IDAPA 58.01.12
This rule applies to wastewater and drinking water system owners and operators such as municipalities, homeowners associations, nonpoint source project sponsors, consulting engineers, and funding agencies.
This rule provides administrative procedures and requirements for establishing, implementing and administering a state loan program for providing financial assistance to the following:
1. Eligible applicants of water pollution control projects. The U.S. Environmental Protection Agency provides annual capitalization grants to the state of Idaho for this program. Financial assistance projects must be in conformance with the requirements of Subchapter VI of the federal Clean Water Act (33 U.S.C. Sections 1381 et seq.).
2. Qualifying entities of public water system facilities. The U.S. Environmental Protection Agency provides annual capitalization grants to the state of Idaho for this program. Financial assistance projects must be in conformance with the requirements of the Safe Drinking Water Act (42 U.S.C. Section 300j et seq.).
This rule implements the following statutes passed by the Idaho Legislature:
Health and Safety -
MaryAnna Peavey Department of Environmental Quality 1410 N. Hilton Boise, ID 83706 Phone: (208) 373-0122 Email: maryanna.peavey@deq.idaho.gov www.deq.idaho.gov
This rule chapter will be reviewed in compliance with Section 67-5292, Idaho Code, and in accordance with the 8-year rule review schedule linked here.
58.01.12 – Rules for Administration of Wastewater and Drinking Water Loan Funds
000. Legal Authority. ... 3
001. Scope. ... 3
002. (Reserved) ... 3
003. Administrative Appeals. ... 3
004. Referenced Material. ... 3
005. – 006. (Reserved) ... 3
007. Definitions. ... 3
008. Eligible Systems. ... 5
009. Ineligible Systems. ... 6
010. Financial And Management Capability Analysis. ... 6
011. – 019. (Reserved) ... 7
020. Priority Rating System. ... 7
021. Disadvantaged Loans and Affordability. ... 8
022. Supplemental Grants. ... 9
023. – 029. (Reserved) ... 9
030. Project Scope And Funding. ... 9
031. Limitation Of Preloan Engineering Reviews. ... 11
032. Loan Fee. ... 11
033. – 039. (Reserved) ... 11
040. Loan Application And Review. ... 11
041. Determination Of Eligibility Of Costs. ... 12
042. Environmental Review. ... 14
043. – 049. (Reserved) ... 16
050. Loan Offer And Acceptance. ... 16
051. Accounting And Auditing Procedures. ... 17
052. – 059. (Reserved) ... 17
060. Disbursements. ... 18
061. Loan Consolidation. ... 18
062. – 079. (Reserved) ... 18
080. Suspension Or Termination Of Loan Contracts. ... 18
081. – 994. (Reserved) ... 19
995. Waivers. ... 19
996. – 999. (Reserved) ... 19
Chapters 1, 36, and 76, Title 39, Idaho Code. (7-1-26)
These rules establish administrative procedures for establishing, implementing and administering two (2) state loan programs for providing financial assistance to eligible applicants of wastewater and drinking water projects. The U.S. Environmental Protection Agency provides annual capitalization grants to the state of Idaho for these programs. Financial assistance projects must be in conformance with the provisions of Subchapter VI of the federal Clean Water Act (33 U.S.C. Sections 1381 et seq.) and the Safe Drinking Water Act (42 U.S.C. Section 300j et seq.). (7-1-26)
Persons may be entitled to appeal agency actions authorized under these rules pursuant to IDAPA 58.01.23, 'Contested Case Rules and Rules for Protection and Disclosure of Records.' (3-24-22)
01. Customer Handbook Grants And Loans Program (Handbook). Available at the Idaho Department of Environmental Quality, Drinking Water Protection and Finance Division, 1410 N. Hilton, Boise, ID 83706-1255, (208) 373-0502, or https://www.deq.idaho.gov. (7-1-26)
02. Idaho Standards for Public Works Construction. This document is available for a fee from the Local Highway Technical Assistance Council (LHTAC) at LHTAC, 3330 Grace Street, Boise, ID, 83703, (208)344-0565, http://lhtac.org/resources/ispwc. (7-1-26)
The terms 'Board,' 'Department,' 'Director' and 'State' are defined in Section 39-103, Idaho Code. The term 'Public Drinking Water System' (which includes 'Community Water System,' and 'Non-community Water System') is defined in IDAPA 58.01.08, 'Idaho Rules for Public Drinking Water Systems.' The terms 'Wastewater,' and 'Wastewater System' are defined in IDAPA 58.01.16, 'Wastewater Rules.' (7-1-26)
01. Affordability. An applicant's ability to pay for drinking water or wastewater service and infrastructure improvements while maintaining reasonable water and sewer rates for residents. (7-1-26)
02. Annual User Rate. The rate for drinking water or wastewater service for residential users based on all operating, maintenance, replacement and debt service costs for the existing system and for upgrades of proposed alternative. (7-1-26)
03. Applicant. An eligible system or nonpoint source project sponsor that has the ability to establish and maintain a loan repayment. (7-1-26)
04. Categorical Exclusion (CE). Category of actions which do not individually or cumulatively have a significant effect on the human environment and for which, therefore, neither an environmental information document nor an environmental impact statement is required. (3-24-22)
05. Contaminant. Any physical, chemical, biological, or radiological substance or matter in water. (3-24-22)
06. Disadvantaged Community. A community or service area of a drinking water or wastewater system that meets the affordability criteria in Section 021 and may be eligible for loan modification, additional subsidy, or assistance. (7-1-26)
07. Disadvantaged Loans. Loans made to a disadvantaged community. (3-24-22)
