Purpose

• The bill would add a requirement for voter referendums in certain cases where local governments use certain financing methods for capital improvement projects. It focuses on capital improvements financed by revenue bonds issued by an economic development authority (EDA) and leased to a city. It also makes targeted amendments to two state statutes to reflect these referendum requirements.

Main provisions

• Section 1 – Installment contracts and lease-purchase agreements
  • Local governments (home rule charter cities, statutory cities, counties, towns, or school districts) may purchase personal property or real property using installment contracts or lease-purchase agreements, with the seller retaining title or the title held as security.
  • For bidding, the contract amount must include the total lease payments over the full term.
  • If the real property contract amount is under $1,000,000, it is not counted as net debt for debt calculations and is not debt under other statutes.
  • Generally, no election is required to execute these installment contracts or lease-purchase agreements.
  • The local government must have the right to terminate the lease-purchase agreement at the end of any fiscal year.
• Subdivision 2 – Referendum for certain purchases financed via lease-purchases
  • A city that is a home rule charter city or statutory city must follow the election requirements in a separate statute when entering into a lease-purchase agreement for a capital improvement funded by revenue bonds issued by an EDA (powers under 469.090 to 469.108).
• Section 2 – Referendum for EDA revenue bonds
  • An EDA must follow the election requirements in section 475.521, subdivision 2, to issue revenue bonds to finance a project that qualifies as a capital improvement and will be leased to a city.
  • For purposes of this subdivision, “authority” refers to an EDA exercising powers under 469.090 to 469.108.

How the changes work in practice

• Public input: The bill creates explicit circumstances under which voters must approve certain financing tied to capital improvements related to EDAs and city use.
• Financing mechanics: It clarifies when lease-purchase arrangements contribute to debt calculations and when they do not, potentially affecting debt limits and budgeting.
• Scope: Applies to various local government types (cities, counties, towns, school districts) and focuses on capital improvements financed by revenue bonds issued by EDAs.

Significance and potential impact

• Increased voter oversight for specific large capital projects funded through EDA-backed revenue bonds.
• Could affect the timing and structure of financing for capital improvements, as some arrangements would require referendums rather than automatic approval.
• May influence how local governments plan, borrow, and lease-purchase property, especially real property used for capital projects.

Notable terms and concepts (for context)

• Capital improvement: Projects that enhance the long-term value or capacity of public infrastructure or facilities.
• Revenue bonds: Bonds repaid from specific revenue sources, not from general tax revenues.
• Economic development authority (EDA): A local entity authorized to foster economic growth, with powers to issue bonds and undertake development projects.
• Installment contract / lease-purchase agreement: Financing methods where the buyer pays over time and ownership may transfer at the end of the term.
• Net debt: A debt measurement used for budgeting and debt limits (the bill specifies when certain purchases are not counted as net debt).
• Election requirements: Rules governing when and how voters must approve certain types of debt or financing.

Relevant terms

• capital improvement
• referendum
• referendum for certain revenue bonds
• revenue bonds
• economic development authority (EDA)
• home rule charter city
• statutory city
• installment contract
• lease-purchase agreement
• net debt
• election requirements
• 475.521
• 469.090-469.108
• 465.71
• 469.103

Relevant Terms section (plain list of keywords) - capital improvement - referendum - revenue bonds - economic development authority - home rule charter city - statutory city - installment contract - lease-purchase agreement - net debt - election requirements - 475.521 - 469.090-469.108 - 465.71 - 469.103