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                            CHAPTER 399-H.F.No. 1567 
                  An act relating to public funds; regulating the 
                  deposit and investment of these funds, and agreements 
                  related to these funds; requiring a study; making 
                  conforming changes; amending Minnesota Statutes 1994, 
                  sections 6.745, as amended; 103E.635, subdivision 8; 
                  121.148, subdivision 4; 136A.32, subdivision 7; 
                  385.07; 447.49; 469.012, subdivision 1; 469.155, 
                  subdivision 15; 473.197, subdivision 4; 473.543, 
                  subdivision 3; and 475.51, subdivision 1; Minnesota 
                  Statutes 1995 Supplement, section 473.900, subdivision 
                  3; proposing coding for new law as Minnesota Statutes, 
                  chapter 118A; repealing Minnesota Statutes 1994, 
                  sections 118.005; 118.01; 118.02; 118.08; 118.09; 
                  118.10; 118.11; 118.12; 118.13; 118.14; 118.16; 
                  124.05; 471.56; 475.66, as amended; and 475.76. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                                  PUBLIC FUNDS 
           Section 1.  Minnesota Statutes 1994, section 6.745, as 
        amended by Laws 1995, chapter 134, section 1, is amended to read:
           6.745 [SUMMARY BUDGET DATA TO THE STATE AUDITOR.] 
           Subdivision 1.  [CITIES.] Annually, upon adoption of the 
        city budget, the city council of each home rule charter or 
        statutory city shall forward summary budget information to the 
        office of the state auditor.  The summary budget information 
        shall be provided on forms prescribed by the state auditor.  The 
        office of the state auditor shall work with representatives of 
        city government to develop a budget reporting form that conforms 
        with city budgeting practices and provides the necessary summary 
        budget information to the office of the state auditor.  The 
        summary budget data must include separately any net unrealized 
        gains or losses from investments.  The summary budget data shall 
        be provided to the office of the state auditor no later than 
        January 31 of each budget year. 
           Subd. 2.  [COUNTIES.] Annually, upon adoption of the county 
        budget, the county board shall forward summary budget 
        information to the office of the state auditor.  The summary 
        budget information shall be provided on forms prescribed by the 
        state auditor.  The office of the state auditor shall work with 
        representatives of county government to develop a budget 
        reporting form that conforms with county budgeting practices and 
        provides the necessary summary budget information to the office 
        of the state auditor.  The summary budget data must include 
        separately any net unrealized gains or losses from investments. 
        The summary budget data shall be provided to the office of the 
        state auditor no later than December 31 of the year preceding 
        each budget year. 
           Sec. 2.  [118A.01] [PUBLIC FUNDS; DEPOSITORIES AND 
        INVESTMENTS.] 
           Subdivision 1.  [DEFINITIONS.] The definitions in this 
        section apply to sections 118A.01 to 118A.06. 
           Subd. 2.  [GOVERNMENT ENTITY.] "Government entity" means a 
        county, city, town, school district, hospital district, public 
        authority, public corporation, public commission, special 
        district, any other political subdivision, except an entity 
        whose investment authority is specified under chapter 11A or 
        356A. 
           Subd. 3.  [FINANCIAL INSTITUTION.] "Financial institution" 
        means a savings association, commercial bank, trust company, 
        credit union, or industrial loan and thrift company. 
           Subd. 4.  [PUBLIC FUNDS.] "Public funds" means all general, 
        special, permanent, trust, and other funds, regardless of source 
        or purpose, held or administered by a government entity, unless 
        otherwise restricted. 
           Sec. 3.  [118A.02] [AUTHORIZATION FOR DEPOSIT AND 
        INVESTMENT.] 
           Subdivision 1.  The governing body of each government 
        entity shall designate, as a depository of its funds, one or 
        more financial institutions.  The governing body may authorize 
        the treasurer or chief financial officer to (1) designate 
        depositories of the funds; (2) make investments of funds under 
        sections 118A.01 to 118A.06 or other applicable law; or (3) both 
        designate depositories and make investments as provided in this 
        subdivision. 
           Subd. 2.  The treasurer or chief financial officer of a 
        government entity may at any time sell obligations purchased 
        pursuant to this section and the money received from such sale, 
        and the interest and profits or loss on such investment shall be 
        credited or charged, as the case may be, to the fund from which 
        the investment was made.  Neither such official nor government 
        entity, nor any other official responsible for the custody of 
        such funds, shall be personally liable for any loss sustained 
        from the deposit or investment of funds in accordance with the 
        provisions of sections 118A.04 and 118A.05. 
           Sec. 4.  [118A.03] [DEPOSITORIES AND COLLATERAL.] 
           Subdivision 1.  To the extent that funds deposited are in 
        excess of available federal deposit insurance, the government 
        entity shall require the financial institution to furnish 
        collateral security or a corporate surety bond executed by a 
        company authorized to do business in the state. 
           Subd. 2.  The following are the allowable forms of 
        collateral in lieu of a corporate surety bond:  
           (1) United States government treasury bills, treasury 
        notes, treasury bonds; 
           (2) issues of United States government agencies and 
        instrumentalities as quoted by a recognized industry quotation 
        service available to the government entity; 
           (3) general obligation securities of any state or local 
        government with taxing powers which is rated A or better by a 
        national bond rating service, or revenue obligation securities 
        of any state or local government with taxing powers which is 
        rated AA or better by a national bond rating service; 
           (4) irrevocable standby letters of credit issued by Federal 
        Home Loan Banks to a municipality accompanied by written 
        evidence that the bank's public debt is rated "AA" or better by 
        Moody's Investors Service, Inc., or Standard & Poor's 
        Corporation; and 
           (5) time deposits that are fully insured by the Federal 
        Deposit Insurance Corporation. 
