Ariz. Admin. Code § R18-4-607 – Appeals

1. Source Adequacy - Does the documentation demonstrate 50 gallons of water per person per day for 100 years or does the system have an Arizona Department of Water Resources Certificate of assured water supply?
2. Source Adequacy - Does the source approval information demonstrate that the source meets drinking water quality standards or have applicable drinking water technologies been described?
3. Infrastructure - Do the design criteria meet the requirements of R18-4-502 through R18-4-509?
4. Treatment - Do the design criteria include treatment technologies approved by ADEQ in 18 A.A.C. 4, Articles 2, 3, and 5?
5. Does the system have a certified operator of the appropriate grade and type?
6. Does the documentation include an elementary business plan containing technical and engineering needs projections for a time period covering day 1 to final build-out or for a five-year time period, which ever is greater?
7. Does the documentation include the proposed water system design specifications and proposed uses including commercial and domestic use phases?
8. Does the documentation include an elementary business plan containing the information on the components used in the design and construction of the system along with the components life span based upon manufacturer’s specifications?
9. Does the documentation include an Operations and Maintenance Plan that contains standards that are nationally recognized on all site-specific components, such as American Water Works Association, National Sanitation Foundation, or Underwriter’s Laboratory?
10. Does the documentation include an operation and maintenance plan with the manufacturer’s specifications on all components used in the construction of the water system?
12. Does the documentation include ownership type?
Select all that apply.
Sole Proprietor
Major Stockholders
Board of Directors
Cooperative
Government Agency or District
Corporation
Limited Liability Corporation
Partnership
Other__________________________
13. Does the documentation include name, address, and telephone number of owner?
14. Does the documentation include an organizational chart of owners, management, and staff with their position or job titles?
15. Does the documentation include staff job descriptions and responsibilities?
16. Does the documentation include a capital improvement plan up to the proposed full system build-out or for a five-year projection, whichever is greater?
17. Does the documentation identify the grade and type of certified operator that will be needed to operate the system according to site-specific components?
18. Does the documentation identify the intent to create a CWS or NTNCWS?
19. Does the documentation transfer the ownership of the water system as part of the build-out phase of the project?
20. Does the documentation identify the policies or mechanisms to ensure that all system-specific technical, managerial, and financial information of the water system is transferred to a new owner?
22. Is the system regulated by the Arizona Corporation Commission (ACC) or ADWR? If Yes go to Question 23. If No go to Question 25.
23. Has the system received an approval from the ACC on its fee structure, or ADWR on its financial capacity?
24. Systems regulated by the Arizona Corporation Commission or Department of Water Resources shall provide information required in 22 and 23 for the financial capacity determination review by ADEQ.
d. Total Water Revenues
h. Total Cash Revenues
j. Loans, Grants or other
j. Total Operations and
Maintenance Expenses
l. Total Operations and
Maintenance expenditures
plus Replacement
m. Loan Principal/Capital
5. Total Cash Paid Out
9. Coverage Ratio
11. End of Year Operating
a. Total Revenues - Total Expenses = Net Income > 0
b. Total Revenues - One-Time Revenues - Interest Income - Other Income = Operating Revenues
c. Total Expenses - One-Time Expenditures - Debt Service - Capital Outlays = Operating Expenditures
d. Operating Revenues - Operating Expenses = Net Revenues > 0
e. Operating Ratio = Operating Expenses £ 1 Operating Revenues
Test 2: Will the proposed water system generate reserves?
The following measurements shall be > 0 at the time submitted:
a. Operating Cash Reserve = $___________
b. Replacement Reserve = $____________
c. Working Capital = Current Assets - Current Liabilities
Test 3: Are the proposed rates reasonable compared to the median household income of the area to be served?
The following measurement shall be:
Average Annual Rates < Median Household Income* x 2.5%.
* The sources of median household income data include the most recent United States Census Bureau (USCB) data collected by the Department or generated by an impartial third party experienced in collecting income data and supplied to the Department by the applicant seeking viability determinations. Acceptable sources of income data, other than USCB data include feasibility studies, engineering reports, market studies, income surveys, or another source or collection methodology approved by the Department.

