2006 Minnesota Statutes

CHAPTER 475. DEBT OF DEFINED MUNICIPALITIES

475.01 [Repealed, 1949 c 682 s 26]

475.02 [Repealed, 1949 c 682 s 26]

475.03 [Renumbered 475.51]

475.04 [Superseded by 475.03]

475.05 [Repealed, 1947 c 296 s 6]

475.06 [Repealed, 1947 c 296 s 6]

475.07 [Renumbered 475.55]

475.08 [Superseded by 475.31]

475.09 [Repealed, 1947 c 296 s 6]

475.091 [Repealed, 1947 c 296 s 6]

475.10 [Repealed, 1947 c 296 s 6]

475.11 [Renumbered 475.56]

475.12 [Renumbered 475.71]

475.13 [Superseded]

475.14 [Renumbered 475.52]

475.15 [Repealed, 1949 c 682 s 26]

475.16 [Repealed, 1949 c 682 s 26]

475.17 [Repealed, 1949 c 682 s 26]

475.18 [Renumbered 475.65]

475.19 [Renumbered 475.69]

475.20 [Renumbered 475.70]

475.21 [Renumbered 475.64]

475.22 [Renumbered 471.69]

475.23 [Renumbered 475.53]

475.24 [Renumbered 475.54]

475.25 [Renumbered 475.58]

475.26 [Repealed, 1949 c 682 s 26]

475.27 [Renumbered 475.62]

475.28 [Renumbered 475.63]

475.29 [Repealed, 1949 c 682 s 26]

475.30 [Renumbered 475.66]

475.31 [Repealed, 1949 c 682 s 26]

475.32 [Renumbered 475.72]

475.33 [Renumbered 471.70]

475.34 [Renumbered 475.67]

475.35 [Repealed, 1949 c 682 s 26]

475.36 [Superseded]

475.37 [Superseded]

475.38 [Superseded]

475.39 [Repealed, 1949 c 682 s 26]

475.40 [Repealed, 1949 c 682 s 26]

475.41 [Renumbered 475.68]

475.42 [Repealed, 1949 c 682 s 26]

475.43 [Repealed, 1949 c 682 s 26]

475.51 DEFINITIONS.
    Subdivision 1. Terms. For the purposes of this chapter, the terms defined in this section
shall have the meanings given them.
    Subd. 2. Municipality. "Municipality" means a city of any class, county, town, or school
district.
    Subd. 3. Obligation. "Obligation" means any promise to pay a stated amount of money at a
fixed future date or upon demand of the obligee, regardless of the source of funds to be used for
its payment, made for the purpose of incurring debt, including the purchase of property through
an installment purchase contract or any other deferred payment agreement, for which funds are
not appropriated in the current year's budget.
    Subd. 4. Net debt. "Net debt" means the amount remaining after deducting from its gross
debt the amount of current revenues which are applicable within the current fiscal year to the
payment of any debt and the aggregate of the principal of the following:
(1) Obligations issued for improvements which are payable wholly or partly from the
proceeds of special assessments levied upon property specially benefited thereby, including those
which are general obligations of the municipality issuing them, if the municipality is entitled to
reimbursement in whole or in part from the proceeds of the special assessments.
(2) Warrants or orders having no definite or fixed maturity.
(3) Obligations payable wholly from the income from revenue producing conveniences.
(4) Obligations issued to create or maintain a permanent improvement revolving fund.
(5) Obligations issued for the acquisition, and betterment of public waterworks systems,
and public lighting, heating or power systems, and of any combination thereof or for any other
public convenience from which a revenue is or may be derived.
(6) Debt service loans and capital loans made to a school district under the provisions of
sections 126C.68 and 126C.69.
(7) Amount of all money and the face value of all securities held as a debt service fund for
the extinguishment of obligations other than those deductible under this subdivision.
(8) Obligations to repay loans made under section 216C.37.
(9) Obligations to repay loans made from money received from litigation or settlement of
alleged violations of federal petroleum pricing regulations.
(10) Obligations issued to pay pension fund liabilities under section 475.52, subdivision
6 , or any charter authority.
(11) Obligations issued to pay judgments against the municipality under section 475.52,
subdivision 6 , or any charter authority.
(12) All other obligations which under the provisions of law authorizing their issuance are
not to be included in computing the net debt of the municipality.
    Subd. 5. Net tax capacity. "Net tax capacity" means the latest valuation for purposes of
taxation, as finally equalized, of all property taxable within the municipality.
    Subd. 6. Debt service fund. "Debt service fund" means any money and investments in
the treasury of a municipality appropriated to pay the principal, interest, or premiums for the
redemption of any of its obligations. "Sinking fund" means debt service fund. A separate balance
sheet need not be maintained for any debt service fund, and the fund need not be segregated from
other funds of the municipality in a separate bank deposit account or in a separate investment fund
or account, unless so provided in a resolution or other instrument securing obligations payable
from the debt service fund; but a separate bookkeeping account or accounts shall be maintained in
the official financial records of the municipality reflecting all receipts and disbursements of money
and investments of principal and income appropriated for the purposes of each debt service fund.
    Subd. 7. Acquisition. "Acquisition" includes purchase, condemnation, construction, and
acquisition of necessary land, easements, buildings, structures, machinery or equipment.
    Subd. 8. Betterment. "Betterment" includes reconstruction, extension, improvement, repair,
remodeling, lighting, equipping, and furnishing.
    Subd. 9. Governing body. "Governing body" means the board, council, commission, or
other body of the municipality charged with the general control of its financial affairs; provided,
that where any charter or law confers bond issuing power on a particular board or body of a
municipality, such board or body is the governing body under the provisions of sections 475.51
to 475.74.
    Subd. 10. General obligations. "General obligations" means any obligations which pledge
the full faith and credit of the municipality to their payment.
    Subd. 11. Reporting dealer to the Federal Reserve Bank of New York. "Reporting dealer
to the Federal Reserve Bank of New York" means a securities broker-dealer licensed pursuant to
chapter 80A, or an affiliate thereof, which makes primary markets in United States government
securities and reports daily to the Federal Reserve Bank of New York its position with respect
to such securities held by it and amounts borrowed thereon.
    Subd. 12. Reverse repurchase agreement. "Reverse repurchase agreement" means an
obligation incurred by a municipality to repurchase at a fixed future date and price a security
sold by it to a financial institution on the date of the agreement, or another security identical
as to the issuer, source of payment, principal amount, interest rate, maturity, and redemption
provisions. The principal amount of the obligation is the sale price of the security, excluding any
accrued interest thereon paid to the municipality. The interest payable by the municipality on
the obligation is the difference between the sale price and the repurchase price of the security,
excluding any accrued interest thereon received by the financial institution.
    Subd. 13. Other governmental unit. "Other governmental unit" means any public
corporation, authority, governmental unit, or other political subdivision of the state of Minnesota
that is not a municipality.
    Subd. 14. Bond reinvestment program. "Bond reinvestment program" means a program
under which a municipality, either directly or through an agent employed for the purpose, offers
and sells its obligations to the holders of other obligations of the municipality. These offers and
sales are directed at the reinvestment in new obligations of funds derived from maturing principal
and interest and may also include offers and sales of additional newly issued obligations in
addition to the reinvestment of principal and interest paid or to be paid on outstanding obligations
and provision for the temporary investment of funds received for the purchase of new obligations
in tax-exempt securities pending the issuance of the new obligations.
History: (1936) RL s 778; 1943 c 656 s 30 subd 3; 1947 c 296 s 2; 1949 c 682 s 1; 1951 c
422 s 1; 1961 c 752 s 8; 1971 c 903 s 1; 1973 c 123 art 5 s 7; 1974 c 380 s 1; 1976 c 324 s 1,2,26;
1977 c 259 s 1; 1978 c 674 s 41; 1987 c 289 s 4; 1987 c 312 art 1 s 10; 1987 c 344 s 17; 1988 c
719 art 5 s 84; 1989 c 329 art 13 s 20; 1989 c 355 s 15,16; 1990 c 562 art 11 s 6; 1995 c 256 s
24; 1996 c 399 art 2 s 11; 1997 c 7 art 1 s 158; 1998 c 397 art 11 s 3; 2005 c 152 art 1 s 23

475.52 BOND ISSUES; PURPOSES.
    Subdivision 1. Statutory cities. Any statutory city may issue bonds or other obligations
for the acquisition or betterment of public buildings, means of garbage disposal, hospitals,
nursing homes, homes for the aged, schools, libraries, museums, art galleries, parks, playgrounds,
stadia, sewers, sewage disposal plants, subways, streets, sidewalks, warning systems; for any
utility or other public convenience from which a revenue is or may be derived; for a permanent
improvement revolving fund; for changing, controlling or bridging streams and other waterways;
for the acquisition and betterment of bridges and roads within two miles of the corporate limits;
for the acquisition of development rights in the form of conservation easements under chapter
84C; and for acquisition of equipment for snow removal, street construction and maintenance,
or fire fighting. Without limitation by the foregoing the city may issue bonds to provide money
for any authorized corporate purpose except current expenses.
    Subd. 2. Home rule charter cities. Any city governed by a home rule charter may issue
bonds for any purpose enumerated in subdivision 1 unless forbidden by its charter, except
that any such city may issue bonds for the acquisition of ambulances and related equipment
notwithstanding the provisions of its charter; and for other purposes as authorized by its charter.
    Subd. 3. Counties. Any county may issue bonds for the acquisition or betterment of
courthouses, county administrative buildings, health or social service facilities, correctional
facilities, law enforcement centers, jails, morgues, libraries, parks, and hospitals, for roads and
bridges within the county or bordering thereon and for road equipment and machinery and for
ambulances and related equipment; for the acquisition of development rights in the form of
conservation easements under chapter 84C, and for capital equipment for the administration and
conduct of elections providing the equipment is uniform countywide, except that the power of
counties to issue bonds in connection with a library shall not exist in Hennepin County.
    Subd. 4. Towns. Any town may issue bonds for the acquisition and betterment of town halls,
town roads and bridges, nursing homes and homes for the aged, and for acquisition of equipment
for snow removal, road construction or maintenance, and fire fighting; for the acquisition of
development rights in the form of conservation easements under chapter 84C; and for the
acquisition and betterment of any buildings to house and maintain town equipment.
    Subd. 5. School districts. For capital improvements any school district may issue bonds for
the acquisition or betterment of school facilities, including gymnasiums, athletic fields, stadia,
teacherages, school garages, school buses, and all other facilities for administration, academic
instruction, and physical and vocational education.
    Subd. 6. Certain purposes. Any municipality may issue bonds for paying judgments against
it; for refunding outstanding bonds; for funding floating indebtedness; or for funding all or part
of the municipality's current and future unfunded liability for a pension or retirement fund or
plan referred to in section 356.20, subdivision 2, as those liabilities are most recently computed
pursuant to sections 356.215 and 356.216. The board of trustees or directors of a pension fund or
relief association referred to in section 69.77 or chapter 422A must consent and must be a party
to any contract made under this section with respect to the fund held by it for the benefit of
and in trust for its members.
History: (1942) RL s 784; 1907 c 297 s 1; 1909 c 261 s 1; 1921 c 209 s 2; 1939 c 223 s 1;
1945 c 126 s 1; 1947 c 296 s 4; 1949 c 682 s 2; 1959 c 42 s 2,3; 1961 c 51 s 1; 1967 c 583 s 4;
1969 c 333 s 5,6; 1973 c 123 art 5 s 7; 1974 c 69 s 1; 1976 c 324 s 3; 1978 c 743 s 17; 1985
c 109 s 15; 1Sp1985 c 14 art 8 s 49; 1986 c 314 s 2; 1988 c 519 s 3; 1995 c 256 s 25; 1999 c
243 art 5 s 39-41; 2005 c 152 art 1 s 24-26

