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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1989 

                          CHAPTER 1-H.F.No. 40 
           An act relating to the financing of local government; 
          providing for computation of debt limits as a 
          percentage of market value; adjusting other debt 
          limits for the conversion to tax capacities; adjusting 
          disparity reduction aid in certain cases; making 
          technical corrections in 1988 tax increment financing 
          law and providing an exception to one of its 
          provisions; amending Minnesota Statutes 1988, sections 
          124.43, subdivision 1; 275.08, by adding a 
          subdivision; 366.095, subdivision 1; 410.32; 412.301; 
          469.177, subdivision 1a; 475.53, subdivisions 1, 5, 
          and by adding a subdivision; 641.24; Laws 1988, 
          chapter 719, article 12, section 30. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1988, section 124.43, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REVIEW BY COMMISSIONER.] (a) The 
commissioner may, after review and a favorable recommendation by 
the state board of education, recommend to the legislature 
capital loans to school districts.  Proceeds of the loans shall 
be used only for sites for school buildings and for acquiring, 
bettering, furnishing, or equipping school buildings under 
contracts to be entered into within 12 months from and after the 
date on which each loan is granted.  
     (b) Any school board that intends to submit an application 
for a capital loan shall submit a proposal to the commissioner 
for review and comment pursuant to section 121.15 by September 1 
of any year, and the commissioner shall prepare a review and 
comment on the proposed facility, regardless of the amount of 
the capital expenditure required to construct the facility.  The 
state board shall not make a favorable recommendation on an 
application for a capital loan for any facility unless:  
     (1) the facility receives a positive review and comment 
pursuant to section 121.15; and 
     (2) the state board determines that 
     (A) the facilities are needed to replace facilities 
dangerous to the health and safety of pupils, or to provide for 
pupils for whom no adequate facilities exist; 
     (B) the facilities could not be made available through 
dissolution and attachment of the district to another district 
or through pairing, interdistrict cooperation, or consolidation 
with another district, or through the purchase or lease of 
facilities from existing institutions within the area.  The 
preference of the school district regarding reorganization shall 
not be a criterion used by the state board in determining 
whether the facilities could be made available through 
reorganization; 
    (C) the facilities are comparable in size and quality to 
facilities recently constructed in other districts of similar 
enrollment; and 
    (D) the district's need for the facilities is comparable to 
needs that comparable districts are meeting through local bond 
issues. 
    The state board may recommend that the loan be approved in 
a reduced amount in order to meet the foregoing criteria.  If 
the state board recommends that a loan not be approved, the 
commissioner shall not recommend approval of the loan.  If the 
state board recommends that the loan be approved in a reduced 
amount, the commissioner shall not recommend approval of a loan 
larger than that recommended by the state board.  
    (c) As part of reviewing an application for a capital loan, 
the commissioner of education shall prepare estimated yearly 
repayments by the school district and the estimated amount of 
principal and interest that may be forgiven after the term of 
the loan.  These estimates shall assume no growth in gross tax 
capacity over the term of the loan, shall assume a levy equal to 
16 mills times the adjusted gross tax capacity, and shall be 
prepared using a methodology approved by the commissioner of 
finance.  The commissioner of education shall use a discount 
factor provided by the commissioner of finance in determining 
the present value of the estimated amount of interest and 
principal which may be forgiven after the term of the loan.  
    (d) No loan shall be recommended for approval for any 
district exceeding an amount computed as follows: 
    (1) The amount requested by the district under subdivision 
2; 
    (2) Plus the aggregate principal amount of general 
obligation bonds of the district outstanding on June 30 of the 
year following the year the application was received, not 
exceeding the limitation on net debt of the district in section 
475.53, subdivision 4, or 24 percent of the adjusted gross tax 
capacity, the following amount: 
    (i) for the period October 1, 1988, to September 30, 1989, 
197 percent of its adjusted gross tax capacity, 
    (ii) for any 12-month period beginning October 1 of any 
year after 1988, 245 percent of its adjusted net tax capacity as 
most recently determined, whichever is less; 
    (3) Less the maximum net debt permissible for the district 
on December 1 of the year the application is received, under the 
limitation in section 475.53, subdivision 4, or 24 percent of 
the most recent adjusted gross tax capacity available at the 
time of application, the following amount: 
    (i) for the period October 1, 1988, to September 30, 1989, 
197 percent of its adjusted gross tax capacity, 
    (ii) for any 12-month period beginning October 1 of any 
year after 1988, 245 percent of its adjusted net tax capacity as 
most recently determined, whichever is less; and 
    (4) Less any amount by which the amount voted exceeds the 
total cost of the facilities for which the loan is granted, as 
estimated in accordance with subdivision 4, provided that the 
loan may be approved in an amount computed as provided in 
clauses (1) to (3), subject to subsequent reduction in 
accordance with this clause.  
