(A) Fund created. There is hereby created a fund designated as the “Debt Service Fund”, referred to in this section as the “fund”, which the Finance Director shall maintain on the official books and records of the municipality and administer in accordance with this section, so long as any bonds directed by the Council to be payable therefrom are outstanding.
(B) Purpose. This fund shall be used to pay principal and interest only on general obligation improvement bonds issued to finance improvements instituted under the city’s Home Rule Charter, as amended, Ch. 37 of this code of ordinances, as amended, or other statutory or Charter provisions amending or supplementing the Home Rule Charter or otherwise authorizing the issuance of general obligation bonds payable primarily from special assessments, whether in whole or in part.
(C) Use of fund. The fund shall be used for no other purpose except, when all such principal and interest due have been paid in full, to repay any advances from other funds used for the payments.
(D) Investment of fund. The fund may be invested in accordance with M.S. § 475.66, as it may be amended from time to time, or supplementary acts.
(E) Separate funds.
(1) Each bond issue authorized hereunder and the fund created thereby shall be separate, and any balance remaining in the separate fund after all bonds payable therefrom have been duly paid with interest and redeemed may be transferred to the general fund.
(2) A separate fund shall be created for each improvement or consolidated group of improvements to be financed by an issue of the bond, and all collections of special assessments and taxes levied for each improvement and all bond proceeds and any other moneys appropriated thereto by the Council shall be held in the fund and used solely to defray the expenses of the improvement (including interest and principal, if any, becoming due on bonds whose proceeds are appropriate to the fund), until the improvement is completed and the cost thereof is paid in full. Thereupon, the fund shall be discontinued, and any balance of bond proceeds remaining therein may be transferred to the fund of another improvement similarly instituted to be used for debt service or to the general fund if so directed by the Council.
(F) Tax levies.
(1) Before the delivery of any issue of improvement bonds directed by the Council to be payable from the fund, the Council shall, by resolution, estimate the approximate principal amount of special assessments to be levied for each improvement financed thereby and appropriated to the Debt Service Fund, the number of installments thereof and the rate of interest to be charged upon deferred installments and shall levy, if necessary, a general ad valorem tax upon all taxable property within the municipality, to be spread upon the tax rolls for each property with year of the term of the bonds, in amounts for all years such that if collected in full, they, together with the taxes theretofore levied and appropriated to the Debt Service Fund, plus the estimated collections of the special assessments and of all other special assessments theretofore pledged to the Debt Service Fund, will produce at least 5% in excess of the amount needed to meet, when due, the principal and interest payments on the bonds and on all other then outstanding bonds which are payable from the Debt Service Fund.
(2) All such tax levies shall be irrepealable; except that, if the Council, in any year, makes an irrevocable appropriation to the fund of moneys actually on hand from sources other than the special assessments and taxes herein referred to, or if there is on hand any excess amount in that fund, the municipality reserves the right to certify to the County Auditor the fact and amount thereof and to request the Auditor to reduce by the amount so certified the amount otherwise to be included in the tax rolls next thereafter prepared.
(G) Certification of levies. The City Administrator is directed to file a certified copy of this section in the office of the County Auditor and prior to the delivery of each series of improvement bonds payable from the fund, the City Administrator shall also file with the County Auditor a certified copy of the resolution authorizing the bonds and levying a tax for the payment thereof, together with full information regarding the bonds for which the tax levy required by law has made, and no further action by the municipality shall be required to authorize the extension, assessment and collection of the tax, but the Auditor shall annually assess and extend upon the tax rolls the amounts specified in the resolution for each year, unless the amount has been reduced as authorized in division (E) above.
(H) Pledge of credit. The full faith and credit of the municipality shall be and are hereby pledged for the prompt and full payment of the principal of and interest on all improvement bonds made payable from the fund, and the Council shall pay the principal and interest out of any fund of the municipality if ever the amount credited to the Redemption Fund is insufficient for such purpose and shall each year levy a sufficient amount to meet any accumulated or anticipated deficiency in that fund, which levy shall not be subject to any statutory or Charter tax limitations. The provisions of M.S. §§ 475.61 and 475.74, as they are amended from time to time, are hereby acknowledged to be and are affirmed as covenants of the municipality with the holders of all such bonds, from time to time, outstanding.
(I) Preparation, sale, execution and delivery.
(1) Improvement bonds to be made payable from the fund may be prepared for execution in form, as provided for in M.S. § 475.55, as it may be amended from time to time, with suitable variations as to date of issue, maturity, interest payment dates, redemption privilege, serial designation and number and other details.
(2) The amounts, maturity, interest rates and other terms of each issue of improvement bonds made payable from the fund shall be established by the Council, by resolution, and the bonds shall be issued and sold upon such terms as are deemed by the Council, from time to time, to be reasonable and in the best interest of the municipality and owners of property subject to special assessment.
(3) Upon the sale of each issue, the bonds shall be prepared for execution under the direction of the City Administrator and shall be executed as provided for in M.S. Ch. 475, as it may be amended from time to time, and the corporate seal of the municipality shall be affixed to each bond.
(4) When executed, the bonds shall be delivered by the Finance Director to the purchaser thereof upon payment of the agreed purchase price, and the purchaser shall not be obligated to see to the application of the bond proceeds.
(J) Authentication of transcript. The officers of the municipality and the County Auditor shall prepare and furnish to the purchaser of each series of the bonds certified copies of all proceedings and records relating to the authorization thereof and other certificates and affidavits as to matters shown by the records in their custody or otherwise known to them as may be required to evidence the validity and marketability of the bonds, and all such documents shall be deemed representations of the municipality as to the correctness of all statements therein contained.
(Prior Code, § 203.01) (Ord. 844, passed 05-20-2010; Ord. 944, passed 06-25-2018)