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S.F. No. 343 - Destination Medical Center (as Proposed to be Amended by A14 Delete-Everything Amendment)
 
Author: Senator David H. Senjem
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: April 22, 2013



 

The amendment provides local taxing authority to the city of Rochester and Olmsted Counties and establishes a destination medical center authority to develop and finance public infrastructure for the destination medical center project.  The amendment authorizes state aid based on a threshold amount of private capital investment and commitments by the city and county for investment in Mayo Clinic building projects in the city. The city and county must commit to investing at least $128 million for the project to qualify for state aid.  Additionally, $116 million funding for public transit for the project is provided, with a portion of this amount to be funded with local taxes.

Section 1.  Construction material; public infrastructure costs.  Provides a sales tax exemption for construction materials and supplies used in, and equipment incorporated into public infrastructure included in the destination medical center authority development plan.  Effective for purchases after June 30, 2015.

Section 2.  Definitions. Defines “authority” (destination medical center authority), “board” (the governing body of the authority), “city” (Rochester), “county” (Olmsted), “destination medical center development district” (geographic area in the city in which under the development plan public infrastructure projects are implemented), “development plan” (adopted by the authority), “medical business entity” (Mayo Clinic), and “public infrastructure project” (project funded in part or whole with public money to support the medical business entity’s development identified in the development plan).

Section 3, subd. 1.  Establishment of authority and board.  Establishes the authority and board.  The board has eight members:  four members appointed by the Governor and confirmed by the Senate; two members appointed by the city council; one member appointed by the county; and one member appointed by Mayo.  The Governor’s appointees may not be residents of the city.  The gubernatorial, city, and county appointees must not have financial interests in Mayo or any projects under consideration or authorized by the authority. 

Subd. 2.  Terms; vacancies.  Provides that the eight board members are to be appointed by the first Monday in January 2014.  A board member’s term is six years, except that two of the Governor’s appointees, one city appointee, and the county appointee serve a three-year term after the 2014 appointment, and the Governor, city council, and county board of commissioners, respectively, must make replacement appointments for those board seats in January 2017. 

Subd. 3.  Chair.  Requires the Governor to appoint a chair from the board’s membership and requires that the chair convene a meeting within two months of the senate confirmation of the Governor’s appointees.

Subd. 4.  Pay.  Provides that the board members are to be compensated as required under current law for administrative boards and commissions and may be reimbursed for actual expenses.

Subd. 5.  Removal.  Provides the procedures for removing a member of the board for cause.

Subd 6.  Sunset.  Requires the authority to sunset on December 31, 2043. 

Section 4.  Board characteristics and jurisdiction.  Provides that the authority is a subdivision of the state and states that the boundary of the authority must be within a medical development district.  If the authority finances development outside a medical development district, that development must be included in the public infrastructure development plan and is subject to the planning, zoning, sanitary, and building laws applicable to the area where the development authority takes place.  

Section 5.  Officers; duties; organizational matters.  Requires the authority to annually elect a treasurer and appoint a secretary and assistant treasurer.  The secretary and assistant treasurer may be board members.  Provides the duties of the treasurer, secretary, and assistant treasurer.  Requires that the authority’s financial statements must be prepared in the same way as city financial statements.  Requires the authority to employ a CPA for annual examination and audit and that the exam and audit report be filed with the state auditor by June 30 of every year.

Section 6.  Depositories; default; collateral.  Sets forth the provisions for authority depositories and a bond for repayment of deposits.  Exempts the treasurer from liability for loss of deposits based on fault of the depository. 

Section 7.  Tax levies; city or county appropriations; other fiscal matters.  Requires that the authority must not levy a tax or special assessment or incur obligation on property not owned by the authority.  Requires the authority to send its budget to the house and senate tax committee chairs and ranking minority members.  Authorizes the city or county to appropriate money for the authority’s use.  Provides that local government tax base is not reduced by any provision in the new chapter. 

Section 8, subd. 1.  Development plan.  Directs the authority to prepare and adopt a development plan after publication, notice, and public hearing.  Requires the authority to make certain findings before adopting the plan. The plan must give priority to projects that pay wages equal to a basic cost of living wage as calculated by the DEED commissioner. 

Subd. 2.  City review of development plan.  Requires the authority to submit the development plan to the city for review and comment on the plan’s consistency with the city’s adopted comprehensive plan.  Requires the city to determine by written resolution any reasons for finding that the development plan is not consistent with the city comprehensive plan. 

Subd. 3.  Modification of development plan.  Authorizes the authority to modify the development plan at any time, but the development plan must be reviewed and updated at least every five years.

Subd. 4.  Authority consultant.  Allows the authority to hire a consultant to provide expertise and experience in developing the destination medical center.

Subd. 5.  Audit of consultant contracts.  Authorizes the state auditor to audit the books and records of the consultant. 

