• The North Dakota DWSRF Program is jointly managed by the North Dakota Department of Health (NDDoH) and the North Dakota Public Finance Authority (PFA).
• The current effective interest rate for DWSRF loans is 2.0 percent for most projects. This includes a 1.5 percent interest rate plus a 0.5 percent administration fee.
• Loan terms up to 30 years are available depending on the useful life of the project.
• The SRF programs require borrowers to only pay interest on loan funds that have been drawn.
• There is no penalty for early payment from excess revenues; prepayments are not allowed from bond proceeds.
• Bond counsel fees are the only cost of issuance expense.
• The SRF programs prepare the continuing disclosure filings.

• Loans
• Loan guaranties
• A source of reserve and security for leveraged loans
  • proceeds must be place in the DWSRF
• Buy or refinance existing local debt obligations
  • publicly-owned systems only
  • initial debt was incurred and construction started after July 1, 1993
• Earn interest prior to disbursement of assistance
• Set-asides (up to 31 percent of capitalization grant)
  • administration (up to 4 percent)
  • state environmental program assistance (up to 10 percent)
  • small system (less than 10,000 population) technical assistance (up to 2 percent)
  • local assistance and other state programs including the delineation and assessment of source water protection areas (up to 10 percent for any one activity with a maximum of 15 percent for all activities combined)
  • subsidized loans to disadvantaged communities as defined by the state and agreed to by the EPA (up to 30 percent)

To the extent that there are a sufficient number of eligible projects, at least 15 percent of the available funds must be annually used to provide project loan assistance to eligible PWSs that serve fewer than 10,000 persons. Available funds constitute the total annual allotment, including the required 20 percent state match, minus funds dedicated to the above set-asides (excluding the set-aside for disadvantaged communities).

The overall philosophy of the North Dakota Department of Health is to maximize the availability of DWSRF funds for project construction.

• Public water systems (PWSs) including:
  • community water systems, both publicly- and privately-owned
  • nonprofit noncommunity water systems (schools, publicly-owned campgrounds, parks, and rest areas)
• Federally-owned PWSs are not eligible to receive DWSRF assistance

• Projects that address present Safe Drinking Water Act (SDWA) exceedances
• Projects that prevent future SDWA exceedances (applies only to regulations in effect)
• Projects to replace aging infrastructure
  • rehabilitate or develop drinking water sources to replace contaminated sources
  • install or upgrade drinking water treatment facilities if the project would improve the quality of drinking water to comply with primary or secondary SDWA standards
  • install or upgrade storage facilities, including finished water reservoirs, to prevent microbiological contaminants from entering the water system
  • install or replace transmission and distribution piping to prevent contamination caused by leaks or breaks, or to improve water pressure to safe levels
• Projects to restructure and consolidate water supplies to rectify a contamination problem, or to assist systems unable to maintain SDWA compliance for financial or managerial reasons (assistance must ensure compliance)
• Projects that purchase a portion of another system's capacity, if such purchase will cost-effectively rectify a SDWA compliance problem
• Projects to construct a new system to serve homes with contaminated individual wells
• Land acquisition
  • land must be integral to the project (i.e., needed to meet or maintain compliance and further public health protection such as land needed to locate eligible treatment or distribution facilities), and acquisition must be from a willing seller
    
    Note: The The cost of complying with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the Uniform Act) is an eligible cost.
• Planning (including required environmental assessment reports), design, and construction inspection costs associated with eligible projects

• Dams, or rehabilitation of dams
• Water rights, except if the water rights are owned by a system that is being purchased through consolidation as part of a capacity development strategy
• Reservoirs, except for finished water reservoirs and those reservoirs that are part of the treatment process and are located on the property where the treatment facility is located
• Drinking water monitoring costs
• Operation and maintenance costs
• Projects needed mainly for fire protection
• Projects for systems that lack adequate technical, managerial and financial capability, unless assistance will ensure compliance
• Projects for systems in significant noncompliance under the SDWA, unless funding will ensure compliance
• Projects primarily intended to serve future growth

There are a number of federal laws, executive orders, and government-wide policies that apply to projects and activities receiving federal financial assistance, regardless of whether the federal laws authorizing the assistance make them applicable. These federal authorities are referred to as cross-cutting authorities or cross-cutters. The cross-cutters can be divided into three groups: environmental; social policy, and economic and miscellaneous authorities. Environmental cross-cutters include federal laws and executive orders that relate to preservation of historical and archaeological sites, endangered species, wetlands, agricultural land, and the like. Social policy cross-cutters include requirements such as minority and women's business enterprise participation goals, equal opportunity employment goals, and nondiscrimination laws (super cross-cutters). The super cross-cutters prohibit the discrimination on the basis of race, color, national origin, sex, handicap or age. Economic cross-cutters directly regulate the expenditure of federal funds. A list of the cross-cutters can be found here.

