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Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1987 

                        CHAPTER 344-S.F.No. 971 
           An act relating to public finance; modifying and 
          extending means of financing operations of local 
          government and certain nonprofit institutions; 
          amending Minnesota Statutes 1986, sections 124.76, 
          subdivision 2; 275.50, subdivision 5; 429.061, 
          subdivision 2; 429.091, subdivision 2, and by adding a 
          subdivision; 462.461, subdivision 4; 462.555; 462C.05, 
          subdivision 1; 466.06; 471.981, subdivision 4, and by 
          adding subdivisions; 474.02, subdivision 2; 474.03, 
          subdivision 12; 475.51, subdivision 3; 475.54, 
          subdivision 1 and by adding subdivisions; 475.55, 
          subdivisions 1, 2, 3, 4, 6, 7, and by adding a 
          subdivision; 475.56; 475.60, subdivision 2; 475.66, 
          subdivision 3; and 475.67, subdivisions 3 and 12; 
          proposing coding for new law in Minnesota Statutes, 
          chapters 471, and 475; repealing Minnesota Statutes 
          1986, sections 475.55, subdivision 5; and 475.67, 
          subdivision 11.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 124.76, 
subdivision 2, is amended to read:  
    Subd. 2.  [PUBLIC SALE EXCEPTION.] Public sale of tax and 
aid anticipation certificates of indebtedness according to 
subdivision 1 shall not be required (1) if the proposed 
borrowing is in an amount less than $400,000, and if the sum of 
all outstanding tax and aid anticipation certificates issued by 
the board within the preceding six months does not exceed 
$400,000 or, (2) if the certificates mature no later than 12 13 
months after their date of issue.  If no public sale is held, 
the certificates of indebtedness may be sold in accordance with 
the most favorable of two or more proposals solicited privately 
or the interest rates may be determined by direct negotiation.  
     Sec. 2.  Minnesota Statutes 1986, section 275.50, 
subdivision 5, is amended to read:  
    Subd. 5.  Notwithstanding any other law to the contrary for 
taxes levied in 1983 payable in 1984 and subsequent years, 
"special levies" means those portions of ad valorem taxes levied 
by governmental subdivisions to: 
    (a) satisfy judgments rendered against the governmental 
subdivision by a court of competent jurisdiction in any tort 
action, or to pay the costs of settlements out of court against 
the governmental subdivision in a tort action when substantiated 
by a stipulation for the dismissal of the action filed with the 
court of competent jurisdiction and signed by both the plaintiff 
and the legal representative of the governmental subdivision, 
but only to the extent of the increase in levy for such 
judgments and out of court settlements over levy year 1970, 
taxes payable in 1971; 
    (b) pay the costs of complying with any written lawful 
order initially issued prior to January 1, 1977 by the state of 
Minnesota, or the United States, or any agency or subdivision 
thereof, which is authorized by law, statute, special act or 
ordinance and is enforceable in a court of competent 
jurisdiction, or any stipulation agreement or permit for 
treatment works or disposal system for pollution abatement in 
lieu of a lawful order signed by the governmental subdivision 
and the state of Minnesota, or the United States, or any agency 
or subdivision thereof which is enforceable in a court of 
competent jurisdiction.  The commissioner of revenue shall in 
consultation with other state departments and agencies, develop 
a suggested form for use by the state of Minnesota, its agencies 
and subdivisions in issuing orders pursuant to this subdivision; 
    (c) pay the costs to a governmental subdivision for their 
minimum required share of any program otherwise authorized by 
law for which matching funds have been appropriated by the state 
of Minnesota or the United States, excluding the administrative 
costs of public assistance programs, to the extent of the 
increase in levy over the amount levied for the local share of 
the program for the taxes payable year 1971.  This clause shall 
apply only to those programs or projects for which matching 
funds have been designated by the state of Minnesota or the 
United States on or before September 1, of the previous year and 
only when the receipt of these matching funds is contingent upon 
the initiation or implementation of the project or program 
during the year in which the taxes are payable or those programs 
or projects approved by the commissioner; 
    (d) pay the costs not reimbursed by the state or federal 
government, of payments made to or on behalf of recipients of 
aid under any public assistance program authorized by law, and 
the costs of purchase or delivery of social services.  Except 
for the costs of general assistance as defined in section 
256D.02, subdivision 4, general assistance medical care under 
section 256D.03 and the costs of hospital care pursuant to 
section 261.21, the aggregate amounts levied pursuant to this 
clause are subject to a maximum increase of 18 percent over the 
amount levied for these purposes in the previous year; 
    (e) pay the costs of principal and interest on bonded 
indebtedness except on bonded indebtedness issued under sections 
13 to 16 or to reimburse for the amount of liquor store revenues 
used to pay the principal and interest due in the year preceding 
the year for which the levy limit is calculated on municipal 
liquor store bonds; 
    (f) pay the costs of principal and interest on certificates 
of indebtedness, except tax anticipation or aid anticipation 
certificates of indebtedness, issued for any corporate purpose 
except current expenses or funding an insufficiency in receipts 
from taxes or other sources or funding extraordinary 
expenditures resulting from a public emergency; and to pay the 
cost for certificates of indebtedness issued pursuant to 
sections 298.28 and 298.282;  
    (g) fund the payments made to the Minnesota state armory 
building commission pursuant to section 193.145, subdivision 2, 
to retire the principal and interest on armory construction 
bonds; 
    (h) provide for the bonded indebtedness portion of payments 
made to another political subdivision of the state of Minnesota; 
    (i) pay the amounts required to compensate for a decrease 
in manufactured homes property tax receipts to the extent that 
the governmental subdivision's portion of the total levy in the 
current levy year, pursuant to section 274.19, subdivision 8, as 
amended, is less than the distribution of the manufactured homes 
tax to the governmental subdivision pursuant to Minnesota 
Statutes 1969, section 273.13, subdivision 3, in calendar year 
1971; 
    (j) pay the amounts required, in accordance with section 
275.075, to correct for a county auditor's error of omission but 
only to the extent that when added to the preceding year's levy 
it is not in excess of an applicable statutory, special law or 
charter limitation, or the limitation imposed on the 
governmental subdivision by sections 275.50 to 275.56 in the 
preceding levy year; 
    (k) pay amounts required to correct for an error of 
omission in the levy certified to the appropriate county auditor 
or auditors by the governing body of a city or town with 
statutory city powers in a levy year, but only to the extent 
that when added to the preceding year's levy it is not in excess 
of an applicable statutory, special law or charter limitation, 
or the limitation imposed on the governmental subdivision by 
sections 275.50 to 275.56 in the preceding levy year; 
    (l) pay the increased cost of municipal services as the 
result of an annexation or consolidation ordered by the 
Minnesota municipal board but only to the extent and for the 
levy years as provided by the board in its order pursuant to 
section 414.01, subdivision 15.  Special levies authorized by 
the board shall not exceed 50 percent of the levy limit base of 
the governmental subdivision and may not be in effect for more 
than three years after the board's order; 
    (m) pay the increased costs of municipal services provided 
to new private industrial and nonresidential commercial 
development, to the extent that the extension of such services 
are not paid for through bonded indebtedness or special 
assessments, and not to exceed the amount determined as 
follows.  The governmental subdivision may calculate the 
aggregate of: 
    (1) the increased expenditures necessary in preparation for 
the delivering of municipal services to new private industrial 
and nonresidential commercial development, but limited to one 
year's expenditures one time for each such development; 
    (2) the amount determined by dividing the overall levy 
limitation established pursuant to sections 275.50 to 275.56, 
and exclusive of special levies and special assessments, by the 
total taxable value of the governmental subdivision, and then 
multiplying this quotient times the total increase in assessed 
value of private industrial and nonresidential commercial 
development within the governmental subdivision.  For the 
purpose of this clause, the increase in the assessed value of 
private industrial and nonresidential commercial development is 
calculated as the increase in assessed value over the assessed 
value of the real estate parcels subject to such private 
development as most recently determined before the building 
permit was issued.  In the fourth levy year subsequent to the 
levy year in which the building permit was issued, the increase 
in assessed value of the real estate parcels subject to such 
private development shall no longer be included in determining 
the special levy. 
