DWQ-2024-008776

STATE OF UTAHSTATEREVOLVING FUND
2023 ANNUAL REPORT
P R E P A R E D B Y Adriana Hernandez,Contract/Grant Analyst
Ken Homan,Engineering Section Manager
Emily Cantón,Assistant Director
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Executive Summary
The Utah Water Quality Board (Board)administers nancial assistance programs through
Utah Department of Environmental Quality (DEQ)-Division of Water Quality,including
the Clean Water State Revolving Fund,the Utah Wastewater Loan Fund,and the Hardship
Grant Fund.The Board is comprised of nine members who are appointed by the Governor.
The Board’s primary responsibilities in administering nancial assistance funds include
developing administrative rules for program implementation,authorizing loans,hardship
grant and principal forgiveness amounts,and determining interest rates and loan terms.
The Division of Water Quality (DWQ)serves as staff for the Board and manages the
day-to-day operations of the nancial assistance programs.Those responsibilities include
administering loans,providing construction assistance,and managing fund transactions.
DWQ coordinates their efforts with the Department of Environmental Quality -Office of
Support Services,the Utah Division of Finance,the Utah Attorney General’s Office,and the
State Treasurer’s Office to meet all federal and state requirements.DEQ’s Mission,Vision,
and Values are our guiding principles.
Both direct and indirect costs are incurred by DWQ for the administration of the nancial
assistance programs.Those costs are funded with revenues from Clean Water State
Revolving Fund (SRF)administrative dollars and loan origination fees.DWQ employees
charge time for eligible administrative work on the SRF program.Those employees are
covered by the State of Utah personnel benets plan.Indirect costs for general state
expenses are also charged through a cost allocation plan.
Program History
Utah’s Clean Water SRF was established pursuant to Title VI of the Federal Clean Water Act
of 1987.The SRF provides low interest rate loans for the funding of water quality and
wastewater infrastructure projects in Utah.The Department of Environmental Quality
receives Capitalization Grants from the Environmental Protection Agency (EPA)and
provides 20%in state matching funds for awarded grants.The SRF receives revenue from
principal loan repayments,interest payments,and interest earned on the investment fund.
Expenses for projects under construction are then disbursed from the SRF.
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DWQ also operates a state loan program,which provides an alternative source of funding
for certain water quality projects.The state loan program provides additional exibility for
project development without some of the funding conditions or restrictions that
accompany the SRF funds.State matching funds for the SRF are generated from this state
loan program.
With approval from the EPA,the State of Utah established a Federal Hardship Grant
Program in 1993.This grant program is funded through hardship assessment fees charged
in lieu of interest on SRF loans.The hardship grant assessment fees are deposited into a
Federal Hardship Grant Fund,which is separate from the SRF.These monies are used to
provide grants to communities with a demonstrated economic hardship and that are
otherwise unable to implement clean water projects through the loan programs.
Program Goals
Projects in the state that protect and enhance water quality are considered for nancial
assistance.Eligible projects include construction of publicly owned treatment works
(POTWs),nonpoint source projects,stormwater projects,energy and water efficiency
initiatives,construction of publicly or privately-owned decentralized systems,and
technical assistance in support of these projects.
Long-Term Program Goals
1.Provide a permanent funding source for water quality construction projects that
supplement a community’s own resources and/or other funding sources.
●All projects receiving loans through the SRF are required to make an annual
repayment of principal beginning one year after project construction is
complete.Cash ow projections indicate that the fund will continue to
generate a revenue stream for future projects.
2.Distribute SRF funds to projects with the highest water quality and infrastructure
needs by evaluating and prioritizing proposed projects throughout the state.
●All construction projects presented to the Water Quality Board for funding
receive a ranking on the Project Priority List.The Board balances project water
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quality impacts and nancial need when determining authorization for
funding.
3.Support EPA’s Sustainability Policy by balancing a community’s economic and water
quality needs with the perpetuity of the SRF program.
●All projects receiving funding through the SRF are evaluated for their ability to
solve critical public health and water quality needs while recognizing
community economic conditions.Projects are funded in a manner that will be
protective of the environment,affordable to the community,and consistent
with EPA’s Sustainability Policy.
●DWQ conducts nancial feasibility reviews of all proposed projects that are
based on engineering studies and facility plans conducted by SRF applicants
prior to requesting Water Quality Board authorization of funding.The review
includes an analysis of the value and priority of each project,the construction
loan amount,and interest rate that should be applied.The result of these
reviews ensures that all funded projects will use loan funds effectively and
that the applicants can reasonably afford to repay their loans while properly
maintaining the constructed system and meeting water quality objectives.
