SF4986

Purpose

This bill reshapes how Hennepin County can raise and spend money to support a new ballpark development and related public infrastructure, and it creates a new funding stream to help a private nonprofit Level I trauma hospital in the county with uncompensated care costs. It also adjusts certain financial rules for the ballpark authority and expands the county’s authority to acquire land and issue bonds to finance these projects.

Key goals

• Fund ballpark development, public infrastructure, and related improvements in a defined development area.
• Provide a significant annual grant (and ongoing funding) to a private nonprofit Level I trauma hospital in Hennepin County to cover uncompensated care, under specific formulas and safeguards.
• Modernize how the ballpark authority is treated financially and how the county can borrow and issue bonds to support these activities.
• Create a tax authority (local sales tax) to pay for these purposes, with a sunset after certain obligations are met.

Main provisions and how they work

• Qualifying government status (Section 1)

  • Expands or clarifies when the ballpark authority is treated as a “qualifying government” for certain investment rules, aligning investment calculations with the county’s financial position.

• Ballpark grants and related authority (Section 2)

  • The county can grant funds to the ballpark development authority for ballpark development, construction, public infrastructure, and related improvements within the development area.
  • Grants and terms are subject to limits in later sections and to agreements with the ballpark authority.

• Hennepin County health care facilities funding (Section 3)

  • Up to $24 million annually could be distributed to a designated private nonprofit Level I trauma hospital (in Hennepin County) to fund uncompensated care, subject to a grant agreement and a detailed formula.
  • Uncompensated care is defined using GAAP measures and excludes certain types of debt or high-income cases.
  • The hospital must meet conditions such as being a Level I trauma center and following standard debt collection practices.
  • Residency status of patients is used to determine subsidies, and Medicare bad debt must be treated separately in the calculation.
  • The county pays only after the hospital’s annual uncompensated care exceeds a benchmark, which is tied to county-wide hospital data and specifics in the statute.
  • If the hospital is sold to a for-profit entity, the county can stop payments; advance notice is required for a sale.
  • Additional related provisions: the hospital’s inclusion of Medicare DSH adjustments, avoidance of double-counting grant receipts, and avoidance of paying when other state Emergency Medicaid funds have already been used to cover care.
  • Uses of health care funds (Sec. 3, continuing)
  • Funds may be used for various county-owned or county-operated health care facilities and related infrastructure.
  • Other allowed uses include county health care facilities’ operating costs, county public health priorities, housing that addresses health-related needs, and related county services.
  • The county can also fund uncompensated care provided in county facilities and reserves for related health needs.

• Expenditure and spending limits (Section 4)

  • Ballpark costs capped at $260 million.
  • Capital improvement reserves capped at $1,000,000 annually.
  • Land/site improvements and public infrastructure capped at $90,000,000 (excluding reserves and financing costs).
  • Spending restrictions specify that funds for land/site improvements and public infrastructure must relate to projects within the development area (or within 1,000 feet of the border) and relate to construction contracts within five years of the initial bonds issuance.

• Capital improvement grants (Section 5)

  • The county may make capital improvement grants to the ballpark authority of up to $7,000,000 annually (noting this is separate from the cap in Section 4), subject to the same agreement rules and annual inflation adjustments.

• Property acquisition and disposition (Section 6)

  • The county can acquire land and related rights for the ballpark site and related infrastructure, within the development area or near its border, and can transfer these to the ballpark authority.
  • The county can also acquire land for county health care facilities and related infrastructure.
  • Excess property can be sold, with proceeds going to the debt service reserve fund.

• Local government expenditures (Section 7)

  • The county can reimburse or grant funds to local governmental units for site acquisition, site preparation, ballpark development, and public infrastructure, with certain protections so that expenditures by local units aren’t counted against local statutory limits.

• County authority (Section 8)

  • Expresses legislative intent that the county can acquire and develop sites, enter into contracts, fund capital reserves, and make related expenditures and personnel available to carry out these projects.

