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  • Acts
  • 1998
  • Chapter 78 AN ACT ESTABLISHING A REVOLVING TRUST FUND TO AID IN THE FINANCING OF DRINKING WATER PROJECTS.

Whereas , The deferred operation of this act would tend to defeat its purpose, which is to establish forthwith a revolving trust fund to aid in the financing of drinking water projects, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:


SECTION 1. Subsection (a) of section 27A of chapter 21 of the General Laws, as appearing in the 1996 Official Edition, is hereby amended by striking out the second and third sentences and inserting in place thereof the following two sentences:- As a prior necessary condition to the award of a loan by the trust to a local governmental unit to finance costs of a water pollution abatement project, the board shall receive a certificate issued by the department approving the project and certifying those costs of the project determined by the department to be eligible for financial assistance pursuant to section 6 or section 6A of chapter 29C. The department may approve a loan for costs of a project not eligible for financial assistance pursuant to said section 6 or section 6A; provided, however, that no federal capitalization grants or associated matching grants from the commonwealth shall be applied to fund or secure a loan for any such costs unless otherwise approved by the board.

SECTION 2. Chapter 29 of the General Laws is hereby amended by striking out section 2W, as so appearing, and inserting in place thereof the following section:-

Section 2W. There shall be established and set up on the books of the commonwealth a separate fund to be known as the Water Pollution Abatement and Drinking Water Projects Administration Fund. There shall be credited to said fund any amounts transferred pursuant to sections 5and 18 of chapter 29C and any income derived from the investment of amounts credited to said fund. Amounts credited to said fund shall be held in an expendable trust and the department of environmental protection shall report monthly all amounts credited to said fund and all expenditures by subsidiary on the Massachusetts management and accounting reporting system, so-called. Said amounts shall be used solely for the administration of the provisions of section 27A of chapter 21 and section 18 of said chapter 29C.

SECTION 3. Said chapter 29 is hereby further amended by inserting after section 2PP, inserted by section 4 of chapter 226 of the acts of 1997, the following section:-

Section 2QQ. There shall be established and set up on the books of the commonwealth a separate fund, to be known as the Drinking Water Revolving Fund, consisting of amounts credited to the fund in accordance with chapter 29C. The fund shall be administered in accordance with the provisions of said chapter 29C by the board of trustees of the water pollution abatement trust created thereunder and shall be held in trust exclusively for the purposes and the beneficiaries described therein. The state treasurer shall be treasurer and custodian of the fund and shall have the custody of its moneys and securities.

SECTION 4. Section 1 of chapter 29C of the General Laws, as appearing in the 1996 Official Edition, is hereby amended by inserting after the definition of "Department" the following three definitions:-

"Drinking water project", a project of a type or category which the department has determined, consistent with guidance issued by the United States Environmental Protection Agency in accordance with the Safe Drinking Water Act, shall facilitate compliance with national primary drinking water regulations under section 1412 of the Safe Drinking Water Act or otherwise significantly further the health protection objectives of the Safe Drinking Water Act or the department's drinking water regulations including, without limitation, the rehabilitation or development of water sources to replace contaminated sources, the installation or upgrade of drinking water treatment or storage facilities, the installation or replacement of transmission and distribution pipes to prevent contamination and the planning and design of eligible projects.

"Eligible borrower", with respect to a water pollution abatement project, a local governmental unit authorized to own, operate, finance or otherwise implement such water pollution abatement projects and, with respect to a drinking water project, a local governmental unit or any other person, public or private, authorized to own, operate, finance or otherwise implement such drinking water project.

"Financial assistance or other forms of financial assistance", a type of assistance provided to or on behalf of an eligible borrower as authorized by Title VI of the Clean Water Act, as defined herein, or Title XIV of the Safe Drinking Water Act, as defined herein, approved by the department under section 27A of chapter 21 or section 18 of this chapter.

