4>EPA
United States
Environmental Protection
Agency
Office of Water
(4606)
EPA 816-R-00-004
July 2000
The Drinking Water State
Revolving Fund Program
Case Studies in Implementation
II. Capacity Assessment
Printed on Recycled Paper
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The 1996 SDWA Amendments establish a strong new emphasis on preventing
contamination problems through source water protection and enhanced water
system management. Capacity development is an essential component of the Act's
new preventative focus. Water system capacity is the ability to plan for, achieve,
and maintain compliance with applicable drinking water standards. For a sys-
tem to have "capacity," adequate capability in three key areastechnical, mana-
gerial, and financialis necessary. The capacity assessment process for DWSRF
loan applicants provides a valuable opportunity for States to work with systems
to assure public health protection, compliance and financial viability.
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Contents
I. Introduction 1
II. State Summaries 3
Alaska 3
Arizona 5
Florida 7
Indiana 9
South Dakota 10
Vermont 13
III. Conclusion 15
Appendix A
Attachment 1: Alaska's Capacity Assessment Worksheet
Attachment 2: Alaska's SDWA Compliance Agreement
Attachment 3: Florida's Capital Financing Plan Worksheets
Attachment 4: South Dakota's Capacity Assessment Worksheet (Part I - Applicant)
Attachment 5: South Dakota's Capacity Assessment Worksheet (Part II - State)
Attachment 6: Vermont's Priority List Application/Letter of Intent
Attachment 7: Vermont's Staff Capacity Review Form and Standard Loan
Conditions
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I. Introduction
The 1996 Safe Drinking Water Act (SDWA)
Amendments authorized the Drinking Water
State Revolving Loan Fund (DWSRF)
Program, which provides states with funding to
address important drinking water projects that are
needed to ensure public health protection and
compliance with SDWA. In an effort to ensure that
funds are used wisely and efficiently, the Amend-
ments limit the assistance which states can provide
to drinking water systems that cannot comply with
the Act. Section 1452(a)(3)(A)(i) specifies that "no
assistance shall be provided to a public water
system that does not have the technical, managerial,
and financial capability to ensure compliance with
the requirements of this title." The section also
prohibits state assistance to any system "in signifi-
cant noncompliance with any requirement of a
national primary drinking water regulation or
variance (unless) the use of the assistance will
ensure compliance."
The SDWA Amendments also establish require-
ments for the owners and operators of drinking
water systems in the area of technical, managerial,
and financial capability (known collectively as
"capacity"). Under §1452(a)(3)(B), if a system
lacks capacity, its owner or operator must agree to
"undertake feasible and appropriate changes in
operations (including ownership, management,
accounting, rates, maintenance, consolidation,
alternative water supply, or other procedures) if the
state determines that the measures are necessary to
ensure that the system has the technical, managerial,
and financial capability to comply with the require-
ments of this title over the long term."
EPA's February 1997 Guidelines and April 1999
Draft Program Rules provide additional guidance
regarding these requirements. The Draft Program
Rules require each state to describe in its capitaliza-
tion grant application the process it will use to
assess the capacity of systems that seek assistance
to ensure their compliance with the SDWA. If a
state provides assistance to systems that lack
capacity, it must describe the process it will use to
ensure that each system makes the "feasible and
appropriate changes in operations" necessary for
long-term compliance with the Act. If a state
provides assistance to systems "in significant
noncompliance with any requirement of a national
primary drinking water regulation or variance," it
must describe the process it will use to ensure that
the systems return to compliance.
This document examines the programs that Alaska,
Arizona, Florida, Indiana, South Dakota, and
Vermont have developed to evaluate the capacity of
systems applying for Drinking Water State Revolv-
ing Fund (DWSRF1) assistance. It describes each
state's capacity evaluation process, including the
documentation that systems must supply and the
procedures the state follows to evaluate and docu-
ment capacity determinations. The descriptions of
projects in each state include examples of "feasible
and appropriate changes" required of systems that
lacked capacity prior to receiving loans and the
ramifications (where specified) of failing to make
those changes.
EPA is providing this information to generate ideas
among states for modifying capacity assessment
procedures. In selecting states for the report, the
Agency wished to summarize a practicable number
of state programs while maintaining a representative
cross-section of EPA's ten regions. The Agency
notes that there are numerous other state programs
that could have been featured in this report and
encourages readers to visit other states' websites
for additional examples of assessment tools.
Tor consistency, the acronym DWSRF is used through-
out the paper even though some states use another
acronym to refer to their program.
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II. State Summaries
Alaska
The Alaska Department of Environmental Conser-
vation (ADEC) administers the state's DWSRF
program. ADEC's Division of Facility Construction
and Operation performs the capacity assessment of
all loan applicants. Although the state is consider-
ing expanding assistance to privately owned sys-
tems, at this time, the state provides loans only to
municipal systems (18 AAC 76.210). ADEC used
an EPA-approved "decision tree" process to assess
system capacity from 1997 to 1999. To better meet
the administrative needs of the state, Alaska now
uses a worksheet-based assessment process to
evaluate capacity in DWSRF loan applicants. When
this report was prepared, the state had awarded two
loans using the new assessment process.
Capacity Evaluation Process
Alaska's DWSRF application process is described
in state regulations at 18 AAC 76.225 et. seq. The
regulations specify the documentation that must be
submitted by the system and the evaluation criteria
that the state uses to assess applicants' capacity.
Data Collection
Under 18 AAC 76.225, systems must submit:
1. A complete application.
2. A resolution adopted by the applicant's
governing body that authorizes the applica-
tion.
3. A description of the proposed project.
4. An analysis of the feasibility of the project
identifying necessary permits and the cost.
5. Documentation of dedicated source of repay-
ment revenue.
6. Certification of a separate account to receive
and administer state funds.
7. A financial capability assessment form dem-
onstrating the system's ability to repay the
loan and to operate and maintain the system
after completion of the project.
8. Certification that the system can legally incur
the debt.
9. Plans and specifications prepared by a regis-
tered engineer.
As listed under 18 AAC 76.240, the required
financial capability assessment form (item 7, above)
requires documentation of the following factors,
where applicable:
1. Certification of debt service requirements and
debt service coverage test.
2. The applicant's:
Ability to assess and collect revenues for
the project.
Debt repayment history.
Current and overall structure of debt
repayment.
Revenue bond credit rating.
Financial statements.
Financial history.
Recent levels of debt retirement, opera-
tions, or similar fund balances.
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Compliance with state and federal
environmental laws.
Levels of financial reserves and prospec-
tive judgments from litigation.
Adherence to past and current debt
resolutions.
Capital improvement plan and proposed
debt issuance program.
3. A utility rate feasibility study.
4. Any litigation or threatened litigation that may
affect the applicant's ability to repay.
5. The demand for the project.
6. Demographic and economic trends in the
proposed service area.
Along with the required submissions, the state
requires completion of a capacity assessment
worksheet. The worksheet is designed to educate
potential loan recipients about state and federal
capacity assessment requirements and to provide
information that the state will need to adequately
assess capacity and award loans. It is organized by
the three components of capacity and consists of a
series of questions with documentation require-
ments (e.g., financial records and feasibility studies)
to help reviewers determine capacity (see Appendix
A, Attachment 1).
To evaluate the technical capacity of loan appli-
cants, ADEC has developed questions concerning
existing facilities, existing water source, peak
pressure and demand, certified operators, and
compliance history. The questions considered in the
evaluation of financial capacity address total user
charge revenues and total system expenses, other
revenue sources, fairness and affordability of user
For More Information Contact:
Alaska Department of Environmental
Conservation
Kevin Colanado, phone (907) 269-7696
charges, cash budgeting, preparation and use of
annual and capital budgets, and periodic financial
audits. Questions concerning managerial qualifica-
tions and experience, organizational structure,
compliance history, training programs, preventative
maintenance programs, record-keeping, public
outreach, and system ownership are considered to
evaluate managerial capacity. Additional informa-
tion or documentation must be submitted as neces-
sary to fully answer the questions and assist the
state in the evaluation.
Capacity Evaluation
When a system has completed and submitted all of
the capacity evaluation materials required by rule
and in support of the capacity assessment
worksheet, ADEC begins the evaluation process.
Evaluations are conducted by staff engineers in the
Division of Facility Construction and Operation and
by representatives of the local government entity
applying for assistance. After reviewing all of the
materials, ADEC prepares a report in the same
format as the worksheet documenting its determina-
tions for each area of capacity.
The report also outlines the "feasible and appropri-
ate changes in operation" systems must make to
ensure that they will be able to comply with all
drinking water regulations as a result of the
DWSRF loan. Systems deemed to be significant
non-compilers (SNCs) also sign a Safe Drinking
Water Act Compliance Agreement, (see Appendix
A, Attachment 2). The agreement indicates the
actions the system must take to come into compli-
ance and sets a schedule for their completion.
ADEC has established 11 financial assistance
conditions under 18 AAC 76.245 to which all
assistance recipients must adhere. The conditions
are designed to ensure a fair process (e.g., docu-
mentation of a competitive bidding process for all
loans of $50,000 or more) and financial viability
and management capability over the long term (e.g.,
use of generally accepted accounting principles and
preparation and submission of an operation and
maintenance manual). To confirm compliance
ADEC can, "in its discretion, make site visits to
inspect construction progress and to determine
compliance with 18 AAC 76.200 - 18 AAC
76.265."
www.state.ak. us/dec/dfco/dec mlns.htm
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Project Descriptions
Two systems for which ADEC approved loans
lacked technical capacity, but the systems will
achieve compliance with the Surface Water Treat-
ment Rule (SWTR) as a result of the loans. Accord-
ing to ADEC's capacity assessment:
System A currently has disinfection treatment
facilities for three sources. At this time, two of
the three sources are unfiltered and only receive
chlorine disinfection treatment. Source 1 is of
lower quality than the other sources, and is
treated using the existing 3.5 mgd filtration sys-
tem at the water treatment plant. Source 1 is
expected to only be used as an emergency water
source to supplement the unfiltered water
sources. The plan process appears adequate to
meet the Surface Water Treatment Rule for ef-
fluent turbidity and Giardia removal; however,
the treatment plant will need to be evaluated to
ensure full compliance with the Surface Water
Treatment Rule before System A is allowed to
use Source 1 as a primary or secondary source.
System A is constructing the necessary contact
tanks, related upgrades, and disinfection facility
improvements to achieve compliance. When the
project is complete, it is anticipated that all primary
water sources will satisfy the SWTR by meeting
either the disinfection and filtration requirements or
by meeting all filtration avoidance criteria. ADEC
and System A have signed a Safe Drinking Water
Act Compliance Agreement.
System B also lacks the technical capacity to
comply with the SWTR. According to ADEC's
capacity evaluation:
System B does not meet all capacity require-
ments for their treatment facilities. System B
currently utilizes a surface source impoundment
with no filtration and has not pursued filtration
avoidance.... Gaseous Chlorination is currently
the only treatment that System B's water re-
ceives.
System B's proposed project will provide a new
water treatment facility consisting of ozonation
followed by slow sand filtration that will allow the
system to comply with current and future federal
and state drinking water regulations.
Arizona
The Arizona Water Infrastructure Finance Authority
(WIFA) administers the state's DWSRF. WIFA
coordinates with the Arizona Department of Envi-
ronmental Quality (ADEQ) and the Arizona Corpo-
ration Commission (ACC) in implementing the
program. The state provides assistance to publicly
and privately owned water systems.
Capacity Evaluation Process
Data Collection
To receive a loan, systems on the list must provide
evidence of capacity though the submission of the
following documentation:
Technical Capacity
A copy of each feasibility study, engineering
report, design memorandum, set of plans and
specifications, and other technical documenta-
tion related to the proposed project.
Copies of the resumes or biographies of, or
related information about, the certified opera-
tors, system employees, or contractors em-
ployed by the applicant to operate and main-
tain the existing facilities and the proposed
project.
A description of the service territory, includ-
ing maps.
A description of the existing physical facili-
ties.
Financial Capacity
A description of the system's dedicated
revenue source for repaying financial assis-
tance (including the amount of money col-
lected through the source for each of the
previous 5 fiscal years), an estimate of the
amount that will be collected for the current
fiscal year, and a projection of the amount that
will be collected for each of the next 5 fiscal
years.
An estimate of the project costs, including
planning, design, construction, annual opera-
tion, maintenance, and replacement costs.
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A copy of each financial statement, audit, or
comprehensive financial statement from the
previous 5 fiscal years.
A copy of each budget, business plan, manage-
ment plan, or financial plan from the previous
3 fiscal years and the current fiscal year.
A summary of current user fees for drinking
water or wastewater services, including any
resolutions passed by the governing body of a
political subdivision.
The most recent capital improvement plan or
other plan explaining proposed infrastructure
investments.
Copies of documentation relating to outstand-
ing indebtedness, including official state-
ments, financial assistance agreements, and
amortization schedules.
The number of connections to be served by the
proposed project.
Managerial and Institutional Capacity
Copies of resumes, biographies, years of
experience, terms of office, and related
information pertaining to the owners, manag-
ers, chief elected officials, and members of the
applicant's governing body.
A list of professional and outside services
retained by the applicant for the proposed
project.
Arizona also requires documentation of legal
capability. An applicant must provide information
showing that it is legally authorized to enter into
indebtedness. Privately owned systems must
demonstrate debt authorization from the ACC.
For More Information Contact:
Water Infrastructure Finance Authority
(Wl FA) of Arizona
Greg Swartz, phone (602) 230-9770
In addition to providing the above information, all
applicants must complete a WIFA Project Finance
Application. The application requests information
regarding budgets, project engineering reports,
feasibility studies, and capital improvement plans.
Local borrower information, demographic data,
detailed project information, and more detailed
financial information, such as audited financial
statements or annual reports, are also required.
Capacity Evaluation
System capacity is assessed after the project priority
list has been determined. The first step is comple-
tion of a "Due Diligence Review" by a team of
WIFA staff members and staff members from the
ADEQ, the ACC, and the Arizona Department of
Water Resources. A series of yes/no questions guide
the due diligence reviewer in analyzing applicants
for financial assistance. Negative answers (either
yes or no responses depending on the question
asked) require a narrative explanation. Each team
member reviews information submitted by the
system. Team members may interview systems
directly, if necessary, to obtain further information.
