Minnesota Statutes 1996, Chapter 475.

PUBLIC INDEBTEDNESS

475.51 Definitions.

Subdivision 1. Terms. For the purposes of this
chapter, the terms defined in this section shall have the
meanings given them.

Subd. 2. Municipality. "Municipality" means a city
of any class, county, town, or school district.

Subd. 3. Obligation. "Obligation" means any promise
to pay a stated amount of money at a fixed future date or upon
demand of the obligee, regardless of the source of funds to be
used for its payment, made for the purpose of incurring debt,
including the purchase of property through an installment
purchase contract or any other deferred payment agreement, for
which funds are not appropriated in the current year's budget.

Subd. 4. Net debt. "Net debt" means the amount
remaining after deducting from its gross debt the amount of
current revenues which are applicable within the current fiscal
year to the payment of any debt and the aggregate of the
principal of the following:

(1) Obligations issued for improvements which are payable
wholly or partly from the proceeds of special assessments levied
upon property specially benefited thereby, including those which
are general obligations of the municipality issuing them, if the
municipality is entitled to reimbursement in whole or in part
from the proceeds of the special assessments.

(2) Warrants or orders having no definite or fixed maturity.

(3) Obligations payable wholly from the income from revenue
producing conveniences.

(4) Obligations issued to create or maintain a permanent
improvement revolving fund.

(5) Obligations issued for the acquisition, and betterment
of public waterworks systems, and public lighting, heating or
power systems, and of any combination thereof or for any other
public convenience from which a revenue is or may be derived.

(6) Debt service loans and capital loans made to a school
district under the provisions of sections 124.42 and 124.431.

(7) Amount of all money and the face value of all
securities held as a debt service fund for the extinguishment of
obligations other than those deductible under this subdivision.

(8) Obligations to repay loans made under section 216C.37.

(9) Obligations to repay loans made from money received
from litigation or settlement of alleged violations of federal
petroleum pricing regulations.

(10) Obligations issued to pay pension fund liabilities
under section 475.52, subdivision 6, or any charter authority.

(11) All other obligations which under the provisions of
law authorizing their issuance are not to be included in
computing the net debt of the municipality.

Subd. 5. Net tax capacity. "Net tax capacity" means
the latest valuation for purposes of taxation, as finally
equalized, of all property taxable within the municipality.

Subd. 6. Debt service fund. "Debt service fund"
means any money and investments in the treasury of a
municipality appropriated to pay the principal, interest, or
premiums for the redemption of any of its obligations. "Sinking
fund" means debt service fund. A separate balance sheet need
not be maintained for any debt service fund, and the fund need
not be segregated from other funds of the municipality in a
separate bank deposit account or in a separate investment fund
or account, unless so provided in a resolution or other
instrument securing obligations payable from the debt service
fund; but a separate bookkeeping account or accounts shall be
maintained in the official financial records of the municipality
reflecting all receipts and disbursements of money and
investments of principal and income appropriated for the
purposes of each debt service fund.

Subd. 7. Acquisition. "Acquisition" includes
purchase, condemnation, construction, and acquisition of
necessary land, easements, buildings, structures, machinery or
equipment.

Subd. 8. Betterment. "Betterment" includes
reconstruction, extension, improvement, repair, remodeling,
lighting, equipping, and furnishing.

Subd. 9. Governing body. "Governing body" means the
board, council, commission, or other body of the municipality
charged with the general control of its financial affairs;
provided, that where any charter or law confers bond issuing
power on a particular board or body of a municipality, such
board or body is the governing body under the provisions of
sections 475.51 to 475.75.

Subd. 10. General obligations. "General obligations"
means any obligations which pledge the full faith and credit of
the municipality to their payment.

Subd. 11. Reporting dealer to the Federal Reserve Bank
of New York. "Reporting dealer to the Federal Reserve Bank of
New York" means a securities broker-dealer licensed pursuant to
chapter 80A, or an affiliate thereof, which makes primary
markets in United States government securities and reports daily
to the federal reserve bank of New York its position with
respect to such securities held by it and amounts borrowed
thereon.

Subd. 12. Reverse repurchase agreement. "Reverse
repurchase agreement" means an obligation incurred by a
municipality to repurchase at a fixed future date and price a
security sold by it to a financial institution on the date of
the agreement, or another security identical as to the issuer,
source of payment, principal amount, interest rate, maturity,
and redemption provisions. The principal amount of the
obligation is the sale price of the security, excluding any
accrued interest thereon paid to the municipality. The interest
payable by the municipality on the obligation is the difference
between the sale price and the repurchase price of the security,
excluding any accrued interest thereon received by the financial
institution.

Subd. 13. Other governmental unit. "Other
governmental unit" means any public corporation, authority,
governmental unit, or other political subdivision of the state
of Minnesota that is not a municipality.

Subd. 14. Bond reinvestment program. "Bond
reinvestment program" means a program under which a
municipality, either directly or through an agent employed for
the purpose, offers and sells its obligations to the holders of
other obligations of the municipality. These offers and sales
are directed at the reinvestment in new obligations of funds
derived from maturing principal and interest and may also
include offers and sales of additional newly issued obligations
in addition to the reinvestment of principal and interest paid
or to be paid on outstanding obligations and provision for the
temporary investment of funds received for the purchase of new
obligations in tax-exempt securities pending the issuance of the
new obligations.

HIST: (1936) RL s 778; 1943 c 656 s 30 subd 3; 1947 c 296 s 2;
1949 c 682 s 1; 1951 c 422 s 1; 1961 c 752 s 8; 1971 c 903 s 1;
1973 c 123 art 5 s 7; 1974 c 380 s 1; 1976 c 324 s 1,2,26; 1977
c 259 s 1; 1978 c 674 s 41; 1987 c 289 s 4; 1987 c 312 art 1 s
10; 1987 c 344 s 17; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s
20; 1989 c 355 s 15,16; 1990 c 562 art 11 s 6; 1995 c 256 s 24;
1996 c 399 art 2 s 11


475.52 Bond issues; purposes.

Subdivision 1. Statutory cities. Any statutory city
may issue bonds or other obligations for the acquisition or
betterment of public buildings, means of garbage disposal,
hospitals, nursing homes, homes for the aged, schools,
libraries, museums, art galleries, parks, playgrounds, stadia,
sewers, sewage disposal plants, subways, streets, sidewalks,
warning systems; for any utility or other public convenience
from which a revenue is or may be derived; for a permanent
improvement revolving fund; for changing, controlling or
bridging streams and other waterways; for the acquisition and
betterment of bridges and roads within two miles of the
corporate limits; and for acquisition of equipment for snow
removal, street construction and maintenance, or fire fighting.
Without limitation by the foregoing the city may issue bonds to
provide money for any authorized corporate purpose except
current expenses.

Subd. 2. Home rule charter cities. Any city
governed by a home rule charter may issue bonds for any purpose
enumerated in subdivision 1 unless forbidden by its charter,
except that any such city may issue bonds for the acquisition of
ambulances and related equipment notwithstanding the provisions
of its charter; and for other purposes as authorized by its
charter.

Subd. 3. Counties. Any county may issue bonds for
the acquisition or betterment of courthouses, county
administrative buildings, health or social service facilities,
correctional facilities, law enforcement centers, jails,
morgues, libraries, parks, and hospitals, for roads and bridges
within the county or bordering thereon and for road equipment
and machinery and for ambulances and related equipment, and for
capital equipment for the administration and conduct of
elections providing the equipment is uniform countywide, except
that the power of counties to issue bonds in connection with a
library shall not exist in Hennepin county.

Subd. 4. Towns. Any town may issue bonds for the
acquisition and betterment of town halls, town roads and
bridges, nursing homes and homes for the aged, and for
acquisition of equipment for snow removal, road construction or
maintenance, and fire fighting and for the acquisition and
betterment of any buildings to house and maintain town equipment.

Subd. 5. School districts. For capital improvements
any school district may issue bonds for the acquisition or
betterment of school facilities, including gymnasiums, athletic
fields, stadia, teacherages, school garages, school buses, and
all other facilities for administration, academic instruction,
and physical and vocational education.

Subd. 6. Certain purposes. Any municipality may
issue bonds for paying judgments against it; for refunding
outstanding bonds; for funding floating indebtedness; or for
funding all or part of the municipality's current and future
unfunded liability for a pension or retirement fund or plan
referred to in section 356.20, subdivision 2, as those
liabilities are most recently computed pursuant to sections
356.215 and 356.216. The board of trustees or directors of a
pension fund or relief association referred to in section 69.77
or chapter 422A must consent and must be a party to any contract
made under this section with respect to the fund held by it for
the benefit of and in trust for its members.

HIST: (1942) RL s 784; 1907 c 297 s 1; 1909 c 261 s 1; 1921 c
209 s 2; 1939 c 223 s 1; 1945 c 126 s 1; 1947 c 296 s 4; 1949 c
682 s 2; 1959 c 42 s 2,3; 1961 c 51 s 1; 1967 c 583 s 4; 1969 c
333 s 5,6; 1973 c 123 art 5 s 7; 1974 c 69 s 1; 1976 c 324 s 3;
1978 c 743 s 17; 1985 c 109 s 15; 1Sp1985 c 14 art 8 s 49; 1986
c 314 s 2; 1988 c 519 s 3; 1995 c 256 s 25


475.525 Municipal district heating bonds.

Subdivision 1. General obligation bonds. A
municipality may, by resolution, authorize, issue and sell
general obligation bonds or obligations to finance any
expenditure by the municipality for the acquisition,
construction, expansion, modification or operation of a district
heating system and for the purpose of loaning the proceeds of
the bonds or obligations to any person, firm or public or
private corporation to acquire, construct, expand or modify a
district heating system. Except with regard to the net debt
limit as provided in section 465.74, subdivision 4, the general
obligation bonds or obligations authorized by this subdivision
shall be authorized, issued and sold in the same manner and
subject only to the same conditions as those provided in chapter
475. When revenues from the operation of a district heating
system are pledged to the repayment of the bonds or obligations,
the estimated collections of said revenues so pledged may be
deducted from the taxes otherwise required to be levied before
the issuance of the bonds or obligations under section 475.61,
subdivision 1, or the collections thereof may be certified
annually to reduce or cancel the initial tax levies in
accordance with section 475.61, subdivision 1 or 3.