           Subd. 3.  The total amount of the collateral computed at 
        its market value shall be at least ten percent more than the 
        amount on deposit plus accrued interest at the close of the 
        business day.  The financial institution may furnish both a 
        surety bond and collateral aggregating the required amount. 
           Subd. 4.  Any collateral pledged shall be accompanied by a 
        written assignment to the government entity from the financial 
        institution.  The written assignment shall recite that, upon 
        default, the financial institution shall release to the 
        government entity on demand, free of exchange or any other 
        charges, the collateral pledged.  Interest earned on assigned 
        collateral will be remitted to the financial institution so long 
        as it is not in default.  The government entity may sell the 
        collateral to recover the amount due.  Any surplus from the sale 
        of the collateral shall be payable to the financial institution, 
        its assigns, or both. 
           Subd. 5.  A financial institution may withdraw excess 
        collateral or substitute other collateral after giving written 
        notice to the governmental entity and receiving confirmation.  
        The authority to return any delivered and assigned collateral 
        rests with the government entity.  
           Subd. 6.  For purposes of this section, default on the part 
        of the financial institution includes, but is not limited to, 
        failure to make interest payments when due, failure to promptly 
        deliver upon demand all money on deposit, less any early 
        withdrawal penalty that may be required in connection with the 
        withdrawal of a time deposit, or closure of the depository.  If 
        a financial institution closes, all deposits shall be 
        immediately due and payable.  It shall not be a default under 
        this subdivision to require prior notice of withdrawal if such 
        notice is required as a condition of withdrawal by applicable 
        federal law or regulation.  
           Subd. 7.  All collateral shall be placed in safekeeping in 
        a restricted account at a Federal Reserve Bank, or in an account 
        at a trust department of a commercial bank or other financial 
        institution that is not owned or controlled by the financial 
        institution furnishing the collateral.  The selection shall be 
        approved by the government entity. 
           Sec. 5.  [118A.04] [INVESTMENTS.] 
           Subdivision 1.  Any public funds, not presently needed for 
        other purposes or restricted for other purposes, may be invested 
        in the manner and subject to the conditions provided for in this 
        section. 
           Subd. 2.  Public funds may be invested in governmental 
        bonds, notes, bills, mortgages (excluding high-risk 
        mortgage-backed securities), 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. 
           Subd. 3.  Funds may be invested in the following:  
           (1) any security which is a general obligation of any state 
        or local government with taxing powers which is rated A or 
        better by a national bond rating service; 
           (2) any security which is a revenue obligation of any state 
        or local government with taxing powers which is rated AA or 
        better by a national bond rating service; and 
           (3) a general obligation of the Minnesota housing finance 
        agency which is a moral obligation of the state of Minnesota and 
        is rated A or better by a national bond rating agency. 
           Subd. 4.  Funds may be invested in commercial paper issued 
        by United States corporations or their Canadian subsidiaries 
        that is rated in the highest quality category by at least two 
        nationally recognized rating agencies and matures in 270 days or 
        less. 
           Subd. 5.  Funds may be invested in time deposits that are 
        fully insured by the Federal Deposit Insurance Corporation or 
        bankers acceptances of United States banks. 
           Subd. 6.  For the purposes of this section and section 
        118A.05, "high-risk mortgage-backed securities" are: 
           (a) interest-only or principal-only mortgage-backed 
        securities; and 
           (b) any mortgage derivative security that:  
           (1) has an expected average life greater than ten years; 
           (2) has an expected average life that: 
           (i) will extend by more than four years as the result of an 
        immediate and sustained parallel shift in the yield curve of 
        plus 300 basis points; or 
           (ii) will shorten by more than six years as the result of 
        an immediate and sustained parallel shift in the yield curve of 
        minus 300 basis points; or 
           (3) will have an estimated change in price of more than 17 
        percent as the result of an immediate and sustained parallel 
        shift in the yield curve of plus or minus 300 basis points.  
           Subd. 7.  Funds may be invested in general obligation 
        temporary bonds of the same governmental entity issued under 
        section 429.091, subdivision 7, 469.178, subdivision 5, or 
        475.61, subdivision 6. 
           Subd. 8.  Funds held in a debt service fund may 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 by the governmental entity at any time, 
        but the money so received remains part of the fund until used 
        for the purpose for which the fund was created.  Any obligation 
        held in a debt service fund from which it is payable may be 
        canceled at any time unless otherwise provided in a resolution 
        or other instrument securing obligations payable from the fund.  
           Subd. 9.  (a) For the purpose of this section and section 
        118A.05, the term "broker" means a broker-dealer, broker, or 
        agent of a government entity, who transfers, purchases, sells, 
        or obtains securities for, or on behalf of, a government entity. 
           (b) Prior to completing an initial transaction with a 
        broker, a government entity shall provide annually to the broker 
        a written statement of investment restrictions which shall 
        include a provision that all future investments are to be made 
        in accordance with Minnesota Statutes governing the investment 
        of public funds. 
