When a lake homeowners association and a watershed district in Stearns County, Minn., suspected failing septic systems were affecting local water quality, they asked officials to confirm their suspicions. The county's Environmental Services Department conducted inspections and found the concerns justified; many of the suspected systems received failing marks.

That put the affected homeowners in an unexpected financial bind — until county officials began publicizing a state grant program that pays for upgrades to septic systems owned by qualifying low-income residents. In the last two fiscal years, $750,000 in grants paid for 80 system upgrades, says Mark Latterell, a senior environmental specialist-subsurface sewage treatment systems in the ESD.

Overall, Latterell estimates 86 percent of the county's 16,663 septic systems are compliant. He attributes that high percentage in part to a requirement that all home sales must include a septic system inspection. "With the inventories we've performed and the property transfer requirement ... we have a pretty good system set up internally to get septic systems upgraded," he notes. "Overall, our numbers are pretty decent."

The grant program not only improves water quality, but it is also a boon to local pumpers, installers and ancillary businesses.

Pumper: How does the grant pro-gram work?

Latterell: The state notifies all government units about the grant availability. A 3/8 of 1 percent sales tax, imposed for 25 years as part of the state's 2008 Clean Water Land and Legacy Amendment to the state constitution, funds the grants. Some of the money goes to clean-water projects, some funds wildlife-habitat preservation, and some goes toward cultural and historical projects.

The money pays for on-the-ground (physical) conservation projects. It must be used to supplement projects, not supplant already existing funding sources. The legislature gets together every year and determines how the money is distributed ... what percentage goes to septic systems, preserving wildlife habitat, and so on. They tell the Minnesota Board of Water and Soil Resources how much money is available, which then asks local governments to make requests. The board prioritizes requests and awards money based on a municipality's track record, the potential environmental benefits, and the support of local people. The county receives the money and pays it out when a project is completed.

Pumper: How many grants have been awarded?

Latterell: We received our first grants in fiscal year 2011. All 47 of our applications were accepted, for a total of $420,000. At that time, the criteria was a little different because anyone could apply if they had a failing system — based on either our (inspection) inventory, a private inspector's report or a homeowner's voluntary system condemnation — and if they met the United States Department of Agriculture's low-income standard. For fiscal year 2012, 33 grants worth $330,000 were awarded out of 33 qualified applications. For fiscal year 2013, we submitted 14 applications requesting another $154,000. Everything we've passed along so far has been funded, and we will hope for the best on the pending requests.

Pumper: Has the grant criteria changed over the years?

Latterell: Yes. Last year and this year, the state said it would fund only 95 percent of the rehab cost, and the owner must pay the remaining 5 percent. So the homeowner must obtain two bids, and any grant would cover only the lowest bid. The homeowner is not obligated to use the lowest bid, but if they don't, they have to cover the difference between the two bids — unless they can get a contractor to do it for a lower price.

Also, for fiscal years 2012 and 2013, owners may apply only if their septic systems pose an imminent threat to public health and safety. State code defines an imminent threat as a system that discharges surface effluent or backs up sewage into a home.

Pumper: How does the county get the word out about the grants?

Latterell: We run public service announcements on the radio and in local newspapers. We also do a mass email to local (septic) contractors, telling them that grant applications are available.

I would say the vast majority of applications come through septic system designers and installers. I receive a ton of calls from designers in the field who want to know if a client can qualify ... we tell them to stop what they're doing and see if we can get some funding in place. A couple designers even carry applications with them. In our county, we have a number of guys with multiple license certifications, so they can offer package deals for a design and install.

Pumper: Has the program helped improve local water quality?

Latterell: One measurement we use is how many pounds of phosphorus are no longer going into surface water. A general standard is that a (failed) septic system puts out 1.1 pounds of phosphorus per person per year. In a failing system, that phosphorus encourages algae growth — about 500 pounds of algae for every one pound of phosphorus. So if we fixed 42 systems that are close to surface water, we theoretically prevented the growth of at least 21,000 pounds of algae.

Pumper: How has the grant program benefited the county's economy?

Latterell: Having more septic systems that operate correctly helps stabilize home values, which puts more money in the pockets of homeowners when they sell their homes. And the county benefits because it's getting rid of non-compliant systems that could be a pollution threat.

It's also helped out local septic contractors. The overall economy has slowed down here. There has been virtually no new systems put in for new housing, and transfer certifications have slowed down because of decreasing home sales. For example, in 2004, the county issued 792 permits for new or replacement systems. By 2006, it was down to 597, then 342 in 2008. But we issued 447 permits in 2010 and 401 in 2011, and part of that increase stemmed from the septic inventories we took, which directly kept local contractors floating along. The grant dollars we pulled in helped out the property owners, as well as septic pumpers, designers, installers, pipe and pump distributors, tank manufacturers, electricians ... there's a big trickle-down effect. Plus, contractors know they'll get paid because the county cuts the check.

Pumper: Did the program yield any other benefits?

Latterell: With the grants, people are more willing to show you what they have. It's a risk for them (because they might not qualify for a grant), but in some instances, the effort people go through to point out (system) damage is almost comical. We had two guys who got out a skid-steer to unearth a leaking overflow pipe they couldn't find. They did get funding and had a new system installed. But it's doubtful they would've pointed out the problem without the grant program.

Pumper: Any advice for people interested in lobbying for a grant program in their area?

Latterell: Be patient. It takes a while to get through the process ... helping people get grant money is not the easiest thing in the world. In reality, it's hard to give away money to people. They submit applications, we review them, and then we have to tell some people they don't qualify ... it takes a lot of time. And exceptions always emerge, such as a home owned by a trust, for example. Or what if someone has to relocate a well to make way for a new septic system? Who pays for the well? A lot of gray areas emerge. But at the end of the day, the systems get upgraded and are in good shape. That's our goal.