HF 1111

as introduced - 89th Legislature (2015 - 2016) Posted on 03/18/2015 12:27pm

A bill for an act
relating to capital investment; establishing a program for the issuance of state
appropriation bonds; appropriating money for the Lewis and Clark Regional
Water System; authorizing the sale and issuance of appropriation bonds;
proposing coding for new law in Minnesota Statutes, chapter 16A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [16A.995] APPROPRIATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) The definitions in this subdivision apply to this
section.
new text end

new text begin (b) "Appropriation bond" means a bond, note, or other similar instrument of the state
payable during a biennium from one or more of the following sources:
new text end

new text begin (1) money appropriated by law in any biennium for debt service due with respect
to obligations described in subdivision 3, paragraph (b);
new text end

new text begin (2) proceeds of the sale of obligations described in subdivision 3, paragraph (b);
new text end

new text begin (3) payments received for that purpose under agreements and ancillary arrangements
described in subdivision 3, paragraph (c); and
new text end

new text begin (4) investment earnings on amounts in clauses (1) to (3).
new text end

new text begin (c) "Debt service" means the amount payable in any biennium of principal, premium,
if any, and interest on appropriation bonds.
new text end

new text begin Subd. 2. new text end

new text begin Credit of appropriation bond proceeds. new text end

new text begin (a) Proceeds of appropriation
bonds issued under each law must be credited by the commissioner to a special fund,
as provided in this subdivision. For the purpose of this subdivision, "proceeds of
appropriation bonds" means and includes the principal amount of the bonds and any
premium and accrued interest received on the sale of the bonds.
new text end

new text begin (b) Accrued interest received on sale of appropriation bonds must be credited to the
appropriation bond fund. Any premium received on the sale of state appropriation bonds,
except for refunding bonds at the time of the bond sale, must be either: (1) credited to the
appropriation bond proceeds fund where it is used to reduce the par amount of the bond
issue; or (2) credited to the appropriation bond fund. Any premium received on the sale of
refunding bonds must be either: (1) credited to the appropriation bond fund; or (2) used to
reduce the par amount of the refunding bond issue at the time of the bond sale.
new text end

new text begin (c) Proceeds of appropriation bonds issued for programs of grants or loans to
political subdivisions must be credited to special accounts in the appropriation bond
proceeds fund or to special funds established by laws stating the purposes of the grants or
loans, and the standards and criteria under which an agency is authorized to make them.
new text end

new text begin Subd. 3. new text end

new text begin Authority. new text end

new text begin (a) Subject to the limitations of this subdivision, the
commissioner may sell and issue appropriation bonds of the state under this section for
public purposes as provided by law. Except as provided by subdivision 2, proceeds of
appropriation bonds must be credited to the appropriation bond proceeds fund in the state
treasury. Net income from investment of the proceeds, as estimated by the commissioner,
must be credited to the appropriation bond proceeds fund.
new text end

new text begin (b) Appropriation bonds may be issued from time to time in one or more series on
the terms and conditions the commissioner determines to be in the best interests of the
state, but the term on any series of bonds may not exceed 30 years. The bonds of each
issue shall be dated and bear interest, may be includable in or excludable from the gross
income of the owners for federal income tax purposes, may be tax-deferred, may provide
tax credits, or may offer other tax benefits for federal income tax purposes.
new text end

new text begin (c) At the time of, or in anticipation of, issuing the appropriation bonds, and at any
time thereafter, so long as the appropriation bonds are outstanding, the commissioner
may enter into agreements and ancillary arrangements relating to the appropriation
bonds, including but not limited to trust indentures, liquidity facilities, remarketing or
dealer agreements, letter of credit agreements, insurance policies, guaranty agreements,
reimbursement agreements, indexing agreements, or interest exchange agreements. Any
payments made or received according to the agreement or ancillary arrangement shall be
made from or deposited as provided in the agreement or ancillary arrangement. The
determination of the commissioner included in an interest exchange agreement that the
agreement relates to an appropriation bond shall be conclusive.
new text end

