HomeMy WebLinkAboutTreasure St. Endowment Program9
MONTANA
TO:
FROM:
DATE:
DEPARTMENT OF COMMERCE
Local Government Assistance Division
1424 9th Avenue PO Box 200523
Helena, MT 59620.0523
Local Governments and Others Interested in
Public Infrastructure Financing
Jim Edgcomb, Program Manager
Treasure State Endowment Program
December 21, 2001
FAX: (406) 444-9482
TDD: (406) 444-2978
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DEC 2 7 200
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CITY OF LAUREL
RE: Draft Application Guidelines for the Treasure State Endowment Program
The Montana Department of Commerce is pleased to acquaint you with the proposed
changes presented in the draft of the Treasure State Endowment Program (TSEP)
Application Guidelines. The guidelines explain how cities, towns, counties, tribal
governments, and county water, sewer, and solid waste districts may apply for funding
through the program for the next two years. The guidelines also explain the policies that
the Department proposes to follow in evaluating TSEP funding applications, and the
methodology used to recommend the amount of financial assistance for TSEP applicants
to the Governor and the 2003 Legislature. The Department will hold a public hearing
on the proposed changes on January 10, 2002, and comments will be accepted
through January 17, 2002.
Some of the proposed changes to the guidelines are a result of two new types of grants
made available by the 57th Legislative Assembly during its special session in 2000 and by
the 2001 Legislature: preliminary engineering grants and grants for emergency projects.
Because of the addition of these new grants, the application guidelines have been
organized in a manner differently than in the past. All of the information related to funding
-that is authorized directly by the Legislature will be found in Section III, information on
preliminary engineering grants in Section IV, and information on emergency grants in
Section V.
Rather than sending you the entire draft of the application guidelines, the following points
highlight the major changes that are being proposed:
An eligible applicant would be allowed to apply for funds that could be used to
extend services into an adjacent area, without the adjacent area being required to
form as a county water and sewer district or be annexed. However, an interlocal
agreement would be required between all of the parties involved to assure the long-
term operation and maintenance of the proposed improvements.
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COAL BOARD (406) 444-2400 • CDBG (406) 444-2488 ? CfAP (406) 4443757 ? HRMI BOARD (406) 4443757 ? TSEP (406) 4442400
2. Counties would be allowed to apply for a TSEP preliminary engineering grant in
order to study problems related to subdivisions or areas of the county that have not
yet formed as a county water and sewer district. However, the area being studied
would need to be legally created as a county water and sewer district prior to
applying for a construction grant.
3. Cities and towns would be allowed to apply for a TSEP preliminary engineering
grant in order to study problems related to subdivisions or areas outside of the city's
boundaries in order to study the area for possible annexation or to decide whether
to provide services to the area.
4. The Department would be able to recommend an amount greater than what is
requested by applicants for a construction grant, including exceeding the $500,000
grant ceiling, in order to ensure that applicants with serious and urgent health and
safety problems are not unduly burdened by unreasonably high user rates. In
addition, the Department would be able to recommend increased funding for
projects approved by previous legislatures in order to move projects forward that
have had difficulty obtaining matching funds and that otherwise may not get
constructed. No application would be necessary and the Department would
determine which projects, if any, would be recommended for additional funding
based on its knowledge of the project.
A recommendation for increased funding under either of the two situations would be
made only after taking into account the total amount of funds available for grants,
the number of applicants and the seriousness of the problems to be resolved. The
recommendation for awarding additional funds would be limited to projects that can
meet the same tests required for a Hardship Grant. The Department would only
recommend enough additional funding that would be sufficient to bring the projected
user rates down to 200% of the target rate. The amount recommended by the
Department could potentially exceed $500,000. The Department discussed these
proposed changes with the Legislature's Joint Long-Range Planning Subcommittee
in 2001. The final decision on whether to increase the any grant amount would be
made by the Legislature.
5. Applications for funding that is awarded by the next Legislature will be due no later
than May 3, 2002.
6. Information about preliminary engineering grants, which has already been adopted
through the administrative rule process, is being incorporated into these guidelines.
No changes are proposed to the grant requirements.
7. The 2001 Legislature appropriated $100,000 of the TSEP funds to provide grants
for emergency projects. The emergency grants can be awarded by the Department
at any time between, and during, legislative sessions to remedy conditions that if
allowed to continue until legislative approval could be obtained would endanger the
public health or safety and expose the applicant to substantial financial risk. An
"emergency" means the imminent threat or actual occurrence of a disaster causing
immediate peril to life, property, or the environment, which with timely action can be
averted or minimized.
The Department will not make an emergency grant if it determines that through the
implementation of reasonable management practices, the applicant can forestall the
risks to health or safety until legislative approval can be obtained. Emergency grant
funds cannot be used for preventive maintenance or to provide a backup to an
existing system component. All of the proposed expenditures must be essential to
resolving the emergency and necessary for completing the proposed emergency
project. The proposed emergency project must be critical to the proper operation of
a public facility system. An Emergency Grant Review Form will be completed by the
TSEP staff to determine if an emergency project should be funded (see Appendix
G).