An owner may appeal denial of an elementary business plan under A.R.S. § 41-1092 et seq.

Appendix A. Elementary Business Plan Checklist

Elementary Business Plan Checklist

Technical Capacity

11. Does the documentation include an operations and maintenance plan and emergency operation plan to address site-specific component replacement or repair protocols based on manufacturer’s recommendations or engineer’s specifications?

Managerial Capacity

21. Does the documentation include the owner’s signed disclosure statement agreeing to comply with the requirements of these Articles and a general disclosure statement agreeing to disclose all information relevant to the operation of the water system to any transferee of ownership? (See Appendix B).

Yes No N/A
_____ _____ _____
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Financial Capacity

25. For New CWSs and NTNCWS NOT regulated by ACC, is all information listed in Appendices C and D included?

Yes No N/A
_____ _____ _____
_____ _____ _____
_____ _____ _____
_____ _____ _____

Historical Note

Appendix A adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999 (Supp. 99-4).

Appendix B. Drinking Water Capacity Development Statement of Responsibility

Drinking Water Capacity Development Statement of Responsibility

Applicant Information:

Name:

Mailing Address:

Phone Number: Fax Number: E-mail:

Statement Information:

1) Name of Water System:__________________________________________PWS ID#_____________

2) Ownership Type (Please check all that apply):

____Sole Proprietor ___Major Stockholders ___Board of Directors

____Cooperative ___Government Agency ___District

____Public Entity ___Corporation ___Limited Liability Corporation

____Other (please explain) _________________________________________________________________

3) Name of Owner(s): (Check one) See below Attach a separate sheet if more space is needed

Owner 1:

Owner 2:

Owner 3:

4) Agencies with rules applicable to the Water System: (Please check all that apply)

____Arizona Department of Environmental Quality ____Arizona Corporation Commission

____Arizona Department of Water Resources ____Arizona Department of Real Estate

____Arizona Department of Commerce ____Arizona Department of Agriculture

____Arizona Department of Corrections ____Office of the Fire Marshal

____Arizona Land Department ____Arizona Department of Revenue

____Arizona Department of Transportation ____Maricopa County Environmental Services

____Pima County Department of Environmental Quality ____Environmental Protection Agency Region IX

____Other(s) please specify___________________________________________________________________

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5) Statement of Intent (Select one):

____It IS the intent of the owner or developer of this NEW CWS or NEW NTNCWS to transfer ownership of the water system. As part of the ownership transfer, it is understood that the owner or developer has a responsibility to disclose and transfer ALL information relevant to the construction and operation of the water system to the new owner.

____It is NOT the intent of the owner to transfer ownership of the NEW CWS or NTNCWS within one year of the completion of construction of the water system.

6) Date owner expects to begin operation:

Month_________________ Day _____________ Year______________________

7) Drinking Water Sources used: (Select all that apply)

____Ground Water ____Purchased Ground Water

____Surface Water ____Purchased Surface Water

8) Table of Contents of Systems Elementary Business Plan (Please check one):

____The Table of Contents of the Elementary Business Plan is attached.

____The Table of Contents of the Elementary Business Plan is summarized below.

Summary____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

9) Signature of each current owner: Check if additional signature page is attached.____

I agree to comply with the requirements of 18 A.A.C. 4, Article 6.

Print Name:____________________________Signature:__________________________Date:___________

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Historical Note

Appendix B adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999 (Supp. 99-4).

