Drinking Water State Revolving Fund (DWSRF) Loan Program
The current DWSRF Loan interest rate is 2.01% (until 31 March 2013).
Overview
To fund drinking water capital projects that protect public health, North Carolina makes loans at
one-half (1/2) of the market rate for a period of up to 20 years.
The actual term of the loan is determined by the State Treasurer's Office.
An administrative funding fee of 2.00% is charged and made payable upon award of funding according to
15A NCAC 01N .0203. All funded projects must address a threat to public health
(as described in 15A NCAC 01N
and the
Operating Agreement).
Since the DWSRF is federally-seeded, the loans are subject to additional federal
regulations regarding
environmental review, outreach
for disadvantaged business enterprises, payroll
(Davis Bacon and related Acts), etc.
Application
The Public Water Supply (PWS) Section receives applications throughout the year and considers those
complete applications received as of 30 September.
If you are interested in a DWSRF loan or other financial assistance offered by the PWS Section,
contact the regional office
and the funding engineer listed for your county.
All funding programs use the same application, but each program has its own requirements. The application and the application appendix for the DWSRF program can be found on the forms page. Follow the instructions in the application and appendix carefully.
Availability
Under 40 CFR 35.3525, DWSRF loans provided as part of each years allocation from the federal government to the State of North Carolina must be distributed as follows:
(a)(5) At least 15% must be available to public water systems which regularly serve fewer than 10,000 persons, and
(b)(2) No more than 30% of the principal made available through loans distributed as part of this program may be forgiven. These principal forgiveness loans are distributed through the “Disadvantaged Communities Program” described in the Intended Use Plan (IUP) for the given year.
In addition to the above requirements, 15A NCAC 01N .0201(d) requires that a maximum of 5% be used for loans for project planning purposes only.
For fiscal year 2010, PL 111-88 requires that:
- At least 20% must be available for projects to address green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities. This reserve is a vehicle for “green” projects to receive higher priority for funding and is further outlined on the DWSRF Green Project Reserve Page. The Green Project Reserve, by itself, provides a DWSRF loan at one-half (1/2) of the market rate.
And, separately, that:
- At least 30% must be available as principal forgiveness loans through the “Disadvantaged Communities Program.” This program is further outlined on the Disadvantaged Communities Program Page.
It is possible for a project to qualify for and participate in funding through both the Green Project Reserve and the Disadvantaged Communities Program.
These mandates were renewed for fiscal year 2011 through PL 112-10. However, it is uncertain if these mandates will carry on for future DWSRF allocations.
Eligibility
Under 15A NCAC 01N .0301(c) applications are ineligible if filed after the award of a construction contract on the project, unless:
- The applicant is subject to an administrative order or deadline issued by the Division or
- The project qualifies as an emergency situation.
Applicants
Under NCGS 159G-31, applicants must be either a local government unit or a water corporation in order
to be eligible.
Under 40 CFR 35.3520(d)(2) and (3), applicants must either demonstrate technical, managerial and financial
capacity or a commitment to obtain this capacity to be eligible. Determination of these capacities
is based upon a review of:
- Finances,
- Compliance with applicable public health, environmental and utility laws, and
- [Under 15A NCAC 01N .0202(b)] the experience and certification level of the water system operator
as evidenced by the submission of a Water System Management Plan (WSMP).
Project Types
Under 40 CFR 35.3520(b)(2), eligible projects types include the following:
(i) Treatment,
(ii) Transmission and distribution,
(iii) Source,
(iv) Storage, or
(v) Consolidation.
While 40 CFR 35.3520(b)(2) also allows for the following project types:
(vi) Creation of new systems,
15A NCAC 01N .0302(a) does not make these projects eligible in North Carolina.
The following project types are specifically ineligible under 40 CFR 35.3520(e):
(1) Dams or rehabilitation of dams,
(2) Water rights not acquired through system consolidation,
(3) Reservoirs that either:
- Do not store finished water or
- Are not part of the treatment process,
(4) Projects needed mainly to meet requirements for fire protection,
(5) Projects primarily intended to serve future growth, or
(6) Projects receiving DWSRF funds from the national set-aside for Indian Tribes.
