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March 29, 1993Dear Mr, Pearce: L. I LJJG 1 a!1 L L1•I Il_L. IN_ UNITED STATES DEPARTMENT OF AGRICULTURE FARMERS HOME ADMINISTRATION 5601 CORPORATE WAY, SUITE 400 WEST PALM BEACH, FL 33407 (407) 686 -5633 LETTER OF CONDITIONS NON PROFIT Water FACILITY Mr. Leland Pearce Okeechobee Beach Water Association 8840 Highway 70 West Okeechobee, FL 33974-9787 Re: Application for Rural Development Administration Assistance Please complete and return the attached Form FmHA 1942 -46, "Letter of Intent to Meet Conditions," if you desire that MAR 291993 This letter established conditions which must be understood and agreed to by you before further consideration may be given to the application. Any changes in project cost, source of funds, scope of services, or any other significant changes in the project or applicant must be reported to and approved by FmHA by written amendment to this letter. Any discontinuing processing of the application. This letter is not to be considered as loan approval or as representation as to the availability of funds. The docket may be completed on the basis of a Rural Development Administration loan not to exceed'$4,400,000.00. Since the newly created Rural Development Administration does not yet have its field structure in place, FmHA continues to administer the program. Jf FmHA makes the loan, you may make a written request that the interest rate be the lower of the rate in effect at the time of loan approval or at the time of loan closing. If you do not request the lower of the two interest rates, the interest rate charged will be the rate in effect at the time of loan approval. The loan will be considered approved on the date a signed copy of Form FmHA 1940 1, "Request for Obligation of Funds," is mailed to you. If you want the lower of the two rates, your written request should be submitted to FmHA as soon as practical. In order to avoid possible delays in loan closing, such a request should ordinarily be submitted at least 30 calendar days before loan closing. If the conditions set forth in this letter are not met within 120 days from the date hereof, FmHA reserves the right to discontinue the processing of the application. a Sch edul e The loan will be repaid over a period not exceeding 40 years from the date of loan closing. The it and 2nd payments will consist of interest only. Each succeeding installment, other than the last installment, will be equal amortized installments of principal and interest. Monthly payments to FmHA must be made on the account. pumber of Users amid Verification Reauirements: Prior to beginning construction or prior to closing of the FmHA loan, whichever occurs first, the Association will furnish evidence that 3029 residential water users and 177 commercial users are or have agreed to pay monthly charges tor services to be received from the facility being financed. A member of the the State Programs Chief's staff will audit and authenticate the number of users. l'ne Association will obtain a franchise or similar agreement from Glades and Okeechobee counties defining the service area to be served, and to be served at a future date. Qr anization: The loan docket will include evidence that the Association is legally organized under State Statutes. The Association's attorney is to provide an opinion that the Association has the authority to carry out the planned method of construction, operation and maintenance and repayment in connection with the proposed facility. Interim Financing:' Interim financing at reasonable rates from commercial sources is required during the construction period. The Association will attempt to borrow funds from commercial sources in the amount of the FmHA loan for the construction period only. If credit from commercial sources cannot be obtained, letters from these sources are to be obtained stating that credit is not available and submitted to the District Office. Fm11A cannot issue a commitment letter to a lender for interim financing until the following are completed: 1 LI. 1_I._.L.•I I L LI I 1. Plans, specifications, contract documents and permits are accepted and approved. 2. construction bids are received and are within the funds available. 