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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 493-S.F.No. 3730 
                  An act relating to public finance; authorizing certain 
                  investments by joint powers investment trusts; 
                  exempting certain airport obligations from the public 
                  sale requirement; providing for state payment of 
                  certain county debt obligations upon potential default 
                  and authorizing means for repayment by the county; 
                  extending sunset for self-executing special service 
                  district laws; authorizing special assessments for 
                  communications facilities; modifying authority to 
                  issue variable rate bonds; providing for replacement 
                  heating systems and related energy conservation 
                  measures in cities discontinuing district heating 
                  systems; making technical changes to description of 
                  area served by nonmetropolitan county economic 
                  development authorities; increasing authority for debt 
                  obligations for the financing of the metropolitan 
                  council's transit capital improvement program; 
                  altering qualifications for residential rental bonds; 
                  providing that the Uniform Commercial Code does not 
                  apply to certain government security interests; 
                  allowing certain cities to be eligible for replacement 
                  transit service; regulating 800 megahertz radio 
                  contract requirements; eliminating a limitation on the 
                  amount of certain grants; funding administration of 
                  Laws 2000, chapter 490, articles 4, 5, and 10; 
                  appropriating money and extending the availability of 
                  an appropriation; amending Minnesota Statutes 1998, 
                  sections 118A.05, subdivision 4; 360.036, subdivision 
                  2; 428A.101; 429.021, subdivision 1; 474A.047, 
                  subdivision 1; and 475.78; Minnesota Statutes 1999 
                  Supplement, sections 473.39, subdivision 1g; and 
                  475.56; Laws 2000, chapter 484, article 1, section 4, 
                  subdivisions 3 and 5; proposing coding for new law in 
                  Minnesota Statutes, chapters 373; and 451; repealing 
                  Minnesota Statutes 1998, section 473.867, subdivision 
                  4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, 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, section 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 1998, section 360.036, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ISSUANCE OF BONDS.] (a) Bonds to be issued by a 
        municipality under sections 360.011 to 360.076, shall be 
        authorized and issued in the manner and within the limitation 
        prescribed by laws or the charter of the municipality for the 
        issuance and authorization of bonds for public purposes 
        generally, except as provided in paragraphs (b) and (c). 
           (b) No election is required to authorize the issuance of 
        the bonds if: 
           (1) a board organized under section 360.042 recommends by a 
        resolution adopted by a vote of not less than 60 percent of its 
        members the issuance of bonds, and (2) the bonds are authorized 
        by a resolution of the governing body of each of the 
        municipalities acting jointly pursuant to section 360.042, 
        adopted by a vote of not less than 60 percent of its members; or 
           (2) the bonds are being issued for the purpose of financing 
        the costs of constructing, enlarging, or improving airports and 
        other air navigation facilities; and 
           (i) the governing body estimates that passenger facility 
        charges and other revenues pledged to the payment thereof will 
        be at least 20 percent of the debt service payable on the bonds 
        in any year; 
           (ii) the project will be funded in part by a federal grant 
        for airport development; and 
           (iii) the principal amount of the bonds issued under this 
        clause does not exceed 25 percent of the amount of the federal 
        grant. 
           (c) If the bonds are general obligations of the 
        municipality, the levy of taxes required by section 475.61 to 
        pay principal and interest on the bonds is not included in 
        computing or applying any levy limitation applicable to the 
        municipality. 
           Sec. 3.  [373.45] [STATE PAYMENT OF DEBT OBLIGATION UPON 
        POTENTIAL DEFAULT; REPAYMENT; STATE OBLIGATION NOT DEBT.] 
           Subdivision 1.  [DEFINITIONS.] (a) As used in this section, 
        the following terms have the meanings given. 
           (b) "Authority" means the Minnesota public facilities 
        authority. 
           (c) "Commissioner" means the commissioner of finance. 
           (d) "Debt obligation" means a general obligation bond 
        issued by a county to provide funds for the construction of: 
           (1) jails; 
           (2) correctional facilities; 
           (3) law enforcement facilities; 
           (4) social services and human services facilities; or 
           (5) solid waste facilities. 
           Subd. 2.  [APPLICATION.] (a) This section provides a state 
        guarantee of the payment of principal and interest on debt 
        obligations if: 
           (1) the obligations are issued after June 30, 2000; 
           (2) application to the public facilities authority is made 
        before issuance; and 
           (3) the obligations are covered by an agreement meeting the 
        requirements of subdivision 3. 
