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Minnesota Legislature

Office of the Revisor of Statutes

469.178 TAX INCREMENT BONDING.
    Subdivision 1. Generally. Notwithstanding any other law, no bonds, payment for which tax
increment is pledged, shall be issued in connection with any project for which tax increment
financing has been undertaken except as authorized in this section. The proceeds from the bonds
shall be used only in accordance with section 469.176, subdivisions 4 to 4l, as if the proceeds
were tax increment, except that a tax increment financing plan need not be adopted for any project
for which tax increment financing has been undertaken prior to August 1, 1979, pursuant to
laws not requiring a tax increment financing plan. The bonds are not included for purposes of
computing the net debt of any municipality.
    Subd. 2. Municipality's general obligation bonds. A municipality may issue general
obligation bonds to finance any expenditure by the municipality or an authority the jurisdiction of
which is wholly or partially within that municipality, pursuant to section 469.176, subdivision
4
, in the same manner and subject only to the same conditions as those provided in chapter 475
for bonds financing improvement costs reimbursable from special assessments. Any pledge of
tax increment, assessments, or other revenues for the payment of the principal of and interest
on general obligation bonds issued under this subdivision, except when the authority and the
municipality are the same, shall be made by written agreement by and between the authority and
the municipality and filed with the county auditor. When the authority and the municipality are
the same, the municipality may by covenant pledge tax increment, assessments, or other revenues
for the payment of the principal of and interest on general obligation bonds issued under this
subdivision and shall file the resolution containing the covenant with the county auditor. When
tax increment, assessments, and other revenues are pledged, the estimated collections of the tax
increment, assessments, and other revenues so pledged may be deducted from the taxes otherwise
required to be levied before the issuance of the bonds under section 475.61, subdivision 1, or
the collections thereof may be certified annually to reduce or cancel the initial tax levies in
accordance with section 475.61, subdivision 1 or 3.
    Subd. 3. Authority's general obligation bonds. When the authority and the municipality
are not the same, an authority may, by resolution, authorize, issue, and sell its general obligation
bonds to finance any expenditure which that authority is authorized to make by section 469.176,
subdivision 4
. The bonds of the authority shall be authorized by its resolution and shall mature
as determined by resolution of the authority in accordance with sections 469.174 to 469.178.
The bonds may be issued in one or more series and shall bear the date or dates, bear interest at
the rate or rates, be in the denomination or denominations, be in the form, either coupon or
registered, carry the conversion or registration privileges, have the rank or priority, be executed in
the manner, be payable in medium of payment at the place or places, and be subject to the terms
of redemption, with or without premium, as the resolution, its trust indenture, or mortgage may
provide. The bonds may be sold at public or private sale at the price or prices the authority by
resolution shall determine. Notwithstanding any provision of law to the contrary, the bonds
shall be fully negotiable. In any suit or proceedings involving the validity of enforceability of
any bonds of the authority or the security therefor, any bond reciting in substance that it has
been issued by the authority to aid in financing a project shall be conclusively deemed to have
been issued for that purpose, and the tax increment financing district within the project shall
be conclusively deemed to have been planned, located, and carried out in accordance with the
purposes and provisions of sections 469.174 to 469.178. Neither the authority, nor any director,
commissioner, council member, board member, officer, employee, or agent of the authority nor
any person executing the bonds shall be liable personally on the bonds by reason of the issuance
thereof. The bonds of the authority shall not be a debt of any municipality, the state, or any
political subdivision thereof, and neither the municipality nor the state or any political subdivision
thereof shall be liable thereon, nor shall the bonds be payable out of any funds or properties other
than those of the authority and any tax increment and revenues of a tax increment financing
district pledged therefor; the bonds shall state this on their face.
    Subd. 4. Authority's revenue bonds. Notwithstanding any other law, an authority may,
by resolution, authorize, issue, and sell revenue bonds payable solely from all or a portion
of revenues, including tax increment revenues and assessments, derived from a tax increment
financing district located wholly or partially within the municipality to finance any expenditure
that the authority is authorized to make by section 469.176, subdivision 4. The bonds shall mature
as determined by resolution of the authority in accordance with sections 469.174 to 469.178 and
may be issued in one or more series. The bonds shall bear the date or dates, bear interest at
the rate or rates, be in the denomination or denominations, be in the form, either coupon or
registered, carry the conversion or registration privileges, have the rank or priority, be executed in
the manner, be payable in medium of payment at the place or places, and be subject to the terms
of redemption, with or without premium, as the resolution, its trust indenture, or mortgage may
provide. The bonds may be sold at public or private sale at the price or prices the authority by
resolution determines, and any provision of any law to the contrary notwithstanding, shall be fully
negotiable. In any suit or proceedings involving the validity or enforceability of any bonds of the
authority or the security therefor, any bond reciting in substance that it has been issued by the
authority to aid in financing a project shall be conclusively deemed to have been issued for that
purpose, and the tax increment financing district within the project shall be conclusively deemed
to have been planned, located, and carried out in accordance with the purposes and provisions
of sections 469.174 to 469.178. Neither the authority, nor any director, commissioner, council
member, board member, officer, employee, or agent of the authority nor any person executing the
bonds shall be liable personally on the bonds by reason of their issuance. The bonds may be further
secured by a pledge and mortgage of all or any portion of the district in aid of which the bonds are
issued and by covenants the authority deems by resolution to be necessary and proper to secure
payment of the bonds. The bonds shall not be payable from nor charged upon any funds other
than the revenues and property pledged or mortgaged to the payment thereof, nor shall the issuing
authority be subject to any liability thereon or have the powers to obligate itself to pay or pay the
bonds from funds other than the revenues and properties pledged and mortgaged, and no holder or
holders of the bonds shall ever have the right to compel any exercise of any taxing power of the
issuing authority or any other public body, other than as is permitted or required under sections
469.174 to 469.178 and pledged hereunder, to pay the principal of or interest on the bonds, nor to
enforce payment thereof against any property of the authority or other public body other than that
expressly pledged or mortgaged for the payment thereof; the bonds shall state this on their face.
