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Financial Assistance Options for Homeowners
The ability of property owners to pay a tapping fee in addition to the cost of installing the building sewer is always a concern. Many families find these costs to be extremely burdensome. However, in some communities, the imposition of such fees lowers the overall cost of the system by lowering the long-term borrowing requirements and avoiding the interest cost associated with debt. While these fees may be burdensome for many, their imposition is quite commonplace. For those households where the payment of such fees in addition to the other costs associated with the installation of the sewer system constitute a genuine hardship, there are programs available to help. One of the most popular is a program administered by the U.S. Department of Agriculture's RUS.
Rural Utility Service - U.S. Department of Agriculture
Rural Housing Loans and Grants Program
RUS provides low interest loans and grants to eligible applicants living in rural areas to make improvements to their property. Among these improvements is the cost to install public sewers (including the payment of a reasonable tapping fee). The cost of constructing bathroom facilities or installing the building sewer from the lateral to the household plumbing also qualifies for RUS funding. Loans or grants are made directly to the property owner and are based upon their ability to repay the obligation. Grants may be made to those applicants 62 years of age or older with incomes that are insufficient to repay any portion of the loan. In each instance, the borrower must be the owner of the property. The cumulative maximum loan amount to an individual is $15,000, the maximum cumulative grant amount to any one individual is $5,000, and the maximum loan term is 20 years. The interest rate is 1 percent.
This program offers several advantages.
- Individual home owners, not the authority, apply directly to RUS for assistance.
- Interest rates are 1 percent and, in some instances, grants are available where household incomes are too low to repay the loan.
- The Township is able to impose a reasonable tapping fee on all connections with some assurance that funds will be available to the most needy households in order to pay them.
As with any government financed program, timing is often a problem for the receipt of funds. A lien is placed against the improved property until the loan has been repaid. Applications must be made directly to the county office of RUS.
PENNVEST's Loan/Grant Program
Another program that may be useful for individual homeowners is the loan/grant program offered by PENNVEST to repair or replace on-lot septic systems. Although most authorities operate centralized sewage collection and treatment systems, some have become the responsible agency for administering municipal on-lot management districts. Other authorities operate a pump and haul type of system or provide similar services that require homeowners to have and maintain their own on-lot facilities. The PENNVEST program is administered through local banks but is underwritten by PENNVEST. Lending amounts are subject to a maximum threshold, and maximum household income criteria must be met in order to participate in the program. Due to the difficulty in administering the program, PENNVEST has been reconsidering its usefulness. If your authority provides services to individual households that must maintain their own on-lot sewage facilities, up-to-date information on this program may be obtained directly from PENNVEST.
Grant Programs
A wide variety of grant programs are available to municipal authorities. However, many of these programs have only limited funds, and they seldom offer grant amounts sufficient to make substantial reductions in project cost and user charges. In addition, most grants are directed toward achieving a specific purpose such as economic development, community revitalization, housing rehabilitation, or reduction of cost for low/moderate income households. The principle source of grants is the Pennsylvania Department of Community and Economic Development (DCED).
The DCED administers a Community Development Block Grant Program for the U.S. Department of Housing and Urban Development for a variety of qualified projects, including the construction of water and wastewater facilities. The program has two segments. Approximately 50 percent of the money allocated to Pennsylvania is reallocated to various entitlement communities. Each county in Pennsylvania is an entitlement community as are most major cities. The remaining funds are allocated through a statewide competitive program. Request for funding for county entitlement funds is made through the county's planning commission, which acts as a screening agency for the county commissioners. Applications for funding through the statewide competitive grant process are submitted directly to DCED. The basic eligibility criteria established by DCED requires that 51 percent of the project benefit low and moderate income households in the project area.
The advantages of this program are many:
- It is easy to apply.
- You are able to discuss project merits with the decision makers.
- Multiple-year funding is possible once the project is qualified.
However, the program also has its disadvantages:
- The grants are typically small relative to project size. (Grants through the county entitlement program seldom exceed $20,000 - $30,000, and the maximum grant available through the statewide program is $350,000.)
- As a condition of the grant, tapping fees for low/moderate income households must be eliminated to recognize the impact of the grant.
- Administration is sometimes cumbersome.
- It is often difficult to establish the exact percentage of low/moderate income households in a project area without conducting a house-to-house income survey.
- Separate accounting of all CDBG funds must be maintained.
Additional programs may be available if your project helps local industries create and keep new jobs or is needed to facilitate the location of a new employer to your area. In both instances, additional grant funds may be successfully incorporated into your project's financing package if the Governor's Response Team can provide guidance to your authority on how to access these funds. Many of these programs require the assistance of your municipal officials since grants are made to the municipal body that is responsible for grant administration.
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