2006 Minnesota Statutes

16A.695 PROPERTY PURCHASED WITH STATE BOND PROCEEDS.
    Subdivision 1. Definitions. (a) The definitions in this subdivision apply to this section.
(b) "State bond financed property" means property acquired or bettered in whole or in part
with the proceeds of state general obligation bonds authorized to be issued under article XI,
section 5, clause (a), of the Minnesota Constitution.
(c) "Public officer or agency" means a state officer or agency, the University of Minnesota,
the Minnesota Historical Society, and any county, home rule charter or statutory city, school
district, special purpose district, or other public entity, or any officer or employee thereof.
(d) "Fair market value" means, with respect to the sale of state bond financed property,
the price that would be paid by a willing and qualified buyer to a willing and qualified seller
as determined by an appraisal of the property, or the price bid by a purchaser under a public
bid procedure after reasonable public notice.
(e) "Outstanding state bonds" means the dollar amount certified by the commissioner, upon
the request of a public officer or agency, to be the principal amount of state bonds, including any
refunding bonds, issued with respect to the state bond financed property, less the principal amount
of state bonds paid or defeased before the date of the request.
    Subd. 2. Leases and management contracts. (a) A public officer or agency that is
authorized by law to lease or enter into a management contract with respect to state bond financed
property shall comply with this subdivision.
(b) The lease or management contract may be entered into for the express purpose of
carrying out a governmental program established or authorized by law and established by official
action of the contracting public officer or agency, in accordance with orders of the commissioner
intended to ensure the legality and tax-exempt status of bonds issued to finance the property, and
with the approval of the commissioner. A lease or management contract, including any renewals
that are solely at the option of the lessee, must be for a term substantially less than the useful life
of the property, but may allow renewal beyond that term upon a determination by the lessor
that the use continues to carry out the governmental program. A lease or management contract
must be terminable by the contracting public officer or agency if the other contracting party
defaults under the contract or if the governmental program is terminated or changed, and must
provide for program oversight by the contracting public officer or agency. Money received by
the public officer or agency under the lease or management contract that is not needed to pay
and not authorized to be used to pay operating costs of the property, or to pay the principal,
interest, redemption premiums, and other expenses when due on debt related to the property other
than state bonds, must be:
(1) paid to the commissioner in the same proportion as the state bond financing is to the
total public debt financing for the property, excluding debt issued by a unit of government for
which it has no financial liability;
(2) deposited in the state bond fund; and
(3) used to pay or redeem or defease bonds issued to finance the property in accordance with
the commissioner's order authorizing their issuance.
The money paid to the commissioner is appropriated for this purpose.
(c) With the approval of the commissioner, a lease or management contract between a city
and a nonprofit corporation under section 471.191, subdivision 1, need not require the lessee to
pay rentals sufficient to pay the principal, interest, redemption premiums, and other expenses
when due with respect to state bonds issued to acquire and better the facilities.
    Subd. 3. Sale of property. A public officer or agency shall not sell any state bond financed
property unless the public officer or agency determines by official action that the property is no
longer usable or needed by the public officer or agency to carry out the governmental program
for which it was acquired or constructed, the sale is made as authorized by law, the sale is made
for fair market value, and the sale is approved by the commissioner. If any state bonds issued to
purchase or better the state bond financed property that is sold remain outstanding on the date of
sale, the net proceeds of sale must be applied as follows:
(1) if the state bond financed property was acquired and bettered solely with state bond
proceeds, the net proceeds of sale must be paid to the commissioner, deposited in the state
bond fund, and used to pay or redeem or defease the outstanding state bonds in accordance
with the commissioner's order authorizing their issuance, and the proceeds are appropriated
for this purpose; or
(2) if the state bond financed property was acquired or bettered partly with state bond
proceeds and partly with other money, the net proceeds of sale must be used: first, to pay to the
state the amount of state bond proceeds used to acquire or better the property; second, to pay in
full any outstanding public or private debt incurred to acquire or better the property; and third,
any excess over the amount needed for those purposes must be divided in proportion to the
shares contributed to the acquisition or betterment of the property and paid to the interested
public and private entities, other than any private lender already paid in full, and the proceeds are
appropriated for this purpose. In calculating the share contributed by each entity, the amount to
be attributed to the owner of the property shall be the fair market value of the property that was
bettered by state bond proceeds at the time the betterment began.
When all of the net proceeds of sale have been applied as provided in this subdivision,
this section no longer applies to the property.
    Subd. 3a. Involuntary sale of property. Notwithstanding subdivision 3, this subdivision
applies to the sale of state bond financed property by a lender that has provided money to acquire
or better the property. Purchase by the lender in a foreclosure sale, acceptance of a deed in lieu
of foreclosure, or enforcement of a security interest in personal property, by the lender, is not
a sale. Following purchase by the lender, the lender shall not operate the property in a manner
inconsistent with the governmental program established as provided in subdivision 2, paragraph
(b). The lender shall exercise its best efforts to sell the property to a third party as soon as feasible
following acquisition of marketable title to the property by the lender. A sale by the lender must
be made as authorized by law and must be made for fair market value.
    Subd. 4. Relation to other laws. This section applies to all state bond financed property
unless otherwise provided by law.
    Subd. 5. Program funding. Recipients of grants from money appropriated from the bond
proceeds fund must demonstrate to the commissioner of the agency making the grant that the
recipient has the ability and a plan to fund the program intended for the facility. A private nonprofit
organization that leases or manages a facility acquired or bettered with grant money appropriated
from the bond proceeds fund must demonstrate to the commissioner of the agency making the
grant that the organization has the ability and a plan to fund the program intended for the facility.
History: 1994 c 643 s 36; 1Sp1995 c 2 art 1 s 19-22; 1996 c 463 s 32; 2004 c 278 s 1