3. FmHA Regional Attorney's closing instructions can be compiled with. Provided interim financing is used, construction will not begin until construction bids are obtained and the necessary processing and legal work has been completed to the point where the FmHA loan could be closed. The District Staff will approve Form FmHA 1924 -18, "Partial Payment Estimate to insure that funds are used for authorized purposes during the construction period. Prior to construction the Association is required to comply with all DER, EPA and the Seuth Florida Water Management Districts xequirements for water draw down and wetland protection. All other required permits will be obtained prior to construction. Tf interim financing is used, although a commitment has been made by the Government, only those funds advanced to pay for construction and other authorized and legally eligible expenses incurred by the Association will be deemed by the Government to be interim commercial indebtedness and retired by FmHA with permanent instruments. The FmHA must be sure that the construction loan is properly administered and that when the loan is closed, there is no doubt that the FmHA is fully secured. The Fxn-IA must insist on the following at loan closing: 1. An affidavit by the general contractor that he has been paid in full, in accordance with the terms of the contract, and that he has paid all sub- contractors, materialmen, and laborers with respect to the construction of the project. 2. A certificate by the consulting engineer that the system has been constructed in accordance with the plans and specifications approved by the Government. 3. A statement from the attorney that he has been paid to date in accordance with his agreement. When interim financing funds have been expended, the FmHA loan will be closed and permanent instruments will be issued to evidence the FmHA indebtedness. Security Reauiremgfts: 1. A first lien on all real estate now owned by the Association, and a first lien on any real estate acquired with loan funds. 2. A first lien on the revenues and service charges derived from the operation of the proposed facility and all personal property acquired or now owned as part of the facility. 3_ Promissory Note in the amount of $4,400,000.00 Title of Property: The Association will provide evidence of title satisfactory to FmHA for all the real property on which the improvements being financed are to be located or which will be purchased or improved with the loan proceeds. Business operation: The Board of Directors will carry out the business operation of the facility and will establish, practice, and comply with the requirements of the Articles of Incorporation, Bylaws, Rules and Regulations, and Loan Regulations, and Loan Resolution. The Association will, during the first year of operation, establish a reserve account which will be accumulated at the /ate of one-tenth of the annual payment until this account reaches the amount of one annual payment. The facility must be operated in accordance with applicable State Statutes and Regulations. Before the loan is closed the Association will furnish an outline of management procedures that will be followed. A certified plant operator will be employed. Construction Contract Documents and Bidding: Section 1942-18 of FmHA Instruction 1942 -A and Guide 19 will be followed by the Association and engineer for all construction. Three copies of each of these documents are attached and one copy is to be delivered to your engineer and attorney_ i pre construction conference will be held after bid opening at a convenient time to be scheduled by FmHA. In attendance will be the designated representatives of the Association, the consulting engineer, the resident inspector, contractor's representatives, and Fmn personnel. Insurance and Bonding: Property insurance, fire and extended coverage and flood insurance if applicable, will be required on all above- ground structures including equipment and machinery in an emount equal to the replacement value as recommended by the project engineer and approved by FmHA. No insurance will be required on water reservoirs, standpipes, and elevated tanks. Requirements as outlined in Section 1942.18 of FmHA instruction 1942 -A and Item 21 of Guide 19 will be followed by the Association's engineer for all construction. Workmen's Compensation will be maintained as required by State law. Public liability and property damage insurance will be maintained as recommended by the Association's attorney and approved by the FmHA. If the Association will own trucks, tractors, and other vehicles that frequently will be driven over public highways, liability and property damage insurance will be required. Fidelity bond coverage in an amount of equal to the total annual debt service requirements for the FmHA loans is required on the position of the treasurer and /or others who have access to funds. The bond will be obtained prior to loan and grant closing. Form FmHA 440 -24, "Position Fidelity Bond," may be used and copies are attached. Accounts, Records, and Audit Reports Required: The Association will be required to keep accounts and records on the operation of the facility separate and apart from other records in accordance with the loan resolution. we suggest that the Association's auditing firm develop set of records for this particular purpose unless adequate records are already in use. The person responsible for maintaining such records of accounts will be selected prior to loan closing. The Association will keep records of users, existing and new, including all applications for services