R653-2-6. Financial Arrangements (RCF, CWLF, C and D)

  (1) Project Cost Sharing:

  (a) The Board desires to optimize available funding through the overall water development programs of the state and therefore requires sponsors to share in the cost of projects.

  (b) The sponsor's financial ability to cost share will be determined in the project investigation. On the basis of the investigation, the Division will recommend to the Board the portion of the project cost to be furnished by the sponsoring organization.

  (c) If additional funds become available to the sponsor after the project is authorized, and if project costs do not increase, the additional funds will be used to reduce the Board's financial participation.

  (2) Alternate Financing:

  The Board will consider alternative project funding methods such as letters of credit, bond insurance, and various methods of interest buydown, instead of directly funding construction of project features.

  (3) Repayment of Financial Assistance:

  (a) The repayment period will generally be less than 25 years.

  (b) The minimum annual cost of water for municipal projects will be 1.17% of the region or project area's annual median adjusted gross income. The percentage will increase with income.

  (c) When annual payments are to be made with revenues from the sale or use of project water, the Board may allow the sponsor one year's use of the project before the first payment is due.

  (4) Security Arrangements:

  (a) Depending upon the type of organization sponsoring the project and the Board fund involved, financial assistance may be secured either by a purchase agreement or bond issue.

  (i) Projects financed through the RCF must be secured by a purchase agreement.

  (ii) Projects financed through the CWLF or the C and D Fund will be secured either by a purchase agreement or by the sale of a bond.

  (b) If project financing is secured by a purchase agreement, the following conditions apply:

  (i) The Board must take title to the project including water rights, easements, deeded land for project facilities, and other assets subject to security interest.

  (ii) An opinion from the sponsor's attorney must be submitted stating the sponsor has complied with its articles and bylaws, state law, and the Board's contractual requirements.

  (iii) Title to the project shall be returned to the sponsor upon successful completion of the purchase agreement.

  (c) If project financing is secured by the sale of a bond, the following conditions apply:

  (i) The procedures for bond approval will be substantially the same as required by the Utah Municipal Bond Act.

  (ii) If the sponsor desires to issue a non-voted revenue bond, the sponsor will be required to:

  (A) Hold a public meeting to describe the project and its need, cost, and effect on water rates.

  (B) Give written notice describing the proposed project to all water users in the sponsor's service area. The notice shall include a solicitation of response to the proposed project. A copy of all written responses received by the sponsor shall be forwarded to the Division. If the area Board member determines there is substantial opposition to the project, the Board may require the sponsor to hold a bond election before funds will be made available.