Clean Water State Revolving Fund Loans: Loan Agreement and Conditions
(1)Timely use of loan funding.
(a)DEQ may cancel a loan agreement if a borrower fails to begin using loan proceeds within two years after signing a loan agreement.
(b)Borrowers that do not begin using loan proceeds within two years after signing a loan agreement will have a choice of canceling the loan and reapplying for DEQ funding or paying holding costs to DEQ.
(A)Holding costs are, on an annual basis, the estimated amount of the loan interest payable to DEQ, less the amount of the interest DEQ earned from the Treasurer’s investment of funds for DEQ’s account. DEQ will itemize holding costs on a semi-annual invoice DEQ sends to the borrower. The borrower must pay these costs within 30 days after DEQ sends the invoice.
(B)A borrower may apply for a one-time one year extension to begin using loan proceeds.
(2)Accounting. A borrower must maintain all CWSRF project accounts as separate accounts and must use accounting, audit and fiscal procedures that conform to Generally Accepted Governmental Accounting Standards and the requirements of the Governmental Accounting Standards Board.
(3)Records retention. A borrower must retain project files and records for six years after project performance affirmative certification or project completion as DEQ determines or such longer period as applicable state or federal law requires. A borrower must also retain financial files and records for three years after the loan is repaid in full.
(a)A borrower for constructing a treatment works project must comply with all provisions of the Davis-Bacon Act, as amended, 40 U.S.C. §§ 3141 to 3144 and 3146, as detailed in section 513 of the Clean Water Act. Wage rates must be based on the wage requirements of the Davis Bacon Act or the prevailing wage rate requirements for public works projects under ORS 279C.800 (Definitions for ORS 279C.800 to 279C.870) to 279C.870 (Civil action to enforce payment of prevailing rates of wage) and OAR 839-025-0000 (Notice of Proposed Rules) to 839-025-0540 (Schedule of Civil Penalties), whichever is higher.
(b)A borrower for a project not specified in subsection (a) of this section of the rule must comply with the prevailing wage rate requirements under ORS 279C.800 (Definitions for ORS 279C.800 to 279C.870) to 279C.870 (Civil action to enforce payment of prevailing rates of wage) and OAR 839-025-0000 (Notice of Proposed Rules) to 839-025-0540 (Schedule of Civil Penalties).
(5)Construction materials. A borrower for a treatments works construction project must ensure that all of the iron and steel products used in the project are produced in the United States as required by section 608 of the Clean Water Act.
(6)Debarment and suspension. A borrower must comply with Subpart C of 2 C.F.R part 180, Responsibilities of Participants Regarding Transactions Doing Business with Other Persons and Subpart C of 2 C.F.R part 1532, Responsibilities of Participants Regarding Transactions.
(7)Engineering documents. If a borrower uses CWSRF financing to construct a wastewater facility subject to OAR 340-052, it must submit to DEQ plans and specifications, operation and maintenance manuals, inspection and certification of proper construction, and any other applicable documentation OAR 340-052 and 340-054-022 require.
(8)Inspections and progress reports.
(a)A borrower must have a qualified inspector under the direction of a registered civil, mechanical or electrical engineer, as appropriate, conduct on-going inspections during the construction phase of a wastewater facility subject to OAR 340-052 to ensure the project complies with approved plans and specifications. DEQ or its representative may enter property the borrower owns or controls to conduct interim inspections. DEQ may require progress reports sufficient to determine compliance with approved plans and specifications and with other loan agreement provisions.
(b)DEQ may request review and analysis of construction plans from relevant agencies or offices to ensure the project plans not subject to department review under OAR 340-052 support the project’s successful implementation and completion. A borrower must allow inspections by appropriately qualified persons during project construction or implementation to ensure the project as constructed conforms to project plans and other provisions of the loan agreement.
(a)DEQ will not require a loan amendment for changes in project work that are consistent with project objectives and within the loan scope and funding level.
(b)DEQ will execute a loan amendment if:
(A)DEQ awards a borrower an increase in the original approved loan amount at any time during the project;
(B)The borrower requests a decrease in the original loan amount at any time during the project or completes the project and does not request disbursement of all loan proceeds; or
(C)DEQ determines a borrower must meet additional federal or state requirements for CWSRF financing.
(10)Change orders. DEQ may approve or reject a change order based on the loan eligibility of the project modification and on engineering value under OAR 340-052-0015. A borrower must submit a change order to DEQ for engineering and financial review:
(a)When any change order is executed, and
(b)Before executing any change order that exceeds $100,000 or will alter project performance.