SECTION 5. Said section 1 of said chapter 29C, as so appearing, is hereby further amended by striking out the definition of "Loan" and inserting in place thereof the following definition:-

"Loan", a form of financial assistance subject to repayment in whole or in part which is provided by the trust to a local governmental unit or other eligible borrower for all or any part of the cost of a water pollution abatement project or a drinking water project, as applicable. A loan may (i) provide for planning, construction, bridge or permanent financing; (ii) be disbursed in anticipation of reimbursement of or direct payment of costs of a project or take the form of a guarantee, line of credit, bond purchase agreement, or other form of financial assistance; and (iii) may be issued at such rates of interest including, without limitation, variable rates and zero interest, may mature at such times and be redeemable at the option of the board or the local governmental unit or other eligible borrower, all as may be determined in accordance with this chapter; provided, however, that for all purposes of this chapter, notwithstanding any other general or special law to the contrary and unless otherwise determined by the board, a loan made at one-half of market interest rate shall be deemed the financial equivalent of a grant of 25 per cent of the eligible costs of the project financed by the loan and a loan made at a zero rate of interest shall be deemed the financial equivalent of a grant of 50 per cent of the eligible costs of the project financed by the loan.

SECTION 6. Said section 1 of said chapter 29C, as so appearing, is hereby further amended by striking out, in lines 58 to 60, inclusive, the words "any agreement entered into between the trust and a local governmental unit pertaining to a loan or local governmental obligations" and inserting in place thereof the following words:- an agreement entered into between the trust and a local governmental unit or other eligible borrower pertaining to a loan or the purchase and delivery of local governmental obligations or other instruments evidencing or securing a loan.

SECTION 7. Said section 1 of said chapter 29C, as so appearing, is hereby further amended by striking out the definition of "Local government unit or local governmental unit" and inserting in place thereof the following definition:-

"Local government unit or local governmental unit", a town, city, district, commission, agency, authority, board or other instrumentality of the commonwealth or of any of its political subdivisions, including any regional local governmental unit.

SECTION 8. Said section 1 of said chapter 29C, as so appearing, is hereby further amended by inserting after the definition of "Revenues" the following definition:-

"Safe Drinking Water Act", Title XIV of the Federal Public Health Service Act, commonly known as the Safe Drinking Water Act, 42 USC 300f et seq., as amended.

SECTION 9. Subsection (b) of section 3 of said chapter 29C, as so appearing, is hereby amended by striking out clause (iv) and inserting in place thereof the following clause:-

(iv) to make loans and other forms of financial assistance authorized by Title VI of the Clean Water Act to local governmental units to finance or refinance costs of water pollution abatement projects, to acquire, hold and sell local governmental obligations and other instruments evidencing the loans and other forms of financial assistance at such prices and in such manner as the board shall deem advisable and to secure bonds of the trust with loans, local governmental obligations and other instruments.

SECTION 10. Section 5 of said chapter 29C, as so appearing, is hereby amended by striking out clause (i) and inserting in place thereof the following clause:-

(i) to make, and enter into binding commitments to make, loans and other forms of financial assistance authorized by Title VI of the Clean Water Act approved by the department under section 27A of chapter 21 to local governmental units for the purpose of financing or refinancing costs of water pollution abatement projects and to provide for all or any part of the debt service costs on loans and other forms of financial assistance made by the trust during the implementation of such projects and for such period thereafter as the board shall determine.

SECTION 11. Said section 5 of said chapter 29C, as so appearing, is hereby further amended by striking out clause (iii) and inserting in place thereof the following clause:-

(iii) to transfer to the Water Pollution Abatement and Drinking Water Projects Administration Fund amounts derived from proceeds of each federal capitalization grant award received by the trust to the extent determined by the board and subject to the approval of the executive office for administration and finance.

SECTION 12. Said chapter 29C is hereby further amended by striking out section 6, as so appearing, and inserting in place thereof the following section:-

Section 6. Subject to limitations in other laws respecting the use of particular monies in the fund and the provisions of any trust agreement for bonds of the trust, the board may also apply and disburse monies and revenues in the fund or segregated accounts therein:

(i) after taking account of any grant made by the department pursuant to section 33E of chapter 21, to provide, and enter into binding commitments to provide, a subsidy for, or to otherwise assist local governmental units in the payment of, debt service costs on loans and other forms of financial assistance made by the trust; and

(ii) to provide reserves for, or to otherwise secure, amounts payable by local governmental units on loans and other forms of financial assistance made by the trust pursuant to this chapter.

