373.45 STATE MAY GUARANTEE COUNTY BUILDING DEBT; REPAYMENT.
Subdivision 1. Definitions.
(a) As used in this section, the following terms have the
(b) "Authority" means the Minnesota Public Facilities Authority.
(c) "Commissioner" means the commissioner of finance.
(d) "Debt obligation" means a general obligation bond issued by a county, a bond to which the
general obligation of a county is pledged under section
, subdivision 2, or a bond payable
from a county lease obligation under section
, to provide funds for the construction of:
(2) correctional facilities;
(3) law enforcement facilities;
(4) social services and human services facilities;
(5) solid waste facilities; or
(6) qualified housing development projects as defined in section
, subdivision 2.
Subd. 2. Application.
(a) This section provides a state guarantee of the payment of principal
and interest on debt obligations if:
(1) the obligations are issued after June 30, 2000;
(2) application to the Public Facilities Authority is made before issuance; and
(3) the obligations are covered by an agreement meeting the requirements of subdivision 3.
(b) Applications to be covered by the provisions of this section must be made in a form and
contain the information prescribed by the authority. Applications are subject to a fee of $500 for
the first bond issue requested by the county and $250 for each bond issue thereafter.
(c) Application fees paid under this section must be deposited in a separate county
bond guarantee account in the general fund. Money in the county bond guarantee account is
appropriated to the authority for purposes of administering this section.
(d) Neither the authority nor the commissioner is required to promulgate administrative
rules under this section and the procedures and requirements established by the authority or
commissioner under this section are not subject to chapter 14.
Subd. 3. Agreement.
(a) For specified debt obligations of a county to be covered by this
section, the county must enter an agreement with the authority obligating the county to be bound
by this section.
(b) This agreement must be in a form prescribed by the authority and contain any provisions
required by the authority, including, at least, an obligation to:
(1) deposit with the paying agent three days before the date on which the payment is due
an amount sufficient to make that payment;
(2) notify the authority, if the county will be unable to make all or a portion of the payment;
(3) include a provision in the bond resolution and county's agreement with the paying agent
for the debt obligation that requires the paying agent to inform the commissioner if it becomes
aware of a default or potential default in the payment of principal or interest on that issue or if, on
the day two business days before the date a payment is due on that issue, there are insufficient
funds to make the payment on deposit with the paying agent.
(c) Funds invested in a refunding escrow account established under section
that are to
become available to the paying agent on a principal or interest payment date are deemed to be on
deposit with the paying agent three business days before the payment date.
(d) The provisions of an agreement under this subdivision are binding as to an issue as long
as any debt obligation of the issue remains outstanding.
(e) This section and the obligations of the state under this section are not a public debt of the
state under article XI, section 4, of the Minnesota Constitution, and the legislature may, at any
time, choose not to appropriate amounts under subdivision 4, paragraph (b).
Subd. 4. Notifications; payment; appropriation.
(a) After receipt of a notice of a default or
potential default in payment of principal or interest in debt obligations covered by this section
or an agreement under this section, and after consultation with the county, the paying agent,
and after verification of the accuracy of the information provided, the authority shall notify the
commissioner of the potential default. The notice must include a final figure as to the amount due
that the county will be unable to repay on the date due.
(b) Upon receipt of this notice from the authority, the commissioner shall issue a warrant and
authorize the authority to pay to the paying agent for the debt obligation the specified amount
on or before the date due. The amounts needed for the purposes of this subdivision are annually
appropriated to the authority from the general fund.
Subd. 5. Interest on state paid amount.
If the state has paid part or all of the principal or
interest due on a county's debt obligation, the amount paid bears interest from the date paid by the
state until the date of repayment. The interest rate is the commissioner's invested cash rate as it is
certified by the commissioner. Interest only accrues on the amounts paid and outstanding less the
reduction in aid under subdivision 7 and other payments received from the county.
Subd. 6. Pledge of county's full faith and credit.
If the state has paid part or all of the
principal or interest due on a county's debt obligation, the county's pledge of its full faith
and credit and unlimited taxing powers to repay the principal and interest due on those debt
obligations becomes, without an election or the requirement of a further authorization, a pledge
of the full faith and credit and unlimited taxing powers of the county to repay to the state the
amount paid, with interest. Amounts paid by the state must be repaid in the order in which the
state payments were made.
Subd. 7. Aid reduction for repayment.
(a) Except as provided in paragraph (b), the
commissioner may reduce, by the amount paid by the state under this section on behalf of
the county, plus the interest due on the state payments, the county program aid under section
. The amount of any aid reduction reverts from the appropriate account to the state
(b) If, after review of the financial situation of the county, the authority advises the
commissioner that a total reduction of the aids would cause an undue hardship on the county, the
authority, with the approval of the commissioner, may establish a different schedule for reduction
of aids to repay the state. The amount of aids to be reduced are decreased by any amounts repaid
to the state by the county from other revenue sources.
Subd. 8. Tax levy for repayment.
(a) With the approval of the authority, a county may levy
in the year the state makes a payment under this section an amount up to the amount necessary
to provide funds for the repayment of the amount paid by the state plus interest through the
date of estimated repayment by the county. The proceeds of this levy may be used only for this
purpose unless they exceed the amount actually due. Any excess must be used to repay other state
payments made under this section or must be deposited in the debt redemption fund of the county.
The amount of aids to be reduced to repay the state are decreased by the amount levied.
(b) If the state is not repaid in full for a payment made under this section by November 30
of the calendar year following the year in which the state makes the payment, the authority
shall require the county to certify a property tax levy in an amount up to the amount necessary
to provide funds for repayment of the amount paid by the state plus interest through the date of
estimated repayment by the county. To prevent undue hardship, the authority may allow the
county to certify the levy over a five-year period. The proceeds of the levy may be used only for
this purpose unless they are in excess of the amount actually due, in which case the excess must
be used to repay other state payments made under this section or must be deposited in the debt
redemption fund of the county. If the authority orders the county to levy, the amount of aids
reduced to repay the state are decreased by the amount levied.
(c) A levy under this subdivision is an increase in the levy limits of the county for purposes
275.065, subdivision 6
, and must be explained as a specific increase at the meeting
required under that provision.
Subd. 9. Mandatory plan; technical assistance.
If the state makes payments on behalf of
a county under this section or the county defaults in the payment of principal or interest on an
outstanding debt obligation, it must submit a plan to the authority for approval specifying the
measures it intends to implement to resolve the issues which led to its inability to make the
payment and to prevent further defaults. If the authority determines that a county's plan is not
adequate, the authority shall notify the county that the plan has been disapproved, the reasons
for the disapproval, and that the state will not make future payments under this section for debt
obligations of the affected county issued after the date specified in that notice until its plan is
approved. The authority may also notify the county that until its plan is approved, aids due the
county will be withheld after a date specified in the notice.
Subd. 10. Continuing disclosure agreements.
The authority may enter into written
agreements or contracts relating to the continuing disclosure of information needed to facilitate
the ability of counties to issue debt obligations according to federal securities laws, rules,
and regulations, including securities and exchange commission rules and regulations, section
240.15c2-12. The agreements or contracts may be in any form the authority deems reasonable and
in the state's best interests.
History: 2000 c 493 s 3; 2001 c 214 s 4; 2003 c 112 art 2 s 50; 2003 c 127 art 12 s 9;
1Sp2003 c 21 art 10 s 11; 2005 c 151 art 5 s 41; 2006 c 259 art 9 s 6