Subd. 2. Revenue bonds. Notwithstanding any other
law, general or special, or the provisions of any home rule
charter to the contrary, a municipality may, by resolution,
authorize, issue and sell revenue bonds or obligations payable
solely from all or a portion of revenues derived from a district
heating system located wholly or partially within a municipality
to finance the acquisition, construction, expansion,
modification, or operation of a district heating system and for
the purpose of loaning the proceeds of the bonds or obligations
to any person, firm or public or private corporation to acquire,
construct, expand or modify a district heating system. The
bonds or obligations shall mature as determined by resolution of
the municipality and may be issued in one or more series and
shall bear such date or dates, bear interest at such rate or
rates, be in such denomination or denominations, be in such form
either coupon or registered, carry such conversion or
registration privileges, have such rank or priority, be executed
in such manner, be payable in medium of payment at such place or
places, and be subject to such terms of redemption, with or
without premium, as such resolution, its trust indenture or
mortgage may provide. The bonds or obligations may be sold at
public or private sale at the price or prices as the
municipality by resolution shall determine, and any provision of
any law to the contrary notwithstanding, shall be fully
negotiable. In any suit, action, or proceedings involving the
validity or enforceability of any bonds or obligations of the
municipality or the security therefor, any bond or obligation
reciting in substance that it has been issued by the
municipality to aid in the acquisition, construction, expansion,
modification or operation of a district heating system shall be
conclusively deemed to have been issued for such purpose.
Neither the municipality nor any council member, officer,
employee or agent of the municipality nor any person executing
the bonds or obligations shall be liable personally on the bonds
or obligations by reason of the issuance thereof. The bonds or
obligations may be further secured by a pledge and mortgage of
all or any portion of the property in aid of which the bonds or
obligations are issued and such covenants as the municipality
shall deem by such resolution to be necessary and proper to
secure payment of the bonds or obligations. The bonds or
obligations, and the bonds or obligations shall so state on
their face, shall not be payable from nor charged upon any funds
other than the revenues and property pledged or mortgaged to the
payment thereof, nor shall the issuing municipality be subject
to any liability thereon or have the powers to obligate itself
to pay or pay the bonds or obligations from funds other than the
revenues and properties pledged and mortgaged and no holder or
holders of the bonds or obligations shall ever have the right to
compel any exercise of any taxing power of the issuing
municipality or any other public body to pay the principal of or
interest on any such bonds or obligations, nor to enforce
payment thereof against any property of the municipality or
other public body other than that expressly pledged or mortgaged
for the payment thereof.

Subd. 3. Redevelopment agency. A municipality may
itself, or by ordinance authorize any redevelopment agency as
defined in section 469.153, subdivision 3, acting for the
municipality, to exercise any and all of the powers granted to
the municipality under subdivision 2 and to the redevelopment
agency under any other law for the purpose of financing all or
any portion of the district heating system and any conversion
facilities for modifying the user's heating or water system to
use the heat energy converted from the steam or hot water
furnished by the district heating system including, but without
limitation, the payment of interest during construction and for
a reasonable time thereafter and the establishment of reserves
for bond payment and for working capital, in which event if the
issuer is a redevelopment agency the sources of revenue that may
be pledged to the payment of revenue bonds or obligations shall
include any revenues of the redevelopment agency. The proceeds
of bonds or obligations issued by the municipality or
redevelopment agency may be used to make or purchase loans for
facilities which the issuer estimates will require such
financing, and, for the purpose of making or purchasing such
loans the issuer shall have power to enter into loan agreements
and other related agreements, both before and after the issuance
of the obligations, with such persons, firms, public or private
corporations, federal or state agencies, governmental units, and
under such terms and conditions as the issuer shall deem
appropriate; and any governmental unit in the state shall have
the power to apply, contract for, and receive the loans without
limitation under any other provisions of this chapter.

HIST: 1981 c 334 s 7; 1Sp1981 c 4 art 4 s 4,5; 1987 c 291 s
239


475.53 Limit on net debt.

Subdivision 1. Generally. Except as otherwise
provided in sections 475.51 to 475.75, no municipality, except a
school district or a city of the first class, shall incur or be
subject to a net debt in excess of two percent of the market
value of taxable property in the municipality.

Subd. 2. Repealed, 1Sp1981 c 4 art 1 s 193

Subd. 3. Cities first class. Unless its charter
permits a greater net debt a city of the first class may not
incur a net debt in excess of two percent of the market value of
all taxable property therein. If the charter of the city
permits a net debt of the city in excess of two percent of its
valuation, it may not incur a net debt in excess of 3-2/3
percent of the market value of the taxable property therein.

The county auditor, at the time of preparing the tax list
of the city, shall compile a statement setting forth the total
net tax capacity and the total market value of each class of
taxable property in such city for such year.

Subd. 4. School districts. Except as otherwise
provided by law, no school district shall be subject to a net
debt in excess of ten percent of the actual market value of all
taxable property situated within its corporate limits, as
computed in accordance with this subdivision. The county
auditor of each county containing taxable real or personal
property situated within any school district shall certify to
the district upon request the market value of all such
property. Whenever the commissioner of revenue, in accordance
with section 124.2131, subdivision 1, has determined that the
net tax capacity of any district furnished by county auditors is
not based upon the market value of taxable property in the
district, the commissioner of revenue shall certify to the
district upon request the ratio most recently ascertained to
exist between such value and the actual market value of property
within the district. The actual market value of property within
a district, on which its debt limit under this subdivision is
based, is (a) the value certified by the county auditors, or (b)
this value divided by the ratio certified by the commissioner of
revenue, whichever results in a higher value.

Subd. 5. Certain independent school districts. No
independent school district located wholly or partly within a
city of the first class shall issue obligations with a term of
more than two years, whenever the aggregate of the outstanding
obligations of the district equals or exceeds 0.7 percent of the
market value of the taxable property within the school district.

Subd. 6. Portion of expenditure for technical college.
Only that proportion of the principal amount of obligations
issued by a school district or districts for the acquisition or
betterment of a technical college equal to the percentage of the
total principal amount of the obligations which is or would be
currently borne by the district, shall be included in
calculating the district's net debt. The commissioner of
children, families, and learning shall certify to each district
upon request the current percentage of the total principal
amount of the obligations which is or would be borne by the
district, which certification shall be conclusive in favor of
the holders of the obligations as against the district.

Subd. 7. Adjustment of debt limits. If the amount of
debt a municipality may incur is limited by special law or city
charter to a stated percentage or proportion of assessed value,
the limit must be calculated as a percentage or proportion of
tax capacity. The percentage or proportion provided in the
special law or charter provision must be multiplied by 8.2 to
determine the applicable percentage or proportion of gross tax
capacity and must be multiplied by 10.2 to determine the
applicable percentage or proportion of net tax capacity.

Subd. 8. Debt limit reservation. A municipality may,
by ordinance, reserve a portion of its unencumbered debt limit
for the purpose of providing proof of financial responsibility
for the contingency action portion of the response costs at a
solid waste disposal facility, subject to the rules adopted by
the pollution control agency under section 116.07, subdivision
4h. Reservation of a portion of a municipality's debt limit
under this subdivision may not be revoked by the municipality
until the expiration of the required time period for maintaining
proof of financial responsibility or the municipality adopts and
adequately funds, as of the date of implementation, an alternate
method of financial responsibility under the rules of the
agency, whichever occurs earlier. If the municipality reserves
its debt limit under this subdivision, the debt limit is
computed as if the municipality had issued obligations, subject
to the limit, in the amount of the reservation specified in the
ordinance. Notwithstanding the amount of market value in the
municipality, the reserved amount of the limit is available for
issuance of bonds to pay the municipality's response costs.

HIST: (1938-4) 1927 c 131 s 2; 1935 c 256; 1937 c 285 s 1;
1943 c 480 s 1; 1945 c 549 s 1; 1947 c 296 s 5; 1949 c 682 s 3;
1955 c 304 s 1; 1955 c 356 s 1; 1955 c 656 s 1; 1957 c 879 s 1;
1961 c 560 s 37; 1965 c 875 s 11; 1969 c 6 s 46; 1969 c 1056 s
10; 1971 c 480 s 1; 1973 c 582 s 3; 1974 c 380 s 2-6; 1979 c 303
art 7 s 14; 1981 c 358 art 1 s 48; 1984 c 593 s 42-44; 1987 c
258 s 12; 1987 c 268 art 7 s 54; 1988 c 719 art 5 s 65,84; 1989
c 1 s 7-9; 1989 c 246 s 2; 1989 c 277 art 2 s 65; 1989 c 329 art
15 s 20; 1990 c 604 art 10 s 21; 1994 c 614 s 16; 1Sp1995 c 3
art 16 s 13


475.54 Maturities; redemption.

Subdivision 1. In installments; exception; annual
limit. Except as provided in subdivision 3, 5a, 15, or 17, or
as expressly authorized in another law, all obligations of each
issue shall mature or be subject to mandatory sinking fund
redemption in installments, the first not later than three years
and the last not later than 30 years from the date of the issue;
or 40 years or the useful life of the asset, whichever is less,
for municipal water and wastewater treatment systems and
essential community facilities financed or guaranteed by the
United States Department of Agriculture. No amount of principal
of the issue payable in any calendar year shall exceed five
times the amount of the smallest amount payable in any preceding
calendar year ending three years or more after the issue date.

Subd. 2. Schedule; refunding. A serial maturity
schedule conforming to subdivision 1 may be established for each
new issue of obligations of a municipality, or the governing
body may in its discretion adjust such schedule so that the
combined maturities of the new issue and any other designated
issue or issues will conform to subdivision 1, provided that all
such issues are general obligations or all are payable from a
common fund. Notwithstanding the provisions of any other
general or special law, any school district having an
outstanding state loan or loans, if it issues and sells bonds on
the public market for any purpose other than refunding such
loans, or refunding outstanding bonds as provided in this
subdivision shall adjust the schedule of the maturities thereof
so that the total amount of principal and interest to become due
on these bonds and on all other bonds of the school district,
during each of the 30 fiscal or calendar years next following,
will be as nearly equal as practicable, provided that the annual
amounts of maturing principal may be fixed at multiples of
$5,000. A school district which has an outstanding state loan
or loans may refund outstanding bonds, provided that the school
loan committee established in section 124.41 approves such
refunding. The committee shall approve refunding outstanding
bonds only if such refunding results in lower annual debt
service payments than the district made prior to the refunding.

Subd. 3. Maturities if paid from special fund.
Obligations payable solely from a special fund, for payment of
which the full faith and credit of the issuer is not pledged,
may mature at any time or times within 30 years from date of
issue, (40 years or the useful life of the asset, whichever is
less, if for municipal water and wastewater treatment systems
and essential community facilities financed or guaranteed by the
United States Department of Agriculture) if the receipts pledged
to the fund are estimated by the governing body to be sufficient
and are irrevocably appropriated first to pay annual or
semiannual interest on all obligations payable from the fund and
to provide such reserve as may be agreed upon for the security
of interest payments, and then to retire a specified portion of
the principal in each year according to a schedule of redemption
and prepayment which conforms to the requirements for the
maturity schedule of other obligations in subdivision 1.

Subd. 4. Redemption. Any obligation may be issued
reserving the right of redemption and payment thereof prior to
maturity, at par and accrued interest or at such premium and at
such time or times as shall be determined by the governing
body. Notice of the call of any prepayable obligation shall be
published in a daily or weekly periodical published in a
Minnesota city of the first class, or its metropolitan area,
which circulates throughout the state and furnishes financial
news as a part of its service; provided that published notice of
the call need not be given if the obligation is in registered
form and notice has been mailed to the registered holder of the
obligation. When any such obligation has been validly called
for redemption in accordance with its terms, and the principal
thereof and all interest thereon to the date of redemption have
been paid or deposited with the paying agent, interest thereon
shall cease; provided that no obligation issued subsequent to
July 1, 1967, shall be deemed validly called for redemption
unless the notice herein required has been published or so
mailed prior to the date fixed for its redemption. If actual
notice of the call has been given through a different means of
communication, the holder of an obligation may waive published
or mailed notice.

