Bill Text: MN HF1236 | 2013-2014 | 88th Legislature | Introduced
Bill Title: Capital investment; alternative general system to issue state and local debt obligations provided, Minnesota All-Government Bond Act enacted, funding provided, and money appropriated.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-03-04 - Introduction and first reading, referred to Government Operations [HF1236 Detail]
Download: Minnesota-2013-HF1236-Introduced.html
1.2relating to public finance; providing an alternative general system to issue state
1.3and local debt obligations; enacting the "Minnesota All-Government Bond Act";
1.4appropriating money;proposing coding for new law as Minnesota Statutes,
1.5chapter 16F.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [16F.01] SHORT TITLE.
1.8Sections 16F.01 to 16F.11 may be cited as the "Minnesota All-Government Bond
1.9Act."
1.10 Sec. 2. [16F.02] DEFINITIONS.
1.11 Subdivision 1. Scope. For the purposes of sections 16F.01 to 16F.11, the following
1.12terms have the meanings given them in this section.
1.13 Subd. 2. Board. "Board" means the Minnesota State Board of Investment.
1.14 Subd. 3. Commissioner. "Commissioner" means the commissioner of management
1.15and budget.
1.16 Subd. 4. Minnesota all-government state bonds. "Minnesota all-government state
1.17bonds" means bonds issued by the state pursuant to sections 16F.01 to 16F.11.
1.18 Subd. 5. Political subdivisions. "Political subdivisions" means cities, counties,
1.19towns, school districts, special service districts, and any other local units of government in
1.20Minnesota authorized to incur public debt through the issuance of bonds.
1.21 Sec. 3. [16F.03] MINNESOTA ALL-GOVERNMENT DEBT FINANCING FUND.
1.22For the purpose of providing an alternative financing mechanism for the state
1.23and for political subdivisions in lieu of the direct issuance of bonds by subdivisions,
2.1the Minnesota all-government debt financing fund is established. Proceeds of bonds
2.2issued pursuant to sections 16F.01 to 16F.11 shall be credited to this fund and are annually
2.3appropriated to the commissioner for use at any time. The commissioner shall utilize these
2.4appropriated funds only:
2.5(1) for loans to political subdivisions as provided in section 16F.05;
2.6(2) for state projects authorized to be financed by state bonds consistent with the
2.7Minnesota Constitution, article XI; and
2.8(3) for appropriations made pursuant to this section.
2.9Funds appropriated to this fund shall not cancel and remain available for expenditure.
2.10 Sec. 4. [16F.04] MINNESOTA ALL-GOVERNMENT STATE BONDS.
2.11 Subdivision 1. Authorization. The commissioner shall issue bonds of the state of
2.12Minnesota designated as Minnesota all-government state bonds to finance state projects
2.13authorized by the legislature and to implement the political subdivisions loan program
2.14established by section 16F.05. Proceeds of the bonds are appropriated to the commissioner
2.15for the Minnesota all-government debt fund. The full faith, credit, and taxing powers of
2.16the state are irrevocably pledged for the prompt and full payment of these bonds and their
2.17interest. The proceeds of the bonds shall be credited to the Minnesota all-government debt
2.18fund, except that accrued interest and any premium received on sale of the bonds shall be
2.19credited to the state all-government bond repayment account established in section 16F.08,
2.20together with any additional sum directed to be so credited by each law authorizing an
2.21issue of the bonds. Bonds shall be issued pursuant to this section only as authorized by
2.22section 16F.07 or by other law adopted in accordance with the provisions of the Minnesota
2.23Constitution, article XI, section 7. Any law authorizing the issuance of bonds shall,
2.24together with this section, constitute complete authority for the issue, and the bonds shall
2.25not be subject to restrictions or limitations contained in any other law.
2.26 Subd. 2. Manner of issue. Upon issue by the commissioner, the State Board of
2.27Investment, as fiscal agent, shall market Minnesota all-government state bonds as the
2.28board deems appropriate. The board may offer the bonds for sale, either to the public or
2.29on a private placement basis, to individual investors, institutional investors, syndicated
2.30investors, and other investors. The board may also form and market unit tax exempt bond
2.31pools composed of Minnesota all-government state bonds. These units may be sold to any
2.32person to whom the bonds may be offered for sale pursuant to this subdivision. The board
2.33shall determine the sales price and interest rate of the bonds to be sold and may request
2.34the advice of the commissioner, or others, in making this determination. Notwithstanding
2.35the provisions of any law to the contrary, if the board determines to purchase Minnesota
3.1all-government state bonds for its own accounts to aid the marketing of the bonds and not
3.2for long-term investment, standards of prudence required of the board in its investment
3.3decisions are satisfied if any lower investment return realized by the purchase compared
3.4with the return that would otherwise be realized is compensated for by marketing fees
3.5credited to the account whose funds are so invested.
