HF 2925

1st Committee Engrossment - 86th Legislature (2009 - 2010) Posted on 03/19/2013 07:29pm

1.1A bill for an act

1.2relating to Public Facilities Authority; amending certain programs; making
1.3technical changes;amending Minnesota Statutes 2008, sections 446A.03,
1.4subdivision 5; 446A.07, subdivision 8; 446A.072, subdivisions 1, 3, 5a, 9;
1.5446A.081, subdivision 9; 446A.086, subdivisions 1, 2, 11; Minnesota Statutes
1.62009 Supplement, sections 446A.075, subdivisions 1a, 2, 4, 5; 446A.081,
1.7subdivision 8.
1.8BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9    Section 1. Minnesota Statutes 2008, section 446A.03, subdivision 5, is amended to
1.10read:
1.11    Subd. 5. Executive director; staffing. (a) The authority shall employ and the
1.12chair shall appoint, with the concurrence of the authority, an executive director in the
1.13unclassified service. The executive director shall be responsible for staff of the authority.
1.14(b) The executive director may employ a deputy director and chief financial officer.
1.15(c) The executive director shall:
1.16(1) perform duties that the authority may require in carrying out its responsibilities
1.17to manage and implement the funds and programs in this chapter, implementation of
1.18debt issuance authorized by the authority, compliance with all state and federal program
1.19requirements, and state and federal securities and tax laws and regulations.;
1.20(2) employ officers, employees, and agents that the executive director considers
1.21necessary to discharge the functions of the executive director; and
1.22(3) define the duties of officers, employees, and agents, and delegate to them any
1.23of the powers, duties, and responsibilities, subject to the executive director's control and
1.24under conditions prescribed by the executive director.

2.1    Sec. 2. Minnesota Statutes 2008, section 446A.07, subdivision 8, is amended to read:
2.2    Subd. 8. Other uses of revolving fund. (a) The clean water revolving fund may
2.3be used as provided in title VI of the Federal Water Pollution Control Act, including
2.4the following uses:
2.5(1) to buy or refinance the debt obligation of governmental units for treatment
2.6works where debt was incurred and construction begun after March 7, 1985, at or below
2.7market rates;
2.8(2) to guarantee or purchase insurance for local obligations to improve credit market
2.9access or reduce interest rates;
2.10(3) to provide a source of revenue or security for the payment of principal and
2.11interest on revenue or general obligation bonds issued by the authority if the bond
2.12proceeds are deposited in the fund;
2.13(4) to provide loan guarantees, loans, or set-aside for similar revolving funds
2.14established by a governmental unit other than state agencies, or state agencies under
2.15sections 17.117, 103F.725, subdivision 1a, and 116J.617;
2.16(5) to earn interest on fund accounts; and
2.17(6) to pay the reasonable costs incurred by the authority and the Pollution Control
2.18Agency of administering the fund and conducting activities required under the Federal
2.19Water Pollution Control Act, including water quality management planning under section
2.20205(j) of the act and water quality standards continuing planning under section 303(e)
2.21of the act.;
2.22(7) to provide principal forgiveness or grants to the extent permitted under the
2.23Federal Water Pollution Control Act and other federal law, based on the criteria and
2.24requirements established for the wastewater infrastructure funding program under section
2.25446A.072; and
2.26(8) to provide loans, principal forgiveness, or grants to the extent permitted under the
2.27Federal Water Pollution Control Act and other federal law to address green infrastructure,
2.28water or energy efficiency improvements, or other environmentally innovative activities.
2.29(b) Amounts spent under paragraph (a), clause (6), may not exceed the amount
2.30allowed under the Federal Water Pollution Control Act.
2.31(c) Principal forgiveness or grants provided under paragraph (a), clause (8), may
2.32not exceed 25 percent of the eligible project costs as determined by the Pollution Control
2.33Agency for project components directly related to green infrastructure, water or energy
2.34efficiency improvements, or other environmentally innovative activities, up to a maximum
2.35of $1,000,000.