08. Eligible Costs. Costs which are necessary for planning, designing and/or constructing drinking water or wastewater systems, or implementation of water pollution control projects. To be eligible, costs must be reasonable and not ineligible costs. The determination of eligible costs will be made by the Department pursuant to
(7-1-26)
09. Environmental Impact Statement (EIS). A document prepared by the applicant when the Department determines that the proposed construction project will significantly affect the environment. The major purpose of the EIS will be to describe fully the significant impacts of the project and how these impacts can be either avoided or mitigated. The environmental review procedures contained in Chapter 5 of the Handbooks may be used as guidance when preparing the EIS. (7-1-26)
10. Environmental Information Document (EID). Any written environmental assessment prepared by the applicant describing the environmental impacts of a proposed wastewater or drinking water construction project. This document will be of sufficient scope to enable the Department to assess the environmental impacts of the proposed project. (7-1-26)
11. Financial Management System. Uniform method of recording, summarizing and analyzing financial information about the loan applicant. (3-24-22)
12. Finding of No Significant Impact (FONSI). A document prepared by the Department presenting the reasons why an action, not otherwise excluded, will not have a significant effect on the human environment and for which an EIS will not be prepared. It must include the environmental assessment or a summary of it and shall note any other environmental documents related to it. (7-1-26)
13. Implementation Plan. Nonpoint source project implementation plan or work plan provides detailed documentation of the proposed project including list of tasks, schedule of tasks, agency/contractor/entity responsible for implementation of the project tasks, adequate time schedules for completion of all budget tasks, and the anticipated results of the project. (7-1-26)
14. Ineligible Costs. Costs which are not eligible for funding pursuant to these rules. (3-24-22)
15. Loan Recipient. An applicant who has been awarded a loan. (3-24-22)
16. Nonpoint Source Pollution. Water pollution that enters the waters of the state from nonspecific and diffuse sources and is the result of runoff, precipitation, drainage, seepage, hydrological modification or land disturbing activities. (3-24-22)
17. Nonpoint Source Project Sponsor. Any applicant for wastewater loan funds to address nonpoint source pollution. (3-24-22)
18. Nonprofit Noncommunity Water System. A public drinking water system that is not a community water system and is governed by 26 U.S.C Section 501 of the Internal Revenue Code and includes, but is not limited to, state agencies, municipalities and nonprofit organizations such as churches and schools. (7-1-26)
19. Operation and Maintenance Manual. For wastewater or drinking water facilities, a guidance and training manual outlining the optimum operation and maintenance of the facilities and their components. For nonpoint source water pollution control projects, a plan that incorporates applicable sections of the Natural Resources Conservation Service Field Office Technical Guide, for implementation of best management practices. (3-24-22)
20. Planning Document. A document which describes the condition of a public wastewater or drinking water system and presents a cost effective and environmentally sound alternative to achieve or maintain regulatory compliance. Engineering reports and facility plans are examples of such planning documents. The planning documents must be prepared by or under the responsible charge of an Idaho licensed professional engineer and bear the imprint of the engineer’s seal. Requirements for planning documents prepared using loan funds are provided in Section 030 and in the Handbook. (7-1-26)
21. Priority List. An integrated list of proposed wastewater system and nonpoint source pollution control projects rated as described in Section 020; or a list of proposed drinking water projects rated by severity of risk to public health, the necessity to ensure compliance with IDAPA 58.01.08, Idaho Rules for Public Drinking Water Systems, and the Safe Drinking Water Act (42 U.S.C. Section 300j et seq.), population affected, and need on a
household basis for protection of Idaho's public drinking water. (7-1-26)
22. Readiness to Proceed. The progress which a loan applicant has made toward completion of tasks necessary to receive a loan (e.g. bond election, local improvement district formation, judicial confirmation towards debt authority, completion of facility plan). (7-1-26)
23. Reserve Capacity. That portion of the facility that is designed and incorporated in the constructed facilities to handle future demand upon the system. (3-24-22)
24. Sewer Use Ordinance/Sewer Use Resolution. An ordinance or resolution that requires new sewers and connections to be properly designed and constructed, prohibits extraneous sources of inflow, and prohibits introduction of wastes into the sewer in an amount that endangers the public safety or the physical or operational integrity of the wastewater system. (7-1-26)
25. Supplemental Grants. Grant funds awarded in conjunction with a loan or as a standalone to the project. (7-1-26)
26. Suspension. An action by the Director to suspend a loan contract prior to project completion for a specified cause. Suspended contracts may be reinstated. (3-24-22)