3.6 Subd. 3. Issuance and marketing expenses. All expenses incidental to the sale,
3.7printing, execution, marketing, and delivery of bonds pursuant to this section, including
3.8but not limited to actual and necessary travel and subsistence expenses of state officers
3.9and employees for these purposes, shall be deducted from the Minnesota all-government
3.10financing fund, and are appropriated for expenditure to the state officials or entities
3.11incurring the expense. The amounts necessary for the expenses are appropriated from the
3.12fund, but if any amount is specifically appropriated for this purpose in an act authorizing
3.13the issuance of bonds pursuant to this section, expenses are limited to the amount so
3.14appropriated.
3.15 Subd. 4. Form and nature of bonds. The bonds shall be issued and sold at the
3.16times, in the form and denominations, at the maturities, with provision for registration,
3.17conversion, and exchange and for the issuance of notes in anticipation of the sale and
3.18delivery of definitive bonds, and in accordance with further rules, as the commissioner
3.19determines. The bonds shall be issued and sold without option of prior payment or subject
3.20to prepayment upon the notice and at the times and prices, payable at the bank or banks,
3.21within or without the state as the commissioner determines. The bonds shall be subject to
3.22the approval of the attorney general, but not subject to the provisions of the Administrative
3.23Procedure Act. Each bond shall mature not later than 20 years from its date of issue,
3.24shall be sold at not less than par plus accrued interest, and shall be executed by the
3.25commissioner and attested by the secretary of state under their official seals. The signature
3.26of one of these officers on the face of any bond, and their seals, and the signature of both
3.27officers on the interest coupons appurtenant to any bond, may be printed, lithographed,
3.28stamped, or engraved on them. The commissioner may issue uncertificated securities in
3.29accordance with the provisions of Article VIII of the Uniform Commercial Code.
3.30 Subd. 5. Bondholder indemnification. The commissioner, subject to the approval
3.31of the attorney general, shall ascertain and certify to the purchasers of the bonds the
3.32performance and existence of all acts, conditions, and things necessary to make them valid
3.33and binding obligations of the state of Minnesota in accordance with their terms. The
3.34state shall be a self-insurer as to errors by any state official affecting the validity or tax
3.35exempt status of Minnesota all-government state bonds. The state shall hold harmless and
3.36indemnify any person suffering loss due to an error as described in this subdivision. There
4.1is annually appropriated to the commissioner from the general fund, as an open, standing
4.2appropriation, amounts sufficient at any time to carry out the provisions of this subdivision.
4.3 Subd. 6. Partial redemption. If in any case a portion of the debt underlying an
4.4issue of Minnesota all-government state bonds is defective because it is unauthorized, or
4.5is invalid as a basis for tax-exempt status, or in any way impairs the value or validity of a
4.6Minnesota all-government state bond, the defect shall be allocated by the commissioner to
4.7a portion of the particular bond issue equal to the amount of the defective debt. Without
4.8impairing the rights of any person as provided in subdivision 5, the portion of bonds to
4.9which the defect is allocated under this subdivision shall be redeemed and damages shall
4.10be paid as specified in subdivision 5. Bonds in the remaining portion of the issue shall not
4.11be affected in any way by the redemption nor by the defect which caused the redemption.
4.12 Subd. 7. Purchase by financial institutions. Notwithstanding any provision of
4.13law to the contrary, Minnesota all-government state bonds, whether or not rated by a
4.14national rating service, satisfy all rating requirements imposed for its investments on
4.15any financial institution.
4.16 Sec. 5. [16F.05] LOAN AUTHORIZATION; APPLICATIONS FROM
4.17POLITICAL SUBDIVISIONS.
4.18 Subdivision 1. Authorization. The commissioner, upon timely receipt of a loan
4.19application from a political subdivision, may loan to the political subdivision proceeds
4.20from the issuance of Minnesota all-government state bonds. The commissioner's decision
4.21whether or not to make the loan is discretionary, but the commissioner shall not effect a
4.22loan if the commissioner determines that:
4.23(1) the political subdivision lacks legal authority to issue general obligation bonds
4.24for the purpose for which the loan is requested;
4.25(2) the political subdivision is currently in default on a loan pursuant to this program;
4.26(3) the political subdivision does not appear to be financially able to repay the loan
4.27requested;
4.28(4) the political subdivision has not taken reasonable, preliminary steps in
4.29preparation for repayment of the loan;
4.30(5) the issuance of Minnesota all-government state bonds in connection with the
4.31loan would violate the Minnesota Constitution; or
4.32(6) it would not be financially feasible or wise for the state to make the requested loan.
