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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 278-S.F.No. 1790 
                  An act relating to public administration; increasing 
                  the flexibility of local government contracting; 
                  increasing the purchasing authority of city managers 
                  in plan B cities; increasing the competitive bidding 
                  threshold for small cities; authorizing the use of 
                  reverse auction and electronic bidding and selling; 
                  clarifying the division of proceeds of state bond 
                  financed property; permitting Ramsey County to collect 
                  and retain up to a $1 criminal surcharge in order to 
                  fund Ramsey County's petty misdemeanor diversion 
                  program; amending Minnesota Statutes 2002, sections 
                  16A.695, subdivision 3; 373.01, subdivision 1; 
                  412.691; 429.041, subdivisions 1, 2; 469.015, 
                  subdivisions 1, 3; 471.345, subdivisions 3, 4, by 
                  adding subdivisions; Minnesota Statutes 2003 
                  Supplement, section 357.021, subdivisions 6, 7. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2002, section 16A.695, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SALE OF PROPERTY.] A public officer or agency 
        shall not sell any state bond financed property unless the 
        public officer or agency determines by official action that the 
        property is no longer usable or needed by the public officer or 
        agency to carry out the governmental program for which it was 
        acquired or constructed, the sale is made as authorized by law, 
        the sale is made for fair market value, and the sale is approved 
        by the commissioner.  If any state bonds issued to purchase or 
        better the state bond financed property that is sold remain 
        outstanding on the date of sale, the net proceeds of sale must 
        be applied as follows: 
           (1) if the state bond financed property was acquired and 
        bettered solely with state bond proceeds, the net proceeds of 
        sale must be paid to the commissioner, deposited in the state 
        bond fund, and used to pay or redeem or defease the outstanding 
        state bonds in accordance with the commissioner's order 
        authorizing their issuance, and the proceeds are appropriated 
        for this purpose; or 
           (2) if the state bond financed property was acquired or 
        bettered partly with state bond proceeds and partly with other 
        money, the net proceeds of sale must be used:  first, to pay to 
        the state the amount of state bond proceeds used to acquire or 
        better the property; second, to pay in full any outstanding 
        public or private debt incurred to acquire or better the 
        property; and third, any excess over the amount needed for those 
        purposes must be divided in proportion to the shares contributed 
        to the acquisition or betterment of the property and paid to the 
        interested public and private entities, other than any private 
        lender already paid in full, and the proceeds are appropriated 
        for this purpose.  In calculating the share contributed by each 
        entity, the amount to be attributed to the owner of the property 
        shall be the fair market value of the property that was bettered 
        by state bond proceeds at the time the betterment began. 
           When all of the net proceeds of sale have been applied as 
        provided in this subdivision, this section no longer applies to 
        the property. 
           [EFFECTIVE DATE.] This section is effective the day 
        following final enactment. 
           Sec. 2.  Minnesota Statutes 2003 Supplement, section 
        357.021, subdivision 6, is amended to read: 
           Subd. 6.  [SURCHARGES ON CRIMINAL AND TRAFFIC OFFENDERS.] 
        (a) The court shall impose and the court administrator shall 
        collect a $60 surcharge on every person convicted of any felony, 
        gross misdemeanor, misdemeanor, or petty misdemeanor offense, 
        other than a violation of a law or ordinance relating to vehicle 
        parking, for which there shall be a $3 surcharge.  In the second 
        judicial district, the court shall impose, and the court 
        administrator shall collect, an additional $1 surcharge on every 
        person convicted of any felony, gross misdemeanor, or petty 
        misdemeanor offense, other than a violation of a law or 
        ordinance relating to vehicle parking, if the Ramsey County 
        Board of Commissioners authorizes the $1 surcharge.  The 
        surcharge shall be imposed whether or not the person is 
        sentenced to imprisonment or the sentence is stayed.  
           (b) If the court fails to impose a surcharge as required by 
        this subdivision, the court administrator shall show the 
        imposition of the surcharge, collect the surcharge and correct 
        the record. 
           (c) The court may not waive payment of the surcharge 
        required under this subdivision.  Upon a showing of indigency or 
        undue hardship upon the convicted person or the convicted 
        person's immediate family, the sentencing court may authorize 
        payment of the surcharge in installments. 
           (d) The court administrator or other entity collecting a 
        surcharge shall forward it to the commissioner of finance. 