           (c) A broker must acknowledge annually receipt of the 
        statement of investment restrictions in writing and agree to 
        handle the government entity's account in accordance with these 
        restrictions.  A government entity may not enter into a 
        transaction with a broker until the broker has provided this 
        written agreement to the government entity. 
           (d) The state auditor shall prepare uniform notification 
        forms which shall be used by the government entities and the 
        brokers to meet the requirements of this subdivision. 
           Sec. 6.  [118A.05] [CONTRACTS AND AGREEMENTS.] 
           Subdivision 1.  In addition to other authority granted in 
        sections 118A.01 to 118A.06, government entities may enter into 
        contracts and agreements as follows. 
           Subd. 2.  Repurchase agreements consisting of collateral 
        allowable in section 118A.04, and reverse repurchase agreements 
        may be entered into with any of the following entities:  
           (1) a financial institution qualified as a "depository" of 
        public funds of the government entity; 
           (2) any other financial institution which is a member of 
        the Federal Reserve System and whose combined capital and 
        surplus equals or exceeds $10,000,000; 
           (3) a primary reporting dealer in United States government 
        securities to the Federal Reserve Bank of New York; or 
           (4) a securities broker-dealer licensed pursuant to chapter 
        80A, or an affiliate of it, regulated by the securities and 
        exchange commission and maintaining a combined capital and 
        surplus of $40,000,000 or more, exclusive of subordinated debt. 
           Reverse agreements may only be entered into for a period of 
        90 days or less and only to meet short-term cash flow needs.  In 
        no event may reverse repurchase agreements be entered into for 
        the purpose of generating cash for investments, except as stated 
        in subdivision 3. 
           Subd. 3.  Securities lending agreements, including custody 
        agreements, may be entered into with a financial institution 
        meeting the qualifications of subdivision 2, clause (1) or (2), 
        and having its principal executive office in Minnesota.  
        Securities lending transactions may be entered into with 
        entities meeting the qualifications of subdivision 2 and the 
        collateral for such transactions shall be restricted to the 
        securities described in sections 118A.04 and 118A.05. 
           Subd. 4.  Government entities may enter into agreements or 
        contracts for shares of a Minnesota joint powers investment 
        trust whose investments are restricted to securities described 
        in sections 118A.04 and 118A.05, subdivision 2, or shares of an 
        investment company which is registered under the Federal 
        Investment Company Act of 1940, and whose shares are registered 
        under the Federal Securities Act of 1933, as long as the 
        investment company's fund receives the highest credit rating and 
        is rated in one of the two highest risk rating categories by at 
        least one nationally recognized statistical rating organization 
        and is invested in financial instruments with a final maturity 
        no longer than 13 months. 
           Subd. 5.  Agreements or contracts for guaranteed investment 
        contracts may be entered into if they are issued or guaranteed 
        by United States commercial banks, domestic branches of foreign 
        banks, United States insurance companies, or their Canadian 
        subsidiaries.  The credit quality of the issuer's or guarantor's 
        short- and long-term unsecured debt must be rated in one of the 
        two highest categories by a nationally recognized rating 
        agency.  Should the issuer's or guarantor's credit quality be 
        downgraded below A, the government entity must have withdrawal 
        rights. 
           Sec. 7.  [118A.06] [DELIVERY AND SAFEKEEPING.] 
           Investments, contracts, and agreements may be held in 
        safekeeping with:  
           (1) any Federal Reserve Bank; 
           (2) any bank authorized under the laws of the United States 
        or any state to exercise corporate trust powers, including, but 
        not limited to, the bank from which the investment is purchased; 
           (3) a primary reporting dealer in United States government 
        securities to the Federal Reserve Bank of New York; or 
           (4) a securities broker-dealer having its principal 
        executive office in Minnesota, licensed under chapter 80A, or an 
        affiliate of it, and regulated by the Securities and Exchange 
        Commission; provided that the government entity's ownership of 
        all securities is evidenced by written acknowledgments 
        identifying the securities by the names of the issuers, maturity 
        dates, interest rates, CUSIP number, or other distinguishing 
        marks. 
           Sec. 8.  [118A.07] [ADDITIONAL INVESTMENT AUTHORITY.] 
           Subdivision 1.  [AUTHORITY PROVIDED.] As used in this 
        section, "governmental entity" means a city with a population in 
        excess of 200,000 or a county that contains a city of that 
        size.  If a governmental entity meets the requirements of 
        subdivisions 2 and 3, it may exercise additional investment 
        authority under subdivisions 4, 5, and 6. 
           Subd. 2.  [WRITTEN POLICIES AND PROCEDURES.] Prior to 
        exercising any additional authority under subdivisions 4, 5, and 
        6, the governmental entity must have written investment policies 
        and procedures governing the following: 
           (1) the use of or limitation on mutual bond funds or other 
        securities authorized or permitted investments under law; 
           (2) specifications for and limitations on the use of 
        derivatives; 
           (3) the final maturity of any individual security; 
           (4) the maximum average weighted life of the portfolio; 
           (5) the use of and limitations on reverse repurchase 
        agreements; 
           (6) credit standards for financial institutions with which 
        the government entity deals; and 
           (7) credit standards for investments made by the government 
        entity. 
           Subd. 3.  [OVERSIGHT PROCESS.] Prior to exercising any 
        authority under subdivisions 4, 5, and 6, the governmental 
        entity must establish an oversight process that provides for 
        review of the government entity's investment strategy and the 
        composition of the financial portfolio.  This process shall 
        include one or more of the following: 
           (1) audit reviews; 
           (2) internal or external investment committee reviews; and 
           (3) internal management control. 