    The aggregate of the foregoing amounts, less any costs of 
extending municipal services to new private industrial and 
nonresidential commercial development which are paid by bonded 
indebtedness or special assessments, equals the maximum amount 
that may be levied as a "special levy" for the increased costs 
of municipal services provided to new private industrial and 
nonresidential commercial development.  In the levy year 
following the levy year in which the special levy made pursuant 
to this clause is discontinued, one-half of the amount of that 
special levy made in the preceding year shall be added to the 
permanent levy base of the governmental subdivision; 
    (n) recover a loss or refunds in tax receipts incurred in 
nonspecial levy funds resulting from abatements or court action 
in the previous year pursuant to section 275.48; 
    (o) pay amounts required by law to be paid to pay the 
interest on and to reduce the unfunded accrued liability of 
public pension funds in accordance with the actuarial standards 
and guidelines specified in sections 356.215 and 356.216 reduced 
by 106 percent of the amount levied for that purpose in 1976, 
payable in 1977.  For the purpose of this special levy, the 
estimated receipts expected from the state of Minnesota pursuant 
to sections 69.011 to 69.031 or any other state aid expressly 
intended for the support of public pension funds shall be 
considered as a deduction in determining the required levy for 
the normal costs of the public pension funds.  No amount of 
these aids shall be considered as a deduction in determining the 
governmental subdivision's required levy for the reduction of 
the unfunded accrued liability of public pension funds; 
    (p) the amounts allowed under section 174.27 to establish 
and administer a commuter van program; 
    (q) pay the costs of financial assistance to local 
governmental units and certain administrative, engineering, and 
legal expenses pursuant to Laws 1979, chapter 253, section 3; 
    (r) compensate for revenue lost as a result of abatements 
or court action pursuant to section 270.07, 270.17 or 278.01 due 
to a reassessment ordered by the commissioner of revenue 
pursuant to section 270.16;  
    (s) pay the total operating cost of a county jail as 
authorized in section 641.01.  If the county government utilizes 
this special levy, then any amount levied by the county 
government in the previous year for operating its county jail 
and included in its previous year's levy limitation computed 
pursuant to section 275.51 shall be deducted from the current 
levy limitation; 
    (t) pay the costs of implementing section 18.023, including 
sanitation and reforestation; 
    (u) pay the estimated cost for the following calendar year 
of the county's share of funding the Minnesota cooperative soil 
survey; and 
    (v) pay the costs of meeting the planning requirements of 
section 115A.46; the requirements of section 115A.917; the 
planning requirements of the metropolitan plan adopted under 
section 473.149 and county master plans adopted under section 
473.803; waste reduction and source separation programs and 
facilities; response actions that are financed in part by 
service charges under section 400.08 or 115A.15, subdivision 6; 
closure and postclosure care of a solid waste facility closed by 
order of the pollution control agency or by expiration of an 
agency permit before January 1, 1989; and current operating and 
maintenance costs of a publicly-owned solid waste processing 
facility financed with general obligation bonds issued after a 
referendum before March 25, 1986. 
    Sec. 3.  Minnesota Statutes 1986, section 429.061, 
subdivision 2, is amended to read:  
    Subd. 2.  [ADOPTION; INTEREST.] At such meeting or at any 
adjournment thereof the council shall hear and pass upon all 
objections to the proposed assessment, whether presented orally 
or in writing.  The council may amend the proposed assessment as 
to any parcel and by resolution adopt the same as the special 
assessment against the lands named in the assessment roll.  
Notice of any adjournment of the hearing shall be adequate if 
the minutes of the meeting so adjourned show the time and place 
when and where the hearing is to be continued. 
    The council may consider any objection to the amount of a 
proposed assessment as to a specific parcel of land at an 
adjourned hearing upon further notice to the affected property 
owner as it deems advisable.  At the adjourned hearing the 
council or a committee of it may hear further written or oral 
testimony on behalf of the objecting property owner and may 
consider further written or oral testimony from appropriate city 
officials and other witnesses as to the amount of the 
assessment.  The council or committee shall prepare a record of 
the proceedings at the adjourned hearing and written findings as 
to the amount of the assessment.  The amount of the assessment 
as finally determined by the council shall become a part of the 
adopted assessment roll.  No appeal may be taken as to the 
amount of any assessment adopted under this section unless 
written objection signed by the affected property owner is filed 
with the municipal clerk prior to the assessment hearing or 
presented to the presiding officer at the hearing.  All 
objections to the assessments not received at the assessment 
hearing in the manner prescribed by this subdivision are waived, 
unless the failure to object at the assessment hearing is due to 
a reasonable cause.  
    If the adopted assessment differs from the proposed 
assessment as to any particular lot, piece, or parcel of land, 
the clerk must mail to the owner a notice stating the amount of 
the adopted assessment.  Owners must also be notified by mail of 
any changes adopted by the council in interest rates or 
prepayment requirements from those contained in the notice of 
the proposed assessment.  
