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1987 Minnesota Session Laws

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                         Laws of Minnesota 1987 

                         CHAPTER 386-S.F.No. 1 
           An act relating to economic development; rural 
          development; renaming and providing powers to the 
          agricultural resource loan guaranty board; 
          establishing a mineral resources program; establishing 
          duties for the community development division in the 
          department of energy and economic development; 
          transferring the independent wastewater treatment 
          grant program from the pollution control agency to the 
          Minnesota public finance authority; changing the 
          membership of the Minnesota job skills partnership 
          board; establishing the rural development board; 
          establishing the challenge grant program; establishing 
          the Greater Minnesota Corporation; establishing the 
          state supplemental education grant program; 
          establishing the Minnesota public finance authority; 
          providing a program for revitalization of the cities 
          of St. Paul and Minneapolis; creating a program for 
          funding economic development projects in the taconite 
          tax relief area; permitting investment of earnings of 
          the northeast Minnesota economic protection trust in 
          venture capital enterprises; appropriating money; 
          amending Minnesota Statutes 1986, sections 15.039, by 
          adding a subdivision; 16A.80, subdivision 2a; 41A.01; 
          41A.02, subdivisions 3, 4, 6, 11, and by adding 
          subdivisions; 41A.04, subdivision 1; 41A.05, 
          subdivisions 1 and 2; 41A.08; 116.16, subdivisions 2, 
          4, 5, 9, and by adding subdivisions; 116.18, 
          subdivisions 2a and 3a; 116J.36, subdivisions 2, 3b, 
          3c, 8, 8a, and 11; 116J.37, subdivision 1, and by 
          adding a subdivision; 116J.955, subdivisions 1 and 2; 
          116L.02; 116L.03, subdivisions 1, 2, 5, and 7; 281.17; 
          298.292; 298.296, subdivision 2; 429.061, subdivision 
          2; 462.445, subdivision 1; and Laws 1983, chapter 334, 
          section 7; proposing coding for new law in Minnesota 
          Statutes, chapters 41A; 93; 116; 116J; 116L; and 136A; 
          proposing coding for new law as Minnesota Statutes, 
          chapters 116N; 116P; and 446A; repealing Minnesota 
          Statutes 1986, sections 116.167; 116J.951; 116J.961; 
          116J.965; 116L.03, subdivision 6; 116M.01; 116M.02; 
          116M.03; 116M.04; 116M.05; 116M.06; 116M.07; 116M.08; 
          116M.09; 116M.10; 116M.11; 116M.12; 116M.13; 472.11, 
          subdivisions 3, 5, 6, 7, 8, and 9; 472.12, 
          subdivisions 2, 3, and 4; 472.125; 472.13, 
          subdivisions 2, 3, and 4; and Laws 1969, chapters 833 
          and 984. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1 

                        RURAL DEVELOPMENT BOARD 
    Section 1.  Minnesota Statutes 1986, section 116J.955, 
subdivision 1, is amended to read:  
    116J.955 [RURAL REHABILITATION REVOLVING FUND.] 
    Subdivision 1.  [ESTABLISHMENT.] The rural rehabilitation 
revolving fund is established as an account in the state 
treasury.  The money transferred to the state as a result of 
liquidating the rural rehabilitation corporation trust, and 
money derived from transfer of the trust to the state, must be 
credited to the rural rehabilitation revolving fund.  The 
principal amount of the rural rehabilitation revolving fund, 
$9,300,000, may not be spent and must be invested by the state 
investment board.  The income attributable to investment of the 
principal is appropriated to the commissioner for the activities 
purposes of the rural development council this article. 
    Sec. 2.  Minnesota Statutes 1986, section 116J.955, 
subdivision 2, is amended to read: 
    Subd. 2.  [EXPENDITURE OF INVESTMENT INCOME FUND.] The 
commissioner may only use the income from the investment of the 
rural rehabilitation revolving fund for the purposes that are 
allowed under the Minnesota rural rehabilitation corporation's 
charter and agreement with the United States Secretary of 
Agriculture as provided in Public Law Number 499, 81st Congress, 
enacted May 3, 1950 and as allowed under section 116J.961, 
subdivision 8 this article.  Not more than three percent of the 
book value of the Minnesota rural rehabilitation corporation's 
assets may be used for administrative purposes in a year without 
approval of the United States Secretary of Agriculture.  The 
commissioner may create separate accounts within the fund for 
use in accordance with the fund's purposes. 
    Sec. 3.  [116N.01] [DEFINITIONS.] 
    Subdivision 1.  [TERMS.] For the purposes of sections 3 to 
10, the following terms have the meaning given them.  
    Subd. 2.  [BOARD.] "Board" means the rural development 
board.  
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of energy and economic development.  
    Subd. 4.  [LOCAL GOVERNMENTAL UNIT.] "Local governmental 
unit" means a home rule charter or statutory city when the 
project is located in an incorporated area, a county when the 
project is located in an unincorporated area, or an American 
Indian tribal council when the project is located within a 
federally recognized American Indian reservation or community. 
    Subd. 5.  [LOW INCOME.] "Low income" means equal to or 
below the nonmetropolitan median household income. 
    Subd. 6.  [PRINCIPALLY.] "Principally" means more than half.
    Subd. 7.  [REGIONAL ORGANIZATION.] "Regional organization" 
or "organization" means an organization selected under section 
10, subdivision 3. 
    Subd. 8.  [RURAL.] "Rural" means the area of Minnesota 
located outside of the metropolitan area as defined in section 
473.121, subdivision 2. 
    Sec. 4.  [116N.02] [RURAL DEVELOPMENT BOARD.] 
    Subdivision 1.  [MEMBERSHIP.] The rural development board 
consists of the commissioner of energy and economic development, 
the commissioner of jobs and training, the commissioner of 
agriculture, the president of the Greater Minnesota Corporation 
board, the state director of vocational technical education, the 
chancellor of the state university board, the chancellor of the 
state board for community colleges, the president of the 
University of Minnesota or the president's designee, the chair 
of the regional advisory committee, and six members from the 
general public appointed by the governor, with at least one 
public member from each of the regions established in section 
10.  Two of the public members must be local elected officials.  
Two of the public members must be members of farm 
organizations.  One public member must represent the interests 
of business, and one public member must represent the interests 
of organized labor. 
    Subd. 2.  [MEMBERSHIP TERMS.] The membership terms, 
compensation, removal, and filling of vacancies of public 
members of the board are as provided in section 15.0575.  
    Subd. 3.  [CHAIR; OTHER OFFICERS.] The commissioner of 
energy and economic development shall serve as chair of the 
board.  The board may elect other officers as necessary from its 
members.  
    Subd. 4.  [ADVISORY TASK FORCES.] The board may establish 
advisory task forces under section 15.014 to advise or assist 
the board in identifying and working with rural development 
issues. 
    Subd. 5.  [STAFF.] The commissioner of energy and economic 
development shall provide staff, consultant support, materials, 
and administrative services necessary for the board's 
activities.  The services must include personnel, budget, 
payroll, and contract administration.  The board may request 
staff support from other agencies of state government as needed 
for the execution of the responsibilities of the board, and the 
other agencies shall furnish the staff support upon request. 
    Subd. 6.  [FUND ALLOCATION.] The commissioner shall 
allocate $6,000,000 from the rural rehabilitation revolving fund 
to be used for the challenge grant program.  
    Sec. 5.  [116N.03] [POWERS.] 
    Subdivision 1.  [CONTRACTS.] The board may enter into 
contracts and grant agreements necessary to carry out its 
responsibilities. 
    Subd. 2.  [GIFTS; GRANTS.] The board may apply for, accept, 
and disburse gifts, grants, loans, or other property from the 
United States, the state, private foundations, or any other 
source.  It may enter into an agreement required for the gifts, 
grants, or loans and may hold, use, and dispose of its assets in 
accordance with the terms of the gift, grant, loan, or 
agreement.  Money received by the board under this subdivision 
must be deposited in the state treasury.  The amount deposited 
is appropriated to the board to carry out its duties.  
    Sec. 6.  [116N.04] [DUTIES.] 
    Subdivision 1.  [GENERAL DUTIES.] The board shall 
investigate and evaluate new methods to enhance rural 
development, particularly methods relating to economic 
diversification through private enterprises, including 
technologically innovative industries, value-added 
manufacturing, agriprocessing, information industries, and 
agricultural marketing. 
    Subd. 2.  [ESTABLISH PROGRAM.] The board shall establish a 
rural rehabilitation pilot project program to award up to 
$500,000 from the rural rehabilitation revolving fund in grants 
to public, nonprofit, or private organizations to support 
farm-related pilot projects for rural development.  Projects 
must be designed to principally benefit low-income persons.  
    Subd. 3.  [TECHNICAL ASSISTANCE.] The board shall provide 
technical assistance and rural development information services 
to state agencies, regional agencies, special districts, local 
governments, and the public. 
    Subd. 4.  [BUDGET.] The board shall adopt an annual budget 
and work program and a biennial budget. 
    Subd. 5.  [LEGISLATIVE REPORT.] The board shall submit a 
report to the legislature by January 31 of each year.  The 
report must include a review of rural development in the state, 
a review of the regional advisory committee activities, an 
accounting of loans made under the challenge grant program, an 
evaluation of rural development initiatives, and recommendations 
concerning state support for rural development. 
    Sec. 7.  [116N.05] [REGIONAL ADVISORY COMMITTEE.] 
    Subdivision 1.  [MEMBERS.] The regional advisory committee 
consists of one representative from each of the state's 
development regions.  Members representing the state's 
development regions must be selected by a majority vote of the 
regional development commissions.  In regions that have 
dissolved their development commissions, members must be 
selected by a majority vote of the chairs of the respective 
county boards of commissioners in the region.  Members must 
reside within the region they represent.  The county boards of 
commissioners and the regional development commissions selecting 
members are encouraged to give preference to persons that hold 
an elected office.  The county boards of commissioners and the 
regional development commissions shall give public notice of 
vacancies on the committee and make a selection of a member from 
applications received for the positions.  
    Subd. 2.  [TERMS; COMPENSATION; OFFICERS.] The terms, 
compensation, and expiration of the committee and its members 
are as provided in section 15.059.  A member may not serve more 
than two consecutive terms.  The regional advisory committee 
shall elect a chair and may elect a vice-chair and other 
officers as is necessary from its members. 
    Subd. 3.  [DUTIES.] (a) The regional advisory committee 
shall: 
    (1) administer the rural rehabilitation pilot project 
program established in section 6, including the establishment of 
grant eligibility criteria, solicitation and review of grant 
applications, and determination of projects to be funded; 
    (2) develop priorities for state projects and activities 
related to rural development; 
    (3) advise the rural development board regarding the 
challenge grant program; and 
    (4) coordinate the plans and programs of the regional 
development commissions that have an effect upon the activities 
of the rural development board. 
    (b) The commissioner shall make agreements or contracts to 
distribute grant funds to projects selected by the regional 
advisory committee. 
    Sec. 8.  [116N.06] [RURAL INVESTMENT GUIDE.] 
    The board, after appropriate study and public hearings as 
necessary, shall adopt a comprehensive state rural investment 
guide consisting of policy statements, objectives, standards, 
and program criteria to guide state agencies in establishing and 
implementing programs relating to rural development.  The guide 
must recognize the community and economic needs, the food and 
agricultural policy, and the resources of rural Minnesota, and 
provide a plan to coordinate and allocate public and private 
resources to the rural areas of the state.  The board shall 
submit the guide to the appropriate committees of the 
legislature. 
    Sec. 9.  [116N.07] [BOARD REVIEW.] 
    The board may require state agencies to submit for review 
any state program relating to rural development.  The board may 
comment on the program and may recommend changes consistent with 
the rural investment guide. 
    Sec. 10.  [116N.08] [CHALLENGE GRANT PROGRAM.] 
    Subdivision 1.  [ORGANIZATION.] The board shall make 
challenge grants to regional organizations to encourage private 
investment, to provide jobs for low-income persons, and to 
promote economic development in the rural areas of the state. 
    Subd. 2.  [FUNDING REGIONS.] The board shall divide the 
state outside of the metropolitan area as defined in section 
473.121, subdivision 2, into six regions.  A region's boundaries 
must be coterminous with the boundaries of one or more of the 
development regions established under section 462.385.  The 
board shall designate up to $1,000,000 for each region, to be 
awarded over a period of three years.  The money designated to 
each region must be used for revolving loans authorized in this 
section.  
    Subd. 3.  [SELECTION OF ORGANIZATIONS TO RECEIVE CHALLENGE 
GRANTS.] The board shall select at least one organization for 
each region to receive the challenge grants and shall enter into 
grant agreements with the organizations.  An organization must 
be a nonprofit corporation and must demonstrate that:  
    (1) its board of directors includes citizens experienced in 
rural development, representatives of the regional development 
commissions, and representatives from all geographic areas in 
the region; 
    (2) it has the technical skills to analyze projects;  
    (3) it is familiar with other available public and private 
funding sources and economic development programs; 
    (4) it can initiate and implement economic development 
projects; and 
    (5) it can establish and administer a revolving loan fund. 
    Subd. 4.  [REVOLVING LOAN FUND.] A regional organization 
shall establish a board certified revolving loan fund to provide 
loans to new and expanding businesses in rural Minnesota to 
promote economic development.  Eligible business enterprises 
include technologically innovative industries, value-added 
manufacturing, agriprocessing, information industries, and 
agricultural marketing.  Loan applications given preliminary 
approval by the organization must be forwarded to the 
commissioner for final approval.  The amount of state money 
allocated for each loan is appropriated from the rural 
rehabilitation revolving fund established in section 116J.955 to 
the organization's regional revolving loan fund when the 
commissioner gives final approval for each loan.  The amount of 
money appropriated from the rural rehabilitation revolving fund 
may not exceed 50 percent for each loan.  The amount of 
nonpublic money must equal at least 50 percent for each loan. 
    Subd. 5.  [LOAN CRITERIA.] The following criteria apply to 
loans made under the challenge grant program:  
    (a)  Loans must be made to businesses that are not likely 
to undertake a project for which loans are sought without 
assistance from the challenge grant program.  
    (b) A loan must be used for a project designed principally 
to benefit low-income persons through the creation of job 
opportunities for them.  Among loan applicants, priority must be 
given on the basis of the number of permanent jobs created or 
retained by the project and the proportion of nonstate money 
leveraged by the revolving loan.  
    (c) The minimum loan is $5,000 and the maximum is $100,000. 
    (d) With the approval of the commissioner, a loan may be 
used to provide up to 50 percent of the private investment 
required to qualify for a grant from the economic recovery fund. 
    (e) A loan may not exceed 50 percent of the total cost of 
an individual project.  
    (f) A loan may not be used for a retail development project.
    (g) A business applying for a loan must be sponsored by a 
resolution of the governing body of the local governmental unit 
within whose jurisdiction the project is located. 
    Subd. 6.  [REVOLVING FUND ADMINISTRATION.] (a) The board 
shall establish a minimum interest rate for loans to ensure that 
necessary management costs are covered.  
    (b) Loan repayment amounts equal to one-half of the 
principal and interest must be deposited in the rural 
rehabilitation revolving fund for challenge grants to the region 
from which the money was originally designated.  The remaining 
amount of the loan repayment may be deposited in the regional 
revolving loan fund for further distribution by the regional 
organization, consistent with the loan criteria specified in 
subdivisions 4 and 5. 
     (c) The first $1,000,000 of revolving loans for each region 
must be matched by nonstate sources.  The matching requirement 
does not apply to loans made under subdivision 6, clause (b). 
    (d) The first $1,000,000 of revolving loans for each region 
must be matched by nonstate sources.  The matching requirement 
does not apply to loans made under subdivision 6, clause (b). 
    (e) Administrative expenses of each organization may be 
paid out of the interest earned on loans.  
    Subd. 7.  [RULES.] The board shall adopt rules to implement 
the duties specified in this section.  
    Subd. 8.  [LOCAL GOVERNMENTAL UNIT LOANS.] A local 
governmental unit may receive a loan under this section if the 
local governmental unit has established a local revolving loan 
fund and can provide at least an equal match to the loan 
received from a regional organization.  The maximum loan 
available to a local governmental unit under this section is 
$50,000.  The money loaned to a local governmental unit by a 
regional organization must be matched by the local revolving 
loan fund and used to provide loans to businesses to promote 
local economic development.  One-half of the money loaned to a 
local governmental unit under this section by a regional 
organization must be repaid to the rural rehabilitation 
revolving fund.  One-half of the money may be retained by the 
local governmental unit's revolving loan fund for further 
distribution by the local governmental unit. 
    Subd. 9.  [REGIONAL COOPERATION.] An organization that 
receives a challenge grant shall cooperate with other regional 
organizations, including regional development commissions, 
community development corporations, community action agencies, 
and the Minnesota small business development centers and 
satellites, in carrying out challenge grant program and 
technical assistance responsibilities. 
    Subd. 10.  [REPORTING REQUIREMENTS.] An organization that 
receives a challenge grant shall: 
    (1) submit an annual report to the board by February 15 of 
each year that includes a description of projects supported by 
the challenge grant program, an account of loans made during the 
calendar year, the source and amount of money collected and 
distributed by the challenge grant program, the program's assets 
and liabilities, and an explanation of administrative expenses; 
and 
    (2) provide for an independent annual audit to be performed 
in accordance with generally accepted accounting practices and 
auditing standards and submit a copy of each annual audit report 
to the board. 
    Sec. 11.  [RURAL DEVELOPMENT BOARD COMPLEMENT.] 
     The approved complement of the rural development board is 
six and one-half positions, with six positions in the 
unclassified service and one-half position in the classified 
service, one of which is an executive director position.  
    Sec. 12.  [FAMILY FARM LOANS.] 
    The participant's interest in a family farm loan guarantee 
executed before the effective date of this article may be 
assigned to a new participant. 
    Sec. 13. [REPEALER.] 
    Minnesota Statutes 1986, sections 116J.951; 116J.961; 
116J.965; and 116M.05, are repealed.  
    Sec. 14.  [APPROPRIATION.] 
    $600,000 is appropriated from the economic development fund 
to the commissioner of energy and economic development to 
administer programs under the rural development board.  $300,000 
is for fiscal year 1988 and $300,000 is for fiscal year 1989. 
    $200,000 is transferred from the economic development fund 
to the commissioner of energy and economic development to 
provide grants to the regional organizations selected under 
section 10, subdivision 3, for technical assistance to 
businesses in each region.  Technical assistance includes 
providing information to businesses regarding federal, state, 
and local government economic development programs. 
    $1,000,000 is transferred from the general fund to the 
rural rehabilitation revolving fund, to be used for the 
challenge grant program. 

