Subd. 1. Establishment of program.

The authority will establish a wastewater infrastructure funding program to provide supplemental assistance to municipalities receiving funding through 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. The purpose of the program is to assist municipalities demonstrating financial need in building cost-efficient projects to address existing environmental or public health problems. To implement the program, the authority shall establish a wastewater infrastructure fund to provide grants and loans for the purposes authorized under title VI of the Federal Water Pollution Control Act. The fund shall be credited with all investment income from the fund and all repayments of loans, grants, and penalties.

Subd. 2.

Repealed, 2002 c 393 s 91

Subd. 3. Program administration.

1. (a) The authority shall provide supplemental assistance, as provided in subdivision 5a to municipalities:

   1. (1) whose projects are listed on the agency's project priority list;
   2. (2) that demonstrate their projects are a cost-effective solution to an existing environmental or public health problem; and
   3. (3) whose projects are approved by the USDA/RECD or certified by the commissioner of the agency.
2. (b) For a municipality receiving grant funding from the USDA/RECD, applications must be made to the USDA/RECD with additional information submitted to the authority as required by the authority. Eligible project costs and affordability criteria shall be determined by the USDA/RECD.

3. (c) For a municipality not receiving grant funding from the USDA/RECD, application must be made to the authority on forms prescribed by the authority for the water pollution control revolving fund program with additional information as required by the authority. In accordance with section 116.182, the agency shall:

   1. (1) calculate the essential project component percentage which must be multiplied by the total project cost to determine the eligible project cost; and
   2. (2) review and certify approved projects to the authority.
4. (d) At the time funds are appropriated under this section, the authority shall reserve supplemental assistance for projects in order of their rankings on the agency's project priority list and in an amount based on their most recent cost estimates submitted to the authority or the as-bid costs, whichever is less.

Subd. 4.

Repealed, 2002 c 393 s 91

Subd. 4a.

Repealed, 1998 c 404 s 84

Subd. 5.

Repealed, 2002 c 393 s 91

Subd. 5a. Type and amount of assistance.

1. (a) For a municipality receiving grant funding from the USDA/RECD, the authority shall provide assistance in the form of a grant of up to one-half of the eligible grant amount determined by USDA/RECD. A municipality may not receive a grant under this paragraph for more than $4,000,000 or $15,000 per existing connection, whichever is less, unless specifically approved by law. In the case of a sanitary district or other multijurisdictional project for which the USDA/RECD is unable to fully fund up to one-half of the eligible grant amount, the authority may provide up to an additional $1,000,000 for each additional municipality participating up to a maximum of $8,000,000 or $15,000 per existing connection, whichever is less, but not to exceed the maximum grant level determined by the USDA/RECD as needed to keep the project affordable.
2. (b) For a municipality not receiving grant funding from the USDA/RECD, the authority shall provide assistance in the form of a loan for the eligible project costs that exceed five percent of the market value of properties in the project service area. A municipality may not receive a loan under this paragraph for more than $4,000,000 or $15,000 per existing connection, whichever is less, unless specifically approved by law. In the case of a sanitary district or other multijurisdictional project, the authority may provide a loan under this paragraph for up to an additional $1,000,000 for each additional municipality participating up to a maximum of $8,000,000 or $15,000 per existing connection, whichever is less, unless specifically approved by law. A loan under this paragraph must bear no interest, must be repaid as provided in subdivision 7, and must only be provided in conjunction with a loan from the water pollution control revolving fund under section 446A.07.
3. (c) Notwithstanding the limits in paragraphs (a) and (b), for a municipality receiving supplemental assistance under this section after January 1, 2002, if the authority determines that the municipality'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 authority shall provide assistance in the form of half grant and half loan. Assistance from the authority may not be more than $25,000 per existing connection. Any additional grant amount received for the same project must be used to reduce the amount of the municipality's loan from the water pollution control revolving fund that exceeds five percent of the market value of properties in the project service area.

Subd. 5b. Special assessment deferral.

A municipality receiving a loan under subdivision 5a that levies special assessments to repay the loan under subdivision 5a or section 446A.07 may defer payment of such assessments under the provisions of sections 435.193 to 435.195.

Subd. 6. Disbursements.

Disbursements of grants or loans awarded under this section 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.

A municipality receiving a loan under this section shall repay the loan in semiannual payment amounts determined by the authority. The payment amount must be based on the average payments on the municipality's water pollution control revolving fund loan or, if greater, the minimum amount required to fully repay the loan by the maturity date. Payments must begin within one year of the date of the municipality's final payment on the water pollution control revolving fund loan. The maturity date of the loan must be no later than 20 years from the date of the first payment.

Subd. 8. Eligibility.

A municipality is eligible for assistance under this section 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.

Subd. 10.

Repealed, 2002 c 393 s 91

Subd. 11. Report on needs.

By February 1 of each even-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 municipality receiving a loan under this section shall establish a system replacement fund and shall annually deposit a minimum of $.50 per 1,000 gallons of flow for major rehabilitation, expansion, or replacement of the treatment system at the end of its useful life. Money must remain in the account, for the life of the loan unless use of the fund is approved in writing by the authority for major rehabilitation, expansion, or replacement of the treatment system. By March 1 each year during the life of the loan, each municipality shall submit a report to the authority regarding the amount deposited and the fund balance for the prior calendar year. Failure to comply with the requirements of this subdivision shall result in the authority assessing a penalty fee to the municipality equal to one percent of the outstanding loan balance for each year of noncompliance. Failure to make the required deposit or pay the penalty fee as required constitutes a default on the loan.

Subd. 13.

Repealed, 2002 c 393 s 91

Subd. 14. Consistency with land use plans.

A municipality applying for a project in an unsewered area shall include in its application to the authority a certification from the county in which the project is located that:

1. (1) the project is consistent with the county comprehensive land use plan, if the county has adopted one;
2. (2) the project is consistent with the county water plan, if the county has adopted one; and
3. (3) the county has adopted specific land use ordinances or controls so as to meet or exceed the requirements of Minnesota Rules, part 7080.0305.