DWQ-2024-006427

M E M O R A N D U M
TO:Utah Water Quality Board
THROUGH:Leanna Littler-Woolf & Emily Canton
FROM:Engineering Section
DATE:September 17, 2024
SUBJECT:Finance Committee Meeting – FY 2025 Funding Requests
BACKGROUND
Due to limited fund balances the Water Quality Board has moved from bringing projects in on a first come first serve basis, to reviewing projects in batches. Applications over the past
few years have exceeded available fund balances necessitating the need for the Finance Committee to meet and discuss options with staff. This meeting is used to help form staff recommendations
that utilize the available funds in a way to best support the interest of Water Quality and the Board.
Over the past three years congressionally directed spending has utilized a portion of the base capitalization grant and directed it to projects outside of the SRF program. Due to this
Staff no longer projects funds coming from the base capitalization grant until we receive notification on the actual amount that we are going to receive.
BACKGROUND ON EQUIVALENCY REQUIREMENTS
Equivalency requirements are Build America, Buy America (BABA), American Iron and Steel (AIS), Davis-Bacon wages, Disadvantaged Business Enterprises (DBE) and Environmental Review sometimes
internally referred to as CWSRF First Round Funding. Non-Equivalency requirements are AIS, Davis-Bacon wages, and Environmental Review sometimes internally referred to as CWSRF Second
Round Funding. As part of the award of the Capitalization Grant and General Supplemental Grants from EPA the CWSRF program mustaward projects with Equivalency requirements. In general
equivalency requirements are expected to be fulfilled within two years of the grant award. These projects must close their funding during the fiscal year of the grant and projects may
be used to fulfill previous years equivalency requirements but cannot be utilized for future years. For this cycle is the Capitalization Grant ($3,952,000) and General Supplemental Capitalization
Grant ($11,983,000) therefore $15,935,000 in project funding must be awarded with equivalency requirements. Currently, it is anticipated if funds are awarded that Grantsville and Corinne
would include CWSRF Equivalency requirements, Provo only qualifies for CWSRF Non-Equivalency requirements, and NFSSD and Beaver will likely require Utah Wastewater Loan Funding.
AVAILABLE BALANCES EVALUATION
Attachment 1 to this memorandum is a current Financial Report showing available fund balances. Balances can be brought up from Utah Wastewater Loan Fund to projects funded under CWSRF
requirements. Thus, staff will focus on the total available fund balances. Due to equivalency requirements the Board cannot award future capitalization grants until they are received.
If projects will not require funds until a later fiscal year the Board may authorize loan repayment funds also known as revolved balances which is approximately $17 million per year.
In addition, recently the Board has held back an annual reserve of $5 million in Utah Wastewater Loan Funding for potential emergency projects. Therefore, in Table 1 the cap grant amounts
are not included in the total available loan funds. Table 1 also shows the amount with the reserve subtracted from the available funds.
Table 1: Available Fund Balances
Funding Fiscal Year
FY25
FY26
FY27
FY28
Total Available Loan Funds (without future Cap Grants)
$31.0
$64.1
$96.9
$121.3
Reserve
(cumulative at $5/year)
$0
-$5
-$10
-$15
Available Balances
$31.0
$59.1
$86.8
$106.3
Annual Available Funds
$31.0
$33.1
$32.8
$24.4
Utilizing these assumptions, staff recommends the Board authorize at least $26 million but not greater than $39.5 million in funding during FY25. The two-year average of the fund is
about $32 million per year and the four-year average is $30.3 million per year. Staff believes the two-year average is a reasonable value to evaluate authorizations based on. However,
authorizations above $31 million will need to understand funds may not be available until FY26.
AVAILABLE PRINCIPAL FORGIVENESS BALANCES EVALUATION
As part of the Attachment I Financial Report is an estimation of unobligated balances for Additional Subsidization (AKA Principal Forgiveness). These are available balances the Board
can award principal forgiveness to projects which will result in user fees greater than the State Affordability Criteria. The available principal forgiveness balances are shown below.
Staff recommends the Board award $6.7 million in principal forgiveness. This funding would be part of the available fund balances in Table 1 previously indicated and not in addition

to it. Table 2, below shows a summary of principal forgiveness balances by year.
