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Office of the Revisor of Statutes

SF 2873

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 04/12/2010 12:28pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 1st Engrossment

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A bill for an act
relating to Public Facilities Authority; amending certain programs; making
technical changes; amending Minnesota Statutes 2008, sections 446A.03,
subdivision 5; 446A.07, subdivision 8; 446A.072, subdivisions 1, 3, 5a, 9;
446A.081, subdivision 9; 446A.086, subdivisions 1, 2, 11; Minnesota Statutes
2009 Supplement, sections 446A.075, subdivisions 1a, 2, 4, 5; 446A.081,
subdivision 8.

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

Section 1.

Minnesota Statutes 2008, section 446A.03, subdivision 5, is amended to
read:


Subd. 5.

Executive director; staffing.

new text begin(a) new text endThe authority shall employ and the
chair shall appoint, with the concurrence of the authority, an executive director in the
unclassified service. deleted text beginThe executive director shall be responsible for staff of the authority.
deleted text end

new text begin (b) The executive director may employ a deputy director and chief financial officer.
new text end

new text begin (c) new text endThe executive director shallnew text begin:
new text end

new text begin (1)new text end perform duties that the authority may require in carrying out its responsibilities
to manage and implement the funds and programs in this chapter, implementation of
debt issuance authorized by the authority, compliance with all state and federal program
requirements, and state and federal securities and tax laws and regulationsdeleted text begin.deleted text endnew text begin;
new text end

new text begin (2) employ officers, employees, and agents that the executive director considers
necessary to discharge the functions of the executive director; and
new text end

new text begin (3) define the duties of officers, employees, and agents, and delegate to them any
of the powers, duties, and responsibilities, subject to the executive director's control and
under conditions prescribed by the executive director.
new text end

Sec. 2.

Minnesota Statutes 2008, section 446A.07, subdivision 8, is amended to read:


Subd. 8.

Other uses of revolving fund.

new text begin(a) new text endThe clean water revolving fund may
be used as provided in title VI of the Federal Water Pollution Control Act, including
the following uses:

(1) to buy or refinance the debt obligation of governmental units for treatment
works where debt was incurred and construction begun after March 7, 1985, at or below
market rates;

(2) to guarantee or purchase insurance for local obligations to improve credit market
access or reduce interest rates;

(3) to provide a source of revenue or security for the payment of principal and
interest on revenue or general obligation bonds issued by the authority if the bond
proceeds are deposited in the fund;

(4) to provide loan guarantees, loans, or set-aside for similar revolving funds
established by a governmental unit other than state agencies, or state agencies under
sections 17.117, 103F.725, subdivision 1a, and 116J.617;

(5) to earn interest on fund accounts; deleted text beginand
deleted text end

(6) to pay the reasonable costs incurred by the authority and the Pollution Control
Agency of administering the fund and conducting activities required under the Federal
Water Pollution Control Act, including water quality management planning under section
205(j) of the act and water quality standards continuing planning under section 303(e)
of the actdeleted text begin.deleted text endnew text begin;
new text end

new text begin (7) to provide principal forgiveness or grants to the extent permitted under the
Federal Water Pollution Control Act and other federal law, based on the criteria and
requirements established for the wastewater infrastructure funding program under section
446A.072; and
new text end

new text begin (8) to provide loans, principal forgiveness, or grants to the extent permitted under the
Federal Water Pollution Control Act and other federal law to address green infrastructure,
water or energy efficiency improvements, or other environmentally innovative activities.
new text end

new text begin (b) new text endAmounts spent under new text beginparagraph (a), new text endclause (6)new text begin,new text end may not exceed the amount
allowed under the Federal Water Pollution Control Act.

new text begin (c) Principal forgiveness or grants provided under paragraph (a), clause (8), may
not exceed 25 percent of the eligible project costs as determined by the Pollution Control
Agency for project components directly related to green infrastructure, water or energy
efficiency improvements, or other environmentally innovative activities, up to a maximum
of $1,000,000.
new text end

Sec. 3.

Minnesota Statutes 2008, section 446A.072, subdivision 1, is amended to read:


Subdivision 1.

