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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1992 

                        CHAPTER 545-H.F.No. 2884 
           An act relating to public finance; changing procedures 
          for allocating bonding authority; defining acceptable 
          securities for use by self-insurers for workers' 
          compensation; providing an exemption from competitive 
          bidding for certain HRA projects; correcting and 
          clarifying provisions relating to public obligations; 
          amending Minnesota Statutes 1990, sections 136A.29, 
          subdivision 9; 176.181, subdivision 2, and by adding a 
          subdivision; 429.091, subdivision 2; 469.015, 
          subdivision 4; Minnesota Statutes 1991 Supplement, 
          462A.073, subdivision 1; 469.155, subdivision 12; 
          474A.03, subdivision 4; 474A.04, subdivision 1a; 
          474A.047, subdivision 1; 474A.061, subdivisions 1 and 
          3; 474A.091, subdivisions 2 and 3; and 475.66, 
          subdivision 3.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                             BOND ALLOCATION
    Section 1.  Minnesota Statutes 1990, section 136A.29, 
subdivision 9, is amended to read: 
    Subd. 9.  The authority is authorized and empowered to 
issue revenue bonds whose aggregate principal amount at any time 
shall not exceed $250,000,000 $350,000,000 and to issue notes, 
bond anticipation notes, and revenue refunding bonds of the 
authority under the provisions of sections 136A.25 to 136A.42, 
to provide funds for acquiring, constructing, reconstructing, 
enlarging, remodeling, renovating, improving, furnishing, or 
equipping one or more projects or parts thereof. 
    Sec. 2.  Minnesota Statutes 1991 Supplement, section 
462A.073, subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the following terms have the meanings given them. 
    (b) "Existing housing" means single-family housing that (i) 
has been previously occupied prior to the first day of the 
origination period; or (ii) has been available for occupancy for 
at least 12 months but has not been previously occupied.  
    (c) "Metropolitan area" means the metropolitan area as 
defined in section 473.121, subdivision 2. 
    (d) "New housing" means single-family housing that has not 
been previously occupied.  
    (e) "Origination period" means the period that loans 
financed with the proceeds of qualified mortgage revenue bonds 
are available for the purchase of single-family housing.  The 
origination period begins when financing actually becomes 
available to the borrowers for loans.  
    (f) "Redevelopment area" means a compact and contiguous 
area within which the agency city finds by resolution that 70 
percent of the parcels are occupied by buildings, streets, 
utilities, or other improvements and more than 25 percent of the 
buildings, not including outbuildings, are structurally 
substandard to a degree requiring substantial renovation or 
clearance. 
    (g) "Single-family housing" means dwelling units eligible 
to be financed from the proceeds of qualified mortgage revenue 
bonds under federal law. 
    (h) "Structurally substandard" means containing defects in 
structural elements or a combination of deficiencies in 
essential utilities and facilities, light, ventilation, fire 
protection including adequate egress, layout and condition of 
interior partitions, or similar factors, which defects or 
deficiencies are of sufficient total significance to justify 
substantial renovation or clearance. 
    Sec. 3.  Minnesota Statutes 1991 Supplement, section 
474A.03, subdivision 4, is amended to read: 
    Subd. 4.  [APPLICATION FEE.] Every entitlement issuer and 
other issuer shall pay to the commissioner a nonrefundable 
application fee to offset the state cost of program 
administration.  The application fee is $100 $20 for each 
$500,000 $100,000 of entitlement or allocation requested, with 
the request rounded to the nearest $500,000 $100,000.  The 
minimum fee is $100 $20.  Fees received by the commissioner must 
be credited to the general fund. 
