DDW-2024-008921

195 North 1950 West • Salt Lake City, UT
Mailing Address: P.O. Box 144830 • Salt Lake City, UT 84114-4830
Telephone [phone] • Fax [phone] • T.D.D. [phone]
www.deq.utah.gov
Printed on 100% recycled paper
State of Utah

Department of
Environmental Quality

Kimberly D. Shelley
Executive Director

DIVISION OF DRINKING WATER
Nathan Lunstad
Director

Drinking Water Board
Kristi Bell, Chair
Eric Franson, P.E., Vice-Chair
Dawn Ramsey
Justin Maughan
Corinna Harris
Jeff Coombs
Shazelle Terry
Blake Tullis, Ph.D.
Kimberly D. Shelley
Nathan Lunstad
Executive Secretary

SPENCER J. COX
Governor

DEIDRE HENDERSON
Lieutenant Governor

Bob Young [e-mail]
Wanship Mutual Water Company
PO Box 612
Coalville, Utah 84017

Subject: Federal SRF Loan Authorization and Procedures for Committal of Funds;
Wanship Mutual Water Company, System #22017, Loan #3F2108

Dear Bob Young:

On June 25, 2024, the Drinking Water Board (hereinafter called the "Board") authorized a
loan of $3,806,690, with $1,142,690 in principal forgiveness, for a net repayable amount of
$2,664,000 for 40 years at 0% interest and a release of up to $335,000 from the principal
forgiveness for planning and engineering design to Wanship Mutual Water Company
(hereinafter called the "Recipient") to construct a storage tank, replace a spring pipeline, install a
chlorination system, and upgrade lines, valves, and hydrants. (hereinafter called the "Project"). The
loan from the Board will be evidenced by a promissory note (hereinafter called the Note) issued by
the Recipient, which will provide for incremental advances of loan proceeds from the Board to the
Recipient. The Board has determined the retirement period for the Note to be no more than forty
(40) years, with interest payable on the unpaid principal from the date of each advance of loan
funds. The annual Interest Rate is 0%. Required annual payments on the note will vary according
to the attached loan repayment schedule with an average annual payment of approximately $68,000
(P&I payment rounded to 1,000s).

Wanship Mutual Water Company also has the choice to roll their planning loan (3F1916P) into the
construction loan if they choose to do so. That decision needs to be made prior to closing on loan
3F2108.

Principal forgiveness will be applied to the loan. Net repayable amount will be deposited into the
escrow account mentioned in item 2 along with other funds after completion and signing of the
principal forgiveness agreement and completion of loan requirements for the Note.
July 11, 2024
Bob Young, Wanship MWC

Page 2

Special Conditions

The Recipient will also be required to enter into a written Loan Agreement with the Board. That
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 Recipient to secure the Recipient’s repayment
obligations (e.g., deed of trust interests in real property, security interests in equipment and water
rights and personal guarantees, if required), which requirements will be established after the Board’s
staff has reviewed and analyzed the Recipient’s financial condition. The Loan Agreement will
specify that loan proceeds will be disbursed incrementally into the escrow account (described
below) on a monthly or quarterly basis for expected Project costs for each quarter. The Loan
Agreement will also require the Recipient to establish and fund (a) a debt service reserve account
equal to one annual payment of principal and interest (to be funded monthly over a 120-month
period), and (b) a capital facilities replacement reserve account (described below).

Before proceeding with this loan transaction, the Recipient shall advise the Division of Drinking
Water what the Recipient will pledge as security for the Recipient’s obligations under the
promissory note and demonstrate that the value of the pledged assets is adequate to fully
collateralize their obligations.

This financial assistance was approved subject to the availability of funds. The assistance
represented by this authorization will be funded, in whole or in part, from the proceeds of a federal
SRF Capitalization Grant (Section 1452 SDWA) to the State of Utah. Under the SRF Capitalization
Grant Program, federal funds are to be made available to the State by way of authorized draws on a
letter of credit over the construction period of the Project. Therefore, this authorization is expressly
subject to the continued availability of federal funds through the SRF Capitalization Grant and the
letter of credit related thereto.

Neither the Board nor the State of Utah shall be bound by this authorization or by any obligation to
provide further loan funds to the Recipient if the SRF Capitalization Grant funds to which this
authorization relates are not awarded or if payments under the letter of credit are withheld for any
reason.