           Additionally, the governing body of the governmental entity 
        must, by resolution, authorize its treasurer to utilize the 
        additional authorities under this section within their 
        prescribed limits, and in conformance with the written 
        limitations, policies, and procedures of the governmental entity.
           If the governing body of a governmental entity exercises 
        the authority provided in this section, the treasurer of the 
        governmental entity must annually report to the governing body 
        on the findings of the oversight process required under this 
        subdivision.  If the governing body intends to continue to 
        exercise the authority provided in this section for the 
        following calendar year, it must adopt a resolution affirming 
        that intention by December 1. 
           Subd. 4.  [REPURCHASE AGREEMENTS.] A government entity may 
        enter into repurchase agreements as authorized under section 
        118A.05, provided that the exclusion of mortgage-backed 
        securities defined as "high risk mortgage-backed securities" 
        under section 118A.04, subdivision 6, shall not apply to 
        repurchase agreements under this authority if the margin 
        requirements is 101 percent or more. 
           Subd. 5.  [REVERSE REPURCHASE AGREEMENTS.] Notwithstanding 
        the limitations contained in section 118A.05, subdivision 2, the 
        county may enter into reverse repurchase agreements to: 
           (1) meet cash flow needs; or 
           (2) generate cash for investments, provided that the total 
        securities owned shall be limited to an amount not to exceed 130 
        percent of the annual daily average of general investable monies 
        for the fiscal year as disclosed in the most recently available 
        audited financial report.  Excluded from this limit are: 
           (i) securities with maturities of one year or less; and 
           (ii) securities that have been reversed to maturity. 
           There shall be no limit on the term of a reverse repurchase 
        agreement.  Reverse repurchase agreements shall not be included 
        in computing the net debt of the governmental entity, and may be 
        made without an election or public sale, and the interest 
        payable thereon shall not be subject to the limitation in 
        section 475.55.  The interest shall not be deducted or excluded 
        from gross income of the recipient for the purpose of state 
        income, corporate franchise, or bank excise taxes, or if so 
        provided by federal law, for the purpose of federal income tax. 
           Subd. 6.  [OPTIONS AND FUTURES.] A government entity may 
        enter into futures contracts, options on futures contracts, and 
        option agreements to buy or sell securities authorized under law 
        as legal investments for counties, but only with respect to 
        securities owned by the governmental entity, including 
        securities that are the subject of reverse repurchase agreements 
        under this section that expire at or before the due date of the 
        option agreement. 
           Sec. 9.  [118A.08] [NO SUPERSEDING EFFECT.] 
           Except as provided in section 11, sections 2 to 7 shall not 
        supersede any general or special law relating to the deposit and 
        investment of public funds. 
           Sec. 10.  [STUDY; REPORT.] 
           The department of finance, in cooperation with the 
        Minnesota Association of County Treasurers, the Minnesota 
        Association of School Business Officials, and the Minnesota 
        Government Finance Officers Association, shall review the 
        adequacy of training and certification programs for 
        representatives of local government entities which are entrusted 
        with the deposit and investment of public funds.  The department 
        shall report its finding and any recommendations to the local 
        government and metropolitan affairs committee of the house of 
        representatives and the metropolitan and local government 
        committee of the senate no later than November 15, 1996. 
           Sec. 11.  [REPEALER.] 
           Minnesota Statutes 1994, sections 118.005; 118.01; 118.02; 
        118.08; 118.09; 118.10; 118.11; 118.12; 118.13; 118.14; 118.16; 
        124.05; 471.56; 475.66, as amended by Laws 1995, chapter 122, 
        section 3; and 475.76, are repealed. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Sections 2 to 7 and 11 are effective January 1, 1997.  
        Section 10 is effective the day following final enactment. 
                                   ARTICLE 2
                               CONFORMING CHANGES
           Section 1.  Minnesota Statutes 1994, section 103E.635, 
        subdivision 8, is amended to read: 
           Subd. 8.  [COUNTY INVESTMENT, PURCHASE, AND SELLING OF 
        TEMPORARY DRAINAGE BONDS.] (a) Funds of the issuing county may 
        be invested in temporary drainage bonds under sections 471.56 
        and 475.66 section 118A.04, except that the temporary drainage 
        bonds may be:  
           (1) purchased by the county when the temporary drainage 
        bonds are initially issued; 
           (2) purchased only out of funds that the board determines 
        will not be required for other purposes before the temporary 
        drainage bonds mature; and 
           (3) resold before the temporary drainage bonds mature only 
        if there is an unforeseen emergency.  
           (b) If a temporary drainage bond purchase is made from 
        money held in a sinking fund for other bonds of the county, the 
        holders of the other bonds may enforce the county's obligation 
        to sell definitive bonds at or before the maturity of the 
        temporary drainage bonds, or exchange the other bonds, in the 
        same manner as holders of the temporary drainage bonds.  
           Sec. 2.  Minnesota Statutes 1994, section 121.148, 
        subdivision 4, is amended to read: 
           Subd. 4.  [UNFAVORABLE REVIEW AND COMMENT.] If the 
        commissioner submits an unfavorable review and comment for a 
        proposal under section 121.15, the school board, by resolution 
        of the board, must reconsider construction.  If, upon 
        reconsideration, the school board decides to proceed with 
        construction, it may initiate proceedings for issuing bonds to 
        finance construction under sections 475.51 to 475.76 chapter 475.
