Mo. Code Regs. tit. 10 § 60-13.020

Current through Register Vol. 49, No. 21, November 1, 2024.

Section 10 CSR 60-13.020 - Drinking Water State Revolving Fund Program

PURPOSE: This rule sets forth eligibility and program requirements for financial assistance from the Drinking Water State Revolving Fund program authorized pursuant to section 1452 of the federal Safe Drinking Water Act, as amended, and in section 640.107, RSMo.

PUBLISHER'S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here.

(1) Application and Eligibility Requirements. This section applies to recipients of financial assistance from the Drinking Water State Revolving Fund (DWSRF) program. Recipients of assistance are subject to the requirements of this regulation, unless otherwise specified. The Code of Federal Regulations referenced in the regulation are incorporated as published July 1, 2017. The regulations are incorporated by reference without any later amendments or modifications. To obtain a copy, contact the U.S. Government Printing Office at 732 North Capitol Street N W, Washington, D.C., 20401, toll free at (866) 512-1800 or by visiting https://bookstore.gpo.gov. To obtain the decennial median household income visit the U.S. Census Bureau American Fact Finder webpage https://factfinder.census.gov/faces/nav/jsf/pages/community_facts.xhtml, contact the U.S. Census Bureau, 4600 Silver Hill Road Suitland, MD 20746, or toll free at (800) 923-8282.

(A) Definitions.

1. The terms and definitions in section 640.107, RSMo, 10 CSR 60-2.015, and 40 CFR 35.3505, apply to the rules in this chapter.

2. Initiation of operation-The date when the first constructed component is capable of being used for its intended purpose.

3. PSC-Missouri Public Service Commission.

4. EIERA-State Environmental Improvement and Energy Resources Authority.

5. Loan-Unless stated otherwise, loan generally refers to the agreement to lend money to an eligible recipient. The type of agreement could be a loan agreement, bond purchase agreement, or other debt instrument.

6. Recipient-The recipient of financial assistance from programs supported or secured by the Water and Wastewater Loan Fund, the Water and Wastewater Loan Revolving Fund, DWSRF bonds issued by EIERA, or state bond funds.

(B) Eligible Projects and Project-Related Costs. This subsection incorporates the federal requirements in 40 CFR 35.3520.

(C) Application Procedures.

1. Application deadline.

A. Applications must be postmarked or received by the Water Protection Program by the calendar date established in the annual application package as the application deadline. The deadline will be no sooner than sixty (60) days after the application package is made available. The department may extend this deadline if insufficient applications are received to use all of the funds expected to be available. Applications are valid for two (2) intended use plan cycles. Applications received after the deadline may be placed on a priority list as determined by the commission based on availability of funds.

B. Recipients that have an outstanding loan balance with the department must be in compliance with the terms and conditions of their loan agreements to be eligible for additional funding.

2. Recipients shall provide:

A. A completed application form provided by the department;

B. Documentation that they have a chief operator certified at the appropriate level, or expect to have prior to loan award;

C. Documentation that they have an emergency operating plan, or expect to have prior to loan award;

D. Any additional information requested by the department for priority point award or project evaluation;

E. Any additional information request by the department to determine the recipient's compliance history and technical, managerial, and financial capacity as required under the federal Safe Drinking Water Act (SDWA); and

F. Any additional information for determination of financial capability of the recipient. This may include but is not limited to: changes in economic growth, changes in population growth, depreciation, existing debt, revenues, project costs, and effects of the project on user charge rates.

3. Unsuccessful recipients requesting funds during a given fiscal year who have completed the requirements in this section (1) shall be considered for funding the next fiscal year and need not reapply.

4. By submission of its application, the recipient certifies and warrants that he/she has not, nor will through the DWSRF loan amortization period, violate any of his/her debt covenants.

(D) Intended Use Plan. The department will prepare an annual intended use plan in accordance with 40 CFR 35.3555 and section 640.107, RSMo. The annual intended use plan is approved by the commission after public notice and public comment.

(2) Requirements for Assistance Recipients. This section applies to recipients of the DWSRF program.

