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Office of the Revisor of Statutes

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

                            CHAPTER 455-S.F.No. 2521 
                  An act relating to local government; establishing 
                  standards for the creation of corporations by 
                  political subdivisions; providing for the continuation 
                  of existing corporations created by political 
                  subdivisions; clarifying the application of chapter 
                  238 to municipalities; providing for the number and 
                  requirements for appointment of certain housing and 
                  redevelopment authority members; amending Minnesota 
                  Statutes 1998, sections 238.08, subdivision 3; 
                  469.003, subdivision 5; 469.006, subdivisions 1 and 2; 
                  and 469.011, subdivision 4; proposing coding for new 
                  law in Minnesota Statutes, chapter 465; repealing 
                  Minnesota Statutes 1998, section 465.715, subdivisions 
                  1, 2, and 3; Minnesota Statutes 1999 Supplement, 
                  section 465.715, subdivision 1a. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                   ARTICLE 1 
                 CORPORATIONS CREATED BY POLITICAL SUBDIVISIONS
           Section 1.  [465.717] [CREATION OF CORPORATIONS BY 
        POLITICAL SUBDIVISIONS.] 
           Subdivision 1.  [STATUTORY AUTHORIZATION REQUIRED.] A 
        county, home rule charter city, statutory city, town, school 
        district, or other political subdivision, including a joint 
        powers entity operating under section 471.59, may not create a 
        corporation, whether for profit or not for profit, unless 
        explicitly authorized to do so by law.  
           Subd. 2.  [AUTHORITY TO INCORPORATE A JOINT POWERS ENTITY.] 
        A joint powers entity created under section 471.59 may 
        incorporate itself as a nonprofit under chapter 317A.  A 
        corporation created under this subdivision shall comply with 
        every law that applies to the participating political 
        subdivisions and shall possess no greater authority or power 
        than that held by the joint powers entity itself. 
           Sec. 2.  [465.719] [EXISTING CORPORATIONS CREATED BY 
        POLITICAL SUBDIVISIONS.] 
           Subdivision 1.  [DEFINITIONS.] The following definitions 
        apply to this section: 
           (a) "Political subdivision" means a county, a statutory or 
        home rule charter city, a town, a school district, or other 
        political subdivision of the state.  Political subdivision 
        includes a political subdivision acting individually or jointly 
        as provided under section 471.59. 
           (b) "Corporation" means a corporation created by a 
        political subdivision before May 31, 1997, in which (1) the 
        corporation's articles of incorporation or bylaws provide for 
        the governing body of the political subdivision to serve as a 
        corporation's governing board; (2) the articles of incorporation 
        or bylaws provide for appointed officials of the political 
        subdivision or members of the governing body of the political 
        subdivision or both to be automatically appointed to the board 
        solely by virtue of their appointment or election to office and 
        they constitute a majority of the corporation's board members; 
        or (3) the governing body of the political subdivision approves 
        the budget or expenditures of the corporation for purposes other 
        than those related to oversight of public grants or loans made 
        to the corporation under a competitive process for which other 
        entities are eligible.  Corporation does not include: 
           (1) a corporation established under chapters 453, 453A, or 
        sections 119A.374 to 119A.376; 245.62 to 245.66; 
           (2) a nonprofit corporation created to raise funds for use 
        by a political subdivision if less than a majority of the board 
        of directors of the corporation are members of the governing 
        body of the political subdivision appointed to the board of 
        directors by virtue of their election to office; or 
           (3) a corporation created by a political subdivision 
        pursuant to state statute or special law or federal law. 
           Subd. 2.  [RESOLUTION REQUIRED.] In order to provide for 
        the continued existence of a corporation created by a political 
        subdivision, the political subdivision, or its successor, that 
        created the corporation must adopt a resolution at a regularly 
        scheduled meeting of the governing body of the political 
        subdivision.  The resolution must include the information 
        required in subdivisions 4 to 9.  A certified copy of the 
        resolution must be filed with the secretary of state.  If a 
        resolution is not adopted within three years of the effective 
        date of this section, the board of directors of the corporation 
        shall direct and authorize an officer or designee of the 
        corporation to file with the secretary of state immediately a 
        notice of intent to dissolve the corporation and then as soon as 
        possible, complete dissolution of the corporation as provided in 
        the corporation's articles of incorporation and bylaws, and the 
        law under which the corporation was formed. 
           Subd. 3.  [AMENDED ARTICLES OF INCORPORATION, BYLAWS.] If 
        the political subdivision adopts a resolution under subdivision 
        2, the board of directors of the corporation shall direct and 
        authorize an officer or designee of the corporation to file 
        amended articles of incorporation, if necessary, as soon as 
        practicable after adoption of the resolution to make the 
        articles of incorporation consistent with the resolution and to 
        provide for the application of the laws under subdivision 9.  
