SF 2460

as introduced - 92nd Legislature (2021 - 2022) Posted on 04/23/2021 07:54am

A bill for an act
relating to capital investment; authorizing the issuance of appropriation bonds for
fire-suppressing sprinkler systems in high-rise residential buildings; appropriating
money; proposing coding for new law in Minnesota Statutes, chapter 16A.

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

Section 1. new text begin LEGISLATIVE FINDINGS; PURPOSE.
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new text begin (a) The legislature recognizes that owners of high-rise apartment buildings, particularly
those that provide affordable housing to persons of low and moderate income, may find the
cost of retrofitting a high-rise building with a fire-suppressing sprinkler system to be
prohibitive. The legislature recognizes the safety of residents in high-rise apartment buildings
would be improved by the installation of sprinkler systems to mitigate the spread of fires.
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new text begin (b) The financing provided by Minnesota Statutes, section 16A.962, is for the public
purpose of improving tenant safety, particularly for buildings where the state has an interest
in ensuring that recipients of the benefits of subsidized housing programs are safe.
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Sec. 2.

new text begin [16A.962] HIGH-RISE FIRE SAFETY APPROPRIATION BONDS.
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new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this section.
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new text begin (b) "Appropriation bond" or "bond" means a bond, note, or other similar instrument of
the state payable during a biennium from one or more of the following sources:
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new text begin (1) money appropriated by law from the general fund in any biennium for debt service
due with respect to obligations described in subdivision 3, paragraph (a);
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new text begin (2) proceeds from the sale of obligations described in subdivision 3, paragraph (a);
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new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 3, paragraph (d); and
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new text begin (4) investment earnings on amounts in clauses (1) to (3).
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new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium, if
any, and interest on appropriation bonds, and the fees, charges, and expenses related to the
bonds.
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new text begin Subd. 2. new text end

new text begin Eligible building. new text end

new text begin (a) "Eligible building" means an existing residential building
that meets the following requirements:
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new text begin (1) has at least one story used for human occupancy that is 75 feet or more above the
lowest level of fire department vehicle access;
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new text begin (2) was not subject to a requirement to include a sprinkler system at the time the building
was constructed; and
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new text begin (3) has at least two-thirds of its units rented to an individual or family with an annual
income of up to 50 percent of the area median income as determined by the United States
Department of Housing and Urban Development, adjusted for family size, that is paying
no more than 30 percent of annual income on rent.
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new text begin (b) Eligible building does not include the following:
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new text begin (1) a monument or war memorial that is included in the National Register of Historic
Places or the state register of historic places;
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new text begin (2) an airport control tower or control room;
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new text begin (3) an open parking structure;
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new text begin (4) a building used for agricultural purposes;
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new text begin (5) a residential building in which at least 70 percent of the dwelling units are owner
occupied;
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new text begin (6) elevator equipment rooms and elevator shafts;
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new text begin (7) electric generation and distribution facilities operated by a public utility, a municipal
utility, or a cooperative electric association;
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new text begin (8) areas utilized for surgery, surgical recovery, emergency backup power systems, and
electrical closets within facilities licensed by the Department of Health;
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new text begin (9) a manufacturing facility that is required to meet the fire safety standards adopted by
the Occupational Safety and Health Administration in Code of Federal Regulations, title
29, part 1910, subpart L; or
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new text begin (10) an area used exclusively for telecommunications equipment and associated generator
and power equipment and under exclusive control of a telecommunications provider if:
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new text begin (i) the area is separated from the remainder of the building by construction equivalent
to a one-hour fire resistant wall and two-hour floor and ceiling assemblies; and
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new text begin (ii) the area has an automatic fire detection and alarm system that complies with standards
in the State Fire Code and State Building Code.
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new text begin Subd. 3. new text end

new text begin Authorization to issue appropriation bonds; appropriation of investment
income. new text end