475.521 CAPITAL IMPROVEMENT BONDS.
    Subdivision 1. Definitions. For purposes of this section, the following terms have the
meanings given.
(a) "Bonds" mean an obligation defined under section 475.51.
(b) "Capital improvement" means acquisition or betterment of public lands, buildings or other
improvements for the purpose of a city hall, town hall, library, public safety facility, and public
works facility. An improvement must have an expected useful life of five years or more to qualify.
Capital improvement does not include light rail transit or any activity related to it, or a park, road,
bridge, administrative building other than a city or town hall, or land for any of those facilities.
(c) "Municipality" means a home rule charter or statutory city or a town described in section
368.01, subdivision 1 or 1a.
    Subd. 2. Election requirement. (a) Bonds issued by a municipality to finance capital
improvements under an approved capital improvements plan are not subject to the election
requirements of section 475.58. The bonds must be approved by an affirmative vote of three-fifths
of the members of a five-member governing body. In the case of a governing body having
more or less than five members, the bonds must be approved by a vote of at least two-thirds of
the members of the governing body.
(b) Before the issuance of bonds qualifying under this section, the municipality must publish
a notice of its intention to issue the bonds and the date and time of the hearing to obtain public
comment on the matter. The notice must be published in the official newspaper of the municipality
or in a newspaper of general circulation in the municipality. Additionally, the notice may be
posted on the official Web site, if any, of the municipality. The notice must be published at least
14 but not more than 28 days before the date of the hearing.
(c) A municipality may issue the bonds only after obtaining the approval of a majority of
the voters voting on the question of issuing the obligations, if a petition requesting a vote on
the issuance is signed by voters equal to five percent of the votes cast in the municipality in
the last general election and is filed with the clerk within 30 days after the public hearing. The
commissioner of revenue shall prepare a suggested form of the question to be presented at the
election.
    Subd. 3. Capital improvement plan. (a) A municipality may adopt a capital improvement
plan. The plan must cover at least a five-year period beginning with the date of its adoption. The
plan must set forth the estimated schedule, timing, and details of specific capital improvements by
year, together with the estimated cost, the need for the improvement, and sources of revenue to
pay for the improvement. In preparing the capital improvement plan, the governing body must
consider for each project and for the overall plan:
(1) the condition of the municipality's existing infrastructure, including the projected need
for repair or replacement;
(2) the likely demand for the improvement;
(3) the estimated cost of the improvement;
(4) the available public resources;
(5) the level of overlapping debt in the municipality;
(6) the relative benefits and costs of alternative uses of the funds;
(7) operating costs of the proposed improvements; and
(8) alternatives for providing services most efficiently through shared facilities with other
municipalities or local government units.
(b) The capital improvement plan and annual amendments to it must be approved by the
governing body after public hearing.
    Subd. 4. Limitations on amount. A municipality may not issue bonds under this section if
the maximum amount of principal and interest to become due in any year on all the outstanding
bonds issued under this section, including the bonds to be issued, will equal or exceed 0.16
percent of the taxable market value of property in the municipality. Calculation of the limit must
be made using the taxable market value for the taxes payable year in which the obligations are
issued and sold. In the case of a municipality with a population of 2,500 or more, the bonds are
subject to the net debt limits under section 475.53. In the case of a shared facility in which more
than one municipality participates, upon compliance by each participating municipality with the
requirements of subdivision 2, the limitations in this subdivision and the net debt represented
by the bonds shall be allocated to each participating municipality in proportion to its required
financial contribution to the financing of the shared facility, as set forth in the joint powers
agreement relating to the shared facility. This section does not limit the authority to issue bonds
under any other special or general law.
    Subd. 5. Application of this chapter. Bonds to finance capital improvements qualifying
under this section must be issued under the issuance authority in this chapter and the provisions of
this chapter apply, except as otherwise specifically provided in this section.
History: 2003 c 127 art 12 s 16; 1Sp2003 c 21 art 10 s 11; 2005 c 152 art 1 s 27-30

475.525 MUNICIPAL DISTRICT HEATING BONDS.
    Subdivision 1. General obligation bonds. A municipality may, by resolution, authorize,
issue and sell general obligation bonds or obligations to finance any expenditure by the
municipality for the acquisition, construction, expansion, modification or operation of a district
heating system and for the purpose of loaning the proceeds of the bonds or obligations to any
person, firm or public or private corporation to acquire, construct, expand or modify a district
heating system. Except with regard to the net debt limit as provided in section 465.74, subdivision
4 , the general obligation bonds or obligations authorized by this subdivision shall be authorized,
issued and sold in the same manner and subject only to the same conditions as those provided in
chapter 475. When revenues from the operation of a district heating system are pledged to the
repayment of the bonds or obligations, the estimated collections of said revenues so pledged may
be deducted from the taxes otherwise required to be levied before the issuance of the bonds
or obligations 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. 2. Revenue bonds. Notwithstanding any other law, general or special, or the
provisions of any home rule charter to the contrary, a municipality may, by resolution, authorize,
issue and sell revenue bonds or obligations payable solely from all or a portion of revenues
derived from a district heating system located wholly or partially within a municipality to finance
the acquisition, construction, expansion, modification, or operation of a district heating system
and for the purpose of loaning the proceeds of the bonds or obligations to any person, firm or
public or private corporation to acquire, construct, expand or modify a district heating system.
The bonds or obligations shall mature as determined by resolution of the municipality and may
be issued in one or more series and shall bear such date or dates, bear interest at such rate or
rates, be in such denomination or denominations, be in such form either coupon or registered,
carry such conversion or registration privileges, have such rank or priority, be executed in such
manner, be payable in medium of payment at such place or places, and be subject to such terms of
redemption, with or without premium, as such resolution, its trust indenture or mortgage may
provide. The bonds or obligations may be sold at public or private sale at the price or prices as
the municipality by resolution shall determine, and any provision of any law to the contrary
notwithstanding, shall be fully negotiable. In any suit, action, or proceedings involving the
validity or enforceability of any bonds or obligations of the municipality or the security therefor,
any bond or obligation reciting in substance that it has been issued by the municipality to aid in
the acquisition, construction, expansion, modification or operation of a district heating system
shall be conclusively deemed to have been issued for such purpose. Neither the municipality nor
any council member, officer, employee or agent of the municipality nor any person executing
the bonds or obligations shall be liable personally on the bonds or obligations by reason of the
issuance thereof. The bonds or obligations may be further secured by a pledge and mortgage of
all or any portion of the property in aid of which the bonds or obligations are issued and such
covenants as the municipality shall deem by such resolution to be necessary and proper to secure
payment of the bonds or obligations. The bonds or obligations, and the bonds or obligations
shall so state on their face, 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
municipality be subject to any liability thereon or have the powers to obligate itself to pay or
pay the bonds or obligations from funds other than the revenues and properties pledged and
mortgaged and no holder or holders of the bonds or obligations shall ever have the right to compel
any exercise of any taxing power of the issuing municipality or any other public body to pay
the principal of or interest on any such bonds or obligations, nor to enforce payment thereof
against any property of the municipality or other public body other than that expressly pledged or
mortgaged for the payment thereof.
    Subd. 3. Redevelopment agency. A municipality may itself, or by ordinance authorize any
redevelopment agency as defined in section 469.153, subdivision 3, acting for the municipality,
to exercise any and all of the powers granted to the municipality under subdivision 2 and to the
redevelopment agency under any other law for the purpose of financing all or any portion of the
district heating system and any conversion facilities for modifying the user's heating or water
system to use the heat energy converted from the steam or hot water furnished by the district
heating system including, but without limitation, the payment of interest during construction and
for a reasonable time thereafter and the establishment of reserves for bond payment and for
working capital, in which event if the issuer is a redevelopment agency the sources of revenue
that may be pledged to the payment of revenue bonds or obligations shall include any revenues
of the redevelopment agency. The proceeds of bonds or obligations issued by the municipality
or redevelopment agency may be used to make or purchase loans for facilities which the issuer
estimates will require such financing, and, for the purpose of making or purchasing such loans the
issuer shall have power to enter into loan agreements and other related agreements, both before
and after the issuance of the obligations, with such persons, firms, public or private corporations,
federal or state agencies, governmental units, and under such terms and conditions as the issuer
shall deem appropriate; and any governmental unit in the state shall have the power to apply,
contract for, and receive the loans without limitation under any other provisions of this chapter.
History: 1981 c 334 s 7; 1Sp1981 c 4 art 4 s 4,5; 1987 c 291 s 239

475.53 LIMIT ON NET DEBT.
    Subdivision 1. Generally. Except as otherwise provided in sections 475.51 to 475.74, no
municipality, except a school district or a city of the first class, shall incur or be subject to a net
debt in excess of two percent of the market value of taxable property in the municipality.
    Subd. 2.[Repealed, 1Sp1981 c 4 art 1 s 193]
    Subd. 3. Cities first class. Unless its charter permits a greater net debt a city of the first class
may not incur a net debt in excess of two percent of the market value of all taxable property
therein. If the charter of the city permits a net debt of the city in excess of two percent of its
valuation, it may not incur a net debt in excess of 3-2/3 percent of the market value of the taxable
property therein.
The county auditor, at the time of preparing the tax list of the city, shall compile a statement
setting forth the total net tax capacity and the total market value of each class of taxable property
in such city for such year.
    Subd. 4. School districts. Except as otherwise provided by law, no school district shall be
subject to a net debt in excess of 15 percent of the actual market value of all taxable property
situated within its corporate limits, as computed in accordance with this subdivision. The county
auditor of each county containing taxable real or personal property situated within any school
district shall certify to the district upon request the market value of all such property. Whenever
the commissioner of revenue, in accordance with section 127A.48, subdivisions 1 to 6, has
determined that the net tax capacity of any district furnished by county auditors is not based upon
the market value of taxable property in the district, the commissioner of revenue shall certify to
the district upon request the ratio most recently ascertained to exist between such value and the
actual market value of property within the district. The actual market value of property within a
district, on which its debt limit under this subdivision is based, is (a) the value certified by the
county auditors, or (b) this value divided by the ratio certified by the commissioner of revenue,
whichever results in a higher value.
    Subd. 5. Certain independent school districts. No independent school district located
wholly or partly within a city of the first class shall issue obligations with a term of more than two
years, whenever the aggregate of the outstanding obligations of the district equals or exceeds 0.7
percent of the market value of the taxable property within the school district.
    Subd. 6. Portion of expenditure for technical college. Only that proportion of the principal
amount of obligations issued by a school district or districts for the acquisition or betterment of a
technical college equal to the percentage of the total principal amount of the obligations which is
or would be currently borne by the district, shall be included in calculating the district's net debt.
The commissioner of education shall certify to each district upon request the current percentage
of the total principal amount of the obligations which is or would be borne by the district, which
certification shall be conclusive in favor of the holders of the obligations as against the district.
    Subd. 7. Adjustment of debt limits. If the amount of debt a municipality may incur is
limited by special law or city charter to a stated percentage or proportion of assessed value,
the limit must be calculated as a percentage or proportion of tax capacity. The percentage or
proportion provided in the special law or charter provision must be multiplied by 8.2 to determine
the applicable percentage or proportion of gross tax capacity and must be multiplied by 10.2 to
determine the applicable percentage or proportion of net tax capacity.
    Subd. 8. Debt limit reservation. A municipality may, by ordinance, reserve a portion of its
unencumbered debt limit for the purpose of providing proof of financial responsibility for the
contingency action portion of the response costs at a solid waste disposal facility, subject to the
rules adopted by the Pollution Control Agency under section 116.07, subdivision 4h. Reservation
of a portion of a municipality's debt limit under this subdivision may not be revoked by the
municipality until the expiration of the required time period for maintaining proof of financial
responsibility or the municipality adopts and adequately funds, as of the date of implementation,
an alternate method of financial responsibility under the rules of the agency, whichever occurs
earlier. If the municipality reserves its debt limit under this subdivision, the debt limit is computed
as if the municipality had issued obligations, subject to the limit, in the amount of the reservation
specified in the ordinance. Notwithstanding the amount of market value in the municipality,
the reserved amount of the limit is available for issuance of bonds to pay the municipality's
response costs.
History: (1938-4) 1927 c 131 s 2; 1935 c 256; 1937 c 285 s 1; 1943 c 480 s 1; 1945 c 549 s
1; 1947 c 296 s 5; 1949 c 682 s 3; 1955 c 304 s 1; 1955 c 356 s 1; 1955 c 656 s 1; 1957 c 879 s 1;
1961 c 560 s 37; 1965 c 875 s 11; 1969 c 6 s 46; 1969 c 1056 s 10; 1971 c 480 s 1; 1973 c 582 s
3; 1974 c 380 s 2-6; 1979 c 303 art 7 s 14; 1981 c 358 art 1 s 48; 1984 c 593 s 42-44; 1987 c 258
s 12; 1987 c 268 art 7 s 54; 1988 c 719 art 5 s 65,84; 1989 c 1 s 7-9; 1989 c 246 s 2; 1989 c 277
art 2 s 65; 1989 c 329 art 15 s 20; 1990 c 604 art 10 s 21; 1994 c 614 s 16; 1Sp1995 c 3 art 16 s
13; 1997 c 7 art 1 s 159; 1998 c 397 art 11 s 3; 1Sp2001 c 5 art 2 s 26; 2003 c 130 s 12