●The Hardship Grant Program was created specically to provide supplemental
funding for important water quality projects where the applicants are not able
to secure sufficient loan funds due to nancial hardship or other constraints.
4.Assist communities with all phases of a project,including sufficient planning,
project design,environmental work,and construction.
●The Water Quality Board assists communities to address the need for adequate
wastewater infrastructure.In so doing,the Board recognizes that wastewater
facilities must meet community and water quality needs throughout the
design life and that the facilities must be exible to accommodate growth and
changing requirements within that period.Therefore,the Board supports and
requires strong community planning efforts to establish nancial
sustainability,coordinated growth,and cost-effective development and
provision of wastewater services.
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Short-Term Program Goals
1.Present eligible projects to the Water Quality Board for authorization and assist
communities through the application and award process.
●Engineering Section staff works closely with communities to ensure facility
planning satises water quality needs and program requirements.Staff
supports applicants during application preparation to simplify the process,
reduce paperwork,and minimize delays.
2.Collaborate with other agencies (e.g.,Utah Permanent Community Impact Board,
U.S.Department of Agriculture Rural Development,and U.S.Army Corps of
Engineers)to sufficiently fund projects.
●Engineering Section staff assist each community from the beginning stages of
application,planning,and design.Staff coordinates funding partnerships,
particularly for large projects,with other public and private funding entities.
3.Solicit and fund eligible nonpoint source,storm water,and emerging contaminants
projects.
●The Engineering Section,Watershed Management Section,and StormWater
Section staff work together with communities and landowners to identify and
develop important water quality projects that are eligible for SRF funding.
4.Provide funding,equal to at least ten percent (10%)of the capitalization award,for
energy efficiency and recycled water and water reuse projects to the extent such
projects exist.
●Engineering Section and UPDES Permitting Section staff work with
community’s water and wastewater utilities to identify and develop water
conservation,land treatment/disposal,and reuse opportunities that protect
state waters and/or provide an alternative source for secondary water.
5.Increasing the prole of the SRF program as a potential funding source for low
income and rural Utah communities.
●The SRF has partnered with the U.S.Department of Agriculture Rural
Development to bring principal forgiveness grant funding to a small
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community of less than 10,000 in Northern Utah.In addition,Engineering Staff
are currently coordinating with the Utah Permanent Community Impact Board
to partner on the funding for rural communities in Utah.
Program Accomplishments
During FY23,the Water Quality Board authorized hardship grant funding for eleven (11)
projects totaling $1,685,472,loan funding assistance for six (6)projects totaling $9,724,600,
and closed loans for one (1)project totaling $2,792,000.Clean Water State Revolving Fund
and Utah Wastewater Loan Fund loans are not fully obligated until bonds are purchased by
the Water Quality Board,i.e.,the loan is closed.Funds for construction are not available to
communities until loan closing occurs.
Authorized Funding
Long Valley Sewer Improvement District
On August 24,2022 the Utah Water Quality Board authorized a design advance of $84,300
for the modication of their wastewater treatment system.
WQB DesignAdvance $84,300
Hanksville Town
On August 24,2022 the Utah Water Quality Board authorized a design advance of $162,000
to repair damaged lagoon embankments.
WQB DesignAdvance $162,000
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Delta City
On August 24,2022 the Utah Water Quality Board authorized a short term unsecured loan
of $200,000 with a 0%interest rate and a 5-year repayment term,and a design grant of
$200,000 to upgrade a sewer lift station and piping.
WQB Short TermLoan $200,000
Loan Interest Rate 0%
Loan Term 5 years
WQB Design Grant $200,000
Stockton Town
On August 24,2022 the Utah Water Quality Board authorized a planning grant of $20,000 to
pay for a capital facilities plan which will review the existing sewer collection and
treatment facilities and the impact of future growth on these facilities.
WQB Planning Grant $20,000
Elwood Town
On August 24,2022 the Utah Water Quality Board authorized a planning grant of $18,200 to
evaluate expanding their sewer system.
WQB Planning Grant $18,200
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DaggeCounty
On August 24,2022 the Utah Water Quality Board authorized a short term unsecured loan
of $60,000 with a 0%interest rate and a 5-year repayment term for essential maintenance of
their treatment facility,and a planning grant of $95,000 to develop a capital facilities plan.
WQB Short TermLoan $60,000
Loan Interest Rate 0%
Loan Term 5 years
WQB Planning Grant $95,000
Kanab City
On September 28,2022 the Utah Water Quality Board authorized a planning advance of
$29,800 to prepare a feasibility study that will allow them to evaluate wastewater collection
alternatives.
