123-043-0000
Purpose and Objectives

Pursuant to ORS 285B.563, the Oregon Business Development Department is required to adopt rules that provide procedures, standards and criteria for the Water/Wastewater Financing Program.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 7-2002, f. & cert. ef. 4-26-02
EDD 7-1994, f. & cert. ef. 4-7-94
EDD 10-1993(Temp), f. & cert. ef. 10-4-93

123-043-0010
Definitions

For the purposes of these rules additional definitions may be found in Procedural Rules, OAR 123-001. As used in this division of administrative rules, the following terms shall have the following meaning, unless the context clearly indicates otherwise:

(1) "DEQ" means the State of Oregon Department of Environmental Quality.

(2) “Drinking water project” means a project for constructing or improving a drinking water system or a water development project, as defined in ORS 541.700 (6)(a), (b) and (d) to (f), that is owned and operated by a municipality.

(3) "Fund" means the water fund created by ORS 285B.563.

(4) "Non-compliance" means the municipality has received a notice of non-compliance with:

(a) Drinking water quality standards administered by the Oregon Health Authority Drinking Water Services; or

(b) Water quality statutes, rules, orders, or permits administered by DEQ or the Environmental Quality Commission.

(5) "Technical assistance" means preliminary engineering or planning; legal, financial, and economic investigations, reports and studies to determine the feasibility of a water project. Technical assistance also means Water Master Plans or Wastewater Facilities Plans.

(6) “Wastewater system improvement project” means a project for constructing or improving a system for wastewater collection or treatment, including storm drainage systems.

(7) “Water project” means either a drinking water project or a wastewater system improvement project.

[Publications: Publications referenced are available from the agency.]

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 3-2012, f. 3-30-12, cert. ef. 4-2-12
OBDD 6-2011(Temp), f. & cert. ef. 11-3-11 thru 4-30-12
Reverted to EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 32-2008, f. 10-2-08, cert. ef. 10-3-08
EDD 14-2008(Temp), f. & cert. ef. 4-9-08 thru 10-5-08
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02
EDD 7-1994, f. & cert. ef. 4-7-94
EDD 10-1993(Temp), f. & cert. ef. 10-4-93

123-043-0015
Eligible Project Costs and Activities- Water Projects

Eligible costs include the reasonable costs as determined by the Authority for eligible water projects owned and operated either by the municipality or under a management contract or an operating agreement with the municipality and may include:

(1) Water project development costs including but not limited to costs associated with design and engineering, architectural and planning work, permitting, environmental review, regulatory processes, public outreach, community engagement, technical assistance and support activities necessary to support the construction of a project;

(2) Construction, improvement or expansion of drinking water projects including all facilities necessary for source, supply, filtration, treatment, storage, transmission, and metering;

(3) Construction, improvement or expansion of wastewater system improvement projects including all facilities necessary for collecting, conveying, pumping, treating and disposing of sanitary sewage, including correction of infiltration and inflow through replacement of lines, sliplining, or other corrective processes;

(4) Construction, improvement or expansion of storm drainage systems including all facilities necessary for controlling, collecting, conveying, treating and discharging of stormwater;

(5) The acquisition of real property directly related to or necessary for the proposed water project;

(6) Construction contingencies for the water project;

(7) Financing costs associated with the department's financing including capitalized interest, issuance and debt service reserve costs, when such costs are incurred in funding a project;

(8) Costs incurred by the municipality prior to a water project award if such costs are allowable under the department’s adopted policy for reimbursement of pre-award costs; and

(9) Direct project management costs as defined in ORS 285B.560(1).

Statutory/Other Authority: ORS 285B.563
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0025
Ineligible Project Costs

Expenses and costs expressly allowed by OAR 123-043-0015 are eligible for reimbursement from the fund. All other costs, including but not limited to those listed below, are ineligible for reimbursement:

(1) Costs incurred for facilities that are or will be privately owned;

(2) Cost of purchase of general purpose motor vehicles and other equipment not directly related to the project;

(3) Cost of purchase of off-site property for uses not directly related to the project; and

(4) Project operating or maintenance expenses.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 8-2019, minor correction filed 07/03/2019, effective 07/03/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 3-2012, f. 3-30-12, cert. ef. 4-2-12
OBDD 6-2011(Temp), f. & cert. ef. 11-3-11 thru 4-30-12
OBDD 42-2010, f. 11-30-10, cert. ef. 12-1-10
Reverted to EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0035
Criteria and Limitations for Funding — Water Projects

(1) Priority shall be given to projects necessary to ensure that municipal water and wastewater systems achieve or maintain compliance with the requirements of:

(a) Drinking water quality standards administered by the Oregon Health Authority Drinking Water Services; or

(b) Water quality statutes, rules, orders, or permits administered by DEQ or the Environmental Quality Commission.

