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House Bill 645 Local Government Infrastructure Grant Program
(Revised January 31, 2011)
House Bill 645 (HB 645), the Montana Reinvestment Act passed by the 2009 Legislature, provided $20 million in infrastructure grants to Montana local governments:
The links above list the final projects completed by counties, cities, and towns.
The Department of Commerce strove to make these funds available as soon as possible in order to put Montanans back to work addressing critical local needs, and to stimulate both Montana's and the Nation's economy. We enjoyed working with everyone in making their infrastructure project a success.
HB 645 provided that grant recipients must expend 100% of the authorized grant amount on or before September 30, 2010. Unexpended funds reverted to the State and were deposited in the state general fund.
The Department allowed HB 645 Local Government Infrastructure Grant recipients an additional month - until November 1, 2010 - to submit their Project Closeout Report form and accompanying documentation.
Quick links to topics below:
Grant Award Calculations
The final amounts allocated to counties, cities, and towns were determined using the Montana Department of Transportation's standard formula for distribution of gasoline taxes. HB 645, however, also provided that “The department (of Commerce) may retain 1.13% of the amount of the grants to counties, cities, towns, tribal governments, and school districts for administrative purposes.”
As a result, the initial allocation based on the gas tax formula, was reduced by 1.13% and provided funding for the administration of the local government grant program.
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Incurring Costs
In May 2009, the Department informed all Montana counties, cities, and towns that they were authorized to begin incurring eligible expenses for their HB 645 projects as of May 14th, 2009. This is the date Governor Schweitzer signed HB 645 and the law became effective. Local governments could not incur reimbursible costs related to their HB 645 project, prior to this date.
Preparation of Contracts
The Department required each local government to contract with the Department prior to the distribution of funds. Each local government provided a budget breakdown and implementation schedule using fillable templates provided by the Department. With 185 contracts to prepare, the Department attemped to keep the contracting process as simple as possible.
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Changing the Scope of Work
The Legislature allowed local governments to change the scope of work of their identified HB 645 project (see Section 57 (3)(2)(c)i-vii, pages 45-48), using the procedures outlined in the law:
(3) The governing body of a county, city, or town may choose to propose to the Department of Commerce an alternate project to those listed in subsections (2)(a) and (2)(b) based on the criteria in subsection (2)(c). If the alternate project meets the criteria in subsection (2)(c), the Department shall approve the project.
The criteria of subsection (2)(c) include:
(i) designing, erecting, repairing, and remodeling public buildings or making energy efficiency improvements to public buildings;
(ii) designing, constructing, and repairing sewers, storm sewers, sewage treatment and disposal plants, waterworks, and reservoirs;
(iii) designing, constructing, and repairing bridges, docks, wharves, breakwaters, and piers;
(iv) designing, constructing, reconstructing, improving, maintaining, and repairing roads;
(v) acquiring, opening, or widening any street and improving the street by designing, constructing, reconstructing, and repairing pavement, gutters, sidewalks, curbs, and vehicle parking strips;
(vi) designing, building, renovating, and equipping parks and other recreation facilities; and
(vii) installing street lighting.
In order to change their scope of work, local governments had to provide rationale for the change and explain how the alternate scope of work was consistent with one of the seven criteria listed above (i-vii).
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Ineligible Activities
The following prohibitions on the use of federal American Recovery and Reinvestment Act (ARRA) funds were applied to state funds awarded under HB 645: “No Program funds may be used to fund all or any portion of a casino or other gambling establishment, aquarium, zoo, golf course, stadium, or swimming pool.”
In addition, local governments could not use HB 645 funds for administrative costs or overhead. The Legislature intended HB 645 funds to be used only for project costs directly related to construction, including architectural or engineering design, purchase of equipment or materials, and construction expenses, including labor. Grant recipients had to absorb the costs of grant administration with their own resources.
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Applicable State Laws and Regulations
All standard state statutes and regulations applied to the use of these funds, such as current state laws for bidding thresholds and procedures. The grants were not federal funds and federal requirements, such as Davis-Bacon prevailing wage rates, did not apply. State prevailing wage rates, often referred to as “Little Davis-Bacon” wage rates, did apply in situations where they were currently applicable.
Because the grants were not federal funds, federal requirements applicable to projects funded directly under the federal ARRA did NOT apply. The Department did, however, require projects funded through HB 645 to follow the reporting and accountability requirements of the federal ARRA. The Legislature mandated the reporting and accountability requirements, identified in Reporting Requirements, in Section 54 of HB 645.
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Financial Management
Federal standards require the financial management system of a recipient to meet generally accepted accounting principles. For any local government in compliance with the State's audit and annual financial reporting requirements, the Department disbursed the HB 645 local government grant funds on a 90/10 basis. The Department provided the local government with 90% of its HB 645 grant funds upon execution of the contract, and released the remaining 10% of funds upon completion of the final reporting requirements. All county governments and most cities and towns used Electronic Funds Transfer to receive State disbursements. In most cases, once the Department approved all the paperwork, it took no more than ten days for the Department financial staff to process the payment. The Department believes this distribution policy was consistent with the Governor Schweitzer’s commitment to comply with the spirit of the federal ARRA.
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Reporting Requirements
To comply with the intent of transparency and accountability associated with the federal ARRA, contracts between the Department and local governments required quarterly financial, and job creation, reporting.
(a) The Department required local governments to report quarterly so the Department could provide project information to the Governor’s
Office. During their terms of agreement, local governments were to report quarterly, for themselves, and all contractors, subcontractors, and subrecipient entities, the following information:
(1) The dollar amount of all contractor invoices;
(2) The completion status of the work;
(3) An estimate of the number of job hours funded by HB 645 funds, and;
(4) The name and physical location of the primary contractor, subcontractor, or subrecipient entity.
(b) Project closeout allowed the Department to determine if the local government was requesting reimbursement for activities completed in accordance with the terms and conditions of the infrastructure grant. Local governments were to submit within 90 days of project completion, the Project Closeout Report. The Project Closeout Report summarized the following project information:
(1) The total costs incurred;
(2) The final completion date;
(3) Any significant problems;
(4) The total hours worked, and;
(5) Provided supporting documentation (invoices) of each expenditure.
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