TITLE VI
State Revolving Fund Program
PINAL
QUESTIONS AND ANSWERS
CUMULATIVE
Incorporates Previously Issued
Sets 1, 2, and 3
Includes Cross-Index of
Key Words and Phrases
July, 1990
Office of Municipal Pollution Control
U.S. Environmental Protection Agency
Washington, D.C.
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TITLE VI SRF PROGRAM
Draft Questions and Answers: Set 3
SUBJECT OUTLINE Page#
I. FISCAL AUTHORIZATIONS AND RESERVES
A. Authorization, Allotment, and Reallotment ..
B. Notice of Intent
C. Section 205(m) Transfer of Title II Reserves
1. Section 205(g) Management Reserve
2. Section 205(j)(l) Water Quality and
Section 205(j)(5) Non-Point Source Reserves ...
3. Section 201(1)(2) Advance of Allowance,
Section 205(h) Alternative Systems, and
Section 205(i) Innovative/Alternative Reserves
D. Reserves from Title VI Allotments 5
II. USES 07 STATE REVOLVING LOAN FUNDS
A. Eligible Activities of the SRF 6
B. Types of Financial Assistance:
1. Loans (Section 603(d)(1)) 16
a. Interest Rate 18
b. Repayment to SRF 18
c. Dedicated Repayment Source 2 0
2. Refinancing Existing Debt Obligations
(Section 603(d)(2)) 22
3. Guarantee or Purchase Insurance for Local
Debt Obligations (Section 603(d)(3)) 23
4. Guarantee SRF Debt Obligations 24
5. Loan Guarantees for Sub-state Revolving
Funds (Section 603(d)(5)) 26
6. Earn Interest on Fund Accounts (Section 603(d)(6)) . 27
7. SRF Administrative Expenses (Section 603(d)(7)) .... 28
C. Prevention of Double Benefits 30
D. Assistance for the Non-Federal Share 30
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III. MAJOR LEGISLATIVE PROVISIONS AFFECTING CAPITALIZATION
GRANT AGREEMENTS
A. Capitalization Grant Agreement 31
B. Legislative Requirements for the Grant Agreement
1. Agreement to Accept Payments 31
2. Provide a State Match 31
3. Binding Commitments Within One Year 3 3
4. Expeditious and Timely Expenditure 34
5. First Use of Funds For Enforceable Requirements .... 3 5
6. Compliance with Title II Requirements 37
7. State Laws and Procedures 4 2
8. State Accounting and Auditing Procedures 42
9. Recipient Accounting and Auditing Procedures 44
10. Annual Report 44
11. Compliance with Environmental Review Requirements .. 45
C. Application of Other Federal Authorities 47
IV. APPLICATION TOR A CAPITALIZATION GRANT
A. Fund Establishment, Instrumentality of the State 56
B. Decision on the Use of Allotments 57
C. Intended Use Plan (IUP) 58
1. List of Projects 58
2. Short and Long Term Goals 59
3. Information on SRF Activities to be Supported 59
4. Assurances and Specific Proposals 59
5. Criteria/Method for Distribution of Funds 60
D. Payments 60
V. CAPITALIZATION GRANT AGREEMENT 6 3
VI. REPORTINO AND OVERSIGHT OP SRF ACTIVITIES
A. Annual Report 64
B. Annual Review 65
C. Annual Audit 66
D. Compliance Assurance 68
E. Dispute Resolution 68
APPENDIX A
Cross-Index of Key Words and Phrases 69
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Cumulative SRF Questions and Answer3
July 1990
Paga l
fiscal authorizations and reserves
A. Authorization, Allotment, and Reallotment
I.A. 1) What is the definition of "the date such funds were
obligated by the State" in section 601(b)(2)(A)?
A: The date on which the State executes the
capitalization grant award agreement.
I.A. 2) What must a State do in order to be eligible to receive
reallotted funds from a Title VI appropriation?
A: To be eligible to receive reallotted Title VI funds
at the end of the two year period of availability for a
particular allotment, a State must have accepted a
capitalization grant award(s), equal to its full
allotment of Title VI funds, during the first year of
availability. In order for the SRF to receive any
reallotted funds, the State must request the reallotted
funds as part of a capitalization grant application,
and receive the capitalization grant award prior to the
expiration of the availability of the reallotted funds
to that State.
I.A. 3) May deobligated or reallotted Title II funds be awarded
under Title VI capitalization grants?
A: Yes. The full amount of Title II deobligations and
reallotments may be transferred to a Title VI
capitalization grant as a "portion of the amounts
allotted" to a State for a given year, in accordance
with section 205(m), regardless of either the year in
which the Title II funds were originally allotted or
the year in which they are deobligated or reallotted.
The Agency will consider deviations from its regulatory
definition of allotment in 40 CFR sections 35.915-1 and
35.2010(a) to allow this interpretation on a case-by-
case basis until the Part 3 5 regulations can be amended
to reflect this change.
I.A. 4) If a State did not establish its SRF by the end of
FY 1989, will it lose its FY 89 SRF allotment?
A: No. Funds allotted for FY 1989 are available for
obligation to a State for two years. However, States
with FY 1989 Title VI funds not awarded in the first
year of their availability cannot receive FY 1989 funas
reallotted after FY 1990. For the purposes of
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reallotment, the State need only to have received its
capitalization and section 604(b) grants; it need not
have entered into binding commitments or disbursed
funds during the first year after allotment.
I.A. 5) When making a section 205(m) transfer, is the maximum
percent transfer based on the year of the funds
authorization or the year that the transfer occurs?
A: The allowable transfer under section 205(m) is
determined by the authorized percent of the year of the
allotment and is applicable during the initial two year
period of funds availability. For example, Title II
funds allotted during FY 1988 were subject to the 75%
section 205(m) limit through the end of FY 1989 even if
they were available as a result of deobligation.
Beginning in FY 1990, there are no limits on the amount
of Title II funds transferred into the SRF, including
any deobligated or reallotted money. Title II funds
originally allotted prior to FY 1987 as well as funds
allotted in FYs 1987 and 1988 may now be transferred
into the SRF without limit.
I.A. 6) Does the obligation of funds under section 604(b) for
water quality planning affect a State's participation in
reallotment of Title VI funds?
A: Yes. In order to participate in reallotment of
Title VI funds, a State must receive grants for all
funds allotted to it during the first year of
availability. These funds include both those available
under section 601(a) for capitalization of SRFs as well
as under section 604(b) for planning purposes under
sections 205(j) and 303(e).
B. Notice of Intent
I.B. 1) Can someone other than the Governor sign the Notice of
Intent?
A: Yes. The State should submit evidence documenting
the Governor's delegation of authority to the
requesting official along with the first notice of
intent.
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1.3. 2) If a State has previously submitted a Notice of Intent
(NOI), does it need to notify EPA if it changes its plans
for a section 205(m) funds transfer?
A: No. Although not required, States should advise
the Region if their plans for transfer under section
205(m) change. At their option, States may wish to
submit an amended NOI.
I.B. 3) May a State which has not previously filed a Notice of
Intent (NOI) for transferring funds pursuant to section
205(m), now submit an NOI which includes transfer of funds
from prior years?
A: Yes.
c. Section 205(h) Transfer of Title II Reserves
I.e. 1) Why calculate reserves against the full Title II
allotment (authorization for section 205(g) purposes)
if you are going to transfer all or part of the reserves to
Title VI?
A: Section 205 requires the reserves to be calculated
against the total allotment available to a State, not
against the allotment after deducting a proposed 205(m)
transfer.
I.e. 2) How is the governor's Title II 20% discretionary fund
calculated when a State elects to transfer all or part of
its Title II allotment for Title VI purposes?
A: Funds available under the section 201(g)(1)
governor's discretionary fund should be calculated on
the State's total allotment under section 205(c)(3).
The State may elect to retain this amount as grants
under Title II for purposes allowed by section
201(g)(1)(A) and (B) or transfer all or part of the
amount to the SRF, where they may be used for these
purposes. The sum of the amounts available under
Titles II and VI (as a result of funds transfer) for
201(g)(1)(A) purposes should not exceed twenty percent
of the 205(c)(3) allotment. [Note that because section
319 and 320 activities are directly eligible under
Title VI, the governor's 20 percent set-aside only
limits the amount of the capitalization grant that can
be used to fund section 319 and 320 activities which
the State intends to count toward satisfying the
equivalency requirement.]
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1. section 205(g) Management Reserve
I.C.I. 1) Can Construction Grant (CG) and SRF administrative
funds be combined into one account?
A: No. Since the administrative costs for the CG and
SRF programs paid from Federal allocations will be
provided by separate grant awards (205(g) and
capitalization grant awards) separate accounts must be
maintained for grant accounting purposes. In addition,
the SRF administrative funds must be deposited into the
SRF and then spent only on administrative activities
authorized under Title VI.
Section 205(j)(l) Water Quality and
Section 205(j)(5) Non-Point Source Reserves
3. Section 201(1)(2) Advance of Allowance,
Section 205(h) Alternative Systems/ and
Section 205 (i) Innovative/Alternative Reserves
I.e.3. 1) If a State does not transfer its entire Title II
allotment to Title VI, can it still transfer all of the
mandatory section 205(h) and/or 205(i) reserves?
A: Yes, up to the amount of the proposed 205(m)
transfer. As soon as possible, but no later than the
submission of the capitalization grant application
requesting the transfer of the Title II funds, the
State must notify the RA how the reserves will be
affected by the proposed transfer. (Note: 205(j)
funds may not be transferred.)
I.e.3. 2) If the reserves are to be transferred anyway, why
establish them in the first place?
A: Subsections (h) and (i) of section 205 require
States to establish I/A and rural reserves based on the
State's allotment of Title II funds. While section
205(m) authorizes the transfer of Title II funds to
Title VI, no exemption from establishing the 205 (h)
and (i) reserves is provided. Consequently, to permit
compliance with section 2C5(h) and (i) and to allow for
the maximum transfer of Title II funds, the procedural
requirements of 205(h) and (i) must be satisfied before
those amounts may be transferred. The advance of
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allowance reserve is optional. Therefore, it should
not be established if the intention of the State is to
transfer the funds to Title VI. However, if the
advance of allowance reserve is established, the
calculation (up to 10 percent) may be based on the
full Title II allotment. The section 205(g) reserve is
also optional, and is calculated (up to 4 percent) on
the basis of the State's share of the authorization.
I.e.3. 3) Can a portion of a reserve be transferred and the
remainder retained for Title II purposes?
A: Yes. At its option, a State may retain all, none
or a portion of the I/A and rural reserves for Title II
purposes.
I.e.3. 4) If a State opts to transfer its FY 87 and/or FY 88 I/A
and rural reserves in full, how do these transfers
relate to the authorized transfer limits in section
205(m)?
A: A State's decision regarding establishment of
reserves under Title II has no effect on possible
transfers under section 205(m). (See question I.A. 5)
The total funds transferred cannot exceed 50 percent of
FY 87 and 75 percent of FY 88 allotments in the years
of each appropriation. However, the State's entire I/A
and/or rural reserves can be included within the
transferred funds.
I.C.3. 5) May a State revert for Title II purposes some funds
transferred to the SRF under section 205(m) (e.g., to
cover modification and replacement costs arising from
Innovative/Alternative grants)?
A: Yes, but only from the portion of the capitalization
grant amount not reflected in the letter-of-credit
ceiling (i.e., payments have not been made via an
increase to the LOC).
D. Reserves from Title VI Allotments
I.D. 1) How will the section 604(b) reserve be provided?
A: The section 604(b) reserve will be provided as a
separate grant award under 205(j)(2), under Guidance
for Management of Section 205fi)(1) and Section 604(b)
funds during Fiscal Years 1983-1990 issued by the EPA
Office of Water Regulations and Standards (OWRS),
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August 18, 1987, addressed to the Regional Water
Management Division Directors. Grants under this
reserve are subject to the 40 percent passthrough
requirement for regional water quality management
planning under section 205(j)(3).
II. U8ES OF STATS REVOLVING LOAN FUNDS
A. Eligible Activities of the SRF
II.A. 1) Can a municipality receive SRF assistance to purchase a
plant to be used in a regionalization project?
A: Yes, if such purchase is one of the authorized forms
of assistance and meets the requirements established by
Title VI, section 212 and the SRF.
II.A. 2) Can a turnkey (design/build) project receive SRF
assistance?
A: Yes, if the project or activity is eligible under
the State program and sections 212, 319, or 320.
II.A. 3) Can a State count SRF section 319 assistance toward
meeting its section 319(h) 40 percent match or its 319(i) 50
percent match?
A: A State cannot count, as part of its section 319(h)
4 0 percent match or its 319(i) 50 percent match, SRF
assistance provided to sub-recipients for section 319
NPS activities if the SRF assistance is from funds
directly made available by the capitalization grants.
Such funds constitute Federal financial assistance and
may not be used to match other Federal assistance
unless such use is explicitly authorized by statute.
Title VI does not explicitly authorize the use of SRF
funds to match section 319(h) or (i) funds. Section
603(h) only authorizes the use of SRF assistance to
match EPA Title II construction grants for treatment
works projects and, therefore, does not apply to the
proposed section 319 match. Similarly, the State
cannot count the same State expenditures toward meeting
both its SRF and section 319 match requirements. The
State can, however, count the amount of SRF assistance
provided from non-Federal sources toward meeting its
section 319 match, including: interest earnings on
fund accounts, loan repayments, State funds in excess
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of its 20 percent SRF match, and bond proceeds in
excess of the grant amount, when spent on section 319
activities.
II.A. 4) Can a section 212 project (or a portion of a project)
constructed with SRF assistance be sold to a private
concern (privatized), for example, a sale-leaseback transac-
tion?
A: Yes, if provided for under the State program. Since
section 212 project assistance can only be made
available to publicly-owned facilities, however, the
assistance agreement would have to be terminated in
accordance with the terms of the agreement and the
assistance repaid to the SRF immediately upon sale.
II.A. 5) If a section 212 project (or a portion of a project)
constructed with SRF assistance is privatized, how are the
proceeds of the sale distributed?
A: The State should establish policies for distribution
of proceeds from the sale of facilities assisted by the
SRF. In doing so, the State should recognize that it
is not the intent of Title VI to provide subsidies to
the construction of private treatment works. If an SRF
assisted facility is to be sold, the assistance
agreement would have to be terminated in accordance
with the terms of the agreement and the assistance
repaid to the SRF immediately upon sale. The State has
the responsibility to determine disposition procedures
and policies. EPA encourages States to require
facilities to be sold for "fair market" value (i.e.,
construction cost adjusted for depreciation). Further,
EPA encourages States to require that any net proceeds
of the sale, including any amounts in excess of the SRF
assistance amount, be paid to the SRF.
II.A. 6) Are cost effective "conservation-type" wastewater
strategies eligible for assistance from an SRF?
A: At the State's option, conservation strategies
including "structural" approaches (e.g., publicly-owned
water meters, water saving or recycling devices, and
greywater separation systems) and "non-structural"
measures (e.g., public education and incentive
wastewater service charges) are eligible for SRF
assistance. (Note: "publicly-owned" added in
compilation.)
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II.A. 7) Are "replacements'* allowable for SRF assistance?
A: Yes, replacements may be minor or major. Major
replacements, reconstructions, or substitutions
necessary to correct system failures are allowable for
both equivalency and non-equivalency projects. Minor
replacements are generally eligible under section
212(c)(3) (e.g., expenditures for obtaining and
installing equipment, accessories, or appurtenances
during the useful life of the treatment works necessary
to maintain the capacity and performance for which such
works are designed and constructed). However,
equivalency projects and projects previously funded
with construction grants (to the extent that the
facility is within its design life) must comply with
section 204(b)(1) which requires that user charge
systems be adopted which include adequate provision for
operation and maintenance costs, including minor
replacements.
II.A. 8) What types of activities can an SRF fund in accordance
with section 319?
A: Under section 603(c), SRFs can fund implementation
of management program activities detailed in the
approved State Nonpoint Source Management Program
prepared in response to section 319(b)(2)(A-F).
Assistance may be in the form of a loan or other
assistance as provided by Title VI. Activities may be
either for implementation of nonpoint source control
under section 319(h) or ground water protection
activities eligible under section 319(i). SRF
assistance for section 319 activities may be provided
to individuals for demonstration projects. (See
Nonpoint Source Guidance [December, 1987] and CWA
Funding Sources and Their Uses for the Implementation
of State Nonpoint Source Management [August, 1988]
published by EPA Office of Water Regulations and
Standards.)