Due Diligence Reviews usually take only a few
days to complete.
Next, the Project Finance Committee (comprised of
a certified engineer and five members of WIFA's
Board of Directors) reviews all information submit-
ted by the system and obtained during the Due
Diligence Review. When the final review is com-
plete, the Committee may recommend "feasible and
appropriate changes," if necessary, and refer the
project/loan to the WIFA Board of Directors.
The Board, comprised of 12 members which
represent a variety of water system industry con-
stituents, ultimately reviews all loans. Following a
review of the project and system capability (includ-
ing past compliance with the SDWA and state rules
and regulations), the Board can approve the loan
and recommend modifications, or deny the loan.
Project Descriptions
System A provides water service through two
physically separate systems that need extensive
rehabilitation to satisfy an ADEQ Consent Order. A
loan for approximately $620,000 was requested to
construct a new well, pressure tank, and storage
tank for system A(l), a storage tank and booster
pump for system A(2), and to extensively rehabili-
tate and replace distribution system piping for both
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systems. Concerns about System A's financial
capacity were raised during the Due Diligence
Review. WIFA staff recommended limiting the loan
to $600,000 and prioritizing and phasing improve-
ments to ensure the system's ability to repay the
loan. Staff further recommended a Deed of Trust
and other security (i.e., life insurance) as available.
The WIFA Board approved a 20-year loan for
$600,000.
Florida
The Florida Department of Environmental Protec-
tion (DEP) administers the DWSRF for the state.
Two bureaus in DEP's Division of Water Facilities
share the responsibility of assessing capacity for the
purposes of awarding loans. The Bureau of Water
Facilities Regulation (BWFR), through its Public
Water System Supervision program (PWSS), is
primarily responsible for evaluating technical and
managerial capacity. The Bureau of Water Facilities
Funding (BWFF) focuses on financial capacity, but
also looks at the other elements of capacity through
operator certification, and the review of facility
plans and sanitary surveys. The state provides
assistance to publicly and privately owned water
systems.
Capacity Evaluation Process
Data Collection
Florida Administrative Code Chapter 62-552
requires applicants to submit:
Plans and Specifications.
A Water Facilities Plan.
A Request for Inclusion on the Priority List
for Drinking Water Facilities.
A Loan Application.
Besides the submissions required by the rule, DEP
uses data from sanitary surveys to assess capacity.
DEP has developed a Drinking Water Manual which
contains checklists, worksheets, and application
forms. The manual serves as a guide for loan
applicants as they develop materials necessary for
the assessment of capacity, and for DEP staff in the
data collection process. The manual is available
online at: www.dep.state.fl.us/water/wff/pubs/
dwmanual/toc_pic.htm.
To assess water system capacity, DEP primarily
relies on information in the water facilities plan
(including the capital financing plans) and in the
sanitary survey results of systems. The information
discussed below, gathered from these sources, is
used for the assessment.
Technical Capacity
A detailed description of the current system
and the proposed project, including maps of
the planning area.
The system's expectations about meeting
federal and state drinking water regulations
and future water demand.
A discussion of alternatives investigated.
Documentation of operator certification.
A description of the source and an evaluation
of how susceptible it is to contamination.
Storage capacity, treatment type, and mainte-
nance schedules and procedures.
Documentation of system compliance history.
Financial Capacity
Other revenue sources (if applicable).
Cash budgeting.
Water system rate setting frequency.
Actual/projected revenues and debt coverage.
Information on median household income,
size, etc. of population served.
Total annual project costs for a 5-year period.
Existing and anticipated debt for a 5-year
period.
Projected annual operations, maintenance, and
replacement costs; debt service and other
expenses of the utility (providing DWSRF
dedicated revenues) for existing facilities;
DWSRF proposed project(s); non-DWSRF
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proposed projects (if any); and the sum of all
existing and planned facilities.
Projected annual operating, non-operating, and
other utility revenues, assuming all planned
projects are constructed according to reported
schedule.
Explanation of how any net loss will be
covered to keep the utility financially self-
sufficient for the next several fiscal years.
Average water system charges, fees, and
assessments.
Information on prior and parity liens.
Loan repayment reserve requirements.
Certification by the project sponsor's chief
financial officer or by an authorized official
that the project sponsor has the financial
capability to ensure adequate construction,
operation, and maintenance of the water
system.
Managerial Capacity
Identification of the system owners and
manager.
Description of the system's organizational
structure.
Demonstration of a reliable chain of decision
makers in the operation of the facility.
Documentation of written policy guidances.
Compliance history.
For More Information Contact:
Florida Department of Environmental
Protection, Division of Water Facilities
Tim Banks, phone (850) 488-8163
www.dep.state.fl.us/water/wff/dwsrf/
default.htm
Emergency preparedness plan.
Copies of contracts or agreements that provide
auxiliary power or backup water to or from the
system.
Sampling plans.
Capacity Evaluation1
Technical Capacity
Technical capacity is evaluated jointly by the PWSS
program (BWFR) and the BWFF Operator Certifi-
cation program. The PWSS program assesses
technical capacity based on data from sanitary
surveys and water facilities plans. The Operator
Certification program ensures that the individuals
employed to operate the system are properly
licensed and have demonstrated the knowledge and
abilities necessary, based on the system's unique
characteristics, to properly operate the system.
Staffing requirements for the system are monitored
through reviews of monthly operating reports and
periodic inspections by the district office respon-
sible.
Financial Capacity
BWFF is primarily responsible for the financial
capacity review. A system's financial capacity is
evaluated through the Capital Financing Plan (see
Appendix A, Attachment 3) and the loan applica-
tion.
Managerial Capacity
The PWSS program uses sanitary surveys to
determine managerial capacity. Capacity is evalu-
ated through plant records (including monthly
operating reports), chemical reports, and staffing
levels. Adequacy of record keeping, the use of
written policy guidances, and the system's compli-
ance history are also considered. The Water Facili-
ties Plan is reviewed for documentation of organiza-
tional structure, operator certification, and a demon-
strated chain of decision makers.
Project Descriptions
System A is a good example of a small water
system that will meet capacity requirements as a
result of a loan. The system came to DEP's atten-
tion because of a series of monitoring and reporting
'DEP is currently working on a more formalized means
of assessment such as evaluation worksheets.
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(M&R) violations. The system was poorly main-
tained and had serious problems with the reverse
osmosis units that were treating its wells. DEP
found the system to lack technical and managerial
capacity. Financial capacity was also a concern, but
it was determined that the system would be finan-
cially solvent after a rate increase. System A was
issued a consent order which required the system to
physically interconnect with another system. The
consent order also required a state-appointed
receiver. The loan will be used to pay for such
construction costs as piping to connect the systems.
The Grant/Loan Agreement requires the system to
implement recommended operational procedures
and conduct frequent inspections in conjunction
with sanitary surveys.
Indiana
Indiana's DWSRF program is managed jointly by
the Indiana Department of Environmental Manage-
ment (IDEM) and the State Budget Agency. Their
respective authorities are outlined in state statutes
and further described in a Memorandum of Under-
standing (MOU) between IDEM and the Budget
Agency. IDEM evaluates technical and managerial
capabilities. It has the authority to deny funding to
applicants on the project priority list (PPL) that do
not or cannot demonstrate technical and managerial
capacity. The State Budget Agency determines the
financial capacity of each political subdivision or
water system (private or not-for-profit) and can
deny funding to applicants that do not or cannot
demonstrate financial capacity. The Budget Agency
also prepares and executes each Financial Assis-
tance Agreement (1C 13-18-21 -6).
Capacity Evaluation Process
Data Collection
To assess the capacity of eligible systems, Indiana
relies primarily on the information in the Loan
Application, Due Diligence Form, and Preliminary
Engineering Report.
To be placed on the PPL, a public water system
must complete a loan application. Indiana's loan
application contains two yes/no questions that
address capacity: (1) Does your system currently
possess capacity? and (2) If not, will capacity be
achieved after implementation of your community's
DWSRF project? If the system responds no to either
question, and the financial assistance requested
through the DWSRF will not directly provide the
resources to meet the capacity criteria, the system
must submit a plan which describes the steps it will
take to ensure adequate capacity (Draft FY 1999
IUP). In establishing the PPL, IDEM relies on the
community's self-assertion on the loan application
that no deficiencies exist.
For each project on the PPL, the applicant must
complete a comprehensive due diligence form (327
LAC 14- 6-1). The due diligence process "provides
financial disclosures advising the state of economic
matters related to the political subdivision and their
ability to repay the loan" (327 LAC 14-2-10). The
questions on the form range from general inquiries
about the size and type of system to detailed ques-
tions concerning customer base and outstanding
debt through 2025.
Applicants are also required to prepare a prelimi-
nary engineering report for each project on the PPL.
The report must summarize the project, discuss
possible alternatives to the project, provide environ-
mental information, and describe the public partici-
pation process and the required public hearing (327
LAC 14-7-1). The report provides much of the
technical and managerial information used to assess
capacity.
A preliminary design summary will be added as a
component of the DWSRF loan application. This
summary will contain a detailed description of
system components (i.e., treatment plant and water
mains) including the quantities and associated sizes/
capacities being proposed for SRF funding.
Capacity Evaluation
The first step in the evaluation of a system's capac-
ity is a meeting to discuss the development of the
preliminary engineering report and inform the
For More Information Contact:
Indiana Department of Environmental
Management (IDEM), Office of Water
Management
Larry Lazard, phone (317) 233-5962
www.state.in.us/idem/owm/planbr/dwsrf/
geninfo.html
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applicant of the items that it must include. At least
one representative of the community and one
representative of the engineering firm that is going
to construct the project must attend the meeting.
Once the preliminary engineering report is submit-
ted, IDEM begins its review and assessment of the
loan application and supporting documentation.
Technical Capacity
To assess technical capacity, licensed professional
engineers on staff evaluate all of the project's
engineering-related components. First, they check
for a valid construction permit. If a permit is in
place, IDEM next reviews:
The preliminary engineering report.
The system's ability to meet quantity require-
ments.
The results of bacteriological and chemical
sampling.
Compliance with the wellhead protection rule
(for ground water systems).
The results of sanitary surveys to assess the
adequacy of the infrastructure and the condi-
tion of the system and its components.
Documentation of a designated certified
operator in responsible charge for all systems
serving more than 100 persons.2
Financial Capacity
Financial capacity is assessed by the Budget
Agency staff, primarily through a review of the
system's due diligence form. Reviewers search for
evidence of a dedicated source of repayment and
the ability of the system to repay each loan accord-
ing to its terms and conditions.
Managerial Capacity
As with technical capacity, IDEM reviews the
preliminary engineering report to assess a system's
managerial capacity. In addition, it is recommended
that the system owner be identified and that the
membership of the utility board be described (e.g.,
are positions paid or voluntary, are members elected
2Note that this requirement may change once Indiana
finalizes its rules for operator certification.
or appointed, etc.). Systems are also encouraged to
submit a chart that shows the hierarchy of staff
positions and a summary of the training plan that is
being implemented for staff at all levels of certifica-
tion. In its assessment of managerial capacity,
IDEM will look for demonstrated interactions with
external entities (e.g., membership in professional
trade associations, interaction with the community
through public meetings, etc.).
At the time this report was written, Indiana had not
denied a loan to any system because of deficiencies
in technical, financial, or managerial capacity and
only the standard terms and conditions in the state's
Financial Assistance Agreement had been applied.
South Dakota
The South Dakota Department of Environment and
Natural Resources (DENR) administers the
DWSRF program for the state through the Board of
Water and Natural Resources. Its administration
includes capacity assessments of systems applying
for loans. The evaluation process involves several
DENR offices including the Drinking Water Pro-
gram and the Water and Waste Funding Program.
Drinking Water Program staff are primarily respon-
sible for the assessment of capacity. Water and
Waste Funding Program staff also conduct technical
and financial reviews of water systems. After the
capacity review is complete, DENR representatives
present project and funding recommendations to the
Board for final approval. The state provides
assistance to publicly and non-profit privately
owned water systems.
For the purposes of its program, DENR defines the
elements of capacity as follows:
Technical Capacity: The physical infrastructure
of the water system, including but not limited to
the source water adequacy, infrastructure ad-
equacy, and technical knowledge. Does the treat-
ment system work the way it is supposed to? Is
the system providing the safest and cleanest wa-
ter possible and required by law to customers
right now, and will it be able to in the future?
Financial Capacity: The financial resources of
the water system, including but not limited to
revenue sufficiency, credit worthiness, and fis-
cal controls. Basically, does the system have a
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budget and enough revenue coming in to cover
costs, repairs, and replacements?
Managerial Capacity: The management struc-
ture of the system, including but not limited to
ownership accountability, staffing and organi-
zation, and effective linkages. In simpler terms,
does the system have a capable and trained staff?
Does it have an effective management structure?
Capacity Evaluation Process
Data Collection
Both the system and DENR provide information to
evaluate the capacity of a system applying for a
loan. Systems must complete an application form
and Part I of the Capacity Assessment Worksheet.
DENR has made the worksheets available to public
water systems via its website (www.state. sd.us/
denr/des/drinking/capacity.htm). DENR completes
Part II of the Capacity Assessment Worksheet by
using the information provided by the system and
augmenting it with data from state databases (i.e.
monitoring and violations data, sanitary survey
results, microbiological data etc.).
The evaluation process begins when a system
submits an application for DWSRF funds. The
application form includes a budget sheet, questions
regarding proposed methods of financing and
repayments, and general utility and project informa-
tion. It requires the system to submit financial
planning, legal, and engineering documentation
(e.g., recent audits, articles of incorporation, a
facilities plan).
Part I of the Capacity Assessment Worksheet
contains a series of "yes/no" questions and is
organized according to the three components of
capacity (see Appendix A, Attachment 4):
Technical Capacity
Systems are asked questions on present and future
water supply, the water supply source, treatment,
and other system infrastructure (i.e., pumping,
storage, distribution).
Financial Capacity
Systems are asked questions about financial plan-
ning, rates, and billing. They are also required to
submit a budget worksheet, provide information
from the previous and current year, and make
financial projections for the next 3 years.
Managerial Capacity
Systems are asked about operator certification,
continued training and educational opportunities,
and knowledge of technical assistance opportuni-
ties. In addition, there are questions concerning
management structure and capability, regulatory
compliance programs, policies, system mainte-
nance, emergency procedures, and safety measures.
