1. There is created in the state treasury the municipal infrastructure fund. The fund consists of all moneys deposited in the fund under section 57-51.1-07.5.

1. 1. a. The first forty million dollars deposited in the fund each biennium is appropriated to the state treasurer on a continuing basis for the purpose of providing grants to cities located in non-oil-producing counties pursuant to subsections 2 through 5. The grant funding may be distributed only to cities located in non-oil-producing counties, excluding hub cities, and may be used only for essential infrastructure projects.

2. b. The remaining moneys deposited in the fund are available to the department of transportation, within the limits of legislative appropriation, for the purpose of providing grants to cities located in non-oil-producing counties pursuant to subsection 6.

2. 2. By November thirtieth of each even-numbered year, a city that receives a grant from the fund under subsection 3 or 4 and has the population of at least one thousand shall provide a report to the state treasurer on the use of the funding. The state treasurer shall notify cities of the reporting requirement by November first of each even-numbered year. Upon request, the state treasurer may provide an extension of up to fifteen days for a city to submit the report. The state treasurer shall determine the format of the report. The report must include the amount of grant funding received and spent by the city and a description of the infrastructure projects completed in part or in whole with the grant funding. The state treasurer shall make the reports available to the public on the state treasurer's website. A city that does not provide the report in a timely manner or in the correct format is not eligible to receive a grant from the fund under subsection 3 or 4 for a period of two years starting from the date the report was due. If a city uses the funding in a manner inconsistent with the requirements of this section as identified in any financial audits conducted by the state auditor or an independent accounting firm, the state treasurer shall reduce any future grants to that city under subsection 3 or 4 by the amount spent that was inconsistent with the requirements.

3. 3. Within forty days after the fund receives total deposits under subdivision a of subsection 1 that are greater than or equal to the amount needed for the grants under this subsection or by September thirtieth of each odd-numbered year, whichever is earlier, the state treasurer shall distribute moneys in the fund as grants to cities for essential infrastructure projects. The state treasurer shall distribute the grants only if the fund receives total deposits that are at least ten percent of the amount needed for distributions under this subsection based on the following:

1. a. Two million five hundred thousand dollars to each city with a population of at least five thousand;

2. b. Five hundred thousand dollars to each city with a population of at least two thousand but less than five thousand; and

3. c. One hundred twenty-five thousand dollars to each city with a population of at least one thousand but less than two thousand.

4. d. If, at the time of the distributions, the moneys in the fund are less than the amount needed for the grants under this subsection, the state treasurer shall distribute the grants under this subsection on a pro rata basis.

5. e. For the purposes of determining the city's population under this subsection, the state treasurer shall use the most recent actual or estimated census data published by the United States census bureau.

4. 4. Within sixty days after the fund receives total deposits equal to the amount identified under subdivision a of subsection 1 or by September thirtieth of each odd-numbered year, whichever is earlier, the state treasurer shall distribute the moneys in the fund as grants to cities for essential infrastructure projects. The state treasurer shall distribute the grants only if the fund receives total deposits equal to the amount needed under subsection 2 plus at least ten percent of the amount identified under subdivision a of subsection 1, based on the following:

1. a. One hundred fifty dollars per person of the city's population.

1. b. In addition to the amounts in subdivision a, for a city with a positive average of the annual percentage increase in population from three years prior, a dollar amount equal to the product of the following:
2. (1) The amount calculated in subdivision a; and
3. (2) The average of the annual percentage increase in population from three years prior, multiplied by ten.
4. c. In addition to the amounts in subdivisions a and b, for a city with a positive average of the annual percentage increase in taxable property values from three years prior, a dollar amount equal to the average of the annual property valuation percentage increase for the three most recent years, multiplied by twenty-five thousandths.
5. d. Grants may be distributed under this subdivision only if the grant distributions under subsection 3 are completed. If total deposits equal to the amount identified under subdivision a of subsection 1 are insufficient to provide for the grants, the state treasurer shall distribute the grants under this subsection on a pro rata basis. If any moneys remain from the total deposits equal to the amount identified under subdivision a of subsection 1 after the distribution of grants under this subsection, the state treasurer shall distribute any remaining moneys in proportion to the combined total distributed to each city under subsections 3 and 4 relative to the combined total distributed to all the cities under subsections 3 and 4.
6. e. For the purposes of determining the city's population under this subsection, the state treasurer shall use the most recent actual or estimated census data published by the United States census bureau.
7. f. For the purposes of determining taxable property values, the state treasurer shall use the most recent data published by the tax commissioner in the tax levy report.5. For purposes of subsections 2 through 4:- a. 'Essential infrastructure projects' means capital construction projects to construct new infrastructure or to replace existing infrastructure, which provide the fixed installations necessary for the function of a city. Capital construction projects exclude debt repayments and routine maintenance and repair projects, but include the following:
8. (1) Water treatment plants;
9. (2) Wastewater treatment plants;
10. (3) Sewer lines and water lines, including lift stations and pumping systems;
11. (4) Water storage systems, including dams, water tanks, and water towers;
12. (5) Storm water infrastructure, including curb and gutter construction;
13. (6) Road and bridge infrastructure, including paved and unpaved roads and bridges;
14. (7) Airport infrastructure;
15. (8) Electricity transmission infrastructure;
16. (9) Natural gas transmission infrastructure; and
17. (10) Communications infrastructure, excluding fiber optic infrastructure.
18. b. 'Fiscal year' means the period beginning September first and ending August thirty-first of the following calendar year.
19. c. 'Non-oil-producing county' means a county that received no allocation of funding or a total allocation of less than five million dollars under subsection 2 of section 57-51-15 in the most recently completed even-numbered fiscal year before the start of each biennium.6. From the funding identified under subdivision b of subsection 1, the director of the department of transportation shall distribute grants to cities located in non-oil-producing counties from the fund in accordance with the provisions of the flexible transportation fund under section 24-02-37.3.