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HomeMy WebLinkAboutDDW-2024-006096 195 North 1950 West • Salt Lake City, UT Mailing Address: P.O. Box 144830 • Salt Lake City, UT 84114-4830 Telephone (801) 536-4200 • Fax (801) 536-4211 • T.D.D. (801) 536-4284 www.deq.utah.gov Printed on 100% recycled paper State of Utah Drinking Water Board Kristi Bell, Chair Eric Franson, P.E., Vice-Chair Dawn Ramsey Justin Maughan Corinna Harris Jeff Coombs David O. Pitcher Blake Tullis, Ph.D. Kimberly D. Shelley Tim Davis Executive Secretary SPENCER J. COX Governor DEIDRE HENDERSON Lieutenant Governor Department of Environmental Quality Kimberly D. Shelley Executive Director DIVISION OF DRINKING WATER Tim Davis Director DRINKING WATER BOARD MEETING August 30, 2023, 9:00 AM Via Zoom Webinar & In Person: Davis Conference Center / Zoom Webinar 1651 North 700 West Layton, Utah 84041 MINUTES 1. Call to Order Kristi Bell, Chair, called the Drinking Water Board (Board, DWB) meeting to order at 9:03 AM. 2. Roll Call – Michael Grange Board Members Present at Roll Call: Kristi Bell, Eric Franson, Justin Maughan, David Pitcher, Jeff Coombs, and Corinna Harris. Division of Drinking Water (DDW, Division) Staff Present: Tim Davis, Michael Grange, Allyson Spevak, Jessica Fitzgerald, Heather Pattee, Linda Ross, Kjori Shelley, Tom McOmie, and Mark Berger. 3. Oath of Office & Disclosure Statement for New Members – Linda Ross, Notary Notary Linda Ross administered the oath of office and disclosure statement, in turn, to the new board member Corinna Harris. Corinna Harris represents the public on the Board and is the owner of Idle Isle Café in Brigham City. She continues to be an active member of Women in Business, the Brigham City Kiwanis, the Utah Restaurant Association, the Professional Republican Women, and the Chamber of Commerce. 4. Approval of Meeting Minutes A. June 27, 2023 ● Justin Maughan moved to approve the June 27, 2023, Drinking Water Board meeting minutes. David Pitcher seconded. The motion was carried unanimously by the Board. Page 2 5. Disclosure for Conflict of Interest Kristi Bell disclosed her conflict of interest related to the Uintah Town project. 6. Directors Report – Tim Davis A. New Employee; Tom McOmie Tom McOmie has joined the Field Services section as the Emergency Manager. B. Enforcement Report (Board Packet Item Only) C. Other None. 7. Rural Water Association Report – Dale Pierson Dale welcomed the Board to the RWAU conference. Dale reported that the conference has 111 participants in the Operator Certification classes, 36 taking Wastewater Operator Certification classes, 11 Cross-Connection Control, 52 training sessions, 48 speakers, and a total attendee number of around 400. Dale reminded the Board that the RWAU reports are in the packet. 8. Financial Assistance Committee Report A. Status Report – Michael Grange Federal SRF Program Michael Grange, Infrastructure Funding Section Manager, directed the Board to the first page of the report. He reported that in the Federal program, there is a negative balance of approximately $120 million. Over the coming year, the Division is expecting roughly $36 million to come into the program. Showing a negative balance, by August 2024 of $83 million. Page 2 of the report shows the projects that have been authorized by the Board for which SRF staff is in the process of closing loans and moving forward into construction. David Pitcher asked for clarification on the items highlighted in yellow. Michael clarified that these items are projects that have raised special interest with the finance team, but he is uncertain of their meaning. Michael plans to find out what they mean and inform the Board. ARPA Grant Funds Michael informed the Board that this page includes the Emergency Funds that the Board established with the remaining ARPA funds. Approximately, there is $580,000 available to water systems for emergency projects. This funding needs to be obligated by December 31, 2024, and spent by December 31, 2026. Page 3 Tim explained that the Division has received a request from Bicknell, UT. Bicknell had a significant flood and is requesting $100,000 in emergency grant funding from ARPA. Page 4 is a list of projects that have used some of those emergency funds as well as ARPA funds that were obligated by the Board. Lead ARPA Michael reported that the Board set aside $3.5 million out of the ARPA funds that were allotted by the Drinking Water Board for lead. Currently, the Board has authorized $2.7 million