           (e) If the convicted person is sentenced to imprisonment 
        and has not paid the surcharge before the term of imprisonment 
        begins, the chief executive officer of the correctional facility 
        in which the convicted person is incarcerated shall collect the 
        surcharge from any earnings the inmate accrues from work 
        performed in the facility or while on conditional release.  The 
        chief executive officer shall forward the amount collected to 
        the commissioner of finance. 
           [EFFECTIVE DATE.] This section is effective either the day 
        after the governing body of Ramsey County authorizes imposition 
        of the surcharge, or August 1, 2004, whichever is the later 
        date, and applies to convictions on or after the effective date. 
           Sec. 3.  Minnesota Statutes 2003 Supplement, section 
        357.021, subdivision 7, is amended to read: 
           Subd. 7.  [DISBURSEMENT OF SURCHARGES BY COMMISSIONER OF 
        FINANCE.] (a) Except as provided in paragraphs (b) and, (c), and 
        (d), the commissioner of finance shall disburse surcharges 
        received under subdivision 6 and section 97A.065, subdivision 2, 
        as follows: 
           (1) one percent shall be credited to the game and fish fund 
        to provide peace officer training for employees of the 
        Department of Natural Resources who are licensed under sections 
        626.84 to 626.863, and who possess peace officer authority for 
        the purpose of enforcing game and fish laws; 
           (2) 39 percent shall be credited to the peace officers 
        training account in the special revenue fund; and 
           (3) 60 percent shall be credited to the general fund.  
           (b) The commissioner of finance shall credit $3 of each 
        surcharge received under subdivision 6 and section 97A.065, 
        subdivision 2, to the general fund. 
           (c) In addition to any amounts credited under paragraph 
        (a), the commissioner of finance shall credit $32 of each 
        surcharge received under subdivision 6 and section 97A.065, 
        subdivision 2, and the $3 parking surcharge, to the general fund.
           (d) If the Ramsey County Board of Commissioners authorizes 
        imposition of the additional $1 surcharge provided for in 
        subdivision 6, paragraph (a), the court administrator in the 
        second judicial district shall withhold $1 from each surcharge 
        collected under subdivision 6.  The court administrator must use 
        the withheld funds solely to fund the petty misdemeanor 
        diversion program administered by the Ramsey County Violations 
        Bureau.  The court administrator must transfer any unencumbered 
        portion of the funds received under this subdivision to the 
        commissioner of finance for distribution according to paragraphs 
        (a) to (c). 
           [EFFECTIVE DATE.] This section is effective either the day 
        after the governing body of Ramsey County authorizes imposition 
        of the surcharge, or August 1, 2004, whichever is the later 
        date, and applies to convictions on or after the effective date. 
           Sec. 4.  Minnesota Statutes 2002, section 373.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PUBLIC CORPORATION; LISTED POWERS.] (a) 
        Each county is a body politic and corporate and may: 
           (1) Sue and be sued. 
           (2) Acquire and hold real and personal property for the use 
        of the county, and lands sold for taxes as provided by law. 
           (3) Purchase and hold for the benefit of the county real 
        estate sold by virtue of judicial proceedings, to which the 
        county is a party. 
           (4) Sell, lease, and convey real or personal estate owned 
        by the county, and give contracts or options to sell, lease, or 
        convey it, and make orders respecting it as deemed conducive to 
        the interests of the county's inhabitants.  
           (5) Make all contracts and do all other acts in relation to 
        the property and concerns of the county necessary to the 
        exercise of its corporate powers. 
           (b) No sale, lease, or conveyance of real estate owned by 
        the county, except the lease of a residence acquired for the 
        furtherance of an approved capital improvement project, nor any 
        contract or option for it, shall be valid, without first 
        advertising for bids or proposals in the official newspaper of 
        the county for three consecutive weeks and once in a newspaper 
        of general circulation in the area where the property is 
        located.  The notice shall state the time and place of 
        considering the proposals, contain a legal description of any 
        real estate, and a brief description of any personal property.  
        Leases that do not exceed $15,000 for any one year may be 
        negotiated and are not subject to the competitive bid procedures 
        of this section.  All proposals estimated to exceed $15,000 in 
        any one year shall be considered at the time set for the bid 
        opening, and the one most favorable to the county accepted, but 
        the county board may, in the interest of the county, reject any 
        or all proposals.  