    The assessment, with accruing interest, shall be a lien 
upon all private and public property included therein, from the 
date of the resolution adopting the assessment, concurrent with 
general taxes; but the lien shall not be enforceable against 
public property as long as it is publicly owned, and during such 
period the assessment shall be recoverable from the owner of 
such property only in the manner and to the extent provided in 
section 435.19.  Except as provided below Unless otherwise 
provided in the resolution, all assessments shall be payable in 
equal annual installments extending over such period, not 
exceeding 30 years, as the resolution determines, payable on the 
first Monday in January in each year, but the number of 
installments need not be uniform for all assessments included in 
a single assessment roll if a uniform criterion for determining 
the number of installments is provided by the resolution.  The 
first installment of each assessment shall be included in the 
first tax rolls completed after its adoption and shall be 
payable in the same year as the taxes contained therein; except 
that the payment of the first installment of any assessment 
levied upon unimproved property may be deferred until a 
designated future year, or until the platting of the property or 
the construction of improvements thereon, upon such terms and 
conditions and based upon such standards and criteria as may be 
provided by resolution of the council.  If special assessments 
against the property have been deferred pursuant to this 
subdivision, the governmental unit shall file with the county 
recorder in the county in which the property is located a 
certificate containing the legal description of the affected 
property and of the amount deferred.  In any event, every 
assessment the payment of which is so deferred, when it becomes 
payable, shall be divided into a number of installments such 
that the last installment thereof will be payable not more than 
30 years after the levy of the assessment.  All assessments 
shall bear interest at such rate as the resolution determines, 
not exceeding eight percent per annum, except that the rate may 
in any event equal the average annual interest rate on bonds 
issued to finance the improvement for which the assessments are 
levied.  To the first installment of each assessment shall be 
added interest on the entire assessment from a date specified in 
the resolution levying the assessment, not earlier than the date 
of the resolution, until December 31 of the year in which the 
first installment is payable, and to each subsequent installment 
shall be added interest for one year on all unpaid installments; 
or alternatively, any assessment may be made payable in equal 
annual installments including principal and interest, each in 
the amount annually required to pay the principal over such 
period with interest at such rate as the resolution determines, 
not exceeding the maximum period and rate specified above.  In 
the latter event no prepayment shall be accepted under 
subdivision 3 without payment of all installments due to and 
including December 31 of the year of prepayment, together with 
the original principal amount reduced only by the amounts of 
principal included in such installments, computed on an annual 
amortization basis.  When payment of an assessment is deferred, 
as authorized in this subdivision, interest thereon for the 
period of deferment may be made payable annually at the same 
times as the principal installments of the assessment would have 
been payable if not deferred; or interest for this period may be 
added to the principal amount of the assessment when it becomes 
payable; or, if so provided in the resolution levying the 
assessment, interest thereon to December 31 of the year before 
the first installment is payable may be forgiven. 
    Sec. 4.  Minnesota Statutes 1986, section 429.091, 
subdivision 2, is amended to read:  
    Subd. 2.  [TYPES OF OBLIGATIONS PERMITTED.] Except for 
bonds issued for a pedestrian skyway system, The council may by 
resolution adopted prior to the sale of obligations pledge the 
full faith, credit, and taxing power of the municipality for the 
payment of the principal and interest.  Such obligations shall 
be called improvement bonds and the council shall pay the 
principal and interest out of any fund of the municipality when 
the amount credited to the specified fund is insufficient for 
the purpose and shall each year levy a sufficient amount to take 
care of accumulated or anticipated deficiencies, which levy 
shall not be subject to any statutory or charter tax limitation. 
Obligations for the payment of which the full faith and credit 
of the municipality is not pledged shall be called improvement 
warrants or, in the case of bonds for fire protection or 
pedestrian skyway systems, revenue bonds and shall contain a 
promise to pay solely out of the proper special fund or funds 
pledged to their payment.  It shall be the duty of the municipal 
treasurer to pay maturing principal and interest on warrants or 
revenue bonds out of funds on hand in the proper funds and not 
otherwise. 
    Sec. 5.  Minnesota Statutes 1986, section 429.091, is 
amended by adding a subdivision to read: 
    Subd. 7a.  [REVOLVING FUND BONDS.] The council may by 
resolution establish a revolving fund for the payment of the 
costs of any improvement or any waterworks systems, sewer 
systems, or storm sewer systems described in section 444.075 and 
for the payment of any obligations issued to pay the costs 
thereof or to refund obligations issued for those purposes.  The 
council may create within the revolving fund a separate 
construction account into which the municipality may deposit the 
proceeds of any obligations payable from the fund, the proceeds 
of any special assessments collected with respect to any 
improvement, any net revenues of a waterworks, sewer system, or 
storm sewer system described in section 444.075 or any other 
available funds of the municipality appropriated to it.  Amounts 
on deposit in the construction account may be used to pay the 
costs of any improvement or any waterworks, sewer system, or 
storm sewer system described in section 444.075.  No funds may 
be expended for an improvement unless at least 20 percent of the 
costs of each such improvement is to be assessed against 
benefited property.  No funds may be expended for a waterworks, 
sewer system, or storm sewer system, other than a sewer system 
described in section 115.46, unless the council estimates that 
the costs will be recovered from the net revenues of the system 
or any combined waterworks, sewer systems, or storm sewer 
systems operated by the municipality.  The council may also 
create a separate debt service account within the revolving fund 
for the payment of principal of and interest on any obligations 
payable therefrom.  Notwithstanding subdivision 4, the council 
is not required to pledge any particular assessments or other 
revenues to the payment of the obligations.  Collections of 
special assessments or net revenues may be deposited in either 
the construction account or the debt service account as the 
council or an officer designated by the council may determine, 
having due regard for anticipated collections of special 
assessments and net revenues from improvements or waterworks, 
sewer systems, or storm sewer systems financed in whole or in 
part from the construction account, and taxes levied for the 
payment of the obligations.  The council may issue obligations 
that are payable primarily from the debt service account for the 
purpose of providing funds to defray in whole or in part any 
expenses incurred or estimated to be incurred in making the 
improvement or improvements or in constructing the waterworks, 
sewer system, or storm sewer system, including every item of 
cost of the kinds authorized by section 475.65, or to refund 
obligations previously issued under this section or section 
115.46 or 444.075.  The obligations may be general obligations 
to which the full faith and credit of the municipality are 
pledged.  If the special assessments to be levied and net 
revenues estimated to be available for their payment are 
estimated to be at least 20 percent of the principal amount of 
the obligations, the obligations may be issued without an 
election and shall not be included in determining the net 
indebtedness of the municipality under the provisions of any law 
limiting net indebtedness.  
    Sec. 6.  Minnesota Statutes 1986, section 462.461, 
subdivision 4, is amended to read:  
    Subd. 4.  An authority need not require either competitive 
bidding or bonds in the case of a contract for the acquisition 
of a low rent housing project for which financial assistance is 
provided by the federal government or any agency or 
instrumentality thereof, and which does not require any direct 
loan or grant of money from the municipality as a condition of 
such federal financial assistance, and where such contract 
provides for the construction of such a project upon land not 
owned by the authority at the time of such contract, or owned by 
the authority for redevelopment purposes, and provides for the 
conveyance or lease to the authority of such project or 
improvements upon completion of construction.  An authority need 
not require competitive bidding with respect to a structured 
parking facility constructed in conjunction with, and directly 
above or below, a development and financed with the proceeds of 
tax increment or parking ramp revenue bonds. 
    Sec. 7.  Minnesota Statutes 1986, section 462.555, is 
amended to read:  
    462.555 [MANNER OF BOND ISSUANCE; SALE.] 
    Bonds of an authority shall be authorized by its resolution 
and may be issued in one or more series and shall bear such date 
or dates, mature at such time or times, bear interest at such 
rate or rates, not exceeding seven percent per annum, be in such 
denomination or denominations, be in such form either coupon or 
registered, carry such conversion or registration privileges, 
have such rank or priority, be executed in such manner, be 
payable in such medium of payment at such place or places, and 
be subject to such terms of redemption (with or without premium) 
as the resolution, its trust indenture or mortgage may provide.  