27. Sustainability. Sustainability will include efforts for energy and water conservation, extending the life of capital assets, green building practices, and other environmentally innovative approaches to infrastructure repair, replacement and improvement. (3-24-22)
28. Termination. An action by the Director to permanently terminate a loan contract prior to project completion for a specific cause. Terminated contracts will not be reinstated. (3-24-22)
29. User Charge System. A system of rates and service charges applicable to specific types of users, including any legal enforcement mechanism that provides sufficient reserves and/or revenues for debt retirement, operation and maintenance, and replacement of the installed equipment or structures. (7-1-26)
30. Water Pollution Control Project. Any project that contributes to the removal, curtailment, or mitigation of pollution of the surface waters or groundwater of the state, or the restoration of the quality of said waters, and conforms to any applicable planning document which has been approved in the State Water Quality Management Plan. This includes the planning, design, construction/implementation or any other distinct stage or phase of a project. (7-1-26)
31. Water System Protection Ordinance. An ordinance adopted pursuant to Chapter 32, Title 42, Idaho Code, or other applicable law that requires new connections to be properly designed and constructed, which prohibits cross-connections with non-potable water sources and in all ways protects the water system from injection of contaminants, and that provides for fees for service from users or classes of users. (3-24-22)
01. Eligible Drinking Water Systems. Community public water systems and nonprofit noncommunity water systems. (7-1-26)
02. Eligible Wastewater Systems. Counties, cities, special service districts, other governmental entities, and nonprofit corporations with authority to collect, treat, or dispose of wastewater or otherwise provide direct water quality benefits. (7-1-26)
03. Assistance to Ensure Compliance. Public water systems are not eligible for a loan unless: (7-1-26)
a. The use of the assistance will ensure compliance; (3-24-22)
b. The owner or operator of the system agrees to undertake feasible and appropriate changes in
operations (including ownership, management, accounting, rates, maintenance, consolidation, alternative water supply, or other procedures); and (7-1-26)
c. The Department determines that the measures are necessary to ensure the system has the technical, managerial, and financial capability to achieve compliance. (7-1-26)
01. Ineligible Wastewater Systems. Wastewater systems owned by individuals or for-profits; (7-1-26)
02. Ineligible Drinking Water Systems. Drinking water systems in significant noncompliance with any requirement of IDAPA 58.01.08, “Idaho Rules for Public Drinking Water Systems,” and the Safe Drinking Water Act (42 U.S.C. Section 300j et seq.). (7-1-26)
03. Delinquent Systems. Systems delinquent in payment of fines, state revolving fund loans, penalties, or fee assessments due to the Department. (7-1-26)
No loans will be awarded for projects unless the applicant has demonstrated and certified that it has the legal, technical, managerial, and financial capabilities provided in these rules to ensure construction, operation and maintenance, and to repay principal, interest, and any fees that may be due on a loan. (7-1-26)
01. Information Needed. Applicants are to submit a completed application for financial and management capability analysis as outlined in Section 040. (7-1-26)
02. Incorporated Nonprofit Applicants. (3-24-22)
a. In addition to all other information required to be submitted by these rules, an incorporated nonprofit applicant must demonstrate to the satisfaction of the Department by its articles of incorporation and/or bylaws, that the corporation is: (7-1-26)
i. Nonprofit and lawfully incorporated pursuant to Chapter 3, Title 30, Idaho Code; (7-1-26)
ii. Authorized to incur indebtedness to construct, improve or repair wastewater or drinking water facilities and/or implement water pollution control nonpoint source projects; (7-1-26)
iii. Authorized to secure indebtedness by pledging corporation assets, including any revenues raised through a user charge system; (7-1-26)
iv. Capable of raising revenues sufficient to repay a loan; and (7-1-26)
v. Exists either perpetually or for a period long enough to repay a project loan. (7-1-26)
b. The Department may impose conditions on the making of a facility loan or water pollution control nonpoint source project to an incorporated nonprofit applicant that are necessary to carry out the provisions of these rules and Chapters 1, 36, and or 76, Title 39, Idaho Code. (7-1-26)
03. Cost Allocation. An applicant proposing a wastewater, drinking water or nonpoint source project designed to serve two (2) or more entities must show how the costs will be allocated among the participating entities. Such applicants must provide an executed intermunicipal service agreement which, at a minimum, incorporates the following information: (3-24-22)
a. The basis upon which the costs are allocated; (3-24-22)
b. The formula by which the costs are allocated; and (3-24-22)
c. The manner in which the cost allocation system will be implemented. (3-24-22)
04. Waivers. The provision in Subsection 010.03 may be waived by the Department if the applicant can demonstrate: (7-1-26)
a. Such an agreement is already in place; (3-24-22) b. There is documentation of a service relationship in the absence of a formal agreement; or (3-24-22) c. An applicant exhibits sufficient financial strength to continue the project if one (1) or more of the applicants fails to participate. (3-24-22)
011. – 019. (RESERVED)
