DAR File No.: 26975
Filed: 06/15/2004, 06:07
Received by: NLRULE ANALYSIS
Purpose of the rule or reason for the change:
Minor changes are made addressing comments received by Kent Bishop, research consultant for the Legal Review section of the Governor's Office of Planning and Budget.
Summary of the rule or change:
Wording considered regulatory rather than defining is moved out of definitions to initiation procedures. An example of insufficient data relating to local income data is presented which may result in the Board accepting other measures. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed amendment that was published in the March 15, 2004, issue of the Utah State Bulletin, on page 39. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed amendment together to understand all of the changes that will be enforceable should the agency make this rule effective.)
State statutory or constitutional authorization for this rule:
Section 19-4-104, and Title 73, Chapter 10c
Anticipated cost or savings to:
the state budget:
None--The proposed changes only clarify certain issues raised by review and will not add or reduce the cost to the State Budget.
local governments:
Little to None--As indicated in the original amendments, changes simply clarify costs for which reimbursement is eligible.
other persons:
Little to None--As indicated in the original amendments, clarification of issues to be addressed by applicants concerning alternatives and justification for the chosen project as well as financial alternatives may slightly increase the work load for engineering companies and financial consultants.
Compliance costs for affected persons:
Little to None--As indicated in the original amendments, some applicants may see slightly increased costs from engineers and financial consultants as a result of the clarification of items required from the applicant at the time of application.
Comments by the department head on the fiscal impact the rule may have on businesses:
The department agrees that the proposed changes to this rule will have little to no detrimental impact on water systems applying for or receiving financial assistance, nor will it adversely impact any of the affiliated businesses such as engineering firms, escrow agents, bond counselors, or financial advisors which provide service to the applicants.
The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:
Environmental Quality
Drinking Water
150 N 1950 W
SALT LAKE CITY UT 84116-3085Direct questions regarding this rule to:
Bill Birkes at the above address, by phone at 801-536-4201, by FAX at 801-536-4211, or by Internet E-mail at bbirkes@utah.gov
Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:
08/02/2004
This rule may become effective on:
08/03/2004
Authorized by:
Kevin Brown, Director
RULE TEXT
R309. Environmental Quality, Drinking Water.
R309-705. Financial Assistance: Federal Drinking Water Project Revolving Loan Program.
R309-705-1. Purpose.
The purpose of this rule is to establish criteria for financial assistance to public drinking water system in accordance with a federal grant established under 42 U.S.C. 300j et seq., federal Safe Drinking Water Act (SDWA).
R309-705-3. Definitions.
Definitions for general terms used in this rule are given in R309-110. Definitions for terms specific to this rule are given below.
"Board" means the Drinking Water Board.
"Drinking Water Project" means any work or facility necessary or desirable to provide water for human consumption and other domestic uses. Its scope includes collection, treatment, storage, and distribution facilities.
"Project Costs" include the cost of acquiring and constructing any project including, without limitation: the cost of acquisition and construction of any facility or any modification, improvement, or extension of such facility; any cost incident to the acquisition of any necessary property, easement or right of way, except property condemnation cost, which are not eligible costs; engineering or architectural fees, legal fees, fiscal agents' and financial advisors' fees; any cost incurred for any preliminary planning to determine the economic and engineering feasibility of a proposed project; costs of economic investigations and studies, surveys, preparation of designs, plans, working drawings, specifications and the inspection and supervision of the construction of any facility; Hardship Grant Assessments, fees and interest accruing on loans made under this program during acquisition and construction of the project; and any other cost incurred by the Board or the Department of Environmental Quality, in connection with the issuance of obligation to evidence any loan made to it under the law.[
Those costs incurred subsequent to the submission of a funding application to the Board and prior to the execution of a financial assistance agreement and which meet the above criteria are eligible for reimbursement from the proceeds of the financial assistance agreement.]"Disadvantaged Communities" are defined as those communities located in an area which has a median adjusted gross income less than or equal to 80% of the State's median adjusted gross income, as determined by the Utah State Tax commission from federal individual income tax returns excluding zero exemption returns, or where the estimated annual cost, including loan repayment costs, of drinking water service for the average residential user exceeds 1.75% of the median adjusted gross income. If, in the judgment of the Board, the State Tax Commission data is insufficient the Board may accept other measurements of the water users' income (i.e. local income survey or questionnaire when there is a significant difference between the number of service connections for a system and the number of tax filing for a given zip code or city).
