N.Y. Environmental Conservation Law § 17-1909: Water pollution control revolving fund agreements

§ 17-1909. Water pollution control revolving fund agreements.

1. As used in this section:

a. "Allocation" means the amount of moneys allocated to reduce a

municipality's or group of municipalities' total financing costs for one

or more eligible projects.

b. "Construction" means the erection, building, acquisition,

alteration, reconstruction, improvement, enlargement or extension of an

eligible project; the inspection and supervision thereof; and the

engineering, architectural, legal, fiscal, and economic investigations

and studies, surveys, designs, plans, working drawings, specifications,

procedures, and other actions necessary thereto.

c. "Corporation" means the New York state environmental facilities

corporation, continued pursuant to section twelve hundred eighty-two of

the public authorities law, or any successor thereto.

d. "Eligible project" means a project for construction of a facility

which would be eligible for financing under the Federal Water Pollution

Control Act:

(i) for which all required federal and state permits have been issued;

and

(ii) which the commissioner has determined:

(a) is in accord with applicable comprehensive studies and reports

made pursuant to sections 17-0303 and 17-1901 of this article; and

(b) is necessary for the accomplishment of the state water pollution

control program formulated pursuant to sections 17-0303 and 17-1901 of

this article; and

(c) represents a reasonable effort to develop economic viability in

planning, design and construction; and

(d) is a project for which financial assistance is available from the

fund; and

(e) conforms with applicable rules and regulations of the department,

including a demonstration that design and construction consider future

physical climate risk due to sea level rise, and/or storm surges and/or

flooding, based on available data predicting the likelihood of future

extreme weather events, including hazard risk analysis data if

applicable; and

(f) includes consideration of county-wide or regional wastewater

planning.

e. "Financial assistance to a municipality" has the same meaning as

set forth in subdivision four of section twelve hundred eighty-five-j of

the public authorities law.

f. "Fund" means the water pollution control revolving fund established

under section twelve hundred eighty-five-j of the public authorities

law.

g. "Intended use plan" means the plan prepared pursuant to subdivision

two of this section, identifying the intended uses of the amounts

available in the fund, including but not limited to: (i) a list of those

projects for construction of publicly owned treatment works on the

priority list developed pursuant to subdivision two of this section;

(ii) a list of projects developed pursuant to subdivision two of this

section anticipated to be financed by the fund through the water

pollution control linked deposit program; (iii) a description of the

short and long term goals and objectives of the fund; (iv) information

on the activities to be supported, including a description of project

categories, discharge requirements under the Federal Water Pollution

Control Act, terms of financial assistance, and eligible borrowers

pursuant to the water pollution control linked deposit program served;

(v) the criteria and method established for the distribution of funds;

and (vi) the amount of moneys from the fund, not to exceed ten million

dollars annually, to be made available for linked loans under the water

pollution control linked deposit program during the period covered by

such intended use plan.

h. "Municipality" means any county, city, town, village, district

corporation, county or town improvement district, school district,

Indian reservation wholly within New York state, any public benefit

corporation or public authority established pursuant to the laws of New

York or any agency of New York state which is empowered to construct and

operate an eligible project, or any two or more of the foregoing which

are acting jointly in connection with an eligible project.

i. "Project financing agreement" means an agreement between the

corporation and one or more municipalities meeting the requirements of

subdivision four of this section.

2. The commissioner is required to establish and maintain a list of

potentially eligible projects and shall establish, pursuant to rules and

regulations, a process for listing potentially eligible projects

identified by municipalities and eligible borrowers pursuant to article

sixteen of the state finance law and a priority ranking system for the

purpose of providing financial assistance to municipalities and eligible

borrowers for such projects under this section. In establishing such

system, the commissioner shall take into account:

a. The environmental significance of such potentially eligible

projects which shall include, but need not be limited to, an assessment

of (i) public health and safety; (ii) protection of environmental

resources; (iii) population affected; (iv) attainment of state water

quality goals and standards; (v) compliance with state and federal law,

rules and regulations; and (vi) the extent to which such projects

reflect county-wide or regional wastewater planning;

b. A municipality's inability as determined by the corporation to pay

for such potentially eligible project prior to receipt of such financial

assistance;

c. The regional distribution of environmentally significant projects;

d. For agricultural projects funded through the water pollution

control linked deposit program, in consultation with the commissioner of

agriculture and markets, the extent to which the project will reduce,

abate, control, or prevent non-point source pollution originating from

agricultural sources and/or propose to implement best management

practices, as identified in section three of the soil and water

conservation districts law; and

e. For residential and small business on-site wastewater treatment

system projects funded through the water pollution control linked

deposit program, in consultation with the department of state, the

extent to which the project will prevent an increase in nutrients in

water bodies or the extent to which the project will enhance source

water or watershed protection.