The board shall apply and disburse monies in the fund, including contract assistance provided in this section and in section 6A, or shall otherwise structure the debt service costs on loans and other forms of financial assistance made by the trust, to provide a subsidy or other assistance to local governmental units in the payment of debt service costs on such loans and other forms of financial assistance equivalent to a grant of 25 per cent of the eligible costs on the water pollution abatement project financed by the loan or other financial assistance. Notwithstanding the foregoing but subject to the limit on contract assistance provided in this section, all permanent loans and other forms of financial assistance to finance costs of water pollution abatement projects for which the trust shall execute and deliver loan agreements on and after October 1, 1995 shall provide a subsidy or other assistance equivalent to a grant of 50 per cent of the eligible costs of the project financed thereby. To provide for such subsidy or assistance, in addition to the contract assistance provided in section 6A, the state treasurer acting on behalf of the commonwealth shall enter into an agreement with the trust that the commonwealth shall provide contract assistance for debt service obligations on loans and other forms of financial assistance made by the trust up to a maximum amount of $20,000,000 per fiscal year of the commonwealth. Such contract assistance agreement shall provide for payments by the commonwealth to the trust at such times during each fiscal year and upon such terms and under such conditions as the trust may stipulate. The trust may pledge such agreement and the rights of the trust to receive amounts thereunder as security for payment of debt obligations issued to the trust. Such agreement shall constitute a general obligation of the commonwealth for which the faith and credit of the commonwealth shall be pledged for the benefit of the trust and of the holders of any debt obligations of the trust which may be secured by the pledge of such agreement or of amounts to be received by the trust under such agreement.

SECTION 13. Section 6A of said chapter 29C, as so appearing, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

To provide for such subsidy or assistance, the state treasurer acting on behalf of the commonwealth shall enter into an agreement with the trust that the commonwealth shall provide contract assistance for debt service obligations on loans and other forms of financial assistance made by the trust up to a maximum amount of $26,000,000 per fiscal year of the commonwealth. Such contract assistance agreement shall provide for payments by the commonwealth to the trust at such times during each fiscal year and upon such terms and under such conditions as the trust may stipulate. The trust may pledge such agreement and the rights of the trust to receive amounts thereunder as security for payment of debt obligations issued to the trust. Such agreement shall constitute a general obligation of the commonwealth for which the faith and credit of the commonwealth shall be pledged for the benefit of the trust and of the holders of any debt obligations of the trust which may be secured by the pledge of such agreement or of amounts to be received by the trust under such agreement.

SECTION 14. Said chapter 29C is hereby further amended by adding the following section:-

Section 18. (a) In addition to the powers and duties of the board otherwise provided in this chapter, the trust is hereby designated as the instrumentality of the commonwealth to establish and administer within the Drinking Water Revolving Fund, the state revolving fund pursuant to the Safe Drinking Water Act. The board shall apply monies in the Drinking Water Revolving Fund for the purpose of providing financial assistance, in the manner contemplated by section 1452 of the Safe Drinking Water Act, section 160 of chapter 111 and the department's drinking water regulations, to local governmental units and other eligible borrowers as provided herein, as beneficiaries of the fund, to finance or refinance costs of eligible drinking water projects approved by the department of environmental protection.

(b) The board shall receive in trust, hold, administer and disburse without further appropriation or allotment by the commonwealth in and from the Drinking Water Revolving Fund exclusively for the benefit of the beneficiaries thereof the following monies: (i) notwithstanding the provisions of sections 2B and 2C of chapter 29, all federal capitalization grants received under the Safe Drinking Water Act for purposes of the fund; (ii) amounts appropriated by the commonwealth to the trust for purposes of the fund; (iii) proceeds of bonds of the trust to the extent required by the board's resolution for issuance of such bonds or any applicable trust agreement; (iv) investment earnings on monies in the fund; and (v) any other amounts required to be credited to the fund by any law or by any resolution, loan agreement or trust agreement of the board or which the board shall otherwise determine to deposit therein.

