2006 Minnesota Statutes

116R.02 BOND ISSUE; SALE AUTHORIZATION.
    Subdivision 1. Sale authorization. The commissioner of finance, upon the request of the
governor, may issue and sell revenue bonds as provided under sections 116R.01 to 116R.16 in one
or more series or issues for the purposes provided in this section in the aggregate principal amount
of up to $350,000,000, except for refunding bonds. Proceeds of the bonds and investment income
on the proceeds are appropriated in the amounts and for the purposes specified in subdivisions 2,
5, and 6 and section 116R.04.
    Subd. 2. Loan, lease, and revenue agreements. (a) The commissioner may loan the
proceeds of the bonds, make other loans or enter into lease agreements or other revenue
agreements for the projects described in subdivisions 5 and 6. The commissioner may provide for
servicing of the loans and agreements, the times they are payable and the amounts of payments,
the amount of the loans and agreements, their security, and other terms, conditions, and provisions
necessary or convenient in connection with them and may enter into all necessary contracts
and security instruments in connection with them. The commissioner shall seek to obtain the
best available terms and security for the loans or agreements. The terms and security must be
reasonably determined by the commissioner to be adequate and of the kind and degree which
would be required by an investment banking or other financial institution. The facilities described
in subdivisions 5 and 6 must be pledged as collateral for the loans made and bonds issued under
sections 116R.01 to 116R.16.
(b) To reduce the risk that state general funds will be needed to pay debt service on the
state guaranteed bonds, the commissioner must require that the financing arrangements include
a coverage test satisfactory to the commissioner so that the sum of the value of the assets and
other security pledged to the payment of bonds or the rent due under any lease of the project and
taken into account by the commissioner is no less than 125 percent of the difference between the
outstanding state guaranteed bonds, and any cash collateral held in a debt service reserve account
and pledged to the payment of principal and interest for the state guaranteed bonds and no other
bonds. Assets and other security that may be taken into account include (1) net unencumbered
value of the project and any collateral or third party guaranty, including a letter of credit, pledged
or otherwise furnished by a user of the project or by a benefited airline company as security for
the payment of rent, (2) bond proceeds, including earnings thereon, and (3) prepayments of rent,
after making such adjustments the commissioner determines to be appropriate to take into account
any outstanding bonds secured by a lien on the project or rent that is prior to the lien securing the
state guaranteed bonds, but excluding any cash collateral deducted from the outstanding state
guaranteed bonds in applying the coverage test. The commissioner may adopt the method of
valuing the assets and other security as the commissioner determines to be appropriate, including
valuation of the project at its original cost less depreciation.
    Subd. 3. Review procedure; data practices. (a) Before issuing the bonds for a project,
approving financial assistance, or entering into loan, lease, or other revenue agreements for the
project described in subdivisions 5 and 6, the commissioner of finance shall review the financial
condition of the proposed lessee or lessees of the project or projects, and any related person. The
commissioner shall exercise due diligence in the review. The commissioner shall engage an
independent, nationally recognized consultant having special expertise with the airline industry
and its financing to prepare a written report on the financial condition of the lessee or lessees
and any related person. A lessee and any related person shall provide all information required
for the commissioner's review and the consultant's report, including information substantially
equivalent to that required by an investment bank or other financial institution considering a
project for debt financing.
(b) Except as otherwise provided in this subdivision, business plans, financial statements,
customer lists, and market and feasibility studies required under sections 116R.01 to 116R.16 or
submitted in connection with the provision of financial assistance or any agreement authorized
under Laws 1991, chapter 350, are nonpublic data, as defined in section 13.02, subdivision 9. The
commissioner or the commissioner of employment and economic development may make the
data accessible to any person, agency, or public entity if the commissioner or the commissioner of
employment and economic development determines that access is required under state or federal
securities law or is necessary for the person, agency, or public entity to perform due diligence in
connection with the provision of financial assistance to the projects described in subdivisions
5 and 6. The data may also be made available as requested by the Legislative Commission on
Planning and Fiscal Policy.