Establishment of program.

The authority will establish a
wastewater infrastructure funding program to provide supplemental assistance to
governmental units receiving funding through the clean water revolving fund program
or the United States Department of Agriculture Rural Economic and Community
Development's (USDA/RECD) Water and Waste Disposal Loans and Grants program for
thenew text begin predesign,new text end design deleted text beginand planning, improvements todeleted text end, and construction of municipal
wastewater treatment systemsnew text begin, including purchase of land and easementsnew text end. The purpose
of the program is to assist governmental units demonstrating financial need deleted text beginin building
cost-efficient
deleted text end new text beginto build cost-effective new text endprojects to address existing environmental or public
health problems. To implement the program, the authority shall establish a wastewater
infrastructure fund to provide grants and loans for the purposes authorized under title VI
of the Federal Water Pollution Control Act. The fund shall be credited with all investment
income from the fund and all repayments of loans, grants, and penalties.

Sec. 4.

Minnesota Statutes 2008, section 446A.072, subdivision 3, is amended to read:


Subd. 3.

Program administration.

(a) The authority shall provide supplemental
assistance, as provided in subdivision 5a to governmental units:

(1) whose projects are listed on the Pollution Control Agency's project priority list;

(2) that demonstrate their projects are a cost-effective solution to an existing
environmental or public health problem; and

(3) whose projects are approved by the USDA/RECD or certified by the
commissioner of the Pollution Control Agency.

(b) For a governmental unit receiving grant funding from the USDA/RECD,
applications must be made to the USDA/RECD with additional information submitted to
the authority as required by the authority. Eligible project costs and affordability criteria
shall be determined by the USDA/RECD.

(c) For a governmental unit not receiving grant funding from the USDA/RECD,
application must be made to the authority on forms prescribed by the authority for the
clean water revolving fund program with additional information as required by the
authority. In accordance with section 116.182, the Pollution Control Agency shall:

(1) calculate the essential project component percentage which must be multiplied
by the total project cost to determine the eligible project cost; and

(2) review and certify approved projects to the authority.

(d) Each fiscal year the authority shall make funds available for projects based on
their ranking on the Pollution Control Agency's project priority list. The authority shall
reserve funds for a project when the applicant receives a funding commitment from the
United States Department of Agriculture Rural Development (USDA/RECD) or submits
plans and specifications to the Pollution Control Agency. Funds must be reserved in
an amount based on the project cost estimate submitted to the authority prior to the
appropriation of the funds and awarded deleted text beginin the amount reserved or an amount based on the
as-bid costs, whichever is less
deleted text endnew text begin based on the lesser of that amount or the as-bid costnew text end.

Sec. 5.

Minnesota Statutes 2008, section 446A.072, subdivision 5a, is amended to read:


Subd. 5a.

Type and amount of assistance.

(a) For a governmental unit receiving
grant funding from the USDA/RECD, the authority deleted text beginshalldeleted text endnew text begin maynew text end provide assistance in the
form of a grant of up to 65 percent of the eligible grant need determined by USDA/RECD.
A governmental unit may not receive a grant under this paragraph for more than
$4,000,000 new text beginper project new text endor $15,000 per existing connection, whichever is less, unless
specifically approved by law. deleted text beginIn the case of a sanitary district or other multijurisdictional
project for which the USDA/RECD is unable to fully fund its share of the eligible grant
need, the authority may provide up to an additional $1,000,000 for each additional
governmental unit participating up to a maximum of $8,000,000 or $15,000 per existing
connection, whichever is less, but not to exceed the maximum grant level determined by
the USDA/RECD as needed to keep the project affordable.
deleted text end

