Utah Admin. Code 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 or facility plan 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, the local health and planning
departments, and the Department of Environmental Quality (DEQ) District
Engineers will also be accepted. Project costs which meet the criteria of
Subsection R309-705-4(1)
that are incurred after the applicant's funding application has been approved
by the Board and before the financial assistance agreement is executed are
eligible for reimbursement from the proceeds of the financial assistance
agreement.
(3) An engineering and
financial feasibility report and a capacity development analysis are prepared
by Division staff for presentation to and consideration by the Board. A
Capacity Assessment, as required by Rule R309-800, will be made by Division
staff for equivalency projects, essentially, those funded by the annual federal
Capitalization Grant as defined by federal regulations. A capacity assessment
may be prepared for a non-equivalency project when it is determined to be
beneficial for evaluating project feasibility.
(4) Retail water suppliers seeking financial
assistance through the State Revolving Fund must commit to develop and
implement an asset management program as defined in Rule R309-800. Capacity
Development Program.
(5) 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 as described in Section
R309-705-7.
(6) The applicant must demonstrate public
support for the project before 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.
(7) 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 as described in Section
R309-705-8. The opinion must be
submitted to the Board's Attorney for preliminary approval and the applicant
shall publish a Notice of Intent to issue bonds in a newspaper of general
circulation pursuant to Section
11-14-21. 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.
(8) As authorized in Subsection
19-4-106(2)(c),
the Director may review plans, specifications, and other data pertinent to
proposed or expanded water supply systems to insure proper design and
construction, as specified in Section
R309-500-4 General. Construction
of a public drinking water project shall not begin until complete plans and
specifications have been approved in writing by the Director.
(9) 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.
(10) 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 infrastructure 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.
(11) 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 other
forms of security interests it finds acceptable 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.
(12) 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.
(13) 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.
(14) 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.
(15) 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.
(16) 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 Subsection
73-10c-6(3)(d).
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.
(17) The applicant shall open bids for the
project.
(18) LOAN ONLY - The Board
shall give final approval to purchase the bonds and execute the loan
contract.
(19) LOAN ONLY - The
closing of the loan is conducted.
(20) A preconstruction conference shall be
held.
(21) The applicant shall
issue a written notice to proceed to the contractor.
Notes
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