STATE OF COLORADO DRINKING WATER REVOLVING FUND RULES AUTHORITY In Senate Bill 95-083, the Colorado General Assembly created the Drinking Water Revolving Fund to provide financial assistance to certain drinking water projects in the State of Colorado. The fund is held and administered by the Colorado Water Resources and Power Development Authority (hereinafter referred to as the “Authority”), which is authorized to issue bonds to finance the program. Moneys in the fund may be used to provide financial assistance to projects included on a Project Eligibility List. The statute at C.R.S. 37-95-103 and C.R.S. 37-95-107.8 directs the Colorado Board of Health ('Board of Health') to submit additions and modifications to the Project Eligibility List annually for adoption by the General Assembly by Joint Resolution signed by the Governor. This regulation provides for the Board of Health's approval of proposed additions and modifications to the Project Eligibility List, and for prioritization of projects for financial assistance from the limited dollars currently available in the fund. The 1996 amendments to the federal Safe Drinking Water Act (SDWA) include authorization of a state revolving fund program similar to that included in the Clean Water Act for wastewater projects. The Drinking Water Revolving Fund established by Senate Bill 95-083 meets the requirements of the SDWA concerning revolving fund financing programs and allows for federal funding of Colorado's revolving fund financing program.

Section 25-1-107 C.R.S., also provides authority for this regulation. DEFINITIONS Section 1.2.2 of the Colorado Primary Drinking Water Regulations (CPDWR) has additional definitions that apply to this rule.

1. (1) “Beneficial Use” - The use of water treatment plant sludge in conjunction with wastewater treatment plant sludge to act as a soil conditioner or low grade fertilizer for the promotion of vegetative growth on land and that meet the requirements of the state Biosolids Regulations.
2. (2) “Consolidation” - A proposed new construction or expansion of a drinking water supply system that will eliminate one or more existing water supply or treatment works. A letter of intent or a resolution adopted by the project participants must be provided to the Water Quality Control Division (Division) to guarantee the facilities will consolidate.
3. (3) “Emergencies” - Situations or occurences of a serious nature, developing suddenly and unexpectedly that cause a treatment facilities to be in noncompliance with drinking water standards and require immediate action.
4. (4) “Governmental Agencies” - means departments, divisions, or other units of state government, special districts, water conservation districts, metropolitan water districts, conservancy districts, irrigation districts, municipal corporations, counties, cities and other political subdivisions, the United States or any agency thereof, and any agency, commission, or authority established pursuant to an interstate compact or agreement.
5. (5) “Health Hazard” - The Division has identified a maximum contaminant level (MCL) violation or a treatment technique violation. Funding for these projects shall result in compliance with existing standards.
   1. An acute health hazard includes violations of SWTR treatment processes, bacteriological standards, and nitrite/nitrate levels. Acute contaminant health effects can occur immediately or within a short period of time.

      A chronic health hazard includes violations of all MCL's (other than those listed as acute) and treatment technique requirements. Chronic contaminant health effects occur after years of exposure.