The bonds may be sold at public or private sale at not less than 
par.  Any provision of any law to the contrary notwithstanding, 
any bonds issued pursuant to sections 462.415 to 462.705 shall 
be fully negotiable.  In any suit, action, or proceedings 
involving the validity or enforceability of any bonds of an 
authority or the security therefor, any bond reciting in 
substance that it has been issued by the authority to aid in 
financing a project, as herein defined, shall be conclusively 
deemed to have been issued for that purpose, and the project 
shall be conclusively deemed to have been planned, located, and 
carried out in accordance with the purposes and provisions of 
sections 462.415 to 462.705.  Notwithstanding any other 
provision of this section, an authority is authorized to execute 
a note secured by a first mortgage at a rate of interest in 
excess of seven percent per annum with the Minnesota housing 
finance agency, pursuant to chapter 462A, to finance a housing 
project which is subsidized in whole or in part with money 
provided by the federal government. 
    In cities of the first class, the governing body of the 
city must approve all notes executed with the Minnesota housing 
finance agency pursuant to this section, when the interest rate 
on the note exceeds seven percent. 
     Sec. 8.  Minnesota Statutes 1986, section 462C.05, 
subdivision 1, is amended to read: 
    Subdivision 1.  A city may also include in the housing 
plan, a program or programs to administer, and make or purchase 
a loan or loans to finance one or more multifamily housing 
developments within its boundaries, of the kind described in 
subdivision 2, 3, 4 or 7, and upon the conditions set forth in 
this section.  A loan may be made or purchased for 
    (a) the acquisition and preparation of a site and the 
construction of a new development, 
    (b) the rehabilitation of an existing building and site and 
the discharge of any lien or other interest in the building and 
site, 
    (c) for the acquisition of an existing building and site 
and the rehabilitation thereof, or 
    (d) for the acquisition of an existing building and site 
for purposes of conversion to limited equity cooperative 
ownership by low or moderate income families, provided that: or 
    (e) for the acquisition, or acquisition and improvement, of 
an existing building and site by a nonprofit corporation which 
will operate the building as a multifamily housing development 
for rental primarily to elderly or handicapped persons. 
    (a) With respect to loans made or purchased pursuant to 
clause (b) or (c), the cost of rehabilitation of an existing 
building is must be estimated to equal at least $1,000 per 
dwelling unit or 20 percent of the appraised value of the 
original building and site whichever is less., except that with 
respect to rehabilitation which consists primarily of 
improvement of the property with facilities or improvements to 
conserve energy or convert or retrofit for use of alternative 
energy sources, rehabilitation loans may be made without regard 
to cost; (b) and at least a substantial portion of such 
rehabilitation cost is must be estimated to be incurred for 
compliance with building codes or conservation of energy;. 
    (c) Each development upon completion shall comply with all 
applicable code requirements; (d).  A loan or loans may be made 
or purchased for either the construction or the long term 
financing of a development, or both, including the financing of 
the acquisition of dwelling units and interests in common 
facilities provided therein, by persons to whom such units and 
facilities may be sold as contemplated in chapter 515 or 515A or 
any supplemental or amendatory law thereof or as contemplated 
for a development consisting of cooperative housing; and.  
    (e) Substantially all of the proceeds of each loan shall be 
used to pay the cost of a multifamily housing development, 
including property functionally related and subordinate to it; 
but nothing herein prevents the construction or acquisition of 
the development over, under, or adjacent to, and in conjunction 
with facilities to be used for purposes other than housing. 
    Sec. 9.  Minnesota Statutes 1986, section 466.06, is 
amended to read:  
    466.06 [LIABILITY INSURANCE.] 
    The governing body of any municipality may procure 
insurance against liability of the municipality and its 
officers, employees, and agents for damages resulting from its 
torts and those of its officers, employees, and agents, 
including torts specified in section 466.03 for which the 
municipality is immune from liability.  The insurance may 
provide protection in excess of the limit of liability imposed 
by section 466.04.  If the municipality has the authority to 
levy taxes, the premium costs for such insurance may be levied 
in excess of any per capita or millage tax limitation imposed by 
statute or charter.  However, a school district may not levy 
pursuant to this section for premium costs for motor vehicle 
insurance protecting against injuries or damages arising out of 
the operation of district owned, operated, leased, or controlled 
vehicles for the transportation of pupils for purposes for which 
state aid is authorized under section 124.223, or for purposes 
for which the district is authorized to levy under section 
275.125, subdivision 5d.  Any independent board or commission in 
the municipality having authority to disburse funds for a 
particular municipal function without approval of the governing 
body may similarly procure liability insurance with respect to 
the field of its operation.  The procurement of such insurance 
constitutes a waiver of the defense limits of 
governmental immunity liability under section 466.04 to the 
extent of the liability stated in the policy but has no effect 
on the liability of the municipality beyond the coverage so 
provided.  Procurement of commercial insurance, participation in 
a self-insurance pool pursuant to section 471.981, or provision 
for an individual self-insurance plan with or without a reserve 
fund or reinsurance shall not constitute a waiver of any of the 
immunities conferred under section 466.03.  
     Sec. 10.  [471.562] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] In sections 10 to 12, the 
terms defined in this section have the meanings given in this 
section.  
     Subd. 2.  [ECONOMIC DEVELOPMENT LOAN REPAYMENT.] "Economic 
development loan repayment" means any payment received or to be 
received by a municipality with respect to a loan made by the 
municipality for economic development purposes from the proceeds 
of a federal or state grant, from the proceeds of bonds issued 
pursuant to section 12 or from municipal resources appropriated 
for that purpose.  
     Subd. 3.  [MUNICIPALITY.] "Municipality" means any city, 
however organized, a housing and redevelopment authority created 
pursuant to, or exercising the powers contained in, chapter 462, 
or a port authority created pursuant to, or exercising the 
powers contained in, chapter 458.  
     Subd. 4.  [PROJECT.] "Project" means an industrial 
development district as defined in section 458.191, subdivision 
1; a project as defined in section 462.421, subdivision 14; a 
development district as defined in chapter 472A or any special 
law; or a project as defined in section 474.02, subdivisions 1, 
1a, or 1b.  
    Sec. 11.  [471.563] [USES OF LOAN REPAYMENTS.] 
    Subject to any restrictions imposed on their use by any 
related federal or state grant, economic development loan 
repayments, and the proceeds of any bonds issued pursuant to 
section 12 may be applied by a municipality to any of the 
following purposes:  
     (1) to finance or otherwise pay the costs of a project; 
     (2) to pay principal and interest on any bonds issued 
pursuant to section 273.77, with respect to a project, 
certification of which is requested before August 1, 1987, or 
pursuant to chapter 474, chapter 458, chapter 462, or section 
12, to purchase insurance or other credit enhancement for any of 
those obligations or to create or maintain reserves therefor; or 
     (3) for any other purpose authorized by law.  
     If economic development loan repayments are used to pay 
principal or interest on any such obligations, the municipality 
may be reimbursed for the amount so applied with interest not 
exceeding the rate of interest on the obligations from 
subsequent collections of taxes or other revenues that had been 
designated as the primary source of payment of the obligations.  
    Sec. 12.  [471.564] [BONDS.] 
