Mississippi Administrative Code › Title 33 - Public Health - Local Governments And Rural Water Systems Improvements Board › Part 2 - Drinking Water Systems Improvements Revolving Loan Fund Program Regulations › Chapter 3 - Project Requirements › Appendix 33-2-3-A - Determination of Eligible and Allowable Costs

Current through June 25, 2024
A. General
Eligible costs are those costs in which DWSIRLF loan
				  participation is authorized pursuant to applicable statute. Allowable costs are
				  eligible costs that meet the following general criteria in addition to any
				  specific identification as an allowable cost within Appendix A:
(1) Are necessary and reasonable for the proper and
				  efficient administration and construction of the project, are allocable to and
				  within the defined scope of the project, and are not a general expense required
				  to carry out the overall responsibilities of the loan recipient.
(2) Are authorized or not prohibited under state or local
				  laws or regulations.
(3) Conform to any limitations or exclusions set forth in
				  state laws or other governing limitations as to types or amounts of cost items.
(4) Are consistent with policies, regulations, and
				  procedures that apply uniformly to both state assisted and other activities of
				  the loan recipient.
(5) Are accorded consistent treatment through the
				  application of generally accepted accounting principles appropriate to the
				  circumstances.
(6) Are not allocable to, or included as, a cost of any
				  other Federal or State financed program in either the current, prior, or future
				  period.
(7) Are approved as allowable by the Department.
(8) Are within the scope and budget period of the project as
				  per the loan agreement. However, the budget period does not apply to the
				  planning and design allowance.
(9) Notwithstanding this Appendix, are eligible and
				  allowable under the SDWA and any implementing federal regulations.
(10) Are determined without regard to any previous DWSELF or
				  DWSIRLF loan funding provided for facilities to be replaced, upgraded, or
				  rehabilitated, except as described in Rule
				  2.9.1(6) of these
				  regulations.
(11) Are procured in accordance with Appendix D of these
				  regulations.
B. Construction
(1) Allowable costs include the costs for/of:
(a) The following types of projects, and as further
				  described or limited in the Intended Use Plan under which the project is
				  funded:
(i) projects that will facilitate compliance with national
				  primary drinking water regulations;
(ii) projects that will facilitate consolidation of public
				  water systems or the use of an alternative water supply;
(iii) projects that will upgrade a drinking water system; or
(iv) development of a public water system to replace private
				  drinking water supplies if the water poses a significant threat to human
				  health.
(b) Subagreements for construction work on drinking water
				  systems improvements. These subagreements are the prime contracts (including
				  any subcontracts) for such construction work and any necessary contracts for
				  purchase of equipment, materials and supplies by the loan recipient. Should any
				  costs for such contracts be incurred prior to loan offer, said costs will be
				  allowable provided that the loan recipient has requested and obtained
				  Department approval of said costs and provided that the loan agreement budget
				  period includes the time period these costs are incurred.
(c) Drinking water distribution lines on drinking water
				  distribution projects which provide drinking water to previously unserved
				  areas, and the service lines between the public water main and the water meter.
(d) Drinking water distribution system rehabilitation and
				  replacement (including rehabilitation and replacement of eligible service
				  lines) necessary to eliminate water loss or to preserve/restore the safety or
				  integrity of the system, as determined in an approved facilities plan.
(e) Water system capacity equal to all water distribution
				  system leaks that will remain in the system, as determined in an approved
				  facilities plan.
(f) Drinking water systems which include service to
				  industrial or commercial users when such works are owned by an eligible
				  applicant.
(g) Buildings that house or protect water production,
				  treatment or distribution facilities.
(h) Replacement of existing service lines from a water main
				  up to a building (which includes any privately owned portion) if an identified
				  public health threat exists (such as lead in the drinking water) that can be
				  reduced by the replacement of the existing service line.
(2) Unallowable costs include:
(a) Costs for the following types of projects:
(i) Projects primarily for growth, development, or fire
				  protection;
(ii) Projects that can be consolidated (except for projects
				  to implement such consolidation);
(iii) Projects for systems without adequate financial or
				  managerial support necessary to comply with SDWA requirements and all
				  requirements of the loan agreement; and
(iv) Projects for drinking water systems which serve federal
				  users exclusively, or almost exclusively.
(b) Construction and construction related costs which are
				  incurred after the Department approved eligible contract completion date
				  (including approved time extension change orders), unless approved by the
				  Department pursuant to Rule
				  3.7.5.4 of these regulations.
(c) Bonus payments that are part of the construction
				  contract for completion of building before a contractual completion date,
				  unless required by state law.