(A) Fees.

1. Loan Fees. The department may charge annual loan fees not to exceed one-half percent (0.5%) of the outstanding loan balance of each loan, except as provided under paragraph (2)(A)2.

2. Additional administrative fees. Additional administrative fees may be assessed by the department, at the time the administration fee is calculated for failure by a recipient to pay debt service on the loan or submit approved documents to the department (for example, operation and maintenance manuals, enacted user charge and water use ordinances, executed contract documents) in accordance with the time frames provided under the program agreement entered into by the recipient. The additional fee will be an additional one-tenth percent (0.1%) per month that the document remains delinquent. The additional fee for delinquent documents will be collected only during the year in which the document is not submitted.

(B) Engineering Report and Design. Engineering report and design of projects for eligible water systems shall conform with 10 CSR 60-3.010 and 10 CSR 60-10.010.

(C) Additional Preclosing Requirements. All documents necessary to provide assistance must be submitted to the department in sufficient time to allow adequate time for review and approval prior to the loan closing date established by the department. The department may extend deadlines if justified.

1. Final document submittal. The following documents must be submitted to and approved by the department:

A. Resolution identifying the authorized representative by name. Recipients for assistance under the DWSRF program shall provide a resolution by the governing body designating a representative authorized to file the application for assistance, reimbursement requests and act in behalf of the recipient in all matters related to the project;

B. Proposed project schedule. The following represents the minimum requirements for the project schedule;

(I) Construction start defined as date of issuance of notice to proceed;

(II) Construction completion;

(III) Initiation of operation; and

(IV) Project completion;

C. Engineering contract as described in subsection (2)(G) of this rule and the appropriate procurement documentation as described in subsection (2)(H) or subsection (2)(N);

D. Engineering report and plans and specifications certified by a registered professional engineer licensed in Missouri;

E. Certification of easements and real property acquisition. Recipients of assistance under the DWSRF program shall have obtained title or option to the property or easements for the project prior to loan closing;

F. Draft user charge and water use ordinances as described in paragraphs (2)(C)3. and 4. of this rule; and

G. Other information or documentation deemed necessary by the recipient or the department to ensure the proper expenditure of DWSRF funds.

2. Projects serving multiple water systems. Prior to closing, if the project serves two (2) or more public water systems, the recipient shall submit executed agreements or contracts between the public water systems for the financing, construction, and operation of the proposed facilities.

3. User charge (water rate) ordinance.

A. For non-PSC-regulated utilities:

(I) Recipients are required to maintain, for the useful life of the project, user charge ordinances approved by the department. User charge ordinances, at a minimum, shall be adopted prior to financing and implemented by the initiation of operation of the financed project;

(II) The user charge system shall be designed to produce adequate revenues required for the operation and maintenance, including a reserve for equipment replacement. A one hundred ten percent (110%) debt service reserve may be required. Each user charge system shall:

(a) Be based upon actual use;

(b) Include an adequate financial management system that will accurately account for revenues generated by the system, debt service and loan fee costs, and expenditures for operation and maintenance, including replacement based on an adequate budget identifying the basis for determining the annual operation and maintenance costs and the costs of personnel, material, energy, and administration; and

(c) Provide for an annual review of charges; and

(III) The recipient shall submit to the department, for review and approval, the methodology used for determining user rates.

B. PSC-regulated utilities shall comply with the requirements of the PSC in developing and implementing their user charge ordinances but shall ensure that sufficient rates and charges are in effect to satisfy bond covenants throughout the term of the loan.

4. Water use ordinance. Recipients dependent on user fees for debt payment or operation and maintenance expenses shall have in place an enforceable water use ordinance prior to loan closure. The water use ordinance shall address water system responsibilities and customer responsibility relating to installation and maintenance of water meters and water lines; easements; alternative sources of water; and provisions for breach of contract and liquidated damages. The water use ordinance is intended to be an effective business tool for the efficient management of the water system.

5. Additional requirements for privately-owned public water systems. Privately-owned public water systems must provide documentation from the Missouri Department of Economic Development showing an allocation under Missouri's private activity bond cap and must obtain any necessary approvals from the PSC.

