33 Miss. Code. R. 4-IV
This section outlines all sources of funding available to the DWSIRLF Program and indicates intended uses. This section also describes the financial assistance terms available through the Program.
The amount of the FFY-2015 Cap Grant from EPA for Mississippi is not known at this time; therefore, the grant amount received by Mississippi in FFY-2014 will be used in this IUP for planning purposes until the actual Cap Grant amount is provided. A Cap Grant amount of $9,159,000 is used for these purposes. Funding amounts and their use are outlined in Appendix A.
The anticipated FFY-2015 EPA Capitalization Grant allotment for Mississippi is $9,159,000 which will require a 20% state match of $1,831,800; this provides an anticipated amount of $10,990,800 for both loans and set-aside activities.
With $1,931,204 being utilized for set-aside activities, $9,059,596 will be used for loans to Mississippi public water supplies; additionally, unobligated funds from the previous year, anticipated loan repayments and interest earnings (all of which are not classified as state match) should also be available as additional funding sources.
The FFY-2015 "Set-aside" use for the standard Cap grant is outlined in Section V of this IUP. Necessary work plans showing utilization of these funds are found at the end of this IUP.
If the FFY-2015 Capitalization Grant for Mississippi is $9,159,000 the state match requirement to federal grant funds (cash draw ratio) will be 20.22% state match funds to 79.78% federal grant funds; this requirement will be stated in the grant application.
Until 2014 the state 20% match was provided through the sale of General Obligation bonds authorized by the State Legislature. The Legislature passed House Bill No. 209 to establish a Local Governments and Rural Water Systems Improvements Revolving Loan Program and authorized the sale of $15,000,000 in General Obligation Bonds which were deposited into the Fund. As stated in the law, one of the purposes for these funds is that, "All or any portion of the monies in the fund may be used to match any federal funds that are available for the same or related purposes for which funds are used and expended under this act." Initially, $10,000,000 of these General Obligation bonds were sold in May of 1997 and the proceeds were deposited into the Fund on May 29, 1997. Later, the remaining $5,000,000 of the original bonding authority was sold and deposited into the Fund on October 5, 2000.
* $3,294,840 was used as match for the FFY-1997 Cap grant,
* $1,654,340 was used as match for the FFY-1998 Cap grant,
* $1,733,900 was used as match for the FFY-1999 Cap grant,
* $1,802,020 was used as match for the FFY-2000 Cap grant,
* $1,809,480 was used as match for the FFY-2001 Cap grant,
* $1,610,500 was used as match for the FFY-2002 Cap grant,
* $1,600,820 was used as match for the FFY-2003 Cap grant,
* $1,494,100 was used as match for $7,470,500 of the FFY-2004 Cap grant. During the Spring 2003 Legislative Session, the Legislature provided the Board with an additional $130,000 in bonding authority. Additionally, during the Spring 2004 Legislative Session, the Legislature authorized $1,613,000 in general obligation bonds. A total of $1,740,000 was deposited in the DWSIRL Fund during the 1st Quarter of FFY-2005.
* $129,776 was used as match for $648,880 of the FFY-2004 Cap grant.
* $36,744 was used as match for $183,720 which was the remaining FFY-2004 Cap grant.
* $1,573,480 was used as match for $7,867,400 of the FFY-2005 Cap grant. During the 2006 Regular Legislative Session, the Legislature authorized the sale of general obligation bonds in the amount of $4,003,000, which were sold and deposited in the SRF Fund during the 1st Quarter of FFY-2007. After paying the issuance cost of $2,128.26:
* $83,620 was used to match the remaining $418,100 of the FFY-2005 Cap grant.
* $1,645,860 was used to match the FFY-2006 Cap grant ($8,229,300).
* $1,645,800 was used to match the FFY-2007 Cap grant ($8,229,000).
* $625,591 was used to match a portion ($3,127,955) of the FFY-2008 Cap grant.
