1.1                          A bill for an act 
  1.2             relating to education; modifying debt service 
  1.3             equalization program; modifying certain capital loan 
  1.4             provisions; amending Minnesota Statutes 1998, sections 
  1.5             123B.53, by adding subdivisions; 126C.63, subdivision 
  1.6             7, and by adding a subdivision; 126C.69, subdivisions 
  1.7             3, 10, 11, 12, 13, and 15; 126C.71, subdivision 1, and 
  1.8             by adding a subdivision; and 475.53, subdivision 4; 
  1.9             Minnesota Statutes 1999 Supplement, sections 123B.53, 
  1.10            subdivisions 4 and 6; 126C.63, subdivision 8; and 
  1.11            126C.69, subdivisions 2 and 9. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1999 Supplement, section 
  1.14  123B.53, subdivision 4, is amended to read: 
  1.15     Subd. 4.  [DEBT SERVICE EQUALIZATION REVENUE.] The debt 
  1.16  service equalization revenue of a district equals the eligible 
  1.17  debt service revenue minus the amount raised by a levy of 12 
  1.18  percent times the adjusted net tax capacity of the 
  1.19  district minus the district's enhanced debt service equalization 
  1.20  revenue according to subdivision 8. 
  1.21     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  1.22  123B.53, subdivision 6, is amended to read: 
  1.23     Subd. 6.  [DEBT SERVICE EQUALIZATION AID.] A district's 
  1.24  debt service equalization aid is the sum of (1) the difference 
  1.25  between the debt service equalization revenue and the equalized 
  1.26  debt service levy, and (2) the enhanced debt service 
  1.27  equalization aid according to subdivision 10. 
  1.28     Sec. 3.  Minnesota Statutes 1998, section 123B.53, is 
  2.1   amended by adding a subdivision to read: 
  2.2      Subd. 8.  [ENHANCED DEBT SERVICE EQUALIZATION REVENUE.] The 
  2.3   enhanced debt service equalization revenue of a district equals 
  2.4   the lesser of (1) the eligible debt service revenue minus the 
  2.5   amount raised by a levy of 20 percent times the adjusted net tax 
  2.6   capacity of the district, or (2) the amount approved by the 
  2.7   commissioner according to subdivision 11. 
  2.8      Sec. 4.  Minnesota Statutes 1998, section 123B.53, is 
  2.9   amended by adding a subdivision to read: 
  2.10     Subd. 9.  [ENHANCED EQUALIZED DEBT SERVICE LEVY.] To obtain 
  2.11  enhanced debt service equalization revenue, a district must levy 
  2.12  an amount not to exceed the district's enhanced debt service 
  2.13  equalization revenue times the lesser of one of the ratio of: 
  2.14     (1) the quotient derived by dividing the adjusted net tax 
  2.15  capacity of the district for the year before the year the levy 
  2.16  is certified by the adjusted pupil units in the district for the 
  2.17  school year ending in the year prior to the year the levy is 
  2.18  certified; to 
  2.19     (2) $8,000. 
  2.20     Sec. 5.  Minnesota Statutes 1998, section 123B.53, is 
  2.21  amended by adding a subdivision to read: 
  2.22     Subd. 10.  [ENHANCED DEBT SERVICE EQUALIZATION AID.] A 
  2.23  district's enhanced debt service equalization aid is the 
  2.24  difference between the enhanced debt service equalization 
  2.25  revenue and the enhanced equalized debt service levy. 
  2.26     Sec. 6.  Minnesota Statutes 1998, section 123B.53, is 
  2.27  amended by adding a subdivision to read: 
  2.28     Subd. 11.  [LIMIT ON ENHANCED DEBT SERVICE EQUALIZATION 
  2.29  AID; APPROVAL BY COMMISSIONER.] The state total enhanced debt 
  2.30  service equalization aid must not exceed $11,300,000 for fiscal 
  2.31  year 2002, $14,700,000 for fiscal year 2003, or $18,100,000 for 
  2.32  later fiscal years.  If the state total amount computed under 
  2.33  subdivision 10 exceeds the limit under this subdivision, the 
  2.34  commissioner shall prioritize the eligible projects as follows 
  2.35  to limit the enhanced debt service equalization aid to the 
  2.36  amount specified in this subdivision: 
  3.1      (1) debt service for repayment of principal and interest on 
  3.2   bonds issued before January 1, 2000; 
  3.3      (2) debt service for repayment of principal and interest on 
  3.4   bonds issued after December 31, 1999, approved for enhanced debt 
  3.5   service equalization in the previous year; 
  3.6      (3) debt service for repayment of principal and interest on 
  3.7   all other bonds, prioritized using the criteria in section 
  3.8   126C.69, subdivision 3. 