As a condition of this authorization, the Board will require the Recipient to provide a schedule of
estimated engineering and construction time for the Project within ninety (90) days of the date of
this letter. If the Project has not progressed sufficiently for the Board to make the first of the
incremental disbursement of loan proceeds within twelve months of the date of authorization,
authorized funding may be withdrawn.

As a condition of this loan, the Board will require the Recipient to establish a capital facilities
replacement reserve account. Deposits to that account shall be made at least annually in the amount
of five percent (5%) of the Recipient 's annual drinking water system budget, including debt service
and depreciation, and must continue until the entire principal balance and all accrued interest on the
Note(s) have been made in full. Failure to maintain the reserve account will constitute a technical
default on the Note(s) and may result in penalties being assessed.
July 11, 2024
Bob Young, Wanship MWC

Page 3

The Note(s) may be prepaid, in whole or in part, at any time in minimum amounts of $1,000 or any
integral multiple thereof, with the prepayments applied against the Note principal in inverse order
of maturities. In addition, if any Note proceeds remain after the Project has been completed, those
remaining proceeds shall be used to redeem Note principal in inverse order of maturities.

Based on the information presented to the Board, the following sources of funding will be available
for the construction of the Project:
Agency Share % of Total

Drinking Water Board (Loan) $2,664,000 70%
Drinking Water Board (Principal Forgiveness) $1,142,690 30%

Total Project Cost $3,806,690 100%

As a condition to the funding of the loan by the Board, the Recipient must submit plans and
specifications to the Division of Drinking Water for review and approval prior to advertising for
bids, the Recipient must advertise for bids for the construction of the Project, must open bids, and
must demonstrate that the available sources of funding are adequate to cover the cost of the
Project. In addition, prior to loan closing the Recipient must make arrangements for all loan
proceeds and all other Project funds to be available for deposit into the escrow account described
below at the time the Board delivers funds unless other acceptable arrangements have been
previously made.

The financial assistance is conditioned upon the availability of funds at the time of closing,
satisfaction of the conditions specified in this letter, and adherence to the project schedule
approved at that time. If the Project does not proceed according to the project schedule, the Board
may withdraw project authorization, so that other projects ready to proceed can obtain necessary
funding. The Board may consider extensions to the project schedule, but any extension requested
must be fully justified. After the Project's construction bids have been opened and the below listed
requirements have been met, and if the project remains substantially as approved, loan closing will
proceed subject to funds available at that time. But, if substantial changes in the Project are
required, they must be considered by the Board for committal of funds.

As the Recipient, you or your attorney will need to complete the following items prior to the loan
closing:

1. The State of Utah has appointed William L. Prater Esq. as special legal counsel to the
Board (the “Board’s Attorney”) and has assigned to him the responsibility of preparing
and reviewing all proceedings and documents relating to loans to private water companies.
His address is 6925 Union Park Center, Suite 265, Midvale, Utah 84047: telephone
number [phone] or mail to P.O. Box 71368, Salt Lake City, Utah 84171.

As soon as possible, the Recipient shall submit the following items to the Board’s
Attorney:
July 11, 2024
Bob Young, Wanship MWC

Page 4

a. Copies of the Recipient’s articles of incorporation and bylaws, together with all
amendments thereto (if any).

b. A current financial statement for the Recipient, listing all assets and liabilities of
the Recipient. The financial statement shall contain a detailed list of all water rights
owned by the Recipient and detailed information about any liens or encumbrances
on the Recipient’s assets.

c. Cash flow summaries relating to the Recipient’s operations for the most recent
three years of operation.

d. A list of the current officers and directors (trustees) of the Recipient.

e. The Loan Document Information Worksheet (see attachment), duly completed by
the Recipient.

After those items have been received and reviewed, the Board’s Attorney will prepare
drafts of the loan documents and will circulate them for review.

At or after the Closing the Recipient will be billed by the Board’s Attorney and those
legal fees must be paid by the Recipient. This is an eligible project expenditure. If the
Recipient fails to close the loan after this authorization, it will nonetheless be by
billed for the actions taken by the Board’s Attorney prior to loan cancellation.

2. Consistent with requirements of the law and the covenants of applicable loan documents,
the actual payment of funds by the Board to the Recipient will not take place until the
Board has assurance the funds will be used for Project costs and the Project will actually
be completed. To assure this, all monies to be expended on the Project, including the
Recipient 's share shall be placed in an escrow account supervised by the Recipient and the
Board. In general, the Board will make incremental advances into the account on a
monthly or quarterly basis. The proposed escrow agreement will be included in the loan
documents that will be sent to you by the Board’s Attorney.

