33 Miss. Code R. § 2-3-A
A. General
Eligible costs are those costs in which DWSIRLF loan participation is authorized pursuant to applicable statute. Allowable costs are eligible costs that meet the following general criteria in addition to any specific identification as an allowable cost within Appendix A:
(1) Are necessary and reasonable for the proper and efficient administration and construction of the project, are allocable to and within the defined scope of the project, and are not a general expense required to carry out the overall responsibilities of the loan recipient.
(2) Are authorized or not prohibited under state or local laws or regulations.
(3) Conform to any limitations or exclusions set forth in state laws or other governing limitations as to types or amounts of cost items.
(4) Are consistent with policies, regulations, and procedures that apply uniformly to both state assisted and other activities of the loan recipient.
(5) Are accorded consistent treatment through the application of generally accepted accounting principles appropriate to the circumstances.
(6) Are not allocable to, or included as, a cost of any other Federal or State financed program in either the current, prior, or future period.
(7) Are approved as allowable by the Department.
(8) Are within the scope and budget period of the project as per the loan agreement. However, the budget period does not apply to the planning and design allowance.
(9) Notwithstanding this Appendix, are eligible and allowable under the SDWA and any implementing federal regulations.
(10) Are determined without regard to any previous DWSELF or DWSIRLF loan funding provided for facilities to be replaced, upgraded, or rehabilitated, except as described in Rule 2.9.1(6) of these regulations.
(11) Are procured in accordance with Appendix D of these regulations.
B. Construction
(1) Allowable costs include the costs for/of:
(a) The following types of projects, and as further described or limited in the Intended Use Plan under which the project is funded:
(i) projects that will facilitate compliance with national primary drinking water regulations;
(ii) projects that will facilitate consolidation of public water systems or the use of an alternative water supply;
(iii) projects that will upgrade a drinking water system; or
(iv) development of a public water system to replace private drinking water supplies if the water poses a significant threat to human health.
(b) Subagreements for construction work on drinking water systems improvements. These subagreements are the prime contracts (including any subcontracts) for such construction work and any necessary contracts for purchase of equipment, materials and supplies by the loan recipient. Should any costs for such contracts be incurred prior to loan offer, said costs will be allowable provided that the loan recipient has requested and obtained Department approval of said costs and provided that the loan agreement budget period includes the time period these costs are incurred.
(c) Drinking water distribution lines on drinking water distribution projects which provide drinking water to previously unserved areas, and the service lines between the public water main and the water meter.
(d) Drinking water distribution system rehabilitation and replacement (including rehabilitation and replacement of eligible service lines) necessary to eliminate water loss or to preserve/restore the safety or integrity of the system, as determined in an approved facilities plan.
(e) Water system capacity equal to all water distribution system leaks that will remain in the system, as determined in an approved facilities plan.
(f) Drinking water systems which include service to industrial or commercial users when such works are owned by an eligible applicant.
(g) Buildings that house or protect water production, treatment or distribution facilities.
(h) Replacement of existing service lines from a water main up to a building (which includes any privately owned portion) if an identified public health threat exists (such as lead in the drinking water) that can be reduced by the replacement of the existing service line.
(2) Unallowable costs include:
(a) Costs for the following types of projects:
(i) Projects primarily for growth, development, or fire protection;
(ii) Projects that can be consolidated (except for projects to implement such consolidation);
(iii) Projects for systems without adequate financial or managerial support necessary to comply with SDWA requirements and all requirements of the loan agreement; and
(iv) Projects for drinking water systems which serve federal users exclusively, or almost exclusively.
(b) Construction and construction related costs which are incurred after the Department approved eligible contract completion date (including approved time extension change orders), unless approved by the Department pursuant to Rule 3.7.5.4 of these regulations.
(c) Bonus payments that are part of the construction contract for completion of building before a contractual completion date, unless required by state law.
(d) Administration buildings.
C. Equipment, Materials and Supplies
(1) Allowable costs include the costs of:
(a) A reasonable inventory of chemicals and supplies necessary to initiate plant operations and laboratory items necessary to conduct tests required for plant operation.