                               ARTICLE 2 

                     GREATER MINNESOTA CORPORATION 
    Section 1.  [116O.01] [CITATION.] 
    Sections 1 to 10 may be cited as the "Greater Minnesota 
Corporation act." 
    Sec. 2.  [116O.02] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 1 to 15.  
    Subd. 2.  [BOARD.] "Board" means the board of directors of 
the Greater Minnesota Corporation.  
    Subd. 3.  [CORPORATION.] "Corporation" means the Greater 
Minnesota Corporation.  
    Subd. 4.  [FUND.] "Fund" means the greater Minnesota fund. 
    Subd. 5.  [GREATER MINNESOTA.] ]"Greater Minnesota" means 
the area of Minnesota located outside of the metropolitan area 
as defined in section 473.121, subdivision 2. 
    Sec. 3.  [116O.03] [CORPORATION; BOARD OF DIRECTORS; 
POWERS.] 
    Subdivision 1.  [NAME.] The Greater Minnesota Corporation 
is a public corporation of the state and is not subject to the 
laws governing a state agency except as provided in this 
chapter.  The business of the corporation must be conducted 
under the name "Greater Minnesota Corporation."  
    Subd. 2.  [BOARD OF DIRECTORS.] The corporation is governed 
by a board of 11 directors.  The term of a director is six years.
Vacancies on the board are filled by appointment of the board, 
subject to the advice and consent of the senate.  The board may 
determine the compensation of its members. 
    Subd. 3.  [BYLAWS.] The board of directors shall adopt 
bylaws necessary for the conduct of the business of the 
corporation, consistent with this chapter. 
    Subd. 4.  [PLACES OF BUSINESS.] The board shall locate and 
maintain the corporation's places of business within the state.  
    Subd. 5.  [MEETINGS AND ACTIONS OF THE BOARD.] The board 
shall meet at least twice a year and may hold additional 
meetings upon giving notice in accordance with the bylaws of the 
corporation.  Board meetings are subject to section 471.705, 
except when data described in subdivision 7 is discussed. 
    Subd. 6.  [CLOSED MEETINGS; RECORDING.] The board of 
directors may by a majority vote in a public meeting decide to 
hold a closed meeting authorized under subdivision 5.  The time 
and place of the closed meeting must be announced at the public 
meeting.  A written roll of members present at the closed 
meeting must be made available to the public after the closed 
meeting.  The proceedings of a closed meeting must be tape 
recorded at the expense of the board and must be preserved by 
the board for two years.  The data on the tape is nonpublic data 
under section 13.02, subdivision 9. 
    Subd. 7.  [APPLICATION AND INVESTIGATIVE DATA.] The 
following data is classified as private data with regard to data 
on individuals under section 13.02, subdivision 12, or as 
nonpublic data with regard to data not on individuals under 
section 13.02, subdivision 9, whichever is applicable: 
    (1) financial data, statistics, and information furnished 
in connection with assistance or proposed assistance under 
section 6, including credit reports, financial statements, 
statements of net worth, income tax returns, either personal or 
corporate, and any other business and personal financial 
records; or 
    (2) security information, trade secret information, or 
labor relations information, as defined in section 13.37, 
subdivision 1, disclosed to members of the corporation board or 
employees of the corporation under section 6. 
    Subd. 8.  [CONFLICT OF INTEREST.] A director, employee, or 
officer of the corporation may not participate in or vote on a 
decision of the board relating to an organization in which the 
director has either a direct or indirect financial interest. 
    Subd. 9.  [CONTRIBUTIONS TO PUBLIC OFFICIALS; DISCLOSURE.] 
Each director shall file a statement with the ethical practices 
board disclosing the nature, amount, date, and recipient of any 
contribution made to a public official, political committee, 
political fund, or political party, as defined in chapter 10A, 
that: 
    (1) was made within the four years preceding appointment to 
the Greater Minnesota board; and 
    (2) was subject to the reporting requirements of chapter 
10A. 
    The statement must be updated annually during the 
director's term to reflect contributions made to public 
officials during the appointed director's tenure. 
    Sec. 4.  [116O.04] [CORPORATE PERSONNEL.] 
    Subdivision 1.  [GENERALLY.] The board shall appoint and 
set the compensation for a president, who serves as chief 
executive officer of the corporation, and who may appoint 
subordinate officers.  The board may designate the president as 
its general agent.  Subject to the control of the board, the 
president shall employ employees, consultants, and agents the 
president considers necessary.  The staff of the corporation 
must include individuals knowledgeable in commercial and 
industrial financing, research and development, economic 
development, and general fiscal affairs.  The board shall define 
the duties and designate the titles of the employees and agents. 
    Subd. 2.  [STATUS OF EMPLOYEES.] Employees, officers, and 
directors of the corporation are not state employees, but, at 
the option of the board, may participate in the state retirement 
plan and the state deferred compensation plan for employees in 
the unclassified service and an insurance plan administered by 
the commissioner of employee relations. 
    Subd. 3.  [CONTRIBUTIONS TO PUBLIC OFFICIALS; DISCLOSURE.] 
The president shall file a statement with the ethical practices 
board disclosing the nature, amount, date, and recipient of any 
contribution made to a public official which: 
    (1) was made within the four years preceding employment 
with the greater Minnesota board; and 
    (2) was subject to the reporting requirements of chapter 
10A. 
    The statement must be updated annually during the 
president's employment to reflect contributions made to public 
officials during the president's tenure. 
    Sec. 5.  [116O.05] [POWERS OF THE CORPORATION.] 
    (a) Except as otherwise provided in this article, the 
corporation has the powers granted to a business corporation by 
section 302A.161, subdivisions 3; 4; 5; 7; 8; 9; 11; 12; 13, 
except that the corporation may not act as a general partner in 
any partnership; 14; 15; 16; 17; 18; and 22. 
    (b) The state is not liable for the obligations of the 
corporation. 
    (c) Section 302A.041 applies to this article and the 
corporation in the same manner that it applies to business 
corporations established under chapter 302A. 
    Sec. 6.  [116O.06] [FINANCIAL ASSISTANCE.] 
    Subdivision 1.  [FINANCIAL ASSISTANCE; TYPES.] The 
corporation may provide financial assistance to sole 
proprietorships, businesses, or for-profit or nonprofit 
organizations.  Financial assistance includes, but is not 
limited to, loan guarantees or insurance, direct loans, and 
interest subsidy payments.  The corporation may participate in 
loans by purchasing from a lender up to 50 percent of each loan. 
    Subd. 2.  [EQUITY INVESTMENTS.] The corporation may acquire 
an interest in a product or a private business entity, except 
that the corporation may not acquire an interest in a business 
entity engaged in a trade or industry whose profits are directly 
regulated by the commissioner of commerce or the department of 
public service.  The corporation may enter into joint venture 
agreements with other private corporations to promote economic 
development and job creation.  
    Subd. 3.  [GREATER MINNESOTA FINANCE AUTHORITY.] The board 
may designate the greater Minnesota finance authority to provide 
financial assistance.  The authority, if established, consists 
of seven members, five of whom are members of the general public 
appointed by the board with experience in business development, 
finance, banking, or venture capital.  The president of the 
corporation and one board member must be members of the 
authority.  Members of the authority shall serve without 
compensation, but shall receive necessary and actual expenses 
while engaged in the business of the corporation. 
    Subd. 4.  [STANDARDS.] The board may establish minimum 
interest rates, security requirements, restrictions on the 
amount of the corporation's financial participation in a 
project, and other financial standards the board determines 
necessary to establish in providing financial assistance. 
    Subd. 5.  [PREFERENCE.] In providing financial assistance, 
the corporation must give preference to sole proprietorships, 
businesses, or organizations that are starting or expanding 
their operations in greater Minnesota. 
    Sec. 7.  [116O.07] [ON-SITE RESEARCH.] 
    The corporation may construct, acquire, lease, own, or 
operate one or more on-site research facilities in Minnesota. 
    Sec. 8.  [116O.08] [REGIONAL RESEARCH INSTITUTES.] 
    Subdivision 1.  [ESTABLISHMENT.] The board may establish up 
to four regional research institutes in greater Minnesota.  Each 
institute shall be located at or near a post-secondary education 
institution whose primary focus is comparable to the mission of 
the institute. 
    Subd. 2.  [PURPOSE.] The purpose of the institutes is to 
provide applied research and development services to 
individuals, businesses, or organizations for the purposes of 
developing the region's economy through the utilization of the 
region's resources and the development of technology.  Research 
and development services may include on-site research, product 
development grants, testing of production techniques and product 
quality, marketing and business management assistance, and 
feasibility studies.  
    Subd. 3.  [INSTITUTE ADMINISTRATION; STAFF.] The board 
shall appoint a director to manage the operation of the 
institute.  The director may employ employees and enter into 
contracts with post-secondary education governing boards for 
research services of post-secondary institution staff, 
facilities, or equipment. 
    Subd. 4.  [RESEARCH CONTRACTS.] The director of each 
institute may enter into contracts with individuals, businesses, 
or organizations to provide research and development assistance 
at institute facilities or at other sites the director 
determines appropriate.  The board shall establish the overall 
contract guidelines. 
    Subd. 5.  [PRODUCT DEVELOPMENT GRANTS.] The director of 
each institute may provide product development grants to those 
individuals, businesses, or for-profit or nonprofit 
organizations that, without financial assistance, would not be 
able to undertake the development of a product or 
technology-related service.  The board shall establish 
eligibility criteria and the terms of the product development 
grants. 
    Subd. 6.  [INSTITUTE ADVISORY BOARD.] A regional research 
institute advisory board may be appointed by the board.  The 
advisory board may consist of representatives of public 
post-secondary institutions in the area surrounding the 
institute, business owners, and members of the general public.  
Terms and removal of members must be set by the board and the 
members of each advisory board shall serve without compensation 
but shall receive their necessary and actual expenses. The 
purpose of the advisory board is to provide the institute 
director assistance in operating the institute, review contract 
proposals and provide recommendations relating to product 
development grants. 
    Subd. 7.  [DESIGNATED RESEARCH INSTITUTE.] The agricultural 
utilization research institute established in section 9 is 
designated as one of the regional research institutes authorized 
under this section. 
    Sec. 9. [116O.09] [AGRICULTURAL UTILIZATION RESEARCH 
INSTITUTE.] 
    Subdivision 1.  [ESTABLISHMENT.] The corporation shall 
establish an agricultural utilization research institute to 
promote the establishment of new products and product uses and 
the expansion of existing markets for the state's agricultural 
commodities and products.  The institute must be located near an 
existing agricultural research facility in the agricultural 
region of the state.  
    Subd. 2.  [DUTIES.] In addition to the duties and powers 
assigned to the institutes in section 8, the agricultural 
utilization research institute shall: 
    (1) identify the various market segments characterized by 
Minnesota's agricultural industry, address each segment's 
individual needs, and identify development opportunities in each 
segment; 
    (2) develop and implement a utilization program for each 
segment that addresses its development needs and identifies 
techniques to meet those needs; 
    (3) coordinate research among the public and private 
organizations and individuals specifically addressing procedures 
to transfer new technology to businesses, farmers and 
individuals; and 
    (4) provide research grants to public and private 
educational institutions and other organizations that are 
undertaking basic and applied research that would promote the 
development of the various agricultural industries. 
    Subd. 3.  [STAFF.] The corporation shall provide staff to 
the agricultural utilization research institute and assist in 
carrying out the duties of the agricultural utilization research 
institute. 
    Subd. 4.  [AGRICULTURAL RESEARCH GRANTS.] The institute may 
make matching grants for agricultural product utilization 
research to the University of Minnesota, a state university, a 
community college, a Minnesota private college or university, an 
area vocational technical institute, a private corporation, or a 
person.  Grants may be matched from private sources, including 
farm commodity groups and farm organizations. 
    Subd. 5.  [ADVISORY BOARD.] A 26-member advisory board is 
established to identify priorities for the agricultural 
utilization research institute.  Members of the advisory board 
are appointed by the board.  The advisory board consists of:  
the chair of the Minnesota house of representatives agricultural 
committee; the chair of the Minnesota senate agricultural 
committee; a representative from each of the 10 largest 
agricultural-related businesses in the state as determined by 
the corporation; a member from each of the appropriate trade 
organizations representing producers of beef cattle, dairy, 
corn, soybeans, pork, wheat, turkey, barley, wild rice, edible 
beans, eggs, and potatoes; a member of the Farmers's Union; and 
a member of the Farm Bureau.  Terms and removal of members must 
be set by the board and members of the advisory board serve 
without compensation but shall receive their necessary and 
actual expenses. 
    The advisory board shall annually provide a list of 
priorities and suggested research and marketing studies that 
should be performed by the agricultural utilization research 
institute. 
    Sec. 10.  [116O.10] [RESEARCH ADVISORY BOARD.] 
    Subdivision 1.  [ESTABLISHMENT.] The board shall establish 
a research advisory board to provide advisory assistance to the 
board and the research institutes.  The research advisory board 
consists of seven members appointed by the board.  Terms and 
removal of members must be set by the board and research 
advisory board members shall serve without compensation but 
shall receive their necessary and actual expenses while engaged 
in the business of the corporation.  The membership of the 
advisory board must have representatives that are experienced or 
have expertise in technology, applied research, agriculture, 
business, labor, or productivity. 
    Subd. 2.  [DUTIES.] The research advisory board has the 
following duties and responsibilities: 
    (a) Identify specific areas where research and development 
will contribute to the productivity of the state's businesses 
and farms. 
    (b) Determine specific areas where financial assistance for 
research and development could assist the development of 
businesses and create new employment opportunities. 
    (c) Advise the board in the development and establishment 
of the regional research institutes and the research grants to 
public and private post-secondary education institutions. 
    (d) Advise public and private post-secondary education 
institutions on the research and development needs of businesses 
in Minnesota. 
    (e) Review the applications and make recommendations to the 
board for research grants to public and private post-secondary 
education institutions. 
    (f) Develop guidelines for an effective peer review process 
for evaluating scientifically- or technologically-related 
financial assistance.  
    Sec. 11.  [116O.11] [RESEARCH GRANTS TO EDUCATION UNITS.] 
    Subdivision 1.  [GRANTS GENERALLY.] The board may make 
matching grants to public and private post-secondary education 
institutions or units within those institutions, including the 
natural resource research institute, for applied research and 
development.  Grants are to be made for projects which will 
likely result in assisting economic and employment development 
in greater Minnesota.  The corporation board shall not give 
final approval to a research grant until it has received an 
evaluation and recommendation from the research advisory board 
established in section 10. 
    Sec. 12.  [116O.12] [GREATER MINNESOTA FUND.] 
    (a) The greater Minnesota fund is created in the state 
treasury.  The board may require the commissioner of finance to 
create separate accounts within the fund for use in accordance 
with the fund's purposes.  Money in the fund not needed for the 
immediate purposes of the corporation may be invested by the 
corporation in any way authorized by section 11A.24.  Money in 
the fund is appropriated to the corporation to be used as 
provided in this chapter.  
    (b) The fund consists of:  
    (1) money appropriated and transferred from other state 
funds; 
    (2) fees and charges collected by the corporation;  
    (3) income from investments and purchases;  
    (4) revenue from loans, rentals, royalties, dividends, and 
other proceeds collected in connection with lawful corporate 
purposes; and 
    (5) gifts, donations, and bequests made to the corporation. 
    Sec. 13.  [116O.13] [AGRICULTURAL PROJECT UTILIZATION 
FUND.] 
    The agricultural project utilization fund is a fund in the 
state treasury.  Money in the fund is appropriated to the 
agricultural utilization research institute to be used for 
agricultural research grants as provided in section 9, 
subdivision 4, and for the agricultural utilization research 
institute. 
    Sec. 14.  [116O.14] [AUDITS.] 
    The corporation board shall contract with a certified 
public accounting firm to do a financial and compliance audit of 
the corporation and any subsidiary annually in accordance with 
generally accepted accounting standards. 
    The books and records of the corporation and any 
subsidiary, fund, or entity to be administered or governed by 
the corporation are subject to audit without previous notice by 
the legislative auditor.  
    Sec. 15.  [116O.15] [REPORTS.] 
    The board shall report to the appropriate committees of the 
legislature and the governor on the activities of the 
corporation by January 1 of each year.  The report must include, 
at least, a description of projects supported by the 
corporation, an account of all grants made by the corporation 
during the calendar year, the source and amount of all money 
collected and distributed by the corporation, the corporation's 
assets and liabilities, an explanation of administrative 
expenses, and any amendments to the operational plan.  Reports 
must be made to the legislature as required by section 3.195. 
    Sec. 16.  [REGISTERED NAME.] 
    Notwithstanding Minnesota Statutes, section 302A.117, the 
secretary of state shall register the name "Greater Minnesota 
Corporation" on behalf of the corporation. 
    Sec. 17.  [INITIAL APPOINTMENTS.] 
    Notwithstanding section 3, subdivision 2, the governor 
shall appoint the initial members of the board of directors of 
the Greater Minnesota Corporation, subject to the advice and 
consent of the senate, as follows:  four to six-year terms, four 
to four-year terms, and three to two-year terms.  As the terms 
of the initial appointments expire, appointments must be made by 
the board, subject to the advice and consent of the senate. 
    Sec. 18.  [NATURAL RESOURSES RESEARCH INSTITUTE.] 
    The Greater Minnesota Corporation board and the University 
of Minnesota board of regents may examine the feasibility of 
entering into a formal agreement for joint administration or 
transfer of the natural resources research institute from the 
University to the corporation.  The corporation and board of 
regents shall report to the governor and legislative by January 
15, 1988.  The report must include recommendations for the 
structure for administrating the institution, the potential use 
of university staff and facilities, funding sources and whether 
the institute should be transferred to the Greater Minnesota 
Corporation.  The corporation may not establish a regional 
institute whose research focus is comparable to the present 
research undertaken at the natural resources research institute. 
    Sec. 19.  [VENTURE CAPITAL STUDY.] 
    The Greater Minnesota Corporation shall study the effect 
and the possible administrative and legal structure of the 
establishment of a for-profit venture capital corporation.  This 
venture capital corporation may be capitalized by a state 
appropriation that in turn may be converted into shares of stock 
owned by every resident of the state.  This corporation would 
invest only in Minnesota companies or production facilities 
located in the state with a preference to ventures that utilize 
the state's resources and intermediate products and services.  
The venture capital corporation would invest in local capital 
venture pools that are managed by experienced private venture 
capital firms and this corporation would only provide investment 
capital for product development and start-up business 
development.  The venture capital corporation would target its 
investment capital to products and businesses that reduce costs 
to the state's residents and government jurisdictions such as 
products that improve resource efficiency or products that 
improve the independence of the physically disabled.  
    The study may be completed directly by the Greater 
Minnesota Corporation or the corporation may contract with a 
business, state agency, organization, or individual to complete 
the study.  The study must include the examination of at least 
the following: 
    (1) the anticipated demand for venture capital that meets 
the investment criteria of the venture capital corporation; 
    (2) an estimation of the start-up costs of the venture 
capital corporation; 
    (3) an estimation of on-going administrative costs of the 
venture capital corporation including shareholder-related costs; 
    (4) the most appropriate legal structure for the venture 
capital corporation including recommendations for the enabling 
legislation for the corporation;  
    (5) an estimation of the potential additional investment 
through stock purchases by Minnesota residents; 
    (6) an inventory of experienced and interested local 
venture capital firms that the corporation would utilize in 
distributing its venture capital; and 
    (7) an analysis of the type of products that meet the 
investment criteria of the venture capital corporation. 
    The Greater Minnesota Corporation shall submit the study to 
the legislature and the governor by July 1, 1988. 
    Sec. 20.  [DISSOLUTION.] 
    In the event of dissolution of the Greater Minnesota 
Corporation for any reason, the state of Minnesota, upon action 
by the governor, and after consultation with the legislative 
advisory commission, may require the liquidation of all holdings 
and investments and the return of the proceeds of that 
liquidation and any wholly-owned assets of the corporation to 
the state, in exchange for the assumption of all outstanding 
obligations of the corporation. 
    If the corporation is dissolved, or certain of its 
functions transferred to another entity, the assets and 
liabilities and property associated with the dissolved or 
transferred functions must return to the state or to the entity 
designated by law. 
    Sec. 21.  [OPERATIONAL PLAN.] 
    The board of directors of the Greater Minnesota Corporation 
shall prepare a comprehensive operational plan and submit the 
plan to the governor and the legislature by November 15, 1987.  
The operational plan must at least include operating procedures, 
accounting procedures, grant procedures, loan procedures, 
personnel procedures, investment procedures, and board conduct 
and ethics.  
    If the board proposes to make equity investments under 
section 6, subdivision 2, the board shall explain in the report 
how the investments will be made, how much money will be 
invested in them, how much private money is expected to be 
invested in the same investments, and why equity investments 
would be more desirable and effective than the other means of 
promoting development that are available to the board.  No 
equity investments may be made unless the board has first 
submitted the information required by this section.  
    In addition, the operational plan must include a budget 
proposal and a five-year strategic plan setting out its 
objectives and general strategy for achieving the objectives.  
It must identify sources and amounts of available 
nongovernmental money and the purposes for which the money may 
be used.  
    Sec. 22.  [LOAN PROGRAMS TERMINATED; ADMINISTRATION; CREDIT 
OF REPAYMENTS.] 
    The following loan programs administered by the Minnesota 
energy and economic development authority are terminated:  the 
special assistance program under section 116M.07, subdivision 
11, except for the small business development loans; the 
technology product loan program; the tourism loan program 
created under section 116M.07; the energy loan insurance program 
under section 116M.11; the energy development fund program under 
section 116M.12; and the Minnesota fund program under sections 
472.11 to 472.13.  Loan repayments, earnings, releases from 
insurance reserve accounts, and other income from these programs 
must be paid to the commissioner of energy and economic 
development, who shall deposit them in the state treasury and 
credit them to the greater Minnesota fund. 
    Sec. 23.  [LOAN PROGRAM ADMINISTRATION.] 
    Subdivision 1.  [POWERS.] To administer the loan programs 
transferred to the department of energy and economic development 
by section 22, the commissioner of energy and economic 
development has the powers in this section.  
    Subd. 2.  [PERSONAL PROPERTY.] The commissioner may 
acquire, hold, and dispose of personal property where necessary 
or appropriate to protect a loan in which the department has an 
interest. 
    Subd. 3.  [REAL PROPERTY.] The commissioner may acquire 
real property, or an interest in real property, in the 
department's name, by purchase or foreclosure, where the 
acquisition is necessary or appropriate to protect a loan in 
which the department has an interest and may sell, transfer, and 
convey the property to a buyer and, in the event the sale, 
transfer, or conveyance cannot be effected with reasonable 
promptness or at a reasonable price, may lease the property to a 
tenant. 
    Subd. 4.  [INSURANCE.] The commissioner may procure 
insurance against a loss in connection with the department's 
property in the amounts, and from the insurers, as may be 
necessary or desirable.  
    Subd. 5.  [LOAN TERMS; MODIFICATION.] The commissioner may 
consent, whenever it is considered necessary or desirable to 
increase the probability that the loan will be repaid, to the 
modification of the rate of interest, time of payment, or 
installment of principal or interest, or other term, of a 
contract or agreement to which the department is a party. 
    Subd. 6.  [FINANCIAL INFORMATION.] Financial information, 
including credit reports, financial statements, and net worth 
calculations, received or prepared by the department regarding a 
department loan, financial assistance, or insurance is private 
data with regard to data on individuals as defined in section 
13.02, subdivision 12 and nonpublic data with regard to data not 
on individuals as defined in section 13.02, subdivision 9.  
    Subd. 7.  [ROYALTY PAYMENTS.] The department may receive 
payments in the form of royalties, dividends, or other proceeds 
in connection with technology-related products, energy 
conservation products, or other equipment which it has purchased 
or in which it has participated. 
    Sec. 24.  [REPEALER.] 
    Minnesota Statutes 1986, sections 116M.11; 116M.12; 472.11, 
subdivisions 3, 5, 6, 7, 8, and 9; 472.12, subdivisions 2, 3, 
and 4; 472.125; and 472.13, subdivisions 2, 3, and 4, are 
repealed. 
    Sec. 25.  [APPROPRIATION.] 
    $6,500,000 is appropriated from the general fund for 
transfer to the greater Minnesota fund, to be available until 
expended.  $3,500,000 is appropriated from the rural 
rehabilitation revolving fund for transfer to the agricultural 
product utilization fund, to be available until expended. 
    Sec. 26.  [EFFECTIVE DATE.] 
    This article is effective the day following final 
enactment, except that sections 19 to 22 are effective July 1, 
1987; and section 6, subdivisions 1 to 3, are effective July 1, 
1988.  