and there is $782,000 left to be authorized for Lead projects. Page 6 includes a list of projects using the Lead ARPA funds in school districts. Tim informed the Board that the Division has over 60% of all schools sampled. Letters are going out to the remaining schools to inform them of the upcoming deadline at the end of this year for sampling of human consumption fixtures. Corinna Harris requested a list of the school districts that have completed the sampling. Lead Service Line Funds Michael informed the Board that as part of the Bi-Partisan Infrastructure Law (BIL), the Division receives approximately $26 million per year for Lead Service Line Replacement funds. The Division has set aside money for inventories. Currently, the Division has accepted expedited applications for Lead Service Line inventories. Page 7 details allocations for water system inventories, totaling $2 million in authorizations. The revised Lead and Copper Rule requires inventory completion by October 2024. Around 72 systems have been authorized for these inventories, with staff assisting to complete the inventories. In addition, the Division has a contract with Sunrise Engineering to assist small water systems in completing their inventories. Regarding lead service line replacements, over $55 million is allocated through June 2024, covering inventories and replacements. State SRF Program The State SRF Program currently has a balance of $6.3 million available for projects. Over the next year, the Division expects approximately $3 million through allocations from the Legislature, as well as the repayment stream. By June 30, 2024, the Division is expecting about $9.4 million available in the fund. Page 9 of the report lists the current State SRF Projects. Tim shared that since January 2022, the Board has authorized infrastructure projects for 120 public water systems out of Utah’s 504 total community water systems. This constitutes funding for approximately 24% of these types of systems throughout the state. Tim informed the Board that in the upcoming Cashflow discussion, recommendations for Fiscal Year 2025 will be presented, highlighting a potential negative balance in the Federal Fund. Page 4 B. Project Priority List – Michael Grange Michael reported that two (2) new projects are recommended to be added to the Project Priority List: 1. Granger Hunter Improvement District scored 40.7 priority rating points. Their project is to construct the Anderson Water Treatment Plant to treat groundwater by removing manganese from Well Nos. 16 and 18. Well No. 18 is currently proposed and would be constructed near Well No. 16. 2. Fremont Water Works scored 15.3 priority rating points. Their project is to install a new 8- inch transmission line, new master meters for source flow monitoring, fire hydrants, and radio read meters with a radio read meter base and software. The Financial Assistance Committee (FAC) recommends that the Drinking Water Board approve the updated Project Priority List as presented, with the addition of these two (2) projects. ● Jeff Coombs moved that the Drinking Water Board approve the updated Project Priority List. Justin Maughan seconded. The motion was carried unanimously by the Board. C. Cashflow – Michael Grange Federal SRF The available Federal Program balance for June 2023, as per the Cashflow report is approximately $107 million. This includes our BIL, Capitalization Grant, State match, and second-round repayment stream, as well as interest earnings and loan repayments. After accounting for project obligations of approximately $76 million, the estimated fund availability of over $30 million. State SRF For Fiscal Year (FY) 2023, the State SRF Program has approximately $28 million in available funds, with project obligations over $14.5 million, leaving unobligated funds at approximately $13 million. Looking ahead to FY24, the total funds availability is projected to be $44.5 million, including $3.6 million for the Base SRF. Tim emphasized that for FY25, the Division is not estimating any funding for the Base Drinking Water SRF (DWSRF) Capitalization Grant due to uncertainties linked to earmarks. The report calculates the BIL, state match, which has already been appropriated, second-round interest earnings, and loan repayments. Projected Federal funding for FY25 shows a negative balance of $2.3 million. However, considering unobligated State funds of around $9.1 million, the Division would maintain a positive position at $6.8 million. Adjustments