Drinking Water Project Funding
The Department of Environment and Natural Resources is committed to improving and maintaining the drinking water infrastructure throughout the state. Grants and low-interest loans offered through the Board of Water and Natural Resources are available for these purposes.
Funding for drinking water projects is provided through the Drinking Water State Revolving Fund program and the Consolidated Water Facilities Construction Program. Applicants should expect to receive some portion of funding as a loan from the Drinking Water SRF program. As a result, applicants must satisfy all requirements associated with the Drinking Water SRF program.
Top of page
State Water Plan
Drinking Water projects requesting funding must be on the State Water Plan. State Water Plan applications must be postmarked or received at the Department of Environment and Natural Resources on or before the first day of October. Applications for amendment onto the State Water Facilities Plan are considered on a quarterly basis and must be postmarked or received by the department on or before the first day of February, May and August. A preliminary engineering report or facilities plan must accompany the application.
Large costly water projects that are seeking significant state cost share participation must be identified on the State Water Resources Management System portion of the State Water Plan. Often these projects require significant federal financing and may require federal authorization. These projects normally require several years to be completed. Projects are placed onto the State Water Resources Management System by the Legislature and the Governor based on recommendations made by the Board of Water and Natural Resources. Projects that have been placed on the State Water Resources Management System remain on the list until removed by the Legislature.
Small Community Planning Grants
Communities of 2,500 or less can receive a Small Community Planning Grant to assist in the preparation of a preliminary engineering report or facilities plans. Small Community Planning Grant applications can be submitted at any time.
Top of page
In order to be eligible for drinking water funding, a project must:
1) Be included on the State Water Facilities Plan prior to the application deadline; and
2) Be sponsored by one of the following entities: a special purpose district that has the authority to construct a water resources project; a state agency or general purpose government such as a municipality, county, or township; a federally recognized Indian tribe; or a nonprofit corporation.
Very Small System Compliance Grant
Water systems with 50 or less connections and not-for-profit, non-transient non-community water systems can receive a Very Small System Compliance Grant to assit water systems that are in violation of the Safe Drinking Water Act, excluding the Total Coliform Rule, to achieve compliance. Very Small System Compliance Grant applications can be submitted at any time.
A capacity review or sanitary survey should be completed by the Drinking Water Program prior to submission of the grant application in order to identify and support the need of the project.
Examples of eligible projects may include, but are not limited to:
- Installation or rehabilitation of a well in order to meet current or future Safe Drinking Water Act requirements, excluding the Total Coliform Rule.
- Compliance issues that are not solely related to capacity.
- Systems that have a significant deficiency or existing violations, or non-compliance and deficiency not corrected within said amount of time.
- Significant deficiency for ancillary equipment.
- Pilot studies related to equipment and new system installations.
Application Deadlines and Award Dates
Drinking water project applications are considered on a quarterly basis and must be postmarked or received by the department on or before the first day of January, April, July, and October. The department will notify applicants of the date for the board meeting at which applications will be considered by the board. Board meeting dates are public noticed and available on the DENR website.
Top of page
Additional Subsidy – Grants and Principal Forgiveness
Applicants that meet the minimum established residential water rates may receive a grant or loan principal forgiveness. Adoption of minimum monthly utility rates provides no guarantee of an applicant receiving additional subsidy.
The minimum monthly residential water rates necessary for an applicant to be eligible for additional subsidy are $30 based on 5,000 gallons usage for municipalities and sanitary districts and $55 based on 7,000 gallons usage for all other applicants
Grant assistance may be awarded to applicants not meeting the minimum established rates for economic development opportunities, expansion into new areas, regionalization or consolidation of facilities, or other unique situations that may require special consideration.
The minimum rates are established in sections Administrative Rules of South Dakota 74:05:07:01(12) and 74:05:11:01(21).
Interest Rates and Terms
The board sets interest rates for the program and makes adjustments to the rates on an as-needed basis. By Administrative Rule, it is required that to amend the interest rates they must be included as part of the posted board meeting agenda. Borrowers meeting the criteria of a disadvantaged community may be eligible for reduced interest rates and a term up to 30 years. Municipalities, intermunicipal and interstate agencies may be eligibile for extended term financing for 21-30 years.
Top of page
Drinking Water SRF Program Requirements
Financial Statements/Annual Reports - the applicant must submit the most recent audited financial statements or unaudited annual reports. This financial information must include a detailed break-down of the revenue fund pledged toward repayment of the loan.
Capacity Assessments - the Safe Drinking Water Act prohibits the department from loaning funds to water systems that do not have the technical, managerial, and financial capacity to operate the system, unless the intended project will address the capacity deficiency. Applicants with an existing public water system are required to complete the capacity assessment worksheets. The completed capacity assessment must be included as part of the application.
Bond/Legal Counsel – political subdivisions must retain bond counsel and non-profit entities must retain legal counsel when the application is submitted to the department. Bond counsel and legal counsel will prepare the loan documents for the applicant and all necessary resolutions and ordinances. An opinion will be issued by bond counsel or legal counsel on the applicant's ability to incur Drinking Water SRF debt.
Facilities Planning Process - A Drinking Water Facilities Plan must be prepared and submitted as part of the Drinking Water SRF application. This is an engineering evaluation that describes the need for the proposed supply, treatment, storage, or distribution project based on present conditions and future needs; evaluates the costs and adequacies of appropriate alternatives; identifies potential environmental impacts of the proposed project; and provides the selection and justification of a final alternative;
Top of page
Several state and federal agencies mustbe giventhe opportunity to review and comment on the proposed project. These agencies are SD Game, Fish and Parks, USFish and Wildlife Service, USDA Natural Resources Conservation Service, US Army Corps of Engineers, SD State HistoricPreservation Office.
The facilities planning process requires a public hearing. A "Notice of Public Hearing" should be published at least 10 days prior to the hearing. The publication shall include a description of the project, the amount of SRF loan to be borrowed, and the interest rate and term of the loan. Minutes must be kept at the public hearing and should include a summary of any comments received on the proposed project. A copy of the affidavit of publication and meeting minutes must be submitted as part of the final Facilities Plan.
Funding for Drinking Projects of $250,000 or Less
Drinking water projects with a total cost of $250,000 or less may apply using the Small Water Facilities Funding application. These applicants are not subject to the Drinking Water SRF program requirements.
Funding for Drinking Projects That are Not Eligible for Drinking Water SRF Loan
Drinking water projects that are not eligible for a Drinking Water SRF loan may also apply using the Small Water Facilities Funding application. Common examples of projects not eligible for a Drinking Water SRF loan are new water systems, projects intended primarily for fire protection or future growth, and projects that provide water for industrial applications.
Top of page
Rules and Regulations
Rules concerning the Consolidated Water Facilities Construction Program may be found in the Administrative Rules of South Dakota 74:05:07. Rules and regulations concerning the Drinking Water SRF Program may be found in the Administrative Rules of South Dakota 74:05:11 and the federal Safe Drinking Water Act. For copies of these rules or the Act, you may contact:
Department of Environment and Natural Resources
Division of Financial and Technical Assistance
Joe Foss Building
523 East Capitol
Pierre, South Dakota 57501
Phone: (605) 773-4216
Fax: (605) 773-4068
Email: Mike Perkovich
Top of page