(c) In the implementation of this section and the administration of the Drinking Water Revolving Fund, all provisions of this chapter and subsections (a), (c), (e) and (f) of section 27A of chapter 21 applicable to the Water Pollution Abatement Revolving Fund and the provision of financial assistance by the trust to local governmental units and other eligible borrowers for costs of water pollution abatement projects shall be equally applicable, to the extent consistent with this section, to the Drinking Water Revolving Fund and to the provision of financial assistance for costs of drinking water projects and the board and the department shall have the powers and shall be subject to the applicable limitations provided in this chapter and said subsections (a), (c), (e) and (f) to carry out the provisions of this section. Without limiting the generality of the foregoing, the board may apply and disburse monies and revenues of the Drinking Water Revolving Fund: (i) to make, and enter into binding commitments to make, loans and other forms of financial assistance authorized by the Safe Drinking Water Act to local governmental units and other eligible borrowers for the purpose of financing or refinancing costs of drinking water projects or portions thereof which have been approved by the department, including approval of the costs of such projects or portion thereof eligible to receive financial assistance as provided in this section, and completed, as determined by the department, after the promulgation date of the department's regulations implementing its powers under this section and to provide for all or any part of the debt service costs on loans and other forms of financial assistance made by the trust during the construction of such projects and for such period thereafter as the board shall determine; (ii) to provide reserves for or otherwise secure bonds of the trust and to provide insurance and letters or lines of credit or other credit enhancement which it deems reasonable and appropriate for bonds; (iii) to provide, and enter into binding commitments to provide, a subsidy for, or to otherwise assist local governmental units and other eligible borrowers in the payment of, debt service costs on loans and other forms of financial assistance made by the trust pursuant to this section and to provide any other subsidization authorized by the Safe Drinking Water Act in addition to the subsidy or other assistance authorized by this section; (iv) to provide reserves for, or to otherwise secure, amounts payable by local governmental units and other eligible borrowers on, loans and other forms of financial assistance made by the trust pursuant to this section; (v) to transfer to the Water Pollution Abatement and Drinking Water Projects Administration Fund established under section 2W of chapter 29 amounts derived from the proceeds of each federal capitalization grant award received by the trust to the extent determined by the board; and (vi) to provide payment from any available source for reasonable and necessary professional and financial services incident to the conduct of the programs of the trust, including costs of issuance of its bonds.

(d) The powers and duties otherwise conferred upon the department by law with respect to the regulation and supervision of public water supplies shall in no respect be diminished by this section including, but not limited to, the authority of the department to ensure that public water systems demonstrate technical, managerial and financial capacity with respect to the department's drinking water regulations. The department and the board shall establish standards, guidelines, criteria and other rules and regulations for the administration and implementation of their powers under this section including, without limitation, a priority system and priority list for the approval of projects, the determination of eligible borrowers and eligible costs of projects and the terms and conditions of loans by the trust.

(e) In addition to the authority provided in section 9, the board may provide by resolution for the issuance from time to time of bonds of the trust to carry out the purposes of this section. The holders of such bonds shall also be beneficiaries of the Drinking Water Revolving Fund to the extent provided in any trust agreement entered into by the trust with such holders. Except to the extent limited by the requirements of Title VI of the Clean Water Act or by the Safe Drinking Water Act or other applicable federal law, the board may secure bonds of the trust by pledging monies held in or otherwise allocable to either or both the Water Pollution Abatement Revolving Fund or the Drinking Water Revolving Fund, where the board determines that doing so will reasonably promote the purposes of either or both funds.

(f) Any local governmental unit and any other eligible borrowers may apply to the trust for a loan or other financial assistance authorized by the Safe Drinking Water Act to assist in financing or refinancing the cost of a drinking water project approved by the department. For entering into a loan or other financial assistance for financing or refinancing a drinking water project and establishing the authorized terms and conditions thereof and for issuing any local governmental obligations to secure the same, a local governmental unit shall be deemed to have all of the same powers expressly granted to local governmental units by this chapter with respect to loans or other financial assistance for financing or refinancing water pollution abatement projects and the powers granted to any such local governmental unit in any bond act applicable to it specifically or as a member of a class of governmental instrumentalities. Without limiting the generality of the foregoing, all local governmental units shall have the powers and shall be subject to the limitations with respect to such loans and local government obligations and the public water system of which the drinking water project financed by such loan is a part and the local system revenues therefrom set forth in sections 10 to 15, inclusive.

