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HF 500

1st Engrossment - 92nd Legislature (2021 - 2022) Posted on 04/13/2021 12:27pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 01/28/2021
1st Engrossment Posted on 04/13/2021

Current Version - 1st Engrossment

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A bill for an act
relating to public finance; modifying local government debt financing; amending
Minnesota Statutes 2020, sections 297A.993, subdivision 2; 453A.04, subdivision
21, by adding a subdivision; 465.71; 475.56; 475.58, subdivision 3b; 475.60,
subdivision 1; 475.67, subdivision 8; repealing Minnesota Statutes 2020, section
469.055, subdivision 7.

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

Section 1.

Minnesota Statutes 2020, section 297A.993, subdivision 2, is amended to read:


Subd. 2.

Allocation; termination.

The proceeds of the taxes must be dedicated
exclusively to: (1) payment of the capital cost of a specific transportation project or
improvement; (2) payment of the costs, which may include both capital and operating costs,
of a specific transit project or improvement; (3) payment of the capital costs of a safe routes
to school program under section 174.40; deleted text beginordeleted text end (4) payment of transit operating costsnew text begin; or (5)
payment of the capital cost of constructing buildings and other facilities for maintaining
transportation or transit projects or improvements
new text end. The transportation or transit project or
improvement must be designated by the board of the county, or more than one county acting
under a joint powers agreement. Except for taxes for operating costs of a transit project or
improvement, or for transit operations, the taxes must terminate when revenues raised are
sufficient to finance the project. Nothing in this subdivision prohibits the exclusive dedication
of the proceeds of the taxes to payments for more than one project or improvement. After
a public hearing a county may, by resolution, dedicate the proceeds of the tax for a new
enumerated project.

Sec. 2.

Minnesota Statutes 2020, section 453A.04, subdivision 21, is amended to read:


Subd. 21.

deleted text beginAll other powersdeleted text endnew text begin Exercising powers of a municipal power agencynew text end.

deleted text begin It may
exercise all other powers not inconsistent with the Constitution of the state of Minnesota
or the United States Constitution, which powers may be reasonably necessary or appropriate
for or incidental to the effectuation of its authorized purposes or to the exercise of any of
the powers enumerated in this section, and generally may exercise in connection with its
property and affairs, and in connection with property within its control, any and all powers
which might be exercised by a natural person or a private corporation in connection with
similar property and affairs.
deleted text end new text begin It may exercise the powers of a municipal power agency under
chapter 453 for the limited purpose of engaging in tax-exempt prepayments and related
transactions as described in section 148(b)(4) of the Internal Revenue Code of 1986, as
amended, and the Code of Federal Regulations, title 26, part 1, section 1.148-1(e)(2)(iii),
both as may be amended from time to time, or as may otherwise be authorized by statute
or the Commissioner of Internal Revenue.
new text end

Sec. 3.

Minnesota Statutes 2020, section 453A.04, is amended by adding a subdivision to
read:


new text begin Subd. 22. new text end

new text begin All other powers. new text end

new text begin It may exercise all other powers not inconsistent with the
Constitution of the state of Minnesota or the United States Constitution, which powers may
be reasonably necessary or appropriate for or incidental to the effectuation of its authorized
purposes or to the exercise of any of the powers enumerated in this section, and generally
may exercise in connection with its property and affairs, and in connection with property
within its control, any and all powers which might be exercised by a natural person or a
private corporation in connection with similar property and affairs.
new text end

Sec. 4.

Minnesota Statutes 2020, section 465.71, is amended to read:


465.71 INSTALLMENT, LEASE PURCHASE; CITY, COUNTY, TOWN,
SCHOOL.

A home rule charter city, statutory city, county, town, or school district may purchase
personal property under an installment contract, or lease real or personal property with an
option to purchase under a lease-purchase agreement, by which contract or agreement title
is retained by the seller or vendor or assigned to a third party as security for the purchase
price, including interest, if any, but such purchases are subject to statutory and charter
provisions applicable to the purchase of real or personal property. For purposes of the bid
requirements contained in section 471.345, "the amount of the contract" shall include the
total of all lease payments for the entire term of the lease under a lease-purchase agreement.
The obligation created by new text beginan installment contract or new text enda lease-purchase agreement for personal
propertynew text begin,new text end or new text beginan installment contract or new text enda lease-purchase agreement for real property if the
amount of the contract for purchase of the real property is less than $1,000,000new text begin,new text end shall not
be included in the calculation of net debt for purposes of section 475.53, and shall not
constitute debt under any other statutory provision. No election shall be required in
connection with the execution of new text beginan installment contract or new text enda lease-purchase agreement
authorized by this section. The city, county, town, or school district must have the right to
terminate a lease-purchase agreement at the end of any fiscal year during its term.

