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I ( J?) DORSEV PUBLIC FINANCE UPDATE City Capital Improvement Bonding Authority The 2003 Minnesota Legislature enacted into law a program that allows home rule and statutory cities to establish a capital improvement program and issue bonds for certain capital improvements without an election. Similar authority has been in place for counties for severai years. Permissible Capital Improvements The law defines 'capital improvements' to include acquisition or betterment of public lands, buildings or other improvements, with an expected useful life of at least five years or more, for the purpose of a city hall, public safety facility, and public works facility. Specifically excluded are: parks, libraries, roads, bridges, other city administrative buildings, light rail transit and related activities, and land therefor. Capital Improvement Plan Requirements Contents A capital improvement pian must cover at least a five-year period beginning with the date of its adoption and must contain: the estimated schedule, timing, and details of specific capital improvements by year; , the estimated costs of the capital improvements; the need for the capital improvements; and , the sources of revenue to pay for the capitai improvements. A capital improvement plan may be amended annually by the City Councii after a public hearing. Considerations In preparing a capital improvement plan, a City Council must consider, for each capital improvement and for the capital improvement plan overall: the condition of the City's existing infrastructure, including the projected need for repair or replacement; the likely demand for the capital improvemen~ , the estimated cost of the capital improvement; , the available public resources; , the level of overlapping debt in the City; , the relative benefits and costs of altemative uses of the funds; operating costs of the proposed improvements; and alternatives for providing selVices most efficiently through shared facilities with other cities or local govemment units. Bond Characteristics & Limitations Bonds issued under this authority are subject to the provisions of Chapter 475, including the net debt limits contained in Minnesota Statutes, Section 475.53. Bonds may not be issued if the maximum amount of principal and interest to become due in any year on all such bonds issued under this authority would equal or exceed 0.05367 percent of taxable market value of all property in the county. This calculation is required to be made using the taxable market value for the taxes payable in the year in which the obligations are issued and sold. We believe that the reference to taxable market value in the county was a drafting error in the legislation, and that the Legislature intended to refer to taxable market vaiue In the City. We have been advised that a correction to this language will be included in the Public Finance Bill to be considered during the 2004 legislative session. .' ,," ....', ......:,., " ,." . - .. ,-"-".<::, :- Look inside for step-by"step instructions ~n hovv to apply this new tool in your city! Dorsey & Whitney UP p\:.n:.\..;C ;t~:<.J;:,~~CE: tn~:::,,!;.7E f A PubJjcation of Dorsey's Public Anance Practice Group July 2000