State funding for water and wastewater facilities

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"State Funding for Water and Wastewater Facilities"
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w. Ross King
Special Assistant Georgia Environmental Faci Iit ies Authori ty ,
UNIVERSITY of GEORGIA
WATER RESOURCES SEMINAR

May 20 1987 J

Received
JUt 02 1987 DOCUMENTS UGA LIBRARIES

YEAR ONE FUND DISTRIBUTION YEAR TWO FUND DISTRIBUTION

GEORGIA DEVELOPMENT AUTHORITY ENVIRONMENTAL FACILITIES PROGRAM
PROGRAM YEAR ONE LOAN RECIPIENTS

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PROGRAM YEAR THREE POLICIES

GEORIGA ENYIRONMENTAL FACILITIES AUTHORITY
PROGRAM YEAR THREE
POLICY 1: PROJECT CARRY-OYER
The Authori ty shoul d not make future cOllll1i tments to projects whi ch are submitted in one year that do not receive a loan. The cOllll1unity should be allowed to request that its application be placed in the subsequent year's application pool, if desired. This will be done with the understanding that it would be evaluated against the next year's application pool. Further, the cOllll1unity must submit a new signature page showing support of the current chief elected official. A cOllll1Unity which desires to resubmit a project will be encouraged to update project related information, including the project budget and schedule.
POLICY 2: ECONOttIC DEYELOPJENT SET ASIDE
The Authority will set aside lOS' or $2 million, whichever is less, of its available funds in a separate fund for the fi,rst three quarters of the year. These funds will be utilized where necessary to facilitate the location of a specific employer either industrial or commercial. A job creation criteria will be an integral part of the decision process. There will also be a. limit on anyone loan of 20S of the annual set aside. Set aside funds not expended by the end of the third quarter will be transferred back to the general loan fund for regular program cOllll1itments. The cOllll1itments in the last quarter for long-term economic development projects would obviously subject to the availabilty of program funds.
POLICY 3: LOAN GUARANTEE FOR WATER/SEVER AUTHORITY APPLICANTS .
The Authority shall require that the sponsoring general purpose local government(s) guarantee the debt of a water/sewer authority, or utility cOllll1ission which applies to GEFA for project funding.
POLICY 4: NOT A LENDER OF LAST RESORT
Every cOllll1unity will be allowed to participate in the program regardless of need. Since this program was not created to be a lender of last resort, financial needs criteria will not be included in the selection process. POLICY 5: NO POPULATION CAP
Every cOllll1unity, regardless of size, should be allowed to apply for GEFA funds and participate in the program, if approved.
POLICY 6: FUNDING CAP
The Authori ty sha 11 estab1ish a program fundi ng cap to ensure maximum distribution of the funds. A cap was utilized in program year one and will be continued in the future. The. size of the cap will be determined once a decision is made on the amount of funding to be available to the program in any particular year. Imposing a cap will ensure that all local governments, regardless of size, have the same opportunity to benefit from the GEFA program.

~/ POLICY 7: FORCE ACCOUNT LABOR I PERMANENT FINANCING

GEFA will not allow force account labor costs to be paid with GEFA loan funds. In addition, GEFA will continue its policy of not replacing permanent financing on existing systems. Force account labor., for the purposes of this policy, is defined as any conmunity employee labor costs.

POLICY 8: INTEREST RATE

Until such time as bonds are sold (when the interest rate would be determined by that rate), GEFA will charge the approximate interest rate paid by the state on its most recent 5 year General Ohligation Bond issue. If the bond sale has occurred within six months of the time in which the Board establishes the rate, GEFA will utilize the
approximate state G. o. issue rate. In the event that a state sale
of 5 year G.O. bonds has not occurred within that time period, the Authority will seek current rate information from state fiscal officers.