6. (6) “Other Future Needs” - Facility is beyond the useful/design life and is in need of equipment replacement, rehabilitation or repair in order to maintain compliance or further the public health protection goals of the SDWA.
7. (7) “Operational Means” - Taking temporary managerial or technical steps to protect public health during the time period when the plant is out of compliance, e.g., boil order or bottled water.
8. (8) “Pollution” - The man-made, man-induced, or natural alteration of the physical, chemical, biological, and radiological integrity of water.
9. (9) “Potential Health Hazard” - The system has periodically exceeded an MCL, has levels greater than 50% of an MCL on a regular basis, or has short term problems meeting a treatment technique requirement.
10. (10) “Project Eligibility List” - The list of projects eligible for financial assistance from the Authority through the Drinking Water Revolving Fund (DWRF), as adopted and from time to time modified in accordance with C.R.S. 37-95-107.8(4). The list shall consist of projects which address public health and SDWA compliance issues in the State of Colorado, and shall include only those domestic drinking water supply projects eligible for financial assistance through a state revolving fund pursuant to the terms of the SDWA.
11. (11) “Source Water Protection” - Structural or nonstructural source water protection activities done in addition to area delineation and contaminant assessment.
12. (12) 'Treatment Facilities" - Any devices or systems used in the collection, storage, treatment, transmission, diversion, or distribution of water intended for drinking water purposes.
13. (13) “Wastewater Treatment Plant Sludge” - The accumulated solids resulting from treatment of domestic wastewater.
14. (14) “Water Conservation” - Any structural or nonstructural water conservation measure that achieves a reduction in water consumption for a publicly-owned treatment works. Structural measures shall include installation of interior low-flow plumbing fixtures that are distributed and/or installed by a governmental agency or that are funded in whole or in part by the governmental agency and water meters which are funded and owned by the governmental agency. Nonstructural measures shall include but are not necessarily limited to: incentives for previously installed low-flow fixtures, leak detection or infiltration/inflow programs, public awareness, public education, and incentive water service charges.
15. (15) “Water Treatment Plant Sludge” - The accumulated solids resulting from treatment of water for domestic use.

PURPOSE The purpose of the DWRF is to provide financial assistance to governmental agencies for the construction of treatment facilities for health and compliance purposes as defined above. The project eligibility list is intended to identify those drinking water projects of governmental agencies that are eligible for financial assistance from the DWRF. The project priority system is intended to establish priorities for financial assistance from the DWRF in order to protect and improve the health, safety, and reliability of drinking water supplies in Colorado. It is the policy of the Board of Health to maintain and improve the existing high quality standards for drinking water in the State by providing accessibility to the DWRF. It is also the policy of the Board of Health to encourage consolidation of drinking water systems and to promote water conservation where practicable. The Board of Health and the Water Quality Control Commission shall promote sludge disposal methods for beneficial use. Any applicant for financial assistance from the DWRF must comply with policies and procedures and other requirements of the Authority.

INTENDED USE PLAN PROCEDURES The Division, in cooperation with the Division of Local Government and the Authority will develop an annual Intended Use Plan (IUP). The IUP is required by the SDWA to provide information about how the state will assist communities with their drinking water needs. The IUP will be recommended to the Board of Health for final agency action which will also provide for public comment and review to comply with the SDWA.

1. The IUP shall include:
   1. (1) Priority/Eligibility List of projects including description and size of community.
   2. (2) Descriptions of:
      1. –criteria and method used for distribution of funds –financial status of the dwrf program –short and long term goals of the dwrf program –amounts transferred between the dwrf and the water pollution control revolving fund –set aside activities and percentage of the capitalization grant to be used –how a state disadvantaged community program will be defined and utilized if applicable.

PROJECT ELIGIBILITY LIST PROCEDURES (1) The initial project eligibility list was authorized by the general assembly through the enactment of Senate Joint Resolution 95-19.

(2) Each year the Division shall (after consultation with the Division of Local Government, and the Authority) review, update, and compile additions and modifications to the project eligibility list and recommend such additions and modifications to the Board of Health for final agency action.

(3) Each governmental agency whose project is eligible for inclusion on the proposed project eligibility list will be notified and a public hearing regarding the list shall be held. After considering all pertinent comments, the Board of Health shall adopt additions and modifications to the project eligibility list for submittal to the general assembly by January 15 of each year.

(4) Projects on the eligibility list will be financed in priority order; however, exceptions for funding out of priority order shall be due to one of the following reasons:

1. (a) Governmental agencies are not ready to proceed with the project.
2. (b) Governmental agencies do not wish to participate in the; DWRF or they have received funding from other sources.
3. (c) Governmental agencies (on the list) that have an emergency situation occur during the funding year.
4. (d) Governmental agencies not approved for funding because of technical, financial or managerial deficiencies. (The Division will attempt to work with the governmental entity to resolve the issue through the capacity development program.) Determinations for such out of priority financing shall be made by the Authority with recommendations from the Division and Division of Local Government.

