HF 790

1st Committee Engrossment - 85th Legislature (2007 - 2008) Posted on 12/22/2009 12:37pm

1.1A bill for an act

1.2relating to public facilities; modifying provisions of the Minnesota Public
1.3Facilities Authority Act; making technical and housekeeping changes; modifying
1.4Pollution Control Agency project priority rule;amending Minnesota Statutes
1.52006, sections 116.182, subdivision 5; 446A.02; 446A.03; 446A.04; 446A.051;
1.6446A.07; 446A.072; 446A.073; 446A.074; 446A.075; 446A.081; 446A.085;
1.7446A.09; 446A.11, subdivision 13; 446A.17, subdivision 1; repealing Minnesota
1.8Statutes 2006, sections 446A.05; 446A.06; 446A.15, subdivision 6.
1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.10ARTICLE 1

1.11PUBLIC FACILITIES AUTHORITY TECHNICAL AND
1.12HOUSEKEEPING CHANGES

1.13    Section 1. Minnesota Statutes 2006, section 446A.02, is amended to read:
1.14446A.02 DEFINITIONS.
1.15    Subdivision 1. Applicability. For the purposes of this chapter, the terms in this
1.16section have the meanings given them.
1.17    Subd. 1a. Agency. "Agency" means the Minnesota Pollution Control Agency.
1.18    Subd. 2. Authority. "Authority" means the Minnesota Public Facilities Authority.
1.19    Subd. 3. Commissioner. "Commissioner" means the commissioner of employment
1.20and economic development.
1.21    Subd. 4. Federal Water Pollution Control Act. "Federal Water Pollution Control
1.22Act" means the Federal Water Pollution Control Act, as amended, United States Code,
1.23title 33, sections 1251 et seq.
1.24    Subd. 4a. Eligible recipient. "Eligible recipient" means a governmental unit or
1.25other entity that may be defined as an eligible recipient for specific programs within this
1.26chapter, and which may be different from one program to another.
2.1    Subd. 5. Governmental unit. "Governmental unit" means a state agency, home rule
2.2charter or statutory city, county, sanitary district, or other governmental subdivision.
2.3    Subd. 6. Project. "Project" means any eligible activity authorized in this chapter
2.4including the acquisition, design, construction, improvement, expansion, repair, or
2.5rehabilitation of all or part of any structure, facility, or equipment necessary for a
2.6wastewater treatment system or water supply system.

2.7    Sec. 2. Minnesota Statutes 2006, section 446A.03, is amended to read:
2.8446A.03 MINNESOTA PUBLIC FACILITIES AUTHORITY.
2.9    Subdivision 1. Membership. The Minnesota Public Facilities Authority consists
2.10of the commissioner of employment and economic development, the commissioner
2.11of finance, the commissioner of the Pollution Control Agency, the commissioner of
2.12agriculture, the commissioner of health, and the commissioner of transportation.
2.13    Subd. 2. Chair; other officers. The commissioner of employment and economic
2.14development shall serve as the chair and chief executive officer of the authority. The
2.15authority shall have the position of vice-chair rotate annually among its members. In the
2.16absence of the chair or vice-chair at meetings of the authority members may elect a chair
2.17for the meeting, and may elect other officers as necessary from its members.
2.18    Subd. 3a. Delegation. In addition to any powers to delegate that members of the
2.19authority have as commissioners, they may delegate to the commissioner of employment
2.20and economic development chair, vice-chair, or executive director their responsibilities as
2.21members of the authority for reviewing and approving financing of eligible projects that
2.22have been certified to the authority by another department or agency, projects that have
2.23been authorized by law, or programs specifically authorized by resolution of the authority.
2.24    Subd. 4. Board actions. (a) A majority of the authority, excluding vacancies,
2.25constitutes a quorum to conduct its business, to exercise its powers, and for all other
2.26purposes.
2.27(b) The board may conduct its business by any technological means available,
2.28including teleconference calls or interactive video, that allows for an interaction between
2.29members. If a meeting is conducted under this paragraph, a specific location must be
2.30available for the public to attend the meeting and at least one member must be present at
2.31that location.
2.32    Subd. 5. Executive director; staffing. The commissioner authority shall employ
2.33and the chair shall appoint, with the concurrence of the authority, an executive director
2.34in the unclassified service. The executive director shall be responsible for staff of the
2.35authority. The executive director shall perform duties that the authority may require in
3.1carrying out its responsibilities to manage and implement the funds and programs in this
3.2chapter, implementation of debt issuance authorized by the authority, compliance with
3.3all state and federal program requirements, and state and federal securities and tax laws
3.4and regulations.
3.5    Subd. 6. Administrative services. The commissioner shall provide administrative
3.6services to the authority shall enter into agreements for administrative and professional
3.7services, and technical support.
3.8    Subd. 7. Personal liability. Members and officers of the authority are not liable
3.9personally for any debt or obligation of the authority.

3.10    Sec. 3. Minnesota Statutes 2006, section 446A.04, is amended to read:
3.11446A.04 POWERS; DUTIES; PROGRAM ADMINISTRATION.
3.12    Subdivision 1. Bylaws; rules. The authority shall adopt bylaws for its organization
3.13and internal management. The commissioner may adopt rules covering the authority's
3.14operations, properties, and facilities.
3.15    Subd. 2. Power to sue; enter contracts. The authority may sue and be sued. The
3.16authority may make and enter into contracts, leases, and agreements necessary to perform
3.17its duties and exercise its powers.
3.18    Subd. 3. Gifts; grants. The authority may apply for, accept, and disburse gifts,
3.19grants, loans, or other property from the United States, the state, private sources, or
3.20any other source for any of its purposes. Money received by the authority under this
3.21subdivision must be deposited in the state treasury and is appropriated to the authority to
3.22carry out its duties.
3.23    Subd. 4. Contract for services. The authority may retain or contract for the
3.24services of accountants, financial advisors, and other consultants or agents needed to
3.25perform its duties and exercise its powers.
3.26    Subd. 5. Fees. (a) The authority may set and collect fees for costs incurred by the
3.27authority for audits, arbitrage accounting, and payment of fees charged by the State Board
3.28of Investment. The authority may also set and collect fees for costs incurred by, the
3.29commissioner Department of Employment and Economic Development, the Department
3.30of Health, the Pollution Control Agency, and the Department of Transportation, including
3.31costs for personnel, professional, and administrative services, for financings debt issuance
3.32related costs and the establishment and maintenance of reserve funds. Fees charged
3.33directly to borrowers or grantees upon executing a loan or grant agreement must not
3.34exceed one-half of one percent of the loan or grant amount. Servicing fees assessed to loan
3.35repayments must not exceed two percent of the loan repayment. The disposition of fees
4.1collected for costs incurred by the authority is governed by section 446A.11, subdivision
4.213 . The authority shall enter into interagency agreements to transfer funds into appropriate
4.3administrative accounts established for fees collected under this subdivision for costs
4.4incurred by the commissioner Department of Employment and Economic Development,
4.5the Department of Health, or the Pollution Control Agency. Fees collected under this
4.6subdivision for costs incurred by the commissioner Department of Transportation must be
4.7credited to the fund or account which is the source of the loan to which the fees are related.
4.8(b) The authority shall annually report to the chairs of the finance and appropriations
4.9committees of the legislature on:
4.10(1) the amount of fees collected under this subdivision for costs incurred by the
4.11authority;
4.12(2) the purposes for which the fee proceeds have been spent; and
4.13(3) the amount of any remaining balance of fee proceeds.
4.14    Subd. 6. Property. The authority may acquire, encumber, hold, and convey through
4.15lease, purchase, gift, or otherwise, any real or personal property.
4.16    Subd. 6a. Loans; grants. The authority may make and contract to make loans and
4.17grants to eligible recipients to finance projects that the eligible recipient may construct or
4.18acquire or may acquire or contract to acquire notes and bonds issued by eligible recipients
4.19to finance those projects.
4.20    Subd. 6b. Debt. The authority may borrow money to carry out and effectuate its
4.21programs and may issue bonds or notes as evidence of any such borrowing in accordance
4.22with sections 446A.12 to 446A.20.
4.23    Subd. 7. In general. The authority has all the powers necessary and convenient
4.24to carry out its duties under this chapter.