4.33 Subd. 2. Authorization; conditions. The commissioner, on behalf of the state and
4.34the authorized representatives of the political subdivision, shall enter into an agreement
4.35providing:
5.1(1) the political subdivision is irrevocably bound to repay the loan in full;
5.2(2) the political subdivision shall hold the state and its officers and employees
5.3harmless from any claim, cause of action, or damages arising from the political
5.4subdivision's misapplication of loaned funds;
5.5(3) the books, records, and accounts of the political subdivision shall be available
5.6during business hours at any time for inspection by either the commissioner or state
5.7auditor; and
5.8(4) other conditions as may be required by the commissioner.
5.9 Subd. 3. Withholding by commissioner. When making a loan to a political
5.10subdivision, the commissioner shall deduct an amount sufficient, when added to the
5.11balance on hand in the portion of the bond account dedicated to debt service for the subject
5.12loan, to pay all principal and interest due and to become due on the portion of the bonds
5.13issued for the particular loan to and including July 1 in the second ensuing year. The funds
5.14so withheld shall be placed in the Minnesota all-government repayment bond account in
5.15the state bond fund and are appropriated for expenditure at any time for debt service
5.16on Minnesota all-government state bonds.
5.17 Subd. 4. Repayment by political subdivisions. Political subdivisions receiving
5.18loans pursuant to this section shall obtain repayment funds and transmit those funds to the
5.19state in the same manner as if the political subdivisions had themselves issued bonds for
5.20the purposes for which they obtained loans from the Minnesota all-government financing
5.21fund. In addition to the initial withholding undertaken by the commissioner pursuant to
5.22subdivision 3, each loan recipient shall, not later than October 15 of each year, transmit to
5.23the commissioner a loan repayment sum sufficient in amount, when added to the balance
5.24on hand in the bond account, to pay all principal and interest due and to become due on
5.25the portion of the bonds issued for the subject loan to and including July 1 in the second
5.26ensuing year. The funds so transmitted shall be placed in the Minnesota all-government
5.27repayment bond account in the state bond fund and are appropriated for expenditure at any
5.28time for debt service on Minnesota all-government state bonds.
5.29 Subd. 5. Loan rules. The commissioner shall promulgate and adopt rules necessary
5.30regarding loan applications, the granting of loans, and administration of this program.
5.31 Sec. 6. [16F.06] STATE PROJECTS.
5.32The commissioner may issue Minnesota all-government state bonds pursuant to the
5.33provisions of sections 16F.01 to 16F.11 to finance state projects if the commissioner
5.34determines that the project has been authorized by the legislature in accordance with the
5.35Minnesota Constitution, article XI, section 7. The proceeds of the bonds are annually
6.1appropriated to the commissioner to be disbursed for the purposes of sections 16F.01
6.2to 16F.11.
6.3 Sec. 7. [16F.07] BOND AUTHORIZATION.
6.4For the purpose of providing funds to the commissioner for establishment and
6.5implementation of the political subdivision loan programs established by section 16F.05,
6.6and state projects as authorized by section 16F.06 and other law, the commissioner is
6.7authorized to sell and issue Minnesota all-government state bonds in the manner and upon
6.8the conditions provided in sections 16F.01 to 16F.11 and in the Minnesota Constitution,
6.9article XI, section 7. The proceeds of the bonds, except premium and accrued interest,
6.10are appropriated to the Minnesota all-government state debt fund in the general fund, for
6.11expenditure by the commissioner for the purpose for which the bonds are authorized in
6.12accordance with the provisions of section 16F.03. In order to reduce the amount of taxes
6.13otherwise required by the Minnesota Constitution and by section 16F.09 to be levied for
6.14the payment of interest and principal on Minnesota all-government state bonds, there is
6.15also appropriated annually to the Minnesota all-government state bond repayment account
6.16in the state bond fund from the general fund a sum of money sufficient in amount, when
6.17added to the balance on hand on November 1 in each year in the bond repayment account,
6.18to pay all principal and interest due and to become due on the bonds to and including July
6.191 in the second ensuing year. The money received and on hand pursuant to this annual
6.20appropriation is available in the state bond fund prior to the levy of the tax in any year
6.21required by the Minnesota Constitution and by section 16F.09 and shall be used to reduce
6.22the amount of the tax otherwise required to be levied.