           (b) Applications to be covered by the provisions of this 
        section must be made in a form and contain the information 
        prescribed by the authority.  Applications are subject to a fee 
        of $500 for the first bond issue requested by the county and 
        $250 for each bond issue thereafter. 
           (c) Application fees paid under this section must be 
        deposited in a separate county bond guarantee account in the 
        general fund.  Money in the county bond guarantee account is 
        appropriated to the authority for purposes of administering this 
        section. 
           (d) Neither the authority nor the commissioner is required 
        to promulgate administrative rules under this section and the 
        procedures and requirements established by the authority or 
        commissioner under this section are not subject to chapter 14. 
           Subd. 3.  [AGREEMENT.] (a) In order for specified debt 
        obligations of a county to be covered by the provisions of this 
        section, the county must enter an agreement with the authority 
        obligating the county to be bound by the provisions of this 
        section.  This agreement must be in a form prescribed by the 
        authority and contain any provisions required by the authority, 
        including at least an obligation to: 
           (1) deposit with the paying agent three days before the 
        date on which the payment is due an amount sufficient to make 
        that payment; 
           (2) notify the authority, if the county will be unable to 
        make all or a portion of the payment; and 
           (3) include a provision in the bond resolution and county's 
        agreement with the paying agent for the debt obligation that 
        requires the paying agent to inform the commissioner if it 
        becomes aware of a default or potential default in the payment 
        of principal or interest on that issue or if, on the day two 
        business days before the date a payment is due on that issue, 
        there are insufficient funds to make the payment on deposit with 
        the paying agent.  Funds invested in a refunding escrow account 
        established under section 475.67 that are to become available to 
        the paying agent on a principal or interest payment date are 
        deemed to be on deposit with the paying agent three business 
        days before the payment date.  
           (b) The provisions of an agreement under this subdivision 
        are binding as to an issue as long as any debt obligation of the 
        issue remains outstanding. 
           (c) This section is a contract with bondholders and may not 
        be amended or repealed for the covered bonds so long as the 
        covered bonds are outstanding. 
           Subd. 4.  [NOTIFICATIONS; PAYMENT; APPROPRIATION.] (a) 
        After receipt of a notice of a default or potential default in 
        payment of principal or interest in debt obligations covered by 
        this section or an agreement under this section, and after 
        consultation with the county, the paying agent, and after 
        verification of the accuracy of the information provided, the 
        authority shall notify the commissioner of the potential 
        default.  The notice must include a final figure as to the 
        amount due that the county will be unable to repay on the date 
        due.  
           (b) Upon receipt of this notice from the authority, the 
        commissioner shall issue a warrant and authorize the authority 
        to pay to the paying agent for the debt obligation the specified 
        amount on or before the date due.  The amounts needed for the 
        purposes of this subdivision are annually appropriated to the 
        authority from the general fund. 
           Subd. 5.  [INTEREST ON STATE PAID AMOUNT.] If the state has 
        paid part or all of the principal or interest due on a county's 
        debt obligation, the amount paid bears interest from the date 
        paid by the state until the date of repayment.  The interest 
        rate is the state treasurer's invested cash rate as it is 
        certified by the commissioner.  Interest only accrues on the 
        amounts paid and outstanding less the reduction in aid under 
        subdivision 7 and other payments received from the county. 
           Subd. 6.  [PLEDGE OF COUNTY'S FULL FAITH AND CREDIT.] If 
        the state has paid part or all of the principal or interest due 
        on a county's debt obligation, the county's pledge of its full 
        faith and credit and unlimited taxing powers to repay the 
        principal and interest due on those debt obligations becomes, 
        without an election or the requirement of a further 
        authorization, a pledge of the full faith and credit and 
        unlimited taxing powers of the county to repay to the state the 
        amount paid, with interest.  Amounts paid by the state must be 
        repaid in the order in which the state payments were made. 
           Subd. 7.  [AID REDUCTION FOR REPAYMENT.] (a) Except as 
        provided in paragraph (b), the commissioner may reduce, by the 
        amount paid by the state under this section on behalf of the 
        county, plus the interest due on the state payments, the 
        following aids payable to the county:  
           (1) homestead and agricultural credit aid and disparity 
        reduction aid payable under section 273.1398; 
           (2) county criminal justice aid payable under section 
        477A.0121; and 
           (3) family preservation aid payable under section 477A.0122.
