2007 Minnesota Statutes

473.599 DEBT OBLIGATIONS.
    Subdivision 1. Revenues. It is the intent of the legislature that the commission shall, to the
maximum extent possible consistent with the provisions of this section, impose rates, rentals,
and other charges in the operation of the basketball and hockey arena which together with
the admissions tax and surcharge provided in section 473.595, subdivision 1a, will make the
basketball and hockey arena self-supporting so that the taxes imposed under section 473.592 for
the basketball and hockey arena will be at the lowest possible rate consistent with the obligations
of the city of Minneapolis as provided in sections 473.551 to 473.599.
    Subd. 2. Bonds. The council shall by resolution authorize the sale and issuance of its bonds
for any of the following purposes upon its determination that the conditions of subdivision 4
have been met:
(a) To provide funds for the acquisition or betterment of the basketball and hockey arena
by the commission pursuant to sections 473.598 and 473.599;
(b) To refund bonds issued under this section; and
(c) To fund judgments entered by any court against the commission or against the council in
matters relating to the basketball and hockey arena.
    Subd. 3. Procedure. The bonds shall be sold, issued, and secured in the manner provided in
chapter 475 for bonds payable solely from revenues, except as otherwise provided in sections
473.551 to 473.599, and the council shall have the same powers and duties as a municipality and
its governing body in issuing bonds under chapter 475. The council may pledge for the payment
of the bonds the net revenues of the commission arising from the commission's operation of the
basketball and hockey arena, the tax provided by section 473.592 for the basketball and hockey
arena, and the admission tax and surcharge authorized in section 473.595, subdivision 1a. The
bonds may be sold at any price and at public or private sale as determined by the council. They
shall be payable solely from tax and other revenues referred to in sections 473.551 to 473.599,
and shall not be a general obligation or debt of the council or of the commission, and shall not be
included in the net debt of any city, county, or other subdivision of the state for the purpose of any
net debt limitation, but nothing in this section shall affect the obligation of the city of Minneapolis
to levy a tax pursuant to an agreement made under the provisions of section 473.592. No election
shall be required. The principal amount shall not be limited except as provided in subdivision 4.
    Subd. 4. Limits. The principal amount of the bonds issued pursuant to subdivision 2, clause
(a), exclusive of any original issue discount, shall not exceed the total amount of $42,000,000
plus such amount as the council determines necessary to pay the costs of issuance, fund reserves
for operation and debt service, and pay for any bond insurance or other credit enhancement. The
bonds may be issued as tax-exempt revenue bonds or as taxable revenue bonds in the proportions
that the commission may determine. The proceeds of the bonds issued pursuant to subdivision
2, clause (a), shall be used only for acquisition and betterment of sports facilities suitable for
a basketball and hockey arena and the arena land and the related purposes referred to in this
subdivision, and for reimbursement of any expenses of the commission related to its determination
of whether to acquire the basketball and hockey arena, whenever incurred. The council shall issue
its bonds pursuant to subdivision 2, clause (a), and the commission may acquire the basketball
and hockey arena and the arena land when the council has made the following determinations:
(a) The commission, the city of Minneapolis or the Minneapolis Community Development
Agency, or any or all of them, as the commission may deem appropriate, has executed agreements
with a major league professional basketball organization to use the arena for all scheduled regular
season home games and play-off home games, and for at least one of its exhibition games played
each season. The agreements shall be for a period of 30 years. The agreements may contain
provisions negotiated with the organization which provide for earlier termination of the use of
the basketball and hockey arena by the commission upon conditions related to and limited to the
bankruptcy or insolvency of the organization. The agreements shall afford to the commission, the
city of Minneapolis, or the Minneapolis Community Development Agency, or each or all of them,
as the commission deems appropriate, the remedies that are deemed necessary and appropriate
to provide reasonable assurances that the major league professional basketball organization or
another major league professional basketball organization shall comply with the agreements. The
remedies shall include the payment of liquidated damages equivalent to direct and consequential
damages incurred by reason of the breach of the agreements and any additional remedies or
security arrangements the commission reasonably determines to be effective in accomplishing the
purposes of this paragraph. The damages payment may be payable in a lump sum or in installments
as the commission may deem appropriate. The commission may require that the agreements
include other terms and conditions to provide reasonable assurances that the major league
professional basketball team or a successor major league professional basketball team will play
the required games at the basketball and hockey arena during the 30-year term of the agreements,
or, in the event of a breach, to assure the payment of the required damages. The agreements shall
address contingencies that may arise in the event of change of ownership of the professional
teams. The agreements with the professional basketball organization for the use of the basketball
and hockey arena shall provide for arrangements which the commission may deem necessary
or appropriate to accommodate a future agreement between the commission and a professional
hockey organization to occupy the basketball and hockey arena, consistent with this section.
