Office of the Revisor of Statutes
Minnesota Session Laws - 1996, Regular Session
Key: (1) language to be deleted (2) new language
KEY: stricken = old language to be removed
underscored = new language to be added
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.
Official Publication of the State of Minnesota
Revisor of Statutes