6. Environmental review. All applicable environmental review requirements in 10 CSR 60-13.030 must be completed before the department enters into a binding commitment with the recipient.

7. Cross-cutters. Recipients shall comply with Federal cross-cutting authorities unless an exemption is provided through department policy, as outlined in accordance with 40 CFR 35.3575.

(D) Operation and Maintenance.

1. Operation and maintenance manual. The recipient must make provision satisfactory to the department for assuring effective operation and maintenance of the constructed project throughout its design life. If required by the department, recipients of assistance for construction of mechanical facilities must make provision satisfactory to the department to develop for approval an operation and maintenance manual. The operation and maintenance manual, if required, must be submitted by final construction completion.

2. Start-up training. At construction completion, a start-up training proposal (if required) and proposed follow-up services contract must be submitted by final construction completion.

3. Certified operator. The recipient must make provision satisfactory to the department for assuring that certified operator(s) and maintenance personnel are hired in accordance with an approved schedule.

4. System certification. If required by the department, one (1) year after initiation of operation of the constructed public water system, the recipient shall certify to the department whether or not the public water system meets the project performance standards. Any statement of noncompliance must be accompanied by a corrective action report containing an analysis of the cause of the project's inability to meet performance standards, actions necessary to bring it into compliance, and reasonably scheduled date for positive certification of the project. Timely corrective action shall be executed by the recipient.

(E) Accounting and Audits. Recipients are required to have a dedicated source for repayment of any loans and an adequate financial management system and audit procedure for the project which provides efficient and effective accountability and control of all property, funds, and assets related to the project. The recipient's financial system is subject to state or federal audits to assure fiscal integrity of public funds.

1. Each recipient is expected to have an adequate accounting system for the project which provides efficient and effective accountability and control of all property, funds, and assets.

A. The recipient is responsible for maintaining a financial management system which will adequately provide for an accurate, current, and complete disclosure of the financial results of each DWSRF project. The proprietary fund (business-related fund) accounting will be in accordance with generally accepted government accounting principles and practices, regardless of the source of funds.

B. An acceptable accounting system includes books and records showing all financial transactions related to the construction project. The system must document all receipt and disbursement transactions and group them by type of account (for example, asset, revenue, expense, etc.) and by individual expense account (for example, personnel salaries and wages, subcontract costs, etc.) The recipient shall maintain books, records, documents, and other evidence and accounting procedures and practices, sufficient to reflect properly the amount, receipt, and disposition by the recipient for all assistance received for the project and the total costs of the project of whatever nature incurred for the performance of the project for which the assistance was awarded.

2. Annual Audited Financial Statements.

A. The recipient shall cause an audit of the recipient's annual financial report for the preceding fiscal year to be made by a certified public accountant or firm of certified public accountants employed for that purpose.

(I) The annual audit will cover in reasonable detail the operation of the proprietary system during the fiscal year.

(II) Within one hundred eighty (180) days after the end of the recipient's fiscal year, a copy of the annual financial report will be submitted to the department as long as the recipient is in loan repayment status. A recipient who cannot meet this deadline will notify the department in writing of the delay with the expected date of completion.

B. As required by federal law, a recipient must comply with the provisions of 2 CFR part 200 sub-part F governing the audit of state and local governments. When applicable, a copy of the recipient's annual audit, including all written comments and recommendations of the accountant, will be furnished to the department within the time period as provided in 2 CFR part 200 subpart F.

(F) Record Retention Requirements.

The recipient must retain all records according to the retention schedules established by chapter 109, RSMo. A longer retention period may be required under the loan documentation.

(G) Minimum Requirements for Architectural or Engineering Contracts.

