From The EditorSusan McCannonPlanning and Funding SpecialistSusan.McCannon@feiengineers.com

This issue of The Bucket Li$t is all about Opportunities - such as new grant funds that will soon be available, more frequent

opportunities to submit loan applications, and ways to improve the caliber of budget planning and protection for your community. Frachetti Engineering, Inc. will embark on an exciting business opportunity as we merge with Briliam Engineering Services. We have enjoyed 11 years of success working together as partners and cooperators, but this opportunity will allow us to create a stronger team and bringmore robust resources to our projects. So, as we take thisopportunity to become FEI Engineers we also want to renew our commitment to our clients to better serve your needs.

IN THIS ISSUE:

CHANGES AT FRACHETTI ENGINEERING

GRANTS OPPORTUNITIES

CHANGES AT CDPHE

RESERVE ACCOUNTS

Next Time in The Bucket Li$t:• Changes to State Revolving Loan Funds• 2015 Loan Rates

5325 S Valentia Way | Greenwood Village, CO | 80111www.feiengineers.com | (303) 300-3464

Volume 4 Issue 3October, 2014

Funding and finance ideas and strategies for water and wastewater

How BIG is your project funding bucket... and what’s in it? We can help!

Letter from the Editor

When Opportunity Knocks …Be Open to Those Possibilities. In my personal financial planning, I typically try to avoid debt and instead save up cash to make improvements to my home or other assets. However, an interesting discussion about the opportunity cost of money in a recent webinar shifted my thinking about the timing of a planned energy efficiency improvement. Using a Cash Flow Opportunity Calculator I could see that the wisest financial choice was to finance the improvement and pay the debt service out of the energy cost savings that would immediately start to accrue. Acting now also allowed me to avoid inevitable increases in labor and material costs that would have likely occured in the future. Finally, finance interest rates are currently low, so that, coupled with the cash I had on hand, enabled me to move forward with an important improvement without increasing my total out-of-pocket expense.

You may have similar opportunities available to you. I know that many small municipalities and special districts have been “hunkered down” for the past few years and have put a lot of planned improvements on hold. That made sense given that many grant funds had dried up and system revenues were tight. Now however, opportunity is knocking and the smart choice is to open the door and explore ways to move your improvements projects forward.

One way to explore opportunities is by using the Cash Flow Opportunity Calculator mentioned earlier. Access this tool, developed by the EPA for EnergyStar, by clicking on the link below.

http://www.energystar.gov/buildings/tools-and-resources/financial-resourc-es

Grant Opportunity Knocks

A number of grant funds have been renewed and a few new ones are emerging. For example, the Department of Local Affairs (DOLA) is now experiencing normal funding levels in its Energy and Mineral Impact Assistance grant funds. Due in part to the pent-up demand from a few years of no funding availability, DOLA is experiencing a high level of demand for those funds, so applicants need to have adequate local cash matches and good applications for projects that are ready to proceed. If you don’t succeed in one grant cycle be willing to apply in a subsequent cycle until successful.

Volume 4 Issue 3 October 2014

In addition, the USDA has funds available through their Emergency Community Water Assistance Grant program. Applications for these grant funds can be submitted to your local Rural Development office at any time.

A few important aspects of this grant opportunity include:

• Funds can be used for construction, improvements, renovation or reconstruction. Preliminary design and plan-ning work must be included with the application.

• Funds can be used as a local match to FEMA and other funds

• $500,000 cap on water source, treatment, and trans-mission projects.

• $150,000 cap on distribution projects.

• Eligible communities have populations smaller than 10,000 and MHI less than the statewide MHI of $57,685.

Visit the USDA-Rural Development websitefor more information or click on this link:

http://www.rurdev.usda.gov/UWP-ecwag.htm

If your community is in a flood disaster area and still has impacts that need to be addressed,you are likely feeling exhausted and overwhelmed,but take heart - these funds can help you rebuildand I can help you prepare and submit a stronggrant application.

The Colorado Department of Public Health and Environment (CDPHE) will soon launch a new grant program for communities with populations of 5,000 or less. The Small Communities Assistance Grant program will make $10 million available this year to fund planning, design, and/or construction of water and wastewater projects. Stay tuned to the CDPHE website for more details.