3.1    Sec. 3. Minnesota Statutes 2008, section 446A.072, subdivision 1, is amended to read:
3.2    Subdivision 1. Establishment of program. The authority will establish a
3.3wastewater infrastructure funding program to provide supplemental assistance to
3.4governmental units receiving funding through the clean water revolving fund program
3.5or the United States Department of Agriculture Rural Economic and Community
3.6Development's (USDA/RECD) Water and Waste Disposal Loans and Grants program for
3.7the predesign, design and planning, improvements to, and construction of municipal
3.8wastewater treatment systems, including purchase of land and easements. The purpose
3.9of the program is to assist governmental units demonstrating financial need in building
3.10cost-efficient to build cost-effective projects to address existing environmental or public
3.11health problems. To implement the program, the authority shall establish a wastewater
3.12infrastructure fund to provide grants and loans for the purposes authorized under title VI
3.13of the Federal Water Pollution Control Act. The fund shall be credited with all investment
3.14income from the fund and all repayments of loans, grants, and penalties.

3.15    Sec. 4. Minnesota Statutes 2008, section 446A.072, subdivision 3, is amended to read:
3.16    Subd. 3. Program administration. (a) The authority shall provide supplemental
3.17assistance, as provided in subdivision 5a to governmental units:
3.18    (1) whose projects are listed on the Pollution Control Agency's project priority list;
3.19    (2) that demonstrate their projects are a cost-effective solution to an existing
3.20environmental or public health problem; and
3.21    (3) whose projects are approved by the USDA/RECD or certified by the
3.22commissioner of the Pollution Control Agency.
3.23    (b) For a governmental unit receiving grant funding from the USDA/RECD,
3.24applications must be made to the USDA/RECD with additional information submitted to
3.25the authority as required by the authority. Eligible project costs and affordability criteria
3.26shall be determined by the USDA/RECD.
3.27    (c) For a governmental unit not receiving grant funding from the USDA/RECD,
3.28application must be made to the authority on forms prescribed by the authority for the
3.29clean water revolving fund program with additional information as required by the
3.30authority. In accordance with section 116.182, the Pollution Control Agency shall:
3.31    (1) calculate the essential project component percentage which must be multiplied
3.32by the total project cost to determine the eligible project cost; and
3.33    (2) review and certify approved projects to the authority.
3.34    (d) Each fiscal year the authority shall make funds available for projects based on
3.35their ranking on the Pollution Control Agency's project priority list. The authority shall
4.1reserve funds for a project when the applicant receives a funding commitment from the
4.2United States Department of Agriculture Rural Development (USDA/RECD) or submits
4.3plans and specifications to the Pollution Control Agency. Funds must be reserved in
4.4an amount based on the project cost estimate submitted to the authority prior to the
4.5appropriation of the funds and awarded in the amount reserved or an amount based on the
4.6as-bid costs, whichever is less based on the lesser of that amount or the as-bid cost.

