Wisconsin Administrative Code
Department of Natural Resources
NR 100-199 - Environmental Protection General
Chapter NR 166 - Safe Drinking Water Loan Program
Subchapter II - Financial Assistance Requirements
Section NR 166.07 - Cost eligibility

(a) Abandonment. Abandonment of an entire water system or portions of a water system if approved in the plans and specifications of an eligible project or by department staff, including activities such as demolition, re-landscaping, and removal and disposal of debris.

(b) Access roads. Construction of roadways necessary to provide appropriate access to water system facilities such as wellhouses, storage tanks, and water treatment plants.

(c) Administrative buildings and equipment. Buildings, offices, and office equipment and furnishings used for purposes of operating a water system, such as administration and storage buildings when part of the scope of the scored project and included in the approved plans and specifications or otherwise approved by department staff. The department may prorate costs for buildings, offices, and office equipment and furnishings that are partially used for purposes not related to the water system.

(d) Administrative costs of a commission. Administrative, legal, and other costs incurred by a commission solely for the scored project if identifiable in a contract or agreement between the member municipalities.

(e) Compliance with state and federal requirements. Costs incurred for activities associated with complying with state and federal requirements related to the scored project.

Note: State and federal requirements may include any of the following: Americans with Disabilities Act design and construction; green project reserve documentation; Davis-Bacon and Related Acts administration or other activities associated with wage rate requirements; DBE solicitation and documentation; activities associated with the use of products made in the United States; environmental review of project sites and other activities related to ch. NR 150 compliance, including costs of public notices and hearings; historical, architectural, archaeological, and cultural resources work identified during planning, design, or construction of the project and incurred prior to project closeout; signage requirements, including on a website or at a drinking water facility or project site; audit activities related to the federal single audit act portion of the municipality's annual audit report until the project is complete.

(f) Construction activities. Activities defined in s. NR 166.03 (14) and included in construction contracts or performed by force account, including any of the following:

(g) Demolition. Demolishing existing portions of a water system if the demolition is part of a scored project and at least one of any of the following applies:

(h) Easements and rights-of-way. Acquiring easements and rights-of-way if acquisition is from a willing seller. Expenses related to acquisition include purchase cost and administrative and legal expenses.

(i) Equipment. Equipment related to the scored project, the costs of which the department may prorate if the municipality intends to use the equipment for multiple purposes rather than solely for the water system. Eligible equipment includes any of the following:

(j) Fees. Fees paid by the municipality for any of the following:

(k) Galvanized pipe. Removal of galvanized pipe that was or is downstream of lead pipe, a lead gooseneck, or other appurtenances containing lead if the municipality has approval from the public service commission for a lead service line replacement program or is pledging general obligation bonds to the SDWLP.

(L) Groundwater monitoring. Installing groundwater monitoring equipment or facilities.

(m) Insurance. Purchasing insurance necessary during construction of the project, including property, liability, builder's risk, and construction insurance.

(n) Interim debt. Costs associated with interim debt for the scored project as delineated in sub. (3).

(o) Laboratories. Laboratory equipment related to initial setup or a significant upgrade or expansion of an on-site laboratory if requested in the financial assistance application.

(p) Land acquisition. Acquiring land, including purchase cost and administrative and legal expenses if all of the following apply:

(q) Lead service lines. Costs for removal and replacement of private service lines that are made of lead or galvanized materials if the municipality has public service commission approval for a lead service line replacement program or is pledging general obligation bonds to the SDWLP.

(r) Municipal staff, equipment, and materials. Municipal expenses incurred solely for the scored project and documented by the municipality as force account, including any of the following:

(s) Professional services. Service fees and costs of engineering, architectural, legal, and other professional services provided for the project that are not force account work, including any of the following:

(t) Project site. Construction-related work activities at the project site of a scored project, including any of the following:

(u) Safety. Purchasing and installing safety equipment related to the scored project, the costs of which the department may prorate if the municipality intends to use the equipment for multiple purposes rather than solely for the water system.