    Sec. 4.  Minnesota Statutes 1991 Supplement, section 
474A.04, subdivision 1a, is amended to read: 
    Subd. 1a.  [ENTITLEMENT RESERVATIONS; CARRYFORWARD; 
DEDUCTION.] Except as provided in Laws 1987, chapter 268, 
article 16, section 41, subdivision 2, paragraph (a), any amount 
returned by an entitlement issuer before the last Monday in July 
shall be reallocated through the housing pool.  Any amount 
returned on or after the last Monday in July shall be 
reallocated through the unified pool.  An amount returned after 
the last Monday in November shall be reallocated to the 
Minnesota housing finance agency.  Beginning with entitlement 
allocations received in 1987 under Minnesota Statutes 1986, 
section 474A.08, subdivision 1, paragraphs (2) and (3), there 
shall be deducted from an entitlement issuer's allocation for 
the subsequent year an amount equal to the entitlement 
allocation under which bonds are not issued, returned on or 
before the last Monday in December, or carried forward under 
federal tax law.  Except for the Minnesota housing finance 
agency, any amount of bonding authority that an entitlement 
issuer carries forward under federal tax law that is not 
permanently issued by the end of the succeeding calendar year 
shall be deducted from the entitlement allocation for that 
entitlement issuer for the next succeeding calendar year.  Any 
amount deducted from an entitlement issuer's allocation under 
this subdivision shall be divided equally for allocation through 
the manufacturing pool and the housing pool. 
    Sec. 5.  Minnesota Statutes 1991 Supplement, section 
474A.047, subdivision 1, is amended to read: 
    Subdivision 1.  [ELIGIBILITY.] An issuer may only use the 
proceeds from residential rental bonds if the proposed project 
meets one of the following: 
    (a) The proposed project is a single room occupancy project 
and all the units of the project will be occupied by individuals 
whose incomes at the time of their initial residency in the 
project are 50 percent or less of the greater of the statewide 
or county median income adjusted for household size as 
determined by the federal Department of Housing and Urban 
Development; or 
    (b) The proposed project is a multifamily project where at 
least 75 percent of the units have two or more bedrooms and (1) 
at least one-third of the 75 percent have three or more 
bedrooms; or (2) 
    (c) The proposed project is a multifamily project that 
meets the following requirements: 
    (i) the proposed project is the rehabilitation of an 
existing multifamily building which meets the requirements for 
minimum rehabilitation expenditures in section 42(e)(2) of the 
Internal Revenue Code; 
    (ii) the developer of the proposed project includes a 
managing general partner which is a nonprofit organization under 
chapter 317A and meets the requirements for a qualified 
nonprofit organization in section 42(h)(5) of the Internal 
Revenue Code; and 
    (iii) the proposed project involves participation by a 
local unit of government in the financing of the acquisition or 
rehabilitation of the project.  At least 75 percent of the units 
of the multifamily project must be occupied by individuals or 
families whose incomes at the time of their initial residency in 
the project are 60 percent or less of the greater of the:  (1) 
statewide median income or (2) county or metropolitan 
statistical area median income, adjusted for household size as 
determined by the federal Department of Housing and Urban 
Development. 
     The maximum rent for a proposed single room occupancy unit 
under paragraph (a) is 30 percent of the amount equal to 30 
percent of the greater of the statewide or county median income 
for a one-member household as determined by the federal 
Department of Housing and Urban Development.  The maximum rent 
for at least 75 percent of the units of a multifamily project 
under paragraph (b) is 30 percent of the amount equal to 50 
percent of the greater of the statewide or county median income 
as determined by the federal Department of Housing and Urban 
Development based on a household size with one person per 
bedroom.  
    Sec. 6.  Minnesota Statutes 1991 Supplement, section 
474A.061, subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICATION.] (a) An issuer may apply for 
an allocation under this section by submitting to the department 
an application on forms provided by the department, accompanied 
by (1) a preliminary resolution, (2) a statement of bond counsel 
that the proposed issue of obligations requires an allocation 
under this chapter, (3) the type of qualified bonds to be 
issued, (4) an application deposit in the amount of one percent 
of the requested allocation before the last Monday in July, or 
in the amount of two percent of the requested allocation on or 
after the last Monday in July, and (5) a public purpose scoring 
worksheet for manufacturing project applications.  The issuer 
must pay the application deposit by a check made payable to the 
department of finance.  The Minnesota housing finance 
agency and, the Minnesota rural finance authority, and the 
Minnesota higher education coordinating board may apply for and 
receive an allocation under this section without submitting an 
application deposit. 
