1.1                          A bill for an act
  1.2             relating to capital investment; authorizing the 
  1.3             issuance of state revenue bonds backed by tobacco 
  1.4             settlement fund annual payments to fund a road 
  1.5             improvement and bottleneck reduction fund; 
  1.6             appropriating money; proposing coding for new law in 
  1.7             Minnesota Statutes, chapters 16A; 174. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  [16A.875] [TOBACCO SETTLEMENT REVENUE BONDS.] 
  1.10     Subdivision 1.  [AUTHORIZATION.] The commissioner of 
  1.11  finance is authorized to sell and issue in one or more series or 
  1.12  issues state revenue bonds to fund the road improvement and 
  1.13  bottleneck reduction fund, established in section 174.042, to 
  1.14  fund any bond reserve determined to be necessary, and to pay 
  1.15  costs of issuance of the bonds.  The proceeds of the bonds are 
  1.16  appropriated for these purposes.  The principal amount of the 
  1.17  bonds must not exceed $1,500,000,000.  The bonds may be sold at 
  1.18  any price and at public or private sale, as determined by the 
  1.19  commissioner.  The bonds must be sold and issued upon such terms 
  1.20  and in such manner as the commissioner determines to be in the 
  1.21  best interests of the state.  Before selling and issuing bonds 
  1.22  under this section, the commissioner must determine that the 
  1.23  terms and security for the bonds are adequate to insure that at 
  1.24  least one nationally recognized rating agency will rate the 
  1.25  bonds as investment-grade bonds.  The bonds may be for terms up 
  1.26  to 20 years. 
  2.1      Subd. 2.  [SECURITY; BONDS NOT PUBLIC DEBT.] The bonds and 
  2.2   the interest thereon must be payable solely from and secured by 
  2.3   the revenues appropriated and transferred to the debt service 
  2.4   fund established for this purpose in subdivision 4 and 
  2.5   investment income thereon, and any bond reserve established for 
  2.6   the bonds.  The bonds are not public debt, and the full faith, 
  2.7   credit, and taxing powers of the state are not pledged for their 
  2.8   payment.  The bonds and the interest thereon must not be paid, 
  2.9   directly or indirectly, in whole or in part, from a tax of 
  2.10  statewide application on any class of property, income, 
  2.11  transaction, or privilege. 
  2.12     Subd. 3.  [SPECIAL REVENUE FUND; APPROPRIATION.] There is 
  2.13  established in the state treasury a separate and special revenue 
  2.14  fund for deposit of the revenues from the annual payments to the 
  2.15  state under the terms of the 1998 settlement agreement of the 
  2.16  lawsuit styled as State v. Philip Morris Inc., No. C1-94-8565 
  2.17  (Minnesota District Court, Second Judicial District), beginning 
  2.18  in fiscal year 2004 and thereafter.  Money in the special 
  2.19  revenue fund is appropriated and transferred to the debt service 
  2.20  fund in subdivision 4 in the amount and at the time necessary to 
  2.21  make debt service payments when due and to maintain any debt 
  2.22  service reserve required.  Any funds from the annual tobacco 
  2.23  settlement payments in the special revenue fund that are not 
  2.24  needed for transfer to the debt service fund in subdivision 4, 
  2.25  are transferred to the general fund. 
  2.26     Subd. 4.  [DEBT SERVICE FUND.] There is established in the 
  2.27  state treasury a separate and special debt service fund.  Money 
  2.28  transferred or appropriated to the fund and investment income 
  2.29  thereon on hand or required to be transferred to the fund must 
  2.30  be used and are irrevocably appropriated for the payment of the 
  2.31  principal of and interest on the bonds authorized in this 
  2.32  section when due. 