6.23 Sec. 8. [16F.08] MINNESOTA ALL-GOVERNMENT BOND REPAYMENT
6.24ACCOUNT.
6.25The commissioner of management and budget shall maintain in the state bond fund a
6.26separate bookkeeping account which shall be designated as the Minnesota all-government
6.27state bond repayment account, to record receipts and disbursements of money transferred
6.28to the fund to pay Minnesota all-government state bonds and to record income from the
6.29investment of the money, which income shall be credited to the account in each fiscal year.
6.30The amounts directed to be transferred to this bond repayment account are appropriated to
6.31it, and the legislature may also appropriate to the bond repayment account any other money
6.32in the state treasury not otherwise appropriated. On November 1 of each year there shall
6.33be transferred to the bond repayment account all of the money then available under any
6.34appropriation or a lesser sum as will be sufficient, with all money previously transferred to
7.1the bond repayment account and all income from the investment of the money, and all
7.2payments by political subdivisions, to pay all principal and interest then and theretofore
7.3due and all principal and interest to become due to and including July 1 in the second
7.4ensuing year on Minnesota all-government state bonds. All money so transferred and all
7.5income from the investment of it shall be available to pay the bonds and interest on them,
7.6and so much thereof as may be necessary is appropriated for these payments. The state
7.7auditor is directed to make the appropriate entries in the accounts of the respective funds.
7.8 Sec. 9. [16F.09] TAX LEVY.
7.9On or before December 1 in each year, the state auditor shall levy on all taxable
7.10property within the state whatever tax may be necessary to produce an amount sufficient,
7.11with all money then and theretofore credited to the Minnesota all-government state
7.12bond repayment account, to pay the entire amount of principal and interest then and
7.13theretofore due and principal and interest to become due on or before July 1 in the second
7.14year thereafter on Minnesota all-government state bonds. This tax shall be levied upon
7.15all real property used for the purposes of a homestead, as well as other taxable property,
7.16notwithstanding the provisions of other law, and shall be subject to no limitation of rate
7.17or amount until all these bonds and interest on them are fully paid. The proceeds of this
7.18tax are appropriated and shall be credited to the state bond fund, and the principal of and
7.19interest on the bonds are payable from the proceeds, and the whole of the proceeds, or
7.20so much as may be necessary, is appropriated for the payments. If at any time there is
7.21insufficient money from the proceeds of taxes to pay the principal and interest when due
7.22on Minnesota all-government state bonds, the principal and interest shall be paid out of
7.23the general fund in the state treasury, and the amount necessary is annually appropriated,
7.24with the sums from tax levies and the general fund subject to future reimbursement to the
7.25bond fund by the Minnesota all-government state bond repayment account.
7.26 Sec. 10. [16F.10] CERTIFICATES OF INDEBTEDNESS.
7.27Whenever the state auditor would otherwise be required to levy a property tax to pay
7.28obligations incurred under sections 16F.01 to 16F.11, and there is a reasonable expectation
7.29that the obligations will be paid from appropriations or payments by political subdivisions
7.30pursuant to section 16F.07, the commissioner may issue certificates of indebtedness as
7.31authorized by the Minnesota Constitution, article XI, section 6, in an amount sufficient to
7.32avoid the necessity of a levy pursuant to the Minnesota Constitution, article XI, section 7.
7.33 Sec. 11. [16F.11] DEFAULT.
8.1If a political subdivision defaults on repayment of any loan financed through
8.2Minnesota all-government state bonds, the state auditor shall cause taxes to be levied on
8.3the real property of the defaulting political subdivision in an amount sufficient to make
8.4overdue payments plus interest at a reasonable rate not greater than one percent more than
8.5the average annual rate of interest on Minnesota all-government state bonds issued during
8.6the preceding calendar year and to make future loan payments as they become due. The
8.7interest rate shall be calculated to yield an amount sufficient to discharge the costs to the
8.8state of the default. All funds generated from this levy shall be transmitted to the state,
8.9placed in the Minnesota all-government state bond repayment account in the state bond
8.10fund, and are appropriated for expenditure at any time for debt service on Minnesota
8.11all-government state bonds.
8.12 Sec. 12. APPROPRIATION.
8.13$150,000 is appropriated to the commissioner as a revolving fund to cover the initial
8.14cost of issuance of Minnesota all-government state bonds.