Subd. 5. Repealed, 1971 c 903 s 6

Subd. 5a. Tender. Any obligation may be issued
giving its owner the right to tender, or the municipality to
demand tender of, the obligation to the municipality or another
person designated by it, for purchase at a specified time or
times, if the municipality has first entered into an agreement
with a suitable financial institution obligating the financial
institution to provide funds on a timely basis for purchase of
bonds tendered. The obligation shall not be deemed to mature on
any tender date, within the meaning of subdivision 1, and the
purchase of a tendered obligation shall not be deemed a payment
or discharge of the obligation by the municipality. Obligations
tendered for purchase may be remarketed by or on behalf of the
municipality or any other purchaser. The municipality may enter
into agreements deemed appropriate to provide for the purchase
and remarketing of tendered obligations, including provisions
under which undelivered obligations may be deemed tendered for
purchase and new obligations may be substituted for them,
provisions for the payment of charges of tender agents,
remarketing agents, and financial institutions extending lines
of credit or letters of credit assuring repurchase, and for
reimbursement of advances under letters of credit, which charges
and reimbursements may be paid from the proceeds of the
obligations or from tax and other revenues appropriated for the
payment and security of the obligations, and similar or related
provisions.

Subd. 6. Repealed, 1971 c 903 s 6

Subd. 6a. Foreign currency obligations. Any
obligation issued as part of a series in a principal amount of
$25,000,000 or more may be payable in currency other than
currency of the United States if at the time of issue of the
obligation the municipality enters into an agreement with a bank
or dealer described in section 118A.06, that provides for
payments to the municipality in the foreign currency at the
times and in the amounts necessary to pay principal and interest
on the obligations when due and payable in the foreign currency
and corresponding payments by the municipality in United States
currency of a determinate amount or amounts and at the times the
agreement specifies. For purposes of chapter 475, the
outstanding amount of the municipality's obligations payable in
a foreign currency is the principal component of all remaining
payments to be made by the municipality in United States
currency under the agreement and the amount or rate of interest
on the obligations is the interest component of the payments.

Subd. 7. Repealed, 1971 c 903 s 6

Subd. 8. Repealed, 1971 c 903 s 6

Subd. 9. Repealed, 1971 c 903 s 6

Subd. 10. Repealed, 1971 c 903 s 6

Subd. 11. Repealed, 1971 c 903 s 6

Subd. 12. Repealed, 1971 c 903 s 6

Subd. 13. Repealed, 1971 c 903 s 6

Subd. 14. Repealed, 1971 c 903 s 6

Subd. 15. If pay secured by investment. For purposes
of determining the amount of principal that may be payable in
any calendar year under subdivision 1, any principal payment
obligation secured by an investment, the face amount of which is
equal to or greater than the amount of principal, may be
disregarded if the investment matures or is callable by the
holder thereof on or before the maturity date of the principal.

Subd. 16. Pact for interest rate exchange. A
municipality may enter into an agreement for an exchange of
interest rates pursuant to this subdivision if the agreement
either is with or is guaranteed by a party whose equivalent
obligations are rated A+ or better by a nationally recognized
rating agency. A municipality with outstanding obligations or a
municipality which has determined to issue obligations it is
authorized to issue may agree to pay sums equal to interest at a
fixed rate or at a variable rate determined pursuant to a
formula set out in the agreement on an amount not exceeding the
outstanding principal amount of the obligations at the time of
payment, in exchange for an agreement by the counterparty to pay
sums equal to interest on a like amount at a fixed rate or a
variable rate determined pursuant to a formula set out in the
agreement or to provide for an interest rate cap or floor. The
agreement to pay the counterparty is not an obligation of the
municipality as defined in section 475.51, subdivision 3. For
purposes of calculation of a debt service levy, determination of
a rate of interest on a special assessment or other calculation
based on the rate of interest on an obligation, a municipality
which has entered into an interest rate swap agreement described
in this subdivision may determine to treat the amount or rate of
interest on the obligation as the net rate or amount of interest
payable after giving effect to the swap agreement. Subject to
any applicable bond covenants, the municipality may pledge to
the payment of amounts due or to become due under the swap
agreement, including termination payments, sources of payment
pledged or available to pay debt service on the obligations with
respect to which the swap agreement was made or from any other
available source of the municipality. A municipality may issue
obligations under section 475.67 to provide for any payment,
including a termination payment, due or to become due under a
swap agreement.

Subd. 17. Maturities if primary source sufficient,
irrevocable. Obligations payable primarily from a source
other than ad valorem taxes may mature at any time or times
within 30 years after the date of issue, if the governing body
estimates that the primary source of payment is sufficient to
pay when due the principal of and interest on the obligations
and if the primary source of payment is irrevocably appropriated
to payment of the obligations.

HIST: (1938-5) 1927 c 131 s 3; 1949 c 682 s 4; 1951 c 422 s 2;
1955 c 179 s 1; 1959 c 687 s 11; Ex1959 c 27 s 11; 1963 c 825 s
1; 1965 c 435 s 1,2; 1967 c 481 s 1,2; 1967 c 583 s 5; 1975 c
432 s 83; 1Sp1985 c 14 art 8 s 50,51; 1987 c 344 s 20-22; 1988 c
702 s 9,10; 1989 c 355 s 17,18; 1994 c 614 s 17; 1996 c 297 s
2,3; 1996 c 399 art 2 s 12


475.55 Execution; negotiability; interest rates.

Subdivision 1. Form. All obligations shall be
securities as provided in the Uniform Commercial Code, chapter
336, article 8, may be issued as certificated securities or as
uncertificated securities, and if issued as certificated
securities may be issued in bearer form or in registered form,
as defined in section 336.8-102. The validity of an obligation
shall not be impaired by the fact that one or more officers
authorized to execute it by the governing body of the
municipality shall have ceased to be in office before delivery
to the purchaser or shall not have been in office on the formal
issue date of the obligation. Every obligation, as to
certificated securities, or transaction statement, as to
uncertificated securities, shall be signed manually by one
officer of the municipality or by a person authorized to act on
behalf of a bank or trust company, located in or outside of the
state, which has been designated by the governing body of the
municipality to act as authenticating agent. Other signatures
and the seal of the issuer may be printed, lithographed,
stamped, or engraved thereon and on any interest coupons to be
attached thereto. The seal need not be used. A municipality
may do all acts and things which are permitted or required of
issuers of securities under the Uniform Commercial Code, chapter
336, article 8, and may designate a corporate registrar to
perform on behalf of the municipality the duties of a registrar
as set forth in those sections. Any registrar shall be an
incorporated bank or trust company, located in or outside of the
state, authorized by the laws of the United States or of the
state in which it is located to perform the duties. If
obligations are issued as uncertificated securities, and a law
requires or permits the obligations to contain a statement or
recital, whether on their face or otherwise, it shall be
sufficient compliance with the law that the statement or recital
is contained in the transaction statement or in an ordinance,
resolution, or other instrument which is made a part of the
obligation by reference in the transaction statement as provided
in section 336.8-202.

Subd. 1a. Interest. Interest on obligations issued
after April 1, 1986, is not subject to any limitation on rate or
amount.

Subd. 2. Supersession. The provisions of this
section shall supersede any maximum interest rate fixed by any
other law or a city charter with respect to obligations of the
state or any municipality or governmental or public subdivision,
district, corporation, commission, board, council, or authority
of whatsoever kind, including warrants or orders issued in
evidence of allowed claims for property or services furnished to
the issuer.

Subd. 3. Special assessments. Notwithstanding any
contrary provisions of law or charter, special assessments
pledged to the payment of obligations may bear interest at the
rate the governing body by resolution determines, not exceeding
the maximum interest rate permitted to be charged against the
assessments under the city charter pursuant to which the
assessments were levied.

Subd. 4. Rate determination. On or before the 20th
day of each month, the commissioner of finance shall determine
the most recently published yield for the Bond Buyer's Index of
20 Municipals. This rate plus one percent and rounded to the
next highest percent per annum shall be the rate for the next
succeeding month for the purpose set forth in subdivision 7.
The commissioner of finance shall publish the maximum rate in
the State Register each month.

Subd. 5. Repealed, 1987 c 344 s 37

Subd. 6. Registration data private. All information
contained in any register maintained by a municipality or by a
corporate registrar with respect to the ownership of municipal
obligations is nonpublic data as defined in section 13.02,
subdivision 9, or private data on individuals as defined in
section 13.02, subdivision 12. The information is not public
and is accessible only to the individual or entity that is the
subject of it, except if disclosure:

(1) is necessary for the performance of the duties of the
municipality or the registrar;

(2) is requested by an authorized representative of the
state commissioner of revenue or attorney general or of the
commissioner of internal revenue of the United States for the
purpose of determining the applicability of a tax;

(3) is required under section 13.03, subdivision 4; or

(4) is requested at any time by the corporate trust
department of a bank or trust company acting as a tender agent
pursuant to documents executed at the time of issuance of the
obligations to purchase obligations described in section 475.54,
subdivision 5a, or obligations to which a tender option has been
attached in connection with the performance of such person's
duties as tender agent, or purchaser of the obligations.

A municipality or its agent may use the information in a
register for purposes of offering obligations under a bond
reinvestment program.

Subd. 7. Assumed maximum interest rate for other laws.
If an obligation is not subject to a maximum interest rate
pursuant to subdivision 1, paragraph (1) and another law
provides for a calculation of a debt service levy, determination
of a rate of interest on a special assessment, or other factor
based on an assumption that a maximum interest rate applies to
the obligation, the governing body of the municipality may
estimate or determine an assumed maximum interest rate for
purposes of that law. If the municipality does not determine,
specify or estimate the maximum interest rate for such purpose,
then the maximum interest rate for purposes of the other law is
the interest rate determined by the commissioner of finance
under subdivision 4. This subdivision does not limit the
interest rate that may be paid on obligations under subdivision
1a.

Subd. 8. Bond reinvestment programs. In connection
with a bond reinvestment program, the governing body may by
resolution delegate to any appropriate officer of the
municipality authority to establish from time to time the
interest rate or rates, subject to limitations imposed by law,
on such obligations and other terms of obligations issued under
a bond reinvestment program. Obligations issued under a bond
reinvestment program may be in any denomination as determined by
the governing body or an officer acting pursuant to delegation
from the governing body.

HIST: (1939) RL s 781; 1947 c 296 s 3; 1949 c 682 s 5; 1951 c
422 s 3; 1969 c 93 s 1; 1971 c 903 s 2; 1976 c 324 s 4; 1980 c
607 art 8 s 2; 1982 c 523 art 3 s 2; 1982 c 642 s 19; 1984 c 563
s 2-4; 1986 c 465 art 2 s 18,19; 1987 c 344 s 23-29; 1989 c 355
s 19,20


475.551 Excessive interest, validation.

In all cases where obligations have been or shall hereafter
be issued and sold upon terms and conditions conforming to the
provisions of section 475.55, and otherwise in conformity with
law, such issuance and sale are hereby authorized, legalized and
validated.