  3.9      Sec. 7.  Minnesota Statutes 1998, section 126C.63, 
  3.10  subdivision 7, is amended to read: 
  3.11     Subd. 7.  [REQUIRED DEBT SERVICE LEVY.] "Required debt 
  3.12  service levy" means the total dollar amount needed to be 
  3.13  included in the taxes levied by the district in any year for 
  3.14  payment of interest and principal falling due on its debts prior 
  3.15  to collection of the next ensuing year's debt service levy.  The 
  3.16  capital loan levy is not included in the required debt service 
  3.17  levy. 
  3.18     Sec. 8.  Minnesota Statutes 1999 Supplement, section 
  3.19  126C.63, subdivision 8, is amended to read: 
  3.20     Subd. 8.  [MAXIMUM EFFORT DEBT SERVICE LEVY.] "Maximum 
  3.21  effort debt service levy" means the lesser of: 
  3.22     (1) a levy in whichever of the following amounts is 
  3.23  applicable: 
  3.24     (a) in any district receiving a debt service loan for a 
  3.25  debt service levy payable in 1991 and thereafter, or granted a 
  3.26  capital loan after between January 1, 1990, and June 30, 2000, a 
  3.27  levy in a total dollar amount computed at a rate of 24 percent 
  3.28  of adjusted net tax capacity for taxes payable in 1991 and 
  3.29  thereafter; 
  3.30     (b) in any district granted a debt service loan after July 
  3.31  31, 1981, or granted a capital loan which is approved after July 
  3.32  31, 1981, a levy in a total dollar amount computed as a tax rate 
  3.33  of 21.92 percent on the adjusted net tax capacity for taxes 
  3.34  payable in 1991 and thereafter; or 
  3.35     (2) a levy in any district for which a capital loan was 
  3.36  approved prior to August 1, 1981, a levy in a total dollar 
  4.1   amount equal to the sum of the amount of the required debt 
  4.2   service levy and an amount which when levied annually will in 
  4.3   the opinion of the commissioner be sufficient to retire the 
  4.4   remaining interest and principal on any outstanding loans from 
  4.5   the state within 30 years of the original date when the capital 
  4.6   loan was granted.  
  4.7      The board in any district affected by the provisions of 
  4.8   clause (2) may elect instead to determine the amount of its levy 
  4.9   according to the provisions of clause (1).  If a district's 
  4.10  capital loan is not paid within 30 years because it elects to 
  4.11  determine the amount of its levy according to the provisions of 
  4.12  clause (2), the liability of the district for the amount of the 
  4.13  difference between the amount it levied under clause (2) and the 
  4.14  amount it would have levied under clause (1), and for interest 
  4.15  on the amount of that difference, must not be satisfied and 
  4.16  discharged pursuant to Minnesota Statutes 1988, or an earlier 
  4.17  edition of Minnesota Statutes if applicable, section 124.43, 
  4.18  subdivision 4. 
  4.19     Sec. 9.  Minnesota Statutes 1998, section 126C.63, is 
  4.20  amended by adding a subdivision to read: 
  4.21     Subd. 14.  [CAPITAL LOAN LEVY.] For capital loans issued 
  4.22  after July 1, 2000, "capital loan levy" means the amount needed 
  4.23  to pay the annual principal and interest on the state bonds used 
  4.24  to finance the capital loan over 20 years.  The capital loan 
  4.25  levy must be certified annually by the commissioner of finance 
  4.26  to the commissioner of children, families, and learning. 
