The staff of Sweetland Engineering & Associates, Inc. (SEA) has worked with Rural Utilities Service (RUS) on numerous projects in the past. Through the course of these projects we have worked closely with Ervin Meyers, District Loan Specialist, Armine Wodehouse, District Loan Specialist, and John Williams, State Engineer, of RUS. We have submitted both pre-applications and final applications to RUS and as a result many of our clients have been successful in obtaining funding for their water, wastewater, or site improvement projects.

We have worked with PennVEST on a number of projects in the past. We have submitted funding requests to PennVEST for both advanced funding for engineering costs, as well as, requests for construction funding. As a result, many of our clients have been successful in obtaining funding for their much needed projects.

We have also worked with the Department of Commerce on projects. We have submitted funding requests for Community Facilities Act Grant (CFG) funding. As a result, many of our clients have been successful in obtaining grant funds that assisted with their project.

Additionally, we have worked with the Department of Community and Economic Development and County Planning Commissions on funding requests for Community Development Block Grant (CDBG) funding resulting in many of our clients successfully obtaining grant funds that assisted with their project.

With our experience in municipal water and wastewater projects and the many avenues available to fund such projects, we are well qualified to assist Municipal Officials in obtaining the funding needed to implement their much needed sewerage project.

Furthermore, upon our review of scope of the project and our knowledge and understanding of funding sources presently being utilized for similar projects, we have prepared the following list of "Available Funding Sources". It is likely that any sewerage project proposed as a result of Act 537 planning will involve a combination of the different funding mechanisms listed below.

A list of sources presently providing financial assistance for planning, design, and construction of municipal wastewater facilities is as follows:

1. Pennsylvania Infrastructure Investment Authority (PennVEST)

This program provides public funding for drinking water, wastewater, and storm sewer system projects in Pennsylvania with use of such mechanisms as revolving funds and revenue bonds. This program, which provides funding mostly in the form of low interest loans, is geared toward projects involving acquisition, construction, improvement, expansion, repair, or rehabilitation to water, wastewater, and storm sewer systems.

This program, also, requires a financial analysis to determine the need of applicants for financial assistance. The analysis would include, but is not limited to the following:

a. Fair and reasonable cost of wastewater treatment, or of supplying drinking water incurred by comparable systems.

b. The income of affected rate payers and their ability to pay increased rates necessary to complete the proposed projects.

c. Other sources of financing available to entities seeking assistance from PennVEST.

d. A determination that any financial assistance provided by PennVEST will not be used to replace financial resources already available to the applicant.

As part of the decision to provide a loan, a determination of the interest rate to be charged would be made. A minimum rate of 1% is required. Currently, projects are financed for a 20 to 30 year term with the interest rate applying to the amortization over the first five (5) years. Usually, the interest rate is increased for the remaining loan term.

2. Community Development Block Grants (CDBG)

These federal monies are administered by the Pennsylvania Department of Community and Economic Development (DCED)

Through this program, federal monies are channeled through the Department of Housing and Urban Development to DCED to local counties and municipalities. Under present structure, certain municipalities are considered entitlement communities and are automatically entitled to predetermined grant offers each year. Other grants up to $350,000 are available on a competitive basis from DCED. The competition for these grants is state wide, and the grants can only be used for certain eligible expenditures and must be expended in such a manner and for such a project so as to benefit a population base made up of more than 51% low to moderate income families.

3. Rural Utilities Service (RUS)

Water and Waste Disposal Loans and Grants for Rural Communities

Facilities financed by RUS must serve rural areas and populations must not exceed 10,000 according to the latest decennial census. Areas or communities adjacent to, or closely associate with, non-rural areas are given low priority.

To be eligible to receive assistance, the applicant must be a public entity and meet the following criteria:

- Be unable to obtain funds from other sources at reasonable rates and terms.

- Must have legal authority to borrow and repay loans and be financially sound.

- Have ability to operate and maintain the facilities.

- Proposed Facilities must be consistent with state, county, and local municipal plans.

These funds may be used to acquire, construct, expand, and improve waste disposal systems, as well as, other essential community facilities. Additional project costs, such as land and rights-of-way, legal, and engineering fees, and equipment are also eligible through this funding.

The maximum term on a loan is 40 years. The interest rates charged are adjusted quarterly and are assigned when funds are obtained. The rate will vary in accordance with the average of the Bond Buyers Index. Once funds are obligated, the interest rate will remain unchanged for the term of the loan.

Grant monies are available through the RUS. Communities with Median Household Incomes (MHI) of less than $31,498 may qualify for grant funds up to 55%of the eligible project costs. Very low income communities with a MHI of $25,198 or less may be considered for grant funds up to 75% of the eligible project costs. Lower rates on loans are also available to these same communities.

Community Programs (CP) Guaranteed Loans

RUS may guarantee loans made by eligible lenders to borrowers in rural areas and in towns of up to 10,000 for developing water and waste disposal facilities, or up to 20,000 for developing other essential community facilities.

4. Pennsylvania Department of Commerce

Community Facilities Grant

This Pennsylvania State Program provides supplemental financial assistance for construction and improvements of water and sewage facilities. The assistance is limited to a maximum grant of $50,000 or 50% of the total project cost, whichever is less. Communities designated as "distressed" are eligible to receive a maximum grant of $75,000 or 75% of the total project cost, whichever is less. Eligible applicants are cities, boroughs, and townships of less than 12,000 in population. Municipal and County Authorities are, also, eligible with service populations less than 12,000. However, these grants are limited to projects of $2 million or less.

5. Issuance of Municipal Bonds

Issuance of municipal bonds serves as source of funds when other sources are not available, or the interest rate and term of the bonds provides the most favorable funding package. The term and interest rate of the bonds varies with economic factors, though most municipal bonds are issued for a thirty (30) year term. With the issuance of municipal bonds, there is a need to retain outside bond council to handle the legal and accounting duties required for the issuance of bonds.

6. Private Financing

Either through local financial institutions (Banks) or by utilizing one of many financial consultants, private sector financing can be obtained.

7. Developer Contributions

Often the installation of public sewerage promotes development of certain areas of the municipality where development is planned or proposed, yet restricted by proper sewage disposal methods. In these cases, land developers often contribute funds towards the proposed project. The funds are used to lower the project costs, and, thereby, making the project more affordable for customers served by the project. The developer benefits from the resolution of the sewage disposal problems by being able to develop his/her land by constructing sewers which connect to the sewers constructed by the proposed project.

Municipal Officials should contact a financial consultant early on in any major project to assist them in securing the optimum financing available.