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MARY FRANCES SKALA AIIorne)' al Law D~rt~ Dial (612) .~37-q23~ September 17, 1990 Richard B. Gardner Research Analyst Supervisor Senior Local Government Services Division Department of Revenue Mail Station 3340 St. Paul, Minnesota 55146-3340 Re: Lease Purchase Agreements under Minnesota Statutes, 1990, Section 465.71 (amended by Laws of Minnesota Chapter 562) Dear Mr. Gardner: We represent a City as bond counsel. The City is intending to purchase a building for its use from another political subdivision under a lease purchase agreement as authorized by Minnesota Statutes, Section 475.61 (the Act). It is proposed that the transaction be financed through the issuance and sale of revenue bonds by the political subdivision which currently owns the building. As you know, prior to July 1, 1990, the Act authorized municipalities, including cities, counties, towns and school districts, to enter into long term installment contracts for purchase of real property without an annual appropriation and without voter approval The Act was amended during the 1990 legislative session with the effect that real property can only be purchased under a lease purchase agreement, giving the lessee the right to terminate the lease at the end of any fiscal year during its term (non-appropriation clause). We are aware of your letter to John Kirby dated January 30, 1990, a copy of which is attached to this letter, in which you stated that a property tax levied by Anoka County to make payments to the City of Anoka Housing and Redevelopment Authority (HRA) under an ins:aliment purchase contract governed by the Act, (which payments would be used directly by the ARA to make payments of principal and interest on its bonds,) would be a special levy. under Minnesota Statutes, Section 275.50, Subdivision 5(e) not subject to the levy limits of Minnesota Statutes, Section 275.51. Now that the Act has been amended, and ail agreements for the lease and subsequent purchase of real property pu~uant to the Act must contain an annual non-appropriation clause, we are faced with the question of whether tax levies for the purpose of making payments to another poetical subdivision under such agreements, (which payments are used directly to pay debt service on bonds of the other political subdivision) remain outside of statutory levy limits under the analyse presented in your let%er referenced above. We believe that the amendment would not change the result in the Anoka County scenario