020. PRIORITY RATING SYSTEM.
01. Purpose. A priority rating system will be utilized by the Department to annually allot available funds to wastewater and drinking water projects determined eligible for funding assistance under these rules. (7-1-26)
02. Priority Rating for Drinking Water Systems. The priority rating system will be based on a numerical points system. Priority criteria will contain the following points. (7-1-26)
a. Any documented condition that creates, or may create, a public health hazard or danger to the consumer's health, which may include any one (1) or more of the following, may be awarded a maximum of one hundred (100) points: (7-1-26)
i. Unresolved violations of the primary drinking water standards including maximum contaminant levels, action levels, and treatment techniques (to include maximum contaminant levels for acute and chronic contaminants); (7-1-26)
ii. Unresolved violations of pressure requirements; (7-1-26)
iii. Reduction in source capacity that impacts the system's ability to reliably serve water; (7-1-26)
iv. Significant deficiencies (e.g., documented in a sanitary survey) in the physical system that are causing the system to not reliably serve safe drinking water; or (7-1-26)
v. Unregulated contaminants shown by EPA to be a risk to public health. (7-1-26)
b. General Conditions of Existing Facilities. Points will be given based on deficiencies, which may not constitute a public health hazard, for pumping, treating, and delivering drinking water - up to sixty (60) points. (7-1-26)
c. Sustainability efforts (e.g., prospective efforts at energy conservation, water conservation, extending the life of capital assets, green building practices, and other environmentally innovative approaches to infrastructure repair, replacement and improvement) - up to fifty (50) points. (7-1-26)
d. Regulatory compliance issues (e.g., noncompliance and resulting legal actions relating to infrastructure deficiencies of drinking water system) - up to thirty (30) points. (7-1-26)
e. Incentives. Bonus points will be awarded to systems including such things as source water protection, economy, proper operation and maintenance, and monitoring - up to ten (10) points. (7-1-26)
f. Affordability. Systems that meet the state affordability criteria and are defined as a disadvantaged community - up to fifty (50) points. (7-1-26)
03. Priority Rating for Wastewater Systems. The priority rating system will be based on a numerical
point system. Priority criteria will contain the following points: (7-1-26)
a. Regulatory compliance issues (e.g., noncompliance and resulting legal actions relating to infrastructure deficiencies of a wastewater system) - up to one hundred (100) points. (7-1-26)
b. Watershed restoration (e.g., implementation of best management practices or initiation of construction at wastewater collection and treatment facilities as part of an approved total maximum daily load plan, implementation of nonpoint source management actions in protection of a threatened water, or is part of a special water quality effort) - up to one hundred (100) points. (7-1-26)
c. Watershed protection from impacts (e.g., improvement of beneficial use(s) in a given water body, evidence of community support, or recognition of the special status of the affected water body) - up to one hundred (100) points. (7-1-26)
d. Preventing impacts to uses (nonpoint source pollution projects) - up to one hundred (100) points. (7-1-26)
e. Sustainability efforts (e.g., prospective efforts at energy conservation, water conservation, extending the life of capital assets, green building practices, and other environmentally innovative approaches to infrastructure repair, replacement and improvement) - up to fifty (50) points. (7-1-26)
f. Affordability. Systems that meet the state affordability criteria and are defined as a disadvantaged community – up to fifty (50) points. (7-1-26)
04. Priority List. A list will be developed from projects rated according to Section 020, submitted for public review and comment, and submitted to the Board for approval. (7-1-26)
a. Whenever significant changes occur, which in the Department’s judgment may affect the design parameters or treatment requirements by either increasing or decreasing the need for or scope of any project, a reevaluation of that priority rating will be conducted. (7-1-26)
b. A project that does not or will not meet the Department schedule that allows for timely utilization of loan funds may be bypassed, substituting in its place the next highest ranking project(s) that is ready to proceed. An eligible applicant that is bypassed will be notified in writing of the reasons for being bypassed. (7-1-26)
05. Amendment of a Priority List. The Director may amend a priority list as set forth in Section 995. (7-1-26)
The Department may award disadvantaged loans to applicants deemed a disadvantaged community using the following criteria: (7-1-26)
01. Disadvantaged Community. In order to qualify for a disadvantaged loan, A disadvantaged community may be designated by the Department as a Tier 1, Tier 2, or Tier 3 disadvantaged community if the following affordability criteria are met: (7-1-26)
a. Tier 1 disadvantaged community is considered disadvantaged if the community: (7-1-26)
i. Is at or below state median household income (MHI); or (7-1-26)
ii. Has an MHI equal to or less than one hundred twenty-five percent (125%) of the state MHI and the system meets one (1) of the following four (4) criteria: (7-1-26)
(1) Greater than the state poverty rate; (7-1-26)
(2) Greater than the state unemployment rate; (7-1-26)
(3) The population trend over the most recent five years shows a stagnant or decreasing trend; or (7-1-26)
(4) Annual user rate exceeds one and one-half percent of community’s MHI. (7-1-26)
b. Tier 2 disadvantaged community is considered disadvantaged if the criteria in Subsection 021.01.a. is met and the annual user rates, based on all operating, maintenance, replacement, and debt service costs (both for the existing system and for upgrades of proposed alternative) for either drinking water or wastewater services exceed two percent (2%) of the applicant community’s MHI. (7-1-26)
c. Tier 3 disadvantaged community is considered disadvantaged if the criteria in Subsections 021.01.a. and 021.01.b. are met and the MHI of the applicant’s community is less than eight tenths (0.8) the current statewide MHI. (7-1-26)
d. Special conditions and adjustments may include the following. (7-1-26)
i. If the applicant’s service area is not within the boundaries of a municipality, or if the applicant’s service area’s MHI is not consistent with the municipality as a whole, the applicant may use the census data for the county or the most representative area in which it is located or may use a representative survey, conducted by a Department approved, objective third party, to verify the MHI of the applicant’s service area. (7-1-26)
