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This filing was published in the 01/15/2008, issue, Vol. 2008, No. 2, of the Utah State Bulletin.
[ 01/15/2008 Bulletin Table of Contents / Bulletin Page / Rules Home ]
Natural Resources, Water Resources
Financial Assistance from the Board of Water Resources
DAR File No.: 30855
Filed: 12/18/2007, 10:57
Received by: NL
The purpose of this rule is to provide the standards and procedures for providing technical and financial assistance to water users to achieve the highest beneficial use of water resources within the state. (DAR NOTE: This new rule is proposed subsequent to the expiration of the previous version on 12/14/2007. Notice of the expiration was published in the January 1, 2008, issue of the Utah State Bulletin under DAR No. 30850 on page 53.)
This rule describes three revolving construction loan funds. It also describes the priority system used by the Board of Water Resources in determining how to allocate monies from those funds. The rule outlines the procedure for applying for an award from the funds and describes the funding process. Special provision is made for reviewing applications that may need to comply with the Dam Safety Act. Other details about funding and project engineering and construction are also supplied.
Section 73, Chapter 15
None--This will not generate additional revenue or cost for the state of Utah additional funds to administer. This is the rule the Board operated under in the past.
None--This rule will not provide costs or provide savings to local governments. It is the rule the Board has operated under in the past.
None--This rule does not apply to small businesses.
None--This rule will not add additional costs to project sponsors doing business with the Board. The administrative fee specified in the rule is already being charged by the Board.
No impact on businesses. Michael Styler, Executive Director
Geralee Murdock at the above address, by phone at 801-538-7235, by FAX at 801-538-7279, or by Internet E-mail at firstname.lastname@example.org
Dennis J Strong, Director
R653. Natural Resources, Water Resources.
R653-2. Financial Assistance from the Board of Water
The purpose of this rule is to
provide the standards and procedures for providing technical and financial
assistance to water users to achieve the highest beneficial use of water
resources within the state.
R653-2-2. Description of Funding Program.
(1)(a) The Board of Water Resources (Board) administers three revolving
construction funds: the Revolving Construction Fund, the Cities Water Loan
Fund, and the Conservation and Development Fund. Funding is available for projects that conserve, protect, or more
efficiently use present water supplies, develop new water, or provide flood
control. Project facilities may be
constructed in another state if project water is to be used within the state of
(b) The Board will fund projects based on the following
(i) Projects which involve public health problems, safety problems,
(ii) Municipal water projects that are required to meet an existing or
(iii) Agricultural water projects that provide a significant economic
benefit for the local area.
(iv) Projects which will receive a large portion of their funding from
(v) Projects not included in items 1-4, but which have been
authorized by the Board, are funded on a first come first served basis.
(2) The Board will not fund the following types of projects:
(a) Projects that are, in the opinion of the Board, routine or
regularly occurring system operation and maintenance.
(b) Domestic water systems where less than 20% of the residents live
in the project area year-round.
(c) Projects sponsored by developers.
(3) General guidelines of each of the Board's funding programs are:
(a) Revolving Construction Fund (RCF)
(i) In the RCF, the Board will accept applications from incorporated
groups such as mutual irrigation and water companies.
(ii) The RCF advances financial assistance to the following types of
(A) Irrigation projects costing less than $500,000.
(B) Rural culinary projects costing less than $250,000 that involve
mutual irrigation and water companies.
(C) Dam Safety Studies
(iii) The staff will recommend repayment terms in the feasibility
report it will prepare. Interest will
not be charged.
(b) Cities Water Loan Fund (CWLF)
(i) Through the CWLF, the Board may finance the construction of
municipal water facilities for political subdivisions of the state such as
cities, towns, and districts.
(ii) The staff will recommend repayment terms and interest rates in
the feasibility report.
(c) Conservation and Development Fund (CDF)
(i) Through the CDF, the Board may finance the construction of water
projects sponsored by incorporated groups, political subdivisions of the state,
the federal government, or Indian tribes.
R653-2-3. Application Procedure.
(1) Applicants shall submit a completed application form directly to
the member of the Board residing in the river district in which the project is
located. If the Board member determines
the application meets general Board guidelines, the Board member will sign the
application and forward it to the Division for action.
(2) Additional information not specifically requested on the
application form should also be furnished when such information would be
helpful in appraising the merits of the project.
(3) An application form can be obtained from the Division, a Board
member, or the Division's website.
R653-2-4. Project Funding Process.
(1) After the application for assistance has been completed by the
sponsor/applicant, signed by the Board member, and forwarded to the Division, a
three-step process will be followed to determine those projects which will be
funded by the Board.
(2) The three steps of the funding process are:
(a) Approval for Staff Investigation
(i) The Board member considers the proposed project to fall within
the Board's general statutory authority.
