HF 724

as introduced - 94th Legislature (2025 - 2026) Posted on 02/13/2025 02:47pm

A bill for an act
relating to capital investment; making changes to the water infrastructure funding
program; making changes to the point source implementation grant program;
establishing an emerging contaminants grant program; appropriating money for
clean water; authorizing the sale and issuance of state bonds; amending Minnesota
Statutes 2024, sections 446A.072, subdivision 5a; 446A.073, subdivision 1;
proposing coding for new law in Minnesota Statutes, chapter 446A.

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

Section 1.

Minnesota Statutes 2024, 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 may 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 deleted text begin $5,000,000 deleted text end new text begin $10,000,000 new text end
per project or $20,000 per existing connection, whichever is less, unless specifically approved
by law.

(b) For a governmental unit receiving a loan from the clean water revolving fund under
section 446A.07, the authority may provide assistance under this section in the form of a
grant 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 deleted text begin $5,000,000 deleted text end new text begin $10,000,000 new text end per project or $20,000
per existing connection, whichever is less, unless specifically approved by law. 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.

(c) For a governmental unit receiving a loan from the drinking water revolving fund
under section 446A.081, the authority may provide assistance under this section in the form
of a grant 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 of 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 existing
drinking water 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 drinking water revolving fund loan under section
446A.081, subdivision 8, paragraph (c). The amount of the grant is 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
deleted text begin $5,000,000 deleted text end new text begin $10,000,000 new text end per project or $20,000 per existing connection, whichever is less,
unless specifically approved by law. 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.

(d) Notwithstanding the limits in paragraphs (a), (b), and (c), 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 maximum award under this
section shall not be more than $25,000 per existing connection.

Sec. 2.

Minnesota Statutes 2024, section 446A.073, subdivision 1, is amended to read:

Subdivision 1.

Program established.

When money is appropriated for grants under this
program, the authority shall award grants up to a maximum of deleted text begin $7,000,000 deleted text end new text begin $12,000,000 new text end to
governmental units to cover 80 percent of the cost of water infrastructure projects made
necessary by:

(1) a wasteload reduction prescribed under a total maximum daily load plan required by
section 303(d) of the federal Clean Water Act, United States Code, title 33, section 1313(d);

(2) a phosphorus concentration or mass limit which requires discharging one milligram
per liter or less at permitted design flow which is incorporated into a permit issued by the
Pollution Control Agency;

(3) any other water quality-based effluent limit established under section 115.03,
subdivision 1, paragraph (e), clause (8), and incorporated into a permit issued by the Pollution
Control Agency that exceeds secondary treatment limits; or

(4) a total nitrogen concentration or mass limit that requires discharging ten milligrams
per liter or less at permitted design flow.

Sec. 3.

new text begin [446A.082] EMERGING CONTAMINANTS GRANTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin For the purposes of this section, "supplemental demographic
index" means an index in the Environmental Justice Screening and Mapping Tool developed
by the United States Environmental Protection Agency that is based on socioeconomic
indicators, including low income, unemployment, less than high school education, limited
English speaking, and low life expectancy.
new text end

new text begin Subd. 2. new text end

new text begin Program established. new text end

new text begin When money is appropriated under this program, the
authority shall award grants to a governmental unit for up to 80 percent of the cost of drinking
water infrastructure projects to address a confirmed exceedance of a health advisory level
for a drinking water emerging contaminant as defined by the Environmental Protection
Agency.
new text end

new text begin Subd. 3. new text end

new text begin Eligibility. new text end

new text begin An eligible project for this program must:
new text end

new text begin (1) be listed on the Drinking Water Revolving Fund Project Priority List per Minnesota
Rules, part 4720.9015;
new text end

new text begin (2) receive priority points under Minnesota Rules, part 4720.9020, subpart 4a; and
new text end

new text begin (3) be certified by the commissioner of health per Minnesota Rules, part 4720.9060.
new text end

new text begin Subd. 4. new text end

new text begin Application and reservation of funds. new text end

new text begin (a) Grant applications to the authority
may be made at any time on forms prescribed by the authority, including a project schedule
and cost estimate for the work necessary to comply with the purpose described in subdivision
2.
new text end