(b) For a governmental unit deleted text beginnot receiving grant funding from the USDA/RECDdeleted text endnew text begin
receiving a loan from the clean water revolving fund under section 446A.07
new text end, the authority
deleted text begin shalldeleted text endnew text begin maynew text end provide assistance new text beginunder this section new text endin the form of a deleted text beginloan for the eligible project
costs plus the outstanding balance on any existing wastewater system debt that together
exceed five percent of the market value of properties in the project service area, less the
amount of any other grant funding received by the governmental unit for the project. A
governmental unit may not receive a loan under this paragraph for more than
deleted text end new text begingrant if the
average annual residential wastewater system cost after completion of the project would
otherwise exceed 1.4 percent of the median household income of the project service area.
In determining whether the average annual residential wastewater system cost would
exceed 1.4 percent, the authority must consider the total costs associated with building,
operating, and maintaining the wastewater system, including existing wastewater debt
service, debt service on the eligible project cost, and operation and maintenance costs.
Debt service costs for the proposed project are calculated based on the maximum loan
term permitted for the clean water revolving fund loan under section 446A.07, subdivision
7. The amount of the grant is equal to 80 percent of the amount needed to reduce the
average annual residential wastewater system cost to 1.4 percent of median household
income in the project service area, to a maximum of
new text end$4,000,000 new text beginper project new text endor $15,000 per
existing connection, whichever is less, unless specifically approved by law. deleted text beginIn the case of
a sanitary district or other multijurisdictional project, the authority may provide a loan
under this paragraph for up to an additional $1,000,000 for each additional municipality
participating up to a maximum of $8,000,000 or $15,000 per existing connection,
whichever is less, unless specifically approved by law. A loan under this paragraph must
bear no interest, must be repaid as provided in subdivision 7, and must only be provided
in conjunction with a loan from the clean water revolving fund under section 446A.07.
deleted text endnew text begin
The eligible project cost is determined by multiplying the total project costs minus any
other grants by the essential project component percentage calculated under subdivision 3,
paragraph (c), clause (1). In no case may the amount of the grant exceed 80 percent of
the eligible project cost.
new text end

(c) Notwithstanding the limits in paragraphs (a) and (b), for a governmental
unit receiving supplemental assistance under this section after January 1, 2002, if the
authority determines that the governmental unit's construction and installation costs are
significantly increased due to geological conditions of crystalline bedrock or karst areas
and discharge limits that are more stringent than secondary treatment, the deleted text beginauthority shall
provide assistance in the form of half grant and half loan. Assistance from the authority
may
deleted text end new text beginmaximum award under this section shall new text endnot be more than $25,000 per existing
connection. deleted text beginAny additional grant amount received for the same project must be used to
reduce the amount of the governmental unit's loan from the clean water revolving fund
that exceeds five percent of the market value of properties in the project service area.
deleted text end

Sec. 6.

Minnesota Statutes 2008, section 446A.072, subdivision 9, is amended to read:


Subd. 9.

deleted text beginLoandeleted text end new text beginFunding new text endlimitation.

Supplemental assistance may not be used to
reduce the sewer service charges of a significant wastewater contributor, or a single user
that has caused the need for the project or whose current or projected flow and load exceed
one-half of the current wastewater treatment plant's capacity.

Sec. 7.

Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 1a,
is amended to read:


Subd. 1a.

Technical assistance grants.

If requested, and if it is an eligible use of
funds, the authority deleted text beginshalldeleted text endnew text begin maynew text end provide technical assistance grants to governmental units deleted text beginas
provided in this section to analyze possible solutions to problems from
deleted text end new text beginseeking to address
new text endnoncomplying subsurface sewage treatment systems. A grant under this subdivision deleted text beginshall
equal
deleted text endnew text begin must not exceednew text end $10,000 plus $500 per household, deleted text beginnot to exceed adeleted text endnew text begin for a maximumnew text end
total of $40,000. Technical assistance grant funds may be used new text beginby the governmental unit
new text endtodeleted text begin:deleted text endnew text begin contract with a licensed subsurface sewage treatment system business, the University
of Minnesota onsite sewage treatment program, a regional development commission, or
other qualified nonprofit organization for one or more of the following services:
new text end

(1) deleted text begincontract with a licensed subsurface sewage treatment system professional for
a preliminary analysis of
deleted text end new text beginconduct site evaluations and prepare a report by a certified
subsurface sewage treatment system designer indicating
new text endthe feasibility of installing new
new text begin subsurface sewage treatment new text endsystems meeting the requirements of section 115.55; deleted text beginand
deleted text end

