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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 219-S.F.No. 1754 
                  An act relating to public finance; modifying 
                  provisions relating to the issuance of debt and the 
                  use and investment of public funds; amending Minnesota 
                  Statutes 1996, sections 118A.05, subdivision 4; 
                  136A.32, subdivision 7; 373.40, subdivision 7; 
                  414.067, subdivision 2; 429.021, subdivision 1; 
                  447.45, subdivision 2; 469.0171; 471.981, by adding a 
                  subdivision; and 641.23; proposing coding for new law 
                  in Minnesota Statutes, chapters 465; and 475. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 118A.05, 
        subdivision 4, is amended to read: 
           Subd. 4.  [MINNESOTA JOINT POWERS INVESTMENT TRUST.] 
        Government entities may enter into agreements or contracts for 
           (1) shares of a Minnesota joint powers investment trust 
        whose investments are restricted to securities described in this 
        subdivision, subdivision 2 and section 118A.04,; 
           (2) units of a short-term investment fund established and 
        administered pursuant to regulation 9 of the Office of the 
        Comptroller of the Currency, in which investments are restricted 
        to securities described in this section and section 118A.04; 
           (3) shares of an investment company which is registered 
        under the Federal Investment Company Act of 1940 and which holds 
        itself out as a money market fund meeting the conditions of rule 
        2a-7 of the Securities and Exchange Commission and is rated in 
        one of the two highest rating categories for money market funds 
        by at least one nationally recognized statistical rating 
        organization; or 
           (4) 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. 
           Sec. 2.  Minnesota Statutes 1996, 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 funds of municipalities pursuant to section 
        sections 118A.04 and 118A.05, 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 
        118A, 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. 3.  Minnesota Statutes 1996, section 373.40, 
        subdivision 7, is amended to read: 
           Subd. 7.  [REPEALER.] This section is repealed effective 
        for bonds issued after July 1, 1998 2002, but continues to apply 
        to bonds issued before that date. 
           Sec. 4.  Minnesota Statutes 1996, section 414.067, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ENTIRE TOWNSHIP OR MUNICIPALITY.] When an entire 
        township is annexed by an existing municipality, or an entire 
        township is incorporated into a new municipality, or a 
        municipality is consolidated into a new municipality, all money, 
        claims, or properties, including real estate owned, held, or 
        possessed by the annexed, incorporated township or municipality, 
        and any proceeds or taxes levied by such town or municipality, 
        collected or uncollected, shall become and be the property of 
        the new or annexing municipality with full power and authority 
        to use and dispose of the same for public purposes as the 
        council or new annexing municipality may deem best, subject to 
        the rights of creditors.  Any taxes levied to pay bonded 
        indebtedness of a town or former municipality annexed to an 
        existing municipality or incorporated or consolidated into a new 
        municipality shall be borne only by that taxable property within 
        the boundaries of the former town or municipality, provided, 
        however, the units of government concerned may by resolution of 
        their governing bodies agree that taxes levied to pay the 
        indebtedness must be levied upon all taxable property within the 
        boundaries of the new municipality shall assume the bonded 
        indebtedness of the former units of government existing and 
        outstanding at the time of annexation, incorporation or 
        consolidation.  Notwithstanding that the bonded indebtedness may 
        be payable from taxes levied on only a portion of the taxable 
        property in the new or surviving municipality, the full faith 
        and credit of the new or surviving municipality must secure any 
        outstanding bonded indebtedness to which the full faith and 
        credit of the annexed or consolidated township or municipality 
        was pledged.  If any general funds of the new or surviving 
        municipality are used to pay debt service on the bonded 
        indebtedness, the general funds must be reimbursed, with or 
        without interest, from taxes levied on taxable property in the 
        former township or municipality. 
           Sec. 5.  Minnesota Statutes 1996, section 429.021, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [IMPROVEMENTS AUTHORIZED.] The council of a 
        municipality shall have power to make the following improvements:
           (1) To acquire, open, and widen any street, and to improve 
        the same by constructing, reconstructing, and maintaining 
        sidewalks, pavement, gutters, curbs, and vehicle parking strips 
        of any material, or by grading, graveling, oiling, or otherwise 
        improving the same, including the beautification thereof and 
        including storm sewers or other street drainage and connections 
        from sewer, water, or similar mains to curb lines. 
           (2) To acquire, develop, construct, reconstruct, extend, 
        and maintain storm and sanitary sewers and systems, including 
        outlets, holding areas and ponds, treatment plants, pumps, lift 
        stations, service connections, and other appurtenances of a 
        sewer system, within and without the corporate limits. 
           (3) To construct, reconstruct, extend, and maintain steam 
        heating mains. 
           (4) To install, replace, extend, and maintain street lights 
        and street lighting systems and special lighting systems. 