HIST: 1969 c 93 s 2


475.553 Paying agent; destruction of obligations and
coupons.

Subdivision 1. Principal office within issuer's area;
exception. The governing body may appoint as paying agent for
an issue of obligations one or more national banks, or banks
incorporated under the laws of any state, provided that no bank
shall be appointed as paying agent for obligations of any issuer
except one within whose corporate limits the principal office of
the bank is situated, unless it is authorized to execute
corporate trust powers pursuant to the laws under which it is
organized; and the governing body may direct the treasurer to
remit funds for payment of both principal and interest to such
paying agent although such paying agent has not complied with
statutes relating to public depositories. It may also direct
the county treasurer to remit any proceeds from assessments or
taxes levied for payment of obligations directly to such paying
agent. In such case, the county treasurer shall furnish a
duplicate statement of each remittance to the treasurer of the
municipality who shall enter the amount on the treasury's books.

Subd. 2. Agreement with bank. The governing body may
by resolution direct that all bonds, obligations, coupons
appertaining thereto, or any specified obligations or coupons,
when paid, shall be canceled by the paying agent and destroyed
as herein provided. Before such authority is granted, the
municipality shall enter into an agreement with a bank or
banking association incorporated under the laws of the United
States or of any state and authorized by such laws to exercise
corporate trust powers, specifying (a) the obligations and
coupons to be destroyed, (b) the method of destruction, (c) the
information to be recorded in a certificate of destruction to be
delivered to the municipality and the paying agent, (d) the
indemnification of the municipality in the event of duplicate
payment, wrongful and improper payment to unauthorized persons
and nonpayment to authorized persons occurring as a result of
any destruction of bonds, obligations, or coupons, and (e) such
other terms and conditions as may be determined by the governing
body of such municipality. Obligations and coupons may be
destroyed by cremation, shredding, or any other effective means.

Subd. 3. Certificates of destruction. Certificates
provided under subdivision 2 shall be retained in the official
records of the municipality and the paying agent. Such
certificates may subsequently be destroyed at the times and upon
the conditions otherwise permitted by law, but no earlier than
the time of final payment and redemption of all obligations of
the respective issues to which they pertain.

Subd. 4. Repealed, 1976 c 324 s 27

Subd. 5. Officers have powers of body; state auditors
requirements; other law. Any obligation, as defined in
section 475.51, issued or to be issued by the state or any
agency, instrumentality, or subdivision thereof, by written
order and agreement executed by the officer or officers
authorized by law to issue such obligations, may be destroyed as
provided herein, and for this purpose such officers shall have
all the powers granted herein to governing bodies of
municipalities. The state auditor, pursuant to the
administrative procedures act, may formulate and prescribe
requirements for resolutions, orders, agreements, and
certificates relating to the destruction of public obligations
and coupons. The provisions of any other law relating to the
destruction of public records shall not apply to the destruction
of obligations and coupons.

HIST: 1951 c 422 s 10; 1953 c 64 s 1; 1963 c 833 s 1; 1973 c
492 s 7; 1976 c 324 s 5-8; 1986 c 444


475.56 Interest rate.

(a) Any municipality issuing obligations under any law may
issue obligations bearing interest at a single rate or at rates
varying from year to year which may be lower or higher in later
years than in earlier years. Such higher rate for any period
prior to maturity may be represented in part by separate coupons
designated as additional coupons, extra coupons, or B coupons,
but the highest aggregate rate of interest contracted to be so
paid for any period shall not exceed the maximum rate authorized
by law. Such higher rate may also be represented in part by the
issuance of additional obligations of the same series, over and
above but not exceeding two percent of the amount otherwise
authorized to be issued, and the amount of such additional
obligations shall not be included in the amount required by
section 475.59 to be stated in any bond resolution, notice, or
ballot, or in the sale price required by section 475.60 or any
other law to be paid; but if the principal amount of the entire
series exceeds its cash sale price, such excess shall not, when
added to the total amount of interest payable on all obligations
of the series to their stated maturity dates, cause the average
annual rate of such interest to exceed the maximum rate
authorized by law. This section does not authorize a provision
in any such obligations for the payment of a higher rate of
interest after maturity than before.

(b) Any obligation of an issue of obligations otherwise
subject to section 475.55, subdivision 1, may bear interest at a
rate varying periodically at the time or times and on the terms,
including convertibility to a fixed rate of interest, determined
by the governing body of the municipality, but the rate of
interest for any period shall not exceed the maximum rate of
interest for the obligations determined in accordance with
section 475.55, subdivision 1. For purposes of section 475.61,
subdivisions 1 and 3, the interest payable on variable rate
obligations for their term shall be determined as if their rate
of interest is the maximum rate permitted for the obligations
under section 475.55, subdivision 1, or the lesser maximum rate
of interest payable on the obligations in accordance with their
terms, but if the interest rate is subsequently converted to a
fixed rate the levy may be modified to provide at least five
percent in excess of amounts necessary to pay principal of and
interest at the fixed rate on the obligations when due. For
purposes of computing debt service or interest pursuant to
section 475.67, subdivision 12, interest throughout the term of
bonds issued pursuant to this subdivision is deemed to accrue at
the rate of interest first borne by the bonds. The provisions
of this paragraph do not apply to obligations issued by a
statutory or home rule charter city with a population of less
than 7,500, as defined in section 477A.011, subdivision 3, or to
obligations that are not rated A or better, or an equivalent
subsequently established rating, by Standard and Poor's
Corporation, Moody's Investors Service or other similar
nationally recognized rating agency, except that any statutory
or home rule charter city, regardless of population or bond
rating, may issue variable rate obligations as a participant in
a bond pooling program established by the league of Minnesota
cities that meets this bond rating requirement.

HIST: (1938-2 1/2) 1933 c 171; 1949 c 682 s 6; 1959 c 36 s 1;
1963 c 829 s 1; 1967 c 481 s 3; 1974 c 380 s 7; 1Sp1985 c 14 art
8 s 52; 1986 c 465 art 2 s 20; 1987 c 344 s 30


475.561 Taxable status; special provisions.

Subdivision 1. Increase or decrease in interest. (a)
Obligations may be issued which provide, if interest on the
obligations is determined under the terms of the obligations to
be subject to federal income taxation, for an increase in the
rate of interest payable on the obligations, from the date of
issuance or another date, to a rate provided under the terms of
the obligations.

(b) If the municipality issues obligations it intends to be
exempt from federal income taxation but bond counsel cannot
provide an opinion that the interest on the obligations will be
exempt from federal income taxation under pending legislation or
regulations existing or proposed with retroactive effect or
otherwise, the municipality may provide for the obligations to
bear interest at a rate that will decrease, if the obligations
are subsequently determined to be exempt from federal income
taxation, to a rate and from a date to be determined under the
provisions of the obligations.

(c) For purposes of section 475.61, subdivisions 1 and 3,
the increase or decrease in interest rate permitted by this
subdivision need not be taken into account until the increase or
decrease occurs. Upon occurrence of the increase or decrease,
the levy must be modified to provide at least five percent in
excess of the amount necessary to pay principal and interest at
the new rate of interest on the obligations.

Subd. 2. Arbitrage rebate. A municipality may, from
the proceeds of bonds, investment earnings, or any other
available money of the municipality, pay to the United States or
an officer, department, agency or instrumentality of the United
States a rebate of excess earnings payment required by federal
law to maintain the interest as tax exempt. A covenant to make
a payment or payments pursuant to this subdivision is not an
obligation of the municipality as defined in section 475.51,
subdivision 3.

Subd. 3. Prepayment or purchase of bonds. A
municipality that issues obligations it intends to be exempt
from federal income taxation may agree to prepay or purchase the
obligations (a) at the time and in the amount it determines
necessary or desirable to maintain the obligations as exempt
from federal income taxation or (b) upon a determination that
the obligations are taxable. A municipality may make
arrangements to have money available with which to purchase or
prepay the obligations as the municipality determines necessary
or desirable. If arrangements are made with a financial
institution pursuant to section 475.54, subdivision 5a or this
subdivision and if the municipality owes the financial
institution money under the arrangement, the agreement to pay
the financial institution is not an obligation of the
municipality as defined in section 475.51, subdivision 3, unless
and until the amount to be paid or reimbursed is determined and
becomes due and payable, whereupon, the obligation is, as
provided by the agreement, a general or special obligation of
the municipality, and may also be paid from the proceeds of
refunding bonds issued pursuant to this chapter. The agreement
may not be or become a general obligation of the municipality
unless the underlying, originally issued obligation was a
general obligation of the municipality. For purposes of section
475.61, subdivisions 1 and 3, money necessary to make the
purchase or prepayment are not amounts needed to meet when due
principal and interest payments on the obligations.

Subd. 4. Ratification. This section is, in part,
remedial in nature. Obligations issued prior to March 26, 1986
are not invalid or unenforceable for providing terms,
consequences or remedies that are authorized by this section.

HIST: 1986 c 465 art 2 s 22


475.57 Initiation of proceedings; resolution.

Proceedings for issuing bonds under sections 475.51 to
475.75 shall be initiated by a resolution of the governing body
of the municipality stating the amount proposed to be borrowed
and the purpose for which the debt is to be incurred. Such
resolution may provide for the submission of the question to
vote of the electors. A town board may adopt such resolution
without a statement for special town meeting being filed with
the clerk.

HIST: 1949 c 682 s 7


475.58 Obligations; elections to determine issue.

Subdivision 1. Approval by electors; exceptions.
Obligations authorized by law or charter may be issued by any
municipality upon obtaining the approval of a majority of the
electors voting on the question of issuing the obligations, but
an election shall not be required to authorize obligations
issued:

(1) to pay any unpaid judgment against the municipality;

(2) for refunding obligations;

(3) for an improvement or improvement program, which
obligation is payable wholly or partly from the proceeds of
special assessments levied upon property specially benefited by
the improvement or by an improvement within the improvement
program, or of taxes levied upon the increased value of property
within a district for the development of which the improvement
is undertaken, including obligations which are the general
obligations of the municipality, if the municipality is entitled
to reimbursement in whole or in part from the proceeds of such
special assessments or taxes and not less than 20 percent of the
cost of the improvement or the improvement program is to be
assessed against benefited property or is to be paid from the
proceeds of federal grant funds or a combination thereof, or is
estimated to be received from such taxes within the district;

(4) payable wholly from the income of revenue producing
conveniences;

(5) under the provisions of a home rule charter which
permits the issuance of obligations of the municipality without
election;

(6) under the provisions of a law which permits the
issuance of obligations of a municipality without an election;

(7) to fund pension or retirement fund liabilities pursuant
to section 475.52, subdivision 6;

(8) under a capital improvement plan under section 373.40;
and

(9) to fund facilities as provided in subdivision 3.

Subd. 1a. Resubmission limitation. If the electors
do not approve the issuing of obligations at an election
required by subdivision 1, the question of authorizing the
obligations for the same purpose and in the same amount may not
be submitted to the electors within a period of 180 days from
the date the election was held. If the question of authorizing
the obligations for the same purpose and in the same amount is
not approved a second time it may not be submitted to the
electors within a period of one year after the second election.