                               ARTICLE 3 

                 MINNESOTA PUBLIC FACILITIES AUTHORITY 
    Section 1.  Minnesota Statutes 1986, section 116.16, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] In this section and sections 
116.17 and 116.18: 
    (1) Agency means the Minnesota pollution control agency 
created by this chapter; 
    (2) Municipality means any county, city, and town, the 
metropolitan waste control commission established in chapter 473 
and the metropolitan council when acting under the provisions of 
that chapter or an Indian tribe or an authorized Indian tribal 
organization, and any other governmental subdivision of the 
state responsible by law for the prevention, control, and 
abatement of water pollution in any area of the state; 
    (3) Pollution control fund means the Minnesota state water 
pollution control fund created by subdivision 1; 
    (4) Bond account means the Minnesota state water pollution 
control bond account created in the state bond fund by section 
116.17, subdivision 4; 
    (5) Terms defined in section 115.01 have the meanings 
therein given them; 
    (6) The eligible cost of any municipal project, except as 
otherwise provided in clauses (7) and (8), includes (a) 
preliminary planning to determine the economic, engineering, and 
environmental feasibility of the project; (b) engineering, 
architectural, legal, fiscal, economic, sociological, project 
administrative costs of the agency and the municipality, and 
other investigations and studies; (c) surveys, designs, plans, 
working drawings, specifications, procedures, and other actions 
necessary to the planning, design, and construction of the 
project; (d) erection, building, acquisition, alteration, 
remodeling, improvement, and extension of disposal systems; (e) 
inspection and supervision of construction; and (f) all other 
expenses of the kinds enumerated in section 475.65. 
    (7) For state independent grant and matching grant purposes 
hereunder, the eligible cost for grant applicants shall be the 
eligible cost as determined by the United States environmental 
protection agency under the Federal Water Pollution Control Act, 
as amended, United States Code, title 33, section 1314, et seq 
sections 1281 to 1299. 
    (8) Notwithstanding clause (7), for state grants under the 
state independent grants program, the eligible cost includes the 
acquisition of land for stabilization ponds, the construction of 
collector sewers for totally unsewered statutory and home rule 
charter cities and towns described under section 368.01, 
subdivision 1 or 1a, that are in existence on January 1, 1985, 
and the provision of reserve capacity sufficient to serve the 
reasonable needs of the municipality for 20 years in the case of 
treatment works and 40 years in the case of sewer systems.  
Notwithstanding clause (7), for state grants under the state 
independent grants program, the eligible cost does not include 
the provision of service to seasonal homes, or cost increases 
from contingencies that exceed three percent of as-bid costs or 
cost increases from unanticipated site conditions that exceed an 
additional two percent of as-bid costs. 
    (9) Authority means the Minnesota public facilities 
authority established in section 20. 
    Sec. 2.  Minnesota Statutes 1986, section 116.16, 
subdivision 4, is amended to read:  
    Subd. 4.  [DISBURSEMENTS.] Disbursements from the fund 
shall be made by the state treasurer upon order of the 
commissioner of finance at the times and in the amounts 
requested by the agency or the Minnesota public facilities 
authority in accordance with the applicable state and federal 
law governing such disbursements; except that no appropriation 
or loan of state funds for any project shall be disbursed to any 
municipality until and unless the agency has by resolution 
determined the total estimated cost of the project, and 
ascertained that financing of the project is assured by: 
    (1) A grant to the municipality by an agency of the federal 
government within the amount of funds then appropriated to that 
agency and allocated by it to projects within the state; or 
    (2) A grant of funds appropriated by state law; or 
    (3) A loan authorized by state law; or 
    (4) The appropriation of proceeds of bonds or other funds 
of the municipality to a fund for the construction of the 
project; or 
    (5) Any or all of the means referred to in paragraphs (1) 
to (4); and 
    (6) An irrevocable undertaking, by resolution of the 
governing body of the municipality, to use all funds so made 
available exclusively for the construction of the project, and 
to pay any additional amount by which the cost of the project 
exceeds the estimate, by the appropriation to the construction 
fund of additional municipal funds or the proceeds of additional 
bonds to be issued by the municipality; and 
    (7) Conformity of the project and of the loan or grant 
application with the state water pollution control plan as 
certified to the federal government and with all other 
conditions under applicable state and federal law for a grant of 
state or federal funds of the nature and in the amount involved. 
    Sec. 3.  Minnesota Statutes 1986, section 116.16, 
subdivision 5, is amended to read: 
    Subd. 5.  [RULES.] (a) The agency shall promulgate 
permanent rules and may promulgate emergency rules for the 
administration of grants and loans authorized to be made from 
the fund or from federal funds under the Federal Water Pollution 
Control Act, as amended, which rules, however, shall not be 
applicable to the issuance of bonds by the commissioner of 
finance as provided in section 116.17.  The rules shall contain 
as a minimum: 
    (1) procedures for application by municipalities; 
    (2) conditions for the administration of the grant or loan; 
    (3) criteria for the ranking of projects in order of 
priority for grants or loans, based on factors including the 
extent and nature of pollution, technological feasibility, 
assurance of proper operation, maintenance and replacement, and 
participation in multimunicipal systems; and 
    (4) such other matters as the agency and the director find 
necessary to the proper administration of the grant program. 
    (b) Except as otherwise provided in sections 116.16 to 
116.18, the rules for the administration of state independent 
grants must comply, to the extent practicable, with provisions 
relating directly to protection of the environment contained in 
the Federal Water Pollution Control Act, as amended, and 
regulations and guidelines of the United States environmental 
protection agency promulgated under the act, except provisions 
regarding allocation contained in section 205 of the act and 
regulations and guidelines promulgated under section 205 of the 
act.  This provision does not require approval from federal 
agencies for the issuance of grants or for the construction of 
projects under the state independent grants program. 
    (c) For purposes of awarding independent state grants, the 
agency may by rule waive the federal 20-year planning 
requirement for municipalities with a population of less than 
1,500. 
    Sec. 4.  Minnesota Statutes 1986, section 116.16, 
subdivision 9, is amended to read:  
    Subd. 9.  [APPLICATIONS.] Applications by municipalities 
for grants or loans from the fund shall be made to the director 
of the agency authority on forms requiring information 
prescribed by rules of the agency.  The authority shall send the 
application to the agency within ten days of receipt.  The 
director shall certify to the agency authority those 
applications which appear to meet the criteria set forth in 
sections 116.16 to 116.18 and the rules promulgated hereunder, 
and the agency authority shall award the grants or loans on the 
basis of the criteria and priorities established by the agency 
in its rules and in sections 116.16 to 116.18.  A municipality 
that is designated under agency rules to receive state or 
federal funding for a project and that does not make a timely 
application for or that refuses the funding is not eligible for 
either state or federal funding for that project in that fiscal 
year or the subsequent year.  
    Sec. 5.  Minnesota Statutes 1986, section 116.16, is 
amended by adding a subdivision to read: 
    Subd. 11.  [AWARDS OF GRANTS AND LOANS.] Upon certification 
by the director of the pollution control agency, the authority 
shall notify a municipality that is to receive a grant or loan 
and advise the municipality of the grant agreement or loan form 
or other document that must be executed to complete the grant or 
loan.  Upon certification from the director that the work has 
been completed and that payment is proper, the authority shall 
pay to the municipality the periodic grant or loan payment.  
    Sec. 6.  Minnesota Statutes 1986, section 116.16, is 
amended by adding a subdivision to read: 
    Subd. 12.  [AMENDMENTS.] A municipality that seeks an 
amendment to a previously awarded grant or loan shall follow the 
procedure in subdivision 9 for applying to the authority.  The 
request for a grant or loan amendment must be forwarded by the 
authority to the director of the pollution control agency for 
consideration, and the authority shall process a grant or loan 
amendment that is approved by the director. 
    Sec. 7.  Minnesota Statutes 1986, section 116.18, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [STATE MATCHING GRANTS PROGRAM BEGINNING OCTOBER 
1, 1984 1987.] For projects tendered, on or after October 
1, 1984 1987, a grant of federal money under section 201(g), 
section 202, 203, or 206(f) of the Federal Water Pollution 
Control Act, as amended, United States Code, title 33, sections 
1251 to 1376, at 55 percent or more of the eligible cost for 
construction of the treatment works, state money appropriated 
under subdivision 1 must be expended for up to 30 50 percent of 
the nonfederal share of the eligible cost of construction for 
municipalities for which the construction would otherwise impose 
significant financial hardship; provided, that not less than ten 
percent of the eligible cost must be paid by the municipality or 
agency constructing the project.  If a municipality is tendered 
federal and state grants in a percentage cumulatively exceeding 
90 percent of the eligible cost of construction, the state 
pollution control agency shall reduce the grant to the 
municipality under this chapter to the extent necessary to 
ensure that not less than ten percent of the eligible cost will 
be paid by the municipality.  The amounts of the matching grants 
must be based on per connection capital cost, median household 
income, and per capita adjusted assessed valuation with 
populations of 25,000 or less. 
    Sec. 8.  Minnesota Statutes 1986, section 116.18, 
subdivision 3a, is amended to read:  
    Subd. 3a.  [STATE INDEPENDENT GRANTS PROGRAM.] (a) The 
agency Minnesota public facilities authority may award 
independent grants for projects certified by the state pollution 
control director for 50 percent or, if the agency requires 
advanced treatment, 65 population of the municipality is 25,000 
or less, 80 percent of the eligible cost of construction.  The 
agency may award independent grants for up to an additional 30 
percent or, if the agency requires advanced treatment, up to an 
additional 25 percent of the eligible cost of construction to 
municipalities for which the construction would otherwise impose 
significant financial hardship; the amounts of the additional 
grants shall be based on per connection capital cost, median 
household income, and per capita adjusted assessed valuation.  
These grants may be awarded in separate steps for planning and 
design in addition to actual construction.  Until December 31, 
1990, not more than 20 percent of the total amount of grants 
awarded under this subdivision in any single fiscal year may be 
awarded to a single grantee.  
    (b) Up to ten percent of the money to be awarded as grants 
under this subdivision in any single fiscal year shall be set 
aside for municipalities having substantial economic development 
projects that cannot come to fruition without municipal 
wastewater treatment improvements.  The agency shall forward its 
municipal needs list to the commissioner of energy and economic 
development authority at the beginning of each fiscal year, and 
the commissioner authority shall review the list and identify 
those municipalities having substantial economic development 
projects. After the first 90 percent of the total available 
money is allocated to municipalities in accordance with agency 
priorities, the set-aside shall be used by the agency authority 
to award grants to remaining municipalities that have been 
identified.  
    (c) Grants may also be awarded under this subdivision to 
reimburse municipalities willing to proceed with projects and be 
reimbursed in a subsequent year conditioned upon appropriation 
of sufficient money under subdivision 1 for that year.  The 
maximum amount of the reimbursement the agency may commit in any 
single fiscal year is equal to the amount newly appropriated to 
the state grants programs for that year. 
    (d) A municipality that applies for a state independent 
grant to be reimbursed for a project must receive an additional 
five percent of the total eligible cost of construction beyond 
the normal percentage to which the municipality is entitled 
under paragraph (a). 
    Sec. 9.  [STATE INDEPENDENT GRANTS PROGRAM.] 
    (a) The state pollution control agency may award 
independent grants for projects for 50 percent or, if the 
population of the municipality is 25,000 or less, 80 percent of 
the eligible cost of construction.  These grants may be awarded 
in separate steps for planning and design in addition to actual 
construction.  Until December 31, 1990, not more than 20 percent 
of the total amount of grants awarded under this section in a 
fiscal year may be awarded to a single grantee.  
    (b) Up to ten percent of the money to be awarded as grants 
under this section in a fiscal year must be set aside for 
municipalities having substantial economic development projects 
that cannot come to fruition without municipal wastewater 
treatment improvements.  The agency shall forward its municipal 
needs list to the authority at the beginning of each fiscal 
year, and the authority shall review the list and identify those 
municipalities having substantial economic development projects. 
After the first 90 percent of the total available money is 
allocated to municipalities in accordance with agency 
priorities, the set-aside must be used by the authority to award 
grants to remaining municipalities that have been identified. 
    (c) Grants may also be awarded under this section to 
reimburse municipalities willing to proceed with projects and be 
reimbursed in a subsequent year conditioned upon appropriation 
of sufficient money under Minnesota Statutes, section 116.18, 
subdivision 1, for that year. 
    (d) A municipality that applies for a state independent 
grant to be reimbursed for a project must receive an additional 
five percent of the total eligible cost of construction beyond 
the normal percentage to which the municipality is entitled 
under paragraph (a). 
    Sec. 10.  Minnesota Statutes 1986, section 116J.36, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEFINITIONS.] In this section: 
    (a) "Authority" means the Minnesota public facilities 
authority.  
    (b) "Construction costs" means all costs associated with 
the construction, modification or expansion of a district 
heating system except for preliminary planning costs and 
detailed design costs.  Construction costs include the cost of 
debt service from the time a construction loan is made until 
five years after the beginning of the operation of the district 
heating system constructed or the part of the system being 
modified or expanded. 
    (b) (c) "District heating" means the use of a central 
energy conversion facility to produce hot water or steam for a 
district heating system.  District heating facilities may also 
produce electricity in addition to hot water or steam. 
    (c) (d) "Municipality" means any county, home rule charter 
or statutory city, town, school district or a municipal power 
agency formed pursuant to sections 453.53 to 453.62.  
Municipality also means a public utility, as defined in section 
452.01, subdivision 3, owned and operated by a city, however 
organized.  For purposes of a district heating system only, 
municipality also means a nonprofit corporation organized 
pursuant to the provisions of chapter 317 whose membership is 
limited to the mayor and governing body of the city in which the 
district heating system is located. 
    (d) (e) "District heating system" means any existing or 
proposed facility for (1) the production, through cogeneration 
or otherwise, of hot water or steam to be used for district 
heating, or (2) the transmission and distribution of hot water 
or steam for district heating either directly to heating 
consumers or to another facility or facilities for transmission 
and distribution, or (3) any part or combination of the 
foregoing facilities. 
    (e) (f) "Qualified energy improvement" means a 
cost-effective capital improvement to public land, buildings, or 
energy using systems, other than a district heating system, 
including the purchase or installation of equipment to reduce 
the usage of conventional energy sources or to use alternative 
energy resources.  Qualified energy improvements also include 
waste-to-energy facilities that meet the criteria specified in 
subdivision 8a and any rule adopted under that subdivision.  
Qualified energy improvements shall meet all environmental and 
permitting standards established by state and federal law.  
    Sec. 11.  Minnesota Statutes 1986, section 116J.36, 
subdivision 3b, is amended to read:  
    Subd. 3b.  [GRANT ELIGIBILITY, DISTRICT HEATING.] The 
commissioner of energy and economic development authority may 
provide district heating system planning grants to 
municipalities for planning related to the development of 
district heating systems certified by the director of public 
service as eligible to receive planning grants.  The 
municipality must demonstrate that a community heatload survey 
and map have been successfully completed, that potential 
district heating load is sufficiently large to justify further 
consideration, and that sufficient resources are available for 
the municipality to meet its financial requirements.  Eligible 
planning grant costs include project definition, development of 
preliminary financing and distribution system plans, and 
obtaining commitment for detailed planning or design and 
preparation of a final report.  The amount of the grant to a 
municipality is limited to 90 percent of eligible planning costs 
and shall not exceed $70,000 as established by rule or emergency 
rule.  
    Sec. 12.  Minnesota Statutes 1986, section 116J.36, 
subdivision 3c, is amended to read:  
    Subd. 3c.  [GRANT ELIGIBILITY, QUALIFIED ENERGY 
IMPROVEMENTS.] The commissioner of energy and economic 
development authority may provide qualified energy improvement 
planning grants to municipalities for planning related to the 
development of qualified energy improvements certified by the 
director of public service as eligible to receive planning 
grants.  The municipality must demonstrate that sufficient 
resources are available for the municipality to meet its 
financial requirements.  Eligible planning grant costs include 
definition of the improvement, development of preliminary 
financing plans, and obtaining commitment for detailed planning 
or design and preparation of a final report.  The amount of a 
grant to a municipality is limited to 90 percent of eligible 
planning costs and must not exceed $100,000 as established by 
rule or emergency rule.  
    Sec. 13.  Minnesota Statutes 1986, section 116J.36, 
subdivision 8, is amended to read:  
    Subd. 8.  [LOAN APPROVAL.] The commissioner of energy and 
economic development director of public service shall prepare 
and submit to the energy and economic development authority 
separate priority lists of loan requests for district heating 
systems and qualified energy improvements.  The priority list 
for district heating loans shall contain the supporting 
information required by must be based on the requirements under 
subdivisions 3, 4, 5, 6, and 7.  The priority list for qualified 
energy improvements shall contain the supporting information 
required by must be based on the requirements under subdivisions 
3a, 3c, 4a, 5, and 6.  The recommendation of the authority shall 
be transmitted to the commissioner of finance.  The commissioner 
of finance shall sell bonds and the authority shall make loans 
for district heating projects and qualified energy improvements 
only upon the recommendation of the authority director of public 
service. 
    Sec. 14.  Minnesota Statutes 1986, section 116J.36, 
subdivision 8a, is amended to read:  
    Subd. 8a.  [CRITERIA FOR QUALIFIED ENERGY IMPROVEMENTS.] 
Qualified energy improvements eligible for loans must meet 
criteria established in rule by the commissioner of energy and 
economic development director of public service.  Rules shall 
include criteria for analyzing the cost-effectiveness of 
improvements.  Rules relating to qualified energy improvements 
involving a waste-to-energy facility must be adopted in 
consultation with the waste management board, the authority, and 
the pollution control agency.  An improvement involving a 
waste-to-energy facility must be part of a solid waste 
management plan approved by the pollution control agency or a 
plan approved under section 473.803.  
    Sec. 15.  Minnesota Statutes 1986, section 116J.36, 
subdivision 11, is amended to read:  
    Subd. 11.  [RULES.] The commissioner of energy and economic 
development shall adopt rules and may adopt emergency rules 
necessary to carry out the programs of this section.  The 
director of public service shall adopt rules for the 
administration of programs under this section.  The commissioner 
of energy and economic development director of public service 
may adopt emergency rules pursuant to sections 14.29 to 14.36, 
meeting the requirements of this section.  The rules shall 
contain as a minimum:  
    (a) Procedures for application by municipalities; and 
    (b) Criteria for reviewing grant and loan applications. 
    Sec. 16.  Minnesota Statutes 1986, section 116J.37, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] In this section:  
    (a) "Commissioner" means the commissioner of energy and 
economic development.  Upon passage of legislation creating a 
body known as the Minnesota energy public facilities authority, 
the duties assigned to the commissioner in this section are 
delegated to the authority.  
    (b) "Maxi-audit" has the meaning given in section 116J.06, 
subdivision 12.  
    (c) "Energy conservation investments" mean all capital 
expenditures that are associated with conservation measures 
identified in a maxi-audit and that have a ten-year or less 
payback period.  Public school districts that received a federal 
institutional building grant in 1984 to convert a heating system 
to wood, and that apply for an energy conservation investment 
loan to match a federal grant for wood conversion, shall be 
allowed to calculate payback of conservation measures based on 
the costs of the traditional fuel in use prior to the wood 
conversion. 
    Sec. 17.  Minnesota Statutes 1986, section 116J.37, is 
amended by adding a subdivision to read:  
    Subd. 8.  [TECHNICAL SUPPORT.] The director of public 
service shall prepare and submit to the authority the technical 
evaluation of all applicants under this section. 
