WAC 173-322-130   Loans.  (1) Purpose. This section establishes requirements for a program of remedial action loans to local governments under RCW 70.105D.070 (3)(a) and (7). The loan program shall be limited to providing loans to supplement local government funding and funding from other sources to meet the match requirements for oversight remedial action grants. The intent of the loan program is to encourage and expedite the cleanup of hazardous waste sites and to lessen the impact of the cleanup cost on ratepayers and taxpayers.

     (2) Types of loans. The loan program includes two different types of loans, a standard loan and an extraordinary financial hardship loan. The two types of loans have different applicant eligibility requirements and different terms and conditions for repayment based upon the applicant's ability to repay the loan.

     (a) Standard loan. A standard loan is a loan that includes the terms and conditions for repayment.

     (b) Extraordinary financial hardship loan. An extraordinary financial hardship loan is a loan that includes deferred terms and conditions for repayment. Deferred terms and conditions may not be indefinite. Any such loan must be approved by the director.

     (3) Applicant eligibility. To be eligible for a loan, the applicant must meet the following requirements:

     (a) The applicant must be a local government, as defined in WAC 173-322-020;

     (b) The applicant must meet the eligibility requirements for an oversight remedial action grant set forth in WAC 173-322-070(2);

     (c) The applicant must agree to undergo an independent third-party financial review to determine its financial need for the loan, ability to repay the loan, and inability to obtain funds from other sources. The financial review shall be conducted at the direction and cost of the department. Based on that financial review, the applicant must demonstrate the following:

     (i) For a standard loan, its financial need for the loan, ability to repay the loan, and inability to obtain funds from any other source;

     (ii) For an extraordinary financial hardship loan, its financial need for the loan, inability to repay the loan under present circumstances, inability to obtain funds from any other source, and inability to bond or raise its tax base;

     (d) The hazardous waste site must present an immediate danger to human health and the environment; and

     (e) The inability to obtain a loan would significantly delay the cleanup and subsequent use, sale or redevelopment of the properties affected by the hazardous waste site.

     (4) Application process.

     (a) Submittal. The loan application must be submitted to the department at the same time as the associated oversight remedial action grant application.

     (b) Content. The loan application must be completed on forms provided by the department and include the following:

     (i) Sufficient evidence to demonstrate the following:

     (A) For a standard loan, the applicant's financial need for the loan, ability to repay the loan, and inability to obtain matching funds from any other source;

     (B) For an extraordinary financial hardship loan, the applicant's financial need for the loan, inability to repay the loan under present circumstances, inability to obtain funds from any other source, and inability to bond or raise its tax base;

     (ii) Sufficient evidence that the hazardous waste site presents an immediate danger to human health and the environment;

     (iii) Sufficient evidence that the inability to obtain a loan would significantly delay the cleanup and subsequent use, sale or redevelopment of the properties affected by the hazardous waste site; and

     (iv) A copy of the applicant's most recent Comprehensive Annual Financial Report.

     (5) Application evaluation and prioritization.

     (a) The department will evaluate the loan application together with the associated oversight remedial action grant application. The grant and loan applications will be evaluated by the department for completeness and adequacy. After the grant and loan applications have been completed, the department and the applicant will negotiate a scope of work and budget for the grant and loan. The department will consider cost eligibility and other sources of funding when negotiating the scope of work and budget for the grant and loan.

     (b) If the department determines that the applicant meets eligibility requirements for an extraordinary financial hardship loan in subsection (3) of this section, then the department may, upon the approval by the director, provide such a loan to the applicant instead of a standard loan.

     (c) The department will fund the loan from the same fund allocation used to fund the associated oversight remedial action grant. When the demand for funds allocated for oversight remedial action grants and loans exceeds the amount of funds available, the department will prioritize the associated grant and loan applications together using the criteria set forth in WAC 173-322-070(5).

     (6) Cost eligibility. The eligible costs for the loan program shall be the same as the eligible costs for the oversight remedial action grant program set forth in WAC 173-322-070(6).

     (7) Retroactive cost eligibility. The eligibility of retroactive costs for the loan program shall be the same as the eligibility of retroactive costs for the oversight remedial action grant program set forth in WAC 173-322-070(7).

     (8) Funding and repayment.

     (a) General. If the department provides the applicant an oversight remedial action grant and the grant is funded to the maximum extent allowed under WAC 173-322-070(8), then the department may also provide the applicant a loan to enable the applicant to meet the match requirement for the grant. The loan shall be used to supplement local government funding and funding from other sources to meet the match requirement.

     (b) Department funding of match requirement. The department may provide a loan to the applicant for up to one hundred percent of the match requirement for the oversight remedial action grant.

     (c) Local government funding of match requirement. The applicant shall fund those eligible costs not funded by the department under the grant or loan. The applicant may not use in-kind services or proceeds from contribution claims to meet the match requirement.

     (d) Repayment of loan. The terms and conditions for repayment of the loan shall be based on the applicant's ability to repay the loan, as determined by an independent third-party financial review. The independent third-party financial review shall be conducted at the direction and cost of the department. For extraordinary financial hardship loans, the repayment terms and conditions can be deferred. Deferred terms are dependent on periodic review of the applicant's ability to pay. Deferred terms and conditions may not be indefinite.



[Statutory Authority: RCW 70.105D.070. 07-08-010 (Order 06-13), § 173-322-130, filed 3/22/07, effective 4/22/07; 05-07-104 (Order 04-06), § 173-322-130, filed 3/18/05, effective 4/18/05.]