        Unless 60 percent of the voters at the election approve of 
        issuing the obligations, the board is not authorized to issue 
        the obligations. 
           Sec. 3.  Minnesota Statutes 1994, section 136A.32, 
        subdivision 7, is amended to read: 
           Subd. 7.  The authority may invest any bond proceeds, 
        sinking funds or reserves in any securities authorized for 
        investment of debt service funds of municipalities pursuant to 
        section 475.66, subdivision 3 118A.04, including securities 
        described in section 475.67, subdivision 8.  In addition, such 
        bond proceeds, sinking funds and reserves may be 
           (1) deposited in time deposits of any state or national 
        bank subject to the limitations and requirements of chapter 118, 
        or 
           (2) invested in repurchase agreements with, providing for 
        the repurchase of securities described in the preceding sentence 
        by, a bank qualified as a depository of money of the authority, 
        a national or state bank in the United States that is a member 
        of the federal reserve system and whose combined capital and 
        surplus equals or exceeds $10,000,000, or a reporting dealer to 
        the federal reserve bank of New York.  Power to make any such 
        investment or deposit is subject to the provisions of any 
        applicable covenant or restriction in a resolution or trust 
        agreement of the authority. 
           Sec. 4.  Minnesota Statutes 1994, section 385.07, is 
        amended to read: 
           385.07 [FUNDS, WHERE DEPOSITED OR INVESTED.] 
           All county funds shall be deposited promptly and intact by 
        the county treasurer in the name of the county or invested as 
        provided in sections 471.56 and 475.66 section 118A.04.  
        Interest and profits which accrue from such investment shall, 
        when collected, be credited to the general revenue fund of the 
        county.  
           Sec. 5.  Minnesota Statutes 1994, section 447.49, is 
        amended to read: 
           447.49 [MISCELLANEOUS PROVISIONS.] 
           Bonds issued under sections 447.45 to 447.50 must be issued 
        and sold as provided in chapter 475.  If the bonds do not pledge 
        the credit of the county, city, or hospital district as provided 
        in section 447.48, the governing body may negotiate their sale 
        without advertisement for bids.  They shall not be included in 
        the net debt of any municipality, and are not subject to 
        interest rate limitations, as defined or referred to in sections 
        475.51 and 475.55.  If the bonds do not pledge the credit of the 
        county, city, or hospital district as provided in section 447.48 
        and are payable from rental payments to be made under a lease 
        agreement entered into pursuant to section 447.47, the county, 
        city, or hospital district may invest or deposit, or authorize a 
        trustee to invest or deposit, any proceeds of the bonds, rental 
        payments, and income from the investment of them, in any manner 
        and upon any terms and conditions agreed to by the lessee under 
        the lease agreement, resolution, or indenture, notwithstanding 
        chapter 118 or section 471.56 or 475.66 118A, but subject to any 
        statutory provisions that govern the deposit and investment of 
        funds of a lessee which is itself a governmental subdivision or 
        agency.  
           Sec. 6.  Minnesota Statutes 1994, section 469.012, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SCHEDULE OF POWERS.] An authority shall be 
        a public body corporate and politic and shall have all the 
        powers necessary or convenient to carry out the purposes of 
        sections 469.001 to 469.047, except that the power to levy and 
        collect taxes or special assessments is limited to the power 
        provided in sections 469.027 to 469.033.  Its powers include the 
        following powers in addition to others granted in sections 
        469.001 to 469.047:  
           (1) to sue and be sued; to have a seal, which shall be 
        judicially noticed, and to alter it; to have perpetual 
        succession; and to make, amend, and repeal rules consistent with 
        sections 469.001 to 469.047; 
           (2) to employ an executive director, technical experts, and 
        officers, agents, and employees, permanent and temporary, that 
        it requires, and determine their qualifications, duties, and 
        compensation; for legal services it requires, to call upon the 
        chief law officer of the city or to employ its own counsel and 
        legal staff; so far as practicable, to use the services of local 
        public bodies in its area of operation, provided that those 
        local public bodies, if requested, shall make the services 
        available; 
           (3) to delegate to one or more of its agents or employees 
        the powers or duties it deems proper; 
           (4) within its area of operation, to undertake, prepare, 
        carry out, and operate projects and to provide for the 
        construction, reconstruction, improvement, extension, 
        alteration, or repair of any project or part thereof; 
           (5) subject to the provisions of section 469.026, to give, 
        sell, transfer, convey, or otherwise dispose of real or personal 
        property or any interest therein and to execute leases, deeds, 
        conveyances, negotiable instruments, purchase agreements, and 
        other contracts or instruments, and take action that is 
        necessary or convenient to carry out the purposes of these 
        sections; 
           (6) within its area of operation, to acquire real or 
        personal property or any interest therein by gifts, grant, 
        purchase, exchange, lease, transfer, bequest, devise, or 
        otherwise, and by the exercise of the power of eminent domain, 
        in the manner provided by chapter 117, to acquire real property 
        which it may deem necessary for its purposes, after the adoption 
        by it of a resolution declaring that the acquisition of the real 
        property is necessary to eliminate one or more of the conditions 
        found to exist in the resolution adopted pursuant to section 
        469.003 or to provide decent, safe, and sanitary housing for 
        persons of low and moderate income, or is necessary to carry out 
        a redevelopment project.  Real property needed or convenient for 
        a project may be acquired by the authority for the project by 
        condemnation pursuant to this section.  This includes any 
        property devoted to a public use, whether or not held in trust, 
        notwithstanding that the property may have been previously 
        acquired by condemnation or is owned by a public utility 
        corporation, because the public use in conformity with the 
        provisions of sections 469.001 to 469.047 shall be deemed a 
