21 NYCRR PART 2604 NEW YORK STATE DRINKING WATER REVOLVING FUND REGULATIONS
21 NYCRR PART 2604 NEW YORK STATE DRINKING WATER REVOLVING FUND REGULATIONS
Part 2604 to Title 21 of the official compilation Codes Rules and Regulations of the State of New York is amended to read as follows:
- 2604.1 Purpose, Scope and Applicability
- 2604.2 Definitions
- 2604.3 Project Certification
- 2604.4 Direct Financings
- 2604.5 Hardship Assistance
- 2604.6 Financing of Planning Costs
- 2604.7 General Project Requirements
- 2604.8 Application and Project Financing Agreements
- 2604.9 Disbursements
- 2604.10 Remedies
- 2604.11 Program Obligations
- 2604.12 Severability
2604.1 Purpose, Scope and Applicability
- (a) The purpose of this Part is to provide rules and procedures for the New York State Environmental Facilities Corporation (Corporation), in conjunction with the New York State Department of Health (Department), to provide financial assistance from the New York State Drinking Water Revolving Fund (DWSRF) created by Chapter 413 of the Laws of 1996.
- (b) This Part, in conjunction with the applicable rules and regulations of the Department, 10 NYCRR Part 53, applies to all parties seeking or receiving financial assistance from the DWSRF and to the activities of the Corporation and the Department in the discharge of their duties related to the DWSRF. For the purposes of the Corporation, to the extent this Part conflicts with 10 NYCRR Part 53, this Part shall prevail.
- (a) Unless defined herein, terms used in this Part shall have the meaning set forth under section 1281 of the Public Authorities Law (PAL), and/or the Public Health Law (PHL). Terms used in this Part or to be used in complying with this Part have the following meanings.
- (1) Act means title XIV of the Public Health Service Act (commonly known as the Safe Drinking Water Act), 42 U.S.C. §§ 300f et seq., as amended, and as amended by the American Recovery and Reinvestment Act of 2009, P.L. 111-5 (ARRA).
- (2) Additional subsidization means forgiveness of principal, a negative interest loan or a grant to be provided in accordance with the Act.
- (3) Administrator means the Administrator of the United States Environmental Protection Agency or the chief executive officer of such agency or any successor agency or department or any authorized representatives of the Administrator.
- (4) Ad valorem tax means a tax based upon the value of real property.
- (5) Allocation means the amount of moneys of the DWSRF allocated in accordance with section 1162 of the PHL, or other security or funds used to reduce a recipient's total financing costs for an eligible project.
- (6) Allowable costs means all costs of an eligible project which the Corporation determines are (i) properly allocable to that project in accordance with applicable laws and regulations; and (ii) not annual facility operation costs, including but not limited to, those for maintenance, or replacement and repair of minor equipment.
- (7) Business day means any day on which New York State offices are open to conduct business.
- (8) Commencement of construction means the date that (i) a notice to proceed is issued by the recipient to the contractor following the execution of the contract between the recipient and such contractor for the erection, building, acquisition, alteration, reconstruction, improvement, enlargement or extension of the project; or (ii) in the event that the project will be built by recipient employees (force account) in lieu of a contractor, the first day that a work crew occupies the project; or (iii) in the event that the project is a contract to purchase supplies, material or equipment, a binding purchase agreement is executed between the contracting parties and the recipient has provided evidence satisfactory to the Corporation of the execution of such agreement; or (iv) at the election of the Corporation, such other date as may be permitted by applicable law.
- (9) Commissioner means the Commissioner of the New York State Department of Health.
- (10) Comptroller means the Comptroller of New York State.
- (11) Construction means the erection, building, acquisition, alteration, reconstruction, improvement, enlargement or extension of a project; the inspection and supervision thereof; and the engineering, architectural, legal, fiscal, and economic investigations and studies, surveys, designs, plans, working drawings, specifications, procedures, and other actions necessary thereto.
