1.1 	A bill for an act
1.2 	relating to capital improvements; establishing and appropriating money for clean 
1.3 	water legacy phosphorus reduction and small community wastewater treatment 
1.4 	programs; authorizing the issuance of general obligation bonds;amending 
1.5 	Minnesota Statutes 2005 Supplement, section 116.182, subdivision 2; proposing 
1.6 	coding for new law in Minnesota Statutes, chapter 446A.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2005 Supplement, section 116.182, subdivision 2, 
1.9 	is amended to read:
1.10 		Subd. 2.Applicability. This section governs the commissioner's certification of 
1.11 	projects seeking financial assistance under section 103F.725, subdivision 1a; 446A.04; 
1.12 	446A.07; 446A.072; or446A.073; or 446A.074.

1.13 	Sec. 2. [446A.073] CLEAN WATER LEGACY PHOSPHORUS REDUCTION 
1.14 	GRANTS.
1.15 		 Subdivision 1.Creation of fund; appropriation. The authority shall establish a 
1.16 	clean water legacy capital improvement fund and shall make grants from the fund as 
1.17 	provided in this section.  Money in the clean water legacy capital improvement fund, 
1.18 	including interest earned, is appropriated to the authority for the purposes of this section.
1.19 		 Subd. 2.Grants. The authority shall award grants from the clean water legacy 
1.20 	capital improvement fund to governmental units for the capital costs of wastewater 
1.21 	treatment facility projects or a portion thereof that will reduce the discharge of total 
1.22 	phosphorus from the facility to one milligram per liter or less.  A project is eligible for a 
1.23 	grant if it meets the following requirements:
2.1 	 (1) the applicable phosphorus discharge limit is incorporated in a permit issued by 
2.2 	the agency for the wastewater treatment facility on or after March 28, 2000, the grantee 
2.3 	agrees to comply with the applicable limit as a condition of receiving the grant, or the 
2.4 	grantee made improvements to a wastewater treatment facility on or after March 28, 2000, 
2.5 	that include infrastructure to reduce the discharge of total phosphorus to one milligram 
2.6 	per liter or less;
2.7 	 (2) the governmental unit has submitted a facilities plan for the project to the agency 
2.8 	and a grant application to the authority on a form prescribed by the authority; and 
2.9 	 (3) the agency has approved the application and facilities plan, and certified the 
2.10 	eligible costs for the project to the authority.
2.11 		 Subd. 3.Eligible capital costs. Eligible capital costs for phosphorus reduction 
2.12 	grants under subdivision 4, paragraph (a), include the as-bid construction costs and 
2.13 	engineering planning and design costs.  Eligible capital costs for phosphorus reduction 
2.14 	grants under subdivision 4, paragraph (b), include the final, incurred construction, 
2.15 	engineering, planning, and design costs.
2.16 		 Subd. 4.Grant amounts and priorities. (a) Priority must be given to projects that 
2.17 	start construction on or after July 1, 2005.  If a facility's plan for a project is approved 
2.18 	by the agency before July 1, 2009, the amount of the grant is 75 percent of the eligible 
2.19 	capital cost of the project.  If a facility's plan for a project is approved by the agency on 
2.20 	or after July 1, 2009, the amount of the grant is 50 percent of the eligible capital cost of 
2.21 	the project.  Priority in awarding grants under this paragraph must be based on the date of 
2.22 	approval of the facility's plan for the project.
2.23 	 (b) Projects that meet the eligibility requirements in subdivision 2 and have started 
2.24 	construction before July 1, 2005, are eligible for grants to reimburse 75 percent of the 
2.25 	eligible capital cost of the project, less any amounts previously received in grants from 
2.26 	other sources.  Application for a grant under this paragraph must be submitted to the 
2.27 	agency no later than June 30, 2007.  Priority for award of grants under this paragraph must 
2.28 	be based on the date of agency approval of the application for the grant.
2.29 	 (c) In each fiscal year that money is available for grants, the authority shall first 
2.30 	award grants under paragraph (a) to projects that met the eligibility requirements of 
2.31 	subdivision 2 by May 1 of that year.  The authority shall use any remaining money 
2.32 	available that year to award grants under paragraph (b). Grants that have been approved 
2.33 	but not awarded in a previous fiscal year carry over and must be awarded in subsequent 
2.34 	fiscal years in accordance with the priorities in this paragraph.
3.1 	 (d) Disbursements of grants under this section by the authority to recipients must 
3.2 	be made for eligible project costs as incurred by the recipients, and must be made by the 
3.3 	authority in accordance with the project financing agreement and applicable state law.
3.4 		 Subd. 5.Fees. The authority may charge the grant recipient a fee for its 
3.5 	administrative costs not to exceed one-half of one percent of the grant amount, to be 
3.6 	paid upon execution of the grant agreement.