(d) Administration buildings.
C. Equipment, Materials and Supplies
(1) Allowable costs include the costs of:
(a) A reasonable inventory of chemicals and supplies
				  necessary to initiate plant operations and laboratory items necessary to
				  conduct tests required for plant operation.
(b) Necessary and reasonable safety equipment, provided the
				  equipment meets applicable federal, state, local or industry safety
				  requirements.
(c) Constructing or installing water flow metering devices
				  for the primary purpose of monitoring and/or billing inter-municipal or other
				  flows or serving and billing individual residential, commercial or industrial
				  users.
(d) Backflow preventers.
(e) Computers, display monitors, and computer software which
				  are designed into the control system for the daily operation of the water
				  system, used for the operational control and analysis of the water system, or
				  specifically designed for the operation and maintenance (including the cost of
				  developing unique operating programs for the specific loan funded project) of
				  the treatment works.
(f) Specialized mobile equipment for the operation of the
				  water system, or for the maintenance of equipment. These items include, but are
				  not limited to:
(i) Portable stand-by generators.
(ii) Portable emergency pumps to provide "pump-around"
				  capability in the event of booster station failure or pipeline breaks.
(2) Unallowable costs include the costs of:
(a) Vehicles for the transportation of the loan recipient's
				  employees, including buses, trucks, cars, motorcycles, ATVs, golf carts,
				  bicycles, etc.
(b) Items of routine "programmed" maintenance such as
				  filters, couplings, hoses, belts, etc.
(c) Radios, televisions, VCRs, camcorders, and other items
				  of a similar nature.
(d) Shop equipment installed at the treatment works or
				  elsewhere.
(e) Distribution system maintenance equipment.
(f) Replacement parts.
(g) Furnishings, office equipment, and maintenance
				  equipment, including chairs, desks, file cabinets, typewriters, coffee tables,
				  telephones, office supplies, calculators, copiers, book cases, shelves and
				  lamps, etc.
(h) Ordinary site and building maintenance equipment such as
				  lawn mowers, rakes, shovels, brooms, picks, hedge trimmers, and other such
				  equipment.
(i) Hand tools such as screw drivers, pliers, socket
				  wrenches, electric drills or saws, etc.
(j) Computers for non-operational purposes, such as for the
				  scheduling of equipment maintenance and replacement and for accounting and
				  billing services.
D. Change Orders
(1) Change orders are allowable provided the costs are:
(a) Necessary and reasonable.
(b) Within the scope of the project.
(c) Not caused by the loan recipient's mismanagement.
(d) Not caused by the loan recipient's vicarious liability
				  for the improper actions of others.
(e) In conformance with the DWSIRLF regulations.
(2) Provided the above requirements are met, the following
				  are examples of allowable change orders.
(a) Construction costs resulting from defects in the plans,
				  design drawings and specifications, or other contract documents only to the
				  extent that the costs would have been incurred if the contract documents on
				  which the bids were based had been free of the defects, and excluding the costs
				  of any rework, delay, acceleration or disruption caused by such defects.
If the defect is realized after substantial construction
				  work has been completed, and therefore requires rework, delay, or additional
				  work beyond that which would have been required by defect-free drawings, the
				  cost would still be allowable, but the additional cost of rework or delay is
				  unallowable.
The additional cost is measured as the difference between
				  the cost which would have been included in the bid based on defect free
				  drawings and the actual cost of the change order.
(b) Equitable adjustments for differing site conditions.
E. Professional Services
The term professional services refers to engineering, legal,
				  administrative, and similar services.
(1) Allowable costs include the costs of/for:
(a) Planning, application, and design. These costs include
				  all engineering and other costs that are incurred in planning and designing the
				  project, as well as applying for the loan. These costs include but are not
				  necessarily limited to the following services, as determined allowable in
				  Appendix B of these regulations. Contracts for planning, application and design
				  costs need not be submitted to the Department.
(i) Preparing the facilities plan.
(ii) Public notification and public hearings.
(iii) Preparing the plans, specifications, and contract
				  documents.
(iv) Value engineering.
(v) Preparing the draft user charge ordinance/corporate
				  resolution and draft user charge system.
(vi) Preparing interlocal agreements necessary for the
				  project.
(vii) Surveys and all other work needed to obtain clearance
				  or permits from all intergovernmental review agencies.
(viii) Preparing the loan application, preparing
				  applications for permits required by federal, state or local regulations or
				  procedures.
(ix) Compliance with the requirements of the Uniform
				  Relocation Assistance and Real Property Acquisition Policies Act as implemented
				  by federal regulation 49CFR Part 24.101(a)(1) and (2), as applicable.