To complete Part II of the Worksheet (see Appendix
A, Attachment 5), DENR staff review state data-
bases for system information, source/facility
information, microbiological data, turbidity/en-
hanced surface water treatment rule information,
violations, chemical data, lead and copper data and
information, laboratory certification information,
and data concerning operator certification. Staff
also review compliance data and results from past
sanitary surveys.
This part of the Worksheet requires state staff to
answer questions about the technical and manage-
rial capacity of the system. All of the financial
information is provided by the system.
Capacity Evaluation
DENR reviews the information using an evaluation
form comprising several yes/no questions that is
organized into the three components of capacity.
Both the evaluation form and Part II of the
worksheet provide space for reviewers to comment.
If the answer to any question is "no," the reviewer
is asked if a DWSRF loan would ensure the correc-
tion of the problem. The final question in each
section asks the reviewer if the system "does" or
"does not" have capacity in the component being
reviewed.
Technical Capacity
The reviewer is asked to evaluate the system's
capacity (treatment, storage, pumping and distribu-
tion facilities) to meet current and future drinking
water treatment requirements and water quantity
demands, and to protect existing sources. Space is
provided for the reviewer to list requirements and
recommendations.
Financial Capacity
The reviewer is asked if the system produces and
uses an annual budget and if it is audited periodi-
cally. Several questions examine the system's
budget, including: Do revenues cover expenses? Is
the operating ratio greater than 1.0? Are the rates
&
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«
less than or equal to 1.5 percent of the county's
average annual median household income (MFfl)?
Managerial Capacity
The reviewer is asked to evaluate whether the
system meets all state operator certification require-
ments; if the system has had any violations of
drinking water regulations within the past 2 years
(and the relation of those violations to managerial
deficiencies); and if the system has adequately
maintained required records, distribution system
histories, and compliance information.
The evaluation concludes in one of three ways: (1)
Funding Recommended, (2) Funding Recommended
with Requirements, or (3) Funding Denied. Re-
quirements may include creating a source water
protection plan or developing a cross-connection
control program, written operating procedures, or a
rate adjustment plan. Of the eleven loans that had
been issued at the time of this report, applicants
have either been recommended for funding or for
funding with requirements.
Following the final determination, DENR notifies
the system of the assessment results by mail and
describes the requirements to which the system
must agree for the state to issue the loan. The state
ensures that systems lacking capacity undertake the
"feasible and appropriate" recommendations
through contractor support and may condition
future financial assistance on the implementation of
the recommendations. For example, a system that
lacks technical capacity because of inadequate
storage may be denied full funding if storage needs
are not addressed.
Project Descriptions
DENR determined that System A possessed ad-
equate capacity. Funding was recommended but
For More Information Contact:
South Dakota Department of Environment
and Natural Resources (DENR)
Andrea Griese, phone (605) 773-6045
www.state.sd.us/denr/des/drinking/
capacity.htm
DENR also recommended that the system complete
several activities to maintain capacity:
The system should develop a source water
protection plan after receiving the results of a
source water assessment conducted by DENR,
as required by the SDWA.
EPA is developing new requirements involv-
ing disinfection and disinfection by-products.
The system will have to re-evaluate its disin-
fection process once the disinfectant/disinfec-
tion by-products rule is finalized.
A valve exercise program should be started for
the water system. This program will help
ensure that the system's valves operate prop-
erly during an emergency.
A cross-connection control program should be
started for the water system. Cross-connection
control inspection at each service connection
will help prevent the back-siphoning of water
from customer taps into the water lines.
The amount of unaccounted-for water should
be calculated monthly.
A plan to periodically increase water rates
should be developed. It is much easier to
provide for small, planned rate adjustments,
than it is to implement a large rate hike when a
crisis hits. Rates must be kept current with the
increasing costs of providing water.
System B was determined by DENR to have "mar-
ginal" technical capacity and was therefore recom-
mended for "funding with requirements." In a letter
to the system regarding the assessment results
DENR explains:
System B currently does not have enough stor-
age to meet peak day demands. An additional
291 users are to be added to the water system in
the future. The addition of the new 550 gpm well
will alleviate some of the current storage prob-
lems; however, adding additional storage should
be the next water project System B undertakes.
When demands exceed the capacity of the stor-
age facility, inadequate flow or pressure in the
system can result. This can affect the consumer's
use of the water supply and create opportunities
for non-potable liquids to enter the system
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through cross-connections. Prolonged interrup-
tions in water service represent a public health
hazard. Additional funding from this department
may be denied if additional storage is not in-
cluded in the next water project.
DENR also made the following recommendations to
System B:
The system should develop a source water
protection plan after receiving the results of a
source water assessment that will be con-
ducted by the department.
A qualified pump contractor should inspect all
pumping equipment annually to identify
potential problems and perform maintenance.
This will help extend the life and reliability of
the system's pumps.
To prevent water main breaks, a routine
program for leak detection should be con-
ducted and a record of distribution repairs
should be kept.
A cross-connection control program should be
started for the water system.
Written procedures for routine and emergency
system operations should be developed. These
written procedures may be as simple as a one-
page list of instructions. They should cover
items such as daily operations/inspections,
start-up and shut-down procedures, and
response to equipment failure and other
emergencies.
A plan to periodically increase water rates and
keep them current with the costs of providing
water should be developed.
Vermont
The Water Supply Division (WSD) of the Depart-
ment of Environmental Conservation (DEC) is
primarily responsible for implementing the policies
and procedures of the DWSRF program. However,
the Vermont Municipal Bond Bank makes determi-
nations of financial capacity for municipal systems,
and the Vermont Economic Development Authority
(VEDA) makes fiscal capability determinations for
private systems (24 V.S.A. §4756). The Bond Bank
and VEDA make loans on behalf of the state.
Capacity Evaluation Process
Data Collection
WSD assesses system capacity based on informa-
tion from these documents:
1. Project Priority List Application/Letter of
Intent - contains a series of yes/no and short
answer questions on capacity issues to aid
WSD in screening loan applicants (see Appen-
dix A, Attachment 6).
2. Loan Application - requires the applicant to
complete a capacity questionnaire and provide
additional information regarding proposed
project financing in addition to that applied for
from the DWSRF.
3. WSD Records (i.e., sanitary surveys, water
quality documents, etc.).
Information obtained from these documents that
factors into the eligibility decision includes:
Technical Capacity
Water quality monitoring.
Source water protection.
Determinations of groundwater under the
influence of surface water.
Sanitary survey recommendations.
Financial Capacity
Current and projected water rates.
Delinquent accounts.
Financial planning.
Payment of lawful fees.
Managerial Capacity
Compliance status with current requirements
for an O&M manual.
Operator certification.
Long-range planning.
&
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&
Identified responsible officials.
Capacity Evaluation
To determine whether capacity-based conditions are
needed in the loan agreement, WSD developed a
form for staff to complete while reviewing loan
applications (see Appendix A, Attachment 7). The
form, similar to the capacity questionnaire in the
loan application, requires the staff reviewer(s) to
answer 17 yes/no answers and provide documenta-
tion in support of each response. Vermont's 17
standard loan conditions correspond to the ques-
tions on the form (see Appendix A, Attachment 7).
The corresponding condition is applied to a loan
agreement if the reviewer provides a negative
response.
Vermont has never denied assistance on account of
capacity deficiencies, but the state often places
conditions on loans in an effort to improve a
system's technical, managerial, or financial capac-
ity. For example, if a system lacked a certified
operator, its loan agreement would require the
hiring of such a professional by a specified date and
so eliminate that deficiency in managerial capacity.
Similarly, a system that lacked an annual budget
would be required to develop one and submit a copy
to WSD by a set date.
Vermont is working with New England Rural Water
Association (NERWA) to track loan conditions and
to develop templates and other tools to help systems
demonstrate compliance with each condition. All
loan conditions are entered into a database main-
tained by WSD. None of the longer term conditions
have come due for any of the loan agreements that
have been issued (approximately 20 as of the
writing of this report, with several more very close
to being issued), and all of the shorter term condi-
tions (e.g., a bacteriological sampling plan) have
been met.
If a system fails to comply with the terms and
conditions of a loan agreement, the state can "call
the loan" (i.e., collect from the system's assets).
Conversations with Vermont's DWSRF contact
indicate that, because of all the technical assistance
that is now offered to systems, the state believes it
will never have to call a loan.
Project Description
System A received a $360,000 no-interest loan for
the interconnection of, and improvements to, two
water systems. The preliminary engineering study
and final design were also financed under the loan.
The term of the loan is 20 years, with $18,000
payable each year following the issuance of a
certificate of completion.
Due to capacity deficiencies identified by the
reviewer, 8 of the state's 17 standard conditions
were placed on the loan. For example, the system
did not have a long-range plan for facility improve-
ments and operation and maintenance, so the state
made plan development a condition of the loan.
Because the system had not completed water quality
monitoring as required by Vermont's Water Supply
Rule, another loan condition required that such
monitoring be completed by January 1, 1999. As of
the writing of this report, System A had satisfied all
of the conditions that had come due under the loan
agreement.
For More Information Contact:
Vermont Department of Environmental
Conservation, Water Supply Division
Tom Bartholomew, phone (802) 241-3425
www.anr.state.vt.us/dec/watersup/
dwsrf.htm
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III. Conclusion
A review of the criteria and processes used
by six states to assess the capacity of loan
applicants indicates that states are not
rejecting systems for loans based strictly on techni-
cal, financial, or managerial deficiencies. Such
deficiencies are being handled through loan terms
and conditions, which detail the required "feasible
and appropriate changes" to meet the requirements
of the SDWA. Some state contacts noted that future
loans may be denied based on capacity, but until
rules are final and a baseline established (for all
systems, not just new systems), it will be very
difficult to deny a loan to a system based on its
capacity.
The states reviewed in this report evaluate similar
information to assess capacity (see Figure 1),
although how the information is obtained and used
varies. For example, some states require specific
information by law (i.e., annual budgets and facility
plans), while others obtain similar information
through questions on a loan application or from
state records on the system. Similarly, some states
consider certified operators to be an indication of
technical capacity, others consider them an aspect
of managerial capacity, and still others consider
them an aspect of both.
Due to the potential repercussions that a system's
lack of financial capacity may have on the lender, in
this case the state, the financial assessment is more
involved than the technical and managerial review
for a DWSRF loan. The financial assessment
typically requires detailed documentation of a
sound financial history and projections for the
future, in addition to basic questions on an applica-
tion form. As a result, some states have a separate
agency (e.g., the Budget Agency in Indiana) that
conducts the financial assessment. Florida's Bureau
of Water Facilities Funding assesses financial
capacity, while the Bureau of Water Facilities
Regulation evaluates technical and managerial
capacity. Both bureaus, however, have the power to
place conditions on loans, if necessary. Vermont
further defines these roles for municipal and private
systems. The Municipal Bond Bank assesses the
financial capacity of municipals, and the Vermont
Economic Development Authority completes the
financial assessment of private-sector applicants.
Assessment procedures also vary by state. Alaska,
Arizona, South Dakota, and Vermont use capacity
assessment worksheets to guide reviewers (and in
the case of Alaska, loan applicants) through the
assessment process. The process used in Arizona
and Vermont leads the reviewer through a series of
yes/no questions which correspond to a list of loan
conditions. The corresponding conditions are
applied to the loan agreement in any area where the
reviewer's response was negative.
South Dakota's capacity review process is an
example of effective data gathering. The state uses
worksheets to facilitate the review of capacity, but it
shares the collection burden with the applicant. This
efficiency most likely stems from the state's well-
developed capacity development program and
proven dedication to comprehensive assessment. A
portion of South Dakota's set-aside dollars is
devoted to employing contractors to help water
systems complete Capacity Assessment Worksheets
and implement any recommendations ("feasible and
appropriate changes") that are attached to the loan.
As indicated in Figure 1, a number of the states
reviewed, including Arizona, Florida, Indiana,
South Dakota and Vermont, use sanitary survey
results as a key factor in assessing capacity. Florida,
for example, relies on sanitary survey records for
information on applicants' existing physical facili-
ties, compliance history, emergency operating
procedures, and other aspects of capacity. A new
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?
sanitary survey guidance, published by EPA in
April 1999, recommends that surveys include a
section on water system management and operation
with questions on management structure, planning,
staffing, O&M manuals and procedures, funding,
and administrative records. The guidance manual
also explains that the purpose of a sanitary survey is
"to evaluate and document the capabilities of the
water system's sources, treatment, storage, distribu-
tion network, operation and maintenance, and
overall management...." [Guidance Manual for
Conducting Sanitary Surveys of Public Water
Systems; Surface Water and Ground Water Under
the Direct Influence (GWUDI) EPA 815-R-99-016
April 1999 or online at www.epa.gov/safewater/
mdbp/pdf/sansurv/sansurv.pdfj Sanitary surveys
developed under these guidelines are excellent
capacity assessment tools and may substitute for a
more complicated or fragmented method of infor-
mation acquisition.
States assess system capacity at different points in
the application process. Capacity considerations are
factored into Vermont's initial determination of
system eligibility through the priority list applica-
tion and other means. This pre-screening of appli-
cants limits the number of assessments that the state
must conduct. The final assessment of system
capacity comes later, when the results can be used
to identify the loan conditions necessary to improve
a system's capacity. The DWSRF Program Coordi-
nator explained that an assessment later in the
process works for Vermont because systems are not
denied funding strictly due to deficiencies in
capacity. South Dakota, on the other hand, conducts
a preliminary assessment of capacity as part of a
pre-application process for a DWSRF loan. In this
way, the state limits the number of loan applications
that it must process.
There was not much evidence of enforcement
provisions if a system fails to meet its obligations
under a loan agreement. Arizona includes enforce-
ment provisions in loan documents and coordinates
with the ACC for non-governmental water systems.
Indiana's rules require any system that fails to
satisfy the conditions of its agreement to immedi-
ately repay all outstanding principal and accrued
interest on the loan. Other states are not so prescrip-
tive. Conversations with the states indicate that,
because the DWSRF program is so new and many
states are just beginning to make loans, enforcement
has not been much of an issue. If the loans have
conditions, most of them have not yet come due.
