The Drinking Water State Revolving Fund (SRF) Program was established to provide low interest loans for drinking water projects. The amount of funds available is dependent upon the amount of appropriations from the U.S. Congress and the amount of repayments from funds previously loaned.
In order to be eligible for the Drinking Water SRF program, the applicant must be: 1) a governmental entity with the authority to generate revenues and to repay either a general obligation, revenue obligation, sales tax obligation, or combination of these bonds or 2) a non-profit corporation with the authority to generate revenues and repay a loan. The project must be on the State Water Plan prior to submitting the funding application.
The project/activity must be identified and included as a potential project in the Intended Use Plan (IUP). The IUP identifies potential drinking water projects. The list of potential projects incorporates a priority ranking system to comply with Project Priority List requirements as per federal regulations.
Applications must be postmarked or received on or before the first day of January, April, July, and October. The department will present applications to the board after the required technical review and financial analysis have been completed. The department will notify applicants of the date for the board meeting at which applications will be considered by the board.
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.
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Interest Rates and Terms
The current interest rates and terms are 2.25% for up to 10 years or 3.0% for 11-20 years. 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 of 3.25% for 21-30 years.
The board awards Drinking Water SRF loans by considering the following:
1) The availability of funds in the Drinking Water SRF program;
2) The applicant’s need;
3) Violation of health and safety standards; and
4) The applicant’s ability to repay.
Drinking Water SRF applications must include the entity’s 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.
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Green Project Reserve
Water and wastewater projects that address green infrastructure, water or energy efficiency improvements, or other environmentally innovative activities are being sought for funding from the State Revolving Fund (SRF) programs. These four categories of projects are collectively referred to as the Green Project Reserve or “green projects.”
Facilities Planning Process
A Drinking Water Facilities Plan must be prepared and submitted as part of the Drinking Water SRF application. The facilities plan documents the studies and plans required of treatment works under the Safe Drinking Water Act. Drinking Water SRF staff review the facilities plan and prepare an environmental review document. The public and several review agencies are involved in the facilities plan process, making this process time-consuming for the applicant and the department.
Facilities planning investigates the need for proposed facilities through a systematic evaluation of alternatives that are feasible in light of the unique demographic, topographic, hydrologic, and institutional characteristics of the area; and demonstrates that the selected alternative is cost effective.
A facilities plan must describe both the proposed treatment works and the complete water distribution system of which it is a part.
A facilities plan must also include adequate information to complete an environmental review.
The agencies listed in the facilities plan document must be given the opportunity to review and comment on the proposed project. After these items are addressed, the department will issue an environmental review to the applicant to publish in a local newspaper. The Board of Water and Natural Resources will consider a loan application after the publication of the environmental review.
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.
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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 included in the application. The completed capacity assessment must be included as part of the application.
Applicants requesting assistance for new public water systems must also complete a capacity assessment worksheet. For more information on the new system assessments, see page 21 of the capacity assessment.
Bond counsel must be retained when the application is submitted to the department. Bond counsel will prepare the provided loan documents for the applicant, as well as the necessary resolutions and ordinances including the resolution for the board to approve the loan. An opinion will be issued by bond counsel on the applicant's ability to incur the Drinking Water SRF debt.
Legal counsel must be retained when the application is submitted to the department. Legal counsel will prepare the provided loan documents for the applicant, as well as the necessary resolutions and ordinances including the resolution for the board to approve the loan. An opinion will be issued by legal counsel on the applicant's ability to incur the Drinking Water SRF debt.
Rules and Regulations
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. The document related to median household income is referenced in the rules. 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
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