• Revenue bonds and financing (Section 9)

  • The county can issue revenue bonds to fund grants to the ballpark authority and other development costs, and to fund county-owned health care facilities.
  • Bonds can be limited obligations payable from taxes and other revenues, may be issued in series, and can be refunded.
  • Bonds are not counted toward county debt limits, can be sold without an election, and may be secured through trusts or indentures.
  • The county can provide temporary interfund loans in anticipation of bond issuance.

• Sales and use tax authority (Section 10)

  • The county can impose a local sales and use tax within a defined rate (the text shows a range in the bill; the intended effect is to fund the described purposes), with the tax exempt from certain standard state tax rules.
  • The tax’s effect on other Minneapolis tax limits is addressed.

• Uses of tax revenues (Section 11)

  • Revenues May be used to pay tax collection costs, debt service on bonds, operating costs for the ballpark authority, grants and financing costs, reserves, youth activities/amateur sports, library hours, and funding for health care facilities and capital improvements described in prior sections.
  • After the ballpark is completed, any remaining tax revenue is used to redeem or defease bonds and to fund future obligations; the tax ends once those obligations are satisfied and the reserves are funded.

• Reserve for capital improvements (Section 12)

  • Requires annual payments into a capital improvements reserve fund, with specified total amounts and a split between the county and the “team” share as determined by agreement.
  • The annual payments are indexed to inflation, with adjustments for present-value reductions.
  • The authority may accept contributions from the county or other sources for the portion not required from the team.

• Additional notes

  • The bill outlines a comprehensive framework for financing a ballpark project and related infrastructure, plus a separate but linked funding stream to support a private county hospital’s uncompensated care, all financed through a county-imposed local sales tax and supported by bond financing and reserve funds.
  • It includes safeguards around for-profit ownership, sunset provisions for the tax after obligations are met, and performance-based triggers for certain funding (e.g., uncompensated care benchmarks).

Significant changes to existing law

• Expands the county’s ability to impose a local sales tax specifically for ballpark development, public infrastructure, and related health care facility funding, with a sunset once obligations are satisfied.
• Establishes a substantial annual grant to a private nonprofit Level I trauma hospital for uncompensated care, with a defined formula, benchmarks, and conditions (including protections around for-profit sales).
• Broadens the ballpark authority’s funding and debt-issuance framework, including new caps on expenditures, new grant authorities (capital improvements), and explicit authorization for revenue bonds secured by taxes and other revenues.
• Aligns investment rules for the ballpark authority with the county’s financial position and audited statements.
• Expands the county’s land and property authority to acquire, develop, and dispose of development-area property (and property for health care facilities), including limited use of eminent domain and funding for related infrastructure.
• Creates structured reserve funds for capital improvements, with obligations shared between the county and a team (likely a sports franchise) and inflation-based growth in annual payments.

Practical implications for the public

• A new local sales tax (rate defined in the bill) would fund ballpark development, infrastructure, and health care subsidies, among other purposes, with a sunset period after obligations are met.
• The county would have enhanced authority to acquire land, issue bonds, and undertake large development projects tied to the ballpark site and health care facilities.
• A private nonprofit hospital could receive substantial annual funding for uncompensated care, subject to strict benchmarks and guardrails to prevent use if ownership changes to for-profit.
• Tax revenues are tightly directed to specific uses, with a mechanism to redeem bonds after completion and a cap on ongoing obligations.

Relevant Terms - ballpark, ballpark authority - Hennepin County - health care facilities, county-owned health care facilities - private nonprofit hospital, Level I trauma hospital - uncompensated care - benchmark, average percent of gross revenues of uncompensated care - Medicare disproportionate share (DSH), Affordable Care Act adjustments - development area, public infrastructure, land/site improvements - capital improvement reserve, debt service reserve fund - revenue bonds, bonds, tax levy, tax revenue, sales and use tax - eminent domain, property acquisition and disposition - grants, grant agreements - inflation index - for-profit ownership (and related sale/transfer safeguards)