2005 Minnesota Statutes

     373.45 State may guarantee county building debt; 
  repayment. 

    Subdivision 1.    Definitions.  (a) As used in this 
 section, the following terms have the meanings given. 

    (b) "Authority" means the Minnesota Public Facilities 
 Authority. 

    (c) "Commissioner" means the commissioner of finance. 

    (d) "Debt obligation" means a general obligation bond 
 issued by a county, or a bond payable from a county lease 
 obligation under section 641.24, to provide funds for the 
 construction of: 

    (1) jails; 

    (2) correctional facilities; 

    (3) law enforcement facilities; 

    (4) social services and human services facilities; or 

    (5) solid waste facilities. 

    Subd. 2.    Application.  (a) This section provides a 
 state guarantee of the payment of principal and interest on debt 
 obligations if: 

    (1) the obligations are issued after June 30, 2000; 

    (2) application to the Public Facilities Authority is made 
 before issuance; and 

    (3) the obligations are covered by an agreement meeting the 
 requirements of subdivision 3. 

    (b) Applications to be covered by the provisions of this 
 section must be made in a form and contain the information 
 prescribed by the authority.  Applications are subject to a fee 
 of $500 for the first bond issue requested by the county and 
 $250 for each bond issue thereafter. 

    (c) Application fees paid under this section must be 
 deposited in a separate county bond guarantee account in the 
 general fund.  Money in the county bond guarantee account is 
 appropriated to the authority for purposes of administering this 
 section. 

    (d) Neither the authority nor the commissioner is required 
 to promulgate administrative rules under this section and the 
 procedures and requirements established by the authority or 
 commissioner under this section are not subject to chapter 14. 

    Subd. 3.    Agreement.  (a) For specified debt 
 obligations of a county to be covered by this section, the 
 county must enter an agreement with the authority obligating the 
 county to be bound by this section.  

    (b) This agreement must be in a form prescribed by the 
 authority and contain any provisions required by the authority, 
 including, at least, an obligation to: 

    (1) deposit with the paying agent three days before the 
 date on which the payment is due an amount sufficient to make 
 that payment; 

    (2) notify the authority, if the county will be unable to 
 make all or a portion of the payment; and 

    (3) include a provision in the bond resolution and county's 
 agreement with the paying agent for the debt obligation that 
 requires the paying agent to inform the commissioner if it 
 becomes aware of a default or potential default in the payment 
 of principal or interest on that issue or if, on the day two 
 business days before the date a payment is due on that issue, 
 there are insufficient funds to make the payment on deposit with 
 the paying agent.  

    (c) Funds invested in a refunding escrow account 
 established under section 475.67 that are to become available to 
 the paying agent on a principal or interest payment date are 
 deemed to be on deposit with the paying agent three business 
 days before the payment date.  

    (d) The provisions of an agreement under this subdivision 
 are binding as to an issue as long as any debt obligation of the 
 issue remains outstanding. 

    (e) This section and the obligations of the state under 
 this section are not a public debt of the state under article 
 XI, section 4, of the Minnesota Constitution, and the 
 legislature may, at any time, choose not to appropriate amounts 
 under subdivision 4, paragraph (b). 

    Subd. 4.    Notifications; payment; appropriation.  (a) 
 After receipt of a notice of a default or potential default in 
 payment of principal or interest in debt obligations covered by 
 this section or an agreement under this section, and after 
 consultation with the county, the paying agent, and after 
 verification of the accuracy of the information provided, the 
 authority shall notify the commissioner of the potential 
 default.  The notice must include a final figure as to the 
 amount due that the county will be unable to repay on the date 
 due.  

    (b) Upon receipt of this notice from the authority, the 
 commissioner shall issue a warrant and authorize the authority 
 to pay to the paying agent for the debt obligation the specified 
 amount on or before the date due.  The amounts needed for the 
 purposes of this subdivision are annually appropriated to the 
 authority from the general fund. 

    Subd. 5.    Interest on state paid amount.  If the state 
 has paid part or all of the principal or interest due on a 
 county's debt obligation, the amount paid bears interest from 
 the date paid by the state until the date of repayment.  The 
 interest rate is the commissioner's invested cash rate as it is 
 certified by the commissioner.  Interest only accrues on the 
 amounts paid and outstanding less the reduction in aid under 
 subdivision 7 and other payments received from the county. 