475.533 [Repealed, 1969 c 1056 s 11]

475.54 MATURITIES; REDEMPTION.
    Subdivision 1. In installments; exception; annual limit. Except as provided in subdivision
3, 5a, 15, or 17, or as expressly authorized in another law, all obligations of each issue shall
mature or be subject to mandatory sinking fund redemption in installments, the first not later than
three years and the last not later than 30 years from the date of the issue; or 40 years or the
useful life of the asset, whichever is less, for municipal water and wastewater treatment systems
and essential community facilities financed or guaranteed by the United States Department of
Agriculture. No amount of principal of the issue payable in any calendar year shall exceed an
amount equal to the smallest amount payable in any preceding calendar year ending three years or
more after the issue date multiplied:
(1) by five, in the case of obligations maturing not later than 25 years from the date of
issue; and
(2) by six, in the case of obligations maturing 25 years or later from the date of issue.
    Subd. 2. Schedule; refunding. A serial maturity schedule conforming to subdivision 1 may
be established for each new issue of obligations of a municipality, or the governing body may
in its discretion adjust such schedule so that the combined maturities of the new issue and any
other designated issue or issues will conform to subdivision 1, provided that all such issues are
general obligations or all are payable from a common fund. Notwithstanding the provisions of
any other general or special law, any school district having an outstanding state loan or loans, if
it issues and sells bonds on the public market for any purpose other than refunding such loans,
or refunding outstanding bonds as provided in this subdivision shall adjust the schedule of the
maturities thereof so that the total amount of principal and interest to become due on these bonds
and on all other bonds of the school district, during each of the 30 fiscal or calendar years next
following, will be as nearly equal as practicable, provided that the annual amounts of maturing
principal may be fixed at multiples of $5,000. A school district which has an outstanding state
loan or loans may refund outstanding bonds, provided that the school loan committee established
in section 126C.67 approves such refunding. The committee shall approve refunding outstanding
bonds only if such refunding results in lower annual debt service payments than the district
made prior to the refunding.
    Subd. 3. Maturities if paid from special fund. Obligations payable solely from a special
fund, for payment of which the full faith and credit of the issuer is not pledged, may mature at any
time or times within 30 years from date of issue, (40 years or the useful life of the asset, whichever
is less, if for municipal water and wastewater treatment systems and essential community facilities
financed or guaranteed by the United States Department of Agriculture) if the receipts pledged to
the fund are estimated by the governing body to be sufficient and are irrevocably appropriated first
to pay annual or semiannual interest on all obligations payable from the fund and to provide such
reserve as may be agreed upon for the security of interest payments, and then to retire a specified
portion of the principal in each year according to a schedule of redemption and prepayment which
conforms to the requirements for the maturity schedule of other obligations in subdivision 1.
    Subd. 4. Redemption. Any obligation may be issued reserving the right of redemption and
payment thereof prior to maturity, at par and accrued interest or at such premium and at such time
or times as shall be determined by the governing body. Notice of the call of any prepayable
obligation shall be published in a daily or weekly periodical published in a Minnesota city of the
first class, or its metropolitan area, which circulates throughout the state and furnishes financial
news as a part of its service; provided that published notice of the call need not be given if
the obligation is in registered form and notice has been mailed to the registered holder of the
obligation. When any such obligation has been validly called for redemption in accordance with
its terms, and the principal thereof and all interest thereon to the date of redemption have been
paid or deposited with the paying agent, interest thereon shall cease; provided that no obligation
issued subsequent to July 1, 1967, shall be deemed validly called for redemption unless the notice
herein required has been published or so mailed prior to the date fixed for its redemption. If actual
notice of the call has been given through a different means of communication, the holder of an
obligation may waive published or mailed notice.
    Subd. 5.[Repealed, 1971 c 903 s 6]
    Subd. 5a. Tender. Any obligation may be issued giving its owner the right to tender, or
the municipality to demand tender of, the obligation to the municipality or another person
designated by it, for purchase at a specified time or times, if the municipality has first entered into
an agreement with a suitable financial institution obligating the financial institution to provide
funds on a timely basis for purchase of bonds tendered. The obligation shall not be deemed to
mature on any tender date, within the meaning of subdivision 1, and the purchase of a tendered
obligation shall not be deemed a payment or discharge of the obligation by the municipality.
Obligations tendered for purchase may be remarketed by or on behalf of the municipality or any
other purchaser. The municipality may enter into agreements deemed appropriate to provide
for the purchase and remarketing of tendered obligations, including provisions under which
undelivered obligations may be deemed tendered for purchase and new obligations may be
substituted for them, provisions for the payment of charges of tender agents, remarketing agents,
and financial institutions extending lines of credit or letters of credit assuring repurchase, and for
reimbursement of advances under letters of credit, which charges and reimbursements may be
paid from the proceeds of the obligations or from tax and other revenues appropriated for the
payment and security of the obligations, and similar or related provisions.
    Subd. 6.[Repealed, 1971 c 903 s 6]
    Subd. 6a. Foreign currency obligations. Any obligation issued as part of a series in a
principal amount of $25,000,000 or more may be payable in currency other than currency of the
United States if at the time of issue of the obligation the municipality enters into an agreement
with a bank or dealer described in section 118A.06, that provides for payments to the municipality
in the foreign currency at the times and in the amounts necessary to pay principal and interest on
the obligations when due and payable in the foreign currency and corresponding payments by the
municipality in United States currency of a determinate amount or amounts and at the times the
agreement specifies. For purposes of chapter 475, the outstanding amount of the municipality's
obligations payable in a foreign currency is the principal component of all remaining payments to
be made by the municipality in United States currency under the agreement and the amount or
rate of interest on the obligations is the interest component of the payments.
    Subd. 7.[Repealed, 1971 c 903 s 6]
    Subd. 8.[Repealed, 1971 c 903 s 6]
    Subd. 9.[Repealed, 1971 c 903 s 6]
    Subd. 10.[Repealed, 1971 c 903 s 6]
    Subd. 11.[Repealed, 1971 c 903 s 6]
    Subd. 12.[Repealed, 1971 c 903 s 6]
    Subd. 13.[Repealed, 1971 c 903 s 6]
    Subd. 14.[Repealed, 1971 c 903 s 6]
    Subd. 15. If pay secured by investment. For purposes of determining the amount of
principal that may be payable in any calendar year under subdivision 1, any principal payment
obligation secured by an investment, the face amount of which is equal to or greater than the
amount of principal, may be disregarded if the investment matures or is callable by the holder
thereof on or before the maturity date of the principal.
    Subd. 16. Pact for interest rate exchange. A municipality may enter into an agreement
for an exchange of interest rates pursuant to this subdivision if the agreement either is with or
is guaranteed by a party whose equivalent obligations are rated A+ or better by a nationally
recognized rating agency. A municipality with outstanding obligations or a municipality which
has determined to issue obligations it is authorized to issue may agree to pay sums equal to interest
at a fixed rate or at a variable rate determined pursuant to a formula set out in the agreement on an
amount not exceeding the outstanding principal amount of the obligations at the time of payment,
in exchange for an agreement by the counterparty to pay sums equal to interest on a like amount
at a fixed rate or a variable rate determined pursuant to a formula set out in the agreement or to
provide for an interest rate cap or floor. The agreement to pay the counterparty is not an obligation
of the municipality as defined in section 475.51, subdivision 3. For purposes of calculation of a
debt service levy, determination of a rate of interest on a special assessment or other calculation
based on the rate of interest on an obligation, a municipality which has entered into an interest rate
swap agreement described in this subdivision may determine to treat the amount or rate of interest
on the obligation as the net rate or amount of interest payable after giving effect to the swap
agreement. Subject to any applicable bond covenants, the municipality may pledge to the payment
of amounts due or to become due under the swap agreement, including termination payments,
sources of payment pledged or available to pay debt service on the obligations with respect to
which the swap agreement was made or from any other available source of the municipality. A
municipality may issue obligations under section 475.67 to provide for any payment, including a
termination payment, due or to become due under a swap agreement.
    Subd. 17. Maturities if primary source sufficient, irrevocable. Obligations payable
primarily from a source other than ad valorem taxes may mature at any time or times within 30
years after the date of issue, if the governing body estimates that the primary source of payment
is sufficient to pay when due the principal of and interest on the obligations and if the primary
source of payment is irrevocably appropriated to payment of the obligations.
History: (1938-5) 1927 c 131 s 3; 1949 c 682 s 4; 1951 c 422 s 2; 1955 c 179 s 1; 1959 c 687
s 11; Ex1959 c 27 s 11; 1963 c 825 s 1; 1965 c 435 s 1,2; 1967 c 481 s 1,2; 1967 c 583 s 5; 1975 c
432 s 83; 1Sp1985 c 14 art 8 s 50,51; 1987 c 344 s 20-22; 1988 c 702 s 9,10; 1989 c 355 s 17,18;
1994 c 614 s 17; 1996 c 297 s 2,3; 1996 c 399 art 2 s 12; 1998 c 397 art 11 s 3; 2001 c 214 s 42

475.55 EXECUTION; NEGOTIABILITY; INTEREST RATES.
    Subdivision 1. Form. All obligations shall be securities as provided in the Uniform
Commercial Code, chapter 336, article 8, may be issued as certificated securities or as
uncertificated securities, and if issued as certificated securities may be issued in bearer form or
in registered form, as defined in section 336.8-102. The validity of an obligation shall not be
impaired by the fact that one or more officers authorized to execute it by the governing body of
the municipality shall have ceased to be in office before delivery to the purchaser or shall not
have been in office on the formal issue date of the obligation. Every obligation, as to certificated
securities, or transaction statement, as to uncertificated securities, shall be signed manually by
one officer of the municipality or by a person authorized to act on behalf of a bank or trust
company, located in or outside of the state, which has been designated by the governing body
of the municipality to act as authenticating agent. Other signatures and the seal of the issuer
may be printed, lithographed, stamped, or engraved thereon and on any interest coupons to be
attached thereto. The seal need not be used. A municipality may do all acts and things which are
permitted or required of issuers of securities under the Uniform Commercial Code, chapter
336, article 8, and may designate a corporate registrar to perform on behalf of the municipality
the duties of a registrar as set forth in those sections. Any registrar shall be an incorporated
bank or trust company, located in or outside of the state, authorized by the laws of the United
States or of the state in which it is located to perform the duties. If obligations are issued as
uncertificated securities, and a law requires or permits the obligations to contain a statement or
recital, whether on their face or otherwise, it shall be sufficient compliance with the law that the
statement or recital is contained in the transaction statement or in an ordinance, resolution, or
other instrument which is made a part of the obligation by reference in the transaction statement
as provided in section 336.8-202.
    Subd. 1a. Interest. Interest on obligations issued after April 1, 1986, is not subject to any
limitation on rate or amount.
    Subd. 2. Supersession. The provisions of this section shall supersede any maximum interest
rate fixed by any other law or a city charter with respect to obligations of the state or any
municipality or governmental or public subdivision, district, corporation, commission, board,
council, or authority of whatsoever kind, including warrants or orders issued in evidence of
allowed claims for property or services furnished to the issuer.
    Subd. 3. Special assessments. Notwithstanding any contrary provisions of law or charter,
special assessments pledged to the payment of obligations may bear interest at the rate the
governing body by resolution determines, not exceeding the maximum interest rate permitted
to be charged against the assessments under the city charter pursuant to which the assessments
were levied.
    Subd. 4. Rate determination. On or before the 20th day of each month, the commissioner
of finance shall determine the most recently published yield for the Bond Buyer's Index of 20
Municipals. This rate plus one percent and rounded to the next highest percent per annum
shall be the rate for the next succeeding month for the purpose set forth in subdivision 7. The
commissioner of finance shall publish the maximum rate in the State Register each month.
    Subd. 5.[Repealed, 1987 c 344 s 37]
    Subd. 6. Registration data private. All information contained in any register maintained by
a municipality or by a corporate registrar with respect to the ownership of municipal obligations is
nonpublic data as defined in section 13.02, subdivision 9, or private data on individuals as defined
in section 13.02, subdivision 12. The information is not public and is accessible only to the
individual or entity that is the subject of it, except if disclosure:
(1) is necessary for the performance of the duties of the municipality or the registrar;
(2) is requested by an authorized representative of the state commissioner of revenue or
attorney general or of the commissioner of internal revenue of the United States for the purpose of
determining the applicability of a tax;
(3) is required under section 13.03, subdivision 4; or
(4) is requested at any time by the corporate trust department of a bank or trust company
acting as a tender agent pursuant to documents executed at the time of issuance of the obligations
to purchase obligations described in section 475.54, subdivision 5a, or obligations to which a
tender option has been attached in connection with the performance of such person's duties as
tender agent, or purchaser of the obligations.
A municipality or its agent may use the information in a register for purposes of offering
obligations under a bond reinvestment program.
    Subd. 7. Assumed maximum interest rate for other laws. If an obligation is not subject to
a maximum interest rate pursuant to subdivision 1, paragraph (1) and another law provides for a
calculation of a debt service levy, determination of a rate of interest on a special assessment, or
other factor based on an assumption that a maximum interest rate applies to the obligation, the
governing body of the municipality may estimate or determine an assumed maximum interest rate
for purposes of that law. If the municipality does not determine, specify or estimate the maximum
interest rate for such purpose, then the maximum interest rate for purposes of the other law is the
interest rate determined by the commissioner of finance under subdivision 4. This subdivision
does not limit the interest rate that may be paid on obligations under subdivision 1a.
    Subd. 8. Bond reinvestment programs. In connection with a bond reinvestment program,
the governing body may by resolution delegate to any appropriate officer of the municipality
authority to establish from time to time the interest rate or rates, subject to limitations imposed by
law, on such obligations and other terms of obligations issued under a bond reinvestment program.
Obligations issued under a bond reinvestment program may be in any denomination as determined
by the governing body or an officer acting pursuant to delegation from the governing body.
History: (1939) RL s 781; 1947 c 296 s 3; 1949 c 682 s 5; 1951 c 422 s 3; 1969 c 93 s 1;
1971 c 903 s 2; 1976 c 324 s 4; 1980 c 607 art 8 s 2; 1982 c 523 art 3 s 2; 1982 c 642 s 19; 1984
c 563 s 2-4; 1986 c 465 art 2 s 18,19; 1987 c 344 s 23-29; 1989 c 355 s 19,20