  4.27     Sec. 10.  Minnesota Statutes 1999 Supplement, section 
  4.28  126C.69, subdivision 2, is amended to read: 
  4.29     Subd. 2.  [CAPITAL LOANS ELIGIBILITY.] Beginning July 
  4.30  1, 1999 2000, a district is not eligible for a capital loan 
  4.31  unless the sum of the proposed project cost and the district's 
  4.32  estimated existing net debt tax rate as computed by the 
  4.33  commissioner after debt service equalization aid would be more 
  4.34  than 24 percent of adjusted net tax capacity.  The estimate must 
  4.35  assume a 20-year maturity schedule for new debt exceeds the 
  4.36  district's net debt limit under section 475.53, subdivision 4. 
  5.1      Sec. 11.  Minnesota Statutes 1998, section 126C.69, 
  5.2   subdivision 3, is amended to read: 
  5.3      Subd. 3.  [DISTRICT REQUEST FOR REVIEW AND COMMENT.] A 
  5.4   district or a joint powers district that intends to apply for a 
  5.5   capital loan must submit a proposal to the commissioner for 
  5.6   review and comment according to section 123B.71 by July 1 of an 
  5.7   odd-numbered year.  The commissioner shall prepare a review and 
  5.8   comment on the proposed facility, regardless of the amount of 
  5.9   the capital expenditure required to construct the facility.  In 
  5.10  addition to the information provided under section 123B.71, 
  5.11  subdivision 9, the commissioner shall require that predesign 
  5.12  packages comparable to those required under section 16B.335 be 
  5.13  prepared by the applicant school district.  The predesign 
  5.14  packages must be sufficient to define the scope, cost, and 
  5.15  schedule of the project and must demonstrate that the project 
  5.16  has been analyzed according to appropriate space needs standards 
  5.17  and also consider the following criteria in determining whether 
  5.18  to make a positive review and comment.  
  5.19     (a) To grant a positive review and comment the commissioner 
  5.20  shall determine that all of the following conditions are met: 
  5.21     (1) the facilities are needed for pupils for whom no 
  5.22  adequate facilities exist or will exist; 
  5.23     (2) the district will serve, on average, at least 80 pupils 
  5.24  per grade or is eligible for elementary or secondary sparsity 
  5.25  revenue there is evidence to indicate that the facilities will 
  5.26  have a useful public purpose for at least the term of the bonds; 
  5.27     (3) no form of cooperation with another district would 
  5.28  provide the necessary facilities; 
  5.29     (4) the facilities are comparable in size and quality to 
  5.30  facilities recently constructed in other districts that have 
  5.31  similar enrollments; 
  5.32     (5) the facilities are comparable in size and quality to 
  5.33  facilities recently constructed in other districts that are 
  5.34  financed without a capital loan; 
  5.35     (6) the district is projected to maintain or increase its 
  5.36  average daily membership over the next five years or is eligible 
  6.1   for elementary or secondary sparsity revenue have adequate funds 
  6.2   in its general operating budget to support a quality education 
  6.3   for its students for at least the next five years; 
  6.4      (7) the current facility poses a threat to the life, 
  6.5   health, and safety of pupils, and cannot reasonably be brought 
  6.6   into compliance with fire, health, or life safety codes; 
  6.7      (8) the district has made a good faith effort, as evidenced 
  6.8   by its maintenance expenditures, to adequately maintain the 
  6.9   existing facility during the previous ten years and to comply 
  6.10  with fire, health, and life safety codes and state and federal 
  6.11  requirements for handicapped accessibility; 
  6.12     (9) the district has made a good faith effort to encourage 
  6.13  integration of social service programs within the new facility; 
  6.14  and 
  6.15     (10) evaluations by boards of adjacent districts have been 
  6.16  received; 
  6.17     (11) the proposal includes a comprehensive technology plan 
  6.18  that assures information access for the students' parents and 
  6.19  community; 
  6.20     (12) the performance of the students indicates that the 
  6.21  district is providing a quality educational program for the 
  6.22  students it serves; and 
  6.23     (13) the proposal is consistent with local, regional, and 
  6.24  state planning goals. 