    (b) An entitlement issuer may not apply for an allocation 
from the housing pool or from the public facilities pool unless 
it has either permanently issued bonds equal to the amount of 
its entitlement allocation for the current year plus any amount 
of bonding authority carried forward from previous years or 
returned for reallocation all of its unused entitlement 
allocation.  For purposes of this subdivision, its entitlement 
allocation includes an amount obtained under section 474A.04, 
subdivision 6.  This paragraph does not apply to an application 
from the Minnesota housing finance agency for an allocation 
under subdivision 2a for cities who choose to have the agency 
issue bonds on their behalf. 
    (c) If an application is rejected under this section, the 
commissioner must notify the applicant and return the 
application deposit to the applicant within 30 days unless the 
applicant requests in writing that the application be 
resubmitted.  The granting of an allocation of bonding authority 
under this section must be evidenced by a certificate of 
allocation. 
    Sec. 7.  Minnesota Statutes 1991 Supplement, section 
474A.061, subdivision 3, is amended to read: 
    Subd. 3.  [ADDITIONAL DEPOSIT.] An issuer which has 
received an allocation under this section may retain any unused 
portion of the allocation after the first Tuesday in August only 
if the issuer has submitted to the department before the first 
Tuesday in August a letter stating its intent to issue 
obligations pursuant to the allocation before the end of the 
calendar year or within the time period permitted by federal tax 
law and a deposit in addition to that provided under subdivision 
1, equal to one percent of the amount of allocation to be 
retained.  Subdivision 4 applies to an allocation made under 
this section.  The Minnesota housing finance agency and the 
Minnesota rural finance authority may retain an unused portion 
of an allocation after the first Tuesday in August without 
submitting an additional deposit. 
    Sec. 8.  Minnesota Statutes 1991 Supplement, section 
474A.091, subdivision 2, is amended to read: 
    Subd. 2.  [APPLICATION.] Issuers other than the Minnesota 
rural finance authority may apply for an allocation under this 
section by submitting to the department an application on forms 
provided by the department accompanied by (1) a preliminary 
resolution, (2) a statement of bond counsel that the proposed 
issue of obligations requires an allocation under this chapter, 
(3) the type of qualified bonds to be issued, (4) an application 
deposit in the amount of two percent of the requested 
allocation, and (5) a public purpose scoring worksheet for 
manufacturing applications.  The issuer must pay the application 
deposit by check.  An entitlement issuer may not apply for an 
allocation for public facility bonds, residential rental project 
bonds, or mortgage bonds under this section unless it has either 
permanently issued bonds equal to the amount of its entitlement 
allocation for the current year plus any amount carried forward 
from previous years or returned for reallocation all of its 
unused entitlement allocation.  For purposes of this 
subdivision, its entitlement allocation includes an amount 
obtained under section 474A.04, subdivision 6. 
    The Minnesota housing finance agency may not apply for an 
allocation for mortgage bonds under this section until after the 
last Monday in August.  Notwithstanding the restrictions imposed 
on unified pool allocations after September 1 under subdivision 
3, paragraph (c)(2), the Minnesota housing finance agency may be 
awarded allocations for mortgage bonds from the unified pool 
after September 1.  The Minnesota housing finance agency, the 
Minnesota higher education coordinating board, and the Minnesota 
rural finance authority may apply for and receive an allocation 
under this section without submitting an application deposit. 
    Sec. 9.  Minnesota Statutes 1991 Supplement, section 
474A.091, subdivision 3, is amended to read: 
    Subd. 3.  [ALLOCATION PROCEDURE.] (a) The commissioner 
shall allocate available bonding authority under this section on 
the Monday of every other week beginning with the first Monday 
in August through and on the last Monday in November.  
Applications for allocations must be received by the department 
by the Monday preceding the Monday on which allocations are to 
be made.  If a Monday falls on a holiday, the allocation will be 
made or the applications must be received by the next business 
day after the holiday.  