ii. The affordability criteria may be adjusted by the Department on a case-by-case basis if there is a demonstration of special conditions and if approved by the Board as part of the Intended Use Plan. (7-1-26)
02. Disadvantage Loans. The Department will prioritize loan modifications to Tier 3 disadvantaged communities, then Tier 2 and Tier 1 disadvantaged communities such that the loan modifications do not result in user rates below two percent (2%) of the MHI. (7-1-26)
a. A disadvantaged loan may be a thirty (30) year loan unless the design life of the project is documented to be less than thirty (30) years. For wastewater loan funding, the length of the repayment period is set at the loan recipient’s discretion, up to the maximum repayment period of thirty (30) years. (7-1-26)
b. The interest rate may be reduced from the rate established by the Department to a rate that results in an annual user rate equal to two percent (2%) of the MHI. If the annual user rate still exceeds two percent (2%) of the MHI with the rate reduction, then the community may be provided with principal forgiveness. (7-1-26)
c. Principal forgiveness will be allocated proportionally among prioritized disadvantaged communities in the Intended Use Plan. The principal forgiveness may be revised from the initial estimates in the Intended Use Plan based upon review of the total indebtedness. (7-1-26)
d. The Department may make adjustments to the disadvantaged loan terms on a case-by-case basis if special conditions exist and are outlined in the Intended Use Plan for Board approval. (7-1-26)
In conjunction with loans, the Department may award supplemental grants as determined by Director and Board approval. (7-1-26)
Loan funds awarded under this program may be used to prepare a facility planning document which identifies the cost effective and environmentally sound alternative to achieve or maintain compliance with IDAPA 58.01.08, “Idaho Rules for Public Drinking Water Systems,” the Safe Drinking Water Act, 42 U.S.C., Sections 300j et seq., IDAPA 58.01.16, “Wastewater Rules,” and the Clean Water Act, 33 U.S.C. Sections 1381 et seq., and which is approvable by the Department. Loan funds may also be used for design and construction of the chosen alternative and project specific efforts committed to in the Letter of Interest submitted for the project. (7-1-26)
01. Nonpoint Source Implementation Funding. Eligible nonpoint source water pollution control projects may be funded when all of the following criteria are met: (3-24-22)
02. Facility Funding. (7-1-26)
d. Funding for reserve capacity of a wastewater treatment facility will not exceed a twenty (20) year population growth and funding for reserve capacity of a wastewater collection system will not exceed a forty (40) year population growth as determined by the Department. (7-1-26)
e. Funding for reserve capacity of a drinking water system will not exceed a twenty (20) year population growth, except that distribution and transmission lines which may be planned for a forty (40) year useful life. (7-1-26)
03. Professional Services. The engineering firm selected must meet the following qualifications at a minimum: (7-1-26)
a. Be a registered professional engineer currently licensed by the Idaho Board of Professional Engineers and Land Surveyors; (7-1-26)
b. Not be debarred or otherwise prevented from providing services under another federal or state financial assistance program; and (7-1-26)
c. Be covered by professional liability insurance in accordance with Section 050. (7-1-26)
Preloan engineering documents prepared by consulting engineers will be reviewed by Department staff only when the consulting engineer carries professional liability insurance in accordance with Section 050. (7-1-26)
01. Loan Fee. The Department may elect to impose a loan fee when necessary to offset the costs of administering the loan program, to provide planning assistance, or to otherwise facilitate the operation of the loan efforts. The loan fee will not exceed one percent (1%) of the unpaid balance of the loan at the time each loan payment is due. (7-1-26)
02. Effect on Loan Interest Rate. The loan interest rate, as described in Section 050, will be reduced by the corresponding percentage of the loan fee. (3-24-22)
03. Payment of Loan Fee. The loan fee will be due and payable concurrently with scheduled loan principal and interest repayments over the repayment period. (7-1-26)
01. Submission of Application. Those eligible systems that received high priority ranking and are ready to proceed will be invited to apply. The applicant must submit to the Department, a completed application on a form as prescribed by the Department. (7-1-26)
02. Application. Applications must contain the following documentation, as applicable: (7-1-26)
a. The construction funding application and all the accompanying documentation requested. This information may include, but is not limited to, financial control policy, managerial policies, financial statements, annual operating costs, and information regarding the financing, including the legal debt limit of the applicant, and the existence and amount of any outstanding bonds or other funding which may affect the project; (7-1-26)
b. If applicable, a resolution passed by the governing body authorizing an elected official or officer of the applicant to execute a loan contract and sign subsequent loan disbursement requests; (7-1-26)
c. Contracts for engineering or other technical services and the description of costs and tasks set forth therein must be in sufficient detail for the Department to determine whether the costs associated with the tasks are
eligible costs pursuant to Section 041; (7-1-26)
d. A description of other costs, not included in the contracts for engineering or other technical services, for which the applicant seeks funding. The description of the costs and tasks for such costs must be in sufficient detail for the Department to determine whether the costs are eligible costs pursuant to Section 041; (3-24-22)
e. A demonstration that the obligation to pay the costs for which funding is requested is the result or will be the result of the applicant’s compliance with applicable requirements for competitive bidding for construction and professional service contracts, including without limitation, the provisions in Sections 67-2801 et seq., 67-2320, and 42-3212, Idaho Code; (7-1-26)
f. Intermunicipal service agreements between all entities within the scope of the project, if applicable; (3-24-22)
g. Documented evidence of all necessary easements and land acquisition, if applicable; (7-1-26)
h. Nonpoint source implementation funding; (7-1-26)
i. Information demonstrating that the project is consistent with and implements the Idaho Nonpoint Source Management Plan; (3-24-22)