4.25    Sec. 4. Minnesota Statutes 2006, section 446A.051, is amended to read:
4.26446A.051 PROJECT FINANCIAL ASSISTANCE.
4.27    Subdivision 1. Determination of financial assistance. The authority shall assist
4.28eligible governmental units recipients in determining what grants or loans under sections
4.29446A.06, 446A.07, 446A.072, 446A.073, 446A.074, 446A.075, and 446A.081 to apply
4.30for to finance projects and the manner in which the governmental unit eligible recipient
4.31will pay for its portion of the project cost.
4.32    Subd. 2. Grant limitations. If a project is eligible for a grant under section
4.33446A.073 , 446A.074, or 446A.075, the total grant shall not exceed the greater of the
4.34maximum amount from a single program or the amount the project could receive under
4.35section 446A.072.
5.1    Subd. 3. Financial feasibility review. (a) The authority shall review the proposed
5.2financing for each project certified by the agency to the authority to ascertain whether or
5.3not: (1) total financing of a project is assured; and (2) the governmental unit's financial
5.4plan to pay for its portion of the project cost is feasible; (3) the proposed project and
5.5financing plan is an eligible use of the money; and (4) the proposal is in compliance with
5.6applicable state and federal tax and securities laws and regulations.
5.7(b) Unless a project is specifically authorized by law, the authority may reject the
5.8proposed financing for a project meeting the requirements in paragraph (a) if a majority
5.9of members believe the financing of the project would not be in the best interests of the
5.10state or would be detrimental to the authority's funds or programs. A determination to
5.11reject a proposed project shall not be made in an arbitrary and capricious manner and must
5.12be supported by substantive evidence and documented by a resolution of the authority
5.13stating its findings.

5.14    Sec. 5. Minnesota Statutes 2006, section 446A.07, is amended to read:
5.15446A.07 CLEAN WATER POLLUTION CONTROL REVOLVING FUND.
5.16    Subdivision 1. Establishment of fund. The authority shall establish a clean water
5.17pollution control revolving fund to provide loans for the purposes and eligible costs
5.18authorized under title VI of the Federal Water Pollution Control Act. The fund must be
5.19credited with repayments.
5.20    Subd. 1a. Definitions. (a) For the purposes of this section, the terms in this
5.21subdivision have the meanings given them.
5.22(b) "Eligible recipients" means governmental units or other entities eligible to receive
5.23loans or other assistance as provided in title VI of the Federal Water Pollution Control Act.
5.24(c) "Federal Water Pollution Control Act" means the Federal Water Pollution Control
5.25Act, as amended, United States Code, title 33, sections 1251 et seq.
5.26    Subd. 2. State funds. A state matching fund is established to be used in compliance
5.27with federal matching requirements specified in the Federal Water Pollution Control Act.
5.28A state grant and loan fund is established to provide grants and loans to governmental
5.29units for the planning and construction of treatment works as specified in section 116.16,
5.30subdivision 2 , paragraphs (6) and (7).
5.31    Subd. 3. Capitalization grant agreement. The authority shall enter an agreement
5.32with the administrator of the United States Environmental Protection Agency to receive
5.33capitalization grants for the clean water revolving fund. The authority may exercise
5.34powers necessary to comply with the requirements specified in the agreement, which must
5.35be in compliance with the Federal Water Pollution Control Act.
6.1    Subd. 4. Intended use plan. (a) The Public Facilities authority shall annually
6.2prepare and submit to the United States Environmental Protection Agency an intended use
6.3plan. The plan must identify the intended uses of the amounts available to the clean water
6.4pollution control revolving fund, including a list of wastewater treatment and storm water
6.5projects and all other eligible activities to be funded during the fiscal year.
6.6(b) To be eligible for placement on the intended use plan:
6.7(1) a project must be listed on the Pollution Control Agency's project priority list;
6.8(2) the applicant must submit a written request to the Public Facilities authority,
6.9including a brief description of the project, a project cost estimate and the requested loan
6.10amount, and a proposed project schedule; and
6.11(3) for a construction loan, the project must have a facility plan approved by the
6.12Pollution Control Agency.
6.13(c) The Pollution Control Agency shall annually provide to the Public Facilities
6.14authority its project priority list of wastewater and storm water projects to be considered
6.15for funding. The Public Facilities authority may not submit the plan until it has received
6.16the review and comment of the Pollution Control Agency or until 30 days have elapsed
6.17since the plan was submitted to the Pollution Control Agency, whichever occurs first. In
6.18addition, the Public Facilities authority shall offer municipalities eligible recipients seeking
6.19placement on the intended use plan an opportunity to review and comment on the plan
6.20before it is adopted. The plan may be amended to add additional projects for consideration
6.21for funding as it determines funds are available and additional projects are able to proceed.
6.22    Subd. 5. Applications. Applications by municipalities and other entities identified
6.23in the annual intended use plan eligible recipients for loans from the clean water pollution
6.24control revolving fund must be made to the authority on forms requiring information
6.25prescribed by the rules of the agency adopted under this section. The authority shall send
6.26the applications to the agency within ten days of receipt authority. The director Pollution
6.27Control Agency shall certify to the authority those applications projects that appear to
6.28meet the criteria set forth in the Federal Water Pollution Control Act, this section, and
6.29rules of the Pollution Control Agency.
6.30    Subd. 6. Award and terms of loans. The authority shall award loans to those
6.31municipalities and other entities for projects certified by the Pollution Control Agency
6.32or shall provide funding for the appropriate state agency or department to make loans
6.33for eligible activities certified by the pollution control agency identified in the intended
6.34use plan, provided the use of funds and the terms and conditions of the loans are in
6.35conformance with the federal Water Pollution Control Act, this section, and rules of the
6.36Pollution Control Agency and the authority adopted under this section.
7.1    Subd. 7. Loan conditions. When making loans from the revolving fund, the
7.2authority shall comply with the conditions of the Federal Water Pollution Control Act,
7.3including:
7.4(a) Loans must be made at or below market interest rates, including interest-free
7.5loans, at terms not to exceed 20 years.
7.6(b) The annual principal and interest payments must begin no later than one year
7.7after completion of a project. Loans must be fully amortized no later than 20 years after
7.8project completion.
7.9(c) A loan An eligible recipient shall establish a dedicated source of revenue for
7.10repayment of the loan.
7.11(d) The fund must be credited with all payments of principal and interest on all loans.
7.12(e) A loan may not be used to pay operating expenses or current obligations, unless
7.13specifically allowed by the Federal Water Pollution Control Act.
7.14(f) A loan made by the authority must be secured by notes or bonds of the eligible
7.15recipient of the loan.
7.16    Subd. 8. Other uses of revolving fund. The clean water pollution control revolving
7.17fund may be used as provided in title VI of the Federal Water Pollution Control Act,
7.18including the following uses:
7.19(1) to buy or refinance the debt obligation of governmental units for treatment
7.20works where debt was incurred and construction begun after March 7, 1985, at or below
7.21market rates;
7.22(2) to guarantee or purchase insurance for local obligations to improve credit market
7.23access or reduce interest rates;
7.24(3) to provide a source of revenue or security for the payment of principal and
7.25interest on revenue or general obligation bonds issued by the authority if the bond
7.26proceeds are deposited in the fund;
7.27(4) to provide loan guarantees, loans, or set-aside for similar revolving funds
7.28established by a governmental unit other than state agencies, or state agencies under
7.29sections 17.117, 103F.725, subdivision 1a, 116J.403, and 116J.617; provided that no more
7.30than $4,000,000 of the balance in the fund may be used for the small cities block grant
7.31program under section 116J.403 and the tourism loan program under section 116J.617,
7.32taken together;
7.33(5) to earn interest on fund accounts; and
7.34(6) to pay the reasonable costs incurred by the authority and the Pollution Control
7.35Agency of administering the fund and conducting activities required under the Federal
7.36Water Pollution Control Act, including water quality management planning under section
8.1205(j) of the act and water quality standards continuing planning under section 303(e)
8.2of the act.
8.3Amounts spent under clause (6) may not exceed the amount allowed under the
8.4Federal Water Pollution Control Act.
8.5    Subd. 9. Payments. Payments from the fund must be made in accordance with the
8.6applicable state and federal law governing the payments, except that for projects other
8.7than those funded under section 17.117, 103F.725, subdivision 1a, 116J.403, 116J.617,
8.8or 462A.05, no payment for a project may be made to a governmental unit an eligible
8.9recipient until and unless the authority has determined the total estimated cost of the
8.10project and ascertained that financing of the project is assured by:
8.11(1) a loan authorized by state law or the appropriation of proceeds of bonds or other
8.12money of the governmental unit to a fund for the construction of the project; and
8.13(2) an irrevocable undertaking, by resolution of the governing body eligible recipient
8.14of the governmental unit, to use all money made available for the project exclusively for
8.15the project, and to pay any additional amount by which the cost of the project exceeds the
8.16estimate by the appropriation to the construction fund of additional money or the proceeds
8.17of additional bonds to be issued by the governmental unit eligible recipient.
8.18    Subd. 10. Rules of authority. The commissioner shall adopt rules containing
8.19procedures for the administration of the authority's duties as provided in this section,
8.20including loan interest rates, the amounts of loans, and municipal financial need.
8.21    Subd. 11. Rules of Pollution Control Agency. The Pollution Control Agency
8.22shall adopt rules relating to the procedure for preparation of the annual intended use plan
8.23certification of projects to the authority for funding, and other matters that the Pollution
8.24Control Agency considers necessary for proper loan administration of its duties under this
8.25section. Eligible activities are those required under the Federal Water Pollution Control
8.26Act of 1987, as amended.