During the 2008 Regular Legislative Session, the State Legislature authorized an additional $4,000,000 in general obligation bonds which were sold and deposited into the Fund during the 1st Quarter of FFY-2009. After paying issuance costs of $2,256.05:
* $1,003,609 was used to match the remaining FFY-2008 Cap grant.
* $1,629,200 was used to match the FFY-2009 Cap grant ($8,146,000).
* $1,364,935 was used to match a portion of the FFY-2010 Cap grant or $6,824,675.
During the 2010 Regular Legislative Session, the State Legislature authorized an additional $1,400,000 in general obligation bonds which were sold and deposited into the Fund during the 4th Quarter of FFY-2010. After paying issuance cost of $9,087:
* $1,390,913 was used to match a portion ($6,954,566) of the FFY-2010 Cap grant.
During the 2011 Regular Legislative Session, the State Legislature authorized an additional $2,700,000 in general obligation bonds which were sold and deposited into the Fund during the 4th Quarter of FFY-2011. After paying issuance and discount costs of $13,105:
* $69,152 was used to match the remaining FFY-2010 Cap grant ($345,760).
* $1,960,400 was used to match the FFY-2011 Cap grant (9,802,000).
* $1,834 was used to match $9,166 which was transferred to DWSIRLF from the remaining balance of the MS Operator Certification Grant for making additional loans.
* The remaining $655,509 was used to match $3,277,545 of the FFY-2012 capitalization grant leaving a balance of $6,063,455 to be matched.
During the 2013 Regular Legislative Session, the State Legislature authorized an additional $1,000,000 in general obligation bonds. These bonds were sold and the funds were deposited into the DWSIRLF in December 2013. No issuance or discount costs were charged, therefore, the full $1,000,000 bond amount is available to match a portion ($1,902,240) of the FFY-2013 Cap grant and match a portion of ($3,097,760) of the remaining FFY-2012 Cap grant. The $1,000,000 state bond funds will be used as follows.
* $380,448 will match the FF Y-2013 Cap Grant Set-aside amount ($1,902,240).
* $619,552 will match $3,097,760 of the remaining FFY-2012 Capitalization Grant.
* $593,139 from the Drinking Water Systems Emergency Loan Fund (DWSELF) will be used to complete the match of the remaining FFY-2012 Capitalization Grant ($2,965,695). (That portion of the DWSELF which exceeds the $5,000,000 initially deposited in the fund may be used to match capitalization grant funds).
* $26,861 remaining from the $620,000 used from the DWSELF Fund will be used to match a portion ($134,305) of the FFY-2013 Cap Grant.
During the 2014 Regular Legislative Session, the State Legislature authorized $1,000,000 in direct funding for the DWSRF program and the use of $2,000,000 in an existing MSDH account for the DWSRF program. Additionally, $180,000 was used from the Drinking Water Systems Emergency Loan Fund (DWSELF). The total of all the state match funds matched all outstanding EPA Grant funds; the remaining portion of the FFY-2013 Cap Grant ($6,727,455) and the total FFY-2014 Cap Grant ($9,159,000). The $3,180,000 of state funds was used as follows.
* $ 1,345,491 matched the remainder of the FFY-2013 Cap Grant amount ($6,727,455).
* $1,831,800 matched the FFY-2014 Capitalization Grant ($9,159,000).
* $2,709 from the Drinking Water Systems Emergency Loan Fund (DWSELF) will remain to be used as match for future Capitalization Grants.
It is anticipated that the State Legislature will continue to provide a direct appropriation for the State's 20% match portion of the FFY-2015 EPA Capitalization Grant. If this happens, the match amount would be $1,831,800 for an amount of $9,159,000.
Beginning in FFY-2003 the Board began to make loan awards after approval of the facilities plans and loan application, rather than after completion of the project design. This change in the loan award sequence increased the likelihood that bid overruns on some projects could be greater than the construction contingency included in the loan agreement. In order to be able to provide loan increases (when needed) to existing loans, the Board intends to set-aside the amount indicated in Appendix A for such loan increases; loan increases will be awarded on a first-come, first-served basis. Any funds not obligated for these purposes by the end of the fiscal year may be made available for new loan awards to the highest ranking project(s) that is ready for loan award at the time funds become available.