(b) Necessary and reasonable safety equipment, provided the equipment meets applicable federal, state, local or industry safety requirements.
(c) Constructing or installing water flow metering devices for the primary purpose of monitoring and/or billing inter-municipal or other flows or serving and billing individual residential, commercial or industrial users.
(d) Backflow preventers.
(e) Computers, display monitors, and computer software which are designed into the control system for the daily operation of the water system, used for the operational control and analysis of the water system, or specifically designed for the operation and maintenance (including the cost of developing unique operating programs for the specific loan funded project) of the treatment works.
(f) Specialized mobile equipment for the operation of the water system, or for the maintenance of equipment. These items include, but are not limited to:
(i) Portable stand-by generators.
(ii) Portable emergency pumps to provide "pump-around" capability in the event of booster station failure or pipeline breaks.
(2) Unallowable costs include the costs of:
(a) Vehicles for the transportation of the loan recipient's employees, including buses, trucks, cars, motorcycles, ATVs, golf carts, bicycles, etc.
(b) Items of routine "programmed" maintenance such as filters, couplings, hoses, belts, etc.
(c) Radios, televisions, VCRs, camcorders, and other items of a similar nature.
(d) Shop equipment installed at the treatment works or elsewhere.
(e) Distribution system maintenance equipment.
(f) Replacement parts.
(g) Furnishings, office equipment, and maintenance equipment, including chairs, desks, file cabinets, typewriters, coffee tables, telephones, office supplies, calculators, copiers, book cases, shelves and lamps, etc.
(h) Ordinary site and building maintenance equipment such as lawn mowers, rakes, shovels, brooms, picks, hedge trimmers, and other such equipment.
(i) Hand tools such as screw drivers, pliers, socket wrenches, electric drills or saws, etc.
(j) Computers for non-operational purposes, such as for the scheduling of equipment maintenance and replacement and for accounting and billing services.
D. Change Orders
(1) Change orders are allowable provided the costs are:
(a) Necessary and reasonable.
(b) Within the scope of the project.
(c) Not caused by the loan recipient's mismanagement.
(d) Not caused by the loan recipient's vicarious liability for the improper actions of others.
(e) In conformance with the DWSIRLF regulations.
(2) Provided the above requirements are met, the following are examples of allowable change orders.
(a) Construction costs resulting from defects in the plans, design drawings and specifications, or other contract documents only to the extent that the costs would have been incurred if the contract documents on which the bids were based had been free of the defects, and excluding the costs of any rework, delay, acceleration or disruption caused by such defects.
If the defect is realized after substantial construction work has been completed, and therefore requires rework, delay, or additional work beyond that which would have been required by defect-free drawings, the cost would still be allowable, but the additional cost of rework or delay is unallowable.
The additional cost is measured as the difference between the cost which would have been included in the bid based on defect free drawings and the actual cost of the change order.
(b) Equitable adjustments for differing site conditions.
E. Professional Services
The term professional services refers to engineering, legal, administrative, and similar services.
(1) Allowable costs include the costs of/for:
(a) Planning, application, and design. These costs include all engineering and other costs that are incurred in planning and designing the project, as well as applying for the loan. These costs include but are not necessarily limited to the following services, as determined allowable in Appendix B of these regulations. Contracts for planning, application and design costs need not be submitted to the Department.
(i) Preparing the facilities plan.
(ii) Public notification and public hearings.
(iii) Preparing the plans, specifications, and contract documents.
(iv) Value engineering.
(v) Preparing the draft user charge ordinance/corporate resolution and draft user charge system.
(vi) Preparing interlocal agreements necessary for the project.
(vii) Surveys and all other work needed to obtain clearance or permits from all intergovernmental review agencies.
(viii) Preparing the loan application, preparing applications for permits required by federal, state or local regulations or procedures.
(ix) Compliance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act as implemented by federal regulation 49CFR Part 24.101(a)(1) and (2), as applicable.