(2) If a municipal water or wastewater system has not been issued a notice of non-compliance by the governing regulatory authority, the Authority may determine that a proposed project is eligible for assistance upon a finding that one of the following has been met:

(a) A recent letter has been issued by the appropriate regulatory authority, such as the Oregon Health Authority Drinking Water Services, DEQ, or its contracted agent, which indicates a high probability that the system owner will soon be notified of non-compliance with either the Safe Drinking Water Act or the Clean Water Act;

(b) The project would assist a municipality achieve or maintain compliance with the Safe Drinking Water Act or the Clean Water Act, as documented by a regulatory agency recognized by the Authority as having responsibility for the protection of water quality and the supply of clean drinking water; or

(c) The project would address an urgent need including:

(A) Projects intended to address a community drinking water health risk;

(B) Projects intended to address a community drinking water supply concern;

(C) Wastewater projects intended to address a surface water or groundwater quality concern; or

(D) Stormwater projects intended to reduce community vulnerability to flooding.

(3) The project must be consistent with the acknowledged local comprehensive plan.

(4) When the Authority determines funds are limited, it will apply the following prioritization criteria when selecting water projects to receive funding:

(a) A preference for projects located within rural economically distressed areas as defined by the Oregon Business Development Department;

(b) A preference for projects that support a municipality’s efforts to achieve or maintain compliance with the Safe Drinking Water Act and the Clean Water Act;

(c) A preference for projects that achieve water project regionalization; and

(d) A preference for partnerships and collaborative projects.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 32-2008, f. 10-2-08, cert. ef. 10-3-08
EDD 14-2008(Temp), f. & cert. ef. 4-9-08 thru 10-5-08
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 9-2004, f. & cert. ef. 3-22-04
EDD 8-2003(Temp), f. & cert. ef. 9-24-03 thru 3-22-04
Reverted to EDD 7-2002, f. & cert. ef. 4-26-02
EDD 1-2003(Temp), f. 2-20-03, cert. ef. 2-24-03 thru 6-30-03
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0041
Criteria and Limitations for Funding — Technical Assistance Projects

(1) Technical assistance awards are available to municipalities with populations of 15,000 or less.

(2) The Authority may make technical assistance awards for:

(a) Water Master Plans or Wastewater Facility Plans;

(b) Preliminary engineering or planning; legal, financial, and economic investigations, reports and studies to determine the feasibility of a project, if the Authority determines there is adequate documentation from a regulatory authority recognized by the Authority as having responsibility for the protection of water quality or the supply of clean drinking water that shows the technical assistance project is needed; or

(c) Studies to assess the feasibility of regionalization of drinking water or wastewater infrastructure.

(3) Pre-award expenses are not eligible for reimbursement.

(4) When the Authority determines funds are limited, it will apply the following criteria when selecting technical assistance project to receive funding:

(a) A preference for technical assistance projects located within rural economically distressed areas as defined by the Oregon Business Development Department;

(b) A preference for technical assistance projects to address documented non-compliance;

(c) A preference for technical assistance projects related to water project regionalization; and

(d) A preference for partnerships and collaborative technical assistance projects.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 10-2014, f. 5-30-14, cert. ef. 6-1-14
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10

123-043-0055
Loan and Grant Information

(1) The Authority may award financing in a manner that maximizes the use of available resources and maintains the desired credit standards of the fund. The Authority shall determine the amount, type, interest rate and terms of any financing awarded. It may offer an alternate mix or lower amount of assistance than requested. The amount of the award may be the minimum amount that the department determines is necessary to enable the project to proceed, and the Authority may investigate and recommend other sources of funds for all or part of a proposed project. Projects that the Authority determines are not financially feasible will not be funded.

(2) Loans for water projects:

(a) The term of a loan is limited to the usable life of the contracted project, or 30 years from the year of project completion, whichever is less.

(b) The interest rate on a loan is based on market conditions for similar debt. In addition to, or in lieu of a grant, the Authority may offer a subsidized interest rate if the community meets the criteria identified in (3)(b) and (3)(c) below.

(c) The interest rate on a bond funded loan is equal to the coupon rates on the state revenue bonds funding the loan. Until the state revenue bonds funding the loan are sold, the municipality will pay interest at a rate established by the Authority on loan funds disbursed to the municipality.