3. a. The corporation is authorized to promulgate regulations,

developed in consultation with the commissioner and the director of the

division of the budget, for the purpose of carrying out its

responsibilities under this section, including establishing criteria and

standards for determining the amount of financial assistance to a

municipality for an eligible project. To the extent financial assistance

to a municipality for an eligible project is provided as a loan from the

proceeds of bonds or notes of the corporation, the amount of an

allocation applicable to the portion of such eligible project financed

with such loan shall be, subject to such maximum financial limitations

as may otherwise be necessary and prescribed by the commissioner and the

director of the division of the budget, thirty-three and one-third

percent of the principal amount of such loan outstanding at any time for

such eligible project, to the extent reasonably practicable, and subject

to such deviation as may be necessary, in connection with the

administration and investment of moneys in the fund, unless allocations

in differing amounts are necessary to preclude a determination by the

commissioner or the corporation pursuant to paragraph e of subdivision

eight of this section or unless an allocation in a differing amount is

required for an innovative technology demonstration project; provided,

however, that in the case of any municipality which has, during the

period commencing on June first, nineteen hundred ninety-two and ending

on September thirtieth, two thousand twenty-seven, (i) submitted an

application for financial assistance in the form of such a loan for an

eligible project, which application has been accepted by the

corporation, (ii) closed on such loan, and (iii) commenced construction

of such eligible project, the allocation applicable to the portion of

such project financed with such loan shall be, subject to maximum

financial limitations as may otherwise be necessary and prescribed by

the commissioner and the director of the division of the budget, fifty

percent of the principal balance outstanding on such loan at any time

for such eligible project, to the extent reasonably practicable, and

subject to such deviation as may be necessary, in connection with the

administration and investment of moneys in the fund, unless allocations

in differing amounts are necessary to preclude a determination by the

commissioner or the corporation pursuant to paragraph e of subdivision

eight of this section or unless an allocation in a differing amount is

required for an innovative technology demonstration project.

b. The corporation may enter into a project financing agreement with

up to three municipalities which provides for up to one hundred percent

subsidy of the interest on the amount of principal not to exceed three

million dollars for the construction of innovative technology

demonstration projects which shall be waste water treatment facilities

which utilize innovative technology approved by the commissioner as

defined in regulations promulgated by the United States environmental

protection agency in accordance with the Federal Water Pollution Control

Act. The commissioner shall prepare criteria for selection of eligible

projects pursuant to this paragraph including, but not limited to, the

use of innovative technology which has been proven reasonably effective

on at least a demonstration model basis.

c. The department is authorized to promulgate regulations, developed

in consultation with the director of the division of the budget, for the

purpose of carrying out its responsibilities under this section.

4. The corporation may enter into project financing agreements with

municipalities providing for the construction and financing of eligible

projects. The corporation shall prepare each project financing

agreement, which shall include but is not limited to the following

provisions:

a. A description of the eligible project;

b. An estimate of the reasonable cost of the eligible project and a

projected cash flow schedule for meeting that cost;

c. A schedule for construction of the eligible project;

d. A right of the corporation to approve all contracts for services

and construction funded pursuant to a project financing agreement, and

to inspect and review the construction of eligible projects;

e. Notwithstanding the provisions of any other law, general, special

or local, inconsistent with this section, a right of the corporation to

invest proceeds of the corporation's bonds or notes, including proceeds

of bonds or notes of the municipality, as provided in subdivision four

of section twelve hundred eighty-four and subdivision six of section

twelve hundred eighty-five-j of the public authorities law.

Such right shall include the right to invest such monies together with

any other monies held by the corporation pursuant to the provisions of

section twelve hundred eighty-five-j of the public authorities law;

f. Remedies in the event of a municipality's failure to comply with

the terms of a project financing agreement;

g. An agreement by the corporation to:

(i) lend to the municipality for the construction of an eligible

project a specified amount from the proceeds of the corporation's bonds

or notes, not to exceed the estimated reasonable cost of construction of

the eligible project established in the project financing agreement or

any loan agreement, subject to the ability of the corporation to provide

such financing, including but not limited to the approval of the

corporation's board and any other approvals required by state or federal

law;

(ii) use all reasonable efforts to issue its bonds or notes in an

amount sufficient to finance the estimated reasonable cost of the

eligible project, including but not limited to costs of issuance, credit

support fees, if any, trustees fees, interest during construction, and

such reserve funds, if any, as may be necessary to secure such bonds or

notes;