II.A. 9) What types of activities can an SRF fund in accordance
with section 320?
A: An SRF can fund under section 320 the development of
or implementation of Estuary Conservation and
Management Plans. Section 320 activities that are
nonpoint source control related should be included in
an approved State Nonpoint Source Management Program in
order to be eligible for assistance. (More specific
guidance is currently under development by the EPA
Office of Marine and Estuarine Protection.)
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II.A. 10) Can a State provide both SRF and section 319(h)
assistance to the same nonpoint source activity?
A: Yes, providing that eligibility requirements for
each assistance program are satisfied.
II.A. 11) If a State imposes its own match requirement on
recipients of section 319(h) or (i) assistance, can the
State accept SRF nonpoint source assistance to the
recipients as meeting that match requirement?
A: Yes.
II.A. 12) Are costs of collection systems eligible?
A: Yes. However, funding of collection systems is
subject to the provisions of sections 201(g)(1)(A) and
211, which condition the use of funds directly made
available by the capitalization grant. In addition to
the 20 percent discretionary amount (which applies to
funds directly made available by tfre capitalization
grant), States, at their option, may use SRF funds
other than those directly made available by the
capitalization grant to provide assistance for the
construction of collection systems without regard to
sections 211 or 201(g)(1)(A).
These limits on the use of funds directly made
available by the capitalization grant do not apply to
funds appropriated for FY 1990. Pursuant to the
FY 1990 appropriation act, PL 101-144, FY 1990 Federal
funds are available for any POTW construction, as
defined in section 212, without regard to the limits in
section 201(g)(1).
II.A. 13) Are start-up services eligible for SRF assistance?
A: Yes, at the option of the State.
II.A. 14) Are planning and design costs eligible for SRF
assistance?
A: Yes, at the option of the State.
II.A. 15) If SRF assistance is provided for planning and design
costs, is the SRF obligated to provide assistance for
facility construction?
A: No. At its option, an SRF may provide assistance
only for facility planning and design.
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II.A. 16) Can States use an "allowance" table to determine
allowable costs for non-building activities (e.g.,
planning, design, and construction engineering
activities)?
A: Yes.
II.A. 17) Are costs for land, rights-of-way, easements, and
compliance with the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 for section 212
projects eligible for SRF assistance?
A: For all section 212 projects, eligibility for
purchase of lands, rights-of-ways, and easements is
limited to land that will be an integral part of the
treatment process or will be used for sludge disposal.
Because the Uniform Relocation Assistance and Real
Property Acquisition Policies Act of 1970 (the Uniform
Act) is a cross-cutting Federal requirement, SRF
assistance recipients from funds directly made
available by the capitalization grant must comply with
its terms. The Uniform Act makes allowable compliance
costs incurred by Federal financial assistance
recipients. Therefore, such costs are allowable under
the SRF program for recipients of funds directly made
available by capitalization grants.
II.A. 18) Can a community pledge its POTW or the revenue stream
from its POTW financed with SRF assistance as
collateral for a private loan for subsequent expansion or
improvements?
A: Yes, however subsequent debt obligations must not
reduce the ability of the community to meet its
repayment obligations to the SRF and the community must
maintain the debt service coverage used to underwrite
the SRF loan. Underwriting practices for subsequent
debt obligations may provide bondholders of both SRF
and non-SRF obligations with equal, parity claims to
revenues of the wastewater system. The administrator
of the SRF should examine the credit tests which a
local community would have to meet before issuing
further obligations on a parity with existing SRF
loans.
II.A. 19) May a community lease, to a private operator, a POTW
constructed with SRF assistance?
A: Yes, subject to the terms of its SRF assistance
agreement with the State. The State and community
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should carefully review possible tax implications prior
to approving lease arrangements. (Leases are typically
part of contract operations arrangements.)
II.A. 20) Can SRF assistance be provided to buy a wastewater
treatment facility which was privately financed and/or
operated?
A: Yes, so long as the facility meets the definition
of a section 212 treatment works and, if the SRF funds
used for the purchase are equivalency funds, the
purchase in and of itself provides new pollution
control benefits [see also II.A.l.]. The latter
limitation does not apply to non-equivalency funds.
Assistance provided must be in the form of refinancing.
The cash draw rules for refinancing apply whether or
not the privately financed facility has outstanding
indebtedness.
II.A. 21) How should "municipality" be defined in the SRF
program?
A: The definition of municipality for the purposes of
the SRF program is as stated in section 502 of the
Clean Water Act: "a city, town, borough, county,
parish, district, association, or other public body
created by or pursuant to State law and having
jurisdiction over disposal of sewerage, industrial
wastes, or other wastes, or an Indian tribe or an
authorized Indian tribal organization, or a designated
and approved management agency under section 2 08 of
this Act." States may at their option also provide SRF
assistance to special districts with appropriate
authorities under State law.
The 40 CFR section 35.2005(27) restriction that a
special district must have as one of its principal
responsibilities the treatment, transport or disposal
of domestic wastewater does not apply.
II.A. 22) Can SRF assistance be provided for municipal
facilities constructed to transport or treat industrial
wastes?
A: Yes, as long as the facility is publicly-owned,
because the definition of treatment works in section
212 of the CWA includes facilities to deal with serve
municipal or industrial wastes, the State has the
option of funding municipal facilities to handle
industrial wastes. However, such projects must be part
of a larger wastewater system, the primary purpose of
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which is to treat domestic waste. In addition,
assuming the use of tax-exempt bonds, States are
encouraged to seek assistance from appropriate
authorities to determine the tax impacts regarding the
"private purpose" provisions of the Tax Act.
II.A. 23) May SRF loans be assumed by private purchasers upon
sale of a facility?
A: No. Upon sale of a wastewater treatment works to a
private purchaser, all SRF direct loans are due in
full. SRF guarantees are not transferrable to
privatized facilities.
II.A. 24) Is capitalized interest an eligible cost for SRF
assistance?
A: Yes, at the option of the State. Construction
loans generally factor in interim interest carrying
costs. The State may wish to collect advanced interest
as "discount points" on the principal to be received at
the closing for the loan agreement. Because the
project does not generate revenues until initiation of
operations, payment of interest from the loan proceeds
allows timely repayments. To assure the financial
health of the SRF, a State may wish to charge interest
on funds advanced during construction until project
completion. An SRF may wish to consider "interest-
only" payments from the period of loan closing until
project completion.
II.A. 25) What is the relationship between the use of 205(g)
funds for SRF development and the 4 percent limit for
administrative expenses from the capitalization grant?
A: There is no relationship. Funds spent under
section 205(g) do not count against the 4 percent limit
of the capitalization grant for administration.
II.A. 26) May an SRF provide assistance to municipalities in
another State?
A: No, unless consistent with section 603(c) which
authorizes SRFs to provide assistance to interstate
agencies for the construction of publicly-owned
treatment works. Proposals for assistance to
municipalities should be reviewed on a case-by-case
basis to determine tneir compliance with the language
and intent of the statute. Under section 603(g), an
SRF may fund the construction of publicly-owned
treatment works only if the treatment works appear on
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the State's PPL. Section 216 assigns States the
responsibility for determining the priority of projects
"within each State". Under the SRF program, funds
allotted to a State, but not obligated by the end of
their period of availability, must be reallotted by EPA
to other States to ensure that funds are distributed on
an equitable, nationwide basis.
II.A. 27) May an SRF finance the construction of a private
wastewater treatment system, such as replacement/ upgrade of
a failing system that is in need of rehabilitation?
A: An SRF may only finance the construction of
wastewater treatment works that are publicly-owned.
However, if a unit of government assumes ownership of a
system which was previously privately owned, it may be
funded under the authority of section 603(c). Certain
privately owned systems may also be funded if they can
be classified as NPS projects eligible for construction
under sections 319 or 320. At their option, States may
deem the public ownership requirement to be met for
small/onsite systems where adequate inspections and
operations are assured through the establishment of a
management district or use of service easements or
agreements.
II.A. 28) Is implementation of activities recommended in plans
developed under the Great Lakes and Chesapeake Bay programs
eligible for assistance under section 320?
A: Under section 320, Title VI loans may support the
development and implementation of a conservation and
management plan under The National Estuary Program).
The Great Lakes and Chesapeake Bay programs are not
currently designated under the NEP. Title VI
assistance cannot fund Chesapeake Bay or Great Lakes
clean-up initiatives unless they are also eligible
under sections 212 or 319. Great Lakes and Chesapeake
Bay management activities are funded independently
under sections 118(h) and 117(d) of the Clean Water Act
respectively and, therefore, are not eligible under
section 320(a). within these two drainage basins,
section 319 NPS management program implementation and
section 212 projects could receive SRF assistance.
II.A. 29) Is implementation of activities recommended in plans
developed under the near coastal areas program eligible for
assistance under section 320?
A: Not unless part of an estuary CCMP.
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II.A. 30) Which estuaries are eligible for SRF assistance under
section 320?
A: Estuaries must be nominated under section 320(a) in
order to be eligible for assistance. Governors may
nominate other estuaries for designation consideration
by the EPA Administrator. Currently management
conferences have been convened in twelve estuaries: San
Francisco Bay, Santa Monica Bay, Long Island Sound,
Delaware Bay, Delaware Inland Bays, Sarasota Bay (FL) ,
Buzzards Bay (MA), New York-Hew Jersey Harbor,
Albermarle/Pamlico Sound (NC), Narragansett Bay (RI),
Galveston Bay (TX), and Puget Sound (WA). In April
1990, the following estuaries were added to the
National Estuary Program: Barataria-Terrebonne
Estuarine Complex (LA), Casco Bay (ME), Indian River
Lagoon (FL), Massachusetts Bay (MA), and Tampa Bay
(FL). (Mote: Additional estuary designations included
in complilation.)
II.A. 31) How can designated estuaries participate in SRFs?
A: Under section 3 20, the SRF can loan funds for
undertaking a management conference to develop a
comprehensive coordinated management plan (CCMP) for
the estuary. The management conference members should
work with appropriate State SRF administrators and/or
appropriate State water quality officials to ensure
that priority estuary activities are included on the
State's Priority Project List and/or Intended Use Plan.
II.A. 32) What types of estuary restoration activities are
eligible for SRF assistance?
A: Any project or activity included in the
comprehensive coordinated management plan (CCMP)
developed by the Management Conference and approved by
the EPA Administrator and concurred in by the
Governor(s) is eligible for SRF assistance under
section 320. These projects could include wetlands
restoration, nonpoint source control programs, sediment
detoxification, living resource restoration, water
quality monitoring, and construction of capital
facilities such as treatment plants or stormwater
retention basins. In practice, however, some
activities (e.g., water quality monitoring) may be
impractical to implement under the SRF.
Other types of estuary clean-up projects — those that
are capital intensive with a user base to support
repayments — are well suited to SRF financing. For
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example, wastewater treatment facilities which
discharge to estuarine waters or to the headwaters of
estuaries are eligible for SRF assistance (subject to
the first use requirement). To use SRF funds "directly
made available" by the Federal capitalization grant,
stormwater control facilities must meet the conditions
of sections 201(n)(l), 201(g)(1), and 211. [Note that
section 201(n)(l) provides States flexibility in
funding combined sewer overflow facilities if a
priority water quality problem in the State.] Because
of the limitations of section 211, funding of separate
stormwater facilities (i.e., not part of a CSO sewer
separation project) prior to FY 1990 cannot be counted
towards satisfying the equivalency requirement.
However, the State at its option may bank such funding
toward satisfying the equivalency requirement in future
years.
II.A. 33) May SRF assistance finance the correction of
combined sewer overflow (CSO) problems that affect estuary
water quality?
A: Yes. However, as one of the equivalency
requirements, section 201(g)(1) limits to 20 percent
use of the capitalization grant amount to fund certain
section 212 projects including CSOs. (This limit does
not apply to funds appropriated in FY 1990. See II.A.
13.) Under section 201(n)(l), however, up to the full
amount of the grant can be used for CSOs to satisfy the
equivalency requirement if the State determines (as
reflected in a request from the Governor) that CSOs are
a major priority in its water quality management
program. Any other funds in the SRF can be used for
CSOs.
II.A. 34) May funds available under section 604(b) be used in
accordance with 205(j)(5)?
A: No. Section 604(b) funds are for water quality
management planning purposes, in accordance with
sections 303(e) or 205(j)(l), including activities such
as monitoring, standards setting, and planning, but not
program implementation.
II.A. 35) Are environmental review costs allowable?
A: Yes. Costs to municipalities for preparing
environmental assessment rsports (including EISs
prepared by "third party" consultants hired by loan
recipients and approved by the State SRF agency) may be
included as part of the assistance amount. Costs
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incurred by the State in reviewing the environmental
assessments are considered SRF administrative costs.
II.A. 36) If a State provides overmatch and deposits these funds
into the SRF, can these funds be used to provide
assistance to projects which might not meet all Title VI
requirements?
A: No. Once funds from any source are deposited into
the SRF account, the funds are subject to applicable
provisions of Title VI regarding operations of the SRF.
II.A. 37) If a treatment works project that has received a Title
II construction grant experiences a cost overrun, and
no additional grant funds are provided to cover that cost
overrun, may the SRF provide a loan for the full amount of
those additional costs?
A: Yes. Section 603(h) prohibits loans only for the
non-Federal share of a treatment works project funded
under the construction grant program. In the case
above, the project has already received a construction
grant for the Federal share, and the State or
municipality has provided the non-Federal share.
Federal construction grants assistance is not being
furnished for the cost overrun, so a non-Federal share
requirement does not exist.
B. Types of Financial Assistance
1. Loans (Section 603(d)(1))
II.B.l. 1) Can States provide "incremental" assistance to
finance a multi-year construction activity?
A: Yes.
II.B.l. 2) May separate loans be made for planning and/or design
costs?
A: Yes, at the option of the State. -Repayment of such
loans would begin consistent with project completion as
described in the State's capitalization grant
application. At the option of the State, separate
loans for planning and/or design may be "rolled ever"
into a subsequent loan for construction.
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II.B.l. 3) For "second round" (and later) loans, may SRFs enter
into loan agreements with repayment periods longer than 20
years?
A: No. The limitation on twenty year repayment
periods applies to all loans made by the SRF.
II.B.l. 4) What previously incurred costs may be included in a
loan under section 603(d)(1)?
A: Loan assistance may be provided for prebuilding
project costs (planning, design, etc.), regardless of
when they were incurred, and building costs incurred
after March 7, 1985. The prebuilding costs in the loan
agreement must be limited to the prebuilding costs
associated with the scope of the building included in
the loan.
II.B.l. 5) May States draw cash for prebuilding and building
costs incurred prior to an SRF loan which are included in a
loan for prospective work?
A: Yes, States may provide SRF assistance for
previously incurred building costs which were incurred
after March 7, 1985. Where an otherwise eligible
project has been constructed after March 7, 1985, with
funds obtained from intramunicipal transfers rather
than third party debt for construction, such
intramunicipal transfers will be treated as debt
obligations and therefore, as refinancing under section
603(d)(2). The proceeds of such a refinancing
transaction should be deposited in the construction
account and used to repay the debt obligation. Where
SRF refinancing assistance is provided for a project
originally funded with other than third party debt, the
Regional Office will examine the areas discussed below
in the Annual Review of the State's SRF.
As with any use of the fund, the requirements of Title
VI must be met, and we strongly encourage States to
establish binding or other funding commitments for
these projects prior to initiation of construction to
the extent possible. In addition, the link of the
project to the goals and objectives of .the State's SRF
program as stated in the IUP must be documented, and
the project must be included on the Project Priority
List in the year the assistance is provided. The
Region must confirm that the above documentation has
been included in the State's IUP which has been
subjected to public review.
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The State should consider any tax implications of
funding such a project and be able to document that
eligible costs were actually incurred on the project in
the amount of the SRF assistance. Loans must be fully
amortized not later than twenty years after project
completion and annual principal and interest payments
must commence not later than one year after project
completion or upon loan closing, whichever is later.
a. Interest Rate
II.B.l.a. 1) The Act requires that loans be made at or below
"market rate". Who is responsible for determining the
market rate?
A: The State is responsible for determining the market
rate, as well as the actual SRF loan/refinancing
rate(s).
II.B.l.a. 2) Can an SRF enter into a loan agreement with variable
interest rates?
A: Yes. The SRF may charge different rates of interest
during the term of the loan. It may be desirable to
allow interest deferral. For example, the SRF could
charge a 0% rate of interest for the first five years
of a loan, 5% per year for the second five years, and a
market interest rate (prevailing at the time of the
loan agreement) for the duration of the loan.