    Sec. 18.  [446A.01] [MINNESOTA PUBLIC FACILITIES AUTHORITY 
ACT.] 
    Sections 18 to 26 may be cited as the "Minnesota public 
facilities authority act." 
    Sec. 19.  [446A.02] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] For the purposes of 
sections 18 to 26, the terms in this section have the meanings 
given them. 
    Subd. 2.  [AUTHORITY.] "Authority" means the Minnesota 
public facilities authority. 
    Subd. 3.  [COMMISSIONER.] "Commissioner" means the 
commissioner of energy and economic development. 
    Subd. 4.  [FEDERAL WATER POLLUTION CONTROL ACT.] "Federal 
Water Pollution Control Act" means the Federal Water Pollution 
Control Act, as amended, United States Code, title 33, sections 
1281 to 1299. 
    Subd. 5.  [GOVERNMENTAL UNIT.] "Governmental unit" means a 
state agency, home rule charter or statutory city, county, 
sanitary district, or other governmental subdivision. 
    Subd. 6.  [PROJECT.] "Project" means the acquisition, 
construction, improvement, expansion, repair, or rehabilitation 
of all or part of any structure, facility, or equipment 
necessary for a wastewater treatment system or water supply 
system. 
    Sec. 20.  [446A.03] [MINNESOTA PUBLIC FACILITIES 
AUTHORITY.] 
    Subdivision 1.  [MEMBERSHIP.] The Minnesota public 
facilities authority consists of the commissioner of energy and 
economic development, the commissioner of finance, the director 
of public service, the director of the pollution control agency, 
and three additional members appointed by the governor from the 
general public with the advice and consent of the senate. 
    Subd. 2.  [CHAIR; OTHER OFFICERS.] The commissioner of 
energy and economic development shall serve as the chair and 
chief executive officer of the authority.  The authority may 
elect other officers as necessary from its members. 
    Subd. 3.  [MEMBERSHIP TERMS.] The membership terms, 
compensation, removal, and filling of vacancies of public 
members of the authority are as provided in section 15.0575. 
    Subd. 4.  [BOARD ACTIONS.] A majority of the authority, 
excluding vacancies, constitutes a quorum to conduct its 
business, to exercise its powers, and for all other purposes.  
    Subd. 5.  [EXECUTIVE DIRECTOR.] The commissioner shall 
employ, with the concurrence of the authority, an executive 
director.  The director shall perform duties that the authority 
may require in carrying out its responsibilities.  The executive 
director's position is in the unclassified service. 
    Subd. 6.  [ADMINISTRATIVE SERVICES.] The commissioner shall 
provide administrative services to the authority.  
    Subd. 7.  [PERSONAL LIABILITY.] Members and officers of the 
authority are not liable personally for any debt or obligation 
of the authority.  
    Sec. 21.  [446A.04] [POWERS; DUTIES.] 
    Subdivision 1.  [BYLAWS; RULES.] The authority shall adopt 
bylaws for its organization and internal management.  The 
commissioner may adopt rules covering the authority's 
operations, properties, and facilities. 
    Subd. 2.  [POWER TO SUE; ENTER CONTRACTS.] The authority 
may sue and be sued.  The authority may make and enter into 
contracts, leases, and agreements necessary to perform its 
duties and exercise its powers. 
    Subd. 3.  [GIFTS; GRANTS.] The authority may apply for, 
accept, and disburse gifts, grants, loans, or other property 
from the United States, the state, private sources, or any other 
source for any of its purposes.  Money received by the authority 
under this subdivision must be deposited in the state treasury 
and is appropriated to the authority to carry out its duties. 
    Subd. 4.  [CONTRACT FOR SERVICES.] The authority may retain 
or contract for the services of accountants, financial advisors, 
and other consultants or agents needed to perform its duties and 
exercise its powers. 
    Subd. 5.  [FEES.] The authority may set and collect fees 
for costs incurred by the authority for its financings and the 
establishment and maintenance of reserve funds. 
    Sec. 22.  [446A.05] [PROJECT LOANS.] 
    Subdivision 1.  [LOANS.] The authority may make and 
contract to make loans to governmental units to finance projects 
that the governmental unit may construct or acquire.  A loan may 
not be used to pay current expenses or obligations, except for 
temporary financing.  A loan must be secured by notes or bonds 
of the borrowing governmental unit. 
    Subd. 2.  [RULES.] The commissioner may adopt rules 
governing loans awarded under this section. 
    Sec. 23.  [446A.06] [INDEPENDENT WASTEWATER TREATMENT 
GRANTS.] 
    Subdivision 1.  [AWARD OF GRANTS.] The authority shall 
award independent state grants to municipalities selected by the 
pollution control agency upon certification by the agency that 
the municipalities' projects and applications have been reviewed 
and approved by the agency in accordance with sections 116.16 to 
116.18 and agency rules. 
    Subd. 2.  [RULES.] The commissioner shall adopt rules 
containing procedures for the administration of the authority's 
duties as provided in subdivision 1. 
    Sec. 24.  [446A.07] [WATER POLLUTION CONTROL REVOLVING 
FUND.] 
    Subdivision 1.  [ESTABLISHMENT OF FUND.] The authority 
shall establish a water pollution control revolving fund to 
provide loans for the purposes and eligible costs authorized 
under title VI of the Federal Water Pollution Control Act.  The 
fund must be credited with repayments. 
    Subd. 2.  [STATE FUNDS.] A state matching fund is 
established to be used in compliance with federal matching 
requirements specified in the Federal Water Pollution Control 
Act.  A state grant and loan fund is established to provide 
grants and loans to governmental units for the planning and 
construction of treatment works as specified in section 116.16, 
subdivision 2, paragraphs (6), (7), and (8).  
    Subd 3.  [CAPITALIZATION GRANT AGREEMENT.] The authority 
shall enter an agreement with the administrator of the United 
States Environmental Protection Agency to receive capitalization 
grants for the revolving fund.  The authority may exercise 
powers necessary to comply with the requirements specified in 
the agreement, which must be in compliance with the Federal 
Water Pollution Control Act. 
    Subd. 4.  [INTENDED USE PLAN.] The pollution control agency 
shall annually prepare and submit to the United States 
Environmental Protection Agency an intended use plan.  The plan 
must identify the intended uses of the amounts available to the 
water pollution control revolving fund, including a list of 
wastewater treatment projects and other eligible activities to 
be funded during the fiscal year.  The agency may not submit the 
plan until it has received the review and comment of the 
authority or until 30 days have elapsed since the plan was 
submitted to the authority, whichever occurs first. 
    Subd. 5.  [APPLICATIONS.] Applications by municipalities 
and other entities identified in the annual intended use plan 
for loans from the water pollution control revolving fund must 
be made to the authority on forms requiring information 
prescribed by the rules of the agency adopted under this 
section.  The authority shall send the applications to the 
agency within ten days of receipt.  The director shall certify 
to the authority those applications that appear to meet the 
criteria set forth in the Federal Water Pollution Control Act, 
this section, and rules of the agency. 
    Subd. 6.  [AWARD AND TERMS OF LOANS.] The authority shall 
award loans to those municipalities and other entities certified 
by the agency.  The terms and conditions of the loans must be in 
conformance with the Federal Water Pollution Control Act, this 
section, and rules of the agency, and authority adopted under 
this section. 
    Subd. 7.  [LOAN CONDITIONS.] When making loans from the 
revolving fund, the authority shall comply with the conditions 
of the Federal Water Pollution Control Act, including: 
    (a) Loans must be made at or below market interest rates, 
including interest-free loans, at terms not to exceed 20 years. 
    (b) The annual principal and interest payments must begin 
no later than one year after completion of a project.  Loans 
must be fully amortized no later than 20 years after project 
completion. 
    (c) A loan recipient shall establish a dedicated source of 
revenue for repayment of the loan.  
    (d) The fund must be credited with all payments of 
principal and interest on all loans. 
    Subd. 8.  [OTHER USES OF REVOLVING FUND.] The water 
pollution control revolving fund may be used as provided in 
title VI of the Federal Water Pollution Control Act, including 
the following uses: 
    (1) to buy or refinance the debt obligation of governmental 
units for treatment works incurred after March 7, 1985, at or 
below market rates; 
    (2) to guarantee or purchase insurance for local 
obligations to improve credit market access or reduce interest 
rates; 
    (3) to provide a source of revenue or security for the 
payment of principal and interest on revenue or general 
obligation bonds issued by the authority if the bond proceeds 
are deposited in the fund; 
    (4) to provide loan guarantees for similar revolving funds 
established by a governmental unit other than state agencies; 
    (5) to earn interest on fund accounts; and 
    (6) to pay the reasonable costs incurred by the authority 
and the agency of administering the fund and conducting 
activities required under the Federal Water Pollution Control 
Act, including water quality management planning under section 
205(j) of the act and water quality standards continuing 
planning under section 303(e) of the act. 
    Amounts spent under clause (6) may not exceed the amount 
allowed under the Federal Water Pollution Control Act.  Five 
percent of the revolving loan fund repayments may be used by the 
agency and the authority for the purposes listed in clause (6). 
    Subd. 9.  [PAYMENTS.] Payments from the fund must be made 
in accordance with the applicable state and federal law 
governing the payments, except that no payment for a project may 
be made to a governmental unit until and unless the authority 
has determined the total estimated cost of the project and 
ascertained that financing of the project is assured by: 
    (1) a loan authorized by state law or the appropriation of 
proceeds of bonds or other money of the governmental unit to a 
fund for the construction of the project; and 
    (2) an irrevocable undertaking, by resolution of the 
governing body of the governmental unit, to use all money made 
available for the project exclusively for the project, and to 
pay any additional amount by which the cost of the project 
exceeds the estimate by the appropriation to the construction 
fund of additional money or the proceeds of additional bonds to 
be issued by the governmental unit. 
    Subd. 10.  [RULES OF THE AUTHORITY.] The commissioner shall 
adopt rules containing procedures for the administration of the 
authority's duties as provided in this section, including loan 
interest rates, the amounts of loans, and municipal financial 
need. 
    Subd. 11.  [RULES OF THE AGENCY.] The agency shall adopt 
rules relating to the procedure for preparation of the annual 
intended use plan and other matters that the agency considers 
necessary for proper loan administration. 
    Sec. 25.  [446A.08] [HEALTH CARE EQUIPMENT LOANS.] 
    Subdivision 1.  [AUTHORITY.] The authority may make or 
participate in making health care equipment loans.  The loans 
may be made only from the proceeds of bonds or notes issued 
under subdivision 2.  Before making a commitment for a loan, the 
authority shall forward the application to the commissioner of 
health for review under subdivision 3.  The authority may not 
approve or enter into a commitment for a loan unless the 
application has been approved by the commissioner of health. 
    Subd. 2.  [BONDS AND NOTES.] The authority may issue its 
bonds and notes to provide money for the purposes specified in 
subdivision 1.  The principal amount of bonds and notes issued 
and outstanding under this subdivision at any time may not 
exceed $95,000,000.  The bonds and notes issued to make the 
loans may not be insured by the authority but must be insured by 
a letter of credit or bond insurance issued by a private insurer.
    Subd. 3.  [ADMINISTRATION.] (a) The commissioner of health 
shall review each loan application received from the authority 
to determine whether the application is an eligible 
application.  An application is eligible if the following 
criteria are satisfied: 
    (1) the hospital is owned and operated by a county, 
district, municipality, or nonprofit corporation;  
    (2) the loan would not be used to refinance existing debt;  
    (3) the hospital was unable to obtain suitable financing 
from other sources;  
    (4) the loan is necessary to establish or maintain patient 
access to an essential health care service that would not 
otherwise be available within a reasonable distance from the 
facility; and 
    (5) the equipment to be financed by the loan is 
cost-effective and efficient.  
    (b) The authority shall determine whether the allocation 
available for the health care equipment loan program is 
sufficient for all eligible applications received during a 
specified time.  If the allocations are sufficient, the 
authority shall approve all eligible applications.  If the 
allocations are not sufficient, the authority shall compare the 
relative merits of the eligible applications with respect to the 
criteria in paragraph (a), clauses (4) and (5), rank the 
applications in order of priority, and approve the applications 
in order of priority to the extent possible within the available 
allocation. 
    (c) The authority may charge a reasonable fee under section 
16A.128 to an applicant for the costs of review of the 
application.  The authority shall transfer to the commissioner 
of health from the fees collected an amount sufficient to pay 
the costs of the commissioner of health in the review of 
applications.  The commissioner of health and the authority may 
each adopt permanent rules to implement subdivisions 1 to 3.  
    Sec. 26.  [446A.09] [REPORT; AUDIT.] 
    The authority shall report to the legislature and the 
governor by January 1 of each year.  The report must include a 
complete operating and financial statement covering the 
authority's operations during the year, including amounts of 
income from all sources.  Books and records of the authority are 
subject to audit by the legislative auditor in the manner 
prescribed for state agencies.  
    Sec. 27.  [GOVERNOR'S ACTION.] 
    The governor may request the administrator of the 
environmental protection agency to make available to the state, 
capitalization grants to be deposited in the water pollution 
control revolving fund, for the fiscal year beginning October 1, 
1987.  The governor may request that up to 75 percent of the 
amount allotted to the state for the fiscal year beginning 
October 1, 1987, be made available for deposit in the water 
pollution control revolving fund. 
    Sec. 28.  [466A.10] [TRANSFER OF AUTHORITY.] 
    Subdivision 1.  [WATER POLLUTION CONTROL GRANTS.] (a) The 
responsibilities of the pollution control agency for the state 
independent wastewater treatment grant program under Minnesota 
Statutes, section 116.18, subdivision 3a, are transferred on 
July 1, 1988, to the Minnesota public facilities authority under 
Minnesota Statutes, section 15.039, except that the commissioner 
of energy and economic development and the director of the 
pollution control agency shall determine which classified and 
unclassified positions associated with these responsibilities 
are transferred. 
    (b) Any continuing obligation with respect to grants made 
before September 30, 1984, under Minnesota Statutes 1984, 
section 116.18, subdivision 2, remains with the pollution 
control agency. 
    (c) The pollution control agency shall continue to 
administer the combined sewer overflow program under Minnesota 
Statutes, section 116.162, and the appropriations for the 
program. 
    Subd. 2.  [OTHER RESPONSIBILITIES.](a) The responsibilities 
for the health care equipment loan program under section 
116M.07, subdivisions 7a, 7b, and 7c; the public school energy 
conservation loan program under section 116J.37; and the 
district heating and qualified energy improvement loan program 
under section 116J.36, are transferred from the Minnesota energy 
and economic development authority to the Minnesota public 
facilities authority.  The director of public service shall 
continue to administer the municipal energy grant and loan 
programs under section 116J.36 and the school energy loan 
program under section 116J.37 until the commissioner of energy 
and economic development has adopted rules to implement the 
financial administration of the programs as provided under 
sections 10 to 17. 
    (b) Except as otherwise provided in this paragraph, section 
15.039 applies to the transfer of responsibilities.  The 
transfer includes eight and one-half positions from the 
financial management division of the department of energy and 
economic development to the community development division of 
the department of energy and economic development.  The 
commissioner of energy and economic development and the director 
of public service shall determine which classified and 
unclassified positions associated with the responsibilities of 
the grant and loan programs under section 116J.36 and the school 
energy loan program under section 116J.37 are transferred to the 
director of public service and which positions are transferred 
to the commissioner of energy and economic development in order 
to carry out the purposes of this article. 
    Sec. 29.  [466A.11] [PROGRAM ADMINISTRATION.] 
    Subdivision 1.  [POWERS.] In implementing the purposes and 
the programs transferred to the authority by section 28, 
subdivision 2, the authority has the powers in this section.  
    Subd. 2.  [RULES.] It may adopt, amend, and repeal rules, 
including emergency rules, necessary to effectuate its purposes. 
    Subd. 3.  [PERSONAL PROPERTY.] It may acquire, hold, and 
dispose of personal property for its corporate purposes. 
    Subd. 4.  [REAL PROPERTY.] It may acquire real property, or 
an interest in real property, in its own name, by purchase or 
foreclosure, where the acquisition is necessary or appropriate 
to protect a loan in which the authority has an interest and may 
sell, transfer, and convey the property to a buyer and, in the 
event the sale, transfer, or conveyance cannot be effected with 
reasonable promptness or at a reasonable price, may lease the 
property to a tenant. 
    Subd. 5.  [NOTES; MORTGAGES; OBLIGATIONS; SALE OF.] It may 
sell, at public or private sale, any note, mortgage or other 
instrument or obligation evidencing or securing a loan. 
    Subd. 6.  [INSURANCE.] It may procure insurance against a 
loss in connection with its property in the amounts, and from 
the insurers, as may be necessary or desirable.  
    Subd. 7.  [LOAN TERMS; MODIFICATION.] It may consent, 
whenever it considers it necessary or desirable in the 
fulfillment of its purpose, to the modification of the rate of 
interest, time of payment, installment of principal or interest, 
or other term, of a contract or agreement to which the authority 
is a party. 
    Subd. 8.  [LOAN PAYMENTS; INTEREST AND AMORTIZATION.] It 
may establish and collect reasonable interest and amortization 
payments on loans, and in connection with them may establish and 
collect or authorize the collection of reasonable fees and 
charges or require money to be placed in escrow, sufficient to 
provide for the payment and security of its bonds, notes, 
commitments and other obligations and for their servicing, to 
provide reasonable allowances for or insurance against losses 
which may be incurred and to cover the cost of issuance of 
obligations and technical, consultative, and project assistance 
services.  
    Subd. 9.  [INVESTMENTS.] (a) It may cause any money not 
required for immediate disbursement, including the general 
reserve account, to be invested in direct obligations of or 
obligations guaranteed as to principal and interest by the 
United States, or in insured savings accounts, up to the amount 
of the insurance, in any institution the accounts of which are 
insured by the federal savings and loan insurance corporation or 
to be deposited in a savings or other account in a bank insured 
by the federal deposit insurance corporation or to be invested 
in time certificates of deposit issued by a bank insured by the 
federal deposit insurance corporation and maturing within one 
year or less and in the investments described in section 11A.24, 
subdivision 4, except clause (d) of subdivision 4.  It may 
deposit money in excess of the amount insured with security as 
provided in chapter 118.  
    (b) Notwithstanding paragraph (a), it may invest and 
deposit money into accounts established pursuant to resolutions 
or indentures securing its bonds or notes in investments and 
deposit accounts or certificates, and with security, agreed upon 
with the holders or a trustee for the holders. 
    Subd. 10.  [CONSULTATIVE AND TECHNICAL SERVICES.] It may 
provide general consultative and technical services to assist in 
financing the entities to which loans may be made.  It may enter 
into agreements or other transactions concerning the receipt or 
provision of those services.  
    Subd. 11.  [FINANCIAL INFORMATION.] Financial information, 
including credit reports, financial statements and net worth 
calculations, received or prepared by the authority regarding an 
authority loan, financial assistance, or insurance is private 
data with regard to data on individuals as defined in section 
13.02, subdivision 12 and nonpublic data with regard to data not 
on individuals as defined in section 13.02, subdivision 9.  
    Subd. 12.  [APPROPRIATIONS; GIFTS; GRANTS.] The authority 
may accept appropriations, gifts, grants, bequests, and devises 
and use or dispose of them for its purposes.  All gifts, grants, 
bequests, and revenues from those sources are appropriated to 
the authority. 
    Subd. 13.  [PROCEEDS APPROPRIATED TO AUTHORITY.] Proceeds 
of the authority's bonds, notes, and other obligations; amounts 
granted or appropriated to the authority for the making or 
purchase or the insurance or guaranty of loans or for bond 
reserves; income from investment; money in the funds; and all 
revenues from loans, fees, and charges of the authority 
including rentals, royalties, dividends, or other proceeds in 
connection with technology-related products, energy conservation 
products, or other equipment are annually appropriated to the 
authority for the accomplishment of its corporate purposes and 
must be spent, administered, and accounted for in accordance 
with the applicable provisions of all bond and note resolutions, 
indentures, and other instruments, contracts, and agreements of 
the agency.  Notwithstanding section 16A.28, these 
appropriations are available until expended.  
    Subd. 14.  [GENERAL PURPOSE.] The authority may do all 
things necessary and proper to fulfill its purpose. 
    Sec. 30.  [REPEALER.] 
    Minnesota Statutes 1986, section 116.167, is repealed.  
    Sec. 31.  [APPROPRIATION.] 
    $800,000 is appropriated from the economic development fund 
to the commissioner of energy and economic development to 
administer programs under the Minnesota public facilities 
authority.  $400,000 is for fiscal year 1988 and $400,000 is for 
fiscal year 1989.  
    Sec. 32.  [EFFECTIVE DATE.] 
    Sections 1, 2, 4, 5, 6, 8, 23, and 28, subdivision 1, are 
effective on July 1, 1988.  
    Section 9 is repealed July 1, 1988. 