(iii) in the alternative, provide financial assistance to the

municipality for the construction of an eligible project in a specified

amount from the proceeds of any federal capitalization grant, award,

assistance, or any state moneys appropriated to or otherwise transferred

into the fund, not to exceed the estimated reasonable cost of

construction of the eligible project established in the project

financing agreement or any loan agreement, as determined by the

corporation or as directed by the commissioner pursuant to subdivision

eight of this section or subdivision four of section twelve hundred

eighty-five-j of the public authorities law;

(iv) make reimbursements for the administrative and management costs

of the department and the corporation in accordance with subdivisions

five and seven of section twelve hundred eighty-five-j of the public

authorities law;

(v) provide to the municipality, for any loan made from the proceeds

of the corporation's bonds or notes, an interest rate subsidy allocation

for the eligible project in accordance with section twelve hundred

eighty-five-j of the public authorities law and this section;

(vi) administer any federal rebate requirement in connection with

obligations of the corporation and of any municipality issued in

accordance with a project financing or loan agreement;

h. An agreement by the municipality to:

(i) proceed expeditiously with and complete the eligible project in

accordance with plans approved pursuant to titles seven and eight of

this article;

(ii) commence operation of the eligible project on completion of the

project, and not discontinue operation of or dispose of the eligible

project as long as a loan to the municipality for such project remains

outstanding, without approval of the commissioner; provided, however,

that the commissioner shall not approve disposition of the eligible

project without the concurrent approvals, as appropriate, of the

corporation and the state comptroller. None of the foregoing shall limit

the commissioner's authority to terminate or impose conditions upon the

operation of an eligible project pursuant to the provisions of this

chapter and any implementing regulations thereto;

(iii) operate and maintain the eligible project in accordance with

applicable requirements of federal and state law;

(iv) establish and maintain project accounts in accordance with the

project financing agreement and generally accepted government accounting

standards;

(v) establish a dedicated source of revenue (which may include a

general obligation of the municipality) providing for:

(a) operation and maintenance costs of the eligible project and

equipment renewal and replacement; and

(b) loan repayment regardless of whether the eligible project is in

operation;

(vi) permit any reviews or audits and provide assistance determined to

be reasonable and necessary by the department or the corporation;

(vii) retain public ownership of the eligible project; and

(viii) notwithstanding the provisions of any other law, general,

special or local, inconsistent with this section, delegate to the

corporation the authority to invest proceeds of bonds or notes issued by

the corporation or the municipality on behalf of the municipality.

i. An agreement by the corporation to certify, subject to the

availability of funds, payment upon submission of a satisfactory request

for disbursement of loan proceeds by a municipality, of an amount

equivalent to actual construction costs incurred on or before the date

of submission of the request for disbursement of loan proceeds, plus any

projected construction costs which will be incurred within ninety days

from the date of submission of the request for disbursement of loan

proceeds, less any funds already advanced;

j. An agreement in regard to financial assistance provided pursuant to

paragraph (b) of subdivision four of section twelve hundred

eighty-five-j of the public authorities law, to waive programmatic

requirements other than those mandated by federal law and subparagraph

(i) of paragraph d of subdivision one of this section, provided that the

project was in compliance with the goals and requirements of the Federal

Water Pollution Control Act, prior to July first, nineteen hundred

eighty-eight, or was subject to an administrative or judicial order

requiring compliance with the goals and requirements of the Federal

Water Pollution Control Act prior to September thirtieth, nineteen

hundred eighty-nine; and

k. Such other agreements or covenants as may be required in connection

with the issuance by the corporation of its bonds or notes.

5. For the purpose of implementing the program set forth in this

section and section twelve hundred eighty-five-j of the public

authorities law, and ensuring compliance with the requirements of Title

VI of the Federal Water Pollution Control Act, the corporation shall

ensure compliance with each project financing agreement by:

a. retaining the right to inspect and review work on each eligible

project in progress and upon completion, and determining whether such

work was undertaken and completed in compliance with all relevant plans

and the terms of such project financing agreement;

b. retaining the right to certify or refuse to certify advances and

payments to a municipality pursuant to a project financing agreement or

any loan agreement executed subsequent thereto to finance an eligible

project;

c. retaining the right to certify or refuse to certify advances and

payments to a municipality pursuant to a project financing agreement and

any loan agreement executed subsequent thereto to finance an eligible

project based upon the determinations of any review or audit;

d. establishing remedies if work on an eligible project has not been

completed in accordance with all relevant plans and the terms of such

project financing agreement due to factors within the municipality's

control; and

e. requiring a municipality to maintain project accounts with respect

to any eligible project.

Nothing herein shall be construed to affect or diminish the general

authority of the department to inspect and review the work on any

project financed pursuant to this section, or to inspect the records

relating to such project, for the purpose of determining compliance with

any other provisions of this chapter.

6. In the event the work completed pursuant to a project financing

agreement or loan agreement is deemed not in compliance with such

agreements, the corporation shall expeditiously notify the municipality

of such non-compliance and indicate the reasons for such determination.