8.27    Sec. 6. Minnesota Statutes 2006, section 446A.072, is amended to read:
8.28446A.072 WASTEWATER INFRASTRUCTURE FUNDING PROGRAM.
8.29    Subdivision 1. Establishment of program. The authority will establish a
8.30wastewater infrastructure funding program to provide supplemental assistance to
8.31municipalities governmental units receiving funding through the clean water pollution
8.32control revolving loan fund program or the United States Department of Agriculture
8.33Rural Economic and Community Development's (USDA/RECD) Water and Waste
8.34Disposal Loans and Grants program for the design and planning, improvements to, and
8.35construction of municipal wastewater treatment systems. The purpose of the program
9.1is to assist municipalities governmental units demonstrating financial need in building
9.2cost-efficient projects to address existing environmental or public health problems. To
9.3implement the program, the authority shall establish a wastewater infrastructure fund to
9.4provide grants and loans for the purposes authorized under title VI of the Federal Water
9.5Pollution Control Act. The fund shall be credited with all investment income from the
9.6fund and all repayments of loans, grants, and penalties.
9.7    Subd. 3. Program administration. (a) The authority shall provide supplemental
9.8assistance, as provided in subdivision 5a to municipalities governmental units:
9.9(1) whose projects are listed on the Pollution Control Agency's project priority list;
9.10(2) that demonstrate their projects are a cost-effective solution to an existing
9.11environmental or public health problem; and
9.12(3) whose projects are approved by the USDA/RECD or certified by the
9.13commissioner of the Pollution Control Agency.
9.14(b) For a municipality governmental unit receiving grant funding from the
9.15USDA/RECD, applications must be made to the USDA/RECD with additional
9.16information submitted to the authority as required by the authority. Eligible project costs
9.17and affordability criteria shall be determined by the USDA/RECD.
9.18(c) For a municipality governmental unit not receiving grant funding from the
9.19USDA/RECD, application must be made to the authority on forms prescribed by the
9.20authority for the clean water pollution control revolving fund program with additional
9.21information as required by the authority. In accordance with section 116.182, the Pollution
9.22Control Agency shall:
9.23(1) calculate the essential project component percentage which must be multiplied
9.24by the total project cost to determine the eligible project cost; and
9.25(2) review and certify approved projects to the authority.
9.26(d) At the time funds are appropriated under this section, the authority shall reserve
9.27supplemental assistance for projects in order of their rankings on the Pollution Control
9.28Agency's project priority list and in an amount based on their most recent cost estimates
9.29submitted to the authority or the as-bid costs, whichever is less.
9.30    Subd. 5a. Type and amount of assistance. (a) For a municipality governmental
9.31unit receiving grant funding from the USDA/RECD, the authority shall provide assistance
9.32in the form of a grant of up to one-half of the eligible grant amount determined by
9.33USDA/RECD. A municipality governmental unit may not receive a grant under this
9.34paragraph for more than $4,000,000 or $15,000 per existing connection, whichever
9.35is less, unless specifically approved by law. In the case of a sanitary district or other
9.36multijurisdictional project for which the USDA/RECD is unable to fully fund up to
10.1one-half of the eligible grant amount, the authority may provide up to an additional
10.2$1,000,000 for each additional municipality governmental unit participating up to a
10.3maximum of $8,000,000 or $15,000 per existing connection, whichever is less, but not to
10.4exceed the maximum grant level determined by the USDA/RECD as needed to keep the
10.5project affordable.
10.6(b) For a municipality governmental unit not receiving grant funding from the
10.7USDA/RECD, the authority shall provide assistance in the form of a loan for the eligible
10.8project costs that exceed five percent of the market value of properties in the project
10.9service area, less the amount of any other grant funding received by the governmental
10.10unit for the project. A municipality governmental unit may not receive a loan under
10.11this paragraph for more than $4,000,000 or $15,000 per existing connection, whichever
10.12is less, unless specifically approved by law. In the case of a sanitary district or other
10.13multijurisdictional project, the authority may provide a loan under this paragraph for up to
10.14an additional $1,000,000 for each additional municipality participating up to a maximum
10.15of $8,000,000 or $15,000 per existing connection, whichever is less, unless specifically
10.16approved by law. A loan under this paragraph must bear no interest, must be repaid as
10.17provided in subdivision 7, and must only be provided in conjunction with a loan from the
10.18clean water pollution control revolving fund under section 446A.07.
10.19(c) Notwithstanding the limits in paragraphs (a) and (b), for a municipality
10.20governmental unit receiving supplemental assistance under this section after January 1,
10.212002, if the authority determines that the municipality's governmental unit's construction
10.22and installation costs are significantly increased due to geological conditions of crystalline
10.23bedrock or karst areas and discharge limits that are more stringent than secondary
10.24treatment, the authority shall provide assistance in the form of half grant and half loan.
10.25Assistance from the authority may not be more than $25,000 per existing connection. Any
10.26additional grant amount received for the same project must be used to reduce the amount
10.27of the municipality's governmental unit's loan from the water pollution control revolving
10.28fund that exceeds five percent of the market value of properties in the project service area.
10.29    Subd. 5b. Special assessment deferral. A municipality governmental unit
10.30receiving a loan under subdivision 5a that levies special assessments to repay the loan
10.31under subdivision 5a or section 446A.07 may defer payment of such assessments under
10.32the provisions of sections 435.193 to 435.195.
10.33    Subd. 6. Disbursements. Disbursements of grants or loans awarded under this
10.34section by the authority to recipients must be made for eligible project costs as incurred by
10.35the recipients, and must be made by the authority in accordance with the project financing
10.36agreement and applicable state and federal laws and rules governing the payments.
11.1    Subd. 7. Loan repayments. Notwithstanding the limitations set forth in section
11.2475.54 , subdivision 1, this subdivision shall govern the maturities and mandatory sinking
11.3fund redemptions of the loans under this section. A municipality governmental unit
11.4receiving a loan under this section shall repay the loan in semiannual payment amounts
11.5determined by the authority. The payment amount must be based on the average payments
11.6on the municipality's governmental unit's clean water pollution control revolving fund
11.7loan or, if greater, the minimum amount required to fully repay the loan by the maturity
11.8date. Payments must begin within one year of the date of the municipality's governmental
11.9unit's final payment on the clean water pollution control revolving fund loan. The final
11.10maturity date of the loan under this section must be no later than 20 years from the date of
11.11the first payment on the loan under this section and no later than 40 years from the date of
11.12the first payment on the clean water pollution control revolving fund loan.
11.13    Subd. 8. Eligibility. A municipality governmental unit is eligible for assistance
11.14under this section only after applying for grant funding from other sources and funding
11.15has been applied for, obtained, rejected, or the authority has determined that the potential
11.16funding is unlikely.
11.17    Subd. 9. Loan limitation. Supplemental assistance may not be used to reduce
11.18the sewer service charges of a significant wastewater contributor, or a single user that
11.19has caused the need for the project or whose current or projected flow and load exceed
11.20one-half of the current wastewater treatment plant's capacity.
11.21    Subd. 11. Report on needs. By February 1 of each even-numbered year, the
11.22authority, in conjunction with the Pollution Control Agency, shall prepare a report to the
11.23Finance Division of the senate Environment and Natural Resources Committee and the
11.24house Environment and Natural Resources Finance Committee on wastewater funding
11.25assistance needs of municipalities governmental units under this section.
11.26    Subd. 12. System replacement fund. Each municipality governmental unit
11.27receiving a loan or grant under this section shall establish a system replacement fund
11.28and shall annually deposit a minimum of $.50 per 1,000 gallons of flow for major
11.29rehabilitation, or expansion of the treatment system, or replacement of the treatment
11.30system at the end of its useful life. Money must remain in the account, for the life of the
11.31loan from the authority or USDA/RECD, unless use of the fund is approved in writing by
11.32the authority for major rehabilitation, expansion, or replacement of the treatment system.
11.33By March 1 each year during the life of the loan, each municipality recipient shall submit
11.34a report to the authority regarding the amount deposited and the fund balance for the
11.35prior calendar year. Failure to comply with the requirements of this subdivision shall
11.36result in the authority assessing a penalty fee to the municipality recipient equal to one
12.1percent of the outstanding loan balance supplemental assistance amount for each year of
12.2noncompliance. Failure to make the required deposit or pay the penalty fee as required
12.3constitutes a default on the loan.
12.4    Subd. 14. Consistency with land use plans. A municipality governmental unit
12.5applying for a project in an unsewered area shall include in its application to the authority
12.6a certification from the county in which the project is located that:
12.7(1) the project is consistent with the county comprehensive land use plan, if the
12.8county has adopted one;
12.9(2) the project is consistent with the county water plan, if the county has adopted
12.10one; and
12.11(3) the county has adopted specific land use ordinances or controls so as to meet or
12.12exceed the requirements of Minnesota Rules, part 7080.0305.