- (12) Corporation means the New York State Environmental Facilities Corporation, or its successor, unless otherwise indicated.
- (13) Department means the New York State Department of Health.
- (14) Design means necessary design calculations and decisions and the preparation of construction drawings and specifications.
- (15) Direct financing means a financing made available from moneys in the DWSRF other than proceeds of the Corporation's bonds or notes.
- (16) Direct interest rate means the rate of interest no higher than the market rate of interest.
- (17) Disbursement means a transfer of DWSRF assistance moneys to a recipient from accounts held by the Corporation's custodian in accordance with the executed PFA.
- (18) DWSRF or fund means the New York State drinking water revolving fund, established pursuant to Chapter 413 of the Laws of 1996. Such fund shall include, without limitation, moneys available to finance state assistance payments in the manner set forth in paragraphs (d), (f) and (h) of subdivision four of section 1285-m of the PAL.
- (19) DWSRF assistance means any financial assistance from the DWSRF provided by the Corporation to a recipient for an eligible project, including, without limitation, a financing, including additional subsidization, or hardship assistance. It has the same meaning as "financial assistance to recipients" as set forth under Section 1285-m.4 of the PAL.
- (20) Eligible project means a project for construction of a water supply facility which is intended to improve drinking water facilities, or which implements green infrastructure, water or energy efficiency improvements or other environmentally innovative activities, or other activities permitted by the Act, including a project that would be eligible for financing under or designed to comply with the requirements of the Act, which the Commissioner has certified, in writing, is an eligible project as set forth in PHL section 1160.
- (21) Engineering report means the document or documents incorporating the results of preliminary project planning and technical and fiscal studies to determine the technical and economic feasibility of the project.
- (22) Equivalency project means a project that must be constructed in compliance with the provisions of the Act applicable to projects funded from Federal capitalization funds or their equivalent.
- (22) Equivalency project means a project that must be constructed in compliance with the provisions of the Act applicable to projects funded from Federal capitalization funds or their equivalent.
- (24) Financing means a loan, a purchase of debt obligations or other financing for an eligible project.
- (25) Hardship assistance means DWSRF assistance, as may be authorized by law, including, without limitation, a reduced interest rate financing, forgiveness of principal or a principal subsidy, a grant and/or State assistance payments, provided by the Corporation to a recipient in those instances where the Corporation, in its discretion, determines financial hardship exists.
- (26) Intended use plan (IUP) means a plan identifying the intended uses of the amounts available in the DWSRF, including but not limited to: a list of potentially eligible projects; a description of the short-term and long-term goals and objectives of the DWSRF; information on the activities to be supported including a description of project categories, terms of DWSRF assistance, recipients, and the criteria and method established for the distribution of funds. The IUP shall be published in accordance with the Act, and shall be subject to public review and comment.
- (27) Interest rate subsidy means the amount of moneys of the fund credited to the recipient to reduce the interest which the recipient would otherwise be required to pay, as determined by the Corporation.
- (28) Leveraged financing means a financing, including those secured by the DWSRF, made with DWSRF assistance that is made available from the proceeds of bonds or notes of the Corporation.
- (29) Long-term financing means a financing other than a short-term financing.
- (30) Market rate of interest means the interest rate obtained on the most recent sale of bonds or notes by the Corporation for a DWSRF leveraged financing or the interest rate determined by the Corporation to be otherwise payable to reflect the current market conditions from time to time without the provision of any interest rate subsidy.
- (31) Median household income (MHI) means the MHI published by the U.S. Department of Commerce Bureau of the Census, as it shall be adjusted to the most recent biennium for which income data is available. For special districts and other areas for which accurate census data is not available, other income data may be considered by the Corporation.