    Sec. 2.  Minnesota Statutes 1988, section 275.08, is 
amended by adding a subdivision to read: 
    Subd. 1d.  If, after computing each local government's 
adjusted tax capacity rate within a unique taxing jurisdiction 
pursuant to subdivision 1c, the auditor finds that the total 
adjusted tax capacity rate of all local governments combined is 
less than 90 percent of gross tax capacity for taxes payable in 
1989 and 90 percent of net tax capacity for taxes payable in 
1990 and thereafter, the auditor shall increase each local 
government's adjusted tax capacity rate proportionately so the 
total adjusted tax capacity rate of all local governments 
combined equals 90 percent.  The total amount of the increase in 
tax resulting from the increased tax capacity rates must not 
exceed the amount of disparity aid allocated to the unique 
taxing district under section 273.1398.  The auditor shall 
certify to the department of revenue the difference between the 
disparity aid originally allocated under section 273.1398, 
subdivision 3, and the amount necessary to reduce the total 
adjusted tax capacity rate of all local governments combined to 
90 percent.  Each local government's disparity reduction aid 
payment under section 273.1398, subdivision 6, must be reduced 
accordingly. 
    Sec. 3.  Minnesota Statutes 1988, section 366.095, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CERTIFICATES OF INDEBTEDNESS.] The town 
board may issue certificates of indebtedness within the existing 
debt limits for a town purpose otherwise authorized by law.  The 
certificates shall be payable in not more than five years and 
shall be issued on the terms and in the manner as the board may 
determine.  If the amount of the certificates to be issued 
exceeds one 0.25 percent of the gross tax capacity market value 
of the town, excluding money and credits, they shall not be 
issued for at least ten days after publication in a newspaper of 
general circulation in the town of the board's resolution 
determining to issue them; and if before the end of that time, a 
petition asking for an election on the proposition signed by 
voters equal to ten percent of the number of voters at the last 
regular town election is filed with the clerk, the certificates 
shall not be issued until the proposition of their issuance has 
been approved by a majority of the votes cast on the question at 
a regular or special election.  A tax levy shall be made for the 
payment of the principal and interest on the certificates as in 
the case of bonds. 
    Sec. 4.  Minnesota Statutes 1988, section 410.32, is 
amended to read: 
    410.32 [CITIES AUTHORIZED TO ISSUE CAPITAL NOTES FOR 
CERTAIN EQUIPMENT ACQUISITIONS.] 
    Notwithstanding any contrary provision of other law or 
charter, a home rule charter city may, by resolution and without 
public referendum, issue capital notes subject to the city debt 
limit to purchase public safety equipment, ambulance and other 
medical equipment, road construction and maintenance equipment, 
and other capital equipment having an expected useful life at 
least as long as the term of the notes.  The notes shall be 
payable in not more than five years and be issued on terms and 
in the manner the city determines.  The total principal amount 
of the capital notes issued in a fiscal year shall not exceed 
one-tenth of one 0.03 percent of the gross tax capacity of 
market value of taxable property in the city for that year.  A 
tax levy shall be made for the payment of the principal and 
interest on the notes, in accordance with section 475.61, as in 
the case of bonds.  Notes issued under this section shall 
require an affirmative vote of two-thirds of the governing body 
of the city.  Unless prohibited by its charter, a home rule 
charter city may also issue capital notes subject to its debt 
limit in the manner and subject to the limitations applicable to 
statutory cities pursuant to section 412.301. 