in project expenses and potential FY26 funds could improve the Federal Fund balance to $12.3 million. Due to the uncertainty of the Base SRF funding from Congress, the recommendation is to postpone new grants or loans until the end of FY24, prioritizing projects based on funding clarity. Page 5 It’s recommended that the Board directs the Division not to bring forward any new grants or loans until the end of FY24. The purpose is to evaluate the forthcoming Base SRF funding and then prioritize the projects accordingly for the Board between now and June 2024. Funding presentations from the following sources, Lead Service Line, Emerging Contaminants, Emergency funding, and reauthorizations will proceed. David Pitcher inquired how the Division plans to communicate the pause in authorizing new projects until June 2024 to the public. Michael clarified that while there hasn’t been a general announcement, the Division has been addressing funding availability queries from specific systems and engineering firms. David emphasized the challenge of effectively communicating fund availability, especially for purposes like Emerging Contaminants and Lead Service. Michael acknowledged the challenge, stating that funds allocated for specific purposes cannot be redirected for general construction. Tim highlighted that this pause would enable the staff to focus on closing existing projects, emphasizing the need for Board agreement on this approach. David sought clarification regarding the Cashflow Forecast and when they would know the funding for FY25. Tim explained that they anticipate Base SRF funding for FY24, minus earmarks. However, the funding situation for FY25 remains uncertain until Congress passes a budget bill. ● Eric Franson moved that the Drinking Water Board direct Drinking Water staff to pause on general construction funding applications until June 2024. Justin seconded. The motion was carried unanimously by the Board. D. SRF Applications i. State a. Uintah - Deauthorization – Heather Pattee Heather Pattee informed the Board that Uintah City was authorized financial assistance to build two new 375,000-gallon water tanks with associated appurtenances on August 31, 2022. The project is under construction and is anticipated to be completed in October 2023. Based on the timeframe for completion of the project and verbal confirmation the project is moving along with no unexpected expenses, the staff is recommending the funds be deauthorized. The Financial Assistance Committee recommends that the Drinking Water Board deauthorize a loan of $1,000,000 at 2.0% interest/Fee for 20 years to Uintah City. Kristi Bell added that there is a verbal agreement between the council, Mayor, and engineers and they feel that at this point it is okay to deauthorize. The project is nearing completion one of the two tanks is in service, and the second tank is to be filled in the next day. Page 6 ● Jeff Coombs moved that the Drinking Water Board deauthorize a loan of $1,000,000 at 2.0% interest/Fee for 20 years to Uintah City. Seconded by Corinna Harris. The motion was carried unanimously by the Board. Per her conflict of interest, Kristi Bell abstained from participating in discussing and voting on this item as a Board Member. ii. Federal a. Metropolitan Water District of SLC & Sandy –Michael Grange Michael informed the Board that the Metropolitan Water District of SLC & Sandy has withdrawn their request. b. Fremont Water Works Company – Kjori Shelley Representing Fremont Waterworks Company were Richard Fillmore, president of the Water Board, Allen Gundy, Board member, Chris Harker, Board member, Kaitlin Taylor, secretary, and Parker Vercimak with Jones and Demille Engineering. Fremont Waterworks Company is requesting financial assistance to install a new 8-inch transmission line, new master meters for source flow monitoring, fire hydrants, and radio read meters with a radio read meter base and software. This project scored 15.3 points on the Project Priority List. The total project cost is $1,429,250. Fremont Waterworks is contributing $4,250. They are requesting the balance of $1,425,000 from the Drinking Water Board. The local MAGI for Fremont Waterworks is $28,900 which is 62% of the State MAGI. The current average water bill is $45.73/ERC, which is 1.9% of the local MAGI. The estimated after-project water bill at a full loan for 30 years with 2.8% interest would be $79.34/ERC or 3.29% of the local MAGI. Based on the after-project water bill and MAGI, Fremont