"Drinking Water Project Obligation" means any bond, note or other obligation issued to finance all or part of the cost of acquiring, constructing, expanding, upgrading or improving a drinking water project, including, but not limited to, preliminary planning, studies, surveys, engineering or architectural fees, and preparation of plans and specifications.
"Credit Enhancement Agreement" means any agreement entered into between the Board, on behalf of the State, and an eligible water system for the purpose of providing methods and assistance to eligible water systems to improve the security for and marketability of drinking water project obligations.
"Eligible Water System" means any community drinking water system, either privately or publicly owned; and nonprofit noncommunity water systems.
"Interest Buy-Down Agreement" means any agreement entered into between the Board, on behalf of the State, and an eligible water system, for the purpose of reducing the cost of financing incurred by an eligible water system on bonds issued by the subdivision for project costs.
"Financial Assistance" means a project loan, credit enhancement agreement, interest buy-down agreement, or technical assistance.
"Hardship Grant Assessment" means an assessment applied to loan recipients. The assessment shall be calculated as a percentage of principal. Hardship grant assessment funds shall be subject to the requirements of UAC R309-700 for hardship grants.
"Negative Interest" means a loan with an interest rate at less than zero percent. The repayment schedule for loans having a negative interest rate will be prepared by the Drinking Water Board.
"Principal Forgiveness" means a loan wherein a portion of the loan amount is "forgiven" upon closing the loan. The terms for principal forgiveness will be as directed by section 4 of this rule and by the Drinking Water Board.
"Interest" means an assessment applied to loan recipients. The assessment shall be calculated as a percentage of principal.
"Emergency" means an unexpected, serious occurrence of situation requiring urgent or immediate action. With regard to a water system this would be a situation resulting from the failure of equipment or other infrastructure, or contamination of the water supply, which threatens the health and / or safety of the public / water users.
"Technical Assistance" means financial assistance provided for a feasibility study or master plan, to identify and / or correct system deficiencies, to help a water system overcome other technical problems. The system receiving said technical assistance may or may not be required to repay the funds received. If repayment is required, the Board will establish the terms of repayment.
"SRF Technical Assistance Fund" means a fund (or account) that will be established for the express purpose of providing "Technical Assistance" to eligible drinking water systems.
R309-705-5. Application and Project Initiation Procedures.
The following procedures must normally be followed to obtain financial assistance from the Board:
(1) It is the responsibility of the applicant to obtain the necessary financial, legal and engineering counsel to prepare its application and an effective and appropriate financial assistance agreement.
(2) A completed application form and project engineering report listing the project alternatives considered and including a justification for the chosen alternative, a project financing plan including an evaluation of credit enhancement, interest buy-down and loan methods applicable to the project and financial capability assessment and a history of the applicant's compliance with the SDWA are submitted to the Board. Comments from other interested parties such as an association of governments will also be accepted. Those costs incurred subsequent to the submission of a completed funding application form to the Board and prior to the excution of a financial assistance agreement and which meet the criteria for project costs are eligible for reimbursement from the proceeds of the financial assistance agreement.
(3) An engineering, capacity development analysis, and financial feasibility report is prepared by Division staff for presentation to the Board.
(4) The Board may authorize financial assistance for the project on the basis of the staff's feasibility report and designate whether a loan, credit enhancement agreement, interest buy-down agreement, or any combination thereof, is to be entered into, and approve the project schedule (see section 7 of this rule).