Subd. 6.  Report.  Requires the authority and city to submit an annual report to the chairs and ranking minority members of the house and senate committees and divisions with jurisdiction over local and state government operations, economic development, and taxes, and to the commissioners of employment and economic development and revenue, and to the county.  The report must include the adopted development plan and any proposed changes; progress of projects in the development plan; actual and estimated costs and financing sources; and debt service schedules.

Subd. 7.  Construction requirements.  Provides minimum requirements for contracts for construction, materials, supplies and equipment necessary for a public infrastructure project.  Allows a variety of forms of contract, such as design-build and construction manager at risk.  Authorizes the construction manager to hire subcontractors under certain conditions. 

Sec. 9.  Powers and duties.  Provides for the powers of the authority, including those of a redevelopment agency under current law.  Authorizes the authority to undertake public infrastructure projects in a medical center development district, provided the authority finds that the public infrastructure project is consistent with and in furtherance of the development plan.  Allows the authority to acquire property to create medical development districts and provides for a property tax exemption for such property while held by the authority.  Authorizes the authority to sell property it owns or holds with two-thirds approval of the board and provides for notice requirements of property sales or other conveyances. Allows the authority to enter into contracts for economic development purposes and provides that the state and its municipal subdivisions are not liable for the obligations of the authority.  Provides for other powers of the authority, including contracting for services, purchasing supplies, using city facilities and services, delegating power, cooperating with or acting as an agent for state or federal government, and accepting public land, and borrowing in anticipation of bonds.  Provides that the authority does not have tax increment financing powers.

Section 10.  Revenue obligations; pledge; covenants.  Provides that the authority may issue revenue bonds and states the form and sale requirements for bonds.  Provides that bonds may be secured by authority revenue, payments by Mayo, and city and county revenue.  Requires that authority bond debt is not city, county, or state debt. 

Section 11, subd. 1.  City tax authority.  Authorizes the city to impose a tax on receipts for admission to entertainment and recreational facilities as defined by the city, in an amount imposed by ordinance.  Proceeds from the tax must be used to fund obligations related to public infrastructure costs. 

Subd. 2.  General sales tax authority.  Authorizes an extension of the existing half-cent sales tax or the imposition of an additional quarter-cent sales tax. 

Subd 3. and 4.  Special abatement and TIF rules.  States that certain abatement and TIF provisions under general law do not apply if the city uses tax abatement or a redevelopment TIF district to finance the costs of public infrastructure projects. 

Section 12.  County tax authority.  Authorizes the county to impose a quarter-cent transit tax for purposes of financing transit infrastructure for the county share of the development plan.

Section 13.  State infrastructure aid.  Provides the requirements for state aid for the public infrastructure project. 

Subd. 1.  Definitions.  Defines terms applicable to the conditions for state aid. 

Subd. 2, 3, and 4.  Certification of expenditures; general state infrastructure aid; local contribution.  Provides that state aid may not be paid until certified Mayo expenditures reach $250 million.  After that point, the state pledges to pay three percent of the amount of qualified expenditures over $250 million, the total of which may not exceed $455 million plus financing costs.  The city must also pledge a contribution of at least $128 million, not including any state aid, to finance public infrastructure projects and may enter into an arrangement with the county to meet this requirement. 

Subd. 5 and 6.  State transit aid; local contribution.  Provides that the city qualifies for state transit aid if the county imposes the transit tax under section 12 and the county provides a contribution equal to a .15 percent sales tax imposed for the previous calendar year.  State transit aid is .75 percent of qualified expenditures, reduced by the local transit aid contribution.  State transit aid payments may not exceed $7.5 million per fiscal year, and $116 million in total.

Section 14.  Rochester local sales and use tax authorization.  Allows the city to impose an additional quarter-cent sales tax.

Section 15.  Use of revenues.  Requires that if the city decides to extend existing sales taxes or impose the additional quarter-cent sales tax, the excess over the amount needed to fund existing projects must be used to finance costs related to public infrastructure projects.  Authorizes revenue sharing for economic development purposes for additional named cities.

Section 16.  Termination of taxes.  Requires that any additional taxes imposed for public infrastructure costs terminate December 31, 2046, or when the city council determines that sufficient funds have been raised to finance the city’s obligations associated with the development plan and public infrastructure projects. 

Section 17.  Rochester lodging tax.  Authorizes the city to impose an additional three percent lodging tax.  Revenues from the tax must be used to finance for public infrastructure projects in the development plan.  The lodging tax terminates December 31, 2046, or when the city council determines that sufficient funds have been raised to finance the city’s obligations associated with the development plan and public infrastructure projects. 

Section 18.  Effective date.  Provides that, unless stated otherwise, the provisions of the bill are effective when the city formally adopts required items in the bill and files the adoption with the Secretary of State.

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