(b) Construction Phase Professional Services
(i) Services incurred during the advertisement, award and construction of a project to insure compliance with state purchasing laws and to insure that the project is built in conformance with the design plans and specifications. These services are primarily engineering and construction management services provided during the advertisement, award and building of the project, including observation services, materials testing (e.g., concrete strength, soil compaction, etc.) required by the specifications, inspecting and expediting the delivery of equipment and material purchased directly by the loan recipient, reviewing shop drawings and full scale record drawings, preparing change orders, payment processing, etc.
(ii) Legal, engineering, and other services incurred by the loan recipient in deciding procurement protests and defending their decisions in protest appeals under Appendix L are allowable regardless of the outcome of the protest, provided there was not an attempt by the loan recipient to violate or circumvent state purchase laws.
(iii) Development of an operation and maintenance manual.
(iv) Start-up services for onsite training of operating personnel in operation and control of specific treatment processes, laboratory procedures, and maintenance and records management, provided these costs are incurred prior to the end of the 30 day period established in Rule 3.7.7(11) of these regulations.
(v) Professional liability or other insurance premiums for a provider of professional services only for insurance which the provider maintains in connection with the general conduct of its business. The types and extent of coverage must be in accordance with sound business practice, and the rates and premiums must be reasonable under the circumstances but only as part of an indirect cost agreement.
(vi) Administrative services associated with the construction project and administering the DWSIRLF loan.
(vii) Services, other than engineering services during construction/repairs, such as railway or highway flagmen or utility or highway inspectors, required during the building of the project, provided that
(1) The entity responsible for the affected railway, highway, or utility requires such services for all parties conducting similar types of work, regardless of the source of construction funding for the project, or the services are required by law.
(2) The cost of such services has not been included in the construction contractor's bid price.
(viii) Engineering or other services necessary to correct defects in the facilities plan, design drawings and specifications or other documents to the extent that such costs would have been allowable for preparing defect free documents.
(2) Unallowable costs include the costs of:
(a) Public liaison services.
(b) Local travel (i.e., commuting expenses) between living quarters and the construction site for persons working at the site.
F. Claims
(1) Allowable costs, provided the costs are properly documented, incurred and requested prior to the end of the 30 day period established Rule 3.7.7(11) of these regulations, include:
(a) Change orders to the construction contract as a result of settlements, arbitration awards, or court judgements, to the extent that they would have been allowable had there not been a claim.
(b) The costs of assessing the merits of, negotiating, or defending a claim against the loan recipient are allowable, regardless of the outcome, provided that the matter under dispute is not the result of fraudulent or illegal actions or mismanagement on the part of the loan recipient.
(c) Alterations in engineering, legal, contracts etc. as a result of settlements, arbitration awards, or court judgements are allowable to the same extent that they would have been allowable had there not been a claim.
(2) Unallowable costs include the costs of:
(a) Claims arising from work outside the scope of the loan.
(b) Claims resulting from fraudulent or illegal activities.
(c) Claims resulting from mismanagement by the loan recipient.
(d) Claims resulting from the loan recipient's vicarious liability for the improper action of others.
(e) Settlements, arbitration awards or court judgements over the allowable costs as established in these regulations.
G. Mitigation
(1) Allowable costs include the costs of:
(a) Mitigation of only direct adverse physical impacts resulting from construction of the project.
(b) Reasonable site screening necessary to comply with facilities plans and necessary to screen adjacent properties.
(c) Groundwater monitoring facilities necessary to determine the possibility of groundwater deterioration, depletion or modification resulting from construction of the project. The extent of the allowable costs for groundwater monitoring facilities is decided on a case-by-case basis and depends on the size and complexity of the project and the present and potential future use of the groundwater.
(2) Unallowable costs include the costs of:
(a) Solutions to aesthetic problems, including design details which require expensive building techniques and architectural features and hardware, that are unreasonable or substantially higher in cost than approvable alternatives and that neither enhance the function or appearance of the treatment works nor reflect regional architectural tradition.
(b) Land acquired for the mitigation of adverse environmental effects identified pursuant to an environmental review.