It is likely that most states will change the process
they use to evaluate the capacity of systems seeking
DWSRF assistance as programs mature and states
develop capacity development strategies to address
all public water systems. (As noted previously,
many states have yet to define benchmarks for
capacity.) States are encouraged to share informa-
tion about their programs and the lessons learned
through their regional EPA DWSRF or capacity
development coordinators, through newsletters
addressing both programs, and through presenta-
tions at conferences and annual meetings.
Additional information about capacity development
and its relationship to the DWSRF program can be
found on the DWSRF program website at
www. epa.gov/safewater/dwsrf.html
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Appendix A
Attachment 1: Alaska's Capacity Assessment Worksheet
Attachment 2: Alaska's SDWA Compliance Agreement
Attachment 3: Florida's Capital Financing Plan Worksheets
Attachment 4: South Dakota's Capacity Assessment Worksheet (Part I)
Attachment 5: South Dakota's Capacity Assessment Worksheet (Part II)
Attachment 6: Vermont's Priority List Application/Letter of Intent
Attachment 7: Vermont's Staff Capacity Review Form and Standard Loan Conditions
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ADEC ALASKA DRINKING WATER FUND
CAPACITY ASSESSMENT PROCESS
WORKSHEET FOR POTENTIAL PROJECTS
The 1996 amendments to the federal Safe Drinking Water Act require Alaska to assess the capacity of
potential recipients of loans from the Alaska Drinking Water Fund (ADWF). By capacity, EPA means
the technical, financial and managerial capabilities of a water system for proper long-term operations. If a
loan applicant is found lacking in these areas, we may not be able to provide financial assistance from the
ADWF unless the capacity of the system is guaranteed.
Consequently, we are asking for detailed information from potential loan applicants to help us in this
assessment. Such things as financial records, enterprise fund budgets and audits, along with detailed
planning and engineering information for your system will help ensure our ability to provide you this
loan for your project.
The following is an outline of our assessment process. Please carefully review and complete these
worksheets and make sure the information you provide us is current and accurate.
TECHNICAL CAPACITY ASSESSMENT
We intend to use the following questions and answers to help us evaluate your systems technical
capacity. These questions address the physical components of your drinking water system and are related
to water treatment facilities, water sources, storage and pumping capacity and water distribution capacity.
Pertinent technical documentation such as engineering feasibility studies and reports should be provided
as appropriate.
1.) Are the existing water treatment facilities adequate and functional?
Please provide a description of the system and the proposed project.
Will this system likely meet federal and state drinking water regulations expected to be enacted within
the next four years? This includes the ICR, Groundwater Disinfection Rule and Enhanced Surface Water
Treatment -Rule.
2.) Is the existing water source developed and protected?
Will this system likely meet future source protection requirements?
Alaska-1
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3.) Is the current system able to meet peak demand flow and pressure in all points of the treatment
and distribution system?
What is the current peak demand and minimum pressure at peak demand?
Does the system, experience seasonal or periodic difficulties?
When was the last leak detection survey? Please describe any corrections made.
4.) Does the system employ, or have access to, the correct level of certified or qualified operators?
Under State regulation, all water systems serving more than 500 people are classified as to complexity
and require either a I, II, III or IV level operator or a qualified surface water system operator.
Please provide the name and certification number of your lead certified operator or operators in
charge of your water treatment and water distribution systems.
5.) Has the water system been out of compliance with federal or state drinking water regulations
within the past year?
Please provide any compliance or enforcement actions taken recently such as
Notices-of-Violation (NOVs), Compliance-Order-By-Consent (COBCs), boil water notices and
the most recent sanitary survey.
FINANCIAL CAPACITY ASSESSMENT
Financial capacity is assessed by examining the fiscal condition and financial management aspects of the
system. Financial aspects relate to the systems ability to raise the necessary funds to ensure proper
operation and maintenance, including long-term depreciation and reserve accounts. Financial
management refers to the management of those fiscal aspects.
If a system is regulated by the Alaska Public Utilities Commission (APUC), information contained in the
application for the current Certificate Of Public Convenience And Necessity or the annual APUC Report
may help demonstrate financial capacity. A copy of the annual report to the APUC may also contain the
necessary information related to financial capacity. For example, if a system is applying for the APUC
certificate, a copy of the application package should be submitted for review with the ADWF loan
application. If a system already has a current APUC Certificate, a copy of the annual report to the APUC
should be submitted for review with the ADWF loan application.
For those systems that are not regulated by the APUC, have not completed an application package for
certification by APUC, or have not submitted an annual report to the APUC, the following questions will
help us evaluate the financial aspects of the system. These questions relate to total user charge revenues
and total system expenses, other revenue streams, fairness and affordability of user charges, cash
budgeting, preparation and use of annual and capital budgets, and periodic financial audits
1.) Does the water system have user ordinances and a rate structure?
How often are the rates reviewed or updated? When was the last update?
Alaska-2
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2.) Does the water system revenue from user charges meet or exceed system expenses?
Please submit your water utility budget documents that clearly show revenue and expenses.
3.) Are other funds contributed to water system operations to offset expenses?
4.) How affordable are water system rates?
What are the estimated residential rates per household (after the project) compared with the median household
income and other similar system rates?
5.) Does this system use an annual budget?
6.) Does the system include a cash budget within the annual budget for operations and emergency purposes?
7.) Does the system use a capital budget?
8.) Does this system use a capital improvement plan?
9.) Does this system undertake regular financial audits?
Please provide the most recent financial audit of the water utility accounts, including any appropriate state single
audit documents along with the auditor management letters.
10.) How will this loan be repaid?
Please describe how this loan debt will be retired. If user fees are proposed as the repayment source, how -much
will rates need to be increased to retire this loan?
MANAGERIAL CAPACITY ASSESSMENT
Managerial capacity is assessed by evaluating managerial qualifications and experience, organizational structure, the
compliance history of the system, training programs offered, preventive maintenance programs, and documentation of
ownership and responsibility-.
The following questions help us to assess the systems managerial capacity and address the following aspects of system
management:
1.) How is the water system managed?
Who is the system owner(s) and manager?
Does the system utilize personnel and policy procedures or manuals?
Does the system require or encourage continuing education for personnel?
What type of organizational structure exists?
2.) Does the system have written operation and maintenance manuals?
3.) Does the system employ, as needed, the services of a professional engineer?
4.) Does the system have up-to date record or as-built drawings?
5.) Does the system implement a preventative maintenance program?
6.) Does the system have an emergency operating plan and safety program?
7.) What types of public outreach education programs are implemented?
Alaska-3
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8.) What professional organizations do the operators and system managers belong to?
Alaska-4
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SAFE DRINKING WATER ACT
COMPLIANCE AGREEMENT
PURSUANT TO 42 U.S.C. §300j-12(a)(3)
AND
THE ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION
1. is responsible for the operation and
maintenance of a Class A Public Water System, Public Water System Identification No. ("the
Public Water System"). The Public Water System is not in compliance with the Surface Water
Treatment Rule, 18 AAC 80-500 - 18 AAC 80.500 ("SWTR").
2. has applied for or will apply for assistance from the Safe Drinking
Water Act State Revolving Loan Fund ("SRI') to bring the Public Water System into compliance with the
SWTR. Pursuant to 42 U.S.C. §300j-12(a)(3) (also known as Safe Drinking Water Act § 1452(a)(3)), an
owner or operator of a public water system may not receive assistance from an SRF unless "the use of the
assistance will ensure compliance' and, if the owner or operator does not presently have the technical,
managerial, and financial capability to ensure compliance, "the owner or operator agrees to undertake
feasible and appropriate changes in operations ... to comply . . . over the long term."
3. enters this agreement to meet the prerequisites for assistance listed in
42 U.S.C. §300j-12(a)(3). In exchange for agreement, the Alaska Department of
Environmental Conservation agrees to review application for SRF assistance and agrees that it
will not reject the application on the basis of 42 U.S.C. §300j-12(a)(3). The Alaska Department of
Environmental Conservation does not agree or express any opinion concerning other requirements or
criteria for SRF assistance, and does not guarantee that SRF assistance will be available or that assistance
will be granted to
4. understands that the Public Water System is currently not in
compliance with the law and that has an obligation independent of this agreement to comply
with the law. further understands that any failure or inability to receive SRF funds, or any delay
in obtaining SRF funds, does not alter its obligation to comply in a timely manner with all applicable
drinking water standards and requirements,
5. agrees to meet the requirements of the SWTR by meeting the criteria
for avoiding filtration contained in 18 AAC 80.520. does not currently meet the criteria for
avoiding filtration that pertain to
a. adequate disinfection of the water prior to use for potable purposes,
DRINKING WATER AGREEMENT
Page 1 of 6
Alaska-5
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b. implementation of a watershed control program to regulate activities in the
watershed which may be detrimental to water quality, and
c. demonstrate through direct ownership, or written agreements with landowners
within the watershed, that the system can control all human activities that may have an
adverse impact on the microbiological quality for the source water, pursuant to 18 AAC
80.520(c)(3).
6. The decision to meet the requirements of the SWTR by upgrading the water
system to a level consistent with the filtration avoidance criteria is the sole decision of
. The State has accepted proposed compliance plan based on the past water
quality test results and conceptual design plans presented to date. The Alaska Department of
Environmental Conservation does not warrant that compliance under this agreement with the
SWTR filtration avoidance criteria will result in future compliance if conditions in or its
watershed should change, or if future, regulatory changes mandate that meet additional water
quality or water treatment standards,
7. To comply with the water disinfection requirements of the SWTR by December
31, 1999, will install two disinfection contact (CT) tanks. One CT tank will be used to provided
disinfection contact time for the unfiltered water sources. The other CT
tank will be used to provide disinfection contact time for the unfiltered water source and the
filtered water source. The water source will not be used to provide potable water
after these two CT tanks are placed in service. may upgrade the disinfection facilities and
operations to meet the SWTR requirements at a future date, but the source is not a subject to this
agreement.
8. agrees to implement SWTR Compliance Plan
Time Line ("Time Line" attached as Addendum #1), and to complete the water treatment system
upgrades necessary to ensure that all surface water provided to the public for potable purposes meets the
requirements of the SWTR by December 31, 1999. The Time Line and the deadlines contained in the
Time Line are incorporated as enforceable provisions of this agreement.
9. shall submit to the Department's Division of Environmental Health,
(MatSu Office, P.O. Box 871064, Wasilla, Alaska, 99687), quarterly progress reports, and other written
confirmation as requested by the Department, documenting the status of following action items
a. ADEC Municipal Grant Questionnaire to the Department's Facilities
Operations and Construction Division, for the State's fiscal year 1999 (July 1, 1998 June 30, 1999),
requesting financial assistance, for the construction of the two CT tanks. The Grant Questionnaire must
be submitted prior to the questionnaire's submittal deadline date.
b.
Site selection, survey and design for the two CT tank sites.
DRINKING WATER AGREEMENT
Page 2 of 6
Alaska-6
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related piping.
c. Bid award for the construction of the two CT tank sites and access roads.
d. Design of the two CT tanks and Water Treatment Plant upgrades and
e. ADEC Municipal Grant Questionnaire to the Department's Facilities
Construction and Operations Division, for the State's fiscal year 2000 (July 1. 1999 - June 30, 2000),
requesting financial assistance for the completion of the CTtank engineering and construction and
related water system upgrades, as needed. Questionnaire to be submitted to the Department by the
questionnaire submittal deadline date.
f Bid award for construction of the two CT tanks and related water
treatment system upgrades.
upgrades.
10.
Construction of the two CT tanks and related water treatment system
agrees to complete the following action items by the date stipulated:
a. Advertise and bid for the construction of the two CT tank sites and the
access roads, by February 9, 1998.
September?, 1998,
b. Complete construction of the two CT tank sites and the access roads, by
c. Advertise and bid for the construction of the two CT tanks and related
water treatment system upgrades, by August 12, 1998.
d. Submit a complete, set of professional engineering design plans and
drawings for the two CT tanks and related water treatment system upgrades to the Department's Facilities
Operation and Construction Division for plan review and approval, by April 30, 1998.
e. Construction of two CT tanks and related water treatment system
upgrades substantially complete and the two CT tanks operational, by October 30, 1999.
f. Submit a complete set of professional engineering as built
documentation for the two CT tanks and related water treatment system upgrades, to the Department's
Facilities, Operations and Construction Division, by December 30, 1999.
11. has prepared a Watershed Control Program entitled ,
prepared for , Alaska, prepared by CH2MHill and Stephl Engineers, May 1997.
agrees to implement the Watershed Control Program to meet the standards of 18 AAC 80.520(c)(2)
and
DRINKING WATER AGREEMENT
Page 3 of 6
Alaska-7
-------
minimize the potential for contamination by Giardia lamblia cysts and viruses in the source water.
will document the following actions to the Department, no later than the date indicated:
a. Adopt the Watershed Control Program, by City Council resolution, by December
15, 1997. Once adopted by the City Council, the Watershed Control Program and all provisions
contained in the Watershed Control Program are incorporated as enforceable provisions of this
agreement. If the City Council fails to adopt a Watershed Control Program that meets the standards of 18
AAC 80,520 by December 15, 1997, shall be deemed in breach of this agreement.
b. Demonstrate, through direct ownership, local ordinance or written agreements
with landowners within the watershed, that can monitor and regulate land use activities that
may have an adverse impact on the microbiological and physical qualities of the source water, by June 1,
1998, pursuant to 18 AAC 80.520(c)(3).
c. Complete an annual report on the status of the Watershed Control Program and
on the condition and effectiveness of disinfection facilities as described in 18 AAC 80.520(c)(4)(5) and
(d). Submit the report no later than July 16 of each calendar year.
12. When the written construction or other plans required by this agreement are
approved by the Department, including any modifications approved by the Department, the plans will be
automatically incorporated into this agreement and will be fully enforceable as if they were part of the
original agreement. If no satisfactory plan is submitted and approved by the Department pursuant to this
agreement, and the parties are unable to reach an informal accommodation, will be in breach of
this agreement.