Table 2: Summary of Principal Forgiveness Balances
Funding Fiscal Year
FY25
FY26
FY27
FY28
Principal Forgiveness Remain Balance
$6.7
$12.7
$18.6
$18.6
PROJECTS FOR WATER QUALITY BOARD CONSIDERATION
In June 2024, the Board received applications with the requested funding of over $101 Million. As there are not sufficient funds to provide the funding requested, it is necessary to
bring the requests to the Finance Committee for review. Staff has a brief summary of each project in Enclosure 1 and a cost model for each project as Attachments 3 through 7.
Table 3, below, shows a summary of Funding Requests. Historically, when the Board funds Planning, Engineering, or construction management services it is done from the Utah Wastewater
Loan Fund or Hardship Grant Fund to avoid Federal Architectural and Engineering procurement requirements.
Table 3 Summary of Project Requests
Entity
Planning, Engineering, & CMS
Construction & Other Costs
Total Project Cost
Total Requested Funding
North Fork SSD
$1,500,000
$10,141,000
$11,641,000
$3,551,000
Beaver City
$965,000
$6,572,000
$7,537,000
$7,037,000*
Corrine City
$1,431,000
$5,911,000
$7,342,900
$7,342,900
Grantsville City
$3,216,000
$31,417,000
$34,633,000
$34,633,000
Provo City
$368,000
$50,162,000
$50,530,000
$50,530,000
* Beaver is probably going to be fully funded by CIB. See explanation below.
PRIORITIZATION OF APPLICANTS
To evaluate how to authorize funds the Board must determine a priority system. Staff recommends evaluating the applicants under three Tiers. Tier 1 is rural communities unable to bond
on their own with projects without a substantial growth component. Tier 2 is rural communities likely unable to bond with a growth component. Tier 3 is communities large enough to bond
on their own.
Tier 1 - Beaver City and Corrine City.
Tier 2 - North Fork SSD
Tier 3 - Grantsville City and Provo City
STAFF EVALUATED FUNDING SCENARIO
Staff has come up with three possible scenarios using different levels of funding. The tables below note the funding sources including: Clean Water State Revolving Funds (CWSRF), Utah
Wastewater Loan Fund (UWLF), Principal Forgiveness (PF), and Hardship Grant Fund (HGF) are all listed below.
The First Scenario is presented in Table 4 below which would maintain authorization at or below the funds available through FY 25 which is about $27 million in funding.

Table 4: Funding Scenario 1
Entity
CWSRF
PF
UWLF
HGF
North Fork SSD
$0
$0
$3,551,000
$0
Beaver City
$0
$0
$0
$0
Corrine City
$500,000
$4,000,000
$0
$0
Grantsville City
$16,000,000*
$0
$0
$0
Provo City
$500,000
$2,500,000
$0
$0
* - Project will be funded as an Equivalency Project to meet EPA Grant Requirements.
The second scenario is presented in Table 5 below which would authorize the funds available through FY 25 and part of the funds available through FY 26 which is about $31.5 million in
funding.
Table 5: Funding Scenario 2
Entity
CWSRF
PF
UWLF
HGF
North Fork SSD
$0
$0
$3,551,000
$0
Beaver City
$0
$0
$0
$0
Corrine City
$500,000
$4,000,000
$0
$0
Grantsville City
$20,000,000
$0
$0
$0

Provo City
$1,000,000
$2,500,000
$0
$0
The third scenario is presented in table 6 below which would authorize the funds available through FY 25 and much of the funds available through FY 26 which is about $39.5 millionin
funding. This scenario takes into account anticipated loan repayments and brings back Beaver City in the unlikely event that CIB does not fund Beaver City as anticipated at this time.
This Scenario would be about $32.5 million without Beaver City.
Table 6: Funding Scenario 3
Entity
CWSRF
PF
UWLF
HGF
North Fork SSD
$0
$0
$3,551,000
$0
Beaver City
$7,038,000
$0
$0
$0
Corrine City
$500,000
$4,000,000
$0
$0
Grantsville City
$20,000,000
$0
$0
$0
Provo City
$2,000,000
$2,500,000
$0
$0
LEWISTON REGIONALIZATION - UPDATE
Lewiston City is pursuing connecting their sewer collection system to the Richmond MBR treatment plant. It will address current and future treatment needs by pumping sewer flows to the
Richmond City mechanical treatment plant, thereby eliminating the current Lewiston treatment lagoons. The City feels that this regionalization of treatment will be a long-term solution
for the community. Effluent quality will be greatly improved by regionalizing and treating the city's sewer in Richmond's MBR. This also opens up Type 1 reuse opportunities. Lewiston
has updated their Preliminary Engineering Report and cost estimate for the project. The project is now estimated to cost $8,290,000 to construct. In addition, Lewiston will need to purchase
capacity at the treatment plant at a cost of $10,000-$20,000 per connection. Staff reached out to the United States Department of Agriculture-Rural Development (USDA-RD) staff and at
this time it is anticipated that USDA-RD will fund the remainder of the project.
