Committee hears League of Cities amendment to House Bill 15-37 aimed at protecting long‑standing intergovernmental agreements

The Political Subdivisions Committee on 2023-07-14 heard detailed testimony and questions about amendments to House Bill 15-37 that would change how intergovernmental agreements among cities, rural water districts and the state’s Public Finance Authority are treated in law.

Stephanie Ingebretson, representing the North Dakota League of Cities, presented the amendment and described it as a compromise intended to protect long‑standing agreements while also protecting the public finance authority’s loan security. “The amendment reinstates, and takes out a lot of the amendments to that section of code that were proposed in the original bill,” Ingebretson told the committee. She said the draft removes a retroactivity clause, restores existing language the bill had altered, and changes language that, under a Supreme Court interpretation, had rendered some agreements entirely invalid to language that would make them voidable at the option of the Public Finance Authority or another state agency during the term of a loan.

The amendment would, in Ingebretson’s words, “say that an agreement not complying with the provisions … does not create a cause of action or claim to any political subdivision,” so only the state public finance entity — not cities or rural water districts — could void agreements on grounds affecting PFA loan security.

Committee members pressed for specifics. Representative Clamine asked whether the change would affect an ongoing lawsuit involving the city of Grand Forks; Ingebretson replied that because the amendment removes retroactivity and litigation there has already begun, she did not believe it would “completely change the positioning of that litigation.” Representative Figley pressed whether the amendment could limit a lender’s ability to secure repayment; Ingebretson said the amendment was not intended to impair the Public Finance Authority’s ability to “collect what they need for processing the loans.”

Several members raised practical concerns about implementing ratification for decades‑old agreements. Ingebretson told the committee many of the agreements at issue are roughly 25 years old and that asking the Public Finance Authority to review and ratify those historical agreements could be difficult because loans may have been paid off or refinanced and the PFA’s interests today may differ from those when agreements were negotiated.

Representative Mushenbacher said the intent of the proposed language was to prevent future litigation between political subdivisions: “We don't want political subdivisions continuing to sue political subdivisions because the only winner in that case is an attorney.” Representative Killeen and others questioned whether the draft changes would be an improper ex post facto remedy for an issue already decided by the courts.

No vote was taken on the amendment. Committee members said they wanted to hear from the Public Finance Authority director before proceeding. The chair set the item aside and indicated Representative Koppelman would offer an amendment at a later meeting; committee members agreed to revisit the bill when PFA staff could review the proposed language.

The discussion combined legal, financial and practical implementation questions: the role of the state public finance entity in ratifying or voiding older intergovernmental agreements; how a change in statutory language would interact with existing Supreme Court rulings and active litigation; and whether statutory language should bar political subdivisions from asserting claims against one another when a state lending authority was not a party to an original agreement.

If the committee adopts the League of Cities amendment, affected parties — cities, rural water districts and the Public Finance Authority — would still have to resolve whether the PFA will ratify or otherwise secure its position on legacy agreements, a process Ingebretson and members described as potentially lengthy and administratively difficult.