KRS 224A.320: Definitions for KRS 224A.320 to 224A.325 -- Kentucky Water and

Wastewater Assistance for Troubled or Economically Restrained Systems

(WWATERS) Program -- Purpose -- Duties -- Application for funding --

Evaluation of application -- Annual report.

(1) As used in KRS 224A.320 to 224A.325:

(a) "Board" means the Kentucky Infrastructure Authority board established in

KRS 224A.030;

(b) "Eligible funding recipient" means a public water or wastewater system that

meets three (3) or more of the criteria lis ted in subsection (7)(d)1. to 8. of this

section;

(c) "Eligible project":

1. Means a project that would require capital or non -capital expenses

including but not limited to expenses relating to:

a. Developing technical, operational, and maintenance resourc es and

expertise;

b. Improving utility infrastructure planning, repair, maintenance,

renovation, and management of plants and assets;

c. Obtaining technical expertise in areas of rate -setting, cost -of-

service, and proper utility accounting standards for the utility type;

d. Performing and correcting deficiencies from drinking water,

wastewater, and financial audits;

e. Providing financing for financial inadequacies, including debt

service coverage through relief or refinance of the drinking water

or wastewater system's debt;

f. Providing payment assistance for other financial inadequacies

including but not limited to excessive maintenance costs, fines and

penalties from past violations, or consultants; and

g. Extending financing for inadequately maintained distribution,

collection, or treatment works, including service extensions to

unserved or underserved areas and the r enovation of treatment

works to conserve resources; and

2. Does not include any project to expand the utility service area of a

funding applicant;

(d) "Kentucky Water and Wastewater Assistance for Troubled or Economically

Restrained Systems Program" or "Kentucky WWATERS Program" means the

program established under this section and administered by the Kentucky

Infrastructure Authority under the direction of its board; and

(e) "Public water or wastewater system" means any of the following that serve a

community:

1. A water district, water association, or joint water commission formed

under KRS Chapter 74;

2. A sewer district or sanitation district formed under KRS Chapter 67, 76,

or 220;

3. A municipal water utility and water works, sewer utility, sewage syste m

or works, or combined electric and water plant formed under KRS

Chapter 96; and

4. Any combination of two (2) or more of the entities listed in

subparagraphs 1. to 3. of this paragraph.

(2) The Kentucky WWATERS Program is hereby established under the aut hority to

provide for an orderly process for eligible public water or wastewater systems to

apply for funds for eligible projects and for those applications to be evaluated,

scored, and presented to the General Assembly for consideration for funding. The

administration of the program by the authority, under the direction of the board,

includes but is not limited to the following:

(a) Creating and making available standardized funding applications and regional

funding applications;

(b) Verifying the eligibil ity of proposed funding recipients, including but not

limited to engaging in financial reviews of proposed funding recipients to

ensure that they will be able to repay the requested amounts;

(c) Verifying that the proposed funding recipient seeks money for an eligible

project;

(d) Awarding funding to selected eligible funding recipients, which shall be

accomplished within sixty (60) days of the effective date of legislation

enacted by the General Assembly that authorizes and appropriates the

funding;

(e) Administering the funding and monitoring funding recipients for their success

in improving on any of the performance criteria described in subsection

(7)(d)1. to 8. of this section;

(f) Enforcing compliance with the requirements of this section for eligible

funding recipients; and

(g) On or before October 1, 2025, and each quarter thereafter, submitting a report

on the status of all funding awarded and administered by the authority

pursuant to this section and KRS 224A.322 to the Legislative Research

Commission for referral to the Interim Joint Committee on Appropriations

and Revenue, or to the House and Senate Standing Committees on

Appropriations and Revenue when the General Assembly is in session.

(3) (a) To participate in the Kentucky WWATERS Program, a fu nding applicant

shall submit an application to the board, which shall include:

1. A corrective action plan detailing how the requested funds would be

used to address the performance deficiencies that made the applicant

eligible for the funding; and

2. A de tailed budget for all proposed project expenses, including but not

limited to depreciation plans and explanations for expenses categorized

as administrative, miscellaneous, or other expenses.

(b) Funding applications may be shared with third -party independent consultants,

state agencies, or special purpose governmental entities in reviewing the

funding application as allowed under subsection (4) of this section. Once the

application process is complete and the funding application is ready for

review, it shall be made available to the public.

(c) Funding applicants wishing to engage in a regional project shall submit a

single application.

(d) A funding application for a capital construction project shall include cost and

timeline estimates.

(e) The board may evaluate and score funding applications for proposed projects

in phases as it deems appropriate.

(4) The board may contract or consult with a third -party independent consultant, state

agencies, or special purpose governmental entities to assi st with the funding

applicant analysis and scoring described in this section.