        Thereafter, the corporation may not amend its articles of 
        incorporation unless the political subdivision adopts a 
        resolution in support of the change as provided in subdivision 2 
        for ratifying existing corporations and a certified copy of the 
        resolution is attached to the amended articles of incorporation 
        filed with the secretary of state. 
           Subd. 4.  [EXISTING CONTRACTS.] If on the effective date of 
        this section the corporation has contracts or other obligations 
        that are inconsistent with any requirement of this section, the 
        resolution may provide for the delayed application of that 
        requirement for the time necessary to avoid a breach or 
        impairment of the contract or obligation. 
           Subd. 5.  [NEED FOR CORPORATION.] The resolution must make 
        a detailed and specific finding regarding the purpose of the 
        corporation, and why the corporation is the best alternative for 
        accomplishing the purpose. 
           Subd. 6.  [AUTHORITIES AND POWERS OF CORPORATION 
        LIMITED.] The resolution must specify what authorities and 
        powers the corporation possesses.  The authorities and powers of 
        the corporation must not exceed the authorities and powers of 
        the political subdivision that created it, except as otherwise 
        authorized in this section. 
           Subd. 7.  [BOARD MEMBERSHIP.] If a majority of the 
        corporation's governing board includes elected or appointed 
        officials of the political subdivision creating the corporation, 
        the resolution must make a detailed and specific finding 
        regarding the purpose of those officials serving on the board, 
        and why the corporation cannot accomplish its purpose unless 
        those officials serve on the board.  Alternatively, the 
        resolution may provide for other board membership and the 
        articles of incorporation amended to be consistent with the 
        resolution. 
           Subd. 8.  [ALLOCATION OF ASSETS AND LIABILITIES.] If the 
        political subdivision that created the corporation is a joint 
        powers board, the joint powers agreement and the resolution must 
        specify how the assets and liabilities of the corporation are 
        allocated or attributed to each member of the joint powers 
        board, including, but not limited to, for the purposes of any 
        applicable levy or debt limits.  If a corporation is created by 
        more than one political subdivision, each political subdivision 
        that ratifies creation of the corporation must adopt a 
        resolution required by this section and, among other 
        requirements, each resolution must specify and agree with the 
        resolution of the other political subdivisions as to how the 
        assets and liabilities of the corporation are allocated or 
        attributed to each political subdivision, including, but not 
        limited to, for the purposes of any applicable levy or debt 
        limits. 
           Subd. 9.  [APPLICATION OF OTHER LAWS.] A corporation 
        created by a political subdivision under this section must 
        comply with every law that applies to the political subdivision, 
        as if the corporation is a part of the political subdivision, 
        unless the resolution ratifying creation of the corporation 
        specifically exempts the corporation from part or all of a law.  
        If the resolution exempts the corporation from part or all of a 
        law, the resolution must make a detailed and specific finding as 
        to why the corporation cannot fulfill its purpose if the 
        corporation is subject to that law.  A corporation may not be 
        exempted from section 471.705, the Minnesota Open Meeting Law, 
        sections 138.163 to 138.25, governing records management, or 
        chapter 13, the Minnesota Government Data Practices Act.  Any 
        affected or interested person may bring an action in district 
        court to void the resolution on the grounds that the findings 
        are not sufficiently detailed and specific, or that the 
        corporation can fulfill its purpose if it is subject to the law 
        from which the resolution exempts the corporation.  Laws that 
        apply to a political subdivision that also apply to a 
        corporation created by a political subdivision under this 
        subdivision include, but are not limited to: 
           (1) section 471.705, the Minnesota Open Meeting Law; 
           (2) chapter 13, the Minnesota Government Data Practices 
        Act; 
           (3) section 471.345, the Uniform Municipal Contracting Law; 
           (4) sections 43A.17, limiting the compensation of employees 
        based on the governor's salary; 471.991 to 471.999, providing 
        for equitable pay; and 465.72 and 465.722, governing severance 
        pay; 
           (5) section 275.065, providing for truth-in-taxation 
        hearings.  If any tax revenues of the political subdivision will 
        be appropriated to the corporation, the corporation's annual 
        operating and capital budgets must be included in the 
        truth-in-taxation hearing of the political subdivision that 
        created the corporation; 
           (6) if the corporation issues debt, its debt is included in 
        the political subdivision's debt limit if it would be included 
        if issued by the political subdivision, and issuance of the debt 
        is subject to the election and other requirements of chapter 475 
        and section 471.69; 
           (7) section 471.895, prohibiting acceptance of gifts from 
        interested parties, and sections 471.87 to 471.89, relating to 
        interests in contracts; 
           (8) chapter 466, relating to municipal tort liability; 
           (9) chapter 118A, requiring deposit insurance or bond or 
        pledged collateral for deposits; 
           (10) chapter 118A, restricting investments; 
           (11) section 471.346, requiring ownership of vehicles to be 
        identified; 
           (12) sections 471.38 to 471.41, requiring claims to be in 
        writing, itemized, and approved by the governing board before 
        payment can be made; and 
           (13) the corporation cannot make advances of pay, make or 
        guarantee loans to employees, or provide in-kind benefits unless 
        authorized by law. 