new text begin (a) Subject to the limitations of this subdivision, the commissioner may sell and
issue appropriation bonds of the state under this section for public purposes as provided by
law, including for the purposes of making grants to the owners of eligible buildings for the
labor and materials to retrofit eligible buildings with sprinkler systems for fire suppression.
Appropriation bonds may be sold and issued in amounts that, in the opinion of the
commissioner, are necessary to provide sufficient money to the Minnesota Housing Finance
Agency under subdivision 8, not to exceed $....... net of costs of issuance, for the purposes
as provided under this subdivision; to pay debt service including capitalized interest, costs
of issuance, and costs of credit enhancement; or to make payments under other agreements
entered into under paragraph (d).
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new text begin (b) Proceeds of the appropriation bonds must be credited to a special fire safety
appropriation bond proceeds fund in the state treasury. All income from investment of the
bond proceeds is appropriated to the commissioner for the payment of principal and interest
on the appropriation bonds.
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new text begin (c) Appropriation bonds may be issued in one or more issues or series on the terms and
conditions the commissioner determines to be in the best interests of the state, but the term
on any series of appropriation bonds may not exceed 21 years. The appropriation bonds of
each issue and series thereof shall be dated and bear interest from the date of issuance, and
may be includable in or excludable from the gross income of the owners for federal income
tax purposes.
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new text begin (d) At the time of, or in anticipation of, issuing the appropriation bonds, and at any time
thereafter so long as the appropriation bonds are outstanding, the commissioner may enter
into agreements and ancillary arrangements relating to the appropriation bonds, including
but not limited to trust indentures, grant agreements, lease or use agreements, operating
agreements, management agreements, liquidity facilities, remarketing or dealer agreements,
letter of credit agreements, insurance policies, guaranty agreements, reimbursement
agreements, indexing agreements, or interest exchange agreements. Any payments made
or received according to the agreement or ancillary arrangement shall be made from or
deposited as provided in the agreement or ancillary arrangement. The determination of the
commissioner, included in an interest exchange agreement, that the agreement relates to an
appropriation bond, shall be conclusive.
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new text begin (e) The commissioner may enter into written agreements or contracts relating to the
continuing disclosure of information necessary to comply with or facilitate the issuance of
appropriation bonds in accordance with federal securities laws, rules, and regulations,
including Securities and Exchange Commission rules and regulations in Code of Federal
Regulations, title 17, section 240.15c 2-12. An agreement may be in the form of covenants
with purchasers and holders of appropriation bonds set forth in the order or resolution
authorizing the issuance of the appropriation bonds, or a separate document authorized by
the order or resolution.
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new text begin (f) The sale of appropriation bonds is not subject to chapter 16C.
new text end

new text begin Subd. 4. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form of bonds,
notes, or other similar instruments in the manner provided in section 16A.672. In the event
that any provision of section 16A.672 conflicts with this section, this section shall control.
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new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 7.
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new text begin (c) Appropriation bonds may be sold at either public or private sale upon such terms as
the commissioner shall determine are not inconsistent with this section and may be sold at
any price or percentage of par value. Any bid received may be rejected.
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new text begin (d) Appropriation bonds must bear interest at a fixed or variable rate.
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new text begin (e) Notwithstanding any other law, appropriation bonds issued under this section shall
be fully negotiable.
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new text begin Subd. 5. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner may issue appropriation bonds for the
purpose of refunding any appropriation bonds issued under subdivision 3 then outstanding,
including the payment of any redemption premiums on the bonds, any interest accrued or
to accrue to the redemption date, and costs related to the issuance and sale of the refunding
bonds. The proceeds of any refunding bonds may, at the discretion of the commissioner,
be applied to the purchase or payment at maturity of the appropriation bonds to be refunded,
to the redemption of the outstanding appropriation bonds on any redemption date, or to pay
interest on the refunding bonds and may, pending application, be placed in escrow to be
applied to the purchase, payment, retirement, or redemption. Any escrowed proceeds,
pending such use, may be invested and reinvested in obligations that are authorized
investments under section 11A.24. The income earned or realized on the investment may
also be applied to the payment of the appropriation bonds to be refunded or interest or
premiums on the refunded appropriation bonds, or to pay interest on the refunding bonds.
After the terms of the escrow have been fully satisfied, any balance of the proceeds and any
investment income may be returned to the general fund or, if applicable, the special fire
safety appropriation bond proceeds fund for use in any lawful manner. All refunding bonds
issued under this subdivision must be prepared, executed, delivered, and secured by
appropriations in the same manner as the appropriation bonds to be refunded.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities may
legally invest any sinking funds, money, or other funds belonging to them or under their
control in any appropriation bonds issued under this section:
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new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
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new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
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new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 7. new text end