Disbursements from the escrow account will be reviewed and approved by the Division of
Drinking Water. A Disbursement Request Form must be completed and submitted along
with each request. Disbursement amounts must be authorized in writing by the
Recipient and the State prior to any funds being released from the escrow account.
Please refer to the reimbursement instruction sheet.

3. The Recipient shall deliver to the Division of Drinking Water evidence that the Recipient
has enacted a system of assessments or rates for water service that will generate revenues
that are adequate to cover the costs of the operation and maintenance of the Recipient’s
water system and the Recipient’s debt service obligation under the promissory note.

July 11, 2024
Bob Young, Wanship MWC

Page 5

4. The Recipient's contract with its consulting engineer (hereinafter referred to as the
Engineer) shall include the cost of developing the plans and specifications and the
construction inspection of the Project. The contract must be submitted to the Division of
Drinking Water (Division) for review. (This requirement is to assure the Board that
adequate and appropriate arrangements are made for completing and inspecting the project
within the guidelines set by the Board.)

5. The project engineer shall submit, in accordance with R309-500, plans and specifications,
bidding documents, and general conditions to the Division of Drinking Water for review
and Plan Approval prior to soliciting bids on the Project. The engineer shall submit project
documents via ddwpnf@utah,gov per https://deq.utah.gov/drinking-water/general-plan-
approval-process for the expeditious assignment and review of the plans and specifications.
Any changes to approved plans and specifications prior to finalizing the Recipient
Agreement must be reviewed and approved by the Division of Drinking Water. These funds
cannot be disbursed until after the bid opening has occurred and a copy of the bid tabulation
has been reviewed by the Division to assure that sufficient funds are authorized to complete
the Project. If substantial changes in the Project are required, they must be considered by
the Board for committal of additional funds. The following shall be included in the
specifications:

a. The Recipient shall require contractors hired to perform work on their project to pay
prevailing wage rates according to Davis-Bacon labor wage requirements. See attached
Reference Page for document location.

b. The Recipient shall comply with either the American Iron and Steel provision or the
Build America Buy America Act requirements. See attached Reference Page for
document location.

6. Rights-of-way and easements for construction, and operation and maintenance of the
Project shall be acquired. The Recipient, through the Engineer, shall furnish its attorney a
right-of-way map showing the location of all sources, buildings, structures, pipelines, and
other pertinent facilities not only in the Project but also for the entire water system. The
engineer and presiding officer of the Recipient will sign this map and provide a copy to the
Recipient's attorney as a basis for the certification described below.

7. The Recipient's attorney shall certify the following items in writing to the Board:

a. The Recipient is a legal entity as of the date of the loan closing.

b. The Recipient has valid legal title to the rights-of-way designated and shown on the
right-of-way map, including rights-of-way both for the project to be constructed
and the remainder of the existing water system as of the date of loan closing.

July 11, 2024
Bob Young, Wanship MWC

Page 6

c. The Recipient has established the ownership of water rights to any and all water
used in the system and such rights are summarized with associated water right
numbers.

d. After the completed and executed construction contract, along with the
performance and payment bonds and evidence of necessary insurance, has been
reviewed by the Recipient's attorney, the Recipient's attorney shall furnish to the
Drinking Water Board his legal opinion that all of such items are legal and binding
and in compliance with the Utah Code.

A copy of this letter is to be submitted to the Board and the Board’s Attorney two weeks
prior to loan closing.

8. The Recipient must obtain and maintain continuously throughout the loan repayment
period, a fidelity bond on the positions handling the Recipient's funds, in an amount at
least equal to the total amount of funds that will be on hand at any one time, exclusive of
loan funds. This amount should be at least twice an annual payment or $136,000 (Double
the rounded P&I payment). This fidelity bond must be obtained and furnished to the Board
prior to the loan closing date. The names of the insured on the position fidelity bond will
be "Wanship Mutual Water Company and the State of Utah acting through the Drinking
Water Board."

9. As a condition of this loan, the Board will require the Recipient to complete a Water
Conservation Plan. If your system has less than 500 connections, the plan must be
submitted to the Division of Drinking Water prior to loan closing. If your system has more
than 500 connections, the plan must be submitted to the Division of Water Resources for
review and approval, and the approved plan must be adopted (completing the Certification
of Adoption) prior to loan closing. If the Recipient has already adopted such a plan, that
plan and its certification of adoption may be submitted to the Division of Drinking Water
for verification.