           Subd. 10.  [THREE-YEAR REVIEW OF APPLICABILITY OF OTHER 
        LAWS.] At least every three years after adoption of a resolution 
        that exempts a corporation from part or all of a law under 
        subdivision 9, the political subdivision must review the 
        activities of the corporation and whether the exemption should 
        continue to apply to the corporation.  The political subdivision 
        must conduct the review at a regularly scheduled meeting of its 
        governing body.  The political subdivision must adopt a 
        resolution to continue any exemption and a certified copy of the 
        resolution must be filed with the secretary of state.  The 
        political subdivision cannot exempt the corporation from a law 
        for the first time under the review process of this subdivision. 
           Subd. 11.  [TAXES USED FOR PUBLIC PURPOSE.] If the 
        political subdivision has authority under other law to 
        appropriate tax revenues for use by the corporation, those funds 
        must be appropriated and used only for public purposes. 
           Subd. 12.  [AUDIT.] A corporation created by a political 
        subdivision that receives public money from the political 
        subdivision, other than grants or loans made under a competitive 
        process for which other entities are eligible, must be audited 
        annually by either a certified public accountant or the state 
        auditor.  Except as provided below, the audit report must be 
        presented at a regularly scheduled meeting of the governing body 
        of the political subdivision that created the corporation.  The 
        audit report must be made available to individuals after 
        presentation of the audit report to the governing body of the 
        political subdivision.  The data classification of an audit 
        performed by the office of the state auditor is governed by 
        chapter 6. 
           Subd. 13.  [STATE AUDITOR POWERS.] The state auditor has 
        the same powers with regard to a corporation created by a 
        political subdivision as the state auditor has with regard to 
        the political subdivision that created the corporation. 
           Subd. 14.  [DATA CLASSIFICATION.] The following data 
        created, collected, or maintained by a corporation subject to 
        this section are classified as private data under section 13.02, 
        subdivision 12, or as nonpublic data under section 13.02, 
        subdivision 9:  (1) data relating either (i) to private 
        businesses consisting of financial statements, credit reports, 
        audits, business plans, income and expense projections, customer 
        lists, balance sheets, income tax returns, and design, market, 
        and feasibility studies not paid for with public funds, or (ii) 
        to enterprises operated by the corporation that are in 
        competition with entities offering similar goods and services, 
        so long as the data are not generally known or readily 
        ascertainable by proper means and disclosure of specific data 
        would cause harm to the competitive position of the enterprise 
        or private business, provided that the goods or services do not 
        require a tax levy; and (2) any data identified in section 
        13.491 collected or received by a transit organization. 
           Sec. 3.  [CLARIFICATION.] 
           Existing corporations that reported to the state auditor 
        under Minnesota Statutes 1998, section 465.715, subdivision 3, 
        but do not meet the definition of a corporation under section 2, 
        subdivision 1, paragraph (b), remain as established and are not 
        affected by this act or by Minnesota Statutes, section 465.715. 
           Sec. 4.  [REPEALER.] 
           Minnesota Statutes 1998, section 465.715, subdivisions 1, 
        2, and 3; and Minnesota Statutes 1999 Supplement, section 
        465.715, subdivision 1a, are repealed. 

                                   ARTICLE 2 
                                 MISCELLANEOUS 
           Section 1.  Minnesota Statutes 1998, section 238.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MUNICIPAL OPERATION.] Nothing in this chapter 
        shall be construed to limit any municipality from the right to 
        construct, purchase, and operate a cable communications 
        system systems, or, to operate facilities and channels for 
        community television, including, but not limited to, public, 
        educational, and governmental access and local origination 
        programming.  Any municipal system, including the operation of 
        community television by a municipality, shall be subject to this 
        chapter to the same extent as would any nonpublic cable 
        communications system. 
           Sec. 2.  Minnesota Statutes 1998, section 469.003, 
        subdivision 5, is amended to read: 
           Subd. 5.  [COMMISSIONERS.] An authority shall consist 
        of five up to seven commissioners, who shall be residents of the 
        area of operation of the authority, who shall be appointed after 
        the resolution becomes finally effective.  If any additional 
        commissioners are appointed, one of the commissioners must be 
        appointed in accordance with the requirements of Code of Federal 
        Regulations, title 24, part 964. 