        superior public use.  Property devoted to a public use may be so 
        acquired only if the governing body of the municipality has 
        approved its acquisition by the authority.  An award of 
        compensation shall not be increased by reason of any increase in 
        the value of the real property caused by the assembly, clearance 
        or reconstruction, or proposed assembly, clearance or 
        reconstruction for the purposes of sections 469.001 to 469.047 
        of the real property in an area; 
           (7) within its area of operation, and without the adoption 
        of an urban renewal plan, to acquire, by all means as set forth 
        in clause (6) but without the adoption of a resolution provided 
        for in clause (6), real property, and to demolish, remove, 
        rehabilitate, or reconstruct the buildings and improvements or 
        construct new buildings and improvements thereon, or to so 
        provide through other means as set forth in Laws 1974, chapter 
        228, or to grade, fill, and construct foundations or otherwise 
        prepare the site for improvements.  The authority may dispose of 
        the property pursuant to section 469.029, provided that the 
        provisions of section 469.029 requiring conformance to an urban 
        renewal plan shall not apply.  The authority may finance these 
        activities by means of the redevelopment project fund or by 
        means of tax increments or tax increment bonds or by the methods 
        of financing provided for in section 469.033 or by means of 
        contributions from the municipality provided for in section 
        469.041, clause (9), or by any combination of those means.  Real 
        property with buildings or improvements thereon shall only be 
        acquired under this clause when the buildings or improvements 
        are substandard.  The exercise of the power of eminent domain 
        under this clause shall be limited to real property which 
        contains, or has contained within the three years immediately 
        preceding the exercise of the power of eminent domain and is 
        currently vacant, buildings and improvements which are vacated 
        and substandard.  Notwithstanding the prior sentence, in cities 
        of the first class the exercise of the power of eminent domain 
        under this clause shall be limited to real property which 
        contains, or has contained within the three years immediately 
        preceding the exercise of the power of eminent domain, buildings 
        and improvements which are substandard.  For the purpose of this 
        clause, substandard buildings or improvements mean hazardous 
        buildings as defined in section 463.15, subdivision 3, or 
        buildings or improvements that are dilapidated or obsolescent, 
        faultily designed, lack adequate ventilation, light, or sanitary 
        facilities, or any combination of these or other factors that 
        are detrimental to the safety or health of the community; 
           (8) within its area of operation, to determine the level of 
        income constituting low or moderate family income.  The 
        authority may establish various income levels for various family 
        sizes.  In making its determination, the authority may consider 
        income levels that may be established by the Department of 
        Housing and Urban Development or a similar or successor federal 
        agency for the purpose of federal loan guarantees or subsidies 
        for persons of low or moderate income.  The authority may use 
        that determination as a basis for the maximum amount of income 
        for admissions to housing development projects or housing 
        projects owned or operated by it; 
           (9) to provide in federally assisted projects any 
        relocation payments and assistance necessary to comply with the 
        requirements of the Federal Uniform Relocation Assistance and 
        Real Property Acquisition Policies Act of 1970, and any 
        amendments or supplements thereto; 
           (10) to make an agreement with the governing body or bodies 
        creating the authority which provides exemption from all real 
        and personal property taxes levied or imposed by the state, 
        city, county, or other political subdivisions, for which the 
        authority shall make payments in lieu of taxes to the state, 
        city, county, or other political subdivisions as provided in 
        section 469.040.  The governing body shall agree on behalf of 
        all the applicable governing bodies affected that local 
        cooperation as required by the federal government shall be 
        provided by the local governing body or bodies in whose 
        jurisdiction the project is to be located, at no cost or at no 
        greater cost than the same public services and facilities 
        furnished to other residents; 
           (11) to cooperate with or act as agent for the federal 
        government, the state or any state public body, or any agency or 
        instrumentality of the foregoing, in carrying out any of the 
        provisions of sections 469.001 to 469.047 or of any other 
        related federal, state, or local legislation; and upon the 
        consent of the governing body of the city to purchase, lease, 
        manage, or otherwise take over any housing project already owned 
        and operated by the federal government; 
           (12) to make plans for carrying out a program of voluntary 
        repair and rehabilitation of buildings and improvements, and 
        plans for the enforcement of laws, codes, and regulations 
        relating to the use of land and the use and occupancy of 
        buildings and improvements, and to the compulsory repair, 
        rehabilitation, demolition, or removal of buildings and 
        improvements.  The authority may develop, test, and report 
        methods and techniques, and carry out demonstrations and other 
        activities for the prevention and elimination of slums and 
        blight; 
           (13) to borrow money or other property and accept 
        contributions, grants, gifts, services, or other assistance from 
        the federal government, the state government, state public 
        bodies, or from any other public or private sources; 
           (14) to include in any contract for financial assistance 
        with the federal government any conditions that the federal 
        government may attach to its financial aid of a project, not 
        inconsistent with purposes of sections 469.001 to 469.047, 
        including obligating itself (which obligation shall be 
        specifically enforceable and not constitute a mortgage, 
        notwithstanding any other laws) to convey to the federal 
        government the project to which the contract relates upon the 
        occurrence of a substantial default with respect to the 
        covenants or conditions to which the authority is subject; to 
