1.1 	A bill for an act
1.2 	relating to the Public Facilities Authority; providing for use of federal funds 
1.3 	allocated to the state by the American Recovery and Reinvestment Act; providing 
1.4 	for clean water and drinking water loans and grants; appropriating money;
1.5 	amending Minnesota Statutes 2008, sections 446A.07, subdivision 7; 446A.081, 
1.6 	subdivision 8.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2008, section 446A.07, subdivision 7, is amended to 
1.9 	read:
1.10 		Subd. 7.Loan conditions. (a) When making loans from the clean water revolving 
1.11 	fund, the authority shall comply with the conditions of the Federal Water Pollution Control 
1.12 	Act, including: the criteria in this subdivision.
1.13 	(a) (b) Loans must be made at or below market interest rates, including interest-free 
1.14 	loans, at for terms not to exceed 20 years those allowed under the federal Water Pollution 
1.15 	Control Act.
1.16 	(b) (c) The annual principal and interest payments must begin no later than one year 
1.17 	after completion of a the project. Loans must be fully amortized no later than 20 years 
1.18 	after project completion, unless the recipient's average annual residential wastewater 
1.19 	system cost after completion of the project would exceed 1.4 percent of median household 
1.20 	income in the recipient governmental unit or entity, in which case the loan must be fully 
1.21 	amortized no later than 30 years after project completion.
1.22 	(c) (d) An eligible recipient shall establish a dedicated source of revenue for 
1.23 	repayment of the loan.
1.24 	(d) (e) The fund must be credited with all payments of principal and interest on 
1.25 	all loans.
2.1 	(e) (f) A loan may not be used to pay operating expenses or current obligations, 
2.2 	unless specifically allowed by the Federal Water Pollution Control Act.
2.3 	(f) (g) A loan made by the authority must be secured by notes or bonds of the 
2.4 	eligible recipient of the loan.

2.5 	Sec. 2. Minnesota Statutes 2008, section 446A.081, subdivision 8, is amended to read:
2.6 		Subd. 8.Loan conditions. (a) When making loans from the drinking water 
2.7 	revolving fund, the authority shall comply with the conditions of the federal Safe Drinking 
2.8 	Water Act, including the criteria in paragraphs (b) to (e) this subdivision.
2.9 	(b) Loans must be made at or below market interest rates, including zero interest 
2.10 	loans, for terms not to exceed 20 years those allowed under the federal Safe Drinking 
2.11 	Water Act.
2.12 	(c) The annual principal and interest payments must begin no later than one year 
2.13 	after completion of the project. Loans must be amortized no later than 20 years after 
2.14 	project completion, unless the recipient's average annual residential drinking water system 
2.15 	cost after completion of the project would exceed 1.4 percent of median household income 
2.16 	in the recipient governmental unit or entity, in which case the loan must be fully amortized 
2.17 	no later than 30 years after project completion.
2.18 	(d) A loan recipient must identify and establish a dedicated source of revenue for 
2.19 	repayment of the loan, and provide for a source of revenue to properly operate, maintain, 
2.20 	and repair the water system.
2.21 	(e) The fund must be credited with all payments of principal and interest on all loans, 
2.22 	except the costs as permitted under section 446A.04, subdivision 5, paragraph (a). 
2.23 	(f) A loan may not be used to pay operating expenses or current obligations, unless 
2.24 	specifically allowed by the federal Safe Drinking Water Act.
2.25 	(g) A loan made by the authority must be secured by notes or bonds of the 
2.26 	governmental unit and collateral to be determined by the authority for private borrowers.

2.27 	Sec. 3. FEDERAL STIMULUS MONEY FOR CLEAN WATER.
 2.28 		Subdivision 1.Clean water revolving fund loans and grants. Pursuant to Public 
2.29 	Law 111-5, the American Recovery and Reinvestment Act of 2009, referred to in this 
2.30 	section as "the Act," federal money allocated under the Act for capitalization grants for 
2.31 	clean water state revolving funds must be credited to the clean water revolving fund 
2.32 	under Minnesota Statutes, section 446A.07, for the purpose of making loans and grants 
2.33 	to eligible projects as provided in this section, Minnesota Statutes, section 446A.07, 
2.34 	and the Act. Authorization to make loans and grants under this section expires when all 
3.1 	money received under the Act and credited to the clean water revolving fund has been 
3.2 	expended. For the purpose of this section, the term "grant" includes principal forgiveness 
3.3 	that is granted at the time a loan is made.
3.4 		Subd. 2.Grants required. Not less than 50 percent of the money received under 
3.5 	the Act and credited to the clean water revolving fund must be used to provide grants to 
3.6 	eligible projects as provided in subdivision 4, or to provide grants to eligible projects for 
3.7 	up to 65 percent of the eligible grant need identified by the United States Department of 
3.8 	Agriculture Rural Economic and Community Development Program.
3.9 		Subd. 3.Green infrastructure. To the extent that there are sufficient eligible 
3.10 	project applications, not less than 20 percent of the money received under the Act 
3.11 	and credited to the clean water revolving fund must be used for grants and loans for 
3.12 	projects to address green infrastructure, water or energy efficiency improvements, or other 
3.13 	environmentally innovative activities. Grants made under this subdivision count toward 
3.14 	the 50 percent requirement in subdivision 2.
3.15 		Subd. 4.Grant and loan terms. (a) Grants under this section must be based on 
3.16 	as-bid costs and awarded to eligible projects as provided in this subdivision in the order 
3.17 	that projects are certified by the Pollution Control Agency and as-bid costs are submitted 
3.18 	to the Public Facilities Authority.
3.19 	(b) Except for projects that receive a grant under paragraph (d), a base grant must be 
3.20 	provided for 20 percent of the amount approved to be paid from the clean water revolving 
3.21 	fund, up to a maximum of $2,000,000 per project.
3.22 	(c) Except for projects that receive a grant under paragraph (d), a supplemental grant 
3.23 	must be provided if the average annual residential wastewater system cost after completion 
3.24 	in the project would otherwise exceed 1.4 percent of the median household income in 
3.25 	the recipient governmental unit or entity. In determining whether the average annual 
3.26 	residential wastewater system cost would exceed 1.4 percent, the authority must consider 
3.27 	the total costs associated with building, operating, and maintaining the wastewater 
3.28 	system, including debt service and operation and maintenance costs. The amount of the 
3.29 	supplemental grant is equal to 80 percent of the amount needed to reduce the average 
3.30 	annual residential wastewater system cost to 1.4 percent of median household income in 
3.31 	the recipient, to a maximum of $4,000,000 or $15,000 per connection, whichever is less. 
3.32 	The amount of the supplemental grant must not exceed 80 percent of the total amount 
3.33 	approved to be paid from the clean water revolving fund.
3.34 	(d) For eligible projects to address green infrastructure, water or energy efficiency 
3.35 	improvements, or other environmentally innovative activities, a grant must be provided 
4.1 	for 25 percent of the amount approved to be paid from the clean water revolving fund, 
4.2 	to a maximum of $2,000,000 per project.

