16A.632 CAPITAL ASSET PRESERVATION AND REPLACEMENT ACCOUNT.
Subdivision 1. Establishment.
A capital asset preservation and replacement account is
established in the state bond proceeds fund established by section
, separate from
any other accounts maintained in that fund, to receive state bond proceeds appropriated to the
commissioner of administration to be expended for the purpose and in accordance with the
standards and criteria set forth in this section.
Subd. 2. Standards.
Article XI, section 5, clause (a), of the Constitution states general
obligation bonds may be issued to finance only the acquisition or betterment of state land,
buildings, and improvements of a capital nature. In interpreting this and applying it to the
purposes of the program contemplated in this section, the following standards are adopted for the
disbursement of money from the capital asset preservation and replacement account:
(a) No new land, buildings, or major new improvements will be acquired. These projects,
including all capital expenditures required to permit their effective use for the intended purpose
on completion, will be estimated and provided for individually through a direct appropriation
for each project.
(b) An expenditure will be made from the account only when it is a capital expenditure
on a capital asset previously owned by the state, within the meaning of accepted accounting
principles as applied to public expenditures. The commissioner of administration will consult
with the commissioner of finance to the extent necessary to ensure this and will furnish the
commissioner of finance a list of projects to be financed from the account in order of their
priority. The commissioner shall also furnish each revision of the list. The legislature assumes
that many provisions for preservation and replacement of portions of existing capital assets will
constitute betterments and capital improvements within the meaning of the Constitution and
capital expenditures under correct accounting principles, and will be financed more efficiently and
economically under the program than by direct appropriations for specific projects. However,
the purpose of the program is to accumulate data showing how additional costs may be saved by
appropriating money from the general fund for preservation measures, the necessity of which is
predictable over short periods.
(c) The commissioner of administration will furnish instructions to agencies to apply for
funding of capital expenditures for preservation and replacement from the account, will review
applications, will make initial allocations among types of eligible projects enumerated below, will
determine priorities, and will allocate money in priority order until the available appropriation
has been committed.
(d) Categories of projects considered likely to be most needed and appropriate for financing
are the following:
(1) unanticipated emergencies of all kinds, for which a relatively small amount should
be initially reserved, replaced from money allocated to low-priority projects, if possible, as
emergencies occur, and used for stabilization rather than replacement if the cost would exhaust
the account and should be specially appropriated;
(2) projects to remove life safety hazards, like replacement of mechanical systems, building
code violations, or structural defects, at costs not large enough to require major capital requests to
(3) elimination or containment of hazardous substances like asbestos or PCBs;
(4) moderate cost replacement and repair of roofs, windows, tuckpointing, and structural
members necessary to preserve the exterior and interior of existing buildings; and
(5) up to ten percent of an appropriation awarded under this section may be used for design
costs for projects eligible to be funded from this account in anticipation of future funding from
Subd. 3. Criteria for priority.
Criteria can be stated only in general terms, as it is the
purpose of the program to improve the allocation of limited amounts of borrowed money by
enlisting the engineering expertise of the Department of Administration and the closer knowledge
and experience of this and all other agencies in determining relative needs as they develop. The
following criteria must be considered:
(a) Urgency in ensuring the safety of use of existing buildings is the first criterion to be
applied. It will require judgments, for example, about the useful life of electric and mechanical
systems and roofs, in relation to the remaining useful life of each building, and about the presence
of hazardous substances and structural defects in the light of present building regulations.
(b) Economy is also to be determined and may even reinforce a decision based on the first
criterion, if the project would forestall a larger future capital expenditure or would reduce
(c) Absolute cost must also be considered. It may be too high to warrant funding except by
an additional appropriation, or so high as to warrant a recommendation to abandon or to replace
the building. It may be so low as to permit payment out of an agency's operating budget.
Subd. 4. Report.
By January 15 of each year the commissioner of administration, with
respect to each state agency, shall submit to the commissioner of finance, the chairs of the finance
divisions that oversee the appropriations to that state agency, and to the chairs of the senate
Finance Committee and the house of representatives Capital Investment Committee, a list of the
projects in the agency that have been funded with money from the capital asset preservation and
replacement account during the preceding calendar year, as well as a list of those priority projects
for which CAPRA appropriations will be sought for the agency in that year's legislative session.
History: 1990 c 610 art 1 s 34; 1996 c 463 s 30; 1997 c 187 art 3 s 1; 2002 c 393 s 34