2nd Engrossment - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to local government; establishing standards 1.3 for the creation of corporations by political 1.4 subdivisions; providing for the continuation of 1.5 existing corporations created by political 1.6 subdivisions; amending Minnesota Statutes 1998, 1.7 section 238.08, subdivision 3; proposing coding for 1.8 new law in Minnesota Statutes 1998, chapter 465; 1.9 repealing Minnesota Statutes 1998, section 465.715, 1.10 subdivisions 1, 2, and 3; Minnesota Statutes 1999 1.11 Supplement, section 465.715, subdivision 1a. 1.12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.13 ARTICLE 1 1.14 CORPORATIONS CREATED BY POLITICAL SUBDIVISIONS 1.15 Section 1. [465.717] [CREATION OF CORPORATIONS BY 1.16 POLITICAL SUBDIVISIONS.] 1.17 Subdivision 1. [STATUTORY AUTHORIZATION REQUIRED.] A 1.18 county, home rule charter city, statutory city, town, school 1.19 district, or other political subdivision, including a joint 1.20 powers entity operating under section 471.59 may not create a 1.21 corporation, whether for profit or not for profit, unless 1.22 explicitly authorized to do so by law. 1.23 Subd. 2. [AUTHORITY TO INCORPORATE A JOINT POWERS ENTITY.] 1.24 A joint powers entity created under section 471.59 may 1.25 incorporate itself as a nonprofit under chapter 317A. A 1.26 corporation created under this subdivision shall comply with 1.27 every law that applies to the participating political 1.28 subdivisions and shall possess no greater authority or power 2.1 than that held by the joint powers entity itself. 2.2 Sec. 2. [465.719] [EXISTING CORPORATIONS CREATED BY 2.3 POLITICAL SUBDIVISIONS.] 2.4 Subdivision 1. [DEFINITIONS.] The following definitions 2.5 apply to this section: 2.6 (a) "Political subdivision" means a county, a statutory or 2.7 home rule charter city, a town, a school district, or other 2.8 political subdivision of the state. Political subdivision 2.9 includes a political subdivision acting individually or jointly 2.10 as provided under section 471.59. 2.11 (b) "Corporation" means a corporation created by a 2.12 political subdivision before May 31, 1997, in which (1) the 2.13 corporation's articles of incorporation or bylaws provide for 2.14 the governing body of the political subdivision to serve as a 2.15 corporation's governing board; (2) the articles of incorporation 2.16 or bylaws provide for members of the governing body of the 2.17 political subdivision to be automatically appointed to the board 2.18 solely by virtue of their appointment or election to office and 2.19 they constitute a majority of the corporation's board members; 2.20 or (3) the governing body of the political subdivision approves 2.21 the budget or expenditures of the corporation for purposes other 2.22 than those related to oversight of public grants or loans made 2.23 to the corporation under a competitive process for which other 2.24 entities are eligible. Corporation does not include: 2.25 (1) a corporation established under chapters 453, 453A, or 2.26 sections 119A.374 to 119A.376; 245.62 to 245.66; 2.27 (2) a nonprofit corporation created to raise funds for use 2.28 by a political subdivision if less than a majority of the board 2.29 of directors of the corporation are members of the governing 2.30 body of the political subdivision appointed to the board of 2.31 directors by virtue of their election to office; or 2.32 (3) a corporation created by a political subdivision 2.33 pursuant to state statute or special law or federal law. 2.34 Subd. 2. [RESOLUTION REQUIRED.] In order to provide for 2.35 the continued existence of a corporation created by a political 2.36 subdivision, the political subdivision, or its successor, that 3.1 created the corporation must adopt a resolution at a regularly 3.2 scheduled meeting of the governing body of the political 3.3 subdivision. The resolution must include the information 3.4 required in subdivisions 4 to 9. If a resolution is not adopted 3.5 within three years of the effective date of this section, the 3.6 board of directors of the corporation shall direct and authorize 3.7 an officer or designee of the corporation to file with the 3.8 secretary of state immediately a notice of intent to dissolve 3.9 the corporation and then as soon as possible, complete 3.10 dissolution of the corporation as provided in the corporation's 3.11 articles of incorporation and bylaws, and the law under which 3.12 the corporation was formed. 