(d) The maximum amount for a loan for a project will be determined by the Authority on the basis of the department's financial analysis of the municipality's capacity for repaying the debt, the availability of moneys in the fund and prudent fund management, but will not exceed $10,000,000.

(e) A loan must be secured by a full faith and credit obligation that is payable from any taxes which the municipality may levy within the limitations of Article XI of the Oregon Constitution and all legally available revenues and other funds of the municipality. A pledge of specific revenues of the municipality may be required by the Authority to be pledged in addition to the foregoing.

(3) Grants for water projects: When making a determination to award a grant, the Authority will apply prudent fiscal management of the fund in order to manage limited funding resources. The Authority shall determine if the project meets the criteria of a grant and make a determination on the amount of the grant based on financial need or other special circumstances. In making its determination, the Authority shall apply the following criteria:

(a) The Authority's financial analysis determines that the municipality's financial resources, including its borrowing capacity, are insufficient to finance the project;

(b) The projected annual residential utility rate for the system is at least equivalent to a minimum rate as determined by the Authority's policy. The Authority's policy may include such factors as the most recent U.S. Census data on median household income and annual adjustments for inflation since the most recent census;

(c) Only a community with a median household income below the state average is eligible for a grant award; and

(d) Grants may be awarded up to $750,000 based on the department’s policy, but not more than 50 percent of the financial award from the fund.

(4) Loans for technical assistance projects:

(a) A loan of up to $60,000 may be awarded for a technical assistance project. Interest shall be at 50 percent of the annual interest rate for other loans made in accordance with the requirements of this OAR chapter 123, division 43. The loan term shall not exceed seven years.

(b) A loan must be secured by a full faith and credit obligation that is payable from any taxes which the municipality may levy within the limitations of Article XI of the Oregon Constitution and all legally available revenues and other funds of the municipality. A pledge of specific revenues of the municipality may be pledged in addition to the foregoing.

(5) Grants for technical assistance projects:

(a) A grant of up to $20,000 per water, sewer, and storm drainage system may be awarded once every three (3) years for a project.

(b) No more than $600,000 of grant may be awarded for technical assistance projects in any biennium.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 32-2008, f. 10-2-08, cert. ef. 10-3-08
EDD 14-2008(Temp), f. & cert. ef. 4-9-08 thru 10-5-08
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 9-2004, f. & cert. ef. 3-22-04
EDD 8-2003(Temp), f. & cert. ef. 9-24-03 thru 3-22-04
EDD 1-2003(Temp), f. 2-20-03, cert. ef. 2-24-03 thru 6-30-03
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0065
Application Requirements

(1) A municipality may submit an application to the Authority at any time after the Authority has made a preliminary determination of eligibility and shall comply with the Authority's procedures for submitting applications.

(2) For a project that is part of a system that is, or will be, functionally connected to, another municipality's system, an intergovernmental cooperation agreement that describes the duties and obligations of each entity is required. The fully executed intergovernmental agreement must be provided before the financing contract will be executed by the Authority.

(3) The application shall be in the form provided by the Authority and shall contain or be accompanied by such information and documentation as the Authority may require. The Authority will process only completed applications.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0075
Application Review and Approval

(1) For a water project, the Authority must make the following determinations:

(a) Project feasibility as demonstrated by certification from a professional engineer registered in the State of Oregon in an engineering report, such as a Master Plan, that the proposed project is feasible and is the most cost effective solution, or other feasibility documentation approved by the Authority.

(b) The loan is secured by the pledge of utility revenues or other revenues or payments from owners of specially benefited properties, and these revenues or payments are sufficient, when considered with other security, to assure repayment of the loan and the municipality has certified to the Authority that there will be adequate funds available to repay the loans made to the municipality from the fund.

(c) Moneys in the appropriate accounts of the fund are or will be available for the project.

(d) The municipality is willing and able to enter into a contract with the Authority.

(e) The project is consistent with the requirements governing assistance from the fund. If the Authority determines that the municipality or the proposed project does not meet the requirements of this OAR 123-043-0075, the Authority may reject an application or require further documentation from the municipality.

(f) The project is ready to begin and the municipality has committed in writing that, if awarded the assistance it shall proceed immediately.