(g) In addition to the purposes set forth in subsection (c), the board shall apply and disburse monies in the Drinking Water Revolving Fund, including contract assistance as provided in this subsection, or shall otherwise structure the debt service costs on loans and other forms of financial assistance made by the trust, to provide a subsidy or other assistance to local governmental units and other eligible borrowers in the payment of debt service costs on all permanent loans and other forms of financial assistance made by the trust pursuant to this section equivalent to a grant of 50 per cent of the eligible costs of the drinking water project financed thereby. To provide for a portion of such subsidy or assistance, in addition to the contract assistance provided in sections 6 and 6A, the state treasurer acting on behalf of the commonwealth shall enter into an agreement with the trust that the commonwealth shall provide contract assistance for debt service obligations on loans and other forms of financial assistance made by the trust pursuant to this section up to a maximum amount of $9,000,000 per fiscal year of the commonwealth. Such contract assistance agreement shall provide for payments by the commonwealth to the trust at such times during each fiscal year and upon such terms and under such conditions as the trust may stipulate. The trust may pledge such agreements and the rights of the trust to receive amounts thereunder as security for payment of debt obligations issued to the trust. Such agreement shall constitute a general obligation of the commonwealth for which the faith and credit of the commonwealth shall be pledged for the benefit of the trust and of the holders of any debt obligations of the trust which may be secured by the pledge of such agreement or of amounts to be received by the trust under such agreement.

SECTION 15. Section 15 of chapter 275 of the acts of 1989, as amended by section 17 of chapter 203 of the acts of 1992, is hereby further amended by striking out the second and third sentences and inserting in place thereof the following three sentences:- On and after June 30, 1997, the department of environmental protection shall not approve a loan or other financial assistance pursuant to chapter 29C of the General Laws or otherwise from the water pollution abatement trust created thereby to a local governmental unit or other eligible borrower to finance or refinance costs of a drinking water project as defined in said chapter 29C unless the local governmental unit or other eligible borrower receiving such loan or other financial assistance shall have adopted, by ordinance, rule, regulation, vote or other appropriate action, to take effect within 90 days of the award of the loan or other financial assistance, a pricing system for drinking water services which reflects the true cost of such services to the local governmental unit or other eligible borrower and which is based on a flat rate per volume or on the basis of ascending unit rates per volume, whether the cost of such services are included in an annual tax levy or are collected by rates, charges, fees, assessments or other charges. The foregoing requirements shall not apply to a project to which a pricing system is inapplicable as determined by the department. Such requirements shall also not apply to a regional local governmental unit; provided, however, that each city, town, commission, board or other instrumentality which is a member or other service recipient thereof shall adopt a pricing system satisfying the foregoing requirements or such member or other service recipient shall be ineligible to receive its allocable share of any financial assistance provided to the regional local governmental unit under said chapter 29C or otherwise from the trust.

SECTION 16. Section 20 of said chapter 275 is hereby repealed.

SECTION 17. Item 7004-1966 of section 2 of chapter 43 of the acts of 1997 is hereby amended by striking out the figure "$4,500,000" and inserting in place thereof the following figure:- $5,800,000.

SECTION 18. Item 1599-3919 of section 2E of chapter 88 of the acts of 1997, as amended by section 10 of chapter 226 of the acts of 1997, is hereby further amended by adding the following words:- ; and provided, further, that as used in this item, the term "water treatment project" shall mean the planning, including facility study, piloting, value engineering, preliminary and final design and preconstruction activity and construction, including construction supervision, operator training and facility start-up, of publicly owned drinking water filtration plants for the treatment of public water supplies.

SECTION 19. Notwithstanding the provisions of any general or special law to the contrary, the state comptroller shall transfer, within ten days of the effective date of this act, the sum of $32,430,362 from the General Fund to the water pollution abatement trust established pursuant to the provisions of chapter 29C of the General Laws for deposit in the Drinking Water Revolving Fund established pursuant to the provisions of section 2QQ of chapter 29 of the General Laws for application by the trust to the purposes specified in section 18 of said chapter 29C, any portion of which may be used as a matching grant by the commonwealth to federal capitalization grants received under the federal Safe Drinking Water Act.

