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BRIGGS ,~, MORGAN
<br /> Bryan Adams
<br /> October $, 1998
<br /> Page 3
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<br />includes the "generation, production, transmission, purchase, sale, exchange, or interchange of
<br />electric energy or any interest therein or capacity thereof."
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<br /> In turn, Section 453.54, Subdivision 2, authorizes a municipal power agency (and an
<br />individual city acting pursuant to the resolution described above) to undertake one or more projects
<br />within or outside of the state, to acquire any interest in or any right to capacity of a project and to
<br />act as agent, or to designate one or more other "persons" (such as, here, UPA) participating in a
<br />project to act as its agent, in connection with the planning, acquisition, construction, reconstruction,
<br />operation, repair, extension, or improvement of a project. The word "person" is broadly defined in
<br />Section 453.52, Subdivision 9, to include any "private corporation, firm, partnership, [or]
<br />cooperative association .... "
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<br /> In regard to your proposed agreement with UPA and the question of public bidding, I note
<br />that Section 453.54, Subdivision 15, provides that a municipal power agency (or, again, a city acting
<br />under the above-described resolution) "may contract with any person, within or outside the state, for
<br />the construction of any project or for the sale, with or without advertising for bids, or transmission
<br />of electric energy generated by any project, or for any interest therein or any right to capacity thereof,
<br />on such terms and for such a period of time as its board of directors determines." Section 453.59
<br />also appears to exempt these project costs from any public bidding requirements. Beyond that, even
<br />though the revenue bond proceeds would in a technical sense be public funds, the sole source of
<br />payment of those bonds would be the private funds provided by UPA under the contract.
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<br /> Regarding property taxes or payments in lieu of property taxes, in the case of a true
<br />municipal power agency, Section 453.54, Subdivision 20, does require payments in lieu of taxes in
<br />the same amount and manner as would be paid as if the property were held by private persons. I
<br />assume this provision is aimed at putting public consortiums and private electric companies on the
<br />same property tax footing, thereby avoiding competitive cost disadvantage. I also interpret this as
<br />overriding the rule which would otherwise apply, which is that the property of a tree municipal
<br />power agency (being a public body) would not be subject to property taxation. However, the rule
<br />is different for a city acting individually under this law, as Section 453.58, Subdivision 4, expressly
<br />exempts an individual city from the provisions of that Subdivision 20 and also provides, usefully
<br />here, that the sale or distribution of electric energy to private persons "shall not cause a project to
<br />be treated as not used exclusively for a public purpose." We understand that your County Assessor
<br />has preliminarily concurred on this point.
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<br /> Section 453.55 authorizes the type of bonding here envisioned and specifically authorizes
<br />a pledge of the revenues derived solely from the individual project being financed as well as a
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<br />988880.1
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