  6.25     (b) The commissioner may grant a negative review and 
  6.26  comment if: 
  6.27     (1) the state demographer has examined the population of 
  6.28  the communities to be served by the facility and determined that 
  6.29  the communities have not grown during the previous five years; 
  6.30     (2) the state demographer determines that the economic and 
  6.31  population bases of the communities to be served by the facility 
  6.32  are not likely to grow or to remain at a level sufficient, 
  6.33  during the next ten years, to ensure use of the entire facility; 
  6.34     (3) the need for facilities could be met within the 
  6.35  district or adjacent districts at a comparable cost by leasing, 
  6.36  repairing, remodeling, or sharing existing facilities or by 
  7.1   using temporary facilities; 
  7.2      (4) the district plans do not include cooperation and 
  7.3   collaboration with health and human services agencies and other 
  7.4   political subdivisions; or 
  7.5      (5) if the application is for new construction, an existing 
  7.6   facility that would meet the district's needs could be purchased 
  7.7   at a comparable cost from any other source within the area. 
  7.8      Sec. 12.  Minnesota Statutes 1999 Supplement, section 
  7.9   126C.69, subdivision 9, is amended to read: 
  7.10     Subd. 9.  [LOAN AMOUNT LIMITS.] (a) A loan must not be 
  7.11  recommended for approval for a district exceeding an amount 
  7.12  computed as follows: 
  7.13     (1) the amount requested by the district under subdivision 
  7.14  6; 
  7.15     (2) plus the aggregate principal amount of general 
  7.16  obligation bonds of the district outstanding on June 30 of the 
  7.17  year following the year the application was received, not 
  7.18  exceeding the limitation on net debt of the district in section 
  7.19  475.53, subdivision 4, or 363 percent of its adjusted net tax 
  7.20  capacity as most recently determined, whichever is less; 
  7.21     (3) less the maximum net debt permissible for the district 
  7.22  on December 1 of the year the application is received, under the 
  7.23  limitation in section 475.53, subdivision 4, or 363 percent of 
  7.24  its adjusted net tax capacity as most recently determined, 
  7.25  whichever is less; 
  7.26     (4) less any amount by which the amount voted exceeds the 
  7.27  total cost of the facilities for which the loan is granted.  
  7.28     (b) The loan may be approved in an amount computed as 
  7.29  provided in paragraph (a), clauses (1) to (3), subject to later 
  7.30  reduction according to paragraph (a), clause (4). 
  7.31     (c) Notwithstanding paragraphs (a) and (b), the maximum 
  7.32  loan for a district with an outstanding capital loan approved 
  7.33  before July 1, 2000, that qualifies for a loan under paragraphs 
  7.34  (a) and (b) equals the amount requested by the district under 
  7.35  subdivision 6, less any amount by which the amount voted exceeds 
  7.36  the total cost of the facilities for which the loan is granted. 
  8.1      Sec. 13.  Minnesota Statutes 1998, section 126C.69, 
  8.2   subdivision 10, is amended to read: 
  8.3      Subd. 10.  [LEGISLATIVE ACTION.] Each capital loan approved 
  8.4   before July 1, 2000, must be approved in a law. 
  8.5      If the aggregate amount of the capital loans exceeds the 
  8.6   amount that is or can be made available, the commissioner shall 
  8.7   allot the available amount among any number of qualified 
  8.8   applicant districts, according to the commissioner's judgment 
  8.9   and discretion, based upon the districts' respective needs. 
  8.10     Sec. 14.  Minnesota Statutes 1998, section 126C.69, 
  8.11  subdivision 11, is amended to read: 
  8.12     Subd. 11.  [DISTRICT REFERENDUM.] After receipt of the 
  8.13  review and comment on the project and before January 1 of the 
  8.14  even-numbered year, the question authorizing the borrowing of 
  8.15  money for the facilities must be submitted by the school board 
  8.16  to the voters of the district at a regular or special election.  
  8.17  The question submitted must state the total amount to be 
  8.18  borrowed from all sources.  Approval of a majority of those 
  8.19  voting on the question is sufficient to authorize the issuance 
  8.20  of the obligations on public sale in accordance with chapter 
  8.21  475.  The face of the ballot must include the following 
  8.22  statement:  "APPROVAL OF THIS QUESTION DOES NOT GUARANTEE THAT 
  8.23  THE SCHOOL DISTRICT WILL RECEIVE A CAPITAL LOAN FROM THE STATE.  
  8.24  THE LOAN MUST BE APPROVED BY THE STATE LEGISLATURE COMMISSIONER 
  8.25  OF CHILDREN, FAMILIES, AND LEARNING AND IS DEPENDENT ON 
  8.26  AVAILABLE FUNDING."  The district must mail to the commissioner 
  8.27  a certificate by the clerk showing the vote at the election. 