by race. These records will be provided to FmHA upon request. These records will also include all applications denied and reasons for denial; users denied services and reasons for denial, as outlined in FmHA Instruction 1901 E. It is imperative that the Association establish and maintain adequate business management practices through a system of records, reports and audits which will assist the governing body in making effective decisions and thus help to insure a successful operation. FmHA will be furnished management reports as outlined in Section 1942.17 of FmHA Instruction 1942 -A. A copy of this instruction is attached along with copies of our forms to be used for periodic annual reports (see pages 68 and 69) of FmHA Instruction 1942 -A) Prior to loan closing the Association will enter into a contract with a qualified auditor to conduct the annual audit in accordance with Generally Accepted Government Auditing Standards (GALAS). In addition, the audits are also to be performed in accordance with various Office of Management Budget (OMB) Circulars and FmHA requirements_ Refer to pages 70 -74 of the aforementioned procedure. The Association should provide the attached booklet entitled "U.S. Department of Agriculture, Farmers Home Administration, Audit Program," to their accountant for guidance in conducting financial statement audits. FmHA ,rust approve the accounting and financial reporting system prior to loan closing or commencing construction, whichever occurs first. All forms needed for required FmHA reports will be furnished by this office. Closing Instructions: The loan will not be closed until. the Regional Attorney has been furnished all the documents required and has issued closing instructions. The Association's attorney will carry out the Regional Attorney's closing instructions and will certify that the loan has been closed in accordance with the Regional Attorney's closing instructions. Mates and Charges: A rate schedule will be adopted by the Association providing for the following user rates: MONTHLY. SERVICE CHARGES: RATES CHARGES Residential: 0 -3,000 gallons each additional 1,000 gallons or part thereof Commercial: 0-5,000 gallons each additional 1,000 gallons or part thereof Residential 16.25 4.00 31.25 4.00 CONNECTION FEES: Meter Systems Install Member Total Plus Size Capacity Charge ship Fees Deposit Charge fee 5 /8x3/4" $550.00 $200.00 $36.00 $786.00 $30.00 3/4" $700.00 $250.00 $36.00 $986.00 $30.00 Commercial 5/8x3/4" $700.00 $375.00 $36.00 $1000.00 See Note 1 3/4 $875.00 $425.00 $36.00 $1336.00 See Note 1 1" $1750.00 $450.00 $36.00 $2236.00 See Note 1 1 -1/2" $3500.00 $680.00 $36.00 $4216.00 See Note 1 2" $5600.00 $850.00 $36.00 $6486.00 See Note 1 3" $8000.00 By $36.00 $8036.00 See Note 1 Customer $12,500.00 By $36.00 $12,536.00 See Note 1 Customer $25,000.00 By $36.00 $25,036.00 See Note 1 Customer 4 n 6n Note 1: All commercial deposits will be set by OBWA and must equal a 3 month average water bill with a minimum deposit of $60.00. Refinancing: The Association may be requested to refinance the FmNA loan with credit from other sources at such time as credit is available at reasonable rates and terms and the the Association is able to do so. The loan account will be reviewed periodically to evaluate the Association's potential for refinancing. other Requirements Which Must Be Met and Forms to be Completed: 1. All residents located in the service area regardless of race, color, religion, sex national original, marital status, age, physical /mental handicap, or level of income must be afforded an opportunity to become users of the facility. 2. The Association must agree to comply with the requirements of Form FmHA 400 -1, "Equal Opportunity Agreement" and Form FmHA 400 -4, "Assurance Agreement." These agreements must be approved by the governing body and executed before loan approval. 3. Prior to the commencement of construction or loan closing, whichever occurs first, the Association will execute Form FmHA 1942 -9, "Loan Resolution Security Agreement." 4. A third party independent'appraisal is to be provided for any real estate of any others types of acquired properties, which are purchased for use as part of the proposed project for which FmHA funds are to be utilized. 'Funds provided by FmHA can only be utilized to the extent of the purchase price or appraised value, whichever is the owe s t q. The Association must provide for review and approval, by the F'mHA before construction beings a positive program to encourage connections by all users as soon as the service available. This program shall include: a. An aggressive information program to be carried out during the construction period. b. Positive steps to assure that commercial installation services will be available to users. c. Aggressive action to see that all users can finance their connections. 