WQB PlanningAdvance $29,800
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North Logan City
On October 26,2022 the Utah Water Quality Board authorized a loan of $3,500,000 with a
2%interest rate and a 30-year repayment term for the funding needed to complete the
construction of a new gravity sewer trunk line.
WQB Loan Amount $3,500,000
Loan Interest Rate 2%
Loan Term 30 years
Long Valley Sewer Improvement District
On October 26,2022 the Utah Water Quality Board authorized a loan of $1,470,000 with a
1.5%interest rate and a 20-year repayment term as additional funding for the modication
of their wastewater treatment system.
WQB Loan Amount $1,470,000
Loan Interest Rate 1.5%
Loan Term 20 years
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Lewiston City
On October 26,2022 the Utah Water Quality Board authorized a loan of $400,000 with a 0%
interest rate and a 20-year repayment term,and $1,000,000 in principal forgiveness for
sewage and treatment system improvements.The authorization of this funding package
unauthorized the undisbursed balances of the hardship grant that was previously
authorized on March 25,2020 for $500,000.
WQB Loan Amount $400,000
Loan Interest Rate 0%
Loan Term 20 years
WQB PrincipalForgiveness $1,000,000
Hanksville Town
On October 26,2022 the Utah Water Quality Board authorized a loan of $350,000 with a 0%
interest rate and a 30-year repayment term,and $1,694,600 in principal forgiveness as
additional funding to repair damaged lagoon embankments.
WQB Loan Amount $350,000
Loan Interest Rate 0%
Loan Term 30 years
WQB PrincipalForgiveness $1,694,600
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Grantsville City
On April 26,2023 the Utah Water Quality Board authorized a loan of $1,000,000 with a 0%
interest rate and a 20-year repayment term,and a design advance of $300,000 to design a
new treatment system capable of meeting phosphorus requirements and 20-year projected
ows.
WQB Loan Amount $1,000,000
Loan Interest Rate 0%
Loan Term 20 years
WQB DesignAdvance $300,000
Spring City
On April 26,2023 the Utah Water Quality Board authorized a design advance of $289,000 to
cover pre-construction costs related to the extension of their sewer collection system.
WQB DesignAdvance $289,000
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Kane County Water Conservancy District
On May 24,2023 the Utah Water Quality Board authorized a loan of $310,000 with a 0%
interest rate and a 30-year repayment term,and a construction grant of $200,000,as
additional funding to remove material from the primary cell of the Duck Creek lagoon and
reline it.
WQB Loan Amount $310,000
Loan Interest Rate 0%
Loan Term 30 years
WQB ConstructionGrant $200,000
Town of Rockville
On June 28,2023 the Utah Water Quality Board authorized a planning grant of $27,172 to
conduct a water quality study to determine sewage management recommendations,
allowable septic system types,septic system densities,potential impact of development
and increased wastewater on groundwater quality,and to serve as a basis for planning
future development and growth.
WQB Planning Grant $27,172
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Project Loan Closings
On September 15,2022,the Utah Water Quality Board held loan closings for South Salt
Lake City,Projects #260A and #260C,for their portion of Central Valley Water Reclamation
Facility’s project to upgrade,replace,and renew their wastewater infrastructure.
WQB Loan Amount $1,032,000
Loan Interest Rate 0%
Loan Term 20 years
WQB PrincipalForgiveness $1,760,000
Operating Agreement Conditions
The State of Utah has twenty-four conditions in the SRF Operating Agreement with the
EPA that set forth program,management,and nancial policies and procedures to be
implemented.The rst twelve conditions have been met and no status update is required.
These include:Agreement to Accept Payments,State Laws and Procedures,State
Accounting and Auditing Procedures,Recipient Accounting and Auditing Procedures,Use
of the Automated Standard Application for Payments (ASAP),Repayments,Annual Audit,
Annual Report,Annual Review,Anti-lobbying,Drug Free Workplace,Rural Area Business
Enterprise Development Plan.
The remaining twelve conditions in the Operating Agreement have also been met but
require an annual update.These are described below:
1.Provide State Match -State match funds are derived from sales tax dollars that are
deposited into the Utah Wastewater Loan Fund.As prescribed in the Intended Use
Plan,the Division of Water Quality deposits the total amount of state match required
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and uses it toward eligible project costs before making draws from the EPA
Capitalization Grant award.
