From The EditorSusan McCannonPlanning and Funding SpecialistSusan.McCannon@feiengineers.com

I have been waiting to learn how the Cost and Effectiveness provisions of the Water Resource Reform and Development Act of 2014 (WRRDA)

would be implemented with regard to the Water Pollution Control Revolving Loan Fund (WPCRF) in Colorado. The wait is over, as the CDPHE issued their program provisions on May 16, 2016. This issue of The Bucket Li$t contains a brief recap and discussion of these new Cost and Effectiveness provisions.

Readers will recall that the WRRDA has also been the catalyst for three other SRF programmatic changes in the past 18 months, namely:

• American Iron and Steel• Architectural and Engineering Procurement, and• Fiscal Sustainability Planning

These three previous program changes were the subject of the June 2015 and April 2016 issues of The Bucket Li$t. Please click on the following links to re-access those issues and refresh your memory of those changes.

June 2015 Issue of The Bucket Li$t

April 2016 Issue of The Bucket Li$t

It is important for readers to understand that many of these new provisions are being ap-plied retroactively. WRRDA became effective in October 2014. In the case of the newly released Cost and Effectiveness provisions, they will be retroactively applied to all SRF projects in the pipeline as of October 1, 2015. (Continued on following page)

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Volume 6 Issue 2June, 2016

Funding and finance ideas and strategies for water and wastewater

How BIG is your project funding bucket... and what’s in it? We can help!

IN THIS ISSUE:

• DOLA-EIAFunds“Frozen”

• Cost&EffectivenessforSRFProjects

• AnnualEligibilitySurveys

(Continued):So, any projects that had not closed their SRF loan as of that date will now be subject to the Cost and Effectiveness provisions. The three previous program changes were retroactively ap-plied as well. This means that the scope of proj-ect planning keeps expanding. Don’t make the mistake of thinking that once you get your project into the pipeline the rules won’t keep changing, because they probably will. This type of unpre-dictability is frustrating; it makes project planning difficult,increasesfinalprojectcostsandlength-ens design and project approval timelines. Another new development affects the availability of DOLA Energy Impact Assistance Funds for grant purposes. That situation is currently evolv-ing; read more about it below.

Colorado General Assembly “Freezes” Some DOLA FundsOn May 24th DOLA informed their Energy Im-pact Advisory Board of the potential impacts to the DOLA Energy Impact Assistance Fund as a result of the recent Colorado Supreme Court decision concerning a BP lawsuit. This Supreme Court decision is important because it relates to the amount of tax that oil and gas producers pay in the form of severance taxes. Severance taxes, in turn, make up a big portion of the over-all energy and mineral revenue bucket that DOLA uses for its various grant programs.

The Supreme Court found that BP had been charged too much tax, based on the current Colorado tax law. As a result, Colorado now has

a sizeable tax liability, perhaps between $40 million - $125 million, that BP and a few others are entitled to and can request through tax refunds. In response to this liability the Colorado General Assem-bly passed legislation that put a hold or “freeze” on some of DOLA’s current fund balances, including the Energy Impact Grant fund.

In the short term, what will happen is the Department of Revenue will complete a better calculation of the likely tax liability. On June 20th the Joint Budget Commit-tee will meet to discuss how to address that liability. After that, DOLA may have some or all of the freezes lifted, the freeze may remain, or some of their funds may be taken in order to meet the liability.

Based on current knowledge the following describes impacts to their Energy Impact Grant program:

Projects with Currently Executed Contracts

Nothing should change. Projects with executed grant contracts will continue to be reimbursed as normal.

Project Applications Submitted on April 1, 2016

DOLA will continue with its process to review grant applications in the current

Volume 6 Issue 2 June 2016

Cost and Effectiveness CertificationThe goal of this new requirement is for SRF loan candidates to analyze the cost and effective-ness of their proposed wastewater improvements project, and then select project components that resultinefficientwaterandenergyusage.Thisanalysis and selection process must be under-taken during the preliminary planning phase and the results should be addressed in Section 7 and 8 of the Project Needs Assessment (PNA). The loan candidate’s engineer must certify that this analysis and selection process has been com-pleted as Attachment #15 to the PNA.

Theenergyefficiencycomponentoftheanalysiscan be comprised of either an energy use as-sessment or an energy audit. The water ef-ficiencycomponentcanbecomprisedofwateruse audits, water metering, water conservation educationandincentives,waterefficientdevices,and water reuse. These activities and items may be eligible for funding through the SRF loan.

