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    Subdivision 1. Capital loan requests and uses. Capital loans are available only to qualifying
districts. Capital loans must not be used for the construction of swimming pools, ice arenas,
athletic facilities, auditoriums, bus garages, or heating system improvements. Proceeds of the
loans may be used only for sites for education facilities and for acquiring, bettering, furnishing, or
equipping education facilities. Contracts must be entered into within 18 months after the date on
which each loan is granted. For purposes of this section, "education facilities" includes space for
Head Start programs and social service programs.
    Subd. 2. Capital loans eligibility. Beginning July 1, 1999, a district is not eligible for a
capital loan unless the district's estimated net debt tax rate as computed by the commissioner after
debt service equalization aid would be more than 40 percent of adjusted net tax capacity. The
estimate must assume a 20-year maturity schedule for new debt.
    Subd. 3. District request for review and comment. A district or a joint powers district that
intends to apply for a capital loan must submit a proposal to the commissioner for review and
comment according to section 123B.71 by July 1 of an odd-numbered year. The commissioner
shall prepare a review and comment on the proposed facility, regardless of the amount of the
capital expenditure required to construct the facility. In addition to the information provided
under section 123B.71, subdivision 9, the commissioner shall require that predesign packages
comparable to those required under section 16B.335 be prepared by the applicant school district.
The predesign packages must be sufficient to define the scope, cost, and schedule of the project
and must demonstrate that the project has been analyzed according to appropriate space needs
standards and also consider the following criteria in determining whether to make a positive
review and comment.
(a) To grant a positive review and comment the commissioner shall determine that all of
the following conditions are met:
(1) the facilities are needed for pupils for whom no adequate facilities exist or will exist;
(2) there is evidence to indicate that the facilities will have a useful public purpose for at
least the term of the bonds;
(3) no form of cooperation with another district would provide the necessary facilities;
(4) the facilities are comparable in size and quality to facilities recently constructed in
other districts that have similar enrollments;
(5) the facilities are comparable in size and quality to facilities recently constructed in other
districts that are financed without a capital loan;
(6) the district is projected to have adequate funds in its general operating budget to support
a quality education for its students for at least the next five years;
(7) the current facility poses a threat to the life, health, and safety of pupils, and cannot
reasonably be brought into compliance with fire, health, or life safety codes;
(8) the district has made a good faith effort, as evidenced by its maintenance expenditures,
to adequately maintain the existing facility during the previous ten years and to comply with
fire, health, and life safety codes and state and federal requirements for accessibility for people
with disabilities;
(9) the district has made a good faith effort to encourage integration of social service
programs within the new facility;
(10) evaluations by boards of adjacent districts have been received; and
(11) the proposal includes a comprehensive technology plan that assures information access
for the students, parents, and community.
(b) The commissioner may grant a negative review and comment if:
(1) the state demographer has examined the population of the communities to be served by
the facility and determined that the communities have not grown during the previous five years;
(2) the state demographer determines that the economic and population bases of the
communities to be served by the facility are not likely to grow or to remain at a level sufficient,
during the next ten years, to ensure use of the entire facility;
(3) the need for facilities could be met within the district or adjacent districts at a comparable
cost by leasing, repairing, remodeling, or sharing existing facilities or by using temporary
(4) the district plans do not include cooperation and collaboration with health and human
services agencies and other political subdivisions; or
(5) if the application is for new construction, an existing facility that would meet the district's
needs could be purchased at a comparable cost from any other source within the area.
    Subd. 4. Multiple district proposals; review and comment. In addition to the requirements
of subdivision 3, the commissioner may use additional requirements to determine a positive
review and comment on projects that are designed to serve more than one district. These
requirements may include:
(1) reducing or increasing the number of districts that plan to use the facility;
(2) location of the facility; and
(3) formation of a joint powers agreement among the participating districts.
    Subd. 5. Adjacent district comments. The district must present the proposed project to the
board of each adjacent district at a public meeting of that district. The board of an adjacent
district must make a written evaluation of how the project will affect the future education and
building needs of the adjacent district. The board must submit the evaluation to the applying
district within 30 days of the meeting.