  2.33     Subd. 5.  [COVENANTS; AGREEMENTS.] The commissioner may, 
  2.34  for and on behalf of the state, enter into such covenants and 
  2.35  agreements not inconsistent with subdivisions 1 to 5 and section 
  2.36  174.042 as may be necessary or desirable to facilitate the sale 
  3.1   and issuance of the bonds on terms favorable to the state, 
  3.2   including, but not limited to, covenants and agreements relating 
  3.3   to the payment of and security for the bonds, tax-exemption, and 
  3.4   disclosure of information required by federal and state 
  3.5   securities laws.  Such covenants and agreements of the 
  3.6   commissioner constitute an enforceable contract of the state and 
  3.7   the state pledges and agrees with the holders of any bonds that 
  3.8   the state will not limit or alter the rights vested in the 
  3.9   commissioner to fulfill the terms of any such covenants or 
  3.10  agreements made with the holders of the bonds, or in any way 
  3.11  impair the rights and remedies of the holders until the bonds, 
  3.12  together with the interest thereon, with interest on any unpaid 
  3.13  installments of interest, and all costs and expenses in 
  3.14  connection with any action or proceeding by or on behalf of such 
  3.15  holders, are fully met and discharged.  The commissioner is 
  3.16  authorized to include this pledge and agreement of the state in 
  3.17  any covenant or agreement with the holders of such bonds.  The 
  3.18  provisions of sections 16A.672 and 16A.675 are applicable to the 
  3.19  bonds.  The commissioner may pay to the United States of America 
  3.20  any rebate in the amounts and at the times required by the 
  3.21  United States Internal Revenue Code and treasury regulations 
  3.22  promulgated thereunder in order to maintain the federal tax 
  3.23  exemption of bonds issued under this section. 
  3.24     Sec. 2.  [174.042] [ROAD IMPROVEMENT AND BOTTLENECK 
  3.25  REDUCTION FUND.] 
  3.26     Subdivision 1.  [FUND CREATED.] A road improvement and 
  3.27  bottleneck reduction fund is created in the state treasury.  The 
  3.28  fund consists of money credited to the fund by law. 
  3.29     Subd. 2.  [USES OF FUND.] Money in the road improvement and 
  3.30  bottleneck reduction fund may be appropriated by law for 
  3.31  projects for the construction, reconstruction, and improvement 
  3.32  of trunk highways, including acquisition of real property 
  3.33  therefor, in the following categories: 
  3.34     (1) state trunk highway improvements within the 
  3.35  seven-county metropolitan area primarily for the purpose of 
  3.36  improving traffic flow and expanding highway capacity by 
  4.1   eliminating traffic bottlenecks; 
  4.2      (2) improvements on state trunk highways outside the 
  4.3   seven-county metropolitan area that the commissioner designates 
  4.4   as at-risk interregional corridors; and 
  4.5      (3) other trunk highway projects that qualify as major 
  4.6   transportation projects under section 174.55, subdivision 5. 
  4.7      Subd. 3.  [REPORTS.] Any project financed in whole or in 
  4.8   part with money from the road improvement and bottleneck 
  4.9   reduction fund must be included in each report submitted by the 
  4.10  commissioner of transportation to the major transportation 
  4.11  projects commission under section 174.55, subdivision 4. 
  4.12     Subd. 4.  [INVESTMENT OF FUND.] Upon the request of the 
  4.13  commissioner, money in the road improvement and bottleneck 
  4.14  reduction fund must be invested by the state board of investment 
  4.15  in those securities authorized for such purpose in section 
  4.16  11A.21.  All interest and profits from such investments must be 
  4.17  credited to the debt service fund established in section 
  4.18  16A.875, subdivision 4, provided that if bonds are not issued 
  4.19  and outstanding under section 16A.875, all interest and profits 
  4.20  from such investments must be credited to the road improvement 
  4.21  and bottleneck reduction fund.  The state treasurer is the 
  4.22  custodian of all securities purchased under the provisions of 
  4.23  this section. 
  4.24     Sec. 3.  [EFFECTIVE DATE.] 
  4.25     This act is effective the day following final enactment.