II.B.l.a. 3) Is there a minimum "return rate" required to
maintain the "perpetuity" of the fund?
A: No.
b. Repayment to SRF
II.B.l.b. 1) Who determines when a project is complete
(initiation of operation) and that repayments begin?
A: The State will have responsibility for all
project-level management, including verification of
completion.
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II.B.l.b. 2) Can loan repayment schedules be established which
include "balloon" payments (e.g., final payments of
principal and interest falling due in later years of the
debt obligation which are substantially larger than
preceding payments)?
A: Yes, but States considering the use of balloon
payments in their loan agreements should be aware of
possible implications such as: (1) the ability of the
community to repay a balloon payment (potential
default), (2) a possible reduction in State's ability
to leverage, and (3) the reduced payment stream in
early years will reduce the SRF's ability to provide
further assistance. If proposed as part of a SRF
program, this form of repayment should be addressed in
the IUP including a discussion of possible impacts on
the long term health of the fund. Before approving a
capitalization grant, EPA will review the State's
evaluation of the potential effects of use of balloon
payments. In any case, repayments cannot exceed twenty
years (i.e., cannot modify the repayment schedule
during the life of the loan to exceed twenty years).
II.B.l.b. 3) What is the responsibility of the SRF if a loan
recipient fails to comply (defaults) with the repayment
terms of the loan agreement?
A: The SRF is responsible for protecting the financial
integrity of the Fund. Prior to executing loan
agreements, the SRF should determine the financial
capability of the recipient to repay the loan. To
safeguard against the possibility of default, the State
should include procedures in loan agreements which
address the dedicated repayment source requirement. In
addition, the State should have the power to ensure
repayment. For example, if a recipient is unable to
collect sufficient revenues under its wastewater
service charge (i.e., dedicated repayment source), the
SRF should have the ability to require the recipient to
revise its wastewater service charge to generate
sufficient funds to meet the repayment schedule in the
loan agreement or take whatever other steps are
necessary to raise the necessary funds. User fees
should be sufficient to cover not only general
operating costs (including routine repairs and
replacements), but also major replacements and debt
service. In some cases, States may have the authority
to take title to the facility and operate it directly.
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II.B.l.b. 4) May a State charge delinquent fees for late
payments or defaults?
A: Yes.
II.B.l.b. 5) May a State provide a discount to loan recipients
for accelerated repayment?
A: Yes, at the option of the State. Such discounts
apply, however, only to interest, not to outstanding
principal amounts.
II.B.l.b. 6) What is meant by "maintaining the fund in
perpetuity"?
A: Under section 603(c) of the Clean Water Act, SRFs
"shall be established, maintained, and credited with
repayments, and the fund balance shall be available in
perpetuity for providing such financial assistance."
SRF loan conditions are designed to maintain the
financial integrity of the Fund without hampering the
flexibility of States to use SRFs to address the
diverse needs of municipalities. As part of its Fund
management strategy, each State should strive toward
maintaining the availability of money for meeting
future wastewater facility and other water quality
management needs as well as protecting the fiscal
health of the Fund.
c. Dedicated Repayment Source
II.B.I.e. 1) Does the "dedicated source of revenue" requirement
apply to forms of SRF assistance other than loans?
A: No. This provision applies only to SRF assistance
in the form of loans.
II.B.I.e. 2) Who evaluates the sufficiency of the dedicated
source of repayment?
A: The State, as part of the process of reviewing/
negotiating a loan agreement with a recipient. As part
of the Annual Review process, EPA will review State
procedures for assuring the adequacy of dedicated
repayment sources.
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II.B.I.e. 3) Can facilities with existing debt obligations
participate in the SRF program?
A: Yes. Existing debt obligations need not pose a
problem to qualify for SRF assistance. Each SRF should
set its own criteria for financial capability to repay
loans, including consideration of existing debt
obligations. An acceptable loan agreement could
provide that the SRF take a "subordinated" position to
other debts of a loan recipient (i.e., the community's
user charge revenues may already be pledged as
repayment for an existing bond issue for previous
construction; revenues should be sufficient to retire
both bond issues; in case of default, however,
repayment of the pre-existing debt instrument takes
precedence). However, to minimize any cash flow
problems in collecting repayments from a loan recipient
that this may cause, prior to providing a loan, a State
should ensure that: recipients demonstrate both their
ability to make timely repayments to satisfy loan
requirements and to provide "security" or collateral to
ensure that the Fund receives payments when due.
II.B.I.e. 4) What type of revenue would satisfy the requirement
for a dedicated source of repayment for an individual
receiving an SRF loan under the provisions of sections 319
and 320?
A: As provided in the OWRS Nonpoint Source Guidance
(December, 1987), in the case of loans made to
nonpublic entities or to individuals (e.g., farmers)
for section 319 activities, the dedicated source of
revenue for repayment of loans, as required by section
603(d)(1)(C), may include an existing unencumbered
source of revenue (e.g., earnings of the farm) or
assets adequate to meet the loan repayment requirements
in a timely fashion. Because nonpublic entities
generally will not have a wastewater service charge or
other comparable revenue stream, collateral (e.g.,
mortgages, liens) may be required as for commercial
loans under State law.
For loans to municipalities or other public entities
for section 319 or 320 activities, a loan agreement
could provide for a "subordinated" position. The
Office of Marine and Estuarine Protection is preparing
guidance dealing with the funding of section 320
activities. For section 319 activities, see also CWA
Funding Sources and Their Uses for the Implementation
of State Nonpoint Source Management, issued by the
Office of Water Regulations and Standards.
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II.B.I.e. 5) What level of review of the recipient's ability to
repay SRF loans is required?
A: As part of the capitalization grant application
process, the State must agree to require a dedicated
source of repayment for all SRF loans. The specific
procedures a State uses for financial capability
determinations and loan repayment provisions are at the
discretion of the State, but should be established to
protect the financial integrity of the Fund. As part
of the Annual Review process, the Regions can review
the activities of the Fund to ensure that there has not
been a failure to repay loans.
2. Refinancing Existing Debt Obligations
(Section 603
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3. Guarantee or Purchase Insurance for Local
Debt obligations (Section 603(d)(3))
II.B.3. 1) If a State elects to provide assistance in the form of
a guarantee to a community for a section 212 project,
must that project satisfy the Title II equivalency
requirements?
A: Yes, if that project is to be counted towards
meeting the equivalency requirement. The amount of the
guarantee reserve is the amount of assistance that may
be credited towards meeting the equivalency
requirement.
II.B.3. 2) If a State elects to provide assistance in the form of
insuring a local bond issue for a 212 project, must
that project satisfy the Title II equivalency
requirements?
»
A: Yes, if that project is to be used towards meeting
the equivalency requirement. The cost to the SRF of
the insurance premiums is the amount of assistance that
may be credited towards meeting the equivalency
requirement.
II.B.3. 3) Do local bonds guaranteed by the SRF using funds in
the Federal Letter of Credit (LOC) lose their tax-exempt
status?
A: No. The U.S. Treasury Department issued a notice
(#88-54) in April, 1988 which affirmed that the LOC is
not a Federal guarantee for repayment of State and
local bonds guaranteed by the SRF using funds in the
Federal LOC. As a result, the tax-exempt status of
these bonds is not affected by the use of the LOC as a
means of payment to the SRF.
II.B.3. 4) Do local bonds lose their tax-exempt status solely
because they are guaranteed by a reserve account in the
SRF (outside the Federal LOC process)?
A: No.
II.B.3. 5) Is the SRF responsible for loans it has guaranteed?
(I.e., if a community defaulted on a loan, would the
State have to repay the loan or portion thereof?)
A: Yes, but only up to the amount under the terms of
the guarantee agreement. The State is responsible f" *
ensuring the financial health of the fund. To
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safeguard against the possibility of default, the State
should have procedures which require a community to
demonstrate its ability to repay the local debt
obligation, before the SRF provides the guarantee. In
addition, the State should have the power to recover
funds adequate to remedy the default (e.g., by
attaching State financial assistance payments to the
community or requiring the recipient to revise its
wastewater service charge to generate funds sufficient
to meet the repayment schedule).
II.B.3. 6) May an SRF provide assistance to a community which
results in deposit of the funds into an SRF security
account?
A: Yes, if the SRF capitalizes a debt service reserve
in the SRF and uses it to guarantee a local debt.
However, the debt has to be for purposes consistent
with sections 212, 319, or 320.
4. Guarantee 8R7 Debt Obligations
II.B.4. 1) The Initial Guidance permits the SRF to be used as a
source of revenue or security for the payment of principal
and interest on revenue or general obligation bonds issued
by the State if the "net proceeds" of the sale of such bonds
are deposited in the SRF. What is the definition of "net
proceeds"?
A: For purposes here, "net proceeds" is defined as the
funds raised from the sale of the bonds minus issuance
costs (e.g., the underwriting discount, underwriter's
legal counsel fees, bond counsel fee, financial advisor
fee, rating agency fees, printing of disclosure
documents/bond certificates, trustee banks' fees,
various forms of credit enhancement and other costs
that may be incurred by a State agency incidental to
the bond issuance).
II.B.4. 2) How can loan repayments be credited to the SRF if they
are pledged to repayment of SRF bond issues?
A: The repayments are to be first deposited into the
SRF and then paid to the pledged issue.
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II.3.4. 3) Can the State use funds in the SRF as a security for
the issuance of State bonds used to provide the State match?
A: Yes. If the net proceeds of the bond issue were
deposited into the SRF and the amount of the security
subject to being paid out is limited to an amount equal
to the interest payments to the Fund from SRF loan
recipients.
II.B.4. 4) Can the State use funds in the Federal LOC to
guarantee the repayment of a State bond issue used to
provide the State match?
A: No, only loan interest payments may be used to
capitalize a guarantee reserve for the State match.
II.B.4. 5) Do State bonds guaranteed by funds in a Federal
Letter-of-Credit (LOC) lose their tax-exempt status?
A: No. The U.S. Treasury Department issued a notice
(#88-54) in April, 1988 which affirmed that the LOC is
not a Federal guarantee for repayment of State or local
bonds guaranteed by the SRF using funds in the Federal
LOC. As a result, the tax-exempt status of these bonds
is not affected by the use of the LOC as a means of
payment to the SRF.
II.B.4. 6) Do State bonds guaranteed by a reserve account in the
SRF (outside the Federal LOC process) lose their tax-
exempt status?
A: No.
II.B.4. 7) May States use SRF funds to make, rebate payments of
arbitrage earnings and penalties, if applicable, to the
U.S. Treasury?
A: Yes, the proceeds of a bond issue secured by SRF
funds may be used to make rebate payments, but only if
the net proceeds of the bond issue were deposited in
the SRF in accordance with section 603(d)(4).
Moreover, in the case of State bonds issued for the
purpose of providing the State match, the rebate
payment must come from funds attributable to the
interest portion of repayments on SRF loans or interest
earnings of the SRF. SRFS are urged to proceed
cautiously because the Internal Revenue Service has not
yet released regulations implementing the Tax Reform
Act of 1386. Consequently, procedures for accounting
and reporting rebate earnings are unclear.
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II.B.4. 8) How does "first use" apply in the case of an SRF
leveraged with some or all of the capitalization grant?
A: "First use" applies to an amount equal to the
grant, repayments from the first round of loans awarded
from the grant, and the State match, even if some or
all of the grant and the match are used to create a
reserve account to secure a debt (i.e., leverage the
grant).
Withdrawals from the reserve account to satisfy its
reserve function can be made even if first use has not
been satisfied, but these withdrawals cannot be counted
toward meeting the "first use1* provision. In place of
the withdrawn funds, other SRF funds, in an amount up
to the "first use" amount, become subject to the first
use requirement.
5. Loan Guarantees for Sub-stat« Revolving
Funds (Section 603(d)(5))
II.B.5. 1) What does "provide loan guarantees for similar
revolving funds established by municipalities or
intennunicipal agencies" mean?
A: This section refers to municipalities, as defined by
section 502 of the CWA (including special purpose
districts), which have authority over areas that
require multiple projects or activities eligible for
SRF assistance under sections 212, 319 and 320. The
provision allows these entities to receive loan
guarantees for eligible projects or activities that
would serve discrete sub-entities (e.g., a suburb or
subdivision within the district).
II.B.5. 2) What type of review or oversight should States
maintain over sub-state revolving funds?
A: States should review the portfolios and operating
policies of such funds, as well as the risk associated
with providing an SRF guarantee of their debt
obligations. Essentially, the review/oversight should
be comparable to that of any other SRF assisted
activity.
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6. Barn Interest on Fund Accounts (Section 603(d)(6))
II.B.6. 1) Are there any limits to the type of investments that
can be made with fund accounts?
A: Under section 603(d), SRFs may undertake activities
for the purpose of earning interest on fund accounts.
This authority does not include investment methods that
earn dividends or yields other than interest. If the
SRF proposes to derive a substantial portion of its
funds from investments, the IUP should describe the
SRF's general financial management strategy. In these
instances, before approving a capitalization grant, EPA
will review the SRF's evaluation of the long term
fiscal health of the fund as effected by the proposed
investment strategy. The SRF Annual Report should
describe the results of the investment strategy for the
year. In addition, the SRF Annual Audit must report
interest earnings as a result of investment activities.
Most States have State laws that restrict the eligible
investments for these fund accounts. Furthermore, if a
State engages in a leveraged program, there may be
restrictions on eligible investments in the trust
indenture securing the bonds. In certain cases, the
Federal tax code may limit the investments a leveraged
program can make with fund accounts.
II.B.6. 2) Can an SRF make loans the principal purpose of
which is to establish a local interest earning fund from
which the local government will use the interest earned to
reduce the cost of funding its projects?
A: No. This is not an allowable use of the fund as
outlined in section 603(d). Funds internal to the SRF
can be set-aside for investing and earn interest to pay
the debt service of the fund (and thereby offset below
market interest rates). However, if allowed by State
law, not inconsistent with cash draw rules, and
approved by the Region, a community may invest
incidental idle construction funds obtained from an SRF
loan and use the interest to reduce the cost of its
project.
II.B.6. 3) Can an SRF pay interest earned by the SRF to the
State Treasury (or other State account) if required by State
law?
A: No. Once funds are deposited into an SRF, any
interest earned can only be expended by the SRF for one
of the seven types of assistance activities listed in
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section 603(d). However, interest earned on State
funds prior to deposit into an SRF would be paid
according to State law.
7. SRF Administrative Expenses (Section 603(d)(7))
II.B.7. 1) Is there any prohibition against a State using its own
non-SRF funds to augment the administrative funds available
from the SRF, which are limited to 4% of all grants?
A: No. In fact, if additional funds are necessary to
administer the SRF program, beyond the 4% of the grants
authorized by the Clean Water Act, they must be
provided from sources outside of the SRF and in
addition to the State match.
II.B.7. 2) How can a State demonstrate that it has not exceeded
the 4% limit for expenditure of SRF funds for administrative
expenses?
A: As part of its Annual Report, the State should
specifically identify administrative costs. This will
facilitate the Annual Review and audit, including
review of compliance with the 4% limitation.
II.B.7. 3) Can the State use part of its 4% SRF administrative
funds to enter into an intergovernmental agreement with the
U.S. Army Corps of Engineers for construction management
similar to the CG program?
A: Yes, assuming the Corps is willing to enter into
such an agreement.
II.B.7. 4) What is included in the definition of using 205(g)
funds to "develop" an SRF?
A: Planning for, establishing, and refining (but not
administering) the SRF during the period of
availability of 205(g) funds.
II.B.7. 5) Can awarded, unspent, pre-FY 87 205(g) set-asides be
used to develop the SRF (e.g., prepare regulations)?
A: Yes, so long as the 205(g) grant award is amended
to reflect the SRF effort.
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II.B.7. 6) Can a State be reimbursed from a Federally capitalized
SRF, for administrative costs of the SRF incurred prior
to the award of a capitalization grant?
A: No, States cannot be reimbursed for costs incurred
prior to grant award. (See 40 CFR 30.308; effective
10/1/88, Part 31)
II. B. 7. 7) Can costs incurred in development of the SRF
instrumentality or specific portions of capitalization
grant applications be counted against State match?
A: No. This would have the effect of using Title VI
funds to reimburse or directly pay costs incurred by
the State in developing SRF legislation or the
instrumentality or in preparing capitalization grant
applications.
