PURPOSE: This rule defines the department’s grant eligibility and a means of administering the state funds appropriated for rural community and sewer district sanitary sewer collection systems by defining rural communities and sewer districts.

1. (1) Grant Application Requirements.

   1. (A) As required by section 640.615, RSMo, the applicant must first apply with the agency or other financial source which is to furnish the primary financial assistance, and after the amount of that assistance has been determined, an application for a grant under this rule may be made to and processed by the department. This requirement may be met by the submittal of a pre-application form and preliminary engineering report to the Missouri Water and Wastewater Review Committee (MWWRC).
   2. (B) An application for a grant shall be submitted on forms provided by the department. The application shall be supported by the necessary documents and forms from other state and federal grant or lending agencies or private lending agencies to enable the department to establish eligibility for grant funds.
   3. (C) The project for which the grant application is submitted shall comply with appropriate state and local laws, rules and ordinances.

   4. (D) The grant application packet shall contain the information identified below:

      1. 1. The preliminary engineering study

for the proposed project including, but not limited to, the following items: development and administration costs; land, structures, right-of-way costs; legal costs; engineering costs; interest costs; equipment costs, contingencies; other costs; total project costs; and other information as required in rule 10 CSR 20-8.110;

1. 2. Information required to determine the

cost per contracted connection of the proposed project;

1. 3. The median household income of the

residents in the district or community as determined by the latest census; and

1. 4. Information required to determine the

ratio of contracted users to potential users.

1. (2) Eligibility Requirements.

   1. (A) Grants shall be limited to rural communities, neighborhood improvement districts, certain public water supply districts or public sewer districts of less than ten thousand (10,000) population.
   2. (B) Grants awarded under this regulation can be used to supplement other funding sources to provide collection sewers to unsewered areas. Grants for collection sewers are limited to one thousand four hundred dollars ($1,400) per new connection up to fifty percent (50%) of the eligible project costs. No grant will exceed five hundred thousand dollars ($500,000).
   3. (C) Grants awarded under this regulation can be used by any community with less than ten thousand (10,000) population, public sewer district or public water district to fund up to fifty percent (50%) of the costs required to meet more stringent operating permit requirements when those increased permit requirements are attributable to changes in, or the implementation of, the state water quality policies or state water quality standards. Grants will be the lesser of one thousand four hundred dollars ($1,400) per connection or fifty percent (50%) of the eligible costs of the upgrades (including the proportional share of the associated engineering) or five hundred thousand dollars ($500,000) whichever is less.

   4. (D) Other than pre-approved financing costs, no more than fifty percent (50%) of total eligible costs will be reimbursed through the grant. Grants shall be used for the following costs:

      1. 1. Construction contracts for the con-

struction, rehabilitation or upgrade of publicly owned wastewater systems. House laterals are not eligible;

1. 2. Engineering costs including design,

planning and construction phase engineering if the costs are supported by an engineering agreement pre-approved by the department; and

1. 3. One hundred percent (100%) of the

reasonable costs of a grant anticipation loan will be eligible. Departmental approval must be obtained prior to securing the grant anticipation loan. Grant anticipation loan costs will be approved when they are needed for cash flow purposes for the period between grant award and the first grant payment from the department. The approved costs of grant anticipation notes will be in addition to the approved grant amount.

1. (E) No applicant shall receive more than one (1) grant for a sewer collection project in any two (2)-year period.
2. (F) The ratio of contracted users to potential users must be at least seventy-five percent (75%).

1. (3) Grant Priorities.

   1. (A) Priorities for grants awarded under this rule shall be established by the department. Preference will be given to those applicants whose projects are partially funded through other departmental grants or loans and/or to applicants whose projected financial need is based on potential compliance with additional pollution control measures. Additional priority will be given based on readiness to proceed with construction and documented financial need.
   2. (B) The establishment of priorities and determination of relative need will be coordinated with other state and federal grant and lending agencies. 10 CSR 20-4

2. (4) Approval and Payment of Grants Made and Amended Between March 4, 2007 and August 30, 2007.

   1. (A) The applicant shall be notified by the department when the grant application has been approved. Grant award shall be made upon receipt and approval of bid documents and executed contract documents.

