| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to capital investment; requiring local governments to establish replacement |
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| 3 | 3 | | 1.3 accounts to maintain and replace capital projects that receive state funding; |
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| 4 | 4 | | 1.4 proposing coding for new law in Minnesota Statutes, chapter 16A. |
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| 5 | 5 | | 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 6 | 6 | | 1.6 Section 1. [16A.865] CAPITAL PROJECT REPLACEMENT ACCOUNTS. |
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| 7 | 7 | | 1.7 Subdivision 1.Definitions.(a) For the purposes of this section, the following terms have |
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| 8 | 8 | | 1.8the meanings given. |
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| 9 | 9 | | 1.9 (b) "Commissioner" means the commissioner of administration. |
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| 10 | 10 | | 1.10 (c) "Preservation" means improvements and betterments of a capital nature consistent |
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| 11 | 11 | | 1.11with those described in section 16B.307, subdivision 1, paragraph (d). |
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| 12 | 12 | | 1.12 Subd. 2.Replacement account establishment.(a) A grantee that receives a direct |
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| 13 | 13 | | 1.13appropriation or grant from an appropriation of state money for a capital project subject to |
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| 14 | 14 | | 1.14section 16A.642, 16A.695, or 16A.86, must establish a capital project replacement fund for |
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| 15 | 15 | | 1.15major rehabilitation, expansion, replacement, or preservation of the capital project once the |
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| 16 | 16 | | 1.16project has reached its useful life, or for another use as permitted under this section. Money |
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| 17 | 17 | | 1.17must remain in the account for the useful life of the capital project, as determined by the |
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| 18 | 18 | | 1.18grant agreement with the granting state agency, unless use of the fund is approved in writing |
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| 19 | 19 | | 1.19by the granting state agency for major rehabilitation, expansion, replacement, or preservation |
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| 20 | 20 | | 1.20of the capital project funded with state money, or to address a capital project for a different |
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| 21 | 21 | | 1.21capital asset owned by the grantee. |
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| 22 | 22 | | 1Section 1. |
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| 23 | 23 | | 25-04279 as introduced02/27/25 REVISOR JSK/KR |
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| 24 | 24 | | SENATE |
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| 25 | 25 | | STATE OF MINNESOTA |
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| 26 | 26 | | S.F. No. 2321NINETY-FOURTH SESSION |
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| 27 | 27 | | (SENATE AUTHORS: PAPPAS) |
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| 28 | 28 | | OFFICIAL STATUSD-PGDATE |
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| 29 | 29 | | Introduction and first reading03/10/2025 |
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| 30 | 30 | | Referred to Capital Investment 2.1 (b) A grantee must adopt a capital project replacement policy that specifies the following |
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| 31 | 31 | | 2.2for the capital project replacement fund: |
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| 32 | 32 | | 2.3 (1) the risks to be mitigated or managed by the fund; |
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| 33 | 33 | | 2.4 (2) the intended use of the replacement fund, including, but not limited to, how the fund |
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| 34 | 34 | | 2.5will be used for major rehabilitation, expansion, replacement, or preservation of the capital |
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| 35 | 35 | | 2.6project; and |
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| 36 | 36 | | 2.7 (3) criteria for the use of the fund to address other capital improvement needs of the |
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| 37 | 37 | | 2.8grantee, including safety and security, maintenance and utility costs, availability of repair |
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| 38 | 38 | | 2.9parts and materials, sustainability, and any other criteria the grantee deems relevant. |
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| 39 | 39 | | 2.10 (c) For the purposes of this section, "grantee" does not include a state agency or state |
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| 40 | 40 | | 2.11official. |
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| 41 | 41 | | 2.12 Subd. 3.Minimum deposits; fund balance.(a) The commissioner must determine the |
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| 42 | 42 | | 2.13annual minimum deposit amounts to be deposited into capital project replacement funds by |
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| 43 | 43 | | 2.14capital project type. The commissioner must take into account depreciation, construction |
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| 44 | 44 | | 2.15cost inflation, and other relevant factors when determining the minimum deposit amounts. |
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| 45 | 45 | | 2.16 (b) A grantee must not be required to maintain a capital project replacement fund balance |
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| 46 | 46 | | 2.17greater than the amount of the direct appropriation or grant from an appropriation of state |
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| 47 | 47 | | 2.18money for the capital project. |
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| 48 | 48 | | 2.19 Subd. 4.Account auditing.The state auditor may audit capital project replacement |
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| 49 | 49 | | 2.20accounts as part of the regular audits of local governments. |
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| 50 | 50 | | 2.21 Subd. 5.Exceptions.Capital projects that already require a replacement fund under |
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| 51 | 51 | | 2.22section 446A.072, subdivision 12, or any other law, rule, or ordinance, are exempt from the |
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| 52 | 52 | | 2.23requirements under this section, so long as the deposits into the replacement fund are at |
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| 53 | 53 | | 2.24least as large as the minimum deposits established by the commissioner under subdivision |
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| 54 | 54 | | 2.253. |
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| 55 | 55 | | 2.26 Subd. 6.Penalty.Failure of a grantee to comply with the requirements of this section |
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| 56 | 56 | | 2.27shall result in the granting state agency assessing a penalty fee to the grantee equal to one |
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| 57 | 57 | | 2.28percent of the appropriation of state money for the capital project for each year of |
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| 58 | 58 | | 2.29noncompliance. Penalty fees shall be remitted by the granting state agency to the |
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| 59 | 59 | | 2.30commissioner of management and budget for deposit into the general fund. |
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| 60 | 60 | | 2.31 EFFECTIVE DATE.This section is effective for capital projects funded through state |
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| 61 | 61 | | 2.32capital project grant agreements entered into on or after July 1, 2025. |
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| 62 | 62 | | 2Section 1. |
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| 63 | 63 | | 25-04279 as introduced02/27/25 REVISOR JSK/KR |
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