475.551 EXCESSIVE INTEREST, VALIDATION.
In all cases where obligations have been or shall hereafter be issued and sold upon terms and
conditions conforming to the provisions of section 475.55, and otherwise in conformity with law,
such issuance and sale are hereby authorized, legalized and validated.
History: 1969 c 93 s 2

475.552 [Repealed, 1971 c 903 s 6]

475.553 PAYING AGENT; DESTRUCTION OF OBLIGATIONS AND COUPONS.
    Subdivision 1. Principal office within issuer's area; exception. The governing body
may appoint as paying agent for an issue of obligations one or more national banks, or banks
incorporated under the laws of any state, provided that no bank shall be appointed as paying agent
for obligations of any issuer except one within whose corporate limits the principal office of the
bank is situated, unless it is authorized to execute corporate trust powers pursuant to the laws
under which it is organized; and the governing body may direct the treasurer to remit funds for
payment of both principal and interest to such paying agent although such paying agent has not
complied with statutes relating to public depositories. It may also direct the county treasurer
to remit any proceeds from assessments or taxes levied for payment of obligations directly to
such paying agent. In such case, the county treasurer shall furnish a duplicate statement of each
remittance to the treasurer of the municipality who shall enter the amount on the treasury's books.
    Subd. 2. Agreement with bank. The governing body may by resolution direct that all bonds,
obligations, coupons appertaining thereto, or any specified obligations or coupons, when paid,
shall be canceled by the paying agent and destroyed as herein provided. Before such authority
is granted, the municipality shall enter into an agreement with a bank or banking association
incorporated under the laws of the United States or of any state and authorized by such laws to
exercise corporate trust powers, specifying (a) the obligations and coupons to be destroyed, (b)
the method of destruction, (c) the information to be recorded in a certificate of destruction to be
delivered to the municipality and the paying agent, (d) the indemnification of the municipality in
the event of duplicate payment, wrongful and improper payment to unauthorized persons and
nonpayment to authorized persons occurring as a result of any destruction of bonds, obligations,
or coupons, and (e) such other terms and conditions as may be determined by the governing body
of such municipality. Obligations and coupons may be destroyed by cremation, shredding, or
any other effective means.
    Subd. 3. Certificates of destruction. Certificates provided under subdivision 2 shall be
retained in the official records of the municipality and the paying agent. Such certificates may
subsequently be destroyed at the times and upon the conditions otherwise permitted by law, but
no earlier than the time of final payment and redemption of all obligations of the respective
issues to which they pertain.
    Subd. 4.[Repealed, 1976 c 324 s 27]
    Subd. 5. Officers have powers of body; state auditors requirements; other law. Any
obligation, as defined in section 475.51, issued or to be issued by the state or any agency,
instrumentality, or subdivision thereof, by written order and agreement executed by the officer or
officers authorized by law to issue such obligations, may be destroyed as provided herein, and
for this purpose such officers shall have all the powers granted herein to governing bodies of
municipalities. The state auditor, pursuant to the Administrative Procedure Act, may formulate
and prescribe requirements for resolutions, orders, agreements, and certificates relating to the
destruction of public obligations and coupons. The provisions of any other law relating to the
destruction of public records shall not apply to the destruction of obligations and coupons.
History: 1951 c 422 s 10; 1953 c 64 s 1; 1963 c 833 s 1; 1973 c 492 s 7; 1976 c 324 s
5-8; 1986 c 444

475.56 INTEREST RATE.
(a) Any municipality issuing obligations under any law may issue obligations bearing
interest at a single rate or at rates varying from year to year which may be lower or higher in later
years than in earlier years. Such higher rate for any period prior to maturity may be represented
in part by separate coupons designated as additional coupons, extra coupons, or B coupons, but
the highest aggregate rate of interest contracted to be so paid for any period shall not exceed the
maximum rate authorized by law. Such higher rate may also be represented in part by the issuance
of additional obligations of the same series, over and above but not exceeding two percent of the
amount otherwise authorized to be issued, and the amount of such additional obligations shall not
be included in the amount required by section 475.59 to be stated in any bond resolution, notice,
or ballot, or in the sale price required by section 475.60 or any other law to be paid; but if the
principal amount of the entire series exceeds its cash sale price, such excess shall not, when added
to the total amount of interest payable on all obligations of the series to their stated maturity dates,
cause the average annual rate of such interest to exceed the maximum rate authorized by law. This
section does not authorize a provision in any such obligations for the payment of a higher rate of
interest after maturity than before.
(b) Any municipality issuing obligations under any law may sell original issue discount
obligations having a stated principal amount in excess of the authorized amount and the sale
price, provided that:
(1) the sale price does not exceed by more than two percent the amount of obligations
otherwise authorized to be issued;
(2) the underwriting fee, discount, or other sales or underwriting commission does not
exceed two percent of the sale price; and
(3) the discount rate necessary to present value total principal and interest payments over the
term of the issue to the sale price does not exceed the lesser of the maximum rate permitted by
law for municipal obligations or ten percent.
(c) Any obligation may bear interest at a rate varying periodically at the time or times and on
the terms, including convertibility to a fixed rate of interest, determined by the governing body of
the municipality, but the rate of interest for any period shall not exceed any maximum rate of
interest for the obligations established by law. For purposes of section 475.61, subdivisions 1
and 3 , the interest payable on variable rate obligations for their term shall be determined as if
their rate of interest is the lesser of the maximum rate of interest payable on the obligations in
accordance with their terms or the rate estimated for such purpose by the governing body, but if
the interest rate is subsequently converted to a fixed rate the levy may be modified to provide
at least five percent in excess of amounts necessary to pay principal of and interest at the fixed
rate on the obligations when due. For purposes of computing debt service or interest pursuant
to section 475.67, subdivision 12, interest throughout the term of bonds issued pursuant to this
subdivision is deemed to accrue at the rate of interest first borne by the bonds. The provisions
of this paragraph do not apply to general obligations issued by a statutory or home rule charter
city with a population of less than 7,500, as defined in section 477A.011, subdivision 3, or
to general obligations that are not rated A or better, or an equivalent subsequently established
rating, by Standard and Poor's Corporation, Moody's Investors Service or other similar nationally
recognized rating agency, except that any statutory or home rule charter city, regardless of
population or bond rating, may issue variable rate obligations as a participant in a bond pooling
program established by the league of Minnesota cities that meets this bond rating requirement.
History: (1938-2 1/2) 1933 c 171; 1949 c 682 s 6; 1959 c 36 s 1; 1963 c 829 s 1; 1967 c 481
s 3; 1974 c 380 s 7; 1Sp1985 c 14 art 8 s 52; 1986 c 465 art 2 s 20; 1987 c 344 s 30; 1999 c
248 s 13; 2000 c 493 s 16

475.561 TAXABLE STATUS; SPECIAL PROVISIONS.
    Subdivision 1. Increase or decrease in interest. (a) Obligations may be issued which
provide, if interest on the obligations is determined under the terms of the obligations to be subject
to federal income taxation, for an increase in the rate of interest payable on the obligations, from
the date of issuance or another date, to a rate provided under the terms of the obligations.
(b) If the municipality issues obligations it intends to be exempt from federal income taxation
but bond counsel cannot provide an opinion that the interest on the obligations will be exempt
from federal income taxation under pending legislation or regulations existing or proposed with
retroactive effect or otherwise, the municipality may provide for the obligations to bear interest at
a rate that will decrease, if the obligations are subsequently determined to be exempt from federal
income taxation, to a rate and from a date to be determined under the provisions of the obligations.
(c) For purposes of section 475.61, subdivisions 1 and 3, the increase or decrease in interest
rate permitted by this subdivision need not be taken into account until the increase or decrease
occurs. Upon occurrence of the increase or decrease, the levy must be modified to provide at least
five percent in excess of the amount necessary to pay principal and interest at the new rate of
interest on the obligations.
    Subd. 2. Arbitrage rebate. A municipality may, from the proceeds of bonds, investment
earnings, or any other available money of the municipality, pay to the United States or an officer,
department, agency or instrumentality of the United States a rebate of excess earnings payment
required by federal law to maintain the interest as tax exempt. A covenant to make a payment
or payments pursuant to this subdivision is not an obligation of the municipality as defined in
section 475.51, subdivision 3.
    Subd. 3. Prepayment or purchase of bonds. A municipality that issues obligations it intends
to be exempt from federal income taxation may agree to prepay or purchase the obligations (a) at
the time and in the amount it determines necessary or desirable to maintain the obligations as
exempt from federal income taxation or (b) upon a determination that the obligations are taxable.
A municipality may make arrangements to have money available with which to purchase or
prepay the obligations as the municipality determines necessary or desirable. If arrangements are
made with a financial institution pursuant to section 475.54, subdivision 5a or this subdivision and
if the municipality owes the financial institution money under the arrangement, the agreement
to pay the financial institution is not an obligation of the municipality as defined in section
475.51, subdivision 3, unless and until the amount to be paid or reimbursed is determined and
becomes due and payable, whereupon, the obligation is, as provided by the agreement, a general
or special obligation of the municipality, and may also be paid from the proceeds of refunding
bonds issued pursuant to this chapter. The agreement may not be or become a general obligation
of the municipality unless the underlying, originally issued obligation was a general obligation
of the municipality. For purposes of section 475.61, subdivisions 1 and 3, money necessary to
make the purchase or prepayment are not amounts needed to meet when due principal and interest
payments on the obligations.
    Subd. 4. Ratification. This section is, in part, remedial in nature. Obligations issued prior to
March 26, 1986 are not invalid or unenforceable for providing terms, consequences or remedies
that are authorized by this section.
History: 1986 c 465 art 2 s 22