12.13    Sec. 7. Minnesota Statutes 2006, section 446A.073, is amended to read:
12.14446A.073 TOTAL MAXIMUM DAILY LOAD GRANTS.
12.15    Subdivision 1. Program established. When money is appropriated for grants
12.16under this program, the authority must make grants up to a maximum of $3,000,000 to
12.17municipalities governmental units to cover up to one-half the cost of wastewater treatment
12.18or stormwater projects made necessary by wasteload reductions under total maximum
12.19daily load plans required by section 303(d) of the federal Clean Water Act, United States
12.20Code, title 33, section 1313(d).
12.21    Subd. 2. Grant application. Application for a grant must be made to the authority
12.22on forms prescribed by the authority for the total maximum daily load grant program, with
12.23additional information as required by the authority, including a project schedule and cost
12.24estimate for the work necessary to comply with the point source wasteload allocation. The
12.25Pollution Control Agency shall:
12.26(1) in accordance with section 116.182, calculate the essential project component
12.27percentage, which must be multiplied by the total project cost to determine the eligible
12.28project cost; and
12.29(2) review and certify to the authority those projects that have plans and
12.30specifications approved under section 115.03, subdivision 1, paragraph (f).
12.31    Subd. 3. Project priorities. When money is appropriated for grants under this
12.32program, the authority shall accept applications during the month of July and reserve
12.33money for projects expected to proceed with construction by the end of the fiscal year in
12.34the order that their listed on the Pollution Control Agency's project priority list, provided
12.35the project is included in a total maximum daily load plan was that has been approved by
13.1the United States Environmental Protection Agency at the time the appropriation became
13.2law and in an amount based on their most recent the cost estimates estimate submitted to
13.3the authority in the grant application or the as-bid costs, whichever is less.
13.4    Subd. 4. Grant approval. The authority must make a grant to a municipality
13.5governmental unit, as defined in section 116.182, subdivision 1, only after:
13.6(1) the commissioner of the Minnesota Pollution Control Agency has certified to
13.7the United States Environmental Protection Agency a total maximum daily load plan for
13.8identified waters of this state that includes a point source wasteload allocation;
13.9(2) the Environmental Protection Agency has approved the plan;
13.10(3) a municipality governmental unit affected by the plan has estimated the cost to it
13.11of submitted the as-bid cost for the wastewater treatment or storm water projects necessary
13.12to comply with the point source wasteload allocation;
13.13(4) the Pollution Control Agency has approved the cost estimate as-bid costs and
13.14certified the grant eligible portion of the project; and
13.15(5) the authority has determined that the additional financing necessary to complete
13.16the project has been committed from other sources.
13.17    Subd. 5. Grant disbursement. Disbursement of a grant must be made for eligible
13.18project costs as incurred by the municipality governmental unit and in accordance with
13.19a project financing agreement and applicable state and federal laws and rules governing
13.20the payments.