           (c) Sales of personal property the value of which is 
        estimated to be $15,000 or more shall be made only after 
        advertising for bids or proposals as provided for real estate in 
        the county's official newspaper, on the county's Web site, or in 
        a recognized industry trade journal.  At the same time it posts 
        on its Web site or publishes in a trade journal, the county must 
        publish in the official newspaper, either as part of the minutes 
        of a regular meeting of the county board or in a separate 
        notice, a summary of all requests for bids or proposals that the 
        county advertises on its Web site or in a trade journal.  After 
        publication in the official newspaper, on the Web site, or in a 
        trade journal, bids or proposals may be solicited and accepted 
        by the electronic selling process authorized in section 471.345, 
        subdivision 17.  Sales of personal property the value of which 
        is estimated to be less than $15,000 may be made either on 
        competitive bids or in the open market, in the discretion of the 
        county board.  "Web site" means a specific, addressable location 
        provided on a server connected to the Internet and hosting World 
        Wide Web pages and other files that are generally accessible on 
        the Internet all or most of a day. 
           (d) Notwithstanding anything to the contrary herein, the 
        county may, when acquiring real property for county highway 
        right-of-way, exchange parcels of real property of substantially 
        similar or equal value without advertising for bids.  The 
        estimated values for these parcels shall be determined by the 
        county assessor. 
           (e) If real estate or personal property remains unsold 
        after advertising for and consideration of bids or proposals the 
        county may employ a broker to sell the property.  The broker may 
        sell the property for not less than 90 percent of its appraised 
        market value as determined by the county.  The broker's fee 
        shall be set by agreement with the county but may not exceed ten 
        percent of the sale price and must be paid from the proceeds of 
        the sale. 
           (f) A county or its agent may rent a county-owned residence 
        acquired for the furtherance of an approved capital improvement 
        project subject to the conditions set by the county board and 
        not subject to the conditions for lease otherwise provided by 
        this clause paragraph (a), clause (4), and paragraphs (b), (c), 
        (d), (e), and (g). 
           (g) In no case shall lands be disposed of without there 
        being reserved to the county all iron ore and other valuable 
        minerals in and upon the lands, with right to explore for, mine 
        and remove the iron ore and other valuable minerals, nor shall 
        the minerals and mineral rights be disposed of, either before or 
        after disposition of the surface rights, otherwise than by 
        mining lease, in similar general form to that provided by 
        section 93.20 for mining leases affecting state lands.  The 
        lease shall be for a term not exceeding 50 years, and be issued 
        on a royalty basis, the royalty to be not less than 25 cents per 
        ton of 2,240 pounds, and fix a minimum amount of royalty payable 
        during each year, whether mineral is removed or not.  
        Prospecting options for mining leases may be granted for periods 
        not exceeding one year.  The options shall require, among other 
        things, periodical showings to the county board of the results 
        of exploration work done.  
           (5) Make all contracts and do all other acts in relation to 
        the property and concerns of the county necessary to the 
        exercise of its corporate powers. 
           Sec. 5.  Minnesota Statutes 2002, section 412.691, is 
        amended to read: 
           412.691 [MANAGER IS PURCHASING AGENT; AUDIT AND APPROVAL.] 
           The manager shall be the chief purchasing agent of the 
        city.  All purchases for the city and all contracts shall be 
        made or let by the manager when the amount of the purchase or 
        contract does not exceed $15,000 $20,000 unless a lower limit is 
        provided by the city council; but all claims resulting therefrom 
        shall be audited and approved by the council as provided in 
        section 412.271.  All other purchases shall be made and all 
        other contracts let by the council after the recommendation of 
        the manager has first been obtained.  All contracts, bonds and 
        instruments of every kind to which the city is a party shall be 
        signed by the mayor and the manager on behalf of the city and 
        shall be executed in the name of the city. 