Subd. 2. Funding, refunding. Any county, city, town,
or school district whose outstanding gross debt, including all
items referred to in section 475.51, subdivision 4, exceed in
amount 1.62 percent of its market value may issue bonds under
this subdivision for the purpose of funding or refunding such
indebtedness or any part thereof. A list of the items of
indebtedness to be funded or refunded shall be made by the
recording officer and treasurer and filed in the office of the
recording officer. The initial resolution of the governing body
shall refer to this subdivision as authority for the issue,
state the amount of bonds to be issued and refer to the list of
indebtedness to be funded or refunded. This resolution shall be
published once each week for two successive weeks in a legal
newspaper published in the municipality or if there be no such
newspaper, in a legal newspaper published in the county seat.
Such bonds may be issued without the submission of the question
of their issue to the electors unless within ten days after the
second publication of the resolution a petition requesting such
election signed by ten or more voters who are taxpayers of the
municipality, shall be filed with the recording officer. In
event such petition is filed, no bonds shall be issued hereunder
unless authorized by a majority of the electors voting on the
question.

Subd. 3. Youth ice facilities. (a) A municipality
may, without regard to the election requirement under
subdivision 1 or under any other provision of law or a home rule
charter, issue and sell obligations to finance acquisition,
improvement, or construction of an indoor ice arena intended to
be used predominantly for youth athletic activities if all the
following conditions are met:

(1) the obligations are secured by a pledge of revenues
from the facility;

(2) the facility and its financing are approved by
resolutions of at least two of the following governing bodies of
(i) the city in which the facility is located, (ii) the school
district in which the facility is located, or (iii) the county
in which the facility is located;

(3) the governing body of the municipality finds, based on
analysis provided by a professional experienced in finance, that
the facility's revenues and other available money will be
sufficient to pay the obligations, without reliance on a
property tax levy or the municipality's general purpose state
aid; and

(4) no petition for an election has been timely filed under
paragraph (b).

(b) At least 30 days before issuing obligations under this
subdivision, the municipality must hold a public hearing on the
issue. The municipality must publish or provide notice of the
hearing in the same manner provided for its regular meetings.
The obligations are not exempt from the election requirement
under this subdivision, if:

(1) registered voters equal to ten percent of the votes
cast in the last general election in the municipality sign a
petition requesting a vote on the issue; and

(2) the petition is filed with the municipality within 20
days after the public hearing.

(c) This subdivision expires December 31, 1997.

Subd. 4. Proper use of bond proceeds. The proceeds
of obligations issued after approval of the electors under this
section may only be spent: (1) for the purposes stated in the
ballot language; or (2) to pay, redeem, or defease obligations
and interest, penalties, premiums, and costs of issuance of the
obligations. The proceeds may not be spent for a different
purpose or for an expansion of the original purpose without the
approval by a majority of the electors voting on the question of
changing or expanding the purpose of the obligations.

HIST: (1938-6) 1927 c 131 s 4; 1949 c 682 s 8; 1951 c 422 s 4;
1955 c 298 s 1; 1969 c 446 s 1; 1971 c 886 s 1; 1971 c 903 s 3;
1973 c 123 art 5 s 7; 1974 c 380 s 8,9; 1Sp1985 c 14 art 8 s 53;
1988 c 519 s 4; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20;
1990 c 480 art 9 s 22; 1991 c 342 s 16; 1995 c 256 s 26,27; 1996
c 463 s 48


475.59 Manner of submission; notice.

When the governing body of a municipality resolves to issue
bonds for any purpose requiring the approval of the electors, it
shall provide for submission of the proposition of their
issuance at a general or special election or town or school
district meeting. Notice of such election or meeting shall be
given in the manner required by law and shall state the maximum
amount and the purpose of the proposed issue. In any school
district, the school board or board of education may, according
to its judgment and discretion, submit as a single ballot
question or as two or more separate questions in the notice of
election and ballots the proposition of their issuance for any
one or more of the following, stated conjunctively or in the
alternative: acquisition or enlargement of sites, acquisition,
betterment, erection, furnishing, equipping of one or more new
schoolhouses, remodeling, repairing, improving, adding to,
betterment, furnishing, equipping of one or more existing
schoolhouses.

HIST: 1949 c 682 s 9; 1957 c 318 s 1


475.60 Sale of bonds.

Subdivision 1. Advertisement. All obligations shall
be negotiated and sold by the governing body, except when
authority therefor is delegated by the governing body or by the
charter of the municipality to a board, department, or officers
of the municipality. Except as provided in section 475.56,
obligations shall be sold at not less than par value plus
accrued interest to date of delivery. Except as provided in
subdivision 2 all obligations shall be sold at public sale after
notice given at least ten days in advance by publication in a
legal newspaper having general circulation in the municipality
and ten days in advance by publication in a daily or weekly
periodical published in a Minnesota city of the first class, or
its metropolitan area, which circulates throughout the state and
furnishes financial news as a part of its service.

Subd. 2. Requirements waived. The requirements as to
public sale shall not apply to:

(1) obligations issued under the provisions of a home rule
charter or of a law specifically authorizing a different method
of sale, or authorizing them to be issued in such manner or on
such terms and conditions as the governing body may determine;

(2) obligations sold by an issuer in an amount not
exceeding the total sum of $1,200,000 in any 12-month period;

(3) obligations issued by a governing body other than a
school board in anticipation of the collection of taxes or other
revenues appropriated for expenditure in a single year, if sold
in accordance with the most favorable of two or more proposals
solicited privately;

(4) obligations sold to any board, department, or agency of
the United States of America or of the state of Minnesota, in
accordance with rules or regulations promulgated by such board,
department, or agency;

(5) obligations issued to fund pension and retirement fund
liabilities under section 475.52, subdivision 6, obligations
issued with tender options under section 475.54, subdivision 5a,
crossover refunding obligations referred to in section 475.67,
subdivision 13, and any issue of obligations comprised in whole
or in part of obligations bearing interest at a rate or rates
which vary periodically referred to in section 475.56;

(6) obligations to be issued for a purpose, in a manner,
and upon terms and conditions authorized by law, if the
governing body of the municipality, on the advice of bond
counsel or special tax counsel, determines that interest on the
obligations cannot be represented to be excluded from gross
income for purposes of federal income taxation;

(7) obligations issued in the form of an installment
purchase contract, lease purchase agreement, or other similar
agreement;

(8) obligations sold under a bond reinvestment program; and

(9) if the municipality has retained an independent
financial advisor, obligations which the governing body
determines shall be sold by private negotiation.

Subd. 3. Published notice. Published notice, where
required, shall specify the maximum principal amount of the
obligations, the place of receipt and consideration of bids and
such other details as to the obligations and terms of sale as
the governing body deems suitable. The published notice shall
either specify the date and time for receipt of bids or provide
that the bids will be received at a date and time not less than
ten nor more than 60 days after the date of publication. If the
published notice does not state the specific date or amount for
the sale, it shall specify the manner in which notice of the
date or amount of the sale will be given to prospective
bidders. Notification of prospective bidders shall be given by
electronic data transmission or other form of communication
common to the municipal bond trade at least four days (omitting
Saturdays, Sundays, and legal holidays) before the date for
receipt of bids. If within five days after the date of
publication a prospective bidder requests in writing to be
notified by mail, the municipality shall do so. Failure to give
the notice as described in the preceding sentence to a bidder
shall not affect the validity of the sale or of the
obligations. The governing body may employ an agent to receive
and open the bids at any place within or outside the corporate
limits of the municipality, in the presence of an officer of the
municipality or the officer's designee, but the obligations
shall not be sold except by action of the governing body or
authorized officers of the municipality after communication of
the bids to them. Additional notice may be given for such time
and in such manner as the governing body deems suitable. At the
time and place so fixed, the bids shall be opened and the offer
complying with the terms of sale and deemed most favorable shall
be accepted, but the governing body may reject any and all such
offers, in which event, or if no offers have been received, it
may award the obligations to any person who within 30 days
thereafter presents an offer complying with the terms of sale
and deemed more favorable than any received previously, or upon
like notice the governing body may invite other bids upon the
same or different terms and conditions, except that if the
original published notice does not state the specific date or
amount for the sale and if the material terms and conditions of
the sale remain the same, except for the date and amount, notice
of the date or amount may be given in the manner provided above.

Subd. 4. Public subscription. In lieu of calling
for bids, obligations may be sold on public subscription, after
notice given in the manner required for public sale. Such
notice of call for public subscription shall specify the
interest rate and all terms of sale, including the date and
place of delivery of the obligations.

Subd. 5. Compliance mandatory. No contract for the
sale and delivery of obligations shall be enforceable unless
made in accordance with this section.

Subd. 6. Prohibitions and penalties. Any officer of
any municipality who shall enter into or approve any contract or
agreement for the sale of obligations contrary to the provisions
hereof or which lessens, restricts or tends to prevent
competitive bidding shall be guilty of a misdemeanor.

Subd. 7. Investment of proceeds. A municipality,
after it has contracted for the sale of obligations, may enter
into a contract for the future purchase of securities described
in section 118A.04, for a purchase price, including accrued
interest on it, not in excess of the sale price of the
obligations, excluding accrued interest on them. The contract
shall provide a settlement date for the purchase of the
securities which is not earlier than the anticipated delivery
date of the obligations.

Subd. 8. Continuing disclosure agreements. Any
officer of a municipality charged with the responsibility of
issuing bonds for or on behalf of the municipality is authorized
to enter into written agreements or contracts relating to the
continuing disclosure of information necessary to comply with,
or facilitate the issuance of bonds in accordance with, federal
securities laws, rules and regulations, including securities and
exchange commission rules and regulations, section 240.15c2-12.
An agreement may comprise covenants with purchasers and holders
of bonds set forth in the resolution authorizing the issuance of
the bonds, or a separate document authorized by resolution.

HIST: 1949 c 682 s 10; 1965 c 583 s 1; 1971 c 903 s 4; 1976 c
324 s 9,10; 1978 c 764 s 128; 1980 c 607 art 8 s 3; 1982 c 523
art 3 s 3; 1984 c 563 s 5,6; 1Sp1985 c 14 art 8 s 54; 1986 c 465
art 2 s 21; 1987 c 344 s 31; 1988 c 702 s 11; 1989 c 355 s
21-23; 1991 c 342 s 17; 1995 c 256 s 28; 1996 c 399 art 2 s 12


475.61 Tax levies.

Subdivision 1. Debt service resolution. The
governing body of any municipality issuing general obligations
shall, prior to delivery of the obligations, levy by resolution
a direct general ad valorem tax upon all taxable property in the
municipality to be spread upon the tax rolls for each year of
the term of the obligations. The tax levies for all years for
municipalities other than school districts shall be specified
and such that if collected in full they, together with estimated
collections of special assessments and other revenues pledged
for the payment of said obligations, will produce at least five
percent in excess of the amount needed to meet when due the
principal and interest payments on the obligations. The tax
levies for school districts shall be specified and such that if
collected in full they, together with estimated collection of
other revenues pledged for the payment of the obligations, will
produce between five and six percent in excess of the amount
needed to meet when due the principal and interest payments on
the obligations; except that, with the permission of the
commissioner of children, families, and learning, a school board
may specify a tax levy in a higher amount if necessary either to
meet an anticipated tax delinquency or for cash flow needs to
meet the required payments from the debt redemption fund. Such
resolution shall irrevocably appropriate the taxes so levied and
any special assessments or other revenues so pledged to the
municipality's debt service fund or a special debt service fund
or account created for the payment of one or more issues of
obligations. The governing body may, in its discretion, at any
time after the obligations have been authorized, adopt a
resolution levying only a portion of such taxes, to be filed,
assessed, extended, collected, and remitted as hereinafter
provided, and the amount or amounts therein levied shall be
credited against the tax required to be levied prior to delivery
of the obligations.