ENCLOSURE 1
NORTH FORK SSD
North Fork SSD is requesting funding from the Water Quality Board in the amount of $3,551,000 to increase the capacity of the current facility to meet permit requirements. The existing
facility capacity is insufficient to meet the current community demands, specifically higher levels of fat, oil, and grease and biochemical oxygen demand are limiting the hydraulic capacity
and limiting the facility’s ability to meet permit limits. North Fork SSD has received funding from the Utah Lake Preservation Fund ARPA Grant Program along with funding from the Governor’s
Office of Economic Opportunity and Governor’s Local Matching ARPA Grant Program. Funding provided by the Water Quality Board would close the gap of necessary funding for this project
as bids have been received.
This project will increase the capacity of the current facility which will result in the facility meeting permit requirements. Staff is supportive of this project as a loan from the
Water Quality Board. This project must be funded from the Utah Wastewater Loan Fund or Hardship Grant Fund
Staff is supportive of this project as a loan from the WQB as it would close the funding gap to complete the project.
FUNDING OPTIONS:
The Board could fully fund the project with a loan.
The Board could fund a portion of the project and the City would need to reduce the scope of the project to fit the available funding, or privately fund the rest of the project.
BEAVER CITY

Beaver City (Beaver) was requesting funding from the Water Quality Board in the amount $7,038,000 (this includes the loan origination fee added by staff) for upgrades and reconstruction
of the lagoon cells and the addition of an aeration system to the primary cell, a flume, trash auger, and other lagoon improvements, as well as construction of a lift station, as well
as some other sewer system improvements.
Beaver City lagoon system is organically overloaded which has resulted in the primary cells going septic. They have several industrial discharges that discharge an organic load that
non-aerated lagoons have difficulty treating. The addition of aeration along with the other improvements will allow them to address their needs now and into the future. It is worth noting
that they are currently self-funding around $300,000 dollars in sewer improvements, Staff has removed this from the financial analysis, as both a cost and an in-kind local contribution
but it is worth noting for the Boards consideration.
Beaver City originally applied to the Permanent Community Impact Board (CIB) for this funding, but staff encouraged them to apply to the Water Quality Board (WQB) as a backstop in case
CIB did not have sufficient funding available to fund the entire project. Fortunately, Beaver was placed on CIB’s Priority List with full funding so at this point it is highly likely
that CIB will fully fund the project. CIB’s funding meeting will be on October 3rd which is prior to the WQB funding meeting. In the extremely unlikely scenario that CIB does not fund
as advanced Staff will bring it back for the WQB’s consideration in October.
Staff recommends that the Board only considers funding of Beaver City’s project only in the unlikely scenario that CIB does not fund it as advanced.
CORRINE CITY
Corinne City is requesting financial assistance for $7,342,900 for collection and treatment system improvements. The total cost of the project is $7,342,900. The City owns collection
and treatment systems and currently, both require improvements. Therefore, the collection system is anticipated to replace sewer lines and associated manholes and reconnect service laterals.
The City also proposes installing new lift station pumps and replacing the force main. Corrine also is in the process of applying for construction assistance and is working on securing
project construction funding through the U.S. Department of Agriculture - Rural Development (USDA- RD). According to the Board’s affordability criteria, a sewer user rate should exceed
1.4% of MAGI to be considered for grant funds. Corrine’s 2021 MAGI is $50,700 which means rates should exceed $59.15 per month/ ERU for grant consideration. Currently, the monthly sewer
rate is $78.
Staff is supportive of this project and anticipates it will need to include some principal forgiveness and loan funds.
FUNDING OPTION:1.The Board could fully fund the project with a loan. 2.The Board could authorize up to $4,000,000 in principal forgiveness and up to $500,000 inloan. And instruct the
City to pursue funding from other sources such as the USDA-RD.3.The Board could instruct the City to pursue funding from other sources such as the USDA-RD.