13.21    Sec. 8. Minnesota Statutes 2006, section 446A.074, is amended to read:
13.22446A.074 CLEAN WATER LEGACY PHOSPHORUS REDUCTION
13.23GRANTS.
13.24    Subdivision 1. Creation of account. A clean water legacy capital improvement
13.25account is created in the bond proceeds fund state treasury. Money in the account may
13.26only be used for grants for eligible capital costs as provided in this section. Money in
13.27the clean water legacy capital improvement fund account, including interest earned, is
13.28appropriated to the authority for the purposes of this section.
13.29    Subd. 2. Grants. The authority shall award grants from the clean water legacy
13.30capital improvement account to governmental units for the capital costs of wastewater
13.31treatment facility projects or a portion thereof that will reduce the discharge of total
13.32phosphorus from the facility to one milligram per liter or less. A project is eligible for a
13.33grant if it meets the following requirements:
13.34    (1) the applicable phosphorus discharge limit is incorporated in a permit issued by
13.35the Pollution Control Agency for the wastewater treatment facility on or after March 28,
14.12000, the grantee agrees to comply with the applicable limit as a condition of receiving the
14.2grant, or the grantee made improvements to a wastewater treatment facility on or after
14.3March 28, 2000, that include infrastructure to reduce the discharge of total phosphorus to
14.4one milligram per liter or less;
14.5    (2) the governmental unit has submitted a facilities plan plans and specifications
14.6for the project to the Pollution Control Agency and a grant application to the authority
14.7on a form prescribed by the authority; and
14.8    (3) the Pollution Control Agency has approved the facilities plan plans and
14.9specifications, and certified the project and the as-bid or final eligible costs for the project
14.10to the authority.
14.11    Subd. 3. Eligible capital costs. Eligible capital costs for phosphorus reduction
14.12grants under subdivision 4, paragraph (a), include engineering and inspection costs
14.13and the as-bid construction costs for phosphorus treatment. Eligible capital costs for
14.14phosphorus reduction grants under subdivision 4, paragraph (b), include the final, incurred
14.15construction, engineering, and inspection costs for phosphorus treatment.
14.16    Subd. 4. Grant amounts and priorities. (a) Priority must be given to projects that
14.17start construction on or after July 1, 2006, and rank on the Pollution Control Agency's
14.18project priority list. If a facility's plan for a project is approved and certified by the
14.19Pollution Control Agency before July 1, 2010, the amount of the grant is 75 percent of
14.20the eligible capital cost of the project up to a maximum of $500,000. If a facility's plan
14.21for a project is approved and certified by the Pollution Control Agency on or after July
14.221, 2010, the amount of the grant is 50 percent of the eligible capital cost of the project
14.23up to a maximum of $500,000. Priority in awarding grants under this paragraph must be
14.24based on the date of approval of the facility's plan for the project.
14.25    (b) Projects that meet the eligibility requirements in subdivision 2 and have started
14.26construction before July 1, 2006, may be eligible for grants to reimburse up to 75 percent
14.27of the eligible capital cost of the project, less any amounts previously received in grants
14.28from other sources, provided that reimbursement is an eligible use of funds. Application
14.29for a grant under this paragraph must be submitted to the authority no later than June 30,
14.302008. Priority for award of grants under this paragraph must be based on the date of
14.31Pollution Control Agency approval of the facility plan project plans and specifications.
14.32    (c) In each fiscal year that money is available for grants, the authority shall accept
14.33applications during the month of July. Money shall first award grants be reserved until
14.34May 1 of that fiscal year for projects under paragraph (a) to projects that met the eligibility
14.35requirements of subdivision 2 in the order listed on the Pollution Control Agency's
14.36project priority list and in an amount based on the cost estimate submitted to the authority
15.1in the grant application or the as-bid costs, whichever is less. Any money reserved for
15.2projects that are not approved and certified by the Pollution Control Agency by May 1 of
15.3that year. The authority shall use any remaining money be available that year to award
15.4grants under paragraph (b). Grants that have been approved but not awarded in a previous
15.5fiscal year carry over and must be awarded in subsequent fiscal years in accordance with
15.6the priorities in this paragraph.
15.7    (d) Disbursements of grants under this section by the authority to recipients must
15.8be made for eligible project costs as incurred by the recipients, and must be made by the
15.9authority in accordance with the project financing agreement and applicable state law.
15.10    Subd. 5. Fees. The authority may charge the grant recipient a fee for its
15.11administrative costs not to exceed one-half of one percent of the grant amount, to be
15.12paid upon execution of the grant agreement.

15.13    Sec. 9. Minnesota Statutes 2006, section 446A.075, is amended to read:
15.14446A.075 SMALL COMMUNITY WASTEWATER TREATMENT
15.15PROGRAM.
15.16    Subdivision 1. Creation of account. A small community wastewater treatment
15.17account is created in the special revenue fund. The authority shall make loans and grants
15.18from the account as provided in this section. Money in the fund is annually appropriated
15.19to the authority and does not lapse. The account shall be credited with all loan repayments
15.20and investment income from the account and servicing fees assessed under section
15.21446A.04 , subdivision 5. The authority shall manage and administer the small community
15.22wastewater treatment account and for these purposes, may exercise all powers provided
15.23in this chapter.
15.24    Subd. 1a. Technical assistance grants. If requested, and if it is an eligible use of
15.25funds, the authority shall provide technical assistance grants to governmental units as
15.26provided in this section to analyze possible solutions to problems from noncomplying
15.27individual sewage treatment systems. A grant under this subdivision shall equal $10,000
15.28plus $500 per household, not to exceed a total of $40,000. Technical assistance grant
15.29funds may be used to:
15.30(1) contract with a licensed individual sewage treatment system professional for a
15.31preliminary analysis of the feasibility of installing new systems meeting the requirements
15.32of section 115.55; and
15.33(2) to contract for services from the University of Minnesota Extension Service
15.34to advise the governmental unit on the feasibility of possible wastewater treatment
15.35alternatives and help the governmental unit develop the technical, managerial, and
16.1financial capacity necessary to build, operate, and maintain individual wastewater
16.2treatment systems.
16.3    Subd. 2. Construction loans and grants. (a) The authority shall award loans as
16.4provided in paragraph (b) and grants as provided in paragraphs (c) and (d) this subdivision
16.5 to governmental units from the small community wastewater treatment account for
16.6projects to replace noncomplying individual sewage treatment systems with a community
16.7wastewater treatment an individual sewage treatment system or systems meeting the
16.8requirements of section 115.55. A governmental unit receiving a loan or loan and grant
16.9from the account shall own the individual wastewater treatment systems or community
16.10wastewater treatment systems built under the program and shall be responsible, either
16.11directly or through a contract with a private vendor, for all inspections, maintenance, and
16.12repairs necessary to ensure proper operation of the systems.
16.13    (b) Loans may be awarded for up to 100 percent of eligible project costs as described
16.14in this section.
16.15    (c) When the area to be served by a project has a median household income below
16.16the state average median household income, the governmental unit may receive 50 percent
16.17of the funding provided under this section subdivision in the form of a grant. An applicant
16.18may submit income survey data collected by an independent party if it believes the most
16.19recent United States census does not accurately reflect the median household income
16.20of the area to be served.
16.21(d) If requested, and if it is an eligible use of funds, a governmental unit receiving
16.22funding under this section may receive a grant equal to ten percent of its first year's
16.23award, up to a maximum of $30,000, to contract for technical assistance services from
16.24the University of Minnesota Extension Service to develop the technical, managerial, and
16.25financial capacity necessary to build, operate, and maintain the systems.
16.26    Subd. 3. Project priority list. Governmental units seeking loans or loans and grants
16.27from the small community wastewater treatment program shall first submit a project
16.28proposal to the Pollution Control Agency on a form prescribed by the Pollution Control
16.29Agency. A project proposal shall include the compliance status for all individual sewage
16.30treatment systems in the project area. The Pollution Control agency shall rank project
16.31proposals on its project priority list used for the clean water pollution control revolving
16.32fund under section 446A.07.
16.33    Subd. 4. Applications. Governmental units with projects on the project priority list
16.34shall submit applications for loans or grants under this program to the authority on forms
16.35prescribed by the authority. An application for technical assistance funds shall include the
17.1number of households served by individual sewage treatment systems in the community
17.2and the proposed use of funds. The An application for construction funds shall include:
17.3    (1) a list of the individual sewage treatment systems proposed to be replaced over a
17.4period of up to three years;
17.5    (2) a project schedule and cost estimate for each year of the project;
17.6    (3) a financing plan for repayment of the loan; and
17.7    (4) a management plan providing for the inspection, maintenance, and repairs
17.8necessary to ensure proper operation of the systems.
17.9    Subd. 5. Awards. The authority shall award loans or loans and grants as provided
17.10in subdivision 2 this section to governmental units with approved applications based on
17.11their ranking on the Pollution Control Agency's project priority list. Prior to the award
17.12of construction loans or grants under subdivision 2, paragraph (b), the Pollution Control
17.13Agency shall certify that the individual sewage treatment systems to be built appear to
17.14meet the criteria set forth in section 115.55 and rules of the Pollution Control Agency. The
17.15total amount awarded for construction loans and grants under subdivision 2, paragraph
17.16(b), shall be based on the estimated project costs for the portion of the project expected
17.17to be completed within one year, up to an annual maximum of $500,000. For projects
17.18expected to take more than one year to complete, the authority may make a multiyear
17.19commitment for a period not to exceed three years, contingent on the future availability of
17.20funds. Each year of a multiyear commitment must be funded by a separate loan or loan
17.21and grant agreement meeting the terms and conditions in subdivision 6. A governmental
17.22unit receiving a loan or loan and grant under a multiyear commitment shall have priority
17.23for additional loan and grant funds in subsequent years.
17.24    Subd. 6. Loan terms and conditions. Loans from the small community wastewater
17.25treatment account shall comply with the following terms and conditions:
17.26    (1) principal and interest payments must begin no later than two years after the
17.27loan is awarded;
17.28    (2) loans shall carry an interest rate of one percent;
17.29    (3) loans shall be fully amortized within ten years of the first scheduled payment
17.30or, if the loan amount exceeds $10,000 per household, shall be fully amortized within 20
17.31years but not to exceed the expected design life of the system;
17.32    (4) a governmental unit receiving a loan must establish a dedicated source or sources
17.33of revenues for repayment of the loan and must issue a general obligation note to the
17.34authority for the full amount of the loan; and
18.1    (5) each property owner voluntarily seeking assistance for repair or replacement of
18.2an individual treatment system under this program must provide an a utility easement to
18.3the governmental unit to allow access to the system for management and repairs.
18.4    Subd. 7. Special assessment deferral. (a) A governmental unit receiving a loan
18.5under this section that levies special assessments to repay the loan may defer payment of
18.6the assessments under the provisions of sections 435.193 to 435.195.
18.7    (b) A governmental unit that defers payment of special assessments for one or more
18.8properties under paragraph (a) may request deferral of that portion of the debt service on
18.9its loan, and the authority shall accept appropriate amendments to the general obligation
18.10note of the governmental unit. If special assessment payments are later received from
18.11properties that received a deferral, the funds received shall be paid to the authority with
18.12the next scheduled loan payment.
18.13    Subd. 8. Eligible costs. (a) Eligible costs for technical assistance grants as provided
18.14in subdivision 1a shall include the cost of soil borings.
18.15(b) Eligible costs for small community wastewater treatment construction loans
18.16and grants shall include the costs of technical assistance as provided in subdivision 2,
18.17paragraph (d), for design, construction, related legal fees, and land acquisition.
18.18    Subd. 9. Disbursements. Loan and grant disbursements by the authority under this
18.19section must be made for eligible project costs as incurred by the recipients, and must be
18.20made in accordance with the project loan or grant and loan agreement and applicable
18.21state law.
18.22    Subd. 10. Audits. A governmental unit receiving a loan under this section must
18.23annually provide to the authority for the term of the loan a copy of its annual independent
18.24audit or, if the governmental unit is not required to prepare an independent audit, a copy of
18.25the annual financial reporting form it provides to the state auditor.

