YOU NEED SEWERS IN YOUR COMMUNITY

Water Protection Program fact sheet
03/2014
Division of Environmental Quality Director: Leanne Tippett Mosby
PUB2006

Your community may need a central sewer system if on-site wastewater systems are failing, soils in your community are not suitable for drainfields and homes and businesses are close enough and numerous enough to make a central system economically feasible.

What are your options to solve sewage problems?
1. Property owners can repair or replace on-site wastewater systems. Sometimes this is possible, but space can be limiting and systems can be costly.
2. Your community can establish the organizational, management and financing structure to plan and build a community sewer system. Organizational structures that can provide sewer service include
• Cities, towns or villages
• Sewer districts
• Water districts
• Electric cooperatives
• For-profit sewer companies
• Non-profit sewer companies
• Home owner associations
• Neighborhood improvement district (for funding only - no management functions)
Be aware that how you organize can affect options for funding your project.

How do you get started?
Find a project leader and designate a team. If your leader and team are energetic and good at informing people about the benefits and costs of the system, be prepared to work for several years to get the project completed all the way through construction. If they are not energetic and good leaders, the project probably will not materialize.

Assemble consultants to help you plan, organize, design and finance your sewer project. Such consultants can come from the Department of Natural Resources’ Water Protection Program and regional offices, the Midwest Assistance Program, www.map-inc.org, your regional planning commission or council, funding agencies, consulting engineers, legal counsel, professionals from the community and others.

1. Access wastewater infrastructure planning resources.
• The EPA book Environmental Planning for Small Communities (publication number EPA/625/ R-94/009) can be ordered online at www.epa.gov/ncepihom/ordering.htm or by phone 1-800- 490-9198 or it can be viewed on line at www.gdrc.org/decision/smallcom.pdf.
• The Local Government Environmental Assistance Network on the Web at www.lgean.org

2. Inform yourselves about sewer system alternatives and how system designers and other communities have addressed the problems you now face. You can do this by gathering information, subscribing to free newsletters and the like.  One source is National Environmental Services Center 800-624-8301, www.nesc.wvu.edu.

3. Do initial organizational and project planning, make cost estimates and scout for grant and loan opportunities.

4. Through public meetings and information efforts, find out if the community really wants the sewers at the projected costs. If your project may be financed or managed by a sponsor, such as the city or county in which the project is located, or the rural electric cooperative, make sure the desired sponsor is interested in sponsoring your project.

5. Use ballot or petition efforts and court actions to authorize bonds, form a sewer or special assessment district, if needed, and authorize the project.

6. Select and hire a consulting engineer and other professionals.

7. Obtain information about alternative technologies from the local government assistance unit and your consulting engineer.

8. Produce an engineering report and apply for funding.

9. Once you obtain required funding commitments, design, permit, bid and build your project according to the requirements of the funders.

10. Collect enough user charge and tax assessment money, operate your system correctly, make your payments on time and enjoy the rewards of your efforts.

Where can you get help?
Department of Economic Development Community Development Block Grants (CDBG) 573-751-3600 or 1-800-523-1434.
Generally, sewer systems are financed with infrastructure grants. CDBG has a low-to-moderate income (LMI) requirement, meaning the project must provide or retain jobs for low-to-moderate income people, or the project must directly benefit low-to-moderate income households.

These are federal funds, so certain federal requirements will apply. The grant limit is $500,000.

If you can show that all or part of the project is for industrial development, you might qualify for an industrial development grant or loan.  You may qualify for a low interest loan from the Missouri Development Finance Board. Such loans can be applied for through the CDBG Program.

U.S.D.A. Rural Development (RD)  573-876-0976
RD provides grants and loans, loan guarantees and other assistance. Applications are accepted and funded throughout the year. There are three loan interest rate levels: poverty, intermediate
and market. Rates are updated quarterly based on the 20 bond buyer index. The interest rate for a loan and eligibility for a grant are dependent upon the median household income of your
community and several other factors. It is RD’s policy that you serve all residences in your community; however, RD will entertain requests for variances if costs are prohibitive. Unlike CDBG and Department of Natural Resources, unincorporated communities may qualify directly for RD funding.

