446A.072 Wastewater infrastructure funding program.
Subdivision 1. Establishment of program. The authority will establish a wastewater infrastructure funding program to provide supplemental assistance to municipalities applying for funding under the water pollution control revolving loan 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 the design and planning, improvements to, and construction of municipal wastewater treatment systems.
Subd. 2. Type of supplemental assistance. Supplemental assistance shall be in the form of zero percent loans, with loan repayments beginning February 20 or August 20 following the scheduled date of the project obtaining the operational performance standards established by the agency. Upon receipt of notice from the agency that the project operational performance standards have been met, the authority will forgive the scheduled loan repayments made under this section. If not forgiven, loan repayments shall be deferred upon request from the commissioner of the agency for six-month periods, provided the commissioner has determined that satisfactory progress is being made to achieve project performance or is developing or implementing a corrective action plan.
Subd. 3. Program administration. The authority shall provide supplemental assistance, as provided in subdivision 2, to municipalities demonstrating financial need, as provided in subdivision 4, whose projects have been certified to the authority by the commissioner of the agency. The authority shall reserve supplemental assistance for projects in order of their priority ranking established by the agency.
Subd. 4. Funding level. (a) The authority shall provide supplemental assistance for essential project component costs as certified by the commissioner of the pollution control agency under section 116.182, subdivision 4.
(b) A municipality may not receive more than $4,000,000 under this section unless specifically approved by law.
(c) The authority will calculate the grant amount needed for the essential project component costs by first determining the amount needed to reduce a municipality's monthly residential sewer service charge to $25 or to an annual residential sewer service charge in excess of 1.5 percent of the municipality's median household income, whichever is less, and then multiplying that amount by 80 percent to determine the actual award amount to supplement loans under section 446A.07 or provide up to one-third of the amount of the grant funding level required by USDA/RECD for projects listed on the agency's intended use plan.
(d) The authority shall provide supplemental assistance to a municipality that would not otherwise qualify for supplemental assistance if:
(1) the municipality voluntarily accepts a sewer connection from another governmental unit to serve residential, industrial, or commercial developments that were completed before March 1, 1996, or are on lots whose plats were recorded before that date; and
(2) fees charged by the municipality for the connection must take into account state and federal grants used by the municipality for the construction of the treatment plant.
The amount of supplemental assistance under this paragraph must be sufficient to reduce debt service payments under section 446A.07 to an extent equivalent to a zero percent loan in an amount up to the other governmental unit's project costs necessary for connection. Eligibility for supplemental assistance under this paragraph ends three years after the agency certifies that the connection has met the operational performance standards established by the agency.
Subd. 4a. Loan repayment; new development. (a) For the purposes of this subdivision, "loan" includes a loan that has been forgiven under this section.
(b) A municipality that receives a supplemental assistance loan under this section that, within 20 years after receiving the assistance, extends sewer service to serve a residential, industrial, or commercial development that is completed on unplatted land after March 1, 1996, or that is on a lot whose plat was recorded after that date, must repay a portion of the loan to the authority before providing the sewer connection. The commissioner shall calculate the amount to be repaid by first determining the number of households included in the extension financed by the original loan. The commissioner must then determine the present value of the original loan amount. The interest rate used to calculate the present value must be equivalent to the interest rate on the loan made to the municipality under section 446A.07 at the time of the original supplemental assistance loan under this section. The commissioner must then divide the present value of the loan by the number of households included in the original loan. For an extension to a residential development, the repayment to the authority must be equal to the per household amount calculated for the original loan multiplied by the number of households in the proposed extension. For an extension to a commercial or industrial development, the commissioner shall determine the repayment to the authority by using the per household amount calculated for the original loan to calculate a proportionally equivalent amount based on the projected wastewater discharge from the proposed development. The total repayments to the authority under this paragraph may not exceed the original amount of the supplemental assistance loan. The repayment must be processed as provided in subdivision 7.
(c) The authority shall waive the loan repayment if the commissioner determines that the community in which the sewer extension is undertaken meets the following conditions:
(1) there is a shortage of decent, safe, and affordable housing;
(2) the housing units served by the sewer extension are located in an incorporated area; and
(3) the housing units served by the sewer extension are moderately priced.
The authority shall also waive the loan repayment if the commissioner determines that the population of the community in which the sewer extension is undertaken has declined by more than ten percent since the preceding federal decennial census.
The commissioner shall provide the determinations made under this paragraph to the authority to be included in the reports required by subdivision 11.
Subd. 5. Applications. Applications for the wastewater infrastructure funding program must be made to the authority on forms prescribed by the authority and the agency for the water pollution control revolving loan program. The commissioner of the pollution control agency shall determine if the project meets the criteria in section 116.182. The commissioner of the pollution control agency shall certify projects to the authority under section 116.182, and shall rank the certified applications in accordance with section 116.182, and determine the essential project component percentage for each certified application.
Subd. 6. Disbursements. Disbursements made by the authority to recipients must be made for eligible project costs as incurred by the recipients, and must be made by the authority in accordance with the project financing agreement and applicable state and federal laws and rules governing the payments.
Subd. 7. Loan repayments. All loan repayments received by the authority under subdivision 2 must be used to provide additional assistance under this section.
Subd. 8. Eligibility. A municipality is eligible only after grant funding from other sources has been applied for, obtained, rejected, or the authority has determined that the potential funding is unlikely.
Subd. 9. Loan limitation. 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, unless the applicant can demonstrate to the authority that the significant wastewater contributor cannot pay its fair share. Funding will not be provided for projects that are not qualified for assistance or that would violate the state's constitution or laws regarding the use of funds appropriated for the program.
Subd. 10. High cost projects. The authority shall not award supplemental assistance for projects in excess of $10,000 per household unless the agency has ranked the project in the top half of the project priority list.
Subd. 11. Report on needs. By October 15 of each odd-numbered year, the authority, in conjunction with the pollution control agency, shall prepare a report to the finance division of the senate environment and natural resources committee and the house environment and natural resources finance committee on wastewater funding assistance needs of municipalities under this section.
Subd. 12. System replacement fund. Each recipient of assistance under this section shall establish a system replacement fund setting aside a minimum of $.10 per 1,000 gallons of flow for major rehabilitation, expansion, or replacement of the treatment plant at the end of its useful life. Money must remain in the account, for the life of the loan associated with the supplemental assistance under this section, unless use of the fund is approved by the authority for major rehabilitation, expansion, or replacement of the treatment plant. Failure to maintain the fund will cancel the loan forgiveness provided under subdivision 2.