           Sec. 6.  Minnesota Statutes 2002, section 429.041, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PLANS AND SPECIFICATIONS, ADVERTISEMENT 
        FOR BIDS.] When the council determines to make any improvement, 
        it shall let the contract for all or part of the work, or order 
        all or part of the work done by day labor or otherwise as 
        authorized by subdivision 2, no later than one year after the 
        adoption of the resolution ordering such improvement, unless a 
        different time limit is specifically stated in the resolution 
        ordering the improvement.  The council shall cause plans and 
        specifications of the improvement to be made, or if previously 
        made, to be modified, if necessary, and to be approved and filed 
        with the clerk, and if the estimated cost exceeds $35,000 for 
        municipalities of less than 2,500 population, or $50,000 for all 
        others, shall advertise for bids for the improvement in the 
        newspaper and such other papers and for such length of time as 
        it may deem advisable.  If the estimated cost exceeds $100,000, 
        publication shall be made no less than three weeks before the 
        last day for submission of bids once in the newspaper and at 
        least once in either a newspaper published in a city of the 
        first class or a trade paper.  To be eligible as such a trade 
        paper, a publication shall have all the qualifications of a 
        legal newspaper except that instead of the requirement that it 
        shall contain general and local news, such trade paper shall 
        contain building and construction news of interest to 
        contractors in this state, among whom it shall have a general 
        circulation.  The advertisement shall specify the work to be 
        done, shall state the time when the bids will be publicly opened 
        for consideration by the council, which shall be not less than 
        ten days after the first publication of the advertisement when 
        the estimated cost is less than $100,000 and not less than three 
        weeks after such publication in other cases, and shall state 
        that no bids will be considered unless sealed and filed with the 
        clerk and accompanied by a cash deposit, cashier's check, bid 
        bond, or certified check payable to the clerk, for such 
        percentage of the amount of the bid as the council may specify.  
        In providing for the advertisement for bids the council may 
        direct that the bids shall be opened publicly by two or more 
        designated officers or agents of the municipality and tabulated 
        in advance of the meeting at which they are to be considered by 
        the council.  Nothing herein shall prevent the council from 
        advertising separately for various portions of the work involved 
        in an improvement, or from itself, supplying by such means as 
        may be otherwise authorized by law, all or any part of the 
        materials, supplies, or equipment to be used in the improvement 
        or from combining two or more improvements in a single set of 
        plans and specifications or a single contract. 
           Sec. 7.  Minnesota Statutes 2002, section 429.041, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTRACTS; DAY LABOR.] In contracting for an 
        improvement, the council shall require the execution of one or 
        more written contracts and bonds, conditioned as required by 
        law.  The council shall award the contract to the lowest 
        responsible bidder or it may reject all bids.  If any bidder to 
        whom a contract is awarded fails to enter promptly into a 
        written contract and to furnish the required bond, the 
        defaulting bidder shall forfeit to the municipality the amount 
        of the defaulter's cash deposit, cashier's check, bid bond, or 
        certified check, and the council may thereupon award the 
        contract to the next lowest responsible bidder.  When it appears 
        to the council that the cost of the entire work projected will 
        be less than $35,000 for municipalities of less than 2,500 
        population, or $50,000 for all others, or whenever no bid is 
        submitted after proper advertisement or the only bids submitted 
        are higher than the engineer's estimate, the council may 
        advertise for new bids or, without advertising for bids, 
        directly purchase the materials for the work and do it by the 
        employment of day labor or in any other manner the council 
        considers proper.  The council may have the work supervised by 
        the city engineer or other qualified person but shall have the 
        work supervised by a registered engineer if done by day labor 
        and it appears to the council that the entire cost of all work 
        and materials for the improvement will be more than $25,000.  In 
        case of improper construction or unreasonable delay in the 
        prosecution of the work by the contractor, the council may order 
        and cause the suspension of the work at any time and relet the 
        contract, or order a reconstruction of any portion of the work 
        improperly done, and where the cost of completion or 
        reconstruction necessary will be less than $35,000 for 
        municipalities of less than 2,500 population, or $50,000 for all 
        others, the council may do it by the employment of day labor. 
           Sec. 8.  Minnesota Statutes 2002, section 469.015, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BIDS; NOTICE.] All construction work, and 
        work of demolition or clearing, and every purchase of equipment, 
        supplies, or materials, necessary in carrying out the purposes 
        of sections 469.001 to 469.047, that involve expenditure 
        of $35,000 for an authority whose area of operation is less than 
        2,500 population and $50,000 for all other authorities or more 
        shall be awarded by contract.  Before receiving bids the 
        authority shall publish, once a week for two consecutive weeks 
        in an official newspaper of general circulation in the community 
        a notice that bids will be received for that construction work, 
        or that purchase of equipment, supplies, or materials.  The 
        notice shall state the nature of the work and the terms and 
        conditions upon which the contract is to be let, naming a time 
        and place where bids will be received, opened and read publicly, 
        which time shall be not less than seven days after the date of 
        the last publication.  After the bids have been received, opened 
        and read publicly and recorded, the authority shall award the 
        contract to the lowest responsible bidder, provided that the 
        authority reserves the right to reject any or all bids.  Each 
        contract shall be executed in writing, and the person to whom 
        the contract is awarded shall give sufficient bond to the 
        authority for its faithful performance.  If no satisfactory bid 
        is received, the authority may readvertise.  The authority may 
        establish reasonable qualifications to determine the fitness and 
        responsibility of bidders and to require bidders to meet the 
        qualifications before bids are accepted. 