13. If for any reason is unable to comply with any term or condition in this
agreement including a time deadline, or should anticipate a future cause for noncompliance,
shall, prior to the non-compliance, notify the Department in writing with a detailed explanation
of the condition or conditions that will result in the non-compliance and shall provide a proposal to
remedy the violation and a timetable for returning to compliance. obligation to meet the
applicable requirement shall be extended or altered as the Department in its sole discretion, deems
warranted based on the information provided by
14. In the event of breach of a pro vision of this agreement,
consents to the entry of temporary and/or preliminary injunctive relief against it for the purpose of
enjoining such violation. agrees that the Department may apply to and obtain such injunctive
relief from the Superior Court for the State of Alaska without a demonstration of physical irreparable
harm, but must only show the violation of this agreement.
15. The Department expressly reserves its right to initiate any administrative or
legal proceeding related to any violation, including a proceeding for injunctive relief and civil penalties
and/or damages under AS 46.03.760 or AS 46-03.765 or any combination thereof and
DRINKING WATER AGREEMENT
Page 4 of 6
Alaska-8
-------
for criminal penalties under AS 46.03.790 and for any other appropriate remedy for any violation arising
from the events alleged herein or for any future violation. In addition, the Department reserves the right
to initiate appropriate legal, action as to any matter if subsequently discovered events or conditions
constitute an immediate, threat to public health, public safety, or the environment, whether or not the.
Department may have been able to discover the event or condition prior to entering into this agreement.
16. This agreement is not and shall not be construed to be a waiver of any cause of
action or regulatory authority which may be claimed or exercised by any other agency or Department of
the State of Alaska. recognizes that it may be subject to additional requirements imposed by
other local, state, or federal agencies..
17. Nothing in this agreement shall be construed as altering existing or
future obligations to monitor, record, or report information required under any environmental or public
health laws, regulations or permits, or as altering existing or future obligations to allow the
Department access to such information.
18. hereby expressly grants the Department access to the Class A public
water system for inspection at any time during any business day without any prior notice.
19. agrees to hold the State of Alaska and its representatives, agents, and
employees harmless and to indemnify and defend the State of Alaska against all claims (including but not
limited to legal, equitable, or administrative claims), liabilities, losses, and damages, and costs awarded
or incurred, including attorney fees, and against all claims and actions (including but not limited to legal,
equitable, or administrative claims and actions), whether wrongfully brought or not, for injury to or death
of persons and loss of or damage to property arising out of or in any manner connected with the incidents
which give rise to this agreement, except for any claims arising out of the sole negligence of the State.
20. agrees that this agreement shall apply to and bind their agents, heirs,
assigns, and successors and all persons, contractors, and consultants acting on their behalf. If
transfers, sells or leases the water system described in paragraph one to another party prior to
fulfillment of the provisions of this order, shall incorporate a copy of this agreement into the
documents of transfer or lease, and shall provide in those documents that the new owners or lessees shall
take or lease subject to the terms and conditions of this agreement; however, failure to comply
with this procedure shall not relieve any new owner or lessees from liability as successor.
21. This agreement may be modified by the written agreement of the parties. No
amendment is valid unless approved in writing by the Director of the Division of Environmental Health
or his/her written designee.
22. A failure to enforce any provision of this agreement in no way implies a waiver
of the Department's right to insist upon strict performance of the same or other provisions in the future.
DRINKING WATER AGREEMENT
Page 5 of 6
Alaska-9
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DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
Dated:
Dated:
1997
1997
By:
I,
of
acknowledge that
State of Alaska.
Janice Adair, Director
Environmental Health
ASSENT OF COUNSEL
Approved as to legality and form
BRUCE M, BOTELHO
ATTORNEY GENERAL
By:
James Cantor
Assistant Attorney General
CITY OF
, certify that I am the
_, and that I have the authority to enter in this agreement. I
has freely and voluntarily entered into this agreement with the
By:
Position: City Manager
SUBSCRIBED AND SWORN TO before-me this
day of December 1997.
Notary Public in and for Alaska
My commission expires: 4-7-98
DRINKING WATER AGREEMENT
Page 6 of 6
Alaska-10
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WATER SYSTEM ORDINANCE LETTER EXHIBIT WATER-OlLf
CAPITAL FINANCING PLAN WORKSHEETS
Project Sponsoring Agency (DWSRF Project Sponsor)
Authorized Representative and Title Capital Financing Plan Contact, Title, and Telephone Number
Street Address or Other Mailing Address Street Address or Other Mailing Address
City, State, and Zip Code City, State, and Zip Code
The Department needs to know about the financial capabilities of potential Drinking Water State Revolving Fund (DWSRF) loan applicants. Therefore, a financial
capability demonstration (and certification) is required well before the evaluation of the actual loan application. Please see Rule 62-552(5) in Chapter 62-552, F.A.C. for
further details.
It is expected that the revenues to be dedicated to repaying the loan will be generated either from water and sewer utility operations or from water utility operations alone. If
the source of revenues will not be from such enterprises, this set of worksheets alone will not satisfy the Department's needs. (Please contact the Department for further
guidance if dedicated revenues will be generated externally to such utilities.)
This form solicits information for the next five years. Ordinarily, the five-year time frame will cover the period of interest to the Department; but, it will be necessary to
provide additional yearly information until the reported data includes at least one full year of DWSRF project operation and one annual DWSRF repayment to the
Department. Accordingly, attachments may be made to these worksheets. Please use the format established herein when preparing attachments. The worksheets have been
developed to identify the minimum information needed. The completed worksheets should be used in disclosing DWSRF project financing to the public during the required
dedicated revenue hearing. The worksheets can serve to identify the impacts of the SRF project on residential users and how the project fits into the project sponsor's overall
capital improvement program for the water and sewer utility (or water utility, as appropriate). Supplemental capital financing documentation may be submitted with these
worksheets and may be presented at the required dedicated revenue hearing.
a
Q)
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WATER SYSTEM ORDINANCE LETTER
EXHIBIT WATER-OlLf
B.
Household median annual income, average size, number in the utility service area, and population to be served. (Population to be served is determined by the
number of households multiplied by the household size. This data is to be consistent with facilities planning projections.) If the data vary by district or zone, report
the data according to district or zone on an attachment.
Note: Indicate the actual fiscal years for Year 1 - Year 5 wherever they appear in the worksheets.
Year 1 Year 2 Year 3 Year 4 Year 5
1. Fiscal Year
2. Household income ($/year)
3. Household size (people/household)
4. Number of households
5. Serviced population (people)
The revenues being dedicated to repayment of the DWSRF loan are:
C. What projects (including the DWSRF project) will be financed from the operation of the utility generating the revenues to be dedicated to repaying the DWSRF
loan? Total annual cost is the sum of annualized capital costs plus the annual operation, maintenance, and replacement (O/M & R) costs. Note that wastewater
facilities information is to be identified only if the dedicated revenues will be generated from operations of a water and sewer utility.
1.
2.
3.
4.
5.
6.
7.
Facilities Description Construction Capital
Start Dates Costs ($)
(Month/Year)
Water supply well
Water treatment plant
Sites and easements
Water distribution/transmission
systems
Water storage facilities
Other (explain)
Wastewater facilities
Total
Annualized Annual Cost to Total Annual
Capital Operate, Maintain, Costs ($)
Costs ($) and Replace($)
Identify which of the above water facilities are to be financed with the DWSRF loan and combine (as appropriate) the associated costs:
Description ; Total Capital Cost
; Total
Annualized Capital Costs
; Total Annual Costs for O/M&R
; Total Annual Cost
-------
WATER SYSTEM ORDINANCE LETTER
EXHIBIT WATER-OlLf
D.
Identify the D WSRF loan amount scheduled, or to be scheduled, on the project priority list; the interest rate established for the quarter preceding the submittal of the
CFP, annual debt service, and expected pledged revenue coverage. Note that DWSRF repayments begin six months after the estimated construction completion. (It is
recognized that the information provided are best estimates only.)
DWSRF Loan Amount $
; interest rate
_%; annual debt service $_
E.
1.
2.
3.
4.
F.
1.
2.
3.
4.
5.
6.
loan repayment reserve $ ; pledged revenue
Identify other anticipated debt which will be repaid from operations
Description Debt Amount($) Annual
Interest
Rate(%)
Fiscal Year
coverage factor and semi-annual repayments begin (Date).
of the utility providing the dedicated revenues.
Revenue
Coverage Annual Debt Service($)
Rate(%) Yearl Year 2 Year 3 Year 4 Year 5
What is the existing debt for the utility providing the DWSRF dedicated revenues?
Description Current Annual Revenue
Debt Amount ($) Interest Coverage Annual Debt Service($)
Rate (%)
Fiscal Year
Totals ($)
Rate(%) Yearl Year 2 Year 3 Year 4 Year 5
-------
WATER SYSTEM ORDINANCE LETTER EXHIBIT WATER-OlLf
G. Identify the projected annual expenses for the utility providing DWSRF dedicated revenues.
1. Existing facilities
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY(
O, M, &R($)
Debt Service ($)
Other - describe ($)
Totals ($)
2. DWSRF proposed project(s)
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY(
O, M, &R($)
Debt Service ($)
Other - describe ($)
Totals ($)
3. Non-DWSRF proposed project(s) (if any)
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY(
O,M&R($)
Debt Service ($)
Other - describe ($)
Totals ($)
4. All existing and planned facilities (sum of Items 1, 2, & 3, above)
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY(
O, M, &R($)
Debt Service ($)
Other - describe ($)_
Totals ($)
a
Q)
-------
WATER SYSTEM ORDINANCE LETTER EXHIBIT WATER-OlLf
H. Identify the projected annual utility revenues assuming all the planned projects are constructed according to the schedule reported in Item C, above. Compare
revenues to expenses identified in Sub-item G.4, above, and explain (on an attachment) how any net loss is covered to keep the utility financially self-sufficient in
each deficit year.
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY( )
Operating ($)
Non-operating ($)
Other - describe ($)
Totals ($)
I. Identify the projected annual expenses for the water system, assuming all planned water facilities will be constructed. These entries may be skipped if a water
utility alone is providing the DWSRF dedicated revenues since the information already will have been presented in Subitem G.4, bove.
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY( )
O, M, &R($)
Debt Service ($)
Other - describe ($)
Totals ($)
J. Identify the projected annual revenues for the water system, assuming all planned water facilities will be constructed. Compare revenues to expenses identified in
Item I, above, and explain (on an attachment) how any net loss is covered to keep the water system financially self-sufficient in each deficit year. These entries may
be skipped if a water utility alone is providing the DWSRF dedicated revenues since the information already will have been presented in Item H, above.
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY( )
Operating ($)
Non-operating ($)
Other - describe) ($)
Totals ($)
-------
WATER SYSTEM ORDINANCE LETTER EXHIBIT WATER-OlLf
K. Identify the average water system charge, fees, and assessments. If the utility service area encompasses districts or zones which will be subject to different
service charges, fees, etc. attributable to the DWSRF project, it will be necessary to provide the relevant data below separately for the district(s) or zone(s).
Difference in charges, fees, etc. should be explained on the attachment used to present the water system data.
Fiscal Year FY( ) FY( ) FY( ) FY( ) FY( )
Description
1. Water System data
a. Total estimated annual water system costs
b. Non-residential share of total annual water
system costs
c. Residential share of total annual water
system costs
d. Number of households
e. Average residential system charge /per month/customer
2. Average connection fee per residential unit
3. Average impact fee per residential unit
4. Average special assessment per residential unit
(identify basis below)
5. Average capacity charge per residential unit
(identify basis below)
6. Other (describe)
7. DWSRF project capital cost per household
(from Item C divided by Item K.l.d)
Describe basis for special assessments, such as cost per lot length_
Describe basis for capacity charge, such as cost per volume per day
Which, if any, of the following activities must be undertaken to implement the DWSRF project?
1. Acquire privately held land? YES NO_
2. Acquire land held by another public water system entity? YES NO_
3. Enter into inter-local or inter-project sponsoring agency's agreements? YES NO_
4. Hold an election or public referendum? YES NO_
5 Comply with special assessment or similar procedural requirements? YES NO_
-------
WATER SYSTEM ORDINANCE LETTER EXHIBIT WATER-OlLf
M. Attach a certification by the project sponsor's chief financial officer or by an official authorized to commit to the SRF funding that the project sponsor has the
financial capability to ensure adequate construction, operation, and maintenance of the water system.
a
Q)
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Capacity Assessment Worksheets
for
Public Water Systems
Department of
Environment and Natural Resources
Revised July 1999
South Dakota-1
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Introduction
Introduction
Because you are in the process of applying for a Drinking Water State Revolving Fund (DWSRF) loan, it is
necessary for you to complete the following worksheets. The Safe Drinking Water Act requires that a
system applying for a DWSRF loan must demonstrate that it has financial, managerial, and technical
capacity. What exactly does that mean?
Technical capacity - the physical infrastructure of the water system, including but not limited to the
source water adequacy, infrastructure adequacy, and technical knowledge. In other words, does your
treatment system work the way it is supposed to? Are you providing the safest and cleanest water
possible and required by law to your customers right now, and will you be able to in the future?
Managerial capacity - the management structure of the water system, including but not limited to
ownership accountability, staffing and organization, and effective linkages. In simpler terms, do you
have a capable and trained staff? Do you have an effective management structure?
Financial capacity - the financial resources of the water system, including but not limited to the revenue
sufficiency, credit worthiness, and fiscal controls. Basically, does your system have a budget and enough
revenue coming in to cover costs, repairs, and replacements?
If it is determined that your system does NOT have the required capacity, you may still qualify for a DWSRF
loan if it is going to be used to ensure that your system will have the necessary capacity. If you have
questions while completing the following worksheets, please call our office at (605) 773-3754, and we will
be happy to help.
After DENR receives these worksheets, we will be studying them and other information located in our files
to make a determination whether or not your public water system has the technical, financial, and managerial
capacity to be eligible to apply for a DWSRF loan. A final report will be available upon completion of the
analysis.
