103E.635 DRAINAGE BOND ISSUES.
Subdivision 1. Authority.
After the contract for the construction of a drainage project
is awarded, the board of an affected county may issue the bonds of the county in an amount
necessary to pay the cost of establishing and constructing the drainage project.
Subd. 2. Single issue for two or more drainage systems.
The board may include two or
more drainage systems in a single drainage bond issue. The total amount of the drainage bond
issue may not exceed the total cost, including expenses, to be assessed to pay for the drainage
systems. The total cost to be assessed must be determined or estimated by the board when the
drainage bonds are issued.
Subd. 3. Security and source of payment.
The drainage bonds must be issued in accordance
with chapter 475 and must pledge the full faith, credit, and resources of the county for the prompt
payment of the principal and interest of the drainage bonds. The drainage bonds are primarily
payable from the funds of the drainage systems financed by the bonds or from the common
drainage bond redemption fund of the county. The common drainage bond redemption fund
may be created by resolution of the county board as a debt redemption fund for the payment
of drainage bonds issued under this chapter.
Subd. 4. Payment period and interest on drainage bonds.
(a) The board shall determine,
(1) the time of payment for the drainage bonds, not to exceed 23 years from their date of issue;
(2) the rates of interest for the drainage bonds, with the net average rate of interest over the
term of the bonds not to exceed the rate established under section
(3) whether the drainage bonds are payable annually or semiannually.
(b) The board shall determine the years and amounts of principal maturities that are
necessary by the anticipated collections of the drainage systems assessments, without regard to
any limitations on the maturities imposed by section
Subd. 5. Temporary drainage bonds maturing in two years or less.
The board may issue
and sell temporary drainage bonds under this subdivision maturing not more than two years after
their date of issue, instead of bonds as provided under subdivision 4. The county shall issue and
sell definitive drainage bonds before the maturity of bonds issued under this subdivision and
use the proceeds to pay for the temporary drainage bonds and interest to the extent that the
temporary bonds are not paid for by assessments collected or other available funds. The holders
of temporary drainage bonds and the taxpayers of the county have and may enforce by mandamus
or other appropriate proceedings:
(1) all rights respecting the levy and collection of assessments sufficient to pay the cost of
drainage proceedings and construction financed by the temporary drainage bonds that are granted
by law to holders of other drainage bonds, except the right to require levies to be collected before
the temporary drainage bonds mature; and
(2) the right to require the offering of definitive drainage bonds for sale, or to require the
issuance of definitive drainage bonds in exchange for the temporary drainage bonds, on a par for
par basis, bearing interest at the rate established under section
if the definitive drainage
bonds have not been sold and delivered before the maturity of the temporary drainage bonds.
Subd. 6. Definitive drainage bonds.
The definitive drainage bonds issued in exchange for
an issue of temporary drainage bonds must be numbered and mature serially at times and in
amounts to allow the principal and interest to be paid when due by the collection of assessments
levied for the drainage systems financed by the temporary bond issue. The definitive bonds are
subject to redemption and prepayment on any interest payment date when the county notifies the
definitive bondholders who have registered their names and addresses with the county treasurer.
The bondholders must be notified by mail 30 days before the interest payment date. The definitive
bonds must be delivered in order of their serial numbers, lowest numbers first, to the holders of
the temporary drainage bonds in order of the serial numbers of the bonds held by them.
Subd. 7. Sale of definitive drainage bonds.
The board must sell and negotiate the definitive
drainage bonds according to sections
Subd. 8. County investment, purchase, and selling of temporary drainage bonds.
Funds of the issuing county may be invested in temporary drainage bonds under section
except that the temporary drainage bonds may be:
(1) purchased by the county when the temporary drainage bonds are initially issued;
(2) purchased only out of funds that the board determines will not be required for other
purposes before the temporary drainage bonds mature; and
(3) resold before the temporary drainage bonds mature only if there is an unforeseen
(b) If a temporary drainage bond purchase is made from money held in a sinking fund for
other bonds of the county, the holders of the other bonds may enforce the county's obligation to
sell definitive bonds at or before the maturity of the temporary drainage bonds, or exchange the
other bonds, in the same manner as holders of the temporary drainage bonds.
Subd. 9. Delivery of bonds as drainage work proceeds.
The board may provide in the
contract for the sale of drainage bonds, temporary drainage bonds, and definitive drainage bonds,
that the bonds are delivered as the drainage work proceeds and the money is needed, and that
interest is paid only from the date of delivery.
Subd. 10. Bond recital.
Each drainage bond, temporary drainage bond, and definitive
drainage bond must contain a recital that it is issued by authority of and in strict accordance
with this chapter. The recital is conclusive in favor of the holders of the bonds as against the
county, that the drainage project has been properly established, that property within the county is
subject to assessment for benefits in an amount not less than the amount of the bonds, and that all
proceedings and construction relative to the drainage systems financed by the bonds have been
or will be made according to law.
Subd. 11. How bonds may be paid.
The board may pay drainage bonds, temporary drainage
bonds, and definitive drainage bonds issued under this chapter from any available funds in the
county treasury if the money in the common drainage bond redemption fund or in the drainage
fund for the issued bonds is insufficient. The county treasury funds that money is transferred from
must be reimbursed, with interest at a rate of seven percent per year for the time the money is
actually needed, from assessments on the drainage systems or from the sale of drainage funding
History: 1990 c 391 art 5 s 84; 1996 c 399 art 2 s 1; 2006 c 259 art 9 s 1