II.B.7. 8) May a State charge a fee (not interest) to process,
manage or review an application for SRF assistance?
A: Yes, at the option of the State.
II.B.7. 9) May the State collect an application fee? If so,
must collected fees be deposited into the SRF?
A: Yes, States may charge application fees. If
collected, such fees may be kept in a fund outside of
the SRF. Such a fund may be used to supplement the
administrative expenses available from the SRF itself.
If fees collected are deposited into an SRF account,
they are subject to the stipulated uses of the fund,
including the four percent ceiling for administrative
expenses.
II.B.7. 10) What SRF program development activities are
considered to be eligible under section 205(g)?
A: Specific SRF development activities under section
205(g) are subject to negotiation with the Region.
Generally, such costs activities may include
development or revision of SRF base materials (e.g.,
legislation, the instrumentality, regulations) and
establishment or revision of financial, legal, and
administrative procedures necessary to implement the
SRF. These activities may also include preparation of
the IUP or SRF bond issues. In any case, eligible
activities must be described and accounted for in the
same manner as other 205(g) activities.
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July 1990
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II.B.7. 11) When disbursing funds for eligible administrative
costs, can a State use "funds as a result of" prior to
certifying compliance with the first use requirement?
A: Yes.
C. Prevention of Double Benefits
II.C. 1) For projects which may have received construction grant
assistance, can a State provide SRF assistance for the
portion of the project which is ineligible under Title II
(e.g., reserve capacity, replacements)?
A: Yes, if the work is eligible under the State program
and meets the definition of section 212.
II.C. 2) If a State provided a Title II grant for facility
planning, can the SRF provide a loan for design?
A: Yes. This is a separate activity and, therefore,
would not be considered a double benefit.
II.C. 3) Does the section 603(h) prohibition against making SRF
loans available to construction grants projects apply
to activities funded under sections 319 and 320?
A: No. There is no Federally stipulated local match
requirement at the substate level. At its option, a
State may provide SRF assistance to activities under
section 319 which also received Title II grants in
accordance with section 201(g)(1)(B) unless the
activities meet the definition of section 212.
Section 320 activities are not eligible under section
201(g)(1)(B) unless they are included in an approved
State NPS Management Program.
D. Assistance for the Non-Federal Share
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III. MAJOR LEGISLATIVE PROVISIONS APFECTING CAPITALIZATION
GRANT AGREEMENTS
A. capitalization Grant Agreement
III.A. 1) Must a State have delegation under the CG program in
order to receive a capitalization grant?
A: No. However, experience as a delegated State will
make it easier for a state to demonstrate in its
application that it can administer an SRF program in
accordance with Title VI.
B. Legislative Requirements for the Grant Agreement
1. Agreement to Accept Payments
2. Provide a state Match
III.B.2. 1) Must the State have appropriated funds for the match
at the time it enters into the capitalization grant
agreement?
A: No, however, at the time of award, the State must
show that it has the financial and legal capability to
satisfy the match on or before the date of each
capitalization grant payment.
III.B.2. 2) Can a State use funds received under other Federal
programs to meet the match requirement?
A: Only if specifically allowed by the laws and
procedures of those programs.
III.B.2. 3) When including administrative costs as part of a
capitalization grant application, does the State match
requirements apply to the total amount of the capitalization
grant?
A: Yes. The State match must be calculated on the
basis of the entire amount of the capitalization grant.
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III.3.2. 4) Is the State match acceptable to satisfy the level of
effort requirement for the section 106 Program?
A: No. These two different requirements cannot be
satisfied with the same funds.
III.B.2. 5) What requirements must be met to qualify loan and
repayment amounts from "pre-existing" State loan programs as
a source of State match?
A: For loans made from State funds after March 1 ¦ 1985
but before the award of the capitalization grant, the
amount of outstanding principal can be credited in full
toward the State match if the projects met Clean Water
Act requirements in effect at the time of the loans.
(The repayment stream from these loans cannot also be
counted because that would be double counting.)
For loans prior to March 7. 1985. only repayment
amounts can be counted toward State match; credit may
be given as the repayments are received and deposited
into the SRF fund. Similarly, as the State receives
repayments of interest and principal for loans made
after March 7, 1985, it mav want to transfer these
funds to the SRF as part of its match requirement. As
a result, a pre-existing loan portfolio may generate
both cash and credit (of future principal repayments)
toward meeting the State match requirement. As the
State receives repayments of principal which it claimed
credit for, those funds must be transferred to the SRF
if payments are not made directly to the SRF.
III.B.2. 6) Can State loan funds which were used to supplement
Title II grants (e.g., to pay for the 45 percent local share
of a grant project) be claimed as State match for the State
Revolving Fund?
A: No. In order to qualify for match, the funds must
be used for a purpose that is allowable under Title VI.
Use of loan funds to provide local match for a
construction grant is not allowable under section
603(h).
III.B.2. 7) May another State agency loan the SRF funds to
provide for the SRF State match?
A: No, unless another State agency is authorized to
undertake financial transactions with or on behalf cf
another State agency as a normal part of its operations
(e.g., a State operated bank). This may include
providing funds to the SRF through debt offerings if
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the debt is in the form of a revenue or general
obligation bond or a bond anticipation note. These
forms of debt can be paid back from interest earned by
the SRF. In addition, another State agency may act as
trustee on behalf of the grantee for bonds issued to
generate the State match.
III.B.2. 8) May a State use application fees to assist in the
retirement of bonds issued to generate State match?
A: Yes, so long as the application fees are not first
deposited into the SRF account.
III.B.2. 9) Can an SRF use interest repayments from loans and
income derived from investments in marketable securities to
retire bonds issued for generating State match prior to the
satisfaction of the first use requirement?
A: Interest earnings from sources other than loan
repayments may be used to retire bonds issued for State
match because the first use requirement only applies to
funds resulting from the grant (i.e., the grant,
repayments from loans made with the grant and the State
match.) In addition, interest from repayments may be
used to retire bonds, the proceeds of which were used
to provide assistance to first use projects or where
first use was met.
3. Binding Commitments within One Year
III.B.3. 1) Is there a minimum repayment term for a loan to count
towards satisfying the binding commitments requirement?
A: No.
III.B.3. 2) What actions should a State take if it feels it may
not be able to meet the Act's requirement for 120% binding
commitments within 1 year after receiving a grant payment
(increase in the LOC ceiling)?
A: If a State is concerned about its ability to comply
with the binding commitment requirement, it should
notify the RA before it fails to fulfill its
responsibility, and propose a revised payment schedule.
(The payment schedule is based on the estimated
schedule for entering into binding commitments).
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III.B.3. 3) Can SRF assistance, used for administrative costs, be
counted towards the 120% binding commitment requirement?
A: Yes. Administrative costs can be counted as meeting
the binding commitment requirement. For reporting
purposes, these costs may be considered "committed"
according to the cost estimates in the capitalization
grant agreement.
III.B.3. 4) Can a State include reasonable "contingency funds"
for projects when establishing a projected and/or actual
amount of a binding commitment?
A: Yes. If provided for under the State program, a
contingency cost may be included in the estimated
project cost covered by the binding commitment.
III.B.3. 5) Can a binding commitment for a loan or other SRF
assistance be made from more than one capitalization grant?
A: Yes.
Expeditious and Timely Expenditure
1) Can a State ever withdraw State funds deposited into
SRF?
A: No. Once State funds are deposited into the SRF,
they can only be withdrawn to provide authorized types
of assistance established by section 603(d). If a State
desires to modify its plans for an "overmatch", it may
request an amendment to reduce the amount of the
overmatch so long as the amount of funds to be reduced
has not yet been deposited into the fund.
.B.4. 2) What does "expended in an expeditious and timely
manner" mean?
A: Although there is no specific definition in the Act,
the States should move responsibly to commit SRF monies
to assistance recipients as quickly and efficiently as
possible to facilitate the financing of eligible
activities and, where applicable, to initiate
construction with a minimum of delay. In the case of
leveraged funds, recent amendments to Federal tax laws
may require the imposition of tax or arbitrage
liabilities for unnecessary delays in expending SRF
monies resulting from tax-exempt bonds.
4.
III.B.4.
the
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III.B.4. 3) When are detailed plans and specifications required
for projects receiving SRF assistance?
A: The timing is at the discretion of the SRF, in
accordance with State procedures.
III.B.4. 4) Does a State have to commit to maintaining the SRF
balance at a specified level?
/
A: No. The SRF operating procedures, however, should
reflect the intent to administer fund balances "in
perpetuity" for the purposes outlined in section
603(d). The SRF should maintain the fund balance in
such manner as to allow achievement of the short and
long term goals as identified in the Intended Use Plan
(IUP).
5. First Use of Funds For Enforceable Requirements
III.B.5. 1) Can a section 212 project, identified as part of the
NMP universe, include the construction of reserve capacity
as a portion of the project's cost?
A: Yes. Cost-effective reserve capacity for an NMP
project can be funded with first use money. Note that
such funding may reduce available funds for other NMP
projects.
III.B.5. 2) Do section 212 equivalency projects funded under the
governor's 20% discretionary provision have to abide by
the first use requirement?
A: Yes.
III.B.5. 3) Can SRF funds under the governor's 20% discretionary
provision be used for nonpoint source activities before the
first us* requirement is met?
A: No.
III.B.5. 4) Under the first use requirement, does the repayment
provision on first round loans include interest?
A: Yes, all repayments of principal and interest (if
any) must first be used to assure maintenance of
progress toward compliance with the enforceable
requirements as defined in the Initial Guidance.
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III.B.5. 5) Can a State's National Municipal Policy (NMP) list
be amended?
A: Additions are not allowable unless necessary to
correct an error. Deletions are possible if EPA or a
State finds facilities on the NMP list that have new
wasteload allocations developed as a result of new
water quality standards adopted after July 1985.
III.B.5. 6) What is the definition of "have an enforcement
action filed" as part of the first use requirement?
A: To meet the first use requirement, a judicial
referral must be filed by the State or EPA in a court
of proper jurisdiction. A judicial referral is a
request by the State or EPA for a court to review a
case and prepare a legally binding set of
recommendations for the community to achieve
compliance.
III.B.5. 7) Are State administrative orders (AOs) acceptable as
an enforceable schedule required as part of the first
use provision?
A: Yes, provided that noncompliance with the AO can be
judicially enforced, i.e., if enforceable in the same
way as a Federal AO (e.g., the State administrative
order contains a compliance schedule, with specific
time table for corrective actions, and noncompliance
with the administrative order results in judicial
action/penalties).
III.B.5. 8) What are components of an acceptable enforceable
schedule?
A: As provided in guidance issued by the EPA Office of
Water Enforcement and Permits, enforceable schedules
should include the following:
o Schedule should be designed to meet final effluent
limits as soon as possible;
o Schedule should include sufficient milestones to
allow monitoring of interim progress- in
achievement of final effluent limits and taking
appropriate enforcement action as necessary;
recommend milestones every six months;
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o Court order/settlement should include penalties
for previous violations and identify potential
penalties for future violations.
Under a given capitalization grant, if a project fails
to meet its schedule in a judicial order or
administrative order, maintenance of compliance with
the enforceable schedules is the responsibility of the
State's municipal water enforcement program. Once the
State has certified that it has met its first use
requirement for a given grant, the status of compliance
with the schedules has no effect on the SRF program as
it enters into binding commitments.
III.B.5. 9) Can an SRF satisfy the first use requirement by
providing incremental assistance for the construction of an
NMP project?
A: Yes. However, the funding must substantially
contribute to the facility's progress toward
compliance.
6. Compliance with Title II Requirements
III.B.6. 1) An SRF may provide assistance to a project which also
received construction grant funding. If the SRF
assistance is for purposes which were ineligible under Title
II (e.g., reserve capacity, replacements), does the
assistance provided count toward satisfying the equivalency
requirement?
A: Yes. If an eligible category of need exists and
meets the definition of section 212, the SRF may count
the assistance toward meeting its equivalency
requirements. Only the amount of SRF assistance counts
toward equivalency.
III.B.6. 2) If the SRF provides assistance for an initial phase
or segment of a section 212 project, can the entire cost of
future phases and segments count toward the equivalency
requirement at the ~time of the initial phase or segment?
A: No, only the amount of the assistance actually
provided can count toward the equivalency requirement.
The cost of future phases or segments will be counted
at the time assistance is provided for them.
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III.B.6. 3) Do section 212 projects funded by the SRF to count to
satisfy the equivalency requirement under the governor's 20%
discretionary provision have to abide by the equivalency
requirement?
A: Yes.
III.B.6. 4) When will final compliance with the equivalency
requirement be determined for a particular grant?
A: Ultimately, upon closeout of the capitalization
grant. The closeout will be based on the final audit
which must be submitted no later than one year after
the last cash draw from a LOC account established as
part of a capitalization grant award. Practically
speaking, however, the Annual Review of an SRF will
serve to evaluate progress toward meeting the
equivalency requirement.
III.B.6. 5) Does the equivalency requirement still apply to
section 212 projects receiving SRF assistance if a state's
first use requirements are met?
A: Yes, if a State has met its first use requirements,
it must still meet equivalency but only for section 212
projects receiving SRF assistance. Equivalency
requirements apply to SRF assistance up to the amount
of the capitalization grant unless the SRF opts to
"bank" the excess balance and apply the credit to
subsequent year requirements.
III.B.6. 6) Can a section 212 project not meeting the equivalency
requirements receive SRF assistance prior to a section
212 project meeting the equivalency requirements?
A: Yes, so long as the State will be able to
demonstrate, as part of the Annual Report process for
that grant, that the equivalency requirement has been
met or that progress is being made toward meeting the
requirement for an amount equal to the capitalization
grant.
III.B.6. 7) Can SRF assistance used for administrative costs be
counted towards the equivalency test?
A: No. Although administrative costs count toward
binding commitments, only section 212 treatment work
projects count toward satisfying the equivalency
requirements.
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III.B.6. 8) Do any of the Title II requirements apply to section
3 19 (non-point source) and section 320 (estuary)
activities?
A: No. However, the activities must be in conformance
with the appropriate non-point source or estuary
management plan approved by EPA. If the 319 or 320
activity is also a publicly-owned section 212 project
and is funded with designated SRF equivalency funds, it
must meet Title II requirements under section
602(b)(6).
One of these Title II requirements is 201(g)(1)(B).
This requirement limits funding of certain section 212
projects and nonpoint source, groundwater, and estuary
activities, to be credited against the equivalency
requirement, to a maximum of 20 percent of the grant.
The following examples illustrate the relationship
between equivalency and the Governor's discretionary
fund limitation:
PrQjecpl; Count toward Subject to
Equivalency 2 0% Cap
Lagoon yes no
Collector yes yes *
NPS BMP no yes *
* If funded from funds directly made available
by a capitalization grant.
III.B.6. 9) How do the equivalency and other Federal authorities
(cross-cutting) requirements relate to each other?
A: Both sets of requirements apply to section 212
projects funded with funds directly made available by
the capitalization grant. The other Federal
authorities also apply to sections 319 and 3 20
activities funded with funds directly made available by
the capitalization grant. Neither set of requirements
applies to section 212 projects or sections 319 and 320
activities funded with other SRF funds (except as noted
in section III.B.11. below which discusses
environmental review requirements). At the State's
option, the SRF can chose to "bank" satisfaction of
these requirements with other SRF funds, to be applied
to future capitalization grants.
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III.B.6. 10) In section 602(b)(6), what does "will be
constructed in whole or in part before FY 1995" mean?
A: Any section 212 project for which a binding
commitment has been made or which has initiated
construction before October 1, 1994 and which the State
cites as an equivalency project must comply with the
Title II requirements. Title II requirements do not
apply to any projects for which all binding commitments
are entered into after October 1, 1994. Therefore, if
an equivalency project is incrementally funded, those
portions which receive funding after FY 1994 must also
comply with the Title II requirements. Construction is
initiated when the assistance recipient provides a
notice to proceed to its contractor or when a signed
contract has been executed or force account approved by
the SRF.
III.B.6. 11) How does section 211 apply under Title VI?
A: Treatment works projects which are being counted to
satisfy the equivalency requirements are subject to
section 211. This section limits funding for new
collection systems to existing communities with
sufficient existing or planned capacity to treat the
collected wastes. SRFs need not use the two-thirds
rule developed under the construction grant program to
define existing communities. Nevertheless, at least a
majority of the projected flow must be from an existing
community. EPA has long interpreted "existing
community" as used in section 211 to mean a community
in existence on October 18, 1972. This statutory
interpretation is not changed under section 602(b)(6)
for the SRF program. Project costs not eligible under
section 211 can be funded by funds in excess of the
grant amount if the equivalency requirement is met.