(v) Security. Purchasing and installing security equipment and appurtenances for the water system, including surveillance cameras, fencing, security alarms, and motion detectors, and conducting a vulnerability assessment if necessary for determining security needs, the costs of which the department may prorate if the municipality intends to use the equipment for multiple purposes rather than solely for the water system.

(w) Sewers on site. Storm sewers and sanitary sewers necessary for controlling storm water runoff and wastewater on water system sites, such as at a wellhouse or water treatment plant site.

(x) Special assessment fees. Financial and legal costs associated with the process of preparing and implementing special assessments, except when the tasks are performed by an on-staff attorney, when the municipality is pledging special assessments toward repayment of its SDWLP loan.

(y) Staffing evaluations. Conducting an evaluation of staffing needs to determine appropriate changes to staffing levels as a result of the scored project.

(z) Startup. Startup expenses for a water system incurred solely because of the scored project, including costs for any of the following:

(zm) Street restoration. Restoring streets and rights-of-way to preconstruction condition, and repairing items damaged during construction of the scored project, such as pavement, sidewalks, sanitary sewers, and storm sewers. Eligibility of costs may be prorated based on participation by one or more other funding sources, or on the percent of the project attributable to SDWLP-eligible activities.

Note: Other funding sources that tend to participate in the types of projects that involve street restoration include the department of transportation, the community development block grant program, and the U.S. department of agriculture rural development community programs. Proration of costs may be due to the other funding source covering a portion of costs that would otherwise be eligible for SDWLP funding or because some of the project costs are not eligible for SDWLP funding, such as wastewater or storm water pipe costs being ineligible when the overall project purpose is to replace both watermains and sanitary sewers.

(a) Allowances. Any contingency or allowance amounts built into a bid contract for nonspecific or ineligible items or activities.

(b) Basin planning. Basin or areawide planning not related to the scored project.

(c) Bonus payments. Bonus payments not legally required for completion of construction before a contractual completion date.

(d) Certification. Fees for operator certification training.

(dm) Chapter 30 permit fees. Chapter 30 permit fees if a municipality at the time of purchase of a permit under ch. 30, Stats., pays a fee for the permit due to not identifying the project as being funded with state or federal funds.

Note: Permit fees are not required by the department for waterway projects authorized under ch. 30, Stats., that are funded in whole or in part by any federal or state agency.

(e) Conflict of interest. Costs incurred under a contract that creates a real or apparent conflict of interest. An apparent conflict of interest arises when an official or employee of a recipient participates in the selection, award, or administration of a contract supported by the SDWLP and any of the following conditions exist:

(f) DBE noncompliance. The amount of project costs determined by the department to be appropriate for a sanction under s. NR 166.11 (4) (b) for noncompliance with DBE good faith effort requirements.

(g) Engineering. Engineering costs relatable to ineligible construction costs when the ineligible construction and equipment costs are more than 10 percent of total construction and equipment costs.

(h) Grant administration. Any costs for administering or applying for funding from sources other than the SDWLP, such as U.S. department of agriculture's rural development programs, a community development block grant program, federal state and tribal assistance grants, U.S. army corps of engineers, focus on energy, or other non-SDWLP federal or state government loan or grant programs, or other types of financial assistance programs.

(i) Hookup charges. Hookup charges imposed by one municipality on another for hooking up to a water system, unless the charges are based on identifiable capital improvement costs incurred by the municipality imposing the charge, proportional to the capacity to be used by the municipality hooking up, and included in a written agreement signed by both municipalities.

(j) Interim debt. Interest or principal payments on interim debt paid by the municipality out of its internal funds rather than capitalized funds, unless DOA notifies the department that such payments are eligible under the particular circumstances.

Note: The ineligibility of interest or principal payments in par. (j) is based on U.S. treasury reimbursement regulations 26 CFR 1.150-2.

(k) Lab fees. Laboratory fees incurred for activities related to monitoring, except when the monitoring is project specific.

(L) Late fees. Interest or late fees on payments for services provided to the municipality in relation to the scored project.