  8.28     Sec. 15.  Minnesota Statutes 1998, section 126C.69, 
  8.29  subdivision 12, is amended to read: 
  8.30     Subd. 12.  [CONTRACT.] (a) Each capital loan must be 
  8.31  evidenced by a contract between the district and the state 
  8.32  acting through the commissioner.  The contract must obligate the 
  8.33  state to reimburse the district, from the maximum effort school 
  8.34  loan fund, for eligible capital expenses for construction of the 
  8.35  facility for which the loan is granted, an amount computed as 
  8.36  provided in subdivision 9.  The commissioner must receive from 
  9.1   the district a certified resolution of the board estimating the 
  9.2   costs of construction and reciting that contracts for 
  9.3   construction of the facilities for which the loan is granted 
  9.4   have been awarded and that bonds of the district have been 
  9.5   issued and sold in the amount necessary to pay all estimated 
  9.6   costs of construction in excess of the amount of the loan.  For 
  9.7   loans approved before July 1, 2000, the contract must obligate 
  9.8   the district to repay the loan out of the excesses of its 
  9.9   maximum effort debt service levy over its required debt service 
  9.10  levy, including interest at a rate equal to the weighted average 
  9.11  annual rate payable on Minnesota state school loan bonds issued 
  9.12  for the project and disbursed to the districts on a 
  9.13  reimbursement basis, but in no event less than 3-1/2 percent per 
  9.14  year on the principal amount from time to time unpaid.  For 
  9.15  loans approved after June 30, 2000, the contract must obligate 
  9.16  the district to certify a capital loan levy according to section 
  9.17  126C.63, subdivision 14, each year for a period of 20 years. 
  9.18     (b) The district must each year, as long as it is indebted 
  9.19  to the state, levy for debt service (i) the amount of its 
  9.20  maximum effort debt service levy or (ii) the amount of its 
  9.21  required debt service levy, whichever is greater, except as the 
  9.22  required debt service levy may be reduced by a loan under 
  9.23  section 126C.68.  The district shall remit payments to the 
  9.24  commissioner according to section 126C.71. 
  9.25     (c) The commissioner shall supervise the collection of 
  9.26  outstanding accounts due the fund and may, by notice to the 
  9.27  proper county auditor, require the maximum levy to be made as 
  9.28  required in this subdivision.  Interest on capital 
  9.29  loans approved before July 1, 2000, must be paid on December 15 
  9.30  of the year after the year the loan is granted and annually in 
  9.31  later years.  By September 30, the commissioner shall notify the 
  9.32  county auditor of each county containing taxable property 
  9.33  situated within the district of the amount of the maximum effort 
  9.34  debt service levy of the district for that year.  The county 
  9.35  auditor or auditors shall extend upon the tax rolls an ad 
  9.36  valorem tax upon all taxable property within the district in the 
 10.1   aggregate amount so certified. 
 10.2      Sec. 16.  Minnesota Statutes 1998, section 126C.69, 
 10.3   subdivision 13, is amended to read: 
 10.4      Subd. 13.  [LOAN FORGIVENESS.] If any capital loan approved 
 10.5   before July 1, 2000, is not paid within 50 years after it is 
 10.6   granted from maximum effort debt service levies in excess of 
 10.7   required debt service levies, the liability of the district on 
 10.8   the loan is satisfied and discharged and interest on the loan 
 10.9   ceases. 
 10.10     Sec. 17.  Minnesota Statutes 1998, section 126C.69, 
 10.11  subdivision 15, is amended to read: 
 10.12     Subd. 15.  [BOND SALE LIMITATIONS.] A district having an 
 10.13  outstanding state loan approved before July 1, 2000, must not 
 10.14  issue and sell any bonds on the public market, except to refund 
 10.15  state loans, unless it agrees to make the maximum effort debt 
 10.16  service levy in each later year at the higher rate provided in 
 10.17  section 126C.63, subdivision 8, and unless it schedules the 
 10.18  maturities of the bonds according to section 475.54, subdivision 
 10.19  2.  A district that refunds bonds at a lower interest rate may 
 10.20  continue to make the maximum effort debt service levy in each 
 10.21  later year at the current rate provided in section 126C.63, 
 10.22  subdivision 8, if the district can demonstrate to the 
 10.23  commissioner's satisfaction that the district's repayments of 
 10.24  the state loan will not be reduced below the previous year's 
 10.25  level.  The district must report each sale to the commissioner. 