Applicant:
Prepared by:
Phone #:
Date:
Page 1-1
South Dakota-2
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South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Glossary of Terms
Glossary of Terms
Contaminant: Any physical, chemical,
biological, or radiological substance or matter in
water;
Disinfectant: Any oxidant, including chlorine,
chlorine dioxide, chloramine, and ozone, that is
added to water in any part of the treatment or
distribution process and that is intended to kill or
inactivate pathogenic microorganisms;
Disinfectant contact time: The time in minutes
that it takes for water to move from the point of
disinfectant application or the previous point of
disinfectant residual measurement to a point
before or at the point where residual disinfectant
concentration is measured;
Filtration: A process for removing particulate
matter from the water by passing the water
through porous media;
Ground Water: The supply of fresh water found
beneath the surface of the ground, usually in
aquifers, which is often used for supplying wells
and springs;
Ground Water Under the Direct Influence of
Surface Water: Any water beneath the surface
of the ground with a significant occurrence of
insects, macroorganisms, algae, or large-
diameter pathogens such a Giardia lamblia; or any
water with significant and relatively rapid shifts in
water quality characteristics such as turbidity,
temperature, conductivity, or pH which closely
correlate to climatological or surface water
conditions;
Maximum Contaminant Level (MCLs): The
maximum permissible level of a contaminant in
water delivered to any user of a public water
system. MCLs are enforceable standards;
mg/L: milligrams per liter - equivalent to parts
per million;
: micrograms per liter - equivalent to parts
per billion;
NTU: nephelometric turbidity unit;
psi: pounds per square inch
Surface Water: All water that is open to the
atmosphere and subject to surface runoff;
Turbidity: A cloudy condition in water due to
suspended silt or organic matter; and
Waiver: A process used by the Department of
Environment and Natural Resources that allows a
public water system to reduce or eliminate
monitoring for a particular chemical.
Page 2-1
South Dakota-3
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Technical Capacity
The Technical Portion of your System
Your Water Supply
Please mark 13 the appropriate box: Yes, No, or Unknown for each section. Please try to determine the
answer to every question. If a section or question does not apply to your system, please write NA for not
applicable.
Water Supply and Existing Demands
Do you know how much water you pump on an average day?
Amount:
Do you know how much water you pump on a peak day?
Amount:
Do you know the maximum amount of water you can pump from your source?
Amount:
Is your source capacity higher than your peak day demand?
Percentage higher or lower:
Can you meet peak demand without pumping at peak capacity for extended
periods? Longest time pumping at peak demand:
Have you been able to provide adequate volumes of water during drought
cycles?
Do you have an Emergency Response Plan that will allow you to meet system
demand during a drought or shortage, such as the loss of the largest source?
If yes, please attach.
Do you know whether your system demands will be growing, declining, or
remain Stable over the next ten years? Please circle: growing, declining, or stable.
Does your source have additional water available for appropriation?
If you have large commercial, industrial, or irrigation users, do you know
their long-term plans and understand their needs?
Purchased Water
If you purchase water from another system or a wholesaler, do you know their
long-term plans?
Do you have a contract to purchase water?
If yes, with who?
Are you currently staying within your contract?
Do you know the terms affecting your supply during drought conditions?
Are you knowledgeable about other demands being placed on the same water
source that you are using?
Do you know who the other users are and do you understand their future
plans?
Do you fully understand your legal rights to the water?
Do you have a water right?
Water right permit number:
Yes
D
D
D
D
D
D
D
Yes
D
D
D
Yes
n
n
n
n
Yes
n
n
n
n
No
n
n
n
n
n
n
n
No
n
n
n
No
n
n
n
n
No
n
n
n
n
Unknown
n
n
n
n
n
n
n
Unknown
n
n
n
Unknown
n
n
n
n
Unknown
n
n
n
n
Page 3-1
South Dakota-4
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South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Technical Capacity
Alternative Sources
Are alternative water sources possibly available to you?
Are you knowledgeable of the characteristics and costs of using alternative
sources?
Water Source
Do vou know the depth of vour well? Depth:
Do you know the geologic name of the aquifer system from which your water
is drawn?
If yes, geologic name:
Yes
D
D
Yes
D
D
No
D
D
No
D
D
Unknown
D
D
Unknown
D
D
Treatment - Microbiological Contamination
Is your system using surface water
or ground water under the influence
of surface water?
D yes D no
(if you checked "no", skip to the next
section - Ground Water Systems)
Surface Water Systems
Filtration Plant Condition
Is your filter plant in good physical condition (free from spalling concrete,
peeling paint)?
Are repair parts available?
Do you have redundancy (back-ups/automatic switch-overs) for all major
mechanical units?
If no, list units you do NOT have redundancy for:
Can your plant achieve a filtered water turbidity of 0. 5 NTU?
Do you have on-line continuous turbidimeters on each filter?
Have you adopted a turbidity goal lower than the standard?
Do you have the capability to add coagulant before the filter?
Yes
D
D
D
D
D
D
D
No
D
D
D
D
D
D
D
Unknown
D
D
D
D
D
D
D
Ground Water Systems
Ground Water Under the Influence of Surface Water
Is your water free from variations in turbidity and temperature after storm
events?
Do vou know when vour well was constructed? List year:
Is your well(s) constructed according to current South Dakota regulations?
Do you have a source water protection plan?
Is your wellhead finished with a pitless adapter that will prevent
contamination from surface water?
Yes
D
Yes
D
D
D
D
No
D
No
D
D
D
D
Unknown
D
Unknown
D
D
D
D
Page 3-2
South Dakota-5
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South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Technical Capacity
Disinfection
Do you disinfect?
D yes D no
(if you checked "no", skip to the
Infrastructure - Pumping section)
Do you regularly inspect and maintain
equipment? Type of Equipment:
How often?
Disinfectant used:
Do you have back-up equipment? Type:
Do you have adequate contact time following
user in the distribution system (30 minutes for
Contact time:
Can you detect a chlorine residual at taps
svstem? Free Chlorine Residual:
your disinfection/chlorination
disinfection and before the first
ground water systems)?
at the ends
of the distribution
Yes
D
D
D
D
No
D
D
D
D
Unknown
D
D
D
D
Disinfection By-Products
Treatment for the Control of Disinfection By-Products
If you treat surface water, are you already practicing or could you adopt
"enhanced coagulation" in your current plant?
Yes
D
No
D
Unknown
D
If you treat surface water, could you still meet current contact-time
requirements if disinfection were not allowed before sedimentation?
Infrastructure - Pumping
Condition of Pumping Equipment
Do you routinely inspect for signs of pump or pump motor problems?
How often:
Once diagnosed, are problems corrected in a timely enough manner to avoid
crisis financing, costly repairs, and unscheduled downtime?
Do you hire a qualified pump contractor to perform an inspection of all
pumping equipment, identify potential problems, and perform maintenance,
on an annual basis?
Is there sufficient standby/emergency power capacity to supply 100% of the
average daily demand of the system (excluding fire demand)?
Are any existing standby/emergency power equipment, controls and switches
tested or exercised routinely under load conditions, for at least 30 minutes at
a time?
Has the local electric utility been made aware of the standby/emergency
power provisions made by the water system, so that they can reinforce and
safeguard the electrical facilities serving the water operations?
Yes
D
D
D
Yes
n
n
n
No
n
n
n
No
n
n
n
Unknown
n
n
n
Unknown
n
n
n
Page 3-3
South Dakota-6
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South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Technical Capacity
Infrastructure - Storage
Storage Capacity
Does the system have sufficient gravity-flow (non-pumped) or emergency
generator-supported pumping capability to ensure adequate distribution
storage to provide safe and adequate service for up to 24 hours without
power? If no, how long:
Is there reserve capacity in the tank for fire protection support?
Amount:
Security Measures
Are any openings such as vent pipes, screened to protect against the
entrance of small animals, mosquitoes, flies and other small insects?
Is there an entry hatch to allow access for cleaning and painting of the
interior of the tank?
Is your storage tank covered?
Is the tank and the immediate surrounding area fenced?
Control Systems
Is there a high and low water level signal system to control the pumps?
Is there an altitude valve, to preclude the tank from overflowing?
Is there a drain valve or hydrant to allow for draining of the tank?
Tank Maintenance
Is the tank inspected at least every three years by a qualified tank contractor
for evidence of corrosion or pitting, leakage, and structural weakness?
Is the tank contractor capable of analyzing the coating of paint on the interior
and exterior surfaces of the tank to determine if it contains lead or other
hazardous materials?
Yes
D
D
Yes
n
n
n
n
Yes
n
n
n
Yes
n
n
No
n
n
No
n
n
n
n
No
n
n
n
No
n
n
Unknown
n
n
Unknown
n
n
n
n
Unknown
n
n
n
Unknown
n
n
Infrastructure - Distribution
Does the operator routinely flush, test, and maintain the hydrants in the
svstem? How often:
Are the locations of valves in the mains and curb stops on the service lines
precisely known?
Does the system keep a log
areas in the system?
of distribution system breaks to identify weak
Are histories, locations, size, and type of mains and service lines detailed
on records in a secure area?
Are all valves exercised and
lubricated periodically?
Yes
n
n
n
n
n
No
n
n
n
n
n
Unknown
n
n
n
n
n
Page 3-4
South Dakota-7
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Technical Capacity
System Maintenance (continued)
Is the system free of severe "water hammer" problems?
D
D
Unknown
D
Are meter pits, pressure regulating valves, altitude valves, blow-offs, and
other appurtenances maintained on a regular basis?
Unaccounted-for Water
Is unaccounted-for water in the water system monitored and analyzed each
month?
Unknown
D
Is the unaccounted-for water less than 15 percent of the total water
delivered to the mains?
List percentage of unaccounted-for water: %
Are the normal operating pressures in the distribution system between 25
psi and 125 psi?
Normal operating pressure: psi
D
D
D
Do you have a routine leak detection and repair program?
Are all sources of supply and customers metered?
D
D
D
Are the meters calibrated and tested routinely to ensure their accuracy and
reliability?
Water Quality in Distribution System
Is an annual inspection for cross-connections performed?
Unknown
D
Is there a program for installing and testing backflow prevention devices
where potential contamination is present?
Is there a program to eliminate "dead-ends" in the mains, where feasible?
Construction Standards
Is there a low percentage of mains less than 6 inches in diameter in the
water system? List percentage:
D
Yes
D
D
No
D
D
Unknown
D
Is there a program to gradually replace sub-standard sized mains?
D
D
D
Are there suitable rights-of-way and easements provided to the water
system for expansion, maintenance, and replacement of mains and
services?
D
D
D
Is there sufficient earth cover (six feet) to protect the mains from frost
damage or heavy loads, if driven over?
D
D
D
Are materials of mains designed and selected to resist corrosion,
electrolysis, and deterioration?
Distribution System Problems
Do you receive few complaints regarding the taste and odor of chlorine?
List number of complaints in the past year:
Unknown
D
Can you maintain adequate pressure in the distribution system under all
conditions of flow?
D
D
D
Page 3-5
South Dakota-8
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Management Capacity
The Management Portion of your System
Please mark 13 the appropriate box: Yes, No, or Unknown for each section. Please try to determine the
answer to every question. If a section does not apply to your system, please write NA for not applicable.
Operation & Maintenance
Operations Staff
Does the person operating your system have current water treatment plant
and water distribution operator certification credentials from DENR?
If yes, list classification^):
Yes
D
No
D
Unknown
D
Does your operator receive additional training on an ongoing basis to keep
current on new developments in the field?
Future Operational Demands
Does your water system obtain any regular or occasional technical
assistance from outside sources, such as DENR, your engineer, other
utilities or organizations specifically dedicated to providing technical
assistance?
If yes, who:
D
D
D
D
D
Unknown
D
Management & Administration
Who's in Charge?
Is there a clear plan of organization and control among the people
responsible for management and operation of the system?
Are the limits of the operator's authority clearly known?
Are all the specific functional areas of operations and management
assigned?
Does everyone involved in operations know who is responsible for each
area?
Is someone responsible for scheduling work?
Do you have explicit rules and standards for system modifications?
Do you have rules governing new hook-ups?
Do you have a water main extension policy?
Do you have standard construction specifications to be followed?
Do you have measures to assure cross-connection control and backflow
prevention?
Do you have policies or rules describing customer rights and
responsibilities?
Do you fully understand monitoring requirements and have a scheduling
mechanism to assure compliance?
Do you have a mechanism to obtain the most recent information on
regulatory requirements?
Do you know how to obtain clarification or explanation of requirements?
Yes
D
D
D
D
D
Yes
D
D
D
D
D
D
Yes
D
D
D
No
D
D
D
D
D
No
D
D
D
D
D
D
No
D
D
D
Unknown
D
D
D
D
D
Unknown
D
D
D
D
D
D
Unknown
D
D
D
Page 4-1
South Dakota-9
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Management Capacity
Regulatory Compliance Program (cont.)
Do you maintain adequate records to document compliance?
If yes, for how long?
Yes No Unknown
D D D
Do you know what to do in the event of a violation?
Emergencies
Do you have an Emergency Response Plan?
D
Unknown
D
Is there a contingency for making emergency interconnections to
neighboring systems, and do you know they will work if needed?
D
D
D
Does everyone involved in operations know what they are to do in the event
of contamination from a toxic hazardous waste spill in your source water or
a main break or a tank failure?
Do you have a clear chain-of-command protocol for emergency action?
Is someone responsible for emergency operations, for communications with
state regulators, for customer relations, for media relations?
If yes, who (title):
Safety
Do you have a safety program defining measures to be taken if someone is
injured?
Yes No Unknown
D D D
Does everyone understand the risks and safety measures involved in
handling water treatment chemicals?
Do you have written operating procedures for both routine and emergency
system operations?
Are you fully aware of Occupational Safety and Health Administration
(OSHA) confined space (such as trenches/manholes) regulations?
Maintenance
Do you have a planned maintenance management system -- a system for
scheduling routine preventive maintenance?
D
D
D
Yes No Unknown
D D D
Do you have a system for assuring adequate inventory of essential spare
parts and back-up equipment?
D
D
D
Do you have relationships with contractors and equipment vendors to assure
prompt priority service?
D
D
D
Do you have records and data management systems for system operating
and maintenance data, for regulatory compliance data, and for system
management and administration?
Management Capability
Are you getting the outside services and technical assistance you need? Do
you have adequate legal counsel, insurance, engineering advice,
technical/operations assistance, rate case preparation, and financial advice?
Yes No Unknown
D D D
Page 4-2
South Dakota-10
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Financial Capacity
The Financial Portion of your System
Please mark 13 the appropriate box: Yes, No, or Unknown for each section. Please try to determine the
answer to every question. If a section does not apply to your system, please write NA for not applicable.
Financial Planning Mechanisms
Do you have an annual budget?