Under 15A NCAC 01N .0202(e) and 40 CFR 35.3520, the DWSRF program can fund only the most cost-effective
solution to a documented public health problem. Therefore, the applicant must document both the existence
of the problem and the costs of alternatives to address it, typically in the Preliminary Engineering Report, or 'PER.'
In particular, the PER must explicitly discuss the 'do-nothing' or 'no-build' alternative.
Project Costs
Under 40 CFR 35.3520(c), eligible projects costs include the following:
(1) Planning, design, and associated pre-project costs,
(2) Land acquisition (as required for location of project components) from a willing seller (
where there is no condemnation involved),
(3) Restructuring of systems that are found to be:
- Non-compliant with applicable public health, environmental and utility laws, or
- Otherwise lacking in technical, managerial and financial capacity.
In addition to those above, 15A NCAC 01N .0303(a) specifically allows for the following project costs:
(1) Planning
- System needs assessment,
- Preparation of Local Water Supply Plan (LWSP) and
- Preparation of Water System Management Plan (WSMP);
(2) Environmental assessment reports,
(4) Construction,
(5) Legal, fiscal and administrative costs; and
(6) Contingency costs.
The following project costs are specifically ineligible under 40 CFR 35.3520(f):
(1) Laboratory fees for routine compliance monitoring, and
(2) Operation and maintenance expenses.
Eligibility is more fully described in 40 CFR 35.3520 and 15A NCAC 01N .0300.
Priority
The PWS Section prioritizes projects first by category and then by the number of priority points
awarded as described in the Operating Agreement between DENR and EPA [OA S.1.b.(ii)].
Project categories are defined in OA S.1.b.(i) as follows:
(1) Projects that eliminate by consolidation/dissolution a public water system demonstrating a lack of
technical, financial, or management capacity in accordance with the Safe Drinking Water Act, Sections 1402(b)(1)
and 1414(h), and 15A NCAC 18C .0300;
(2) Projects that eliminate compliance problems due to existing violations of the NC Drinking Water
Act or anticipated violations based on data and state or federal rulemaking;
(3) Projects addressing source or treatment needs by improving the available water supply
or treatment capacity to supply existing users, improving treated water quality, or providing a
permanent or emergency interconnection between systems; and
(4) All other public water system projects.
Award of priority points to distinguish between projects in the same category is described in OA S.1.
Unusual Features of the Program
(See the Unusual
DWSRF Features Page.)
Rules and Authority
The Safe Drinking Water Act (SDWA) was originally passed by Congress in 1974 to protect public health by regulating the nation's public drinking water supply. The law was amended in 1986 and 1996 and requires many actions to protect drinking water and resources, rivers, lakes, reservoirs, springs, and ground water wells. (SDWA does not regulate private wells or systems that serve fewer than 25 individuals and 15 connections.) SDWA authorizes the United States Environmental Protection Agency (EPA) to set national health-based standards for drinking water to protect against both naturally-occurring and man-made contaminants that may be found in drinking water. EPA, states, and water systems then work together to make sure that these standards are met. (Source: EPA810-F-99-008)
Congress established the Drinking Water State Revolving Fund (DWSRF) Loan program in the 1996 amendments to provide financial assistance to public water systems to comply with the SDWA. The states are required to provide 20 percent matching funds.
40 CFR 35 Subpart L implements the SDWA in regards to DWSRF. This rule provides general statutory authority for EPA to oversee the DWSRF program nationwide and outlines general requirements for states that administer the funds.
The statute, NCGS 159G, establishes the DWSRF in North Carolina. 15A NCAC 01N implements the DWSRF in North Carolina.
The Operating Agreement (OA) between DENR and EPA governs the program's day-to-day activities.
Each year's Intended Use Plan (IUP) describes the eligible projects and expected activities for the plan year. |
