Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
45.031,
151.601,
151.605,
224A.011,
224A.020,
224A.035,
224A.040,
224A.050 -224A.314,
Pub.L.
117-2, 31 C.F.R. Part 35
NECESSITY, FUNCTION, AND CONFORMITY: On March 11, 2021, the
American Rescue Plan Act, Pub.L. 117-2, was signed into
law, and established the Coronavirus State Fiscal Recovery Fund and Coronavirus
Local Fiscal Recovery Fund, which together make up the Coronavirus State and
Local Fiscal Recovery Funds (SLFRF) program. This program is intended to
provide support to State, territorial, local, and Tribal governments in
responding to the economic and public health impacts of COVID-19 and in their
efforts to contain impacts on their communities, residents, and businesses.
Effective April 1, 2022, the United States Department of the Treasury issued
its final rule for the funds, 31 C.F.R. Part 35 , which necessitates withdrawal
of the existing emergency regulation and the promulgation of a new and
substantially different emergency regulation.
KRS
224A.040 authorizes the Kentucky
Infrastructure Authority to make grants as funds are available, and
KRS
224A.070(1) authorizes the
Kentucky Infrastructure Authority to promulgate administrative regulations that
shall define with specificity conditions precedent under which applications for
loans or grants may be made and the order of priority upon which applications
shall be acted upon. 2021 Ky Acts ch. 195, requires the authority to promulgate
administrative regulations to ensure that project approvals are based on
rational criteria and include a project's readiness to proceed and the
project's social, economic, and environmental benefits. This administrative
regulation establishes procedures for governmental agencies to request and
receive financial assistance for the construction of drinking water and
wastewater infrastructure projects from funds available to the Kentucky
Infrastructure Authority.
Section 1.
Definitions.
(1) "Applicant" means a
governmental agency that has submitted a request to the authority for a grant
from authority funds.
(2)
"Authority" is defined by
KRS
224A.011(6).
(3) "Conditional commitment letter" means a
letter delivered to the applicant stating the authority's commitment to provide
a grant under specifications and subject to the satisfaction of certain
conditions by the applicant.
(4)
"Kentucky State Clearinghouse" means the project review mechanism, attached to
the Department for Local Government, established in
KRS
45.031.
(5) "Kentucky Uniform System of Accounting"
means the elements of a basic accounting system established in
KRS
224A.306, which is used by a water or
wastewater system seeking or using funds of the authority if an alternative
accounting system has not been approved by the authority.
(6) "Project" means an infrastructure project
related to drinking water or wastewater.
(7) "Unserved" means a customer who does not
have access to publicly available potable drinking water or a properly
functioning wastewater system.
Section 2. Eligible Costs Timeline.
(1) Applicants may use funds to cover costs
incurred for eligible projects planned or started prior to March 3, 2021, if
the project costs covered by the funds were incurred by the applicant after
March 3, 2021.
(2) Applicants may
use funds to cover eligible costs incurred during the period that begins on
March 3, 2021 and ends on December 31, 2024, if the award funds for the
obligations incurred by December 31, 2024 are expended by December 31,
2026.
Section 3.
Eligible Projects.
(1) Funds available to the
authority shall be used to fund projects that make necessary investments in
water or sewer infrastructure as defined in
31 C.F.R.
35.6(e)(1).
(2) Only water or wastewater projects
addressing one (1) or more of the conditions established in paragraphs (a)
through (h) of this subsection shall be eligible for funding:
(a) The proposed project shall provide
drinking water services to unserved rural customers.
(b) The proposed project shall address
provisions in a federal consent decree related to water or
wastewater.
(c) The proposed
project shall address the provisions of
KRS
224A.300 - 224A.314.
(d) The proposed project shall address an
emergency situation.
(e) The
proposed project shall alleviate existing conditions that pose a serious and
immediate threat to the health and welfare of the community.
(f) The proposed project shall promote
social, economic, or environmental benefits; but with respect to industrial
sites funds may only be awarded if the site has committed occupants.
(g) Funds are needed to complete a funding
package previously awarded by the authority.
(h) Funds are needed to cover cost overrun
for a project previously awarded by the authority.
(3) Project applications meeting the
guidelines established in subsection (2) of this section shall be funded based
on the project's:
(a) Readiness to
proceed;
(b) Social, economic, and
environmental benefits; and
(c)
Receipt of a project approval from a water management planning council as
created in KRS
151.601.
Section 4. Funding Request.
(1) Each applicant shall request that the
water service coordinator, as established in
KRS
151.605, designate the project for funding.
If a water service coordinator is not available, the request may be made
directly to the authority in writing and mailed.
(2) The authority shall request additional
information about the project or the applicant if needed to comply with local,
state, or federal laws.
(3) Only a
completed Water Resource Information System project profile, including all
supporting documentation, shall be considered for financial assistance from the
Drinking Water and Wastewater Grant Program.
Section 5. Project Priority. Eligible
projects shall be funded subject to:
(1) A
project's readiness to proceed;
(2)
A project's social, economic, and environmental benefits;
(3) The water management council's approval;
and
(4) The availability of
funds.
Section 6.
Additional Conditions to Project Funding.
(1)
A water supply and distribution system seeking funding for a project shall
agree, in writing, to adopt and utilize the Kentucky Uniform System of
Accounting and to charge rates for services based on the actual cost of that
service.
(2) Before funds shall be
disbursed to an applicant whose project has been approved for funding, the
applicant shall demonstrate to the authority that the project:
(a) Has been reviewed through the Kentucky
State Clearinghouse process; and
(b) Is in compliance with applicable state
and federal requirements.
Section 7. Terms of Financial Assistance.
(1) A funding request shall be:
(a) Subject to financial viability review by
authority staff; and
(b) Referred
to the authority chair for final action.
(2) A project shall be funded if approved by
the authority chair and reviewed by the Legislative Research Commission's
Capital Projects and Bond Oversight Committee.
(3) Upon approval of a funding request, the
authority shall issue a conditional commitment letter to the applicant
establishing the requirements to be satisfied by the applicant prior to
execution of an assistance agreement, including:
(a) Accounting standards or financial
reporting conditions;
(b) Rate
covenants;
(c) Other federal or
state legal requirements relating to the project or the applicant;
(d) Engineering or technical requirements;
and
(e) Receipt of additional
funding commitments from other sources.
(4) Financial assistance by the authority
shall be made available only upon:
(a)
Execution of an assistance agreement; and
(b) Satisfaction by the applicant of the
conditions established in the conditional commitment letter.
(5) A grant amount may be adjusted
by up to ten (10) percent from the principal amount approved without further
action if:
(a) Requested by an applicant;
and
(b) The staff of the authority
finds that:
1. The additional requested amount
is needed for the project; and
2.
Adequate funds are available.
(6) The authority shall monitor the
assistance agreements and require that financial reports be made available to
the authority by the applicant.
(7)
The authority may collect an administrative fee of one-half (1/2) of one (1)
percent charged on the principal grant amount, as allowed by law. This fee
shall be applied to the administrative processing servicing costs of the grants
and necessary operating expenses of the program.
STATUTORY AUTHORITY:
KRS
224A.040,
224A.070(1),
224A.113,
224A.300, 2021 Ky Acts ch. 195,
2022 Ky Acts ch. 199