ii. Data that substantiates a nonpoint source pollution problem or issue exists, and how it will be addressed by the project; (7-1-26)
iii. A project implementation plan or workplan; (3-24-22)
iv. Project commitment documentation that demonstrates the ability for loan repayment; (3-24-22)
v. Documentation that the project owner, manager or sponsoring agency will maintain the project for the life of the project; (3-24-22)
vi. A demonstration that there will be adequate tracking and evaluation of the effectiveness of the water quality improvements being funded by either the project owner/manager or the sponsoring agency throughout the life of the project; and (3-24-22)
vii. A description of the nexus/benefit to a municipality and a letter of support from one (1) or more affected municipalities, if applicable. (7-1-26)
03. Determination of Completeness of Application. The Department will review the application to determine whether it includes all of the information listed in Section 040. (7-1-26)
04. Notification of Incompleteness of Application. Notification if an application is incomplete, including an explanation of missing documentation will be sent to the applicant. The applicant may provide the missing documentation. (7-1-26)
05. Reapplication for Loan. The action of disapproving, recalling or terminating a loan in no way precludes or limits an applicant from reapplying for another loan when the project deficiencies are resolved and project readiness is secured. (7-1-26)
The Department will review the application, including necessary contracts to be submitted with the application, to determine whether the costs are eligible costs for funding. (7-1-26)
01. Eligible Costs. Eligible costs are those determined by the Department to be: (3-24-22)
a. Necessary; (7-1-26)
b. Reasonable; and (7-1-26)
c. Are not ineligible as described in Section 041. (7-1-26)
02. Necessary Costs. The Department will determine whether costs are necessary by comparing the tasks for which the costs will be incurred to the scope of the project as described in the planning documents, the project implementation plan or work plan for nonpoint source projects, and any other relevant information in the application that describes the scope of the project to be funded. (7-1-26)
03. Reasonable Costs. Costs will be determined by the Department to be reasonable if the obligation to pay the costs is the result of or will be the result of the applicant’s compliance with applicable requirements for competitive bidding for construction and professional service contracts, including without limitation, the provisions in Sections 67-2801 et seq., 67-2320, 59-1026, and 42-3212, Idaho Code. (7-1-26)
04. Examples of Costs That May Be Eligible. Examples of costs that may be eligible, if determined necessary and reasonable: (7-1-26)
a. Costs of salaries, benefits, and expendable material the applicant incurs in the project except ordinary operating expenses of local government, such as salaries and expenses of mayors, city council members, attorneys, commissioners, board members, or managers; (3-24-22)
b. Costs under construction contracts bid and executed in compliance with state public works construction laws; (3-24-22)
c. Professional and consulting services utilizing a lump sum contract, a negotiated hourly rate contract, a time and materials contract, or cost plus a fixed fee contract; (3-24-22)
d. Planning directly related to the projects; (3-24-22)
e. System evaluations; (3-24-22)
f. Financial and management capability analysis; (3-24-22)
g. Preparation of construction drawings, specifications, estimates, and construction contract documents; (3-24-22)
h. Landscaping; (3-24-22)
i. Removal and relocation or replacement of utilities for which the applicant is legally obligated to pay; (3-24-22)
j. Material acquired, consumed, or expended specifically for the project; (3-24-22)
k. A reasonable inventory of laboratory chemicals and supplies necessary to initiate plant operations; (3-24-22)
l. Preparation of an operation and maintenance manual; (3-24-22)
m. Start-up services; (3-24-22)
n. Project identification signs; (3-24-22)
o. Public participation for alternative selection; (3-24-22)
p. Development of user charge and financial management systems; (3-24-22)
q. Development of sewer use or water system protection ordinance; (3-24-22) r. Staffing plans and budget development; (3-24-22) s. Certain direct and other costs as determined eligible by the Department; (3-24-22) t. Costs of complying with the Clean Water Act as amended, 33 USC Section 1251 et seq. and the Safe Drinking Water Act (42 U.S.C. Section 300j et seq, loan requirements applied to specific projects; and (7-1-26) u. Site acquisition costs, including right of way, plant site, wastewater land application sites and sludge disposal areas. Land purchase must be from a willing seller. (7-1-26)
05. Ineligible Project Costs. Costs which are ineligible for funding include, but are not limited to: (3-24-22) a. Basin or area wide planning not directly related to the project; (3-24-22) b. Bonus payments not legally required for completion of construction before a contractual completion date; (3-24-22) c. Personal injury compensation or damages arising out of the project; (3-24-22) d. Fines or penalties due to violations of, or failure to comply with, federal, state, or local laws; (3-24-22) e. Costs outside the scope of the approved project; (3-24-22) f. Ordinary operating expenses of local government, such as salaries and expenses of mayors, city council members, attorneys, commissioners, board members, or managers; (3-24-22) g. Construction of privately owned wastewater systems; (7-1-26) h. Cost of land in excess of that needed for the proposed project; (3-24-22) i. Cost of refinancing existing indebtedness; (3-24-22) j. Engineering costs incurred without professional liability insurance; (3-24-22) k. Costs of condemnation; (3-24-22) l. Reserve funds; (7-1-26) m. All costs related to assessment, defense and settlement of disputes; and (7-1-26) n. Costs incurred prior to acceptance of the loan unless specifically approved in writing as eligible pre-award costs by the Department. (3-24-22)
06. Notification Regarding Ineligible Costs. Prior to providing a loan offer, the Department will notify the applicant if certain costs are not eligible for funding and the reasons for the Department's determination. The applicant may provide the Department with additional information in response to the notice. (7-1-26)
07. Eligible Costs and the Loan Offer. The loan offer will reflect those costs determined by the Department to be eligible costs. The loan offer, however, may include estimates of some eligible costs, such as construction costs. Actual eligible costs may differ from estimated costs set forth in the loan offer. In addition, loan disbursements may be increased or decreased if eligible costs are modified as provided in Section 060. (7-1-26)
