Grants for Sewer Districts and Certain Small Municipal Sewer Systems

PURPOSE: This rule defines the department’s grant eligibility and a means of administering the state funds appropriated for rural community and sewer district sanitary sewer collection systems by defining rural communities and sewer districts pursuant to sections 640.600, 640.605, 640.615, and 640.620, RSMo. (1) Grant Application Requirements. (A) The applicant must first apply with the agency or other financial source which is to furnish the primary financial assistance, and after the amount of that assistance has been determined, an application for a grant under this rule may be made to and processed by the department. An application for a grant shall be submitted on forms provided by the department and supported by the necessary documents and forms from other state and federal grant or lending agencies or private lending agencies to enable the department to establish eligibility for grant funds. (B) The project for which the grant application is submitted shall comply with appropriate state and local laws, rules, and ordinances. (C) The grant application packet shall contain the information identified below: 1. The preliminary engineering cost study for the proposed project including, but not limited to, the following items: development and administration costs; land, structures, right-of-way costs; legal costs; engineering costs; interest costs; equipment costs, contingencies; other costs; total project costs; and other information as required in rule 10 CSR 20-8.110; 2. Information required to determine the cost per contracted connection of the proposed project; 3. The median household income of the residents in the district or community; as determined by the most recent decennial census or by an income survey overseen by a state or federal agency; 4. Information required to determine the ratio of contracted users to potential users; 5. The number of acres being protected for any source water protection project; and 6. Demonstration of recipient’s legal, institutional, managerial, and financial capability to ensure adequate operation and maintenance of the wastewater treatment works throughout recipient’s jurisdiction. (2) Eligibility Requirements. (A) Grants shall be limited to municipal sewer systems, certain public water supply districts or public sewer districts of less than ten thousand (10,000) population. (B) Grants awarded under this regulation can be used to provide collection sewers to unsewered areas. (C) Grants awarded under this regulation can be used to fund costs incurred to meet more stringent operating permit requirements when those increased permit requirements are attributable to changes in, or the implementation of, the state water quality policies or state water quality standards. (D) Grants will be the lesser of the per connection amount specified in section 640.620, RSMo, fifty percent (50%) of the eligible costs of the improvements, or five hundred thousand dollars ($500,000). (E) Grants shall be used for the following costs: 1. Construction costs for the installation of new sewer collection lines, lift stations, and associated facilities required to serve an unsewered area. House laterals are not eligible; 2. Construction costs for the installation, rehabilitation, or upgrade of a wastewater treatment facility as specified in subsection (2)(C); 3. Engineering services and other services incurred in preparing the design drawings and specifications for the project. Such services must have been procured in accordance with state law to be eligible costs. (F) The ratio of contracted users to potential users must be at least seventy-five percent (75%). (3) Grant Priorities. (A) Priorities for grants awarded under this rule shall be established by the department. Preference will be given to those applicants whose projects are partially funded through other departmental grants or loans and/or to applicants whose projected financial need is based on potential compliance with additional pollution control measures. Additional priority will be given based on readiness to proceed with construction and documented financial need. (B) The establishment of priorities and determination of relative need will be coordinated with other state and federal grant and lending agencies. (4) Approval and Payment of Grant Funds. (A) The grant award shall be made upon receipt and approval of bid documents, executed contract documents, and demonstration by the applicant that funding for the total project costs has been secured. The department may elect to pay out the full grant amount at the time of grant award or to make payments to the grantee based on the cash flow circumstances of the state funds. (B) If the department elects to make full payment of the grant amount, payment shall be made at the time of the department’s receipt of the executed grant award. The following provisions apply: 1. The grantee shall establish a separate escrow account with a bank as defined in Chapter 409, section 409-1.102, RSMo; 2. The full grant award amount will be paid to the grantee for deposit into the grantee’s established escrow account; 3. Grant funds in the escrow account may be used to pay up to fifty percent (50%) of the costs of construction, equipment, and construction phase engineering as the costs are incurred. No funds will be withdrawn for construction costs of house laterals or for costs that have been declared ineligible by the department; 4. The grantee will submit the bank statement of the escrow account monthly, within thirty (30) days of the end of the month. If the monthly statement indicates that funds were withdrawn, the grantee must submit copies of the invoices to document the costs; and 5. The bank account may earn interest, however, all withdrawals from the account must be documented with eligible invoices. If the project costs are inadequate to withdraw all the funds in the account, the balance must be refunded to the department. (C) The department will provide a payment request form for the grantee to use. The payment request must be supported by invoices that document the costs incurred. (D) The grant amount will be reduced, if necessary, to reflect actual project costs as determined by the invoices submitted by the grantee. (E) The department will verify project completion after the final inspection by the department has been conducted. (F) Any funds remaining in the escrow account two (2) years after the date of the initial grant payment will be recovered by the department. On grants that are paid incrementally by the department, no payments will be made after two (2) years from the initial grant award acceptance, unless an extension is granted by the department. (G) An audit to verify expenditure of grant funds may be made by the department. Any funds found not expended for the purposes listed in subsection (2)(E) of this regulation will be recovered. (5) If at any time after initiation of operations of the project, the wastewater treatment works funded under this rule, or any part thereof, is sold, either outright or on contract for deed, to other than a political subdivision of the state, the state shall receive reimbursement of the grant funds. The total amount of grant funds to be reimbursed shall be based on a straight-line depreciation based on the original costs of the facilities being sold, the original loan repayment period or a twenty- (20-) year straight line depreciation schedule in the event of grant only funds, and adjusted for the percentage of grant funds originally disbursed to fund such facilities. Grant funds to be reimbursed shall become due and payable upon transfer of ownership of the facility(ies). AUTHORITY: sections 640.600 and 640.615, RSMo 2016 * Original rule filed Feb. 2, 1983, effective July 1, 1983. Amended: Filed Nov. 27, 1985, effective Feb. 25, 1986. Amended: Filed Aug. 30, 1989, effective Nov. 27, 1989. Amended: Filed Sept. 4, 1991, effective Feb. 6, 1992. Amended: Filed April 14, 1994, effective Nov. 30, 1994. Amended: Filed March 1, 1996, effective Nov. 30, 1996. Amended: Filed June 24, 1999, effective March 30, 2000. Emergency amendment filed Feb. 1, 2007, effective March 4, 2007, expired Aug. 30, 2007. Amended: Filed March 14, 2007, effective Oct. 30, 2007. Amended: Filed June 13, 2018, effective Feb. 28, 2019. *Original authority: 640.600, RSMo 1989 and 640.615, RSMo 1989, amended 1999.