(11)Project performance certification for a wastewater facility. A borrower must submit to DEQ, within a timeframe DEQ specifies, project performance documents to verify whether the facility meets performance and operational requirements and specifications which the project was planned, designed and built to achieve. The documents may include, but are not limited to, construction certification, performance evaluation report or performance certification.
(12)Eligible construction costs. DEQ will only disburse loan funds for construction costs for work that complies with plans, specifications, change orders and addenda DEQ reviewed or approved.
(13)Adjustments. DEQ may at any time review and audit requests for payment and make adjustments for eligibility, math errors, items not built or bought, unacceptable construction or other discrepancies.
(14)Contract and bid documents. A borrower must submit a copy of the awarded contract and bid documents to DEQ, including a tabulation of all bids received.
(15)Architectural and engineering services. Contractors for program management, construction management, feasibility studies, preliminary engineering design, design, engineering, surveying, mapping, or architectural related services for federal loans must be selected as provided in ORS 279C.110 (Selection procedures for consultants to provide services) and OAR chapter 137, division 048; or equivalent federal requirement for selection of architectural and engineering services.
(a)If DEQ requests it, a borrower must submit audited financial statements to DEQ each year until the loan is repaid.
(b)If a borrower expends $500,000 or more in federal funds, from all sources, in its fiscal year beginning before December 26, 2014, the borrower must have a single organization-wide audit conducted under the Single Audit Act, as amended. If a borrower expends $750,000 or more in federal funds, from all sources, in a fiscal year beginning on or after December 26, 2014, borrower must have a single organization-wide audit conducted under the provisions of 2 C.F.R. Subtitle B, with guidance at 2 C.F.R. part 200. The borrower must submit copies of all audits to DEQ within 30 days of completion. If a borrower expends less than $500,000 in federal funds in a fiscal year beginning prior to December 26, 2014, or less than $750,000 in a fiscal year beginning on or after that date, the borrower is exempt from federal audit requirements for that year. Records must be available to DEQ, the Oregon Secretary of State’s Office, the federal government and their duly authorized representatives for the purpose of making audits, examinations and copies.
(17)Default remedies. A loan agreement must provide adequate remedies for DEQ to enforce the agreement’s terms. Upon default by a borrower, DEQ may proceed with one or more of the following:
(a)Pursuing any remedy available to it against the borrower.
(b)Appointing a receiver at the borrower’s expense to operate the facility that generates the pledged revenues.
(c)Setting and collecting utility rates and charges pledged as security for the loan.
(d)Withholding any amounts otherwise due to the borrower from the State of Oregon and directing such funds be applied to the debt service and fees due on the CWSRF loan. If DEQ finds the loan to the borrower is otherwise adequately secured, DEQ may waive this right in the loan agreement or other loan documentation.
(e)Declaring all or any part of the indebtedness immediately due and payable.
(18)Release. A borrower must release and discharge DEQ, its officers, agents and employees from all liabilities, obligations and claims occurring from project work or under the loan, subject only to exceptions previously agreed upon in a written contract between DEQ and the borrower.
(19)Effect of document approval or certification.
(a)DEQ’s review and approval of facilities plans, design drawings and specifications, or any other documents does not relieve a borrower of responsibility to properly plan, design, build and effectively operate and maintain a wastewater or stormwater facility, nonpoint source control or estuary management project as required by law, regulations, permits and good management practices.
(b)DEQ may not be held responsible for:
(A)Any project costs or any losses or damages resulting from defects in plans, design drawings and specifications, or other sub-agreement documents; or
(B)Verifying cost-effectiveness, cost comparisons or adherence to state procurement regulations.
(20)Reservation of rights.
(a)A borrower may require such assurances, guarantees, indemnity or other contractual requirements as it deems necessary or prudent from any party performing project work.
(b)This rule does not affect DEQ’s right to take remedial action, including, but not limited to, administrative enforcement action and actions for breach of contract against a borrower that fails to carry out its obligations under OAR chapter 340.
(21)Other provisions and documentation. DEQ may include other provisions in a CWSRF loan agreement necessary to meet the Clean Water Act and ORS 468.423 (Definitions for ORS 468.423 to 468.440) to 468.440 (Loan terms and interest rates). DEQ may require documentation including, but not limited to, a legal counsel opinion that the loan agreement is enforceable.
Rule 340-054-0060 — Clean Water State Revolving Fund Loans: Loan Agreement and Conditions,