4.7    Sec. 5. Minnesota Statutes 2008, section 446A.072, subdivision 5a, is amended to read:
4.8    Subd. 5a. Type and amount of assistance. (a) For a governmental unit receiving
4.9grant funding from the USDA/RECD, the authority shall is authorized to provide
4.10assistance in the form of a grant of up to 65 percent of the eligible grant need determined
4.11by USDA/RECD. A governmental unit may not receive a grant under this paragraph
4.12for more than $4,000,000 per project or $15,000 per existing connection, whichever
4.13is less, unless specifically approved by law. In the case of a sanitary district or other
4.14multijurisdictional project for which the USDA/RECD is unable to fully fund its share of
4.15the eligible grant need, the authority may provide up to an additional $1,000,000 for each
4.16additional governmental unit participating up to a maximum of $8,000,000 or $15,000
4.17per existing connection, whichever is less, but not to exceed the maximum grant level
4.18determined by the USDA/RECD as needed to keep the project affordable.
4.19    (b) For a governmental unit not receiving grant funding from the USDA/RECD
4.20receiving a loan from the clean water revolving fund under section 446A.07, the authority
4.21shall is authorized to provide assistance under this section in the form of a loan for the
4.22eligible project costs plus the outstanding balance on any existing wastewater system debt
4.23that together exceed five percent of the market value of properties in the project service
4.24area, less the amount of any other grant funding received by the governmental unit for
4.25the project. A governmental unit may not receive a loan under this paragraph for more
4.26than grant if the average annual residential wastewater system cost after completion of the
4.27project would otherwise exceed 1.4 percent of the median household income of the project
4.28service area. In determining whether the average annual residential wastewater system
4.29cost would exceed 1.4 percent, the authority must consider the total costs associated with
4.30building, operating, and maintaining the wastewater system, including existing wastewater
4.31debt service, debt service on the eligible project cost, and operation and maintenance
4.32costs. Debt service costs for the proposed project are calculated based on the maximum
4.33loan term permitted for the clean water revolving fund loan under section 446A.07,
4.34subdivision 7. The amount of the grant is equal to 80 percent of the amount needed to
4.35reduce the average annual residential wastewater system cost to 1.4 percent of median
5.1household income in the project service area, to a maximum of $4,000,000 per project or
5.2$15,000 per existing connection, whichever is less, unless specifically approved by law.
5.3In the case of a sanitary district or other multijurisdictional project, the authority may
5.4provide a loan under this paragraph for up to an additional $1,000,000 for each additional
5.5municipality participating up to a maximum of $8,000,000 or $15,000 per existing
5.6connection, whichever is less, unless specifically approved by law. A loan under this
5.7paragraph must bear no interest, must be repaid as provided in subdivision 7, and must
5.8only be provided in conjunction with a loan from the clean water revolving fund under
5.9section 446A.07. The eligible project cost is determined by multiplying the total project
5.10costs minus any other grants by the essential project component percentage calculated
5.11under subdivision 3, paragraph (c), clause (1). In no case may the amount of the grant
5.12exceed 80 percent of the eligible project cost.
5.13    (c) Notwithstanding the limits in paragraphs (a) and (b), for a governmental
5.14unit receiving supplemental assistance under this section after January 1, 2002, if the
5.15authority determines that the governmental unit's construction and installation costs are
5.16significantly increased due to geological conditions of crystalline bedrock or karst areas
5.17and discharge limits that are more stringent than secondary treatment, the authority shall
5.18provide assistance in the form of half grant and half loan. Assistance from the authority
5.19may maximum award under this section shall not be more than $25,000 per existing
5.20connection. Any additional grant amount received for the same project must be used to
5.21reduce the amount of the governmental unit's loan from the clean water revolving fund
5.22that exceeds five percent of the market value of properties in the project service area.

5.23    Sec. 6. Minnesota Statutes 2008, section 446A.072, subdivision 9, is amended to read:
5.24    Subd. 9. Loan Funding limitation. Supplemental assistance may not be used to
5.25reduce the sewer service charges of a significant wastewater contributor, or a single user
5.26that has caused the need for the project or whose current or projected flow and load exceed
5.27one-half of the current wastewater treatment plant's capacity.

5.28    Sec. 7. Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 1a,
5.29is amended to read:
5.30    Subd. 1a. Technical assistance grants. If requested, and if it is an eligible use
5.31of funds, the authority shall is authorized to provide technical assistance grants to
5.32governmental units as provided in this section to analyze possible solutions to problems
5.33from seeking to address noncomplying subsurface sewage treatment systems. A grant
5.34under this subdivision shall equal must not exceed $10,000 plus $500 per household,
6.1not to exceed a for a maximum total of $40,000. Technical assistance grant funds may be
6.2used by the governmental unit to: contract with a licensed subsurface sewage treatment
6.3system business, the University of Minnesota onsite sewage treatment program, a regional
6.4development commission, or other qualified nonprofit organization for one or more of the
6.5following services:
6.6(1) contract with a licensed subsurface sewage treatment system professional for
6.7a preliminary analysis of conduct site evaluations and prepare a report by a certified
6.8subsurface sewage treatment system designer indicating the feasibility of installing new
6.9subsurface sewage treatment systems meeting the requirements of section 115.55; and
6.10(2) to contract for services from the University of Minnesota Extension Service to
6.11advise the governmental unit provide independent advice on the feasibility of possible
6.12wastewater subsurface sewage treatment system alternatives and help; and
6.13(3) assist the governmental unit to develop the technical, managerial, and financial
6.14capacity necessary to build, operate, and maintain individual wastewater subsurface
6.15sewage treatment systems.