(2) To award assistance from the fund for a technical assistance project, the Authority must determine that the municipality has, or has demonstrated the ability to secure, the administrative capacity to undertake and complete the project.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 32-2008, f. 10-2-08, cert. ef. 10-3-08
EDD 14-2008(Temp), f. & cert. ef. 4-9-08 thru 10-5-08
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 9-2004, f. & cert. ef. 3-22-04
EDD 8-2003(Temp), f. & cert. ef. 9-24-03 thru 3-22-04
EDD 1-2003(Temp), f. 2-20-03, cert. ef. 2-24-03 thru 6-30-03
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0085
Contract Requirements and Disbursement of Funds

(1) The Authority shall disburse monies from the fund for water projects or technical assistance projects only after entering into a binding contract with the municipality.

(2) The contract shall be in a form provided by the Authority.

(3) If any portion of the assistance is in the form of a loan or the purchase of a bond of a municipality, a provision granting the Authority a lien on or a security interest in the collateral as determined by the Authority to be necessary to secure repayment of the loan or bond shall be included in the contract.

(4) Drinking water projects are subject to the following contract provisions:

(a) A provision requiring the municipality to install meters on all new active service connections from any distribution lines that may be included in the project; and

(b) For a drinking water project with existing, active unmetered service connections, a provision requiring the municipality to install meters on such service connections no later than two years after the completion of the project; 

(5) Other funds that may be needed to complete the project must be available or the municipality must have a binding commitment for such funds at the time the contract is executed. If a portion of the other funds needed to complete the project is committed but not available at the time an award is made or the contract executed, the contract shall require that the project be fully funded prior to any disbursement from the fund.

(6) The contract for a loan shall be authorized by an ordinance, order or resolution adopted by the governing body of the municipality in accordance with the municipality's requirements for public notice and authorizing debt.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0095
Recipient Responsibilities

(1) The municipality must comply with all applicable state laws, regulations and requirements, such as Oregon prevailing wage rates, municipal audit law, and procurement regulations.

(2) The municipality shall certify that a registered professional engineer will be responsible for the design and construction of the project and it shall follow standard construction practices, such as bonding of engineers and contractors, requiring errors and omissions insurance, performing testing and inspections during construction, and obtaining as-built drawings.

(3) For a project funded with state lottery proceeds, the municipality shall comply with ORS 280.518 for public display of information on lottery funding of the project. At a minimum the municipality shall:

(a) Include the following statement, prominently placed, on all plans, reports, bid documents and advertisements relating to the Project: "This project was funded in part with a financial award from the Water Fund, funded by the Oregon State Lottery and administered by the State of Oregon, Business Development Department." and

(b) For a construction project, post a sign, provided by the Authority, at the project site or, if more than one site is included in the project, at a site visible to the general public stating that the project is being funded by lottery proceeds.

(4) For a construction project the municipality shall have a plan for ongoing operation, maintenance, and replacement that will preserve the project's benefits over its useful life.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
Reverted to EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02

123-043-0102
Eligibility Criteria for State Revenue Bond Loans

The Authority shall apply the following standards for determining the eligibility of projects for state revenue bond financing:

(1) Loan repayment must be secured by a full faith and credit pledge of the municipality;

(2) The loan must be of sufficient size as determined by the Authority;

(3) The loan must be fully amortized over its term with fixed annual principal and interest payments, and the term of the loan must not exceed the usable life of the contracted project or 30 years from the year of project completion, whichever is less;

(4) The loan must conform to the requirements of the bond indenture for the state revenue bonds; and

(5) The loan and the municipality must meet the minimum underwriting criteria for state revenue bond financing as established by Department policies.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 30-2010, f. 6-30-10, cert. ef. 7-1-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06

123-043-0115
Appeals and Exceptions

The director or the director’s designee will consider appeals of the Authority's funding decisions. Only the municipality may appeal. Appeals must be submitted in writing to the director within 30 days of the event or action that is being appealed. A project that would have been funded but for a technical error in the Authority's review of the application, as determined by the director, will be funded as soon as sufficient moneys become available in the fund, provided the project is still viable. The director or the director’s designee decision is final.

Statutory/Other Authority: ORS 285B.563 & 285A.075
Statutes/Other Implemented: ORS 285B.560 - 285B.599
History:
OBDD 11-2019, amend filed 09/04/2019, effective 09/04/2019
OBDD 12-2013, f. 12-30-13, cert. ef. 1-1-14
OBDD 3-2012, f. 3-30-12, cert. ef. 4-2-12
OBDD 6-2011(Temp), f. & cert. ef. 11-3-11 thru 4-30-12
Reverted to EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
OBDD 2-2010(Temp), f. & cert. ef. 1-14-10 thru 7-13-10
EDD 25-2009, f. 11-30-09, cert. ef. 12-1-09
EDD 11-2006, f. & cert. ef. 11-3-06
EDD 7-2002, f. & cert. ef. 4-26-02