(b) The commission has exercised its reasonable efforts to obtain assurances and/or
agreements from the professional basketball major league to the extent permitted under applicable
federal and state law, that it will not approve the relocation of the major league professional
basketball organization if the relocation is in violation of the terms of the agreements referred
to in paragraph (a).
(c) The professional basketball team has provided information sufficient to satisfy the council
and the commission of the team's ability to comply with the terms of the 30-year lease.
(d) The proceeds of bonds provided for in this subdivision will be sufficient for the purposes
for which they are issued.
(e) The commission has acquired, or has contracted to acquire, (i) leasehold title to the
arena land together with the estate of the tenant and other rights demised under the ground lease,
subject to amendment as provided in clause (o), (ii) ownership of all real and personal property
comprising the basketball and hockey arena, and (iii) all easements, appurtenances and other
rights, title, or interest deemed by the commission necessary or desirable in connection with the
acquisition, financing, ownership, and operation of the basketball and hockey arena.
(f) The percentage of the private boxes provided for in the commission's proposal for the
basketball and hockey arena are sold or leased for the period that the commission finds advisable.
(g) The anticipated admission taxes and surcharges and other revenue from the operation of
the basketball and hockey arena will be sufficient to pay when due all basketball and hockey arena
debt service plus all administration, operating and maintenance expense of the arena.
(h) The city of Minneapolis has entered into an agreement as contemplated in clause (n) and
an agreement or agreements as contemplated in section 473.592 with respect to the basketball
and hockey arena.
(i) The council has entered into an agreement with the brokerage firm or brokerage firms to
be used in connection with the issuance and sale of the bonds guaranteeing that fees and charges
payable to the brokerage firm or firms in connection therewith, including any underwriting
discounts, shall not exceed fees and charges customarily payable in connection with the issuance
and sale of bonds secured by the pledge of the full faith and credit of the city of Minneapolis.
The validity of any bonds issued under subdivision 2, clause (a), and the obligations of
the council and commission related to them, shall not be conditioned upon or impaired by the
council's determination made pursuant to this subdivision. For purposes of issuing the bonds
the determinations made by the commission and council shall be deemed conclusive, and the
council shall be and remain obligated for the security and payment of the bonds irrespective of
determinations which may be erroneous, inaccurate, or otherwise mistaken.
(j) The commission has entered into arrangements with any other persons to create a
condominium or leasehold condominium, or common interest community or leasehold common
interest community, with respect to the building containing the basketball and hockey arena,
including the arena playing and spectator areas, and all other portions of the building, and
together with the arena land and all other related improvements, easements and other appurtenant
and ancillary property and property rights. The Minneapolis Community Development Agency
in its capacity as ground lease landlord may be a party to the condominium or common
interest community declaration. The condominium or common interest community declaration
shall establish the portion of the building containing the health club as a separate unit of the
condominium or common interest community, and the commission shall have entered into an
agreement or agreements with a private sports and health club organization which shall require
that the organization shall purchase or retain ownership of the unit with its own funds and at
no cost or expense to the commission, and that the organization shall pay for all utility and
other operating costs and expenses including allocated common expenses and pay ad valorem
property taxes for the unit. The condominium or common interest community declaration may
also establish other units in the condominium or common interest community which shall include
the arena playing and spectator areas and may also include office space, restaurant space, locker
rooms, private spectator suites or boxes, signage, and other areas, and may also establish common
elements, limited common elements and other easements and interests as the commission deems
necessary or appropriate. The agreement or agreements between the commission and the private
sports and health club organization may also address additional matters which may be the subject
of the bylaws or other agreements or arrangements among unit owners of condominiums or
common interest communities, either as part of, or separately from, the provisions of chapter
515A or 515B, or any other items as may be ordinarily and customarily negotiated between the
commission and the organization.
(k) The private sports and health club organization has executed an assessment agreement
pursuant to section 469.177, subdivision 8, obligating payment of ad valorem taxes based on a
minimum market value of the health club of at least $10,000,000 with the city of Minneapolis or
the Minneapolis Community Development Agency.
