1.1                          A bill for an act
  1.2             relating to public administration; authorizing 
  1.3             spending to acquire and better public land and 
  1.4             buildings and other public improvements of a capital 
  1.5             nature with certain conditions; authorizing the 
  1.6             commissioner of administration, with the approval of 
  1.7             the commissioner of finance, to enter into 
  1.8             lease-purchase agreements and to provide for the 
  1.9             issuance of certificates of participation; prescribing 
  1.10            certain conditions; appropriating money; proposing 
  1.11            coding for new law in Minnesota Statutes, chapter 16B. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  [16B.242] [CERTIFICATE OF PARTICIPATION 
  1.14  FINANCING.] 
  1.15     Subdivision 1.  [AUTHORIZATION.] The commissioner of 
  1.16  administration is authorized, with the approval of the 
  1.17  commissioner of finance, to finance or refinance the capital 
  1.18  cost of acquisition and betterment of a new or existing building 
  1.19  for use as a department of revenue headquarters building by 
  1.20  entering into a lease-purchase agreement, and for this purpose 
  1.21  to provide for the issuance of certificates of participation, on 
  1.22  the terms and conditions and subject to the limitations set 
  1.23  forth in this section.  The terms acquisition and betterment 
  1.24  shall have the meanings given them in section 475.51.  Capital 
  1.25  cost shall include all items of cost which, under generally 
  1.26  accepted accounting principles may be capitalized, including all 
  1.27  costs of the financing transaction. 
  1.28     Subd. 2.  [PURPOSES.] Lease-purchase financing or 
  2.1   refinancing may be used only after consultation with the 
  2.2   legislative advisory commission and when the commissioner of 
  2.3   administration determines that: 
  2.4      (1) based upon present circumstances, the state should and 
  2.5   intends to purchase the property to be financed; and 
  2.6      (2) the financing is expected to result in a cost reduction 
  2.7   to the state when compared to leasing, computed on a present 
  2.8   value basis based upon assumptions approved by the commissioner 
  2.9   of finance. 
  2.10     Subd. 3.  [AGREEMENT TERMS.] Lease-purchase agreements 
  2.11  entered into pursuant to this section: 
  2.12     (1) shall be for a total term not exceeding 20 years, which 
  2.13  shall be subject to termination by the state at the end of each 
  2.14  fiscal year or biennium during the term, without penalty, in the 
  2.15  event the legislature enacts a law specifically prohibiting the 
  2.16  expenditure of state money to pay lease-purchase payments coming 
  2.17  due under the lease-purchase agreement in all subsequent fiscal 
  2.18  years or bienniums; 
  2.19     (2) may be subject to prepayment on such dates and terms as 
  2.20  are approved by the commissioner of finance; 
  2.21     (3) may designate a portion of the lease-purchase payments 
  2.22  due under the lease-purchase agreement as interest; 
  2.23     (4) may require the state to maintain property, general 
  2.24  liability and rental interruption insurance, or self-insure 
  2.25  risks ordinarily covered by such insurance; 
  2.26     (5) may provide that, in the event of termination of the 
  2.27  lease-purchase agreement pursuant to clause (1), the state is 
  2.28  required to transfer or release its interest in and possession 
  2.29  of the property, to pay all costs of the transfer or release, 
  2.30  and to pay all lease-purchase payments due or accrued on or 
  2.31  before the termination date; 
  2.32     (6) may provide that, in the event of default under the 
  2.33  lease-purchase agreement by the state, the lessor or its 
  2.34  assignee shall, after reasonable notice, have the right to 
  2.35  possession of the property, shall have the right to enforce any 
  2.36  mortgage, security interest, or other contractual rights it may 
  3.1   have under the lease-purchase agreement with respect to the 
  3.2   property, and shall have the right to recover all lease-purchase 
  3.3   payments due or to become due or to accrue during the current 
  3.4   fiscal year or biennium.  In no event shall the lessor be 
  3.5   entitled to recover lease-purchase payments accruing after 
  3.6   termination of the lease-purchase agreement or consequential or 
  3.7   punitive damages; and 
  3.8      (7) may contain such other terms as are commonly contained 
  3.9   in like agreements entered into on arms-length basis between 
  3.10  private parties and which the commissioner of finance determines 
  3.11  will be economically advantageous to the state. 
  3.12     Subd. 4.  [LEASE-PURCHASE AND OTHER 
  3.13  PAYMENTS.] Lease-purchase payments and other amounts required to 
  3.14  be paid by the state under or to carry out its obligations under 
  3.15  a lease-purchase agreement shall be paid from money appropriated 
  3.16  to the state departments or agencies using the property to pay 
  3.17  rental or lease-purchase payments and other costs of operating 
  3.18  and maintaining their office space through the internal services 
  3.19  fund, which money is reappropriated for this purpose, and to the 
  3.20  extent of capitalized interest, if any, from financing proceeds 
  3.21  of the lease-purchase agreement or certificates of participation.