        provide in the contract that, in case of such conveyance, the 
        federal government may complete, operate, manage, lease, convey, 
        or otherwise deal with the project until the defaults are cured 
        if the federal government agrees in the contract to reconvey to 
        the authority the project as then constituted when the defaults 
        have been cured; 
           (15) to issue bonds for any of its corporate purposes and 
        to secure the bonds by mortgages upon property held or to be 
        held by it or by pledge of its revenues, including grants or 
        contributions; 
           (16) to invest any funds held in reserves or sinking funds, 
        or any funds not required for immediate disbursement, in 
        property or securities in which savings banks may legally invest 
        funds subject to their control or in the manner and subject to 
        the conditions provided in section 475.66 118A.04 for the 
        deposit and investment of debt service public funds; 
           (17) within its area of operation, to determine where 
        blight exists or where there is unsafe, unsanitary, or 
        overcrowded housing; 
           (18) to carry out studies of the housing and redevelopment 
        needs within its area of operation and of the meeting of those 
        needs.  This includes study of data on population and family 
        groups and their distribution according to income groups, the 
        amount and quality of available housing and its distribution 
        according to rentals and sales prices, employment, wages, 
        desirable patterns for land use and community growth, and other 
        factors affecting the local housing and redevelopment needs and 
        the meeting of those needs; to make the results of those studies 
        and analyses available to the public and to building, housing, 
        and supply industries; 
           (19) if a local public body does not have a planning agency 
        or the planning agency has not produced a comprehensive or 
        general community development plan, to make or cause to be made 
        a plan to be used as a guide in the more detailed planning of 
        housing and redevelopment areas; 
           (20) to lease or rent any dwellings, accommodations, lands, 
        buildings, structures, or facilities included in any project 
        and, subject to the limitations contained in sections 469.001 to 
        469.047 with respect to the rental of dwellings in housing 
        projects, to establish and revise the rents or charges therefor; 
           (21) to own, hold, and improve real or personal property 
        and to sell, lease, exchange, transfer, assign, pledge, or 
        dispose of any real or personal property or any interest 
        therein; 
           (22) to insure or provide for the insurance of any real or 
        personal property or operations of the authority against any 
        risks or hazards; 
           (23) to procure or agree to the procurement of government 
        insurance or guarantees of the payment of any bonds or parts 
        thereof issued by an authority and to pay premiums on the 
        insurance; 
           (24) to make expenditures necessary to carry out the 
        purposes of sections 469.001 to 469.047; 
           (25) to enter into an agreement or agreements with any 
        state public body to provide informational service and 
        relocation assistance to families, individuals, business 
        concerns, and nonprofit organizations displaced or to be 
        displaced by the activities of any state public body; 
           (26) to compile and maintain a catalog of all vacant, open 
        and undeveloped land, or land which contains substandard 
        buildings and improvements as that term is defined in clause 
        (7), that is owned or controlled by the authority or by the 
        governing body within its area of operation and to compile and 
        maintain a catalog of all authority owned real property that is 
        in excess of the foreseeable needs of the authority, in order to 
        determine and recommend if the real property compiled in either 
        catalog is appropriate for disposal pursuant to the provisions 
        of section 469.029, subdivisions 9 and 10; 
           (27) to recommend to the city concerning the enforcement of 
        the applicable health, housing, building, fire prevention, and 
        housing maintenance code requirements as they relate to 
        residential dwelling structures that are being rehabilitated by 
        low- or moderate-income persons pursuant to section 469.029, 
        subdivision 9, for the period of time necessary to complete the 
        rehabilitation, as determined by the authority; 
           (28) to recommend to the city the initiation of municipal 
        powers, against certain real properties, relating to repair, 
        closing, condemnation, or demolition of unsafe, unsanitary, 
        hazardous, and unfit buildings, as provided in section 469.041, 
        clause (5); 
           (29) to sell, at private or public sale, at the price or 
        prices determined by the authority, any note, mortgage, lease, 
        sublease, lease purchase, or other instrument or obligation 
        evidencing or securing a loan made for the purpose of economic 
        development, job creation, redevelopment, or community 
        revitalization by a public agency to a business, for-profit or 
        nonprofit organization, or an individual; 
           (30) within its area of operation, to acquire and sell real 
        property that is benefited by federal housing assistance 
        payments, other rental subsidies, interest reduction payments, 
        or interest reduction contracts for the purpose of preserving 
        the affordability of low- and moderate-income multifamily 
        housing; 
           (31) to apply for, enter into contracts with the federal 
        government, administer, and carry out a section 8 program.  
        Authorization by the governing body creating the authority to 
        administer the program at the authority's initial application is 
        sufficient to authorize operation of the program in its area of 
        operation for which it was created without additional local 
        governing body approval.  Approval by the governing body or 
        bodies creating the authority constitutes approval of a housing 
        program for purposes of any special or general law requiring 
        local approval of section 8 programs undertaken by city, county, 
        or multicounty authorities; and 
           (32) to secure a mortgage or loan for a rental housing 
        project by obtaining the appointment of receivers or assignments 
        of rents and profits under sections 559.17 and 576.01, except 
        that the limitation relating to the minimum amounts of the 
        original principal balances of mortgages specified in sections 
        559.17, subdivision 2, clause (2); and 576.01, subdivision 2, 
        does not apply. 