(c) Before the commissioner issues bonds for a project, approves financial assistance, or
enters into loan, lease, or other revenue agreements for the project, the commissioner shall submit
a report on the proposed transaction to the governor. The report must describe: all proposed state,
metropolitan, and local government financial commitments; the financial assistance proposed to
be provided; the proposed loan, lease, and revenue agreements; any other arrangements related to
state and local debt, taxes, financing, and debt service; and the estimates of economic activity, air
traffic, and other factors that have been used in assessing the prospective financial condition of the
lessee or lessees and any related person. The report must contain the following findings:
(1) that the commissioners of employment and economic development and finance and, for
purposes of a project described in subdivision 5, the Metropolitan Airports Commission have
reviewed the current and prospective financial condition of each proposed lessee of the project or
projects and any related person; and
(2) that, on the basis of their review, the commissioners and, for purposes of the project
described in subdivision 5, the commission have determined that the revenues estimated to be
available to the lessee or lessees for payments under the loan, lease, or other revenue agreements
are at least sufficient during each year of the term of the proposed bonds to pay when due all
financial obligations of the lessee or lessees under the terms of the proposed loan, lease, or other
revenue agreements. Copies of the report must be filed at the legislature as provided in section
3.195 when the report is submitted to the governor.
    Subd. 4. Security. (a) If so provided in the commissioner's order or any indenture authorizing
the applicable series of bonds, up to $125,000,000 principal amount of bonds for the facility
described in subdivision 5, up to $50,000,000 principal amount of bonds for the facility described
in subdivision 6, and any bonds issued to refund these bonds may be secured by either of the
following methods:
(1) upon the occurrence of any deficiency in a debt service reserve fund for a series of bonds
as provided in section 116R.13, subdivision 3, the commissioner shall issue and sell deficiency
bonds in a principal amount not to exceed (i) $125,000,000 for facilities described in subdivision
5 and (ii) $50,000,000 for the facilities described in subdivision 6; or
(2) the bonds may be directly secured by a pledge of the full faith, credit, and taxing power
of the state and issued as general obligation revenue bonds of the state in accordance with the
Minnesota Constitution, article XI, sections 4 to 7. In no event may the security provided by this
paragraph extend in whole or part to any series of bonds other than the initial series of bonds so
secured and any series of bonds issued to refund these bonds.
Deficiency bonds and bonds issued under clause (2) must be issued in accordance with
and subject to sections 16A.641, 16A.66, 16A.672, and 16A.675, except for section 16A.641,
subdivision 5 , except as otherwise provided in Laws 1991, chapter 350, article 1, and except that
the bonds may be sold at public or private sale at a price or prices determined by the commissioner
as provided in section 116R.13, subdivision 3.
(b) The commissioner may request St. Louis County to pay or secure payment of principal
and interest due on up to $12,600,000 principal amount of revenue bonds for the facility described
in subdivision 5 and principal and interest due on up to $15,000,000 principal amount of revenue
bonds for the facility described in subdivision 6. At the request of the commissioner, St. Louis
County shall, by resolution of its county board, unconditionally and irrevocably pledge as a
general obligation, its full faith, credit, and taxing power to pay or secure payment of principal
and interest due on the principal amount or amounts requested by the commissioner. The general
obligation and pledge of St. Louis County are not subject to and shall not be taken into account
for purposes of any debt limitation. A levy of taxes for the St. Louis County general obligation is
not subject to and shall not be taken into account for purposes of any levy limitations. The general
obligation and the bonds secured by the general obligation may be issued without an election.
Except for sections 475.61 and 475.64, chapter 475 does not apply to the general obligation or to
the bonds secured by the general obligation.
(c) The commissioner may request the city of Duluth to pay or secure payment of principal
and interest due on up to $47,600,000 principal amount of revenue bonds for the facility described
in subdivision 5. At the request of the commissioner, the city of Duluth shall pledge specified
revenues of the city, as provided in Laws 1991, chapter 350, article 1, section 24, to pay principal
and interest due on the principal amount requested by the commissioner.
(d) Bonds and deficiency bonds issued under sections 116R.01 to 116R.16 and any indenture
entered into in connection with the issuance of the bonds are not subject to section 16B.06.
    Subd. 5. Use of proceeds; aircraft maintenance facility. The proceeds of the bonds issued
in a principal amount not to exceed $250,000,000 may be used to finance the costs related to the
planning, construction, improvement, or equipping of a heavy maintenance facility for aircraft and
facilities subordinate and related to the facility to be located at the Duluth International Airport
and any costs of issuance, reserves, credit enhancement, or an initial period of interest payments
related to the bonds or the facility. The bond proceeds are appropriated to the commissioner
for the purposes specified in this subdivision. The facility may be owned by the Metropolitan
Airports Commission and leased for the benefit of one or more airline companies for use as a
heavy maintenance base. With the approval of the commissioner, the owner of the facility may
place a mortgage or security interest lien on the facility or any interest in or part of the facility.