           (5) To acquire, improve, construct, reconstruct, extend, 
        and maintain water works systems, including mains, valves, 
        hydrants, service connections, wells, pumps, reservoirs, tanks, 
        treatment plants, and other appurtenances of a water works 
        system, within and without the corporate limits. 
           (6) To acquire, improve and equip parks, open space areas, 
        playgrounds, and recreational facilities within or without the 
        corporate limits. 
           (7) To plant trees on streets and provide for their 
        trimming, care, and removal. 
           (8) To abate nuisances and to drain swamps, marshes, and 
        ponds on public or private property and to fill the same. 
           (9) To construct, reconstruct, extend, and maintain dikes 
        and other flood control works. 
           (10) To construct, reconstruct, extend, and maintain 
        retaining walls and area walls. 
           (11) To acquire, construct, reconstruct, improve, alter, 
        extend, operate, maintain, and promote a pedestrian skyway 
        system.  Such improvement may be made upon a petition pursuant 
        to section 429.031, subdivision 3.  
           (12) To acquire, construct, reconstruct, extend, operate, 
        maintain, and promote underground pedestrian concourses. 
           (13) To acquire, construct, improve, alter, extend, 
        operate, maintain, and promote public malls, plazas or 
        courtyards. 
           (14) To construct, reconstruct, extend, and maintain 
        district heating systems.  
           (15) To construct, reconstruct, alter, extend, operate, 
        maintain, and promote fire protection systems in existing 
        buildings, but only upon a petition pursuant to section 429.031, 
        subdivision 3.  
           (16) To acquire, construct, reconstruct, improve, alter, 
        extend, and maintain highway sound barriers. 
           (17) To improve, construct, reconstruct, extend, and 
        maintain gas and electric distribution facilities owned by a 
        municipal gas or electric utility. 
           Sec. 6.  Minnesota Statutes 1996, section 447.45, 
        subdivision 2, is amended to read: 
           Subd. 2.  [POWERS OVER SPECIAL FACILITIES.] With respect to 
        facilities for the care, treatment, and training of persons with 
        mental retardation or related conditions, and facilities 
        attached or related to a nursing home providing supportive 
        services to elderly persons who are not yet in need of nursing 
        home care, including congregate housing, adult day care and 
        respite care services, a hospital district, county, or city may 
        exercise the powers in sections 447.45 to 447.50 as if these 
        facilities were hospital or nursing home facilities within the 
        meaning of sections 447.45 to 447.50.  "County or city" includes 
        cities of the first class and counties containing them.  
        "Related conditions" is defined in section 252.27, subdivision 
        1a. 
           Sec. 7.  [465.715] [POLITICAL SUBDIVISIONS; CORPORATIONS.] 
           Subdivision 1.  [STATUTORY AUTHORIZATION REQUIRED.] A 
        county, home rule charter city, statutory city, town, school 
        district, or other political subdivision may not create a 
        corporation, whether for profit or not for profit, unless 
        explicitly authorized to do so by law.  
           Subd. 2.  [PRE-DECEMBER 1, 1996, LEASE PURCHASE 
        AGREEMENTS.] The validity of any lease purchase agreement 
        entered into prior to December 1, 1996, and subsequent 
        refinancings are not affected by either the amount of 
        consideration paid by a lessor for an interest in real property 
        or, in the case of lessors organized by or on behalf of the 
        city, county, town, or school district, any defect in or lack of 
        authority to organize such entity.  A nonprofit corporation 
        organized by or on behalf of a city, county, town, or school 
        district, for the purpose of a lease purchase agreement, may 
        continue in existence until the end of any lease agreement in 
        effect on December 1, 1996, but thereafter is dissolved.  During 
        its existence, the nonprofit corporation shall conduct only 
        business that is necessary and directly related to the lease 
        agreement.  The nonprofit corporation is a public corporation 
        for purposes of section 465.035 and is subject to all laws as if 
        it were a part of the city, county, town, or school district. 
           Sec. 8.  Minnesota Statutes 1996, section 469.0171, is 
        amended to read: 
           469.0171 [HOUSING PLAN, PROGRAM, AND REVIEW.] 
           Prior to the issuance of bonds or obligations for a housing 
        development project proposed by an authority under section 
        469.017, the authority shall: 
           (1) prepare a plan meeting the requirements of section 
        462C.03, subdivision 1, paragraphs (a) to (d); 
           (2) obtain review of the plan in the manner provided in 
        section 462C.04, subdivision 1; and 
           (3) prepare and submit for review a program as defined in 
        section 462C.02, subdivision 3, in the manner provided in 
        section 462C.04, subdivision 2, and section 462C.05, subdivision 
        5, for the making or purchasing of loans by cities. 
           The authority shall prepare and submit the report required 
        under section 462C.04, subdivision 3. 
