1.1                          A bill for an act 
  1.2             relating to local government; providing for self 
  1.3             executing special service district procedures in 
  1.4             cities; amending Minnesota Statutes 1994, sections 
  1.5             428A.01, subdivisions 2 and 3; and 428A.02, 
  1.6             subdivision 1; proposing coding for new law in 
  1.7             Minnesota Statutes, chapter 428A. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1994, section 428A.01, 
  1.10  subdivision 2, is amended to read: 
  1.11     Subd. 2.  [CITY.] "City" means the city in which the 
  1.12  special service district is authorized to be established under a 
  1.13  special law a home rule charter or statutory city. 
  1.14     Sec. 2.  Minnesota Statutes 1994, section 428A.01, 
  1.15  subdivision 3, is amended to read: 
  1.16     Subd. 3.  [SPECIAL SERVICES.] "Special services" has the 
  1.17  meaning given in the city's enabling legislation. ordinance but 
  1.18  special services do may not include a service that is ordinarily 
  1.19  provided throughout the city from general fund revenues of the 
  1.20  city unless an increased level of the service is provided in the 
  1.21  special service district. 
  1.22     Sec. 3.  Minnesota Statutes 1994, section 428A.02, 
  1.23  subdivision 1, is amended to read: 
  1.24     Subdivision 1.  [ORDINANCE.] The governing body of the a 
  1.25  city may adopt an ordinance establishing a special service 
  1.26  district.  Only property that is classified under section 273.13 
  2.1   and used for commercial, industrial, or public utility purposes, 
  2.2   or is vacant land zoned or designated on a land use plan for 
  2.3   commercial or industrial use and located in the special service 
  2.4   district, may be subject to the charges imposed by the city on 
  2.5   the special service district.  Other types of property may be 
  2.6   included within the boundaries of the special service district 
  2.7   but are not subject to the levies or charges imposed by the city 
  2.8   on the special service district.  If 50 percent or more of the 
  2.9   market value of a parcel of property is classified under section 
  2.10  273.13 as commercial, industrial, or vacant land zoned or 
  2.11  designated on a land use plan for commercial or industrial use, 
  2.12  or public utility for the current assessment year, then the 
  2.13  entire market value of the property is subject to a service 
  2.14  charge based on net tax capacity for purposes of sections 
  2.15  428A.01 to 428A.10.  The ordinance shall describe with 
  2.16  particularity the area within the city to be included in the 
  2.17  district and the special services to be furnished in the 
  2.18  district.  The ordinance may not be adopted until after a public 
  2.19  hearing has been held on the question.  Notice of the hearing 
  2.20  shall include the time and place of hearing, a map showing the 
  2.21  boundaries of the proposed district, and a statement that all 
  2.22  persons owning property in the proposed district that would be 
  2.23  subject to a service charge will be given opportunity to be 
  2.24  heard at the hearing. 
  2.25     Sec. 4.  [428A.11] [HOUSING IMPROVEMENT AREAS; 
  2.26  DEFINITIONS.] 
  2.27     Subdivision 1.  [APPLICABILITY.] As used in sections 4 to 
  2.28  13, the terms defined in this section have the meanings given 
  2.29  them. 
  2.30     Subd. 2.  [CITY.] "City" means a home rule charter or 
  2.31  statutory city. 
  2.32     Subd. 3.  [ENABLING ORDINANCE.] "Enabling ordinance" means 
  2.33  the ordinance adopted by the city council establishing the 
  2.34  housing improvement area. 
  2.35     Subd. 4.  [HOUSING IMPROVEMENTS.] "Housing improvements" 
  2.36  has the meaning given in the city's enabling ordinance.  Housing 
  3.1   improvements may include improvements to common elements of a 
  3.2   condominium. 
  3.3      Subd. 5.  [HOUSING IMPROVEMENT AREA.] "Housing improvement 
  3.4   area" means a defined area within the city where housing 
  3.5   improvements are made or constructed and the costs of the 
  3.6   improvements are paid in whole or in part from fees imposed 
  3.7   within the area. 