The mortgage is exempt from the mortgage registry tax imposed under chapter 287. In the event
of a default under the loan, lease agreement, or other revenue agreement, the facility, or any
part of the facility, may be leased or sold to another person for any lawful purpose, subject to
the approval of the commissioner. The approval of the commissioner is not required if the bond
trustee has taken control of the facility as a result of a default.
The ownership of the facility by the owner may create no liability of the owner for payment
of the debt service on the bonds if so determined by the commissioner. The owner may require as
a condition of entering into the lease of the facility that the lessee or other party pay all costs,
expenses, or any other obligations of ownership of the facility.
No revenues derived from the lease of the project may be used other than for a purpose related
to the project, including its operation, administration, maintenance, improvement, or financing.
    Subd. 6. Use of proceeds; aircraft engine repair facility. The proceeds of the bonds issued
in a principal amount not to exceed $100,000,000 may be used to finance the costs related to
the planning, construction, improvement, or equipping of an aircraft engine repair facility and
facilities subordinate and related to the facility to be located at the Chisholm-Hibbing Municipal
Airport in the city of Hibbing and any costs of issuance, reserves, credit enhancement, or an
initial period of interest payments related to the bonds or the facility. The bond proceeds are
appropriated to the commissioner for the purposes specified in this subdivision. The facility may
be owned by the owner of the Chisholm-Hibbing Municipal Airport, but may be leased, with or
without a purchase option, to any person for the primary purpose of repairing aircraft engines
or components. With the approval of the commissioner, the owner of the facility may place
a mortgage or security interest lien on the facility. The mortgage is exempt from the mortgage
registry tax imposed under chapter 287. In the event of a default under the loan, lease agreement,
or other revenue agreement, the facility may be leased or sold to another person for any lawful
purpose, subject to the approval of the commissioner. The approval of the commissioner is not
required if the bond trustee has taken control of the facility as a result of a default.
    Subd. 7. Agreement of lessee. (a) Before issuing the bonds for the facilities, approving
financial assistance, or entering into loan, lease, or other revenue agreements for the projects
described in subdivisions 5 and 6, the commissioner shall determine that the lessee and, if
necessary, other corporations affiliated with by common ownership with the lessee have agreed to
requirements satisfactory to the commissioner respecting aircraft noise abatement.
(b) The leases for each of the facilities described in subdivisions 5 and 6 must contain
covenants and agreements by the airline corporation and any successor in interest providing for
the retention and location of existing employees, operations, and facilities, including headquarters,
of the airline corporation in the state until the principal and interest on the last series of deficiency
bonds and general obligation revenue bonds issued under subdivision 4, paragraph (a), clause
(2), are paid.
    Subd. 8. Environmental assessment. Notwithstanding any other law or rule, no
environmental review must be completed prior to the approval of an application and the issuance
of a conditional commitment for the loan, or the taking of any other action permitted by Laws
1991, chapter 350, article 1, including the issuance of bonds, unless considered necessary or
desirable by the commissioner to prepare for a final commitment and to make it effective.
Environmental review, to the extent required by law, shall be made in conjunction with the
issuance by state agencies of environmental permits for the project. Permits may be applied for
prior to the issuance of a conditional commitment. Action shall be taken as expeditiously as
possible on environmental review and all permits required.
    Subd. 9. Project cost report. Before the commissioner of finance issues bonds, approves
financial assistance, or enters into loan, lease, or other revenue agreements for the projects
described in subdivisions 5 and 6, the commissioner of employment and economic development
shall report to the governor on total public costs related to the construction of the projects. The
report must include: an estimate of the total state, metropolitan, and local tax costs for the project;
and an estimate of the total state, metropolitan, and local capital costs, and method of financing,
of any airport and off-airport improvements related to the construction of the facilities but not
included in the cost of the facilities, including any runway or taxiway improvements and road,
highway, sewer, or other public facility or utility improvement costs. Copies of the report must be
filed at the legislature as provided in section 3.195 when the report is submitted to the governor.
History: 1991 c 350 art 1 s 2; 1Sp2003 c 4 s 1