(5) The applicant must demonstrate public support for the project prior to bonding, as deemed acceptable by the Drinking Water Board. As a minimum, for a loan to be secured by a revenue bond, the Sponsor must mail notices to each water user in the Sponsor's service area informing them of a public hearing. In addition to the time and location of the public hearing the notice shall inform water users of the Sponsor's intent to issue a non-voted revenue bond to the Board, shall describe the face amount of the bond, the "effective rate", the repayment schedule and shall describe the impact of the project on the user including: user rates, impact and connection fees. The notice shall state that water users may respond to the Sponsor in writing or in the public hearing within ten days after the date of the notice. A copy of all written responses and a certified record of the public hearing shall be forwarded to the Division of Drinking Water.
(6) For financial assistance mechanisms where the applicant's bond is purchased by the Board, the project applicant's bond documentation must include an opinion from recognized bond counsel. Counsel must be experienced in bond matters, and must include an opinion that the drinking water project obligation is a valid and binding obligation of the applicant (see section 8 of this rule). The opinion must be submitted to the Assistant Attorney General for preliminary approval and the applicant shall publish a Notice of Intent to issue bonds in a newspaper of general circulation pursuant to 11-14-21 of the Utah Code. For financial assistance mechanisms when the applicant's bond is not purchased by the Board, the applicant shall submit a true and correct copy of an opinion from legal counsel, experienced in bond matters, that the drinking water project obligation is a valid and binding obligation of the applicant.
(7) The Board, through its Executive Secretary, shall issue, if warranted by conformance to Rules R309-500-560, a Plan Approval for plans and specifications.
(8) If a project is designated to be financed by the Board through a loan or an interest buy-down agreement, an account supervised by the applicant and the Board will be established by the applicant to assure that loan funds are used only for eligible project costs. If financial assistance for the project is provided by the Board in the form of a credit enhancement or interest buy-down agreement, all project funds will be maintained in a separate account, and a quarterly report of project expenditures will be provided to the Board.
Incremental disbursement bonds will be required. Cash draws will be based on a schedule that coincides with the rate at which project related costs are expected to be incurred for the project.
(9) If a revenue bond is to be used to secure a loan, a User Charge Ordinance, or water rate structure, must be submitted to the Board for review and approval to insure adequate provisions for debt retirement and/or operation and maintenance. If a general obligation bond is to be used to secure a loan, a User Charge Ordinance must be submitted to the Board for review and approval to insure the system will have adequate resources to provide acceptable service.
(10) A "Private Company" will be required to enter into a Loan Agreement with the Board. The loan agreement will establish the procedures for disbursement of loan proceeds and will set forth the security interests to be granted to the Board by the Applicant to secure the Applicant's repayment obligations.
(a) The Board may require any of the following forms of security interest or additional/other security interests to guarantee repayment of the loan: deed of trust interests in real property, security interests in equipment and water rights, and personal guarantees.
(b) The security requirements will be established after the Board's staff has reviewed and analyzed the Applicants financial condition.
(c) These requirements may vary from project to project at the discretion of the Board
(d) The Applicant will also be required to execute a Promissory Note in the face amount of the loan, payable to the order of the lender, and file a Utah Division of Corporations and Commercial Code Financing Statement, Form UCC-1.
(e) The Board may specify that loan proceeds be disbursed incrementally into an escrow account for expected construction costs, or it may authorize another acceptable disbursement procedure.
(11) The applicant's contract with its engineer must be submitted to the Board for review to determine if there will be adequate engineering involvement, including project supervision and inspection, to successfully complete the project.
(12) The applicant's attorney must provide an opinion to the Board regarding legal incorporation of the applicant, valid legal title to rights-of-way and the project site, validity and quantity of water rights, and adequacy of bidding and contract documents, as required.
(13) A position fidelity bond may be required by the Board insuring the treasurer or other local staff handling the repayment funds and revenues produced by the applicant's system and payable to the State of Utah through the Drinking Water Board.
(14) CREDIT ENHANCEMENT AGREEMENT AND INTEREST BUY-DOWN AGREEMENT ONLY - The Board shall execute the credit enhancement agreement or interest buy-down agreement setting forth the terms and conditions of the security or other forms of assistance provided by the agreement and shall notify the applicant to sell the bonds.