    Sec. 5.  Minnesota Statutes 1988, section 412.301, is 
amended to read: 
    412.301 [FINANCING PURCHASE OF CERTAIN EQUIPMENT.] 
    The council may issue certificates of indebtedness or 
capital notes subject to the city debt limits to purchase public 
safety equipment, ambulance equipment, road construction or 
maintenance equipment, and other capital equipment having an 
expected useful life at least as long as the terms of the 
certificates or notes.  Such certificates or notes shall be 
payable in not more than five years and shall be issued on such 
terms and in such manner as the council may determine.  If the 
amount of the certificates or notes to be issued to finance any 
such purchase exceeds one 0.25 percent of the gross tax capacity 
of market value of taxable property in the city, they shall not 
be issued for at least ten days after publication in the 
official newspaper of a council resolution determining to issue 
them; and if before the end of that time, a petition asking for 
an election on the proposition signed by voters equal to ten 
percent of the number of voters at the last regular municipal 
election is filed with the clerk, such certificates or notes 
shall not be issued until the proposition of their issuance has 
been approved by a majority of the votes cast on the question at 
a regular or special election.  A tax levy shall be made for the 
payment of the principal and interest on such certificates or 
notes, in accordance with section 475.61, as in the case of 
bonds.  
    Sec. 6.  Minnesota Statutes 1988, section 469.177, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [ORIGINAL TAX CAPACITY RATE.] (a) At the time of 
the initial certification of the original gross tax capacity for 
a tax increment financing district, the county auditor shall 
certify the original tax capacity rate that applies to the 
district.  The original tax capacity rate is the sum of all the 
tax capacity rates that apply to a property in the district for 
the taxes payable in the calendar year in which the initial 
certification of original gross tax capacity is requested under 
subdivision 1.  If the total tax capacity rate applicable to 
properties in the tax increment financing district varies, the 
tax capacity rate must be computed by determining the average 
total tax capacity rate in the district, weighted on the basis 
of gross tax capacity.  The resulting tax capacity rate is the 
original tax capacity rate for the life of the district. 
    (b) In the case of districts certified during calendar year 
1988, the original tax capacity rate equals the amount 
calculated under paragraph (a) multiplied by 0.45. 
    Sec. 7.  Minnesota Statutes 1988, section 475.53, 
subdivision 1, is amended to read: 
    Subdivision 1.  [GENERALLY.] Except as otherwise provided 
in sections 475.51 to 475.75, no municipality, except a school 
district or a city of the first class, shall incur or be subject 
to a net debt in excess of 7-1/3 two percent of the gross tax 
capacity market value of taxable property in the municipality. 
    Sec. 8.  Minnesota Statutes 1988, section 475.53, 
subdivision 5, is amended to read: 
    Subd. 5.  [CERTAIN INDEPENDENT SCHOOL DISTRICTS.] No 
independent school district located wholly or partly within a 
city of the first class shall issue any obligations unless first 
authorized by a two-thirds vote of the governing body of such 
city.  No such school district shall issue obligations running 
more than two years, whenever the aggregate of the outstanding 
obligations of the district equals or exceeds 2-3/4 0.7 percent 
of the gross tax capacity market value of the taxable property 
within the school district.  
    Sec. 9.  Minnesota Statutes 1988, section 475.53, is 
amended by adding a subdivision to read: 
    Subd. 7.  [ADJUSTMENT OF DEBT LIMITS.] If the amount of 
debt a municipality may incur is limited by special law or city 
charter to a stated percentage or proportion of assessed value, 
the limit must be calculated as a percentage or proportion of 
tax capacity.  The percentage or proportion provided in the 
special law or charter provision must be multiplied by 8.2 to 
determine the applicable percentage or proportion of gross tax 
capacity and must be multiplied by 10.2 to determine the 
applicable percentage or proportion of net tax capacity. 
    Sec. 10.  Minnesota Statutes 1988, section 641.24, is 
amended to read: 
    641.24 [LEASING.] 