10. There are Federal laws, executive orders and government-wide policies that apply to
projects receiving Federal financial assistance. These "cross-cutting Federal authorities"
include the following:

Environmental Authorities:

• Archaeological and Historic Preservation Act of 1974, Pub. L. 86-523, as amended
• Clean Air Act, Pub. L. 84-159, as amended
• Endangered Species Act, Pub. L. 93-205, as amended
• Environmental Justice, Executive Order 12898
• Flood Plain Management, Executive Order 11988 as amended by Executive Order 12148
• Protection of Wetlands, Executive Order 11990
• Farmland Protection Policy Act, Pub. L. 97-98
• Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended
July 11, 2024
Bob Young, Wanship MWC

Page 7

• National Historic Preservation Act of 1966, Pub. L. 89-665, as amended
• Safe Drinking Water Act, Pub. L. 93-523, as amended
• Wild and Scenic Rivers Act, Pub. L. 90-542, as amended

Economic and Miscellaneous Authorities:

• Demonstration Cities and Metropolitan Development Act of 1966, Pub. L. 89-754, as
amended, Executive Order 12372
• Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of the
Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act
and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grant, or
Loans
• Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as
amended
• Debarment and Suspension, Executive Order 12549

Social Policy Authorities:

• Age Discrimination Act of 1975, Pub. L. 94-135
• Title VI of the Civil Rights Act of 1964, Pub. L. 88-352
• Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Pub. L. 92-
500 (the Clean Water Act)
• Section 504 of the Rehabilitation Act of 1973, Pub. L. 93-112 (including Executive Orders
11914 and 11250)
• Equal Employment Opportunity, Executive Order 11246
• Women's and Minority Business Enterprise, Executive Orders 11625, 12138, and 12432
• Section 129, of the Small Business Administration Reauthorization and Amendment Act
of 1988, Pub. L.100-590

11. In compliance with Utah Code Annotated 9-8-404 and 36 CFR 800.3(g), the project
engineer shall submit a report to the Division of Drinking Water that demonstrates a
reasonable and good faith effort was made to identify and gather information to determine
if cultural resources are present in the area of potential effects, including a Class III
Survey. The report format shall meet SHPO State of Utah Archaeological Compliance
Guidance. Cultural resource reporting guidance is outlined in the Utah SHPO Short
Cultural Resources Inventory Report Form. See attached Reference Page for document
location.

12. The Recipient must agree to comply with the above Federal laws, executive orders, and
government-wide policies that apply to the Project, complete the following, and submit
said documents to the Division, as specified below:

a. Ensure that the “six affirmative steps” are taken to assure compliance with the State’s
“fair share goals” in all procurements. The Division will specify the required
language, documents, and instructions.

July 11, 2024
Bob Young, Wanship MWC

Page 8

1) Bid solicitations shall state that this is a federally funded project requiring
compliance with the State’s “fair share goals” and federal EEO regulations.
See attached Reference Page for document location.

2) The same bid documents shall also contain the federal EEO requirements.

b. Include the following certification in the loan agreement:

"The Issuer agrees, in accepting the proceeds of the Loan, to comply with all
applicable state and federal regulations related to the Utah State Revolving Fund
administered by the Drinking Water Board. These requirements include, but are
not limited to, Title XIV of the Safe Drinking Water Act of 1996, OMB Circular A-
133, the Utah Federal State Revolving Fund (SRF) Program (R309-705 of the
Utah Administrative Code), the Utah Procurement Code and the State of Utah
Legal Compliance Audit Guide."

13. The Recipient shall submit a cash drawdown schedule prepared and certified by their
consulting engineer to be a schedule that coincides with the rate at which expected
construction related costs are incurred for that project.

14. The Recipient must get a Unique Entity ID from SAM.gov. Once the entity record has been
validated, submit a copy of the Unique Entity ID to the Division of Drinking Water.

15. In compliance with Utah Code Annotated 73-10g-402, water systems applying for federal
financial assistance for improvements to capital assets related to water infrastructure shall
commit to adopt a capital asset management plan. The Asset Management Plan shall be
submitted to the Division for review and approval prior to loan closing, unless preparing an
Asset Management Plan is included as part of the project for which the Recipient has
applied for financial assistance. In which case, the Asset Management Plan shall be
submitted to the Division as soon as it is completed or prior to the entity submitting its final
project reimbursement request.

