1.1                          A bill for an act 
  1.2             relating to water pollution; creating a revolving loan 
  1.3             fund; proposing coding for new law in Minnesota 
  1.4             Statutes, chapter 446A.  
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  [446A.082] [INFLOW AND INFILTRATION REVOLVING 
  1.7   FUND.] 
  1.8      Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
  1.9   section, the terms in this subdivision have the meanings given 
  1.10  them.  
  1.11     (b) "Infiltration" means water other than wastewater that 
  1.12  enters a sewer system, including sewer service connections and 
  1.13  foundation drains, from the ground through defective pipes, pipe 
  1.14  joints, connections, or manholes.  Infiltration does not 
  1.15  include, and is distinguished from, inflow. 
  1.16     (c) "Inflow" means water other than wastewater that enters 
  1.17  a sewer system, including sewer service connections, from 
  1.18  sources such as, but not limited to, roof leaders, cellar 
  1.19  drains, yard drains, area drains, drains from springs and swampy 
  1.20  areas, manhole covers, cross connections between storm sewers 
  1.21  and sanitary sewers, catch basins, cooling towers, storm waters, 
  1.22  surface runoff, street wash waters, or drainage.  Inflow does 
  1.23  not include, and is distinguished from, infiltration. 
  1.24     Subd. 2.  [ESTABLISHMENT OF FUND.] The authority shall 
  1.25  establish an inflow and infiltration revolving fund to provide 
  2.1   loans as determined by the authority under the rules adopted 
  2.2   under this section for the purposes and eligible costs 
  2.3   authorized.  The fund must be credited with repayments.  
  2.4      Subd. 3.  [PRIORITY LIST.] The agency shall annually 
  2.5   prepare and provide a prioritized list of inflow and 
  2.6   infiltration projects to be considered for funding by the 
  2.7   authority.  The list may be amended by the authority and include 
  2.8   additional eligible projects proposed by the agency. 
  2.9      Subd. 4.  [APPLICATIONS.] Applications by municipalities, 
  2.10  privately owned water systems, and eligible entities identified 
  2.11  in the annual intended use plan for loans from the fund must be 
  2.12  made to the authority on the forms prescribed by the rules of 
  2.13  the authority and the rules of the agency adopted under this 
  2.14  section.  The authority shall forward the application to the 
  2.15  agency within ten days of receipt.  The agency shall approve 
  2.16  those applications that appear to meet the criteria in this 
  2.17  section and the rules of the agency or the authority.  
  2.18     Subd. 5.  [AWARD AND TERMS OF LOANS.] The authority shall 
  2.19  award loans to those applicants approved by the agency, provided 
  2.20  that the applicant is able to comply with the terms and 
  2.21  conditions of the authority loan, this section, and the rules of 
  2.22  the authority adopted under this section.  
  2.23     Subd. 6.  [LOAN CONDITIONS.] (a) When making loans from the 
  2.24  inflow and infiltration revolving fund, the authority shall 
  2.25  utilize the criteria in paragraphs (b) to (e).  
  2.26     (b) Loans must be made at or below market interest rates, 
  2.27  including zero interest loans, for terms not to exceed 20 years. 
  2.28     (c) The annual principal and interest payments must begin 
  2.29  no later than one year after completion of the project.  Loans 
  2.30  must be amortized no later than 20 years after project 
  2.31  completion.  
  2.32     (d) A loan recipient must identify and establish a 
  2.33  dedicated source of revenue for repayment of the loan. 
  2.34     (e) The fund must be credited with all payments of 
  2.35  principal and interest on all loans, except the costs as 
  2.36  permitted under section 446A.04, subdivision 5, paragraph (a). 
  3.1      Subd. 7.  [USES OF FUND.] The inflow and infiltration 
  3.2   revolving loan fund may be used as follows: 
  3.3      (1) to provide loans to municipalities, privately owned 
  3.4   water systems, and eligible entities to make loans to private 
  3.5   parties and individuals to curb inflow and infiltration 
  3.6   problems, including repair or replacement of roof drains, 
  3.7   service laterals, foundation drains, gutters, and downspouts; 
  3.8      (2) to purchase or guarantee insurance for local 
  3.9   obligations to improve credit market access or reduce interest 
  3.10  rates; 
  3.11     (3) to provide a source of revenue or security for the 
  3.12  payment of principal and interest on revenue or general 
  3.13  obligation bonds issued by the authority if the bond proceeds 
  3.14  are deposited in the fund; 
  3.15     (4) to provide loans or loan guarantees for similar 
  3.16  revolving funds established by a governmental unit or state 
  3.17  agency; 
  3.18     (5) to earn interest on fund accounts; and 
  3.19     (6) to pay the reasonable costs incurred by the authority 
  3.20  and the agency for conducting activities up to the limits 
  3.21  authorized under this act. 
  3.22     Subd. 8.  [PAYMENTS AND BOND ISSUANCE.] (a) Payments from 
  3.23  the fund to borrowers must be in accordance with the applicable 
  3.24  state and federal laws governing such payments, except no 
  3.25  payment for a loan from the fund may be made to a borrower until 
  3.26  and unless the authority has determined that loan repayment from 
  3.27  the borrower and the total estimated cost of the projects and 
  3.28  the financing of the projects to be undertaken through a program 
  3.29  of loans to private parties and individuals by the borrower are 
  3.30  assured by:  
  3.31     (1) a loan authorized by state law or appropriation of 
  3.32  proceeds of bonds or other money of the borrower to a fund for 
  3.33  loans to private parties and individuals for the construction of 
  3.34  the project; and 
  3.35     (2) an irrevocable undertaking, by resolution of the 
  3.36  governing body of the borrower, to use all money made available 
  4.1   for loans exclusively for the project, and to loan any 
  4.2   additional amount by which the cost of the project exceeds the 
  4.3   estimate by the appropriation to the loan fund of additional 
  4.4   money or proceeds of additional bonds to be issued by the 
  4.5   borrower. 
  4.6      (b) For the purpose of obtaining a loan from the authority 
  4.7   and assuring repayment, a borrower may make loans to a private 
  4.8   party and individual and may issue and sell its general 
  4.9   obligation bonds, which may be made payable primarily from 
  4.10  taxes, special assessments to be levied to pay the cost of the 
  4.11  project, net revenues derived from water or sewer service 
  4.12  charges, or other nontax revenues pledged for their payment 
  4.13  under charter or other statutory authority, or from two or more 
  4.14  of these sources; or it may issue special obligations payable 
  4.15  solely from taxes, special assessments, or revenues, or from two 
  4.16  or more of these sources.  All obligations shall be issued and 
  4.17  sold in accordance with chapter 475, except that so long as the 
  4.18  obligations are issued to evidence a loan from the authority to 
  4.19  the borrower from the fund, no election may be required, and the 
  4.20  bonds may be sold to the authority by negotiation at private 
  4.21  sale without advertisement for bids or other public sale.  When 
  4.22  special assessments are pledged for the payment of the 
  4.23  obligations, they shall be authorized in accordance with the 
  4.24  provisions of chapter 429, or of the borrower's charter if it 
  4.25  authorizes these obligations and special assessments and the 
  4.26  governing body determines to proceed under the charter. 
  4.27     Sec. 2.  [EFFECTIVE DATE.] 
  4.28     This act is effective the day following final enactment.