    (b) On or before September 1, allocations shall be awarded 
from the unified pool in the following order of priority: 
    (1) applications for small issue bonds; 
    (2) applications for residential rental project bonds; 
    (3) applications for public facility projects funded by 
public facility bonds; 
    (4) applications for redevelopment bonds; 
    (5) applications for mortgage bonds; and 
     (6) applications for governmental bonds. 
     Allocations for residential rental projects may only be 
made during the first allocation in August.  The amount of 
allocation provided to an issuer for a specific manufacturing 
project will be based on the number of points received for the 
proposed project under the scoring system under section 474A.045.
Proposed manufacturing projects that receive 50 points or more 
are eligible for all of the proposed allocation.  Proposed 
manufacturing projects that receive less than 50 points under 
section 474A.045 are only eligible to receive a proportionally 
reduced share of the proposed authority, based upon the number 
of points received.  If there are two or more applications for 
manufacturing projects from the unified pool and there is 
insufficient bonding authority to provide allocations for all 
manufacturing projects in any one allocation period, the 
available bonding authority shall be awarded based on the number 
of points awarded a project under section 474A.045 with those 
projects receiving the greatest number of points receiving 
allocation first. 
    (c)(1) On the first Monday in August, $5,000,000 of bonding 
authority is reserved within the unified pool for agricultural 
development bond loan projects of the Minnesota rural finance 
authority and $20,000,000 of bonding authority or an amount 
equal to the total annual amount of bonding authority allocated 
to the small issue pool under section 474A.03, subdivision 1, 
less the amount allocated to issuers from the small issue pool 
for that year, whichever is less, is reserved within the unified 
pool for small issue bonds.  On the first Monday in September, 
$2,500,000 of bonding authority or an amount equal to the total 
annual amount of bonding authority allocated to the public 
facilities pool under section 474A.03, subdivision 1, less the 
amount allocated to issuers from the public facilities pool for 
that year, whichever is less, is reserved within the unified 
pool for public facility bonds.  If sufficient bonding authority 
is not available to reserve the required amounts for both small 
issue bonds manufacturing projects and public facility bonds 
agricultural development bond loan projects, seven-eighths of 
the remaining available bonding authority is reserved for small 
issue bonds and one-eighth of the remaining available bonding 
authority is reserved for public facility bonds must be 
distributed between the two reservations on a pro rata basis, 
based upon the amounts each would have received if sufficient 
authority was available. 
    (2) The total amount of allocations for mortgage bonds from 
the housing pool and the unified pool may not exceed: 
    (i) $10,000,000 for any one city; or 
    (ii) $20,000,000 for any number of cities in any one county.
    An allocation for mortgage bonds may be used for mortgage 
credit certificates. 
    After September 1, allocations shall be awarded from the 
unified pool only for the following types of qualified bonds:  
small issue bonds, public facility bonds to finance publicly 
owned facility projects, and residential rental project bonds. 
    (d) If there is insufficient bonding authority to fund all 
projects within any qualified bond category, allocations shall 
be awarded by lot unless otherwise agreed to by the respective 
issuers.  If an application is rejected, the commissioner must 
notify the applicant and return the application deposit to the 
applicant within 30 days unless the applicant requests in 
writing that the application be resubmitted.  The granting of an 
allocation of bonding authority under this section must be 
evidenced by issuance of a certificate of allocation. 
    Sec. 10.  [HIGHER EDUCATION COORDINATING BOARD.] 
    Subdivision 1.  [1992 MANUFACTURING POOL RESERVATION.] On 
the first Monday in May of 1992, $15,000,000 of bonding 
authority is reserved within the manufacturing pool and 
$5,000,000 of bonding authority is reserved within the public 
facilities pool for student loan bonds issued by the higher 
education coordinating board.  On the day after the last Monday 
in July of 1992, any bonding authority remaining unallocated 
from the student loan bond reservations is transferred to the 
unified pool and must be reallocated as provided in Minnesota 
Statutes, section 474A.091.  If a common pool is established as 
provided under section 11, any bonding authority remaining 
unallocated from the student loan bond reservations is 
transferred to the common pool on June 1, 1992. 