                               ARTICLE 4 

                         COMMUNITY DEVELOPMENT
    Section 1.  [116J.980] [COMMUNITY DEVELOPMENT DIVISION.] 
    Subdivision 1.  [DUTIES.] The community development 
division is a division within the department of energy and 
economic development.  It shall:  
    (1) be responsible for administering all state community 
development and assistance programs, including the economic 
recovery fund, the outdoor recreation grant program, the rural 
development board programs, the community development 
corporation program, the urban revitalization program, the 
Minnesota public facilities authority loan and grant programs, 
and the enterprise zone program;  
    (2) be responsible for state administration of federally 
funded community development and assistance programs, including 
the small cities development grant program and land and water 
conservation program;  
    (3) provide technical assistance to rural communities for 
community development in cooperation with regional development 
commissions;  
    (4) coordinate the development and review of state rural 
development policies;  
    (5) provide staff and consultant services to the rural 
development board; and 
    (6) be responsible for coordinating community assistance 
and development programs in cooperation with regional 
development commissions. 
    Subd. 2.  [GENERAL COMPLEMENT AUTHORITY.] The community 
development division may combine all related state and federal 
complement positions into general fund positions, to carry out 
the responsibilities under subdivision 1.  The number of general 
fund positions must not exceed the aggregate number of all state 
and federal positions that are to be combined.  Records of the 
actual number of employee hours charged to each state and 
federal account must be maintained for each general fund 
position. 
    Sec. 2.  [116J.981] [MAIN STREET PROGRAM.] 
    The commissioner shall develop and administer a main street 
program to assist cities in the revitalization of their 
businesses.  The purpose of the program is to strengthen local 
organization and local management of business districts so that 
cities become more self-reliant and not dependent on future 
state financial assistance.  The staff dedicated for this 
program shall assist cities that request assistance in the 
following manner: 
    (1) improving the organization of a city's business 
district including the leadership skills of business owners and 
city officials; 
    (2) establishing a marketing strategy to promote a city's 
business district to residents of the surrounding trade area; 
    (3) providing technical assistance in the design and 
rehabilitation of buildings in a city's business district 
including historic preservation; and 
    (4) establishing a strategy to strengthen existing 
businesses, recruit new businesses, diversify the mix of 
businesses, and develop vacant property in a city's business 
district. 
    Sec. 3.  [116J.982] [COMMUNITY DEVELOPMENT CORPORATIONS.] 
    Subdivision 1.  [DEFINITIONS.] For the purposes of this 
section, the terms in this subdivision have the meanings given 
them: 
    (a) "Commissioner" means the commissioner of energy and 
economic development. 
    (b) "Economic development region" means an area so 
designated in the governor's executive order number 60, dated 
June 12, 1970, as amended. 
    (c) "Federal poverty level" means the income level 
established by the United States Community Services 
Administration in Code of Federal Regulations, title 45, section 
1060.2-2. 
    (d) "Low income" means an annual income below the federal 
poverty level. 
    Subd. 2.  [ADMINISTRATION.] The commissioner shall 
administer this section and shall enforce the rules related to 
the community development corporations adopted by the 
commissioner.  The commissioner may amend, suspend, repeal or 
otherwise modify these rules as provided for in chapter 14. 
    Subd. 3.  [GRANTS; CORPORATIONS ELIGIBLE.] (a) The 
commissioner shall designate a community development corporation 
as eligible to receive grants under this section if the 
corporation is a nonprofit corporation incorporated under 
chapter 317 and meets the other criteria in this subdivision. 
    (b) The corporation, in its articles of incorporation or 
bylaws, shall designate a specific geographic community within 
which it will operate.  As least ten percent of the population 
within the designated community must have low incomes.  Within 
the metropolitan area as defined in section 473.121, subdivision 
2, a designated community must be an identifiable neighborhood 
or a combination of neighborhoods or home rule charter or 
statutory cities, townships, unincorporated areas, or 
combinations of those entities.  Outside the metropolitan area, 
designated communities, so far as possible, may not cross 
existing economic development boundaries.  If a proposed 
geographic area overlaps the designated community of a community 
development corporation existing before August 1, 1987, the 
proposed community development corporation shall obtain the 
written consent of the existing community development 
corporation before the proposed corporation may be designated as 
eligible to receive grants under this section. 
    (c) The corporation shall limit voting membership to 
residents of its designated area. 
    (d) The corporation shall have a board of directors with 15 
to 30 members unless the corporation can demonstrate to the 
satisfaction of the commissioner that a smaller or larger board 
is more advantageous.  At least 40 percent of the directors must 
have incomes that do not exceed 80 percent of the county median 
family income or 80 percent of the statewide median family 
income as determined by the state demographer, whichever is 
less, and the remaining directors must be members of the 
business or financial community and the community at large.  To 
the greatest extent possible, and at least 60 percent of, the 
directors must be residents of the designated community.  
Directors who meet the income limitations of this paragraph must 
be elected by the members of the corporation.  The remaining 
directors may be elected by the members or appointed by the 
directors who meet the income limitations of this paragraph. 
    (e) The corporation shall hire low-income residents of the 
designated community to fill nonmanagerial and nonprofessional 
positions. 
    (f) The corporation shall demonstrate that it has or will 
have the technical skills to analyze projects, that it is 
familiar with other available public and private funding sources 
and economic development programs, and that it is capable of 
packaging economic development projects. 
    Subd. 4.  [GRANT APPROVAL FOR PROJECTS.] The commissioner 
shall approve a grant to a community development corporation 
only for a project carried on within the designated community, 
except when the corporation demonstrates that a project carried 
on outside will have a significant impact inside the designated 
community. 
    Subd. 5.  [USE OF GRANT.] The commissioner may approve a 
grant to a community development corporation for planning, 
including organization of the corporation, training of the 
directors, creation of a comprehensive community economic 
development plan, and development of a proposal for a venture 
grant, or for establishment of a business venture, including 
assistance to an existing business venture, purchase of partial 
or full ownership of a business venture, or development of 
resources or facilities necessary for the establishment of a 
business venture. 
    Subd. 6.  [ASSIGNEE.] The commissioner must be named as an 
assignee of the rights of a state-funded community development 
corporation on any loan or other evidence of debt provided by a 
community development corporation to a private enterprise.  The 
assignment of rights must provide that it will be effective upon 
the dormancy or cessation of existence of the community 
development corporation.  "Dormancy" for the purpose of this 
section means the continuation of the corporation in name only 
without any functioning officers or activities.  Upon the 
cessation of the activities of a state-funded community 
development corporation, any assigned money paid to the 
commissioner must be deposited in the state treasury and 
credited to the general fund. 
    Subd. 7.  [FACTORS FOR GRANT APPROVAL.] Factors considered 
by the commissioner in approving a grant to a community 
development corporation must include the creation of employment 
opportunities, the maximization of profit, and the effect on 
securing money from sources other than the state. 
    Subd. 8.  [PROHIBITION.] Grants under this section are not 
available for programs conducted by churches or religious 
organizations or for securing or developing social services. 
    Subd. 9.  [NO EXCLUSION.] A person may not be excluded from 
participation in a program funded under this section because of 
race, color, religion, sex, age, or national origin. 
    Sec. 4.  [TRANSFER OF RESPONSIBILITIES.] 
    Subdivision 1.  [COMMUNITY DEVELOPMENT CORPORATIONS.] The 
responsibilities of the Minnesota energy and economic 
development authority for community development corporations 
under Minnesota Statutes, section 116M.04, are transferred under 
Minnesota Statutes, section 15.039, to the commissioner of 
energy and economic development. 
    Subd. 2.  [OTHER PROGRAMS.] The main street program, the 
Minnesota community improvement program, the governor's design 
team, and the Minnesota beautiful program are transferred under 
Minnesota Statutes, section 15.039, from the state planning 
agency to the department of energy and economic development.  
The four incumbents of the state planning agency responsible for 
the administration of these programs are transferred to the 
department of energy and economic development. 
    Sec. 5.  [REPEALER.] 
    Minnesota Statutes, section 116M.04, is repealed. 
    Sec. 6.  [EFFECTIVE DATE.] 
    This article is effective July 1, 1987. 

                                ARTICLE 5 

           MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY
    Section 1.  Minnesota Statutes 1986, section 15.039, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [OBLIGATIONS.] The new agency is the legal 
successor in all respects of the agency whose responsibilities 
are transferred.  The bonds, resolutions, contracts, and 
liabilities of the agency whose responsibilities are transferred 
become the bonds, resolutions, contracts, and liabilities of the 
new agency. 
    Sec. 2.  Minnesota Statutes 1986, section 16A.80, 
subdivision 2a, is amended to read:  
    Subd. 2a.  [EXEMPT AGENCIES.] This section does not apply 
to:  
    (1) the housing finance agency;  
    (2) the state board of investment;  
    (3) the iron range resources and rehabilitation board;  
    (4) the higher education coordinating board; and 
    (5) the higher education facilities authority; and 
    (6) the energy and economic development authority. 
    Sec. 3.  [116.55) [WASTE TIRE RECYCLING LOANS AND GRANTS.] 
    The pollution control agency may make waste tire recycling 
loans to businesses.  Applications for the loans are not 
complete unless the waste tire recycling project for which the 
loan is to be made is certified to be technically feasible by 
the director of the pollution control agency.  The agency may 
make grants from the waste tire recycling account for studies 
necessary to demonstrate the technical and economic feasibility 
of a proposed waste tire recycling project.  A grant must be 
less than $30,000 and may not exceed 75 percent of the costs of 
the study.  The agency shall adopt rules for administration of 
waste tire recycling grants and loans. 
    Sec. 4.  [RESPONSIBILITIES TRANSFERRED TO POLLUTION CONTROL 
AGENCY.] 
    The responsibilities for the waste tire recycling loan and 
grant program under section 116M.07, subdivision 3, are 
transferred from the Minnesota energy and economic development 
authority to the pollution control agency.  Minnesota Statutes, 
section 15.039, applies to the transfer of responsibilities. 
    Sec. 5.  [TRANSFER OF RESPONSIBILITIES.] 
    The responsibilities of the Minnesota energy and economic 
development authority that are not transferred to any other 
agency are transferred to the commissioner of energy and 
economic development under Minnesota Statutes, section 15.039. 
    Sec. 6.  [REPEALER.] 
    Minnesota Statutes 1986, sections 116M.01; 116M.02; 
116M.03; 116M.06; 116M.07; 116M.08; 116M.09; 116M.10; 116M.105; 
and 116M.13, are repealed. 
    Sec. 7.  [EFFECTIVE DATE.] 
    This article is effective July 1, 1987. 