PRIORITY SYSTEM All governmental agencies' treatment facilities with identified water quality problems related to health and compliance issues may be included in one of the categories listed below. All treatment facility projects of governmental agencies that fall into one of the categories listed below and have a planning document that describes a project to correct the water quality problem, shall be prioritized as ready for funding on the project eligibility list. Funding for the projects under each category shall result in the treatment facility's complying with existing standards.

Eligible Project Criteria Categories were developed to emphasize the most immediate public health and compliance issues. Projects on the eligibility list will be classified by category 1, 2, 3, 4, or 5 below, with “1” being the highest priority. Once a planning document is received, projects within each category will be further prioritized by the assignment of points from the priority point listings under each category. No consideration will be given to governmental agencies that appear to have violations caused by poor operation and maintenance procedures or are under an administrative order for violating reporting requirements. CATEGORIES BY PRIORITY RANKING (1) Acute Health Hazard. The Division has identified continuous violation of an acute maximum contaminant level (MCL) or a surface water treatment rule (SWTR) treatment technique requirement.

(2) Chronic (long term) Health Hazard. The Division has identified a continuous violation of an MCL or a treatment technique requirement for a chronic contaminant.

(3) Potential Acute Health Hazard. The system has periodically exceeded an acute MCL, has levels greater than 50% of an acute MCL on a regular basis, or has short term problems meeting an SWTR treatment technique requirement that can be controlled temporarily by operational means.

(4) Potential Chronic Health Hazard. The system has periodically exceeded a chronic MCL, has levels greater than 50% of a chronic MCL on a regular basis, or has short term problems meeting other treatment technique requirements.

(5) Other Future Needs. Facility is beyond the useful/design life and is in need of equipment replacement, rehabilitation or repair, in order to maintain compliance or further the public health protection goals of the SDWA.

Priority Point Assignments Within Each Category Once a planning document is received, projects within each category will be prioritized by the assignment of points from the following:

1. (1) Population. Points shall be assigned to water systems based on the following schedule of population served by the project with emphasis given to small communities: 25 to 1,000 20 points 1,001 to 3,300 15 points 3,301 to 10,000 10 points Over 10,000 5 points (2) Financial Need. Points shall be assigned to water systems in accordance with the following “financial need criteria” established by the state.
   1. (a) ability to pay (annual water service fee as a percentage of median household income):
      1. Over 3.0% 20 points Over 2%; up to 3.0% 15 points Over 1 %; up to 2% 10 points
   2. (b) local burden (total project cost per equivalent residential tap): Over $5,000 20 points Over $3,500 15 points Over $2,000 10 points
2. (3) Consolidation. Fifteen points shall be assigned to an entity if the project includes consolidating two or more public water systems.
3. (4) Water Conservation. Five points shall be assigned to a project if the governmental agency implements a water conservation measure.
4. (5) Source Water Protection. Two points shall be assigned to a project if the governmental agency implements source water protection measures.
5. (6) Beneficial Use of Sludge. Two points shall be assigned to a project if the governmental agency intends to utilize water treatment plant sludge for a beneficial use as defined herein.
6. (7) Health Risk. To further clarify the ranking of treatment facility projects, the Division shall assign up to twenty points for a project's health risks. Determination of the health risk will be made based upon the type and level of contaminant present within categories. Emergency Procedures

(1) If a system has an emergency situation causing immediate public health concerns and it is identified on the Eligibility List, it may receive a DWRF loan out of priority order if funds are available.

(2) If an emergency arises and the system is not identified on the Eligibility List, funding shall be sought from other available sources. The project, which may include refinancing and/or additional construction costs, may be added to the Eligibility List for funding in the following year.