new text begin (d) The commissioner may enter into written agreements or contracts relating to the
continuing disclosure of information necessary to comply with, or facilitate the issuance
of appropriation bonds in accordance with federal securities laws, rules, and regulations,
including Securities and Exchange Commission rules and regulations in Code of Federal
Regulations, title 17, section 240.15c2-12. An agreement may be in the form of covenants
with purchasers and holders of appropriation bonds set forth in the order or resolution
authorizing the issuance of the appropriation bonds, or a separate document authorized
by the order or resolution.
new text end

new text begin (e) The appropriation bonds are not subject to chapter 16C.
new text end

new text begin Subd. 4. new text end

new text begin Form; procedure. new text end

new text begin (a) Appropriation bonds may be issued in the form
of bonds, notes, or other similar instruments, and in the manner provided in section
16A.672. In the event that any provision of section 16A.672 conflicts with this section,
this section shall control.
new text end

new text begin (b) Every appropriation bond shall include a conspicuous statement of the limitation
established in subdivision 7.
new text end

new text begin (c) Appropriation bonds may be sold at either public or private sale upon such terms
as the commissioner shall determine are not inconsistent with this section and may be sold
at any price or percentage of par value. Any bid received may be rejected.
new text end

new text begin (d) Appropriation bonds may bear interest at a fixed or variable rate.
new text end

new text begin (e) Notwithstanding any other law, appropriation bonds issued pursuant to this
section shall be fully negotiable.
new text end

new text begin Subd. 5. new text end

new text begin Refunding bonds. new text end

new text begin The commissioner from time to time may issue
appropriation bonds for the purpose of refunding any appropriation bonds then outstanding,
including the payment of any redemption premiums on the bonds, any interest accrued or
to accrue to the redemption date, and costs related to the issuance and sale of the refunding
bonds. The proceeds of any refunding bonds may, in the discretion of the commissioner, be
applied to the purchase or payment at maturity of the appropriation bonds to be refunded,
to the redemption of the outstanding bonds on any redemption date, or to pay interest on
the refunding bonds and may, pending application, be placed in escrow to be applied to the
purchase, payment, retirement, or redemption and, in the case of premium, as provided by
subdivision 2, paragraph (b). Any escrowed proceeds, pending such use, may be invested
and reinvested in obligations that are authorized investments under section 11A.24. The
income earned or realized on the investment may also be applied to the payment of the
bonds to be refunded or interest or premiums on the refunded bonds, or to pay interest on
the refunding bonds. After the terms of the escrow have been fully satisfied, any balance
of the proceeds and any investment income may be returned to the general fund or, if
applicable, the appropriation bond proceeds account for use in any lawful manner. All
refunding bonds issued under this subdivision must be prepared, executed, delivered, and
secured by appropriations in the same manner as the bonds to be refunded.
new text end

new text begin Subd. 6. new text end

new text begin Appropriation bonds as legal investments. new text end

new text begin Any of the following entities
may legally invest any sinking funds, money, or other funds belonging to them or under
their control in any appropriation bonds issued under this section:
new text end

new text begin (1) the state, the investment board, public officers, municipal corporations, political
subdivisions, and public bodies;
new text end

new text begin (2) banks and bankers, savings and loan associations, credit unions, trust companies,
savings banks and institutions, investment companies, insurance companies, insurance
associations, and other persons carrying on a banking or insurance business; and
new text end

new text begin (3) personal representatives, guardians, trustees, and other fiduciaries.
new text end

new text begin Subd. 7. new text end

new text begin No full faith and credit; state not required to make appropriations.
new text end

