5.3 Excerpt of LMC Handbook re EDAsRELEVANT LINKS:
League of Minnesota Cities Handbook for Minnesota Cities 12/16/2022 Community Development and Redevelopment Chapter 14 | Page 9
The law states that the principal and interest on bonds are payable
exclusively from the income and revenues of the project financed with the
proceeds of the bonds, or exclusively from the income and revenues of certain designated projects, whether or not they are financed in whole or in part with the proceeds of the bonds.
8. HRA certifications to state
The following documents relating to the establishment and activities of
local HRAs must be filed with the DEED commissioner:
Minn. Stat. § 469.003, subds. 4, 6, 7. Minn. Stat. § 469.013 subd. 2.
• Resolution of need.
• Certificates of appointment or reappointment of HRA commissioners.
• Low-rent public housing project and management plans.
Minn. Stat. § 469.013 subd. 2. The following additional documents relating to local HRA activities may also be requested by the DEED commissioner:
• Project reports.
• Applications for federal assistance.
• Contracts with federal agencies.
• Redevelopment plans.
Minn. Stat. § 469.013. In addition, annual financial reports must go to the state auditor, DEED
commissioner, and the city council.
9. HRA federal certification
24 C.F.R 982.51. In order for a local HRA to use federal Department of Housing and Urban Development (HUD) assistance programs, it must submit a transcript of organizational documents to the HUD area office.
C. Economic development authorities
Minnesota Department of Employment and Economic Development: The Economic Development Authorities Handbook.
An economic development authority (EDA) is a legal entity created by a city to facilitate a well-rounded program for business assistance and
development projects.
Minn. Stat. § 469.091. Minn. Stat. § 469.093. All cities and townships have authority from the Minnesota Legislature to create economic development authorities (EDA). The city may consolidate
an EDA with an existing HRA or the city may grant HRA powers to the
EDA. The city council may create an EDA by passing an enabling resolution. Before adopting the enabling resolution, the city must first conduct a public hearing.
RELEVANT LINKS:
League of Minnesota Cities Handbook for Minnesota Cities 12/16/2022 Community Development and Redevelopment Chapter 14 | Page 10
Minn. Stat. § 469.095. The enabling resolution establishes a board of commissioners for the
EDA. The city council can choose to serve as the EDA board of
commissioners or create a board composed of community members. The mayor, with approval of the council, appoints the commissioners. The board may consist of three, five or seven members who serve six-year terms. The board is subject to the Open Meeting Law.
1. EDA levies
Minn. Stat. § 469.107. As discussed above, an EDA levy differs from an HRA levy. It is not a
levy raised by the EDA — it is a levy set by a city at the request of the EDA.
Minn. Stat. § 469.107. Minnesota Department of Employment and Economic Development: The Economic Development Authorities Handbook.
A city may, at the request of the EDA, levy a tax for the benefit of the EDA in an amount not more than 0.01813% of the taxable market value. The amount levied must be paid by the city treasurer to the treasure of the
EDA to be spent by the EDA. Because the EDA levy is part of the city levy, it is not a “special levy” under state law and therefore the EDA levy is part of the city’s overall levy limit.
Minnesota Department of Employment and Economic Development, The Economic Development Authorities Handbook.
As a result of being part of the city’s overall levy limit, the most common
practice to fund an EDA is a direct general fund appropriation out of the
city’s general fund. There is no limit to the amount of funding that can be provided to an EDA through this mechanism.
Minn. Stat. § 469.091. Alternatively, if the city council’s enabling resolution adopts all of the powers of the HRA for the EDA, the EDA may levy the separate HRA tax
levy, which is not calculated in the city’s levy limit. It is still subject to all
of the statutory limitation of an HRA, including the levy limit of 0.0185% of the estimated market value.
2. EDA loans
Minn. Stat. § 469.192. EDAs are authorized to make loans to businesses, for-profit organizations, nonprofit organizations, or individuals to effectuate the purpose of the EDA.
Minn. Stat. § 469.192. Minn. Stat. § 469.102. Loans must be for a purpose the EDA is authorized to carry out under the
law. An authorized purpose must deal with or contribute to economic or industrial development.
Minn. Stat. § 469.033 subd. 4. Metropolitan Council, City Development Powers.
One benefit of establishing an EDA is that the EDA can create a pool where each project’s revenue goes into a common fund, improving the
security on the pooled bonds, leading to a more favorable interest rate and ultimately a reduced cost of borrowing.
RELEVANT LINKS:
League of Minnesota Cities Handbook for Minnesota Cities 12/16/2022 Community Development and Redevelopment Chapter 14 | Page 11
Minn. Stat. § 469.098. Before taking an action or making a decision which could substantially
affect an EDA commissioner or employee's financial interests or those of
an organization with which the commissioner or an employee is associated, a commissioner or employee of an EDA must comply with specific requirements to disclose the conflict and obtain prior approval. Failure to do so may result in criminal charges.
3. Other EDA powers
Minn. Stat. § 469.101, subds 1, 2. A.G Opinion., 469a-16, July 19, 1966. Minn. Stat. § 475.58. Minn. Stat. § 469.102.
EDAs can acquire property and facilities, but (in most circumstances)
cannot issue obligations (debt) without the approval of the electors. See Minn. Stat. § 475.58 for the list of obligations exempted from this requirement. Otherwise, the city must authorize the issuance of debt in the resolution creating the EDA.
Minn. Stat. § 469.101, subds 1. Minnesota House Research Department, Economic Development TIF Districts.
EDAs can create economic development districts within the city, but the
districts must be contiguous. Economic development districts do not need to meet the blight test and may use tax increment financing.
Minnesota House Research Department, Economic Development TIF Districts.
When an EDA’s enabling resolution includes HRA power, an EDA may
undertake a redevelopment project, housing development, or housing project under which a restrictive blight test does not apply. These projects can be used for similar purposes to those of an economic development district under the EDA law.
D. Port authorities
Minn. Stat. § 469.049. Minn. Stat. § 469.055.
The purpose of a port authority is to promote the general welfare of a port
district, increase the commercial efficiency of the district, and actively
improve business opportunities.
Minn. Stat. § 469.053. Minn. Stat. § 469.060 subd. 1.
The Minnesota Legislature authorizes cities to create port authorities. A port authority is a governmental subdivision with the right to sue and be sued in its own name. A port authority may issue general obligation bonds in the amount authorized by its city’s council.
Minn. Stat. § 469.050. Minn. Stat. § 469.051. Cities establish a port authority by passing an enabling resolution. The port authority may have three commissioners appointed by the city council, or seven commissioners, two of whom must be city council members, with the remaining members appointed by the mayor and approved by the city council. Cities may adopt a different procedure and a
different number of commissioners in the enabling law for the port authority. State law governs commissioner pay, vacancies, duties, and port authority bylaws.