   2. (B) Full payment of the grant amount shall be made at the time of the department’s receipt of the executed grant award or grant amendment. The following provisions shall apply:

      1. 1. The grantee shall established a sepa-

rate escrow account with a bank as defined in Chapter 409, section 409-1.102, RSMo;

1. 2. The full grant award amount, less any

payments processed prior to the date of this rule, will be paid to the grantee for deposit into the grantee’s established escrow account;

1. 3. Grant funds in the escrow account

may be used to pay up to fifty percent (50%) of the costs of construction, equipment and construction phase engineering as the costs are incurred. No funds will be withdrawn for the construction of house laterals; and

1. 4. The grantee shall submit the bank

statement of the escrow account monthly, within thirty (30) days of the end of the month. If the monthly statement indicates that funds were withdrawn, the grantee shall submit copies of the invoices to document the costs.

1. (C) Any cost of work completed after submission of the statement of work completed form shall not be considered an eligible project cost. The grant amount will be reduced, if necessary, to reflect actual project costs as determined by the invoices submitted by the grantee.
2. (D) The department will verify project completion after a final inspection by the department has been conducted.
3. (E) An audit to verify expenditure of grant funds may be made by the department after the completion of each approved project. Any funds found not expended for the purposes listed in subsection (2)(D) of this regulation will be recovered.

1. (5) Approval and Payment of Grants Made after August 30, 2007.

   1. (A) The department shall notify the applicant when the grant application has been approved. Grant award shall be made upon receipt and approval of bid documents and executed contract documents. The department may elect to pay out the full grant amount at the time of grant award or to make payments to the grantee based on the cash flow circumstances of the state funds.

   2. (B) If the department elects to make full payment of the grant amount, payment shall be made at the time of the department’s receipt of the executed grant award. The following provisions apply:

      1. 1. The grantee shall establish a separate

escrow account with a bank as defined in Chapter 409, section 409-1.102, RSMo;

1. 2. The full grant award amount will be

paid to the grantee for deposit into the grantee’s established escrow account;

1. 3. Grant funds in the escrow account

may be used to pay up to fifty percent (50%) of the costs of construction, equipment and construction phase engineering as the costs are incurred. No funds will be withdrawn for construction costs of house laterals or for costs that have been declared ineligible by the department;

1. 4. The grantee will submit the bank

statement of the escrow account monthly, within thirty (30) days of the end of the month. If the monthly statement indicates that funds were withdrawn, the grantee must submit copies of the invoices to document the costs; and

1. 5. The bank account may earn interest,

however, all withdrawals from the account must be documented with eligible invoices. If the project costs are inadequate to withdraw all the funds in the account, the balance must be refunded to the department.

1. (C) If the department elects to make grant payments rather than fund the full grant, payments can be requested no more frequently than monthly. The department will provide a payment request form for the grantee to use. The payment request must be supported by invoices that document the costs incurred.
2. (D) Any cost of work completed after submission of the statement of work completed form shall not be considered an eligible project cost. The grant amount will be reduced, if necessary, to reflect actual project costs as determined by the invoices submitted by the grantee.
3. (E) The department will verify project completion after the final inspection by the department has been conducted.
4. (F) Any funds remaining in the escrow account three (3) years after the date of the initial grant payment will be recovered by the department. On grants that are paid incrementally by the department, no payments will be made after three (3) years from the initial grant award acceptance.
5. (G) An audit to verify expenditure of grant funds may be made by the department after the completion of each approved project. Any funds found not expended for the purposes listed in subsection (2)(D) of this regulation will be recovered.

1. (6) If at any time during the twenty (20)-year design life of the facility(ies) funded under this rule is sold, either outright or on contract for deed, to other than a political subdivision of the state, the state shall receive reimbursement of the grant funds. The total amount of grant funds to be reimbursed shall be based on a twenty (20)-year straight-line depreciation. Grant funds to be reimbursed shall become due and payable upon transfer of ownership of the facility(ies).

AUTHORITY: section 640.600 and 640.615, RSMo 2000 * Original rule filed Feb. 2, 1983, effective July 1, 1983. Amended: Filed Nov. 27, 1985, effective Feb. 25, 1986. Amended: Filed Aug. 30, 1989, effective Nov. 27, 1989. Amended: Filed Sept. 4, 1991, effective Feb. 6, 1992. Amended: Filed April 14, 1994, effective Nov. 30, 1994. Amended: Filed March 1, 1996, effective Nov. 30, 1996. Amended: Filed June 24, 1999, effective March 30, 2000. Emergency amendment filed Feb. 1, 2007, effective March 4, 2007, expired Aug. 30, 2007. Amended: Filed March 14, 2007, effective Oct. 30, 2007.

*Original authority: 640.600, RSMo 1989 and 640.615, RSMo 1989, amended 1999.