Missouri Department of Natural Resources’ Water Protection Program, Financial Assistance Center 573-751-1192
There is no low-to-moderate income requirement. Municipalities, counties, public sewer and water districts, political subdivisions or instrumentalities of the state, or any entity eligible pursuant to the federal Water Pollution Control Act are eligible for SRF assistance.

A. 40 Percent Grants cover 40 percent of the eligible cost of the project. Historically, $3 million has been allocated statewide each year, which is usually enough for four to five
projects. Individual grants are also limited to $1 million. Eligibility is based upon environmental need, as determined by a priority points formula.
B. Direct loans: You may finance up to 100 percent of the eligible project costs with SRF.  Interest rates are 30 percent of the current market rate.

Regional Planning Commissions and Councils
Regional Planning Commissions and Councils provide planning, grant and loan application assistance and project administration. For the commission serving your community, contact the Missouri Association of Councils of Government (MACOG) at 573-634-5337 or visit http://www.macogonline.org/.

The American Council of Engineering Companies of Missouri (ACEC Missouri), 573-634-4080
The council provides guidance in selecting an engineer and referrals to consulting engineer firms. http://www.acecmo.org/

Midwest Assistance Program 660-758-4334
The Midwest Assistance Program provides technical assistance with water and wastewater project development, system operation support and short term financing. See their Web site at
www.map-inc.org for Missouri contact information.

Missouri Rural Water Association 573-657-5533
The Missouri Rural Water Association provides water and wastewater system technical assistance, training and financing options for member utilities. Visit their Web site at www.moruralwater.org.

What are your organizational options?
You may organize your community and finance your project in several different ways, depending on your current organizational structure:

If your community is outside the limits of an incorporated municipality (city, town or village), you may choose to remain outside of the municipality and self-finance the project with private loans and other funds, if possible. This works best for smaller projects when you want to remain
independent from the municipality and also avoid state and federal government requirements. Developers of rural subdivisions can often make this option work. These projects will need a
“continuing authority” in place to deal with the operation and maintenance of the facility. You may need to form a non-profit sewer company, a for-profit sewer company or a neighborhood
association for this function.

If your community is close to, but outside the limits of a municipality, you may choose to be annexed by the municipality and have the municipality build sewers and other kinds of
infrastructure improvements for you. When available, this option is usually the cheapest, most effective way to build sewers and other improvements. It can also be the most expedient way
for your community to manage and maintain the sewer system because the municipality does it for you.

If your community is outside the limits of any municipality, you could choose to organize as a sewer district. Or, if a public water supply district serves your community, the water district could be modified to provide sewer service as well. You may also choose the option to organize as a neighborhood improvement district of your county. The common sewer district structure usually has the greatest latitude to build and finance projects cheaply and manage systems well.

You may desire to organize as one of these districts for various reasons, especially financial. In particular, the State Revolving Fund loan program is only available to applicants that are good credit risks. Organizing as one of these types of districts may enable your community to improve the credit worthiness. This may enable you to obtain low rate financing that would otherwise not be available to you. This shifts some degree of financial risk from the community to the sewer or water district or to the city or county in the case of a neighborhood improvement district. In exchange, the sewer project benefits the district, city or county through increased property values, increased tax receipts and better managed community growth. Managed well, the district, city or county should also save you money on operating expenses due to economies of scale.

Except for neighborhood improvement districts, all of these districts are legal municipalities of the state capable of entering into contracts and functioning much like a municipality or county.
Each can authorize or issue debt to finance projects. The sole purpose of a neighborhood improvement district is to authorize debt.  They have no management function. Voters or real property owners of the district authorize the debt, but the bonds are issued by the municipality or county in which the district lies.