1. General requirements must:

A. Be necessary for and directly related to the accomplishment of the project;

B. Be a lump sum or cost plus fixed fee contract in the form of a bilaterally executed written agreement;

C. Be for monetary consideration;

D. Not be in the nature of a grant or gift;

E. State a time frame for performance;

F. State a cost which cannot be exceeded except by amendment; and

G. State provisions for payment.

2. The nature, scope, and extent of work to be performed during construction should include, but not be limited to, the following:

A. Preparing an operation and maintenance manual if required by the department that meets the requirements of paragraph (2)(D)1. of this rule;

B. Assisting the recipient in letting bids;

C. Assisting the recipient in reviewing and analyzing construction bids and making recommendations for award;

D. Inspecting during construction to ensure conformance with the construction contract documents unless waived by the department; and

E. Assisting with facility operation for purposes of certifying that the facility is operating properly one (1) year after start-up to meet the requirements of paragraph (2)(D)4. of this rule.

3. Executed engineering contract submittal. The final approved executed engineering contract must be submitted prior to the first reimbursement request.

(H) Procurement of Engineering Services. The procurement of engineering services shall be in accordance with sections 8.285 through 8.291, RSMo or section 67.5060, RSMo.

(I) Specifications. The construction specifications must contain the following:

1. Recipients must incorporate in their specifications a clear and accurate description of the technical requirements for the material, product, or service to be procured. The description, in competitive procurement, shall not contain features which unduly restrict competition unless the features are necessary to test or demonstrate a specific thing or to provide for interchangeability of parts and equipment. The description shall include a statement of the qualitative nature of the material, product, or service to be procured and, when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use;

2. The recipient shall avoid the use of detailed product specifications if at all possible;

3. When, in the judgment of the recipient, it is impractical or uneconomical to make a clear and accurate description of the technical requirements, recipients may use a brand name as a means to define the performance or other salient requirements of an item to be procured. The recipient need not establish the existence of any source other than the named brand. Recipients must state clearly in the specification the salient requirements of the named brand which must be met by offerers and that other brands may be accepted;

4. Sole source restriction. A specification shall not require the use of structures, materials, equipment, or processes which are known to be available only from a sole source, unless the department determines that the recipient's engineer has adequately justified in writing to the department that the proposed use meets the particular project's minimum needs;

5. Experience clause restriction. The general use of experience clauses is restricted to special cases

A. The general use of experience clauses requiring equipment manufacturers to have a record of satisfactory operation for a specified period of time or of bonds or deposits to guarantee replacement in the event of failure is restricted to special cases where the recipient's engineer adequately justifies any such requirement in writing. Where this justification has been made, submission of a bond or deposit shall be permitted instead of a specified experience period. The period of time for which the bond or deposit is required shall not exceed the experience period specified;

B. The general use of experience clauses requiring contractors to have a record of satisfactory experience for a specified period of time or the completion of a specified number of similar projects is restricted to special cases where the recipient's engineer adequately justifies any such requirement in writing. Such justification shall not unduly restrict competition or result in excessive bonding requirements. Where this justification has been made, submission of a bond or deposit shall be permitted instead of the specified experience. The period of time for which the bond or deposit is required shall not exceed the experience period specified;

6. Domestic products procurement law requirements in accordance with sections 34.350-34.359, RSMo;

7. Bonding. On construction contracts exceeding fifty thousand dollars ($50,000), the bid documents shall require each bidder to furnish a bid guarantee equivalent to five percent (5%) of the bid price. In addition, the bid documents must require the successful bidder to furnish performance and payment bonds, each of which shall be in an amount not less than one hundred percent (100%) of the contract price;

8. State wage determination in accordance with section 290.210-290.340 RSMo and 8 CFR 30 chapter 3;

9. Contracting with small and minority businesses, women's business enterprises, and labor surplus area firms requirements in accordance with 2 CFR 200.321 and 40 CFR part 33.

10. Debarment/suspension requirements in accordance with 2 CFR part 180 subpart C;

11. Right of entry to the project site shall be provided for representatives of the department, EIERA, the Missouri State Auditor, and U.S. Environmental Protection Agency so they may have access to the work wherever it is in preparation or progress;

12. The following statement: "The owner shall make payment to the contractor in accordance with section 34.057, RSMo";

13. Contractors must comply with the Davis-Bacon requirements in accordance with 29 CFR 5.5. The current Davis-Bacon wage rate from the United States Department of Labor must be incorporated in the bid documents; and

14. American Iron and Steel. Specifications shall adhere to requirements to utilize American Iron and Steel for projects involving the construction, alteration, maintenance, or repair of a public water system, when applicable. The department will publish the American Iron and Steel requirements in the annual intended use plan.