3.13 Subd. 3. [AMENDED ARTICLES OF INCORPORATION, BYLAWS.] If 3.14 the political subdivision adopts a resolution under subdivision 3.15 2, the board of directors of the corporation shall direct and 3.16 authorize an officer or designee of the corporation to file 3.17 amended articles of incorporation, if necessary, as soon as 3.18 practicable after adoption of the resolution to make the 3.19 articles of incorporation consistent with the resolution and to 3.20 provide for the application of the laws under subdivision 10. 3.21 Thereafter, the corporation may not amend its articles of 3.22 incorporation unless the political subdivision adopts a 3.23 resolution in support of the change as provided in subdivision 2 3.24 for ratifying existing corporations. 3.25 Subd. 4. [EXISTING CONTRACTS.] If on the effective date of 3.26 this section the corporation has contracts or other obligations 3.27 that are inconsistent with any requirement of this section, the 3.28 resolution may provide for the delayed application of that 3.29 requirement for the time necessary to avoid a breach or 3.30 impairment of the contract or obligation. 3.31 Subd. 5. [NEED FOR CORPORATION.] The resolution must make 3.32 a detailed and specific finding regarding the purpose of the 3.33 corporation, and why the corporation is the best alternative for 3.34 accomplishing the purpose. 3.35 Subd. 6. [AUTHORITIES AND POWERS OF CORPORATION 3.36 LIMITED.] The resolution must specify what authorities and 4.1 powers the corporation possesses. The authorities and powers of 4.2 the corporation must not exceed the authorities and powers of 4.3 the political subdivision that created it, except as otherwise 4.4 authorized in this section. 4.5 Subd. 7. [BOARD MEMBERSHIP.] If a majority of the 4.6 corporation's governing board includes elected or appointed 4.7 officials of the political subdivision creating the corporation, 4.8 the resolution must make a detailed and specific finding 4.9 regarding the purpose of those officials serving on the board, 4.10 and why the corporation cannot accomplish its purpose unless 4.11 those officials serve on the board. Alternatively, the 4.12 resolution may provide for other board membership and the 4.13 articles of incorporation amended to be consistent with the 4.14 resolution. 4.15 Subd. 8. [ALLOCATION OF ASSETS AND LIABILITIES.] If a 4.16 corporation is created by more than one political subdivision, 4.17 each political subdivision that ratifies creation of the 4.18 corporation must adopt a resolution required by this section 4.19 and, among other requirements, each resolution must specify and 4.20 agree with the resolution of the other political subdivisions as 4.21 to how the assets and liabilities of the corporation are 4.22 allocated or attributed to each political subdivision, 4.23 including, but not limited to, for the purposes of any 4.24 applicable levy or debt limits. 4.25 Subd. 9. [APPLICATION OF OTHER LAWS.] A corporation 4.26 created by a political subdivision under this section must 4.27 comply with every law that applies to the political subdivision, 4.28 as if the corporation is a part of the political subdivision, 4.29 unless the resolution ratifying creation of the corporation 4.30 specifically exempts the corporation from part or all of a law. 4.31 If the resolution exempts the corporation from part or all of a 4.32 law, the resolution must make a detailed and specific finding as 4.33 to why the corporation cannot fulfill its purpose if the 4.34 corporation is subject to that law. A corporation may not be 4.35 exempted from section 471.705, the Minnesota Open Meeting Law, 4.36 sections 138.163 to 138.25, the Records Management Act, or 5.1 Chapter 13, the Minnesota Government Data Practices Act. Laws 5.2 that apply to a political subdivision that also apply to a 5.3 corporation created by a political subdivision under this 5.4 subdivision include, but are not limited to: 5.5 (1) section 471.705, the Minnesota Open Meeting Law; 5.6 (2) chapter 13, the Minnesota Government Data Practices 5.7 Act; 5.8 (3) section 471.345, the Uniform Municipal Contracting Law; 5.9 (4) sections 43A.17, limiting the compensation of employees 5.10 based on the governor's salary; 471.991 to 471.999, providing 5.11 for equitable pay; and 465.72 and 465.722, governing severance 5.12 pay; 5.13 (5) section 275.065, providing for truth-in-taxation 5.14 hearings. If any tax revenues of the political subdivision will 5.15 be appropriated to the corporation, the corporation's annual 5.16 operating and capital budgets must be included in the 5.17 truth-in-taxation hearing of the political subdivision that 5.18 created the corporation; 5.19 (6) if the corporation issues debt, its debt is included in 5.20 the political subdivision's