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Sharon loses stimulus grant

SHARON — The village of Sharon just wanted to be shovel ready.

But the EPA has decided the village jumped the gun and is taking back a promised $547,000 stimulus grant.

The problem is, the work already is done. Now the village might have to take out a bigger loan than expected, which could boost the property tax rate in 2010, village board President Diana Dykstra said.

The village has built a storm water retention system including a pond and improved storm sewers to address flooding in the village along Prairie Street. The storm water upgrades were in addition to a road construction project on County C/Martin Street in the village.

The work added up to $1.3 million, a large sum when compared to the village’s normal annual budget of $1.5 million, Dykstra said.

The village planned to take out a low-interest loan from the DNR in addition to the grant from the EPA.

“We were able to do more because of that (stimulus) money,” Dykstra said. “We knew we would have to borrow half a million. With them awarding us $600,000, we could do things we weren’t so sure we were ever going to get to do like build the storm water pond and the fence around it.”

Work was finished in mid-October.

In late October, the U.S. Environmental Protection Agency notified the village that it was no longer qualified for the grant because contracts had been signed before the magic date of Oct. 1, 2008. The EPA notified the Wisconsin Department of Natural Resources. A DNR employee forwarded the e-mail to the Gazette.

Some costs were allowed, according to the stimulus funding rules. If a municipality paid out-of-pocket for things such as planning or design before Oct. 1, 2008, in order to make a project shovel ready, the costs could have been reimbursable, according to the e-mail sent by Julie Henning with the state revolving loan program.

But—and it’s a big but—those costs are eligible “as long as no construction costs or debt obligations were incurred … and no construction contracts signed prior to Oct. 1, 2008,” the e-mail states.

Construction started Sept. 23, 2008, according to the e-mail.

Dykstra disagrees, saying ground wasn’t broken until after the first.

Workers did clear trees and prepare a dumpsite for the soil and preparation of a dumping site for the dirt that would come from the pond area, Dykstra said.

The village already had started construction when it applied for the grant, Dykstra said.

The project scored well on its application, and the village landed the grant in April. The rest of the project was to be covered with a low-interest Clean Water Act loan from the DNR.

“We had this severe need to deal with storm water,” Dykstra said. “Because of the fact that we have some really bad areas (prone to flooding) in the village, we scored high.”

Navin Jarugumilli, a funding specialist with the DNR, agreed that Sharon was high on the priority list for stimulus money.

“Clearly, they were on the funding list,” Jarugumilli said. “Their priority is high enough they stayed on the funding list all through deliberations. We set up a date to close on the loan.”

As the EPA worked to clarify the rules, the village got a series of letters explaining the qualifications for the stimulus money, Dykstra said.

“We met those standards, and everything was good,” she said. “Then they sent a new letter saying you couldn’t have broken ground. We still met that. Then we got a letter saying, “Oh, you couldn’t have signed a contract before Oct. 1, 2008. Come on! The rules are changing!”

Jarugumilli said the DNR was surprised by the EPA’s decision to pull Sharon’s grant. Clarifying the grant rules took some time, he said.

“This is an issue that the EPA’s had for a fair amount of time trying to legally handle it,” Jarugumilli said. “Finally they came up with a decision.”

Dykstra has been told the EPA does not have an appeal process for the stimulus program. Sharon is one of three municipalities in Wisconsin in the same situation. The EPA reversed funding decisions for the city of Fond du Lac and the village of Brokaw, which is on the Wisconsin River north of Wausau.