POLICY 9: ~NUAL PROGRAM PARTICIPATION

A conmunity will not be precluded from participating in the program because they received a GEFA loan the previous year. If a cOlllllunity which has received a previous GEFA loan reapplies, the review process on the new project request shall include an evaluation of progress
made on. implementation of the previous year's project. Phasing of projects is possible under the program, but each pre-application that is submitted for consideration must identify a pro.ject which will be "environmentally acceptable" immediately upon the completion of construction. COlllllunities that desire to use GEFA funds to phase in projects will be required to compete for funding with all cOlllllunities that submit projects during the annual pre-application period. Projects funded by GEFA during any program year will not
be approved if they are contingent upon obtaining a future GEFA loan.

POLICY 10: tDTHLY DRAW DOlIN OF LOAN FUNDS I DRAV DOWN DOCtIENTATION REQUI REtENTS

COlllllunities may request a payout of funds under the approved contract

on a monthly basis. Only one draw request can be made in any calendar

month. loan draw requests must be submitted on Authority drawdown

forms. All requests must be accompanied with appropriate support

documentation (i.e., invoices). At the 50% and 100% physical project

completion periods, draw request documentation must include copies

(front .and back) of cancelled checks which identify the disbursement

of project-related costs.

.

POLICY 11: ENGINEERING, LEGAL AND ADMINISTRATIVE COSTS

Engineering, legal and administrative costs are a legitimate expense under the GEFA program provided such costs are identified in the approved project bUdget which is incorporated into the loan contract. Si nce the GEFA provi des loans and not grants, GEFA will not impose a limitation on professional services and administrative costs. GEFA and EPO will, however, continue to monitor project budgets and a test of reasonableness will be applied to these project cost items. This will be done to ensure that to the maximum extent feasible, GEFA funds are utilized in the actual construction of needed environmental facilities.

POLICY 12: RELEASE OF GEFA FUNDS
GEFA will payout its funds in accordance with a project bUdget which is identified in Appendix "A" of the loan contract. No drawdown re~uests for engineering, legal and administrative costs will be considered payable until such time as a notice to proceed on construction has been issued.
In all loan drawdowns, GEFA's paYment will reflect the same percentage relationship that GEFA and EPD grant funds (combined) bear to the total cost of any particular item as contained in the approved project budget. This is done to ensure that GEFA funds are spread throughout the life of the project and that GEFA has some leverage in ensuring that the project proposed to be built under the contract is actually completed and placed in service.
In order to make timely payments on draw requests, it is necessary that the contractors, the local government, the consulting engineer, the EPD staff and the GEFA staff expedite the handling of draw requests. Accordingly, the Authority should require that a review of the full process be included in the pre-construction conference.
POLICY 13: ENTERPRISE FUND ANALYSIS
GEFA's financial viability analyses are based primarily on the soundness of the operating and coverage ratios of the enterprise fund that services the water/sewer system. This fund is the primary source of fiscal support for the operating of the system and the servicing of the system debt. While the enterprise fund may be supported by transfers (subsidies) from other funds of the city or county, it is the revenues of the systell which constitute the _in
source of repaYEnt of the GEFA loan.
The revenue coverage analysis should extend to at least three (3) years past history as well as potential revenue from proposed rate increases, increased operating expenses from the proposed new facility and increased debt service required to defray the new GEFA debt. If revenues are projected to be insufficient to adequately cover the operating expenses plus debt service into the future, then the applicant may not satisfy the financial viability threshhold requirement for moving to the full application stage. In summary, system revenues constitute a substantially higher level of importance than general fund soundness and should be closely analyzed to ensure that sound loan decisions are being made.
POLICY 14: UPDATING PRE-APPLICATIONS
A local government may update or amend its response to any item in the pre-application at any time prior to the pre-application deadline of December 31. After the deadline for submitting pre-applications, communities may still continue to update the project schedule, as identified in question 4 of the pre-application, until a specific date to be announced later. This will ensure that the most recent data is available when project rating points are assigned by GEFA/EPD.
POLICY 15: RATING AND SELECTION CRITERIA
(See last Policy that is listed)

POLICY 16: SMALL GOVERNMENTAL UNIT SET ASIDE

While the GEFA program is available for all communities, there is a special need to help the smaller units of local government address their environmental facilities needs. Therefore, the 6EFA is committed to utilize at least $2,000,000 for loans to communities with a current population of 2,500 or less. To be eligible for . funding consideration, these communities must meet the EPD and GEFA threshold requirements.