Sec. 5.

Minnesota Statutes 2020, section 475.56, is amended to read:


475.56 INTEREST RATE.

(a) Any municipality issuing obligations under any law may issue obligations bearing
interest at a single rate or at rates varying from year to year which may be lower or higher
in later years than in earlier years. deleted text beginSuch higher rate for any period prior to maturity may be
represented in part by separate coupons designated as additional coupons, extra coupons,
or B coupons, but the
deleted text endnew text begin Thenew text end highest aggregate rate of interest contracted to be so paid for any
period shall not exceed the maximum rate authorized by lawdeleted text begin. Such higher rate may also be
represented in part by the issuance of additional obligations of the same series, over and
above but not exceeding two percent of the amount otherwise authorized to be issued, and
the amount of such additional obligations shall not be included in the amount required by
section 475.59 to be stated in any bond resolution, notice, or ballot, or in the sale price
required by section 475.60 or any other law to be paid; but if the principal amount of the
entire series exceeds its cash sale price, such excess shall not, when added to the total amount
of interest payable on all obligations of the series to their stated maturity dates, cause
deleted text endnew text begin andnew text end
the average annual rate of such interest deleted text begintodeleted text endnew text begin may notnew text end exceed the maximum rate authorized by
law. This section does not authorize a provision in any such obligations for the payment of
a higher rate of interest after maturity than before.

(b) Any municipality issuing obligations under any law may sell original issue discount
new text begin or premium new text endobligations deleted text beginhaving a stated principal amount in excess of the authorized amount
and the sale price, provided that:
deleted text endnew text begin. To determine the average annual rate of interest on the
obligations, any discount shall be added to, and any premium subtracted from, the total
amount of interest on the obligations to their stated maturity dates.
new text end

deleted text begin (1) the sale price does not exceed by more than two percent the amount of obligations
otherwise authorized to be issued;
deleted text end

deleted text begin (2) the underwriting fee, discount, or other sales or underwriting commission does not
exceed two percent of the sale price; and
deleted text end

deleted text begin (3) the discount rate necessary to present value total principal and interest payments
over the term of the issue to the sale price does not exceed the lesser of the maximum rate
permitted by law for municipal obligations or ten percent.
deleted text end

(c) Any obligation may bear interest at a rate varying periodically at the time or times
and on the terms, including convertibility to a fixed rate of interest, determined by the
governing body of the municipality, but the rate of interest for any period shall not exceed
any maximum rate of interest for the obligations established by law. For purposes of section
475.61, subdivisions 1 and 3, the interest payable on variable rate obligations for their term
shall be determined as if their rate of interest is the lesser of the maximum rate of interest
payable on the obligations in accordance with their terms or the rate estimated for such
purpose by the governing body, but if the interest rate is subsequently converted to a fixed
rate the levy may be modified to provide at least five percent in excess of amounts necessary
to pay principal of and interest at the fixed rate on the obligations when due. For purposes
of computing debt service or interest pursuant to section 475.67, subdivision 12, interest
throughout the term of bonds issued pursuant to this subdivision is deemed to accrue at the
rate of interest first borne by the bonds. The provisions of this paragraph do not apply to
general obligations issued by a statutory or home rule charter city with a population of less
than 7,500, as defined in section 477A.011, subdivision 3, or to general obligations that are
not rated A or better, or an equivalent subsequently established rating, by Standard and
Poor's Corporation, Moody's Investors Service or other similar nationally recognized rating
agency, except that any statutory or home rule charter city, regardless of population or bond
rating, may issue variable rate obligations as a participant in a bond pooling program
established by the League of Minnesota Cities that meets this bond rating requirement.

Sec. 6.

Minnesota Statutes 2020, section 475.58, subdivision 3b, is amended to read:


Subd. 3b.