Do you have within the annual budget a separate reserve account for equipment
replacement and/or capital improvement?
Do you have a capital budget or capital improvement plan that projects future
capital investment needs some distance (at least five years) into the future?
Do you have a process for scheduling and committing to capital projects?
Do you have a capital improvement plan that covers at least the next ten years?
Does your planning process take account of all the potential capital needs
suggested by your answers to the technical questions in these worksheets?
Does your long-term planning incorporate analysis of alternative strategies that
might offer cost saving to customers, such as consolidation with other nearby
systems or sharing of operations and management expenses with other nearby
systems?
Rates/Billing - Are they Adequate?
Do vou regularlv review vour rates? How often?
Do you have a plan in place for periodic increases in rates?
Is the rate structure based on metered watered use?
List water rates per 1000 gallons:
Do users pay the same or higher rate per 1000 gallons as they use more water?
Does the rate structure assure proportionality among users?
Do you have procedures for billing and collection?
Is your billing collection rate greater than 95%?
Do you have collection procedures specifically for delinquent accounts?
Financial Planning Mechanisms - Are they Adequate?
Do you have audited financial statements?
Does your water system presently operate on a break-even basis?
Does the water system keep all the water revenues (i.e., water revenue does
not support other municipal departments or unrelated activities)?
Do you employ standardized accounting and tracking systems?
Do you track budget performance?
Do you keep records to substantiate depreciation of fixed assets and accounting
for reserve funds?
Are financial management recordkeeping systems organized?
Are controls exercised over expenditures?
Are controls exercised to keep from exceeding your budget?
Are there purchasing procedures?
Yes
D
D
D
D
D
D
D
Yes
n
n
n
n
n
n
n
n
Yes
n
n
n
n
n
n
n
n
n
n
No
n
n
n
n
n
n
n
No
n
n
n
n
n
n
n
n
No
n
n
n
n
n
n
n
n
n
n
Unknown
n
n
n
n
n
n
n
Unknown
n
n
n
n
n
n
n
n
Unknown
n
n
n
n
n
n
n
n
n
n
Page 5-1
South Dakota-11
-------
South Dakota Department of Environment and Natural Resources Self-Assessment Worksheets
Financial Capacity
Financial Spreadsheet
Please complete the financial spreadsheet on the following page (Page 5-3) using the guidance
presented on the reverse side of the form.
GUIDELINES:
This cash flow projection form provides a systematic method of estimating cash receipts, disbursements and
balances. The entries listed on the form will not necessarily apply to every PWS, and some entries may not
be included which would be pertinent to each PWS. It is suggested, therefore, that the form be adapted to
each particular PWS, with appropriate changes in the entries as may be required.
Procedure: Most of the entries on the form are self-explanatory; however, the following suggestions are
offered to simplify the procedure:
(1) First gather the audited financial statements, internally prepared statements or budgets and other
information for the current year and the two prior years. Please include the most recent audit financial
statement with your self-assessment report.
(2) Complete the columns for the prior two years using actual data from your audited financial statements, if
available, or your internally prepared financial statements. Keeping in mind that, for purposes of this
analysis, it is important to use cash receipts and disbursements. Suggestion: Round the amounts at least
to the nearest dollar.
(3) Complete the current year's column using the most recent budget information. Include all expenditures
incurred by the utility.
(4) Complete the form using the suggestions in the partial form below for each entry. Be sure to include any
expenditures resulting from planned plant improvement and estimate the impact of inflation on all
expenditures.
(5) Item #1 (Beginning Cash on Hand) plus item #3 (Total Cash Receipts) minus Item #6 (Total Cash Paid
Out) should equal Item #7 (Ending Cash Position).
(6) Item #13 (Total Reserves) plus Item #12 (Operating Cash) should equal Item #7 (Ending Cash Position).
(7) Item #1 (Beginning Cash on Hand) should equal Item #7 (Ending Cash Position) from the prior financial
period.
(8) Items #8 & 9 are used together to determine the impact of the rate structure on the equivalent residential
user. If industrial or business customers contribute a significant portion of the revenues, these amounts
should be looked at separately. Consideration should be given to design a rate structure so that each
category of user pays its proportional share of the costs of operating and maintaining the PWS.
(9) Item #10 is used to determine to what extent a PWS's net operating income is able to cover its debt
service requirements.
(10)Item #11 is used to determine to what extent a PWS's rate structure produces revenues sufficient to cover
operating expenses.
(1 l)Item #12 is the operating cash balance at year end. The operating cash balance at the end of any financial
period should be adequate to meet the cash requirements for a minimum of one month. If there is too
little cash, additional cash may have to be injected or expenditures may have to be reduced. If there is
excessive cash on hand, the money should be invested or otherwise deposited into interest bearing
accounts (e.g., set up reserves for replacement or capital improvements, etc.)
Page 5-2
South Dakota-12
-------
Applicant:
Completed by:
Date:
Financial Spreadsheet
4 Year Projections
Last Year
Actual
Current Year
Budget
Year 1 Projected
Year 2
Projected
YearS
Projected
Year 4
Projected
Enter Year:
1. Beginning Cash on Hand
2. Cash Receipts:
a. Unmetered Water Revenue
b. Metered Water Revenue
c. Other Water Revenue
d. Total Water Revenues (2a thru 2c)
e. Connection Fees
f. Interest and Dividend Income
g. Other Income
h. Total Cash Revenues (2d thru 2g)
i. Transfers in/Additional Rev Needed
Loans, Grants or other Cash Injection
please specify
3. Total Cash Receipts (2h thru 2j)
4. Total Cash Available (1+3)
5. Operating Expenses
a. Salaries and wages
b. Employee Pensions and Benefits
c. Purchased Water
d. Purchased Power
e. Fuel for Power Production
f. Chemicals
g. Materials and Supplies
h. Contractual Services - Engineering
i. Contractual Services - Other
j. Rental of Equipment/Real Property
k. Transportation Expenses
I. Laboratory
m. Insurance
n. Regulatory Commission Expenses
o. Advertising
p. Miscellaneous
q. Total Cash O&M Expenses (5a thru
r. Replacement Expenditures
s. Total OM&R Expenditures (5q+5r)
t. Loan Principal/Capital Lease Payments
u. Loan Interest Payments
v. Transfers Out
w. Capital Purchases (specify):
x. Other
6. Total Cash Paid Out (5s thru 5x)
7. Ending Cash Position (4 - 6)
8. Number of Customer Accounts
9. Average Annual User Charge per
account (2d/8)
10. Coverage Ratio (2h-5s)/(5t+5u)
11. Operating Ratio (2d/5s)
12. End of Year Operating Cash (7-13)
13. End of Year Reserves:
a. Debt Service Reserve
b. Bond Retirement Reserve
c. Capital Improvement Reserve
d. Replacement Reserve
e. Other
Total Reserves (13a thru 13e)
South Dakota-13
-------
Instructions
4 Year Projections
1. Beginning Cash on Hand
2. Cash Receipts:
a. Unmetered Water Revenue
b. Metered Water Revenue
c. Other Water Revenue
d. Total Water Revenues (2a thru 2c)
e. Connection Fees
f. Interest and Dividend Income
g. Other Income
h. Total Cash Revenues (2d thru 2g)
i. Transfers in/Additional Rev Needed
j. Loans, Grants or other Cash Injection
3. Total Cash Receipts (2h thru 2j)
4. Total Cash Available (1+3)
5. Operating Expenses
a. Salaries and wages
b. Employee Pensions and Benefits
c. Purchased Water
d. Purchased Power
e. Fuel for Power Production
f. Chemicals
g. Materials and Supplies
h. Contractual Services - Engineering
i. Contractual Services - Other
j. Rental of Equipment/Real Property
k. Transportation Expenses
I. Laboratory
m. Insurance
n. Regulatory Commission Expenses
o. Advertising
p. Miscellaneous
q. Total Cash O&M Expenses (5a thru
5p)
r. Replacement Expenditures
s. Total OM&R Expenditures (5q+r)
t. Loan Principal/Capital Lease Payments
u. Loan Interest Payments
v. Transfers Out
w. Capital Purchases (specify):
6. Total Cash Paid Out (5s thru 5x)
7. Ending Cash Position (4 - 6)
8. Number of Customer Accounts
9. Ave User Charge per Customer
(2d/8)
10. Coverage Ratio (2h-5s)/(5t+5u)
11. Operating Ratio (2d/5s)
12. End of Year Operating Cash (7-13)
13. End of Year Reserves:
a. Debt Service Reserve
b. Bond Retirement Reserve
c. Capital Improvement Reserve
d. Replacement Reserve
Last Year Current Year
Actual Budget
For the prior period and the current year budget, use the actua
should equal item #12 from previous period.
Year 2 Year 3 Year 4
Projected Projected Projected
cash balance. For all other years, cash on hand
All cash received/estimated for water supplied to residential, commercial, industrial and public customers where the
customer charge is not based on quantity, i.e., its based on diameter of service pipe, room, foot of frontage or other
type units.
all cash received/estimated for water supplied to residential, commercial, industrial and public customers where the
charge is based on quantity of water delivered.
Other cash received/estimated from sale of water, e.g., sales for irrigation, sales for resale, inter- municipal sales,
advalorem taxes (OM&R portion) etc.
Self-explanatory
All cash received/estimated for connection of customer service
All cash received/estimated on interest income from securities,
investments or included in sinking or reserve accounts.
during the year.
loans, notes, etc., whether the securities are carried as
Other revenues collected/estimated during the period (e.g., disconnection or change in service fees,
profit on materials billed to customers, servicing of customer lines, late payment fees, rents, sales
of assets, advalorem taxes (infrastructure portion) etc.).
Self-explanatory
Includes transfers from other funds w/i the municipality or can be used as a "plug" figure when determining the
additional cash needed to cover cash needs.
Includes loans or grants from financial institutions, inter-municipal loans, state or federal sources.
Self-explanatory
Self-explanatory
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 (including those related to needs identified in the self-assessment.
Cash expenditures made/estimated for salaries, bonuses and other consideration for work related to the O&M of the
facility, including administration, and compensation for officers, directors, etc.
Paid vacations, paid sick leave, health insurance, unemployment insurance, pension plan, etc.
Amounts paid/estimated for cost of water purchased for resale.
Amounts paid/estimated for all electrical power for the utility.
Amounts paid/estimated for fuel purchased for the production of power to operate pumps, etc.
Amounts paid/estimated for chemicals used in the treatment and distribution.
Amounts paid/estimated for materials and supplies used for O&M of the PWS other than those under contractual
services.
Amounts paid/estimated to outside engineers to perform ongoing engineering work for the facility.
Amounts paid/estimated for costs of outside accounting, legal,
managerial, and other services.
Amounts paid/estimated for costs associated w/the rental of equipment, buildings and real property.
Amounts paid/estimated for automobile, truck, equipment, and other vehicle use and maintenance.
Self-explanatory
Amounts paid/estimated for vehicle, liability, workers' compensation and other insurance.
Amounts paid/estimated for rate cases and other activities with a regulatory commission
Amounts paid/estimated for informational, instructional and other advertising.
Amounts paid/estimated for all expenses not included elsewhere (e.g. permit fees, training, etc.).
Total of lines 5a thru 5p.
Amounts paid/estimated for replacement of equipment to maintain system integrity.
Include cash payments made/estimated for principal on all loans, including vehicle and equipment purchases on time
payments and capital lease payments.
Self-explanatory
Include cash transfers made/estimated to funds or entities outside the PWS.
Amount of cash outlays/estimates for items such as equipment, building, vehicle purchases, and leasehold
improvements that were not a part of the initial design of the PWS infrastructure.
Self-explanatory
Self-explanatory
Use most recent system data or expected increases.
Self-explanatory
Measure of the sufficiency of net operating profit to cover the debt service requirements of the system. A bond
covenant might require this to meet or exceed certain limits (e.g. 1.25)
Measure of whether operating revenues are sufficient to cover OM&R expenses. An operating ratio of 1 .0 is the bare
minimum for a self-supporting facility. With debt service requirements, the operating ratio would have to be higher.
All non-reserved cash.
Do not include depreciation as a reserve unless there is actually a "depreciation1 reserve that has cash set-aside for
future expansion.
Funds specifically set-aside to meet debt service requirements or requirements set forth in a loan
convenant/bond indenture.
Funds specifically set aside to retire debt as it is scheduled.
Funds specifically set aside to meet long-term objectives for major facility expansion, improvement and/or the
construction of a new facility.
Funds specifically set aside for the future replacement of equipment needed to maintain the integrity
of the facility over its useful life.
South Dakota-14
-------
South Dakota Department of Environment and Natural Resources
Self-Assessment Worksheets
Conclusion
Putting it all Together: Do you have Technical, Managerial, and Financial Capacity?
DENR will be reviewing these worksheets, and information we have in our files, in order to make a
determination whether you have the technical, managerial, and financial capacity to qualify for a Drinking
Water State Revolving Fund loan. Remember, even if you do not have the required capacity right now, you
may still qualify if the loan is going to be used to obtain capacity. Keep in mind that certain other changes
may also have to be made, such as managerial and financial changes, in order to qualify.
These worksheets can also be downloaded from DENR's website at http://www.state.sd.us/denr/dw. If you
need more information or assistance in using and completing these worksheets, please contact:
South Dakota Department of
Environment and Natural Resources
Andrea Griese
Drinking Water Program
(605) 773-3754
Page 6-1
South Dakota-15
-------
Capacity Assessment Worksheets Part
for
Public Water Systems
Department of
Environment and Natural Resources
September 1997
TO BE COMPLETED BYDENR
South Dakota-16
-------
Introduction
When a system applies for a Drinking Water State Revolving Fund (DWSRF) loan, it is necessary to complete the
following worksheets. The Safe Drinking Water Act requires that a system applying for a SWSRF loan must
demonstrate that it has financial, managerial, and technical capacity. What exactly does that mean?
Technical capacity refers to the physical infrastructure of the water system, including but not limited to the
source water adequacy, infrastructure adequacy, and technical knowledge. In other words, does the treatment
system work the way it is supposed to? Is it providing the safest and cleanest water possible and required by
law to customers right now, and will it be able to in the future?
Managerial capacity refers to the management structure of the water system, including but not limited to
ownership accountability, staffing and organization, and effective linkages. In simpler terms, does the system
have a capable and trained staff? Do it have an effective management structure?