                                ARTICLE 6 

                     URBAN REVITALIZATION PROGRAMS 
    Section 1.  Minnesota Statutes 1986, section 281.17, is 
amended to read:  
    281.17 [PERIOD FOR REDEMPTION.] 
    The period of redemption for all lands sold to the state at 
a tax judgment sale shall be three years from the date of sale 
to the state of Minnesota if the land is within an incorporated 
area unless it is:  (a) nonagricultural homesteaded land as 
defined in section 273.13, subdivision 22, (b) homesteaded 
agricultural land as defined in section 273.13, subdivision 23, 
paragraph (a), or (c) seasonal recreational land as defined in 
section 273.13, subdivision 27, paragraph (a), or subdivision 
22, paragraph (c), in which event the period of redemption is 
five years from the date of sale to the state of Minnesota. 
    The period of redemption for homesteaded lands as defined 
in section 273.13, subdivision 22, located in a targeted 
neighborhood as defined in section 4 and sold to the state at a 
tax judgment sale is two years from the date of sale.  The 
period of redemption for other lands in a targeted neighborhood 
as defined in section 4 and sold to the state at a tax judgment 
sale is one year from the date of sale. 
    The period of redemption for all other lands sold to the 
state at a tax judgment sale shall be five years from the date 
of sale. 
    Sec. 2.  Minnesota Statutes 1986, section 429.061, 
subdivision 2, is amended to read:  
    Subd. 2.  [ADOPTION; INTEREST.] At such meeting or at any 
adjournment thereof the council shall hear and pass upon all 
objections to the proposed assessment, whether presented orally 
or in writing.  The council may amend the proposed assessment as 
to any parcel and by resolution adopt the same as the special 
assessment against the lands named in the assessment roll.  
Notice of any adjournment of the hearing shall be adequate if 
the minutes of the meeting so adjourned show the time and place 
when and where the hearing is to be continued. 
    The council may consider any objection to the amount of a 
proposed assessment as to a specific parcel of land at an 
adjourned hearing upon further notice to the affected property 
owner as it deems advisable.  At the adjourned hearing the 
council or a committee of it may hear further written or oral 
testimony on behalf of the objecting property owner and may 
consider further written or oral testimony from appropriate city 
officials and other witnesses as to the amount of the 
assessment.  The council or committee shall prepare a record of 
the proceedings at the adjourned hearing and written findings as 
to the amount of the assessment.  The amount of the assessment 
as finally determined by the council shall become a part of the 
adopted assessment roll.  No appeal may be taken as to the 
amount of any assessment adopted under this section unless 
written objection signed by the affected property owner is filed 
with the municipal clerk prior to the assessment hearing or 
presented to the presiding officer at the hearing.  All 
objections to the assessments not received at the assessment 
hearing in the manner prescribed by this subdivision are waived, 
unless the failure to object at the assessment hearing is due to 
a reasonable cause.  
    If the adopted assessment differs from the proposed 
assessment as to any particular lot, piece, or parcel of land, 
the clerk must mail to the owner a notice stating the amount of 
the adopted assessment.  Owners must also be notified by mail of 
any changes adopted by the council in interest rates or 
prepayment requirements from those contained in the notice of 
the proposed assessment.  
    The assessment, with accruing interest, shall be a lien 
upon all private and public property included therein, from the 
date of the resolution adopting the assessment, concurrent with 
general taxes; but the lien shall not be enforceable against 
public property as long as it is publicly owned, and during such 
period the assessment shall be recoverable from the owner of 
such property only in the manner and to the extent provided in 
section 435.19.  Except as provided below, all assessments 
shall be payable in equal annual installments extending over 
such period, not exceeding 30 years, as the resolution 
determines, payable on the first Monday in January in each year, 
but the number of installments need not be uniform for all 
assessments included in a single assessment roll if a uniform 
criterion for determining the number of installments is provided 
by the resolution.  Assessments on property located in a 
targeted neighborhood as defined in section 4 may be payable in 
variable annual installments if the resolution provides for a 
variable payment.  The first installment of each assessment 
shall be included in the first tax rolls completed after its 
adoption and shall be payable in the same year as the taxes 
contained therein; except that the payment of the first 
installment of any assessment levied upon unimproved property 
may be deferred until a designated future year, or until the 
platting of the property or the construction of improvements 
thereon, upon such terms and conditions and based upon such 
standards and criteria as may be provided by resolution of the 
council.  If special assessments against the property have been 
deferred pursuant to this subdivision, the governmental unit 
shall file with the county recorder in the county in which the 
property is located a certificate containing the legal 
description of the affected property and of the amount 
deferred.  In any event, every assessment the payment of which 
is so deferred, when it becomes payable, shall be divided into a 
number of installments such that the last installment thereof 
will be payable not more than 30 years after the levy of the 
assessment.  All assessments shall bear interest at such rate as 
the resolution determines, not exceeding eight percent per 
annum, except that the rate may in any event equal the average 
annual interest rate on bonds issued to finance the improvement 
for which the assessments are levied.  To the first installment 
of each assessment shall be added interest on the entire 
assessment from a date specified in the resolution levying the 
assessment, not earlier than the date of the resolution, until 
December 31 of the year in which the first installment is 
payable, and to each subsequent installment shall be added 
interest for one year on all unpaid installments; or 
alternatively, any assessment may be made payable in equal 
annual installments including principal and interest, each in 
the amount annually required to pay the principal over such 
period with interest at such rate as the resolution determines, 
not exceeding the maximum period and rate specified above.  In 
the latter event no prepayment shall be accepted under 
subdivision 3 without payment of all installments due to and 
including December 31 of the year of prepayment, together with 
the original principal amount reduced only by the amounts of 
principal included in such installments, computed on an annual 
amortization basis.  When payment of an assessment is deferred, 
as authorized in this subdivision, interest thereon for the 
period of deferment may be made payable annually at the same 
times as the principal installments of the assessment would have 
been payable if not deferred; or interest for this period may be 
added to the principal amount of the assessment when it becomes 
payable; or, if so provided in the resolution levying the 
assessment, interest thereon to December 31 of the year before 
the first installment is payable may be forgiven. 
    Sec. 3.  Minnesota Statutes 1986, section 462.445, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SCHEDULE OF POWERS.] An authority shall be 
a public body corporate and politic and shall have all the 
powers necessary or convenient to carry out the purposes of 
sections 462.415 to 462.705 (but not the power to levy and 
collect taxes or special assessments except as provided in 
sections 462.515 to 462.545 with respect to redevelopment 
projects only) including the following powers in addition to 
others granted in these sections: 
    (1) To sue and be sued; to have a seal, which shall be 
judicially noticed, and to alter the same at pleasure; to have 
perpetual succession; and to make, and from time to time to 
amend and repeal, rules and regulations not inconsistent with 
these sections; 
    (2) To employ an executive director, technical experts, and 
such officers, agents, and employees, permanent and temporary, 
as it may require, and determine their qualifications, duties, 
and compensation; for such legal services as it may require, to 
call upon the chief law officer of the municipality or to employ 
its own counsel and legal staff; so far as practicable, to use 
the services of local public bodies, in its area of operation, 
such local public bodies, if requested, to make such services 
available; 
     (3) To delegate to one or more of its agents or employees 
such powers or duties as it may deem proper; 
     (4) Within its area of operation to undertake, prepare, 
carry out, and operate projects and to provide for the 
construction, reconstruction, improvement, extension, 
alteration, or repair of any project or part thereof; 
     (5) Subject to the provisions of section 462.511, to give, 
sell, transfer, convey, or otherwise dispose of real or personal 
property or any interest therein and to execute such leases, 
deeds, conveyances, negotiable instruments, purchase agreements, 
and other contracts or instruments, and take such action, as may 
be necessary or convenient to carry out the purposes of these 
sections; 
     (6) Within its area of operation to acquire real or 
personal property or any interest therein by gifts, grant, 
purchase, exchange, lease, transfer, bequest, devise, or 
otherwise, and by the exercise of the power of eminent domain, 
in the manner provided by Minnesota Statutes 1945, chapter 117, 
and any amendments thereof or supplements thereto, to acquire 
real property which it may deem necessary for its purposes under 
these sections, after the adoption by it of a resolution 
declaring that the acquisition of the real property is necessary 
to eliminate one or more of the conditions found to exist in the 
resolution adopted pursuant to section 462.425 or found to exist 
by section 462.415, subdivision 5, or is necessary to carry out 
a redevelopment project as defined in section 462.421, 
subdivision 13; 
    (7) Within its area of operation, and without the adoption 
of an urban renewal plan, to acquire, by all means as set forth 
in clause (6) of this subdivision, including by the exercise of 
the power of eminent domain, in the manner provided by chapter 
117, and without the adoption of a resolution provided for in 
subdivision 1, clause (6), real property, and to demolish, 
remove, rehabilitate or reconstruct the buildings and 
improvements or construct new buildings and improvements 
thereon, or to so provide through other means as set forth in 
Laws 1974, chapter 228, or to grade, fill and construct 
foundations or otherwise prepare the site for improvements, and 
to dispose of said property pursuant to section 462.525, 
provided that the provisions of section 462.525 requiring 
conformance to an urban renewal plan shall not apply, and to 
finance such activities by means of the redevelopment project 
fund or by means of tax increments or tax increment bonds or by 
the methods of financing provided for in section 462.545 or by 
means of contributions from the municipality provided for in 
section 462.581, clause (9), or by any combination of such 
means; provided that, real property with buildings or 
improvements thereon shall only be acquired when the buildings 
or improvements are substandard; and provided further that the 
exercise of the power of eminent domain under this clause shall 
be limited to real property which contains buildings and 
improvements which are vacated and substandard.  For the purpose 
of this subparagraph, substandard buildings or improvements mean 
hazardous buildings as defined in section 463.15, subdivision 3, 
or buildings or improvements that are dilapidated or 
obsolescent, faultily designed, lack adequate ventilation, 
light, or sanitary facilities, or any combination of these or 
other factors that are detrimental to the safety or health of 
the community. 
    (8) Within its area of operation to determine the level of 
income constituting low or moderate family income.  Such income 
level shall be that level below which there is not available 
within the area of operation a substantial supply of decent, 
safe and sanitary housing provided by private enterprise without 
subsidy at prices or rents within the financial means of persons 
and families of such incomes.  The authority may establish 
various income levels for various family sizes.  In making its 
determination the authority may consider income levels which may 
be established by the federal housing administration or a 
similar or successor federal agency for the purpose of federal 
loan guarantees or subsidies for persons of low or moderate 
income. The authority may use such determination as a basis for 
the maximum amount of income for admissions to housing 
development projects owned or operated by it; 
    (9) To provide in federally assisted projects such 
relocation payments and assistance as may be necessary to comply 
with the requirements of the Federal Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970, 
and any amendments or supplements thereto. 
    Sec. 4.  [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] The definitions in this 
section apply to sections 4 to 10.  
    Subd. 2.  [CITY.] "City" means the city of Minneapolis or 
the city of Saint Paul.  For each city, a port authority, 
housing and redevelopment authority, or other agency or 
instrumentality, the jurisdiction of which is the territory of 
the city, is included within the meaning of city. 
    Subd. 3.  [CITY COUNCIL.] "City council" means either the 
city council of Minneapolis or the city council of Saint Paul.  
    Subd. 4.  [CITY MATCHING MONEY.] "City matching money" 
means the money of a city specified in a revitalization and 
financing program to be spent to implement a revitalization 
program.  The sources of city matching money may include: 
    (1) money from the general fund or a special fund of a city 
used to implement a revitalization program; 
    (2) money paid or repaid to a city from the proceeds of a 
grant that a city has received from the federal government, a 
profit or nonprofit corporation, or another entity or 
individual, that is to be used to implement a revitalization 
program; 
    (3) tax increments received by a city under sections 273.71 
to 273.78 or other law, if eligible, to be spent in the targeted 
neighborhood; 
    (4) the greater of the fair market value or the cost to the 
city of acquiring land, buildings, equipment, or other real or 
personal property that a city contributes, grants, or loans to a 
profit or nonprofit corporation, or other entity or individual 
in connection with the implementation of a revitalization 
program; 
    (5) city money to be used to install, reinstall, repair, or 
improve the infrastructure facilities of a targeted neighborhood;
    (6) money contributed by a city to pay issuance costs or to 
otherwise provide financial support for revenue bonds or 
obligations issued by a city for a project or program related to 
the implementation of a revitalization program; 
    (7) money derived from fees received by a city in 
connection with its community development activities that are to 
be used in implementing a revitalization program. 
    City matching money does not include: 
    (1) city money used to provide a service or exercise a 
function that is ordinarily provided throughout the city, unless 
an increased level of the service or function is to be provided 
in a targeted neighborhood in accordance with a revitalization 
program;  
    (2) the proceeds of revenue bonds issued by the city under 
chapter 458, 462C, 472, or 474; or 
    (3) administrative expenses that are incurred in connection 
with the planning or implementation of sections 4 to 10. 
    Subd. 5.  [COMMISSIONER.] "Commissioner" means the 
commissioner of energy and economic development. 
    Subd. 6.  [LOST UNIT.] "Lost unit" means a rental housing 
unit that is lost as a result of revitalization activities 
because it is demolished, converted to an owner-occupied unit 
that is not a cooperative, converted to a nonresidential use, or 
if the gross rent to be charged exceeds 125 percent of the gross 
rent charged for the unit six months before the start of 
rehabilitation. 
    Subd. 7.  [TARGETED NEIGHBORHOOD.] "Targeted neighborhood" 
means an area including one or more census tracts as determined 
and measured by the bureau of census of the United States 
Department of Commerce that meet the criteria of section 5, 
subdivision 2, and any additional area designated under section 
5, subdivision 3. 
    Subd. 8.  [TARGETED NEIGHBORHOOD MONEY.] "Targeted 
neighborhood money" means the money designated in the 
revitalization program to be used to implement the 
revitalization program. 
    Subd. 9.  [TARGETED NEIGHBORHOOD REVITALIZATION AND 
FINANCING PROGRAM.] "Targeted neighborhood revitalization and 
financing program," "revitalization program," or "program" means 
the targeted neighborhood revitalization and financing program 
adopted in accordance with section 6. 
    Sec. 5.  [DESIGNATION OF TARGETED NEIGHBORHOODS.] 
    Subdivision 1.  [CITY AUTHORITY.] A city may by resolution 
designate targeted neighborhoods within its borders after 
adopting detailed findings that the designated neighborhoods 
meet the eligibility requirements in subdivision 2 or 3. 
    Subd. 2.  [ELIGIBILITY REQUIREMENTS FOR TARGETED 
NEIGHBORHOODS.] An area within a city is eligible for 
designation as a targeted neighborhood if the area meets two of 
the following three requirements: 
    (a) The area had an unemployment rate that was twice the 
unemployment rate for the Minneapolis and Saint Paul standard 
metropolitan statistical area as determined by the 1980 federal 
decennial census. 
    (b) The median household income in the area was no more 
than half the median household income for the Minneapolis and 
Saint Paul standard metropolitan statistical area as determined 
by the 1980 federal decennial census.  
    (c) The area is characterized by residential dwelling units 
in need of substantial rehabilitation.  An area qualifies under 
this clause if 25 percent or more of the residential dwelling 
units are in substandard condition as determined by the city or 
70 percent or more of the residential dwelling units in the area 
were built before 1940 as determined by the 1980 federal 
decennial census. 
    Subd. 3.  [ADDITIONAL AREA ELIGIBLE FOR INCLUSION IN 
TARGETED NEIGHBORHOOD.] The city may add to the area designated 
as a targeted neighborhood under subdivision 2 additional area 
extending up to four contiguous city blocks in all directions 
from the designated targeted neighborhood.  For the purpose of 
this subdivision, "city block" has the meaning determined by the 
city. 
    Sec. 6.  [TARGETED NEIGHBORHOOD REVITALIZATION AND 
FINANCING PROGRAM REQUIREMENTS.] 
    Subdivision 1.  [COMPREHENSIVE REVITALIZATION AND FINANCING 
PROGRAM.] (a) For each targeted neighborhood for which a city 
requests state financial assistance under section 7, the city 
must prepare a comprehensive revitalization and financing 
program that includes the following: 
    (1) the revitalization objectives of the city for the 
targeted neighborhood;  
    (2) the specific activities or means by which the city 
intends to pursue and implement the revitalization objectives; 
    (3) the extent to which the activities identified in clause 
(2) will benefit low and moderate income families, will 
alleviate the blighted condition of the targeted neighborhood, 
or will otherwise assist in the revitalization of the targeted 
neighborhood; 
    (4) a statement of the intended outcomes to be achieved by 
implementation of the revitalization program, how the outcomes 
will be measured both qualitatively and quantitatively, and the 
estimated time over which they will occur; and 
    (5) a financing program and budget that identifies the 
financial resources necessary to implement the revitalization 
program. 
    (b) The financing program and budget must include the 
following items: 
    (1) the estimated total cost to implement the 
revitalization program;  
    (2) the estimated cost to implement each activity in the 
revitalization program identified in paragraph (a), clause (2); 
    (3) the estimated amount of financial resources that will 
be available from all sources other than from the appropriation 
available under section 7 to implement the revitalization 
program; 
    (4) the estimated amount of the appropriation available 
under section 7 that will be necessary to implement the 
revitalization program; 
    (5) a description of the activities identified in the 
revitalization program for which the state appropriation will be 
used and the time or times at which the state appropriation will 
be committed or spent; and 
    (6) a statement of how the city intends to meet the 
requirement for a financial contribution matching the state 
appropriation from city matching money in accordance with 
section 7, subdivision 3. 
    Subd. 2.  [TARGETED NEIGHBORHOOD PARTICIPATION IN 
REVITALIZATION PROGRAM DEVELOPMENT.] The city shall develop a 
process to consult the residents in the targeted neighborhood 
concerning the development, drafting, and implementation of the 
revitalization program.  The process may include the 
establishment of an advisory board in each city.  The process 
must include at least one public hearing in addition to a public 
hearing held by the advisory board. 
    Subd. 3.  [ADVISORY BOARD.] The governing body of the city 
may establish a nine-member advisory board to assist the city in 
implementing the revitalization program.  The advisory board 
shall consist of two city council members appointed by the city 
council, one county commissioner appointed by the county board 
of the county in which the city is located, two legislators 
appointed by the city legislative delegation, and four residents 
who reside in a targeted neighborhood appointed by the city 
council.  The advisory board shall advise the city on the 
preparation of the revitalization program including the 
conversion from absent-owner rental housing to home ownership, 
the promotion of commercial and industrial growth in targeted 
neighborhoods, and the integration of human service programs and 
the redevelopment in targeted neighborhoods. 
    Subd. 4.  [PRELIMINARY CITY REVIEW; STATE AGENCY 
REVIEW.] Before adoption of the revitalization program under 
subdivision 5, the city must submit a draft program to the 
commissioner and the Minnesota housing finance agency for their 
comment.  The city may not adopt the revitalization program 
until comments have been received from the state agencies or 30 
days have elapsed without response after the program was sent to 
them.  Comments received by the city from the state agencies 
within the 30-day period must be responded to in writing by the 
city before adoption of the program by the city.  
    Subd. 5.  [CITY APPROVAL.] The city may adopt the 
revitalization program only after holding a public hearing after 
the program has been prepared.  Notice of the hearing must be 
provided in a newspaper of general circulation in the city and 
in the targeted neighborhood not less than ten days nor more 
than 30 days before the date of the hearing. 
    Subd. 6.  [PROGRAM CERTIFICATION.] A certification by the 
city that a revitalization program has been approved by the city 
council for the targeted neighborhood must be provided to the 
commissioner together with a copy of the program.  A copy of the 
program must also be provided to the Minnesota housing finance 
agency. 
    Subd. 7.  [REVITALIZATION PROGRAM MODIFICATION.] The 
revitalization program may be modified at any time by the city 
council after a public hearing, notice of which is published in 
a newspaper of general circulation in the city and in the 
targeted neighborhood not less than ten days nor more than 30 
days before the date of the hearing.  If the city council 
determines that the proposed modification is a significant 
modification to the program originally certified under 
subdivision 6, it must implement the revitalization program 
approval and certification process of subdivisions 3 to 6 for 
the proposed modification.  
    Sec. 7.  [PAYMENT; CITY MATCHING MONEY; DRAWDOWN; USES OF 
STATE MONEY.] 
    Subdivision 1.  [PAYMENT OF STATE MONEY.] Upon receipt from 
a city of the certification that a revitalization program has 
been adopted or modified, the commissioner shall, within 30 
days, pay to the city the amount of state money identified as 
necessary to implement the revitalization program or program 
modification.  State money may be paid to the city only to the 
extent that the appropriation limit for the city specified in 
subdivision 2 is not exceeded.  Once the state money has been 
paid to the city, it becomes targeted neighborhood money for use 
by the city in accordance with an adopted revitalization program 
and subject only to the restrictions on its use in sections 4 to 
10. 
    Subd. 2.  [ALLOCATION.] A city may receive a part of the 
appropriations made available that is the proportion that the 
population of the city bears to the combined population of 
Minneapolis and Saint Paul.  One city may agree to reduce its 
entitlement amount so that the other may receive an amount more 
than its entitlement amount.  The population of each city for 
the purposes of this subdivision is determined according to the 
most recent estimates available to the commissioner.  Interest 
earned by a city from money paid to the city must be repaid to 
the commissioner annually unless the revitalization program 
identifies the interest as necessary to implement the 
revitalization program and the requirement for city matching 
money is satisfied with respect to the interest. 
    Subd. 3.  [CITY MATCHING MONEY; DRAWDOWN OF STATE MONEY; 
RESTRICTION ON USE OF STATE MONEY.] A city may spend state money 
only if the revitalization program identifies city matching 
money to be used to implement the program in an amount equal to 
the state appropriation.  A city must keep the state money in a 
segregated fund for accounting purposes.  No state money may be 
used to pay the general administrative expenses of a city that 
are incurred in connection with the planning or implementation 
of sections 4 to 10. 
    Sec. 8.  [CITY POWERS AND ELIGIBLE USES OF TARGETED 
NEIGHBORHOOD MONEY.] 
    Subdivision 1.  [CONSOLIDATION OF EXISTING POWERS IN 
TARGETED NEIGHBORHOODS.] A city may exercise any of its 
corporate powers within a targeted neighborhood including, but 
not limited to, all of the powers enumerated and granted by 
chapters 458, 462, 462C, 472, 472A, and 474.  For the purposes 
of chapter 458, a targeted neighborhood is considered an 
industrial development district.  A city may exercise the powers 
of chapter 458 in conjunction with, and in addition to, 
exercising the powers granted by chapters 462 and 462C in order 
to promote and assist housing construction and rehabilitation 
within a targeted neighborhood.  For the purposes of section 
462C.02, subdivision 9, a targeted neighborhood is considered a 
"targeted area." 
    Subd. 2.  [GRANTS AND LOANS.] In addition to the authority 
granted by other law, a city may make grants and loans to 
individuals, for-profit and nonprofit corporations, and other 
organizations to implement a revitalization program.  The grants 
and loans must contain the terms concerning use of money, 
repayment, and other conditions the city deems proper to 
implement a revitalization program. 
    Subd. 3.  [ELIGIBLE USES OF TARGETED NEIGHBORHOOD 
MONEY.] The city may spend targeted neighborhood money for any 
purpose authorized by subdivision 1 or 2.  Use of targeted 
neighborhood money must be authorized in a revitalization 
program. 
    Sec. 9.  [HAZARDOUS BUILDING PENALTY.] 
    A city may assess a penalty equal to one percent of the 
assessed value of a building located in a targeted neighborhood 
defined in section 4 that the city determined to be hazardous as 
defined in section 463.15, subdivision 3.  The city shall send a 
written notice to the address to which the property tax 
statement is sent at least 90 days before it may assess the 
penalty.  If the owner of the building has not paid the penalty 
and fixed the property within 30 days after receiving notice of 
the penalty, the penalty is considered delinquent and is 
increased by 25 percent each 60 days the penalty is not paid and 
the property remains hazardous.  For the purposes of this 
section, a penalty that is delinquent is considered a delinquent 
property tax and subject to Minnesota Statutes, chapters 279, 
280, and 281, in the same manner as delinquent property taxes. 
    Sec. 10.  [ANNUAL AUDIT AND REPORT.] 
    Subdivision 1.  [ANNUAL FINANCIAL AUDIT.] In 1988 and 
subsequent years, at the end of each calendar year, the 
legislative auditor shall conduct a financial audit to review 
the spending of state money under sections 4 to 10.  Before 
spending state money to implement a revitalization program, the 
city must consult with the legislative auditor to determine 
appropriate accounting methods and principles that will assist 
the legislative auditor in conducting its financial audit.  The 
results of the financial audit must be submitted to the 
legislative audit commission, the commissioner, and the 
Minnesota housing finance agency. 
    Subd. 2.  [ANNUAL REPORT.] A city that begins to implement 
a revitalization program in a calendar year must, by March 1 of 
the succeeding calendar year, provide a detailed report on the 
revitalization program or programs being implemented in the 
city.  The report must describe the status of the program 
implementation and analyze whether the intended outcomes 
identified in section 6, subdivision 1, paragraph (a), clause 
(4), are being achieved.  The report must include at least the 
following: 
    (1) the number of housing units removed, created, lost, 
replaced, relocated, and assisted as a result of the program.  
The level of rent of the units and the income of the households 
affected must be included in the report; 
    (2) the number and type of commercial establishments 
removed, created, and assisted as a result of a revitalization 
program.  The report must include information regarding the 
number of new jobs created by category, whether the jobs are 
full time or part time, and the salary or wage levels of both 
new and expanded jobs in the affected commercial establishments; 
    (3) a description of a statement of the cost of the public 
improvement projects that are part of the program and the number 
of jobs created per each $20,000 of funds expended on commercial 
projects and applicable public improvement projects; 
    (4) the increase in the assessed valuation for the city as 
a result of the assistance to commercial and housing assistance; 
and 
    (5) the amount of private investment that is a result of 
the use of public money in a targeted neighborhood. 
    The report must be submitted to the commissioner, the 
Minnesota housing finance agency, and the legislative audit 
commission, and must be available to the public. 
    Sec. 11.  [APPROPRIATION; DISTRIBUTION.] 
    $9,000,000 is appropriated from the general fund to the 
commissioner of energy and economic development for payment to 
the cities of Minneapolis and Saint Paul as provided in section 
7.  $4,500,000 is for fiscal year 1988 and $4,500,000 is for 
fiscal year 1989. 
    Sec. 12.  [REPEALER.] 
    Laws 1969, chapters 833 and 984, are repealed. 
    Sec. 13.  [EFFECTIVE DATE; LOCAL APPROVAL.] 
    Sections 4 to 11 are effective for the city of Minneapolis 
the day after compliance with section 645.021, subdivision 3, by 
the governing body of the city of Minneapolis. 
    Sections 4 to 11 are effective for the city of Saint Paul 
the day after compliance with section 645.021, subdivision 3, by 
the governing body of the city of Saint Paul. 

                               ARTICLE 7

                           NATURAL RESOURCES
    Section 1.  [93.001] [POLICY FOR MINERAL DEVELOPMENT.] 
    It is the policy of the state to provide for the 
diversification of the state's mineral economy through long-term 
support of mineral exploration, evaluation, development, 
production, and commercialization.  
    Sec. 2.  [93.002] [MINERAL COORDINATING COMMITTEE.] 
    Subdivision 1.  [ESTABLISHMENT.] The mineral coordinating 
committee is established to plan for diversified mineral 
development.  The mineral coordinating committee consists of the 
director of the minerals division of the department of natural 
resources, the director of the Minnesota geological survey, the 
director of the University of Minnesota mineral resources 
research center, and the director of the natural resources 
research institute.  The director of the minerals division of 
the department of natural resources shall serve as chair.  A 
member of the committee may designate another person of the 
member's organization to act in the member's place.  The 
commissioner of natural resources shall provide staff and 
administrative services necessary for the committee's activities.
    Subd. 2.  [MINERAL DIVERSIFICATION PLAN.] The mineral 
coordinating committee shall prepare and adopt a ten-year plan 
for mineral diversification.  The plan must include a strategy 
to: 
    (1) increase the knowledge of the state's mineral potential;
    (2) stimulate the development of mineral resources in the 
state; and 
    (3) promote basic minerals research. 
     The plan must also include a two-year plan that establishes 
funding priorities for the minerals programs under subdivision 
3.  The funding priorities must be updated every two years. 
    Subd. 3.  [MINERALS PROGRAMS.] The mineral diversification 
plan must address at least the following:  aeromagnetic surveys, 
glacial till geochemistry surveys, geologic drilling and 
mapping, LMIC minerals data base, drill core examination and 
assay, industrial minerals characterization and research, 
bedrock geochemistry, nonferrous minerals research, reclamation 
studies, economic evaluation of mineral resources, improved 
geophysical and remote sensing base, acquisition of sampling 
equipment and analyses, determination of mineral rights 
ownership, ferrous minerals research, evaluation of mineral 
resource occurrence, evaluation of value added processes, ore 
deposit modeling, and basic mineral research.  
    Subd. 4.  [SUBMISSION OF PLAN AND FUNDING PRIORITIES.] (a) 
The minerals coordinating committee shall submit the minerals 
diversification plan to the legislature by December 31, 1987. 
    (b) By January 15 of each odd-numbered year, the minerals 
coordinating committee shall submit the two-year funding 
priority plan required under subdivision 2 to the chairs of the 
house appropriations and environment and natural resources 
committees and the chairs of the senate finance and environment 
and natural resources committees.  
    Sec. 3.  [APPROPRIATION.] 
    Subdivision 1.  [MINERALS PROGRAMS.] $1,000,000 is 
appropriated from the general fund to the commissioner of 
natural resources to accelerate geological mapping of the state, 
accelerate evaluation of the state's mineral potential and other 
natural resources, and provide analytical support for the 
minerals industry according to the mineral diversification plan 
or a minerals industry acceleration plan developed by the 
minerals coordinating committee.  $500,000 is for fiscal year 
1988 and $500,000 is for fiscal year 1989. 
    Subd. 2.  [COUNTY FORESTRY ASSISTANCE PROGRAMS.] $1,750,000 
is appropriated from the general fund to the commissioner of 
natural resources for grants to counties or groups of counties 
for county forestry assistance programs.  $875,000 is for fiscal 
year 1988 and $875,000 is for fiscal year 1989.  The 
commissioner of natural resources shall make the appropriation 
available to counties with the amount proportional to the 
acreage of commercial tax-forfeited forested land managed by the 
county.  As a condition of receiving money, the commissioner of 
natural resources shall require work plans, semiannual progress 
reports, and final project reports.  
    Subd. 3.  [FORESTRY MANAGEMENT.] $250,000 is appropriated 
from the general fund to the commissioner of natural resources 
for implementation of the forestry management plan required in 
Minnesota Statutes, section 89.011, on land that is not managed 
for the school trust fund.  $125,000 is for fiscal year 1988 and 
$125,000 is for fiscal year 1989. 
    Sec. 4.  [EFFECTIVE DATE.] 
    This article is effective the day following final enactment.