     A municipality may by resolution authorize, issue, and sell 
revenue bonds payable from all or any portion of a 
municipality's economic development loan repayments to finance 
any expenditure the municipality is authorized to make under 
section 11.  The bonds may be issued in one or more series and 
sold at public or private sale and at the prices the 
municipality may determine.  The bonds may be secured, bear 
interest at the rate or rates, have the rank or priority, be 
executed in the manner, mature and be subject to the defaults, 
redemptions, repurchases, tender options, or other terms that 
the municipality determines.  The municipality may enter into 
and perform all contracts deemed necessary or desirable by it to 
issue the bonds and apply the proceeds of the bonds, including 
an indenture of trust with a trustee within or without the 
state, a loan agreement, lease or installment sale contract in 
connection with the project to be financed, or a guaranty of the 
bonds or related instrument.  The bonds may be further secured 
by any pledge or mortgage securing the economic development loan 
repayments pledged to the bonds.  The bonds, and the bonds shall 
so state, shall not be payable from nor charged upon any funds 
other than the economic development loan repayments and property 
pledged or mortgaged to the payment thereof.  The municipality 
shall not have the power to obligate itself to pay the bonds 
from funds other than the economic development loan repayments 
and properties pledged and mortgaged.  No owner or owners of the 
bonds shall ever have the right to compel any exercise of the 
taxing powers of the municipality to pay the principal of or 
interest on any such bonds or to enforce payment thereof against 
any other property of the municipality.  Bonds may be issued 
under this section and their proceeds loaned to a 
nongovernmental person or entity, only if the municipality 
estimates that the economic development loan repayments pledged 
to the payment of principal and interest, exclusive of economic 
development loan repayments to be made by the person or entity, 
if paid to the municipality in accordance with their terms, are 
sufficient to pay principal and interest on the bonds when due.  
    Sec. 13.  Minnesota Statutes 1986, section 471.981, 
subdivision 4, is amended to read:  
    Subd. 4.  A political subdivision or joint self-insurance 
pool of counties established by the Minnesota association of 
counties insurance trust may participate as create or become a 
member in of a mutual insurance company organized under chapter 
66A, and may exchange reciprocal or interinsurance contracts as 
authorized by chapter 71A.  For purposes of this subdivision and 
subdivisions 4a, 4b, and 4c, "county" includes a joint powers 
entity created by counties for a special purpose.  Membership in 
a mutual insurance company created by a joint self-insurance 
pool of counties shall be limited to joint self-insurance pools 
of counties.  Notwithstanding section 66A.02, chapter 317 shall 
apply to a mutual insurance company created pursuant to this 
subdivision.  Notwithstanding section 66A.08, for a mutual 
insurance company created under this subdivision, there shall be 
not less than 32 bona fide applications for policies of 
insurance of each kind sought to be written, signed by at least 
32 members, covering at least 32 separate risks, each risk, 
within the maximum net single risk described in this subdivision 
and one year's premiums thereon paid in cash, and admitted 
assets of not less than $100,000, which admitted assets shall 
not be less than five times the maximum net single risk, as 
defined in this subdivision.  The company shall have on deposit 
with the commissioner of insurance, as security for all of its 
policyholders, stock or bonds of this state or of the United 
States or bonds of any of the political subdivisions of this 
state, or personal obligations secured by first mortgages on 
real estate within this state worth, exclusive of buildings, the 
amount of the lien, and bearing interest of not less than three 
percent per annum, to an amount the actual market value of 
which, exclusive of interest, shall never be less than 
$100,000.  No such company shall expose itself to any loss on 
any one risk or hazard, except as provided in this subdivision, 
in an amount exceeding ten percent of its net assets, actual and 
contingent.  In this subdivision, "contingent assets" means the 
aggregate amount of the contingent liability of its members for 
the payment of loss and expenses not provided for by its cash 
funds.  "Contingent liability," in this subdivision, means an 
amount not to exceed one annual premium as stated in the 
policy.  No portion of any risk or hazard which has been 
reinsured, as authorized by the laws of this state, shall be 
included in determining the limitation of risk prescribed by 
this subdivision.  
    Sec. 14.  Minnesota Statutes 1986, section 471.981, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [INSURANCE INSTALLMENT PURCHASE AGREEMENT.] A 
county may, by resolution of its governing body, and without 
advertisement for bids, enter into an insurance installment 
purchase agreement with a self-insurance pool created under 
subdivision 3.  Such a self-insurance pool may purchase 
insurance on behalf of the participating counties and may use 
insurance installment purchase agreements or other obligations 
of the participating counties to provide the participating 
counties with coverage against all or any part of the risks 
enumerated in subdivision 1 and against any risk which the 
county is authorized to insure under section 176.181, 
subdivision 1.  The self-insurance pool may fund insurance 
claims and reserves and finance insurance installment purchase 
agreements for the self-insurance pool or a mutual insurance 
company established pursuant to subdivision 4 by issuing revenue 
bonds, bonds which are general obligations of the self-insurance 
pool or mutual insurance company, or other obligations secured 
by payments made or to be made by the participating counties.  
An insurance installment purchase agreement of a participating 
county may require that the county make payments sufficient to 
produce revenue for the prompt payment of the bonds or other 
obligations, including all interest and premiums, if any, 
accruing on them.  The insurance installment purchase agreements 
may provide for additional contributions or premiums if it is 
actuarially determined that the assets of the insurance 
installment purchase agreements available to pay claims are 
insufficient.  The insurance installment purchase agreements may 
be multiyear contracts and shall not be subject to any 
referendum, public bidding, or net debt limitation requirement 
of chapter 475.  
    Sec. 15.  Minnesota Statutes 1986, section 471.981, is 
amended by adding a subdivision to read: 
    Subd. 4b.  [BOND ISSUE FOR INSURANCE PROCUREMENT.] A 
self-insurance pool of counties may issue bonds which are 
general obligations of the self-insurance pool or revenue bonds 
secured by insurance installment purchase agreements of the 
participating counties issued pursuant to subdivision 4a.  The 
self-insurance pool, with the approval of the governing body of 
each participating county, shall fix the total amount needed for 
the procurement of insurance and shall apportion to each 
participating county the county's share of that amount and of 
the costs of operation, or of annual debt service or payments 
required to pay such amount with interest.  Any other law 
notwithstanding, bonds or other obligations issued under this 
subdivision may be sold at public or private sale upon the terms 
and conditions the issuer determines.  No election shall be 
required to authorize the issuance of the obligations, and the 
obligations shall not be subject to any limitation on net debt.  
Proceeds of obligations issued pursuant to this subdivision may 
be used to establish a debt service reserve for the obligations 
or to refund obligations previously issued pursuant to this 
subdivision.  Any debt service reserve fund established under 
this subdivision shall not be subject to investment guidelines 
set forth in chapters 118 and 475.  A self-insurance pool may 
designate a bank or trust company authorized to exercise trust 
powers in this state as trustee for the holders of obligations 
issued pursuant to this subdivision and may create funds and 
accounts necessary to secure payment of the obligations. 
     If required by the resolution authorizing the issuance of 
obligations pursuant to this subdivision, the governing body of 
each participating county shall annually levy a tax sufficient 
to repay the costs of retirement of any bonds or to make 
payments under insurance installment purchase agreements.  Taxes 
may be levied pursuant to this subdivision without limitation as 
to rate or amount.  