Subd. 2. Filing; certification; assessment; extension.
The recording officer of the municipality shall file in the
office of the county auditor of each county in which any part of
the municipality is located a certified copy of the resolution,
together with full information regarding the obligations for
which the tax is levied. No further action by the municipality
is required to authorize the extension, assessment and
collection of the tax, but the municipality's liability on the
obligations is not limited thereto and its governing body shall
levy and cause to be extended, assessed and collected any
additional taxes found necessary for full payment of the
principal and interest. The county auditor shall forthwith
certify to the municipality that the obligations have been
entered in the register required by sections 475.51 to 475.75
and that the tax levy required by sections 475.51 to 475.75 has
been made. The auditor shall annually assess and extend upon
the tax rolls the amount specified for such year in the
resolution, unless the amount has been reduced as authorized
below or, if the municipality is located in more than one
county, the portion thereof which bears the same ratio to the
whole amount as the net tax capacity of taxable property in that
part of the municipality located in the auditor's county bears
to the net tax capacity of all taxable property in the
municipality.

Subd. 3. Irrevocability. Tax levies so made and
filed shall be irrevocable, except as provided in this
subdivision.

In each year when there is on hand any excess amount in the
debt redemption fund of a school district at the time the
district makes its property tax levies, the amount of the excess
shall be certified by the school board to the commissioner. The
commissioner shall report the amount of the excess to the county
auditor and the auditor shall reduce the tax levy otherwise to
be included in the rolls next prepared by the amount certified.
The commissioner shall prescribe the form and calculation to be
used in computing the excess amount. The school board may, with
the approval of the commissioner, retain the excess amount if it
is necessary to ensure the prompt and full payment of the
obligations and any call premium on the obligations, or will be
used for redemption of the obligations in accordance with their
terms. The school board may, with the approval of the
commissioner, specify a tax levy in a higher amount if necessary
because of anticipated tax delinquency or for cash flow needs to
meet the required payments from the debt redemption fund.

If the governing body, including the governing body of a
school district, in any year makes an irrevocable appropriation
to the debt service fund of money actually on hand or if there
is on hand any excess amount in the debt service fund, the
recording officer may certify to the county auditor the fact and
amount thereof and the auditor shall reduce by the amount so
certified the amount otherwise to be included in the rolls next
thereafter prepared.

Subd. 4. Surplus funds. (a) All such taxes shall be
collected and remitted to the municipality by the county
treasurer as other taxes are collected and remitted, and shall
be used only for payment of the obligations on account of which
levied or to repay advances from other funds used for such
payments, except that any surplus remaining in the debt service
fund when the obligations and interest thereon are paid may be
appropriated to any other general purpose by the municipality.
However, the amount of any surplus remaining in the debt service
fund of a school district when the obligations and interest
thereon are paid shall be used to reduce the general education
levy authorized pursuant to section 124A.23 and the state aids
authorized pursuant to chapters 124, 124A, and 273.

(b) The reduction to state aids equals the lesser of (1)
the amount of the surplus times the ratio of the district's debt
service equalization aid to the district's debt service
equalization revenue for the last year that the district
qualified for debt service equalization aid; or (2) the
district's cumulative amount of debt service equalization aid.

(c) The reduction to the general education levy equals the
total amount of the surplus minus the reduction to state aids.

Subd. 5. Temporary obligations anticipating grant or
loan. When all conditions exist precedent to the offering
for sale of obligations of any municipality in any amount for
any purpose authorized by law, and the municipality has applied
for a grant or loan of state or federal funds to aid in payment
of cost incurred for the authorized purpose, its governing body
may by resolution issue and sell temporary obligations not
exceeding the total amount authorized, maturing within not more
than three years from the date such obligations are issued. In
this event so much of the proceeds of the grant or loan when
received shall be credited to the debt service fund for the
temporary obligations as may be needed for the payment thereof,
with interest, when due, and the tax which would otherwise be
required by subdivision 1 need not be levied. Any amount of the
temporary obligations which cannot be paid at maturity, from the
proceeds of the grant or loan or from any other funds
appropriated by the governing body for the purpose, shall be
paid from the proceeds of definitive obligations to be issued
and sold before the maturity date; or if sufficient funds are
not available for payment in full of the temporary obligations
at maturity, the holders thereof shall have the right to require
the issuance in exchange therefor of definitive obligations
secured in the manner provided in subdivision 1 and bearing
interest at the maximum rate permitted by law.

Subd. 6. Other temporary obligations. When all
conditions exist precedent to the offering for sale of
obligations of any municipality in any amount for any purpose
authorized by law, the governing body may issue and sell
temporary obligations not exceeding the total amount authorized,
maturing in not more than three years from the date the
obligations are issued, in anticipation of the issuance of the
permanent obligations. To the extent that the principal of and
interest on the temporary obligations cannot be paid when due
from other sources pledged or appropriated for the purpose, they
shall be paid from the proceeds of permanent bonds or additional
temporary bonds which the governing body shall offer for sale in
advance of their maturity but the indebtedness funded by an
issue of temporary bonds shall not be extended by the issue of
additional temporary bonds for more than six years from the date
of the first issue. The holders of any temporary bonds shall
have and may enforce, by mandamus or other appropriate
proceedings, all rights respecting the levy and collection of
taxes that are granted by law to holders of permanent bonds,
except the right to require the levies to be collected prior to
the maturity of the temporary bonds. If any temporary bonds are
not paid in full at maturity, the holders may require the
issuance in exchange for them, at par, of new temporary bonds
maturing within one year from their date of issue but not
subject to any other maturity limitation, and bearing interest
at the maximum rate permitted by law. The governing body may by
resolution adopted prior to the sale of any temporary bonds
pledge the full faith, credit, and taxing power of the
municipality for the payment of the principal and interest, in
addition to all provisions made for their security in the
authorizing resolution. If it does so, the bonds will be
designated as general obligation temporary bonds, and the
governing body shall levy taxes for their payment in accordance
with this section. Proceeds of permanent bonds or temporary
bonds not yet sold may be treated as pledged revenues, in
reduction of the tax otherwise required by this section to be
levied prior to delivery of the obligations. Funds of a
municipality may be invested in its temporary bonds in
accordance with section 118A.04, and may be purchased upon their
initial issue, but shall be purchased only from funds which the
municipality determines will not be required for other purposes
before the maturity date, and shall be resold before maturity
only in the case of an emergency.

HIST: 1949 c 682 s 11; 1951 c 422 s 5; 1955 c 811 s 8; 1957 c
187 s 1; 1961 c 673 s 1; 1974 c 380 s 10; 1976 c 324 s 11,26;
1977 c 447 art 7 s 27; 1982 c 548 art 4 s 16-18; 1982 c 642 s 2;
1983 c 314 art 1 s 22; art 7 s 36; 1984 c 463 art 9 s 7,8; 1986
c 444; 1987 c 268 art 6 s 52; 1988 c 486 s 93; 1988 c 719 art 5
s 84; art 6 s 17; 1989 c 329 art 13 s 20; 1991 c 265 art 8 s 13;
1993 c 224 art 5 s 40; art 8 s 12; 1994 c 647 art 5 s 16; 1995 c
256 s 29; 1Sp1995 c 3 art 16 s 13; 1996 c 399 art 2 s 12


475.62 Register.

Each county auditor shall keep a register in which shall be
entered, as to each issue of such obligations by any
municipality located, in whole or in part, in the county, a
record of the aggregate amount authorized, the aggregate amount
issued, the purpose for which issued, the number, denomination,
date, and maturity of each, the rate of interest, the time of
payment, the place of payment of principal and interest, and the
amount of tax levied for the payment thereof. The auditor shall
also enter in said register the date and amount of each debt
service loan and capital loan made by the state to any school
district situated wholly or partly within the county, in
accordance with section 124.42, subdivision 2, or 124.431,
subdivision 13, and shall enter on or before November 1 in each
year thereafter the amount of the maximum effort debt service
levy and the additional amount of the levy for interest on state
loans to be extended on the tax rolls in that year, as certified
by the commissioner of children, families, and learning in
accordance with sections 124.42, subdivision 4, and 124.431,
subdivision 11. In each such year the auditor shall extend on
the tax rolls against all taxable property within each such
district either (a) the aggregate amount of all tax levies
required by section 475.61 to be so extended in such year, less
the principal amount of any new debt service loan granted in the
current year, or (b) the maximum effort debt service levy of the
district as certified by the commissioner of children, families,
and learning, if greater than the levy required by the preceding
clause (a); adding in either case (c) the amount of the levy for
interest on state loans as certified by the commissioner of
children, families, and learning, including interest on any new
debt service loan granted in the current year. If the school
district is situated in more than one county, the aggregate levy
shall be apportioned among the counties as provided in section
475.61, subdivision 2, by the county auditor of the county in
which is situated the largest portion by net tax capacity of the
taxable property within the school district.

HIST: (1938-8) 1927 c 131 s 6; 1949 c 682 s 12; 1965 c 875 s
12; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20; 1990 c 562
art 11 s 7; 1Sp1995 c 3 art 16 s 13


475.63 Certificate as to registration.

Before any obligations payable in whole or in part from
taxes shall be delivered to the purchaser, the municipality
shall obtain and deliver to the purchaser a certificate of the
county auditor that the issue has been entered on the register.
If a tax levy is required by law, such certificate shall also
recite that such tax has been levied as required by law.

HIST: (1938-9) 1927 c 131 s 7; 1949 c 682 s 13; 1951 c 422 s
6; 1986 c 444; 1995 c 256 s 30


475.64 Levy by auditor.

In the event no method of levying a tax for the payment of
the indebtedness of any municipality and the interest thereon is
provided, or the municipal authorities fail to cause such levy
to be made, the county auditor shall add to the other taxes
charged upon the property taxable in the municipality an amount
sufficient to meet such obligations when due, which additional
levy shall be extended and collected with the other taxes of the
year.

