Tenn. Comp. R. & Regs. 0400-46-06-.07 - CONDITIONS

(1) Federal Requirements. During the period the SRF is capitalized by EPA grant money, any project funded must meet the following requirements:

(a) Title II Requirements. Projects must comply with the applicable requirements of Title II of the Clean Water Act cited in 40 CFR 35.3135(f)(1) (as amended).

(b) Environmental Review. An environmental review of the proposed project meeting the requirements of 40 CFR 35.3140 (as amended) must be conducted.

(c) Other Federal Authorities. Projects must comply with other applicable federal authorities cited in 40 CFR 35.3145 (as amended).

(2) Loan Agreement.

(a) The loan agreement will be a legally binding contract between the State and the borrower. The agreement will contain general conditions and may, if necessary, contain special conditions.

(b) The general conditions will be requirements of law, regulations and policies of the State.

(c) The special conditions of the loan agreement will relate to specific provisions unique for an individual project including, but not limited to, time schedules and performance requirements.

(3) Loan Amendments. A loan amendment must be approved by the Department and the Authority and shall be required when the final cost of the project is determined to be greater than the total amount approved in the loan agreement.

Loan amendments may be made to the original contract to include but not be limited to differences between the original construction cost estimate and the contract price.

(4) Procurement. Procurement transactions for equipment and construction must be conducted in a manner providing full and open competition consistent with the standards of 40 CFR 31.36 (as amended). The Department will review proposed procurement transactions for equipment and construction which exceed $25,000 prior to contract award. SRF loan participation for any project costs may be limited to amounts determined reasonable by the Department.

(5) Inspections. During project construction the borrower shall provide continuous inspection by qualified inspectors in sufficient numbers to ensure the project complies with approved plans and specifications.

The Department will conduct interim inspections to determine compliance with approved plans and specifications and loan agreement, as appropriate.

The borrower shall notify the Department in writing within 30 days of Initiation of Operation so that an operation and maintenance inspection and final inspection can be made by the Department.

(6) Loan Payments.

(a) Documentation. The Department shall review and certify the loan share of the appropriate project costs incurred and as certified and documented in the borrower's most recent payment request which includes proper invoices to support costs. The payment will be in accordance with Request For Disbursement of Funds form as provided by the Department. The Authority shall pay the loan share of the project costs as certified by the Department.

(b) Non-Compliance. Payments shall be limited to work that complies with approved plans, specifications, and project schedules as determined by the Department.

(c) Adjustments. The Department may at any time review and audit requests for payment and make adjustments for, but not limited to, math errors, items not built or bought, and unacceptable construction.

(d) Release. By its acceptance of final payment, the borrower releases and discharges the Department, its officers, agents, and employees from all liabilities, obligations, and claims arising out of the project work under the loan, subject only to exceptions previously contractually arrived at and specified in writing between the Department and the borrower.

(7) Files and Records. All files and records pertaining to the project shall be maintained by the borrower throughout the project and made accessible to the Department and the Comptroller. These files and records must be retained by the borrower for at least three years after construction completion.

(8) Change Orders. Changes in the project work that are consistent with the objectives of the project and that are within the scope and funding level of the loan agreement do not require the execution of a formal loan amendment, however, where the change order will result in the expenditure of more funds than the loan amount, a loan amendment must be executed prior to the implementation of the changes. The Department will determine the reasonableness of cost for all change orders.

(9) Project Performance.

(a) The borrower shall notify the Department in writing within 30 days of the actual date of Initiation of Operation.

(b) Following written notification to the recipient, the Department may unilaterally designate an Initiation of Operation date if the recipient fails to submit a reasonable date.

(c) One year after the date of Initiation of Operation, the borrower shall certify to the Department in writing whether or not the wastewater facility meets its project performance standards.

(d) The borrower shall take corrective action necessary to bring a project into compliance with the project performance standards.

(10) Reservation of Rights. Nothing in this rule:

(a) Prohibits a borrower from requiring more assurances, guarantees, or indemnity or other contractual requirements from any party performing project work; or,

(b) Affects the Department's right to take remedial action, including, but not limited to, administrative enforcement action and actions for breach of contract against a borrower that fails to carry out its obligations under this chapter.

(11) Effect of Approval or Certification of Documents. Review or approval of facilities plans, design drawings and specifications or other documents by or for the Department does not relieve the borrower of its responsibility to properly plan, design, build and effectively operate and maintain the wastewater facilities as required by law, regulations, permits and good management practices. The Department is not responsible for increased costs resulting from defects in the plans, design drawings and specifications or other subagreement documents.

(12) Value Engineering. During the design of the project the Director will determine when and to what degree value engineering will be conducted. Those value engineering determinations recommended by the Director shall be implemented by the local government and loan eligibility will be limited accordingly.

(13) Operation and Maintenance Manual. Prior to ninety percent payment of loan proceeds, all construction loan borrowers shall submit to the Department a draft Operation and Maintenance Manual for its approval as to adequacy and completeness. This shall apply only to loans for wastewater treatment plants. A final, plant-specific Operation and Maintenance Manual shall be submitted to the Department for its approval one year after Initiation of Operations.

Notes

Tenn. Comp. R. & Regs. 0400-46-06-.07

Original rule filed September 16, 2013; effective December 15, 2013. . Rule originally numbered1200-22-06.

Authority: T.C.A. §§ 68-221-1001 et seq. and 4-5-201 et seq.