    The county may, by resolution of the county board, enter 
into a lease agreement with any statutory or home rule charter 
city situated within the county, or a county housing and 
redevelopment authority established pursuant to chapter 462 or 
any special law whereby the city or county housing and 
redevelopment authority will construct a jail in accordance with 
plans prepared by or at the request of the county board and 
approved by the commissioner of corrections and will finance it 
by the issuance of revenue bonds, and the county may lease the 
jail site and improvements for a term and upon rentals 
sufficient to produce revenue for the prompt payment of the 
bonds and all interest accruing thereon and, upon completion of 
payment, will acquire title thereto.  The real and personal 
property acquired for the jail shall constitute a project and 
the lease agreement shall constitute a revenue agreement as 
contemplated in chapter 474, and all proceedings shall be taken 
by the city or county housing and redevelopment authority and 
the county in the manner and with the force and effect provided 
in chapter 474; provided that: 
    (1) No tax shall be imposed upon or in lieu of a tax upon 
the property; 
    (2) The approval of the project by the commissioner of 
commerce shall not be required; 
    (3) The department of corrections shall be furnished and 
shall record such information concerning each project as it may 
prescribe, in lieu of reports required on other projects to the 
commissioner of trade and economic development; 
    (4) The rentals required to be paid under the lease 
agreement shall not exceed in any year four-tenths one-tenth of 
one percent of the gross tax capacity market value of property 
within the county, as last finally equalized before the 
execution of the agreement; 
    (5) The county board shall provide for the payment of all 
rentals due during the term of the lease, in the manner required 
in section 641.264, subdivision 2; 
    (6) No mortgage on the jail property shall be granted for 
the security of the bonds, but compliance with clause (5) hereof 
may be enforced as a nondiscretionary duty of the county board; 
and 
    (7) The county board may sublease any part of the jail 
property for purposes consistent with the maintenance and 
operation of a county jail. 
    Sec. 11.  Laws 1988, chapter 719, article 12, section 30, 
is amended to read: 
    Sec. 30.  [EFFECTIVE DATES.] 
    Sections 2, 5, 6, 7, 14, 16, subdivision 4e, 17, and the 
provisions of section 15 relating to the duration of hazardous 
substance sites and subdistricts are effective for hazardous 
substance sites and subdistricts designated and created after 
the day following final enactment.  Except as otherwise 
specifically provided, sections 1, 3, 4, 8 to 12, 16, and 20 to 
23, and the provisions of section 15 applying to soils condition 
districts are effective for districts and amendments adding 
geographic area to an existing district for which the request 
for certification was filed with the county auditor after May 1, 
1988.  Sections 13, 15, 16, subdivision 4g, 18, 24, and 25, and 
the provisions of section 21 allowing a change in the fiscal 
disparities election are effective May 1, 1988, except as 
otherwise specifically provided.  Section 16, subdivision 4c 4i, 
is effective for districts for which the request for 
certification is filed with the county before after May 1, 1988, 
and to all increment collected after January 1, 1990.  Sections 
26 to 28 are effective upon approval by the city council of the 
city of Virginia and compliance with Minnesota Statutes, section 
645.021.  Section 29 is effective the day following final 
enactment. 
    Sec. 12.  [EXCEPTION TO PRIOR PLANNED IMPROVEMENT 
AMENDMENT.] 
    Notwithstanding Laws 1988, chapter 719, article 12, section 
22, if a city granted a site permit or building permit on 
September 8, 1988, with the intent of forming a tax increment 
district within three months after that date, whether or not the 
district was formed within that three-month period, then the 
original gross tax capacity of the tax increment district which 
is formed by the city and which includes the parcel or parcels 
to which the permit relates shall not be increased by the gross 
tax capacity upon completion of the improvements constructed 
pursuant to the permit. 
    Sec. 13.  [EFFECTIVE DATE.] 
    Sections 1, 3, 4, 5, 7, 8, 9, 10, and 12 are effective the 
day following final enactment.  Sections 6 and 11 are effective 
beginning for tax increment financing districts certified during 
calendar year 1988.  Section 2 is effective the day after final 
enactment and applies to taxes payable in 1989, and thereafter. 
    Presented to the governor January 30, 1989 
    Signed by the governor January 30, 1989, 3:37 p.m.