    Subd. 2.  [1992 CARRYFORWARD.] Notwithstanding Minnesota 
Statutes, section 474A.091, subdivision 4, the commissioner of 
finance may allocate a portion of remaining available bonding 
authority to the higher education coordinating board for student 
loan bonds on December 1 of 1992. 
    Subd. 3.  [1993 UNIFIED POOL RESERVATION.] On the first 
Monday in August of 1993, up to $10,000,000 of bonding authority 
is reserved within the unified pool for student loan bonds 
issued by the higher education coordinating board; provided that 
the total amount of the unified pool reservation authorized 
under this subdivision and the carryforward authorized under 
subdivision 2 may not exceed $20,000,000 of bonding authority. 
    Sec. 11.  [SUNSET OF QUALIFIED BONDS.] 
    Subdivision 1.  [TRANSFER.] Notwithstanding Minnesota 
Statutes, sections 474A.061 and 474A.091, if federal tax law is 
not amended by May 31, 1992, to permit the issuance of tax 
exempt mortgage bonds or small issue bonds after June 30, 1992, 
any bonding authority remaining in the small issue, housing, and 
public facilities pools is transferred on June 1, 1992, to a 
common pool and is available for allocation as provided in this 
section.  The commissioner of finance shall set aside 
$30,000,000 of bonding authority from the common pool from June 
1, 1992, to July 1, 1992.  After July 1, the set-aside is 
available for allocation as provided under subdivision 2. 
    Subd. 2.  [ALLOCATION.] For the period from June 1, 1992, 
through November 30, 1992, the commissioner of finance may 
allocate any available bonding authority in the common pool for 
any purpose authorized under federal tax law.  The application 
and allocation procedures established in Minnesota Statutes, 
section 474A.091, and the limits on mortgage bonds established 
in Minnesota Statutes, section 474A.091, subdivision 3, 
paragraph (c)(2), apply to allocations from the common pool.  
The reserve and priority requirements established under 
Minnesota Statutes, section 474A.091, do not apply to 
allocations from the common pool. 
    Subd. 3.  [CARRYFORWARD.] Notwithstanding Minnesota 
Statutes, section 474A.091, on December 1, 1992, the 
commissioner may allocate any bonding authority remaining in the 
common pool to any issuer authorized by federal law to carry 
forward bonding authority. 
    Sec. 12.  [EFFECTIVE DATE.] 
    Sections 1 to 11 are effective the day following final 
enactment. 

                                ARTICLE 2
PUBLIC FINANCE
    Section 1.  Minnesota Statutes 1990, section 176.181, 
subdivision 2, is amended to read: 
    Subd. 2.  [COMPULSORY INSURANCE; SELF-INSURERS.] (1) Every 
employer, except the state and its municipal subdivisions, 
liable under this chapter to pay compensation shall insure 
payment of compensation with some insurance carrier authorized 
to insure workers' compensation liability in this state, or 
obtain a written order from the commissioner of commerce 
exempting the employer from insuring liability for compensation 
and permitting self-insurance of the liability.  The terms, 
conditions and requirements governing self-insurance shall be 
established by the commissioner pursuant to chapter 14.  The 
commissioner of commerce shall also adopt, pursuant to clause 
(2)(c), rules permitting two or more employers, whether or not 
they are in the same industry, to enter into agreements to pool 
their liabilities under this chapter for the purpose of 
qualifying as group self-insurers.  With the approval of the 
commissioner of commerce, any employer may exclude medical, 
chiropractic and hospital benefits as required by this chapter.  
