HF 3582

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 02/22/2024 03:41pm

A bill for an act
relating to capital investment; requiring local governments to establish a
replacement fund to maintain and replace capital projects that receive state funding;
proposing coding for new law in Minnesota Statutes, chapter 16A.

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

Section 1.

new text begin [16A.865] CAPITAL PROJECT REPLACEMENT ACCOUNTS.
new text end

new text begin Subdivision 1. new text end

new text begin Replacement account establishment. new text end

new text begin (a) A grantee that receives an
appropriation of state money for a capital improvement project subject to chapter 16A must
establish a capital project replacement fund for major rehabilitation, expansion, or
replacement of the capital project once the project has reached its useful life, or another use
as permitted under this section. Money must remain in the account for the useful life of the
capital project, as determined by the grant agreement with the granting state agency, unless
use of the fund is approved in writing by the granting state agency for major rehabilitation,
expansion, or replacement of the capital project funded with state money, or to address a
capital improvement project for a different capital asset owned by the grantee.
new text end

new text begin (b) A grantee must adopt a capital project replacement policy that specifies the following
for the capital project replacement fund:
new text end

new text begin (1) the risks to be mitigated or managed by the fund;
new text end

new text begin (2) the intended use of the replacement fund, including but not limited to, how the fund
will be used for major rehabilitation, expansion, or replacement of the capital project; and
new text end

new text begin (3) criteria for the use of the fund to address other capital improvement needs of the
grantee, including safety and security, maintenance and utility costs, availability of repair
parts and materials, sustainability, and any other criteria the grantee deems relevant.
new text end

new text begin (c) For the purposes of this section, "grantee" does not include a state agency or state
official.
new text end

new text begin Subd. 2. new text end

new text begin Minimum deposits. new text end

new text begin The commissioner of management and budget must
determine the annual minimum deposit amounts into capital project replacement funds by
capital project type. The commissioner must take into account depreciation, construction
cost inflation, and other relevant factors when determining the minimum deposit amounts.
new text end

new text begin Subd. 3. new text end

new text begin Account auditing. new text end

new text begin The state auditor may audit capital project replacement
accounts as part of the regular audits of local governments.
new text end

new text begin Subd. 4. new text end

new text begin Exceptions. new text end

new text begin Capital projects that already require a replacement fund under
section 446A.072, subdivision 12, or any other law, rule, or ordinance, are exempt from the
requirements under this section, so long as the deposits into the replacement fund are at
least as large as the minimum deposits established by the commissioner of management
and budget under subdivision 2.
new text end

new text begin Subd. 5. new text end

new text begin Penalty. new text end

new text begin Failure of a grantee to comply with the requirements of this section
shall result in the granting state agency assessing a penalty fee to the grantee equal to one
percent of the appropriation of state money for the capital project for each year of
noncompliance. Penalty fees shall be remitted by the granting state agency to the
commissioner of management and budget for deposit into the general fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for capital projects receiving state funding
on or after July 1, 2024.
new text end