A Newsletter About New Jersey's Water Quality Programs Vol. 3 No. 1

The rules governing the financial assistance application and award procedures were proposed for readoption with amendments on April 17, 1995. This proposal would expand the scope of eligible costs considered allowable under the Financing Program. Some of the rule amendments are:

• Delete the 12 percent limit on construction management/engineering costs. Instead, these costs will be eligible for funding based on the actual negotiated allowable cost. The limit of 12 percent of the low bid building cost was adopted to control costs associated with this activity. Experience has shown construction management costs are not totally linked to low bid building costs.

• Raise the one percent limit on a local government unit's allowable administrative costs to three percent and allow additional administrative costs to be eligible under the Financing Program. For example, costs associated with bond counsel and financial advisors, expenses related to local project financing, and the costs of permits required to build the project will be eligible.

• Allow publicly owned portions of house connections (service laterals) to be eligible under the Financing Program. Under the current rules, conveyance pipes from private property to the service "Y" connections were not eligible.

• Allow project sponsors to be reimbursed by the Financing Program for construction cost increases as they are incurred, up to a new five percent contingency amount. Under the provisions of the existing rule, a project sponsor is required to pay the costs of change orders as construction proceeds and receives reimbursement at the end of construction only if cost underruns occurred or if supplemental financing is awarded.

• Increase the amount reimbursed to local government units for costs related to completing planning and/or design activities under the Financing Program. Since planning and design costs typically represent a much greater percentage of building costs for smaller projects, the proposed percentage adjustment of the allowance tables is higher for smaller projects, with the percentage increase gradually reduced as the building costs increase.

• Qualify any eligible project for pre-award approval and allow construction to begin while maintaining eligibility under the Financing Program for incurred costs. In the past, projects were required to be ranked in the top 100 on the state's Project Priority List.

As a final note, the rule changes noted above are also applicable to projects pursuing funding under the Pinelands Infrastructure Trust Financing Program. This program typically provides 40 percent grants and 20 percent loans for the allowable project costs. Rule changes are also proposed allowing sponsors of Pinelands projects to qualify for funding from the Wastewater Treatment Trust for the remaining 40 percent of project costs as an alternative to local financing.

If you have any questions regarding the impact of the proposed readoption with amendments on your wastewater project, please contact Stanley Cach, Chief, Bureau of Engineering North at (609) 292- 6894 or George Goldy, Chief, Bureau of Engineering South at (609) 984-6840, as applicable. For general issues regarding the proposed rule readoption with amendments, please contact Theresa Fenton, Chief, Bureau of Program Development and Technical Services, at (609) 292-3859.