18.26    Sec. 10. Minnesota Statutes 2006, section 446A.081, is amended to read:
18.27446A.081 DRINKING WATER REVOLVING FUND.
18.28    Subdivision 1. Definitions. (a) For the purposes of this section, the terms in this
18.29subdivision have the meanings given them.
18.30(b) "Act" means the Safe Drinking Water Act Amendments of 1996, Public Law
18.31104-182.
18.32(c) "Department" means the Department of Health.
18.33(b) "Eligible recipient" means governmental units or other entities eligible to receive
18.34loans or other assistance as provided in the federal Safe Drinking Water Act.
19.1(c) "Federal Safe Drinking Water Act" means the federal Safe Drinking Water Act,
19.2as amended, United States Code, title 42, sections 300f et seq.
19.3    Subd. 2. Establishment of fund. The authority shall establish a drinking water
19.4revolving fund to provide loans and other forms of financial assistance authorized by the
19.5federal Safe Drinking Water Act, as determined by the authority under the rules adopted
19.6under this section for the purposes and eligible costs authorized under the federal Safe
19.7Drinking Water Act. The fund must be credited with repayments. The federal Safe
19.8Drinking Water Act requires that the fund corpus must be managed so as to be available
19.9in perpetuity for the financing of drinking water systems in the state. At a minimum, 15
19.10percent of the funds received each federal fiscal year shall be available solely for providing
19.11loans to public water systems which regularly serve fewer than 10,000 individuals.
19.12    Subd. 3. State funds. A state matching fund is established to be used in compliance
19.13with federal matching requirements specified in the federal Safe Drinking Water Act.
19.14    Subd. 4. Capitalization grant agreement. The authority shall enter into an
19.15agreement with the administrator of the United States Environmental Protection Agency
19.16to receive capitalization grants for the fund. The authority and the Department of Health
19.17shall enter into an operating agreement with the administrator of the United States
19.18Environmental Protection Agency to satisfy the criteria in the act to operate the fund. The
19.19authority and the Department of Health may exercise the powers necessary to comply with
19.20the requirements specified in the agreements and to ensure that loan recipients comply
19.21with all applicable federal and state requirements.
19.22    Subd. 5. Intended use plan. The authority shall annually prepare and submit
19.23to the United States Environmental Protection Agency an intended use plan. The plan
19.24must identify the intended uses of the amounts available to the drinking water revolving
19.25loan fund. The Department of Health shall provide a prioritized list of drinking water
19.26projects and other eligible activities to be considered for funding by the authority. The
19.27plan may be amended by the authority and include additional eligible projects proposed by
19.28the Department of Health.
19.29    Subd. 6. Applications. Applications by municipalities, privately owned public
19.30water systems, and eligible entities identified in the annual intended use plan for loans
19.31from the fund must be made to the authority on the forms prescribed by the rules of the
19.32authority and the rules of the Department of Health adopted under this section. The
19.33authority shall forward the application to the Department of Health within ten days
19.34of receipt. The Department of Health shall approve those applications that appear to
19.35meet the criteria in the federal Safe Drinking Water Act, this section, and the rules of
19.36the Department of Health or the authority.
20.1    Subd. 7. Award and terms of loans. The authority shall award loans to those
20.2municipalities, privately owned public water systems, and other eligible entities approved
20.3by the Department of Health, provided that the applicant is able to comply with the terms
20.4and conditions of the authority loan, which must be in conformance with the federal Safe
20.5Drinking Water Act, this section, and the rules of the authority adopted under this section.
20.6    Subd. 8. Loan conditions. (a) When making loans from the drinking water
20.7revolving fund, the authority shall comply with the conditions of the federal Safe Drinking
20.8Water Act, including the criteria in paragraphs (b) to (e).
20.9(b) Loans must be made at or below market interest rates, including zero interest
20.10loans, for terms not to exceed 20 years.
20.11(c) The annual principal and interest payments must begin no later than one year
20.12after completion of the project. Loans must be amortized no later than 20 years after
20.13project completion.
20.14(d) A loan recipient must identify and establish a dedicated source of revenue for
20.15repayment of the loan, and provide for a source of revenue to properly operate, maintain,
20.16and repair the water system.
20.17(e) The fund must be credited with all payments of principal and interest on all loans,
20.18except the costs as permitted under section 446A.04, subdivision 5, paragraph (a).
20.19(f) A loan may not be used to pay operating expenses or current obligations, unless
20.20specifically allowed by the federal Safe Drinking Water Act.
20.21(g) A loan made by the authority must be secured by notes or bonds of the
20.22governmental unit and collateral to be determined by the authority for private borrowers.
20.23    Subd. 9. Other uses of fund. The drinking water revolving loan fund may be used
20.24as provided in the act, including the following uses:
20.25(1) to buy or refinance the debt obligations, at or below market rates, of public water
20.26systems for drinking water systems, where such the debt was incurred after the date of
20.27enactment of the act, for the purposes of construction of the necessary improvements
20.28to comply with the national primary drinking water regulations under the federal Safe
20.29Drinking Water Act;
20.30(2) to purchase or guarantee insurance for local obligations to improve credit market
20.31access or reduce interest rates;
20.32(3) to provide a source of revenue or security for the payment of principal and
20.33interest on revenue or general obligation bonds issued by the authority if the bond
20.34proceeds are deposited in the fund;
20.35(4) to provide loans or loan guarantees for similar revolving funds established by a
20.36governmental unit or state agency;
21.1(5) to earn interest on fund accounts;
21.2(6) to pay the reasonable costs incurred by the authority, the Department of
21.3Employment and Economic Development, and the Department of Health for conducting
21.4activities as authorized and required under the act up to the limits authorized under the
21.5act; and
21.6(7) to develop and administer programs for water system supervision, source water
21.7protection, and related programs required under the act.
21.8    Subd. 10. Payments. Payments from the fund to borrowers must be in accordance
21.9with the applicable state and federal laws governing such the payments, except no payment
21.10for a project may be made to a borrower until and unless the authority has determined that
21.11the total estimated cost of the project and the financing of the project are assured by:
21.12(1) a loan authorized by state law or appropriation of proceeds of bonds or other
21.13money of the borrower to a fund for the construction of the project; and
21.14(2) an irrevocable undertaking, by resolution of the governing body of the borrower,
21.15to use all money made available for the project exclusively for the project, and to pay
21.16any additional amount by which the cost of the project exceeds the estimate by the
21.17appropriation to the construction fund of additional money or proceeds of additional
21.18bonds to be issued by the borrower.
21.19    Subd. 11. Rules of the authority. The commissioner of employment and economic
21.20development shall adopt rules containing the procedures for the administration of the
21.21authority's duties as provided by this section that include: setting of interest rates, which
21.22shall take into account the financial need of the applicant; the amount of project financing
21.23to be provided; the collateral required for public drinking water systems and for privately
21.24owned public water systems; dedicated sources of revenue or income streams to ensure
21.25repayment of loans; and the requirements to ensure proper operation, maintenance, and
21.26repair of the water systems financed by the authority.
21.27    Subd. 12. Rules of the department. The Department of Health shall adopt rules
21.28relating to the procedures for administration of the department's Department of Health's
21.29duties under the act and this section. The department and the commissioner of the
21.30Department of Employment and Economic Development may adopt a single set of rules
21.31for the program.