6.16    Sec. 8. Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 2, is
6.17amended to read:
6.18    Subd. 2. Construction loans and grants. (a) The authority shall is authorized to
6.19award loans and grants as provided in this subdivision to governmental units from the
6.20small community wastewater treatment account for projects to replace noncomplying
6.21subsurface sewage treatment systems with a subsurface sewage treatment system or
6.22systems meeting the requirements of section 115.55. A governmental unit receiving a
6.23loan or grant from the account shall own the individual wastewater subsurface sewage
6.24treatment systems built under the program and shall be responsible, either directly or
6.25through a contract with a private vendor, for all inspections, maintenance, and repairs
6.26necessary to ensure proper operation of the systems.
6.27    (b) Loans may be awarded for up to 100 percent of eligible project costs as described
6.28in this section.
6.29    (c) When the area to be served by a project has a median household income below
6.30the state average median household income, the governmental unit may receive 50 percent
6.31of the funding provided under this subdivision in the form of a grant. An applicant may
6.32submit income survey data collected by an independent party if it believes the most recent
6.33United States census does not accurately reflect the median household income of the
6.34area to be served.

7.1    Sec. 9. Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 4, is
7.2amended to read:
7.3    Subd. 4. Applications. Governmental units with projects on the project priority
7.4list shall submit applications for loans or grants under this program to the authority on
7.5forms prescribed by the authority. An application for technical assistance funds shall
7.6include the number of households served by subsurface sewage treatment systems in the
7.7community and a workplan and schedule for the proposed use of funds. An application for
7.8construction funds shall include:
7.9    (1) a list of the subsurface sewage treatment systems proposed to be replaced over a
7.10period of up to three years;
7.11    (2) a project schedule and cost estimate for each year of the project;
7.12    (3) a financing plan for repayment of the loan; and
7.13    (4) a management plan providing for the inspection, maintenance, and repairs
7.14necessary to ensure proper operation of the systems.

7.15    Sec. 10. Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 5,
7.16is amended to read:
7.17    Subd. 5. Awards. (a) The authority shall must award loans and grants as provided
7.18in this section to governmental units with approved applications based on their ranking on
7.19the Pollution Control Agency's project priority list.
7.20(b) Except as provided in paragraph (c), prior to the award of construction loans or
7.21grants under subdivision 2, paragraph (b), the Pollution Control Agency shall certify that
7.22the subsurface sewage treatment systems to be built appear to meet the criteria set forth in
7.23section 115.55 and rules of the Pollution Control Agency.
7.24(c) If a governmental unit receives preliminary approval by the Pollution Control
7.25Agency of its feasibility report prepared under subdivision 1a, clause (1), the authority
7.26may make a partial construction award for eligible design costs.
7.27(d) The total amount awarded for construction loans and grants under subdivision 2,
7.28paragraph (b), shall be based on the estimated project costs for the portion of the project
7.29expected to be completed within one year, up to an annual maximum of $500,000. For
7.30projects expected to take more than one year to complete, the authority may make a
7.31multiyear commitment for a period not to exceed three years, contingent on the future
7.32availability of funds. Each year of a multiyear commitment must be funded by a separate
7.33loan or loan and grant agreement meeting the terms and conditions in subdivision 6. A
7.34governmental unit receiving a loan or loan and grant under a multiyear commitment shall
7.35have priority for additional loan and grant funds in subsequent years.