2.Repayment Begins within One Year of Construction End –Principal and interest
repayments of loans made through the SRF begin within one year of construction
completion.This time allows revenue accumulation for one annual loan repayment.
3.Extended Term Financing –Utah ensures that the long-term revolving nature of the
fund is protected.Based on Clean Water NIMS data,the three-year rolling average of
annual loan commitments for 2021,2022,and 2023 is $41,170,000 which is greater
than the established baseline of $10,770,155.
4.Expeditious and Timely Expenditure -Utah has disbursed all cash draws in a timely
and expeditious manner.Construction has begun on all SRF projects within a short
period after loans are closed.For details on federal cash draw details,please see
Table 6 on page 31.
5.First Use for Enforceable Requirements -Prior to receiving the Capitalization Grant,
Utah had met the requirements of Section 1382(b)(5)of the Clean Water Act.This
section requires that all Capitalization Grant funds be used in a manner that assures
maintenance of progress toward compliance with enforceable deadlines,goals,and
requirements of the Clean Water Act.
6.Eligible Activities of the Fund -All projects that have received SRF loans have
expended loan proceeds for eligible costs.
7.Compliance with Title II Requirements -In accordance with Section 1382 (b)(6)of
the Clean Water Act,the SRF is required to meet sixteen specic Title II
“equivalency”requirements for wastewater treatment projects under Section 212
which have been constructed,in whole or part,before October 1,1994,with funds
“directly made available by the Capitalization Grant.”The State has met equivalency
requirements up to October 1,1994 and documented that compliance in previous
annual reports.Since there was no requirement under this statute beyond the
October 1,1994 date,there has been no additional reporting for equivalency in this
report.
8.DBE Requirements -The State negotiated fair share utilization goals with Region VIII
for participation on activities nanced by the SRF.During the state scal year,the
SRF program has met or exceeded the minimum Disadvantaged Business Enterprise
(DBE)utilization program requirements.Construction projects have either
implemented fair share utilization goals for DBE participation or have demonstrated
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that a good faith effort was made to provide opportunity for qualied DBE
involvement.
9.Other Federal Authorities -The State and all recipients of SRF funds,which were
made available directly by the Capitalization Grant,have complied with applicable
federal authorities.Recipients of SRF assistance agreed to this as a condition of the
bond agreement between the loan recipient and the State.
10.State Environmental Review Process -During the scal year,the State was actively
involved in assisting potential SRF projects with planning.Environmental impacts
are being carefully considered with each plan.No loans are closed with a community
until a Categorical Exclusion,Finding of No Signicant Impact,or Environmental
Impact Statement is issued.
11.Cash Draw Procedures -Pages 31-32 of this report includes the amount of funds
drawn from the EPA Capitalization Grants and from the state match for loan projects
and administration during the scal year.
12.Outlay Projections -Projected draws for loans from the EPA Capitalization Grants
were equal to $14,855,040.During SFY 2023,a total of $5,852,160 was actually drawn.
13.In addition to compliance with its Operation Agreement with EPA,the State adheres
to 40 CFR §35.3135 Binding Commitments -the State made binding commitments
equal to 120 percent of the capitalization award amount within one year.
Additional Subsidization
Clean Water SRF capitalization grant awards contain programmatic requirements for the
State to provide additional subsidy to eligible recipients in the form of forgiveness of
principal,negative interest loans,or grants.Utah’s program provides additional subsidy in
the form of principal forgiveness.The table below updates progress in meeting the
requirement.The program will continue to provide information regarding additional
subsidization projects in subsequent Intended Use Plans and Annual Reports.Utah’s 2023
award has not yet been received,therefore,reporting has not been included in the FY23
Annual Report.
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Table 1 -Additional Subsidization Requirements
AwardYear MinimumAmount MaximumAmount MinimumMet Project PrincipalForgiveness
Base Capitalization Grant
2018 $844,300 $2,532,900 Complete South Salt Lake City $956,220
Millville City $1,576,680
2019 $844,300 $2,532,900 In Progress Millville City $1,688,600
Provo City $844,300
2020 $835,800 $3,343,200 In Progress
Millville City $1,234,720
Provo City $1,155,700
South Salt Lake City $952,780
2021 $835,700 $3,342,800 In Progress
Millville City $2,130,800
Provo City $404,780
South Salt Lake City $807,220
2022 $609,600 $1,828,800 In Progress Millville City $828,800
Payson $1,000,000
General Supplemental Grant
2022 $4,595,220 $4,595,220.In Progress Provo City $4,595,220
Green Project Reserve
To the extent that there are sufficient eligible projects,not less than 10%of the funds made
available through the Clean Water SRF capitalization grants (awarded from FFY22)shall be
used for projects to address green infrastructure,water or energy efficiency improvements,
or other environmentally innovative activities.The table below updates progress in
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meeting the requirement.Potential projects that meet the requirement will be identied in
future Intended Use Plans and reported once funds are expended during the construction
phase.