Financial capacity refers to the financial resources of the water system, including but not limited to the revenue
sufficiency, credit worthiness, and fiscal controls. Basically, does the system have a budget and enough revenue
coming in to cover costs, repairs, and replacements?
If it is determined that the system does NOT have the required capacity, it may still qualify for a DWSRF loan if it
is going to be used to ensure that the system will have the necessary capacity.
After DENR receives Part I of the Capacity Assessment Worksheets and completes the following worksheets, we
will be making a determination whether or not the public water system has the technical, financial, and managerial
capacity to be eligible to apply for a DWSRF loan.
Applicant:
Completed by:
Date:
[Click here and type name]
[Click here and type name]
[Click here and type title]
[Click here and type date]
Page 1
South Dakota-17
-------
Glossary of Terms
Contaminant: Any physical, chemical, biological, or
radiological substance or matter in water;
Corrosion: The dissolving and wearing away of metal
caused by a chemical reaction such as between water and
the pipes that the water contacts, chemicals touching a
metal surface, or contact between two metals;
Disinfectant: Any oxidant, including chlorine, chlorine
dioxide, chloramine, and ozone, that is added to water in
any part of the treatment or distribution process and that is
intended to kill or inactivate pathogenic microorganisms;
Disinfectant contact time: The time in minutes that it
takes for water to move from the point of disinfectant
application or the previous point of disinfectant residual
measurement to a point before or at the point where
residual disinfectant concentration is measured;
Filtration: A process for removing particulate matter from
the water by passing the water through porous media;
First Draw: The water that immediately comes out when a
tap is first opened. This water is likely to have the highest
level of lead contamination from plumbing materials;
Granular Activated Carbon Treatment: A filtering
system often used to remove organics. GAC can be highly
effective in removing elevated levels of radon from water;
Gross Alpha Particle Activity: Total activity due to
emission of alpha particles as inferred from measurements
on a dry sample;
Ground Water: The supply of fresh water found beneath
the surface of the ground, usually in aquifers, which is
often used for supplying wells and springs;
Ground Water Under the Direct Influence of Surface
Water: Any water beneath the surface of the ground with
a significant occurrence of insects, macroorganisms, algae,
or large-diameter pathogens such a Giardia lamblia; or any
water with significant and relatively rapid shifts in water
quality characteristics such as turbidity, temperature,
conductivity, or pH which closely correlate to
climatological or surface water conditions;
Ion Exchange Treatment: A common water softening
method that removes some organics and radium by adding
calcium oxide or calcium hydroxide to increase the pH to a
level where the metals will precipitate out;
Maximum Contaminant Level (MCLs): The maximum
permissible level of a contaminant in water delivered to any
user of a public water system. MCLs are enforceable
standards;
mg/L:
million;
milligrams per liter - equivalent to parts per
micrograms per liter - equivalent to parts per
billion;
NTU: nephelometric turbidity unit;
Rcocurie (pCi): That quantity of radioactive material
producing 2.22 nuclear transformations a minute;
Rcocurie per Liter (pCi/L): A unit of measure used for
expressing levels of radioactivity in water;
psi: pounds per square inch
Sanitary Survey: An on-site review of the water source,
facilities, equipment, operation, and maintenance of a
public water system for the purpose of evaluating the
adequacy of the source, facilities, equipment, operation,
and maintenance for producing and distributing safe
drinking water;
Surface Water: All water that is open to the atmosphere
and subject to surface runoff;
Trihalomethane (THM): One of the family of organic
compounds, which are formed by the reaction with chlorine
used for disinfection;
Turbidity: A cloudy condition in water due to suspended
silt or organic matter; and
Waiver: A process used by the Department of
Environment and Natural Resources that allows a public
water system to reduce or eliminate monitoring for a
particular chemical.
Page 2
South Dakota-18
-------
Assessing the Technical Portion of the System
Treatment - Microbiological Contamination
Is the system using surface water or
ground water under the influence of
surface water?
Surface Water Systems
D yes D no
(if you checked no , skip to the next section
- Ground Water Systems)
Filtration Plant Condition
Has the Department of Environment and Natural Resources performed a
sanitary survey of the plant within the last three years?
Yes
No
Unknown
Ground Water Systems
Ground Water Under the Influence of Surface Water
Has the Department of Environment and Natural Resources contacted the
system about the possibility that the well may be under the influence of surface
water?
Is the well more than 100 feet deep? Depth: [Click here and type depth]
Is the well located outside the zone of influence of nearby streams or rivers?
Distance to nearest stream or river: [Click here and type distance]
Well Construction and Protection
Was the well constructed by a licensed driller?
At the completion of the well installation, did the well driller prepare and file
well construction records?
Has the Department of Environment and Natural Resources performed a
sanitary survey within the last three years?
Yes
D
D
D
Yes
D
D
D
No
D
D
D
No
D
D
D
Unknown
D
D
D
Unknown
D
D
D
Disinfection
Does the system disinfect? Dyes D no
Disinfection By-Products
(if you checked no , skip to the Corrosion Control
section)
Treatment for the Control of Disinfection By-Products
Are the trihalomethane levels below 100 |o,g/L when averaged over the annual
cycle? (This information can be found on the most recent VOC sample)
Nn
Unknown
D
South Dakota-19
-------
Corrosion Control
June 21, 2000
Corrosion By-Products
Are the first draw monitoring results been below 15 (og/L for lead and 1.3 mg/L for
copper?
If no, list results: [Click here and type results]
Yes
D
No
D
Unknown
D
Does the treated water have a pH greater than 8 and an alkalinity greater than
50 mg/L?
D
D
D
Radionuclides
Has radon been monitored in your well?
Yes
D
No
D
Unknown
D
Is the level of radon less than 1000 pCi/L?
List results: [Click here and type results]
Are levels of radium (226 and 228 combined) in the water below 5 pCi/L?
If no, list results: [Click here and type results]
D
D
D
D
D
Unknown
D
Are levels of Gross Alpha below 15 pCi/L?
If no, list results: [Click here and type name]
D
D
D
Inorganic Contaminants
Arsenic
Please check the range of arsenic levels
which applies to the system. (May be
found on the IOC test)
Fluoride
> 50 (j.g/L < 50 |ag/L and >20 (j. g/L
D D
Are the levels of fluoride below 4 mg/L? (May be found on the IOC test)
If no, list results: [Click here and type results]
Nitrates
Are the levels of Nitrate below 10 mg/L?
If no, list results: [Click here and type results]
D
D
20(jg/L
D
Unknown
D
Unknown
D
Pesticides/Herbicides (SOC s)
Pesticides and Herbicides
Are the monitoring results below the MCLs for regulated pesticides and
herbicides?
Has the system been granted a monitoring waiver for all pesticides and
herbicides?
Yes
D
D
No
D
D
Unknown
D
D
Page 4
South Dakota-20
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June 21, 2000
Industrial/Commercial Chemicals
Industrial/Commercial Chemicals
Are the monitoring results free of VOCs?
Unknown
D
Are the monitoring results below the MCLs for regulated organic and inorganic
chemicals?
Infrastructure - Distribution
Distribution System Problems
Is the system always in compliance with the monthly coliform standard?
If no, when: [Click here and type dates]
Yes
D
No
D
Unknown
D
PageS
South Dakota-21
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June 21, 2000
Infrastructure
Figure 1. Public Water System Flow Diagram
Name of Public Water System: [Click here and type name]
Note: Include all water treatment plant processes. The diagram may be developed on more than one page.
Page 6
South Dakota-22
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June 21, 2000
Assessing the Management Portion of the System
Operation & Maintenance
Current Monitoring Requirements
Is the compliance record free of repeated episodes of monitoring violations?
If no, please list monitoring violations in the past three years (type and date):
[Click here and list monitoring violations]
Unknown
D
Are they aware of and do they understand provisions for obtaining waivers
from monitoring requirements and the role of vulnerability assessments?
D
D
D
Assessing the Financial Portion of the System
All financial questions were provided by the applicant.
Page 7
South Dakota-23
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Vermont's Priority List Application/Letter of Intent (Capacity Excerpt)
Technical and Administrative Capacities
1. Does your system have a certified operator? Yes or No
2. How many employees/volunteers operate and maintain the facilities?
3. Estimate total hours per week employees work operating and maintaining facilities?
4. Does the system have a current approved operation and maintenance (O&M) manual? Yes or No
5. Is the preventive maintenance guidance in the O&M manual generally followed? Yes or No
6(a). Does the system have a current written long-range plan for necessary system improvements? Yes or
No
6(b) If Yes, does the plan correct all major deficiencies identified in the most recent sanitary survey?
Yes or No
1. Have all minor deficiencies identified in the most recent survey been corrected? Yes or No
8. Is water quality monitoring for your system current? Yes or No
9. Does your system have an approved source protection plan? Yes or No
10. Has a groundwater under the direct influence of surface water determination been made for each of
your ground water sources? Yes or No
Financial Capacity
1. Does your organization prepare an annual operating budget for the water system? Yes or No
2. For most recent budget year
Estimated Expenditures:
Estimated Revenues:
3. Is the Water Department account audited annually? Yes or No
4. Do current rates adequately fund current department expenses? Yes or No
5. Do annual delinquent water accounts average less than 5% of the total budget? Yes or No
Vermont-1
-------
6. Are grand list revenues used to finance water department expenses? Yes or No
1. Are water bills based on flat fee, metered rate, or both? (Circle one)
8. What is the water rate? (Attach rate schedule if available)
9. What is the total number of equivalent units served by the water system?
10. What percentage of projected revenues were collected from non-residential users during the most
recent budget year?
Vermont-2
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Technical, Financial and Managerial Capacity
Review and Documentation
Water System Name
Proj ect Number
Loan Purpose.
/PID#
_WSID.
Date
Loan Amount Est.
Considerations
Determination
Yes or No
Basis for Determination
1. Operation and Maintenance Manual
Does the system have an approved
current operation and maintenance
manual?
2. Operator Certification
Does the system have a certified
operator?
3. Operator Certification
Will the current operator's
certification be adequate after
the water system improvements?
4. Is all water quality monitoring
current?
5. Does the system have an approved
Source Protection Plan?
Has the system obtained the
required groundwater under the
direct influence of surface water
determination?
7. Did the most recent sanitary survey
indicate adequate routine
maintenance?
Have all deficiencies identified in the
most recent sanitary survey been
corrected?
Vermont-3
-------
Considerations
Determination
Yes or No
Basis for Determination
9. At project completion, will the
system facilities be in compliance
with the Water Supply Rule?
10. Is the estimated user rate after
project completion below 2%
of the median household income?*
11. Does the system adopt/develop an
Annual Budget?
12. Have the estimated user rates been
presented at a public meeting and
made known to the system users?
13. Are delinquent water accounts
below 5% of the annual operating
budget?
14. Does the organization have a
written long range plan (minimum
10 years) to address facility
improvements?
15. Does the responsible organization
hold regularly scheduled meetings?
16. Are all officer positions within the
organization currently filled?
17. Does the organization have a
written procedure for addressing
customer complaints?
Vermont-4
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If the answer to #10 is no, a justification for project approval is required.
#10 Justification:
"No" answers will normally require a loan condition.
Suggested Loan Conditions:
Additional Loan Conditions are indicated on the attached sheet.
The Water Supply Division has determined that the
water system meets the technical, financial, and managerial capacity requirements for a loan from
the DWSRF, with any suggested loan conditions.
Date Water Supply Division Regional Manager
Date Water Systems Section Chief
Date DWSRF Program Manager
Examples of entries under Basis of Determination are: Preliminary Engineering Report, Sanitary
Survey, WSD water quality records, personal knowledge, water system application, etc.
This completed form will be submitted to the Facilities Engineering Division with the WSD loan
approval.
Vermont-5
-------
Project Specific Loan Conditions
Water System Name WSID# Loan#.
If the requirements are currently included in another enforceable document, or will be included in
an enforceable document within the near future (TOPs, AODs, construction permits), they should
not be included as loan conditions.
The provisions circled below should be included in the loan for this project.
1. Operation and Maintenance Manual
An operation and maintenance manual which meets the requirements of the Water
Supply Rule shall be submitted to the Water Supply Division by (date).
2. Operating Permit
The water system must submit an application for a permit to operate in accordance
with the Water Supply Rule by (date).
3. Operator Certification
The water system shall have a certified operator as required by the Water Supply
Rule by (date).
4. Water Quality Monitoring
Water quality monitoring required by the Water Supply Rule shall be completed
by (date).
5. Source Protection Plan
The water system shall complete a source protection plan that meets the
requirements of the Water Supply Rule by (date) and submit it to the Water
Supply Division by (date).
6. Ground Water Under the Direct Influence of Surface Water
The water system must obtain a determination by the Secretary of the Agency of
Natural Resources as to whether the water source is under the direct
influence of surface water in accordance with the Water Supply Rule by (date).
7. Bacteriological Sampling Plan
A bacteriological sampling plan for the water supply system, as required by the
Water Supply Rule, shall be developed and submitted to the Water Supply
Division by (date).
Vermont-6
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9. Facility Deficiencies
Water system improvements necessary to bring the system into compliance with
Water Supply Rule Appendix A requirements shall be completed by (date). These
include
11. Annual Budget
An annual budget shall be developed and adopted by the water system. The
budget for the current year shall be adopted by (date) and a copy submitted to the
Water Supply Division by (date).
13. Delinquent Accounts
A written plan for reducing the amount of delinquent accounts shall be developed,
adopted and implemented by (date) and a copy submitted to the Water Supply
Division by (date).
14. Long Range Plan
A long range plan for facility improvements and operation and maintenance
covering a minimum 10-year period which meets the established standards of the
Water Supply Division shall be completed and submitted to the Water Supply
Division by (date).
15. The water system must submit a meeting schedule for the next year to the Water
Supply Division by (date).
16. Water System Management
The water system must fill all officer positions in the organization by (date) and
submit a list of the officer positions and incumbents to the Water Supply Division
by (date).
17. Customer Concerns
A written procedure for addressing customer concerns shall be developed, adopted
and implemented by (date). A copy of the procedure shall be submitted to the
Water Supply Division by (date).
Date Completed by
cd\tb\loan.app.approval.wpd
Vermont-7
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