Fix Up, Clean Up

A Missouri program provides loans to help homeowners make onsite system repairs and help protect environmental quality.

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Missouri homeowners with financial need can now get loans to help cure failing onsite treatment systems.

The Missouri On-site Wastewater Improvement Loan program, funded by the state Department of Natural Resources and delivered by the state's regional planning commissions and councils of government, helps owners improve or replace their systems with the goal of protecting water quality.

The state has allocated an initial $1 million as a revolving loan fund – enough to help fund about 100 system repairs or replacements statewide, according to Steve Etcher, executive director of the Boonslick Regional Planning Commission in Warrenton. He and other proponents believe that, if successful, the program could be expanded and could serve as a model for other states trying to deal effectively with failing systems.

Missing equity

The program, authorized in July and available in all 114 Missouri counties, grew partly out of the recession and real estate crash of 2008. "It's not designed as a grant program for low-income people who may not have the resources available to make improvements," Etcher says. "It's designed to be a form of gap financing.

"What we've found within our region since 2008 is that home values have declined sharply. Many homeowners who are in a position where they have to make improvements to their onsite systems can't go get home equity lines of credit because of collateral shrinkage in their properties. We will come in and take those loans so that the improvements can be made and we can avoid that water quality degradation.

"It's a pilot project," he says. "We hope we can demonstrate that this is an effective use of resources and does provide an impact on water quality. If so, we'd like to see it expand within Missouri and hope other states would consider and try to replicate this model. A lot of people are watching to see if we can make this work."

A key to the program is to document the impacts by estimating the amount of untreated effluent being kept out of watersheds, based on information about typical onsite system flows. "We will chart every loan we make using our geographic information system," says Etcher. "So over time we can look and see where we've made investments and make some assumptions about water quality impact."

The mechanics

The program is by no means a giveaway – loan recipients have to prove both that their systems have failed or are failing and that they are financially worthy. The system's condition must be documented by a certified installer or local health agency, and the owner must show evidence of financial need in the form of a "turn-down letter" from a bank or other conventional financier.

Homeowners must have a high enough credit score and have the income to make the loan payments and maintain the new system.

Loans can cover repair or replacement of systems for single-family houses and multi-family housing with no more than four units. Loans can finance only approved systems installed by contractors and approved by the county health department. Costs for services such as soils investigation, engineering and surveying can be included, but the loans cannot be used for connecting to a cluster or public sewer system or installing a system for new construction.

Borrowers must procure all services related to the project and must certify that they will maintain the system over the life of the loan, take training on operation and maintenance, and have the system inspected periodically. The inspection interval depends on the type of system but cannot be longer than five years. Owners installing advanced systems must execute a maintenance agreement with a service contractor.

Terms and conditions

Loan terms are based on the homeowner's ability to repay. Amounts can range from $3,000 to $15,000 with a term of up to 10 years at interest rates no higher than 5 percent.

Loans require security, such as a lien on the property. Borrowers pay a loan origination fee of up to 1 percent of the loan amount and are responsible for all closing costs and related fees. Loans must be repaid at the time a property is sold.

Borrowers must get at least three bids for all project-related expenses. The owner must choose the lowest bidder or provide justification for not doing so and request approval from the local regional planning commission.

Loan application packets and basic program information are available at regional planning commission offices in Missouri and online at


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