  3.8      Subd. 6.  [HOUSING UNIT.] "Housing unit" means real 
  3.9   property and improvements thereon consisting of a one-dwelling 
  3.10  unit, or an apartment as described in chapter 515 or 515A, that 
  3.11  is occupied by a person or family for use as a residence. 
  3.12     Sec. 5.  [428A.12] [PETITION REQUIRED.] 
  3.13     No action may be taken under sections 6 and 7 unless owners 
  3.14  of 25 percent or more of the housing units that would be subject 
  3.15  to fees in the proposed housing improvement area file a petition 
  3.16  requesting a public hearing on the proposed action with the city 
  3.17  clerk.  No action may be taken under section 7 to impose a fee 
  3.18  unless owners of 25 percent or more of the housing units subject 
  3.19  to the proposed fee file a petition requesting a public hearing 
  3.20  on the proposed fee with the city clerk or other appropriate 
  3.21  official. 
  3.22     Sec. 6.  [428A.13] [ESTABLISHMENT OF HOUSING IMPROVEMENT 
  3.23  AREA.] 
  3.24     Subdivision 1.  [ORDINANCE.] The governing body of the city 
  3.25  may adopt an ordinance establishing a housing improvement area.  
  3.26  The ordinance must specifically describe the portion of the city 
  3.27  to be included in the area, the basis for the imposition of the 
  3.28  fees, and the number of years the fee will be in effect.  In 
  3.29  addition, the ordinance must include findings that without the 
  3.30  housing improvement area, the proposed improvements could not be 
  3.31  made by the condominium associations or housing unit owners, and 
  3.32  the designation is needed to maintain and preserve the housing 
  3.33  units within the housing improvement area.  The ordinance may 
  3.34  not be adopted until a public hearing has been held regarding 
  3.35  the ordinance.  The ordinance may be amended by the governing 
  3.36  body of the city, provided the governing body complies with the 
  4.1   public hearing notice provisions of subdivision 2. 
  4.2      Subd. 2.  [PUBLIC HEARING.] The notice of public hearing 
  4.3   must include the time and place of hearing, a map showing the 
  4.4   boundaries of the proposed area, and a statement that all 
  4.5   persons owning housing units in the proposed area that would be 
  4.6   subject to a fee for housing improvements will be given an 
  4.7   opportunity to be heard at the hearing.  Notice of the hearing 
  4.8   must be given by publication in the official newspaper of the 
  4.9   city.  The public hearing must be held at least seven days after 
  4.10  the publication.  Not less than ten days before the hearing, 
  4.11  notice must also be mailed to the owner of each housing unit 
  4.12  within the proposed area.  For the purpose of giving mailed 
  4.13  notice, owners are those shown on the records of the county 
  4.14  auditor.  Other records may be used to supply the necessary 
  4.15  information.  At the public hearing a person owning property in 
  4.16  the proposed housing improvement area may testify on any issues 
  4.17  relevant to the proposed area.  The hearing may be adjourned 
  4.18  from time to time.  The ordinance establishing the area may be 
  4.19  adopted at any time within six months after the date of the 
  4.20  conclusion of the hearing by a vote of the majority of the 
  4.21  governing body of the city. 
  4.22     Subd. 3.  [PROPOSED HOUSING IMPROVEMENTS.] At the public 
  4.23  hearing held under subdivision 2, the city shall provide a 
  4.24  preliminary listing of the housing improvements to be made in 
  4.25  the area.  The listing shall identify those improvements, if 
  4.26  any, that are proposed to be made to all or a portion of the 
  4.27  common elements of a condominium.  The listing shall also 
  4.28  identify those housing units that have completed the proposed 
  4.29  housing improvements and are proposed to be exempted from a 
  4.30  portion of the fee.  In preparing the list the city shall 
  4.31  consult with the residents of the area and the condominium 
  4.32  associations. 
  4.33     Subd. 4.  [BENEFIT; OBJECTION.] Before the ordinance is 
  4.34  adopted or at the hearing at which it is to be adopted, the 
  4.35  owner of a housing unit in the proposed housing improvement area 
  4.36  may file a written objection with the city clerk asserting that 
  5.1   the owner's property should not be included in the area or 
  5.2   should not be subjected to a fee and objecting to the inclusion 
  5.3   of the housing unit in the area, for the reason that the 
  5.4   property would not benefit from the improvements. 