           Sec. 9.  Minnesota Statutes 1996, section 471.981, is 
        amended by adding a subdivision to read: 
           Subd. 4d.  [POLITICAL SUBDIVISION BONDS FOR INSURANCE 
        PROCUREMENT.] (a) Notwithstanding any limitations under section 
        475.52, or any other general or special law or charter to the 
        contrary, a political subdivision may issue bonds or other 
        obligations to purchase insurance coverage for employee health 
        benefits, all or any part of the risks enumerated in subdivision 
        1, and any risk which the political subdivision may insure under 
        section 176.181, subdivision 1.  The obligations must be issued 
        under chapter 475, except that no election is required.  The 
        obligations must mature in the years and amounts determined by 
        the governing body, not exceeding the lesser of three years or 
        the term of the insurance contract purchased with the proceeds 
        of the obligations.  
           (b) In addition to the permitted uses described in 
        paragraph (a), proceeds of obligations issued under this 
        subdivision may be used to establish a debt service reserve for 
        the obligations, to pay costs of issuing the obligations, or to 
        refund obligations previously issued under this subdivision. 
           (c) An issuer of obligations authorized under this 
        subdivision may designate a bank or trust company authorized to 
        exercise trust powers in this state as trustee for the holders 
        of obligations issued pursuant to this subdivision and may 
        create funds and accounts necessary to secure payment of the 
        obligations. 
           (d) Notwithstanding any law to the contrary, a levy to pay 
        obligations issued under this subdivision is not a levy to pay 
        bonded indebtedness or other debt levy that is exempt from levy 
        limitations and the levy is subject to any otherwise applicable 
        levy limits. 
           Sec. 10.  [475.80] [PLEDGE ON ATTACHMENT, ANNEXATION, 
        COMBINATION, CONSOLIDATION, OR INCORPORATION.] 
           When all or a part of a municipality is attached, annexed, 
        combined, consolidated, or incorporated into another 
        municipality, the full faith and credit of the surviving or new 
        municipality must secure any general obligation bonds which the 
        surviving or new municipality has assumed or which are payable 
        from property taxes levied on all or any portion of its taxable 
        property, notwithstanding that the bonds may be payable from 
        taxes levied on taxable property in only a portion of the new or 
        surviving municipality.  If any general funds of the 
        municipality are used to pay debt service on general obligation 
        bonds payable from taxes levied on taxable property in only a 
        portion of the new or surviving municipality, the general funds 
        must be reimbursed, with or without interest, from taxes levied 
        on the taxable property in that portion of the new or surviving 
        municipality which was primarily responsible for the general 
        obligation bonds. 
           Sec. 11.  Minnesota Statutes 1996, section 641.23, is 
        amended to read: 
           641.23 [FUNDS, HOW PROVIDED.] 
           Before any contract is made for the erection of a county 
        jail, sheriff's residence, or both, the county board shall 
        either levy a sufficient tax to provide the necessary funds, or 
        issue county bonds therefor in accordance with the provisions of 
        chapter 475, provided that, unless the issuance of the bonds is 
        approved by the majority of voters voting on the question of 
        their issuance, the amount of all bonds issued for this purpose 
        and interest on them which are due and payable in any year shall 
        not exceed an amount equal to 0.09671 percent of market value of 
        taxable property within the county, as last determined before 
        the bonds are issued.  
           Sec. 12.  [NORTHWEST COUNTY MULTICOUNTY HRA; BONDING 
        AUTHORITY.] 
           Subdivision 1.  [REFUNDING AUTHORITY.] (a) The northwest 
        multicounty housing and redevelopment authority may issue bonds 
        under Minnesota Statutes, section 469.034, subdivision 2, to 
        refund obligations issued by the authority before December 31, 
        1994 or obligations refunding such bonds, for which revenues 
        pledged by the authority have not been sufficient on a current 
        basis to pay all principal and interest due on the obligations 
        in the last preceding fiscal year. 
           (b) For purposes of this section, the amount in Minnesota 
        Statutes, section 469.034, subdivision 2, paragraph (c), clause 
        (2), is increased to $6,000,000 and the general jurisdiction 
        government is any of the cities listed in paragraph (c).  The 
        total amount of bonds issued and outstanding under this 
        subdivision at any time may not exceed the total amount of the 
        outstanding obligations as described in paragraph (a), plus 
        reserves and transactional costs. 
           (c) This section applies only to permit pledges of general 
        obligation authority by the following cities:  Ada, Argyle, 
        Clearbrook, Crookston, Erskine, Fertile, Fisher, Fosston, 
        Greenbush, Newfolden, Park Rapids, Shelly, and Warren. 
           Subd. 2.  [EFFECTIVE DATE.] This section is effective for 
        the northwest multicounty housing and redevelopment authority 
        upon compliance by the authority with Minnesota Statutes, 
        section 645.021, subdivision 3, and is effective for each of the 
        cities upon compliance by the city with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Sec. 13.  [EFFECTIVE DATE.] 
           This act is effective the day following final enactment. 
           Presented to the governor May 27, 1997 
           Signed by the governor May 30, 1997, 1:22 p.m.