8.1    Sec. 11. Minnesota Statutes 2009 Supplement, section 446A.081, subdivision 8,
8.2is amended to read:
8.3    Subd. 8. Loan conditions. (a) When making loans from the drinking water
8.4revolving fund, the authority shall comply with the conditions of the federal Safe Drinking
8.5Water Act, including the criteria in this subdivision.
8.6(b) Loans must be made at or below market interest rates, including zero interest
8.7loans, for terms not to exceed those allowed under the federal Safe Drinking Water Act.
8.8(c) The annual principal and interest payments must begin no later than one year
8.9after completion of the project. Loans must be amortized no later than 20 years after
8.10project completion, unless the recipient's average annual residential drinking water system
8.11cost after completion of the project would exceed 1.4 1.2 percent of median household
8.12income in the recipient governmental unit or entity, in which case the loan must be fully
8.13amortized no later than 30 years after project completion.
8.14(d) A loan recipient must identify and establish a dedicated source of revenue for
8.15repayment of the loan, and provide for a source of revenue to properly operate, maintain,
8.16and repair the water system.
8.17(e) The fund must be credited with all payments of principal and interest on all loans,
8.18except the costs as permitted under section 446A.04, subdivision 5, paragraph (a).
8.19(f) A loan may not be used to pay operating expenses or current obligations, unless
8.20specifically allowed by the federal Safe Drinking Water Act.
8.21(g) A loan made by the authority must be secured by notes or bonds of the
8.22governmental unit and collateral to be determined by the authority for private borrowers.

8.23    Sec. 12. Minnesota Statutes 2008, section 446A.081, subdivision 9, is amended to read:
8.24    Subd. 9. Other uses of fund. (a) The drinking water revolving loan fund may be
8.25used as provided in the act, including the following uses:
8.26(1) to buy or refinance the debt obligations, at or below market rates, of public
8.27water systems for drinking water systems, where the debt was incurred after the date of
8.28enactment of the act, for the purposes of construction of the necessary improvements
8.29to comply with the national primary drinking water regulations under the federal Safe
8.30Drinking Water Act;
8.31(2) to purchase or guarantee insurance for local obligations to improve credit market
8.32access or reduce interest rates;
8.33(3) to provide a source of revenue or security for the payment of principal and
8.34interest on revenue or general obligation bonds issued by the authority if the bond
8.35proceeds are deposited in the fund;
9.1(4) to provide loans or loan guarantees for similar revolving funds established by a
9.2governmental unit or state agency;
9.3(5) to earn interest on fund accounts;
9.4(6) to pay the reasonable costs incurred by the authority, the Department of
9.5Employment and Economic Development, and the Department of Health for conducting
9.6activities as authorized and required under the act up to the limits authorized under the
9.7act; and
9.8(7) to develop and administer programs for water system supervision, source water
9.9protection, and related programs required under the act.;
9.10(8) notwithstanding Minnesota Rules, part 7380.0280, to provide principal
9.11forgiveness or grants to the extent permitted under the federal Safe Drinking Water Act
9.12and other federal law;
9.13(9) to provide loans, principal forgiveness or grants to the extent permitted under the
9.14Federal Safe Drinking Water Act and other federal law to address green infrastructure,
9.15water or energy efficiency improvements, or other environmentally innovative activities;
9.16and
9.17(10) to provide principal forgiveness or grants for 50 percent of the project cost up
9.18to a maximum of $10,000 for projects needed to comply with national primary drinking
9.19water standards for an existing community or noncommunity public water system.
9.20(b) Principal forgiveness or grants under paragraph (a), clause (8), must only be
9.21provided if the average annual residential drinking water system cost after completion of
9.22the project would otherwise exceed 1.2 percent of the median household income in the
9.23project service area. In determining whether the average annual residential drinking
9.24water system cost would exceed 1.2 percent, the authority must consider the total costs
9.25associated with building, operating, and maintaining the drinking water system, including
9.26debt service and operation and maintenance costs. Debt service costs for the proposed
9.27project must be calculated based on the maximum loan term permitted for the drinking
9.28water revolving fund loan under this section. The amount of the principal forgiveness or
9.29grant must be equal to 80 percent of the amount needed to reduce the average annual
9.30residential drinking water system cost to 1.2 percent of median household income in the
9.31project service area, to a maximum of $4,000,000 or $15,000 per connection, whichever is
9.32less, and not to exceed 80 percent of the total project cost.
9.33(c) Principal forgiveness or grants provided under paragraph (a), clause (9), may
9.34not exceed 25 percent of the eligible project costs as determined by the Department of
9.35Health for project components directly related to green infrastructure, water or energy
10.1efficiency improvements, or other environmentally innovative activities, up to a maximum
10.2of $1,000,000.
10.3(d) The authority is authorized to reduce the percentage of median household
10.4income at which a loan term could extend to 30 years under subdivision 8, paragraph (c),
10.5and at which principal forgiveness or grants could be provided under paragraph (b) if it
10.6determines that the federal funds allotted to the state cannot be fully utilized without
10.7such a reduction. If it determines that such a reduction is necessary to fully utilize the
10.8federal funds, the authority must effect the change through its approval of the annual
10.9intended use plan.

