FARMERS HOME ADMINISTRATION The 1982 Budget Estimates include proposed language for this item as follows (new language underscored; deleted matter enclosed in brackets): Rural Water and Waste Disposal Grants [For grants pursuant to sections 306(a) (2) and 306(a)(6) of the Consolidated Farm and Rural Development Act, as amended (7 U.S.C. 1926), $200,000,000 to remain available until expended, pursuant to section 306(d) of the above Act.] This change would delete the language contained in the Agriculture, Legislation will be proposed to increase the interest rate for related water and waste disposal system loans from the present 5 percent statutory ceiling to the average level charged on municipal bonds sold for the same type project purposes. This change is being proposed to bring the steady growth in interest subsidy outlays under control. Until this has been accomplished, water and waste disposal grants and related loans will not be proposed. Staff years are reflected on the Salaries and Expenses Project Statement on page 399. The preceding tabulation is based on amounts included in appropriation acts. The following tabulation shows estimated obligations on an available funds basis, including balances brought forward from prior years. Water supply... :$218,163, 850: 148, 166, 296: -148, 166, 296: : : : : : : : 15,034,300: 10,148,377: -10,148,377: : : Total obligations..: 298,734, 305:202,967,529:-202,967,529: year obligations. : -11,027,843: Unobligated balance : brought forward : Unobligated balance : carried forward. - -673,991: -2,967,529: +2,967,529: : : 2,967,529: : Total appropriation : 290,000,000:200,000,000:-200,000,000: Staff years are reflected on the Salaries and Expense Project Statement on page 399. EXPLANATION OF PROGRAM Rural Water and Waste Disposal Grants. Section 306 of the Consolidated Farm and Rural Development Act provides appropriation authority for grants for the development costs of water and waste disposal projects in rural areas. Grants made under this authority may not aggregate more than $500 million in any fiscal year. 1. Eligibility of applicants: Development grants may be made to associations including corporations operating on a nonprofit basis, municipalities, public authorities, districts, certain Indian tribes, and similar organizations, generally designated as public or quasi-public agencies, that propose projects for development, storage, treatment, purification, or distribution of domestic water or the collection, treatment, or disposal of waste in rural areas. Grants may be made to assist eligible applicants to pay for part of the development cost of such projects if grants are necessary to reduce user charges to a reasonable level. Combined loans and grants may be made when the applicant is able to repay part, but not all, of the project costs. Grants also may be made to supplement other funds borrowed or furnished by applicants to pay development costs. An eligible project must serve a rural area which, if such project is carried out, is not likely to decline in population below that for which the project was designed, must be designed and constructed so that adequate capacity will be or can be made available to serve the reasonable foreseeable growth needs of the area, or other development plans for the rural area. Applications for loans and grants for water and waste disposal systems must be reviewed for comment by the officially designated agency and the local county or municipal government in which the proposed project is to be located. 2. Limits: Water and waste disposal development grants may not exceed 75 percent of the development cost of the project. The development cost may include the cost of construction of the proposed facility including rights-of-way and land rights, water rights, engineering fees, legal fees, and administrative costs in connection with construction and acquisition. (1) JUSTIFICATION OF DECREASE A decrease of $200,000,000 for rural water and waste disposal Need for Change. This grant program is proposed to be funded only in conjunction with the funding of the water and waste disposal loan program under proposed legislation. Legislation is being proposed to change the water and waste disposal loan program's statutory interest rate ceiling to a rate commensurate to the municipal bond interest rate for similar maturities. The grant program is used primarily with the loan program to lower the user charges for the proposed system. As such, the need for funding this grant program is contingent on the proposal and enactment of the interest rate legislation. Nature of Change. No funding will be requested until legislation is enacted to modify the interest rate provision relating to the water and waste loan program. Proposed for Later Transmittal, Pending Proposed Legislation for $100,000,000 for water and waste disposal grants ($200,000,000 Need for Change. Legislation will be proposed to increase the interest rate for related water and waste disposal system loans from the present 5 percent statutory ceiling to the average level charged on municipal bonds for the same type project purposes. Until this has been accomplished, water and waste disposal grants and related loans will not be proposed. Nature of Change. The change in the interest rate for water and waste loans is being proposed to bring the steady growth in interest subsidy outlays under control. If the interest rate is changed through proposed legislation, a level of $100,000,000 will be proposed for the water and waste grants in FY 1982 which will permit the Department to fund 279 projects. 77-802 0-81--69 |