(l) The commission has executed an agreement requiring the commission to remit annually
to the Minneapolis Community Development Agency or appropriate agency an amount which
together with any ad valorem taxes or other amounts received by the city of Minneapolis or the
Minneapolis Community Development Agency from the health club as tax increments equals the
debt service required by the tax increment district attributable to the basketball and hockey arena
until the current outstanding indebtedness or any refunding thereof has been paid or retired.
(m) The development agreement shall be amended:
(i) so that no payments are due to the city of Minneapolis or the Minneapolis Community
Development Agency from the commission or any other person with respect to the sale, ownership
or operation of the basketball and hockey arena, except as provided in clauses (k), (l), and (n); and
(ii) to confirm the satisfactory performance of the obligations of the parties to the
development agreement on the effective date of the commission's acquisition; provided, that
the city of Minneapolis and the Minneapolis Community Development Agency shall not be
required to release any claim they may have under the development agreement with respect to
the operations or sale of the health club (except as such claim may arise from the commission's
acquisition of the basketball and hockey arena and the contemporaneous sale or transfer of the
health club to those persons who own the basketball and hockey arena and the health club on the
date of the commission's acquisition) or from the operations or sale of the professional basketball
organization occupying the basketball and hockey arena or the security they may have under the
development agreement or the ground lease to assure its performance, pursuant to the guaranty of
the guarantors in the event of any default of the commission under the ground lease, or of the
owners of the health club with respect to the payment of ad valorem taxes or any payment due
from them under the development agreement as amended in accordance with the provisions
of this subdivision.
(n) The commission has executed an agreement with the city of Minneapolis providing that
for so long as the commission owns the basketball and hockey arena the city shall not impose any
entertainment tax or surcharge on tickets purchased for any and all events at the basketball and
hockey arena. The agreement may also provide that the commission shall compensate the city for
the forbearance of the entertainment tax in effect on the effective date of Laws 1994, chapter 648,
plus accrued interest, after payment of basketball and hockey arena debt service, the necessary
and appropriate funding of debt reserve of the basketball and hockey arena and all expenses of
operation, administration, and maintenance, and the funding of a capital reserve for the repair,
remodeling and renovation of the basketball and hockey arena. The required funding of the capital
reserve shall be in an amount mutually agreed to by the commission and the city.
(o) The ground lease shall be amended by the Minneapolis Community Development
Agency to the reasonable satisfaction of the commission to provide:
(i) that the commission's sole financial obligation to the landlord shall be to make the
payment provided for in clause (1) from the net revenues of the commission attributable to the
operation of the basketball and hockey arena;
(ii) that the term of the lease shall be 99 years;
(iii) that the commission shall have the option to purchase the arena land upon the payment
of $10 at any time during the term of the ground lease, but, unless otherwise agreed to by the
Minneapolis Community Development Agency, only after the payment or retirement of the
general obligation tax increment bonds previously issued by the city of Minneapolis to assist in
financing the acquisition of the arena land; and
(iv) other amendments as the commission deems necessary and reasonable to accomplish its
purposes as provided in sections 473.598 and 473.599.
(p) The commission has received a report or reports by qualified consultants on the basketball
and hockey arena, the health club and the arena land, based on thorough inspection in accordance
with generally accepted professional standards and any correction, repair, or remediation
disclosed by the reports has been made to the satisfaction of commission.
    Subd. 5. Security. To the extent and in the manner provided in sections 473.592 and
473.595, the taxes described in section 473.592 for the basketball and hockey arena, the tax,
surcharge and other revenues of the commission described in section 473.595, subdivision
1a , attributable to the basketball and hockey arena and any other revenues of the commission
attributable to the basketball and hockey arena shall be and remain pledged and appropriated for
the purposes specified in Laws 1994, chapter 648, article 1, and for the payment of all necessary
and reasonable expenses of the operation, administration, maintenance, and debt service of the
basketball and hockey arena until all bonds referred to in section 473.599, subdivision 2, are
fully paid or discharged in accordance with law. Bonds issued pursuant to this section may be
secured by a bond resolution, or by a trust indenture entered into by the council with a corporate
trustee within or outside the state, which shall define the tax and other revenues pledged for the
payment and security of the bonds. The pledge shall be a valid charge on the tax, surcharge and
other revenues attributable to the basketball and hockey arena referred to in sections 473.592,
473.595, subdivision 1a, 473.598, and 473.599 from the date when bonds are first issued or
secured under the resolution or indenture and shall secure the payment of principal and interest
and redemption premiums when due and the maintenance at all times of a reserve securing the
payments. No mortgage of or security interest in any tangible real or personal property shall be
granted to the bondholders or the trustee, but they shall have a valid security interest in all tax and
other revenues received and accounts receivable by the commission or council under sections
473.592 to the extent of the tax imposed as security for the debt service of the basketball and
hockey arena, 473.595, subdivision 1a, 473.598, and 473.599, as against the claims of all other
persons in tort, contract, or otherwise, irrespective of whether the parties have notice of them,
and without possession or filing as provided in the Uniform Commercial Code or any other law.