In accordance with the Board's desire to maintain a financially sound DWSIRLF loan Fund in perpetuity, while at the same time meeting a substantial portion of the drinking water needs in the state within a reasonable period of time, the following financial decisions were made regarding the Fund:
The Board intends that the MSDH apply for the entire state Cap grant allotment under the federal DWSRF, including the set-asides described in Section V below. State bond proceeds obtained shall be deposited into the DWSIRLF Fund and shall be used as the state match for federal DWSRF Cap grants.
It is the Board's intention to adjust interest rates such that the demand will equal the funds available. In order to ensure that this interest rate will be at or below the prevailing market rates at the time a loan is made, this rate will be compared to the twenty-year (20) triple-A rated, tax-exempt insured revenue bond yield published by The Bond Market Association/ Bloomberg (Bloomberg Online, http://www.bloomberg.com/markets/rates/index.html).
Investment Procedures for Excess Cash - According to the State Treasurer, the excess cash in the Fund is invested by the State Treasurer in securities prescribed in Section 27-105-33, et. Seq., of the Mississippi Code of 1972 Annotated, as amended. The securities in which state funds may be invested include certificates of deposit with qualified state depositories, repurchase agreements (fully secured by direct United States Treasury obligations, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations), direct United States Treasury obligations, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations, and any other open-ended or closed-ended management type investment company or investment trust registered under the provisions of 1 5 U.S.C. Section 80 (a)-1 et. Seq, provided that the portfolio is limited to direct obligations issued by the United States of America, United States Government agency obligations, United States Government instrumentalities or United States Government sponsored enterprise obligations and to repurchase agreements fully collateralized by the securities listed above for repurchase agreements.
The following terms will be used for the purpose of making loans to the public water systems within the State of Mississippi.
Under state law, the Board has the discretion to set the maximum amount for DWSIRLF loans. For FFY-2015 a maximum loan amount of $5,000,000 per borrower has been set by the Board. The Board may allow (on a case-by-case basis if requested by the borrower and the need has been justified) the maximum loan limit to be exceeded by vote of the Board. Furthermore, during FFY-2015, no more than one loan per borrower will be allowed. At the end of the fiscal year, in the event that funds are available, systems previously receiving an award during FFY-2015 may obtain an additional award(s) or an increase to a previous FFY-2015 award, if no other eligible systems are evident.
All loan terms will be at 1.95% annual interest rate, compounded monthly, with a maximum 20-year repayment period. The interest will not accrue during construction, but will commence at the date of completion of the original construction period.
Revenues to pay for Program administrative costs will be collected through an administration fee of 5% of the initial loan principal. This fee will be collected from the interest portion of loan repayments on all FFY-2015 loans.
The Federal 2015 appropriations bill has not been finalized and the final EPA FFY-2015 Cap Grant allotment amounts and any additional federal requirements are not known. It is anticipated that subsidization requirements will be required for the FFY-2015 Cap Grant; the subsidization is expected to be in the form of "principal forgiveness", "negative interest rates", or a combination of the two. The anticipated amount of subsidization is expected to be a minimum of 20% of the Cap Grant amount up to 30% of the Cap Grant amount. If the FFY-2015 Cap Grant is $9,159,000 the subsidization amount would be between $1,831,800 (20%) to $2,747,700 (30%) if the Cap Grant amount is $9,159,000. Furthermore, all loans made with all or part FFY-2015 federal appropriation funds are expected to include the Davis-Bacon Act requirements and may include the American Iron and Steel requirements. Appropriate language will be added to all FFY-2015 loan agreements identifying the additional responsibilities for loan recipients. "Green Infrastructure" requirements are not expected to be an appropriation requirement; however, the Program will continue to encourage those types of projects to seek funding from the DWSIRLF.
33 Miss. Code. R. 4-IV