(a) The Arkansas Natural Resources Commission, after duly acting upon an application, may decide to participate in a qualifying water development project or water, sewer, or solid waste management systems project in any of the following ways:

1. (1) Loans.

   1. (A)

(i) The commission will, for those projects in need of urgent financing, make temporary, short-term or long-term loans at low interest rates.

1. (ii) Short-term loans may be made pending acquisition of long-term financing by the applicant.

   1. (iii) The applicant will enter into loan documents with the commission setting forth the terms of the loan.

   2. (B)

      1. (i) The interest rate for long-term or short-term loans by the commission shall not exceed five percent (5%) per annum.
      2. (ii) If the commission is convinced that an applicant is financially unable to pay any interest, then the commission may approve a loan with no interest charge.
   3. (C) The date that interest will begin to accrue on the unpaid balance of a loan will be set by the commission.

   4. (D) The loan documents will provide the terms and conditions of the loan, including but not limited to, the:

      1. (i) Rate;
      2. (ii) Principal amount of the loan; and
      3. (iii) Dates and amounts of payments;

2. (2) Grant-in-aid.

   1. (A) The commission will, for those projects demonstrating an exceptional benefit to the state so general in nature that any method of payment of project costs by the local people would prove inequitable, make a grant to the eligible entity for the payment of such costs.
   2. (B) Grants may also be approved when the eligible entity cannot, in the commission’s judgment, repay a loan; or

3. (3) Joint venture (water development fund projects only).

   1. (A) For any project which would provide exceptional benefits, or when it is determined to be in the best interests of the state, the commission may join with the applicant as a co-owner and sponsor in order to provide for that purpose.
   2. (B) This action may consist of purchases of land or joint ownership of the entire project.
   3. (C) Execution of a joint venture agreement between the applicant and the commission will be required.

(b)

1. (1)

   1. (A) Decisions on the type of financial assistance to be conferred by the commission for water or wastewater projects will be based upon the system’s rate burden factor (RBF).
   2. (B) The RBF is the cost of four thousand (4,000) gallons per month for one (1) year, assuming proposed rates, expressed as a percentage of annual median household income (MHI) in the applicant's locality.
2. (2) In addition, consideration will be given to applicants with percentages of low income, elderly, or unemployed residents higher than the average state incidence of such persons.

3. (3) The example and table set out below indicate the manner in which the above RBF factor criteria will be utilized. Example: MHI from the most recent census = $11,000 Cost of 4,000 gallons/month = $15.00 (cost 4,000 gal/mo. * 12 mo.) RBF= --------------------------------------- * 100 MHI ($15.00 * 12) RBF= --------------------------------------- * 100 $11,000 RBF=1.64% System’s Rate Burden Factor (RBF) Chart

   RBF	Types of financial assistance
   0.0 – 0.49	None.
   0.50 - up	Interim financing; 5 % interest; maximum 3 years payback.
   1.00 – 1.49	5% interest; 10 year payback.
   1.50 – 1.99	5% interest; 20 year payback.
   1.50 - up	Grant; must also have two or more of the following: greater than average State incidence of elderly, low income, or unemployed persons.
   2.00 – 2.99	5% interest; 10 years deferred interest and principal payment; 20 year payback after 10 year deferral.
   2.50 - up	Grant; must also have one or more of the following: greater than average State incidence of elderly, low income, or unemployed persons.
   3.00 - up	Grant.

   1. (c)
4. (1) Calculation of the RBF is intended to provide general guidelines and standards for application and review by the commission.

5. (2) Special consideration may also be given to such factors as:

   1. (A) Documented health hazards; and
   2. (B) Unusual economic impacts.
6. (3) In all instances, each individual application must be reviewed and considered on its own merits.
7. (4) The standards set forth above shall accordingly be interpreted and applied so as to allow sufficient flexibility in the ultimate exercise of the commission’s judgment and discretion.