                               ARTICLE 8 
IRON RANGE RESOURCES AND REHABILITATION 
    Section 1.  [298.2213] [NORTHEAST MINNESOTA ECONOMIC DEVELOPMENT 
FUND.] 
    Subdivision 1.  [APPROPRIATION.] $4,000,000 is appropriated 
from the general fund to the commissioner of iron range 
resources and rehabilitation.  $300,000 of this appropriation 
must be used in the same manner as money appropriated under 
Minnesota Statutes, section 298.17. 
    Subd. 2.  [PURPOSE OF EXPENDITURES.] The money appropriated 
in this section may be used for projects and programs for which 
technological and economic feasibility have been demonstrated 
and that have the following purposes:  
    (1) creating and maintaining productive, permanent, skilled 
employment, including employment in technologically innovative 
businesses; and 
    (2) encouraging diversification of the economy and 
promoting the development of minerals, alternative energy 
sources utilizing indigenous fuels, forestry, small business, 
and tourism.  
    Subd. 3.  [USE OF MONEY.] The money appropriated under this 
section may be used to provide loans, loan guarantees, interest 
buy-downs, and other forms of participation with private sources 
of financing, provided that a loan to a private enterprise must 
be for a principal amount not to exceed one-half of the cost of 
the project for which financing is sought, and the rate of 
interest on a loan must be no less than the lesser of eight 
percent or the rate of interest set by the Minnesota development 
board for comparable small business development loans at that 
time.  
    Money appropriated in this section must be expended only in 
or for the benefit of the tax relief area defined in Minnesota 
Statutes, section 273.134, and as otherwise provided in this 
section. 
    Subd. 4.  [PROJECT APPROVAL.] The board shall by August 1, 
1987, and each year thereafter prepare a list of projects to be 
funded from the money appropriated in this section with 
necessary supporting information including descriptions of the 
projects, plans, and cost estimates.  A project must not be 
approved by the board unless it finds that:  
    (1) the project will materially assist, directly or 
indirectly, the creation of additional long-term employment 
opportunities;  
    (2) the prospective benefits of the expenditure exceed the 
anticipated costs; and 
    (3) in the case of assistance to private enterprise, the 
project will serve a sound business purpose.  
    To be proposed by the board, a project must be approved by 
at least eight iron range resources and rehabilitation board 
members and the commissioner of iron range resources and 
rehabilitation.  The list of projects must be submitted to the 
legislative advisory commission for its review.  The list with 
the recommendation of the legislative advisory commission must 
be submitted to the governor, who shall, by November 15 of each 
year, approve, disapprove, or return for further consideration, 
each project.  The money for a project may be spent only upon 
approval of the project by the governor.  
    The board may submit supplemental projects for approval at 
any time.  Supplemental projects must be submitted to the 
members of the legislative advisory commission for their review 
and recommendations of further review.  If a recommendation is 
not provided within ten days, no further review by the 
legislative advisory commission is required, and the governor 
shall approve or disapprove each project or return it for 
further consideration.  If the recommendation by a member is for 
further review, the governor shall submit the request to the 
legislative advisory commission for its review and 
recommendation.  Failure or refusal of the commission to make a 
recommendation promptly is a negative recommendation.  
    Subd. 5.  [ADVISORY COMMITTEES.] Before submission to the 
board of a proposal for a project for expenditure of money 
appropriated under this section, the commissioner of iron range 
resources and rehabilitation shall appoint a technical advisory 
committee consisting of at least seven persons who are 
knowledgeable in areas related to the objectives of the 
proposal.  If the project involves investment in a scientific 
research proposal, at least four of the committee members must 
be knowledgeable in the specific scientific research area 
relating to the project.  Members of the committees must be 
compensated as provided in Minnesota Statutes, section 15.059, 
subdivision 3.  The board shall not act on a proposal until it 
has received the evaluation and recommendations of the technical 
advisory committee.  
    Subd. 6.  [USE OF REPAYMENTS AND EARNINGS.] Principal and 
interest received in repayment of loans made under this section 
must be deposited in the state treasury and are appropriated to 
the board for the purposes of this section. 
    Sec. 2.  Minnesota Statutes 1986, section 298.292, is 
amended to read: 
    298.292 [POLICY.] 
    Subdivision 1.  [PURPOSES.] The legislature is cognizant of 
the severe economic dislocations and widespread unemployment 
that result when a single industry on which an area is largely 
dependent, experiences a drastic reduction in activity.  The 
northeast Minnesota economic protection trust fund is hereby 
created to be devoted to economic rehabilitation and 
diversification of industrial enterprises where these conditions 
ensue as the result of the decline of such a single industry.  
Priority shall be given to using the northeast Minnesota 
economic protection trust fund for the following purposes:  
    (a) (1) projects and programs that are designed to create 
and maintain productive, permanent, skilled employment, 
including employment in technologically innovative businesses;  
    (b) (2) projects and programs to encourage diversification 
of the economy and to promote the development of minerals, 
alternative energy sources utilizing indigenous fuels, forestry, 
small business, and tourism; and 
    (c) (3) projects and programs for which technological and 
economic feasibility have been demonstrated;. 
    (d) Subd. 2.  [USE OF MONEY.] Money in the northeast 
Minnesota economic protection trust fund may be used for the 
following purposes:  
    (1) to provide loans, loan guarantees, interest buy-downs 
and other forms of participation with private sources of 
financing, but a loan to a private enterprise shall be for a 
principal amount not to exceed one-half of the cost of the 
project for which financing is sought, and the rate of interest 
on a loan shall be no less than the lesser of eight percent or 
an interest rate three percentage points less than a full faith 
and credit obligation of the United States government of 
comparable maturity, at the time that the loan is approved;  
    (e) funding (2) to fund reserve accounts established to 
secure the payment when due of the principal of and interest on 
bonds issued pursuant to section 298.2211; and 
    (f) (3) to pay in periodic payments or in a lump sum 
payment any or all of the interest on bonds issued pursuant to 
chapter 474 for the purpose of constructing, converting, or 
retrofitting heating facilities in connection with district 
heating systems or systems utilizing alternative energy sources; 
and 
    (4) to invest in a venture capital fund or enterprise that 
will provide capital to other entities that are engaging in, or 
that will engage in, projects or programs that have the purposes 
set forth in subdivision 1.  No investments may be made in a 
venture capital fund or enterprise unless at least two other 
unrelated investors make investments of at least $500,000 in the 
venture capital fund or enterprise, and the investment by the 
northeast Minnesota economic protection trust fund may not 
exceed the amount of the largest investment by an unrelated 
investor in the venture capital fund or enterprise.  For 
purposes of this subdivision, an "unrelated investor" is a 
person or entity that is not related to the entity in which the 
investment is made or to any individual who owns more than 40 
percent of the value of the entity, in any of the following 
relationships:  spouse, parent, child, sibling, employee, or 
owner of an interest in the entity that exceeds ten percent of 
the value of all interests in it.  For purposes of determining 
the limitations under this clause, the amount of investments 
made by an investor other than the northeast Minnesota economic 
protection trust fund is the sum of all investments made in the 
venture capital fund or enterprise during the period beginning 
one year before the date of the investment by the northeast 
Minnesota economic protection trust fund.  
    Money from the trust fund shall be expended only in or for 
the benefit of the tax relief area defined in section 273.134. 
    Sec. 3.  Minnesota Statutes 1986, section 298.296, 
subdivision 2, is amended to read:  
    Subd. 2.  [EXPENDITURE OF FUNDS.] Before January 1, 2002, 
funds may be expended on projects and for administration of the 
trust fund only from the net interest, earnings, and dividends 
arising from the investment of the trust at any time, including 
net interest, earnings, and dividends that have arisen prior to 
July 13, 1982, plus $10,000,000 made available for use in fiscal 
year 1983, except that any amount required to be paid out of the 
trust fund to provide the property tax relief specified in Laws 
1977, chapter 423, article X, section 4, and to make school bond 
payments and payments to recipients of taconite production tax 
proceeds pursuant to section 298.225, may be taken from the 
corpus of the trust.  On and after January 1, 2002, funds may be 
expended on projects and for administration from any assets of 
the trust.  Annual administrative costs, not including detailed 
engineering expenses for the projects, shall not exceed five 
percent of the net interest, dividends, and earnings arising 
from the trust in the preceding fiscal year.  
    Principal and interest received in repayment of loans made 
pursuant to this section, and earnings on other investments made 
under section 298.292, subdivision 2, clause (4), shall be 
deposited in the state treasury and credited to the trust.  
These receipts are appropriated to the board for the purposes of 
sections 298.291 to 298.298.  
    Sec. 4.  [EFFECTIVE DATE.] 
    Section 2 is effective the day following final enactment. 

