33 Miss. Code. R. 11-IV
This section outlines all sources of funding available to the DWSIRLF Program and indicates intended uses. This section also describes the financial assistance terms available through the Program.
Using the FFY-2019 EPA Capitalization Grant allotment for Mississippi of $11,985,000 a 20% state match of $2,397,000 is required; this provides an anticipated amount of $14,382,000 for both loans and set-aside activities.
With $2,667,600 ($479,400-4% Admin; $239,700-2% Small Systems Technical Assistance; $1,198,500-10% State Program Management; $750,000-Local Assistance) being utilized for set-aside activities $11,714,400 will remain for loans to Mississippi public water supplies; additionally, unobligated funds from the previous year, anticipated loan repayments and interest earnings (all of which are not classified as state match) will also be available as additional funding sources.
The FFY-2019 "Set-aside" use for the standard Cap grant is outlined in Section V of this IUP. Necessary work plans showing utilization of these funds are found at the end of this IUP.
With the FFY-2019 Capitalization Grant for Mississippi of $11,985,000 the state match requirement to federal grant funds (cash draw ratio) will be 20.46% state match funds to 79.54 federal grant funds; this requirement will be stated in the grant application.
The 2019 State Legislature authorized the issuance of $1,000,000 in bonds to be used as match. Of this amount, $566,135.80 will be used to complete the match for the FFY-2018 EPA Capitalization Grant and $433,864.20 will be used as partial match for the FFY-2019 EPA Capitalization Grant. An additional amount of $1,963,135.80 is required to fully match the FFY-2019 EPA Capitalization Grant.
Beginning in FFY-2003 the Board began to make loan awards after approval of the facilities plans and loan application, rather than after completion of the project design. This change in the loan award sequence increased the likelihood that bid overruns on some projects could be greater than the construction contingency included in the loan agreement. In order to be able to provide loan increases (when needed) to existing loans, the Board intends to set-aside the amount indicated in Appendix A for such loan increases; loan increases will be awarded on a first-come, first-served basis. Any funds not obligated for these purposes by the end of the fiscal year may be made available for new loan awards to the highest ranking project(s) that is ready for loan award at the time funds become available.
In accordance with the Board's desire to maintain a financially sound DWSIRLF loan Fund in perpetuity, while at the same time meeting a substantial portion of the drinking water needs in the state within a reasonable period of time, the following financial decisions were made regarding the Fund:
The Board intends that the MSDH apply for the entire state Cap grant allotment under the federal DWSRF, including the set-asides described in Section V below. State bond proceeds obtained shall be deposited into the DWSIRLF Fund and shall be used as the state match for federal DWSRF Cap grants.
It is the Board's intention to adjust interest rates such that the demand will equal the funds available. In order to ensure that this interest rate will be at or below the prevailing market rates at the time a loan is made, this rate will be compared to the twenty-year (20) triple-A rated, tax-exempt insured revenue bond yield published by fmsbonds, Inc. (fmsbonds Online, https://www.fmsbonds.com/market-yields/)1.
Investment Procedures for Excess Cash - According to the State Treasurer, the excess cash in the Fund is invested by the State Treasurer in securities prescribed in Section 27-105-33, et. Seq., of the Mississippi Code of 1972 Annotated, as amended. The securities in which state funds may be invested include certificates of deposit with qualified state depositories, repurchase agreements (fully secured by direct United States Treasury obligations, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations), direct United States Treasury obligations, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations, and any other open-ended or closed-ended management type investment company or investment trust registered under the provisions of 15 U.S.C. Section 80(a)-1 et. Seq, provided that the portfolio is limited to direct obligations issued by the United States of America, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations and to repurchase agreements fully collateralized by the securities listed above for repurchase agreements.
The following terms will be used for the purpose of making loans to the public water systems within the State of Mississippi.
Under state law, the Board has the discretion to set the maximum amount for DWSIRLF loans. For FFY-2019 a maximum loan amount of $5,000,000 per borrower has been set by the Board. The Board may allow (on a case-by-case basis if requested by the borrower and the need has been justified) the maximum loan limit to be exceeded by a vote of the Board. Furthermore, during FFY-2019, no more than one loan per borrower will be allowed. At the end of the fiscal year, in the event that funds are available, systems previously receiving an award during FFY-2019 may obtain an additional award(s) or an increase to a previous FFY-2019 award, if no other eligible systems are evident.
All loan terms will be at 1.95% annual interest rate, compounded monthly, with a maximum 30-year repayment period, or 40 years for disadvantaged communities. These maximums may not, however exceed the design life of the project. Interest will accrue based on the current loan agreement in conjunction with the DWSIRLF Regulations.
Revenues to pay for Program administrative costs will be collected through an administration fee of 5% of the initial loan principal. This fee will be collected from the interest portion of loan repayments on all FFY-2019 loans.
The FFY-2019 Capitalization Grant includes subsidization requirements. Subsidization can be in the form of principal forgiveness, negative interest rates, or some combination of the two. The amount of subsidization required by the Capitalization Grant is a minimum of 26% of the Capitalization Grant amount. With a Capitalization Grant of $11,985,000, a minimum subsidy amount of $3,116,100 is required. As in the past, the FFY-2019 federal appropriation includes Davis-Bacon Act requirements, American Iron and Steel requirements, and signage requirements. Appropriate language will be added to all FFY-2019 loan agreements identifying the additional responsibilities for loan recipients. "Green Infrastructure" requirements are not expected to be an appropriation requirement. However, the Program will continue to encourage those types of projects to seek funding from the DWSIRLF.
1 2.55% as of May 15, 2019
33 Miss. Code. R. 11-IV