new text begin No full faith and credit; state not required to make appropriations. new text end

new text begin The
appropriation bonds are not public debt of the state, and the full faith, credit, and taxing
powers of the state are not pledged to the payment of the appropriation bonds or to any
payment that the state agrees to make under this section. Appropriation bonds shall not be
obligations paid directly, in whole or in part, from a tax of statewide application on any
class of property, income, transaction, or privilege. Appropriation bonds shall be payable
in each fiscal year only from amounts that the legislature may appropriate for debt service
for any fiscal year, provided that nothing in this section shall be construed to require the
state to appropriate money sufficient to make debt service payments with respect to the
appropriation bonds in any fiscal year. Appropriation bonds shall be canceled and shall no
longer be outstanding on the earlier of (1) the first day of a fiscal year for which the
legislature shall not have appropriated amounts sufficient for debt service, or (2) the date
of final payment of the principal of and interest on the appropriation bonds.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation of bond proceeds. new text end

new text begin The proceeds of appropriation bonds issued
under subdivision 3, paragraph (a), and interest credited to the special fire safety appropriation
bond proceeds fund are appropriated as follows:
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new text begin (1) to the Minnesota Housing Finance Agency for grants to owners of eligible buildings;
and
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new text begin (2) to the commissioner of management and budget for debt service on the bonds
including capitalized interest, nonsalary costs of issuance of the bonds, costs of credit
enhancement of the bonds, and payments under any agreements entered into under
subdivision 3, paragraph (d), as permitted by state and federal law.
new text end

new text begin Subd. 9. new text end

new text begin Appropriation for debt service and other purposes. new text end

new text begin An amount needed to
pay principal and interest on appropriation bonds issued under subdivision 3, paragraph (a),
is appropriated each fiscal year from the general fund to the commissioner of management
and budget, subject to repeal, unallotment under section 16A.152, or cancellation, otherwise
pursuant to subdivision 7, for deposit into the bond payments account established for such
purpose in the special fire safety appropriation bond proceeds fund. The appropriation is
available beginning in fiscal year 2021 and remains available through fiscal year 2042.
new text end

new text begin Subd. 10. new text end

new text begin Waiver of immunity. new text end

new text begin The waiver of immunity by the state provided for by
section 3.751, subdivision 1, shall be applicable to the appropriation bonds and any ancillary
contracts to which the commissioner is a party.
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new text begin Subd. 11. new text end

new text begin Grant agreements. new text end

new text begin In addition to any other terms in a grant agreement between
the Minnesota Housing Finance Agency and the owner of an eligible building, a grant of
special fire safety appropriation bond proceeds must:
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new text begin (1) require the grantee to segregate the grant funds in a separate account;
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new text begin (2) pay to the state, for deposit into the bond payments account established for such
purpose in the special fire safety appropriation bond proceeds fund, the proceeds of the sale
of any property financed with a grant under this section with a closing date less than ten
years after the date of the grant made under this section in an amount up to the amount of
the grant; and
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new text begin (3) require the grantee to report to the Minnesota Housing Finance Agency on the
expenditures made from the accounts funded with a grant made under this section in the
form that the agency prescribes and include any documentation of and supporting information
regarding the expenditures that the agency requires.
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