3.7 	Sec. 3. [446A.074] SMALL COMMUNITY WASTEWATER TREATMENT 
3.8 	LOAN PROGRAM.
3.9 		 Subdivision 1.Creation of fund. The authority shall establish a small community 
3.10 	wastewater treatment fund and shall make loans from the fund as provided in this section. 
3.11 	Money in the fund is annually appropriated to the authority and does not lapse.  The fund 
3.12 	shall be credited with all loan repayments and investment income from the fund, and 
3.13 	servicing fees assessed under section 446A.04, subdivision 5.  The authority shall manage 
3.14 	and administer the small community wastewater treatment fund, and for these purposes, 
3.15 	may exercise all powers provided in this chapter.
3.16 		 Subd. 2.Loans. The authority shall award loans to governmental units from 
3.17 	the small community wastewater treatment fund for projects to replace noncomplying 
3.18 	individual sewage treatment systems with a community wastewater treatment system or 
3.19 	systems meeting the requirements of section 115.55.  A governmental unit receiving a 
3.20 	loan from the fund shall own the community wastewater treatment systems built under 
3.21 	the program and shall be responsible, either directly or through a contract with a private 
3.22 	vendor, for all inspections, maintenance, and repairs necessary to assure proper operation 
3.23 	of the systems.
3.24 		 Subd. 3.Project priority list. Governmental units seeking loans from the small 
3.25 	community wastewater treatment loan program shall first submit a project proposal to the 
3.26 	agency.  A project proposal shall include a compliance determination for all individual 
3.27 	sewage treatment systems in the project area. The agency shall rank project proposals on 
3.28 	its project priority list used for the water pollution control revolving fund under section 
3.29 	446A.07.
3.30 		 Subd. 4.Loan applications. Governmental units with projects on the project 
3.31 	priority list shall submit applications to the authority on forms prescribed by the authority. 
3.32 	The application shall include:
3.33 	 (1) a list of the individual sewage treatment systems proposed to be replaced over a 
3.34 	period of up to three years;
3.35 	 (2) a project schedule and cost estimate for each year of the project;
4.1 	 (3) a financing plan for repayment of the loan; and 
4.2 	 (4) a management plan providing for the inspection, maintenance, and repairs 
4.3 	necessary to assure proper operation of the systems.
4.4 		 Subd. 5.Loan awards. The authority shall award loans to governmental units with 
4.5 	approved loan applications based on their ranking on the agency's project priority list.  The 
4.6 	loan amount shall be based on the estimated project costs for the portion of the project 
4.7 	expected to be completed within one year, up to an annual maximum of $500,000.  For 
4.8 	projects expected to take more than one year to complete, the authority may make a 
4.9 	multiyear commitment for a period not to exceed three years, contingent on the future 
4.10 	availability of funds.  Each year of a multiyear commitment must be funded by a separate 
4.11 	loan agreement meeting the terms and conditions in subdivision 6.  A governmental unit 
4.12 	receiving a loan under a multiyear commitment shall have priority for additional loan 
4.13 	funds in subsequent years.
4.14 		 Subd. 6.Loan terms and conditions. Loans from the small community wastewater 
4.15 	treatment fund shall comply with the following terms and conditions:
4.16 	 (1) principal and interest payments must begin no later than two years after the 
4.17 	loan is awarded;
4.18 	 (2) loans shall carry an interest rate of one percent;
4.19 	 (3) loans shall be fully amortized within ten years of the first scheduled payment 
4.20 	or, if the loan amount exceeds $10,000 per household, shall be fully amortized within 20 
4.21 	years but not to exceed the expected design life of the system;
4.22 	 (4) a governmental unit receiving a loan must establish a dedicated source or sources 
4.23 	of revenues for repayment of the loan and must issue a general obligation note to the 
4.24 	authority for the full amount of the loan; and 
4.25 	 (5) each property owner to be served by a community wastewater treatment system 
4.26 	under this program must provide an easement to the governmental unit to allow access to 
4.27 	the system for management and repairs.
4.28 		 Subd. 7.Special assessment deferral. (a) A governmental unit receiving a loan 
4.29 	under this section that levies special assessments to repay the loan may defer payment of 
4.30 	the assessments under the provisions of sections 435.193 to 435.195.
4.31 	 (b) A governmental unit that defers payment of special assessments for one or more 
4.32 	properties under paragraph (a) may request deferral of that portion of the debt service on 
4.33 	its loan, and the authority shall accept appropriate amendments to the general obligation 
4.34 	note of the governmental unit.  If special assessment payments are later received from 
4.35 	properties that received a deferral, the funds received shall be paid to the authority with 
4.36 	the next scheduled loan payment.
5.1 		 Subd. 8.Eligible costs. Eligible costs for small community wastewater treatment 
5.2 	loans shall include the costs of planning, design, construction, legal fees, administration, 
5.3 	and land acquisition.
5.4 		 Subd. 9.Disbursements. Loan disbursements by the authority under this section 
5.5 	must be made for eligible project costs as incurred by the recipients, and must be made in 
5.6 	accordance with the project loan agreement and applicable state law.
5.7 		 Subd. 10.Audits. A governmental unit receiving a loan under this section must 
5.8 	annually provide to the authority for the term of the loan a copy of its annual independent 
5.9 	audit or, if the governmental unit is not required to prepare an independent audit, a copy of 
5.10 	the annual financial reporting form it provides to the state auditor.

