 
 11.3      Sec. 12.  [EFFECTIVE DATE.] 
 11.4      This act is effective the day following final enactment.