(a) A grant will be awarded only after a complete financial analysis of the municipality has been performed. The Department will give priority to grant applications which include plans for activities which are intended to accomplish the following:

1. (1) Reduce municipal costs.
2. (2) Share municipal services.
3. (3) Improve municipal productivity.
4. (4) Increase municipal revenues.
5. (5) Ease and assist the municipality through consolidation or merger.

(b) Grant eligibility and grant amounts will be determined using the set of criteria used for long-term loans—measured loss of revenue. In addition to the measured loss of revenue, the financial analysis will consider the following:

1. (1) The municipality’s borrowing ability or capacity.
2. (2) The municipality’s revenue raising capacity.
3. (3) The level of reduction of municipal services.