To facilitate the timely completion of the financial assistance requirements outlined in this letter, a
date, which will be determined during the loan closing conference call, shall be deemed to be the
pre-closing date. The Recipient and its attorney and engineer shall submit to the Division all of the
items required before loan closing no later than the pre-closing date.

The final closing on the note may occur two weeks after the pre-closing date if the Division of
Drinking Water and the Board’s Attorney determine that all the items listed in this letter have
been completed and submitted satisfactorily. As soon as that determination has been made, a
representative of the Board will contact the Recipient to arrange a mutually convenient time for
the closing.

July 11, 2024
Bob Young, Wanship MWC

Page 9

These requirements must be completed on or before June 25, 2025. If the Recipient fails to
reasonably comply with the Project schedule, the Authorization may be withdrawn in accordance
with R309-705-7.

These requirements may not cover all the matters pertaining to the Project. We anticipate that
specific questions on matters relating to your Project will arise, and we are confident that a
cooperative effort can resolve any issues.

If you have any questions concerning these requirements, please contact Kjori Shelley at (385)
227-1638 or me at [phone].

Sincerely,

DRINKING WATER BOARD

Michael J. Grange, P.E.
Assistant Executive Secretary

MJG/ks/lr

Enclosures
1. Reference Page
2. Loan Document Information Worksheet
3. Wanship MWC Loan Repayment Schedule

cc: William Prater, Esq., William L. Prater, LLC, P.O. Box 71368, SLC, UT 84171, [e-mail]
Derek Anderson, Sunrise Engineering, [e-mail]
Kjori Shelley, Division of Drinking Water, [e-mail]
Dani Zebelean, Division of Drinking Water, [e-mail]
Julie Cobleigh, Division of Drinking Water, [e-mail]
Finance
July 11, 2024

LOAN DOCUMENT INFORMATION WORKSHEET

In order to provide information needed for the preparation of loan documents for the loan from the Utah
Drinking Water Board, the following form should be completed and sent to:

William L. Prater, Esq.
6925 Union Park Center, Suite 265
Midvale, Utah 84047
Fax: [phone]
Email: [e-mail]

CONTACT INFORMATION

1. Name of Borrower: ___________________________________________

2. Address of Borrower: _________________________________________
_________________________________________

3. Names and email addresses of persons to whom drafts of loan documents should be sent for
review:

Name: Email Address

_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
4. Contact information for Borrower’s project engineer:

Name of responsible engineer: _____________________________________
Name of firm: __________________________________________________
Address: _______________________________________________________
Email address: __________________________________________________
Telephone number: ______________________________________________

5. Contact information for Borrower’s attorney:

Name of attorney: _______________________________________________
Name of firm: __________________________________________________
Address: _______________________________________________________
Email address: __________________________________________________
Telephone number: ______________________________________________

INFORMATION CONCERNING BORROWER’S LEGAL STRUCTURE

1. Type of governing board (select one):
___Board of directors
___Board of trustees
___Other (specify): __________________

2. Names and titles of president and corporate secretary for the Borrower (who will sign the loan
documents on behalf of the Borrower):

President: ________________________________
Secretary: ________________________________

(Note: Borrower must supply copies of Articles of Incorporation, Bylaws and all amendments thereto.)

PROJECT INFORMATION

Brief description of project:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

LOAN COLLATERAL INFORMATION

The Borrower’s obligation to repay the loan will be secured by a pledge of the following assets (choose all
that are applicable):

___Water Rights
___Real Property
___Other (specify): ______________________________

(Note: The Borrower must demonstrate to the Drinking Water Board that the value of the pledged items is
sufficient to fully collateralize the loan.)

ESCROW AGREEMENT INFORMATION

The following information is needed for the Escrow Agreement for the escrow account that will be
established to hold and disburse the Project funds:

1. Name of the escrow agent (e.g., bank): _______________________________________

2. Address of escrow agent: __________________________________________________

3. Name and telephone number for contact person at escrow agent:

(a) Name: ___________________________________
(b) Telephone number: _________________________

Disbursements from the escrow account may be approved on behalf of the Borrower by any one of the
following individuals (identify at least two):

Name Title Telephone no.

____________________ _____________ _ _________________
____________________ ______________ _________________
____________________ ______________ _________________
____________________ ______________ _________________