6. Prior to commencement of construction or loan and grant closing, whichever occurs first, the Association will execute Form FmHA 1910 -11, "Application, Certification, Federal Collection Policies for Consumer or Commercial Debts. 7. Certification for Contracts, Grants and Loans. Prior to commencement of construction the Association will execute Florida Instruction 1942 -A Guide 31. In addition, all contractors, subcontractors or other recipients of Federal assistance in excess of $100,000 will be required to execute this form prior to receiving federal funds. Under section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.G. 794), no handicapped individual in the United States shall, solely by reason of their handicap be uxr:luded from participation in, be denied the benefits of, or be subjected to discrimination under any program or .activity receiving FmHA financial assistance. 9. Prior to commencement of construction or loan and grant closing, whichever occurs first, the Association will execute Form FmHA 1910 -11, "Application, Certification, Federal Collection Policies For Consumer or Commercial Debts. 10. Thn Association will enter into a binding agreement to comply with the mitigation measures outlined in Section XVIII of the FmHA Environmental Assessment as follows: t:ernatives /Mitigation Measures: Cite selection was a comprehensive process that included weighing factors such as land availability, cost of land, :;ize of tract, zoning, access to in ground distribution system, quality of raw water, location of aquifer and community reaction. All sites have :1dvantages /disadvantages. The plant site consisting of 9.6 acres will be large enough to construct a properly sized facility without disturbing the 2.3 acres of floodplain located on the Southeast corner of the property. All parties including Farmers Home Administration agree that the nondisturbance of this area is the best and most appropriate mitigation measure. The wellfield site will largely be undisturbed except for the construction of a service road. As no wetlands are located on the 34.5 acre site, no measures are required to mitigate this site. However, the poorly functional wetland located Northwest of the wellfield site must be protected. South Florida Water Management District SFWMD) responsible for permits to install the wells and operate same, has requested the potential owner, Okeechobee Beach Water Association, to submit information on the potential draw down of the water level which might L.dversely impact the wetland. A permit will be obtained which will meet the requirements of SFWMD. The pumping of .aster surface recharge etc., are all being considered by SFWMD in a computer model to determine any detrimental effects. If the projected installation and water flow of the wells is determined to affect the offsite wetland, the following mitigation measures would be acceptable: 1. Reduce pumping of Water to a restricted quantity. 2. Move applicable wells to another location of site. 3. Locate alternative acceptable site. sincerely, south Florida Water Management District will not issue a well permit until all mitigation measures have been accepted. It would be noted that no adverse impact has been identified, to date. The Association will abide by SFWMD permit requirements. In order to preserve the natural value and function of the 100 -year floodplains, the Association will not serve new development or new expansion within these area as identified by the latest FEMA Floodplain maps. No service will be provided to development within wetland areas. Where service lines must cross these areas, disturbance of vegetation and wildlife will be held to the minimum possible and those areas will be restored to their natural state immediately after construction activity is completed. The natural value and function of wetland areas must be maintained where service is provided to areas encroaching on wetlands. Water well drawdown and plant operation will be regulated in compliance with Florida Department of Environmental Regulation and South Florida Water Management District regulations in order to provide for no significant impact to the Biscayne Sole Source Aquifer Recharge Area relevant to r;altwater intrusion, cone of influence (wellfield) and ground water contamination as outlined in the USEPA letter of concurrence dated March 4, 1993. 10. Prior to commencement of construction the Association will sign a binding agreement that no portion of the 2.3 :acres identified within the 100 year flood prone area will he used for any construction purposes. Further, appropriate preservation measures will be taken to protect this area prior to, during and after construction, to such an extent to allow this area to remain in its natural state. If the Association decides to accept FmHA services, subject to the above conditions, FmHA will proceed to take the necessary steps to process the loan. REGORY L. CARUTHERS District Director V Enclosures cc: State office, RDA