An employer conducting distinct operations at different 
locations may either insure or self-insure the other portion of 
operations as a distinct and separate risk.  An employer 
desiring to be exempted from insuring liability for compensation 
shall make application to the commissioner of commerce, showing 
financial ability to pay the compensation, whereupon by written 
order the commissioner of commerce, on deeming it proper, may 
make an exemption.  An employer may establish financial ability 
to pay compensation by:  (1) providing financial statements of 
the employer to the commissioner of commerce; or (2) filing a 
surety bond or bank letter of credit with the commissioner of 
commerce in an amount equal to the anticipated annual 
compensation costs of the employer, but in no event less than 
$100,000.  Upon ten days' written notice the commissioner of 
commerce may revoke the order granting an exemption, in which 
event the employer shall immediately insure the liability.  As a 
condition for the granting of an exemption the commissioner of 
commerce may require the employer to furnish security the 
commissioner of commerce considers sufficient to insure payment 
of all claims under this chapter, consistent with subdivision 
2b.  If the required security is in the form of currency or 
negotiable bonds, the commissioner of commerce shall deposit it 
with the state treasurer.  In the event of any default upon the 
part of a self-insurer to abide by any final order or decision 
of the commissioner of labor and industry directing and awarding 
payment of compensation and benefits to any employee or the 
dependents of any deceased employee, then upon at least ten days 
notice to the self-insurer, the commissioner of commerce may by 
written order to the state treasurer require the treasurer to 
sell the pledged and assigned securities or a part thereof 
necessary to pay the full amount of any such claim or award with 
interest thereon.  This authority to sell may be exercised from 
time to time to satisfy any order or award of the commissioner 
of labor and industry or any judgment obtained thereon.  When 
securities are sold the money obtained shall be deposited in the 
state treasury to the credit of the commissioner of commerce and 
awards made against any such self-insurer by the commissioner of 
commerce shall be paid to the persons entitled thereto by the 
state treasurer upon warrants prepared by the commissioner of 
commerce and approved by the commissioner of finance out of the 
proceeds of the sale of securities.  Where the security is in 
the form of a surety bond or personal guaranty the commissioner 
of commerce, at any time, upon at least ten days notice and 
opportunity to be heard, may require the surety to pay the 
amount of the award, the payments to be enforced in like manner 
as the award may be enforced. 
     (2)(a) No association, corporation, partnership, sole 
proprietorship, trust or other business entity shall provide 
services in the design, establishment or administration of a 
group self-insurance plan under rules adopted pursuant to this 
subdivision unless it is licensed to do so by the commissioner 
of commerce.  An applicant for a license shall state in writing 
the type of activities it seeks authorization to engage in and 
the type of services it seeks authorization to provide.  The 
license shall be granted only when the commissioner of commerce 
is satisfied that the entity possesses the necessary 
organization, background, expertise, and financial integrity to 
supply the services sought to be offered.  The commissioner of 
commerce may issue a license subject to restrictions or 
limitations, including restrictions or limitations on the type 
of services which may be supplied or the activities which may be 
engaged in.  The license is for a two-year period. 
    (b) To assure that group self-insurance plans are 
financially solvent, administered in a fair and capable fashion, 
and able to process claims and pay benefits in a prompt, fair 
and equitable manner, entities licensed to engage in such 
business are subject to supervision and examination by the 
commissioner of commerce. 
    (c) To carry out the purposes of this subdivision, the 
commissioner of commerce may promulgate administrative rules, 
including emergency rules, pursuant to sections 14.001 to 14.69. 
These rules may: 
    (i) establish reporting requirements for administrators of 
group self-insurance plans; 
    (ii) establish standards and guidelines consistent with 
subdivision 2b to assure the adequacy of the financing and 
administration of group self-insurance plans; 
    (iii) establish bonding requirements or other provisions 
assuring the financial integrity of entities administering group 
self-insurance plans; 
    (iv) establish standards, including but not limited to 
minimum terms of membership in self-insurance plans, as 
necessary to provide stability for those plans; 
    (v) establish standards or guidelines governing the 
formation, operation, administration, and dissolution of 
self-insurance plans; and 
    (vi) establish other reasonable requirements to further the 
purposes of this subdivision. 