           Sec. 3.  Minnesota Statutes 1998, section 469.006, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COUNTY COMMISSIONERS.] When the governing 
        body of a county adopts a resolution under section 469.004, the 
        governing body shall appoint five persons or the number of 
        commissioners for the governing body, plus up to two additional 
        commissioners, as commissioners of the county authority.  If any 
        additional commissioners are appointed, one of the commissioners 
        must be appointed in accordance with the requirements of Code of 
        Federal Regulations, title 24, part 964.  The membership of the 
        commission will reflect an areawide distribution on a 
        representative basis.  The commissioners who are first appointed 
        shall be designated to serve for terms of one, two, three, four, 
        and five years respectively, from the date of their 
        appointment.  Thereafter commissioners shall be appointed for a 
        term of office of five years except that all vacancies shall be 
        filled for the unexpired term.  Persons may be appointed as 
        commissioners if they reside within the boundaries or area, and 
        are otherwise eligible for the appointments under sections 
        469.001 to 469.047. 
           Sec. 4.  Minnesota Statutes 1998, section 469.006, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MULTICOUNTY COMMISSIONERS.] The governing body 
        in the case of a county, and the mayor with the approval of the 
        governing body in the case of a city, of each political 
        subdivision included in a multicounty authority shall appoint 
        one person as a commissioner of the authority at or after the 
        time of the adoption of the resolution establishing the 
        authority. 
           In the case of a multicounty authority comprising only two 
        or three political subdivisions, the appointing authorities of 
        the participating political subdivisions shall each appoint one 
        additional commissioner whose term of office shall be as 
        provided for a commissioner of a multicounty authority.  If any 
        additional commissioners are appointed, one of the commissioners 
        must be appointed in accordance with the requirements of Code of 
        Federal Regulations, title 24, part 964. 
           In the case of a multicounty authority comprising more than 
        three political subdivisions, the appointing authorities of the 
        participating political subdivisions may each appoint one 
        additional commissioner whose term of office shall be as 
        provided for a commissioner of a multicounty authority.  The 
        housing and redevelopment authority board of commissioners of a 
        multicounty authority may appoint one or two additional 
        commissioners in order to comply with the requirements of Code 
        of Federal Regulations, title 24, part 964.  The appointment 
        must be approved by a majority of the commissioners of each of 
        the political subdivisions comprising the multicounty authority. 
           When the area of operation of a multicounty authority is 
        increased to include an additional political subdivision, the 
        appointing authority of each additional political subdivision 
        shall appoint one or, if appropriate, two commissioners of the 
        multicounty authority.  
           The appointing authority of each political subdivision 
        shall appoint the successors of the commissioner appointed by 
        it.  The commissioners of a multicounty authority shall be 
        appointed for terms of five years except that all vacancies 
        shall be filled for the unexpired terms. 
           Sec. 5.  Minnesota Statutes 1998, section 469.011, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXPENSES; COMPENSATION.] Each commissioner may 
        receive necessary expenses, including traveling expenses, 
        incurred in the performance of duties.  Each commissioner may be 
        paid up to $55 $75 for attending each regular and special 
        meeting of the authority.  Commissioners who are full-time state 
        employees or full-time employees of the political subdivisions 
        of the state may not receive the daily payment, but they may 
        suffer no loss in compensation or benefits from the state or a 
        political subdivision as a result of their service on the board. 
        Commissioners who are elected officials may receive the daily 
        payment for a particular day only if they do not receive any 
        other daily payment for public service on that day.  
        Commissioners who are full-time state employees or full-time 
        employees of the political subdivisions of the state may receive 
        the expenses provided for in this subdivision unless the 
        expenses are reimbursed by another source. 
           Sec. 6.  [WASHINGTON COUNTY HRA INCREASED TO SEVEN.] 
           Notwithstanding Minnesota Statutes, section 469.006, 
        subdivision 1, the Washington county housing and redevelopment 
        authority has seven members.  The county board must appoint one 
        member from each county commissioner district after receiving a 
        recommendation for the position from the district's county 
        commissioner.  One housing and redevelopment commissioner must 
        be appointed by the county board to represent the county at 
        large.  One authority member must be appointed by the county 
        board from among county residents who are directly assisted by 
        the public housing agency as defined in Code of Federal 
        Regulations, title 24, part 964.  The first appointee to an 
        at-large position serves for two years; thereafter the term is 
        three years.  The first appointee to the position requiring one 
        directly assisted by the public housing agency serves for one 
        year; thereafter the term is three years. 
           Sec. 7.  [EFFECTIVE DATE; LOCAL APPROVAL.] 
           Section 6 is effective the day after the governing body of 
        Washington county and its chief clerical officer timely complete 
        their compliance with Minnesota Statutes, section 645.021, 
        subdivisions 2 and 3. 
           Presented to the governor May 2, 2000 
           Signed by the governor May 5, 2000, 10:50 a.m.