                               ARTICLE 9 

        MINNESOTA AGRICULTURAL AND ECONOMIC DEVELOPMENT PROGRAM 
    Section 1.  Minnesota Statutes 1986, section 41A.01, is 
amended to read: 
    41A.01 [PURPOSE.] 
    Sections 41A.01 to 41A.06 41A.08 provide a framework for an 
agricultural resource loan guaranty program, the purposes of 
which are to further the development of the state's agricultural 
resources and improve the market for its agricultural 
products and economic development in the state.  All credit 
advanced pursuant to loan guaranty commitments is to be secured 
by subrogation of the state to mortgage security and other 
security interests granted to the private lender, in proportion 
to the amount advanced by the state.  A loan guaranty board is 
established to investigate the feasibility of each project, its 
conformity to public policy and to environmental standards, the 
qualifications of the owners, operators, and lenders, and the 
nature and extent of the security, prior to commitment.  The 
board shall also seek to secure financial participation by 
private persons not supported by the guaranty, to assure that in 
these respects each project satisfies and will continue to 
satisfy criteria which are adequate in the judgment of the board.
    Sec. 2.  Minnesota Statutes 1986, section 41A.02, 
subdivision 3, is amended to read: 
    Subd. 3.  [AGRICULTURAL RESOURCE LOAN GUARANTY MINNESOTA 
AGRICULTURAL AND ECONOMIC DEVELOPMENT BOARD; BOARD.] 
"Agricultural resource loan guaranty Minnesota agricultural and 
economic development board" or "board" means consists of the 
commissioner of finance as chair, the commissioner of 
agriculture, the commissioner of commerce, the commissioner of 
energy and economic development, and the director of the 
pollution control agency, the president of the Greater Minnesota 
Corporation, and two public members with experience in finance, 
appointed by the Greater Minnesota Corporation. 
    Sec. 3.  Minnesota Statutes 1986, section 41A.02, 
subdivision 4, is amended to read: 
    Subd. 4.  [AGRICULTURAL RESOURCE LOAN GUARANTY MINNESOTA 
AGRICULTURAL AND ECONOMIC DEVELOPMENT FUND; GUARANTY DEVELOPMENT 
FUND.] "Agricultural resource loan guaranty Minnesota 
agricultural and economic development fund" or "guaranty 
development fund" means the fund created by section 41A.05. 
    Sec. 4.  Minnesota Statutes 1986, section 41A.02, 
subdivision 6, is amended to read: 
    Subd. 6.  [AGRICULTURAL RESOURCE PROJECT; PROJECT.] 
"Agricultural resource project" or "project" means (1) any 
facility, or portion of a facility, located in the state which 
is operated or to be operated primarily for the production from 
agricultural resources of marketable products, (2) buildings, 
equipment, and land used for the commercial production of 
turkeys or turkey products, (3) a facility or portion of a 
facility used for the commercial production of fish or of 
products made from commercially-produced fish or rough fish, as 
defined in section 97A.015, subdivision 43, that are not 
commercially produced, or (4) real or personal property used or 
useful in connection with a revenue-producing enterprise, or a 
combination of two or more revenue-producing enterprises engaged 
in a business, that is not used for the production of livestock, 
other than poultry, or for the production of crops, plants, or 
milk.  The land in clause (2) is limited to land on which 
buildings and equipment are situated and immediately surrounding 
land used for storage, waste disposal, or other functions 
directly related to the commercial production of turkeys or 
turkey products at that project site.  The land in clause (2) 
does not include land used for the growing or raising of crops 
or the grazing of livestock other than poultry.  A project 
includes a facility or portion of a facility for mixing or 
producing substances to be mixed with other substances for use 
as a fuel or as a substitute for petroleum or petrochemical 
feedstocks. 
    Sec. 5.  Minnesota Statutes 1986, section 41A.02, 
subdivision 11, is amended to read: 
    Subd. 11.  [LENDER.] "Lender" means a corporation or any 
investment or commercial banking institution, savings and loan 
institution, insurance company, investment company, or other 
financial institution or institutional investor making, 
purchasing, or participating in a loan or any part of a loan, or 
a public entity authorized to make agricultural loans.  
    Sec. 6.  Minnesota Statutes 1986, section 41A.02, is 
amended by adding a subdivision to read:  
    Subd. 16.  [ELIGIBLE SMALL BUSINESS.] "Eligible small 
business" means: 
    (1) an enterprise determined by the board to constitute a 
small business concern as defined in regulations of the United 
States Small Business Administration under United States Code, 
title 15, sections 631 to 647; or 
    (2) a business eligible to receive assistance under section 
12. 
    Sec. 7.  Minnesota Statutes 1986, section 41A.02, is 
amended by adding a subdivision to read:  
    Subd. 17.  [SMALL BUSINESS DEVELOPMENT LOAN.] "Small 
business development loan" means a loan to a business that is an 
"eligible small business" to finance capital expenditures on an 
interim or long-term basis to acquire or improve land, acquire, 
construct, rehabilitate, remove, or improve buildings, or to 
acquire and install fixtures and equipment useful to conduct a 
small business, including facilities of a capital nature useful 
or suitable for a business engaged in an enterprise promoting 
employment including, without limitation, facilities included 
within the meaning of the term "project" as defined in sections 
474.02, subdivisions 1 to 1f, and 474.03, subdivision 4.  
    Sec. 8.  [41A.021] [SUCCESSOR STATUS.] 
    The board is the legal successor in all respects of the 
agricultural resource loan guaranty board established by Laws 
1984, chapter 502, article 10, and all bonds, resolutions, 
contracts, and liabilities of the agricultural resource loan 
guaranty board are the bonds, resolutions, contracts, and 
liabilities of the board as renamed and reconstituted by section 
41A.02, subdivision 3. 
    Sec. 9.  [41A.022] [MINNESOTA ENERGY AND ECONOMIC 
DEVELOPMENT AUTHORITY; SUCCESSOR STATUS.] 
    The board is the legal successor in all respects of the 
Minnesota energy and economic development authority under the 
general bond resolution for the Minnesota small business 
development loan program, as amended and restated by the 
authority on September 24, 1986.  All bonds, resolutions, 
contracts, and liabilities of the Minnesota energy and economic 
development authority relating to the Minnesota small business 
development loan program are the bonds, resolutions, contracts, 
and liabilities of the Minnesota agricultural and economic 
development board. 
    Sec. 10.  [41A.023] [POWERS.] 
    In addition to other powers granted by this chapter, the 
board may: 
    (1) sue and be sued; 
    (2) acquire, hold, lease, and transfer any interest in real 
and personal property for its corporate purposes; 
    (3) sell at public or private sale any instrument or 
obligation evidencing a loan; 
    (4) obtain insurance on its property; 
    (5) obtain municipal bond insurance, letters of credit, 
surety obligations, or similar agreements from financial 
institutions; 
    (6) enter into other agreements or transactions, without 
regard to chapter 16B, that the board considers necessary or 
appropriate to carry out the purposes of this chapter with 
federal or state agencies, political subdivisions of the state, 
or other persons, firms, or corporations; 
    (7) establish and collect fees without regard to chapter 14 
and section 16A.128; 
    (8) accept appropriations, gifts, grants, and bequests; 
    (9) use money received from any source for any legal 
purpose or program of the board; 
    (10) participate in loans for agricultural resource 
projects in accordance with section 11; 
    (11) provide small business development loans in accordance 
with section 12; and 
    (12) guarantee or insure bonds or notes issued by the board.
    Sec. 11.  [41A.035] [AGRICULTURAL RESOURCES LOAN 
PARTICIPATION.] 
    The board may participate in loans made to finance 
agricultural resource projects by purchasing from a lender up to 
75 percent of the amount of each eligible loan.  If the loan 
participated in is for $500,000 or less, the loan may be for 100 
percent of the cost of the project.  If the loan participated in 
exceeds $500,000, the loan may not exceed 80 percent of the cost 
of the project.  The lender shall service the loan or cause it 
to be serviced in a manner that equally protects the lender's 
and the board's interests. 
    Sec. 12.  [41A.036] [SMALL BUSINESS DEVELOPMENT LOANS.] 
    Subdivision 1.  [LOANS; LIMITATIONS.] (a) The board may 
make, purchase, or participate with financial institutions in 
making or purchasing small business development loans not 
exceeding $1,000,000 in principal amount with respect to small 
business loans made or purchased by the board and not exceeding 
$1,000,000 principal amount with respect to the board's share 
when the board participates in making or purchasing small 
business loans.  
    (b) With respect to loans that the board makes or purchases 
or participates in, the board may determine or provide for their 
servicing, the percentage of board participation, if any, the 
times the loans or participations are payable and the amounts of 
payment, their amount and interest rates, their security, if 
any, and other terms, conditions, and provisions necessary or 
convenient in connection with them and may enter into all 
necessary contracts and security instruments in connection with 
them.  The board may enter into commitments to purchase or 
participate with financial institutions or other persons upon 
the terms, conditions, and provisions determined by it.  Loans 
or participations may be serviced by financial institutions or 
other persons designated by the board.  
    (c) The board shall obtain the best available security for 
all loans.  The board may provide for or require the insurance 
or guaranteeing of the loans or board participations in whole or 
in part by the federal government or a department, agency, or 
instrumentality of it, by an appropriate board account, or by a 
private insurer.  
    Subd. 2.  [SMALL BUSINESS DEVELOPMENT LOANS; 
PREFERENCES.] The following eligible small businesses have 
preference among all business applicants for small business 
development loans: 
    (1) businesses located in rural areas of the state that are 
experiencing the most severe unemployment rates in the state;  
    (2) businesses that are likely to expand and provide 
additional permanent employment in rural areas of the state;  
    (3) businesses located in border communities that 
experience a competitive disadvantage due to location;  
    (4) businesses that have been unable to obtain traditional 
financial assistance due to a disadvantageous location, minority 
ownership, or other factors rather than due to the business 
having been considered a poor financial risk;  
    (5) businesses that utilize state resources and reduce 
state dependence on outside resources, and that produce products 
or services consistent with the long-term social and economic 
needs of the state; and 
    (6) businesses located in designated enterprise zones, as 
described in section 273.1312, subdivision 4. 
    Subd. 3.  [LOCAL GOVERNMENTAL UNIT SPONSOR; RESOLUTION.] A 
business applying for a loan must be sponsored by a resolution 
of the governing body of the local governmental unit within 
whose jurisdiction the project is located.  For purposes of this 
paragraph, "local governmental unit" means a home rule charter 
or statutory city when the project is located in an incorporated 
area, a county when the project is located in an unincorporated 
area, or an American Indian tribal council when the project is 
located within a federally recognized American Indian 
reservation or community. 
    Sec. 13.  Minnesota Statutes 1986, section 41A.04, 
subdivision 1, is amended to read:  
    Subdivision 1.  [REQUIREMENTS.] (a) Any applicant may file 
a written application with the state commissioner of energy and 
economic development on behalf of the board, to be considered by 
the agricultural resource loan guaranty board, for a guaranty by 
the state of a portion of a loan or for issuance of bonds for an 
agricultural resource project.  In general, the application must 
provide information similar to that required by an investment 
banking or other financial institution considering such a 
project for debt financing.  Specifically, each application must 
include in brief but precise form the following information, as 
supplied by the applicant, the borrower, or the lender:  
    (1) a description of the scope, nature, extent, and 
location of the proposed project, including the identity of the 
borrower and a preliminary or conceptual design of the project;  
    (2) a description of the technology to be used in the 
project and the prior construction and operating experience of 
the borrower with such projects;  
    (3) a detailed estimate of the items comprising the total 
cost of the project, including escalation and contingencies, 
with explanation of the assumptions underlying the estimate;  
    (4) a general description of the financial plan for the 
project, including the mortgage and security interests to be 
granted for the security of the guaranteed loan or the bonds, 
and all sources of equity, grants, or contributions or of 
borrowing the repayment of which is not to be secured by the 
mortgage and security interests, or, if so secured, is expressly 
subordinated to the guaranteed loan;  
    (5) an environmental report analyzing potential 
environmental effects of the project, any necessary or proposed 
mitigation measures, and other relevant data available to the 
applicant to enable the board to make an environmental 
assessment;  
    (6) a list of applications to be filed and estimated dates 
of approvals of permits required by federal, state, and local 
government agencies as conditions for construction and 
commencement of operation of the project;  
    (7) an estimated construction schedule;  
    (8) an analysis of the estimated cost of production of and 
market for the product, including economic factors justifying 
the analysis and proposed and actual marketing contracts, 
letters of intent, and contracts for the supply of feedstock;  
    (9) a description of the management experience of the 
borrower in organizing and undertaking similar projects;  
    (10) pro forma cash flow statements for the first five 
years of project operation including income statements and 
balance sheets;  
    (11) a description of the borrower's organization and, 
where applicable, a copy of its articles of incorporation or 
partnership agreement and bylaws;  
    (12) the estimated amount of the loan or bonds and 
percentage of the guaranty requested, the proposed repayment 
schedule, and other terms and conditions and security provisions 
of the loan;  
    (13) an estimate of the amounts and times of receipt of 
guaranty fees, sales and use taxes, property tax increments, and 
any other governmental charges which may be available for the 
support of the state guaranty agricultural development fund as a 
result of the construction of the project, with an analysis of 
the assumptions on which the estimate is based;  
    (14) a copy of any lending commitment issued by a lender to 
the borrower;  
    (15) a statement from the lender, if identified, as to its 
general experience in financing and servicing debt incurred for 
projects of the size and general type of the project, and its 
proposed servicing and monitoring plan; and 
    (16) additional information required by the board.  
    (b) The applicant shall pay upon filing of the application 
a fee equal to .25 percent of the amount of the loan guaranty or 
bond requested.  The fee shall be paid to the commissioner of 
finance and deposited in the general fund.  If the board 
determines not to issue a commitment for the project, the fee 
shall be refunded to the applicant, less the board's cost of 
processing, reviewing, and evaluating the application.  If the 
board issues a commitment for the project and the application 
fee exceeds the board's cost of processing, reviewing, and 
evaluating the application, the balance shall be transferred 
from the general fund to the project account in the guaranty 
fund and credited against the amount of the commitment fee 
required in section 41A.03, subdivision 3, clause (j).  The 
county or rural development finance authority may require the 
proposed borrower under the project to pay the application fee.  
    (c) If the application is made by an applicant other than 
the county or rural development finance authority and tax 
increment financing is to be used for the project, the 
application must include a copy of a resolution adopted by the 
governing body of the county or rural development finance 
authority in which the project is located.  The resolution must 
authorize the use of tax increment financing for the project as 
required by section 41A.06, subdivision 5. 
    Sec. 14.  Minnesota Statutes 1986, section 41A.05, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ESTABLISHMENT OF FUND.] For the purpose of 
developing the state's agricultural resources by extending 
credit on real estate security, the agricultural resource loan 
guaranty The Minnesota agricultural and economic development 
fund is established as a special and dedicated fund to be held 
and invested separately from all other funds of the state.  All 
money appropriated to the fund, and all guaranty fees, retail 
sales taxes, property tax increments, and other money from any 
source which may be credited to the fund pursuant to law or 
pursuant to the terms of grants, contributions, or contracts are 
appropriated and shall remain available for the purposes of the 
fund until those purposes have been fully accomplished to the 
board to carry out the purposes of this chapter.  The board 
may maintain or establish within the guaranty Minnesota 
agricultural and economic development fund reserve 
funds accounts, project accounts, trustee accounts, special 
guaranty fund accounts, or other restrictions it determines 
necessary or appropriate to carry out the purposes of this 
chapter.  Except as otherwise provided in this section, the fund 
may be used only for paying amounts due under loan guaranties 
and principal and interest assistance contracts entered into by 
the state, pursuant to the agricultural resource loan guaranty 
program.  The board may enter into pledge and escrow agreements 
or indentures of trust with a trustee for the purpose of 
maintaining the accounts. 
    Sec. 15.  Minnesota Statutes 1986, section 41A.05, 
subdivision 2, is amended to read: 
    Subd. 2.  [ISSUANCE OF BONDS.] (a) Subject to section 
16A.80, upon application pursuant to section 41A.04, The board 
by resolution may exercise the powers of a rural development 
authority under sections 362A.01 to 362A.05 and the powers of a 
municipality under chapter 474 for the purposes of providing 
money to pay the costs of financing a project, including the 
issuance of bonds and the loan application of the bond proceeds 
pursuant to a lease, loan, loan guaranty, loan participation, or 
other agreement.  The bonds must be issued, sold, and secured on 
the terms and conditions and in the manner determined by 
resolution of the board.  Sections Section 16A.80 and 474.23 do 
does not apply to the bonds.  Notwithstanding subdivision 1, a 
reserve established for the bonds provided by the borrower, 
including out of bond proceeds, may be deposited and held in a 
separate account in the guaranty Minnesota agricultural and 
economic development fund and applied to the last installments 
of principal or interest on the bonds, subject to the reserves 
being withdrawn for any purpose permitted by subdivision 1.  The 
board may by resolution or indenture pledge any or all amounts 
in the guaranty fund, including any reserves and investment 
income on amounts in the fund, to secure the payment of 
principal and interest on any or all series of bonds, upon the 
terms and conditions as provided in the resolution or 
indenture.  To the extent the board deems necessary or desirable 
to prevent interest on bonds from becoming subject to federal 
income taxation, (1) the amounts in the guaranty fund shall be 
invested in obligations or securities with restricted yields and 
(2) the investment income on the amounts are released from the 
pledge securing the bonds or loan guaranty and appropriately 
applied to prevent taxation. 
    (b) Bonds issued pursuant to this chapter are not general 
obligations of the state or the board.  The full faith and 
credit and taxing powers of the state and the board are not and 
may not be pledged for the payment of the bonds.  No person may 
compel the levy of a tax for the payment or compel the 
appropriation of money of the state or the board for the payment 
of the bonds, except as specifically provided in this chapter. 
    (c) The issuance of bonds pursuant to this subdivision is 
subject to sections 474.18 to 474.25.  For purposes of 
sections 474.16 474A.01 to 474.20 474A.21, the board is a local 
issuer and may apply for allocations of authority to issue 
private activity obligations and may enter into an agreement for 
the issuance of obligations by another issuer. 
    Sec. 16.  [41A.065] [CERTIFIED DEVELOPMENT COMPANY.] 
    Subdivision 1.  [PURPOSE; OBJECTIVES.] The board may 
create, promote, and assist a development company that will 
qualify as a certified development company for the purposes of 
United States Code, title 15, section 697, and Code of Federal 
Regulations, title 13, section 108.503.  
    The board shall utilize the development company program to 
stimulate the state's economic activity.  
    The development company and its directors and officers 
shall comply with the organizational, operational, regulatory, 
and reporting requirements as promulgated by the United States 
Small Business Administration and the guidelines contained in 
the bylaws, articles of incorporation, and standard operating 
procedure prescribed by the Small Business Administration. 
    Subd. 2.  [CAPITAL, LOAN LIMITS; MEMBERSHIP REQUIREMENTS.] 
The capital for a certified development company must be derived 
from corporate holders or members, each of whom must not have 
more than ten percent of the voting control of the development 
company.  The company must have a minimum of ten members.  The 
members of the company from each economic development region 
must represent, to the greatest extent practical, the same 
proportion of the membership of the company as the population of 
the economic development region is of the population of the 
state.  The loan limit of each member must be established at the 
time of its acceptance as a member and must be computed on the 
basis of the financial information contained in or made a part 
of its application for membership.  Loan limits must be 
established at the thousand dollar amount nearest the amount 
computed in accordance with the provisions of the articles of 
incorporation and this section.  
    Subd. 3.  [MEMBERS.] Members must be representatives of 
local government, community organizations, financial 
institutions, and businesses in Minnesota and must, upon 
application, have been accepted for membership by a majority 
vote of the members of the board of directors present at a 
regular or special meeting of the board at which there is a 
quorum.  A "financial institution" is a business organization 
recognized under Minnesota or federal law as a banking 
institution, trust company, savings and loan association, 
insurance company, or a corporation, partnership, foundation or 
other institution licensed to do business in the state of 
Minnesota and engaged primarily in lending or investing money.  
    Subd. 4.  [MEMBERSHIP APPLICATIONS.] Applications for 
membership must be submitted to the development company's board 
of directors on forms provided by the corporation and 
accompanied by additional information as the form may require.  
Application forms must provide that if the application is 
approved and the applicant accepted for membership by the 
development company's board of directors before withdrawal of 
the application, the applicant agrees to become a member upon 
the acceptance and to assume the rights and obligations of a 
member.  Notice of approval or rejection of an application must 
be forwarded, by certified or registered United States mail, to 
the applicant for the attention of the person signing the 
application, within 15 days following the date when the approval 
or rejection is made.  Approval of the application constitutes 
acceptance of the applicant as a member of the corporation.  
    Subd. 5.  [OFFICERS.] The executive officers of the 
development company are a president, one or more vice presidents 
including the executive vice president, a secretary, and a 
treasurer.  None of the officers, except the president, need be 
directors.  One person may hold the offices and perform the 
duties of any two or more of the offices.  The development 
company's board of directors by majority vote may leave unfilled 
for any period it may fix any office except that of president, 
treasurer, or secretary.  
    Subd. 6.  [ASSISTANCE.] The commissioner of energy and 
economic development shall make available the professional staff 
of the department to provide services to the development company 
including, but not limited to, accounting, legal, and business 
assistance services.  The staff must have the capability to 
package, process, close and service loans made through the 
development company.  
    Subd. 7.  [REPORTS.] The development company shall submit 
to the Small Business Administration annual reports on its 
operation.  When requested by the Small Business Administration, 
interim reports of a similar nature must be provided.  The 
reports must be provided in accordance with the instructions and 
attachments set forth by the Small Business Administration.  The 
development company shall comply with all regulations issued 
under the small business investment act of 1958, as amended, as 
well as applicable state and federal laws affecting its 
operation.  
    Subd. 8.  [REVOLVING ACCOUNT.] The development company may 
charge a one-time processing fee up to the maximum allowed by 
the Small Business Administration on a debenture issued for loan 
purposes.  In addition, a fee for servicing loans may be imposed 
up to the maximum allowed by the Small Business Administration 
based on the unpaid balance of each debenture.  These fees must 
be deposited in the state treasury and credited to a special 
account.  Money in the account is appropriated to the board to 
pay the costs of administering the program, including personnel 
costs; compensate members of the board of directors under 
section 15.0575, subdivision 3, and to create and operate a pool 
of money for investment in projects that further the purposes of 
this section. 
    Sec. 17.  Minnesota Statutes 1986, section 41A.08, is 
amended to read:  
    41A.08 [STAFF.] 
    Subdivision 1.  [EMPLOYEES.] Subject to all other 
applicable laws governing employees of or employment by a 
department or agency of the state, the commissioner of energy 
and economic development, on behalf of the board, may retain or 
employ the officers, employees, agents, contractors, and 
consultants the commissioner determines necessary or appropriate 
to discharge the functions of the board in respect to the 
agricultural resource loan program.  The commissioner shall 
define their duties and responsibilities. 
    Subd. 2.  [EXECUTIVE DIRECTOR.] The commissioner shall 
employ, with the concurrence of the board, an executive 
director.  The executive director shall perform the duties that 
the board may require in carrying out its responsibilities.  The 
executive director's position is in the unclassified service. 
    Sec. 18.  [RESPONSIBILITIES TRANSFERRED TO MINNESOTA 
DEVELOPMENT BOARD.] 
    Subdivision 1.  [TRANSFER.] The responsibilities under the 
general bond resolution for the Minnesota small business 
development loan program, as amended and restated by the 
authority on September 24, 1986, and the responsibilities for 
the certified development company program under section 116M.05 
are transferred from the Minnesota energy and economic 
development authority to the Minnesota agricultural and economic 
development board.  Money designated or committed to the small 
business development loan program is transferred to the 
Minnesota agricultural and economic development fund, to be 
credited to a separate account to be used to carry out the 
purposes specified in section 9.  This transfer includes four 
classified positions and one unclassified position from the 
financial management division of the department of energy and 
economic development.  Minnesota Statutes, section 15.039 
applies to the transfer of responsibilities. 
    Subd. 2.  [POWERS CONTINUED.] To carry out the purposes 
specified in sections 9 and 19, the board may exercise the 
powers granted to the Minnesota energy and economic development 
authority under Minnesota Statutes 1986, sections 116M.06, 
116M.07, and 116M.08, notwithstanding the repeal of those 
sections. 
    Sec. 19.  [LOAN REPAYMENTS.] 
    The commissioner of energy and economic development shall 
credit money received before July 1, 1987, from loan repayments, 
earnings, releases from insurance reserve accounts, and other 
income from the following programs to the Minnesota agricultural 
and economic development fund:  the special assistance program 
under section 116M.07, subdivision 11, except for the small 
business development loans; the technology product loan program; 
the tourism loan program created under section 116M.07; the 
energy loan insurance program under section 116M.11; the energy 
development fund program under section 116M.12; and the 
Minnesota fund program under sections 472.11 to 472.13.  The 
commissioner of energy and economic development shall credit 
money received on or after July 1, 1987, to the greater 
Minnesota fund. 
    Sec. 20.  [41A.066] [HAZARDOUS WASTE PROCESSING FACILITY LOANS.] 
    Subdivision 1.  [AUTHORITY TO MAKE LOANS.] The Minnesota 
agricultural and economic development board may make, purchase, 
or participate in making or purchasing hazardous waste 
processing facility loans in any amount, and may enter into 
commitments therefor.  A private person proposing to develop and 
operate a hazardous waste processing facility is eligible to 
apply for a loan under this subdivision.  Applications must be 
made to the Minnesota agricultural and economic development 
board.  The Minnesota agricultural and economic development 
board shall forward the applications to the waste management 
board for review pursuant to section 115A.162.  If the waste 
management board does not certify the application, the Minnesota 
agricultural and economic development board may not approve the 
application nor make the loan.  If the waste management board 
certifies the application, the Minnesota agricultural and 
economic development board shall approve the application and 
make the loan if money is available for it and if the Minnesota 
agricultural and economic development board finds that:  
    (1) development and operation of the facility as proposed 
by the applicant is economically feasible;  
    (2) there is a reasonable expectation that the principal 
and interest on the loan will be fully repaid; and 
    (3) the facility is unlikely to be developed and operated 
without a loan from the Minnesota agricultural and economic 
development board.  
    The Minnesota agricultural and economic development board 
and the waste management board shall establish coordinated 
procedures for loan application, certification, and approval.  
    The Minnesota agricultural and economic development board 
may use the Minnesota agricultural and economic development fund 
to provide financial assistance to any person whose hazardous 
waste processing facility loan application has been certified by 
the waste management board and approved by the Minnesota 
agricultural and economic development board, and for this 
purpose may exercise the powers granted in Minnesota Statutes 
1986, section 116M.06, subdivision 2, with respect to any loans 
made or bonds issued under this subdivision regardless of 
whether the applicant is an eligible small business.  
    The Minnesota agricultural and economic development board 
may issue bonds and notes in the aggregate principal amount of 
$10,000,000 for the purpose of making, purchasing, or 
participating in making or purchasing hazardous waste processing 
facility loans.  
    The Minnesota agricultural and economic development board 
may adopt emergency rules under sections 14.29 to 14.36 to 
implement the loan program under this subdivision.  Emergency 
rules adopted by the Minnesota agricultural and economic 
development board remain in effect for 360 days or until 
permanent rules are adopted, whichever occurs first.  
    Subd. 2.  [MINNESOTA ENERGY AND ECONOMIC DEVELOPMENT 
AUTHORITY; SUCCESSOR STATUS.] Notwithstanding the repeal of 
section 116M.07, subdivision 9, the Minnesota agricultural and 
economic development board is the legal successor in all 
respects of the Minnesota energy and economic development 
authority for the hazardous waste processing facility loan 
program for a project or facility described under Minnesota 
Statutes 1986, section 116M.03, subdivision 15, with respect to 
which the Minnesota energy and economic development authority 
passed a preliminary resolution before May 1, 1987.  All 
resolutions of the Minnesota energy and economic development 
authority relating to the projects or facilities are the 
resolutions of the Minnesota agricultural and economic 
development board. 
    Sec. 20.  [INSTRUCTION TO REVISOR.] 
    The revisor of statutes is directed to change the phrase 
"agricultural resource loan guaranty board" wherever it appears 
in Minnesota Statutes to "Minnesota agricultural and economic 
development board" in the next and subsequent editions of the 
statutes. 
    Sec. 21.  [INSTRUCTION TO REVISOR.] 
    The revisor of statutes is directed to change the phrase 
"agricultural resource loan guaranty fund" wherever it appears 
in Minnesota Statutes to "Minnesota agricultural and economic 
development fund" in the next and subsequent editions of the 
statutes. 
    Sec. 22.  [APPROPRIATION.] 
    $400,000 is transferred from the economic development fund 
to the Minnesota agricultural and economic development fund.  
$200,000 is for fiscal year 1988 and $200,000 is for fiscal year 
1989. 
    Sec. 23.  [EFFECTIVE DATE.] 
    Sections 18 and 19 are effective the day following final 
enactment. 

                               ARTICLE 10

                    EDUCATION AND TRAINING PROGRAMS 
    Section 1.  Minnesota Statutes 1986, section 116L.02, is 
amended to read:  
    116L.02 [JOBS JOB SKILLS PARTNERSHIP PROGRAM.] 
    The Minnesota job skills partnership program is created to 
act as a catalyst to bring together employers with specific 
training needs with educational or other nonprofit institutions 
which can design programs to fill those needs.  The partnership 
shall work closely with employers to train and place workers in 
identifiable positions as well as assisting educational or other 
nonprofit institutions in developing training programs that 
coincide with current and future employer requirements.  The 
partnership shall provide grants to educational or other 
nonprofit institutions for the purpose of training displaced 
workers.  A participating business must match the grant-in-aid 
made by the Minnesota job skills partnership.  Preference must 
be given to a business located in a rural area.  The match may 
be in the form of funding, equipment, or faculty. 
    Sec. 2.  Minnesota Statutes 1986, section 116L.03, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPOINTMENT.] Members shall be appointed as 
follows:  four members appointed by the speaker of the house; 
one member appointed by the minority leader of the house; four 
members appointed by the majority leader of the senate; one 
member appointed by the minority leader of the senate; The 
Minnesota job skills partnership board consists of:  eight 
members appointed by the governor; and, the commissioners of the 
departments commissioner of energy and economic development, 
education, and jobs and training the commissioner of jobs and 
training, and the state director of vocational technical 
education. 
    Sec. 3.  Minnesota Statutes 1986, section 116L.03, 
subdivision 1, is amended to read:  
    Subdivision 1.  [MEMBERS.] The partnership shall be 
governed by a board of 21 11 directors.  
    Sec. 4.  Minnesota Statutes 1986, section 116L.03, 
subdivision 5, is amended to read:  
    Subd. 5.  [TERMS.] The terms of appointed members shall be 
for four years except for the initial appointments.  The initial 
appointments of the speaker and majority leader shall be as 
follows:  two members for two years, two members for three years 
and one member for four years.  The initial appointments of the 
governor shall have the following terms:  two members each for 
one, two, three, and four years.  
    Sec. 5.  Minnesota Statutes 1986, section 116L.03, 
subdivision 7, is amended to read:  
    Subd. 7.  [OFFICES.] The commissioner of jobs and training 
higher education coordinating board shall, upon request, provide 
office space and support staff and administrative services for 
the board.  
    Sec. 6.  [136A.134] [GRANTS TO DISLOCATED RURAL WORKERS.] 
    Subdivision 1.  [ESTABLISHMENT OF PROGRAM.] The higher 
education coordinating board shall develop policies and 
procedures to administer a dislocated rural worker grant program 
and to allocate program money to eligible institutions and shall 
supervise the operation of the program. 
    Subd. 2.  [ELIGIBLE INSTITUTIONS.] For purposes of this 
section, "eligible institution" has the meaning given it in 
section 136A.101. 
    Subd. 3.  [APPLICANTS.] An applicant may be considered for 
a dislocated rural worker grant if the applicant: 
    (1) is a resident of rural Minnesota; 
    (2) is enrolled in an adult farm management program or a 
program designed to provide preparation for available employment 
within the local labor market or in an area to which the 
individual is willing to relocate; 
    (3) has met the financial need criteria established by the 
board; and 
    (4) can demonstrate that one of the following criteria has 
been met: 
    (i) the applicant or applicant's spouse has been separated 
from employment or has received a notice of separation from 
employment as a result of job obsolescence, plant shutdown, 
regional decline in the applicant's customary occupation, or 
industry slowdown, and the applicant or the applicant's spouse 
is unlikely to return to work for that employer or in that 
occupation within 12 months following separation from employment;
    (ii) the applicant is a displaced homemaker; or 
    (iii) the applicant or the applicant's spouse is a farmer 
who can demonstrate severe household financial need. 
    Subd. 4.  [PROGRAM RECIPIENTS.] An eligible institution 
shall select a recipient of a dislocated rural worker grant in 
accordance with guidelines, policies, and rules established by 
the board.  The board may adopt emergency rules for awarding 
grants only for the fiscal year beginning July 1, 1987. 
    Subd. 5.  [PROGRAM COORDINATION; INFORMATION.] The board 
shall develop and provide information to dislocated workers in 
rural areas about post-secondary education opportunities and 
student financial aid programs.  The board shall also provide 
for the coordination of dislocated rural worker grants with 
other available student financial aid programs.  Dislocated 
rural worker grants must be awarded in a manner that maximizes 
the use of existing federal and state student financial aid 
programs. 
    Sec. 7.  [REPEALER.] 
    Minnesota Statutes 1986, section 116L.03, subdivision 6, is 
repealed. 
    Sec. 8.  Laws 1983, chapter 334, section 7, is amended to 
read: 
    Sec. 7.  [REPEALER.] 
    Sections 1 to 6 116L.01; 116L.02; 116L.03, subdivisions 1, 
2, 3, 4, 5, and 7; 116L.04; and 116L.05, 1, 2, 3, 4, 5, and 7 
are repealed June 30, 1987 1989. 
    Sec. 9.  [SUPPLEMENTAL EDUCATION GRANT PROGRAM FUNDING.] 
    $500,000 is appropriated from the general fund to the 
higher education coordinating board for the dislocated rural 
worker grant program established in section 3, to be available 
until June 30, 1989. 
    $1,000,000 is appropriated from the general fund to the 
higher education coordinating board for the Minnesota job skills 
partnership program.  $500,00 is for fiscal year 1988 and 
$500,000 is for fiscal year 1989. 
    Approved June 3, 1987

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569