Appendix C. Financial Capacity for New CWSs and NTNCWSs, Worksheet 1

Financial Capacity for New CWSs and NTNCWSs

Worksheet 1

Owner:___________________________________________________________________________________

Completed by:_______________________________________________________Date:___________________

5-Year Financial Projection

Year 1
Projection

Year 2
Projection

Year 3
Projection

Year 4
Projection

Year 5
Projection

Enter Year:

1. Beginning Cash on Hand

a. Unmetered Water Revenue

b. Metered Water Revenue

c. Other Water Revenue

(1a thru 1c)

e. Connection Fees

f. Interest and Dividend Income

g. Other Income

(1d thru 1g)

i. Additional Revenue Needed

Cash Injection (please specify)

2. Total Cash Balance (1h to 1j)

3. Total Cash Available (1+2)

4. Operating Expenses

a. Salaries and wages

b. Employee Pensions and Benefits

c. Utilities

d. Chemicals

e. Materials and Supplies

f. Laboratory

g. Contractual Services

h. Insurance

i. Miscellaneous

(4a thru 4i)

k. Replacement Expenditures

expenditures (4j+4k)

Lease Payments

n. Loan Interest Payments

o. Capital Purchases (specify):

(4m thru 4o)

6. Ending Cash Position (3 - 5)

7. Number of Customer Accounts

8. Average Annual User Charge per account (1d/7)

(1h-4l)/(4m+4n)

10. Operating Ratio (1d/4l)

Cash (6 - 12)

12. End of Year Reserves

a. Operating Reserves

b. Debt Service Reserve

c. Capital Improvement Reserve

d. Replacement Reserve

e. Other

Total Reserves (12a thru 12e)

Appendix C. (Continued) Financial Capacity for New CWSs and NTNCWSs, Definitions for Worksheet 1

Arizona Financial Capacity For New

CWSs and NTNCWSs

Definitions for Worksheet 1

5-Year Financial

Projection

Year 1
Projection

Year 2
Projection

Year 3
Projection

Year 4
Projection

Year 5
Projection

1. Beginning Cash on Hand	For the current year budget, use the actual cash balance. For all other years, cash on hand should equal item #12 from the previous period.
a) Unmetered Water Revenue	All cash received or estimated for water supplied to residential, commercial, industrial and public customers where the customer charge is not based on quantity, but is based on other criteria such as diameter of service pipe, room, or foot of frontage.
b) Metered Water Revenue	All cash received or estimated for water supplied to residential, commercial, industrial, and public customers where the charge is based on quantity of water delivered.
c) Other water revenues	Other cash received or estimated from sales of water, sales for irrigation, sales for resale, inter-municipal sales, or ad valorem taxes.
d) Total Water Revenues	Total 1(a) thru 1(c)
e) Connection Fee	All cash received or estimated for connection of customer service during the year.
f) Interest and Dividend Income	All cash received or estimated on interest income from securities, loans, notes, and similar instruments, whether the securities are carried as investments or included in sinking or reserve accounts.
g) Other income	Other revenues collected or estimated during the period (such as disconnection or change in service fees, profit on materials billed to customers, servicing of customer lines, late payment fees, rents, sales of assets, or ad valorem taxes (infrastructure portion).
h) Total Cash Revenues	Add 1(d) thru 1(g)
i) Additional Revenues Needed	Additional cash needed to cover cash needs.
j) Loans, Grants or other Cash Injections	Includes loans or grants from financial institutions, inter-municipal loans, state or federal sources.
2. Total Cash Balance	Add items 1(h) thru 1(j)
3. Total Cash Available	Add items 1 and 2
4. Operating Expenses	Use actual amounts paid when completing the prior year. Estimate the amounts for projected years based on prior year amounts, trends, and other known variables.
a) Salaries and wages	Cash expenditures made or estimated for salaries, bonuses, and other considerations for work related to the operation and maintenance of the facility, including administration and compensation for officers and directors.
b) Employee Pensions and Benefits	Paid vacations, paid sick leave, health insurance, unemployment insurance, pension plan, and other similar liabilities.

c) Utilities

Amounts paid or estimated for all fuel or electrical power.

d) Chemicals

Amounts paid or estimated for chemicals used in treatment and distribution.