Additional Requirements:

Financial assistance through the DWSRF program requires compliance with applicable rules, policies, and statutes including:

• Application of Davis-Bacon wage rate requirements (29 CFR Part 5)
• Compliance with EPA’s American Iron & Steel Provision
• Single Audit Act

Additional DWSRF Resources including Laws and Regulations and Policy and Guidance can be found on the EPA’s website here.

Environmental Authorities

• Archeological and Historic Preservation Act, Public Law (PL) 93-291, as amended; 16 USC 469a-1
• Clean Air Act, PL 95-95, as amended; 42 USC 7401
• Clean Water Act, Titles III, IV and V, PL 92-500, as amended
• Endangered Species Act, PL 93-205, as amended; 16 USC 1531
• Environmental Justice, EO 12898
• Farmland Protection Policy Act, PL 97-98; 7 USC 4201
• Fish and Wildlife Coordination Act, PL 85-624, as amended; 16 USC 661
• Floodplain Management, Executive Order 11988 (1977), as amended by EO 12148 (1979)
• National Environmental Policy Act, PL 91-190; 42 USC 4321 et. seq
• National Historic Preservation Act, PL 89-665, as amended; 16 USC 470
• Protection and Enhancement of the Cultural Environment, Executive Order 11593
• Protection of Wetlands, Executive Order 11990 (1977), as amended by EO 12608 (1997)
• Safe Drinking Water Act, PL 93-523, as amended; 42 USC 300f
• Wild and Scenic Rivers Act, PL 90-542; 16 USC 1271-1287

Social Policy Authorities

• Age Discrimination Act of 1975, 42 USC 6101-6107 (super cross-cutter)
• Civil Rights Act of 1964, Title VI, 42 USC 2000d (super cross-cutter)
• Equal Employment Opportunity, EO 11246, as amended
• Prohibition against sex discrimination under the Federal Water Pollution Control Act, Section 13 of PL 92-500 (super cross-cutter)
• Rehabilitation Act of 1973, Section 504, PL 93-112, 29 USC 701 (super cross-cutter)
• Utilization of Small, Minority and Women's Business Enterprises (DBE’s), EO 11625, 12138, and 12432, (40 CRF Part 33)

Economic and Miscellaneous Authorities

• Debarment and Suspension, EO 12549
• Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, as amended; 42 USC 3331
• Drug Free Workplace Act, PL 100-690, 41 USC Ch. 81
• Lobbying Regulation, Section 319 of PL 101-121, 31 USC 1352
• Preservation of Open Competition and Government Neutrality Towards Government Contractors Labor Relations of Federal and Federally Funded construction Projects, EO 13202, as amended by EO 13208
• Procurement Prohibitions, Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, including EO 11738
• Uniform Relocation and Real Property Acquisition Policies Act, PL 91-646 (1971), as amended 42 USC 460

States are required to develop an annual Intended Use Plan (IUP) for the DWSRF, and provide it to the public for review and comment before submitting it to the EPA as part of its capitalization grant application. The IUP must include, among other things, a description of how the DWSRF funds will be used, a priority ranking system which meets the Safe Drinking Water Act (SDWA) and EPA guidelines, a comprehensive project priority list (PPL) based on the ranking system, and project bypass criteria. The PPL (found here) represents all projects that are anticipated to receive loan assistance in the first year following the grant award. In determining funding priority, states are required to ensure, to the maximum extent practical, that priority use of DWSRF funds be given to projects that:

1. address the most serious risks to human health
2. are necessary to ensure compliance under the SDWA
3. assist systems most in need on a per household basis (i.e., affordability)

The North Dakota Department of Health (NDDoH) developed a priority ranking system for the DWSRF which has been approved by the EPA. The priority ranking system is a 100-point system consisting of the following criteria and point assignments:

1. Water Quality (maximum points limited to 35)
2. Water Quantity (maximum of 20 points)
3. Affordability (maximum of 15 points)
4. Infrastructure Adequacy (maximum points limited to 15)
5. Consolidation or Regionalization of Water Supplies (maximum of 10 points)
6. Operator Safety (maximum of 5 points)

To qualify for potential DWSRF assistance, a project must be eligible, ranked, and included on the PPL within an IUP. Once identified in an IUP, a project can be approved for assistance based upon its ranking and the availability of funds. Under certain conditions, lower-ranked projects can be funded ahead of higher-ranked projects. The conditions under which a higher-ranked project can be bypassed are included in the IUP, and include such criteria as readiness to proceed. While an application can be processed and preliminary work completed in advance, no assistance can be approved for nor any funds transferred to a system until their project is identified in a finalized IUP.

In the spring of each year, a letter of interest is sent to all potential DWSRF loan recipients asking for information regarding new drinking water projects for which they may be interested in pursuing DWSRF assistance. Systems that respond are provided a project ranking questionnaire (found here). Eligible projects for which ranking questionnaires are returned are ranked and included on the PPL as part of the IUP development process. In the fall of each year, following public review and comment, the IUP is finalized and subsequently included in the grant application to the EPA.