HIST: (1945) RL s 787; 1949 c 682 s 14


475.65 Delivery of bonds; use of proceeds.

Upon payment to the treasurer of the purchase price by the
successful bidder, the obligations shall be delivered, and the
treasurer shall account for the receipt and disbursement of the
proceeds thereof for the use named in the resolution or other
instrument or instruments authorizing such obligations, in a
separate fund or account in the official financial records of
the municipality. Pending such use the proceeds may be invested
and reinvested in accordance with law, and the income and gain
therefrom shall be held as part of the proceeds and applied to
such use or to the payment of the obligations and interest
thereon or otherwise as provided in any city charter or any
other law. The purchaser shall not be obligated to see to the
application of the purchase price. When the use authorized is
the acquisition or betterment of any land, easements, buildings,
structures, machinery, or equipment, the proceeds may be used to
pay all expenses, incurred and to be incurred, which are
reasonably necessary and incidental to such acquisition or
betterment, including, but without limitation, the cost of
necessary professional planning studies to determine desirable
locations, architectural, engineering, legal, financial
advisory, and other professional services, printing and
publication, and interest to accrue on the obligations prior to
the anticipated date of commencement of the collection of taxes
or special assessments to be levied or other funds pledged for
the payment of the obligations and interest thereon. When the
obligations are payable wholly from the income from a utility or
other project, for the acquisition or betterment of which the
obligations are issued, the proceeds may be used in part to
establish a reserve as further security for the payment of such
principal and interest when due. If the contemplated use be
afterward abandoned, or if any balance of the proceeds of the
obligations remains after the use is accomplished, or if the
governing body determines that at least 85 percent of the cost
of the use has been paid or finally determined and retains in
the fund an amount sufficient to pay the estimated costs of
completion, the remainder of the fund may be devoted to any
other public use authorized by law, and approved by resolution
adopted or vote taken in the manner required to authorize bonds
for such new use and purpose. Any balance remaining after the
improvement has been completed and paid for, unless devoted to a
new use as herein authorized, shall become a part of the debt
service fund of the municipality.

HIST: (1944) RL s 786; 1949 c 682 s 15; 1967 c 481 s 4; 1969 c
183 s 1; 1976 c 324 s 12,26; 1983 c 365 s 3


475.67 Refunding bonds and other obligations; validity;
procedure.

Subdivision 1. Resolution conclusive as to validity.
No purchaser or owner of bonds or other obligations issued by a
municipality for the purpose of refunding its outstanding
obligations or floating indebtedness need inquire into the
validity of the debts refunded by such bonds or other
obligations. The determination by resolution of the governing
body to issue the bonds or other obligations of the municipality
for such purpose, as to such purchaser or owner, shall be
conclusive evidence of the validity of the debts thereby
refunded.

Subd. 2. Invalid not made valid. As between the
municipality and the owner or holder of any bond, warrant, or
order so refunded, nothing in this section validates any invalid
bond, warrant, or order.

Subd. 3. Refunding conditions. (a) Any or all
obligations and interest thereon may be refunded if and when and
to the extent that for any reason the taxes or special
assessments, revenues, or other funds appropriated for their
payment are not sufficient to pay all principal and interest due
or about to become due thereon.

(b) Any or all obligations of one or more issues regardless
of their source of payment and interest thereon may be refunded
before their due dates, if:

(1) consistent with covenants made with the holders
thereof; and

(2) determined by the governing body to be necessary or
desirable:

(i) for the reduction of debt service cost to the
municipality; or

(ii) for the extension or adjustment of the maturities in
relation to the resources available for their payment; or

(iii) for the issuance of obligations bearing a fixed rate
of interest in the case of obligations bearing interest at a
rate varying periodically; or

(iv) in the case of obligations payable solely from a
special fund, for the more advantageous sale of additional
obligations payable from the same fund or to relieve the
municipality of restrictions imposed by covenants made with the
holders of the obligations to be refunded.

(c) The amount of interest which may be refunded from the
proceeds of the refunding obligations shall not exceed the
amount of proceeds estimated to be required in excess of the
principal amount of refunded obligations to retire the refunded
obligations in accordance with subdivision 6.

(d) No general obligations, for which the full faith and
credit of the issuer is pledged, shall be issued to refund
special obligations previously issued for any purpose, payable
solely from a special fund, unless the issuance is authorized by
the election, hearing, petition, resolution, or other procedure
that would have been required as a condition precedent to the
original issuance of general obligations for the same purpose.

Subd. 4. Deadline for refunding obligations;
conditions. Refunding obligations shall not be issued and
sold more than six months before the date on which all
obligations to be refunded thereby will have matured or have
been called for redemption in accordance with their terms,
unless the actions and conditions described in the following
subdivisions of this section are taken or exist at or before the
time when the refunding obligations are delivered to the
purchasers.

Subd. 5. Deposits. The proceeds of the refunding
obligations, less any accrued interest or premium thereon
required to be taken into account for purposes of meeting the
debt service savings test set forth in subdivision 12 or
otherwise deposited in the debt service fund established for the
refunding obligations, less any amount set aside to pay the
expenses of the refunding described in subdivision 12, shall be
deposited, together with any other funds available and
appropriated by the governing body for the purpose, in escrow
with a suitable banking institution within or without the state,
whose deposits are insured by the Federal Deposit Insurance
Corporation, and whose combined capital and surplus is not less
than $500,000.

Subd. 6. Investment. The funds so deposited shall be
invested in securities maturing or callable at the option of the
holder on such dates and bearing interest at such rates as shall
be required to provide funds sufficient, with any cash retained
in the escrow account, to pay when due the interest to accrue on
each obligation refunded to its maturity or, if prepayable and
called for redemption, the earlier date on which it is called
for redemption, and to pay the principal amount of each such
obligation at maturity or, if prepayable and called for
redemption, at such earlier redemption date, and to pay any
premium required for redemption on that date; and the governing
body shall irrevocably appropriate for these purposes the escrow
account and all payments of principal and interest on the
securities deposited therein, provided that any funds in the
escrow account in excess of the amounts from time to time needed
for the foregoing purposes may be remitted to the municipality.

Subd. 7. Notice of call. Provision shall be made for
notice of the call of any refunded obligations to be redeemed
before maturity to be given in accordance with their terms, and
in accordance with section 475.54, subdivision 4, no later than
30 days after issuance of the refunding obligations.

Subd. 8. Escrow account securities. Securities
purchased for the escrow account shall be limited to:

(a) general obligations of the United States, securities
whose principal and interest payments are guaranteed by the
United States, and securities issued by the following agencies
of the United States: Banks for Cooperatives, Federal Home Loan
Banks, Federal Intermediate Credit Banks, Federal Land Banks,
and the Federal National Mortgage Association; or

(b) obligations issued or guaranteed by any state or any
political subdivision of a state, which at the date of purchase
are rated the highest or the next highest rating given by
Standard and Poor's Corporation, Moody's Investors Service, or a
similar nationally recognized rating agency, but not less than
the rating on the refunded bonds immediately prior to the
refunding.

Subd. 9. Escrow agent agreement. The municipality
shall enter into an agreement with the banking institution
acting as escrow agent under which the agent shall acknowledge
receipt of the cash and securities and their sufficiency to
comply with the requirements of this section, and shall agree to
hold them, and all money received in payment of principal and
interest on the securities, in a special trust account, and to
remit from this account to each paying agent for the refunded
obligations sufficient funds to pay the principal and interest
due thereon at each maturity, interest payment date, and
redemption date. The agent may be directed to reinvest the
balance held in the account from time to time in other
securities of the kinds authorized in this section, maturing or
subject to redemption at the times and in the amounts required
to meet all payments of principal and interest when due on the
refunded obligations, which securities may be purchased from its
own investment department at prices not higher than those at
which similar securities are currently being sold by it to
others.

Subd. 10. Republication; failure. The escrow agent
shall be directed to cause notice of the call of the refunded
obligations which are to be prepaid to be republished not more
than 90 nor less than 45 days before the date fixed for their
redemption, in the manner provided in subdivision 7; but failure
to republish shall not affect the validity of the call for
redemption.

Subd. 11. Repealed, 1987 c 344 s 37

Subd. 12. Additional conditions. In the refunding of
general obligations, for which the full faith and credit of the
issuing municipality has been pledged, the following additional
conditions shall be observed: each such obligation, if
repayable, shall be called for redemption prior to its maturity
in accordance with its terms no later than either (i) the
earliest date on which it may be redeemed without payment of any
premium, or (ii) if the obligation is only prepayable with
payment of a premium, on the earliest date on which it may be
redeemed with payment of the least premium required by its
terms. No refunding obligations shall be issued and sold more
than six months before the refunded obligations mature or are
called for redemption in accordance with their terms, unless
either (i) as a result of the refunding the average life of the
maturities is extended at least three years or (ii) as of the
nominal date of the refunding obligations the present value of
the dollar amount of the debt service on the refunding
obligations, computed to their stated maturity dates, after
deducting any premium, is lower by at least three percent than
the present value of the dollar amount of debt service, on all
general obligations refunded, exclusive of any premium, computed
to their stated maturity dates; provided that in computing the
dollar amount of debt service on the refunding obligations, any
expenses of the refunding payable from a source other than the
proceeds of the refunding obligations or the interest derived
from the investment thereof shall be added to the dollar amount
of debt service on the refunding obligations. For purposes of
this subdivision, the present value of the dollar amount of debt
service means the dollar amount of debt service to be paid,
discounted to the nominal date of the refunding obligations at a
rate equal to the yield on the refunding obligations. Expenses
of the refunding include the amount, if any, in excess of the
proceeds of the refunding obligations or the principal amount of
obligations to be refunded, whichever is the greater, which is
required to be deposited in escrow to provide cash and purchase
securities sufficient to retire the refunded obligations and
unaccrued interest thereon in accordance with subdivision 6;
charges of the escrow agent and of the paying agent for the
refunding obligations; and expenses of printing and publications
and of fiscal, legal, or other professional service necessarily
incurred in the issuance of the refunding obligations.

Subd. 13. Crossover refunding obligations. Crossover
refunding obligations may be issued by a municipality without
regard to the limitations in subdivisions 4 to 10. The proceeds
of crossover refunding obligations, less any proceeds applied to
payment of the costs of their issuance, shall be deposited in a
debt service fund irrevocably appropriated to the payment of
principal of and interest on the refunding obligations until the
date the proceeds are applied to payment of the obligations to
be refunded. The debt service fund shall be maintained as an
escrow account with a suitable financial institution within or
without the state and amounts in it shall be invested in
securities described in subdivision 8 or in an investment
contract or similar agreement with a bank or insurance company
meeting the requirements of section 118A.05, subdivision 5.
Excess proceeds, if any, of the tax levy pursuant to section
475.61, subdivision 1, made with respect to the obligations to
be refunded, and any other available amounts, may be deposited
in the escrow account. In the resolution authorizing the
issuance of crossover refunding obligations, the governing body
may pledge to their payment any source of payment of the
obligations to be refunded. The resolution may provide that the
refunding obligations are payable solely from the escrow account
prior to the date scheduled for payment of the obligations to be
refunded and that the obligations to be refunded shall not be
discharged if the amounts on deposit in the escrow account on
that date are insufficient. Subdivision 12 applies to crossover
refunding obligations, but the present value of debt service on
the refunding and refunded obligations shall be determined as of
the date the proceeds are applied to payment of the obligations
to be refunded. Subject to section 475.61, subdivision 3, in
the case of general obligation bonds, taxes shall be levied
pursuant to section 475.61 and appropriated to the debt service
fund in the amounts needed, together with estimated investment
income of the debt service fund and any other revenues available
upon discharge of the obligations refunded, to pay when due the
principal of and interest on the refunding obligations. The
levy so imposed may be reduced by earnings to be received from
investments on hand in the debt service fund to the extent the
applicable recording officer certifies to the county auditor
that the earnings are expected to be received in amounts and at
such times as to be sufficient, together with the remaining
levy, to satisfy the purpose of the levy requirements under
section 475.61.