        The amount of any aid reduction reverts from the appropriate 
        account to the state general fund.  
           (b) If, after review of the financial situation of the 
        county, the authority advises the commissioner that a total 
        reduction of the aids would cause an undue hardship on the 
        county, the authority, with the approval of the commissioner, 
        may establish a different schedule for reduction of aids to 
        repay the state.  The amount of aids to be reduced are decreased 
        by any amounts repaid to the state by the county from other 
        revenue sources. 
           Subd. 8.  [TAX LEVY FOR REPAYMENT.] (a) With the approval 
        of the authority, a county may levy in the year the state makes 
        a payment under this section an amount up to the amount 
        necessary to provide funds for the repayment of the amount paid 
        by the state plus interest through the date of estimated 
        repayment by the county.  The proceeds of this levy may be used 
        only for this purpose unless they exceed the amount actually 
        due.  Any excess must be used to repay other state payments made 
        under this section or must be deposited in the debt redemption 
        fund of the county.  The amount of aids to be reduced to repay 
        the state are decreased by the amount levied. 
           (b) If the state is not repaid in full for a payment made 
        under this section by November 30 of the calendar year following 
        the year in which the state makes the payment, the authority 
        shall require the county to certify a property tax levy in an 
        amount up to the amount necessary to provide funds for repayment 
        of the amount paid by the state plus interest through the date 
        of estimated repayment by the county.  To prevent undue 
        hardship, the authority may allow the county to certify the levy 
        over a five-year period.  The proceeds of the levy may be used 
        only for this purpose unless they are in excess of the amount 
        actually due, in which case the excess must be used to repay 
        other state payments made under this section or must be 
        deposited in the debt redemption fund of the county.  If the 
        authority orders the county to levy, the amount of aids reduced 
        to repay the state are decreased by the amount levied.  
           (c) A levy under this subdivision is an increase in the 
        levy limits of the county for purposes of section 275.065, 
        subdivision 6, and must be explained as a specific increase at 
        the meeting required under that provision.  
           Subd. 9.  [MANDATORY PLAN; TECHNICAL ASSISTANCE.] If the 
        state makes payments on behalf of a county under this section or 
        the county defaults in the payment of principal or interest on 
        an outstanding debt obligation, it must submit a plan to the 
        authority for approval specifying the measures it intends to 
        implement to resolve the issues which led to its inability to 
        make the payment and to prevent further defaults.  If the 
        authority determines that a county's plan is not adequate, the 
        authority shall notify the county that the plan has been 
        disapproved, the reasons for the disapproval, and that the state 
        will not make future payments under this section for debt 
        obligations of the affected county issued after the date 
        specified in that notice until its plan is approved.  The 
        authority may also notify the county that until its plan is 
        approved, aids due the county will be withheld after a date 
        specified in the notice. 
           Subd. 10.  [CONTINUING DISCLOSURE AGREEMENTS.] The 
        authority may enter into written agreements or contracts 
        relating to the continuing disclosure of information needed to 
        facilitate the ability of counties to issue debt obligations 
        according to federal securities laws, rules, and regulations, 
        including securities and exchange commission rules and 
        regulations, section 240.15c2-12.  The agreements or contracts 
        may be in any form the authority deems reasonable and in the 
        state's best interests. 
           Sec. 4.  Minnesota Statutes 1998, section 428A.101, is 
        amended to read: 
           428A.101 [SPECIAL SERVICE DISTRICT; SUNSET OF 
        SELF-EXECUTING PROVISIONS.] 
           The establishment of a new special service district after 
        June 30, 2001, must be made pursuant to enabling legislation 
        under Minnesota Statutes 1994, sections 428A.01 to 428A.10 2005, 
        requires enactment of a special law authorizing the 
        establishment. 
           Sec. 5.  Minnesota Statutes 1998, 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. 
           (18) To improve, construct, extend, and maintain facilities 
        for Internet access and other communications purposes, if the 
        council finds that: 
           (i) the facilities are necessary to make available Internet 
        access or other communications services that are not and will 
        not be available through other providers or the private market 
        in the reasonably foreseeable future; and 
           (ii) the service to be provided by the facilities will not 
        compete with service provided by private entities. 
           Sec. 6.  [451.10] [DISTRICT HEATING SYSTEM.] 