III.B.6. 12) Can States separately bank individual Title II
requirements?
Ai No. The sixteen Title II requirements are not
separable; projects funded with funds directly made
available by the capitalization grant must comply with
all sixteen requirements.
III.B.6. 13) In expending funds directly made available by the
capitalization grant for administrative costs, must the SRF
comply with Parts 31 and 3 2 regulations?
A: Yes. However, Part 31 requirements do not pass
through to SRF assistance recipients.
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III.B.6. 14) May an SRF count toward its equivalency
requirement, the "banking" or "crediting" of satisfaction of
equivalency requirements by projects outside of the SRF
(i.e., from pre-existing State loan program)?
A: Yes, if the projects met the requirements of Title
VI, including: (1) the projects, or portions of
projects for which credit is sought, did not receive
funding under Title II, (2) all repayments of loans
from the "equivalency" portion of the projects must be
deposited into the SRF, and (3) loans for which
repayments are deposited into the SRF must be
considered State match or excess State match and will
be subject to SRF restrictions. The equivalency
requirements include section 201(g)(1) which limits
otherwise ineligible categories to 20 percent of the
sum of the Title II and VI allotments.
III.B.6. 15) If an SRF wishes to count section 319 activities
funded by the SRF in accordance with section 201(g)(1)(B)
from funds directly made available by the grant toward
meeting its equivalency requirement, do the sixteen
equivalency provisions apply to the section 319 activities?
A: No. [Note: If a State is not funding any other
section 212 projects, it may count section 319
activities toward meeting its equivalency requirement
irrespective of section 201(g)(1).]
III.B.6. 16) What steps must be taken to comply with the
equivalency requirements by those refinancing projects which
the State identifies as equivalency projects?
A: To claim the costs of a refinanced project as an
equivalency project, the State must be able to document
that the project complied with the equivalency
requirements, either during the project's
planning/design process, or based on an "after the
fact" review. The need to demonstrate compliance with
the equivalency requirements cannot be waived because
costs have already been incurred, environmental impacts
have already been caused, or contractual obligations
were made prior to issuance of the binding commitment.
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7. state Lavs and Procedures
III.B.7. 1) How will the RA determine if a State is following its
own laws and procedures regarding commitment and
expenditure of funds?
A: The Regional Administrator will look for a
certification in the State's application to follow its
own laws and procedures applicable to the commitment
and expenditure of funds. The Region will also look
for evidence of meeting that certification during the
Annual Review and audit.
III.B.7. 2) What is the role of the State in protecting the SRF
from waste, fraud, and abuse?
A: As a recipient of Federal assistance under 40 CFR
Part 30, the State assumes the primary responsibility
for safeguarding the SRF funds. If a State determines
that SRF resources might be subject to waste, fraud, or
abuse, the State must follow the procedures at 4 0 CFR
30.610. (Note: Effective 10/1/88, Part 30 will be
superseded by a new Part 31.)
III.B.7. 3) How should SRF records be maintained?
A: The State must maintain capitalization grant records
and records of assistance to projects made with funds
directly made available by the capitalization grant in
accordance with 40 CFR Part 30.500-502. (Note:
Effective 10/1/88, Part 30 will be superseded by a new
Part 31.) For projects assisted with other than funds
directly made available by the capitalization grant,
records of SRF assistance must be maintained in
accordance with applicable State laws and procedures.
8. State Accounting and Auditing Procedures
III.B.8. 1) How does the Single Audit Act apply to the SRF?
A: As a direct recipient of Federal assistance, the SRF
must prepare an audit which conforms with the
requirements of the Single Audit Act (SAA) and CMB
Circular A-128. The SAA requires that the recipient of
Federal funds (the State) maintain an "audit trail'1
(itemization) of monies directly made available by the
Federal grant which "pass tnrough" to sub-recipients
(SRF assistance recipients). Therefore, an SRF that
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Cumulative SRF Questions and Answers July 1990 Page 43
receives a capitalization grant is required under the
SAA to itemize the expenditures of the Fund. The SRF
is not, however, required to report transactions
between assistance recipients (e.g., a municipality)
and their contractors (e.g., the construction firm).
The SRF, however, may impose its own audit requirements
on assistance recipients.
III.B.8. 2) Will completion of a single audit of the State agency
fulfill the requirements of the Annual Audit of the
SRF?
A: No. A single audit of the State agency is
insufficient to meet the requirements of the Annual
Audit required by section 606(b) of the Clean Water
Act. A single audit does not include work equivalent
to the financial and compliance audit of this specific
fund (SRF). The SRF audit requirement can be satisfied
only if the audit is performed in accordance with the
auditing standards of the General Accounting Office
(Standards for Audit of Governmental Organizations.
Programs. Activities, and Functions. February 1981).
To the extent practicable, the Annual Audit should
build on the audit work done in a single audit, if one
has been performed. If it is determined that a State
must conduct or arrange for an independently conducted
Annual Audit, the State may have the Annual Audit done
in conjunction with a single audit to minimize costs.
If combined, a separate audit report would be issued
for the SRF and another for the single audit.
III.B.8. 3) Do SRF accounting practices need to indicate if
funds from more than one capitalization grant are used to
fund specific projects?
A: No. There are no requirements for such accounting
arising from the Clean Water Act. Once capitalization
grant funds are deposited into an SRF, an SRF does not
need to track funds by grant at the project level. As
part of its Annual Report, an SRF must list those
projects which were funded by an amount equal to the
Federal grant payments. However, such a listing need
not identify which grant was the source of funding.
III.B.8. 4) Do SRF accounting/auditing practices need to track
State match funds?
A: Yes. For auditing purposes, States should be able
to account for the source and amount of State match
funds attributable to specific capitalization grants.
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9. Recipient Accounting and Auditing Procedures
III.B.9. 1) Does the Single Audit Act (SAA) apply to SRF
assistance recipients receiving loans or other assistance
from funds directly made available by the SRF capitalization
grant?
A: The Single Audit Act (SAA) applies to subrecipients
of funds directly made available by the capitalization
grant (i.e., "equivalency projects") if the total
Federal assistance which the subrecipient receives
during the fiscal year is at least $25,000. The
subrecipient will be subject to the SAA to the extent
that it has received disbursements from the SRF, rather
than the indicated assistance amount in the binding
commitment. Only the amount of SRF assistance which is
specifically identified as funds directly made
available by the capitalization grant shall be deemed
to be Federal assistance for the purposes of the SAA.
III.B.9. 2) What does the Single Audit Act require?
A: The Single Audit Act (SAA) requires the following:
o State and local governments that receive $100,000
or more a year in Federal financial assistance,
shall have an audit made in accordance with 0MB
Circular A-128;
o State or local governments that receive between
$25,000 and $100,000 a year shall have an audit
made in accordance with OMB Circular A-128 or in
accordance with Federal laws and regulations
governing the programs that they participate in;
and
o State and local governments that receive less than
$25,000 a year shall be exempt from compliance
with the SAA Act and other Federal audit
requirements. These States and local governments,
however, shall be governed by audit requirements
prescribed by State or local law or regulations.
III.B.9. 3) Do EPA Part 31 procurement regulations apply to sub-
recipients receiving assistance from the SRF?
A: No.
10. Annual Report
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Cumulative 8RF Questions and Answers July 1990 page 44
9. Recipient Accounting and Auditing Procedures
III.B.9. 1) Does the Single Audit Act (SAA) apply to SRF
assistance recipients receiving loans or other assistance
from funds directly made available by the SRF capitalization
grant?
A: The Single Audit Act (SAA) applies to subrecipients
of funds directly made available by the capitalization
grant (i.e., "equivalency projects") if the total
Federal assistance which the subrecipient receives
during the fiscal year is at least $25,000. The
subrecipient will be subject to the SAA to the extent
that it has received disbursements from the SRF, rather
than the indicated assistance amount in the binding
commitment. Only the amount of SRF assistance which is
specifically identified as funds directly made
available by the capitalization grant shall be deemed
to be Federal assistance for the purposes of the SAA.
III.B.9. 2) What does the Single Audit Act require?
A: The Single Audit Act (SAA) requires the following:
o State and local governments that receive $100,000
or more a year in Federal financial assistance,
shall have an audit made in accordance with 0MB
Circular A-128;
o State or local governments that receive between
$25,000 and $100,000 a year shall have an audit
made in accordance with 0MB Circular A-128 or in
accordance with Federal laws and regulations
governing the programs that they participate in;
and
o State and local governments that receive less than
$25,000 a year shall be exempt from compliance
with the SAA Act and other Federal audit
requirements. These States and local governments,
however, shall be governed by audit requirements
prescribed by State or local law or regulations.
III.B.9. 3) Do EPA Part 31 procurement regulations apply to sub-
recipients receiving assistance from the SRF?
A: Ho.
10. Annual Report
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11. compliance with Environmental Review Requirements
III.B.11. 1) What is EPA's responsibility under the SRF
environmental review requirements?
A: EPA's responsibility will be limited to approving
proposed State processes and revisions to them,
conducting annual oversight, providing technical
assistance when requested, providing guidance regarding
compliance with the provisions of the Other Federal
Authorities (i.e., "cross-cutting authorities"), and on
an exceptions basis consulting with other Federal
agencies under the cross-cutting authorities.
III.B.11. 2) What is the State's responsibility under the SRF
environmental review requirements?
A: The State will be responsible to develop and, after
EPA approval, implement the environmental review
procedures. This includes, but is not limited to,
documenting, making determinations on, and providing
for public comment on environmental issues associated
with section 212 projects receiving SRF assistance and
ensuring implementation of mitigation measures.
III.B.11. 3) Must the SRF establish a two-tier environmental
review process?
A: No. The Initial Guidance does not imply that States
must establish two distinct sets of laws, regulations
or procedures (e.g., one set for equivalency [tier one]
and another for non-equivalency section 212 POTW
projects [tier two]). The intent of the guidance is to
allow States the option to employ different levels of
environmental review stringency to these two tiers or
to apply a NEPA-like review to all 212 POTW projects.
III.B.11. 4) Can States adopt environmental determinations
previously issued by EPA or another Federal agency as part
of the required NEPA-like review process?
A: Yes, if: (a) the State process allows for the
utilization of the Federal determination,- including any
associated mitigation measures and (b) either the
determination is less than five years old or the State
has reaffirmed the determination through an approved
process updating previously issued determinations over
five years old.
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III.B.11. 5) Can the SRF instrumentality hire other entities
(such as other State agencies, universities, or consulting
firms) to do the environmental reviews on projects including
EISS?
A: Yes. However, the required determinations must be
signed and distributed for review by the State agency
identified in the State's approved capitalization grant
application.
III.B.11. 6) If an activity to be funded under sections 319 or
320 meets the definition of a section 212 treatment works,
is an environmental review required?
A: Yes. If the project is to be counted toward
meeting the SRF's equivalency requirement, the
environmental review must be NEPA-like. If not, at
least an approved alternative environmental review
process is required.
III.B.11. 7) Must all alternatives considered in the planning
phase beyond the selected "preferred alternative" be
subjected to a State-level interdisciplinary review?
A: Yes. The State should have the interdisciplinary
expertise for reviewing the preliminary alternatives to
identify and evaluate all environmental concerns to
ensure the selection of the preferred alternative which
avoids, minimizes, or mitigates undesirable project
impacts.
III.B.11. 8) What is the meaning of the statement on page 0-4 of
the Initial Guidance that State procedures may
substitute for Federal agency coordination procedures in
regard to assuring compliance with cross-cutting
requirements?
A: State procedures and responsibilities relating to
compliance with cross-cutting requirements are
explained in a memorandum from the Acting Assistant
Administrator for Water to the Regional Water
Management Division Directors on September 30, 1988.
States are' responsible for assisting EPA in assuring
compliance with cross-cutting Federal environmental
authorities by reviewing a funded project for
compliance under the State's environmental review
process. Where an environmental cross-cutting
authority requires notification and consultation with
the lead Federal agency regarding the preliminary
determination under the cross-cutting authority, the
State will take this action, In making a preliminary
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decision, the State may initiate consultation directly
(1) with lead Federal agencies, (2) with State agencies
delegated or designated by the lead Federal agency, or
(3) through existing Federal clearinghouses at the
State level. If an issue arises regarding a Federal
cross-cutting law that cannot be resolved through the
initial consultation process, the State must notify
EPA, which will assist in resolving the issue.
III.B.11. 9) If an environmental review was not conducted on a
project expected to receive SRF refinancing assistance, what
steps must be taken to comply with the SERP requirements?
A: If the local debt was incurred on or after January
28. 1988 (date of issuance of the SRF Initial
Guidance), an environmental review must have been
completed in accordance with the SERP (i.e., NEPA-like
for equivalency projects or an approved alternative
process for non-equivalency projects). If the local
debt was incurred before January 28. 1988 and is
refinanced from funds other than those "directly made
available by", an environmental review is not
necessary, unless required by the State. If such a
project funded prior to January 28, 1988 is to be
refinanced from funds "directly made available by",
prior to issuance of the binding commitment, the State
must subject the project to an "after the fact" NEPA-
like review. The review process must consider the
impacts of the project based on the pre-building site
conditions. A finding of compliance with the SERP
cannot be justified because costs have already been
incurred, environmental impacts have already been
caused, or contractual obligations were made prior to
the binding commitment.
c. Application of other Federal Authorities
III.e. 1) Does the Brooks-Murkcvski Compromise apply to the SRF
program (i.e., prohibits the obligation or expenditure of
Federal funds to enter into any contracts for the
construction, alteration or repair of any public work or
public building with any contractor or subcontractor of a
foreign country or any supplier of products from a foreign
country identified as one that discriminates against U.S.
firms)?
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212 projects or sections 319, 320, and administrative
activities that receive SRF funds beyond those directly
made available by EPA's grant, except that all state
administrative activities are subject to the civil
rights laws, as a result of the Civil Rights
Restoration Act.
III.C. 5) May a State select individual projects or activities
to be subject to different Federal cross-cutters?
A: No. As a recipient of Federal financial
assistance, if a project or activity is subject to the
equivalency requirements or one cross-cutter, it is
subject to all cross-cutters. However, if a State
uses a single environmental review process to review
environmental cross-cutters, non-equivalency projects
reviewed for compliance with the State environmental
cross-cutters need not be reviewed for compliance with
Federal cross-cutters, because they are not recipients
of Federal financial assistance.
III.C. 6) How will the State assure compliance with environmental
cross-cutters?
A: The State can determine initially whether a project
needs to comply and does comply with Federal cross-
cutting requirements and take steps to assure that
compliance occurs. The SERP may incorporate the
initial procedural and consultative requirements of the
environmental cross-cutters based on procedures
developed under the delegated construction grants
program or as revised for the SRF. In most cases, an
initial favorable determination under the SERP and
review by the appropriate State and Federal agencies
will comply with the cross-cutters. However, where a
protected resource (e.g., endangered species) is found
to be affected by a project, the environmental cross-
cutters may require additional review or consultation
with lead State or Federal agencies and may also impose
substantive restrictions on the use of SRF funds.
III.C. 7) How will the environmental cross-cutters be
implemented for section 212 equivalency projects?
A: Implementation of environmental cross-cutter3 for
SRF equivalency projects may be achieved through the
SERP process. In the SRF program, the FNSI-like
decision document regarding a project's compliance with
environmental cross-cutters (or the ElS-like document)
will be issued by the State under the SERP, rather th^"
by EPA. [This is not "delegation11 of EPA's NEPA
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authority; the State is given this authority directly
by section 602(b)(6)].
In making a preliminary decision to issue a FNSI-like
document or to prepare an ElS-like document, the State
will "coordinate directly with lead Federal agencies
identified in 40 CFR Part 6, Subpart C or utilize
existing Federal clearinghouses at the State level."
(See Initial Guidance, Appendix D, p. D-4) Direct
project-level coordination between State SRF agencies
and lead State and Federal agencies is an integral part
of the SERP. EPA is developing programmatic agreements
with other Federal agencies to facilitate direct
coordination between State SRF agencies and lead
Federal agencies.
If a lead State or Federal agency identifies a problem
regarding a project's compliance with a particular
cross-cutting authority that is not resolved through
the consultation process, the State SRF agency would
notify the EPA Regional SRF and environmental review
offices. Those offices would then participate in
resolving the problem. EPA retains ultimate
responsibility for SRF projects' compliance with
Federal cross-cutters.