(2) deleted text beginto contract for services from the University of Minnesota Extension Service to
advise the governmental unit
deleted text end new text beginprovide independent advice new text endon the feasibility of deleted text beginpossible
wastewater
deleted text end new text beginsubsurface sewage new text endtreatment new text beginsystem new text endalternatives deleted text beginand helpdeleted text endnew text begin; and
new text end

new text begin (3) assistnew text end the governmental unit new text beginto new text enddevelop the technical, managerial, and financial
capacity necessary to build, operate, and maintain deleted text beginindividual wastewaterdeleted text end new text beginsubsurface
sewage
new text endtreatment systems.

Sec. 8.

Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 2, is
amended to read:


Subd. 2.

Construction loans and grants.

(a) The authority deleted text beginshalldeleted text endnew text begin maynew text end award
loans and grants as provided in this subdivision to governmental units from the small
community wastewater treatment account for projects to replace noncomplying subsurface
sewage treatment systems with a subsurface sewage treatment system or systems meeting
the requirements of section 115.55. A governmental unit receiving a loan or grant from
the account shall own the deleted text beginindividual wastewaterdeleted text end new text beginsubsurface sewage new text endtreatment systems
built under the program and shall be responsible, either directly or through a contract
with a private vendor, for all inspections, maintenance, and repairs necessary to ensure
proper operation of the systems.

(b) Loans may be awarded for up to 100 percent of eligible project costs as described
in this section.

(c) When the area to be served by a project has a median household income below
the state average median household income, the governmental unit may receive 50 percent
of the funding provided under this subdivision in the form of a grant. An applicant may
submit income survey data collected by an independent party if it believes the most recent
United States census does not accurately reflect the median household income of the
area to be served.

Sec. 9.

Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 4, is
amended to read:


Subd. 4.

Applications.

Governmental units with projects on the project priority
list shall submit applications for loans or grants under this program to the authority on
forms prescribed by the authority. An application for technical assistance funds shall
include the number of households served by subsurface sewage treatment systems in the
community andnew text begin a workplan and schedule fornew text end the proposed use of funds. An application for
construction funds shall include:

(1) a list of the subsurface sewage treatment systems proposed to be replaced over a
period of up to three years;

(2) a project schedule and cost estimate for each year of the project;

(3) a financing plan for repayment of the loan; and

(4) a management plan providing for the inspection, maintenance, and repairs
necessary to ensure proper operation of the systems.

Sec. 10.

Minnesota Statutes 2009 Supplement, section 446A.075, subdivision 5,
is amended to read:


Subd. 5.

Awards.

new text begin(a) new text endThe authority deleted text beginshalldeleted text endnew text begin mustnew text end award loans and grants as provided
in this section to governmental units with approved applications based on their ranking on
the Pollution Control Agency's project priority list.

new text begin (b) Except as provided in paragraph (c),new text end prior to the award of construction loans or
grants under subdivision 2, paragraph (b), the Pollution Control Agency shall certify that
the subsurface sewage treatment systems to be built appear to meet the criteria set forth in
section 115.55 and rules of the Pollution Control Agency.

new text begin (c) If a governmental unit receives preliminary approval by the Pollution Control
Agency of its feasibility report prepared under subdivision 1a, clause (1), the authority
may make a partial construction award for eligible design costs.
new text end

new text begin (d)new text end The total amount awarded for construction loans and grants under subdivision 2,
paragraph (b), shall be based on the estimated project costs for the portion of the project
expected to be completed within one year, up to an annual maximum of $500,000. For
projects expected to take more than one year to complete, the authority may make a
multiyear commitment for a period not to exceed three years, contingent on the future
availability of funds. Each year of a multiyear commitment must be funded by a separate
loan or loan and grant agreement meeting the terms and conditions in subdivision 6. A
governmental unit receiving a loan or loan and grant under a multiyear commitment shall
have priority for additional loan and grant funds in subsequent years.

Sec. 11.