HIST: (1946-1, 1946-2) 1921 c 185 s 1,2; 1933 c 232 s 2; 1949
c 682 s 17; 1971 c 903 s 5; 1973 c 494 s 13; 1976 c 324 s 14,15;
1978 c 521 s 1; 1Sp1985 c 14 art 8 s 55,56; 1987 c 344 s 33,34;
1988 c 702 s 13,14; 1991 c 342 s 19; 1993 c 271 s 6,7; 1996 c
399 art 2 s 12


475.68 Joint liability of town and statutory city.

In the event a town and a statutory city are jointly liable
for the payment of any bonded indebtedness or in the event all
the property within any town or statutory city is liable to be
taxed for the payment of any such indebtedness, any such town or
statutory city, at the time bonds mature, may pay that
proportion of such indebtedness that the amount of the last
assessment of property situate in the town or the statutory city
bears to the net tax capacity of both the town and the statutory
city. If either the town or the statutory city deems such
assessment to be inequitable, its governing body may demand, in
writing, that the commissioner of revenue appoint a
disinterested assessor, not a resident of either the town or the
statutory city, to make a reassessment of all the property
situate in the town and the statutory city. Thereupon the
commissioner shall appoint such assessor. The reassessment so
made governs in the division of such indebtedness. Any such
town or statutory city may issue bonds for the payment of the
amount thereof for which it is liable.

HIST: (1953) 1909 c 254 s 1; 1949 c 682 s 18; 1973 c 123 art 5
s 7; 1973 c 582 s 3; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s
20


475.69 Defaced bonds; duplicates.

When any obligation of a municipality becomes unfit for
circulation, it may be surrendered and canceled. Upon the
authorization of the governing body, a duplicate of the
obligation except as to signatures and a duplicate of any unpaid
coupons, may be issued to the owners. These duplicates shall be
marked "DUPLICATE" and the date of issue shown thereon. Such
marking shall be signed by the treasurer then in office.

HIST: (1970) RL s 791; 1949 c 682 s 19


475.70 Lost instruments; indemnity.

If the owner of any obligation which is destroyed or lost,
first gives a satisfactory surety bond to the municipality, in a
sum double the amount of such obligation, conditioned to save it
harmless in the premises, the governing body thereof may
authorize the issuance of another to the owner in its place,
corresponding with the missing obligation as to number, date,
amount, and unpaid coupons. Such obligation shall be signed by
the proper officials who are then in office, and shall be marked
and dated as provided in section 475.69. The treasurer shall
keep a record of all reissues and duplicates showing the date of
issue and the persons to whom issued.

HIST: (1971) RL s 792; 1949 c 682 s 20


475.72 Violations and penalties.

Any officer of any municipality who knowingly fails to
comply with any provision of Laws 1949, chapter 682 is guilty of
a misdemeanor.

HIST: (1938-12) 1927 c 131 s 10; 1949 c 682 s 22


475.73 State board of investment.

Subdivision 1. May purchase these bonds; conditions.
Obligations sold under the provisions of section 475.60 may be
purchased by the state board of investment if the obligations
meet the requirements of section 11A.24, subdivision 2, upon the
approval of the attorney general as to form and execution of the
application therefor, and under rules as the board may specify,
and the state board shall have authority to purchase the same to
an amount not exceeding 3.63 percent of the market value of the
taxable property of the municipality, according to the last
preceding assessment. The obligations shall not run for a
shorter period than one year, nor for a longer period than 30
years and shall bear interest at a rate to be fixed by the state
board but not less than two percent per annum. Forthwith upon
the delivery to the state of Minnesota of any obligations issued
by virtue thereof, the commissioner of finance shall certify to
the respective auditors of the various counties wherein are
situated the municipalities issuing the same, the number,
denomination, amount, rate of interest and date of maturity of
each obligation.

Subd. 2. Tax levy. The annual tax levy for the
payment of principal and interest on account of such obligations
shall be for an amount 50 percent in excess of the sum to be
paid therefrom. The state auditor, at the time of certifying
the state tax, shall also certify to each county auditor the
amount necessary to pay such principal and interest. When
collected so much of such tax as may be necessary shall be paid
into the state treasury. The excess remaining shall be held
over in the county treasury to be applied on the next future
payment due on such obligations, and the amount of such excess
shall be reported by the county auditor to the state auditor on
or before August first each year, who shall deduct the same from
the next annual tax levy for such purpose. The remainder, when
such bonds are paid in full, shall be credited to the general
fund of the municipality; and, in case a portion of the
territory embraced in such municipality at the time such
obligations were issued, has since been set off to another
municipality, such remainder shall be divided with such other
municipality, using as a basis for such division the last net
tax capacity of the territory affected by such obligations. Any
such municipality which shall make payment to the state of the
full amount of principal and interest due on account of such
obligations prior to the extending of such tax therefor by the
state auditor shall be exempt from the provisions of this
section.

HIST: 1949 c 682 s 23; 1973 c 492 s 14; 1980 c 607 art 14 s
44; 1986 c 444; 1988 c 719 art 5 s 84; 1989 c 329 art 13 s 20;
1990 c 480 art 9 s 23


475.74 Law limiting taxes not applicable.

The provisions of any law limiting taxes shall not limit
the power of any city of the first or second class or any
independent school district in any city of the first class, or
any special school district in a city of the second class having
a population of not less than 28,000 nor more than 32,000
according to the 1950 federal census, to levy taxes to pay its
general obligation bonds nor shall such provisions limit the
power of any municipality to levy taxes to make good any
deficiency in any prior levies made pursuant to section 475.61.
The governing body shall levy such taxes without limitation as
to rate or amount.

HIST: 1949 c 682 s 24; 1951 c 422 s 8; 1957 c 43 s 1; 1957 c
743 s 1; 1Sp1989 c 1 art 5 s 43


475.753 Municipalities are subject to this chapter.

All municipalities are subject to the provisions of this
chapter in the issuance of obligations and may incur
indebtedness to the extent of but not in excess of the debt
limit in said chapter notwithstanding any home rule charter
provision or charter law adopted prior to April 1, 1951.
Nothing herein shall prevent the adoption after that date of
additional debt limitations or restrictions. This section shall
not be deemed to amend or otherwise affect or change section
475.53, subdivision 3.

HIST: 1951 c 422 s 9


475.754 Disasters or public emergencies, certificates of
indebtedness.

If in any fiscal year the receipts from taxes or other
sources are insufficient to meet the expenses incurred or to be
incurred in said year by any city however organized, county or
town by reason of any natural disaster or other public emergency
requiring the making of extraordinary expenditures, the
governing body of any such city, county or town may authorize
the sale of certificates of indebtedness to mature within three
years and to bear interest at a rate not to exceed the amount
prescribed in this chapter. The certificates may be issued with
or without advertising for bids on such terms and conditions as
the governing body may determine and shall be in such form as
the state auditor in cooperation with the commissioner of
commerce shall prescribe. All certificates and interest thereon
shall be payable from taxes levied within existing limitations
or from other available revenue. The certificates shall not be
included in the net debt of the issuing city, county or town.

HIST: 1973 c 61 s 1; 1973 c 123 art 5 s 7; 1973 c 492 s 7;
1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1Sp1985 c 14 art
4 s 94; 1Sp1989 c 1 art 5 s 44


475.77 Obligations subject to federal volume limitation
act.

Sections 474A.01 to 474A.21 apply to any issuance of
obligations which are subject to limitation under a federal
volume limitation act as defined in section 474A.02, subdivision
9, or existing federal tax law as defined in section 474A.02,
subdivision 8.

HIST: 1984 c 582 s 21,23; 1Sp1985 c 14 art 8 s 63; 1986 c 465
art 1 s 30


475.78 Perfection of pledge.

Neither filing nor possession is required to perfect the
security interest created by any pledge or appropriation of
revenues or funds of the municipality, including any of its
investments, to the payment of bonds issued by the municipality.

HIST: 1987 c 344 s 35


475.79 Powers available to other political subdivisions.

Any powers granted to a municipality under this chapter,
other than the power to issue general obligation bonds and levy
taxes, may be exercised by any other governmental unit. This
grant of authority does not limit the powers granted to an
entity under any other law. In connection with the issuance of
bonds authorized to be issued by any law or charter provision
other than this chapter, a governmental unit determining to
exercise any power under any of sections 475.54, 475.55,
475.553, 475.56, 475.561, 475.60, 475.61, 475.65, 475.67,
475.69, 475.70, and 475.78 may do so notwithstanding any
contrary provision in the authorizing law or charter unless the
authorizing law or charter provides that this chapter or the
specific section does not apply. This section is, in part,
remedial in nature. Obligations issued prior to June 2, 1995,
are not invalid or unenforceable for providing terms,
consequences, or remedies that are authorized by this section
and chapter 475.

HIST: 1987 c 344 s 36; 1989 c 355 s 24; 1995 c 256 s 31; 1996
c 399 art 2 s 12

==475.misc1996 Minn. Stats. repealed, etc. secs in chap 475
475.01 Repealed, 1949 c 682 s 26
475.02 Repealed, 1949 c 682 s 26
475.03 Renumbered 475.51
475.04 Superseded by 475.03
475.05 Repealed, 1947 c 296 s 6
475.06 Repealed, 1947 c 296 s 6
475.07 Renumbered 475.55
475.08 Superseded by 475.31
475.09 Repealed, 1947 c 296 s 6
475.091 Repealed, 1947 c 296 s 6
475.10 Repealed, 1947 c 296 s 6
475.11 Renumbered 475.56
475.12 Renumbered 475.71
475.13 Superseded
475.14 Renumbered 475.52
475.15 Repealed, 1949 c 682 s 26
475.16 Repealed, 1949 c 682 s 26
475.17 Repealed, 1949 c 682 s 26
475.18 Renumbered 475.65
475.19 Renumbered 475.69
475.20 Renumbered 475.70
475.21 Renumbered 475.64
475.22 Renumbered 471.69
475.23 Renumbered 475.53
475.24 Renumbered 475.54
475.25 Renumbered 475.58
475.26 Repealed, 1949 c 682 s 26
475.27 Renumbered 475.62
475.28 Renumbered 475.63
475.29 Repealed, 1949 c 682 s 26
475.30 Renumbered 475.66
475.31 Repealed, 1949 c 682 s 26
475.32 Renumbered 475.72
475.33 Renumbered 471.70
475.34 Renumbered 475.67
475.35 Repealed, 1949 c 682 s 26
475.36 Superseded
475.37 Superseded
475.38 Superseded
475.39 Repealed, 1949 c 682 s 26
475.40 Repealed, 1949 c 682 s 26
475.41 Renumbered 475.68
475.42 Repealed, 1949 c 682 s 26
475.43 Repealed, 1949 c 682 s 26
475.533 Repealed, 1969 c 1056 s 11
475.552 Repealed, 1971 c 903 s 6
475.66 Repealed, 1996 c 399 art 1 s 11
475.71 Repealed, 1984 c 563 s 7
475.75 Repealed, 1996 c 310 s 1
475.76 Repealed, 1996 c 399 art 1 s 11

Copyright 1996 by the Office of Revisor of Statutes, State of Minnesota.

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