    Sec. 16.  Minnesota Statutes 1986, section 471.981, is 
amended by adding a subdivision to read: 
    Subd. 4c.  [INSURANCE INSTALLMENT PURCHASE; INTEREST RATE.] 
Participating counties may delegate to a self-insurance pool of 
counties the power to determine the interest rate on insurance 
installment purchase agreements provided that the rate is 
uniform and does not exceed the net effective rate on revenue 
bonds or other obligations sold by the pool by more than 
one-fourth of one percent. 
    Sec. 17.  Minnesota Statutes 1986, section 475.51, 
subdivision 3, is amended to read:  
    Subd. 3.  "Obligation" means any promise to pay a stated 
amount of money at a fixed future date or upon demand of the 
obligee, regardless of the source of funds to be used for its 
payment, made for the purpose of incurring debt, including the 
purchase of property through an installment purchase contract or 
any other deferred payment agreement, for which funds are not 
appropriated in the current year's budget. 
    Sec. 18.  Minnesota Statutes 1986, section 474.02, 
subdivision 2, is amended to read:  
    Subd. 2.  "Municipality" means any city and any town 
described in section 368.01 and any county where the project is 
located outside the boundaries of a city or a town described in 
section 368.01.  In all cases in which a project involves 
telephonic communications conducted by or to be conducted by a 
telephone company, or financial or other assistance to rail 
users as defined in section 222.48, subdivision 6, for the 
purpose of making capital investment loans for rail line 
rehabilitation, "municipality" also means any county.  In any 
case in which a city or town described in section 368.01 has 
consented to the issuance of bonds by a county on behalf of an 
organization described in section 501(c)(3) of the Internal 
Revenue Code of 1986, as amended through December 31, 1986, to 
finance a project within its boundaries or to refund bonds 
previously issued by such city or town, "municipality" means any 
county.  
    Sec. 19.  Minnesota Statutes 1986, section 474.03, 
subdivision 12, is amended to read:  
    Subd. 12.  [REFUNDING.] It may issue revenue bonds to 
refund, in whole or in part, bonds previously issued by the 
municipality or redevelopment agency under authority of sections 
474.01 to 474.13, and interest on them.  The municipality may 
issue revenue bonds to refund, in whole or in part, bonds 
previously issued by any other municipality or redevelopment 
agency on behalf of an organization described in section 
501(c)(3) of the Internal Revenue Code of 1986, as amended 
through December 31, 1986, under authority of sections 474.01 to 
474.13, and interest on them, but only with the consent of the 
original issuer of such bonds. 
    Sec. 20.  Minnesota Statutes 1986, section 475.54, 
subdivision 1, is amended to read:  
    Subdivision 1.  Except as provided in subdivision 3 or, 5a, 
or 5b, or as expressly authorized in another law, all 
obligations of each issue shall mature or be subject to 
mandatory sinking fund redemption in installments, the first not 
later than three years and the last not later than 30 years from 
the date of the issue. No amount of principal of the issue 
payable in any calendar year shall exceed five times the amount 
of the smallest amount payable in any preceding calendar year 
ending three years or more after the issue date.  
    Sec. 21.  Minnesota Statutes 1986, section 475.54, is 
amended by adding a subdivision to read: 
    Subd. 15.  For purposes of determining the amount of 
principal that may be payable in any calendar year under 
subdivision 1, any principal payment obligation secured by an 
investment, the face amount of which is equal to or greater than 
the amount of principal, may be disregarded if the investment 
matures or is callable by the holder thereof on or before the 
maturity date of the principal.  
    Sec. 22.  Minnesota Statutes 1986, section 475.54, is 
amended by adding a subdivision to read: 
    Subd. 16.  A municipality may enter into an agreement with 
a bank or dealer described in section 475.66, subdivision 1, for 
an exchange of interest rates pursuant to this subdivision.  A 
municipality with outstanding obligations bearing interest at a 
variable rate may agree to pay sums equal to interest at a fixed 
rate or at a different variable rate determined pursuant to a 
formula set out in the agreement on an amount not exceeding the 
outstanding principal amount of the obligations, in exchange for 
an agreement by the bank or dealer to pay sums equal to interest 
on a like amount at a variable rate determined pursuant to a 
formula set out in the agreement.  A municipality with 
outstanding obligations bearing interest at a fixed rate or 
rates may agree to pay sums equal to interest at a variable rate 
determined pursuant to a formula set out in the agreement on an 
amount not exceeding the outstanding principal amount of the 
obligations, in exchange for an agreement by the bank or dealer 
to pay sums equal to interest on a like amount at a fixed rate 
or rates set out in the agreement.  The agreement to pay the 
bank or dealer is not an obligation of the municipality as 
defined in section 475.51, subdivision 3.  For purposes of 
calculation of a debt service levy, determination of a rate of 
interest on a special assessment or other calculation based on 
the rate of interest on an obligation, a municipality which has 
entered into an interest rate swap agreement described in this 
subdivision may determine to treat the amount or rate of 
interest on the obligation as the net rate or amount of interest 
payable after giving effect to the swap agreement.  Subject to 
any applicable bonds covenants, any payments required to be made 
by the municipality under the swap agreement may be made from 
sums secured to pay debt service on the obligations with respect 
to which the swap agreement was made or from any other available 
source of the municipality. 
    Sec. 23.  Minnesota Statutes 1986, section 475.55, 
subdivision 1, is amended to read:  
    Subdivision 1.  [INTEREST; FORM.] (1) Interest on 
obligations shall not exceed the greatest of (a) the rate 
determined pursuant to subdivision 4 for the month in which the 
resolution authorizing the obligations was adopted, or (b) the 
rate determined pursuant to subdivision 4 for the month in which 
the obligations are sold, or (c) the rate of ten percent per 
annum.  All obligations shall be securities as provided in the 
Uniform Commercial Code, chapter 336, article 8, may be issued 
as certificated securities or as uncertificated securities, and 
if issued as certificated securities may be issued in bearer 
form or in registered form, as defined in section 336.8-102.  
The validity of an obligation shall not be impaired by the fact 
that one or more officers authorized to execute it by the 
governing body of the municipality shall have ceased to be in 
office before delivery to the purchaser or shall not have been 
in office on the formal issue date of the obligation.  Every 
obligation, as to certificated securities, or transaction 
statement, as to uncertificated securities, shall be signed 
manually by one officer of the municipality or by a person 
authorized to act on behalf of a bank or trust company, located 
in or outside of the state, which has been designated by the 
governing body of the municipality to act as authenticating 
agent.  Other signatures and the seal of the issuer may be 
printed, lithographed, stamped or engraved thereon and on any 
interest coupons to be attached thereto.  The seal need not be 
used.  A municipality may do all acts and things which are 
permitted or required of issuers of securities under the Uniform 
Commercial Code, chapter 336, article 8, and may designate a 
corporate registrar to perform on behalf of the municipality the 
duties of a registrar as set forth in those sections.  Any 
registrar shall be an incorporated bank or trust company, 
located in or outside of the state, authorized by the laws of 
the United States or of the state in which it is located to 
perform the duties.  If obligations are issued as uncertificated 
securities, and a law requires or permits the obligations to 
contain a statement or recital, whether on their face or 
otherwise, it shall be sufficient compliance with the law that 
the statement or recital is contained in the transaction 
statement or in an ordinance, resolution, or other instrument 
which is made a part of the obligation by reference in the 
transaction statement as provided in section 336.8-202.  