475.57 INITIATION OF PROCEEDINGS; RESOLUTION.
Proceedings for issuing bonds under sections 475.51 to 475.74 shall be initiated by a
resolution of the governing body of the municipality stating the amount proposed to be borrowed
and the purpose for which the debt is to be incurred. Such resolution may provide for the
submission of the question to vote of the electors. A town board may adopt such resolution
without a statement for special town meeting being filed with the clerk.
History: 1949 c 682 s 7; 1997 c 7 art 1 s 160

475.58 OBLIGATIONS; ELECTIONS TO DETERMINE ISSUE.
    Subdivision 1. Approval by electors; exceptions. Obligations authorized by law or charter
may be issued by any municipality upon obtaining the approval of a majority of the electors
voting on the question of issuing the obligations, but an election shall not be required to authorize
obligations issued:
(1) to pay any unpaid judgment against the municipality;
(2) for refunding obligations;
(3) for an improvement or improvement program, which obligation is payable wholly or
partly from the proceeds of special assessments levied upon property specially benefited by the
improvement or by an improvement within the improvement program, or from tax increments, as
defined in section 469.174, subdivision 25, including obligations which are the general obligations
of the municipality, if the municipality is entitled to reimbursement in whole or in part from the
proceeds of such special assessments or tax increments and not less than 20 percent of the cost
of the improvement or the improvement program is to be assessed against benefited property or
is to be paid from the proceeds of federal grant funds or a combination thereof, or is estimated
to be received from tax increments;
(4) payable wholly from the income of revenue producing conveniences;
(5) under the provisions of a home rule charter which permits the issuance of obligations of
the municipality without election;
(6) under the provisions of a law which permits the issuance of obligations of a municipality
without an election;
(7) to fund pension or retirement fund liabilities pursuant to section 475.52, subdivision 6;
(8) under a capital improvement plan under section 373.40; and
(9) under sections 469.1813 to 469.1815 (property tax abatement authority bonds), if the
proceeds of the bonds are not used for a purpose prohibited under section 469.176, subdivision
4g , paragraph (b).
    Subd. 1a. Resubmission limitation. If the electors do not approve the issuing of obligations
at an election required by subdivision 1, the question of authorizing the obligations for the same
purpose and in the same amount may not be submitted to the electors within a period of 180 days
from the date the election was held. If the question of authorizing the obligations for the same
purpose and in the same amount is not approved a second time it may not be submitted to the
electors within a period of one year after the second election.
    Subd. 2. Funding, refunding. Any county, city, town, or school district whose outstanding
gross debt, including all items referred to in section 475.51, subdivision 4, exceed in amount 1.62
percent of its market value may issue bonds under this subdivision for the purpose of funding or
refunding such indebtedness or any part thereof. A list of the items of indebtedness to be funded
or refunded shall be made by the recording officer and treasurer and filed in the office of the
recording officer. The initial resolution of the governing body shall refer to this subdivision as
authority for the issue, state the amount of bonds to be issued and refer to the list of indebtedness
to be funded or refunded. This resolution shall be published once each week for two successive
weeks in a legal newspaper published in the municipality or if there be no such newspaper, in a
legal newspaper published in the county seat. Such bonds may be issued without the submission of
the question of their issue to the electors unless within ten days after the second publication of the
resolution a petition requesting such election signed by ten or more voters who are taxpayers of
the municipality, shall be filed with the recording officer. In event such petition is filed, no bonds
shall be issued hereunder unless authorized by a majority of the electors voting on the question.
    Subd. 3.[Expired.]
    Subd. 3a. Youth ice facilities. A municipality may, without regard to the election
requirement under subdivision 1 or under any other provision of law or home rule charter, issue
and sell obligations to refund existing debt of an indoor ice arena that is used predominantly for
youth athletic activity if all the following conditions are met:
(1) the obligations are secured by a pledge of revenues from the facility; and
(2) the governing body of the municipality finds, based on analysis provided by a
professional experienced in finance, that the facility's revenues and other available money will
be sufficient to pay the obligations, without reliance on a property tax levy or the municipality's
general purpose state aid.
    Subd. 3b. Street reconstruction. (a) A municipality may, without regard to the election
requirement under subdivision 1, issue and sell obligations for street reconstruction, if the
following conditions are met:
(1) the streets are reconstructed under a street reconstruction plan that describes the streets
to be reconstructed, the estimated costs, and any planned reconstruction of other streets in the
municipality over the next five years, and the plan and issuance of the obligations has been
approved by a vote of all of the members of the governing body following a public hearing for
which notice has been published in the official newspaper at least ten days but not more than 28
days prior to the hearing; and
(2) if a petition requesting a vote on the issuance is signed by voters equal to five percent of
the votes cast in the last municipal general election and is filed with the municipal clerk within 30
days of the public hearing, the municipality may issue the bonds only after obtaining the approval
of a majority of the voters voting on the question of the issuance of the obligations.
(b) Obligations issued under this subdivision are subject to the debt limit of the municipality
and are not excluded from net debt under section 475.51, subdivision 4.
(c) For purposes of this subdivision, street reconstruction includes utility replacement
and relocation and other activities incidental to the street reconstruction, turn lanes and other
improvements having a substantial public safety function, realignments, other modifications to
intersect with state and county roads, and the local share of state and county road projects.
(d) Except in the case of turn lanes, safety improvements, realignments, intersection
modifications, and the local share of state and county road projects, street reconstruction does
not include the portion of project cost allocable to widening a street or adding curbs and gutters
where none previously existed.
    Subd. 4. Proper use of bond proceeds. The proceeds of obligations issued after approval
of the electors under this section may only be spent: (1) for the purposes stated in the ballot
language; or (2) to pay, redeem, or defease obligations and interest, penalties, premiums, and costs
of issuance of the obligations. The proceeds may not be spent for a different purpose or for an
expansion of the original purpose without the approval by a majority of the electors voting on the
question of changing or expanding the purpose of the obligations.
History: (1938-6) 1927 c 131 s 4; 1949 c 682 s 8; 1951 c 422 s 4; 1955 c 298 s 1; 1969 c
446 s 1; 1971 c 886 s 1; 1971 c 903 s 3; 1973 c 123 art 5 s 7; 1974 c 380 s 8,9; 1Sp1985 c 14 art
8 s 53; 1988 c 519 s 4; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20; 1990 c 480 art 9 s 22; 1991
c 342 s 16; 1995 c 256 s 26,27; 1996 c 463 s 48; 1998 c 389 art 3 s 25; art 8 s 24; 1999 c 248 s
14; 2001 c 214 s 43; 1Sp2001 c 5 art 15 s 28; 2002 c 390 s 18; 2003 c 127 art 12 s 23; 1Sp2003 c
21 art 10 s 11; 2005 c 152 art 1 s 31; 2006 c 259 art 10 s 11

475.59 MANNER OF SUBMISSION; NOTICE.
When the governing body of a municipality resolves to issue bonds for any purpose requiring
the approval of the electors, it shall provide for submission of the proposition of their issuance
at a general or special election or town or school district meeting. Notice of such election or
meeting shall be given in the manner required by law and shall state the maximum amount and
the purpose of the proposed issue. In any school district, the school board or board of education
may, according to its judgment and discretion, submit as a single ballot question or as two or
more separate questions in the notice of election and ballots the proposition of their issuance
for any one or more of the following, stated conjunctively or in the alternative: acquisition or
enlargement of sites, acquisition, betterment, erection, furnishing, equipping of one or more new
schoolhouses, remodeling, repairing, improving, adding to, betterment, furnishing, equipping
of one or more existing schoolhouses. In any city, town, or county, the governing body may,
according to its judgment and discretion, submit as a single ballot question or as two or more
separate questions in the notice of election and ballots the proposition of their issuance, stated
conjunctively or in the alternative, for the acquisition, construction, or improvement of any
facilities at one or more locations.
History: 1949 c 682 s 9; 1957 c 318 s 1; 2001 c 214 s 44

475.60 SALE OF BONDS.
    Subdivision 1. Advertisement. All obligations shall be negotiated and sold by the governing
body, except when authority therefor is delegated by the governing body or by the charter of the
municipality to a board, department, or officers of the municipality. Except as provided in section
475.56, obligations shall be sold at not less than par value plus accrued interest to date of delivery
and not greater than two percent greater than the amount authorized to be issued plus accrued
interest. Except as provided in subdivision 2 all obligations shall be sold at competitive sale
after notice given as provided in subdivision 3.
    Subd. 2. Requirements waived. The requirements as to public sale shall not apply to:
(1) obligations issued under the provisions of a home rule charter or of a law specifically
authorizing a different method of sale, or authorizing them to be issued in such manner or on such
terms and conditions as the governing body may determine;
(2) obligations sold by an issuer in an amount not exceeding the total sum of $1,200,000 in
any 12-month period;
(3) obligations issued by a governing body other than a school board in anticipation of the
collection of taxes or other revenues appropriated for expenditure in a single year, if sold in
accordance with the most favorable of two or more proposals solicited privately;
(4) obligations sold to any board, department, or agency of the United States of America or
of the state of Minnesota, in accordance with rules or regulations promulgated by such board,
department, or agency;
(5) obligations issued to fund pension and retirement fund liabilities under section 475.52,
subdivision 6 , obligations issued with tender options under section 475.54, subdivision 5a,
crossover refunding obligations referred to in section 475.67, subdivision 13, and any issue of
obligations comprised in whole or in part of obligations bearing interest at a rate or rates which
vary periodically referred to in section 475.56;
(6) obligations to be issued for a purpose, in a manner, and upon terms and conditions
authorized by law, if the governing body of the municipality, on the advice of bond counsel
or special tax counsel, determines that interest on the obligations cannot be represented to be
excluded from gross income for purposes of federal income taxation;
(7) obligations issued in the form of an installment purchase contract, lease purchase
agreement, or other similar agreement;
(8) obligations sold under a bond reinvestment program; and
(9) if the municipality has retained an independent financial advisor, obligations which the
governing body determines shall be sold by private negotiation.
    Subd. 3. Published notice. The notice of sale to prospective bidders, where required, shall
specify the maximum principal amount of the obligations, the place of receipt and consideration
of bids and other details as to the obligations and terms of sale as the governing body or the
municipality's authorized financial consultant deems suitable. The notice shall either specify the
date and time for receipt of bids or specify the manner in which notice of the date or amount of
the sale will be given to prospective bidders. Notification of prospective bidders shall be given
by mail, facsimile, electronic data transmission or other form of communication common to the
municipal bond trade at least two days (omitting Saturdays, Sundays, and legal holidays) before
the date for receipt of bids to at least five firms determined by the governing body or its financial
consultant to be prospective bidders, or shall be published in a newspaper or other periodical
which circulates throughout the state and furnishes financial news as part of its service. Failure to
give the notice as described in this subdivision shall not affect the validity of the obligations. Bids
may be accepted by facsimile or other electronic transmission or in writing as specified by the
governing body or its financial consultant. The governing body may employ an agent to receive
and open the bids at any place within or outside the corporate limits of the municipality, in the
presence of an officer of the municipality or the officer's designee, but the obligations shall not
be sold except by action of the governing body or authorized officers of the municipality after
communication of the bids to them. Additional notice may be given for such time and in such
manner as the governing body deems suitable. At the time and place so fixed, the bids shall be
considered and the offer complying with the terms of sale and deemed most favorable shall
be accepted, but the governing body may reject any and all such offers, in which event, or if
no offers have been received, it may award the obligations to any person who within 30 days
thereafter presents an offer complying with the terms of sale and deemed more favorable than
any received previously, or upon like notice the governing body may invite other bids upon
the same or different terms and conditions.
    Subd. 4. Public subscription. In lieu of calling for bids, obligations may be sold on public
subscription, after notice given in the manner required for public sale. Such notice of call for
public subscription shall specify the interest rate and all terms of sale, including the date and
place of delivery of the obligations.
    Subd. 5. Compliance mandatory. No contract for the sale and delivery of obligations shall
be enforceable unless made in accordance with this section.
    Subd. 6. Prohibitions and penalties. Any officer of any municipality who shall enter into or
approve any contract or agreement for the sale of obligations contrary to the provisions hereof or
which lessens, restricts or tends to prevent competitive bidding shall be guilty of a misdemeanor.
    Subd. 7. Investment of proceeds. A municipality, after it has contracted for the sale of
obligations, may enter into a contract for the future purchase of securities described in section
118A.04, for a purchase price, including accrued interest on it, not in excess of the sale price of
the obligations, excluding accrued interest on them. The contract shall provide a settlement
date for the purchase of the securities which is not earlier than the anticipated delivery date of
the obligations.
    Subd. 8. Continuing disclosure agreements. Any officer of a municipality charged with
the responsibility of issuing bonds for or on behalf of the municipality is authorized to enter into
written agreements or contracts relating to the continuing disclosure of information necessary
to comply with, or facilitate the issuance of bonds in accordance with, federal securities laws,
rules and regulations, including securities and exchange commission rules and regulations,
section 240.15c2-12. An agreement may comprise covenants with purchasers and holders of
bonds set forth in the resolution authorizing the issuance of the bonds, or a separate document
authorized by resolution.
History: 1949 c 682 s 10; 1965 c 583 s 1; 1971 c 903 s 4; 1976 c 324 s 9,10; 1978 c 764 s
128; 1980 c 607 art 8 s 3; 1982 c 523 art 3 s 3; 1984 c 563 s 5,6; 1Sp1985 c 14 art 8 s 54; 1986 c
465 art 2 s 21; 1987 c 344 s 31; 1988 c 702 s 11; 1989 c 355 s 21-23; 1991 c 342 s 17; 1995 c 256
s 28; 1996 c 399 art 2 s 12; 1999 c 248 s 15,16

