Public Water System Construction Loans
DEQ's Drinking Water Revolving Loan Fund provides below-market-rate interest loans to help repair or build new drinking water facilities. Loans of up to 100% of project costs may be awarded for project design and/or construction.
Community water systems and nonprofit, noncommunity water systems are eligible to participate in the Drinking Water Loan Program. Community water systems serve at least 15 service connections used by year-round residents or regularly serve at least 25 year-round residents. Noncommunity water systems regularly serve at least 25 of the same persons over 6 months in a year.
DEQ queries drinking water systems annually to obtain information on projects for which loan funds can be used. Potential candidates must submit a Letter of Interest (LOI) to DEQ indicating their desire for DEQ funding and stating the improvements or expansion needed. Those systems that submit LOIs are eligible for placement on the state’s priority list, which is developed through a rating and ranking process based upon public health concerns, long-term viability of the system (i.e., sustainability), and the status of the system’s compliance with state and federal regulations. The systems on the priority list are further refined based on the entity’s readiness to proceed. The refined list makes up the final fundable list.
Fundable projects on the priority list are placed on the Intended Use Plan (IUP), which outlines the purpose and goals of the state's drinking water loan program, explains how projects are selected for funding, and identifies priority projects eligible for state assistance. The fiscal year (FY) 2018 IUP was reviewed and adopted by the Board of Environmental Quality in May 2017.
Once funding is secured from US Environmental Protection Agency (EPA) and the state match is provided, communities with projects on the IUP are invited to submit applications. After review of the application and satisfaction that all environmental and legal requirements have been met, a loan may be offered.
For FY 2017 (July 1, 2016–June 30, 2017), the interest rate for loans ranges from 1.50% to 3.00%. These loans must be fully repaid within 20 to 30 years of project completion. Some applicants may qualify as disadvantaged and be eligible for an interest rate as low as 0% and possible principal forgiveness.
Source of Revenue
Funding is derived from four sources. Congress appropriates funds to EPA, which then allots those funds to the states based upon set formulas. Each state is required to provide a 20% match. Idaho's match comes from a transfer to the loan account from the Water Pollution Control Account. Loan repayments and interest earnings provide other resources for new drinking water loans.
In 2016, an audit of the Idaho State Drinking Water Revolving Fund was conducted by the Legislative Services Office of the Idaho State Legislature in 2016. The audit concluded that the DWSRF's financial statements are materially accurate and reliable, and that fiscal operations comply with laws and regulations affecting fiscal operations.
- Legislative Services Office Individual Entity Audit Reports on the Idaho DEQ Drinking Water State Revolving Fund, FY 2016
Periodically, EPA conducts an audit of state revolving loan funds to ensure that monies are being appropriately allocated.