Waterworks Company qualifies to be considered for additional subsidy. Currently, Fremont Waterworks has three loans through USDA. The combined balance owed on the loans is $777,990. The only collateral they have is a water right that is currently in the name of Water Resources as it is being used as collateral for three of the loans. The water right appears to have 543 acre-feet of water for municipal use and has an estimated value of $2,715,000. Deducting the balance of the three loans, the available value for collateral for this loan would be $1,937,010. The Financial Assistance Committee recommends that the Drinking Water Board authorize a construction loan of $1,425,000 with $428,000 in principal forgiveness to Fremont Waterworks Company, for a repayable loan amount of $997,000 at 1.0% interest for 30 years. Parker Vercimak provided additional context on Fremont describing it as a small rural system that has effectively managed its resources. Fremont used loans to address spring redevelopment and augment storage capacity. Fremont faced challenges due to rural expansion, prompting a growth moratorium in 2022 until a culinary water master plan was completed. This plan was created in 2023, key improvements identified in the plan included an 8-inch transmission line to tackle Page 7 existing deficiencies. Additionally, the installation of radio read meters was proposed to improve metering, especially during heavy winter snows, ultimately enhancing revenue generation for sustaining the system. ● Dave Pitcher moved that the Drinking Water Board authorize a construction loan of $1,425,000 with $428,000 in principal forgiveness to Fremont Waterworks Company, for a repayable loan amount of $997,000 at 1.0% interest for 30 years. Seconded by Eric Franson. The motion was carried unanimously by the Board. c. Irontown - Additional Funding – Cadence Hernandez Representing Irontown was Irontown Property Owners’ Association President Barbara Osborne. Irontown is requesting additional funding to complete their waterline project replacing and upgrading distribution lines, and hydrants, and installing new water meters. This project scored 47.1 points on the Project Priority List. The system is requesting $106,100 in additional funding. The local MAGI for Irontown is $34,700, which is 75% of the State MAGI. The current average water bill is $43.28/ERC, which is 1.5% of the local MAGI. The estimated after-project water bill at full loan would be $81.65/ERC or 2.82% of the local MAGI The Financial Assistance Committee recommends the Drinking Water Board authorize a loan of $106,100 with $21,100 in principal forgiveness for a repayable loan amount of $85,000 at 0% interest for 30 years to Irontown. Eric Franson requested clarification on whether this is in addition to an existing loan and requested what were the original terms for the funding package. Barbara Osborne informed the Board that the original funding package was for a total of approximately $1.6 million. The funding package was $511,000 with a 0% interest loan repaid over 40 years and the remainder of $1.1 million in principal forgiveness. In a community committed to contributing $101,000 in cash and kind payments. Barbara added that the project needed to be extended and additional funding requested, due to the existing water system having lines that couldn’t be located. ● Eric Franson moved that the Drinking Water Board authorize a loan of $106,100 with $21,100 in principal forgiveness for a repayable loan amount of $85,000 at 0% interest for 30 years to Irontown. Seconded by Jeff Coombs. The motion was carried unanimously by the Board. d. Granger-Hunter WID - Emerging Contaminants – Allyson Spevak Representing Granger-Hunter Improvement District were General Manager, Jason Helm, Assistant General Manager, Todd Marti, Assistant General Manager, Troy Stout, and Controller, Austin Ballard. Granger-Hunter Improvement District is requesting financial assistance to construct the Anderson Water Treatment Plant in order to treat groundwater by removing manganese Page 8 from Well Nos. 16 and 18. Well No. 18 is currently proposed and would be constructed in close proximity to Well No. 16. This project scored 40.7 points on the Project Priority List. The total project cost is $11,457,840. Granger-Hunter has received a $3,333,333 WaterSMART grant for this project. Granger-Hunter is contributing $5,624,507. Granger-Hunter is requesting that the balance of $2,500,000 be allocated from the Bipartisan