475.61 TAX LEVIES.
    Subdivision 1. Debt service resolution. The governing body of any municipality issuing
general obligations shall, prior to delivery of the obligations, levy by resolution a direct general
ad valorem tax upon all taxable property in the municipality to be spread upon the tax rolls for
each year of the term of the obligations. The tax levies for all years for municipalities other than
school districts shall be specified and such that if collected in full they, together with estimated
collections of special assessments and other revenues pledged for the payment of said obligations,
will produce at least five percent in excess of the amount needed to meet when due the principal
and interest payments on the obligations. The tax levies for school districts shall be specified and
such that if collected in full they, together with estimated collection of other revenues pledged for
the payment of the obligations, will produce five percent in excess of the amount needed to meet
when due the principal and interest payments on the obligations, rounded up to the nearest dollar;
except that, with the permission of the commissioner of education, a school board may specify
a tax levy in a higher amount if necessary either to meet an anticipated tax delinquency or for
cash flow needs to meet the required payments from the debt redemption fund. Such resolution
shall irrevocably appropriate the taxes so levied and any special assessments or other revenues so
pledged to the municipality's debt service fund or a special debt service fund or account created
for the payment of one or more issues of obligations. The governing body may, in its discretion, at
any time after the obligations have been authorized, adopt a resolution levying only a portion of
such taxes, to be filed, assessed, extended, collected, and remitted as hereinafter provided, and
the amount or amounts therein levied shall be credited against the tax required to be levied
prior to delivery of the obligations.
    Subd. 2. Filing; certification; assessment; extension. The recording officer of the
municipality shall file in the office of the county auditor of each county in which any part of the
municipality is located a certified copy of the resolution, together with full information regarding
the obligations for which the tax is levied. No further action by the municipality is required to
authorize the extension, assessment and collection of the tax, but the municipality's liability on
the obligations is not limited thereto and its governing body shall levy and cause to be extended,
assessed and collected any additional taxes found necessary for full payment of the principal and
interest. The county auditor shall forthwith certify to the municipality that the obligations have
been entered in the register required by sections 475.51 to 475.74 and that the tax levy required by
sections 475.51 to 475.74 has been made. The auditor shall annually assess and extend upon the
tax rolls the amount specified for such year in the resolution, unless the amount has been reduced
as authorized below or, if the municipality is located in more than one county, the portion thereof
which bears the same ratio to the whole amount as the net tax capacity of taxable property in
that part of the municipality located in the auditor's county bears to the net tax capacity of all
taxable property in the municipality.
    Subd. 3. Irrevocability. (a) Tax levies so made and filed shall be irrevocable, except as
provided in this subdivision.
(b) For purposes of this subdivision, "excess debt redemption fund balance" means the
greater of zero or the balance in the district's debt redemption fund as of June 30 of the fiscal year
ending in the year before the year the levy is certified, minus any debt redemption fund balance
attributable to refunding of existing bonds, minus the amount of the levy reduction for the current
year and the prior year under paragraphs (e) and (f), minus five percent of the district's required
debt service levy for the next year.
(c) By July 15 each year, a district shall report to the commissioner of education the amount
of the districts' debt redemption fund balance as of June 30 of the prior year attributable to
refunding of existing bonds.
(d) By August 15 each year, the commissioner shall determine the excess debt redemption
fund balance for each school district, and shall certify the amount of the excess balance to the
school district superintendent.
(e) In each year when a district has an excess debt redemption fund balance, the commissioner
shall reduce the tax levy otherwise to be included in the rolls next prepared by the amount certified.
(f) The school board may, with the approval of the commissioner, retain all or part of the
excess balance if it is necessary to ensure the prompt and full payment of its obligations and any
call premium on its obligations, will be used for redemption of its obligations in accordance with
their terms, or to level out the debt service tax rate, excluding the debt excess adjustment, for
its obligations over the next two years. A school district requesting authority to retain all or part
of the excess balance shall provide written documentation to the commissioner describing the
rationale for its request by September 15 including the issuance of new obligations within the
next year or the refunding of existing obligations. A school district that retains an excess may
request to transfer the excess to its operating capital account in the general fund under section
123B.80. The school board may, with the approval of the commissioner, specify a tax levy in
a higher amount if necessary because of anticipated tax delinquency or for cash flow needs to
meet the required payments from the debt redemption fund.
(g) If the governing body, including the governing body of a school district, in any year
makes an irrevocable appropriation to the debt service fund of money actually on hand or if there
is on hand any excess amount in the debt service fund, the recording officer may certify to the
county auditor the fact and amount thereof and the auditor shall reduce by the amount so certified
the amount otherwise to be included in the rolls next thereafter prepared.
    Subd. 4. Surplus funds. (a) All such taxes shall be collected and remitted to the municipality
by the county treasurer as other taxes are collected and remitted, and shall be used only for
payment of the obligations on account of which levied or to repay advances from other funds
used for such payments, except that any surplus remaining in the debt service fund when the
obligations and interest thereon are paid may be appropriated to any other general purpose by the
municipality. However, for obligations authorized before July 1, 2005, the amount of any surplus
remaining in the debt service fund of a school district when the obligations and interest thereon
are paid shall be used to reduce the general fund levies authorized pursuant to chapters 122A,
123A, 123B, 124D, and 126C and the state aids authorized pursuant to chapters 122A, 123A,
123B, 124D, 125A, 126C, and 127A. For obligations authorized on July 1, 2005, or thereafter, the
amount of any surplus remaining in the debt service fund of a school district when the obligations
and interest thereon are paid in full may be appropriated to any other general purpose by the
school district without any reduction in state aid or levies or may be used to reduce the general
fund levies authorized under chapters 122A, 123A, 123B, 124D, and 126C, and the state aids
authorized under chapters 122A, 123A, 123B, 124D, 125A, 126C, and 127A.
(b) If the district qualified for second tier debt service equalization aid in the last year that
it qualified for debt service equalization aid, the reduction to state aids equals the lesser of (1)
the amount of the surplus times the ratio of the district's second tier debt service equalization aid
to the district's second tier debt service equalization revenue for the last year that the district
qualified for debt service equalization aid; or (2) the district's cumulative amount of debt service
equalization aid.
(c) If the district did not qualify for second tier debt service equalization aid in the last year
that it qualified for debt service equalization aid, the reduction to state aids equals the lesser of
(1) the amount of the surplus times the ratio of the district's debt service equalization aid to the
district's debt service equalization revenue for the last year that the district qualified for debt
service equalization aid; or (2) the district's cumulative amount of debt service equalization aid.
(d) The reduction to the general fund levies equals the total amount of the surplus minus
the reduction to state aids.
    Subd. 5. Temporary obligations anticipating grant or loan. When all conditions exist
precedent to the offering for sale of obligations of any municipality in any amount for any purpose
authorized by law, and the municipality has applied for a grant or loan of state or federal funds to
aid in payment of cost incurred for the authorized purpose, its governing body may by resolution
issue and sell temporary obligations not exceeding the total amount authorized, maturing within
not more than three years from the date such obligations are issued. In this event so much of the
proceeds of the grant or loan when received shall be credited to the debt service fund for the
temporary obligations as may be needed for the payment thereof, with interest, when due, and
the tax which would otherwise be required by subdivision 1 need not be levied. Any amount of
the temporary obligations which cannot be paid at maturity, from the proceeds of the grant or
loan or from any other funds appropriated by the governing body for the purpose, shall be paid
from the proceeds of definitive obligations to be issued and sold before the maturity date; or if
sufficient funds are not available for payment in full of the temporary obligations at maturity,
the holders thereof shall have the right to require the issuance in exchange therefor of definitive
obligations secured in the manner provided in subdivision 1 and bearing interest at the maximum
rate permitted by law.
    Subd. 6. Other temporary obligations. When all conditions exist precedent to the offering
for sale of obligations of any municipality in any amount for any purpose authorized by law,
the governing body may issue and sell temporary obligations not exceeding the total amount
authorized, maturing in not more than three years from the date the obligations are issued, in
anticipation of the issuance of the permanent obligations. To the extent that the principal of
and interest on the temporary obligations cannot be paid when due from other sources pledged
or appropriated for the purpose, they shall be paid from the proceeds of permanent bonds or
additional temporary bonds which the governing body shall offer for sale in advance of their
maturity 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. The
holders of any temporary bonds shall have and may enforce, by mandamus or other appropriate
proceedings, all rights respecting the levy and collection of taxes that are granted by law to holders
of permanent bonds, except the right to require the levies to be collected prior to the maturity of
the temporary bonds. If any temporary bonds are not paid in full at maturity, the holders may
require the issuance in exchange for them, at par, of new temporary bonds maturing within one
year from their date of issue but not subject to any other maturity limitation, and bearing interest
at the maximum rate permitted by law. The governing body may by resolution adopted prior to the
sale of any temporary bonds pledge the full faith, credit, and taxing power of the municipality for
the payment of the principal and interest, in addition to all provisions made for their security in the
authorizing resolution. If it does so, the bonds will be designated as general obligation temporary
bonds, and the governing body shall levy taxes for their payment in accordance with this section.
Proceeds of permanent bonds or temporary bonds not yet sold may be treated as pledged
revenues, in reduction of the tax otherwise required by this section to be levied prior to delivery of
the obligations. Funds of a municipality may be invested in its temporary bonds in accordance
with section 118A.04, and may be purchased upon their initial issue, but shall be purchased only
from funds which the municipality determines will not be required for other purposes before the
maturity date, and shall be resold before maturity only in the case of an emergency.
History: 1949 c 682 s 11; 1951 c 422 s 5; 1955 c 811 s 8; 1957 c 187 s 1; 1961 c 673 s 1;
1974 c 380 s 10; 1976 c 324 s 11,26; 1977 c 447 art 7 s 27; 1982 c 548 art 4 s 16-18; 1982 c 642
s 2; 1983 c 314 art 1 s 22; art 7 s 36; 1984 c 463 art 9 s 7,8; 1986 c 444; 1987 c 268 art 6 s 52;
1988 c 486 s 93; 1988 c 719 art 5 s 84; art 6 s 17; 1989 c 329 art 13 s 20; 1991 c 265 art 8 s 13;
1993 c 224 art 5 s 40; art 8 s 12; 1994 c 647 art 5 s 16; 1995 c 256 s 29; 1Sp1995 c 3 art 16 s 13;
1996 c 399 art 2 s 12; 1997 c 7 art 1 s 161; 1998 c 397 art 11 s 3; 1Sp2001 c 6 art 5 s 9; 1Sp2003
c 9 art 4 s 22,23; 1Sp2003 c 9 art 5 s 31; 2004 c 294 art 4 s 2; 1Sp2005 c 5 art 4 s 19

