Sections 5(b) and 5(c) of Chapter 306, Acts of 1982, Laws of Maryland, authorizes the Board of Public Works to award financial assistance to State and local governmental entities for the purpose of assisting in the acquisition, construction, equipping, rehabilitation, and improvement of water supply facilities where these projects are critical to public health or necessary to assure compliance with Safe Drinking Water Requirements. “Applicant” means any State or local governmental entity. “Construction” means the physical installation of any new water supply facility, or the upgrading or rehabilitation of any existing water supply facility. “Department” means the Department of the Environment. “Financial assistance” means State grants, loans, or loan guarantees. “Local governmental entity” includes a county, municipality, sanitary commission, and local or regional water authority. “Secretary” means the Secretary of the Environment. “Significant change order” means one which introduces a new element or goal in the approved water facility project. It may consist of a change in treatment capacity or flow capacity, a different area to be served, the purchase of equipment not contemplated in the original contract, or the substitution of a piece of equipment by another which has a capability greater or less than that originally specified. The dollar amount of the change may not be the sole determining factor as to whether or not a change order significantly alters the project. Funds available under this program are intended to be used as a last resort measure to assist regional and local governmental agencies in solving water supply system inadequacies, when it can be demonstrated that the applicant has insufficient or limited financial capability to proceed with necessary construction projects. Financial assistance is limited to State and local governmental entities. Eligible project costs are determined by the Department using principles set forth in Regulation .05 of this chapter. The Department shall use a project priority system in determining which projects will receive financial assistance. Financial assistance may only be provided up to a maximum of 87-1/2 percent of the eligible costs of the project. Project applications shall consist of a pre-application and final application, including documentation of need and such other information as may be required by the Department. A water facility construction permit, as required by the Environment Article, §9-204, Annotated Code of Maryland, shall be required before the Board of Public Works' consideration of financial assistance for construction of the project. The proposed project is subject to State Clearinghouse review procedures. The applicant shall follow all local bidding requirements. When local bidding requirements do not exist, bidding procedures satisfactory to the Board of Public Works shall be followed. A governmental entity receiving financial assistance under this chapter may not award a contract on a “cost-plus” basis. Any project for which State financial assistance is granted shall comply with all applicable State Law. The documents listed below are incorporated by reference. Each is available for public inspection at the appropriate office in each county, and in Baltimore City. The documents are: Allegany County Comprehensive Water and Sewerage Plan; Anne Arundel County Comprehensive Water and Sewerage Plan; Baltimore County Comprehensive Water and Sewerage Plan; Calvert County Comprehensive Water and Sewerage Plan; Caroline County Comprehensive Water and Sewerage Plan; Carroll County Comprehensive Water and Sewerage Plan; Cecil County Comprehensive Water and Sewerage Plan; Charles County Comprehensive Water and Sewerage Plan; Dorchester County Comprehensive Water and Sewerage Plan; Frederick County Comprehensive Water and Sewerage Plan; Garrett County Comprehensive Water and Sewerage Plan; Harford County Comprehensive Water and Sewerage Plan; Howard County Comprehensive Water and Sewerage Plan; Kent County Comprehensive Water and Sewerage Plan; Montgomery County Comprehensive Water and Sewerage Plan; Prince George's County Comprehensive Water and Sewerage Plan; Queen Anne's County Comprehensive Water and Sewerage Plan; St. Mary's County Comprehensive Water and Sewerage Plan; Somerset County Comprehensive Water and Sewerage Plan; Talbot County Comprehensive Water and Sewerage Plan; Washington County Comprehensive Water and Sewerage Plan; Wicomico County Comprehensive Water and Sewerage Plan; Worcester County Comprehensive Water and Sewerage Plan; Baltimore City Comprehensive Water and Sewerage Plan. Before the award of State financial assistance for construction, the need for facility construction or improvement shall be identified, and a project to meet that need shall be contained in the approved County Comprehensive Water and Sewerage Plan. The Department may also require a public hearing on the project, in addition to the public hearing required pursuant to adoption of the county water and sewerage plan. A water appropriation and use permit, as required by Natural Resources Article, §8-811, Annotated Code of Maryland, shall be required before the Board of Public Work's approval of financial assistance for construction of the project. Financial assistance may be approved by the Board of Public Works for community associations if the assistance is passed through a governmental entity. In these cases, a governmental entity shall be the responsible applicant. The Department shall require that the community association be incorporated and be responsible for financial and ownership requirements as are found necessary to assure continued, efficient, and effective operation of the system. The governmental entity shall agree to act as the agent for the community association in applying for financial assistance and shall be jointly responsible for complying with the terms of the grant or loan agreement. An applicant shall submit a pre-application which includes sufficient information for the Department to determine: Project eligibility; Priority ranking; The extent to which funds will be available to support projects on the annual priority list. Final Application. The Department shall require the applicant to submit, within 1 year, a final application when the project falls within the fundable range on the annual priority list. The Department may, at its discretion, extend the application deadline. The application shall contain any additional information the Department may require including: Certification that the project is in conformance with the County Comprehensive Water and Sewerage Plan; Copies of pertinent State construction permits; Copies of design plans and specifications; Studies and reports which demonstrate the engineering feasibility and cost effectiveness of projects where acquisition, equipment, and construction or any combination of these costs exceed $5,000; Certification that all