Click on the following link to access the CDPHE & EPA’s Guidance on implementation of this re-quirement:https://www.colorado.gov/pacific/sites/default/files/WQ_GLU_WPCRF_Cost_Effective-ness_Guidance.pdf

Click on the following link for the Cost and Effec-tivenessCertificationform:https://www.colorado.gov/pacific/sites/default/files/WQ_GLU_WPCRF_Cost_Effectiveness_Certification.pdf

How BIG is your project funding bucket... and what’s in it? We can help!Volume 6 Issue 2 June 2016

grant cycle. The staff have completed their work on Tier I grant applications. They plan to hold their July Advisory Board meeting on Tier II applications, which is scheduled to be held in Salida in mid-July. At that time the staff will recommend that the Advisory Committee make selections of projects, rather than awards, if their grant funds are still “frozen.” Selected projects then may be funded at a later date when DOLA knows the amount of sever-ance tax receipts in their funds.

Project Applications Planned for the August 1, 2016 Grant Cycle

The application deadline for the next grant cycle, previously planned for August 1, 2016, has been delayed. This grant cycle maypossiblybesuspendedindefinitely,orcancelled. If the August 2016 grant cycle is totally disrupted, DOLA hopes that the December 1st grant cycle can proceed as normal, with typical levels of funding avail-able. Typical funding levels in the past two years have been around $20-$25 million per cycle.

Keep in mind that Severance taxes consti-tute a portion of the energy impact grant fund, so if the worst happens and DOLA loses all the Severance taxes they cur-rently have in their fund, that will not mean a loss of the entire fund. This BP lawsuit decision does not affect the federal mineral leasing monies that are also a part of the fund. So, the amount of funds available for several months could be diminished, but would then presumably return to a new normal. I continue to expect that the 2017 grant cycles will experience a decline in normal funding levels due to recent de-creases in prices, and production in the Colorado oil and gas industry.

The Direct Distribution funds that DOLA expects to disburse on August 31, 2016 are not subject to the freeze.

For additional information on topics covered in this issue of

The Bucket Li$t please contact me at: Susan.McCannon@FEIEngineers.com

Annual Eligibility SurveysThe annual Drinking Water and/or Wastewater Eligibility Survey(s) will be collected by the CDPHE from June 15 - July 30, 2016. Do you need to complete a survey even if you don’t plan to apply for a loan in 2017? Yes, because plans change, and the CDPHE uses the responses to identify the overall need for investment in drinking water and wastewater infrastructure, so your information is important even in you don’t currently project a need in 2017. The blank survey forms will be emailed to system operators and can be found on the CDPHE website as of June 15, 2016. If you have questions or need assistance call and I can provide guidance.

FEI Funding Project RecapTown of Ault Wastewater Treatment Facility Improvements ProjectOne sample of how FEI’s in-house project planningandfundingexpertisehasbenefitteda client includes the assistance provided to the Town of Ault, Colorado. The small community received a $2 Million CDPHE Green Project Reserve project loan for 0% despite the fact that all 2014 GPR dollars were allocated. The Town received a waiver on the 1.2% debt covenant requirement, meeting 1.1% instead.

They also received a $2 Million DOLA Tier II Energy Impact Assistance Fund Grant for the wastewater project.

The aerated lagoon plant was constructed in 2008 and faced challenges to meet strict nutrientcontrollimits.Alongwithinfiltrativehydraulic capacity limitations and chlorine contact basin backups, the plant experienced a number of issues.

FEI was contracted to complete a WastewaterUtilityPlan,evaluatedvariousupgradeapproaches,andbringaqualifiedConstruction Manager at Risk contractor on board to upgrade the Town’s wastewater treatment facility.

The new plant will utilize a Single Basin Nutrient Removal treatment process and is scheduled to be completed October 2016. Hydraulic capacity will be 0.15 MGD and the plant will meet the low nutrient control limits.

FEI Engineers is a full service professional engineeringfirmspecializinginwaterandwastewater. With staff dedicated to project fundingandsystemfinanceissues,aswellasproject design, engineering and construction needs, we can help you reach your goals in moreways than one.

The Bucket Li$t is a quarterly electronic newsletter distributed by FEI Engineers. Please feel free to forward this newsletter to colleagues or other interested parties.