695-048-0100 Use of Grant Funds Funding for the Community Drinking Water Enhancement and Protection Fund comes from the General Fund and from Lottery Revenue Bonds. Eligible costs for each fund source are specified in this section. Lottery Revenue Bonds shall not be used for loan repayment. (1) Drinking Water Source Protection Grants may be applied towards costs related to : (a) A cquiring lands from willing sellers for the purposes in ORS 448.370 ; (b) En tering into real covenants, C onservation E asements , or similar agreements for the purposes of ORS 448.370 , which are defined as Protective Instruments in these rules ; and (c) R epaying a loan used to finance a P roject to protect, restore, or enhance lands consistent with OAR 695-048-0 10 0( 1 ) ( a ) or ( b ). If a Project involves the payoff of a Grantee’s loan used to finance the acquisition of a Protective Instrument, and the loan is forgivable in part, the Grantee cannot be reimbursed by OWEB for the forgiven portion of the loan. (2) Use of Lottery Revenue Bon d funds deposited into the Community Drinking Water Enhancement and Protection Fund may only be applied to a P roject for acquisition of Protective Instrument s that include the protection, restoration, or en h ancement of lands for the benefit of drinking water source accomplished through the following : an estate in fee simple absolute , C onservation E asement, or other legal agreement s drafted to run with the land and survive in perpetuity. (3) Eligible costs for P rojects under OAR 695-048-0100 (1) (a) or ( b ) that are funded with Lottery R evenue Bonds deposited into the Community Drinking Water Enhancement and Protection Fund must be only “capital expenditures” for federal income tax purposes as defined by 26 C.F.R. § 1.150-1(b). This term includes both capitalized and capitalizable expenditures. Eligible costs include : (a) The purchase price associated with the Prot ective Instrument . ( A ) The purchase price shall be based on an appraisal and review appraisal completed in accordance with applicable appraisal standards, including the Uniform Standards of Professional Appraisal Practice for an estate in fee simple absolute and C onservation E asement acquisitions. ( B ) Other method s of substantiating the purchase price conducted by an independent third-party entit y may be accepted at the discretion of OWEB for all other Protective Instruments . (b) The staff and contractor costs incurred as part of the acquisition process related to the Protective Instrument. Staff and contractor costs (labor hours) must be documented and tracked to the P roject and capitalizable to the asset . (c) The cost of due diligence activities associated with acquisition of the Protective Instrument after the specific property has been identified and that are capitalizable to the asset , including appraisal or other method of substantiating the purchase price , environmental site assessment, survey, title review, consultant fees, and other customary due diligence activities . (d) The cost of baseline inventory preparation documenting the natural and human characteristics and conditions of the specific property at the time of acquisition . The cost of the baseline inventory must be capitalizable to the asset . (e) Discret e legal costs incurred by the W ater S upplier that are specific to the acquisition of the asset, and capitalizable to the asset. Legal costs (labor hours) must be documented and tracked . General in-house legal costs that are related to the overall management or policy of the entity are not eligible . (f) C losing fees, including recording and title insurance costs . P re-payments , such as those that fund the escrow account for insurance, taxes, or interest payments, are not eligible . (g) For the costs in OAR 695-048-0 10 0( 3 ) ( a )-( f ) to be eligible for reimbursement by OWEB, costs must have been incurred no earlier than 60 days prior to the issuance of the L ottery Revenue B ond s . (4) Eligible costs for P rojects under OAR 695-048-0 10 0 (1) (a)-(c) that are funded with General Funds deposited into the Community Drinking Water Enhancement and Protection Fund include : (a) The purchase price associated with the Protective Instrument. ( A ) The purchase price shall be based on an appraisal and review appraisal completed in accordance with applicable appraisal standards, including but not limited to the Uniform Standards of Professional Appraisal Practice for an estate in fee simple absolute and C onservation E asement acquisitions. ( B ) Other methods of substantiating the purchase price conducted by an independent third-party entity may be accepted at the discretion of OWEB for all other Protective Instruments . (b) The interest on bridge loans needed to close on the Protective Instrument prior to when funding will be available for distribution through the program. (c) The staff and contractor costs incurred as part of the Protective Instrument acquisition process related to the property . (d) The cost of due diligence activities, including appraisal or other method of substantiating the purchase price , environmental site assessment, survey, title review, consultant fees, and other customary due diligence activities . (e) The cost of baseline inventory preparation documenting the natural and human characteristics and conditions of the specific property at the time of the acquisition of the Protective Instrument . (f) The legal fees incurred by the W ater Supplier related to the Project . General in-house legal costs that are related to the overall management or policy of the entity are not eligible. (g) The closing fees, including recording and title insurance costs . (h) The cost of developing a Long-Term Management Plan to meet program requirements. (i) Indirect costs of the Grantee, dependent on available funding. (j) For the costs in OAR 695-048-0 10 0( 4 ) ( a )-( i ) to be eligible for reimbursement by OWEB, costs must have been incurred no earlier than 18 months before the applicable Drinking Water Source Protection Grant application deadline . Statutory/Other Authority: ORS 448.370(7) Statutes/Other Implemented: ORS 448.370 - 448.380 History: OWEB 1-2024, adopt filed 07/26/2024, effective 08/01/2024