21.32    Sec. 11. Minnesota Statutes 2006, section 446A.085, is amended to read:
21.33446A.085 TRANSPORTATION REVOLVING LOAN FUND.
21.34    Subdivision 1. Definitions. (a) For the purposes of this section, the terms defined in
21.35this subdivision have the meanings given them.
22.1(b) "Act" means the National Highway System Designation Act of 1995, Public
22.2Law 104-59, as amended.
22.3(c) "Borrower" means the state, counties, cities, and other governmental entities
22.4eligible under the act and state law to apply for and receive loans from the transportation
22.5revolving loan fund.
22.6(d) "Loan" means financial assistance provided for all or part of the cost of a
22.7project including money disbursed in anticipation of reimbursement or repayment, loan
22.8guarantees, lines of credit, credit enhancements, equipment financing leases, bond
22.9insurance, or other forms of financial assistance.
22.10(e) "Transportation Committee" means a committee of the Minnesota Public
22.11Facilities Authority, acting on behalf of the Minnesota Public Facilities Authority,
22.12consisting of the commissioner of the Department of Employment and Economic
22.13Development, the commissioner of finance, and the commissioner of transportation.
22.14    Subd. 2. Purpose. The purpose of the transportation revolving loan fund is
22.15to provide loans for public transportation projects eligible for financing or aid under
22.16any federal act or program or state law, including, without limitation, the study of
22.17the feasibility of construction, reconstruction, resurfacing, restoring, rehabilitation, or
22.18replacement of transportation facilities; acquisition of right-of-way; and maintenance,
22.19repair, improvement, or construction of city, town, county, or state highways, roads,
22.20streets, rights-of-way, bridges, tunnels, railroad-highway crossings, drainage structures,
22.21signs, maintenance and operation facilities, guardrails, and protective structures used in
22.22connection with highways or transit projects. Enhancement items, including without
22.23limitation bicycle paths, ornamental lighting, and landscaping, are eligible for financing
22.24provided they are an integral part of overall project design and construction of a
22.25federal-aid highway. Money in the fund may not be used for any toll facilities project or
22.26congestion-pricing project.
22.27    Subd. 3. Establishment of fund. A transportation revolving loan fund is established
22.28to make loans for the purposes described in subdivision 2. A highway account is
22.29established in the fund for highway projects eligible under United States Code, title 23. A
22.30transit account is established in the fund for transit capital projects eligible under United
22.31States Code, title 49. A state funds general loan account is established in the fund for
22.32transportation projects eligible under state law. Other accounts may be established in the
22.33fund as necessary for its management and administration. The transportation revolving
22.34loan fund receives federal money under the act and money from any source. Money
22.35received under this section must be paid to the commissioner of finance and credited to
22.36the transportation revolving loan fund. Money in the fund is annually appropriated to the
23.1authority and does not lapse. The fund must be credited with investment income, and with
23.2repayments of principal and interest, except for servicing fees assessed under sections
23.3446A.04, subdivision 5 , and 446A.11, subdivision 8.
23.4    Subd. 4. Management of fund and accounts. The authority shall manage and
23.5administer the transportation revolving loan fund and individual accounts in the fund. For
23.6those purposes, the authority may exercise all powers provided in this chapter.
23.7    Subd. 6. Transportation Committee. The Transportation Committee may
23.8authorize the making of loans to borrowers by the authority for transportation purposes
23.9authorized by the act or this section, without further action by the authority. The authority
23.10may not make loans for transportation purposes without the approval of the Transportation
23.11Committee. Each project must be certified by the commissioner of transportation before
23.12its consideration by the Transportation Committee.
23.13    Subd. 7. Applications. (a) Applicants for loans must submit an application to the
23.14Transportation Committee authority on forms prescribed by the Transportation Committee
23.15authority. The applicant must provide the following information:
23.16(1) the estimated cost of the project and the amount of the loan sought;
23.17(2) other possible sources of funding in addition to loans sought from the
23.18transportation revolving loan fund;
23.19(3) the proposed methods and sources of funds to be used for repayment of loans
23.20received; and
23.21(4) information showing the financial status and ability of the borrower to repay
23.22loans.
23.23    (b) Each project must be certified by the commissioner of transportation under
23.24subdivision 8 before its consideration by the authority.
23.25    Subd. 8. Certification of projects. The commissioner of transportation shall
23.26consider the following information when evaluating projects to certify for funding to
23.27the Transportation Committee authority:
23.28(1) a description of the nature and purpose of the proposed transportation project
23.29including an explanation of the need for the project and the reasons why it is in the
23.30public interest;
23.31(2) the relationship of the project to the area transportation improvement program,
23.32the approved statewide transportation improvement program, and to any transportation
23.33plans required under state or federal law;
23.34(3) the estimated cost of the project and the amount of loans sought;
23.35(4) proposed sources of funding in addition to loans sought from the transportation
23.36revolving loan fund;
24.1(5) the need for the project as part of the overall transportation system;
24.2(6) the overall economic impact of the project; and
24.3(7) the extent to which completion of the project will improve the movement of
24.4people and freight.
24.5    Subd. 9. Loan conditions. When making loans from the transportation revolving
24.6loan fund, the Transportation Committee shall comply with the applicable provisions of
24.7the act and state law. In addition, A loan made under this section must:
24.8(1) bear interest at or below market rates or as otherwise specified in federal law;
24.9(2) have a repayment term not longer than 30 years;
24.10(3) be fully amortized no later than 30 years after project completion;
24.11(4) be subject to repayment of principal and interest beginning not later than five
24.12years after the facility financed with a loan has been completed, or in the case of a highway
24.13project, five years after the facility has opened to traffic; and
24.14(5) be disbursed for specific project elements only after all applicable environmental
24.15requirements have been met.
24.16    Subd. 10. Loans in anticipation of future apportionments. A loan may be made
24.17to a county, or to a statutory or home rule charter city having a population of 5,000 or
24.18more, in anticipation of repayment of the loan from sums that will be apportioned to a
24.19county from the county state-aid highway fund under section 162.07 or to a city from the
24.20municipal state-aid street fund under section 162.14.
24.21    Subd. 11. Payment by county or city. Notwithstanding the allocation provisions of
24.22section 162.08 for counties, and the apportionment provisions of section 162.14 for cities,
24.23sums apportioned under section 162.13 to a statutory or home rule charter city, or under
24.24section 162.07 to a county, that has loan repayments due to the transportation revolving
24.25loan fund, shall be paid by the commissioner of transportation to the appropriate loan fund
24.26to offset the loan repayments that are due.
24.27    Subd. 12. Rules of Transportation Committee and authority. The commissioner
24.28of the Department of Employment and Economic Development shall adopt administrative
24.29rules specifying the procedures that will be used for the administration of the duties of the
24.30Transportation Committee and authority. The rules must include criteria, standards, and
24.31procedures that will be used for making loans, determining interest rates to be charged on
24.32loans, the amount of project financing to be provided, the collateral that will be required,
24.33the requirements for dedicated sources of revenue or income streams to ensure repayment
24.34of loans, and the length of repayment terms.
24.35    Subd. 13. Authority Duties and Rules of Department of Transportation.
24.36The commissioner of transportation shall establish, adopt rules for, and adopt rules to
25.1implement a program to identify, assist with the development of, and certify projects
25.2eligible for loans under the act this section to the Transportation Committee. Until rules
25.3are adopted by the commissioner of transportation, the commissioner of transportation
25.4may certify to the Transportation Committee any project that has been reviewed through
25.5an approved planning process that qualifies the project to be included in the statewide
25.6transportation program or amended into the statewide transportation improvement
25.7program authority.
25.8    Subd. 14. Joint rules. The commissioner of the Department of Employment and
25.9Economic Development and the commissioner of transportation may adopt a single set
25.10of rules.