Street reconstruction and bituminous overlays.

(a) A municipality may,
without regard to the election requirement under subdivision 1, issue and sell obligations
for street reconstruction or bituminous overlays, if the following conditions are met:

(1) the streets are reconstructed or overlaid under a street reconstruction or overlay plan
that describes the street reconstruction or overlay to be financed, the estimated costs, and
any planned reconstruction or overlay 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 a two-thirds
majority 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. 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.

(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 and bituminous overlays
deleted text begin includesdeleted text endnew text begin include but are not limited to:new text end utility replacement and relocation and other activities
incidental to the street reconstructiondeleted text begin,deleted text endnew text begin; the addition or reconstruction ofnew text end turn lanesnew text begin, bicycle
lanes, sidewalks, paths,
new text end and other improvements having a substantial public safety functiondeleted text begin,deleted text endnew text begin;new text end
realignmentsdeleted text begin,deleted text endnew text begin andnew text end other modifications to intersect with state and county roadsdeleted text begin,deleted text endnew text begin;new text end and the local
share of state and county road projects. 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.

(d) Except in the case of turn lanes, new text beginbicycle lanes, sidewalks, paths, and other new text endsafety
improvementsdeleted text begin,deleted text endnew text begin;new text end realignmentsdeleted text begin,deleted text endnew text begin;new text end intersection modificationsdeleted text begin,deleted text endnew text begin;new text end and the local share of state and
county road projects, street reconstruction and bituminous overlays does not include the
portion of project cost allocable to widening a street or adding curbs and gutters where none
previously existed.

Sec. 7.

Minnesota Statutes 2020, section 475.60, subdivision 1, is amended to read:


Subdivision 1.

Advertisement.

All obligations shall be negotiated and sold by the
governing body, except when authority therefor is delegated by the governing body or by
the charter of the municipality to a board, department, or officers of the municipality. deleted text beginExcept
as provided in section 475.56, obligations shall be sold at not less than par value plus accrued
interest to date of delivery and not greater than two percent greater than the amount
authorized to be issued plus accrued interest.
deleted text end Except as provided in subdivision 2 all
obligations shall be sold at competitive sale after notice given as provided in subdivision
3.

Sec. 8.

Minnesota Statutes 2020, section 475.67, subdivision 8, is amended to read:


Subd. 8.

Escrow account securities.

Securities purchased for the escrow account shall
be limited to:

(1) general obligations of the United States, securities whose principal and interest
payments are guaranteed by the United States,new text begin including but not limited to Resolution
Funding Corporation Interest Separate Trading of Registered Interest and Principal of
Securities (STRIPS) and United States Agency for International Development Bonds or
STRIPS,
new text end and securities issued by deleted text beginthe following agencies of the United States: Banks for
Cooperatives,
deleted text endnew text begin United States government-sponsored enterprises including but not limited tonew text end
Federal Home Loan Banks, deleted text beginFederal Intermediate Credit Banks, Federal Land Banks, anddeleted text endnew text begin
the Federal Farm Credit System,
new text end the Federal National Mortgage Associationnew text begin, or the Federal
Home Loan Mortgage Corporation
new text end; or

(2) obligations issued or guaranteed by any state or any political subdivision of a state,
which at the date of purchase are rated in the highest or the next highest rating category by
Standard and Poor's Corporation, Moody's Investors Service, or a similar nationally
recognized rating agency, but not less than the rating on the refunded bonds immediately
prior to the refunding.

"Rating category," as used in this subdivision, means a generic securities rating category,
without regard in the case of a long-term rating category to any refinement or gradation of
such long-term rating category by a numerical modifier or otherwise.

Sec. 9. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2020, section 469.055, subdivision 7, new text end new text begin is repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: H0500-1

469.055 POWERS AND DUTIES.

Subd. 7.

Sale of realty.

The authority may sell, convey, and exchange any real or personal property owned or held by it in any manner and on any terms it wishes. Real property owned by the authority must not be sold, be exchanged, or have its title transferred without approval of two-thirds of the commissioners. All commissioners must have ten days' written notice of a regular or special meeting at which a sale, conveyance, exchange, or transfer of property is to be voted on. The notice must contain a complete description of the affected real estate. The resolution authorizing the real estate transaction is not effective unless a quorum is present.