new text begin The appropriation bonds are not public debt of the state, and the full faith, credit, and
taxing powers of the state are not pledged to the payment of the appropriation bonds or to
any payment that the state agrees to make under this section. Appropriation bonds shall
not be obligations paid directly, in whole or in part, from a tax of statewide application
on any class of property, income, transaction, or privilege. Appropriation bonds shall be
payable in each fiscal year only from amounts that the legislature may appropriate for
debt service for any fiscal year, provided that nothing in this section shall be construed
to require the state to appropriate funds sufficient to make debt service payments with
respect to the bonds in any fiscal year. Appropriation bonds shall be canceled and shall
no longer be outstanding on the earlier of (1) the first day of a fiscal year for which the
legislature shall not have appropriated amounts sufficient for debt service, or (2) the date
of final payment of the principal of and interest on the appropriation bonds.
new text end

new text begin Subd. 8. new text end

new text begin Appropriation of proceeds. new text end

new text begin (a) The proceeds of appropriation bonds
issued under each law are appropriated for the purposes described in the law and in this
subdivision.
new text end

new text begin (b) Before the proceeds are received in the appropriation bond proceeds fund, the
commissioner may transfer to that fund from the general fund amounts not exceeding the
expected proceeds from the next bond sale. The commissioner shall return these amounts
to the general fund by transferring proceeds when received. The amounts of these transfers
are appropriated from the general fund and from the appropriation bond proceeds.
new text end

new text begin (c) Actual and necessary travel and subsistence expenses of employees and all
other nonsalary expenses incidental to the sale, printing, execution, and delivery of
appropriation bonds must be paid from the proceeds. The proceeds are appropriated for
this purpose. Appropriation bond proceeds must not be used to pay any part of the salary
of a state employee involved in the sale, printing, execution, or delivery of the bonds.
new text end

new text begin (d) Appropriation bond proceeds remaining in a special fund after the purposes for
which the appropriation bonds were issued are accomplished or abandoned, as certified by
the head of the agency administering the money, or as determined by the commissioner,
unless devoted under the appropriation act to another purpose designated in the act, must
be transferred to the appropriation bond fund.
new text end

new text begin Subd. 9. new text end

new text begin Special accounts; appropriation. new text end

new text begin (a) The commissioner shall establish
separate accounts in the appropriation bond fund for each grant, loan, or program for
which appropriation bond proceeds are appropriated, to record payments and receipts
attributable to the grant, loan, or program.
new text end

new text begin (b) All money credited, transferred, or appropriated to the state appropriation
bond fund and all income from the investment of that money is appropriated to the
commissioner for the payment of principal and interest on appropriation bonds or, in the
case of premium received on the sale of refunding bonds, as provided by subdivision 8.
new text end

new text begin Subd. 10. new text end

new text begin Appropriation for debt service. new text end

new text begin The amount needed to pay principal
and interest on appropriation bonds issued under this section is appropriated each year
to the commissioner from the general fund subject to repeal, unallotment under section
16A.152, or cancellation otherwise pursuant to subdivision 7.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2. new text begin LEWIS AND CLARK RURAL WATER SERVICE; STATE
APPROPRIATION BONDS; BOND SALE AUTHORIZATION.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin $48,000,000 is appropriated from the appropriation
bond proceeds fund to the Public Facilities Authority for a grant to the Lewis and Clark
Joint Powers Board to complete the Lewis and Clark Regional Water System project in
Minnesota, to the city of Worthington. This appropriation does not require a nonstate
match, but the grant agreement must provide for reimbursement to the state from any
federal funds provided for the project, consistent with the Lewis and Clark Regional
Water System, Inc. agreement.
new text end

new text begin Subd. 2. new text end

new text begin Bond sale. new text end

new text begin To provide the money appropriated in this section from the
state appropriation bond proceeds fund, the commissioner of management and budget
shall sell and issue bonds of the state in an amount up to $48,000,000 plus the amount
necessary to pay the costs of issuing the bonds, in the manner, upon the terms, and with
the effect prescribed by Minnesota Statutes, sections 16A.995.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end