HF 2063

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/20/2023 12:21pm

A bill for an act
relating to capital investment; modifying the drinking water revolving fund law
to address replacement of lead service lines and emerging contaminants; amending
Minnesota Statutes 2022, section 446A.081, subdivisions 8, 9.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 446A.081, subdivision 8, is amended to read:

Subd. 8.

Loan conditions.

(a) When making loans from the drinking water revolving
fund, the authority shall comply with the conditions of the federal Safe Drinking Water Act,
including the criteria in this subdivision.

(b) Loans must be made at or below market interest rates, including zero interest loans,
for terms not to exceed those allowed under the federal Safe Drinking Water Act.

(c) The annual principal and interest payments must begin no later than one year after
completion of the project. Loans must be amortized no later than 20 years after project
completion, unless the recipient's average annual residential drinking water system cost
after completion of the project would exceed 1.2 percent of median household income in
the recipient governmental unit or entity, in which case the loan must be fully amortized
no later than 30 years after project completion.

(d) A loan recipient must identify and establish a dedicated source of revenue for
repayment of the loan, and provide for a source of revenue to properly operate, maintain,
and repair the water system.

(e) The fund must be credited with all payments of principal and interest on all loans,
except the costs as permitted under section 446A.04, subdivision 5, paragraph (a).

(f) A loan may not be used to pay operating expenses or current obligations, unless
specifically allowed by the federal Safe Drinking Water Act.

(g) A loan made by the authority must be secured by notes or bonds of the governmental
unit and collateral to be determined by the authority for private borrowers.

new text begin (h) Notwithstanding Minnesota Rules, part 7380.0272, the interest rate for loans made
to replace lead service lines shall be zero percent.
new text end

Sec. 2.

Minnesota Statutes 2022, section 446A.081, subdivision 9, is amended to read:

Subd. 9.

Other uses of fund.

(a) The drinking water revolving loan fund may be used
as provided in the act, including the following uses:

(1) to buy or refinance the debt obligations, at or below market rates, of public water
systems for drinking water systems, where the debt was incurred after the date of enactment
of the act, for the purposes of construction of the necessary improvements to comply with
the national primary drinking water regulations under the federal Safe Drinking Water Act;

(2) to purchase or guarantee insurance for local obligations to improve credit market
access or reduce interest rates;

(3) to provide a source of revenue or security for the payment of principal and interest
on revenue or general obligation bonds issued by the authority if the bond proceeds are
deposited in the fund;

(4) to provide loans or loan guarantees for similar revolving funds established by a
governmental unit or state agency;

(5) to earn interest on fund accounts;

(6) to pay the reasonable costs incurred by the authority, the Department of Employment
and Economic Development, and the Department of Health for conducting activities as
authorized and required under the act up to the limits authorized under the act;

(7) to develop and administer programs for water system supervision, source water
protection, and related programs required under the act;

(8) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal law, based on the criteria and requirements
established for drinking water projects under the water infrastructure funding program under
section 446A.072;

(9) to provide loans, principal forgiveness or grants to the extent permitted under the
federal Safe Drinking Water Act and other federal law to address green infrastructure, water
or energy efficiency improvements, or other environmentally innovative activities;

(10) to provide principal forgiveness, or grants for 80 percent of project costs up to a
maximum of $100,000 for projects needed to comply with national primary drinking water
standards for an existing nonmunicipal community public water system; deleted text begin and
deleted text end

(11) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal laws deleted text begin for 50 percent of the project costs up to a
maximum of $250,000 deleted text end for projects to replace the privately owned portion of drinking water
lead service lines deleted text begin . deleted text end new text begin ; and
new text end

new text begin (12) to provide principal forgiveness or grants to the extent permitted under the federal
Safe Drinking Water Act and other federal laws for 50 percent of project costs up to a
maximum of $3,000,000 for projects to address emerging contaminants in drinking water
as defined by the U.S. Environmental Protection Agency.
new text end

(b) Principal forgiveness or grants provided under paragraph (a), clause (9), may not
exceed 25 percent of the eligible project costs as determined by the Department of Health
for project components directly related to green infrastructure, water or energy efficiency
improvements, or other environmentally innovative activities, up to a maximum of
$1,000,000.