- (32) Municipality means any county, city, town, village, district corporation, county or town improvement district, school district, Indian nation or tribe recognized by the State or the United States with a reservation wholly or partly within the boundaries of New York State, any public benefit corporation or public authority established pursuant to the laws of New York, any sewer authority now existing in a city, or any agency of New York State which is empowered to construct and operate an eligible project, or any two or more of the foregoing which are acting jointly in connection with an eligible project.
- (33) Planning means the orderly development of a project concept from the original statement of need or purpose through the evaluation of alternatives to a final recommendation on a course of action and measures to implement the selected alternative.
- (34) Principal subsidy means a payment by the Corporation of up to seventy-five percent of the principal of a financing made by the Corporation to a recipient or a bond purchased by the Corporation from a recipient under the DWSRF, such payment to be made pursuant to, and in accordance with, section 1285-m.4(g) of the PAL.
- (35) Program Obligations shall mean bonds, notes or other obligations issued by eligible entities to fund projects eligible for assistance under the DWSRF bearing interest at a market rate of interest.
- (36) Project means a water supply facility or a facility or site for the supply, control, treatment or distribution of water, including but not limited to water transmission lines, pumping stations, reservoirs, dams and other impoundments, and all of the necessary appurtenances, and any other property, real or personal, functionally related and subordinate to said facility, for the purpose of providing a public water supply, or which implements green infrastructure, water or energy efficiency improvements or other environmentally innovative activities, or other activities permitted by the Act. A project may include an eligible project.
- (37) Project completion means the later of (i) the date that operation of the project is initiated or is capable of being initiated; or (ii) the date on which all construction or other activities for which allowable costs have been incurred, and for which DWSRF assistance has been provided, have been completed
- (38) Project financing agreement (PFA) means an agreement, or agreements, between the Corporation and one or more recipients with respect to the financing of an eligible project or projects or pre-design planning for such, in such forms as may be approved by the Corporation from time to time.
- (39) Public Authorities Law (PAL) means Chapter 43-A of the Consolidated Laws of New York State entitled the Public Authorities Law.
- (40) Public Health Law (PHL) means Chapter 45 of the Consolidated Laws of New York State entitled the Public Health Law.
- (41) Public water supply means any water system as defined in 10 N.Y.C.R.R. Part 5, Subpart 5-1, Section 5-1.1, Public Water systems.
- (42) Recipient means any municipality, public utility, or person, including any individual, firm, partnership, association, not-for-profit corporation or other corporation organized and existing under the laws of the State or any other state which is empowered to construct and operate an eligible project, or any two or more of the foregoing which are acting jointly in connection with an eligible project.
- (43) Reduced interest rate means an interest rate or rates less than the market rate of interest, including a rate of zero percent, as determined by the Corporation from time to time.
- (44) Segment of a project means one or more construction contracts and associated costs that the Corporation and the Department determine constitute a discrete portion of the project which may be financed and constructed separately from other project segments.
- (45) Service charge means the total annual cost of service for a household or equivalent dwelling unit in the area served by the project, which includes a user charge, a charge for debt service, and all other annualized charges.
- (46) Short-term financing means a financing in which the security provided by the recipient is a short-term note including but not limited to a bond anticipation note.
- (47) State means the State of New York.
- (48) State assistance payment means a payment by the Corporation to a recipient of all or a part of the state share of the cost of an eligible project from moneys available therefore, pursuant to, and in accordance with, section 1285-m.4(h) of the PAL.
- (49) Target service charge means the amount, as determined by the Corporation, that a household or equivalent dwelling unit having an income equal to the MHI for the area served by the project reasonably could pay annually. Criteria for the Corporation's calculation of the target service charge shall be set forth in the annual IUP.
- (50) User charge means a charge levied on users of a project, or that portion of the ad valorem taxes paid by a user, for the user's proportionate share of the cost of operation and maintenance (including replacement) of such project.
- (51) User charge system means a system for apportioning user charges.