Table 2 -Green Project Reserve Requirements
Award Year Amount Project Credit
2022 $609,600 Payson Alloed
FFATA &Equivalency
As required by the Federal Funding Accountability and Transparency Act (FFATA),Utah’s
program ensures that all federal award funds are tracked and reported in the FFATA
Subaward Reporting System (FSRS).The Clean Water SRF program maintains its
commitment to ensuring compliance with the federal requirements through the use of
equivalency projects.Equivalency projects are selected to meet federal cross-cutter
requirements,including those related to Davis-Bacon wages,American Iron and Steel,
NEPA-like environmental review,Single Audit Act,Disadvantaged Business Enterprise,and
Architectural and Engineering Services procurement.The accompanying table lists the
program’s equivalency projects that have been reported in the FSRS.
Table 3 -Equivalency Projects
AwardYear GrantAmount AgreementDate Project Assistance Amount
Base Capitalization Grant
2021 $8,357,000 10/14/2020 Provo City $77,800,000
2022 $6,096,000 5/5/2022 Payson City $14,500,000
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General Supplemental Grant
2022 $9,378,000 5/5/2022 Provo City $15,000,000
A/E Procurement
Beginning with capitalization grants awarded after October 1,2014,architectural and
engineering (A/E)contracts for projects using funds directly made available by a
capitalization grant must comply with the elements of procurement processes for A/E
services as identied in 40 U.S.C.1101 or an equivalent State qualications-based
requirement.
Build America Buy America
For SRF recipients,BABA expands existing American Iron and Steel (AIS)requirements
(which EPA has implemented since 2014)to include construction materials and
manufactured goods.
The Bipartisan Infrastructure Law includes the Build America,Buy America Act (Buy
America)requirements which places additional requirements on the Clean Water SRF
Program.The United States must make signicant investments to install,upgrade,or
replace the public works infrastructure of the United States;with respect to investments in
the infrastructure of the United States,taxpayers expect that their public works
infrastructure will be produced in the United States by American workers.These new Buy
America requirements will be placed on federal equivalency infrastructure projects.
Current Program Status
Since its inception,the State Revolving Fund has been steadily increasing and has grown
into a permanent source of nancial assistance for the construction of water quality
projects throughout the State of Utah.Each year,there are water quality projects in Utah
that do not receive funding directly from the SRF.Utah encourages community
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self-reliance through prudent planning and cooperative efforts to utilize other sources of
available nancial assistance.
Many of the larger wastewater treatment facilities located in high population areas of the
State can afford construction nancing without utilization of the State Revolving Fund.
Medium-sized communities rely heavily on the SRF to provide additional assistance,
making wastewater treatment affordable to their citizens.To achieve efficient and
affordable public health and water quality solutions,communities with small populations
use the USDA Rural Development and Utah Wastewater Project Assistance Program
nancing for loans and grants for their wastewater projects.The Utah Community Impact
Board funding is used by communities located within impacted (mineral extracting)
counties.
DWQ continues to work with communities to provide construction assistance and to
improve water quality for the State of Utah.
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Notes to Clean Water SRF FinancialStatements
Note 1 -Definition of Reporting Entity
Fund)program was established pursuant to federal action to provide low interest rate
loans to public wastewater systems for preservation and protection projects that meet
eligibility requirements.The United States Environmental Protection Agency (EPA)allows
for reasonable costs of administering the program to be funded by the SRF Capitalization
Grant.The maximum annual amount may be the greatest of the following:
●An amount equal to 4 percent of all grant awards received by a State Clean Water
SRF less any amounts that have been used in previous years to cover administrative
expenses;
●$400,000;or
●1/5 percent of the current valuation of the fund
The Division of Water Quality will use an amount equal to 4 percent of all grant awards.
Funding from the administrative portion of the capitalization grant and from the collection
of loan origination fees allows for the supervision of the SRF program as well as for
oversight of individual projects.
The Water Quality Board (the Board)has nine members appointed by the Governor.The
Board develops policies and procedures for program implementation and authorizes loans
under the SRF program.The Utah Department of Environmental Quality (DEQ)and the
Board jointly manage the SRF program.DEQ -Division of Water Quality reviews loan
applications for eligibility,prioritizes eligible projects,monitors loan disbursements and
repayments,and conducts project inspections.Through the Utah Code,the legislature has
given the Board rule making authority that meets federal law requirements.The Board
reviews each loan applicant to determine its ability to repay the loan,its readiness to
proceed with the project,and its ability to complete the project.