475.62 REGISTER.
Each county auditor shall keep a register in which shall be entered, as to each issue of
such obligations by any municipality located, in whole or in part, in the county, a record of the
aggregate amount authorized, the aggregate amount issued, the purpose for which issued, the
number, denomination, date, and maturity of each, the rate of interest, the time of payment, the
place of payment of principal and interest, and the amount of tax levied for the payment thereof.
The auditor shall also enter in said register the date and amount of each debt service loan and
capital loan made by the state to any school district situated wholly or partly within the county, in
accordance with section 126C.68, subdivision 2, or 126C.69, subdivision 12, and shall enter on or
before November 1 in each year thereafter the amount of the maximum effort debt service levy
and the additional amount of the levy for interest on state loans to be extended on the tax rolls in
that year, as certified by the commissioner of education in accordance with sections 126C.68,
subdivision 4 , and 126C.69, subdivision 14. In each such year the auditor shall extend on the tax
rolls against all taxable property within each such district either (a) the aggregate amount of all
tax levies required by section 475.61 to be so extended in such year, less the principal amount of
any new debt service loan granted in the current year, or (b) the maximum effort debt service levy
of the district as certified by the commissioner of education, if greater than the levy required by
the preceding clause (a); adding in either case (c) the amount of the levy for interest on state loans
as certified by the commissioner of education, including interest on any new debt service loan
granted in the current year. If the school district is situated in more than one county, the aggregate
levy shall be apportioned among the counties as provided in section 475.61, subdivision 2, by
the county auditor of the county in which is situated the largest portion by net tax capacity of
the taxable property within the school district.
History: (1938-8) 1927 c 131 s 6; 1949 c 682 s 12; 1965 c 875 s 12; 1988 c 719 art 5 s
84; 1989 c 329 art 13 s 20; 1990 c 562 art 11 s 7; 1Sp1995 c 3 art 16 s 13; 1998 c 397 art 11
s 3; 2003 c 130 s 12

475.63 CERTIFICATE AS TO REGISTRATION.
Before any obligations payable in whole or in part from taxes shall be delivered to the
purchaser, the municipality shall obtain and deliver to the purchaser a certificate of the county
auditor that the issue has been entered on the register. If a tax levy is required by law, such
certificate shall also recite that such tax has been levied as required by law.
History: (1938-9) 1927 c 131 s 7; 1949 c 682 s 13; 1951 c 422 s 6; 1986 c 444; 1995
c 256 s 30

475.64 LEVY BY AUDITOR.
In the event no method of levying a tax for the payment of the indebtedness of any
municipality and the interest thereon is provided, or the municipal authorities fail to cause such
levy to be made, the county auditor shall add to the other taxes charged upon the property taxable
in the municipality an amount sufficient to meet such obligations when due, which additional levy
shall be extended and collected with the other taxes of the year.
History: (1945) RL s 787; 1949 c 682 s 14

475.65 DELIVERY OF BONDS; USE OF PROCEEDS.
Upon payment to the treasurer of the purchase price by the successful bidder, the obligations
shall be delivered, and the treasurer shall account for the receipt and disbursement of the proceeds
thereof for the use named in the resolution or other instrument or instruments authorizing such
obligations, in a separate fund or account in the official financial records of the municipality.
Pending such use the proceeds may be invested and reinvested in accordance with law, and the
income and gain therefrom shall be held as part of the proceeds and applied to such use or to the
payment of the obligations and interest thereon or otherwise as provided in any city charter or any
other law. The purchaser shall not be obligated to see to the application of the purchase price.
When the use authorized is the acquisition or betterment of any land, easements, buildings,
structures, machinery, or equipment, the proceeds may be used to pay all expenses, incurred and
to be incurred, which are reasonably necessary and incidental to such acquisition or betterment,
including, but without limitation, the cost of necessary professional planning studies to determine
desirable locations, architectural, engineering, legal, financial advisory, and other professional
services, printing and publication, and interest to accrue on the obligations prior to the anticipated
date of commencement of the collection of taxes or special assessments to be levied or other
funds pledged for the payment of the obligations and interest thereon. When the obligations are
payable wholly from the income from a utility or other project, for the acquisition or betterment
of which the obligations are issued, the proceeds may be used in part to establish a reserve as
further security for the payment of such principal and interest when due. If the contemplated use
be afterward abandoned, or if any balance of the proceeds of the obligations remains after the use
is accomplished, or if the governing body determines that at least 85 percent of the cost of the
use has been paid or finally determined and retains in the fund an amount sufficient to pay the
estimated costs of completion, the remainder of the fund may be devoted to any other public use
authorized by law, and approved by resolution adopted or vote taken in the manner required to
authorize bonds for such new use and purpose. Any balance remaining after the improvement has
been completed and paid for, unless devoted to a new use as herein authorized, shall become a
part of the debt service fund of the municipality.
History: (1944) RL s 786; 1949 c 682 s 15; 1967 c 481 s 4; 1969 c 183 s 1; 1976 c 324 s
12,26; 1983 c 365 s 3

475.66 [Repealed, 1996 c 399 art 1 s 11]

475.67 REFUNDING BONDS, OTHER OBLIGATIONS; VALIDITY; PROCEDURE.
    Subdivision 1. Resolution conclusive as to validity. No purchaser or owner of bonds or
other obligations issued by a municipality for the purpose of refunding its outstanding obligations
or floating indebtedness need inquire into the validity of the debts refunded by such bonds or
other obligations. The determination by resolution of the governing body to issue the bonds or
other obligations of the municipality for such purpose, as to such purchaser or owner, shall be
conclusive evidence of the validity of the debts thereby refunded.
    Subd. 2. Invalid not made valid. As between the municipality and the owner or holder
of any bond, warrant, or order so refunded, nothing in this section validates any invalid bond,
warrant, or order.
    Subd. 3. Refunding conditions. (a) Any or all obligations and interest thereon may be
refunded if and when and to the extent that for any reason the taxes or special assessments,
revenues, or other funds appropriated for their payment are not sufficient to pay all principal and
interest due or about to become due thereon.
(b) Any or all obligations of one or more issues regardless of their source of payment and
interest thereon may be refunded before their due dates, if:
(1) consistent with covenants made with the holders thereof; and
(2) determined by the governing body to be necessary or desirable:
(i) for the reduction of debt service cost to the municipality; or
(ii) for the extension or adjustment of the maturities in relation to the resources available
for their payment; or
(iii) for the issuance of obligations bearing a fixed rate of interest in the case of obligations
bearing interest at a rate varying periodically; or
(iv) in the case of obligations payable solely from a special fund, for the more advantageous
sale of additional obligations payable from the same fund or to relieve the municipality of
restrictions imposed by covenants made with the holders of the obligations to be refunded.
(c) The amount of interest which may be refunded from the proceeds of the refunding
obligations shall not exceed the amount of proceeds estimated to be required in excess of the
principal amount of refunded obligations to retire the refunded obligations in accordance with
subdivision 6.
(d) No general obligations, for which the full faith and credit of the issuer is pledged, shall
be issued to refund special obligations previously issued for any purpose, payable solely from a
special fund, unless the issuance is authorized by the election, hearing, petition, resolution, or
other procedure that would have been required as a condition precedent to the original issuance
of general obligations for the same purpose.
    Subd. 4. Deadline for refunding obligations; conditions. Refunding obligations shall not
be issued and sold more than six months before the date on which all obligations to be refunded
thereby will have matured or have been called for redemption in accordance with their terms,
unless the actions and conditions described in the following subdivisions of this section are taken
or exist at or before the time when the refunding obligations are delivered to the purchasers.
    Subd. 5. Deposits. The proceeds of the refunding obligations, less any accrued interest or
premium thereon required to be taken into account for purposes of meeting the debt service
savings test set forth in subdivision 12 or otherwise deposited in the debt service fund established
for the refunding obligations, less any amount set aside to pay the expenses of the refunding
described in subdivision 12, shall be deposited, together with any other funds available and
appropriated by the governing body for the purpose, in escrow with a suitable banking institution
within or without the state, whose deposits are insured by the Federal Deposit Insurance
Corporation, and whose combined capital and surplus is not less than $500,000.
    Subd. 6. Investment. The funds so deposited shall be invested in securities maturing or
callable at the option of the holder on such dates and bearing interest at such rates as shall be
required to provide funds sufficient, with any cash retained in the escrow account, to pay when
due the interest to accrue on each obligation refunded to its maturity or, if prepayable and called
for redemption, the earlier date on which it is called for redemption, and to pay the principal
amount of each such obligation at maturity or, if prepayable and called for redemption, at such
earlier redemption date, and to pay any premium required for redemption on that date; and the
governing body shall irrevocably appropriate for these purposes the escrow account and all
payments of principal and interest on the securities deposited therein, provided that any funds in
the escrow account in excess of the amounts from time to time needed for the foregoing purposes
may be remitted to the municipality.
    Subd. 7. Notice of call. Provision shall be made for notice of the call of any refunded
obligations to be redeemed before maturity to be given in accordance with their terms, and
in accordance with section 475.54, subdivision 4, no later than 30 days after issuance of the
refunding obligations.
    Subd. 8. Escrow account securities. Securities purchased for the escrow account shall be
limited to:
(a) general obligations of the United States, securities whose principal and interest payments
are guaranteed by the United States, and securities issued by the following agencies of the United
States: Banks for Cooperatives, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks, and the Federal National Mortgage Association; or
(b) obligations issued or guaranteed by any state or any political subdivision of a state, which
at the date of purchase are rated the highest or the next highest rating given by Standard and Poor's
Corporation, Moody's Investors Service, or a similar nationally recognized rating agency, but not
less than the rating on the refunded bonds immediately prior to the refunding.
    Subd. 9. Escrow agent agreement. The municipality shall enter into an agreement with
the banking institution acting as escrow agent under which the agent shall acknowledge receipt
of the cash and securities and their sufficiency to comply with the requirements of this section,
and shall agree to hold them, and all money received in payment of principal and interest on the
securities, in a special trust account, and to remit from this account to each paying agent for
the refunded obligations sufficient funds to pay the principal and interest due thereon at each
maturity, interest payment date, and redemption date. The agent may be directed to reinvest the
balance held in the account from time to time in other securities of the kinds authorized in this
section, maturing or subject to redemption at the times and in the amounts required to meet all
payments of principal and interest when due on the refunded obligations, which securities may be
purchased from its own investment department at prices not higher than those at which similar
securities are currently being sold by it to others.
    Subd. 10. Republication; failure. The escrow agent shall be directed to cause notice of the
call of the refunded obligations which are to be prepaid to be republished not more than 90 nor
less than 45 days before the date fixed for their redemption, in the manner provided in subdivision
7; but failure to republish shall not affect the validity of the call for redemption.
    Subd. 11.[Repealed, 1987 c 344 s 37]
    Subd. 12. Additional conditions. In the refunding of general obligations, for which the full
faith and credit of the issuing municipality has been pledged, the following additional conditions
shall be observed: each such obligation, if repayable, shall be called for redemption prior to its
maturity in accordance with its terms no later than either (i) the earliest date on which it may be
redeemed without payment of any premium, or (ii) if the obligation is only prepayable with
payment of a premium, on the earliest date on which it may be redeemed with payment of the
least premium required by its terms. No refunding obligations shall be issued and sold more than
six months before the refunded obligations mature or are called for redemption in accordance
with their terms, unless either (i) as a result of the refunding the average life of the maturities is
extended at least three years or (ii) as of the nominal date of the refunding obligations the present
value of the dollar amount of the debt service on the refunding obligations, computed to their
stated maturity dates, after deducting any premium, is lower by at least three percent than the
present value of the dollar amount of debt service, on all general obligations refunded, exclusive
of any premium, computed to their stated maturity dates; provided that in computing the dollar
amount of debt service on the refunding obligations, any expenses of the refunding payable
from a source other than the proceeds of the refunding obligations or the interest derived from
the investment thereof shall be added to the dollar amount of debt service on the refunding
obligations. For purposes of this subdivision, the present value of the dollar amount of debt
service means the dollar amount of debt service to be paid, discounted to the nominal date of the
refunding obligations at a rate equal to the yield on the refunding obligations. Expenses of the
refunding include the amount, if any, in excess of the proceeds of the refunding obligations or
the principal amount of obligations to be refunded, whichever is the greater, which is required to
be deposited in escrow to provide cash and purchase securities sufficient to retire the refunded
obligations and unaccrued interest thereon in accordance with subdivision 6; charges of the
escrow agent and of the paying agent for the refunding obligations; and expenses of printing and
publications and of fiscal, legal, or other professional service necessarily incurred in the issuance
of the refunding obligations.
    Subd. 13. Crossover refunding obligations. Crossover refunding obligations may be issued
by a municipality without regard to the limitations in subdivisions 4 to 10. The proceeds of
crossover refunding obligations, less any proceeds applied to payment of the costs of their
issuance, shall be deposited in a debt service fund irrevocably appropriated to the payment of
principal of and interest on the refunding obligations until the date the proceeds are applied
to payment of the obligations to be refunded. The debt service fund shall be maintained as an
escrow account with a suitable financial institution within or without the state and amounts in it
shall be invested in securities described in subdivision 8 or in an investment contract or similar
agreement with a bank or insurance company meeting the requirements of section 118A.05,
subdivision 5 . Excess proceeds, if any, of the tax levy pursuant to section 475.61, subdivision 1,
made with respect to the obligations to be refunded, and any other available amounts, may be
deposited in the escrow account. In the resolution authorizing the issuance of crossover refunding
obligations, the governing body may pledge to their payment any source of payment of the
obligations to be refunded. The resolution may provide that the refunding obligations are payable
solely from the escrow account prior to the date scheduled for payment of the obligations to be
refunded and that the obligations to be refunded shall not be discharged if the amounts on deposit
in the escrow account on that date are insufficient. Subdivision 12 applies to crossover refunding
obligations, but the present value of debt service on the refunding and refunded obligations
shall be determined as of the date the proceeds are applied to payment of the obligations to be
refunded. Subject to section 475.61, subdivision 3, in the case of general obligation bonds, taxes
shall be levied pursuant to section 475.61 and appropriated to the debt service fund in the amounts
needed, together with estimated investment income of the debt service fund and any other
revenues available upon discharge of the obligations refunded, to pay when due the principal of
and interest on the refunding obligations. The levy so imposed may be reduced by earnings to be
received from investments on hand in the debt service fund to the extent the applicable recording
officer certifies to the county auditor that the earnings are expected to be received in amounts
and at such times as to be sufficient, together with the remaining levy, to satisfy the purpose of
the levy requirements under section 475.61.
History: (1946-1, 1946-2) 1921 c 185 s 1,2; 1933 c 232 s 2; 1949 c 682 s 17; 1971 c 903 s
5; 1973 c 494 s 13; 1976 c 324 s 14,15; 1978 c 521 s 1; 1Sp1985 c 14 art 8 s 55,56; 1987 c 344 s
33,34; 1988 c 702 s 13,14; 1991 c 342 s 19; 1993 c 271 s 6,7; 1996 c 399 art 2 s 12