(15) CREDIT ENHANCEMENT AGREEMENT AND INTEREST BUY-DOWN AGREEMENT ONLY - The applicant shall sell the bonds and shall notify the Board of the terms of sale. If a credit enhancement agreement is utilized, the bonds shall contain the legend required by 73-10c-6(3)(d) of the Utah Code. If an interest buy-down agreement is being utilized, the bonds shall bear a legend referring to the interest buy-down agreement and state that such agreement does not constitute a pledge of or charge against the general revenues, credit or taxing powers of the state and that the holder of any such bond may look only to the applicant and the funds and revenues pledged by the applicant for the payment of interest and principal on the bonds.
(16) The applicant shall open bids for the project.
(17) LOAN ONLY - The Board shall give final approval to purchase the bonds and execute the loan contract.
(18) LOAN ONLY - The closing of the loan is conducted.
(19) A preconstruction conference shall be held.
(20) The applicant shall issue a written notice to proceed to the contractor.
R309-705-12. Compliance with Federal Requirements.
(1) Applicants must show the legal, institutional, managerial, and financial capability to construct, operate, and maintain the drinking water system(s) that the project will serve.
(2) Applicant(s) shall require its contractors to comply with federal provisions for disadvantaged business enterprises and exclusions for businesses under suspension and/or debarment. Any bidder not complying with these requirements shall be considered a non-responsive bidder.
(3) As required by Federal Code, applicants may be subject to the following federal requirements (all assessments shall consider the impacts of the project twenty (20) years into the future):
Archeological and Historic Preservation Act of 1974, Pub. L. 86-523, as amended
Clean Air Act, Pub. L. 84-159, as amended
Coastal Barrier Resources Act, Pub. L. 97-348
Coastal Zone Management Act, Pub. L. 92-583, as amended
Endangered Species Act, Pub. L. 92-583
Environmental Justice, Executive Order 12898
Floodplain Management, Executive Order 11988 as amended by Executive Order 12148
Protection of Wetlands, Executive Order 11990
Farmland Protection Policy Act, Pub. L. 97-98
Fish and Wildlife Coordination Act, Pub. L. 85-624
National Environmental Policy Act of 1969 (NEPA), Pub. L. 91-190
National Historic Preservation Act of 1966, PL 89-665, as amended
Safe Drinking Water Act, Pub. L. 93-523, as amended
Wild and Scenic Rivers Act, Pub. L. 90-542, as amended
Age Discrimination Act of 1975, Pub. L. 94-135
Title VI of the Civil Rights Act of 1964, Pub. L. 88-352
Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Pub. L. 92-500 (the Clean Water Act)
Section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112 (including Executive Orders 11914 and 11250)
The Drug-Free Workplace Act of 1988, Pub. L. 100-690 (applies only to the capitalization grant recipient)
Equal Employment Opportunity, Executive Order 11246
Women's and Minority Business Enterprise, Executive Orders 11625, 12138 and 12432
Section 129 of the Small Business Administration Reauthorization and Amendment Act of 1988, Pub. L. 100-590
Anti-Lobbying Provisions (40 CFR Part 30)
Demonstration Cities and Metropolitan Development Act of 1966, Pub. L. 89-754, as amended
Procurement Prohibitions under Section 306 of the Clean Water Act and Section 508 of the Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans
Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as amended
Debarment and Suspension, Executive Order 12549
Accounting procedures, whereby applicants agree to maintain a separate project account in accordance with Generally Accepted Accounting Standards and Utah State Uniform Accounting requirements
KEY: SDWA, financial assistance, loans
2004
Notice of Continuation September 16, 2002
73-10c
Document Information
- Effective Date:
- 8/3/2004
- Publication Date:
- 07/01/2004
- Filed Date:
- 06/15/2004
- Agencies:
- Environmental Quality,Drinking Water
- Rulemaking Authority:
Section 19-4-104, and Title 73, Chapter 10c
- Authorized By:
- Kevin Brown, Director
- DAR File No.:
- 26975
- Related Chapter/Rule NO.: (1)
- R309-705. Financial Assistance: Federal Drinking Water Project Revolving Loan Program.