Drinking Water State Revolving Fund (DWSRF) Overview
To fund drinking water capital projects that protect public health, North Carolina makes loans at one-half (1/2) of the market rate for a period of up to 20 years. The actual term of the loan is determined by the State Treasurer's Office. An administrative funding fee of 2.00% is charged and made payable upon award of funding according to 15A NCAC 01N .0203. All funded projects must address a threat to public health (as described in 15A NCAC 01N and the Operating Agreement).
Since the DWSRF is federally-seeded, the loans are subject to additional federal regulations regarding environmental review, outreach for disadvantaged business enterprises, payroll (Davis Bacon and related Acts), etc.
The Division of Water Infrastructure receives applications throughout the year and considers those complete applications received as of 30 September.
If you are interested in a DWSRF loan or other financial assistance offered by the Division, contact us for more information on the application process.
All funding programs use the same application, but each program has its own requirements. The application, application appendix, Scoring Sheet and Guidance, and Fund Transfer Certifications for the DWSRF program can be found on the forms page.
Signed Fund Transfer Certifications in support of October 2014 funding applications will be accepted until 5 PM on October 31, 2014. All other application material including signed resolutions must be received by the October 2, 2014, funding deadline. Applications where a Fund Transfer Certification is not received by the deadline will be considered incomplete.
The Fund Transfer Certification should be consistent with the most recent audit of the local government enterprise fund. Transfers for common exemption purposes may be grouped into a single line item on the certification.
Under 40 CFR 35.3525, DWSRF loans provided as part of each years allocation from the federal government to the State of North Carolina must be distributed as follows:
In addition to the above requirements, 15A NCAC 01N .0201(d) requires that a maximum of 5% be used for loans for project planning purposes only.
For fiscal year 2010, PL 111-88 requires that:
These mandates were renewed for fiscal year 2011 through PL 112-10. However, it is uncertain if these mandates will carry on for future DWSRF allocations.
Under 15A NCAC 01N .0301(c) applications are ineligible if filed after the award of a construction contract on the project, unless:
Under NCGS 159G-31, applicants must be either a local government unit or a water corporation in order to be eligible.
Under 40 CFR 35.3520(d)(2) and (3), applicants must either demonstrate technical, managerial and financial capacity or a commitment to obtain this capacity to be eligible. Determination of these capacities is based upon a review of:
Under 40 CFR 35.3520(b)(2), eligible projects types include the following:
15A NCAC 01N .0302(a) does not make these projects eligible in North Carolina.
The following project types are specifically ineligible under 40 CFR 35.3520(e):
Under 15A NCAC 01N .0202(e) and 40 CFR 35.3520, the DWSRF program can fund only the most cost-effective solution to a documented public health problem. Therefore, the applicant must document both the existence of the problem and the costs of alternatives to address it, typically in the Preliminary Engineering Report, or 'PER.' In particular, the PER must explicitly discuss the 'do-nothing' or 'no-build' alternative.
Under 40 CFR 35.3520(c), eligible projects costs include the following:
In addition to those above, 15A NCAC 01N .0303(a) specifically allows for the following project costs:
The following project costs are specifically ineligible under 40 CFR 35.3520(f):
Eligibility is more fully described in 40 CFR 35.3520 and 15A NCAC 01N .0300.
The Division prioritizes projects first by category and then by the number of priority points awarded as described in the Operating Agreement between DENR and EPA [OA S.1.b.(ii)]. Project categories are defined in OA S.1.b.(i) as follows:
Award of priority points to distinguish between projects in the same category is described in OA S.1.
Unusual Features of the Program
Allowance for Facilities Planning and Design (i.e. Engineering Fee Curves)
It is advised that applicants for and recipients of DWSRF funding maintain an allowance for facilities planning and design services based on Appendix B to 40 CFR 35 Subpart I. This appendix establishes the allowance based on the estimated or actual building cost. (This spreadsheet may prove a useful tool in interpolating values from the appendix tables 1 and 2.) Any significant exceedance should be accompanied by written explanation in order to approve these services as part of the project budget.
In addition to the State Environmental Policy Act (SEPA), which all public projects are subject to, DWSRF projects are also subject to the National Environmental Policy Act (NEPA). In practice this is handled by the State Environmental Review Procedures (SERP) - a set of procedural enhancements to SEPA environmental review that makes it also comply with NEPA (it becomes 'NEPA-like').
All public projects are subject to NCGS 143-128.2, which governs minority business participation, and 01 NCAC 30I, which is the rule that implements the statute. In addition, DWSRF projects are also subject to the Federal DBE Rule (40 CFR 33), which governs participation of and outreach to Disadvantaged Business Enterprises (DBEs). In practice this is handled by requiring that both the Owner’s / State Special Conditions Package and the Federal Special Conditions Package be inserted into any project-related construction contract. Carefully follow directions in these Special Conditions Packages and the related Owner’s Compliance Package.
Davis Bacon Payroll Requirements
The Davis Bacon Act governs labor wage rates and compensation for contractor and sub-contractor employees working on federally funded projects, such as those funded by the DWSRF. The United States Environmental Protection Agency (EPA) have provided the following presentations as an overview of these requirements:
The Davis-Bacon Contract Provisions subject contractors and subcontractors to certain minimum “wage determinations”.
Once construction is underway, the applicant is responsible for:
These reports and interviews are to determine that employees are compensated properly according to the wage determinations included in the construction contract while the poster is to inform employees of their rights.
Rules and Authority
The Safe Drinking Water Act (SDWA) was originally passed by Congress in 1974 to protect public health by regulating the nation's public drinking water supply. The law was amended in 1986 and 1996 and requires many actions to protect drinking water and resources, rivers, lakes, reservoirs, springs, and ground water wells. (SDWA does not regulate private wells or systems that serve fewer than 25 individuals and 15 connections.) SDWA authorizes the United States Environmental Protection Agency (EPA) to set national health-based standards for drinking water to protect against both naturally-occurring and man-made contaminants that may be found in drinking water. EPA, states, and water systems then work together to make sure that these standards are met. (Source: EPA 810-F-99-008)
Congress established the Drinking Water State Revolving Fund (DWSRF) Loan program in the 1996 amendments to provide financial assistance to public water systems to comply with the SDWA. The states are required to provide 20 percent matching funds.
40 CFR 35 Subpart L implements the SDWA in regards to DWSRF. This rule provides general statutory authority for EPA to oversee the DWSRF program nationwide and outlines general requirements for states that administer the funds.
The Operating Agreement (OA) between DENR and EPA governs the program's day-to-day activities.
Each year's Intended Use Plan (IUP) describes the eligible projects and expected activities for the plan year.
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