The United States Department of Agriculture – Rural Development launched a new program known as Special Evaluation Assistance for Rural Communities and Households (SEARCH) that can provide up to $30,000 forplanning and design of water and wastewater projects. Applicants must have populations of 2,500 or less and median household incomes below $52,720. Contact me or your local USDA-RUS representative for more details.

Other Changes Ahead

The Grants and Loans Unit of the Colorado Water Quality Control Division continues to make changes to their various grants and loans programs. Starting in 2015 loan applications will be accepted on a more frequent schedule; five application openings per year instead of four. The Green Project Reserve will continue in 2015 but likely at a lower level than in years past. On the other hand, Principal Forgiveness will not be continued in 2015. Finally, prospective loan applicants will need to demonstrate a higher level of readiness-to-proceed before a loan application can be submitted. This is the result of more emphasis on the ability of a

project to receive funds, complete their project and get all funds expended within two years of a loan commitment. On the Grants front, the $10,000 Planning & Design grants will be discontinued and replaced with more robust grants that provide a higher level of financial support for planning and design activities. Some Nutrients Management grants may be available in 2015 as well as Natural Disaster Recovery grants.

Reservations about Reserves?

Reserve Accounts are a powerful tool that all water and wastewater providers should be using in their annual budgets. As you work on your 2015 budget consider including specific reserve accounts to improve the caliber of your budget planning and the level of protection for your community.

Reserve accounts are akin to the dedicated savings accounts that most of us have in our personal financial portfolios; think about your child’s college fund, or the car repair and replacement savings account, or the retirement savings account that you and perhaps your employer contribute to every month. Reserve accounts are based on the same concept – meeting future needs, providing resiliency in times of emergency, and making small, regular strides towards BIG goals.

How BIG is your project funding bucket... and what’s in it? We can help!Volume 4 Issue 3 October 2014

For additional information on project funding or other topics covered in this issue of The

Bucket Li$t please contact me at: Susan.McCannon@feiengineers.com

Typical standard accounts used by the water and wastewater industry include:

• O & M - Containing a 45 to 90 day supply of cash to maintain operations in a cash crunch.

• Repair & Replacement - Annual contributions should equal annual depreciation expenses.

• Contingency / Emergency - Funds should be available to cover the cost of replacing the most expensive component or facility that may be

affected by a natural disaster (remember the floods of 2013) less any insurance payments that may be applicable. An available line of credit with a local lending institution can mitigate or replace the need for a Contingency/Emergency reserve.

• Debt Payment – One year’s worth of payments.

When establishing reserve accounts for the first time here are the things to think about:

1. What type of account (or which of the four above-mentioned accounts) to establish and the specific purpose for those funds? Draft policy language to establish the need and guidelines for use.

2. The total amount of funds the reserve should contain. Be realistic, state the needed amount, but don’t get discouraged if it looks like an unat-tainable goal.

3. How is the reserve to be funded, i.e. can an initial transfer from the General or Enterprise Fund be made this year, and/or will yearly contributions be required to grow or replenish the fund? If yearly contributions are necessary decide how much per year over how many years.

Be as detailed and stringent/flexible as you believe appropriate. Remember that reserve planswithspecificgoalsandsideboardsaremuch less likely to get sidelined or sidetracked in the future.

Volume 4 Issue 3 October 2014

After you have a thoughtful plan put together, take it to the folks who need to either make the decisions or get on board with your plan. Include a discussion about reserve accounts in the budget narrative. Describe what you have been able to accomplish this year, addresswhat you want to accomplish next year, and lay out any upcoming steps to achieve that final goal: having well thought-out, well-funded reserve accounts that protect and enhance the ability of the water or wastewater system to serve the community. If you can’t get it all accomplished this year make a good first step and plan to build on it next year and beyond. Another benefit -- having a well thought-out reserve plan will allow you to present yourself as a stronger candidate for grants and loans. Good financial management practices are hallmarks that lenders and funders look for. So, if you are planning to pursue funding for improvements in 2015 now is the time to establish good practices related to reserve accounts.

FEI Engineers is a full service professional engineering firm specializing in water and wastewater. With staff dedicated to project funding and system finance issues, as well asproject design, engineering and construction needs, we can help you reach your goals in moreways than one.

The Bucket Li$t is a quarterly electronic newsletter distributed by FEI Engineers. Please feel free to forward this newsletter to colleagues or other interested parties.