    Sec. 2.  Minnesota Statutes 1990, section 176.181, is 
amended by adding a subdivision to read: 
    Subd. 2b.  [ACCEPTABLE SECURITIES.] The following are 
acceptable securities and surety bonds for the purpose of 
funding self-insurance plans and group self-insurance plans: 
    (1) direct obligations of the United States government 
except mortgage-backed securities of the Government National 
Mortgage Association; 
    (2) bonds, notes, debentures, and other instruments which 
are obligations of agencies and instrumentalities of the United 
States including, but not limited to, the Federal National 
Mortgage Association, the Federal Home Loan Mortgage 
Corporation, the Federal Home Loan Bank, the Student Loan 
Marketing Association, and the Farm Credit System, and their 
successors, but not including collateralized mortgage 
obligations or mortgage pass-through instruments; 
    (3) bonds or securities that are issued by the state of 
Minnesota and that are secured by the full faith and credit of 
the state; 
    (4) certificates of deposit which are insured by the 
Federal Deposit Insurance Corporation and are issued by a 
Minnesota depository institution; 
    (5) obligations of, or instruments unconditionally 
guaranteed by, Minnesota depository institutions whose long-term 
debt rating is at least AA-, Aa3, or their equivalent, by at 
least two nationally recognized rating agencies; 
    (6) surety bonds issued by a corporate surety authorized by 
the commissioner of commerce to transact such business in the 
state; 
    (7) obligations of or instruments unconditionally 
guaranteed by Minnesota insurance companies, whose long-term 
debt rating is at least AA-, Aa3, or their equivalent, by at 
least two nationally recognized rating agencies and whose rating 
is A+ by A. M. Best, Inc.; and 
    (8) any guarantee from the United States government whereby 
the payment of the workers' compensation liability of a 
self-insurer is guaranteed; and bonds which are the general 
obligation of the Minnesota housing finance agency. 
    Sec. 3.  [RULE CHANGE.] 
    The commissioner of commerce shall amend Minnesota Rules, 
part 2780.0400, so that it is consistent with the changes in 
section 2. 
    Sec. 4.  Minnesota Statutes 1990, section 429.091, 
subdivision 2, is amended to read: 
    Subd. 2.  [TYPES OF OBLIGATIONS PERMITTED.] 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 assessment revenue notes or, in the case of bonds for 
fire protection, 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 1990, section 469.015, 
subdivision 4, is amended to read: 
    Subd. 4.  [EXCEPTIONS.] (a) An authority need not require 
competitive bidding in the following circumstances:  
    (1) in the case of a contract for the acquisition of a 
low-rent housing project: 
    (i) for which financial assistance is provided by the 
federal government; 
    (ii) which does not require any direct loan or grant of 
money from the municipality as a condition of the federal 
financial assistance; and 
    (iii) for which the contract provides for the construction 
of the project upon land not that is either owned by the 
authority for redevelopment purposes or not owned by the 
authority at the time of the contract, or owned by the authority 
for redevelopment purposes, and but the contract provides for 
the conveyance or lease to the authority of the project or 
improvements upon completion of construction; 
    (2) with respect to a structured parking facility:  
    (i) constructed in conjunction with, and directly above or 
below, a development; and 
    (ii) financed with the proceeds of tax increment or parking 
ramp revenue bonds; and 
    (3) in the case of a housing development project if: 
    (i) the project is financed with the proceeds of bonds 
issued under section 469.034 or from nongovernmental sources; 
    (ii) the project is either located on land that is not 
owned or is being acquired by the authority at the time the 
contract is entered into, or is owned by the authority only for 
development purposes, and or is not owned by the authority at 
the time the contract is entered into but the contract provides 
for conveyance or lease to the authority of the project or 
improvements upon completion of construction; and 
    (iii) the authority finds and determines that elimination 
of the public bidding requirements is necessary in order for the 
housing development project to be economical and feasible. 
    (b) An authority need not require a performance bond in the 
case of a contract described in paragraph (a), clause (1). 