  3.22     Subd. 5.  [CERTIFICATES OF PARTICIPATION; 
  3.23  SALE.] Certificates of participation shall be issued and sold by 
  3.24  or with the approval of the commissioner of finance on such 
  3.25  terms and conditions and in such manner as the commissioner 
  3.26  shall determine.  The net proceeds of the certificates of 
  3.27  participation and interest earnings on them shall be used to pay 
  3.28  capital costs financed and are appropriated to the commissioner 
  3.29  of administration for this purpose.  Net proceeds and interest 
  3.30  earnings not needed for this purpose are appropriated to the 
  3.31  commissioner of administration to pay lease-purchase payments 
  3.32  and shall be credited to the department or agencies using the 
  3.33  property. 
  3.34     Subd. 6.  [LEASE-PURCHASE AGREEMENT NOT DEBT.] The 
  3.35  commissioner of administration may not enter into a 
  3.36  lease-purchase agreement unless the commissioner of finance has 
  4.1   conducted a demand survey of the amount of projected rentals and 
  4.2   determines that money has been appropriated and allotted for the 
  4.3   payment of the maximum amount of lease-purchase payments payable 
  4.4   from state money and that will become due and payable during the 
  4.5   appropriation period in which the lease-purchase agreement is 
  4.6   entered into.  A lease-purchase agreement does not constitute or 
  4.7   create a general or moral obligation or indebtedness of the 
  4.8   state in excess of the money from time to time appropriated or 
  4.9   otherwise available for the payment of lease-purchase payments 
  4.10  coming due under the lease-purchase agreement, and the state has 
  4.11  no continuing obligation to appropriate money for the payment of 
  4.12  lease-purchase payments or other amounts required to be paid 
  4.13  under the lease-purchase agreement.  Lease-purchase payments and 
  4.14  other amounts due under a lease-purchase agreement during a 
  4.15  fiscal year or biennium for which money has been appropriated 
  4.16  are current expenses of the state. 
  4.17     Subd. 7.  [TAX EXEMPTION.] Property subject to a 
  4.18  lease-purchase agreement is not subject to real estate taxes. 
  4.19     Subd. 8.  [RELATION TO OTHER LAWS.] The authority granted 
  4.20  by this section is separate from and in addition to the 
  4.21  authority granted in, and shall not be subject to the terms and 
  4.22  conditions of, any other financing law. 
  4.23     Sec. 2.  [CAPITAL IMPROVEMENTS APPROPRIATIONS; REVENUE 
  4.24  BUILDING.] 
  4.25     Subdivision 1.  [APPROPRIATION.] $....... is appropriated 
  4.26  from the bond proceeds fund to the commissioner of 
  4.27  administration to be spent to acquire and to better public land 
  4.28  and buildings and other public improvements of a capital nature, 
  4.29  as specified in this section. 
  4.30     Subd. 2.  [PURPOSES.] The appropriation in subdivision 1 is 
  4.31  to design, construct, furnish, and equip a new department of 
  4.32  revenue headquarters building.  The building shall provide at 
  4.33  least 300,000 net square feet, and at a cost not to exceed 
  4.34  $....... including inflation adjustments and other 
  4.35  contingencies.  The design-build plan will call for completion 
  4.36  of the project in time for the department of revenue to take 
  5.1   occupancy before the expiration of its current lease in November 
  5.2   1998. 
  5.3      As an alternative to building, the commissioner of 
  5.4   administration may use this appropriation to purchase the 
  5.5   building currently leased for use by the department of revenue 
  5.6   as its headquarters or another existing building determined by 
  5.7   the commissioner to be suitable for use as a headquarters 
  5.8   building for the department of revenue.  The commissioner of 
  5.9   administration may not use or encumber any portion of this 
  5.10  appropriation for remodeling or renovation of the current 
  5.11  building.  No agreement for purchase of the current building may 
  5.12  include any agreement that the present owner undertake any 
  5.13  remodeling or renovation of the building.  However, the 
  5.14  commissioner may use or encumber a portion of this appropriation 
  5.15  for remodeling or renovation, or enter an agreement to purchase 
  5.16  the current building which includes remodeling or renovation, 
  5.17  during the break between legislative sessions with the approval 
  5.18  of the legislative coordinating commission. 
  5.19     Sec. 3.  [APPROPRIATION.] 
  5.20     $2,300,000 is appropriated from the general fund to the 
  5.21  bond proceeds fund to replace appropriations made by Laws 1995, 
  5.22  First Special Session chapter 2, article 1, section 2, 
  5.23  subdivision 2, and Laws 1996, chapter 463, section 13, 
  5.24  subdivision 8, for predesign and design of new revenue 
  5.25  department facilities.  This appropriation is only effective if 
  5.26  the commissioner of administration elects to finance new or 
  5.27  existing revenue department facilities using certificate of 
  5.28  participation financing pursuant to new Minnesota Statutes, 
  5.29  section 16B.242. 
  5.30     Sec. 4.  [EFFECTIVE DATE.] 
  5.31     Sections 1 to 3 are effective on the day following final 
  5.32  enactment.