debt limit if it would be included 5.21 if issued by the political subdivision, and issuance of the debt 5.22 is subject to the election and other requirements of chapter 475 5.23 and section 471.69; 5.24 (7) section 471.895, prohibiting acceptance of gifts from 5.25 interested parties, and sections 471.87 to 471.89, relating to 5.26 interests in contracts; 5.27 (8) chapter 466, relating to municipal tort liability; 5.28 (9) chapter 118A, requiring deposit insurance or bond or 5.29 pledged collateral for deposits; 5.30 (10) chapter 118A, restricting investments; 5.31 (11) section 471.346, requiring ownership of vehicles to be 5.32 identified; 5.33 (12) sections 471.38 to 471.41, requiring claims to be in 5.34 writing, itemized, and approved by the governing board before 5.35 payment can be made; and 5.36 (13) the corporation cannot make advances of pay, make or 6.1 guarantee loans to employees, or provide in-kind benefits unless 6.2 authorized by law. 6.3 Subd. 10. [TAXES USED FOR PUBLIC PURPOSE.] If the 6.4 political subdivision has authority under other law to 6.5 appropriate tax revenues for use by the corporation, those funds 6.6 must be appropriated and used only for public purposes. 6.7 Subd. 11. [AUDIT.] A corporation created by a political 6.8 subdivision that receives public money from the political 6.9 subdivision, other than grants or loans made under a competitive 6.10 process for which other entities are eligible, must be audited 6.11 annually by either a certified public accountant or the state 6.12 auditor. Except as provided below, the audit report must be 6.13 presented at a regularly scheduled meeting of the governing body 6.14 of the political subdivision that created the corporation. The 6.15 audit report must be made available to individuals after 6.16 presentation of the audit report to the governing body of the 6.17 political subdivision. The data classification of an audit 6.18 performed by the office of the state auditor is governed by 6.19 chapter 6. 6.20 Subd. 12. [STATE AUDITOR POWERS.] The state auditor has 6.21 the same powers with regard to a corporation created by a 6.22 political subdivision as the state auditor has with regard to 6.23 the political subdivision that created the corporation. 6.24 Subd. 13. [DATA.] (a) The following government data of a 6.25 corporation subject to this section that are provided by a 6.26 private business are private data on individuals or nonpublic 6.27 data, as defined in section 13.02: 6.28 (1) trade secret information, as defined in section 13.37; 6.29 and 6.30 (2) financial statements; credit reports; business plans; 6.31 income and expense projections; customer lists; balance sheets; 6.32 income tax returns; and design, market, and feasibility studies 6.33 not paid for with public funds. 6.34 (b) The following government data of the corporation are 6.35 private data on individuals or nonpublic data, as defined in 6.36 section 13.02: 7.1 (1) trade secret information, as defined in section 13.02; 7.2 (2) other data, to the extent the corporation is competing 7.3 with other organizations providing the same goods or services 7.4 and disclosure of the data would impair the ability of the 7.5 corporation to compete; and 7.6 (3) data identified in section 13.491 collected or received 7.7 by a transit organization. 7.8 Sec. 3. [CLARIFICATION.] 7.9 Existing corporations that reported to the state auditor 7.10 under Minnesota Statutes 1998, section 465.715, subdivision 3, 7.11 but do not meet the definition of a corporation under section 2, 7.12 subdivision 1, paragraph (b), remain as established and are not 7.13 affected by this act or by Minnesota Statutes, section 465.715. 7.14 Sec. 4. [REPEALER.] 7.15 Minnesota Statutes 1998, section 465.715, subdivisions 1, 7.16 2, and 3; and Minnesota Statutes 1999 Supplement, section 7.17 465.715, subdivision 1a, are repealed. 7.18 ARTICLE 2 7.19 MISCELLANEOUS 7.20 Section 1. Minnesota Statutes 1998, section 238.08, 7.21 subdivision 3, is amended to read: 7.22 Subd. 3. [MUNICIPAL OPERATION.] Nothing in this chapter 7.23 shall be construed to limit any municipality from the right to 7.24 construct, purchase, and operate
acable communications 7.25 systemsystems, or, to operate facilities and channels for 7.26 community television, including, but not limited to, public, 7.27 educational, and governmental access and local origination 7.28 programming. Any municipal system, including the operation of 7.29 community television by a municipality, shall be subject to this 7.30 chapter to the same extent as would any nonpublic cable 7.31 communications system.