SECTION 20. Notwithstanding the provisions of any general or special law to the contrary, the state comptroller shall transfer, within ten days of the effective date of this act, the sum of $2,327,179 to the water pollution abatement trust established pursuant to the provisions of chapter 29C of the General Laws for deposit in the Water Pollution Abatement Revolving Fund established pursuant to the provisions of section 2L of chapter 29 of the General Laws for application by the trust to the purposes specified in section 5 and clauses (i) and (ii) of section 6 of said chapter 29C, any portion of which may be used as a matching grant by the commonwealth to federal capitalization grants received under Title VI of the federal Clean Water Act.

SECTION 21. The comptroller shall transfer the unexpended balance of the Water Treatment Facilities Revolving Fund, established by section 20 of chapter 275 of the acts of 1989, to the Drinking Water Revolving Fund established under section 2QQ of chapter 29 of the General Laws; provided, however, that said Drinking Water Revolving Fund shall be considered the successor fund established for the purpose of creating a safe drinking water revolving fund program pursuant to section 106 of chapter 88 of the acts of 1997.

SECTION 22. Notwithstanding the provisions of any general or special law to the contrary, the water pollution abatement trust established under the provisions of chapter 29C of the General Laws is hereby authorized and directed, subject to appropriation, to provide financial assistance to local governmental units to meet debt service obligations on bonds incurred by such local governmental units after January 1, 1992 to finance costs of water treatment projects, or portions thereof, which have been approved by the department of environmental protection, including approval of the costs of such water treatment projects or portions thereof eligible to receive financial assistance as provided in this section, and completed, as determined by the department, on or prior to the promulgation date of the department's regulations implementing its powers under section 18 of said chapter 29C.

As used in this section, the term "water treatment project" shall mean the planning, including facility study, piloting, value engineering, preliminary and final design and preconstruction activity and construction, including construction supervision, operator training and facility start-up, of publicly owned drinking water filtration plants for the treatment of public water supplies; provided, however, that notwithstanding the provisions of any general or special law to the contrary, the following shall constitute water treatment projects for the purposes of this section: (1) a water disinfection treatment, corrosion control and storage facility, including an essential related pump station and transmission lines, in the city of Holyoke; (2) an ozonation and ultrafiltration facility, so-called, for the treatment and filtration of Spectacle Pond Well water in the town of Littleton; (3) a treatment plant incorporating "air stripping" technology, so-called, to remove volatile organic compounds at the Springvale Wells facility in the town of Natick; provided, further, that any private water company serving as a public water supplier for more than one municipality and constituting a large or medium sized water system, as defined by United States environmental protection agency, which leases and operates or has completed a water treatment project for a surface water source, shall be eligible to receive financial assistance if such a private water company enters into a memorandum of understanding with the department which establishes a method for ensuring that all financial assistance provided under the provisions of this program are returned to the customers in the form of a rate reduction; provided, further, that the provisions of such memorandum of understanding shall also ensure compliance with the provisions of Article LXII of the Amendments to the Constitution; provided, further, that any such private water company shall file a rate reduction petition with the department of telecommunications and energy within 30 days after approving the memorandum of understanding with the department; and provided, further, that in no event shall financial assistance be paid to such a private water company until the department of telecommunications and energy has taken final action on such petition for rate reduction. Subject to the limit on contract assistance provided herein, the trust shall provide financial assistance for each water treatment project or portion thereof authorized by this section in such manner and under such terms and conditions as shall be determined by the board of trustees of the trust in an aggregate amount equal to 50 per cent of the eligible costs of such water treatment project or portion thereof. Water treatment projects or portions thereof which receive financial assistance in accordance with this section shall not be eligible for a loan or other forms of financial assistance from the trust under said chapter 29C. To provide for such financial assistance, in addition to the contract assistance provided in sections 6, 6A and 18 of said chapter 29C, the state treasurer, acting on behalf of the commonwealth, shall enter into an agreement with the trust that the commonwealth shall provide contract assistance to the trust up to a maximum amount of $8,000,000 per fiscal year of the commonwealth and up to $80,000,000 in the aggregate. The department shall report the total annual amount of contract assistance necessary and the amounts that each municipality shall receive in each current and subsequent fiscal year to meet the provisions of this section. Said report shall be filed with the house and senate committees on ways and means no later than March first of each year. Such contract assistance agreement shall provide for a schedule of payments to be made by the commonwealth to the trust and may provide for other terms and conditions.

Approved April 9, 1998.