U.S. Department of Agriculture Rural Development, Rural Utilities Service Water and Environmental Programs UNC School of Government Environmental Finance Center 2018 Water & Wastewater Finance Workshop February 6-7, 2018 Types of Eligible Projects Drinking Water Facilities Sanitary Sewer Facilities Storm Water Drainage Facilities Solid Waste Disposal Facilities Typical Drinking Water Projects New Water Systems (Distribution and/or Treatment Facilities) Water Lines Extensions Improvements to Existing Distribution and/or Treatment Facilities Water Storage Facilities (Tanks and/or Reservoirs) 1
Typical Sewer Projects New Sewer Systems (Collection and/or Treatment Facilities) Sewer Line Extensions Improvements to Existing Collection and/or Treatment Facilities Typical Solid Waste Disposal Projects New Landfills Purchase Trash Trucks Construct Transfer Stations Construct Convenience Centers Eligible Applicants Public Bodies: Counties Towns & Cities Water & Sewer Districts Water & Sewer Authorities Metropolitan Sewerage Districts Sanitary Districts 2
Eligible Applicants Federally Recognized Indian Tribes: NC has 1 Federally Recognized Indian Tribe: Eastern Band of Cherokee Indians Eligible Applicants Organizations Operated on a Not-For-Profit Basis: Associations Cooperatives Water and/or Sewer Corporations Eligibility Requirements Must serve rural area - any area not in a city or town with a population in excess of 10,000 people according to 2010 US Census Applicant must be financially sound and have a tax collection rate of 90% or greater (LGC requirement) 3
Interest Rates - Current (subject to change Oct. 1, Dec. 1, Apr. 1 & July 1) Poverty 2.125% MHI below poverty or 80% of State non-metropolitan MHI and a health and sanitary problem exists Intermediate - 2.750% MHI is 80-100% of State non-metropolitan MHI without any health issues Market 3.500% MHI exceeds 100% of State non-metropolitan MHI Terms Repayment period 40 years Principal payments may be deferred up to 3 years Public Body Debt Security General Obligation Bond (Pledge of taxes) Revenue Bond (Pledge of Revenues) Combined General Obligation and Revenue Bonds (Pledge of taxes and revenues) Installment/Purchase (Only if loan amount is $500,000 or less) 4
WEP FY 2018 Funding* Loan - $42,167,000 Grant - $13,510,000 *Proposed FY 2018 funding What are we looking for? Cash or Cash Equivalents (Current Assets) Current Liabilities Restricted and Unrestricted Cash Operating Income and Expense History Outstanding Debts Reserves Funded Customer Deposits Other Underwriting or Loan/Grant Determination Two Main Documents: Preliminary Engineering Report Audit or Financial Statements 5
Loan/Grant Determination Other Factors MHI of Proposed Service Area Is There a Health or Sanitary Issue Existing Monthly User Rates as a % of MHI Proposed Monthly EDU (Equivalent Dwelling Unit) User Rates as a % of MHI Rates Compared to those of Similar Systems What s New RD Apply Convenience - Access to information 24/7 from anywhere Identity Security - Safe and secure unique User ID and password only authorized persons have access. Faster Application Process Less delay due to what is next step? Reduced Paper Consumption - benefits the environment; less physical files. What s New Environmental Regulation Simplified regulation Some projects do not even require the preparation of an environmental report More projects qualify as a Categorical Exclusion 6
What s New Electronic Preliminary Engineering Report (eper) Online innovation to enhance the application process Consulting engineers can use the eper to interactively create technical documents online eper has built-in features such as life-cycle analysis and service area mapping tool, etc. Special Evaluation Assistance for Rural Communities and Households Program (SEARCH Grant) Grants to assist financially distressed communities in paying costs associated with preparing feasibility studies, preliminary engineering reports, and environmental reports Limit is $30,000 or 100% of the predevelopment cost, whichever is less Special Evaluation Assistance for Rural Communities and Households Program (SEARCH Grant) Median Household Income of the proposed project service area must be under $36,555 Project must be carried out in a rural area (2,500 or less population) Applicant basically is unable to pay the proposed predevelopment expenses from their own resources 7
Predevelopment Planning Grants (PPG) Grants to assist financially distressed communities in paying costs associated with preparing feasibility studies, preliminary engineering reports, and environmental reports, etc. Limit is $25,000 or 75% of the predevelopment cost, whichever is less Predevelopment Planning Grants (PPG) Median Household Income of the proposed project service area must be under $36,555 Project must be carried out in a rural area (10,000 or less population) Applicant basically is unable to pay the proposed predevelopment expenses from their own resources Purpose: To assist the residents in rural areas and small communities obtain or maintain adequate quantities of safe water when a decline in quantity or quality occurs or is imminent 8
Emergency: Occurrence of an incident such as, but not limited to: drought; earthquake; flood; tornado; hurricane; disease outbreak; or spills, leakage, of hazardous substances or chemicals. Significant Decline in Quality: Occurs when the present community source or delivery system does not meet, as a result on an emergency, the current Safe Drinking Water Act requirements. For a private source or delivery system a significant decline in quality occurs when the water in no longer potable as a result of an a emergency. Significant Decline in Quantity: Caused by a disruption of the potable water supply by an emergency. The disruption in quantity of water prevents the present source or delivery system from supplying potable water needs to rural residents. This would not include a decline in excess water capacity. 9
Significant Decline in Quality or Quantity: The term significant decline in quality or quantity may also include a situation where a significant decline is likely to occur within one year from the date of filing of an application. Significant Maintenance: Any repair work resulting from an emergency event required to return a portion of a water system to working order to provide an adequate quantity or quality of water, that does not involve new construction. Significant Maintenance (examples): Painting or applying coatings, and replacement of short-lived assets such as pumps Annual recurring costs that are considered to operational expenses are not significant maintenance. 10
Median Household Income of the proposed project service area must be under $45,444 Project must be carried out in a rural area (10,000 or less population) Proposed project cannot contain costs that are eligible for funding from the Federal Emergency Management Agency (FEMA) or covered by insurance. Documentation of such must be provided. Grant Limit - $500,000 (generally a new water source: Wells Treatment Plant Line extensions associated with a new water source Water Tank if damage impacts source/delivery Grant Limit - $150,000 (generally repairs/replacement: Distribution lines Pumps or motors Meters Other equipment damaged as a result of the emergency event 11
For additional information about the USDA Water & Environmental Program National Website: http://www.usda.gov/rus/water/index.htm NC State Website: http://www.rurdev.usda.gov/nc/index.html Contact Information: Dennis R. DeLong 4405 Bland Rd. Raleigh, NC 27609 919-873-2046 dennis.delong@nc.usda.gov 12