H. Real Property
(1) Allowable costs include the costs of:
(a) Land acquired in fee simple title or by easement, from a willing seller, for:
(i) Water supply and/or storage purposes;
(ii) A consolidation project; and
(iii) Protection of the source water of the system from contamination.
(b) Preparation of the treatment works site before, during and, to the extent agreed on in the loan agreement, after building. These include the cost of:
(i) Demolition of existing structures on the treatment works site (including rights-of-way) if building cannot be undertaken without such demolition. Demolition of existing structures on the treatment works site (including rights-of-way), when not required for building the project, will be considered to be an allowable cost only if the existing structures constitute a real and present hazard to safety, public health, or water quality and when the hazard can best be abated by the removal of the existing structures.
(ii) Removal, relocation or replacement of utilities, provided the loan recipient is legally obligated to pay for such as a result of the DWSIRLF project under state or local law.
(iii) Restoration of streets and rights-of-way to their original condition. The need for such restoration must result directly from the construction of the DWSIRLF project and is generally limited to repaving the width of trench.
(2) Unallowable costs include the costs of:
(a) Any amount paid by the loan recipient for eligible land in excess of the appraised value or the loan recipient's record of negotiation.
An amount higher than the appraised value may be found allowable if the loan recipient provides sufficient written documentation to the Department and receives allowability approval prior to the actual acquisition.
(b) Removal, relocation or replacement of utilities located on land by privilege, such as a franchise, unless the loan recipient is required to pay such costs under state or local law.
(c) Land acquired in fee simple title or by easements for land other than that described under H.(1)(a) above, such as easements for the purpose of water distribution system expansion or improvement.
(d) Acquiring all or part of an existing publicly or privately owned drinking water treatment works.
(e) The demolition of an existing structure for the convenience of the owner as a means of increasing property value or property use.
I. Miscellaneous Costs
(1) Allowable costs include the costs of:
(a) Equipment rental and material costs necessary for the construction project.
(b) Meeting specific legal requirements directly related to the project unless otherwise specified in these regulations.
(c) Royalties associated with the procurement of the right to use, or the rights in, a patented product, apparatus, or process, provided that they are based on a published fee schedule or on reasonable fees charged to other users under similar conditions.
(d) Training workshops/seminars for loan recipient employees that are necessary to provide instruction in operational, administrative, fiscal or contracting procedures required to complete the construction of the project. Attendance at such training workshops or seminars must occur after loan offer but before the end of the loan agreement budget period.
(e) A reasonable project sign.
(2) Unallowable costs include the costs of:
(a) Salaries and benefits for the loan recipient's employees.
(b) Ordinary operating expenses of the loan recipient, including salaries and expenses of elected and appointed officials and preparation of routine financial reports and studies.
(c) Administrative, engineering and legal activities associated with the creation of special departments, agencies, commissions, regions, districts, associations, or other entities.
(d) Approval, preparation, issuance and sale of bonds or other forms of indebtedness required to finance any portion of the project and the interest on them.
(e) Personal injury compensation or damages arising out of the project.
(f) Fines and penalties due to violations of or failure to comply with federal, state or local laws, regulations or procedures, and related legal expenses.
(g) Operation and maintenance of the water system, which include but are not limited to, labor, utilities, chemicals, materials and supplies, monitoring, testing, equipment replacement, periodic payment of royalties for the right to operate under a patent, etc.
(h) Lease payments.
(i) Travel, by the loan recipient, unless included under an indirect cost agreement, and except as allowed under I.(1)(d) above.
J. Project Income:
(1) Bid bond forfeitures will have no effect on the determination of allowable and unallowable costs. The loan recipient must make the determination of whether or not a bid bond will be forfeited.
(2) The amount of liquidated damages collected will have no effect on the determination of allowable and unallowable costs, except as described by Rule 3.7.5.4 of these regulations.
(3) Interest income on DWSIRLF payments to loan recipients will have no effect on the determination of allowable and unallowable costs.
(4) The loan recipient must receive all income generated from use of the project facilities.
33 Miss. Code. R. § 2-3-A