(J) Construction Equipment and Supplies Procurement. This section describes the minimum procurement requirements which the recipient must use under the DWSRF program.

1. Small purchases. A small purchase is the procurement of materials, supplies, and services when the aggregate amount involved in any one (1) transaction does not exceed one hundred fifty thousand dollars ($150,000). The small purchase limitation of one hundred fifty thousand dollars ($150,000) applies to the aggregate total of an order, including all estimated handling and freight charges, overhead, and profit to be paid under the order. In arriving at the aggregate amount involved in any one (1) transaction, all items which should properly be grouped together must be included. Department concurrence and a minimum of three (3) quotes must be obtained prior to purchase.

2. Bidding requirements. This paragraph applies to procurement of construction equipment, supplies, and construction services in excess of one hundred fifty thousand dollars ($150,000) awarded by the recipient for any project. No contract shall be awarded until the department has approved the formal advertising and bidding.

A. Formal advertising.

(I) Adequate public notice. The recipient will cause adequate notice to be given of the solicitation by publication in newspapers of general circulation beyond the recipient's locality (preferable statewide), construction trade journals, or plan rooms, inviting bids on the project work and stating the method by which bidding documents may be obtained or examined.

(II) Adequate time for preparing bids. A minimum of thirty (30) days shall be allowed between the date when public notice, publication, insertion, or document availability in a plan room is first published and the date by which bids must be submitted. Bidding documents shall be available to prospective bidders from the date when the notice is first published or provided. Recipients are encouraged to directly solicit bids from prospective bidders.

B. Bid document requirements and procedure.

(I) The recipient shall prepare a reasonable number of bidding documents (Invitations for Bids) and shall furnish them upon request on a first-come, first-served basis. The recipient shall maintain a complete set of bidding documents and shall make them available for inspection and copying by any party. The bidding documents shall include, at a minimum:

(a) A completed statement of the work to be performed or equipment to be supplied and the required completion schedule;

(b) The terms and conditions of the contract to be awarded;

(c) A clear explanation of the method of bidding and the method of evaluation of bid prices and the basis and method for award of the contract or rejection of all bids;

(d) Responsibility requirements and criteria which will be employed in evaluating bidders;

(e) The recipient shall provide for bidding by sealed bid and for the safeguarding of bids received until public opening;

(f) If a recipient desires to amend any part of the bidding documents during the period when bids are being prepared, addenda shall be communicated in writing to all firms which have obtained bidding documents in time to be considered before the bid opening time. All addenda must be approved by the department prior to award of the contract;

(g) A firm which has submitted a bid shall be allowed to modify or withdraw its bid before the time of bid opening;

(h) The recipient shall provide for a public opening of bids at the place, date, and time announced in the bidding documents. Bids received after the announced opening time shall be returned unopened;

(i) Award shall be to the lowest, responsive, responsible bidder. After bids are opened, the recipient shall evaluate them in accordance with the methods and criteria set forth in the bidding documents. The recipient shall award contracts only to responsible contractors that possess the potential ability to perform successfully under the terms and conditions of a proposed contract. A responsible contractor is one that has financial resources, technical qualifications, experience, organization, and facilities adequate to carry out the contract or a demonstrated ability to obtain these. The recipient may reserve the right to reject all bids. Unless all bids are rejected for good cause, award shall be made to the lowest responsive, responsible bidder. The recipient shall have established protest provisions in the specifications. These provisions shall not include the department as a participant in the protest procedures. If the recipient intends to make the award to a firm which did not submit the lowest bid, the recipient shall prepare a written statement before any award, explaining why each lower bidder was deemed nonresponsible or nonresponsive and shall retain the statements in its files. The recipient shall not reject a bid as nonresponsive for failure to list or otherwise indicate the selection of subcontractor(s) or equipment unless the recipient has clearly stated in the solicitation documents that the failure to list shall render a bid nonresponsive and shall cause rejection of a bid;

