PURPOSE: This rule establishes the department’s grant application procedures requirements and for construction of projects at public water supply districts and rural community water systems, and providing source water protection grants to support the Conservation Reserve Enhancement Program.

1. (1) Pre-Application Requirements. A preapplication for a grant shall be submitted on forms provided by the department and shall be accompanied by a preliminary engineering report. The pre-application shall contain a brief project description and such information as the department may find necessary to begin coordination with the Missouri water and wastewater review committee or its successor and with other primary funding programs or agencies.

2. (2) 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. The application 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 and need for grant funds.
   2. (B) The project for which the grant application is submitted shall comply with appropriate state and local laws, rules and ordinances.
   3. (C) These grants are to be considered secondary sources of funding and, as such, shall in no case exceed one thousand four hundred dollars ($1,400) per contracted connection, fifty percent (50%) of the total project cost, or $500,000, whichever is less.

   4. (D) The grant application shall contain the following information:

      1. 1. The preliminary engineering cost

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; and total project costs;

1. 2. The engineering report for the pro-

posed project which is in accordance with accepted engineering practices. The current “Design Guide for Community Water System” and “Ten State Standards” and applicable rules should be considered for design standards;

1. 3. Bonded indebtedness or other indebt-

edness of the district or community, including: outstanding general obligation and revenue bonds; the purpose of each indebtedness; the amount of each indebtedness; the amortization period; the date payments are due; amount of installment; and the interest rate;

1. 4. The financial condition of the district

or community, including: the total assessed value of agricultural, commercial and industrial property, vacant lots and residential property; total annual revenue anticipated from this assessed property; water user charges; other sources of income available to finance the project; and cash on hand. The latest audit with an update would satisfy the requirements of this paragraph;

1. 5. The information required to deter-

mine the cost per contracted connection;

1. 6. The median annual household income

of the residents in the district or community as determined in the latest federal census;

1. 7. Information required to determine the

ratio of the contracted users to the potential users; and

1. 8. An evaluation of the applicant’s tech-

nical, managerial, and financial (TMF) capacity on forms provided by the department. An applicant that does not meet the TMF capacity requirements established in 10 CSR 60-3.030 shall submit a plan outlining the steps the applicant will take to meet the requirements. The plan shall show the applicant will meet TMF requirements before the project is complete or within one (1) year of the award of the grant unless the department determines that a longer period of time is necessary.

1. (3) Grant Priorities.

   1. (A) Priorities for grants for public water supply districts and rural community water systems shall be established by the department.
   2. (B) Determination of relative need will be coordinated with appropriate federal grant and lending agencies and with appropriate state agencies. Preference may be given to projects needing a grant in order to obtain state or federal drinking water loan assis- 10 CSR 60-13

tance. It is the intent of the department to maximize the effective use of state and federal grant and loan funds.

1. (4) Approval and Payment of Grants.

   1. (A) The applicant shall be notified by the department when the grant application has been approved.

   2. (B) Installment payments of the grant for construction projects shall be made at the request of the applicant and shall be based on expenditures outlined in paragraph (2)(E)1. of this rule. Payments will be made in equal installments as follows:

      1. 1. A first installment will be made when

not less than twenty-five percent (25%) of the construction of the project is completed;

1. 2. A second installment will be made

when not less than fifty percent (50%) of the construction of the project is completed;

1. 3. A third installment will be made

when not less than seventy-five percent (75%) of the construction of the project is completed; and

1. 4. A fourth installment will be made

after the project is completed, appropriate receipts and expenditures have been submitted and approved by the department, a consultant’s statement of work completion has been received, and a final inspection has been performed by department personnel and construction is approved by the department.

1. (C) Any cost of work completed after the department’s final inspection approval shall not be an eligible project cost.
2. (D) An audit to verify expenditures of grant funds may be made by the department after the completion of each approved project.

1. (5) If at any time during the first twenty (20)- years of the design life of the facility(ies) funded under this rule the facility is sold, leased or otherwise transferred, either outright or on a contract for deed or lease-purchase agreement, to other than a political subdivision of the state, the state shall require reimbursement of the grant funds. The total amount of the grant funds to be reimbursed shall be based on a twenty (20)-year straightline depreciation. Grant funds to be reimbursed, shall become due and payable upon transfer of ownership of the facility(ies).