           Sec. 9.  Minnesota Statutes 2002, section 469.015, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PERFORMANCE AND PAYMENT BONDS.] Performance and 
        payment bonds shall be required from contractors for any works 
        of construction as provided in and subject to all the provisions 
        of sections 574.26 to 574.31 except for contracts entered into 
        by an authority for an expenditure of less than $35,000 for an 
        authority whose area of operation is less than 2,500 population 
        and $50,000 for all others.  
           Sec. 10.  Minnesota Statutes 2002, section 471.345, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONTRACTS OVER $35,000 FOR MUNICIPALITIES OF 
        LESS THAN 2,500 POPULATION; $50,000 FOR ALL OTHERS.] If the 
        amount of the contract is estimated to exceed $35,000 for 
        municipalities of less than 2,500 population, or $50,000 for all 
        others, sealed bids shall be solicited by public notice in the 
        manner and subject to the requirements of the law governing 
        contracts by the particular municipality or class thereof 
        provided that with regard to repairs and maintenance of ditches, 
        bids shall not be required if the estimated amount of the 
        contract does not exceed the amount specified in section 
        103E.705, subdivisions 5, 6, and 7. 
           Sec. 11.  Minnesota Statutes 2002, section 471.345, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONTRACTS FROM $10,000 TO $35,000 FOR 
        MUNICIPALITIES OF LESS THAN 2,500 POPULATION; $50,000 FOR ALL 
        OTHERS.] If the amount of the contract is estimated to exceed 
        $10,000 but not to exceed $35,000 for municipalities of less 
        than 2,500 population, or $50,000 for all others, the contract 
        may be made either upon sealed bids or by direct negotiation, by 
        obtaining two or more quotations for the purchase or sale when 
        possible, and without advertising for bids or otherwise 
        complying with the requirements of competitive bidding.  All 
        quotations obtained shall be kept on file for a period of at 
        least one year after receipt thereof. 
           Sec. 12.  Minnesota Statutes 2002, section 471.345, is 
        amended by adding a subdivision to read: 
           Subd. 16.  [REVERSE AUCTION.] Notwithstanding any other 
        procedural requirements of this section, a municipality may 
        contract to purchase supplies, materials, and equipment using an 
        electronic purchasing process in which vendors compete to 
        provide the supplies, materials, or equipment at the lowest 
        selling price in an open and interactive environment.  A 
        municipality may not use this process to contract for services, 
        as defined by section 16C.02, subdivision 17, or a service 
        contract, as defined by section 16C.02, subdivision 16.  Nothing 
        in this subdivision must be construed to prohibit a municipality 
        from adopting a resolution, rule, regulation, or ordinance 
        relating to minimum labor standards under subdivision 7, or 
        procurement from economically disadvantaged persons under 
        subdivision 8.  
           Sec. 13.  Minnesota Statutes 2002, section 471.345, is 
        amended by adding a subdivision to read: 
           Subd. 17.  [ELECTRONIC SALE OF SURPLUS SUPPLIES, MATERIALS, 
        AND EQUIPMENT.] Notwithstanding any other procedural 
        requirements of this section, a municipality may contract to 
        sell supplies, materials, and equipment which is surplus, 
        obsolete, or unused using an electronic selling process in which 
        purchasers compete to purchase the surplus supplies, materials, 
        or equipment at the highest purchase price in an open and 
        interactive environment. 
           Sec. 14.  Minnesota Statutes 2002, section 471.345, is 
        amended by adding a subdivision to read: 
           Subd. 18.  [ELECTRONIC BIDDING.] Notwithstanding any other 
        procedural requirements of this section, vendors may submit 
        bids, quotations, and proposals electronically in a form and 
        manner required by the municipality.  A municipality may allow 
        bid, performance, or payment bonds, or other security, to be 
        furnished electronically. 
           Sec. 15.  [EFFECTIVE DATE.] 
           Sections 4 to 14 are effective the day following final 
        enactment. 
           Presented to the governor May 18, 2004 
           Signed by the governor May 29, 2004, 8:25 a.m.