2004 Minnesota Statutes

     446A.081 Drinking water revolving fund. 

    Subdivision 1.    Definitions.  (a) For the purposes of 
 this section, the terms in this subdivision have the meanings 
 given them.  

    (b) "Act" means the Safe Drinking Water Act Amendments of 
 1996, Public Law 104-182. 

    (c) "Department" means the Department of Health.  

    Subd. 2.    Establishment of fund.  The authority shall 
 establish a drinking water revolving fund to provide loans and 
 other forms of financial assistance authorized by the act, as 
 determined by the authority under the rules adopted under this 
 section for the purposes and eligible costs authorized under the 
 act.  The fund must be credited with repayments.  The act 
 requires that the fund corpus must be managed so as to be 
 available in perpetuity for the financing of drinking water 
 systems in the state.  At a minimum, 15 percent of the funds 
 received each federal fiscal year shall be available solely for 
 providing loans to public water systems which regularly serve 
 fewer than 10,000 individuals.  

    Subd. 3.    State funds.  A state matching fund is 
 established to be used in compliance with federal matching 
 requirements specified in the act.  

    Subd. 4.    Capitalization grant agreement.  The 
 authority shall enter into an agreement with the administrator 
 of the United States Environmental Protection Agency to receive 
 capitalization grants for the fund.  The authority and the 
 department shall enter into an operating agreement with the 
 administrator of the United States Environmental Protection 
 Agency to satisfy the criteria in the act to operate the fund.  
 The authority and the department may exercise the powers 
 necessary to comply with the requirements specified in the 
 agreements and to ensure that loan recipients comply with all 
 applicable federal and state requirements.  

    Subd. 5.    Intended use plan.  The authority shall 
 annually prepare and submit to the United States Environmental 
 Protection Agency an intended use plan.  The plan must identify 
 the intended uses of the amounts available to the drinking water 
 revolving loan fund.  The department shall provide a prioritized 
 list of drinking water projects and other eligible activities to 
 be considered for funding by the authority.  The plan may be 
 amended by the authority and include additional eligible 
 projects proposed by the department. 

    Subd. 6.    Applications.  Applications by 
 municipalities, privately owned public water systems, and 
 eligible entities identified in the annual intended use plan for 
 loans from the fund must be made to the authority on the forms 
 prescribed by the rules of the authority and the rules of the 
 department adopted under this section.  The authority shall 
 forward the application to the department within ten days of 
 receipt.  The department shall approve those applications that 
 appear to meet the criteria in the act, this section, and the 
 rules of the department or the authority.  

    Subd. 7.    Award and terms of loans.  The authority 
 shall award loans to those municipalities, privately owned 
 public water systems, and other eligible entities approved by 
 the department, provided that the applicant is able to comply 
 with the terms and conditions of the authority loan, which must 
 be in conformance with the act, this section, and the rules of 
 the authority adopted under this section.  

    Subd. 8.    Loan conditions.  (a) When making loans from 
 the drinking water revolving fund, the authority shall comply 
 with the conditions of the act, including the criteria in 
 paragraphs (b) to (e).  

    (b) Loans must be made at or below market interest rates, 
 including zero interest loans, for terms not to exceed 20 years. 

    (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.  

    (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). 

    Subd. 9.    Other uses of fund.  The 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 such 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 for conducting activities as authorized and required 
 under the act up to the limits authorized under the act; and 

    (7) to develop and administer programs for water system 
 supervision, source water protection, and related programs 
 required under the act. 

    Subd. 10.    Payments.  Payments from the fund to 
 borrowers must be in accordance with the applicable state and 
 federal laws governing such payments, except no payment for a 
 project may be made to a borrower until and unless the authority 
 has determined that the total estimated cost of the project and 
 the financing of the project are assured by:  

    (1) a loan authorized by state law or appropriation of 
 proceeds of bonds or other money of the borrower to a fund for 
 the construction of the project; and 

    (2) an irrevocable undertaking, by resolution of the 
 governing body of the borrower, to use all money made available 
 for the project exclusively for the project, and to pay any 
 additional amount by which the cost of the project exceeds the 
 estimate by the appropriation to the construction fund of 
 additional money or proceeds of additional bonds to be issued by 
 the borrower.  

    Subd. 11.    Rules of the authority.  The commissioner 
 of employment and economic development shall adopt rules 
 containing the procedures for the administration of the 
 authority's duties as provided by this section that include:  
 setting of interest rates, which shall take into account the 
 financial need of the applicant; the amount of project financing 
 to be provided; the collateral required for public drinking 
 water systems and for privately owned public water systems; 
 dedicated sources of revenue or income streams to ensure 
 repayment of loans; and the requirements to ensure proper 
 operation, maintenance, and repair of the water systems financed 
 by the authority.  

    Subd. 12.    Rules of the department.  The department 
 shall adopt rules relating to the procedures for administration 
 of the department's duties under the act and this section.  The 
 department and the commissioner of the Department of Employment 
 and Economic Development may adopt a single set of rules for the 
 program. 

    HIST: 1994 c 632 art 2 s 50; 1997 c 200 art 5 s 3-5; 1Sp2003 c 
 4 s 1