(b) Construction Phase Professional Services
(i) Services incurred during the advertisement, award and
				  construction of a project to insure compliance with state purchasing laws and
				  to insure that the project is built in conformance with the design plans and
				  specifications. These services are primarily engineering and construction
				  management services provided during the advertisement, award and building of
				  the project, including observation services, materials testing (e.g., concrete
				  strength, soil compaction, etc.) required by the specifications, inspecting and
				  expediting the delivery of equipment and material purchased directly by the
				  loan recipient, reviewing shop drawings and full scale record drawings,
				  preparing change orders, payment processing, etc.
(ii) Legal, engineering, and other services incurred by the
				  loan recipient in deciding procurement protests and defending their decisions
				  in protest appeals under Appendix L are allowable regardless of the outcome of
				  the protest, provided there was not an attempt by the loan recipient to violate
				  or circumvent state purchase laws.
(iii) Development of an operation and maintenance manual.
(iv) Start-up services for onsite training of operating
				  personnel in operation and control of specific treatment processes, laboratory
				  procedures, and maintenance and records management, provided these costs are
				  incurred prior to the end of the 30 day period established in Rule
				  3.7.7(11)  of these
				  regulations.
(v) Professional liability or other insurance premiums for a
				  provider of professional services only for insurance which the provider
				  maintains in connection with the general conduct of its business. The types and
				  extent of coverage must be in accordance with sound business practice, and the
				  rates and premiums must be reasonable under the circumstances but only as part
				  of an indirect cost agreement.
(vi) Administrative services associated with the
				  construction project and administering the DWSIRLF loan.
(vii) Services, other than engineering services during
				  construction/repairs, such as railway or highway flagmen or utility or highway
				  inspectors, required during the building of the project, provided that
(1) The entity responsible for the affected railway,
				  highway, or utility requires such services for all parties conducting similar
				  types of work, regardless of the source of construction funding for the
				  project, or the services are required by law.
(2) The cost of such services has not been included in the
				  construction contractor's bid price.
(viii) Engineering or other services necessary to correct
				  defects in the facilities plan, design drawings and specifications or other
				  documents to the extent that such costs would have been allowable for preparing
				  defect free documents.
(2) Unallowable costs include the costs of:
(a) Public liaison services.
(b) Local travel (i.e., commuting expenses) between living
				  quarters and the construction site for persons working at the site.
F. Claims
(1) Allowable costs, provided the costs are properly
				  documented, incurred and requested prior to the end of the 30 day period
				  established Rule
				  3.7.7(11) of these
				  regulations, include:
(a) Change orders to the construction contract as a result
				  of settlements, arbitration awards, or court judgements, to the extent that
				  they would have been allowable had there not been a claim.
(b) The costs of assessing the merits of, negotiating, or
				  defending a claim against the loan recipient are allowable, regardless of the
				  outcome, provided that the matter under dispute is not the result of fraudulent
				  or illegal actions or mismanagement on the part of the loan recipient.
(c) Alterations in engineering, legal, contracts etc. as a
				  result of settlements, arbitration awards, or court judgements are allowable to
				  the same extent that they would have been allowable had there not been a claim.
(2) Unallowable costs include the costs of:
(a) Claims arising from work outside the scope of the loan.
(b) Claims resulting from fraudulent or illegal activities.
(c) Claims resulting from mismanagement by the loan
				  recipient.
(d) Claims resulting from the loan recipient's vicarious
				  liability for the improper action of others.
(e) Settlements, arbitration awards or court judgements over
				  the allowable costs as established in these regulations.
G. Mitigation
(1) Allowable costs include the costs of:
(a) Mitigation of only direct adverse physical impacts
				  resulting from construction of the project.
(b) Reasonable site screening necessary to comply with
				  facilities plans and necessary to screen adjacent properties.
(c) Groundwater monitoring facilities necessary to determine
				  the possibility of groundwater deterioration, depletion or modification
				  resulting from construction of the project. The extent of the allowable costs
				  for groundwater monitoring facilities is decided on a case-by-case basis and
				  depends on the size and complexity of the project and the present and potential
				  future use of the groundwater.
(2) Unallowable costs include the costs of:
(a) Solutions to aesthetic problems, including design
				  details which require expensive building techniques and architectural features
				  and hardware, that are unreasonable or substantially higher in cost than
				  approvable alternatives and that neither enhance the function or appearance of
				  the treatment works nor reflect regional architectural tradition.