III.e. 8) How will environmental cross-cutters be implemented
for sections 319, 320, and administrative activities?
A: States may, at their option, choose to review
sections 319, 320, and administrative activities under
their SERPs. In any case, if these activities are
funded with funds directly made available by the
capitalization grant, their compliance with
environmental cross-cutters must be reviewed by the
State through some process that includes coordination
with lead State and Federal agencies, just as with
equivalency projects. EPA would retain a consultation
role and ultimate responsibility in the event of a
major unresolvable issue regarding an activity's
compliance with a cross-cutter. (However, as a
practical matter, environmental cross-cutters will have
only limited applicability to administrative
activities.)
III.C. 9) Will EPA routinely deal directly with local
assistance recipients in implementing the Federal cross-
cutting authorities?
A: No. EPA and lead Federal agencies will retain
responsibility for compliance, but the State will deal
directly with the local assistance recipient. The
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State will collect and review all necessary
certifications and forms from the recipients and
forward them to lead Federal agencies when committing
SRF funds directly made available by the grant.
III.C. 10) How will cross-cutter compliance be treated in the
capitalization grant agreement?
A: EPA will require a special condition in
capitalization grant agreements or a statement in the
Operating Agreement in which the State assures that
(1) the State and recipients of SRF assistance will
comply with applicable cross-cutting Federal
requirements, including those identified in Appendix F
of the Initial Guidance, and (2) the State will notify
EPA when consultation or coordination by EPA id
necessary to resolve issues regarding those
requirements and is necessary to achieve compliance.
III.C. 11) ' Must a project which meets the equivalency
requirements that is "banked" by a State also meet the other
Federal authorities requirement?
A: Yes.
III.C. 12) How often does an SRF need to report MBE/WBE
compliance?
A: Based on a special grant condition that will be
included in capitalization grant awards or a statement
in the Operating Agreement, the State will need to
agree to submit to the Regional MBE/WBE Coordinator, a
completed EPA Form 334 (MBE/WBE Utilization Report)
within 30 days after the end of each quarter during
which the State or its subrecipients award any
subagreements.
III.C. 13) How will States and assistance recipients comply with
the Civil Rights Act preaward compliance requirements
on SRF assistance provided from funds directly made
available by the capitalization grant?
A: As agreed upon between the State and the Region,
the State may, at any time before such SRF assistance
is provided (i.e., execution of binding commitment),
submit to the Region the completed Civil Rights
preaward compliance review form prepared by SRF
recipients (Form 4700-4 or subsequent versions). As in
the construction grants program, the Region will
continue to review the 47 00-4 forms submitted by the
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State. The State itself must also complete Form 4700-4
as a recipient of Federal assistance.
III.C. 14) If the Federal cross-cutting authorities were not
applied to a project expected to receive SRF refinancing
assistance from funds "directly made available by", what
steps must be taken to comply with the Federal cross-cutting
authorities?
A: To claim the costs of a refinanced project as
meeting the requirements of the Federal cross-cutting
authorities, the State must be able to document that
the project complied with the Federal cross-cutting
authorities, either during the project's
planning/design process, or based on a retroactive
review. A finding of compliance with the Federal
cross-cutting authorities cannot be justified because
costs have already been incurred, environmental impacts
have already been caused, or contractual obligations
were made prior to the issuance of the binding
commitment.
III.C. 15) Must an SRF notify the public regarding those
projects/activities which are to be funded from "funds
directly made available by" so that the public is aware of
its rights under the Federal cross-cutting authorities? How
will the public know to contact the Federal government if
violations of the Federal authorities occur?
A: Yes. The State must identify projects and
activities subject to Federal cross-cutting authorities
in the IUP made available for public comment.
III.C. 16) Does the Brooks-Murkowski Amendment (section 109 of
PL 100-202) continue to apply to contracts awarded in
subsequent fiscal years with funds obligated in FY 1988?
A: Yes. According to an Office of Management and
Budget Memorandum dated January 25, 1989, the provision
still applies to all funds obligated during FY 1988,
regardless of when the contract was awarded. (For
example, a community may receive funds from a State's
capitalization grant which was awarded in FY 1988. The
community, however, may have entered into a loan
agreement with the State in FY 1989 and awarded a
construction contract in FY 1990.) In the case of the
SRF program, the provision would pertain to projects in
an amount equal to capitalization grants awarded during
FY 1988.
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III.c. 17) What is the responsibility of the State to
coordinate compliance with the Federal cross-cutting
authorities?
A: The State, on behalf of SRF assistance recipients,
has the lead role in coordinating with Federal agencies
in regard to Federal cross-cutting authorities. It is
up to the State as to which State agency(ies) work with
the applicable Federal agencies. As part of its
capitalization grant application, the State should
describe procedures and assignment of responsibilities
to assure coordination with the applicable Federal
agencies. Although the State has the lead in regard to
coordination in the area of cross-cutting authorities,
it should seek EPA assistance when necessary to achieve
compliance.
III.C. 18) Do OSHA safety regulations apply to SRF funded
projects?
A: Yes, but not because they are SRF funded, but
because OSHA regulations apply to all construction
projects.
III.C. 19) Do State Clearinghouses for Federal assistance
(established under Executive Order 12372 and 0MB Circular A-
109) need to review all SRF assistance agreements?
A: Ho. At its option, a State may require the SRF to
submit assistance agreements to the State Clearinghouse
for review.
III.C. 20) Does the Prompt Payment Act apply to recipients of
capitalization grants?
A: Yes, but only with regard to payment by the State
to contractors or vendors for SRF administrative
expenses (e.g., for services or acquisition of
materials by the SRF). The Prompt Payment Act does not
apply to disbursements from the SRF account to loan
recipients.
III.C. 21) What procedures should SRFs use to assure compliance
with the requirements of the Clean Air Act?
A: In its NEPA-like environmental review, the state
must assure that equivalency projects conform to the
population projections of the State's Clean Air Act
implementation plan (SIP). This should reduce the
potential for violations of air quality standards that
could be caused by the growth induced by the
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construction of POTWs. States should also assure
through its approved alternative environmental review
process that SRF funded projects are consistent with
the SIPs, including NSPSs (New Source Performance
Standards which are industry specific) and NESHAPs
(National Emission Standards for Hazardous Air
Pollutants which are pollutant specific).
At their option, States may streamline the conformity
process by placing their SERP conformity criteria in
future SIPs. Where there is a population growth
inconsistency beyond what the SIP can accommodate, the
State may negotiate either case-by-case emission
offsets (i.e., variances) or revise the SIP. Otherwise
such projects cannot be funded with funds directly made
available by the Federal capitalization grant. After
the expenditure of funds directly made available by
capitalization grants, the only remaining SRF-imposed
CAA conformity requirements are the SERP's air quality
conformity procedures.
III.e. 22) How do the requirements contained in the programmatic
agreement for the National Historic Preservation Act
(NHPA) relate to the requirements of the Archeological
and Historic Preservation Act (AHPA), the Historic
Sites Act (HSA), and Executive Order 11593 on
Protection and Enhancement of the Cultural Environment?
A: Although the subject matter contained in the AHPA,
HSA, and EO 11593 are closely related to NHPA matters,
these authorities are not administered by the Council
on Historic Preservation or members of the National
Council of Historic Preservation Officers with whom the
PA is being negotiated. However, State SRF SERP staffs
should be cognizant of the relationships and undertake
similar tasks involving all four cross-cutter
authorities at the same time to reduce or avoid
duplicate surveys.
III.C. 23) Can someone other than a staff member of the SRF
Agency be responsible for meeting the requirements of the
Programmatic Agreement for the National Historic
Preservation Act (NHPA) or for other environmental cross-
cutter laws?
A: Yes. Authority given to SRF Agencies in both the
PA on the NHPA and in approved SERP processes allows
the SRF Agency to delegate responsibilities to another
State Agency with the staff expertise to discharge such
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duties. However, this delegation cannot be given to a
loan applicant or consultant.
III.C. 24) Does execution of programmatic agreements between EPA
and other Federal agencies on environmental cross-
cutters, especially those with "dispute resolution"
provisions, indicate an expected higher level of Agency
involvement in project level decision-making compared
to the Construction Grants program under delegation?
A: No. The EPA does not anticipate any higher level
involvement on individual projects than has been
experienced in the Construction Grants program, and may
even be less as State SRF Agencies, the Council on
Historic Preservation, and State Historic Preservation
Officers strengthen their working relationships under
the PAs.
III.C. 25) What is the difference between the language in
Attachment 6 of the National Historic Preservation Act
(NHPA) Programmatic Agreement (PA) referring to
"...a decision on a project..." as used in paragraph
6(C)(1) and "...final determination..." as used in
paragraph 6(C)(2)?
A: Paragraph 6(C)(1) relates to any "preliminary"
decision(s) made which are used in initiating
consultation with lead Federal agencies, while
paragraph 6(C)(2) relates to notifying the lead Federal
agency of its intended action on a project taken in
response to the consultation process.
III.C. 26) Do Federal Flood Insurance requirements apply to
projects funded with funds directly made available by
Federal capitalization grants?
A: No.
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IV. application for a capitalization grant
IV. 1) Can a State include "contingency funds" as a separate
line item in the intended use plan as part of its
capitalization grant application?
A: No. All costs must be accounted for by a projected
binding commitment for a specific type of Title VI
assistance. If allowed by the State program, however,
reasonable contingency funds may be included in the
estimated project cost covered by individual binding
commitments.
A. Fund Establishment, Instrumentality of the State
IV.A. 1) Can the SRF establish additional requirements for
recipients beyond what is designated in sections
603(b), (c), and (d) ?
A: Yes, provided the additional provisions do not
conflict with the requirements of the CWA,
capitalization grant agreement or other applicable
Federal rules and regulations.
IV.A. 2) What action can be taken if enabling legislation for
the SRF includes provisions which are inconsistent with
Title VI?
A: The appropriate action will depend upon a number of
factors. In general, one of the following actions may
be necessary to address an inconsistency between a
State's SRF enabling legislation and Title VI:
o If the legislation authorizes something that is
not consistent with Title VI, but it is not
mandatory, a special condition can be placed on
the capitalization grant.
o If the legislation is silent about something that
is required under Title VI, it can be handled in
State rules, the Operating Agreement or the grant
agreement.
o If the legislation prohibits something that Title
VI requires or if the legislation requires
something that Title VI prohibits, legislation to
revise the State law is necessary prior to
capitalization grant award.
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IV.A. 3) If more than one State agency will be involved in
management of the SRF program, what documentation should be
included as part of the capitalization grant application to
describe the division of responsibilities among the
agencies?
A: Memoranda of Understanding (MOUs) or similar
agreements should be included as part of the
capitalization grant application. If the State has
opted for an operating agreement (OA), the MOUs should
be attached to the OA. The MOUs should clearly
delineate the division of management responsibilities
among the agencies.
IV.A. 4) Must SRF enabling legislation include provisions for
providing assistance to sections 319 and 320 activities?
A: No. States, however, are encouraged to include
provisions in enabling legislation to engage in all
activities authorized by Title VI. Such broad
authorizing legislation will minimize the need to seek
additional legislative action in the future if the SRF
decides to offer SRF assistance to sections 319 and 320
activities.
IV.A. 5) Are State regulations required to implement the SRF?
A: No, unless required by the State to implement its
program. Policies, procedures, guidelines, etc. are
acceptable, providing they give the State sufficient
enforceable authority to operate its SRF.
IV.A. 6) Can Indian tribes receive capitalization grants to
establish SRFs?
A: No, only States are currently authorized to
establish SRFs. Indian tribes, however, are eligible
to receive assistance from SRFs.
B. Decision on the Use of Allotments
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C. intended Use Plan (IUP)
IV.C. 1) What does "public comment and review" mean in relation
to the preparation of an IUP?
A: It means that the State must provide an opportunity
for the public to review and comment on the State's IUP
in accordance with State public participation
requirements. The State will describe its public
review and comment procedures in its capitalization
grant application. At its option, a State may continue
practices consistent with 40 CFR Part 25.
IV.C. 2) When does the requirement for preparation of IUPs end?
A: The SRF must prepare and submit an IUP in
conjunction with each capitalization grant application.
After the
end of the availability of Federal capitalization
grants, the SRF must continue to prepare and have
public review of annual IUPs.
1. List of Projects
IV.C.l. 1) Must States continue using the Priority List after the
Federal financing role ends?
A: Yes. The State's Priority List is an integral part
of the process required to develop the IUP.
IV.C.l. 2) Can a State have two project priority lists — one
for assistance under the construction grant program and
another for SRF assistance?
A: Yes, as long as both lists comply with the
requirements of section 216. Alternatively, a State
may choose to have one list that includes projects and
activities under both construction grants and SRF.
IV.C.l. 3) What is the relationship between the timing of EPA
acceptance of the project priority list (prepared in
accordance with section 216) and development of the IUP?
A: SRF section 212 projects must be on the current
priority list when the IUP is accepted by the P.egior.3]
Administrator and when the SRF makes binding
commitments.
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iv.c.l. 4) Must refinanced projects be listed on a State's
current SRF PPL to qualify for inclusion in the IUP and
subsequent SRF assistance?
A: Yes.
IV.C.l. 5) If the IUP project list includes a project from the
current PPL scheduled to receive SRF financial assistance in
a year after that PPL has expired, must the project appear
on the PPL of the year in which financial assistance will be
provided?
A: Yes, financial assistance provided through a loan
agreement or other contract between the SRF and the
recipient can only be provided to a project which
appears on the PPL of the year in which that assistance
is provided. However, the "current PPL" may be a
multiyear PPL.
IV.C.l. 6) What is the definition of a "current" SRF PPL?
A: The current SRF PPL is the most recent State SRF
PPL based upon a project priority system developed
pursuant to section 216 of the CWA. States need not
develop a new SRF priority list each year; they may
develop a single multi-year SRF priority list which
could be considered their current list and not need to
be updated annually.
2. Short and Long Tarn Goals
3. Information on SR7 Activities to be Supported
4. Assurances and Specific Proposals
IV.C.4. 1) What is the State's responsibility concerning the
construction of oversized facilities or facilities which
serve growth and development only?
A: The State must certify that it will assure
compliance with Title II requirements as discussed in
section III.B.6. of the initial guidance. In cases
where the State will not be following EPA regulations,
it must submit its ovm specific procedures for ensurinq
that these requirements are met. One of these
requirements mandates that the State assure that the
facilities constructed with State Revolving Funds be
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cost-effective. This means, for example, that the
State needs to assure that oversized facilities which
cannot be effectively and efficiently built or operated
are not constructed, and that facilities or portions
thereof are not over-designed to serve inappropriate
growth and development.
5. criteria/Method for Distribution of Funds
IV.C.5. 1) Are States required to conduct a public
hearing/meeting as part of the development of the IUP?
A: No. The State must, however, provide public notice
and an opportunity for public comment and review.
D. Payments
IV.D. 1) Can the negotiated payment schedule be amended once it
is part of the capitalization grant agreement?
A: Yes, so long as the last payment is received no
later than the earlier of 8 quarters after the date
such funds were obligated by the State or 12 quarters
after the date such funds were allotted to the State.
IV.D. 2) Prior to requesting a cash draw from the Federal LOC,
what should be the extent of State review of a disbursement
request from a SRF assistance recipient?
A: The State has responsibility for determining
appropriate review of disbursement requests.
IV.D. 3) What qualifies as a "particularly aggressive leveraging
proposal"? How does leveraging affect the payments
schedule?
A: A State must explain its leveraging approach as
pairt of its capitalization grant application. States
contemplating an aggressive leveraging plan are
encouraged to meet with Regional and Headquarters staff
prior to submitting an application. Details as to what
qualifies as a "particularly aggressive leveraging
proposal" and how it affects the payment schedule can
be found in the SRF Letter of Credit brochure
(September 1988) published by the Office of Municipal
Pollution Control.
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IV.D. 4) Can States use the LOC to negotiate a bank loan to nake
construction loans immediately (i.e., to support
interim financing)?
A: The Act says that the SRF can serve as a source of
revenue or security for the payment of principal and
interest on revenue or general obligation bonds. Other
State debt instruments such as a bank loan are not
authorized types of assistance and, therefore, cannot
be secured by the SRF. Interim financing will not be
required due to the use of LOCs. Loans can be made to
municipalities as soon as the grant is awarded and cash
draws can be made as soon as construction related costs
are incurred, but before they are actually paid.