The SRF program receives assistance and support from the Department of Environmental
Quality -Office of Support Services,the Department of Administrative Services -Division
of Finance,the Utah Attorney General’s Office,and the State Treasurer’s Office.Salaries
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and benets of employees as well as indirect costs based on direct salary costs are
accumulated in the state’s general fund and charged to the SRF based on actual time spent
on SRF activities.Employees who charge time to the SRF are covered by the State of Utah
personnel benets plan.
The SRF program is funded by a series of capitalization grant awards from EPA.Grant
conditions require States to provide twenty percent (20%)matching funds for the base
program,and a 10%state match for the general supplemental portion (in FY24 this match
will return to 20%)of the federal capitalization grant.
The Fund follows the Governmental Accounting Standards Board (GASB)accounting
pronouncements which provide guidance for determining which governmental activities,
organizations and functions should be included within the nancial reporting entity.GASB
pronouncements set forth the nancial accountability of a governmental organization’s
elected governing body as the basic criterion for including a possible component
governmental organization in a primary government’s legal entity.Financial accountability
includes,but is not limited to,appointment of a voting majority of the organization’s
governing body,ability to impose its will on the organization,a potential for the
organization to provide specic nancial benets or burdens and scal dependency.
The SRF program and activities are included in the Utah Comprehensive Annual Financial
Report (CAFR)as part of the Proprietary Funds (Water Loan Programs).The SRF assets,
liabilities,and net assets are combined with other state programs and are not separately
identiable.
Note 2 -Summary of Significant Accounting Policies
The accounting policies of the Fund conform to generally accepted accounting principles
as applicable to a governmental unit accounted for as a proprietary enterprise fund.The
enterprise fund is used since the Fund’s powers are related to those operated in a manner
similar to a for prot business where an increase in net assets is an appropriate
determination of accountability.
Basis of Accounting
The SRF nancial statements are presented as an enterprise fund.Revenues are recorded
when earned expenses are recorded and when the related liability is incurred,regardless of
the timing of the cash ows.All assets and liabilities associated with the operation of the
SRF are included in the statement of net assets.The SRF has elected to follow the
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accounting pronouncements of the Governmental Accounting Standards Board (GASB),as
well as statements issued by the Financial Accounting Standards Board (FASB)on or before
November 30,1989,unless the pronouncements conict with or contradict GASB
pronouncements.
Cash and Cash Equivalents
In accordance with the Money Management Act,Section 51-7 of the Utah Code,the State
Treasurer administers cash and manages investments in the State.The Money
Management Act species the investments that may be made,which are only high-grade
securities.Investments include variable rate corporate notes and obligations of U.S.
government agencies that base their rates on standard quoted money market indexes that
have a direct correlation to the federal funds rate.
Therefore,there is very little market risk because the investments follow the normal
swings of interest rates.Cash equivalents are generally considered short-term highly liquid
investments with maturity of three months or less from the purchase date.
All funds deposited with the Treasurer are considered to be cash or cash equivalents
regardless of the actual maturities of the underlying investments in the statement of cash
ows.Investments in debt and equity securities are reported at fair value in the statement
of net assets,and all investment income,including changes in the fair value,are reported
in the statement of revenue,expenses,and changes in fund net assets.
When cash is transferred from the fund for a loan closing to an escrow account the
transaction is recorded as an expense for a principal forgiveness agreement and a loan
receivable for a loan agreement at the time of transfer.At year end the program identies
all unused funds in escrow and puts them back on the books as a short-term asset in cash
and cash equivalents.The escrow cash is recognized as restricted cash with a
corresponding reduction in loans receivable.
Operating Revenues and Expenses
The SRF distinguishes between operating revenues and expenses and non-operating items
in the statements of revenues,expenses,and changes in net assets.Operating revenues
and expenses generally result from carrying out the purpose of the SRF,which is to
provide low interest loans to communities and assistance for prevention programs and
administration.Operating revenues consist of loan and interest payments from borrowers.
Operating expenses include direct salary costs and benets,indirect costs,and allowance
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for bad debt.All revenues and expenses not meeting this denition are reported as
non-operating revenues and expenses or capital contributions.
The EPA capitalization grant and the associated State match are recorded as capital
contributions,except for principal forgiveness which is reported as non-operating
revenue,and the administrative match which is reected as operating revenue.