--- - Generally,-emergency grants are -limited to $30;000 per project, but special
exceptions may be approved by MDOC. The applicant must demonstrate that it has
contributed as much financial and other resources as possible towards completing
the proposed emergency project, and has exhausted all other means of funding the
emergency project. The use of TSEP funds, and expenses that will be eligible for
reimbursement, will be determined on a case-by-case basis.
8. The information required in a preliminary engineering report for a bridge project has
been revised to conform to similar changes made to the preliminary engineering
report outline presented in the Uniform Application for other types of projects.
9. The sub-criteria under Statutory Priority #1 have been revised:
a. Does a serious deficiency exist in a basic or necessary community public
facility or service, such as the provision of a safe domestic water supply or
does the community lack the facility or service entirely, and will the
deficiencies be corrected by the proposed project (bolded portion
added)? (Describe all deficiencies.)
-hr: - -Are there any- reliable-and long-term- management practices that would
reduce the public health or safety problems? (question added)
10. In analyzing the financial need for applicants with bridge projects, the Department
would use 2.78% of a county's MHI for analyzing the total residential property tax
burden. This percentage is the statewide median for what counties are levying for
bridge budgets.
11. The type of analysis used to analyze financial need for projects that would be
providing water and/or sewer service to undeveloped land would be based on the
type of development. If the undeveloped land would be used primarily for
commercial and industrial use, the type of analysis utilized would be determined by
how the cost of the project would be paid. If the cost of the project would be paid
for by all of the users on the system, target rate analysis would be utilized using the
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target rate for the entire jurisdiction. However, if the cost of the project would not be
borne by all of the users on the system, a "financing gap" must be identified and
documented in the financial package. The financial analysis would evaluate
whether other funds, including private funds from the business, are insufficient to
complete the project without TSEP participation.
Applicants that can demonstrate that a greater quantity of cash (instead of in-kind or
other grants) would be used to satisfy the match requirement would receive a
greater number of points for this indicator. A greater number of points would also
be given to applicants that conclusively demonstrate that quantifiable results can be
achieved and measured as a direct result of the project, especially the creation and
retention of local jobs. Applicants may also be given a greater number of points if
they can demonstrate that a high ratio of jobs to TSEP dollars would be created or
retained.
If the undeveloped land would be used to provide housing, the target rate analysis
would be utilized. If the cost of the project would be paid for by all of the users of
the system, the target rate for the entire jurisdiction would be used. However, if only
the area to be served would be paying for the cost of the project, a target rate for
the new development would be required. However, since there may not be any, or
an insufficient amount of, household income data for the area, a target rate would
have to be generated by the TSEP staff. An appropriate target rate would need to
be established to reflect the income levels of the families living in the type of
housing that is expected to be built. Other developed areas in the vicinity with
similar types of housing would be looked at in determining income levels and the
target rate. If the developer of the undeveloped land is committed to providing a
certain percentage of the housing to low or moderate-income families, the TSEP
staff would take into account the percentage of low or moderate-income housing
when establishing the target rate for the applicant.
Regardless of the type of development, the applicant must provide documentation
showing that the applicant has a firm commitment from a developer of residential
property or, in the case of an economic development project, a business that would
occupy the undeveloped land. A TSEP grant would not be recommended for purely
speculative proiects. The applicant must provide a business plan as discussed in
Appendix I, Components of a Business Plan.
12. The type of analysis used to analyze financial need for economic development
projects would be the same as discussed above in #11. Staff from the Business
Resources Division would be involved in assisting with the financial analysis.
13. The complete 2000 Census income data will not be available until mid-2002.
Applicants should determine their funding needs based upon the most current
income data and target rate, which will most likely still be the 1990 Census data.
However, assuming that the new data will be available by September when the
financial analysis is run, TSEP would use the new data and target rates in the
analysis if it is more advantageous for the applicant. In other words, TSEP would
use whichever data produces the lowest median household income to determine the
target rate and conduct the TSEP financial analysis. '
14. A question was added to the sub-criteria under Statutory Priority #5:
b. How viable is the proposed funding package? (Describe the level of
commitment from the various funding sources and the likelihood of receiving
the various funds proposed.)
15. Because communities may have undergone dramatic demographic or economic
changes since the last Census information was obtained, applicants would be
allowed to conduct an income surrey in order to establish more current income
figures. An appendix has been added that explains what is required to conduct an
income survey. Examples have also been provided.
16. An appendix has been added to provide information about what is required in a
business plan, which is required for projects related to economic development or
providing the extension of services to undeveloped land.
Your comments are very important to the Department. Please consider attending the
public hearing on January 10, 2002, at 1:30 p.m., at the Department of Commerce,
downstairs conference room (Rm 160), 1424 9th Avenue, Helena, to provide
comments on the "Draft" TSEP Application Guidelines. Written comments are
strongly encouraged, and the Department will accept them by mail, email
(rweddle@state. mt. us) or fax (444-4482). They can also be submitted at the public
hearing so that your concerns or suggestions are clearly communicated. In order
for your comments to be considered, they must be received no later than January 17,
2002.
Thank you for your time and consideration of the changes proposed in the Draft TSEP
Application Guidelines. The entire text of the Draft TSEP Application Guidelines is
available upon request. Please contact the TSEP staff at 444-2400 if we can be of
-assistance thou or if you have any questions regarding the proposed changes.
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