June 11, 2009Client Alert

Update #3 on Use of Federal Stimulus Funds for Clean Water Fund Program and Safe Drinking Water Loan Program

In mid-April 2009, the Wisconsin Department of Natural Resources (“DNR”) announced that it would use a portion of federal stimulus funds provided by the American Recovery and Reinvestment Act of 2009 (“The Act”) for grants under the Safe Drinking Water Loan Program (“SDWLP”) and Clean Water Fund Program (“CWFP”). Recent client alerts discussing this announcement and an update following the announcement can be found at:;; and

DNR has provided updated information regarding the granting of funds under these two programs.

Funds Requested to Date under SDWLP
To date, DNR has received more than 100 requests for SDWLP funds, totaling over $177 million. DNR expects to fund $75.5 million in projects using 50% of regular SDWLP funds and 50% of funds from The Act.

CWFP Update
DNR is urging municipalities to submit the Intent to Apply and Priority Evaluation and Ranking forms as soon as possible to allow DNR to award funds on a timely basis.

Storm Water Projects
Fifty percent of costs for storm water projects will be funded with funds from The Act for principal forgiveness, and 50% of the project will be funded with a CWFP subsidized loan at 65% of the market interest rate.

The green space requirement for storm water projects will not be satisfied by a detention pond, unless the pond is designed to infiltrate storm water.

Municipalities seeking funds for storm water projects need to submit one copy of their Storm Water/Urban Runoff Projects Financial Assistance Application form to their DNR regional storm specialist and one copy to the Bureau of Watershed Management. Municipalities should indicate if the project is part of a large plan and highlight those aspects related to storm water management. Storm water plans must include a description of the need for the project and include a cost-effective alternative analysis. Municipalities need to submit two copies of their plans to the Bureau of Watershed Management and one copy to the regional storm water specialist.

Small Loan Program
Municipalities seeking CWFP funds under the Small Loan Program are eligible for funds under The Act. However, drinking water projects are not eligible for the Small Loan Program.

Applicants must submit to DNR an Interest Rate Subsidy Application, copies of engineering agreements, copies of construction contracts, the CWFP Requirements Checklist, the CWFP Addendum to Financial Assistance Application, and intermunicipal agreements, if any. Projects receiving funding through the Small Loan Program must comply with the Davis-Bacon, Buy American, and Disadvantaged Business Enterprise provisions of The Act and any other federal crosscutting legislation.

Impact of Build America Bonds
Pursuant to the federal legislation creating Build America Bonds, municipalities can be reimbursed by the federal government for 35% of their interest payments on eligible debts. Loans and debts with the Board of Commissioners of Public Lands may be eligible for this subsidy. All eligible debts must be finalized by the end of 2010. Municipalities will receive these funds directly from the federal government. DNR will issue CWFP funds regardless of whether a municipality receives a federal subsidy.

Single Audit Act
Funds issued pursuant to The Act are subject to the Single Audit Act. Accordingly, any funds from The Act issued to a municipality will be included in the $500,000 threshold under the Single Audit Act.

Buy American Requirement
DNR provided additional guidance regarding the Buy American provision of The Act. This provision requires that all materials for a project be provided by American companies. It is possible to receive a waiver for this requirement in certain circumstances. The United States Environmental Protection Agency has already issued two waivers to the Buy American provision. These waivers apply to products constituting a de minimis portion of the project and projects that were bid on between October 1, 2008 and February 17, 2009.

Central Contractor Registry
All recipients of funds from The Act must register in the Central Contractor Registry. The registry is for all recipients – not just contractors. Municipalities need to obtain a DUNS number from DNR in order to register.

This client alert is one of a series designed to provide summaries of The Act and information and guidance regarding opportunities and relief made available through The Act. All of The Act client alerts are available on Michael Best's Stimulus and Economic Recovery Team publications page. For additional information on this topic, please feel free to contact one of the authors of this alert or your Michael Best attorney.

If you are interested in learning about other provisions included in The Act, the Michael Best Stimulus and Economic Recovery Team is prepared to assist you in understanding the implications and in developing and implementing a strategy to secure the benefits of this unprecedented legislation. Specifically, we will assist you to identify opportunities, prepare appropriate proposals and make targeted contacts to secure funds. We will also work with you to ensure that your applications are tailored to meet your needs and that your funded projects proceed in compliance with award requirements and applicable laws.

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