           Subdivision 1.  [APPLICATION.] Sections 451.10 to 451.17 
        apply to a city that: 
           (1) owns and operates a district heating system either 
        directly by the city council or by a utility board or utility 
        commission of the city; and 
           (2) has taken action under law or charter to discontinue 
        the operation of the district heating system in whole or in part.
           Subd. 2.  [SUPERSEDES OTHER LAW.] Sections 451.10 to 451.17 
        apply to the cities described in subdivision 1 notwithstanding a 
        contrary provision in a city charter or in any other law 
        including section 451.09. 
           Subd. 3.  [SUPPLEMENTAL TO OTHER LAW.] The powers granted 
        by sections 451.10 to 451.17 are supplemental and additional to 
        other powers granted by law or charter. 
           Sec. 7.  [451.11] [POLICY; PURPOSE.] 
           Subdivision 1.  [FINDINGS.] The legislature finds that it 
        is in the public interest that cities owning and operating a 
        district heating system that have determined to discontinue the 
        system in whole or in part be authorized to establish and 
        conduct a program to provide replacement heating and related 
        equipment to the owners of property whose district heating 
        service is discontinued.  The legislature also finds that the 
        cities should be authorized to adopt and implement programs to 
        provide for the installation of energy conservation equipment 
        and measures to enhance the efficient and economical use of 
        energy in buildings and structures served by a district heating 
        system and in which replacement heating systems are installed 
        under sections 451.10 to 451.17. 
           Subd. 2.  [PUBLIC PURPOSE.] The legislature further finds 
        that expenditures made by cities for a purpose in sections 
        451.10 to 451.17 are expenditures for a public purpose. 
           Sec. 8.  [451.12] [DEFINITIONS.] 
           Subdivision 1.  [APPLICATION.] In sections 451.10 to 451.17 
        the definitions in this section apply. 
           Subd. 2.  [CITY.] "City" means a city, however organized, 
        acting through its city council or through a public utilities 
        commission duly created by law or charter. 
           Subd. 3.  [REPLACEMENT HEATING SYSTEM IMPROVEMENT.] 
        "Replacement heating system improvement" means and includes 
        furnaces, boilers, and similar heat generating and exchanging 
        equipment together with related equipment, duct work, and 
        control mechanisms that are installed to provide heating, 
        ventilating, and air conditioning services in a building or 
        structure whose district heating service has been discontinued 
        by a city. 
           Subd. 4.  [ENERGY CONSERVATION IMPROVEMENT.] (a) "Energy 
        conservation improvement" means and includes, but is not limited 
        to, the following devices, methods, and materials, if 
        recommended by an energy audit approved in a program and having 
        a maximum cost of $20,000, that increase the efficiency of the 
        use of energy in a building or structure: 
           (1) insulation and ventilation; 
           (2) storm windows, thermal windows, and storm doors; 
           (3) caulking and weatherstripping; 
           (4) heating system modifications; and 
           (5) thermostats or lighting controls. 
           (b) The term does not include a device or method that 
        creates, converts, or actively uses energy from renewable 
        resources such as wind, solar, or biomass. 
           Subd. 5.  [PROGRAM.] "Program" means a statement of goals, 
        procedures, standards of eligibility, and methods of financing 
        for the installation of heating replacement system improvements 
        and energy conservation improvements. 
           Subd. 6.  [IMPROVEMENT.] "Improvement" includes replacement 
        heating system improvements and energy conservation improvements.
           Sec. 9.  [451.13] [PROGRAM.] 
           Subdivision 1.  [AFTER NOTICE AND HEARING.] A program may 
        be adopted by resolution of the city council of a city after 
        reasonable notice and hearing provided for by the city council. 
           Subd. 2.  [ELEMENTS.] The program must contain at least the 
        following elements: 
           (1) a description of the kinds of property eligible for 
        assistance with heating replacement improvements and energy 
        conservation improvements; 
           (2) procedures for accomplishing the improvements by the 
        city or private contractors; 
           (3) methods of financing the installation of the heating 
        replacement and energy conservation improvements; and 
           (4) the administrative agency of the city responsible for 
        conducting the program. 
           Subd. 3.  [DELEGATION.] The city council may by resolution 
        delegate the responsibility for the conduct of the program to a 
        public utilities commission or public utilities board of the 
        city. 
           Sec. 10.  [451.14] [INSTALLING THE IMPROVEMENTS.] 