    Sec. 6.  Minnesota Statutes 1991 Supplement, section 
469.155, 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 
469.152 to 469.165, and interest on them.  The municipality or 
redevelopment agency 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, 1990, under authority of sections 
469.152 to 469.155, and interest on them, but only with the 
consent of the original issuer of such bonds.  The municipality 
or redevelopment agency may issue and sell warrants which give 
to their holders the right to purchase refunding bonds issuable 
under this subdivision prior to a stipulated date.  The warrants 
are not required to be sold at public sale and all or any agreed 
portion of the proceeds of the warrants may be paid to the 
contracting party under the revenue agreement required by 
subdivision 5 or to its designee under the conditions the 
municipality or redevelopment agency shall agree upon.  Warrants 
shall not be issued which obligate a municipality or 
redevelopment agency to issue refunding bonds that are or will 
be subject to federal tax law as defined in section 474A.02, 
subdivision 8.  The warrants may provide a stipulated exercise 
price or a price that depends on the tax exempt status of 
interest on the refunding bonds at the time of issuance.  The 
average interest rate on refunding bonds issued upon the 
exercise of the warrants to refund fixed rate bonds shall not 
exceed the average interest rate on fixed rate bonds to be 
refunded.  The municipality or redevelopment agency may appoint 
a bank or trust company to serve as agent for the warrant 
holders and enter into agreements deemed necessary or incidental 
to the issuance of the warrants. 
    Sec. 7.  Minnesota Statutes 1991 Supplement, 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, or in certificates of deposit secured by letters of 
credit issued by federal home loan banks, 
    (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 (i) securities described in the 
preceding clause, (ii) general obligation tax-exempt securities 
rated A or better by a national bond rating service, and (iii) 
repurchase agreements or reverse repurchase agreements fully 
collateralized by those securities, if the repurchase agreements 
or reverse 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 another state or local government with 
taxing powers which is rated A or better by a national bond 
rating service, or (2) (3) a general obligation of the Minnesota 
housing finance agency, or (3) (4) a general obligation of a 
housing finance agency of any state if it includes a moral 
obligation of the state, or (4) (5) a general or revenue 
obligation of any agency or authority of the state of Minnesota 
other than a general obligation of the Minnesota housing finance 
agency, provided that.  Investments under clauses (2) (3) and 
(3) (4) must be in obligations that are rated A or better by a 
national bond rating service and provided that investments under 
clause (4) (5) must be in obligations that are rated AA or 
better by a national bond rating service, 
    (d) in bankers acceptances of United States banks eligible 
for purchase by the Federal Reserve System, 
    (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, or 
    (f) in guaranteed investment contracts issued or guaranteed 
by United States commercial banks or domestic branches of 
foreign banks or United States insurance companies or their 
Canadian or United States subsidiaries; provided that the 
investment contracts rank on a parity with the senior unsecured 
debt obligations of the issuer or guarantor and, (1) in the case 
of long-term investment contracts, either (i) the long-term 
senior unsecured debt of the issuer or guarantor is rated, or 
obligations backed by letters of credit of the issuer or 
guarantor if forming the primary basis of a rating of such 
obligations would be rated, in the highest or next highest 
rating category of Standard & Poor's Corporation, Moody's 
Investors Service, Inc., or a similar nationally recognized 
rating agency, or (ii) if the issuer is a bank with headquarters 
in Minnesota, the long-term senior unsecured debt of the issuer 
is rated, or obligations backed by letters of credit of the 
issuer if forming the primary basis of a rating of such 
obligations would be rated in one of the three highest rating 
categories of Standard & Poor's Corporation, Moody's Investors 
Service, Inc., or similar nationally recognized rating agency, 
or (2) in the case of short-term investment contracts, the 
short-term unsecured debt of the issuer or guarantor is rated, 
or obligations backed by letters of credit of the issuer or 
guarantor if forming the primary basis or a rating of such 
obligations would be rated, in the highest two rating categories 
of Standard and Poor's Corporation, Moody's Investors Service, 
Inc., or similar nationally recognized rating agency.  
    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. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 3 are effective March 1, 1993.  Sections 4 to 
7 are effective the day following final enactment. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 27, 1992, 2:01 p.m.