Section 166.07. Cost eligibility.

 

(1)   Eligible costs. Allocable project-specific costs that are necessary and reasonable are eligible for financial assistance. Eligible costs include expenses incurred by the municipality for any of the following items and activities when specific to the core scope of work in a scored project, or when approved by the department after being identified in the application as necessary for the efficient operation or the integrity of the overall water system and having de minimis cost:

(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 project-specific costs incurred by a commission, 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.

(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:

1. Replacing, repairing, or rehabilitating a water system if identified in the plans and specifications as cost-effective and necessary.

2. Restoring streets and rights-of-way, and repairing damage to items such as pavement, sidewalks, and sewers necessary as a result of construction of the project.

3. Punch list item activities.

4. Acquiring, consuming, or expending materials.

5. Other capital costs incurred solely for purposes of the scored project.

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

1. The demolition will remove an existing building structure located in the space in which a new structure is to be constructed.

2. The demolition is necessary for site preparation.

3. The demolition is included in abandonment procedures as approved in the project plans and specifications or by department staff.

4. The demolition entails removal of equipment or materials, or both, from inside an existing water system building or other structure being modified or repurposed as part of the scored project.

(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 and tools. Equipment and tools, the costs of which the department may prorate if the municipality intends to use the equipment or tools for multiple purposes rather than solely for the water system. Eligible equipment and tools include any of the following:

1. Mobile equipment, such as portable stand-by generators, portable emergency pumps, and grounds and maintenance equipment for mowing and snow removal, for the water system.

2. Spare parts, if included in the plans and specifications or otherwise approved by the department.

3. Tools necessary for operations and maintenance of the water system, including specialized tools for specific purposes, site and building maintenance tools such as wheelbarrows, lawn sprinklers, weed trimmers, hoses, shovels, and rakes, and other basic tools such as trash cans, brooms, flashlights, and multiple-use hand tools.

4. Machinery for manufacturing or repairing necessary water system tools or equipment for the water system.

5. Computers and related equipment, including purchasing, installing, programming, or upgrading computers, printers, control systems, and other computer-related equipment necessary for operating and maintaining the public water system. This includes equipment and systems for accounting, billing, public notification, testing, monitoring, reporting, emergency alerts, supervisory control and data acquisition, and communications.

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

1. Permits obtained for construction, including building, electrical, and plumbing permits, pit/trench dewatering permits, hydrostatic test water permits, construction site storm water permits, railroad crossing permits, and permits required under ch. 30 , Stats.

2. Legal fees of an attorney that is not an on-staff municipal attorney, including costs of legal reviews of architectural, engineering, or construction contracts, user charge systems and water system ordinances, management plans, intermunicipal agreements, and work necessary for securing eligible permits.

3. Service fees paid to a state or federal agency, except administrative fees paid annually along with principal and interest payments on a SDWLP loan.

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

(L) Insurance. Purchasing insurance necessary during construction of the project, including property, liability, builders risk, and construction insurance.

(m) Interim financing. Costs associated with interim financing incurred for the scored project as delineated in sub. (3) .

(n) Laboratories. Laboratory equipment, chemicals, and supplies related to initial setup, upgrade, or expansion of the laboratory.

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

1. The land is integral to the project, including land needed to locate a treatment facility, transmission line, storage tank, pump station, or well.

2. The land is acquired from a willing seller.

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

1. Salary and benefits of municipal employees, except elected officials or on-staff attorneys, for time spent working directly on the project.

2. Expendable material costs incurred by the municipality.

3. Estimated costs incurred using equipment owned by the municipality.

(q) Professional services. Engineering, architectural, legal, and other professional services and fees, including any of the following:

1. Conducting value engineering studies or analyses during the design phase.

2. Conducting system evaluations and studies, including well site investigations.

3. Preparing and submitting engineering reports and plans and specifications.

4. Preparing, printing, and distributing bidding documents.

5. Gathering documents and information for, and completing, the SDWLP financial assistance application and other forms required for financial assistance.

6. Developing or revising an operations and maintenance manual.

7. Preparing a plan of operation for the project.

8. Advertising for and conducting bid lettings.

9. Analyzing bids, preparing award recommendations, and preparing contracts.

10. Providing construction management, observation, and inspection.

11. Preparing for and facilitating public education and participation opportunities.

12. Travel, indirect costs, and labor.

13. Preparing a user charge system.

14. Preparing environmental assessment reports and evaluations.

15. Conducting archaeological surveys and gathering historical site information.

16. Providing financial advisor or bond counsel services related to loan closing or the issuance of bonds.

17. Preparing a water conservation or wellhead protection plan.

18. Producing record drawings.

19. Updating or upgrading system maps of the areas impacted by the project.

20. Providing administration of activities related to Davis-Bacon and related acts or other wage rate requirements, if applicable.