(ii) Division staff will prepare a feasibility report covering the
general scope of the proposed project but focusing on technical, financial,
legal, and environmental aspects, water needs and rights, and water users' support.
(i) The feasibility report will be presented to the Board, which will
consider the project for authorization on the basis of its merits and overall
feasibility and the contribution the project will make to the general economy of
the area and the state.
(ii) As part of its decision-making process, the Board considers it
important to discuss the merits of the project with the sponsor. Therefore, representatives of the project
sponsor must attend the Board meeting when the project is considered for
(iii) If the project is AUTHORIZED by the Board, a letter outlining the
engineering and legal requirements for the project, and other conditions of the
financial assistance will be sent to the sponsor. For example, some of the more common conditions of these projects
(A) Preparation of a Water Management and Conservation Plan for the
sponsor's service area.
(B) Adoption of an ordinance prohibiting municipal irrigation of
landscapes between the hours of 10:00 a.m. and 6:00 p.m.; the Division has
prepared a Model Ordinance which is available for the sponsors of municipal
(C) Adoption of a progressive water rate schedule (municipal
projects). Division staff will assist
sponsors in establishing such schedules to fit local conditions and
(c) Committal of Funds
(i) After the sponsor has complied with the Board requirements and
conditions, the project will be presented for final review. If the Board finds the project to be in
order and ready for construction, and IF FUNDS ARE AVAILABLE, the Board will
commit funds and direct its officers to enter into the necessary agreements to
secure project financing.
(ii) The project sponsor will not normally be required to attend the
Board meeting at which funds are to be committed for the project. If the
project scope or cost estimate has changed substantially, the sponsor may be
asked to attend the meeting to discuss the changes with the Board.
R653-2-5. Dam Safety Grants and Loans.
(1) After the application for assistance has been completed and
signed by the Board member the application will be submitted to the Division
for review. The Division staff will
review the application for compliance with the Dam Safety Act and requirements,
if any, placed on the sponsor by the State Engineer.
(2) A report will be prepared by the Division presenting its findings
and recommending the amount of the grant and repayment terms for loans.
(3) Grants will be considered when money is appropriated by the
legislature and will be restricted by limitations placed on the funding by the
legislature and Board.
(4) The amount of each grant will be based on conditions determined
by the legislature on the money appropriated, and/or by analysis of such items
as the number of acres irrigated, the number of water users, the size of the
reservoir, the use of the waters, and cost of the proposed improvements.
R653-2-6. Financial Arrangements.
(1) Project Cost Sharing
(a) The Board desires to optimize available funding for 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. The sponsor will
generally be expected to provide 15% - 25% of the project cost.
(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
(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 Revolving Construction Fund must be
secured by a purchase agreement.
(ii) Projects financed through the Cities Water Loan Fund or the
Conservation and Development 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
(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.
R653-2-7. Project Engineering and Construction.
To expedite projects and
facilitate the coordination of project development, sponsors are encouraged to
select a design engineer prior to making application to the Board.
(2) Staff and Legal Costs
(a) Costs incurred by the Division for investigation, administration,
engineering, and construction inspection will be paid to the Board according to
the terms set by the Board.
(b) Costs incurred by the Division during project investigation will
not become a charge to the sponsor if the project is found infeasible, denied
by the Board, or if the sponsor withdraws the application.
(c) Legal fees incurred in the review of a sponsor's bonding
documents will be billed directly to the sponsor by the legal firm doing the
review for the Board.
(3) Design Standards and Approval
(a) All projects funded by the Board shall be designed according to
appropriate technical standards and shall be stamped and signed by a Utah
registered professional engineer responsible for the work.
(b) Prior to soliciting construction bids, plans and specifications
must be approved by the Division and all other state and federal agencies which
have regulatory or funding involvement in the project.
(4) Project Bidding and Construction
(a) The Board desires that all project construction be awarded to
qualified contractors based on competitive bids. The Board may waive this requirement and allow a sponsor to act
as its own contractor on small projects.
However, in all cases the sponsor must comply with the laws governing
its operation as well as the statutory requirements placed on the Board and
(b) The design engineer shall coordinate the project bidding process.
(c) Construction inspection will be performed under the direction of
the registered professional engineer having responsible charge of project
R653-2-8. Qualifications to Guidelines.
The foregoing guideline
statements are meant as a guide for the Board, staff, and sponsor to provide an
orderly and effective procedure for preparing projects for construction. The Board reserves the right to consider
each project on its own merits and may consider and authorize a project that
does not meet all requirements of the guidelines.
KEY: water funding
Date of Enactment
or Last Substantive Amendment: 2008
Implemented or Interpreted Law: 73-15
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For questions regarding the content or application of this rule, please contact Geralee Murdock at the above address, by phone at 801-538-7235, by FAX at 801-538-7279, or by Internet E-mail at email@example.com
For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.
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Last modified: 01/14/2008 8:11 PM
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