    Subd. 6. District application for capital loan. The school board of a district desiring a
capital loan shall adopt a resolution stating the amount proposed to be borrowed, the purpose for
which the debt is to be incurred, and an estimate of the dates when the facilities for which the loan
is requested will be contracted for and completed. Applications for loans must be accompanied
by a copy of the adopted board resolution and copies of the adjacent district evaluations. The
commissioner shall retain the evaluation as part of a permanent record of the district submitting
the evaluation.
Applications must be in the form and accompanied by the additional data required by
the commissioner. Applications must be received by the commissioner by September 1 of an
odd-numbered year. A district must resubmit an application each odd-numbered year. Capital loan
applications that do not receive voter approval or are not approved in law cancel July 1 of the year
following application. When an application is received, the commissioner shall obtain from the
commissioner of revenue the information in the Revenue Department's official records that is
required to be used in computing the debt limit of the district under section 475.53, subdivision 4.
    Subd. 7. Commissioner review; district proposals. By November 1 of each odd-numbered
year, the commissioner must review all applications for capital loans that have received a positive
review and comment. When reviewing applications, the commissioner must consider whether
the criteria in subdivision 3 have been met. The commissioner may not approve an application
if all of the required deadlines have not been met. The commissioner may either approve or
reject an application for a capital loan.
    Subd. 8. Recommendations of the commissioner. The commissioner shall examine and
consider applications for capital loans that have been approved and promptly notify any district
rejected of the decision.
The commissioner shall report each capital loan that has been approved by the commissioner
and that has received voter approval to the education committees of the legislature by January 1 of
each even-numbered year. The commissioner must not report a capital loan that has not received
voter approval. The commissioner shall also report on the money remaining in the capital loan
account and, if necessary, request that another bond issue be authorized.
    Subd. 9. Loan amount limits. (a) A loan must not be recommended for approval for a
district exceeding an amount computed as follows:
(1) the amount requested by the district under subdivision 6;
(2) plus the aggregate principal amount of general obligation bonds of the district outstanding
on June 30 of the year following the year the application was received, not exceeding the
limitation on net debt of the district in section 475.53, subdivision 4, or 607 percent of its adjusted
net tax capacity as most recently determined, whichever is less;
(3) less the maximum net debt permissible for the district on December 1 of the year the
application is received, under the limitation in section 475.53, subdivision 4, or 607 percent of its
adjusted net tax capacity as most recently determined, whichever is less;
(4) less any amount by which the amount voted exceeds the total cost of the facilities for
which the loan is granted.
(b) The loan may be approved in an amount computed as provided in paragraph (a), clauses
(1) to (3), subject to later reduction according to paragraph (a), clause (4).
    Subd. 10. Legislative action. Each capital loan must be approved in a law.
If the aggregate amount of the capital loans exceeds the amount that is or can be made
available, the commissioner shall allot the available amount among any number of qualified
applicant districts, according to the commissioner's judgment and discretion, based upon the
districts' respective needs.
    Subd. 11. District referendum. After receipt of the review and comment on the project and
before January 1 of the even-numbered year, the question authorizing the borrowing of money
for the facilities must be submitted by the school board to the voters of the district at a regular
or special election. The question submitted must state the total amount to be borrowed from
all sources. Approval of a majority of those voting on the question is sufficient to authorize
the issuance of the obligations on public sale in accordance with chapter 475. The face of the
ballot must include the following statement: "APPROVAL OF THIS QUESTION DOES NOT
DEPENDENT ON AVAILABLE FUNDING." The district must mail to the commissioner a
certificate by the clerk showing the vote at the election.
