09.02 Old Highway 371 Improvement Project

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Springsted Financing Options for Minnesota Cities Cities in Minnesota have broad authority to issue General Obligation Bonds without a referendum to meet their capital needs. The following list outlines the primary authorities used by cities to finance capital projects. All of the authorities listed below allow cities to secure the bonds with a general obligation pledge. 1. Improvement Bonds (M.S. 429) • Purpose: Street improvement projects whereby the benefiting property pays at least 20%of project cost • Voter Approval: Not as long as the 20%test is met • Board Approval: Majority vote of the governing body • Subject to Statutory Debt Limit: No • Other Statutory Limitations: No • Term Limitations: 30 years • Cities must hold public hearing ordering the project before bonds can be sold • Cities must hold public hearing setting assessment and comply with notification requirements in statute • Assessments may be set before or after bonds are sold • Amount of the assessment cannot exceed the value added to the property • Tax exempt properties, i.e. churches, schools, and non-profits, pay assessments 2. Equipment Certificates (M.S. 412.301) • Purpose: Public safety, road and maintenance equipment,software and other capital equipment • Voter Approval: No • Board Approval: Two-thirds of government body • Subject to Statutory Debt Limit: Yes • Other Statutory Limitations: Total principal amount issued in a fiscal year cannot exceed 0.25 percent of the estimated market value in the city for that year • Term Limitations: 10 Years from the date of issue; software and equipment must have an expected useful life at least as long as the term of the certificates • Public hearing required only if the principal exceeds 0.25 percent of estimated market value 3. Capital Improvement Plan Bonds (M.S. 475.521) • Purpose: Acquisition or betterment of public lands, city hall, library, public safety facilities and public works facilities. Does not include light rail transit, parks, roads, bridges or other administrative buildings. • Voter Approval: No; subject to reverse referendum if 5%of electorate in last general election sign petition • Board Approval: Three-fifths of government body; Two-thirds on seven-member boards • Subject to Statutory Debt Limit: Yes • Other Statutory Limitations: Maximum principal and interest due in any one year on all outstanding bonds issued under M.S.475.521 cannot exceed 0.16 percent of the estimated market value in the city. • Term Limitations: 30 years • Cities must establish five-year CIP and address eight criteria outlined in M.S. 475.521 • Cities must hold public hearing on the CIP and intent to issue bonds • Public hearing notification must be in the official newspaper at least 14 days but no more than 28 days prior to the hearing • Reverse referendum period begins the day after the public hearing 2014 Public Sector Advisors