The commissioner shall establish a grant-in-aid program for local units of government and special park districts to acquire, develop, and maintain cross-country-ski trails that are determined by the commissioner to be part of the state‘s grant-in-aid system. Grants are available to acquire trail easements but may not be used to acquire any lands in fee title. Local units of government and special park districts applying for and receiving grants under this section are considered to have cross-country-ski trails for one year following the expiration of their last grant. The department shall reimburse all public sponsors of grants-in-aid cross-country-ski trails based upon criteria established by the department. Before using any reimbursement criteria, a certain proportion of the revenues must be allocated on the basis of user fee sales location. The commissioner may establish a performance-based funding formula for annual grants-in-aid. The procedures and criteria for grants-in-aid are not subject to the rulemaking provisions of chapter 14, and section 14.386 does not apply. In administering the performance-based grants-in-aid, the commissioner must:

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(1) determine annual grant amounts based on a funding formula that includes consideration of historical costs, snowfall, use, and tourism;

(2) make grant payments based on:

(i) successful completion of performance benchmarks;

(ii) reimbursement of eligible expenditures; or

(iii) a combination of items (i) and (ii); and

(3) assess penalties to nonperforming grant-in-aid recipients, which may include withholding grant payments or making the grantee or trail system ineligible for future grant-in-aid funding.