           Subdivision 1.  [METHODS.] The program may provide for the 
        methods of installing the improvements set out in this 
        subdivision. 
           (a) The city may contract with one or more contractors to 
        perform work and furnish materials for the improvements. 
           (b) The owner of a building or structure eligible for an 
        improvement may contract for the installation of the 
        improvement, subject to approval by the city as provided in the 
        program. 
           (c) The city may contract with a property owner for the 
        installation of an improvement by the property owner, but no 
        payment under section 451.15 may be made for the property 
        owner's labor. 
           Subd. 2.  [INSPECTION AND CERTIFICATION.] The program must 
        provide a method by which a city official or employee may 
        inspect and is to certify the completed installation of the 
        improvement to ensure compliance with city codes and ordinances 
        and other standards specified in the program.  
           Subd. 3.  [COMPETITIVE BIDS.] Contracts entered into under 
        subdivision 1, paragraph (a), are subject to competitive bidding 
        requirements of law. 
           Sec. 11.  [451.15] [PAYMENTS; FINANCING.] 
           Subdivision 1.  [FINANCING.] The program may include one or 
        more of the methods described in this section for financing the 
        cost of the installation of improvements. 
           Subd. 2.  [CASH.] The city may contract with a property 
        owner for the payment in cash of the cost of the installation of 
        the improvements upon completion of the installation of the 
        improvements.  The payment must be secured by: 
           (1) a deposit with the city of 90 percent of the contract 
        price; or 
           (2) a written commitment from a bank or other financial 
        institution approved in the program to lend the property owner 
        the full amount of the contract price for payment to the city.  
           Subd. 3.  [PROMISSORY NOTE.] The city may accept payment of 
        the contract price by a promissory note from the property owner 
        delivered at the time of entering into the contract payable at 
        such times, not exceeding ten years, and in the amounts and at 
        the interest rate specified in the program. 
           Subd. 4.  [LIEN AS SECURITY.] The balance of payments due 
        under subdivision 2 and the entire principal of and interest on 
        a promissory note delivered under subdivision 3 are secured by a 
        lien created by this subdivision on the real property on which 
        the improvements are made.  If payment is not made according to 
        the terms of the program, or the note, the chief financial 
        officer of the city may certify the entire amount so due to the 
        county auditor for collection as other taxes are collected. 
           Subd. 5.  [SPECIAL ASSESSMENTS.] The program may provide 
        that at the request of the property owner the unpaid cost of the 
        installation of an improvement is to be specially assessed 
        against the real property on which the improvement is installed 
        in the manner provided by section 429.101, except that: 
           (1) the adoption of an ordinance is not required; and 
           (2) obligations issued to finance the improvements must 
        mature not later than ten years from the date of their issuance. 
           Sec. 12.  [451.16] [FINANCING; OBLIGATIONS.] 
           Subdivision 1.  [BONDS; OTHER OBLIGATIONS.] In addition to 
        the authority to issue obligations under section 429.101, a city 
        may issue its bonds or other obligations to finance the cost of 
        the installation of improvements as provided in this section. 
           Subd. 2.  [REVENUE OBLIGATIONS.] A city may issue and sell 
        its revenue obligations payable solely from the revenues derived 
        or to be derived from assessments and payments from property 
        owners under section 451.15, which revenues must be pledged to 
        the payment of the obligations.  Obligations issued under this 
        subdivision are considered to be payable wholly from the income 
        of a revenue producing convenience within the meaning of 
        sections 475.51 and 475.58. 
           Subd. 3.  [GENERAL OBLIGATIONS.] A city may issue and sell 
        its general obligations under chapter 475, payable from the 
        revenues and assessments derived or to be derived from property 
        owners under section 451.15, which revenues must be pledged to 
        the payment of the obligations.  General obligations must not be 
        issued unless the pledged revenues are estimated to equal at 
        least 105 percent of the amount necessary to pay when due the 
        principal of and interest on the obligations.  Obligations 
        issued under this subdivision are considered to be payable 
        wholly from the income of a revenue producing convenience within 
        the meaning of sections 475.51 and 475.58. 
           Sec. 13.  [451.17] [CITY OF VIRGINIA.] 
           The city of Virginia is considered to have complied with 
        section 451.09, notwithstanding section 451.09, subdivision 4. 