(b) Land acquired for the mitigation of adverse
				  environmental effects identified pursuant to an environmental review.
H. Real Property
(1) Allowable costs include the costs of:
(a) Land acquired in fee simple title or by easement, from a
				  willing seller, for:
(i) Water supply and/or storage purposes;
(ii) A consolidation project; and
(iii) Protection of the source water of the system from
				  contamination.
(b) Preparation of the treatment works site before, during
				  and, to the extent agreed on in the loan agreement, after building. These
				  include the cost of:
(i) Demolition of existing structures on the treatment works
				  site (including rights-of-way) if building cannot be undertaken without such
				  demolition. Demolition of existing structures on the treatment works site
				  (including rights-of-way), when not required for building the project, will be
				  considered to be an allowable cost only if the existing structures constitute a
				  real and present hazard to safety, public health, or water quality and when the
				  hazard can best be abated by the removal of the existing structures.
(ii) Removal, relocation or replacement of utilities,
				  provided the loan recipient is legally obligated to pay for such as a result of
				  the DWSIRLF project under state or local law.
(iii) Restoration of streets and rights-of-way to their
				  original condition. The need for such restoration must result directly from the
				  construction of the DWSIRLF project and is generally limited to repaving the
				  width of trench.
(2) Unallowable costs include the costs of:
(a) Any amount paid by the loan recipient for eligible land
				  in excess of the appraised value or the loan recipient's record of
				  negotiation.
An amount higher than the appraised value may be found
				  allowable if the loan recipient provides sufficient written documentation to
				  the Department and receives allowability approval prior to the actual
				  acquisition.
(b) Removal, relocation or replacement of utilities located
				  on land by privilege, such as a franchise, unless the loan recipient is
				  required to pay such costs under state or local law.
(c) Land acquired in fee simple title or by easements for
				  land other than that described under H.(1)(a) above, such as easements for the
				  purpose of water distribution system expansion or improvement.
(d) Acquiring all or part of an existing publicly or
				  privately owned drinking water treatment works.
(e) The demolition of an existing structure for the
				  convenience of the owner as a means of increasing property value or property
				  use.
I. Miscellaneous Costs
(1) Allowable costs include the costs of:
(a) Equipment rental and material costs necessary for the
				  construction project.
(b) Meeting specific legal requirements directly related to
				  the project unless otherwise specified in these regulations.
(c) Royalties associated with the procurement of the right
				  to use, or the rights in, a patented product, apparatus, or process, provided
				  that they are based on a published fee schedule or on reasonable fees charged
				  to other users under similar conditions.
(d) Training workshops/seminars for loan recipient employees
				  that are necessary to provide instruction in operational, administrative,
				  fiscal or contracting procedures required to complete the construction of the
				  project. Attendance at such training workshops or seminars must occur after
				  loan offer but before the end of the loan agreement budget period.
(e) A reasonable project sign.
(2) Unallowable costs include the costs of:
(a) Salaries and benefits for the loan recipient's
				  employees.
(b) Ordinary operating expenses of the loan recipient,
				  including salaries and expenses of elected and appointed officials and
				  preparation of routine financial reports and studies.
(c) Administrative, engineering and legal activities
				  associated with the creation of special departments, agencies, commissions,
				  regions, districts, associations, or other entities.
(d) Approval, preparation, issuance and sale of bonds or
				  other forms of indebtedness required to finance any portion of the project and
				  the interest on them.
(e) Personal injury compensation or damages arising out of
				  the project.
(f) Fines and penalties due to violations of or failure to
				  comply with federal, state or local laws, regulations or procedures, and
				  related legal expenses.
(g) Operation and maintenance of the water system, which
				  include but are not limited to, labor, utilities, chemicals, materials and
				  supplies, monitoring, testing, equipment replacement, periodic payment of
				  royalties for the right to operate under a patent, etc.
(h) Lease payments.
(i) Travel, by the loan recipient, unless included under an
				  indirect cost agreement, and except as allowed under I.(1)(d) above.
J. Project Income:
(1) Bid bond forfeitures will have no effect on the
				  determination of allowable and unallowable costs. The loan recipient must make
				  the determination of whether or not a bid bond will be forfeited.
(2) The amount of liquidated damages collected will have no
				  effect on the determination of allowable and unallowable costs, except as
				  described by Rule
				  3.7.5.4 of these regulations.
(3) Interest income on DWSIRLF payments to loan recipients
				  will have no effect on the determination of allowable and unallowable
				  costs.
(4) The loan recipient must receive all income generated
				  from use of the project facilities.
Miss. Code Ann. §
										41-3-16(3)(b)