    Subd. 12. Contract. (a) Each capital loan must be evidenced by a contract between the
district and the state acting through the commissioner. The contract must obligate the state to
reimburse the district, from the maximum effort school loan fund, for eligible capital expenses
for construction of the facility for which the loan is granted, an amount computed as provided
in subdivision 9. The commissioner must receive from the district a certified resolution of the
board estimating the costs of construction and reciting that contracts for construction of the
facilities for which the loan is granted have been awarded, that bonds of the district have been
issued and sold in the amount necessary to pay all estimated costs of construction in excess of the
amount of the loan, and that all work, when completed, meets or exceeds standards established
in the State Building Code. The contract must obligate the district to repay the loan out of the
excesses of its maximum effort debt service levy over its required debt service levy, including
interest at a rate equal to the weighted average annual rate payable on Minnesota state school
loan bonds issued or reissued for the project.
(b) The district must each year, as long as it is indebted to the state, levy for debt service
(i) the amount of its maximum effort debt service levy or (ii) the amount of its required debt
service levy, whichever is greater, except as the required debt service levy may be reduced by a
loan under section 126C.68. The district shall remit payments to the commissioner according
to section 126C.71.
(c) The commissioner shall supervise the collection of outstanding accounts due the fund and
may, by notice to the proper county auditor, require the maximum levy to be made as required in
this subdivision. Interest on capital loans must be paid on December 15 of the year after the year
the loan is granted and annually in later years. By September 30, the commissioner shall notify
the county auditor of each county containing taxable property situated within the district of the
amount of the maximum effort debt service levy of the district for that year. The county auditor or
auditors shall extend upon the tax rolls an ad valorem tax upon all taxable property within the
district in the aggregate amount so certified.
    Subd. 13. Loan forgiveness. If any capital loan is not paid within 50 years after it is granted
from maximum effort debt service levies in excess of required debt service levies, the liability of
the district on the loan is satisfied and discharged and interest on the loan ceases.
    Subd. 14. Participation by county auditor; record of contract; payment of loan. The
district must file a copy of the capital loan contract with the county auditor of each county
in which any part of the district is situated. The county auditor shall enter the capital loan,
evidenced by the contract, in the auditor's bond register. The commissioner shall keep a record
of each capital loan and contract showing the name and address of the district, the date of the
contract, and the amount of the loan initially approved. On receipt of the resolution required in
subdivision 12, the commissioner shall issue warrants, which may be dispersed in accordance
with the schedule in the contract, on the capital loan account for the amount that may be disbursed
under subdivision 1. Interest on each disbursement of the capital loan amount accrues from the
date on which the commissioner of finance issues the warrant.
    Subd. 15. Bond sale limitations. (a) A district having an outstanding state loan must not
issue and sell any bonds on the public market, except to refund state loans, unless it agrees to
make the maximum effort debt service levy in each later year at the higher rate provided in section
126C.63, subdivision 8, and unless it schedules the maturities of the bonds according to section
475.54, subdivision 2. A district that refunds bonds at a lower interest rate may continue to make
the maximum effort debt service levy in each later year at the current rate provided in section
126C.63, subdivision 8, if the district can demonstrate to the commissioner's satisfaction that the
district's repayments of the state loan will not be reduced below the previous year's level. The
district must report each sale to the commissioner.
(b) For a capital loan issued prior to July 1, 2001, after the district's capital loan has been
outstanding for 30 years, the district must not issue bonds on the public market except to refund
the loan.
(c) For a capital loan issued on or after July 1, 2001, after the district's capital loan has
been outstanding for 20 years, the district must not issue bonds on the public market except to
refund the loan.
History: 1990 c 562 art 11 s 5; 1992 c 499 art 5 s 6; 1993 c 224 art 5 s 14-17; 1Sp1995 c
2 art 1 s 27-31; 1Sp1995 c 3 art 1 s 16; art 16 s 13; 1Sp1997 c 4 art 4 s 13,14; 1998 c 397 art
7 s 54-62,164; art 11 s 3; 1998 c 398 art 5 s 55; 1999 c 241 art 4 s 16,17; 2000 c 489 art 5 s
12; 1Sp2001 c 5 art 2 s 21-25; 1Sp2001 c 6 art 1 s 55 subd 2; art 4 s 17,18; 2003 c 112 art 2 s
50; 1Sp2003 c 9 art 4 s 20,21, 2005 c 56 s 1