other requirements for eligibility found in Regulations .05 and .07 of this chapter are met; and In addition to all other eligibility and special requirements, grant applicants may be required to demonstrate a plan of action that will provide for the future financial stability of the water supply system. The plan of action may include a rational rate structure, scheduled capital improvements, and assurances that sufficient funding will be available to provide for continued, efficient, and effective operation of the system. If the Department determines that under Regulation .05E, of this chapter, feasibility studies, planning, and plans and specifications are eligible for funding, the Department may petition the Board of Public Works for these funds before determining the extent to which the State may participate in providing financial assistance for construction. The award of financial assistance may not cause a project to be funded at a level exceeding 100 percent of the total project costs. State financial assistance may not exceed 87-1/2 percent of the eligible cost of a project, except that in the case of a project to be undertaken by the Maryland Environmental Service, pursuant to an order issued by the Secretary, the State financial assistance may equal the total cost of the project less the amount of any federal grant application to project costs. The total amount of a State grant for any project may not exceed $1,500,000. Project Costs Eligible for Financial Assistance. Project costs which are eligible for financial assistance under this chapter may include: The acquisition of facilities; The construction of new facilities; Additions to or modifications of existing facilities; Equipment purchases; Lands, easements, and rights-of-way; and Planning, design, and project administration. The Department shall annually rank applications for grant and loan assistance. The Department shall hold a public hearing, following public notification in the Maryland Register and the Department's web site regarding the annual priority list. Following the public hearing, the Department may change the rankings of projects based on public input. Projects Not on Annual Priority List. The Board of Public Works may award financial assistance for projects not included on the annual priority list, if it determines that: The project arises out of an unanticipated immediate need; and Irreparable damage to the public health would result if the project is not constructed. Priority System. The State priority system for the award of financial assistance shall be developed by the Department, may be subject to public hearings, and will result in a priority list that shall be used to award the financial assistance. The priority system shall take into account, as appropriate: The public health benefits of the project; The project's ability to comply with any mandatory legal requirements; The environmental benefits, system reliability benefits, or both of the project; The project's compliance with water conservation requirements; The size of the community, with a preference given to small community projects; and The financial, technical, and managerial capacity of the applicant. Based on the priority system, the Department shall develop a priority list of projects. The Department annually shall establish a reserve fund to be used for grant and loan amendments in order to meet change orders, cost overruns, and emergency projects. Financial assistance provided under this chapter may not be applied to projects whose construction was initiated before approval by the Board of Public Works. State Loans. Loans for water supply facility projects shall bear the same rate of interest as the bonds from which the proceeds are used to provide the loan. The loan shall be repaid within 30 years and the first payment shall be made at a time stipulated by the Board of Public Works. Costs associated with the sale, administration, and registration of bonds may be included in the repayment schedule, as required by the Board of Public Works. State Loan Guarantees. A loan guarantee of the principal of, or interest on, any commercial loan or obligation to finance an eligible project may be made under the following conditions: The applicant certifies that it is unable to obtain sufficient credit on reasonable terms to finance its actual needs without the guarantee; and The Board of Public Works determines that there is a reasonable assurance of repayment of the loan obligation. Terms of Financial Agreement. The financial agreement required by the Board of Public Works as a condition of financial assistance shall include terms which: Provide salvage rights by the State upon default of the applicant; Require that the applicant maintain adequate accounting records and submit monthly accounting reports to the Department; Describe the grant, loan, or loan guarantee payment and repayment schedules; Provide that a project sign will be erected when total State participation in the project exceeds $10,000; Require the applicant to follow all State and local environmental control laws in constructing the project; Require the applicant to operate and maintain the water supply facility in accordance with applicable sections of Environment Article, Title 9, Annotated Code of Maryland; Provide that the agreement may be voided by the Department if construction has not commenced within 6 months of the award for construction and, if voided, shall require the applicant to repay all funds with interest; Require that all significant extra work orders or change orders be approved by the Department before the contractor is authorized to proceed and, upon approval, the applicant may request an amendment to the grant or loan agreement; and Require that the applicant agree that the total amount of all change orders not exceed 5 percent of the original total award of financial assistance and that all costs exceeding this amount or costs not authorized by the Department are the responsibility of the applicant. Financial agreements may also include any special conditions or requirements recommended by the Department and approved by the Board of Public Works. Environment Article, §§9-404 and 9-420—9-426, Annotated Code of Maryland Effective date: December 19, 1983 (10:25 Md. R. 2269) Regulation .05L adopted as an emergency provision effective August 17, 1984 (11:18 Md. R. 1582); emergency status expired December 15, 1984; adopted permanently effective December 17, 1984 (11:25 Md. R. 2134) Regulation .05L amended effective July 15, 1985 (12:14 Md. R. 1432) Chapter recodified from COMAR 10.17.12 to COMAR 26.03.09 Regulation .05 amended effective October 6, 2008 (35:20 Md. R. 1776) Regulation .05C amended as an emergency provision effective March 6, 1996 (23:7 Md. R. 550); emergency status expired June 28, 1996; amended permanently effective December 2, 1996 (23:24 Md. R. 1685) Regulation .06 amended effective October 6, 2008 (35:20 Md. R. 1776)