4.3 	Sec. 4. FEDERAL STIMULUS MONEY FOR DRINKING WATER.
 4.4 		Subdivision 1.Drinking water revolving fund loans and grants. Pursuant to 
4.5 	Public Law 111-5, the American Recovery and Reinvestment Act of 2009, federal money 
4.6 	allocated under the Act for capitalization grants for drinking water state revolving funds 
4.7 	must be credited to the drinking water revolving fund under Minnesota Statutes, section 
4.8 	446A.081, for the purpose of making loans and grants to eligible projects as provided in 
4.9 	this section, Minnesota Statutes, section 446A.081, and the Act. Authorization to make 
4.10 	loans and grants under this section expires when all money received under the Act and 
4.11 	credited to the drinking water revolving fund has been expended. For the purpose of 
4.12 	this section, the term "grant" includes principal forgiveness that is granted at the time a 
4.13 	loan is made.
4.14 		Subd. 2.Grants required. Not less than 50 percent of the money received under the 
4.15 	Act and credited to the drinking water state revolving fund must be used to provide grants 
4.16 	to eligible projects as provided in subdivision 4, or to provide grants to eligible projects 
4.17 	for up to 65 percent of the eligible grant need identified by the United States Department 
4.18 	of Agriculture Rural Economic and Community Development Program.
4.19 		Subd. 3.Green infrastructure. To the extent that there are sufficient eligible 
4.20 	project applications, not less than 20 percent of the money received under the Act and 
4.21 	credited to the drinking water revolving fund must be used for grants and loans for 
4.22 	projects to address green infrastructure, water or energy efficiency improvements, or other 
4.23 	environmentally innovative activities. Grants made under this subdivision count toward 
4.24 	the 50 percent requirement in subdivision 2.
4.25 		Subd. 4.Grant and loan terms. (a) Grants under this section must be based on 
4.26 	as-bid costs and awarded as provided in this subdivision to eligible projects in the order 
4.27 	that projects are certified by the Department of Health and as-bid costs are submitted to 
4.28 	the Public Facilities Authority.
4.29 	(b) Except for projects that receive a grant under paragraph (d) or (e), a base grant 
4.30 	must be provided for 20 percent of the amount approved to be paid from the drinking 
4.31 	water revolving fund, up to a maximum of $2,000,000 per project.
4.32 	(c) Except for projects that receive a grant under paragraph (d) or (e), a supplemental 
4.33 	grant must be provided if the average annual residential drinking water system cost after 
4.34 	completion of the project would otherwise exceed 1.4 percent of the median household 
4.35 	income in the recipient governmental unit or entity. In determining whether the average 
5.1 	annual residential drinking water system cost would exceed 1.4 percent, the authority must 
5.2 	consider the total costs associated with building, operating and maintaining the drinking 
5.3 	water system, including debt service and operation and maintenance costs. The amount of 
5.4 	the supplemental grant is equal to 80 percent of the amount needed to reduce the average 
5.5 	annual residential drinking water system cost to 1.4 percent of median household income 
5.6 	in the recipient, to a maximum of $4,000,000 or $15,000 per connection. The amount of 
5.7 	the supplemental grant must not exceed 80 percent of the total amount approved to be paid 
5.8 	from the drinking water revolving fund.
5.9 	(d) For eligible projects to address green infrastructure, water or energy efficiency 
5.10 	improvements, or other environmentally innovative activities, a grant must be provided 
5.11 	for 25 percent of the amount approved to be paid from the drinking water revolving fund, 
5.12 	to a maximum of $2,000,000 per project.
5.13 	(e) For projects needed to comply with national primary drinking water standards for 
5.14 	an existing community public water system or for an existing noncommunity public water 
5.15 	system, a grant must be provided for 50 percent of the project cost, up to a maximum of 
5.16 	$10,000. Total grants approved under this paragraph must not exceed $250,000.

5.17 	Sec. 5. EFFECTIVE DATE.
 5.18 	This act is effective the day following final enactment.