    Subd. 6.    Pledge of county's full faith and credit.  
 If the state has paid part or all of the principal or interest 
 due on a county's debt obligation, the county's pledge of its 
 full faith and credit and unlimited taxing powers to repay the 
 principal and interest due on those debt obligations becomes, 
 without an election or the requirement of a further 
 authorization, a pledge of the full faith and credit and 
 unlimited taxing powers of the county to repay to the state the 
 amount paid, with interest.  Amounts paid by the state must be 
 repaid in the order in which the state payments were made. 

    Subd. 7.    Aid reduction for repayment.  (a) Except as 
 provided in paragraph (b), the commissioner may reduce, by the 
 amount paid by the state under this section on behalf of the 
 county, plus the interest due on the state payments, the county 
 program aid under section 477A.0124.  The amount of any aid 
 reduction reverts from the appropriate account to the state 
 general fund.  

    (b) If, after review of the financial situation of the 
 county, the authority advises the commissioner that a total 
 reduction of the aids would cause an undue hardship on the 
 county, the authority, with the approval of the commissioner, 
 may establish a different schedule for reduction of aids to 
 repay the state.  The amount of aids to be reduced are decreased 
 by any amounts repaid to the state by the county from other 
 revenue sources. 

    Subd. 8.    Tax levy for repayment.  (a) With the 
 approval of the authority, a county may levy in the year the 
 state makes a payment under this section an amount up to the 
 amount necessary to provide funds for the repayment of the 
 amount paid by the state plus interest through the date of 
 estimated repayment by the county.  The proceeds of this levy 
 may be used only for this purpose unless they exceed the amount 
 actually due.  Any excess must be used to repay other state 
 payments made under this section or must be deposited in the 
 debt redemption fund of the county.  The amount of aids to be 
 reduced to repay the state are decreased by the amount levied. 

    (b) If the state is not repaid in full for a payment made 
 under this section by November 30 of the calendar year following 
 the year in which the state makes the payment, the authority 
 shall require the county to certify a property tax levy in an 
 amount up to the amount necessary to provide funds for repayment 
 of the amount paid by the state plus interest through the date 
 of estimated repayment by the county.  To prevent undue 
 hardship, the authority may allow the county to certify the levy 
 over a five-year period.  The proceeds of the levy may be used 
 only for this purpose unless they are in excess of the amount 
 actually due, in which case the excess must be used to repay 
 other state payments made under this section or must be 
 deposited in the debt redemption fund of the county.  If the 
 authority orders the county to levy, the amount of aids reduced 
 to repay the state are decreased by the amount levied.  

    (c) A levy under this subdivision is an increase in the 
 levy limits of the county for purposes of section 275.065, 
 subdivision 6, and must be explained as a specific increase at 
 the meeting required under that provision.  

    Subd. 9.    Mandatory plan; technical assistance.  If 
 the state makes payments on behalf of a county under this 
 section or the county defaults in the payment of principal or 
 interest on an outstanding debt obligation, it must submit a 
 plan to the authority for approval specifying the measures it 
 intends to implement to resolve the issues which led to its 
 inability to make the payment and to prevent further defaults.  
 If the authority determines that a county's plan is not 
 adequate, the authority shall notify the county that the plan 
 has been disapproved, the reasons for the disapproval, and that 
 the state will not make future payments under this section for 
 debt obligations of the affected county issued after the date 
 specified in that notice until its plan is approved.  The 
 authority may also notify the county that until its plan is 
 approved, aids due the county will be withheld after a date 
 specified in the notice. 

    Subd. 10.    Continuing disclosure agreements.  The 
 authority may enter into written agreements or contracts 
 relating to the continuing disclosure of information needed to 
 facilitate the ability of counties to issue debt obligations 
 according to federal securities laws, rules, and regulations, 
 including securities and exchange commission rules and 
 regulations, section 240.15c2-12.  The agreements or contracts 
 may be in any form the authority deems reasonable and in the 
 state's best interests. 

    HIST: 2000 c 493 s 3; 2001 c 214 s 4; 2003 c 112 art 2 s 50; 
 2003 c 127 art 12 s 9; 1Sp2003 c 21 art 10 s 11; 2005 c 151 art 
 5 s 41