475.68 JOINT LIABILITY OF TOWN AND STATUTORY CITY.
In the event a town and a statutory city are jointly liable for the payment of any bonded
indebtedness or in the event all the property within any town or statutory city is liable to be taxed
for the payment of any such indebtedness, any such town or statutory city, at the time bonds
mature, may pay that proportion of such indebtedness that the amount of the last assessment
of property situate in the town or the statutory city bears to the net tax capacity of both the
town and the statutory city. If either the town or the statutory city deems such assessment to
be inequitable, its governing body may demand, in writing, that the commissioner of revenue
appoint a disinterested assessor, not a resident of either the town or the statutory city, to make
a reassessment of all the property situate in the town and the statutory city. Thereupon the
commissioner shall appoint such assessor. The reassessment so made governs in the division of
such indebtedness. Any such town or statutory city may issue bonds for the payment of the
amount thereof for which it is liable.
History: (1953) 1909 c 254 s 1; 1949 c 682 s 18; 1973 c 123 art 5 s 7; 1973 c 582 s 3;
1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20

475.69 DEFACED BONDS; DUPLICATES.
When any obligation of a municipality becomes unfit for circulation, it may be surrendered
and canceled. Upon the authorization of the governing body, a duplicate of the obligation except
as to signatures and a duplicate of any unpaid coupons, may be issued to the owners. These
duplicates shall be marked "DUPLICATE" and the date of issue shown thereon. Such marking
shall be signed by the treasurer then in office.
History: (1970) RL s 791; 1949 c 682 s 19

475.70 LOST INSTRUMENTS; INDEMNITY.
If the owner of any obligation which is destroyed or lost, first gives a satisfactory surety
bond to the municipality, in a sum double the amount of such obligation, conditioned to save it
harmless in the premises, the governing body thereof may authorize the issuance of another to the
owner in its place, corresponding with the missing obligation as to number, date, amount, and
unpaid coupons. Such obligation shall be signed by the proper officials who are then in office, and
shall be marked and dated as provided in section 475.69. The treasurer shall keep a record of all
reissues and duplicates showing the date of issue and the persons to whom issued.
History: (1971) RL s 792; 1949 c 682 s 20

475.71 [Repealed, 1984 c 563 s 7]

475.72 VIOLATIONS AND PENALTIES.
Any officer of any municipality who knowingly fails to comply with any provision of Laws
1949, chapter 682 is guilty of a misdemeanor.
History: (1938-12) 1927 c 131 s 10; 1949 c 682 s 22

475.73 STATE BOARD OF INVESTMENT.
    Subdivision 1. May purchase these bonds; conditions. Obligations sold under the
provisions of section 475.60 may be purchased by the State Board of Investment if the obligations
meet the requirements of section 11A.24, subdivision 2, upon the approval of the attorney general
as to form and execution of the application therefor, and under rules as the board may specify,
and the state board shall have authority to purchase the same to an amount not exceeding 3.63
percent of the market value of the taxable property of the municipality, according to the last
preceding assessment. The obligations shall not run for a shorter period than one year, nor for a
longer period than 30 years and shall bear interest at a rate to be fixed by the state board but not
less than two percent per annum. Forthwith upon the delivery to the state of Minnesota of any
obligations issued by virtue thereof, the commissioner of finance shall certify to the respective
auditors of the various counties wherein are situated the municipalities issuing the same, the
number, denomination, amount, rate of interest and date of maturity of each obligation.
    Subd. 2. Tax levy. The annual tax levy for the payment of principal and interest on account
of such obligations shall be for an amount 50 percent in excess of the sum to be paid therefrom.
The state auditor, at the time of certifying the state tax, shall also certify to each county auditor
the amount necessary to pay such principal and interest. When collected so much of such tax
as may be necessary shall be paid into the state treasury. The excess remaining shall be held
over in the county treasury to be applied on the next future payment due on such obligations,
and the amount of such excess shall be reported by the county auditor to the state auditor on
or before August first each year, who shall deduct the same from the next annual tax levy for
such purpose. The remainder, when such bonds are paid in full, shall be credited to the general
fund of the municipality; and, in case a portion of the territory embraced in such municipality
at the time such obligations were issued, has since been set off to another municipality, such
remainder shall be divided with such other municipality, using as a basis for such division the
last net tax capacity of the territory affected by such obligations. Any such municipality which
shall make payment to the state of the full amount of principal and interest due on account of
such obligations prior to the extending of such tax therefor by the state auditor shall be exempt
from the provisions of this section.
History: 1949 c 682 s 23; 1973 c 492 s 14; 1980 c 607 art 14 s 44; 1986 c 444; 1988 c 719
art 5 s 84; 1989 c 329 art 13 s 20; 1990 c 480 art 9 s 23

475.74 LAW LIMITING TAXES NOT APPLICABLE.
The provisions of any law limiting taxes shall not limit the power of any city of the first or
second class or any independent school district in any city of the first class, or any special school
district in a city of the second class having a population of not less than 28,000 nor more than
32,000 according to the 1950 federal census, to levy taxes to pay its general obligation bonds
nor shall such provisions limit the power of any municipality to levy taxes to make good any
deficiency in any prior levies made pursuant to section 475.61. The governing body shall levy
such taxes without limitation as to rate or amount.
History: 1949 c 682 s 24; 1951 c 422 s 8; 1957 c 43 s 1; 1957 c 743 s 1; 1Sp1989 c 1
art 5 s 43

475.75 [Repealed, 1996 c 310 s 1]

475.753 MUNICIPALITIES ARE SUBJECT TO THIS CHAPTER.
All municipalities are subject to the provisions of this chapter in the issuance of obligations
and may incur indebtedness to the extent of but not in excess of the debt limit in said chapter
notwithstanding any home rule charter provision or charter law adopted prior to April 1, 1951.
Nothing herein shall prevent the adoption after that date of additional debt limitations or
restrictions. This section shall not be deemed to amend or otherwise affect or change section
475.53, subdivision 3.
History: 1951 c 422 s 9

475.754 DISASTER, PUBLIC EMERGENCY; CERTIFICATES OF INDEBTEDNESS.
If in any fiscal year the receipts from taxes or other sources are insufficient to meet the
expenses incurred or to be incurred in said year by any city however organized, county or town by
reason of any natural disaster or other public emergency requiring the making of extraordinary
expenditures, the governing body of any such city, county or town may authorize the sale of
certificates of indebtedness to mature within three years and to bear interest at a rate not to exceed
the amount prescribed in this chapter. The certificates may be issued with or without advertising
for bids on such terms and conditions as the governing body may determine and shall be in such
form as the state auditor in cooperation with the commissioner of commerce shall prescribe. All
certificates and interest thereon shall be payable from taxes levied within existing limitations or
from other available revenue. The certificates shall not be included in the net debt of the issuing
city, county or town.
History: 1973 c 61 s 1; 1973 c 123 art 5 s 7; 1973 c 492 s 7; 1983 c 289 s 114 subd 1; 1984
c 655 art 1 s 92; 1Sp1985 c 14 art 4 s 94; 1Sp1989 c 1 art 5 s 44

475.76 [Repealed, 1996 c 399 art 1 s 11]

475.77 WHEN BOND ALLOCATION ACT APPLIES.
Sections 474A.01 to 474A.21 apply to any issuance of obligations which are subject to
limitation under a federal tax law as defined in section 474A.02, subdivision 8.
History: 1984 c 582 s 21,23; 1Sp1985 c 14 art 8 s 63; 1986 c 465 art 1 s 30; 2000 c 260 s 69

475.78 PERFECTION OF PLEDGE; SECURITY INTERESTS.
Neither filing nor possession is required to perfect the security interest created by any pledge
or appropriation of revenues or funds of the municipality, including any of its investments, to the
payment of bonds issued by the municipality. Notwithstanding any contrary provision of law,
article 9 of the Uniform Commercial Code does not apply to security interests created by a
municipality or the state, except security interests in equipment and fixtures.
History: 1987 c 344 s 35; 2000 c 493 s 17

475.79 POWERS AVAILABLE TO OTHER POLITICAL SUBDIVISIONS.
Any powers granted to a municipality under this chapter, other than the power to issue
general obligation bonds and levy taxes, may be exercised by any other governmental unit.
This grant of authority does not limit the powers granted to an entity under any other law. In
connection with the issuance of bonds authorized to be issued by any law or charter provision
other than this chapter, a governmental unit determining to exercise any power under any of
sections 475.54, 475.55, 475.553, 475.56, 475.561, 475.60, 475.61, 475.65, 475.67, 475.69,
475.70, and 475.78 may do so notwithstanding any contrary provision in the authorizing law or
charter unless the authorizing law or charter provides that this chapter or the specific section
does not apply. This section is, in part, remedial in nature. Obligations issued prior to June 2,
1995, are not invalid or unenforceable for providing terms, consequences, or remedies that are
authorized by this section and chapter 475.
History: 1987 c 344 s 36; 1989 c 355 s 24; 1995 c 256 s 31; 1996 c 399 art 2 s 12

475.80 ATTACHED, ANNEXED, COMBINED, CONSOLIDATED, INCORPORATED.
When all or a part of a municipality is attached, annexed, combined, consolidated,
or incorporated into another municipality, the full faith and credit of the surviving or new
municipality must secure any general obligation bonds which the surviving or new municipality
has assumed or which are payable from property taxes levied on all or any portion of its taxable
property, notwithstanding that the bonds may be payable from taxes levied on taxable property in
only a portion of the new or surviving municipality. If any general funds of the municipality are
used to pay debt service on general obligation bonds payable from taxes levied on taxable property
in only a portion of the new or surviving municipality, the general funds must be reimbursed,
with or without interest, from taxes levied on the taxable property in that portion of the new or
surviving municipality which was primarily responsible for the general obligation bonds.
History: 1997 c 219 s 10