(5) If a funding applicant is selected as an eligible funding recipient approved under the

Kentucky WWATERS Program, it shall:

(a) Comply with any reporting or other requirements deemed necessary by the

authority to verify that the awarded funding goes toward an eligible project

and that the funding recipient is making improvements on the performance

criteria described in subsection (7)(d)1. to 8. of this section;

(b) Comply with any internal management and governance procedures that the

authority may impose in order to correct any performance deficiencies that

gave rise to the need for the requested funds; and

(c) Adopt best management practices as established and administered by the

board that would address the performance deficiencies that made the applicant

eligible for the funding, including but not limited to practices relating to:

1. Regulatory compliance;

2. Minimum debt service coverage ratios;

3. Operating ratio targets;

4. Regular rate reviews and adjustments;

5. Minimum cash reserve requirements;

6. Accounts receivable turnover and collection rates;

7. Asset management, lifecycle planning, capital depreciation, and capital

reserve funding;

8. Audits, financial reporting, and rate transparency;

9. Water loss reduction; and

10. Training, certification, and emergency preparedness.

(6) (a) A funding recipient shall forfeit all moneys received pursuant to this section

and KRS 224A.322 and all outstanding funding amounts, includ ing accrued

interest, shall be immediately due to the authority if the selected funding

recipient:

1. Fails to comply with any of the requirements of this section;

2. Uses the awarded funding for any purpose other than the eligible project

for which the funding was awarded; or

3. Transfers or assigns the obligation to repay the funding amounts to any

other entity, including any successor in interest.

(b) Funding recipients may also forfeit funds and be subject to immediate

repayment to the authority of all outstanding funding amounts, including

accrued interest, if the authority finds that the recipient has not made adequate

improvements on the performance criteria described in subsection (7)(d)1. to

8. of this section.

(7) In the implementation of the Kentucky WWATERS Program, the board shall:

(a) Hold at least monthly meetings, which may be in conjunction with regularly

scheduled board meetings, to discharge its duties under this section;

(b) Determine whether a funding applicant is an eligible funding reci pient and is

seeking funding for an eligible project;

(c) Based on the criteria listed in paragraph (d) of this subsection, develop an

objective score card or rubric, which may be amended from time to time, to

aid in the analysis and scoring of funding applications;

(d) Separately evaluate and score each funding applicant's individual project

according to the extent to which it meets the following criteria:

1. The median household income within the service area of the funding

applicant is less than the Commonwealth's median household income;

2. User rates for the public drinking water or wastewater services provided

by the funding applicant are at or above one percent (1%) of annual

household income for its service area;

3. The funding applicant has failed to produce a fin ancial statement audit

in at least one (1) of the prior three (3) years;

4. The funding applicant has negative income in any two (2) of the

previous five (5) years;

5. The funding applicant's debt service coverage ratio, calculated by

dividing its annual n et operating income by its annual debt payments,

was less than one and one -tenth (1.1) in any three (3) of the previous

five (5) years;

6. The funding applicant has received a notice of violation or has entered

into an agreed order or consent decree as a r esult of a violation of the

requirements of the Safe Drinking Water Act, 42 U.S.C. sec. 300f et

seq., or the Clean Water Act, 33 U.S.C. sec. 1251 et seq., and the

funding applicant's proposed project would contribute to resolving the

violation, ensuring it s continued compliance with the relevant

requirements of law, or both;

7. The percentage of water loss of the funding applicant's system is greater

than thirty percent (30%);

8. The funding applicant can demonstrate, in the form and to the extent

that the board may require, that the amount of stormwater inflow and

groundwater infiltration entering the funding applicant's system

seriously impairs its effectiveness;

9. The funding applicant can demonstrate that the estimated costs of the

proposed project are comparable to the actual costs incurred for similar

recently completed projects in the same or other systems;

10. The funding applicant has previously received funding through the

Kentucky WWATERS Program for a prior phase of the proposed

project that has been completed in accordance with the requirements of

the program and the funding applicant is seeking additional funding to

complete the next phase;

11. For a funding application for a capital construction project, the cost and

timeline estimates have bee n reviewed by a licensed professional

engineer permitted to provide such service in the Commonwealth;

12. The funding applicant is willing to use the funding for regionalization,

consolidation, or partnerships, consistent with the policy stated in KRS

224A.300(1);

13. The funding applicant, after receiving the funding, will be able to fully

resolve the pending issues that are the subject of its application using the

funding and other funding sources, if available; and

14. The funding applicant's proposed pr oject demonstrates a high level of

community or regional impact potential if funding is awarded;

(e) Separately score and individually rank all eligible projects, including

proposed projects from the same funding applicant, with additional

consideration given to how important the completion of the proposed project

would be in providing or restoring safe water or wastewater utility service that

is compliant with state and federal law;

(f) Within sixty (60) days of a funding application being deemed complete under

subsection (3)(b) of this section, make determinations on the eligibility of the

proposed project and the applicant and issue a project score for the

application;

(g) Provide detailed feedback to all funding applicants within fourteen (14) days

of the project score being completed; and

(h) No later than December 1, 2024, and each December 1 thereafter, submit to

the Legislative Research Commission for referral to the Interim Joint

Committee on Appropriations and Revenue an annual report containing:

1. The evaluations and scores of the proposed funding recipients for the

year to allow for the General Assembly to make the determinations for

funding the proposed funding recipients. For each proposed funding

recipient that meets the eligibility requirement s for funding, the board

shall provide a proposal for the structure and the terms of the funding,

including but not limited to whether the funding should be awarded in

whole or in part as a grant, loan, no -interest loan, or forgivable loan, the

repayment t erms and interest rates for loans or portions of loans, and

any other conditions that the board proposes to be placed on the funding;

2. A list of all program applicants;

3. The identity of applicants who did not meet the eligibility requirements

for participation in the program;

4. Trends found in feedback given to applicants who did not meet the

eligibility requirements for participation in the program; and

5. Eligible uses of funding cited in the funding applications.