Minnesota Statutes 2009 Supplement, section 446A.081, subdivision 8,
is amended to read:


Subd. 8.

Loan conditions.

(a) When making loans from the drinking water
revolving fund, the authority shall comply with the conditions of the federal Safe Drinking
Water Act, including the criteria in this subdivision.

(b) Loans must be made at or below market interest rates, including zero interest
loans, for terms not to exceed those allowed under the federal Safe Drinking Water Act.

(c) The annual principal and interest payments must begin no later than one year
after completion of the project. Loans must be amortized no later than 20 years after
project completion, unless the recipient's average annual residential drinking water system
cost after completion of the project would exceed deleted text begin1.4deleted text endnew text begin 1.2new text end percent of median household
income in the recipient governmental unit or entity, in which case the loan must be fully
amortized no later than 30 years after project completion.

(d) A loan recipient must identify and establish a dedicated source of revenue for
repayment of the loan, and provide for a source of revenue to properly operate, maintain,
and repair the water system.

(e) The fund must be credited with all payments of principal and interest on all loans,
except the costs as permitted under section 446A.04, subdivision 5, paragraph (a).

(f) A loan may not be used to pay operating expenses or current obligations, unless
specifically allowed by the federal Safe Drinking Water Act.

(g) A loan made by the authority must be secured by notes or bonds of the
governmental unit and collateral to be determined by the authority for private borrowers.

Sec. 12.

Minnesota Statutes 2008, section 446A.081, subdivision 9, is amended to read:


Subd. 9.

Other uses of fund.

new text begin(a) new text endThe drinking water revolving loan fund may be
used as provided in the act, including the following uses:

(1) to buy or refinance the debt obligations, at or below market rates, of public
water systems for drinking water systems, where the debt was incurred after the date of
enactment of the act, for the purposes of construction of the necessary improvements
to comply with the national primary drinking water regulations under the federal Safe
Drinking Water Act;

(2) to purchase or guarantee insurance for local obligations to improve credit market
access or reduce interest rates;

(3) to provide a source of revenue or security for the payment of principal and
interest on revenue or general obligation bonds issued by the authority if the bond
proceeds are deposited in the fund;

(4) to provide loans or loan guarantees for similar revolving funds established by a
governmental unit or state agency;

(5) to earn interest on fund accounts;

(6) to pay the reasonable costs incurred by the authority, the Department of
Employment and Economic Development, and the Department of Health for conducting
activities as authorized and required under the act up to the limits authorized under the
act; deleted text beginand
deleted text end

(7) to develop and administer programs for water system supervision, source water
protection, and related programs required under the actdeleted text begin.deleted text endnew text begin;
new text end

new text begin (8) notwithstanding Minnesota Rules, part 7380.0280, to provide principal
forgiveness or grants to the extent permitted under the federal Safe Drinking Water Act
and other federal law;
new text end

new text begin (9) to provide loans, principal forgiveness or grants to the extent permitted under the
Federal Safe Drinking Water Act and other federal law to address green infrastructure,
water or energy efficiency improvements, or other environmentally innovative activities;
and
new text end

new text begin (10) to provide principal forgiveness or grants for 50 percent of the project cost up
to a maximum of $10,000 for projects needed to comply with national primary drinking
water standards for an existing community or noncommunity public water system.
new text end

new text begin (b) Principal forgiveness or grants under paragraph (a), clause (8), must only be
provided if the average annual residential drinking water system cost after completion of
the project would otherwise exceed 1.2 percent of the median household income in the
project service area. In determining whether the average annual residential drinking
water system cost would exceed 1.2 percent, the authority must consider the total costs
associated with building, operating, and maintaining the drinking water system, including
debt service and operation and maintenance costs. Debt service costs for the proposed
project must be calculated based on the maximum loan term permitted for the drinking
water revolving fund loan under this section. The amount of the principal forgiveness or
grant must be equal to 80 percent of the amount needed to reduce the average annual
residential drinking water system cost to 1.2 percent of median household income in the
project service area, to a maximum of $4,000,000 or $15,000 per connection, whichever is
less, and not to exceed 80 percent of the total project cost.
new text end