25.11    Sec. 12. Minnesota Statutes 2006, section 446A.09, is amended to read:
25.12446A.09 REPORT; AUDIT.
25.13The authority shall report to the legislature and the governor by January 1 15 of each
25.14year. The report must include a complete operating and financial statement covering the
25.15authority's operations during the year, including amounts of income from all sources. The
25.16report must also include the authority's analysis of the interest rate subsidy provided to
25.17borrowers on loans made during the year. Books and records of the authority are subject
25.18to audit by the legislative auditor in the manner prescribed for state agencies.

25.19    Sec. 13. Minnesota Statutes 2006, section 446A.11, subdivision 13, is amended to read:
25.20    Subd. 13. Proceeds appropriated to authority. Proceeds of the authority's bonds,
25.21notes, and other obligations; amounts granted or appropriated to the authority for the
25.22making or purchase or the insurance or guaranty of loans or for bond reserves; income
25.23from investment; money in the funds; and all revenues from loans, fees, and charges
25.24of the authority including rentals, royalties, dividends, or other proceeds in connection
25.25with technology-related products, energy conservation products, or other equipment
25.26are annually appropriated to the authority for the accomplishment of its corporate
25.27purposes and must be spent, administered, and accounted for in accordance with the
25.28applicable provisions of all bond and note resolutions, indentures, and other instruments,
25.29contracts, and agreements of the agency authority. Notwithstanding section 16A.28, these
25.30appropriations are available until expended.

25.31    Sec. 14. Minnesota Statutes 2006, section 446A.17, subdivision 1, is amended to read:
25.32    Subdivision 1. Nonliability of individuals. No member of the authority, staff of
25.33the authority, or other person executing the bonds, loans, interest rate swaps, or other
26.1agreements or contracts of the authority is liable personally on the bonds, loans, interest
26.2rate swaps, or other agreements or contracts of the authority or is subject to any personal
26.3liability or accountability by reason of their issuance, execution, delivery, or performance.

26.4    Sec. 15. REVISOR'S INSTRUCTION.
26.5(a) The revisor of statutes shall renumber Minnesota Statutes, section 373.45,
26.6as Minnesota Statutes, section 446A.086. The revisor shall also make necessary
26.7cross-reference changes in Minnesota Statutes and Minnesota Rules consistent with the
26.8renumbering.
26.9(b) The revisor of statutes shall renumber Minnesota Statutes, section 446A.11,
26.10subdivisions 1 to 14, as Minnesota Statutes, section 446A.04, subdivisions 8 to 21. The
26.11revisor shall also make necessary cross-reference changes in Minnesota Statutes and
26.12Minnesota Rules consistent with the renumbering.

26.13    Sec. 16. REPEALER.
26.14Minnesota Statutes 2006, sections 446A.05; 446A.06; and 446A.15, subdivision
26.156, are repealed.

26.16ARTICLE 2

26.17POLLUTION CONTROL AGENCY PROJECT PRIORITY
26.18RULE MODIFICATION

26.19    Section 1. Minnesota Statutes 2006, section 116.182, subdivision 5, is amended to read:
26.20    Subd. 5. Rules. (a) The agency shall adopt rules for the administration of the
26.21financial assistance program. For wastewater treatment projects, the rules must include:
26.22(1) application requirements;
26.23(2) criteria for the ranking of projects in order of priority based on factors including
26.24the type of project and the degree of environmental impact, and scenic and wild river
26.25standards; and
26.26(3) criteria for determining essential project components.
26.27(b) Notwithstanding Minnesota Rules, chapter 7077, the agency shall apply the
26.28following criteria to Minnesota Rules, part 7077.0119:
26.29(1) ten points shall be assigned if the municipality proposing the project holds a
26.30NPDES permit for a municipal separate storm sewer system and is implementing a storm
26.31water pollution prevention plan pursuant to Code of Federal Regulations, title 40, section
26.32122.34, that addresses requirements resulting from an USEPA-approved TMDL for an
27.1impaired water listed under United States Code, title 33, section 303(d), of the Clean
27.2Water Act; and
27.3(2) up to ten points shall be assigned to a municipal storm water project by
27.4multiplying 20 times the ratio of the project area's impervious surface area to the total
27.5project area to be served by the proposed best management practices. A maximum of ten
27.6points shall be awarded and any fraction of a point shall be rounded up to the nearest
27.7whole number.
27.8(c) Paragraph (b) expires on June 30, 2012.