(m) Leases. Costs related to leasing land or buildings.

(n) Mismanagement and litigation. Costs of claims against the recipient resulting from mismanagement or caused by the recipient's vicarious liability for the improper action of others and costs resulting from litigation of contract disputes, liquidated damages, appeals, and other related disputes.

(o) Negligence. Costs incurred due to negligence or error of a party contracted by the municipality.

(p) No construction. All costs of a project if the municipality does not finance some construction costs through the SDWLP, unless the department is cooperating with another governmental funding agency to provide an affordable financing package for the project, the other agency is financing the construction costs, and the department receives acceptable documentation of the other agency's commitment.

(q) Operations and maintenance. Operations and maintenance expenses as defined in s. NR 166.03 (38) and (29), respectively.

(r) Ordinary municipal operating expenses. Ordinary operating expenses of a municipality, such as salaries and expenses of elected officials and on-staff attorneys, postage, utility bills, and annual financial audits.

(s) Other funding. Costs for which payment has been or will be received from another funding source, including costs for which funds from the U.S. department of agriculture's rural development program or a community development block grant program are committed, or costs covered by a focus on energy grant. If the municipality does not receive the funds expected from the other source, the department may consider the costs of the work that was to be funded through the other source to be eligible for SDWLP financial assistance unless the costs are considered ineligible under another paragraph in this subsection.

(t) Outside of scope. Costs outside the scope of the scored project unless the department approves the costs as necessary and reasonable to improve the overall integrity, operation, or functionality of the water system.

(u) Personal injury. Personal injury compensation or damages arising out of the project, whether determined by adjudication, arbitration, negotiation, or otherwise.

(v) Post-closeout. Expenses incurred after the project completion date of the scored project.

(w) Private service lines. Removal or replacement of private service lines that are not made of lead or galvanized materials.

(x) Sewer pipes. Storm sewer or wastewater sewer pipe construction, replacement, or repair, unless the work is necessary as a direct result of work performed for a scored project, such as moving a wastewater pipe to allow appropriate distance between it and a watermain being constructed or repairing or replacing a sewer pipe damaged during construction of the scored project.

(xm) Site acquisition. Site acquisition expenses other than those meeting the criteria established under sub. (1) (h) and (p).

(y) Source water protection. Land acquisition or easement costs incurred for land used for source water protection.

(ym) Special districts. Costs of establishing special purpose districts or commissions, such as sanitary districts, utility districts, public inland lake protection and rehabilitation districts, joint local water authorities created under s. 66.0823, Stats., municipal water districts, and joint commissions.

(z) Violation penalties. Fines and penalties due to violations of, or failure to comply with, federal, state, or local laws.

(zm) Warranty inspections after construction completion. Costs related to post-construction warranty inspections, including costs of a consulting engineer or a third-party inspector, and costs of extended warranties or service contracts that go beyond construction completion.

(a) Net interest expense. Interim debt interest expenses shall be offset with any interest earnings from the investment of the proceeds from the interim debt to determine the amount eligible for SDWLP financial assistance.

(b) Interim debt issuance costs. The amount of interim debt issuance costs eligible for financial assistance is limited to $15,000 plus 0.5 percent of the total eligible face amount of the interim debt. If interim debt is rolled over or renewed, the face amount may not be counted multiple times in calculating the eligible face amount of interim debt for purposes of this limit.

(c) Interim debt interest costs. The period of time for which interest on interim debt is eligible for financial assistance shall run from no earlier than 18 months prior to the start of construction to the earliest of the following:

(d) Cost proration. If the term of the interim debt exceeds the limit in par. (c), the interim debt costs shall be prorated using the length of the eligible term divided by the total time that the interim debt is outstanding. If the interim debt is not exclusively for the SDWLP scored project, costs shall be prorated according to the proportion of the total debt that is for the scored project.

(e) Maximum principal. The amount of interim debt principal that may be refinanced with SDWLP financial assistance may not exceed the total amount of the interim debt that was spent on eligible project costs.