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

1. Landscaping areas impacted by construction of the project.

2. Reconnecting water service lines due to the rehabilitation of a publicly-owned water system.

3. Relocating storm water or wastewater sewer pipes if necessary for construction, and replacing sewers with the same size or required minimum size pipe if breakage from construction occurs.

4. Erecting project and water system identification signs.

5. Preparing a site for construction, including surveying, staking, and grading.

6. Restoring the construction site to original condition or upgrading the site to meet state and local requirements.

7. Removing, relocating or replacing utilities, providing temporary utilities, installing new utility equipment, or upgrading utilities, if the recipient is legally obligated to pay these costs.

(s) Safety. Purchasing and installing safety equipment to be used in the operation and maintenance of the public water system.

(t) 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.

(u) 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.

(v) Special assessment fees. Financial and legal costs associated with the process of preparing and implementing special assessments when the municipality is pledging special assessments for repayment of its SDWLP loan.

(w) Startup. Startup expenses for a water system incurred solely because of the scored project or items approved in the application as necessary for the efficient operation or the integrity of the overall water system and having de minimis costs, including costs for any of the following:

1. Preparing a start-up curriculum and training materials.

2. Initial training of operating personnel on new or modified equipment, laboratory procedures, computers, controls, records management, and treatment processes.

3. Obtaining expert operational assistance for adjustments to the treatment process or other significant portions of the water system.

4. Implementing a maintenance management system.

5. Obtaining necessary computers, upgrades, and software.

6. Attending off-site formal training programs if necessary for the initial operation of the constructed water system.

7. Purchasing the first fuel fill-up for new equipment, such as generators.

(x) Street restoration. Restoring streets and rights-of-way, and repairing damage to items such as pavement, sidewalks, and storm sewers necessary as a result of construction of the scored project. 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.

(2)   Ineligible costs. Costs for items and activities not directly associated with or not necessary for the construction or startup of a scored project are not eligible for financial assistance, except activities or items identified in the application as necessary for the efficient operation or the integrity of the overall water system and as having de minimis cost, and approved by the department to be included in the scored project. Ineligible items and activities include all of the following:

(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 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.

(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:

1. The official or employee, the official's or employee's spouse, or the official's or employee's partner has an ownership interest in the firm selected for the contract.

2. Any person identified in subd. 1. receives any contract, gratuity, or favor from the award of the contract.

(f) DBE noncompliance. The amount of project costs determined by the department to be appropriate for a sanction under s. NR 166.12 (4) (b) for noncompliance with DBE good faith effort requirements.

(g) Engineering. Engineering costs attributable to ineligible construction costs when ineligible construction and equipment costs are 10% or more 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 into 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 an intermunicipal agreement meeting the requirements of s. NR 166.10 (2) (h) .

(j) Interim financing. Interest or principal payments on interim financing paid by the municipality out of its internal funds rather than capitalized funds.

(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 charged a municipality for delayed payments to engineers, construction contractors, financial advisors, and others providing services to the municipality.

(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 put together an affordable financing package and the other agency is providing funding for the construction.

(q) O and M. Operations and maintenance expenses as defined in ss. NR 166.03 (41) and (32) , 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 eligible for SDWLP financial assistance.

(t) Outside of scope. Costs outside the scope of the scored project. The department may approve a de minimis amount of costs outside the scope of the scored project if the extra items or activities will 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) Service lines. Water service lines downstream of the curb stop.

(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 as part of the core scope of work or repairing or replacing a sewer pipe damaged during construction of the scored project.

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

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

(zg) 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.

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

(3)   Limitation on eligibility of interim financing costs.

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

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

(c) Interim interest costs. The period of time for which interest on interim financing is eligible for financial assistance shall run from no earlier than 12 months prior to the start of construction through the earliest of the following:

1. The date of the first disbursement of the financial assistance.

2. One year following substantial completion of the project.

(d) Cost proration. If the term of the interim financing exceeds the limit in par. (c) , the interim financing costs shall be prorated using the length of the eligible term divided by the total time that the interim financing is outstanding. If the debt used for interim financing 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 plus any approved de minimis costs.

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

(4)   Reimbursement of previously paid project costs. The department may reimburse eligible project costs previously paid by the municipality from its internal funds, if the reimbursement is in compliance with applicable U.S. treasury reimbursement regulations in 26 CFR 1.150 –2 and the criteria under s. NR 166.04 (intro.) are met.

History: CR 14-044 : cr. Register June 2015 No. 714 , eff. 7-1-15; correction in (1) (w) 7. made under s. 35.17 Register June 2015 No. 714 .

Note

Federal and state 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; 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. Microsoft Windows NT 6.1.7601 Service Pack 1 The ineligibility of interest or principal payments in par. (j) is based on U.S. treasury reimbursement regulations 26 CFR 1.150 - 2 . Microsoft Windows NT 6.1.7601 Service Pack 1