8.15 Sec. 13. EFFECTIVE DATE.
8.16Sections 1 to 12 are effective the day following final enactment. To facilitate the
8.17prompt implementation of this loan program, the commissioner is authorized to promulgate
8.18temporary rules pursuant to the provisions of the Administrative Procedure Act.
1.3and local debt obligations; enacting the "Minnesota All-Government Bond Act";
1.4appropriating money;proposing coding for new law as Minnesota Statutes,
1.5chapter 16F.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.7 Section 1. [16F.01] SHORT TITLE.
1.8Sections 16F.01 to 16F.11 may be cited as the "Minnesota All-Government Bond
1.9Act."
1.10 Sec. 2. [16F.02] DEFINITIONS.
1.11 Subdivision 1. Scope. For the purposes of sections 16F.01 to 16F.11, the following
1.12terms have the meanings given them in this section.
1.13 Subd. 2. Board. "Board" means the Minnesota State Board of Investment.
1.14 Subd. 3. Commissioner. "Commissioner" means the commissioner of management
1.15and budget.
1.16 Subd. 4. Minnesota all-government state bonds. "Minnesota all-government state
1.17bonds" means bonds issued by the state pursuant to sections 16F.01 to 16F.11.
1.18 Subd. 5. Political subdivisions. "Political subdivisions" means cities, counties,
1.19towns, school districts, special service districts, and any other local units of government in
1.20Minnesota authorized to incur public debt through the issuance of bonds.
1.21 Sec. 3. [16F.03] MINNESOTA ALL-GOVERNMENT DEBT FINANCING FUND.
1.22For the purpose of providing an alternative financing mechanism for the state
1.23and for political subdivisions in lieu of the direct issuance of bonds by subdivisions,
2.1the Minnesota all-government debt financing fund is established. Proceeds of bonds
2.2issued pursuant to sections 16F.01 to 16F.11 shall be credited to this fund and are annually
2.3appropriated to the commissioner for use at any time. The commissioner shall utilize these
2.4appropriated funds only:
2.5(1) for loans to political subdivisions as provided in section 16F.05;
2.6(2) for state projects authorized to be financed by state bonds consistent with the
2.7Minnesota Constitution, article XI; and
2.8(3) for appropriations made pursuant to this section.
2.9Funds appropriated to this fund shall not cancel and remain available for expenditure.
2.10 Sec. 4. [16F.04] MINNESOTA ALL-GOVERNMENT STATE BONDS.
2.11 Subdivision 1. Authorization. The commissioner shall issue bonds of the state of
2.12Minnesota designated as Minnesota all-government state bonds to finance state projects
2.13authorized by the legislature and to implement the political subdivisions loan program
2.14established by section 16F.05. Proceeds of the bonds are appropriated to the commissioner
2.15for the Minnesota all-government debt fund. The full faith, credit, and taxing powers of
2.16the state are irrevocably pledged for the prompt and full payment of these bonds and their
2.17interest. The proceeds of the bonds shall be credited to the Minnesota all-government debt
2.18fund, except that accrued interest and any premium received on sale of the bonds shall be
2.19credited to the state all-government bond repayment account established in section 16F.08,
2.20together with any additional sum directed to be so credited by each law authorizing an
2.21issue of the bonds. Bonds shall be issued pursuant to this section only as authorized by
2.22section 16F.07 or by other law adopted in accordance with the provisions of the Minnesota
2.23Constitution, article XI, section 7. Any law authorizing the issuance of bonds shall,
2.24together with this section, constitute complete authority for the issue, and the bonds shall
2.25not be subject to restrictions or limitations contained in any other law.
2.26 Subd. 2. Manner of issue. Upon issue by the commissioner, the State Board of
2.27Investment, as fiscal agent, shall market Minnesota all-government state bonds as the
2.28board deems appropriate. The board may offer the bonds for sale, either to the public or
2.29on a private placement basis, to individual investors, institutional investors, syndicated
2.30investors, and other investors. The board may also form and market unit tax exempt bond
2.31pools composed of Minnesota all-government state bonds. These units may be sold to any
2.32person to whom the bonds may be offered for sale pursuant to this subdivision. The board
2.33shall determine the sales price and interest rate of the bonds to be sold and may request
2.34the advice of the commissioner, or others, in making this determination. Notwithstanding
2.35the provisions of any law to the contrary, if the board determines to purchase Minnesota
3.1all-government state bonds for its own accounts to aid the marketing of the bonds and not
3.2for long-term investment, standards of prudence required of the board in its investment
3.3decisions are satisfied if any lower investment return realized by the purchase compared
3.4with the return that would otherwise be realized is compensated for by marketing fees
3.5credited to the account whose funds are so invested.