IV.D. 5) How will payments be made to the LOC?
A: The process for making payments to the LOC are
explained in detail in the SRF Letter of Credit
brochure (September 1988) published by the Office of
Municipal Pollution Control.
IV.D. 6) If a State proposes to make binding commitments which
equal 120 percent of the grant within three months of the
grant award, will EPA make payments equal to the grant
amount within the first quarter?
A: Yes. This assumes that in negotiation of the
payment schedule, the State and the Region agree that
the State can achieve its projection that quickly.
IV.D. 7) In determining the payment schedule, what date is used
to determine the availability of the allotment?
A: The date of the Advice of Allowance from the EPA
Comptroller.
IV.D. 8) An SRF identifies a group of projects in order to
maintain proportionality (i.e., disbursements from
Federal payments and State funds). If one of these projects
becomes delayed to the extent that it cannot be used to meet
proportionality (e.g., construction is shutdown), can the
SRF substitute another project for purposes of cash draw?
A: Yes, unless cash has been drawn for the project for
which substitution is intended as prescribed on page 2 6
of the Letter-of-Credit Brochure, change 2. If,
however, a project for which cash has been drawn is
significantly delayed, then, subject to a non-monetary
grant amendment, the Region and State may negotiate the
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substitution of another project provided that outlay
commitments are not negatively impacted.
IV.D. 9) When is a project complete for purposes of loan
repayments?
A: For building projects, project completion is the
date operations of the treatment works are initiated,
or are capable of being initiated. For planning or
design projects or sections 319 and 320 activities, the
State should describe its definition of project
completion in its capitalization grant application.
IV.D. 10) What are incremental disbursement bonds?
A: In some States, State law or constitutions restrict
local bond indebtedness. Incremental disbursement
bonds (or similar techniques) allow communities to
"draw down" from their estimated debt needs on a
periodic basis as project costs are incurred. These
bonds are generally issued by local communities and
purchased by State entities which supply the needed
funds.
IV.D. 11) If a State uses the group of projects method to ensure
proportionality, may it switch to the all projects
method after a payment and cash draw has been made?
A: Yes, a State may change to the all project method
if it demonstrates, to the satisfaction of the Regional
Administrator, that project(s) in the group are
significantly delayed and the delay will cause an
adverse impact on the fund.
To accomplish the change, the amount of cash drawn that
would have been allowed if the all projects method was
initially employed must be calculated. Once the cash
draw method is changed, additional cash draws may only
be made if the cumulative amount that would have been
allowed under the initial all project method is greater
than the draws that have actually been made. (In other
words, any additional draws mav not cause the
cumulative total of actual draws to exceed the amount
allowed using the initial all project method.) Upon
Regional Office approval, the State may, if necessary,
substitute projects designated for purposes of cash
draw tracking.
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July 1990
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V. CAPITALIZATION GRANT AGREEMENT
V. 1) Since changes in operating agreements affect all
capitalization grants awarded under that agreement,
would the new requirements affect previously awarded loans
(i.e., are requirements retroactive)?
A: Changes in operating agreements are intended to be
applied to future SRF assistance agreements unless the
Agency is statutorily directed to apply changes
retroactively.
V. 2) May operating agreements have a specified termination
date?
A: Yes, if mutually agreeable to the State and the
Region at the time of negotiation of the capitalization
grant agreement.
V. 3) Can a capitalization grant award be amended to
increase the amount of the grant?
A: Yes, so long as the intended use plan is amended to
reflect the revised grant amount.
V. 4) What are GAAPs and GANs (Referred to on page 29 of the
Initial Guidance)?
A: GANs - Grant Anticipation Notes;
GAAPs - Generally Accepted Accounting Principles;
however, inclusion of this acronym is an error in the
Initial Guidance.
The correct acronym is:
GAGAS - Generally Accepted Government Auditing
Standards
For more information on standards for audits of
government funds received by other organizations, see
the booklet Standards for Audit of Governmental
Organizations. Programs. Activities, and Functions.
1988 revision, U.S. Government Printing Office.
V. 5) Do project/budget periods of capitalization grants need
to conform to the Federal fiscal year?
A: No.
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Cumulative SR-F Questions and Answers
July 1990
page 64
VI. reporting and oversight op srp activities
A. Annual Report
VI.A. 1) Do uses of SRF funds have to be accounted for
separately (e.g., meeting equivalency and/or first use
requirements)?
A: Yes, the Annual Report will need to show which
projects satisfy the various requirements (including
the costs related to each project).
VI.A. 2) How long into the future will Federal SRF reporting
requirements apply?
A: Section 606 is not tied to the award of
capitalization grants. The appropriate level of State
reporting to EPA after the award of the last
capitalization grant has not yet been determined, but
is expected to be less since several requirements will
no longer apply.
VI.A. 3) Will the SRF be required to include information in its
Annual Report on the accomplishments of the Minority
Business/Women Business Enterprise program?
A: Yes. At the time of the capitalization grant
agreement, the Region and State shall negotiate a "fair
share" objective for MBE/WBE participation. The State
shall select certain projects or activities expected to
meet this objective. To the extent that the fair share
objectives are not met, the Annual Report shall include
information on the progress of the selected projects or
activities in meeting the fair share objectives. To
report WBE/MBE accomplishments, the State should
establish reporting requirements as part of its
assistance agreements with recipients in accordance
with Executive Order 12432.
VI.A. 4) How long does the SRF need to keep records relating to:
(1) capitalization grants (e.g., development of IUP,
negotiation of payment schedules, grant application and
agreement materials) and (2) SRF assistance (e.g.,
applications, completed review checklists,
environmental review materials, documentation related
to compliance with equivalency requirements and other
Federal authorities, repayment records)?
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Cumulative SRF Questions and Answers
July 1990
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A: Records relating to capitalization grants must t
maintained in accordance with 40 CFR 31 and be readi.,
available for auditors' use. Records relating to
specific assistance projects must be maintained in
accordance with State laws and procedures and as
necessary to support Annual Reviews and audits.
B. Annual Review
VI.B. 1) Will the Grant Information and Control System (GICS) be
used to maintain a national data base on capitalization
grants?
A: Yes. EPA will maintain GICS as a national database.
Those States which wish to use it will be allowed to.
VI.B. 2) How long into the future will EPA review requirements
apply?
A: Some review requirement will continue so long as
the SRF is in operation. The level of review beyond
the period covered by capitalization grants has not yet
been determined.
VI.B. 3) What is the EPA Headquarters (HQ) role in the annual
review?
A: The conduct of Annual Reviews is a Regional Office
responsibility. Headquarters will oversee Regional
Office implementation of SRF activities.
VI.B. 4) Can there be a review of a State's SRF program
operations during the year?
A: EPA plans to conduct reviews of State performance
in the Annual Report/review/audit process prescribed in
Title VI. However, if significant issues arise during
the course of the year of the award (e.g., allegation
of waste, fraud, abuse, or major problems with the
operation of the SRF program), EPA does not preclude
the potential need for interim reviews or audits.
VI.B. 5) Will EPA get involved in review of project specific
issues?
A: Other than audit-related reviews, the only time
EPA might review project specific issues is as part of
its Annual Review of the State program. In its Annu-"1
Review, EPA will examine the management and operate
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Cumulative SRF Questions and Answers
July 1990 Page $6
of the SRF as identified in the State's Annual Report
and Intended Use Plan. To determine the adequacy of a
State's technical reviews of designated Title II
equivalency projects, EPA may review certain documents
of selected projects as provided in the Operating
Agreement. The purpose of this sampling would not be
to review the judgment of the State with regard to
specific project-level decisions, but to evaluate the
effectiveness of the State's review. The State has
lead responsibility for resolving project specific
issues. If questions of waste, fraud or abuse arise,
however, EPA may require project level review in some
cases. In conducting its audits, the Office of
Inspector General may find it necessary to review
recipient records. In addition, in some cases, at the
request of the State or another Federal agency, EPA may
participate in the review or resolution of some issues
related to compliance with cross-cutting Federal
authorities.
VI.B. 6) Can GICS be used by a State to maintain a data base on
SRF assistance recipients?
A: Yes. EPA is committed to maintaining the
availability and viability of GICS so that States may
utilize it to track both Title II and Title VI
activities. Additional data elements are now under
consideration to make GICS more responsive to the needs
of tracking SRF activities. States, however, may
utilize whatever data base meets their needs for Title
VI projects and activities.
c. Annual Audit
VI.C. 1) How long into the future will Federal SRF auditing
requirements apply?
A: Section 606 is not tied to award of capitalization
grants. The nature and extent of auditing following
project administrative completions after the period
covered by capitalization grants has not yet been
determined.
VI.C. 2) If States conduct audits under the SRF program, can the
costs of such audits be paid for with SRF funds?
A: The State can use administrative funds from the SRF
to pay the cost of complying with the audit
requirements.
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July 1990
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vi.c. 3) How will it be determined who will conduct (EPA or th
State) the required annual Federal audit?
A: The EPA's Office of Inspector General (OIG) will
provide Regional Administrators with a list of States
from which the OIG or its representatives will be
performing the required Annual Audit for the next
fiscal year. The Regional Administrators, in turn,
will notify each State as to whether the OIG will
perform the Annual Audit or whether the State must
conduct or arrange to have independently conducted
audits. The accounting period for the Annual Audit
will be the State's fiscal year unless the State and
Regional Offices select a different accounting period.
VI.C. 4) Does the EPA's Inspector General have access to State
and loan recipient records?
A: Yes. Under section 606(e) of the Water Quality Act
of 1987, the Administrator has access to the records of
States and loan recipients to review and determine
compliance with the Clean Water Act and capitalization
grant agreements. Section 6(a)(1) of the Inspector
General Act of 1978 authorizes the EPA's Inspector
General to have access to all records, reports,
documents, papers or other materials that are avail?
to the Administrator. The Office of Inspector Genet
intends to perform selective audits of the efficiency,
effectiveness, and compliance of the SRF program and,
in the course of these audits, will require access to
the records of State agencies and loan recipients.
VI.C. 5) What does the Annual Audit of the SRF require?
A: According the section 606(b) of Title VI of the
Clean Water Act, "the Administrator shall, at least on
an annual basis, conduct or require each State to have
independently conducted reviews and audits." As such,
financial and compliance audits of SRFs and its
operations are needed. The audit should be conducted
in accordance with the auditing standards of the
General Accounting Office (Standards for Audit of
Governmental Organizations. Programs and Functions).
VI.C. 6) What audit coverage is required of local recipients of
SRF assistance?
A: When a recipient of a loan or other SRF assistance
is a local government, the SRF (direct recipient of
Federal assistance) must ensure that the local
government (subrecipient) complies with the provisic
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Cumulative SRF Questions and Answers
July 1990
Page 68
of the Single Audit Act (SAA) as it applies to the
receipt of Federal financial assistance. Only funds
designated by the SRF as directly made available from
the capitalization grant should be considered Federal
funds subject to the threshold amount which would
require the local community to prepare an audit under
the terms of the SAA.
D. Compliance Assurance
VI.D. 1) Can the award of a capitalization grant be "held up"
pending review of a previous grant's Annual Report and
Audit?
A: Yes. However, if the RA is satisfied with the
State's conduct of its SRF program at the time of
application for a subsequent year's capitalization
grant, the subsequent year's capitalization grant can
be awarded prior to the completion of the Annual Review
and audit.
VI.D. 2) What payments are subject to possible withholding?
A: The possible withholding of payments is discussed
on page 3 3 of the SRF Letter of Credit brochure
(September 1988) published by the Office of Municipal
Pollution Control.
VI.D. 3) How will the Regions assure that SRFs comply with Title
VI requirements?
A: During the Annual Review process, the Regions will
review SRF procedures and conduct spot checks of
selected project files to overview compliance with
Title VI requirements.
E. Dispute Resolution
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Appendix A
CROS8-INDEX OF KEY WORD8 AND PHRASES
Compilation of Seta 1, 2, & 3
of the SRF Questions and Answers
Note to User: Reference to questions is indicated by section and
question number (followed by a right parenthesis). The sections of the
Questions and Answers document are organized consistent with the State
Revolving Fund Initial Guidance issued in January 1988. References are
separated by semi-colons. Multiple references in the same section are
shown as a series followed by the right parenthesis. Please scan the
list of keywords to find related terms of interest.
Accounting I.C.I. 1); II.B.4. 7); III.B.8. 3,4);
Activities of Fund II.A. 8-9); II.TT. I.e. 5); II.B.6. 1)
Administrative Activities . I.C.I. 1); III.C. 3,4,8)
Administrative Costs/ I.C.I. 1); II.A. 25); II.A. 35);
Expenses II.B.7. 1-3,6,9,11); III.B.2. 3);
III.B.3. 3); III.B.6. 7,13); III.C. 20);
VI.C. 2)
Administrative Order III.B.5. 7,8)
Advance of Allowance I.e.3. 2)
Allotment (Formula) I.A. 2-5); I.C. 1,2); I.C.3. 1,2,4);
III.B.6. 14); IV.D. 7)
Allowable Costs II.A. 7,16,17,35); II.B.6. 2); III.B.2. 6)
Allowance I.C.3. 2); II.A. 16); IV.D. 7)
Annual Report II.B.6. 1); II.B.7. 2); III.B.6. 6);
III.B.8. 3); VI.A. 1,3); VI.B. 4,5);
VI.D. 1)
Annual Review II.B.l. 5); II.B.I.e. 2,5); II.B.7. 2);
III.B.6. 4); III.B.7. 1); VI.A. 4);
VI.B. 3,5); VI.D. 1,3)
Arbitrage/Rebate II.B.4. 7); III.B.4. 2)
Audit/Auditing II.B.6. 1); II.B.7. 2); III.B.6. 4)y
III.3.7. 1); III.B.8. 1,2,4); III.B.9. 1,2);
V. 4); VI.A. 4); VI.B. 4,5); VI.C. 1-6);
VI.D. 1)
Authorization I.A. 5); I.C. 1); I.C.3. 2)
Balloon Payments II.B.l.b. 2)
Bank/banking (equivalency/ II.A. 32); III.B.6. 5,9,12,14); III.C. 11)
match/binding commitment)
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KEYWORD INDEX — SRF QUESTIONS AND ANSWERS
Page 7 0
Binding Commitment I.A. 4); II.B.l. 5); III.B.3. 1-5,8);
III.B.6. 7,10,16); III.B.9. 1);
III.B. 11. 9); III.C. 13,14); IV. 1);
IV.C.1. 3); IV.D. 6)
Bonds/Bond Proceeds II.A. 4,18,22); II.B.I.e. 3); II.B.3. 2-4);
II.B.4. 1-7); II.B.6. 1); II.B.7. 10);
III.B.2. 7-9); III.B.4. 2); IV.D. 4,10)
Capitalization Grant I.A. 3,6); I.e. 2); I.C.I. 1); I.C.3. 5);
Agreement II.A. 3,25,33); II.B.l.b. 2); II.B.4. 8);
II.B.6. 1); II.B.7. 6); III.A. 1);
III.B.2. 1,5); III.B.3. 3,5); III.B.5. 8);
III.B.6. 4,5,9); III.B.8. 3,4);
III.C. 10,12); IV.A. 1,2,6); IV.D. 1);
V. 1-3,5); VI.A. 2-4); VI.B. 1,2);
VI.C. 1,4); VI.D. 1)
Capitalization Grsint ...... I.A. 2); I.e.3. 1); II.B.l. 2),
Application II.B.I.e. 5); II.B.7. 7); III.B.2. 3);
III.B.11. 5); III.C. 17); IV. 1);
IV.A. 3); IV.C. 1,2); IV.D. 3,9)
Cash Draw II.A. 20); II. B. 6. 2); III.B.6. 4);
IV.D. 2,4,8,11)
Certification III.B.7. 1); III.C. 9)
Civil Rights III.C. 4); III.C. 13)
Clearinghouse III.B.11. 8); III.C. 7,19)
Collateral II.A. 18); II.B.I.e. 3,4)
Jollection Systems II.A. 12); III.B.6. 11)
Combined Sewer (CSO) II.A. 32,33)
Compliance I.C.3. 2); II.A. 17) II.B.7. 2,11);
III.B.5. 4,6-9); III.B.6. 4,16);
III.B.8. 2); III.B.9. 2); III.B. 11. 1,8)
III.C. 2,5-10,12-14,17,21); IV.C.4. 1);
VI.A. 4); VI.B. 5); VI.C. 4,5); VI.D. 3)
Comprehensive Coordinated II.A. 29,31,32)
Management Plan (CCMP)
Contingency Funds III.B.3. 4); IV. 1)
Contract Operation II.A. 19)
Core, Elligible Categories III.B.6. 14)
Cost Effective II.A. 6)
Cost Overrun II.A. 37)
Court Ordered Schedule .... III.B.5. 7,8)
Credit II.A. 18); II.B.2. 2); II.B.3. 1,2);
II.B.4. 1,2); III.B.2. 5); III.B.6. 5);
III.B.6. 8,14)
Cross-Cutter/Cross-Cutting II.A. 17); III.B.6. 9); III.B.11. 1,8);
III.C. 2-10,14,15,17,22-24); VI.B. 5)
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KEYWORD INDEX — SRF QUESTIONS AND ANSWERS Page 7 1
Debt Obligation II.A. 18,20); II.B.l. 5); II.B.l.b. 2);
II.B.I.e. 3); II.B.2. 1,3); II.B.3. 5) ;
II.B.4. 8); II.B.5. 2); III.B.2. 7);
III.B.11. 9); IV.D. 4,10)
Debt Service II.A. 18); II.B.l.b. 4); II.B.3. 6);
II.B.6. 2)
Dedicated Source (of II.B.l.b. 3); II.B.I.e. 1,2,4,5)
Repayments)
Default II.B.l.b. 2-4); II.B.I.e. 3); II.B.3. 5)
Deobligated/Deobligation .. I.A. 3,5)
Deposits Into Fund I.C.I. 1); II.A. 36); II.B.3. 6);
II.B.4. 1-3,7); II.B.6. 3); II.B.7. 9);
III.B.2. 5,8); III.B.4. 1); III.B.6. 14);
III.B.8. 3)
Design/Design Costs II.A. 2,14-16); II.B.l. 2,4); II.C. 2);
IV.D. 9)
Designated/Designation .... II.A. 28,30,31); III.B.11 8); IV.D. 11);
VI.B. 5)
Development (SRF) II.A. 25); II.B.7. 7); II.B.7. 10)
Development (Sec. 319/320) II.A. 9,28)
Directly Made Available ... II.A. 3,12,17,32); III.B.6. 8,9,12,13,15);
III.B.7. 3); III.B.8. 1); III.B.9. 1);
III.B.11. 9); III.C. 1-4,8,9,13-15,21,26);
VI.C. 6)
Disbursement (Schedule) ... III.B.9. 1); III.C. 20); IV.D. 2,8)
Discount II.A. 24); II.B.l.b. 5); II.B.4. 1)
Dispute III.C. 24)
Earn Interest (See Interest) II.A. 3); II.B.4. 7); II.B.6. 1-3);
III.B.2. 7,9)
Eligible Cost I.C. 2)
II.B.1.