10.10    Sec. 13. Minnesota Statutes 2008, section 446A.086, subdivision 1, is amended to read:
10.11    Subdivision 1. Definitions. (a) As used in this section, the following terms have
10.12the meanings given.
10.13    (b) "Authority" means the Minnesota Public Facilities Authority.
10.14    (c) "Commissioner" means the commissioner of management and budget.
10.15    (d) "Debt obligation" means:
10.16    (1) a general obligation bond or note issued by a county, a bond or note to which the
10.17general obligation of a county is pledged under section 469.034, subdivision 2, or a bond
10.18or note payable from a county lease obligation under section 641.24, to provide funds
10.19for the construction of:
10.20    (i) jails;
10.21    (ii) correctional facilities;
10.22    (iii) law enforcement facilities;
10.23    (iv) social services and human services facilities;
10.24    (v) solid waste facilities; or
10.25    (vi) qualified housing development projects as defined in section 469.034,
10.26subdivision 2; or
10.27    (2) a general obligation bond or note issued by a governmental unit to provide funds
10.28for the construction, improvement, or rehabilitation of:
10.29    (i) wastewater facilities;
10.30    (ii) drinking water facilities;
10.31    (iii) stormwater facilities; or
10.32    (iv) any publicly owned building or infrastructure improvement that has received
10.33partial funding from grants awarded by the commissioner of employment and economic
10.34development related to redevelopment, contaminated site cleanup, bioscience, small cities
11.1development programs, and rural business infrastructure programs, for which bonds are
11.2issued by the authority under section 446A.087.
11.3    (e) "Governmental unit" means a county or a statutory or home rule charter city.

11.4    Sec. 14. Minnesota Statutes 2008, section 446A.086, subdivision 2, is amended to read:
11.5    Subd. 2. Application. (a) This section provides a state guarantee of the payment of
11.6principal and interest on debt obligations if:
11.7    (1) the obligations are issued after June 30, 2000 for new projects and are not issued
11.8for the purposes of refunding previous obligations;
11.9    (2) application to the Public Facilities Authority is made before issuance; and
11.10    (3) the obligations are covered by an agreement meeting the requirements of
11.11subdivision 3.
11.12    (b) Applications to be covered by the provisions of this section must be made in a
11.13form and contain the information prescribed by the authority. Applications are subject to
11.14either a fee of $500 for each bond issue requested by a county or governmental unit or the
11.15applicable fees under section 446A.087.
11.16    (c) Application fees paid under this section must be deposited in a separate
11.17credit enhancement bond guarantee account in the general fund. Money in the credit
11.18enhancement bond guarantee account is appropriated to the authority for purposes of
11.19administering this section.
11.20    (d) Neither the authority nor the commissioner is required to promulgate
11.21administrative rules under this section and the procedures and requirements established by
11.22the authority or commissioner under this section are not subject to chapter 14.

11.23    Sec. 15. Minnesota Statutes 2008, section 446A.086, subdivision 11, is amended to
11.24read:
11.25    Subd. 11. Amount of debt obligation authorized. The amount of debt outstanding
11.26under this section must not exceed $500,000,000 $1,000,000,000.

11.27    Sec. 16. EMPLOYEE TRANSFER.
11.28Employees employed by the Department of Employment and Economic
11.29Development and assigned to the Public Facilities Authority are transferred to the Public
11.30Facilities Authority in accordance with Minnesota Statutes, section 15.039, subdivision 7.
11.31No employee in the classified service shall suffer job loss, have a salary reduced, or have
11.32employment benefits reduced as a result of the transfer under this section. No action taken
11.33after June 1, 2011, shall be considered a result of the transfer under this section.

12.1    Sec. 17. EFFECTIVE DATE.
12.2Sections 1 to 16 are effective the day following final enactment.