1. A. The department shall administer the RIA Program. Money in the fund is appropriated to the department to carry out the provisions of the Rural Infrastructure Act. The department may allocate up to two percent of the total balance in the fund to pay for administrative expenses necessary to carry out the provisions of the Rural Infrastructure Act. Money allocated for administrative expenses shall be placed in a separate administrative account in the fund to be used solely for administrative expenses, and the department shall at the beginning of the fiscal year determine the projected administrative costs for the year and deposit in the account the appropriate amount; provided that the amount to be deposited does not exceed two percent of the total balance fund. Money in the account shall remain in the account at the end of a fiscal year.
2. B. Applications are to be submitted on standard forms provided by the department.
3. C. All applications for assistance under the RIA are due on the date(s) specified by the department.
4. D. The department shall review the application for eligibility, technical merits, and financial capability, and rate the applications based on the priority ranking system described in Section 20.7.2.300 NMAC.

5. E. The department shall make loans and, if applicable, average user cost reduction grants and/or zero percent loans to local authorities in order of priority on the current fiscal year priority list and considering the following:

   (1) willingness of a local authority to accept a loan;

   (2) financial capability of the local authority to repay the loan, to properly operate and maintain the water supply, wastewater or solid waste facility, to maintain a replacement fund and a debt service reserve fund; and

   (3) readiness to proceed with the project.

6. F. The department shall establish procedures to determine when the principal and interest portion of an average residential user cost is a reasonable cost.

7. G. The department shall establish procedures for the allocation and approval of average residential user cost reduction grants and zero percent loans which:

   (1) shall reduce only the principal and interest portion of the average residential user cost for a recipient whose water supply, wastewater or solid waste facility serves a population of less than 3,000; and

   (2) shall be for financially needy local authorities receiving RIA loan funds and which comply with the conditions outlined in the RIA:

   (a) the construction project is designed using the most cost-effective and dependable option;

   (b) the system is designed with adequate built-in expansion capacity;

   (c) other sources of grant funds have been sought and are not available in a timely manner;

   (d) the project cannot feasibly be reduced in scope or phased, so as to bring it within available loan funds and within reasonable user cost; and

   (e) the local authority’s median household income (MHI) is less than ninety percent of the statewide non-metropolitan MHI based on the most current decennial census.

8. H. Loan agreements will be prepared by the department and executed for those projects which can be financed with available funds.

9. I. The department may:

   (1) conduct periodic reviews of the operation of a local authority that has received funding from the department;

   (2) require the local authority to submit information relevant to the loan to the department;

   (3) require the submission of financial reports relevant to the ability of the local authority to repay the loan; and

   (4) review and require changes to the rate-setting analysis that supports the loan payments.

[ 20.7.2.202 NMAC - Rp, 20 NMAC 7.2.202, 10/31/2001; A, 10/29/2007]