1. Project Gets on the Division's Annual Priority List.

In the early Spring of each year, the Division solicits proposed projects for financial assistance by mailing each community in the state Project Evaluation Forms. These forms, along with their supporting documentation, once completed and submitted by the community or its consulting engineer, provide the information necessary for the Division to rank projects in accordance with the rating systems established by regulation for each category of project.

All projects eligible for funding under the SRF are placed on the coming fiscal year's project priority list in order of priority points assigned by the rating system. The rating system assigns points on the basis of type of project, extent of environmental or public health protection improvement to be achieved, and other factors which are specific to each category of project. It is important that the problems to be corrected by a proposed project, and the benefits to be achieved, be adequately documented by the community in completing the Project Evaluation Form.

An important consideration in the Division's review of a Project Evaluation Form is the status and timing of the proposed project. From the list of all eligible projects that will be ready to proceed during the coming year, the Division establishes a proposed fundable list of projects (also called the Intended Use Plan) identifying those projects planned for financial assistance during the fiscal year. Projects are assigned to the fundable list in order of priority points, with the total cost of all projects on the list not to exceed the amount of funding available for the year. In order to be considered for the fundable list, the applicant must be able to submit an application for financial assistance in time to be reviewed and approved by the Division before the end of the coming fiscal year (generally, at the latest at least three months before the end of the fiscal year.) In order for the application to be approved, other steps would also have to have been accomplished before that time, such as a local appropriation of funds and, in the case of a construction project, the preparation of plans and specifications.

While only projects which appear on the current fundable list (Intended Use Plan) can receive financial assistance during a given year, it is possible for a project on the extended priority list to be moved up to the fundable list during the course of the year. This could occur if any of the fundable list projects encounter delays which would prevent their approval before the end of the fiscal year.

2. Community Submits Application and Supporting Documentation.

In order for a community to obtain funding for its project appearing on the fundable list (Intended Use Plan), it must file an Application for Financial Assistance and obtain a Project Approval Certificate from the Division. In addition to information about the project and documentation that applicable requirements are met by the project, the application requires community financial data needed to determine the applicant's ability to repay the loan.

3. The Division Approves the Project and Certifies the Application to the Trust.

The Division evaluates projects for compliance with engineering and environmental requirements as well as a number of specific legal, regulatory, and administrative requirements. Examples of such requirements would include the local appropriation of funds previously mentioned; existence of any necessary easements or legal title to land; presence of acceptable user charge systems, sewer use ordinances, and O & M programs; and evidence of compliance with other federal and state permitting requirements.

For a construction project, completed plans and specifications must be approved by the Division prior to or at the time of issuance of the Project Approval Certificate. The corresponding prerequisites for design and planning projects are an approved Facilities Plan and an approved Plan of Study, respectively.

Once the Division certifies the application to the Water Pollution Abatement Trust (TRUST), an applicant may proceed with construction of its project without loss of eligibility for financial assistance.

4. The Trust and the Community Enter into a Binding Commitment.

Once MassDEP certifies to the Trust that costs are eligible for funding from the Revolving Loan Fund Program the Water Pollution Abatement Trust Board of Trustees votes to issue the borrower a Binding commitment. The binding commitment outlines the steps the Trust and the borrower must complete prior to the execution of the final loan documents. The terms are consistent with the project approval certificate. In addition, the binding commitment provides a pro forma amortization schedule to demonstrate the interaction of the interest rate subsidy with the borrower's repayment of the loan.

5. Borrower Meeting - Loan Questionnaire - Local Bonds

Prior to the execution of the final loan agreement a Borrower Meeting is held by the Trust to meet with the Treasurer and project professional of each borrower to discuss the loan parameters and the local bond issue. The purpose of the meeting is to review a Loan Questionnaire provided to the borrower that underscores any problems the local or Trust bond counsel may have in issuing an opinion certifying the tax exempt status of the bond issued by the borrower and that the obligation is valid and binding under local authorization. The Local Bonds are the General Obligation of the borrower and act as security and the source of repayment of the loan. The meeting also provides an opportunity for the Trust and the borrower to discuss the issues concerning credit ratings, cost of issuance expense and loan closing timing.

6. The Community and the Department execute a Project Regulatory Agreement.

At the time a loan is made by the Trust under the Revolving Loan Fund Program, the Department and borrower enter into a Project Regulatory Agreement. The agreement includes a loan disbursement schedule, procedures for approval and payment of requisitions and any special conditions related to the projects compliance with MassDEP regulations and other federal and state statutes and regulations applicable to the construction and operation of the project. The agreement outlines the conduct of MassDEP site inspections and other related oversight activities to ensure that the project has been constructed in accordance with plans and specifications previously approved by MassDEP.

7. The Trust Enters into a Loan Agreement with the Community.

The Loan Agreement is an agreement between the Trust and the borrower pertaining to the MassDEP approved project cited in the Project Regulatory Agreement and the repayment evidenced by the bonds securing the loan. The agreement establishes the security of the loan, repayment dates and schedule, interest rates and subsidies, construction deposit account, and borrower repayment account. The agreement specifies the events which cause a loan default and the steps allowed by the Trust to remedy any borrower default.

8. Interim Construction loans.

The borrower can enter into a short term loan to enable the project to proceed during the time prior to the Trust bond sale. This depends on the cash needs of the borrower and the timing of the Trust bond sale. The Trust is capable of funding a project from 60 days to one year prior to a bond sale. The Trust extends the use of program equity as a source of capital. The interest is accrued monthly on the basis of the balance drawn on the construction account. The interest rate is set at one-half of the one year rate published quarterly in the Bond Buyer. At the time the Trust issues bonds the loan is refinanced as a bond funded loan and the borrower pays the interest due on the interim loan.