SF2321

Purpose of the Bill

The purpose of this bill is to ensure that local governments maintain and replace capital projects that receive state funding. The bill requires grantees who receive state money for capital projects to set aside funds for the future rehabilitation, replacement, or preservation of these projects.

Main Provisions

• Establishment of Replacement Accounts: Local governments (grantees) receiving state funds for capital projects must create a "capital project replacement fund." This fund is intended for major rehabilitation, expansion, replacement, or preservation once the project reaches its useful life.

• Adoption of a Replacement Policy: Grantees must have a policy outlining:

  • Risks the fund will address.
  • How the fund will be used for significant repairs or expansions.
  • Criteria for using the funds for other needs like safety, maintenance, or sustainability.

• Minimum Deposits and Fund Balances: The Commissioner of Administration will determine minimum annual deposits into these funds based on factors like depreciation and inflation. A grantee is not required to maintain more in the fund than the original state appropriation for the project.

• Audit and Compliance: The state auditor can audit these funds, and if a grantee fails to comply with the requirements, a 1% penalty fee based on the original appropriation amount will be imposed annually. This fee will be deposited into the general fund.

Significant Changes to Existing Law

• This bill requires the establishment of dedicated accounts for capital projects supported by state funding, which is new. There are exceptions for projects already adhering to similar requirements under existing laws.

Relevant Terms

• Capital project replacement fund
• Useful life
• Rehabilitation
• Preservation
• Depreciation
• Construction cost inflation
• Audit
• Penalty fee