 10.26     After a district's capital loan has been outstanding for 20 
 10.27  years, the district must not issue bonds on the public market 
 10.28  except to refund the loan. 
 10.29     Sec. 18.  Minnesota Statutes 1998, section 126C.71, 
 10.30  subdivision 1, is amended to read: 
 10.31     Subdivision 1.  [PAYMENT.] (a) On November 20 of each year, 
 10.32  each district having an outstanding capital loan approved before 
 10.33  July 1, 2000, or debt service loan shall compute the excess 
 10.34  amount in the debt redemption fund.  The commissioner shall 
 10.35  prescribe the form and calculation to be used in computing the 
 10.36  excess amount.  A completed copy of this form shall be sent to 
 11.1   the commissioner before December 1 of each year.  The 
 11.2   commissioner may recompute the excess amount and shall promptly 
 11.3   notify the district of the recomputed amount. 
 11.4      (b) On December 15 of each year, the district shall remit 
 11.5   to the commissioner an amount equal to the greater of: 
 11.6      (i) the excess amount in the debt redemption fund; or 
 11.7      (ii) the amount by which the maximum effort debt service 
 11.8   levy exceeds the required debt service levy for that calendar 
 11.9   year. 
 11.10  Any late payments shall be assessed an interest charge using the 
 11.11  interest rates specified for the debt service notes and capital 
 11.12  loan contracts. 
 11.13     (c) If a payment required under the Maximum Effort School 
 11.14  Aid Law is not made within 30 days, the commissioner may reduce 
 11.15  any subsequent payments due the district under this chapter and 
 11.16  chapters 120B, 122A, 123A, 123B, 124D, 125A, and 127A by the 
 11.17  amount due, after providing written notice to the district. 
 11.18     Sec. 19.  Minnesota Statutes 1998, section 126C.71, is 
 11.19  amended by adding a subdivision to read: 
 11.20     Subd. 3.  [PAYMENT ON CAPITAL LOANS APPROVED AFTER JUNE 30, 
 11.21  2000.] For capital loans approved after June 30, 2000, the debt 
 11.22  service aid attributable to the capital loan levy shall not be 
 11.23  paid to the district, but shall be transferred to the loan 
 11.24  repayment account of the maximum effort school loan fund.  The 
 11.25  commissioner shall reduce the general education aid paid to the 
 11.26  district by an amount equal to the net capital loan levy after 
 11.27  the reduction for debt service equalization aid attributable to 
 11.28  the capital loan levy, and shall transfer the amount deducted 
 11.29  from the general education aid to the loan repayment account of 
 11.30  the maximum effort school loan fund. 
 11.31     Sec. 20.  Minnesota Statutes 1998, section 475.53, 
 11.32  subdivision 4, is amended to read: 
 11.33     Subd. 4.  [SCHOOL DISTRICTS.] Except as otherwise provided 
 11.34  by law, no school district shall be subject to a net debt in 
 11.35  excess of ten percent of the actual market value of all taxable 
 11.36  property situated within its corporate limits, as computed in 
 12.1   accordance with this subdivision.  The county auditor of each 
 12.2   county containing taxable real or personal property situated 
 12.3   within any school district shall certify to the district upon 
 12.4   request the market value of all such property.  Whenever the 
 12.5   commissioner of revenue, in accordance with section 127A.48, 
 12.6   subdivisions 1 to 6, has determined that the net tax capacity of 
 12.7   any district furnished by county auditors is not based upon the 
 12.8   market value of taxable property in the district, the 
 12.9   commissioner of revenue shall certify to the district upon 
 12.10  request the ratio most recently ascertained to exist between 
 12.11  such value and the actual market value of property within the 
 12.12  district.  The actual market value of property within a 
 12.13  district, on which its debt limit under this subdivision is 
 12.14  based, is (a) the value certified by the county auditors, or (b) 
 12.15  this value divided by the ratio certified by the commissioner of 
 12.16  revenue, whichever results in a higher value times the adjusted 
 12.17  net tax capacity of the district as defined in section 126C.01, 
 12.18  subdivision 2.