           Sec. 7.  Minnesota Statutes 1994, section 469.155, 
        subdivision 15, is amended to read: 
           Subd. 15.  [INVESTMENT AND DEPOSIT OF FUNDS.] It may invest 
        or deposit, or authorize a trustee to invest or deposit, any 
        proceeds of revenue bonds or notes issued pursuant to sections 
        469.152 to 469.165, and income from the investment of the 
        proceeds, in any manner and upon any terms and conditions agreed 
        to by the contracting party under the related revenue agreement, 
        resolution, or indenture, notwithstanding chapter 118 or section 
        471.56 or 475.56 118A, but subject to any statutory provisions 
        which govern the deposit and investment of funds of a 
        contracting party which is itself a governmental subdivision or 
        agency.  
           Sec. 8.  Minnesota Statutes 1994, section 473.197, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DEBT RESERVE; LEVY.] To provide money to pay 
        debt service on bonds issued under the credit enhancement 
        program if pledged revenues are insufficient to pay debt 
        service, the council must maintain a debt reserve fund in the 
        manner and with the effect provided by section 475.66 118A.04 
        for public debt service funds.  To provide funds for the debt 
        reserve fund, the council may use up to $3,000,000 of the 
        proceeds of solid waste bonds issued by the council under 
        section 473.831 before its repeal.  To provide additional funds 
        for the debt reserve fund, the council may levy a tax on all 
        taxable property in the metropolitan area and must levy the tax 
        if sums in the debt reserve fund are insufficient to cure any 
        deficiency in the debt service fund established for the bonds.  
        The tax authorized by this section does not affect the amount or 
        rate of taxes that may be levied by the council for other 
        purposes and is not subject to limit as to rate or amount. 
           Sec. 9.  Minnesota Statutes 1994, section 473.543, 
        subdivision 3, is amended to read: 
           Subd. 3.  The moneys on hand in said funds and accounts may 
        be deposited in the official depositories of the council or 
        invested as hereinafter provided.  The amount thereof not 
        currently needed or required by law to be kept in cash on 
        deposit may be invested in obligations authorized for the 
        investment of municipal sinking public funds by section 475.66 
        118A.04.  Such moneys may also be held under certificates of 
        deposit issued by any official depository of the council.  
           Sec. 10.  Minnesota Statutes 1995 Supplement, section 
        473.900, subdivision 3, is amended to read: 
           Subd. 3.  [DEPOSITORIES; INVESTMENTS.] The money on hand in 
        the funds and accounts may be deposited in the official 
        depositories of the metropolitan council or invested as provided 
        in this subdivision.  The amount not currently needed or 
        required by law to be kept in cash on deposit, may be invested 
        in obligations authorized for the investment of municipal 
        sinking public funds by section 475.66 118A.04.  The money may 
        also be held under certificates of deposit issued by any 
        official depository of the metropolitan council.  
           Sec. 11.  Minnesota Statutes 1994, section 475.51, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TERMS.] For the purposes of sections 
        475.51 to 475.76 this chapter, the terms defined in this section 
        shall have the meanings given them. 
           Sec. 12.  [REVISOR'S INSTRUCTION.] 
           To replace or remove references to repealed statutes, in 
        the next edition of Minnesota Statutes the revisor of statutes 
        shall 
           (a) in the sections listed in column A, change the 
        reference in column B to the reference in column C: 
        Row
        No.     Column A            Column B          Column C
        (1)     37.07               118.01            118A.03
        (2)     37.07               118.10            118A.03
        (3)     60F.05              475.66            118A.04
        (4)     62H.05              475.66            118A.04
        (5)     115.46, subd. 2     475.66            118A.04
        (6)     136F.90, subd. 5    475.66            118A.04
        (7)     356A.06, subd. 6    118.01            118A.03
        (8)     356A.06, subd. 8a   118.01            118A.03
        (9)     400.11              475.66            118A.04
        (10)    427.01              118.01            118A.03
        (11)    427.02              118.01            118A.03
        (12)    429.091             471.56            118A.04
        (13)    458D.16             118.01            118A.03
        (14)    458D.17, subd. 3    475.66            118A.04
        (15)    462.396, subd. 6    118.10            118A.03
        (16)    469.084, subd. 13   471.56            118A.04
        (17)    469.178, subd. 5    471.56            118A.04
        (18)    471.982, subd. 2    475.66            118A.04
        (19)    473.542             118.01            118A.03
        (20)    473.606, subd. 3    471.56            118A.04
        (21)    473.711, subd. 3    118.01            118A.03
        (22)    473.711, subd. 3    118.10            118A.03
        (23)    473.811, subd. 1    475.66            118A.04
        (24)    473.899             118.01            118A.03
        (25)    475.54, subd. 6a    475.66, subd. 1   118A.06
        (26)    475.60, subd. 7     475.66            118A.04
        (27)    475.61, subd. 6     471.56            118A.04
        (28)    475.67, subd. 13    475.66, subd. 3,  118A.05, subd. 5;
                                    clause (f)
        and (b) in sections 365.48, subdivision 4; 469.129, subdivision 
        1; and 475.79, remove the reference to section 475.66. 
           Presented to the governor March 29, 1996 
           Signed by the governor April 2, 1996, 10:14 a.m.