3.6 Subd. 3. Issuance and marketing expenses. All expenses incidental to the sale,
3.7printing, execution, marketing, and delivery of bonds pursuant to this section, including
3.8but not limited to actual and necessary travel and subsistence expenses of state officers
3.9and employees for these purposes, shall be deducted from the Minnesota all-government
3.10financing fund, and are appropriated for expenditure to the state officials or entities
3.11incurring the expense. The amounts necessary for the expenses are appropriated from the
3.12fund, but if any amount is specifically appropriated for this purpose in an act authorizing
3.13the issuance of bonds pursuant to this section, expenses are limited to the amount so
3.14appropriated.
3.15 Subd. 4. Form and nature of bonds. The bonds shall be issued and sold at the
3.16times, in the form and denominations, at the maturities, with provision for registration,
3.17conversion, and exchange and for the issuance of notes in anticipation of the sale and
3.18delivery of definitive bonds, and in accordance with further rules, as the commissioner
3.19determines. The bonds shall be issued and sold without option of prior payment or subject
3.20to prepayment upon the notice and at the times and prices, payable at the bank or banks,
3.21within or without the state as the commissioner determines. The bonds shall be subject to
3.22the approval of the attorney general, but not subject to the provisions of the Administrative
3.23Procedure Act. Each bond shall mature not later than 20 years from its date of issue,
3.24shall be sold at not less than par plus accrued interest, and shall be executed by the
3.25commissioner and attested by the secretary of state under their official seals. The signature
3.26of one of these officers on the face of any bond, and their seals, and the signature of both
3.27officers on the interest coupons appurtenant to any bond, may be printed, lithographed,
3.28stamped, or engraved on them. The commissioner may issue uncertificated securities in
3.29accordance with the provisions of Article VIII of the Uniform Commercial Code.
3.30 Subd. 5. Bondholder indemnification. The commissioner, subject to the approval
3.31of the attorney general, shall ascertain and certify to the purchasers of the bonds the
3.32performance and existence of all acts, conditions, and things necessary to make them valid
3.33and binding obligations of the state of Minnesota in accordance with their terms. The
3.34state shall be a self-insurer as to errors by any state official affecting the validity or tax
3.35exempt status of Minnesota all-government state bonds. The state shall hold harmless and
3.36indemnify any person suffering loss due to an error as described in this subdivision. There
4.1is annually appropriated to the commissioner from the general fund, as an open, standing
4.2appropriation, amounts sufficient at any time to carry out the provisions of this subdivision.
4.3 Subd. 6. Partial redemption. If in any case a portion of the debt underlying an
4.4issue of Minnesota all-government state bonds is defective because it is unauthorized, or
4.5is invalid as a basis for tax-exempt status, or in any way impairs the value or validity of a
4.6Minnesota all-government state bond, the defect shall be allocated by the commissioner to
4.7a portion of the particular bond issue equal to the amount of the defective debt. Without
4.8impairing the rights of any person as provided in subdivision 5, the portion of bonds to
4.9which the defect is allocated under this subdivision shall be redeemed and damages shall
4.10be paid as specified in subdivision 5. Bonds in the remaining portion of the issue shall not
4.11be affected in any way by the redemption nor by the defect which caused the redemption.
4.12 Subd. 7. Purchase by financial institutions. Notwithstanding any provision of
4.13law to the contrary, Minnesota all-government state bonds, whether or not rated by a
4.14national rating service, satisfy all rating requirements imposed for its investments on
4.15any financial institution.
4.16 Sec. 5. [16F.05] LOAN AUTHORIZATION; APPLICATIONS FROM
4.17POLITICAL SUBDIVISIONS.
4.18 Subdivision 1. Authorization. The commissioner, upon timely receipt of a loan
4.19application from a political subdivision, may loan to the political subdivision proceeds
4.20from the issuance of Minnesota all-government state bonds. The commissioner's decision
4.21whether or not to make the loan is discretionary, but the commissioner shall not effect a
4.22loan if the commissioner determines that:
4.23(1) the political subdivision lacks legal authority to issue general obligation bonds
4.24for the purpose for which the loan is requested;
4.25(2) the political subdivision is currently in default on a loan pursuant to this program;
4.26(3) the political subdivision does not appear to be financially able to repay the loan
4.27requested;
4.28(4) the political subdivision has not taken reasonable, preliminary steps in
4.29preparation for repayment of the loan;
4.30(5) the issuance of Minnesota all-government state bonds in connection with the
4.31loan would violate the Minnesota Constitution; or
4.32(6) it would not be financially feasible or wise for the state to make the requested loan.