7. For the purpose of implementing the program set forth in this

section and section twelve hundred eighty-five-j of the public

authorities law, and ensuring compliance with the requirements of Title

VI of the Federal Water Pollution Control Act, the department shall:

a. Enter into any agreement between the state of New York and the

administrator of the United States environmental protection agency and

take all other actions necessary to comply with the requirements of

Title VI of the Federal Water Pollution Control Act and state law,

including but not limited to:

(i) determining a reasonable schedule for financing and construction

of eligible projects;

(ii) directing the establishment of systems of records or accounts and

subaccounts within the water pollution control revolving fund as the

department deems necessary or desirable, and approving or disapproving

the establishment of such record systems or accounts and subaccounts as

the corporation requests for the operation of the water pollution

control revolving loan fund;

(iii) determining the accounts or subaccounts within the water

pollution control revolving fund which will be used as a source of

funding for each eligible project subject to the limitations of

subdivision six of this section; and

(iv) approving each project for qualification as an eligible project.

b. Arrange in consultation with the corporation for independently

conducted reviews and audits on at least an annual basis necessary to

carry out the objectives of the fund.

c. Submit a copy of the draft intended use plan to the governor, the

director of the division of the budget, the chairman of the senate

finance committee and the chairman of the assembly ways and means

committee on or before October thirty-first, nineteen hundred

eighty-nine and annually on or before such date thereafter and submit a

copy of the final intended use plan to such persons upon its approval by

the administrator of the United States environmental protection agency.

8. The corporation may or, if so directed by the commissioner, the

corporation shall provide financial assistance to municipalities as a

loan pursuant to paragraph (a) of subdivision four of section twelve

hundred eighty-five-j of the public authorities law from any available

moneys in the fund other than the proceeds of the corporation's bonds or

notes or moneys needed to comply with subdivision five of section twelve

hundred eighty-five-j of the public authorities law if and to the extent

any of the following conditions are met:

a. The corporation determines that it is unable to, or that it is

impracticable to, finance all or a portion of the costs of an eligible

project from the proceeds of bonds or notes that are special obligations

of the corporation; or

b. The total cost of the eligible project and related segments does

not exceed four million dollars where such project and related segments

service a municipality with a population of three thousand five hundred

or less; or

c. The commissioner or the corporation determines that failure to do

so would jeopardize the receipt or maintenance of federal capitalization

grant moneys, awards or assistance; or

d. A determination is made by the corporation that the issuance of and

use of the proceeds of the corporation's bonds to provide financial

assistance to municipalities would cause the loss of the tax-exempt

status of any bonds or other obligations of New York state, all or a

portion of the proceeds of which are appropriated or otherwise

transferred into the fund; or

e. Federal capitalization grants are provided in the form of a letter

of credit or draws under capitalization grant agreements and the

commissioner or the corporation determines, consistent with the purposes

of the fund, that providing financial assistance from the proceeds of

corporation bonds or notes would delay receipt of moneys from the

federal government under the Federal Water Pollution Control Act.

The interest rate charged on any loan made by the corporation pursuant

to this subdivision shall be no more than two-thirds of the market rate

of interest otherwise applicable thereto, provided, however, that in the

case of any municipality which has, during the period commencing on June

first, nineteen hundred ninety-two and ending on September thirtieth,

two thousand twenty-seven, (i) submitted an application for financial

assistance in the form of a loan from the corporation pursuant to this

subdivision, for an eligible project, which application has been

accepted by the corporation, (ii) closed on such loan, and (iii)

commenced construction of such eligible project, the interest rate

charged on such loan shall be no more than one-half of the market rate

otherwise applicable thereto.

9. The contracts for the construction of eligible projects constructed

and financed pursuant to a project financing agreement shall be subject

to the requirements and provisions of article 15-A of the executive law

and, for such purposes, any such contract shall be considered a "state

contract" and the department shall be the "contracting agency" for each

such contract.

10. Notwithstanding the provisions of any other law, general, special

or local, the following determinations shall be made by the corporation

in its sole and absolute discretion:

(a) In connection with any application for financial assistance from

the fund in the form of a loan from the proceeds of bonds or notes of

the corporation, the determination as to whether the municipality

receiving such loan has qualified for an allocation of fifty percent of

the principal amount of such loan outstanding at any time, pursuant to

subdivision three of this section; and

(b) In connection with any application for financial assistance from

the fund in the form of a loan from the corporation pursuant to

subdivision eight of this section, where the municipality receiving such

loan is not qualified for an interest rate of zero percent, the

determination as to whether such municipality has qualified for an

interest rate of one-half of the market rate otherwise applicable

thereto, pursuant to subdivision eight of this section.