§ 1624 - Financial assistance with water supply projects
§ 1624. Financial assistance with water supply projects
(a) Grants. The secretary may award a municipality a state grant for a potable water supply facility of up to 35 percent of its total eligible project cost, when the municipality contributes at least ten percent of the total eligible costs, for which purpose the municipality may use federal funds obtained from other programs, and when the secretary finds that:
(1) the project is necessary, and the proposed type, size and estimated cost of the project are suitable for its intended purpose;
(2) at least one-half of the property owners of the new area of the municipality to be served by the project have contracted to connect to the water system and pay for service at rates which the legislative body of the municipality determines to be adequate to cover the anticipated operating and maintenance costs including debt services;
(3) the proposed rate and fee schedule provide for reasonable contributions by all persons in the municipality benefited by the project; and
(4) the municipality has voted bonds for the project prior to April 5, 1997 in anticipation of the receipt of a construction grant authorized under this subsection.
(b) Loans.
(1) The secretary may certify to the Vermont municipal bond bank established by section 4571 of Title 24 the award of a loan to a municipality to assist with a potable water supply facility project, when the secretary finds that:
(A) the project is necessary;
(B) the proposed type, size and estimated cost of the project are suitable for its intended purpose; and
(C) the municipality will have the technical, financial and managerial ability to operate the facility in compliance with federal and state law.
(2) The certification by the secretary shall specify the interest rate, and indicate which of the following loan conditions concerning construction loans apply:
(A) The term shall not exceed 20 years, and the annual interest rate, plus administrative fee, shall be no more than three percent or less than zero percent, except that when the applicant municipality is disadvantaged as defined by section 1571(9) of this title, the term shall not exceed 30 years. When the applicant municipality is disadvantaged as defined in subdivision 1571(9)(A) of this title, the annual interest rate, plus administrative fee, shall be no less than minus three percent.
(B) In no instance shall the annual interest rate, plus administrative fee, be less than necessary to achieve an annual household user cost equal to one percent of the median household income of the applicant municipality or served area, taking into account:
(i) debt retirement of the project, including any monies a municipality may borrow to match federal funds available to the drinking water state revolving fund pursuant to subsection (d) of this section;
(ii) prior drinking water projects; and
(iii) estimated annual operation and maintenance costs as determined by the secretary.
(3) A municipal legislative body may execute a loan agreement under this subsection, provided the loan is authorized by municipal voters and secured by the full faith and credit of the municipality.
(4) A loan shall be issued and administered pursuant to chapter 120 of Title 24.
(5) Loans shall be available to the extent funds are available and according to priorities established by the secretary.
(6) For purposes of this subsection, the secretary shall determine the median household income of a municipality from the most recent federal census data available when the priority list used for funding the project was approved, or at the option of an applicant municipality, based on the recommendation of an independent contractor hired by the municipality and approved by the secretary. The determination of the secretary shall be final. The cost of an independent contractor may be included in the total cost of a project. When using federal census data to determine the median household income of a municipality, the census data shall be adjusted for inflation beginning in the second year of availability by increasing it four percent per year.
(7) Loans awarded for the purpose of refinancing old debt shall be for a term of no more than 20 years and at an interest rate set by the state treasurer at no less than zero percent and no more than 80 percent of the average rate on marketable obligations of the state, except that municipalities or private water system owners which qualify for loan awards under section 4770 of Title 24 and which incurred debt and initiated construction after April 5, 1997 may receive loans at interest rates and terms pursuant to subdivision (b)(2)(A) of this section.
(8) Loans awarded for the purpose of conducting feasibility studies and preparation of engineering plans and designs shall be for a term of no more than five years at an interest rate of zero percent.
(9) Loans awarded for the purpose of purchasing land or conservation easements to protect public water sources shall be for a term of no more than 20 years at an annual interest rate of three percent.
(10) The secretary may forgive up to $25,000.00 of a loan from the Vermont environmental protection agency (EPA) drinking water state revolving fund to municipalities for improvements to public school water systems following substantial completion of the project. The secretary shall establish amounts, eligibility, policies, and procedures for loan forgiveness in the annual state intended use plan (IUP) with public review and comment prior to finalization and submission to the EPA.