e) Materials and Supplies	Amounts paid or estimated for materials and supplies used for operation and maintenance of the new public water system other than those under contractual services.
f) Laboratory	Amounts paid or estimated for laboratory and associated services.
g) Contractual Services	Amounts paid or estimated for outside engineering, accounting, legal, managerial, and other services.
h) Insurance	Amounts paid or estimated for vehicle, liability, worker’s compensation, and other insurance associated with the public water system.
i) Miscellaneous	Amounts paid or estimated for all expenses not included elsewhere (such as permit fees, training, and certification fees).
j) Total operation and maintenance expenditures	Add amounts in lines 4(a) thru 4(i).
k) Replacement expenditures	Amounts paid or estimated for replacement of equipment to maintain system integrity (capital improvement plan).
l) Total Operations and Maintenance expenditures plus Replacement expenditures	Add amounts in 4(j) and 4(k)
m) Loan Principal, Capital Lease or Loan payment	Include cash payments made or estimated for principal and interest on all loans, including vehicle loans and equipment on time payments, and capital lease payments.
n) Loan Interest payments	Include cash payments made or estimated for interest on all loans, including vehicle loans, and equipment on time payments, and capital lease payments.
o) Capital Purchases	Amount of cash outlays or estimates for items such as equipment, building, or vehicle purchases and leasehold improvements that were not a part of the initial design of the water system.
5) Total Cash Paid Out	Add amounts in 4(m) thru 4(o)
6) Total Cash Available Minus Expenditures Calculation	Take Amount in 1 and subtract Amount in 5. If this amount is positive, there is operating cash left over after all calculated expenditure obligations have been met. If the number is negative, there are more expenses than there are funds available to pay for the expenses to operate the water system.
7) Number of Customer Accounts	Use most recent system data or expected increases.
8) Average User Charge per Customer	Take amount listed in 1(d) and divide it by amount listed in 7.
9) Coverage Ratio	Take amount in 1(h) and subtract the amount in 4(l). Then divide that amount with the sum of 4(m) + 4(n). The equation looks like this: [1(h) - 4(l)] ) [4(m) + 4(n)] and measures the sufficiency of net operating profit to cover the debt service requirements of the system. A bond covenant might require the debt service to meet or exceed certain limits.
10) Operating Ratio	Take amount in 1(d) and divide it by the amount in 4(l). The equation looks like this: 1(d)) 4(l). This figure measures whether operating revenues are sufficient to cover operation, maintenance, replacement expenses. An operating ratio of 1:0 is the minimum for a self-supporting facility. If there are debt service requirements, the operating ratio would have to be higher.
11) End of Year Operating Cash	All non-reserved cash. Add amounts from 6 thru 12.
12) End of Year Reserves	Do not include depreciation as a reserve unless there is actually a designated depreciation reserve containing cash set aside for future expansion.
a) Operating Cash Reserve	Funds set aside to meet cash flow, operating, and seasonal fluctuations.
b) Debt Service Reserve	Funds specifically set aside to retire debt as it is scheduled.
c) Capital Improvement Reserve	Funds specifically set aside to meet long-term objectives for a major facility expansion, improvement, or the construction of a new facility.
d) Replacement Reserves	Funds specifically set aside for the future replacement of equipment needed to maintain the integrity of the facility over the useful life of the equipment.
e) Total End of Year Reserves	Add amounts 12 (a) thru 12 (d).

Historical Note

Appendix C adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999 (Supp. 99-4).

Appendix D. Water System Financial Viability Tests

Water System Financial Viability Tests

Test 1: Will the proposed water system collect sufficient revenues to meet all of its projected expenses?

Measurements:

Historical Note

Appendix D adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999; Test 1(e) amended to correct a manifest clerical error (Supp. 99-4).

Historical Note

New Section adopted by final rulemaking effective September 23, 1999; the A.A.R. citation was not available at the time of publication and will appear in Supp. 99-4 (Supp. 99-3). Amended by final rulemaking at 5 A.A.R. 4456, effective September 23, 1999 (Supp. 99-4).