§ 4763c. Loans to municipalities for municipal public water supply systems
(a) The Secretary may certify to the Vermont Municipal Bond Bank established by section 4571 of this title the award of a loan to a municipality to assist with a public water supply system project, when the Secretary finds that:
(1) the project is necessary;
(2) the proposed type, size, and estimated cost of the project are suitable for its intended purpose; and
(3) the municipality will have the technical, financial, and managerial ability to operate the facility in compliance with federal and State law.
(b) The certification by the Secretary shall specify the interest rate, and indicate which of the following loan conditions concerning construction loans apply:
(1) The term shall not exceed 30 years, and the annual interest rate, plus the administrative fee, shall be no more than three percent or less than zero percent, except that when the applicant municipality is disadvantaged as defined by subdivision 4752(12) of this title, the term shall not exceed 40 years. When the applicant municipality is disadvantaged as defined in subdivision 4752(12), the annual interest rate, plus the administrative fee, shall be no less than minus three percent.
(2) In no instance shall the annual interest rate, plus the administrative fee, be less than necessary to achieve an annual household user cost equal to one percent of the median household income of the applicant municipality or served area, taking into account:
(A) debt retirement of the project, including any monies a municipality may borrow to match federal funds available to the Vermont EPA Drinking Water State Revolving Fund pursuant to section 4763d of this title;
(B) prior drinking water projects; and
(C) estimated annual operation and maintenance costs as determined by the Secretary.
(3) Loans awarded to a municipality that has not initiated repayment prior to January 1, 2019 may be extended as provided by subdivisions (b)(1) and (b)(2) of this section.
(c) A municipal legislative body may execute a loan agreement under this subsection provided the loan is authorized by municipal voters and secured by the full faith and credit of the municipality.
(d) A loan shall be issued and administered pursuant to this chapter.
(e) Loans shall be available to the extent funds are available and according to priorities established by the Secretary.
(f) For purposes of this section, the Secretary shall determine the median household income of a municipality from the most recent federal census data available when the priority list used for funding the project was approved, or at the option of an applicant municipality, based on the recommendation of an independent contractor hired by the municipality and approved by the Secretary. The determination of the Secretary shall be final. The cost of an independent contractor may be included in the total cost of a project.
(g) Loans awarded for the purpose of refinancing old debt shall be for a term of no more than 20 years and at an interest rate set by the State Treasurer at no less than zero percent and no more than the market interest rate, as determined by the Bond Bank, except that municipalities or private water system owners that qualify for loan awards under section 4770 of this title and that incurred debt and initiated construction after April 5, 1997 may receive loans at interest rates and terms pursuant to subdivision (b)(2)(A) of this section.
(h) Loans awarded for the purpose of conducting feasibility studies and preparation of engineering plans and designs shall be for a term of no more than five years at an interest rate of zero percent.
(i) Loans awarded for the purpose of purchasing land or conservation easements to protect public water sources shall be for a term of no more than 20 years at an annual interest rate of three percent.
(j) The Secretary may forgive up to $25,000.00 of a loan from the Vermont Environmental Protection Agency (EPA) Drinking Water State Revolving Fund to municipalities for improvements to public school water systems following substantial completion of the project. The Secretary shall establish amounts, eligibility, policies, and procedures for loan forgiveness in the annual State Intended Use Plan (IUP), as required by the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., with public review and comment prior to finalization and submission to the EPA.
(k) Subject to the interest rate and administrative fee limitations of subsection (b) of this section, the Secretary may designate projects as U.S. Department of Agriculture Rural Development-Vermont EPA Drinking Water State Revolving Fund jointly funded projects, and reduce the Vermont EPA revolving fund interest rate, plus administrative fee, in order to make the total loan cost of the joint loan to the municipality equivalent to the total loan cost of a separately funded Vermont EPA revolving loan for the same project. (Added 2015, No. 103 (Adj. Sess.), § 31, eff. May 12, 2016; amended 2017, No. 185 (Adj. Sess.), § 9, eff. May 28, 2018; 2019, No. 42, § 37, eff. May 30, 2019.)