           Sec. 14.  Minnesota Statutes 1999 Supplement, section 
        473.39, subdivision 1g, is amended to read: 
           Subd. 1g.  [OBLIGATIONS; 2000-2002.] In addition to the 
        authority in subdivisions 1a, 1b, 1c, 1d, and 1e, the council 
        may issue certificates of indebtedness, bonds, or other 
        obligations under this section in an amount not exceeding 
        $36,000,000 $55,400,000, which may be used for capital 
        expenditures, other than for construction, maintenance, or 
        operation of light rail transit, as prescribed in the council's 
        transit capital improvement program and for related costs, 
        including the costs of issuance and sale of the obligations.  
        The funds must be proportionally spent on capital improvement 
        projects as recommended by the regional transit capital 
        evaluation committee. 
           Sec. 15.  Minnesota Statutes 1998, section 474A.047, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ELIGIBILITY.] (a) An issuer may only use 
        the proceeds from residential rental bonds if the proposed 
        project meets one of the following: 
           (1) the proposed project is a single room occupancy project 
        and all the units of the project will be occupied by individuals 
        whose incomes at the time of their initial residency in the 
        project are 50 percent or less of the greater of the statewide 
        or county median income adjusted for household size as 
        determined by the federal Department of Housing and Urban 
        Development; 
           (2) the proposed project is a multifamily project where at 
        least 75 percent of the units have two or more bedrooms and at 
        least one-third of the 75 percent have three or more bedrooms; 
        or 
           (3) the proposed project is a multifamily project that 
        meets the following requirements: 
           (i) the proposed project is the rehabilitation of an 
        existing multifamily building which meets the requirements for 
        minimum rehabilitation expenditures in sections 42(e)(2) and 
        42(e)(3)(A) of the Internal Revenue Code; 
           (ii) the proposed project involves participation by the 
        Minnesota housing finance agency or a local unit of government 
        in the financing of the acquisition or rehabilitation of the 
        project.  For purposes of this subdivision, "participation" 
        means an activity other than the issuance of the bonds; and 
           (iii) the proposed project must be occupied by individuals 
        or families whose incomes at the time of their initial residency 
        in the project meet the requirements of section 42(g) of the 
        Internal Revenue Code. 
           (b) The maximum rent for a proposed single room occupancy 
        unit under paragraph (a), clause (1), is 30 percent of the 
        amount equal to 30 percent of the greater of the statewide or 
        county median income for a one-member household as determined by 
        the federal Department of Housing and Urban Development.  The 
        maximum rent for at least 75 percent of the units of a 
        multifamily project under paragraph (a), clause (2), is 30 
        percent of the amount equal to 50 percent of the greater of the 
        statewide or county median income as determined by the federal 
        Department of Housing and Urban Development based on a household 
        size with 1.5 persons per bedroom. 
           (c) The proceeds from residential rental bonds may be used 
        for a project for which project-based federal rental assistance 
        payments are made only if: 
           (1) the owner of the project enters into a binding 
        agreement with the Minnesota housing finance agency under which 
        the owner is obligated to extend any existing low-income 
        affordability restrictions and any contract or agreement for 
        rental assistance payments for the maximum term permitted, 
        including any renewals thereof; and 
           (2) the Minnesota housing finance agency certifies that 
        project reserves will be maintained at closing of the bond issue 
        and budgeted in future years at the lesser of: 
           (i) the level described in Minnesota Rules, part 4900.0010, 
        subpart 7, item A, subitem (2), effective May 1, 1997; or 
           (ii) the level of project reserves available prior to the 
        bond issue, provided that additional money is available to 
        accomplish repairs and replacements needed at the time of bond 
        issue. 
           Sec. 16.  Minnesota Statutes 1999 Supplement, section 
        475.56, is amended to read: 
           475.56 [INTEREST RATE.] 
           (a) Any municipality issuing obligations under any law may 
        issue obligations bearing interest at a single rate or at rates 
        varying from year to year which may be lower or higher in later 
        years than in earlier years.  Such higher rate for any period 
        prior to maturity may be represented in part by separate coupons 
        designated as additional coupons, extra coupons, or B coupons, 
        but the highest aggregate rate of interest contracted to be so 
        paid for any period shall not exceed the maximum rate authorized 
        by law.  Such higher rate may also be represented in part by the 
        issuance of additional obligations of the same series, over and 
        above but not exceeding two percent of the amount otherwise 
        authorized to be issued, and the amount of such additional 
        obligations shall not be included in the amount required by 
        section 475.59 to be stated in any bond resolution, notice, or 
        ballot, or in the sale price required by section 475.60 or any 
        other law to be paid; but if the principal amount of the entire 
        series exceeds its cash sale price, such excess shall not, when 
        added to the total amount of interest payable on all obligations 
        of the series to their stated maturity dates, cause the average 
        annual rate of such interest to exceed the maximum rate 
        authorized by law.  This section does not authorize a provision 
        in any such obligations for the payment of a higher rate of 
        interest after maturity than before. 