II.B.6.
III.B.4
II.B.7.
III.B.5
III.B.5
Enabling Legislation
Enforceable Requirements
Enforcement Action
Environmental Assessment
Environmental Impact
Environmental Review
II.A. 2,6-9,12-14,17,24,27-30,32);
5); II.B.2. 3); II.B.5. 1);
1); II.B.7. 10,11); II.C. 1,3);
2); III.B.6. 1,11,14)
7,10) ; IV.A. 2,4)
4)
6-8)
III.B.11. 4,7)
III.B.6. 16); III.C. 14)
II.A. 35); III.B.6. 9); III.B.11. 1-3,
5,6,8,9); III.C. 2,5,7,21); VI.A. 4)
Equivalency/Funds/Projects/ I.C. 2); II.A. 7,20,32,33); II.B.3. 1,2);
Requirement III.B.5. 2); III.B.6. 1-11,14-16);
III.B.9. 1); III.B.11. 3,6,9); III.C. 5,7,
8,11,21); VI.A. 1,4); VI.B. 5)
Establish Fund I.A. 4); I.C.3. 4); II.B.l.b. 6); IV.A. 6)
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KEYWORD INDEX — BRF QUESTIONS AND ANSWERS
Page 72
Estuary (Section 320) II.A. 2,9,27-33); II.B.I.e. 4); II.B.3. 6);
II.B.5. 1); II.C. 3); III.B.6. 8,9);
III.B.11. 6); III.C. 3,4,8); IV.A. 4);
IV.D. 9)
Existing Community III.B.6. 11)
Expansion II.A. 18)
Expeditious & Timely III.B.4. 2)
Expenditure
Facility Planning II.A. 15)
Fair Market Value II.A. 6); II.B.l.a. 1); II.B.l.a. 2);
II.B.6. 2)
Fair Share (See MBE/WBE) .. VI.A. 3)
Federal Share II.A. 37)
Fees II.B.l.b. 3,4); II.B.4. 1); II.B.7. 9);
III.B.2. 8)
Financial Capability II.B.l.b. 3); II.B.I.e. 3,5)
Financial Health/Integrity II.A. 24); II.B.l.b. 6); II.B.I.e. 5);
II.B.3. 5)
Financial Management II.B. 6. 1)
First Round Loans II.B.4. 8); III.B.5. 4)
First Use II.A. 32); II.B.4. 8); II.B.7. 11);
III.B.2. 9); III.B.5. 1-4,6-9); III.B.6. 5) ;
VI.A. 1)
FNSI III.C. 7)
Fund Management II.B.l.b. 6)
"unds Transfer (Title II .. I.A. 5); I.B. 2); I.C. 2); I.C.3. 4)
to Title VI)
GICS VI.B. 1,6)
Goals II.B.l. 5); III.B.4. 4)
Governor's Discretionary .. I.C. 2); II.A. 12,33); II.C. 3);
Authority III.B.5. 2,3); III.B.6. 3,8,14,15)
Groundwater Protection .... II.A. 8); III.B.6. 8)
(See Section 319)
Guarantee II.A. 23); II.B.3. 1,3-6); II.B.4. 5,6);
II.B.5. 1,2)
Implementation II.A. 8,9,28,29,32,34); II.B.7. 10);
IV.A. 5)
Incremental II.B.l. 1); III.B.5. 9); III.B.6. 10);
IV.D. 10)
Indian Tribes II.A. 21); IV.A. 6)
Industrial II.A. 21,22)
Initiation of Operations .. II.A. 24); II.B.l.b. 1); IV.D. 9)
Innovative/Alternative (I/A) I.C.3. 2-5)
Instrumentality II.B.7. 7,10); III.3.11. 5)
Insurance II.B.3. 2)
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keyword index — SRP questions and answers
Page 7 3
Intended Use Plan (IUP) ... II.A. 31); II.B.l. 5); II.B.l.b. 2);
II.B.6. 1); II.B.7. 10); III.B.4. 4);
III.C. 15); IV. 1); IV.C. 1,2);
IV.C.l. 1,3,4,5); IV.C.5. 1); V. 3);
VI.B. 5)
Interest (See Earn Interest) II.A. 24); II.B.l. 5); II.B.l.b. 2);
II.B.4. 1,3,4,7); II.B.6. 1-3);
III.B.2. 5,7,9); III.B.5. 4); IV.D. 4)
Interest Rate/Market II.B.l.a. 2); II.B.l.b.5)
Intergovernmental Agreement II.B.7. 3)
Interim Financing II.A. 24); IV.D. 4)
Investment II.B.6. 1); III.B.2. 9)
Land Acquisition II.A. 17)
Lease II.A. 4); II.A. 19)
Legal Capability III.B.2. 1)
Letter of Credit/LOC I.C.3. 5); II.B.3. 3); II.B.4. 5);
IV.D. 3,5,8) ; VI.D. 2)
Leveraging II.B.l.b. 2); II.B.4. 8); II.B.6. 1);
III.B.4. 2); IV.D. 3)
Loan II.A. 18,23,24,28,31,37); II.B.l. 2,4,5);
II.B.l.a. 1); II.B.l.b. 6);
II.B.I.e. 1,3,4); II.B.2. 2); II.B.3. 5);
II.B.6. 2); II.C. 2,3); III.B.2. 5-7);
III.B.3. 5); III.B.6. 14);
IV.D. 4); V. 1)
Loan Agreement II.A. 24); II.B.l. 3); II.B.l.a. 2);
II.B.l.b. 2,3); II.B.I.e. 2-4); III.C. 16);
IV.C.l. 5)
Loan Closing II.A. 24); II.B.l. 5)
Loan Guarantee (See Guarantee)
Loan Recipient (See Recipient)
Loan Repayment II.A. 3); II.B.l.b. 2); II.B.I.e. 4,5);
II.B.2. 2); II.B.3. 5); II.B.4. 2,7);
III.B.2. 5,9); III.B.3. 1); III.B.5. 4);
III.B.6. 14); IV.D. 9)
Loan Terms II.B.l.b. 3); III.B.3. 1)
Local Match/Local Share ... II.C. 3); III.B. 2. 6)
Management Conference II.A. 3 0-3 2)
Management Plan/Program ... II.A. 8,9,28,31-33); II.C. 3); III.B.6. 8)
Match (See State Match)
MBE/WBE III.C. 12)
Memorandum of Understanding IV.A. 3)
National Estuary Program .. II.A. 28,30)
National Municipal Policy III.B.5. 1,5,9)
NEPA-Like III.B.11. 3,4,6,9); III.C. 21)
Net Proceeds II.A. 24); II.B.4. 1); II.B.4. 3,7);
III .13. 2 . 9)
Noncompliance III.B.5. 7)
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KEYWORD INDEX — SRF QUESTION8 AND ANSWERS
Page 7 4
Nonpoint Source/NPS
Notice of Intent (NOI) . .
Obligation/Obligated
Operating Agreement (OA)
Operation and Maintenance
OSHA
II.A. 3,8-11,27,28,32); II.B.I.e. 4);
II.C. 3); III.B.5. 3); III.B.6. 8)
I.B. 1-3)
I.A. 1,3-6) ; III.C. 1,16)
III.C. 10,12); IV.A. 2,3)
II.A. 7)
III.C. 18)
IV.D. 1)
V. 1,2); VI.B. 5)
Other Federal Authorities/
Requirements (See Cross-
Cutter)
Outlay/Outlay Management ..
Overmatch
Oversight
Parity
Part 31/Part 32
II.A. 3); III.B.2. 2); III.B.6. 9);
III.B.11. 1); III.C. 1,11,24); VI.A. 4)
IV.D. 8)
II.A. 36); III.B.4. 1)
II.B.5. 2) ; III.B.11. 1)
II.A. 18)
II.B.7. 6); III.B.6. 13); III.B.7. 2,3);
III.B.9. 3)
Payment/Payment Schedule ..
Perpetuity
Planning Costs
Prebuilding (Pre-building)
Previously Incurred
I.e.3. 5); II.B.3. 3); II.B.4. 5);
III.B.2. 1); III.B.3. 2); III.C. 20)
IV.D. 1,3-8,11); VI.A. 4); VI.D. 2)
II.B.l.a. 3)
II.A. 14-16)
II.B.l. 4,5)
II.B.l. 4,5)
III.B.11. 9)
II.B.l.b. 6); III.B.4. 4)
II.B.1. 2,4) ; II.C. 2)
II.B.2. 3); III.B.11. 9)
II.B.7. 6,7); III.B.6. 16);
III.C. 14)
Principal
Priority List/PPL
Private Operations
Private Purpose (Loan) ..
Privitization/Privatized
Procurement
Programmatic Agreement (PA)
Project Completion
Project Review
Proportionality
Public Comment/Review/
Hearing/Notice
Reallotment
Rebate Payments
II.A. 24); II.B.l. 5)? II.B.l.b. 2,5);
II.B.4. 1); III.B.2. 5); III.B.5. 4);
IV.D. 4)
II.A. 26,31); II.B.l. 5); IV.C.l. 1-6)
II.A. 19,20)
II.A. 18,22)
II.A. 4,5,23,27)
III.B.9. 3)
III.C. 7,22-25)
II.A. 24); II.B.l. 2,5); IV.D. 9)
II.A. 26); II.B.I.e. 2,5); II.B.7. 8);
III.C. 19); IV.C. 1); IV.C.5. 1); VI.B. 5)
IV.D. 8,11)
II.B.l. 5); III.B.11 2); III.C. 15);
IV.C. 1,2) ; IV.C.5. 1)
I.A. 3,4,6)
II.B.4. 7)
Recipient
II.A. 3,11,17,35); II.B.l.b. 3,5);
II.B.I.e. 2,3,5); II.B.3. 5); II.B.4. 3);
III.B.4. 2); III.B.6. 10,13); III.B.7. 2);
III.B.8. 1); III.B.9. 1,3); III.C. 5,9,10,
12,13,17,20); IV.A. 1); IV.C.l. 5);
IV.D. 2); VI.A. 3); VI.B. 5,6); VI.C. 4,6)
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KEYWORD INDEX — SRP QUESTIONS AND ANSWERS Page 7 5
Records Retention III.B.7. 3); VI.A. 4); VI.B. 5); VI.C. 4)
Refinancing/Refinanced .... II.A. 20); II.B.l. 5); II.B.2. 1-3);
III.B.6. 16); III.B.11. 9); III.C. 14);
IV.C.l. 4)
Repayments (See Loan Repayment)
Replacement I.C.3. 5); II.A. 7,27); II.B.l.b. 3);
II.C. 1); III.B.6. 1)
Reserve Account II.B.3. 4); II.B.3. 6); II.B.4. 4,6,8)
Reserve Capacity II.C. 1); III.B.5. 1); III.B.6. 1)
Reserves I.C. 1); I.e.3. 1-4); I.D. 1)
Return/Rate of Return II.B.l.a. 3)
Revenue/Revenue Stream .... II.A. 18,24); II.B.l.b. 3);
II.B.I.e. 1,3,4); II.B.4. 1); IV.D. 4)
Section 205(g) I.C. 1); I.C.I. 1); I.C.3. 3); II.A. 25);
II.B.7. 4,5,10)
Section 212 Projects
Section 319 (See ..
Nonpoint Source)
Section 320 (See Estuary)
Security/Securities
SERP
Set-asides
Single Audit Act (SAA)
State Laws, Comply With ...
State Match (See Overmatch)
Storm Sewers (See CSO) ....
Tax/Tax Implications
Tax-exempt (Bonds)
Technical Assistance
Timely Expenditures
Title II Requirements
Track
Transfer of Funds
Turnkey
Uniform Relocation
User Charge System
Water Quality Planning
Water Quality Standards ...
Wetlands
Withholding Payments
II.A. 1,2,4,5,7, 12, 17,20,22,28,33) ;
II.B.3. 2,6); II.B.5. 1); II.C. 1,3);
III.B.5. 1,2); III.B.6. 1-3,5-10,15);
III.B.11. 2,3,6); III.C. 2,4,7); IV.C.l. 3)
I.C. 2); II.A. 2,3,8,10,11,27,28);
II.B.I.e. 4); II.B.3. 6); II.B.5. 1) ;
II.C. 3); III.B.6. 8,9,15); III.B.11. 6);
III.C. 3,4,8); IV.A. 4); IV.D. 9)
II.B.I.e. 3); II.B.3. 6); II.B.4. 1,3);
IV.D. 4)
III.B.11. 9); III.C. 2,6-8,21-23)
I.C. 2); II.B.6. 2)
III.B.8. 1); III.B.9. 1,2); VI.C. 6)
II.B.6. 1); III.B.7. 3); VI.A. 4)
II.A. 3,11); II.B.2. 2); II.B.4. 3,4,7,8);
II.B.7. 1,7); II.C. 3); III.B.2. 1-9,14);
III.B.8. 4)
II.A. 32)
II.A. 19,22); II.B.l. 5); II.B.4. 7);
II.B.6. 1); III.B.4. 2)
II.A. 22); II.B.3. 3,4); II.B.4. 5,6);
III.B.4. 2)
III.B.11. 1)
III.B.4. 2)
III.B.6. 8,10,12); IV.C.4. 1)
III.B.8. 3,4); IV.D. 11); VI.B. 6)
I.A. 3,5); I.B. 2,3); I.C. 1,2);
I.C.3. 1-5); III.B.2. 5)
II.A. 2)
II.A. 17)
II.A. 7) ; II.B. I.e. 3)
I.D. 1); II.A. 34)
II.A. 34); III.B.5. 5)
II.A. 32)
VI.D. 2)
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KEYWORD INDEX — SRF QUESTIONS AND ANSWERS Page 7 6
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on Niehus
>NIEHUS/dn/rev6/2 9/90/1117et/3 8 2-7 3 66/Epson/Q-A3Rev/QAcum.123
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