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HF 4840

Lease-purchase agreement and sale and issuance of certificates of participation authorized to fund improvements to or replacement of state's MAXIS system.

2025-2026 Regular Session Introduced by Brion Curran and 13 co-sponsors

The bill authorizes the state to fund MAXIS system improvements through lease-purchase financing and COPs, creating a dedicated framework and funding stream for up to 10-year terms

Author added Hansen, R., and Lillie
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Bill Summary · HF 4840

Summary of HF4840 (2025-2026) – Minnesota

Title: Lease-purchase agreement and sale and issuance of certificates of participation authorized to fund improvements to or replacement of state's MAXIS system

Jurisdiction: Minnesota
Session: 2025-2026
Committee: Capital Investment
Status: Introduced and referred to Capital Investment (as of 2026-04-07)

1) Purpose and intent

  • The bill authorizes the state to finance improvements to or replacement of the MAXIS system through lease-purchase financing and the sale of certificates of participation (COPs).
  • It creates a new statutory framework (16A.83) for MAXIS lease-purchase financing and a dedicated appropriation (16A.835) to fund MAXIS payments.

2) Key provisions and changes

A. Definitions and framework (new §16A.83)

  • Definitions:
    • Lease-purchase agreement: A contract for lease and installment purchase of the MAXIS project between the state (via the commissioner) and a vendor or financing source.
    • MAXIS lease-purchase guidelines: Policies and requirements established by the commissioner for MAXIS financing.
    • MAXIS project: The development, acquisition, installation, and implementation of a modernization plan or replacement of the MAXIS system.
  • Authority to finance:
    • The commissioner may enter into a lease-purchase agreement and issue COPs to fund the MAXIS project, subject to specific conditions.

B. Requirements for lease-purchase financing (Subd. 2)

  • Legislative authorization: The MAXIS project must be authorized by law to be funded via lease-purchase.
  • Term limits: The lease-purchase term and COPs must not exceed the lesser of:
    • The expected useful life of the MAXIS project, or
    • Ten years from issuance.
  • Financing sufficiency: Principal amount must cover costs of issuance, capitalized interest, credit enhancement, and reserves as needed.
  • Annual appropriations constraint: Money for lease payments must be committed in the authorizing legislation for the current fiscal year; no obligation to appropriate for future years.
  • Compliance with guidelines: Expenditures must align with MAXIS lease-purchase guidelines.

C. Covenants (Subd. 3)

  • Insurance: State must maintain required insurance.
  • Liability and maintenance: State bears public liability/property damage responsibility to the extent of state insurance/self-insurance; lessee costs if state defaults.
  • Secured party rights: Lessor may exercise rights of a secured party on default or nonappropriation, including recovering lease payments as liquidated damages.

D. Proceeds and funds (Subds. 4–7)

  • Proceeds: Must be credited to the MAXIS lease project fund; net investment income credited to appropriate MAXIS accounts.
  • Transfers: Pre-receipt transfers from the general fund to the MAXIS fund allowed but must be returned when proceeds are received; transfers are appropriated from the general fund and MAXIS fund.
  • Administrative expenses: Non-salary and travel expenses for issuing the lease-purchase may be paid from lease-purchase proceeds.

E. Treatment of remaining funds and debt status (Subds. 7–8)

  • Surplus funds: Any leftover MAXIS lease-purchase proceeds after project completion must be transferred to the general fund.
  • Not general debt: A lease-purchase agreement does not create general or moral debt; payments in a current term are a state expense within appropriated money.

F. Tax considerations (Subd. 9)

  • Property tax: Property purchased under a lease-purchase is not subject to personal property taxes.
  • Sales tax: Purchaser (lessor) is not subject to sales tax, but the state is subject to Sales/Use tax on property acquired under the agreement.

G. Refunding (Subd. 10)

  • The commissioner may issue new lease-purchase agreements to refund outstanding ones, including related costs and premiums.
  • Application of proceeds and escrow provisions mirror standard refunding practices; investments must follow authorized instruments.
  • After escrow terms are satisfied, any balance may be returned to the general fund or MAXIS fund.

H. MAXIS Lease-Purchase Appropriation (Sec. 16A.835)

  • Biennial and ongoing appropriations:
    • $10,000,000 for fiscal years 2027, 2028, and 2029-2036 (each year) to fund MAXIS payments under the lease-purchase.
    • Unexpended amounts cancel to the general fund at the end of each biennium.
    • No obligation to continue appropriations in future fiscal years.
    • Expiration: June 30, 2037.

3) Who/what is affected

  • State of Minnesota and its MAXIS system modernization efforts.
  • The Commissioner (presumably of Management and Budget or related agency) authorized to enter lease-purchase agreements and manage the MAXIS fund.
  • Lenders, vendors, or private financing sources that would provide lease-purchase arrangements and issue COPs.
  • General Fund and MAXIS lease project fund accounts within the state treasury.
  • Public liability, insurance, and tax treatment related to property financed under the lease-purchase structure.

4) Procedural and timeline aspects

  • Legislative pathway: Introduced and referred to Capital Investment in April 2026; ongoing committee consideration.
  • Financing timeline: Appropriations for MAXIS lease payments are outlined for 2027–2036, with annual payments of $10 million, and a 10-year maximum term (or useful life) for each financing.
  • Sunset/expiration: The appropriation authority and related provisions expire June 30, 2037.
  • Refundings: The bill provides authority to implement refunding transactions to manage debt/refinancing costs.

5) Potential impacts and considerations

  • Enables rapid, upfront funding for MAXIS modernization without immediate general obligation debt, leveraging lease-purchase structures and COPs.
  • Caps financing term to maximize alignment with useful life and limit long-term obligations.
  • Creates dedicated funding stream for MAXIS improvements, with annual appropriations required in the current year (no future-year appropriation guarantees).
  • Tax treatment provisions affect how property is taxed and how contracts are structured for vendors and the state.
  • Requires adherence to internal MAXIS guidelines and risk management covenants, including liability, insurance, and default mechanisms.

This summary provides a neutral overview of HF4840’s proposed lease-purchase financing mechanism for MAXIS system improvements, including key provisions, affected parties, and timelines. If you’d like, I can add a comparison to similar lease-purchase authorities in other states or outline potential policy considerations for oversight and transparency.

Compiled from official sources — confirm details with the bill’s official record.

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