CHICAGO — Minnesota is teeing up a $904 million new money and refunding general obligation sale for next week in a deal that will follow a rare certificate of participation issue for $85.4 million to raise funds for a new legislative office building that was the subject of a legal challenge.
The GO sale will include about $150 million of refunding bonds with the rest providing new money for approved capital projects. The state will take competitive bids on the bonds Aug. 12. An offering statement was expected to post on the state's website Tuesday. The state's $5.7 billion of general obligation bonds carry ratings in the high-double-A category.
On the COPs competitive issue slated for Tuesday, Public Financial Management Inc. is advising the state and Kutak Rock LLP is bond counsel. The COPs will mature between 2016 and 2039.
Proceeds will finance the "predesign, design, construction and equipping of offices, hearing rooms and parking facilities for a legislative office facility," according to the sale notice posted on Minnesota Management and Budget's website. It will house state senators being displaced by the restoration of the Capitol.
The certificates are payable from amounts that the legislature may appropriate for rental payments under a lease between the administration and Senate or under a lease between the administration and the state. The state last used a COPs structure on a debt issue in 2009.
Lawmakers originally approved the project backed by Democrats last year and earlier this year approved a design and budget for the building, which is being constructed north of the Capitol. Republicans slammed the building as unneeded and over-priced and argued more public input was needed. Gov. Mark Dayton is a member of the state's Democratic-Farmer-Labor Party, which also holds a majority in the Legislature.
Lawmakers later revised the project, lowering the public cost to $77 million from $93 million. Another $13 million toward the building's price tag will come from parking fees.
Former Republican Representative Jim Knoblach filed a lawsuit in an attempt to block the project, arguing that its inclusion in the tax bill violated the single-subject rule and that the project should have been included in a construction bill. A Ramsey County Circuit Court judge rejected the argument and an appellate court ruled Knoblach needed to post an $11 million surety bond to continue the challenge.
The Minnesota Supreme Court in June refused to overturn the appellate court decision, forcing Knoblach to drop the litigation. State lawyers sought the bond, arguing the delay could raise the cost of the project.
"Requiring a member of the public to come up with $11 million in a case like this is a chilling precedent to a citizen raising a constitutional challenge," Knoblach said in published reports.
The state in its latest financial reports said it closed the books on fiscal 2014 June 30 with general fund revenues of $19.26 billion, nearly 1% more than projected in the state's February revenue forecast. General fund revenues grew by 7.3% over fiscal 2013.
