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Minnesota Legislature

Office of the Revisor of Statutes

471.191 ACQUISITION OF FACILITIES BY CITY, SCHOOL DISTRICT.
    Subdivision 1. Lease to nonprofit. Any city operating a program of public recreation and
playgrounds pursuant to sections 471.15 to 471.19 may acquire or lease, equip, and maintain
land, buildings, and other recreational facilities, including, but without limitation, outdoor or
indoor swimming pools, skating rinks and arenas, athletic fields, golf courses, marinas, concert
halls, museums, and facilities for other kinds of athletic or cultural participation, contests, and
exhibitions, together with related automobile parking facilities as defined in section 459.14, and
may expend funds for the operation of such program and borrow and expend funds for capital
costs thereof pursuant to the provisions of this section. A school district operating a program of
public recreation and playgrounds has the rights provided in this section. Any facilities to be
operated by a nonprofit corporation, as contemplated in section 471.16, may be leased to the
corporation upon such rentals and for such term, not exceeding 30 years, and subject to such other
provisions as may be agreed; including but not limited to provisions (a) permitting the lessee,
subject to whatever conditions are stated, to provide for the construction and equipment of the
facilities by any means available to it and in the manner determined by it, without advertisement
for bids as required for other municipal facilities, and (b) granting the lessee the option to renew
the lease upon such conditions and rentals, or to purchase the facilities at such price, as may be
agreed; provided that (c) any such lease shall require the lessee to pay net rentals sufficient to
pay the principal, interest, redemption premiums, and other expenses when due with respect to
all city bonds issued for the acquisition or betterment of the facilities, less such amount of taxes
and special assessments, if any, as may become payable in any year of the term of the lease, on
the land, building, or other facilities leased, and (d) no option shall be granted to purchase the
facilities at any time at a price less than the amount required to pay all principal and interest to
become due on such bonds to the earliest date or dates on which they may be paid and redeemed,
and all redemption premiums and other expenses of such payment and redemption.
    Subd. 2. Bonds. Any such city may issue bonds pursuant to chapter 475, for the acquisition
and betterment of land, buildings, and facilities for the purpose of carrying out the powers granted
by this section. Such bonds, unless authorized as general obligations of the issuer pursuant to
approval of the electors or pursuant to another law or charter provision permitting such issuance
without an election, shall be payable solely from the income of land, buildings, and facilities used
or useful for the operation of the program, but may be secured by a pledge to the bondholders,
or to a trustee, of all income and revenues of whatsoever nature derived from any such land,
buildings, and facilities, as a first charge on the gross revenues thereof to the extent necessary
to pay the bonds and interest thereon when due and to accumulate and maintain an additional
reserve for that purpose in an amount equal to the total amount of payments to become due in any
fiscal year. In this event the governing body of the issuer may by resolution or trust indenture
define the land, buildings, or facilities, the revenues of which are pledged, and establish covenants
and agreements to be made by the issuer for the security of the bonds, including a covenant that
the issuer will establish, maintain, revise when necessary, and collect charges for all services,
products, use, and occupancy of the land, buildings, and facilities, in the amounts and at the times
required to produce the revenues pledged, and also sufficient, with any other funds appropriated
by the governing body from time to time, to provide adequately for the operation and maintenance
of the land, buildings, and facilities. After the issuance of any bonds for which revenues are so
pledged, the governing body of the issuer shall provide in its budget each year for any anticipated
deficiency in the revenues available for such operation and maintenance. For this purpose any
issuer may levy a tax on the taxable property within its boundaries, in excess of taxes which may
otherwise be levied within charter limitations. The authority to levy additional taxes granted
herein shall not apply to cities or towns in which the net tax capacity consists in part of iron ore
or lands containing taconite or semitaconite.
    Subd. 3. Leasing terms. Any such city may acquire land, buildings, and facilities for the
purpose of carrying out the powers granted by this section under a lease agreement for a term
not exceeding 30 years, vesting title in the lessee upon the payment of all amounts due and the
performance of all covenants thereunder, provided that the rentals under any such lease agreement
shall be payable solely from the revenues of the leased property. The terms and conditions of
the lease agreement shall be established by resolution of the governing body of the lessee, and
may include a pledge to the lessor of all income and revenues of whatsoever nature derived from
the leased property, as a first charge on the gross revenues thereof to the extent necessary to
pay the rentals when due, and a covenant that the lessee will establish, maintain, revise when
necessary, and collect charges for all service, products, use, and occupancy of the leased property
in the amounts and at the times required to produce the revenues pledged, and also sufficient, with
any other funds appropriated by the governing body from time to time, to provide adequately for
the operation and maintenance of the property. From and after the execution of any such lease
agreement, the governing body of the lessee shall provide for any deficiencies in the revenues
available for operation and maintenance, to the same extent and in the same manner as provided
in subdivision 2. If such lease agreement is entered into with a nonprofit corporation as owner and
lessor, organized and existing under chapter 317A for the sole purpose of providing and leasing
such land, buildings, and facilities for public use and of conveying the same to the lessee when
all sums borrowed therefor have been repaid, such corporation shall be deemed to be a public
corporation, agency, and instrumentality of the city, and obligations incurred by it for this purpose,
together with the interest on such obligations, shall be exempt from taxation to the same extent
as obligations of the city. Any mortgage or trust indenture executed by such corporation for the
security of its obligations may provide for the segregation and payment of rentals and revenues of
land, buildings, and facilities directly by the lessee to the mortgagee or trustee, whether or not
such mortgagee or trustee is in possession under foreclosure proceedings or otherwise, and the
mortgage or trust indenture may be enforced by foreclosure and sale and by any other remedy
at law or in equity which is available in the event of default in payment of amounts due and
performance of covenants under any mortgage of real or personal property; provided that no such
mortgage or trust indenture shall impair the continued right of the lessee to the use and enjoyment
of the land, buildings, and facilities so long as the lessee is not in default in the payment of rentals
due and in the performance of covenants under the lease agreement.
    Subd. 4. Public property, purpose; conditions. Any and all properties acquired and used,
whether under lease or otherwise, by a city for the purposes authorized and contemplated in this
section shall be deemed and are declared to be public property exclusively used for a public
purpose and as such exempt from taxation, so long as and to the extent that such property is
devoted to said purposes and is not subleased to any private individual, association, or corporation
in connection with a business conducted for profit, for a term of three or more years. An agreement
whereby a city, as owner or lessee, employs a private individual, association, or corporation
to operate facilities for use of the public, for the purposes herein contemplated and subject to
regulation by the public owner or lessee, is not a sublease for the purpose of this subdivision.
    Subd. 5. Obligations, rentals, and securities issued distinguished. All obligations issued by
any city pursuant to this section are issued for the acquisition or betterment of revenue producing
public conveniences and are payable wholly from the income thereof, within the meaning of all
provisions of chapter 475. The rentals payable under a lease and the securities issued by the lessor
pursuant to subdivision 3 are not obligations within the meaning of chapter 475.
History: 1967 c 725 s 1; 1973 c 123 art 5 s 7; 1973 c 321 s 1; 1973 c 773 s 1; 1988 c 719
art 5 s 84; 1989 c 277 art 4 s 68; 1989 c 304 s 137; 1989 c 329 art 13 s 20; 1994 c 505 art
3 s 13; 1994 c 643 s 75; 1995 c 256 s 17,18