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SF2321 (Legislative Session 94 (2025-2026))

Local government requirement to establish replacement accounts to maintain and replace capital projects that receive state funding

Related bill: HF2418

AI Generated Summary

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

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 09, 2025SenateFloorActionIntroduction and first reading
March 09, 2025SenateFloorActionReferred toCapital Investment

Citations

 
[
  {
    "analysis": {
      "added": [
        "No additions made directly to the 16B.307 section."
      ],
      "removed": [
        "No elements removed directly from the 16B.307 section."
      ],
      "summary": "This bill refers to improvements and betterments of a capital nature consistent with those described in section 16B.307.",
      "modified": [
        "References to preservation in the new proposal indicate alignment with section 16B.307 standards."
      ]
    },
    "citation": "16B.307"
  },
  {
    "analysis": {
      "added": [
        "Introduces situations where the replacement account becomes mandatory when state funds are used."
      ],
      "removed": [],
      "summary": "This section is cited regarding the requirement to establish a replacement fund when receiving state money for a capital project.",
      "modified": [
        "The rules for replacement accounts have been updated to specify compliance with section 16A.642."
      ]
    },
    "citation": "16A.642"
  },
  {
    "analysis": {
      "added": [
        "Inclusion of section 16A.695 to the list that requires setting up a replacement fund."
      ],
      "removed": [],
      "summary": "This section relates to the management of state funds for capital projects.",
      "modified": [
        "Clarifies aspects of capital project fund management relating to the use of section 16A.695."
      ]
    },
    "citation": "16A.695"
  },
  {
    "analysis": {
      "added": [
        "Additional clarity on process and requirements involving section 16A.86 compliance."
      ],
      "removed": [],
      "summary": "This section is mentioned in context with setting up capital project replacement funds.",
      "modified": [
        "Updates to ensure uniformity across sections mentioned, including impacts on 16A.86."
      ]
    },
    "citation": "16A.86"
  },
  {
    "analysis": {
      "added": [
        "Exemption for projects under section 446A.072 given existing replacement fund requirements."
      ],
      "removed": [],
      "summary": "This is referred under exceptions in the proposed bill for projects already requiring a replacement fund.",
      "modified": [
        "Points out the exemption from new requirements for funds already compliant with section 446A.072."
      ]
    },
    "citation": "446A.072"
  }
]

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