(11) Subject to the interest rate and administrative fee limitations of subdivision (b)(2) of this section, the secretary may designate projects as United States Department of Agriculture Rural Development-Vermont EPA drinking water state revolving fund jointly-funded projects, and reduce the Vermont EPA revolving fund interest rate, plus administrative fee, in order to make the total loan cost of the joint loan to the municipality equivalent to the total loan cost of a separately-funded Vermont EPA revolving loan for the same project.
(c)(1) Zebra mussel control. The department may award supplemental financial aid for the construction of zebra mussel control measures, upon finding that the proposed project is necessary. The supplemental aid shall be awarded in such a manner that the total financial burden of a water system, including zebra mussel controls, shall not exceed, in the first year after receiving the supplemental aid, an annual cost to a typical household of 1.5 percent of median household income for the project area as determined by the department. The estimate of such cost shall include all awards of aid under subsections (a) and (b) of this section, all other aid available to the applicant, and the estimated new and existing capital debt retirement and annual operating costs of the system. Awards of supplemental aid may, in accordance with the eligibility limitations of section 1622(1) of this title, consist of:
(A) a loan under chapter 120 of Title 24 with an interest rate sufficient to assure that annual user costs do not exceed 1.5 percent of the median household income; or
(B) a grant for up to, but not exceeding, the total capital cost of the proposed project, in order to assure as closely as possible that annual household user costs do not exceed 1.5 percent of the median household income for the project area.
(2) In awarding financial assistance under this section, the department shall determine the existing and proposed annual user cost in accordance with procedures or rules adopted under chapter 25 of Title 3.
(d) Municipal match of federal revolving funds.
(1) A municipality may choose to provide the state money necessary to match federal monies available to the drinking water state revolving fund established by section 4753(a)(3) of Title 24, and thereby become eligible to receive a loan from the revolving fund in the amount of the total cost of a water facility project approved under this section. Such a loan from the revolving fund, for up to the total project cost, shall be approved by municipal voters and secured by the full faith and credit of the municipality or anticipated revenues from municipal water charges.
(2) The amount of such a municipal match of federal funds shall be equal to one-sixth of the total project cost, which shall constitute a sum in addition to the amount of a loan for the total project cost to be received by the municipality from the revolving fund. A municipality is authorized to borrow monies needed for the match amount, from sources other than the revolving fund, which shall be approved by municipal voters and secured by the full faith and credit of the municipality or anticipated revenues from municipal water charges, or a municipality may use other funds or tax revenues available to it for this purpose.
(e) Upon request of the owner of a privately-owned public water system, a municipality shall apply for and support an application for a community development block grant to receive use of state and federal funds provided:
(1) the private water system owner agrees to pay all administrative and legal costs incurred by the municipality in pursuit of the grant;
(2) the municipality finds that the project to be supported by the grant is consistent with applicable local and regional plans, and local ordinances or other local enactments;
(3) the private water system owner, to the extent practicable, undertakes the administration of logistical and legal work necessary to prepare the application materials; and
(4) the private water system owner agrees to hold the municipality harmless from any claims of liability arising from the grant application or project.
(f) The secretary may use federal funds to award grants to municipalities to complete studies, or for start-up costs associated with the physical and operational consolidation of public water systems or the interconnection of public water systems. The secretary shall establish amounts, eligibility, priorities, policies, and procedures in the annual state intended use plan (IUP). (Added 1971, No. 97, § 3, eff. April 22, 1971; amended 1971, No. 255 (Adj. Sess.), § 9, eff. April 11, 1972; 1973, No. 112, § 2, eff. April 25, 1973; 1979, No. 73, § 1, eff. May 7, 1979; 1985, No. 172 (Adj. Sess.), § 6; 1987, No. 76, § 18; 1993, No. 233 (Adj. Sess.), § 58, eff. June 21, 1994; 1995, No. 190 (Adj. Sess.), § 1(b); 1997, No. 62, § 60, eff. June 26, 1997; 1997, No. 134 (Adj. Sess.), § 7; 2001, No. 61, §§ 36, 37, eff. June 16, 2001; 2003, No. 63, § 59, eff. June 11, 2003; 2003, No. 121 (Adj. Sess.), § 64, eff. June 8, 2004.)