Bill > SF2321

This bill requires local governments that receive state funding for capital projects to establish and maintain replacement accounts to ensure the long-term preservation and maintenance of those projects. Under the proposed law, grantees (excluding state agencies) must create a capital project replacement fund that will remain in place for the project's useful life, as determined by the grant agreement. The grantee must develop a policy specifying the fund's purpose, which includes mitigating risks, planning for major rehabilitation, expansion, replacement, or preservation, and addressing other capital improvement needs. The commissioner of administration will determine the annual minimum deposit amounts for these funds, taking into account factors like depreciation and construction cost inflation. The bill caps the required fund balance at the amount of the original state appropriation and allows for potential use of the funds for other capital assets with state agency approval. The state auditor may audit these accounts, and grantees who fail to comply will face a penalty of 1% of the original state appropriation per year of noncompliance. The law would apply to capital project grant agreements entered into on or after July 1, 2025, and provides exceptions for projects already subject to replacement fund requirements under other laws.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=Senate&f=SF2321&ssn=0&y=2025