(j) The recipient is encouraged though not required to use the model specification clauses developed by the department; and

(k) Departmental concurrence with contract award must be obtained prior to actual contract award. Recipients shall notify the department in writing of each proposed construction contract which has an aggregate value over one hundred fifty thousand dollars ($150,000). The recipient shall notify the department within ten (10) calendar days after the bid opening for each construction subagreement. The notice shall include:

I. Proof of advertising;

II. Tabulation of bids;

III. The bid proposal from the bidder that the recipient wishes to accept, including justification if the recommended successful bidder is not also the lowest bidder;

IV. Recommendation of award;

V. Any addenda not submitted previously and bidder acknowledgment of all addenda;

VI. Copy of the bid bond;

VII. One (1) set of as-bid specifications;

VIII. Suspension/Debarment Certification;

IX. Revised financial capability worksheet and certification if bids exceed prebid estimates by more than fifteen percent (15%);

X. MBE/WBE Worksheet;

XI. Recipient's statement that proposed contractor(s) positive efforts, MBE/WBE utilization, or both, have been reviewed and meet regulatory requirements;

XII. Site certification, if not previously submitted; and

XIII. Certification of Nonsegregated Facilities.

(K) Conflict of Interest.

1. No employee, officer, or agent of the recipient shall participate in the selection, award, or administration of a subagreement supported by state or federal funds if a conflict of interest, real or apparent, would be involved. This conflict would arise when-

A. Any employee, officer, or agent of the recipient, any member of their immediate families, or their partners have a financial or other interest in the firm selected for a contract; or

B. An organization which may receive or has been awarded a subagreement employs, or is about to employ, any person listed in subparagraph (2)(K)1.A. of this rule.

2. The recipient's officers, employees, or agents shall neither solicit nor accept gratuities, favors, or anything of substantial monetary value from contractors, potential contractors, or other parties to subagreements.

(L) Changes in Contract Price or Time. The contract price or time may be changed only by a change order. The value of any work covered by a change order or of any claim for increase or decrease in the contract price shall be determined by the methods set forth in the following:

1. Unit prices.

A. Unit prices previously approved are acceptable for pricing changes of original bid items. However, when changes in quantities exceed fifteen percent (15%) of the original bid quantity and the total dollar change of that bid item is greater than twenty-five thousand dollars ($25,000), the recipient shall review the unit price to determine if a new unit price should be negotiated.

B. Unit prices of new items shall be negotiated;

2. A lump sum to be negotiated; and

3. Cost reimbursement. The actual cost for labor, direct overhead, materials, supplies, equipment, and other services necessary to complete the work plus an amount to cover the cost of general overhead and profit.

(M) Progress Payments to Contractors.

1. Recipients should make prompt progress payments to prime contractors and prime contractors should make prompt progress payments to subcontractors and suppliers for eligible construction, supplies, and equipment costs in accordance with section 34.057, RSMo.

2. Retention from progress payments. The amount the recipient retains shall be in accordance with section 34.057, RSMo.

(N) Procurement of Design-build Services. The procurement of design-build services shall be in accordance with section 67.5060, RSMo. Recipients that are exempt from section 67.5060, RSMo. may also utilize design-build services if local ordinances or policies allow design-build and the procurement of the design-build team considers both the qualifications of the team. Recipients seeking funds for a project utilizing design-build services must notify the department with the recipient's application. Recipients that utilize design-build services shall coordinate procurement activities with the department to ensure compliance. The department may restrict the amount of funding available for projects using design-build services, if needed to comply with federal law and regulations.

(3) DWSRF Direct Loans.

(A) General.

1. This section describes the process and requirements for direct loans awarded under this rule. All other requirements also apply, including administrative fees in subsection (2)(A) of this rule.