In the bond resolution or trust indenture the council may make the covenants, which shall be
binding upon the commission, as are determined to be usual and reasonably necessary for the
protection of the bondholders. No pledge, mortgage, covenant, or agreement securing bonds may
be impaired, revoked, or amended by law or by action of the council, commission, or city, except
in accordance with the terms of the resolution or indenture under which the bonds are issued, until
the obligations of the council under the resolution or indenture are fully discharged.
    Subd. 6. Revenue anticipation certificates. After approval by the council and final adoption
by the commission of an annual budget of the commission for operation, administration, and
maintenance of the basketball and hockey arena, and in anticipation of the proceeds from the taxes
under section 473.592 and the revenues of the commission provided for in the budget, but subject
to any limitation or prohibition in a bond resolution or indenture, the council may authorize the
issuance, negotiation, and sale, in the form and manner and upon the terms that it may determine,
of revenue anticipation certificates. The principal amount of the certificates outstanding shall at
no time exceed 25 percent of the total amount of the tax and other revenues anticipated. The
certificates shall mature not later than three months after the close of the budget year. Prior to the
approval and final adoption of the annual budget of the commission, the council may authorize
revenue anticipation certificates under this subdivision. So much of the anticipated tax and other
revenues as may be needed for the payment of the certificates and interest on them shall be paid
into a special debt service fund established for the certificates in the council's financial records. If
for any reason the anticipated tax and other revenues are insufficient, the certificates and interest
shall be paid from the first tax, surcharge and other revenues received attributable to the basketball
and hockey arena, subject to any limitation or prohibition in a bond resolution or indenture. The
proceeds of the certificates may be used for any purpose for which the anticipated revenues or
taxes may be used or for any purpose for which bond proceeds under subdivision 2 may be used.
    Subd. 7. Arena free of mortgages, liens, and obligations. With the exception of the
obligations imposed by sections 473.598 and 473.599, the commission shall not assume any notes,
pledges, mortgages, liens, encumbrances, contracts, including advertising contracts or marquee
agreements, or other obligations upon acquisition of the basketball and hockey arena or the
arena land, including but not by way of limitation, management or concession agreements. Upon
acquisition by the commission, the basketball and hockey arena and the arena land shall be free of
all liens and encumbrances, including the foregoing but excluding the easements and rights-of-way
that the commission shall determine do not materially impair or affect its ownership and operation
of the basketball and hockey arena. Upon acquisition, the commission shall, through a process
involving statewide public participation, select a name for the basketball and hockey arena. In the
process of selecting the name, the commission shall consider its obligation under section 473.599,
subdivision 1 , but that obligation must not be the principal consideration in making the selection.
    Subd. 8. Reimbursement to state. The commission shall compensate the state for its
contribution from the general fund under section 240A.08, plus accrued interest, after payment
of basketball and hockey arena debt service, the necessary and appropriate funding of debt
reserve of the basketball and hockey arena and all expenses of operation, administration, and
maintenance and the funding of a capital reserve for the repair, remodeling and renovation of the
basketball and hockey arena. Compensation paid to the state shall occur at the same time that
compensation is paid to the city of Minneapolis, as provided in paragraph (n) of subdivision 4,
on a basis proportionate to the amount of forbearance of the entertainment tax or surcharge as
provided in paragraph (n) to that date, and the amount of general fund appropriations paid by the
state under section 240A.08 to that date. No reimbursement will be paid under this subdivision
after (1) the aggregate amount of the appropriations granted under section 240A.08 to that time,
plus accrued interest, has been reimbursed under this subdivision, or (2) December 31, 2024,
whichever is earlier.
History: 1994 c 648 art 1 s 15; 1995 c 186 s 89