2. (6) Grants for Conservation Reserve Enhancement Program Participants.

   1. (A) Program Description and Definition of Terms.

      1. 1. The Conservation Reserve Enhance-

ment Program (CREP) is a state-federal partnership program targeted to address specific water quality, soil erosion and wildlife habitat issues related to agricultural use. The CREP uses financial incentives to encourage farmers to voluntarily enroll in contracts to remove lands from agricultural production and, instead, to implement approved conservation reserve practices.

1. 2. Approved conservation reserve prac-

tices in this program are: introduced grasses and legumes, native grasses, hardwood tree planting, wildlife habitat, contour grass strips, filter strips, riparian buffers, and wetland restoration.

1. 3. The purpose of the grants provided

under this section (6) is to provide an additional cash incentive (“rental enhancement payment”) to farmers to encourage participation in CREP. The rental enhancement payment is a per-acre cash payment to participating farmers for land enrolled in the CREP that is in addition to other payments or financial assistance from federal or state funds and is a percentage of the annual base rental payment.

1. 4. The annual base rental payment is the

average weighted soil rental rate for the three (3) predominant soil types on the acreage offered. The U.S. Department of Agriculture maintains this information on a county-bycounty basis for the entire country.

1. (B) Application Requirements.

   1. 1. 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. After the amount of that assistance has been determined, 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 and need for grant funds.

1. 2. The application shall contain:

   1. A. The number of acres being pro-

tected;

1. B. The source for the local match;
2. C. A letter from the local soil conser-

vation district approving the proposed practices to be implemented including a reasonable time line for completion;

1. D. A legal description of the project;

and

1. E. The name and address of the

farmer(s) (subrecipients) proposing the practices.

1. 3. The project for which the grant appli-

cation is submitted shall comply with appropriate state and local laws, rules and ordinances. These projects shall be limited to those areas with a source water protection program approved by the department.

1. 4. These grants are to be considered sec-

ondary sources of funding and, as such, shall in no case exceed one thousand four hundred dollars ($1,400) per contracted connection, fifty percent (50%) of the total project cost, or five hundred thousand dollars ($500,000), whichever is less.

1. 5. A local match for the rental enhance-

ment payment grant is expected.

1. A. The department expects rental

enhancement payment grants not to exceed the product of five percent (5%) of the annual base rental payment times the duration of the contract in years (for example, if the contract is in effect fifteen (15) years, the rental enhancement grant would equal seventy-five percent (75%) of the total of all annual base rental payments), and expects this to be matched with an equal amount of other nonfederal funding.

1. B. Funding priority will be given to

those applicants that offer the highest percentage of matching funds. If matching funds are not available, the applicant may request a reduction or waiver of the match requirement, in which case the rental enhancement payment grant shall not exceed the product of ten percent (10%) of the annual base rental payment times the duration of the contract in years.

1. (C) Approval and Payment of Grants.

   1. 1. The applicant shall be notified by the

department when the grant application has been approved.

1. 2. Payments will be made to the recipi-

ent after completion of the approved practice. These grant payments shall be made immediately available to the farmer (subrecipient) implementing the practices. Grant payments to the recipient may be combined to cover multiple subrecipients.

1. (D) If a subrecipient fails to carry out the terms and conditions of the CREP contract, the state may require reimbursement of the rental enhancement payment portion of the grant with interest.

AUTHORITY: section 640.615, RSMo 2000.* This rule was previously filed as 10 CSR 60- 2.020 Sept. 21, 1973, effective Oct. 1, 1973. Amended: Filed May 4, 1979, effective Sept. 14, 1979. Amended: Filed April 14, 1981, effective Oct. 11, 1981. Rescinded and readopted: Filed Feb. 2, 1983, effective July 1, 1983. Emergency amendment filed July 3, 1989, effective July 27, 1989, expired Nov. 23, 1989. Amended: Filed July 3, 1989, effective Nov. 23, 1989. Amended: Filed Jan. 19, 2001, effective Sept. 30, 2001. *Original authority: 640.615, RSMo 1989, amended 1999.