Once the IUP is finalized, systems with projects on the PPL may apply for DWSRF assistance.

Depending on the complexity of the project, the NDDoH and/or The North Dakota Public Finance Authority (PFA) may schedule a meeting to explain the program, answer any questions that the system may have, and assist the system as needed.

The NDDoH assesses the applicant's technical and managerial capability and ensures that other programmatic requirements are met. The PFA reviews the financial information and assesses the applicant's financial capability. Loan application packets can be obtained from the PFA’s website here. All items in the loan application, including the DWSRF attachment, must be completed. One copy of the signed application must be submitted to the NDDoH at the address listed on the instruction page of the application. The NDDoH will send a copy of the loan application to the PFA for its review.

Eligible PWSs will typically require the services of a consulting engineer (a North Dakota registered Professional Engineer) and bond counsel (an attorney or law firm). The consulting engineer is responsible for preparing all required technical documents. These include the facility plan, plans and specifications, bidding documents, and the operation and maintenance manual. The consulting engineer also provides onsite inspection services during construction to ensure quality control and construction in accordance with the approved plans and specifications. The North Dakota Department of Health will work closely with the system's consulting engineer to ensure compliance with federal and state requirements. The North Dakota Public Finance Authority will work with the system and its bond counsel to ensure that all legal and financial requirements are met. Bond Counsel can be found on the PFA website here.

SRF Project Flowchart can be found here. And the SRF Project Manual can be found here.

The typical SRF project consists of three steps, the facility plan, plans and specifications, and construction. As the name implies, the facility plan is a planning document that establishes existing conditions, identifies the current problems, projects future conditions at the design year, and evaluates alternatives to solve the existing problems and meet future needs. The evaluation of alternatives includes both a cost effectiveness analysis and an environmental assessment. The intent of the facility plan is to arrive at the most cost effective, environmentally sound solution to the problem. The facility plan must be approved by the North Dakota Department of Health (NDDoH) before the project can proceed to the next step. The Outline for Facilities Planning can be found here.

When the facility plan is approved, plans, specifications, and bidding documents are prepared based on the recommended alternative from the facility plan. These must comply with, among other things, MBE/WBE and EEO requirements. The Specification Package and Required Bid Language can be found here.Once the documents are approved by the NDDoH, the project can be advertised and bids opened. If the bids are acceptable, the construction contract must be awarded to the low, responsive, responsible bidder following NDDoH authorization. The Bid Document Submittal Checklist can be found here. Construction can now begin at the systems's convenience.

At this time, the NDDoH will schedule a preconstruction meeting with the system, consulting engineer and contractor(s) to explain the construction related requirements that must be complied with and to answer any questions that arise. In addition to the preconstruction meeting, periodic interim inspections will be conducted by NDDoH engineers during the construction phase of the project. Since SRF loans are cost reimbursable, construction costs must be incurred before the system can receive payments. Once costs are incurred, the system should submit periodic payment requests to the NDDoH for processing. Payment Request Forms can be found here. Payment should be received by the system within two weeks of receipt of the request by the NDDoH. When construction is completed, the NDDoH will conduct a final inspection to verify compliance with federal requirements, verify that the project was constructed in accordance with the approved plans and specifications, and establish final costs. The Final Document Checklist and Forms can be found here.

Repayment of principle must begin no more than one year after the project is declared operational. Prior to this, the North Dakota Public Finance Authority will work with the system to establish a repayment schedule.

Each loan recipient is required to certify that one year after the initiation of operation date, the project is still meeting design specifications and project performance standards. A sample of the One Year Certification letter can be found here.

The DWSRF was authorized by the U.S. Congress under the 1996 Amendments to the Safe Drinking Water Act (SDWA). The Amendments authorize the U.S. Environmental Protection Agency (EPA) to provide federal funds to the states to capitalize DWSRFs. States are required to provide a 20 percent match for the federal funds. DWSRFs are established and managed by the states. The overall purpose of the DWSRF is to assist public water systems (PWSs) in financing the costs of drinking water infrastructure needed to achieve or maintain compliance with the SDWA, and to protect public health.

The North Dakota DWSRF Program is jointly managed by the NDDoH and the PFA. The NDDoH receives the Federal Capitalization Grant and is responsible for the technical and overall administrative functions of the program. The PFA, under agreement with the NDDoH, acts as the Department's financial agent and is responsible for the preparation and issuance of bonds, reviewing the financial capability of loan applicants, investing program proceeds, handling loan repayments, financial statement preparation and other necessary financial functions.

Each year, the NDDoH receives a capitalization grant from the EPA and the state of North Dakota is required to provide a 20 percent match; the PFA issues bonds to provide these match funds. Loan repayments are used to retire any outstanding bonds and provide additional loans for project funding. The revolving aspect of the program will assure that North Dakota has funds for needed projects far into the future.

Additional information about the DWSRF program can be found on the EPA’s website here.