           (b) Any municipality issuing obligations under any law may 
        sell original issue discount obligations having a stated 
        principal amount in excess of the authorized amount and the sale 
        price, provided that: 
           (1) the sale price does not exceed by more than two percent 
        the amount of obligations otherwise authorized to be issued; 
           (2) the underwriting fee, discount, or other sales or 
        underwriting commission does not exceed two percent of the sale 
        price; and 
           (3) the discount rate necessary to present value total 
        principal and interest payments over the term of the issue to 
        the sale price does not exceed the lesser of the maximum rate 
        permitted by law for municipal obligations or ten percent. 
           (c) Any obligation of an issue of obligations otherwise 
        subject to section 475.55, subdivision 1, may bear interest at a 
        rate varying periodically at the time or times and on the terms, 
        including convertibility to a fixed rate of interest, determined 
        by the governing body of the municipality, but the rate of 
        interest for any period shall not exceed the any maximum rate of 
        interest for the obligations determined in accordance with 
        section 475.55, subdivision 1 established by law.  For purposes 
        of section 475.61, subdivisions 1 and 3, the interest payable on 
        variable rate obligations for their term shall be determined as 
        if their rate of interest is the maximum rate permitted for the 
        obligations under section 475.55, subdivision 1, or the lesser 
        of the maximum rate of interest payable on the obligations in 
        accordance with their terms or the rate estimated for such 
        purpose by the governing body, but if the interest rate is 
        subsequently converted to a fixed rate the levy may be modified 
        to provide at least five percent in excess of amounts necessary 
        to pay principal of and interest at the fixed rate on the 
        obligations when due.  For purposes of computing debt service or 
        interest pursuant to section 475.67, subdivision 12, interest 
        throughout the term of bonds issued pursuant to this subdivision 
        is deemed to accrue at the rate of interest first borne by the 
        bonds.  The provisions of this paragraph do not apply to general 
        obligations issued by a statutory or home rule charter city with 
        a population of less than 7,500, as defined in section 477A.011, 
        subdivision 3, or to general obligations that are not rated A or 
        better, or an equivalent subsequently established rating, by 
        Standard and Poor's Corporation, Moody's Investors Service or 
        other similar nationally recognized rating agency, except that 
        any statutory or home rule charter city, regardless of 
        population or bond rating, may issue variable rate obligations 
        as a participant in a bond pooling program established by the 
        league of Minnesota cities that meets this bond rating 
        requirement. 
           Sec. 17.  Minnesota Statutes 1998, section 475.78, is 
        amended to read: 
           475.78 [PERFECTION OF PLEDGE; SECURITY INTERESTS.] 
           Neither filing nor possession is required to perfect the 
        security interest created by any pledge or appropriation of 
        revenues or funds of the municipality, including any of its 
        investments, to the payment of bonds issued by the municipality. 
        Notwithstanding any contrary provision of law, article 9 of the 
        Uniform Commercial Code does not apply to security interests 
        created by a municipality or the state, except security 
        interests in equipment and fixtures. 
           Sec. 18.  Laws 2000, chapter 484, article 1, section 4, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COMMITTEE REPORT.] The committee shall issue its 
        report within 90 days of its initial meeting.  The committee may 
        request one 60-day extension from the county board.  The report 
        must contain the committee's recommendation for the preferred 
        organizational option for a county economic development service 
        provider, including the distance of the radius of the 
        extraterritorial parcel from the boundary of the city that may 
        be controlled by each affected city in subdivision 5.  This 
        extraterritorial parcel The distance may not exceed two miles 
        from the city boundary.  The report must contain written 
        findings on issues considered by the committee including, but 
        not limited to, the following: 
           (1) identification of the current level of economic 
        development, housing, and community development programs and 
        services provided by existing agencies, any existing gaps in 
        programs and services, and the capacity and ability of those 
        agencies to expand their activities; and 
           (2) the recommended organizational option for providing 
        needed economic development, housing, and community development 
        services in the most efficient, effective manner. 