new text begin (b) The commissioner of health shall review and certify to the authority those projects
that have plans and specifications approved under Minnesota Rules, part 4720.9060. The
commissioner of health must also indicate in the certification the supplemental demographic
index scores of the projects.
new text end

new text begin (c) When a project is certified by the commissioner of health, the authority shall first
reserve grant funds for projects located in a census block group with a supplemental
demographic index score in the 70th percentile or higher within the state of Minnesota. Any
remaining funds shall be reserved for projects in the order listed on the commissioner of
health's project priority list and in an amount based on the cost estimate in the commissioner
of health certification or the as-bid costs, whichever is less.
new text end

new text begin Subd. 5. new text end

new text begin Grant amount. new text end

new text begin The grant amount for an eligible project under this program
shall be for an amount up to 80 percent of the eligible as-bid project cost up to $12,000,000,
minus the amount of federal emerging contaminant funds the project receives under section
446A.081, subdivision 9, paragraph (a), clause (12), or other federal emerging contaminant
funds.
new text end

new text begin Subd. 6. new text end

new text begin Grant approval. new text end

new text begin The authority shall award a grant for an eligible project only
after:
new text end

new text begin (1) the applicant has submitted the as-bid project cost;
new text end

new text begin (2) the commissioner of health has certified the grant eligible portion of the project; and
new text end

new text begin (3) the authority has determined that the additional financing necessary to complete the
project has been committed from other sources.
new text end

new text begin Subd. 7. new text end

new text begin Grant disbursement. new text end

new text begin Grant funds shall be disbursed by the authority as eligible
project costs are incurred by the governmental unit and in accordance with a project financing
agreement and applicable state laws and rules governing the disbursements.
new text end

new text begin Subd. 8. new text end

new text begin Recovering expenses. new text end

new text begin Money granted to a grantee under this program may be
recovered in a civil action brought by the attorney general against any person who may be
liable under section 115B.04 or any other law. To be eligible for recovery, the expenses
must be reasonable and necessary expenses, including all response costs, and administrative
and legal expenses. The authority, Department of Health, and Pollution Control Agency's
certification of expenses shall be prima facie evidence that the expenses are reasonable and
necessary. Any money recovered in a civil action for a project financed with bonds under
this section shall be transferred to the commissioner of management and budget for deposit
in the state bond proceeds fund and applied toward principal interest on outstanding bonds.
new text end

Sec. 4. new text begin CLEAN WATER APPROPRIATIONS; GENERAL OBLIGATION BONDS.
new text end

new text begin Subdivision 1. new text end

new text begin Total appropriation. new text end

new text begin $299,000,000 is appropriated from the bond
proceeds fund to the Public Facilities Authority for the purposes of this section.
new text end

new text begin Subd. 2. new text end

new text begin Emerging contaminants grants. new text end

new text begin $18,000,000 of this appropriation is for the
emerging contaminants grant program under Minnesota Statutes, section 446A.082.
new text end

new text begin Subd. 3. new text end

new text begin State match for revolving loan funds. new text end

new text begin $39,000,000 of this appropriation is to
match federal capitalization grants for the clean water revolving fund under Minnesota
Statutes, section 446A.07, and the drinking water revolving fund under Minnesota Statutes,
section 446A.081. This appropriation must be used for qualified capital projects.
new text end

new text begin Subd. 4. new text end

new text begin Water infrastructure funding program. new text end

new text begin $121,000,000 of this appropriation
is for grants to eligible municipalities under the water infrastructure funding program under
Minnesota Statutes, section 446A.072.
new text end

new text begin Subd. 5. new text end

new text begin Point source implementation grants program. new text end

new text begin $121,000,000 of this
appropriation is for grants to eligible municipalities under the point source implementation
grants program under Minnesota Statutes, section 446A.073. This appropriation must be
used for qualified capital projects.
new text end

new text begin Subd. 6. new text end

new text begin Bond sale. new text end

new text begin To provide the money appropriated in this section from the bond
proceeds fund, the commissioner of management and budget shall sell and issue bonds of
the state in an amount up to $299,000,000 in the manner, upon the terms, and with the effect
prescribed by Minnesota Statutes, sections 16A.631 to 16A.675, and by the Minnesota
Constitution, article XI, sections 4 to 7.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end