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Ms. Mary Kueffner Page 2 g) The budget period extension request was denied because the city fulfilled all the grant requirements before the January 31, 1989, budget period end date. As described in 40 CFR 35.2212, the grantee shall expeditiously initiate and complete the project in accordance with the project schedule. The city initiated operation and completed its one year certification period in accordance with the approved project schedule. The city received MPCA approval on the project performance certification and evaluation report dated December 31, 1988. This satisfied the primary purpose of the grant in accordance with 40 CFR 35.2000. A budget period extension would be necessary for any land, administrative, engineering, or legal costs to be considered grant eligible. 2) LAND COSTS As stated in previous correspondence, in accordance with 40 CFR Part 35, Appendix A (a), the Minnesota Pollution Control Agency (MPCA) has the authority to review the just compensation amount and other requested costs to determine grant allowability of the costs based on reasonableness. Allowable costs are defined in 40 CFR 30.200 as "those project costs that are: eligible, reasonable, necessary, and allocable to the project." The Findings of Fact Order and Order For Judgment (District Court, Tenth Judicial District) dated September 20, 1989, identified $70,000 as the just compensation due to Edward T. Gorman (landowner) for Site D. Of the $70,000, $45,000 was to compensate the landowner for the land actually taken and the remaining $25,000 was to compensate the landowner for damages to the remaining property not taken. The city's appraisal prepared by Penfield, Inc. valued the property at $30,000. The landowner's appraisal prepared by Wiley Appraisal, Inc. valued the property at $88,000, The landowner's appraiser reviewed comparative sales. The appraiser believed that the location of a large sewage drainfield adjacent to the remaining parcel was a potential hazard. The location was also recognized as being a market perceived detriment to value. Therefore, he adjusted the comparative sales partially on location next to a large sewage drainfield. The final value was based on sAs of the comparative sales. In accordance with 40 CFR Part 35, Appendix H.2.f., unallowable costs include ". . . damages arising out of the project." Therefore, the $25,000 awarded to the landowner for damages to the remaining property is not allowable. The Minnesota Pollution Control Agency (MPCA) previously approved $49,600 for Site D. Although this amount exceeds the amount of $45,000 awarded by the court to approved as ahe lanowne reasonabler for the land, we consider the $49,600 previously app amount. Therefore, the MPCA's final determination of the just compensation amount eligible for grant assistance as $49,600. This determination would not change even if a budget period extension was granted.