POLICY 17: GEFA PROGRAM SCHEDULE

The GEFA program year will be conducted as identified below:

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lEY PROGRAM DATES

(APPROXIMTE DATES ARE LISTED)

OCTOBER 1 - DECEMBER 31 PRE-APPLICATIONS FOR FUNDING WILL BE ACCEPTED

OCTOBER 15 - FEBRUARY 15 EPD WILL REVIEW PRE-APPLICATIONS

DECEMBER 1 - MARCH 1 ... GEFA LOAN APPLICATIONS WILL BE MAILED TO COMMUNITIES THAT HAVE HAD THEIR PROJECTS CERTIFIED BY EPD.

MARCH 15 - APRIL 15

GEFA/EPD WILL RATE PROJECTS UTILIZING THE RATING AND SELECTION SYSTEM

MID-APRIL ......... COMMUNITIES RECEIVING LOANS WILL BE ANNOUNCED.

APRIL 30 - MAY 30 . COtfTRACT PREPARATION PERIOD

JUNE 1 - AUGUST 31 .. CONTRACTS EXECUTED

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POLICY 15:

RATING AND SELECTION CRITERIA

(Maxi..u. Point Total - 1000 Points)

Priority Points

I) PROJECT READINESS CRITERIA: (Only one applicable) (Maxi.u. 400 Points)

Plans and specifications and all necessary

400

construction permits approved by EPD.

(This includes everything needed to bid project)

Including D.O.T. and railroad permits.

Final plans and specifications conditionally approved

by EPD. Applications for all necessary construction

permits issued.

350

Complete olans and specifications submitted to EPD for

review.

300

Project Design Development Report* or equivalent approved

by EPD; final plans and specifications to be completed

within six (6) months.

200

Project design development report submitted to EPD

150

Project design under contract; Planning completed and

approved by EPD.

100

Engineering Report* Submitted to EPD

50

2) COfIIINITY AND ECONOMIC DEVELOPflENT (Maxi.u. 300 Points)

A. DEVELOPMENT: (Only one applicable)

Community has a written commitment from a developer

or there is reasonable expectation that industrial or

commercial development will be completed based on the

recommendations from the Department of Community

Affairs (DCA) and the Department of Industry and

Trade, as a direct result of the environmental

improvements outlined by the community.

150

(Note: A community with such a commitment would also be eligible for the Authority's Economic Development set-aside program).

Project will provide capability for future community

development, expanded utility service and expanded

fire and/or flow capabilities.

75

* See attached definition

-

B. GROWTH POTENTIAL: (Only one applicable)

(VQ) Project is needed to provide relief from a

sewer connection moratorium imposed as a result

of inadequate treatment or collection system capacity.

150

(VS) Project is needed to provide relief where

treatment capacity, number or quality of sources,

or distribution or storage capacity is insufficient

to meet existing domestic or industrial demand.

150

Project is needed to provide additional capacity

to

existing facilities presently operating at or near

capacity and documentation has been provided

indicating

that capacity will be reached within five (5) years.

100

Present system is operating at or above seventy-five

percent (75%) of capacity.

50

3) ENVIRONMENTAL CRITERIA: (Only one applicable) (Maxi~ 200 Points)

(VQ) Project is needed to meet the goals of the Clean Water Act, thus eliminating existing water quality violations in the receiving stream. Facilities meeting this criterion

are currently under enforceable orders from EPD or orders

of the Court.

150

(VS) The project is needed to eliminate violations of State Drinking Water standards resulting from inadequate equipment

or raw water source.

150

Project will eliminate existing or potential health hazards.

100

BONUS: Existing facilities are being properly operated and are meeting applicable (interim or final) permit limitations. Facilities have not been in significant noncomp1iance* for any quarter during the past year.

