From: WATTERS Rick

Sent: Thu Aug 13 13:09:54 2009

To: 'Albany'; 'Astoria'; 'Central OR I.D.'; 'Clackamas Count'; 'Farmers I.D.'; 'Millersburg'; 'Milwaukie'; 'MWMC'; 'Pendleton'; 'Scappoose'; 'St. Helens'; 'Swalley I.D.'; 'Three Sisters'

Cc: [WQ] SRF

Subject: SRF Loan Terms For 2010

Importance: Normal

To all proposed ARRA loan recipients:

I want to inform you of a temporary rulemaking DEQ is proposing for the Clean Water SRF loan program. The temporary administrative rules will be presented for adoption at the Environmental Quality Commission meeting on August 21^st in Newport, Oregon. These rules would allow DEQ to create a new special reserve for state fiscal year 2010 program funds. Under the proposed rules, DEQ would be able to set aside 50 percent of the program funds (excluding EPA capitalization grants), or about $24.25 million, to the special reserve that will fund new priority projects. The special reserve will not be used to fund increases to existing loans. DEQ also proposes to offer a financial incentive of zero percent interest for these new priority projects. The maximum amount that can be allocated under the special reserve will be $5 million to any one borrower.

As you know, there was significant interest from applicants for stimulus funding under the American Recovery and Reinvestment Act of 2009. DEQ wants to supplement the stimulus funding under ARRA by making a portion of the state fiscal year 2010 program funds available for priority projects that did not receive stimulus funding. Since the proposed special reserve is under the CWSRF loan program funds and not ARRA, the Davis-Bacon and Buy American provisions will not apply to a loan that is allocated funding under the special reserve. Also, there will not be additional subsidization for these loans. All CWSRF program requirements are still applicable, including a maximum repayment term of 20 years and an annual fee of 0.5% of the unpaid balance.

What does this mean for you? As we have discussed, your project has been allocated funding under ARRA and I am in the process of finalizing your loan agreement. If the EQC adopts the proposed temporary rules and you have interest in receiving a loan under the proposed 2010 special reserve rather than a loan under ARRA, please contact me as soon as possible. The state fiscal year 2010 program funds, including the special reserve, will be allocated to new priority projects when DEQ finalizes the new Intended Use Plan in September.

More information on the proposed rulemaking is posted on DEQ’s website. If you have further questions, you may also contact me.

Please send me your response by COB Friday, August 21. Thanks.

Rick Watters, Loan Specialist

DEQ CWSRF Loan Program