4.33 Subd. 2. Authorization; conditions. The commissioner, on behalf of the state and
4.34the authorized representatives of the political subdivision, shall enter into an agreement
4.35providing:
5.1(1) the political subdivision is irrevocably bound to repay the loan in full;
5.2(2) the political subdivision shall hold the state and its officers and employees
5.3harmless from any claim, cause of action, or damages arising from the political
5.4subdivision's misapplication of loaned funds;
5.5(3) the books, records, and accounts of the political subdivision shall be available
5.6during business hours at any time for inspection by either the commissioner or state
5.7auditor; and
5.8(4) other conditions as may be required by the commissioner.
5.9 Subd. 3. Withholding by commissioner. When making a loan to a political
5.10subdivision, the commissioner shall deduct an amount sufficient, when added to the
5.11balance on hand in the portion of the bond account dedicated to debt service for the subject
5.12loan, to pay all principal and interest due and to become due on the portion of the bonds
5.13issued for the particular loan to and including July 1 in the second ensuing year. The funds
5.14so withheld shall be placed in the Minnesota all-government repayment bond account in
5.15the state bond fund and are appropriated for expenditure at any time for debt service
5.16on Minnesota all-government state bonds.
5.17 Subd. 4. Repayment by political subdivisions. Political subdivisions receiving
5.18loans pursuant to this section shall obtain repayment funds and transmit those funds to the
5.19state in the same manner as if the political subdivisions had themselves issued bonds for
5.20the purposes for which they obtained loans from the Minnesota all-government financing
5.21fund. In addition to the initial withholding undertaken by the commissioner pursuant to
5.22subdivision 3, each loan recipient shall, not later than October 15 of each year, transmit to
5.23the commissioner a loan repayment sum sufficient in amount, when added to the balance
5.24on hand in the bond account, to pay all principal and interest due and to become due on
5.25the portion of the bonds issued for the subject loan to and including July 1 in the second
5.26ensuing year. The funds so transmitted shall be placed in the Minnesota all-government
5.27repayment bond account in the state bond fund and are appropriated for expenditure at any
5.28time for debt service on Minnesota all-government state bonds.
5.29 Subd. 5. Loan rules. The commissioner shall promulgate and adopt rules necessary
5.30regarding loan applications, the granting of loans, and administration of this program.
5.31 Sec. 6. [16F.06] STATE PROJECTS.
5.32The commissioner may issue Minnesota all-government state bonds pursuant to the
5.33provisions of sections 16F.01 to 16F.11 to finance state projects if the commissioner
5.34determines that the project has been authorized by the legislature in accordance with the
5.35Minnesota Constitution, article XI, section 7. The proceeds of the bonds are annually
6.1appropriated to the commissioner to be disbursed for the purposes of sections 16F.01
6.2to 16F.11.
6.3 Sec. 7. [16F.07] BOND AUTHORIZATION.
6.4For the purpose of providing funds to the commissioner for establishment and
6.5implementation of the political subdivision loan programs established by section 16F.05,
6.6and state projects as authorized by section 16F.06 and other law, the commissioner is
6.7authorized to sell and issue Minnesota all-government state bonds in the manner and upon
6.8the conditions provided in sections 16F.01 to 16F.11 and in the Minnesota Constitution,
6.9article XI, section 7. The proceeds of the bonds, except premium and accrued interest,
6.10are appropriated to the Minnesota all-government state debt fund in the general fund, for
6.11expenditure by the commissioner for the purpose for which the bonds are authorized in
6.12accordance with the provisions of section 16F.03. In order to reduce the amount of taxes
6.13otherwise required by the Minnesota Constitution and by section 16F.09 to be levied for
6.14the payment of interest and principal on Minnesota all-government state bonds, there is
6.15also appropriated annually to the Minnesota all-government state bond repayment account
6.16in the state bond fund from the general fund a sum of money sufficient in amount, when
6.17added to the balance on hand on November 1 in each year in the bond repayment account,
6.18to pay all principal and interest due and to become due on the bonds to and including July
6.191 in the second ensuing year. The money received and on hand pursuant to this annual
6.20appropriation is available in the state bond fund prior to the levy of the tax in any year
6.21required by the Minnesota Constitution and by section 16F.09 and shall be used to reduce
6.22the amount of the tax otherwise required to be levied.
6.23 Sec. 8. [16F.08] MINNESOTA ALL-GOVERNMENT BOND REPAYMENT
6.24ACCOUNT.