When both restricted and unrestricted resources are available for use,it is the Fund’s
policy to follow the State of Utah’s policy as dened in the State of Utah Comprehensive
Annual Financial Report.
Hardship Assessments
The Board has the option to charge a hardship assessment in lieu of interest on loans made
from the repayment stream,also known as 2nd Round funds.Hardship assessments are
calculated and paid in the same manner as interest.The restriction for the use of hardship
assessments differs from the restriction for the use of interest.Hardship assessments can
be used for purposes other than loans,including grants to disadvantaged communities.
Loan Origination Fee
The Water Quality Board may charge a Loan Origination Fee up to 1%of the principal loan
amount.This fee may be used for any allowable activities under the Act and administration
of the loan program.
Budgets
The SRF,as an enterprise fund of the State,does not require appropriation.Even so,the
legislature reviews SRF amounts and authorizes an annual budget.
Use of Estimates in Preparing Financial Statements
The preparation of nancial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the nancial statements and the reported amounts of revenues,
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expenses,gains,losses,and other changes during the reporting period.Actual results
could differ from those estimates.
Loans Receivable
Loans are funded by capitalization grants from the EPA,State matching funds,loan
repayments and interest earnings.Interest is calculated from the date that funds are
advanced.After the nal disbursement has been made,the loan agreement is adjusted for
the actual amounts disbursed.Loans are amortized for up to 30 years.Loan repayments
must begin within one year of construction completion and are made on an annual basis.
For projects receiving principal forgiveness,monies are advanced and forgiven as each
disbursement occurs.Loan agreements require repayment of the forgiven loan if all
program requirements are not met.
Allowance for Bad Debts
The allowance for bad debts is established as losses are estimated to have occurred
through a provision for bad debts charged to earnings.Loans receivable are charged
against the allowance for bad debts when management believes that the principal being
uncollectable is probable.The allowance for bad debts was $0.00 on June 30,2022.
Note 3 -Cash and Investments
All monies of the SRF are deposited with the Utah State Treasurer and are considered cash
and cash equivalents.All cash deposited with the State Treasurer is maintained by the
Treasurer in various pooled investment funds.The State Treasurer invests the deposited
cash,including the cash oat,in short term securities and other investments.
The Utah State Treasurer’s Office operates the Public Treasurers Investment Fund (PTIF)
investment pool.The PTIF is available for investment of funds administered by any Utah
public treasurer.Participation is not required,and no minimum balance or
minimum/maximum transaction is required.State agencies and funds that are authorized
to earn interest also invest in the PTIF as an internal investment pool.No separate report as
an external investment pool has been issued for the PTIF.Details of the investments of the
PTIF can be obtained from the State Treasurer.
The PTIF is not registered with the SEC as an investment company and is not rated.The
PTIF is authorized and regulated by the Utah Money Management Act,(Utah Code Title 51,
Chapter 7).The Act establishes the Money Management Council,which oversees the
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activities of the State Treasurer and the PTIF.The Act lists the investments that are
authorized which are high-grade securities which minimizes credit risk except in the most
unusual and unforeseen circumstances.
Deposits in the PTIF are not insured or otherwise guaranteed by the State of Utah,and
participants share proportionally in any realized gains or losses on investments.
Income,gains and losses,and net of administration fees of the PTIF are allocated to
participants on the ratio of the participants’share of the total funds in the PTIF based on
the participant’s average daily balance.The PTIF allocates income and issues statements
upon request.Twice a year,on June 30 and December 31,the investments are valued at fair
value.The SRF has adjusted the PTIF funds to fair value as of June 30,2023.
Investments in PTIF are not categorized because they are not evidenced by securities that
exist in physical or book entry form.Cash and cash equivalents are presented below:
Cash:$19,991,467
Cash in Escrow with Trustee:$35,352,408
Cash with PTIF in Escrow:$1,224,069
Total cash and cash equivalents:$56,567,944
Note 4 -Loans Receivable
Loans are made to qualifying entities for projects that meet eligibility criteria.The SRF
loan awards consist of the following funding sources:(1)the federal EPA Capitalization
Grants;(2)State match funds;(3)loan repayments;(4)interest payments;and (5)SRF
interest earnings.Projects are funded through the purchase of incremental disbursement
bonds and proceeds are deposited into an escrow account based on a quarterly schedule of
anticipated costs.Loan interest begins accruing when funds are deposited in the escrow
account.Principal repayment must begin no later than one year after the completion of the
project.