2604.3 Project Certification.
- The Corporation shall not provide DWSRF financial assistance to a recipient unless and until the Department has certified to the Corporation, in writing, that (i) the project to be financed through the DWSRF is an eligible project; and (ii) all applicable requirements of the Department have been met, including, without limitation, requirements relating to equivalency projects, and all Federal and State requirements relating to environmental review of the project.
2604.4 Direct Financings.
- (a) The Corporation may provide financial assistance to recipients for eligible projects from any available moneys in the fund, if and to the extent the Corporation determines that it is unable to, or that it is impractical or inadvisable to, finance all or a portion of the costs of an eligible project from the proceeds of bonds or notes that are special obligations of the Corporation.
- (b) The Corporation may provide a short-term financing or a long-term financing as a direct financing.
- (c) Interest rates for direct financings shall be determined by the Corporation as an interest rate or rates no higher than the market rate of interest.
2604.5 Hardship Assistance.
- (a) The Corporation may provide hardship assistance in those cases where the Corporation, in its discretion, determines financial hardship exists. In making such determination, the Corporation may consider whether the total estimated annual service charge for a household or equivalent dwelling unit in the area served by the project, calculated using the maximum interest rate applicable to the project, exceeds the target service charge. The provisions relating to hardship assistance shall be published annually in the IUP.
- (b) To the extent such hardship assistance includes a principal subsidy, the Corporation shall give preference in the granting of such subsidies to small and rural communities.
- (c) To the extent such hardship assistance includes a grant or State assistance payments, the Corporation shall give preference to recipients which would be unable to carry out such eligible projects in the absence of such grant or state assistance payments without creating a financial hardship on system users.
- (d) The applicable terms of the hardship assistance are those which bring the estimated service charge closest to the target service charge. Notwithstanding the foregoing, the Corporation may also consider other conditions deemed relevant to adjust the terms of the hardship assistance if such adjustment is necessary to reflect actual financial needs (or lack thereof).
- (e) Hardship assistance in the form of a grant or reduced interest rate financing may be provided only for an eligible recipient's project or allocable portion thereof and shall be limited to the amounts published in the IUP. Hardship assistance will not be provided for a segment of a recipient's project if the total cost of all segments of such project exceeds the hardship limit. The Corporation may provide a written confirmation that a potential recipient qualifies for hardship assistance because of financial hardship.
2604.6 Financing of Planning Costs.
- DWSRF assistance may be provided for project planning costs prior to completion of that planning. Planning costs may also be included as allowable costs for purposes of DWSRF assistance for any subsequent portion of the project.
2604.7 General Project Requirements.
- The Corporation shall require each recipient of DWSRF financing to agree to the following, as applicable:
- (a) The Corporation shall require each recipient to effectively protect water quality, employ good management practices, and fulfill all applicable requirements of: Federal and State laws, regulations, and executive orders, including, without limitation, prevailing wage requirements under Article 8 of the Labor Law, all requirements of the PFA, and all applicable instructions issued by the Commissioner or the Corporation to ensure that these requirements are met.
- (b) The Corporation and the Department may conduct such reviews, inspections and investigations as they determine necessary to ensure that applicable Federal, State and local requirements are fulfilled, and that the terms, requirements, and conditions of the PFA are being met.
- (c) The Corporation and the Department may accept recipient certification that project requirements have been met as permitted by State laws or regulations. Acceptance of a certification that a project require-ment was met shall not preclude either the Corporation or the Department from carrying out selective sampling and verification of such certification.
- (d) All contracts between the recipient and parties carrying out construction and other DWSRF assisted activities shall provide that representatives of the Commissioner, the Comptroller, and the Corporation shall have access to the work wherever it is in preparation or progress and shall permit extracts and copies of project records to be made by them.
- (e) All change orders shall be submitted to the Department within thirty days following the date they are ordered. Proposed changes which will significantly alter any treatment process incorporated in the project shall require prior approval by the Department. The Department will notify the Corporation of any approved change orders at the same time it notifies the recipient.