  5.5      The governing body shall make a determination of the 
  5.6   objection within 60 days of its filing.  Pending its 
  5.7   determination, the governing body may delay adoption of the 
  5.8   ordinance or it may adopt the ordinance with a reservation that 
  5.9   the landowner's property may be excluded from the housing 
  5.10  improvement area or fee when the determination is made. 
  5.11     Subd. 5.  [APPEAL TO DISTRICT COURT.] Within 30 days after 
  5.12  the determination of the objection, any person aggrieved, who is 
  5.13  not precluded by failure to object before or at the hearing, or 
  5.14  whose failure to object is due to a reasonable cause, may appeal 
  5.15  to the district court by serving a notice upon the mayor or city 
  5.16  clerk.  The notice shall be filed with the court administrator 
  5.17  of the district court within ten days after its service.  The 
  5.18  city clerk shall furnish the appellant a certified copy of the 
  5.19  findings and determination of the governing body.  The court may 
  5.20  affirm the action objected to or, if the appellant's objections 
  5.21  have merit, modify or cancel it.  If the appellant does not 
  5.22  prevail upon the appeal, the costs incurred are taxed to the 
  5.23  appellant by the court and judgment entered for them.  All 
  5.24  objections are deemed waived unless presented on appeal. 
  5.25     Sec. 7.  [428A.14] [IMPROVEMENT FEES AUTHORITY; NOTICE AND 
  5.26  HEARING.] 
  5.27     Subdivision 1.  [AUTHORITY.] Fees may be imposed by the 
  5.28  city on the housing units within the housing improvement area at 
  5.29  a rate, term, or amount sufficient to produce revenue required 
  5.30  to provide housing improvements in the area.  The fee can be 
  5.31  imposed on the basis of the tax capacity of the housing unit, or 
  5.32  the total amount of square footage of the housing unit, or a 
  5.33  method determined by the council and specified in the resolution.
  5.34  Before the imposition of the fees, a hearing must be held and 
  5.35  notice must be published in the official newspaper at least 
  5.36  seven days before the hearing and shall be mailed at least seven 
  6.1   days before the hearing to any housing unit owner subject to a 
  6.2   fee.  For purposes of this section, the notice must also include:
  6.3      (1) a statement that all interested persons will be given 
  6.4   an opportunity to be heard at the hearing regarding a proposed 
  6.5   housing improvement fee; 
  6.6      (2) the estimated cost of improvements including 
  6.7   administrative costs to be paid for in whole or in part by the 
  6.8   fee imposed under the ordinance; 
  6.9      (3) the amount to be charged against the particular 
  6.10  property; 
  6.11     (4) the right of the property owner to prepay the entire 
  6.12  fee; 
  6.13     (5) the number of years the fee will be in effect; and 
  6.14     (6) a statement that the petition requirements of section 5 
  6.15  have either been met or do not apply to the proposed fee. 
  6.16     Within six months of the public hearing, the city may adopt 
  6.17  a resolution imposing a fee within the area not exceeding the 
  6.18  amount expressed in the notice issued under this section. 
  6.19     Prior to adoption of the resolution approving the fee, the 
  6.20  condominium associations located in the housing improvement area 
  6.21  shall submit to the city a financial plan prepared by an 
  6.22  independent third party, acceptable to the city and 
  6.23  associations, that provides for the associations to finance 
  6.24  maintenance and operation of the common elements in the 
  6.25  condominium and a long-range plan to conduct and finance capital 
  6.26  improvements. 
  6.27     Subd. 2.  [LEVY LIMIT.] Fees imposed under this section are 
  6.28  not included in the calculation of levies or limits on levies 
  6.29  imposed under any law or charter. 
  6.30     Sec. 8.  [428A.15] [COLLECTION OF FEES.] 
  6.31     The city may provide for the collection of the housing 
  6.32  improvement fees according to the terms of section 428A.05. 