new text begin (c) Principal forgiveness or grants provided under paragraph (a), clause (9), may
not exceed 25 percent of the eligible project costs as determined by the Department of
Health for project components directly related to green infrastructure, water or energy
efficiency improvements, or other environmentally innovative activities, up to a maximum
of $1,000,000.
new text end

new text begin (d) The authority may reduce the percentage of median household income at which
a loan term could extend to 30 years under subdivision 8, paragraph (c), and at which
principal forgiveness or grants could be provided under paragraph (b) if it determines that
the federal money allotted to the state cannot be fully utilized without the reduction. If it
determines that the reduction is necessary to fully utilize the federal money, the authority
must effect the change through its approval of the annual intended use plan.
new text end

Sec. 13.

Minnesota Statutes 2008, section 446A.086, subdivision 1, is amended to read:


Subdivision 1.

Definitions.

(a) As used in this section, the following terms have
the meanings given.

(b) "Authority" means the Minnesota Public Facilities Authority.

(c) "Commissioner" means the commissioner of management and budget.

(d) "Debt obligation" means:

(1) a general obligation bond new text beginor note new text endissued by a county, a bond new text beginor note new text endto which the
general obligation of a county is pledged under section 469.034, subdivision 2, or a bond
new text begin or note new text endpayable from a county lease obligation under section 641.24, to provide funds
for the construction of:

(i) jails;

(ii) correctional facilities;

(iii) law enforcement facilities;

(iv) social services and human services facilities;

(v) solid waste facilities; or

(vi) qualified housing development projects as defined in section 469.034,
subdivision 2; or

(2) a general obligation bond new text beginor note new text endissued by a governmental unit to provide funds
for the construction, improvement, or rehabilitation of:

(i) wastewater facilities;

(ii) drinking water facilities;

(iii) stormwater facilities; or

(iv) any publicly owned building or infrastructure improvement that has received
partial funding from grants awarded by the commissioner of employment and economic
development related to redevelopment, contaminated site cleanup, bioscience, small cities
development programs, and rural business infrastructure programs, for which bonds are
issued by the authority under section 446A.087.

(e) "Governmental unit" means a county or a statutory or home rule charter city.

Sec. 14.

Minnesota Statutes 2008, section 446A.086, subdivision 2, is amended to read:


Subd. 2.

Application.

(a) This section provides a state guarantee of the payment of
principal and interest on debt obligations if:

(1) the obligations are issued deleted text beginafter June 30, 2000deleted text endnew text begin for new projects and are not issued
for the purposes of refunding previous obligations
new text end;

(2) application to the Public Facilities Authority is made before issuance; and

(3) the obligations are covered by an agreement meeting the requirements of
subdivision 3.

(b) Applications to be covered by the provisions of this section must be made in a
form and contain the information prescribed by the authority. Applications are subject to
either a fee of $500 for each bond issue requested by a county or governmental unit or the
applicable fees under section 446A.087.

(c) Application fees paid under this section must be deposited in a separate
credit enhancement bond guarantee account in the general fund. Money in the credit
enhancement bond guarantee account is appropriated to the authority for purposes of
administering this section.

(d) Neither the authority nor the commissioner is required to promulgate
administrative rules under this section and the procedures and requirements established by
the authority or commissioner under this section are not subject to chapter 14.

Sec. 15.

Minnesota Statutes 2008, section 446A.086, subdivision 11, is amended to
read:


Subd. 11.

Amount of debt obligation authorized.

The amount of debt outstanding
under this section must not exceed deleted text begin$500,000,000deleted text endnew text begin $1,000,000,000new text end.

Sec. 16. new text beginEMPLOYEE TRANSFER.
new text end

new text begin Employees employed by the Department of Employment and Economic
Development and assigned to the Public Facilities Authority are transferred to the Public
Facilities Authority in accordance with Minnesota Statutes, section 15.039, subdivision 7.
new text end

Sec. 17. new text beginEFFECTIVE DATE.
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new text begin Sections 1 to 16 are effective the day following final enactment.
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