6.25The commissioner of management and budget shall maintain in the state bond fund a
6.26separate bookkeeping account which shall be designated as the Minnesota all-government
6.27state bond repayment account, to record receipts and disbursements of money transferred
6.28to the fund to pay Minnesota all-government state bonds and to record income from the
6.29investment of the money, which income shall be credited to the account in each fiscal year.
6.30The amounts directed to be transferred to this bond repayment account are appropriated to
6.31it, and the legislature may also appropriate to the bond repayment account any other money
6.32in the state treasury not otherwise appropriated. On November 1 of each year there shall
6.33be transferred to the bond repayment account all of the money then available under any
6.34appropriation or a lesser sum as will be sufficient, with all money previously transferred to
7.1the bond repayment account and all income from the investment of the money, and all
7.2payments by political subdivisions, to pay all principal and interest then and theretofore
7.3due and all principal and interest to become due to and including July 1 in the second
7.4ensuing year on Minnesota all-government state bonds. All money so transferred and all
7.5income from the investment of it shall be available to pay the bonds and interest on them,
7.6and so much thereof as may be necessary is appropriated for these payments. The state
7.7auditor is directed to make the appropriate entries in the accounts of the respective funds.
7.8 Sec. 9. [16F.09] TAX LEVY.
7.9On or before December 1 in each year, the state auditor shall levy on all taxable
7.10property within the state whatever tax may be necessary to produce an amount sufficient,
7.11with all money then and theretofore credited to the Minnesota all-government state
7.12bond repayment account, to pay the entire amount of principal and interest then and
7.13theretofore due and principal and interest to become due on or before July 1 in the second
7.14year thereafter on Minnesota all-government state bonds. This tax shall be levied upon
7.15all real property used for the purposes of a homestead, as well as other taxable property,
7.16notwithstanding the provisions of other law, and shall be subject to no limitation of rate
7.17or amount until all these bonds and interest on them are fully paid. The proceeds of this
7.18tax are appropriated and shall be credited to the state bond fund, and the principal of and
7.19interest on the bonds are payable from the proceeds, and the whole of the proceeds, or
7.20so much as may be necessary, is appropriated for the payments. If at any time there is
7.21insufficient money from the proceeds of taxes to pay the principal and interest when due
7.22on Minnesota all-government state bonds, the principal and interest shall be paid out of
7.23the general fund in the state treasury, and the amount necessary is annually appropriated,
7.24with the sums from tax levies and the general fund subject to future reimbursement to the
7.25bond fund by the Minnesota all-government state bond repayment account.
7.26 Sec. 10. [16F.10] CERTIFICATES OF INDEBTEDNESS.
7.27Whenever the state auditor would otherwise be required to levy a property tax to pay
7.28obligations incurred under sections 16F.01 to 16F.11, and there is a reasonable expectation
7.29that the obligations will be paid from appropriations or payments by political subdivisions
7.30pursuant to section 16F.07, the commissioner may issue certificates of indebtedness as
7.31authorized by the Minnesota Constitution, article XI, section 6, in an amount sufficient to
7.32avoid the necessity of a levy pursuant to the Minnesota Constitution, article XI, section 7.
7.33 Sec. 11. [16F.11] DEFAULT.
8.1If a political subdivision defaults on repayment of any loan financed through
8.2Minnesota all-government state bonds, the state auditor shall cause taxes to be levied on
8.3the real property of the defaulting political subdivision in an amount sufficient to make
8.4overdue payments plus interest at a reasonable rate not greater than one percent more than
8.5the average annual rate of interest on Minnesota all-government state bonds issued during
8.6the preceding calendar year and to make future loan payments as they become due. The
8.7interest rate shall be calculated to yield an amount sufficient to discharge the costs to the
8.8state of the default. All funds generated from this levy shall be transmitted to the state,
8.9placed in the Minnesota all-government state bond repayment account in the state bond
8.10fund, and are appropriated for expenditure at any time for debt service on Minnesota
8.11all-government state bonds.
8.12 Sec. 12. APPROPRIATION.
8.13$150,000 is appropriated to the commissioner as a revolving fund to cover the initial
8.14cost of issuance of Minnesota all-government state bonds.
8.15 Sec. 13. EFFECTIVE DATE.
8.16Sections 1 to 12 are effective the day following final enactment. To facilitate the
8.17prompt implementation of this loan program, the commissioner is authorized to promulgate
8.18temporary rules pursuant to the provisions of the Administrative Procedure Act.