5.11 	Sec. 4. APPROPRIATIONS.
 5.12 	(a) $16,360,000 is appropriated from the bond proceeds fund to the Public Facilities 
5.13 	Authority for the purposes specified in this section.
5.14 	 (1) $10,000,000 is for the phosphorus reduction grant program for grants under 
5.15 	Minnesota Statutes, section 446A.073.
5.16 	 (2) $1,000,000 is for the small community wastewater treatment fund for loans and 
5.17 	grants under Minnesota Statutes, section 446A.074. 
5.18 	(3) $5,360,000 is to the water pollution control revolving fund under Minnesota 
5.19 	Statutes, section 446.07, for wastewater treatment and stormwater projects. 
5.20 	(b) $100,000 is appropriated from the general fund to the Public Facilities Authority 
5.21 	for technical assistance to implement the small community wastewater treatment program 
5.22 	under Minnesota Statutes, section 446A.074. 
5.23 	(c) Funds appropriated under this section do not cancel and are available until spent.

5.24 	Sec. 5. BOND SALE.
 5.25 	To provide the money appropriated in section 1, paragraph (a), from the bond 
5.26 	proceeds fund, the commissioner of finance shall sell and issue bonds of the state in an 
5.27 	amount up to $16,360,000 in the manner, on the terms, and with the effect prescribed by 
5.28 	Minnesota Statutes, sections 16A.631 to 16A.675, and by the Minnesota Constitution, 
5.29 	article XI, sections 4 to 7.

5.30 	Sec. 6. EFFECTIVE DATE.
 5.31 	This act is effective the day following final enactment.