042. ENVIRONMENTAL REVIEW.
01. Environmental Documentation. Guidance on how to complete an environmental review is found in the Handbook. For eligible projects, the loan recipient must complete an environmental review. Projects funded exclusively as nonpoint or estuary management projects may not be required to complete an environmental review. The loan recipient must consult with the Department at an early stage in the loan application process to determine the necessary level of environmental review. Based on review of existing information, and assessment of environmental impacts, the loan recipient must complete one (1) of the following per the Department's instruction: (7-1-26)
a. Categorical Exclusion (CE) with supporting backup documentation as specified by the Department; (7-1-26) b. Environmental Information Document (EID) in a format specified by the Department; or (7-1-26) c. Environmental Impact Statement (EIS) in a format specified by the Department. (7-1-26)
02. CE. The Department will take one (1) of the following actions: (7-1-26)
a. Determine if the action is consistent with categories eligible for exclusion whereupon the Department will issue a notice of CE from substantive environmental review. Once the CE is granted for the selected alternative(s), the Department will publish a notice of CE in a local newspaper in the geographical area of the proposed project to inform the public of this action, following which the planning document can be approved and the loan award can proceed; or (7-1-26)
b. Determine if the action is not consistent with categories eligible for exclusion and that issuance of a CE is not appropriate. If a CE is not issued, the Department will notify the loan recipient to prepare an EID. (3-24-22)
03. EID. When an EID is required, the loan recipient must prepare the EID in accordance with the following: (7-1-26)
a. Various laws and executive orders related to environmentally sensitive resources must be considered as the EID is prepared and appropriate state and federal agencies consulted regarding these laws and executive orders; (7-1-26)
b. A full range of relevant impacts, both direct and indirect, of the proposed project must be discussed in the EID, including measures to mitigate adverse impacts, cumulative impacts, and impacts that will cause irreversible or irretrievable commitment of resources; and (7-1-26)
c. The Department will review the draft EID and either request additional information about one (1) or more potential impacts or draft a "finding of no significant impact" (FONSI). (7-1-26)
04. FONSI. The Department will publish the draft FONSI in a local newspaper in the geographical area of the proposed project and will allow a minimum thirty (30) day public comment period. Following the required period of public review and comment, and after any public concerns about project impacts are addressed, the FONSI will become final. The Department will assess the effectiveness and feasibility of the mitigation measures identified in the FONSI and EID prior to the issuance of the final FONSI. (7-1-26)
05. EIS. If an EIS is required, the loan recipient must: (7-1-26)
a. Consult with all affected federal and state agencies, and other interested parties, to determine the required scope of the document; (3-24-22)
b. Prepare and submit a draft EIS to all interested agencies, and other interested parties, for review and comment; (3-24-22)
c. Conduct a public meeting which may be in conjunction with a planning document meeting; and (3-24-22)
d. Prepare and submit a final EIS incorporating all agency and public input for Department review and approval. (3-24-22)
06. Final EIS. Upon completion of the EIS by the loan recipient and approval by the Department of all requirements listed in Section 042, the Department will issue a record of decision, documenting the mitigation measures to be required of the loan recipient. The loan agreement can be completed once the final EIS has been approved by the Department. (3-24-22)
07. Partitioning the Environmental Review. Under certain circumstances, the building of a component/partition of a system may be justified in advance of all environmental review requirements for the remainder of the system. The Department will approve partitioning the environment review in accordance with established procedures. (7-1-26)
08. Use of Environmental Reviews Conducted by Other Agencies. If environmental review for the project has been conducted by another state, federal, or local agency, the Department may, at its discretion, issue its own determination by adopting the document and public participation process of the other agency. (3-24-22)
09. Validity of Review. Environmental reviews, once completed by the Department, are valid for five (5) years from the date of completion. If a loan application is received for a project with an environmental review which is more than five (5) years old, the Department will reevaluate the project, environmental conditions and public views and will: (3-24-22)
a. Reaffirm the earlier decision; or (3-24-22)
b. Request supplemental information to the earlier EIS, EID, or request for CE. Based upon a review of the updated document, the Department will issue and distribute a revised notice of CE, FONSI, or record of decision. (7-1-26)
10. Exemption From Review. Loan projects may be exempt from certain federal crosscutting authorities at the discretion of the Department as long as in any given year the annual amount of loans, equal to the most recent federal capitalization grant, complies with all of the federal crosscutting authorities. (3-24-22)
043. – 049. (RESERVED)
01. Loan Offer. Loan offers will be delivered to successful applicants by representatives of the Department. (7-1-26)
02. Acceptance of Loan Offer. Applicants have sixty (60) days in which to officially accept the loan offer on prescribed forms furnished by the Department. The sixty (60) day acceptance period commences from the date indicated on the loan offer notice. If the applicant does not accept the loan offer within the sixty (60) day period the loan funds may be offered to the next project of priority. (3-24-22)
03. Acceptance Executed as a Contract Agreement. Upon signature by the Director and upon signature by the authorized representative of the eligible applicant, the loan offer will become a contract. Upon accepting a loan offer, an eligible applicant becomes a loan recipient. The disbursement of funds pursuant to a loan contract is subject to a finding by the Director that the loan recipient has complied with all loan contract conditions and has prudently managed the project. The Director may, as a condition of disbursement, require that a loan recipient vigorously pursue any claims it has against third parties who will be paid in whole or in part, directly or indirectly, with loan funds. No third party may acquire any rights against the state or its employees from a loan contract. (7-1-26)
04. Estimate of Reasonable Cost. All loan contracts will include the eligible costs of the project. Some eligible costs may be estimated, and disbursements may be increased or decreased as provided in Section 060. (7-1-26)
05. Terms of Loan Offers. The loan offer will contain such terms as are prescribed by the Department including but not limited to: (7-1-26)
a. Terms consistent with these rules, the project to be funded under the loan offer, and Title 39, Chapter 36, Idaho Code; (7-1-26)