2. This rule sets out the general format for the direct loan program. The commission, the department, and EIERA shall have the authority to make specific refinements, variations, or additional requirements as may be necessary or desirable in connection with the efficient operation of the direct loan program.

3. The department may make direct loans by purchasing the general obligation bonds, revenue bonds, short-term notes, or other acceptable obligation of any qualified recipient for the planning, design, and/or construction of an eligible project. These loans shall not exceed the total eligible project costs described in subsection (1)(B) of this rule less any amounts finalized by any means other than through the direct loan program.

(B) Reimbursement Terms.

1. The maximum reimbursement will be no more than the sum of all eligible costs incurred to date. Each payment request shall include the following information:

A. Completed reimbursement request form;

B. Construction pay estimates signed by the construction contractor, the recipient, and the consulting engineer, if applicable;

C. Invoices for other eligible services, equipment, and supplies for the project; and

D. Any other information deemed necessary by the department to ensure proper project management and expenditure of public funds.

2. If the department is satisfied that the payment request accurately reflects the eligible cost incurred to date on the project, the department will request that state payment be issued to the recipient.

(C) Trustee or Paying Agent. The department may require the recipient to contract with a trustee or paying agent to provide the services below, along with other such services as detailed in the recipient's escrow agreement:

1. Maintain separate trust funds and accounts for recipients;

2. Disburse funds to recipients;

3. Collect principal and interest quarterly payments from recipients; and

4. Provide monthly financial reports to recipients.

(D) Amortization Schedules. The following guidelines are to be used to establish amortization schedules under this rule:

1. The bonds, notes, or other debt obligations shall be fully amortized as outlined in 40 CFR 35.3525;

2. Principal payment frequency shall be no less than annual and interest payments at least semi-annual;

3. The amortization schedule may either be straight line or declining schedules for the term of the debt obligation. The department may approve an alternative amortization method if deemed appropriate; and

4. Repayment of principal shall begin not later than one (1) year after initiation of operation.

(E) Target Interest Rate (TIR). The TIR shall be established by the commission in consultation with the department and the EIERA based upon current economic factors, projected fund utilization, deposits in the fund, and actual or anticipated federal capitalization grants and published in the annual intended use plan. The department reserves the right to refinance, assign, pledge, or leverage any loans originated under this rule.

(F) If at any time during the loan period the facility(ies) financed under this rule is sold, either outright or on contract for deed, the loan becomes due and payable upon transfer unless otherwise approved by the department.

(G) If at any time the public water system or any part thereof, funded with a DWSRF grant is sold, either outright or on contract for deed, to other than a political subdivision of the state, the department 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

(4) Additional subsidization (such as principal forgiveness, negative interest loans, grants, or the like) may be provided as federal law requires or allows.

(5) Disadvantaged Communities. A disadvantaged community is defined as a recipient that-

(A) Serves a population of three thousand three hundred (3,300) or less;

(B) Has a median household income at or below seventy-five percent (75%) of the state average median household income as determined by the most recent decennial census or by an income survey overseen by a state or federal agency; and

(C) Has an average water user charge for five thousand (5,000) gallons that is at least two percent (2%) of the median household income of the recipient, determined by the decennial census or income survey listed in (5)(B).

10 CSR 60-13.020

AUTHORITY: section 640.100, RSMo Supp. 2008 and section 640.107, HB 661, Ninetyfifth General Assembly 2009.* Emergency rule filed July 15, 1998, effective 7/25/1998, expired 2/25/1999. Original rule filed Aug. 17, 1998, effective 4/30/1999. Amended: Filed Jan. 19, 2001, effective 9/30/2001. Emergency amendment filed May 20, 2009, effective 5/30/2009, expired 2/25/2010. Amended: Filed June 24, 2009, effective 1/30/2010.

Amended by Missouri Register January 2, 2019/Volume 44, Number 1, effective 2/28/2019

*Original authority: 640.100, RSMo 1939, amended 1978, 1981, 1982, 1988, 1989, 1992, 1993, 1995, 1996, 1998, 1999, 2002, 2006 and 640.107, RSMo 1998, amended 2009.