- (f) The recipient shall be required to provide for inspection of project construction, under the direction of a professional engineer licensed in New York State who shall be responsible for determining whether such work has been performed in accordance with the approved plans and specifications. Following project completion, the professional engineer shall certify to the recipient, the Commissioner and the Corporation that the construction is in accordance with the approved plans and specifications or approved amendments thereto.
- (g) The recipient shall be required to have or acquire such title, estate or interest in the site of the project, including, without limitation, necessary easements and rights-of-way, to ensure the undisturbed use and possession during construction of the project and for the term of its DWSRF obligation under the PFA.
- (h) The recipient, all authorized representatives of the recipient, and all contractors and subcontractors providing services for the project shall be required to comply with all Federal, State and local laws, rules, regulations, and executive orders applicable to the project, including, without limitation, laws, rules, regulations, and executive orders regarding affirmative action, equal employment opportunity, and small, minority and women's business enterprises. The recipient shall include in all contracts or subcontracts financed with DWSRF assistance which the Commissioner determines are subject to article 15-A of the Executive Law, contract provisions determined necessary by the Commissioner for purposes of complying with article 15-A of the Executive Law and any regulations adopted pursuant thereto.
- (i) The recipient is solely responsible for the preparation of engineering reports, design drawings, plans and specifications, contract documents, and the inspection of project construction necessary for the completion of the project. Notwithstanding any review or approval of engineering reports, design drawings, plans and specifications, contract documents, change orders, and/or the inspection of project construction by the Department or the Corporation, neither the Department nor the Corporation, nor their employees, agents or representatives, are responsible for increased costs resulting from defective engineering reports, design drawings, plans and specifications, change orders, or negligent inspection of project construction.
2604.8 Application and Project Financing Agreements.
- (a) Applications for DWSRF assistance shall be submitted in accordance with the provisions set forth in the IUP, in a format that is consistent with instructions published by the Corporation including, at the Corporation's discretion, the use of forms published by the Corporation for use by parties seeking DWSRF assistance. An applicant may submit an application to the Corporation for DWSRF assistance for projects for pre-design planning costs as set forth in the IUP.
- An applicant may submit an application to the Corporation for DWSRF assistance for projects beyond the pre-design planning stage when:
- (1) project planning is completed and the applicant has submitted to the Department an engineering report, and that report has been or is in the process of being approved by the Department;
- (2) any necessary water district has been formed; and
- (3) at the time of such application, the applicant is in compliance with all applicable project requirements specified in section 2604.7 of this Part, and any preapplication instructions issued by the Department, or the Corporation.
- (b) A PFA shall not be executed for a project until the applicant has submitted to the Corporation an application for DWSRF assistance for such project, and the Corporation has approved such application.
- (d) A PFA for a segment of a project other than pre-design planning shall include a schedule for the completion of the entire project and an agreement by the recipient to complete the entire project in accordance with that project completion schedule regardless of the availability of future DWSRF assistance.
- (e) An applicant shall not receive DWSRF assistance if either the Corporation or the Department in its discretion determines that such recipient cannot be reasonably expected to meet its managerial, technical or financial capability obligations under the applicable PFA.
- (a) Disbursement requests shall be submitted by the recipient to the Corporation on forms provided by, or acceptable to, the Corporation, in accordance with any instructions issued by, and together with any documentation of costs required by, the Corporation. Copies of the disbursement request shall be submitted simultaneously to the Corporation, and to any party named in the applicable PFA.
- (b) Proceeds or other financial assistance will be disbursed by the Corporation only for costs associated with a project which has been certified by the Department, in writing, as an eligible project. Recipients shall apply the proceeds of DWSRF assistance only to costs associated with such eligible project.