GRANTSVILLE CITY
Grantsville City (Grantsville) is requesting funding from the Water Quality Board (Board) in the amount of $34,230,000 for the construction of a new fine bubble diffuser biological nutrient
removal (BNR) treatment facility with tertiary filtration and disinfection.
In 2022, Grantsville conducted a WWTP Study to evaluate options for upgrading and expanding their WWTP. Grantsville’s existing WWTP was determined to be at 95% capacity, with significant
upgrades required to meet increasing demand and more stringent effluent nutrient requirements. An alternatives analysis was performed for possible upgrades to or replacement of the existing
treatment facility, and the preferred alternative was theconstruction of a new BNR activated sludge treatment facility with tertiary filtration. In April 2023, Grantsville was awarded
a $1,000,000 loan for the design of the new facility.
The project will include the construction of a new 3 MGD (average daily flow), 7 MGD (peak hourly flow) WWTP on city-owned property near the existing treatment facility. Facilities will
include a new headworks building, anaerobic basins, anoxic basins, fine bubble diffuser aeration basins, blower equipment building, secondary clarifiers, and tertiary equipment to meet
Type I reuse requirements.
Division staff is supportive of Grantsville’s efforts to increase the capacity of their facility to meet anticipated demand due to growth, as well as updating their treatment facility
to meet phosphorus effluent requirements. The construction of this treatment facility should meet both of those goals. Grantsville has performed a sewer rate study which, when implemented,
will aid in repaying construction funding for this project. Since Grantsville is over 10,000 in population and not in a producing county, Grantsville currently does not qualify for funding
from USDA-RD or CIB.
It is anticipated that the Board is the primary source of funding outside of the private market.
Staff believes that since this would be a new treatment plant the Grantsville engineer could likely demonstrate the useful life of the capital assets majority to be 30 years. Staff recommends
a 30-year loan would be the best funding package for the project. As only partial funding is likely to be available the Board might consider reducing the interest rate and could keep
the overall same monthly rate with the combination of private/public funding.
ADDITIONAL FUNDING OPTIONS:
The Board could partially fund the project with a loan. Grantsville City would need to obtain private funding for the remaining project funds.
The Board could instruct Grantsville City to fully fund the project through private options.
PROVO CITY
Provo City is requesting funding from the Water Quality Board in the amount of $50,530,000 to construct a third bioreactor to expand the plants treatment capacity, construct a new collections
building to store large equipment, construct an expanded administration building with a lab and maintenance shop, and to address aging infrastructure and equipment. Provo currently discharges
treated effluent to Mill Race Creek which flows to Provo Bay in Utah Lake. Mill Race Creek is listed as Category 5 (not supporting) on the 2024 Integrated Report for E. coli and Benthic
Macroinvertebrates Bioassessments. Provo Bay is listed in the 2024 Integrated Report as Category 5 (not supporting) for Eutrophication, Harmful Algal Blooms, pH, PCBs in Fish Tissue,
Total Ammonia (as N), and Total Phosphorus. The improvement in effluent water quality discharged from this project will significantly improve the water quality discharged from the reclamation
facility and have a positive impact on the quality of the water in Provo Bay and Utah Lake.
Major upgrades to replace the current treatment plant are underway. Most of the upgrades identified in this 2024 application were part of the original project but removed from the design
due to costs. These additions will extend the capacity and life of the assets that are currently under construction. The additional work from this project would bring project estimates
to $169,400,000 with current project funding of $92,800,000 from the Utah Water Quality Board.
Staff is supportive of this project, but with current balances the entire project cannot be funded.
FUNDING OPTION:
The Board could partially fund the project with a loan. Provo would need to obtain private funding for the remaining project funds.
The Board could instruct Provo to return during next year's funding process.
The Board could instruct Provo to fully fund the project through private options.
DWQ-2024-
ATTACHMENT 1- Financial Status Report

ATTACHMENT 2-Financial Status Report – Potential Authorizations
ATTACHMENT 3-North Fork SSD Cost Model
ATTACHMENT 4- Beaver City Cost Model
ATTACHMENT 5- Corrine City Cost Model
ATTACHMENT 6- Grantsville City Cost Model
ATTACHMENT 7- Provo City Cost Model