Infrastructure Law’s (BIL) Emerging Contaminant Assistance Fund to treat the manganese, which is eligible for financial assistance under the BIL’s Emerging Contaminants funding criteria. The local MAGI for the Granger-Hunter Improvement District is $36,400, which is 78% of the State MAGI. The current average water bill is $59.99/ERC, which is 1.98% of the local MAGI. The estimated after-project water bill at full loan would be $61.80/ERC or 2.04% of the local MAGI. Financial assistance from the Bipartisan Infrastructure Law’s Emerging Contaminant Assistance Fund must be provided to systems as a 100% subsidy. Granger-Hunter, as a disadvantaged community, qualifies to receive assistance from this fund as indicated in the table below. The Financial Assistance Committee recommends that the Drinking Water Board authorize a construction loan of $2,500,000 with $2,500,000 in principal forgiveness from the Bipartisan Infrastructure Law’s Emerging Contaminant Assistance Fund to Granger-Hunter Improvement District. David Pitcher inquired at what stage is Granger-Hunter at in the project. Jason Helm clarified that the Granger-Hunter project is in development. One of the wells is existing, the master plan has another well proposed that there is funding for. We are at 4-5 years for it to be fully implemented. They are currently at the beginning of the project. ● Dave Pitcher motioned that the Drinking Water Board authorize a construction loan of $2,500,000 with $2,500,000 in principal forgiveness from the Bipartisan Infrastructure Law’s Emerging Contaminant Assistance Fund to Granger-Hunter Improvement District. Seconded by Jeff Coombs. The motion was carried unanimously by the Board. e. Henefer - Change in Scope – Heather Pattee Henefer Town was authorized financial assistance in the amount of $3,200,000 for 30 years at 1.0% Hardship Grant Assessment Fee to install a secondary water system including transmission and distribution on June 7, 2022, and May 16, 2023. The total project cost is $7,635,000,000. The original project has been separated into 2 projects with the distribution lines being funded with a WaterSMART grant and the Division of Water Resources loan. The Upper Ditch project will be funded with the Drinking Water Board funding. Henefer has run into an issue with the irrigation company they were working with to get the water from the intake structure at Echo Reservoir. They would like to pump the water directly from the river to a storage pond within city limits. Page 9 The local MAGI for Henefer Town is $68,700, which is 148% of the State MAGI. The current average water bill is $41.45/ERC, which is 0.72% of the local MAGI. The estimated after-project water bill at full loan, with the additional request, would be $105.92/ERC or 1.85% of the local MAGI. The Financial Assistance Committee recommends the Drinking Water Board authorize a change in the scope of work to include the construction of a 4-acre foot pond and pump station. Heather added that the most current cost estimate is lower than the original authorization. It was recommended that they do not request less, when closing Henefer may post for less than the authorization amount. ● Justing Maughan moved that the Drinking Water Board authorize a change in the scope of work to include the construction of a 4-acre foot pond and pump station. Seconded by Eric Franson. The motion was carried unanimously by the Board. 9. Public Comment Period No public comments were made. 10. Open Board Discussion Justin Maughan requested an update on the ongoing changes to R309. Tim updated the Board, stating that the rules are still being refined. Additional informal comments will be collected, and a new draft, along with an FAQ, will be shared with a wider stakeholder group. This update will likely be presented to the Board in early 2024. 11. Other A. Intended Use Plan – Michael Grange Michael briefed the Board on the purpose of the Intended Use Plan, a document prepared by staff in compliance with the Division's grant conditions. This plan outlines how the Division intends to use the annual Capitalization Grant for the DWSRF. The Intended Use Plan is available for public review and comment on the website. 12. Next Board Meeting Date: November 7, 2023 Time: 1:00 PM Place: Multi Agency State Office Building / Zoom Webinar 195 N 1950 W Salt Lake City, Utah 84116 13. Adjourn Page 10 ● Justin Maughan moved to adjourn the meeting. Eric Franson seconded. The motion was carried unanimously by the board.