    (2) Notwithstanding paragraph (1), interest on obligations 
issued after April 1, 1986 and before July 1, 1987 is not 
subject to any limitation on rate or amount.  For purposes of 
this paragraph, obligations issued after April 1, 1986 and 
before July 1, 1987 include reissuing, reselling, remarketing, 
refunding, refinancing or tendering, whether pursuant to section 
475.54, subdivision 5a, or otherwise, of obligations after July 
1, 1987 if the original obligations were issued before July 1, 
1987 and after April 1, 1986. 
    Sec. 24.  Minnesota Statutes 1986, section 475.55, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [INTEREST.] Interest on obligations issued after 
April 1, 1986, is not subject to any limitation on rate or 
amount.  
    Sec. 25.  Minnesota Statutes 1986, section 475.55, 
subdivision 2, is amended to read: 
    Subd. 2.  [SUPERSESSION.] The provisions of this section 
shall supersede any maximum interest rate fixed by any other law 
or a city charter with respect to obligations of the state or 
any municipality or governmental or public subdivision, 
district, corporation, commission, board, council, or authority 
of whatsoever kind, including warrants or orders issued in 
evidence of allowed claims for property or services furnished to 
the issuer, but shall not limit the interest on any obligation 
issued pursuant to a law or charter authorizing the issuer to 
determine the rate or rates of interest. 
    Sec. 26.  Minnesota Statutes 1986, section 475.55, 
subdivision 3, is amended to read: 
    Subd. 3.  [SPECIAL ASSESSMENTS.] Notwithstanding any 
contrary provisions of law or charter, special assessments 
pledged to the payment of obligations may bear interest at the 
rate the governing body by resolution determines, not exceeding 
the greater of (a) the maximum interest rate per annum which the 
obligations may bear under the provisions of this section for 
the month in which the resolution authorizing the special 
assessment was adopted or (b) the maximum interest rate 
permitted to be charged against the assessments under the law or 
city charter pursuant to which the assessments were levied. 
    Sec. 27.  Minnesota Statutes 1986, section 475.55, 
subdivision 4, is amended to read: 
    Subd. 4.  [RATE DETERMINATION.] On or before the 20th day 
of each month, the commissioner of finance shall determine the 
most recently published yield for the Bond Buyer's Index of 20 
Municipals.  This rate plus one percent and rounded to the next 
highest percent per annum shall be the rate for the next 
succeeding month for the purpose set forth in subdivision 7.  
The commissioner of finance shall publish the maximum rate in 
the State Register each month.  
    Sec. 28.  Minnesota Statutes 1986, section 475.55, 
subdivision 6, is amended to read:  
    Subd. 6.  [REGISTRATION DATA PRIVATE.] All information 
contained in any register maintained by a municipality or by a 
corporate registrar with respect to the ownership of municipal 
obligations is nonpublic data as defined in section 13.02, 
subdivision 9, or private data on individuals as defined in 
section 13.02, subdivision 12.  The information is not public 
and is accessible only to the individual or entity that is the 
subject of it, except if disclosure:  
    (1) is necessary for the performance of the duties of the 
municipality or the registrar;  
    (2) is requested by an authorized representative of the 
state commissioner of revenue or attorney general or of the 
commissioner of internal revenue of the United States for the 
purpose of determining the applicability of a tax; or 
    (3) is required under section 13.03, subdivision 4; or 
    (4) is requested at any time by the corporate trust 
department of a bank or trust company acting as a tender agent 
pursuant to documents executed at the time of issuance of the 
obligations to purchase obligations described in section 475.54, 
subdivision 5a, or obligations to which a tender option has been 
attached in connection with the performance of such person's 
duties as tender agent, or purchaser of the obligations. 
    Sec. 29.  Minnesota Statutes 1986, section 475.55, 
subdivision 7, is amended to read: 
    Subd. 7.  [ASSUMED MAXIMUM INTEREST RATE FOR OTHER LAWS.] 
If an obligation is not subject to a maximum interest rate 
pursuant to subdivision 1, paragraph (1) and another law 
provides for a calculation of a debt service levy, determination 
of a rate of interest on a special assessment, or other factor 
based on an assumption that a maximum interest rate applies to 
the obligation, the governing body of the municipality may 
estimate or determine an assumed maximum interest rate for 
purposes of that law.  If the municipality does not determine, 
specify or estimate the maximum interest rate for such purpose, 
then the maximum interest rate for purposes of the other law is 
the maximum interest rate that would apply if subdivision 1, 
paragraph (2) were not in effect determined by the commissioner 
of finance under subdivision 4.  This subdivision does not limit 
the interest rate that may be paid on obligations under 
subdivision 1 1a. 
    Sec. 30.  Minnesota Statutes 1986, 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.  Such 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 highest aggregate rate of interest contracted to be so 
paid for any period shall not exceed the maximum rate authorized 
by law.  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 the average 
annual rate of such interest to 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 obligation of an issue of obligations otherwise 
subject to section 475.55, subdivision 1, 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 the maximum rate of 
interest for the obligations determined in accordance with 
section 475.55, subdivision 1.  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 maximum rate permitted for the obligations 
under section 475.55, subdivision 1, or the lesser maximum rate 
of interest payable on the obligations in accordance with their 
terms, 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 obligations issued by a 
statutory or home rule charter city with a population of less 
than 10,000 7,500, as defined in section 477A.011, subdivision 
3, or to 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. 31.  Minnesota Statutes 1986, section 475.60, 
subdivision 2, is amended to read:  
    Subd. 2.  [REQUIREMENTS WAIVED.] The requirements as to 
public sale shall not apply to: 
    (1) obligations issued under the provisions of a home rule 
charter or of a law specifically authorizing a different method 
of sale, or authorizing them to be issued in such manner or on 
such terms and conditions as the governing body may determine; 
    (2) obligations sold by an issuer in an amount not 
exceeding the total sum of $300,000 $1,200,000 in any 
three-month 12-month period; 
    (3) obligations issued by a governing body other than a 
school board in anticipation of the collection of taxes or other 
revenues appropriated for expenditure in a single year, if sold 
in accordance with the most favorable of two or more proposals 
solicited privately;  
    (4) obligations sold to any board, department, or agency of 
the United States of America or of the state of Minnesota, in 
accordance with rules or regulations promulgated by such board, 
department, or agency; 
    (5) obligations issued to fund pension and retirement fund 
liabilities under section 475.52, subdivision 6, obligations 
issued with tender options under section 475.54, subdivision 5a, 
crossover refunding obligations referred to in section 475.67, 
subdivision 13, and any issue of obligations comprised in whole 
or in part of obligations bearing interest at a rate or rates 
which vary periodically referred to in section 475.56; and 
    (b) (6) obligations qualifying under section 475.55, 
subdivision 1, paragraph (2) to be issued for a purpose, in a 
manner, and upon terms and conditions authorized by law, if the 
governing body of the municipality, on the advice of bond 
counsel or special tax counsel, determines that interest on the 
obligations will be includable in cannot be represented to be 
excluded from gross income for purposes of federal income 
taxation. 