  6.33     Sec. 9.  [428A.16] [BONDS.] 
  6.34     At any time after a contract for the construction of all or 
  6.35  part of an improvement authorized under sections 4 to 13 has 
  6.36  been entered into or the work has been ordered, the governing 
  7.1   body of the city may issue obligations in the amount it deems 
  7.2   necessary to defray in whole or in part the expense incurred and 
  7.3   estimated to be incurred in making the improvement, including 
  7.4   every item of cost from inception to completion and all fees and 
  7.5   expenses incurred in connection with the improvement or the 
  7.6   financing. 
  7.7      The obligations are payable primarily out of the proceeds 
  7.8   of the fees imposed under section 7, or from any other special 
  7.9   assessments or revenues available to be pledged for their 
  7.10  payment under charter or statutory authority, or from two or 
  7.11  more of those sources.  The governing body may, by resolution 
  7.12  adopted prior to the sale of obligations, pledge the full faith, 
  7.13  credit, and taxing power of the city to assure payment of the 
  7.14  principal and interest if the proceeds of the fees in the area 
  7.15  are insufficient to pay the principal and interest.  The 
  7.16  obligations must be issued in accordance with chapter 475, 
  7.17  except that an election is not required, and the amount of the 
  7.18  obligations are not included in determination of the net debt of 
  7.19  the city under the provisions of any law or charter limiting 
  7.20  debt. 
  7.21     Sec. 10.  [428A.17] [ADVISORY BOARD.] 
  7.22     The governing body of the city may create and appoint an 
  7.23  advisory board for the housing improvement area in the city to 
  7.24  advise the governing body in connection with the planning and 
  7.25  construction of housing improvements.  In appointing the board, 
  7.26  the council shall consider for membership, members of 
  7.27  condominium associations located in the housing improvement 
  7.28  area.  The advisory board shall make recommendations to the 
  7.29  governing body to provide improvements or impose fees within the 
  7.30  housing improvement area.  Before the adoption of a proposal by 
  7.31  the governing body to provide improvements within the housing 
  7.32  improvement area, the advisory board of the housing improvement 
  7.33  area shall have an opportunity to review and comment upon the 
  7.34  proposal. 
  7.35     Sec. 11.  [428A.18] [VETO POWERS OF OWNERS.] 
  7.36     Subdivision 1.  [NOTICE OF RIGHT TO FILE OBJECTIONS.] The 
  8.1   effective date of any ordinance or resolution adopted under 
  8.2   sections 6 and 7 must be at least 45 days after it is adopted. 
  8.3   Within five days after adoption of the ordinance or resolution, 
  8.4   a summary of the ordinance or resolution shall be mailed to the 
  8.5   owner of each housing unit included in the housing improvement 
  8.6   area.  The mailing shall include a notice that owners subject to 
  8.7   a fee have a right to veto the ordinance or resolution by filing 
  8.8   the required number of objections with the city clerk before the 
  8.9   effective date of the ordinance or resolution and that a copy of 
  8.10  the ordinance or resolution is on file with the city clerk for 
  8.11  public inspection. 
  8.12     Subd. 2.  [REQUIREMENTS FOR VETO.] If owners of 35 percent 
  8.13  or more of the housing units in the area subject to the fee file 
  8.14  an objection to the ordinance adopted by the city under section 
  8.15  6 with the city clerk before the effective date of the 
  8.16  ordinance, the ordinance does not become effective.  If owners 
  8.17  of 35 percent or more of the housing units' tax capacity subject 
  8.18  to the fee under section 7 file an objection with the city clerk 
  8.19  before the effective date of the resolution, the resolution does 
  8.20  not become effective. 
  8.21     Sec. 12.  [428A.19] [ANNUAL REPORTS.] 
  8.22     Each condominium association located within the housing 
  8.23  improvement area must, by August 15 annually, submit a copy of 
  8.24  its audited financial statements to the city.  The city may 
  8.25  also, as part of the enabling ordinance, require the submission 
  8.26  of other relevant information from the associations. 
  8.27     Sec. 13.  [428A.20] [SPECIAL ASSESSMENTS.] 
  8.28     Within a housing improvement area, the governing body of 
  8.29  the city may, in addition to the fee authorized in section 7, 
  8.30  special assess housing improvements to benefited property.  The 
  8.31  governing body of the city may by ordinance adopt regulations 
  8.32  consistent with this section.