           Sec. 19.  Laws 2000, chapter 484, article 1, section 4, 
        subdivision 5, is amended to read: 
           Subd. 5.  [AREA OF OPERATION.] The area of operation of a 
        county economic development service provider created under this 
        section shall include all cities within a county that have 
        adopted resolutions electing to participate.  A city may adopt a 
        resolution electing to withdraw participation.  The withdrawal 
        election may be made every fifth year following adoption of the 
        resolution electing participation.  The withdrawal election is 
        effective on the anniversary date of the original resolution 
        provided notice is given to the county economic development 
        authority not less than 90 nor more than 180 days prior to that 
        anniversary date.  The city electing to withdraw retains any 
        rights, obligations, and liabilities it obtained or incurred 
        during its participation.  Any city within the county shall have 
        the option to adopt a resolution to prohibit the county economic 
        development service provider created under this section from 
        operating within its boundaries and (1) within an agreed upon 
        urban service area, or (2) within the boundary distance approved 
        in the committee report referenced in subdivision 3.  If a city 
        prohibits a county economic development service provider created 
        under this section from operating within its boundaries, the 
        city's property taxpayers shall not be subject to the property 
        tax levied for the county economic development service provider. 
           Sec. 20.  [APPROPRIATION AVAILABILITY EXTENDED.] 
           The appropriation in Laws 1995, chapter 220, section 19, 
        subdivision 4, paragraph (g), clause (2), as amended by Laws 
        1996, chapter 407, section 50, is available until June 30, 2001. 
           Sec. 21.  [REPLACEMENT TRANSIT SERVICE; ELIGIBILITY.] 
           (a) Notwithstanding the eligibility requirements in 
        Minnesota Statutes, section 473.388, subdivision 2, the city of 
        Minnetonka is eligible for the replacement service program under 
        Minnesota Statutes, section 473.388, if the city first applies 
        for assistance or exercises the local levy option under 
        Minnesota Statutes, section 473.388, before June 30, 2003. 
           (b) Notwithstanding the eligibility requirements in 
        Minnesota Statutes, section 473.388, subdivision 2, the city of 
        Shorewood is eligible for the replacement service program under 
        Minnesota Statutes, section 473.388, if the city first applies 
        for assistance or exercises the local levy option under 
        Minnesota Statutes, section 473.388, before June 30, 2003. 
           Sec. 22.  [PUBLIC SAFETY RADIO SYSTEM CONTRACTS.] 
           Any contracts relating to an 800 megahertz trunked radio 
        network for service shall be let for bid only on a competitive 
        basis. 
           The trunked backbone network and 800 megahertz radios used 
        on it must include at a minimum features that meet open 
        standards of interoperability.  The contracting government 
        authority may not accept any feature enhancement that would 
        interfere with or impede the interoperability of the network as 
        a whole or with any radios regardless of manufacturer. 
           Sec. 23.  [NO LOCAL APPROVAL; EFFECTIVE DATE.] 
           Sections 6 to 13 do not require local approval as they fit 
        within the exception in Minnesota Statutes, section 645.023, 
        subdivision 1, clause (a).  Sections 6 to 13 are effective the 
        day after final enactment. 
           Sec. 24.  [APPLICATION.] 
           Sections 14 and 25 apply in the counties of Anoka, Carver, 
        Dakota, Hennepin, Ramsey, Scott, and Washington. 
           Sec. 25.  [REPEALER.] 
           Minnesota Statutes 1998, section 473.867, subdivision 4, is 
        repealed. 
           Sec. 26.  [APPROPRIATION.] 
           $354,000 is appropriated from the general fund to the 
        commissioner of revenue for fiscal year 2001 to administer the 
        provisions of Laws 2000, chapter 490, articles 4, 5, and 10. 
           Sec. 27.  [EFFECTIVE DATE.] 
           Sections 1, 22, and 25 are effective the day following 
        final enactment.  Section 3 is effective the day following final 
        enactment and applies to bonds issued after a rating has been 
        obtained for the program from a national rating agency.  Section 
        20 is effective retroactively from December 31, 1999. 
           Presented to the governor May 19, 2000 
           Signed by the governor May 30, 2000, 2:11 p.m.