MassDEP -Mass Clean Water Trust $133,057,300 ARRA SRF Audit

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Sep 30, 2010 - MassDEP and the Trust chose to distribute all of the ARRA project funds as Clean Water SRF received $133,057,300 in ARRA funds

Loan agreement with the Trust ...... Falmouth, Massachusetts

State Revolving Fund Annual Report

September 30, 2010
MESSAGE FROM THE EXECUTIVE DIRECTOR

The Massachusetts Water Pollution Abatement Trust (the Trust) in partnership with the Massachusetts Department of Environmental (MassDEP) provides low interest loans to municipalities and other governmental entities to finance water quality improvement and public health-related projects. This is accomplished through two programs – the Clean Water State Revolving Fund (SRF) and the Drinking Water State Revolving Fund. The Environmental Protection Agency (EPA) requires reporting on both of the programs through the Clean Water SRF Annual Report and the Drinking Water SRF Biennial Report. These reports have been combined into this report, which covers State Fiscal Year 2010.

5. Other Program Accomplishments

ARRA Inspections
To ensure compliance with the provisions of ARRA, MassDEP transferred four staff members to the SRF program to provide a compliance review of each ARRA funded project. Using the checklist developed by the EPA, the inspectors traveled throughout Massachusetts to review the status of each project and to provide assistance to the communities in improving their compliance with ARRA

Clean Water Commitments ARRA Green

CWSG-09-36 Falmouth Wind Turbine II Loan/Grant

Wind Turbine and Photovoltaic Installation $4,865,000.00 2/1/2010
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Outside legal counsel has advised that Wind II is subject to specific provisions of ARRA and applicable federal regulations and guidelines ("Federal Law') in addition to the terms and conditions of the Project Regulatory Agreement ("PRA") and the Loan Agreement associated with the funding of Wind II, Under Federal Law and the PRA and Loan Agreement, the Town must maintain Wind II as an "energy efficiency" project, as described in EPA guidelines dated March 2, 2009, in order to benefit from the financial subsidy provided by the Trust under ARRA and the Trust's Clean Water State Revolving Fund program.

Under federal regulations governing the Trust's ARRA grant at 40 CRF Part 31.30(d) (1), if the Town chooses to change the scope or objectives for Wind II in any significant manner, the Town will have to request the Trust's prior written approval.

If the change is such that Wind II continues to be used in a manner that is consistent with an "energy efficiency" project, the Trust will be able to approve such a change. But if the change would result in Wind II being used in a manner that is not consistent with an "energy efficiency" project (for example either ceasing operations or curtailing them to the extent that Wind II operates for only a very limited period of time each day), the Trust will not be able to approve the request and the Town will not be allowed to utilize the ARRA funds with principal forgiveness.
Federal regulations at 40 CFR 31.30(1)(3) states that a grantee, such as the Trust, "will not approve any budget or project revision which is inconsistent with the purpose or terms and conditions of the Federal grant to the grantee."

Thus, the Trust's disapproval of such a change is compelled by Federal Law.
Because of the foregoing requirements of Federal Law and actions taken by the Falmouth Board of Selectmen and warrant articles that will be considered by the April 8, 2013 Falmouth Town Meeting, the Trust is requiring that the Town provide it with "fur pursuant to section 20 of the Loan Agreement, as follows:

First, DEP will conduct its normal completion audit in response to the Town's submission of its Project Completion Certificate to DEP;

Second, the Trust will require that the Town enter into an agreement to operate Wind II at a level that permits it to continue to qualify as an "energy efficiency" project in accordance with DEP requirements for the duration of the Loan;

Third, upon the signing of the agreement, the Trust will conditionally forgive principal repayment by waiving the payment of principal and interest under the Note and amending Schedule C to the Loan Agreement accordingly, to be in effect so long as there is no default under the agreement;

Fourth, the agreement will include on-going reporting requirements and auditing procedures with respect to the project to ensure that Wind II continues to operate as an energy efficiency project for the duration of the loan; and

Fifth, in the event that the project ceases to function as an energy efficient project, the Trust will amend Schedule C to reinstate the Town's obligation to pay principal and interest on the Loan and take such other actions as it deems necessary or appropriate to ensure compliance with Federal Law, the PRA, and the Loan Agreement.

If you have any questions regarding the foregoing, please call me at (617)367-9333 x816.
Very truly yours,
Susan E. Perez Executive Director MWPAT
Kenneth L. Kimmell Commissioner MassDEP
(Note # 1 )
(Massachusetts Water Pollution Abatement Trust, MWPAT has changed its name to Massachusetts Clean Water Trust, MCWT. )
(Massachusetts has a history of changing state agency names to hide "mistakes")