Effective interest rates and hardship assessments on loans vary between 0.0 and 5.0
percent and are generally repaid over 20-30 years.The interest rates on the loans are
generally lower than market rates and,in some cases,are non-interest bearing.Loans
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mature at various intervals and recipients make annual payments.Loans mature at various
intervals through June 30,2060 and the scheduled principal repayments on loans follows:
Table 4 -Loans Receivable
Year Ending June 30 Amount
2024 $15,251,946
2025 $15,140,042
2026 $15,302,009
2027 $15,076,365
2028-2032 $81,106,411
2033-2037 $66,716,931
2038-2042 $59,332,523
2043-2047 $13,369,519
2048-2060 $5,621,036
Total $286,916,782
Loans to Major Local Agencies
The Fund has made loans to the following major local agencies.The aggregate outstanding
loan balances for each of these agencies exceed ve percent (5%)of total loans receivable.
The combined outstanding loan balances on June 30,2023 of these major local agencies
represent approximately eighty two percent (82%)of the total loans receivable and are as
follows:
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Table 5 -Loans to Major Local Agencies
Borrower Authorized Amount Outstanding Loan Balance
Central Valley WaterReclamationFacility $65,100,000 $65,100,000
Logan City $90,000,000 $81,840,000
Provo City $85,800,000 $75,143,879
Salem City $20,000,000 $18,300,000
Total $260,900,000 $240,383,879
Note 5 -Due to State of Utah
Due to the State of Utah,balances are an aggregation of amounts due to employees for
salaries and benets and/or vendors and miscellaneous suppliers paid by the state.
Note 6-Capital Contributions
The following table summarizes the activity of the State’s Clean Water Revolving Loan
Fund by award year:
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Table 6 -State Revolving Fund Account Activity
AwardYear Grant Award Funds DrawnasofJune30,2022
Funds DrawnDuringYearEndJune30,2023
Total FundsDrawnasofJune30,2023
AvailableFundsasofJune30,2023
Base Capitalization Grant
1988-2015 $200,202,394 $200,202,394 $0 $200,202,394 $0
2009-ARRA $20,649,900 $20,649,900 $0 $20,649,900 $0
2016 $7,011,000 $7,011,000 $0 $7,011,000 $0
2017 $6,956,000 $6,956,000 $0 $6,956,000 $0
2018 $8,443,000 $8,443,000 $0 $8,443,000 $0
2019 $8,357,000 $8,308,589 $48,411 $8,357,000 $0
2020 $8,358,000 $7,958,000 $400,000 $8,358,000 $0
2021 $8,357,000 $7,957,000 $112,661 $8,069,661 $287,339
2022 $6,096,000 $0 $5,852,160 $5,852,160 $243,840
General Supplemental Grant
2022 $9,871,000 $0 $0 $0 $9,871,000
Totals $284,301,294 $267,485,883 $6,413,232 $273,899,115 $10,402,179
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The following is a summary of the state contributions made to meet match requirements of
the EPA grant:
State match paid as of June 30,2022:$50,597,998
State match paid during the year ended June 30,2023:$1,219,200
Total State match paid as of June 30,2023:$51,817,198
Note 7 -Risk Management
The SRF is included in Utah’s Risk Management Fund,which provides insurance in case of
loss or claims against the SRF.The State has elected,with a few exceptions,to be
self-insured against loss or liability.There have been no signicant reductions in insurance
coverage from the prior year.In addition,settled claims have not exceeded insurance
coverage in the last three scal years.Refer to the State’s Risk Management disclosure in
the June 30,2023 Comprehensive Annual Financial Reports.
Note 8 -Contingencies and Subsequent Events
As of June 30,2023,the total remaining draws for SRF projects with closed loans was
$55,894,121.These draws will be processed during future scal years as wastewater project
construction continues.As of June 30,2023,the Board authorized an additional $9,724,600
in SRF loan funding.However,loan closing had not been completed for the six projects.
Note 9 -Net Assets
Governmental Accounting Standards Board Statement No.34 provides for three
components of net assets:invested in capital assets,net of related debt,restricted and
unrestricted.As of June 30,2023,the Fund had no restricted net assets or net assets
invested in capital assets,net of related debt.Unrestricted net assets consist of net assets
that do not meet the denition of invested in capital assets,net of related debt or
restricted.Although the Fund reports unrestricted net assets on the face of the statements
of net assets,unrestricted net assets are to be used by the Fund for the payment of
obligations incurred by the Fund in carrying out its statutory powers and duties and are to
remain in the Fund.
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Supplementary Information
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