Grants for Public Water Supply Districts and Small Municipal Water Supply Systems

PURPOSE: This rule establishes the department’s grant eligibility and application procedures requirements and for construction of projects at public water supply districts and rural community water system pursuant to sections 640.600, 640.605, 640.615 and 640.620, RSMo. (1) Application Requirements. (A) The recipient 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 shall be submitted on forms provided by the department. The application shall be 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 and need for grant funds. (B) The project for which the grant application is submitted shall comply with appropriate state and local laws, rules and ordinances and is limited to public water supply districts or municipal water supply systems of less than ten thousand (10,000) population. (C) The ratio of contracted users to potential users shall not be less than seventy-five percent (75%). (D) These grants are to be considered secondary sources of funding and, as such, shall in no case exceed the per connection amount as specified in section 640.620, RSMo, fifty percent (50%) of the total eligible project cost, or five hundred thousand dollars ($500,000), whichever is less. (E) Grant funds may be used for the following costs: 1. Construction costs for new construction, rehabilitation or upgrade of publicly owned treatment systems including upgrades made to comply with additional safe drinking water requirements. 2. 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 grant application packet shall contain the following information: 1. A 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; and total project costs; 2. An engineering report for the proposed project which is in accordance with 10 CSR 60-3.010 and 10 CSR 60-10.010; 3. The information required to determine the cost per contracted connection; 4. The median annual household income of the residents in the district or community; 5. Information required to determine the ratio of the contracted users to the potential users; 6. An evaluation of the recipient’s technical, managerial, and financial (TMF) capacity on forms provided by the department. A recipient that does not meet the TMF capacity requirements established in 10 CSR 60-3.030 shall submit a plan outlining the steps the recipient will take to meet the requirements. The plan shall show the recipient will meet TMF requirements before the project is complete or within one (1) year of the award of the grant unless the department determines that a longer period of time is necessary; 7. The ratio of contracted users to potential users; and 8. The number of acres being protected for any source water protection project. (2) Grant Priorities. (A) Priorities for grants for public water supply districts and rural community water systems shall be established by the department. (B) Determination of relative need will be coordinated with appropriate federal grant and lending agencies and with appropriate state agencies. Preference may be given to projects needing a grant in order to obtain state or federal drinking water loan assistance. It is the intent of the department to maximize the effective use of state and federal grant and loan funds. (C) Additional priority will be awarded to projects whose projected financial need is based on potential compliance with additional safe drinking water requirements. (D) Priority will be given to recipients who consider regionalization or for projects that include regionalization. (3) 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 recipient that the funding for the total project costs has been secured. The department, based on the status of state funding, may elect to pay out the full grant amount at the time of grant award or to make payments to the grantee. (B) If the department elects to make full payment of the grant amount for the construction project, payment shall be made at the time of the department’s receipt of the executed grant document. The following provisions shall apply: 1. The grantee shall establish a separate escrow account with a bank as defined in Chapter 409, section 409-1.102; 2. The full grant award amount, less any payments processed prior to the date of this rule, 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 eligible costs shown in subsection (1)(D) of this rule except that one hundred percent (100%) of the reasonable costs associated with a grant anticipation loan will be eligible when this financing is pre-approved by the department. 4. The grantee shall 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 shall submit copies of the invoices to document the costs. 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) An audit to verify expenditure of grant funds may be made by the department after the completion of each approved project. Any funds found not expended for the purposes listed in subsection (1)(D) of this regulation will be recovered. (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 (1)(D) of this regulation will be recovered. (4) If at any time during the first twenty (20)- years of the design life of the facility(ies) funded under this rule the facility is sold, leased or otherwise transferred, either outright or on a contract for deed or lease-purchase agreement, to other than a political subdivision of the state, the state shall require reimbursement of the grant funds. The total amount of the grant funds to be reimbursed shall be based on a twenty (20)-year straightline depreciation. Grant funds to be reimbursed, shall become due and payable upon transfer of ownership of the facility(ies). AUTHORITY: sections 640.600, 640.605, and 640.615, RSMo 2016, and section 640.620, RSMo Supp. 2018.* This rule was previously filed as 10 CSR 60-2.020 Sept. 21, 1973, effective Oct. 1, 1973. Amended: Filed May 4, 1979, effective Sept. 14, 1979. Amended: Filed April 14, 1981, effective Oct. 11, 1981. Rescinded and readopted: Filed Feb. 2, 1983, effective July 1, 1983. Emergency amendment filed July 3, 1989, effective July 27, 1989, expired Nov. 23, 1989. Amended: Filed July 3, 1989, effective Nov. 23, 1989. Amended: Filed Jan. 19, 2001, effective Sept. 30, 2001. 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; 640.605, RSMo 1989, amended 1999; 640.615, RSMo 1989, amended 1999; and 640.620, RSMo 1989, amended 1995, 1999, 2018.