(+50)

* See attached definitions.

4) FINANCIAL MANAGEMENT (Maxi. . 100 Points)

A. Financial Reporting (Maxi. . 55 Points)

1. Possession of a current GFOA Certificate

of Achievement*. (See note below).

55

2. Having an audit in which the auditor's unqualified

opinion states that the financial statements and

significant accounting policies are in conformance

with generally accepted governmental accounting

principles (GAAPl.*

20

3. Having an audit in which the auditor's

unqualified opinion states that the audit

,was performed in accordance with generally

'accepted auditing standards (GAAS)*.

20

(Note) - If Maxi. . points are awarded under A.l. no further points are available under A.2 or A.3.

B. Financial Operation (Maxi. . 45 Points)

1. Having an average of five percent or less of total

water and sewer charges billed delinquent for more

than thirty (30) days at the end of any billing

period.

15

2. Having an operating ratio (total operating revenues

divided by operating and maintenance expenses) above

120 percent. (Figured on a three year average plus

a pro forma year which includes revenues and costs

associated with the GEFA-funded project.

15

3. Having a coverage ratio (net revenues divided by

principal plus interest requirements for one year)

above 150 percent. (Figured on a three year average

plus a pro forma year which includes revenues and

costs associated with the GEFA-funded project).

15

* See attached definition

7
DEFINITIONS
DESIGN DEYELOPtOT REPORT lOOR)
The ~esign development report should include as a minimum: 1. Design influent and effluent wastewater characteristics including flow (average, peak), BOD, TSS, pH and NH3-N*, p* and any industrial waste* (* if applicable). 2. Description of existing facilities (if applicable) including flow schematics, sizes of unit operation/unit process, sizes of major equipment and proposed operating conditions. 3. Proposed and selected treatment alternatives including flow schematics, mass balance for liquid and sludge, design criteria, sizes of unit operation/unit process, sizes of major equipment and proposed operating con~itions. 4. Sludge disposal method .
. 5. Construction cost estimates. 6. Sunnary.
ENGINEERING REPORT
A detailed project analysis which will include flow projections, population projections, estimated transportation and treatment facilities (i.e. lines, pumping stations, treatment units) and any other information pertinent to the project.
SIGNIFICANT NON COtFLIANCE
Significant Non Compliance means - exceeding NPDES Permit limits by 40%. Minor violations (ie. less than 40%) also considered. Four minor violations within a six month period is considered chronic and will place a facility on the quarterly noncompliance report. Two significant violations will also place a facility on the noncompliance report. Being placed on two consecutive noncompliance reports will .result in enforcement action being taken. in the form of an Administrative Order or fine or both.

~ CERTIFICATE OF ACHIEVEMENT The Governmental Finance Officer's Association Certificate of
Achievement in Financial Reporting is an award which signifies that a qovernment has attained one of the highest recognitions in governmental accounting and financial reporting. Receipt of this award comes after an examination of the government's annual financial report by a Special Review Cornnittee of experts in governmental accounting and reporting.
GENERALLY ACCEPTED ACCOUIITING PRINCIPLES (GAAP) Generally Accepted Accounting Principles (GAAP) are conventions,
rules and procedures that provide uniform minimum standards of and guidelines to financial accounting and reporting. This system encompasses the principles contained in Governmental Accounting Standards Board (GASB) Statement 11 which affirms the authoritative status of all National Council on Governmental Accounting (NCGA) Statements and Interpretations in effect at July, 1984 and the American Institute of Certified Public Accountants' (AICPA) Audits of State and Local Governmental Units (1986). GASB Statement II continues these principles in force until altered, amended, supplemented, revoked or superseded by subsequent GASB pronouncements. GENERALLY ACCEPTED AUDITING STANDARDS (GAAS)
Generally Accepted AUditing Standards (GAAS) are those standards for audit of governmental units as stated in Standards for Audit of Governmental Organizations, Programs, Activities and Functions, Comptroller General of the United States, 1981 Revision.