- (c) The Corporation may at any time review or audit disbursement requests and make adjustments for, among other things, arithmetical errors, items not built or bought, unallowable costs, or any other reasons as set forth in the PFA, and may refuse to certify advances or payments to a recipient based thereon. The Corporation may recover any such funds from the recipient that it determines after any review or audit should not have been released under the PFA or applicable law, including the ARRA.
- (d) The Corporation may transfer the full amount or any part of the DWSRF assistance to a project account established for that purpose.
- (e) Satisfactory documentation supporting DWSRF disbursement requests shall demonstrate that the costs claimed were those approved in the PFA, that they are allowable costs and that the goods or services for which the costs were incurred have been provided. Satisfactory documentation may include, but is not limited to, the following:
- (1) signed copies of payment vouchers or invoices, cancelled checks, details of current indirect cost and fringe benefit rates, copies of all subagreements, executed construction contracts, change orders, payroll records, tabulations of allowable costs incurred to date;
- (2) for construction, the latest cumulative work-in-place estimate and a summary of executed change orders for each construction contract;
- (3) for professional services, a description of the nature of the service, and documentation that the service was provided according to the terms of a professional services agreement;
- (4) for purchase of equipment not included in a construction contract, a detailed list of equipment purchased, price of each item, and the method and details of the procurement of each item and, where applicable, the origin of its manufacture; and
- (5) for project services approved in a PFA to be provided by employees of the recipient, employee time records, signed by the employee and the employee's supervisor, which account for all hours worked in the period covered, and describe in detail the work claimed as approvable.
- All documentation for a project shall be incorporated and referenced in project accounts maintained by the recipient in accordance with generally accepted government accounting principles, or, in the case of non-governmental recipients, generally accepted accounting principles.
- (a) If a recipient has received DWSRF assistance for work which is not an allowable cost of a project, the recipient may be required to reimburse the DWSRF for the amount of misapplied DWSRF assistance received (reimbursed amounts may be applied to allowable project costs or to bond redemption) and until the full amount of such misapplied DWSRF assistance has been reimbursed, the Corporation may apply any interest rate subsidy to such reimbursement or recoup any other benefit provided to the recipient, or reduce any future interest rate subsidy or such other benefit, or reduce any future interest rate subsidy or such other benefit for future DWSRF assistance, for purposes of reimbursing the DWSRF in addition to any other remedy permitted pursuant to this section, the PFA, or by law.
- (b) If the Corporation or the Department determines that the project or the recipient is not in compliance with Federal or State laws or the terms of the applicable PFA, and, following written notice to the recipient, the project or recipient is not brought into compliance, the Corporation may, on its own initiative or at the direction of the Department, (i) withdraw the interest rate subsidy, recoup any other benefit provided to the recipient, or reduce any future interest rate subsidy or such other benefit, or reduce any future interest rate subsidy or such other benefit for future DWSRF assistance, (ii) refuse to approve DWSRF disbursement requests and (iii) refuse execution of subsequent PFAs until the project or recipient is brought into compliance.
- (c) Nothing in this section shall be construed to limit the rights of the Corporation or the Department to take actions including, but not limited to, administrative enforcement actions and actions for breach of contract against a recipient that fails to carry out its obligations under this Part, the PFA, or any other applicable State or Federal law, rule or regulation.
2604.11 Program Obligations.
- Notwithstanding any other provision of these regulations, any investment of moneys held in reserve funds established under the Master Trust Agreement or any Financing Indenture (as defined in the Master Trust Agreement) which secure bonds, notes or other obligations of the Corporation or any temporary investment of moneys in the Equity Fund established under the Master Trust Agreement in Program Obligations shall be governed solely by the applicable provisions of the Master Trust Agreement or such Financing Indenture and the Corporation's investment guidelines rather than by these regulations.
- If any provisions of this Part or the application thereof to any person or circumstance is adjudged invalid by a court of competent jurisdiction, such judgment shall not affect or impair the validity of the other provisions of this Part or the application thereof to other persons and circumstances.