1.1                          A bill for an act 
  1.2             relating to the Minnesota agricultural and economic 
  1.3             development board; placing restrictions on the board 
  1.4             and the commissioner relating to the issuance of bonds 
  1.5             for purposes of capital improvements and acquisitions 
  1.6             of hospitals; amending Minnesota Statutes 1996, 
  1.7             section 41A.05, subdivision 2. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1996, section 41A.05, 
  1.10  subdivision 2, is amended to read: 
  1.11     Subd. 2.  [ISSUANCE OF BONDS.] (a) The board by resolution 
  1.12  may exercise the powers of a rural development authority under 
  1.13  sections 469.142 to 469.151 and the powers of a municipality 
  1.14  under sections 469.152 to 469.165 for the purposes of financing 
  1.15  one or more projects, including the issuance of bonds and the 
  1.16  application of the bond proceeds and investment income pursuant 
  1.17  to a lease, loan, loan guaranty, loan participation, or other 
  1.18  agreement.  The bonds must be issued, sold, and secured on the 
  1.19  terms and conditions and in the manner determined by resolution 
  1.20  of the board.  Notwithstanding subdivision 1, a reserve 
  1.21  established for the bonds provided by the borrower, including 
  1.22  out of bond proceeds, may be deposited and held in a separate 
  1.23  account in the Minnesota agricultural and economic development 
  1.24  account and applied to the last installments of principal or 
  1.25  interest on the bonds, subject to the reserves being withdrawn 
  1.26  for any purpose permitted by subdivision 1.  The board may by 
  2.1   resolution or indenture pledge any or all amounts in the fund, 
  2.2   including any reserves and investment income on amounts in the 
  2.3   fund, to secure the payment of principal and interest on any or 
  2.4   all series of bonds, upon the terms and conditions as provided 
  2.5   in the resolution or indenture.  To the extent the board deems 
  2.6   necessary or desirable to prevent interest on bonds from 
  2.7   becoming subject to federal income taxation, (1) the amounts in 
  2.8   the fund shall be invested in obligations or securities with 
  2.9   restricted yields; and (2) the investment income on the amounts 
  2.10  are released from the pledge securing the bonds or loan guaranty 
  2.11  and appropriately applied to prevent taxation. 
  2.12     (b) Bonds issued pursuant to this chapter are not general 
  2.13  obligations of the state or the board.  The full faith and 
  2.14  credit and taxing powers of the state and the board are not and 
  2.15  may not be pledged for the payment of the bonds.  No person may 
  2.16  compel the levy of a tax for the payment or compel the 
  2.17  appropriation of money of the state or the board for the payment 
  2.18  of the bonds, except as specifically provided in this chapter. 
  2.19     (c) For purposes of sections 474A.01 to 474A.21, the board 
  2.20  is a local issuer and may apply for allocations of authority to 
  2.21  issue private activity obligations and may enter into an 
  2.22  agreement for the issuance of obligations by another issuer. 
  2.23     (d) The board must not exercise its powers as a 
  2.24  municipality under sections 469.152 to 469.165 to finance one or 
  2.25  more projects for the acquisition of a public hospital by a 
  2.26  not-for-profit hospital in Minneapolis. 
  2.27     Sec. 2.  [EFFECTIVE DATE.] 
  2.28     Section 1 is effective retroactively to February 1, 1997.