WATER AND SEWER RATE DATA BASE

IEORIIA MOUITAIIS

SAMPLE

Page No.
01/16/87

1
GEORGIA ENVIRONMENTAL FACILITIES AUTHORITY INVENTORY SURVEY: WATER RATES

JURISDICTION

2000 2000 10000 10000 100000 100000
GALLONS GALLONS GALLONS GALLONS GALLONS GALLONS INSIDE OUTSIDE INSIDE OUTSIDE INSIDE OUTSIDE JURISD. JURISD. JURISD. JURISD. JURISD. JURISD.

Alto Blairsville Clarkesvill e Clayton Cleveland Cumming Dahlonega
Demorest Dillard Flowery Branch Gainesville Gillsville Hiawassee
Maysvill e Mount Airy Oakwood Royston Tallulah Falls Toccoa Young Harris Banks County Dawson County Forsyth County Hall County Towns County

600 800 1300 1640 8950 10640

650 900 1560 2250 13000 19500

550 1100 1590 3180 13290 26580

800 900 1800 1900 13050 13150

650 1050 1530 2090 11430 13790

500 750 1375 1975 12625 17725

600 900 1580 2370 13740 20610

600 800 1520 1720 '12100 12300

M

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300 600 900 1250 5000 10000

281
M

562 1131 2262
MMM

9366 18732
MM

700 950 1400 1650 10400 10650

500 500 1500 1500 12750 12750

500 M

750 1100 1650 10100 14250

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500 750 1340 2010 10240 25600

1000

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600 1120 1800 3200 12650 23'340

755 M
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NOTE: - ..- . DID lOT RESPOlO TO THE RATE REQUEST OR 10 RATE 'FOR THAT PARTICULAR RATE CATEGORY
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SAMPLE

. GEORGIA MOUITAIIS

Page No.
01/16/87

1
GEORGIA ENVIRONMENTAL FACILITIES AUTHORITY INVENTORY SURVEY: SEWER RATES

JURISDICTION

2000 2000 10000 10000 100000 100000
GALLONS GALLONS GALLONS GALLONS GALLONS GALLONS INSIDE OUTSIDE INSIDE OUTSIDE INSIDE OUTSIDE JURISD. JURISD. JURISD. JURISD. JURISD. JURISD.

Alto Blairsville Clarkesville Clayton Cleveland Cumming Dahlonega' Demorest Dillard Flowery Branch Gainesville Gillsville Hiawassee Maysville Mount Airy Oakwood Royston Tallulah Falls Toccoa Young Harrh Banks County Dawson County
Forsyth County
Hall County Towns County

M

M

M

M

M

M

200 300 655 1140 6500 1200 367 734 1060 2121 8864 . 17728

800 900 1800 1900 13050 13150

325 525 765 1045 5715 6895

400 400 1100 1100 10200 10200

250

M 1250

M 12500 M

600 800 1520 1720 12100 12300

M

M

M

M

600 1200 1500 3000

M

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8200 16500

366
M

366
M

1586
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1586
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16348 16348

M

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475 250

700' 925

950
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5200 5325
7675 M

M

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MM

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200
M

300
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536
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804
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4096 6144

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400 800 750 1500 5250 10500

400 M

500 1285 1406
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2039 2167

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1I0TE: -M-. DID lOT. RESPOND TO THE RATE REQUEST OR 10 RATE, FOR THAT PARTICULAR RATE CATEGORY
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TRADITIONAL WATER AND SEWER FUNDING-SOURCE ANALYSIS

WATER &WASTEWATER FUNDS

IN GEORGIA 1980 - 1985

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, 71 IIPA GRANTS

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WATER &WASTEWATER FUNDS

IN GEORGIA 1980 -
54.0%

1985 ~EPA GRANTS
IFMHA .
. ~EPD GRANTS

ICDOG

gARC/EDA . ~GEFA LOANS

J 25.3%

2.7%
7.7%
6.4%

WATER & WASTEWATER FUNDS

IN GEORGIA 1979 - 1984

$120

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