    Sec. 32.  Minnesota Statutes 1986, section 475.66, 
subdivision 3, is amended to read:  
    Subd. 3.  Subject to the provisions of any resolutions or 
other instruments securing obligations payable from a debt 
service fund, any balance in the fund may be invested 
    (a) in governmental bonds, notes, bills, mortgages, and 
other securities, which are direct obligations or are guaranteed 
or insured issues of the United States, its agencies, its 
instrumentalities, or organizations created by an act of 
Congress, 
    (b) in shares of an investment company (1) registered under 
the Federal Investment Company Act of 1940, whose shares are 
registered under the Federal Securities Act of 1933, and (2) 
whose only investments are in securities described in the 
preceding clause and repurchase agreements fully collateralized 
by those securities, if the repurchase agreements are entered 
into only with those primary reporting dealers that report to 
the Federal Reserve Bank of New York and with the 100 largest 
United States commercial banks, 
    (c) in any security which is (1) a general obligation of 
the state of Minnesota or any of its municipalities or (2) a 
general obligation of the Minnesota housing finance agency, 
provided that investments under this clause (2) may be made only 
(i) prior to August 1, 1990, and (ii) for a period of no more 
than three years, 
    (d) in bankers acceptances of United States banks eligible 
for purchase by the Federal Reserve System, or 
    (e) in commercial paper issued by United States 
corporations or their Canadian subsidiaries that is of the 
highest quality and matures in 270 days or less. 
    The fund may also be used to purchase any obligation, 
whether general or special, of an issue which is payable from 
the fund, at such price, which may include a premium, as shall 
be agreed to by the holder, or may be used to redeem any 
obligation of such an issue prior to maturity in accordance with 
its terms.  The securities representing any such investment may 
be sold or hypothecated by the municipality at any time, but the 
money so received remains a part of the fund until used for the 
purpose for which the fund was created. 
    Sec. 33.  Minnesota Statutes 1986, section 475.67, 
subdivision 3, is amended to read:  
    Subd. 3.  Any or all obligations and interest thereon may 
be refunded if and when and to the extent that for any reason 
the taxes or special assessments, revenues, or other funds 
appropriated for their payment are not sufficient to pay all 
principal and interest due or about to become due thereon. All 
obligations of one or more issues regardless of their source of 
payment and interest thereon may be refunded before their due 
dates, if consistent with covenants made with the holders 
thereof, when determined by the governing body to be necessary 
or desirable for the reduction of debt service cost to the 
municipality or for the extension or adjustment of the 
maturities in relation to the resources available for their 
payment, or in the case of obligations payable solely from a 
special fund, for the more advantageous sale of additional 
obligations payable from the same fund or to relieve the 
municipality of restrictions imposed by covenants made with the 
holders of the obligations to be refunded; provided the amount 
of interest which may be refunded from the proceeds of the 
refunding obligations shall not exceed the amount of proceeds 
estimated to be required in excess of the principal amount of 
refunded obligations to retire the refunded obligations in 
accordance with subdivision 6, but in no event shall the 
aggregate principal amount of the refunding obligations exceed 
by more than ten percent the aggregate principal amount of the 
obligations to be refunded.  No general obligations, for which 
the full faith and credit of the issuer is pledged, shall be 
issued to refund special obligations previously issued for any 
purpose, payable solely from a special fund, unless such 
issuance is authorized by such election, hearing, petition, 
resolution, or other procedure as would have been required as a 
condition precedent to the original issuance of general 
obligations for the same purpose. 
    Sec. 34.  Minnesota Statutes 1986, section 475.67, 
subdivision 12, is amended to read:  
    Subd. 12.  In the refunding of general obligations, for 
which the full faith and credit of the issuing municipality has 
been pledged, the following additional conditions shall be 
observed:  each such obligation, if repayable, shall be called 
for redemption prior to its maturity in accordance with its 
terms no later than either (i) the earliest date on which it may 
be redeemed without payment of any premium, or (ii) if the 
obligation is only prepayable with payment of a premium, on the 
earliest date on which it may be redeemed with payment of the 
least premium required by its terms.  No refunding obligations 
shall be issued and sold more than six months before the 
refunded obligations mature or are called for redemption in 
accordance with their terms, unless either (i) as a result of 
the refunding the average life of the maturities is extended at 
least five three years or (ii) as of the nominal date of the 
refunding obligations the present value of the dollar amount of 
the debt service or interest only on the refunding obligations, 
computed to their stated maturity dates, after deducting any 
premium or adding any discount, is lower by at least five three 
percent than the present value of the dollar amount of debt 
service or interest only, as the case may be, on all general 
obligations refunded, exclusive of any premium or discount, 
computed to their stated maturity dates; provided that in 
computing the dollar amount of debt service or interest only on 
the refunding obligations, any expenses of the refunding payable 
from a source other than the proceeds of the refunding 
obligations or the interest derived from the investment thereof 
shall be added to the dollar amount of debt service or interest 
only on the refunding obligations.  For purposes of this 
subdivision, the present value of the dollar amount of debt 
service means the dollar amount of debt service to be paid, 
discounted to the nominal date of the refunding obligations at a 
rate equal to the yield on the refunding obligations.  Expenses 
of the refunding include the amount, if any, in excess of the 
proceeds of the refunding obligations or the principal amount of 
obligations to be refunded, whichever is the greater, which is 
required to be deposited in escrow to provide cash and purchase 
securities sufficient to retire the refunded obligations and 
unaccrued interest thereon in accordance with subdivision 6; 
charges of the escrow agent and of the paying agent for the 
refunding obligations; and expenses of printing and publications 
and of fiscal, legal, or other professional service necessarily 
incurred in the issuance of the refunding obligations. 
    Sec. 35.  [475.78] [PERFECTION OF PLEDGE.] 
    Neither filing nor possession is required to perfect the 
security interest created by any pledge or appropriation of 
revenues or funds of the municipality, including any of its 
investments, to the payment of bonds issued by the municipality. 
    Sec. 36.  [475.79] [POWERS AVAILABLE TO OTHER POLITICAL 
SUBDIVISIONS.] 
    Any powers granted to a municipality under chapter 475, 
other than the power to issue general obligation bonds and levy 
taxes, may be exercised by any other public corporation, 
authority, governmental unit, or other political subdivision of 
the state of Minnesota that is not a municipality.  This grant 
of authority does not limit the powers granted to an entity 
under any other law. 
    Sec. 37.  [REPEALER.] 
    Minnesota Statutes 1986, sections 475.55, subdivision 5; 
and 475.67, subdivision 11; are repealed. 
    Sec. 38.  [EFFECTIVE DATE.] 
    Sections 8, 18, 19, 23 to 29, 31, 35, and 37 are effective 
the day following final enactment. 
    Approved June 1, 1987