b. Special clauses as determined necessary by the Department for the successful investigation, design, construction and management of the project; (3-24-22)
c. Terms consistent with applicable state and federal laws pertaining to planning documents, design, and construction, including the Public Works Contractors License Act and the Public Contracts Bond Act, Chapter 19, Title 54, Idaho Code, and the federal Clean Water Act and Safe Drinking Water Act requirements for projects funded with loan moneys of federal origin; (3-24-22)
d. Requirement for the prime engineering firm(s) and their principals retained for engineering services to carry professional liability insurance to protect the public from the engineer’s negligent acts and errors and omissions of a professional nature. The total aggregate of the engineer’s professional liability insurance must be one hundred thousand dollars ($100,000) or twice the amount of the engineer’s fee, whichever is greater. Professional liability insurance must cover all such services rendered for all project phases, whether or not such services or phases are state funded, until the certification of project performance is accepted by the Department. The required professional liability insurance amount may be reduced if a written request is submitted for the Department’s review and approval demonstrating that the reduced coverage will adequately protect public funds and the project from financial risk associated with engineering errors or omissions. The request must include: (7-1-26)
i. A justification for reduced coverage; and (7-1-26)
ii. An alternative insurance or coverage mechanisms, if applicable, demonstrating other financial protections that provide an equivalent or greater level of coverage; (7-1-26)
e. The project must be bid, contracted, and constructed according to acceptable public works construction standards approved by the Department, which may include the current edition of Idaho Standards for Public Works Construction and the Handbook referenced in Section 004 or other acceptable public works construction standards; (7-1-26)
f. The loan interest rate for loans made during the state fiscal year beginning July 1 will be established by the Director. The interest rate will be a fixed rate in effect for the life of the loan. The rate may equal but not exceed the current market rate; (7-1-26)
g. The loan fee pursuant to Section 032; (3-24-22)
h. All loans must be fully amortized within a period not to exceed thirty (30) years after project completion. The loan contract will be appended with a schedule of loan repayments stating the due dates and the amount due upon project completion. The loan recipient may elect for either a schedule of semi-annual or annual repayments at the time the loan is finalized; and (3-24-22)
i. Repayment default will occur when a scheduled loan repayment is thirty (30) days past due. If default occurs, the Department may invoke all available remedies included but not limited to appropriate loan contract provisions and/or bond covenants. (7-1-26)
Loan recipients must maintain project accounts in accordance with generally accepted accounting principles. Projects may be audited on an annual basis according to government auditing standards issued by the U.S. Governmental Accountability Office. (3-24-22)
052. – 059. (RESERVED)
01. Loan Disbursements. Requests to the Department for actual disbursement of loan proceeds will be made by the loan recipient on forms provided by the Department. (3-24-22)
02. Loan Increases. An increase in the loan amount as a result of an increase in eligible project costs may be considered, provided funds are available. Documentation supporting the need for an increase must be submitted to the Department for approval prior to incurring any costs above the eligible cost ceiling. (7-1-26)
03. Loan Decreases. If the actual eligible cost is determined by the Department to be lower than the estimated eligible cost the loan amount may be reduced proportionately. (7-1-26)
04. Project Review to Determine Final Eligible Costs. A project review by the Department or a Department designee will determine the final eligible costs. (3-24-22)
05. Final Disbursement. The final loan disbursement consisting of five percent (5%) of the total loan amount will not be made until final inspection, final review, and a final loan repayment schedule have been completed. (7-1-26)
If two (2) or more loans are consolidated into one (1) loan, the interest rate for the consolidated loan will be at the same rate as the loan being consolidated with the lowest interest rate. (3-24-22)
01. Causes. The Director may suspend or terminate any loan contract prior to final disbursement for failure by the loan recipient or its agents, including engineering firm(s), contractor(s) or subcontractor(s) to perform. A loan contract may be suspended or terminated for good cause including, but not limited to, the following: (3-24-22)
a. Commission of fraud, embezzlement, theft, forgery, bribery, misrepresentation, conversion, malpractice, misconduct, malfeasance, misfeasance, falsification or unlawful destruction of records, or receipt of stolen property, or any form of tortious conduct; or (3-24-22)
b. Commission of any crime for which the maximum sentence includes the possibility of one (1) or more years’ imprisonment or any crime involving or affecting the project; or (3-24-22)
c. Violation(s) of any term of the loan contract; or (3-24-22)
d. Any willful or serious failure to perform within the scope of the project, and project schedule, terms of engineering subagreements, or contracts for construction; or (7-1-26)
e. Debarment of a contractor or subcontractor for good cause by any federal or state agency from working on public work projects funded by that agency. (3-24-22)
02. Notice. The Director will notify the loan recipient in writing and by certified mail of the intent to suspend or terminate the loan contract. The notice of intent will state: (7-1-26)
a. Specific acts or omissions which form the basis for suspension or termination; and (3-24-22)
b. That the loan recipient may be entitled to appeal the suspension or termination pursuant to Section 003. (7-1-26)
03. Reinstatement of Suspended Loan. Upon written request by the loan recipient with evidence that the cause(s) for suspension no longer exists, the Director may, if funds are available reinstate the loan contract. If a
suspended loan contract is not reinstated, the loan will be amortized and a repayment schedule prepared in accordance with provisions of the loan contract. (7-1-26)
04. Reinstatement of Terminated Loan. No terminated loan will be reinstated. Terminated loans will be amortized and a repayment schedule prepared in accordance with provisions of the loan contract. (7-1-26)
081. – 994. (RESERVED)
The Director may amend the priority list and grant a waiver from the provisions of these rules on a case-by-case basis upon full demonstration that the following conditions exist. (7-1-26)
01. Public Health Protection. The requirement is not necessary for the protection of public health and the environment and does not affect the priority ranking status of the project. (7-1-26)
02. Affordability Criteria Exceeded. The project will exceed affordability criteria adopted by the Department in the event the waiver is not granted. (3-24-22)
996. – 999. (RESERVED)