    Subd. 5. Temporary bonds. (a) In anticipation of the issuance of bonds pursuant to
subdivision 2, 3, or 4, the authority or municipality may by resolution issue and sell temporary
bonds pursuant to subdivision 2, 3, or 4, maturing within three years from their date of issue, to
pay any part or all of the cost of a project. To the extent that the principal of and interest on the
temporary bonds cannot be paid when due from receipts of tax increment, assessments, or other
funds appropriated for the purpose, they shall be paid from the proceeds of long-term bonds or
additional temporary bonds that the authority or municipality offers for sale in advance of the
maturity date of the temporary bonds, but the indebtedness funded by an issue of temporary bonds
shall not be extended by the issue of additional temporary bonds for more than six years from the
date of the first issue. Long-term bonds may be issued pursuant to subdivision 2, 3, or 4 without
regard to whether the temporary bonds were issued pursuant to subdivision 2, 3, or 4. If general
obligation temporary bonds are issued pursuant to subdivision 2, proceeds of long-term bonds or
additional temporary bonds not yet sold may be treated as pledged revenues, in reduction of the
tax otherwise required by section 475.61 to be levied prior to delivery of the obligations. Subject
to the six-year maturity limitation contained above, but without regard to the requirement of
section 475.58, if any temporary bonds are not paid in full at maturity, in addition to any other
remedy authorized or permitted by law, the holders may demand that the authority or municipality
issue pursuant to subdivision 2, 3, or 4 as the temporary bonds and in exchange for the temporary
bonds, at par, replacement temporary bonds dated as of the date of the replaced temporary bonds,
maturing within one year from the date of the replacement temporary bonds and earning interest
at the rate set forth in the resolution authorizing the issuance of the replaced temporary bonds,
provided that the rate shall not exceed the maximum rate permitted by law at the date of issue of
the replaced temporary bonds. The authority or municipality shall do so upon demand.
(b) Funds of a municipality may be invested in its temporary bonds in accordance with
the provisions of section 118A.04, and may be purchased upon their initial issue, but shall be
purchased only from funds which the governing body of the municipality determines will not
be required for other purposes before the maturity date, and shall be resold before maturity only
in case of emergency. If purchased from a debt service fund securing other bonds, the holders
of those bonds may enforce the municipality's obligations on the temporary bonds in the same
manner as if they held the temporary bonds.
    Subd. 6. When bond allocation act applies. Sections 474A.01 to 474A.21 apply to any
issuance of obligations under this section that are subject to limitation under a federal tax law
as defined in section 474A.02, subdivision 8.
    Subd. 7. Interfund loans. The authority or municipality may advance or loan money to
finance expenditures under section 469.176, subdivision 4, from its general fund or any other
fund under which it has legal authority to do so. The loan or advance must be authorized, by
resolution of the governing body or of the authority, whichever has jurisdiction over the fund from
which the advance or loan is made, before money is transferred, advanced, or spent, whichever is
earliest. The resolution may generally grant to the authority the power to make interfund loans
under one or more tax increment financing plans or for one or more districts. The terms and
conditions for repayment of the loan must be provided in writing and include, at a minimum, the
principal amount, the interest rate, and maximum term. The maximum rate of interest permitted
to be charged is limited to the greater of the rates specified under section 270C.40 or 549.09 as
of the date or advance is made, unless the written agreement states that the maximum interest
rate will fluctuate as the interest rates specified under section 270C.40 or 549.09 are from time to
time adjusted.
History: 1987 c 291 s 179; 1996 c 399 art 2 s 12; 2000 c 260 s 66; 1Sp2001 c 5 art 15 s 21;
2003 c 127 art 10 s 21; 2005 c 151 art 2 s 17; 2005 c 152 art 2 s 20; 2006 c 259 art 9 s 9