Drinking Water State Revolving Fund (DWSRF) SFY ... annual report

              E 4850.3 D781w 2009/10 c.1
DRINKING WATER STATE REVOLVING FUND
(DWSRF)
SFY 2010 Annual Report
(Pursuant to: Title 82, Oklahoma Statutes, Section 1085.82(2))
October 28, 2010
State of Oklahoma
OKLAHOMA
DEPARTMENT OF ENVIRONMENTAL QUALITY
o I
WATER RESOURCES BOARD
the water agency
Prepared for the:
State of Oklahoma Governor, Speaker of the House of Representatives, and
President Pro Tempore of the Senate
Prepared by:
The Oklahoma Department of Environmental Quality
And
The Oklahoma Water Resources Board
DRINKING WATER STATE REVOLVING FUND
(DWSRF)
SFY 2010 Annual Report
(Pursuant to: Title 82, Oklahoma Statutes, Section 1085.82(2))
October 28, 2010
State of Oklahoma
OKLA ·OMA
DEPARTMENT OF ENVIRON ENTAL QUALITY
WATER RESOURCES BOARD
the water agency
Prepared for the:
State of Oklahoma Governor, Speaker of the House of Representatives, and
President Pro Tempore of the Senate
Prepared by:
The Oklahoma Department of Environmental Quality
And
The Oklahoma Water Resources Board
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
TABLE OF CONTENTS
I. Background 1
II. DWSRFSummary 1
A. Set-asides 2
1. DWSRFAdministration 3
2. Small System Technical Assistance 4
3. State Program Management 5
4. Local Assistance and Other State Programs 7
B. State Matching Funds 11
C. Project Activities 11
D. Prospective Loan Projects 17
III. DWSRFGoals Attained 17
A. Project Accomplishments 17
B. Program Accomplishments 18
IV. Capacity Development Strategy Activities 19
v. Operator Certification Activities 20
VI. EPAAutomated Standard Application for Payments (ASAP) Payment System 20
VII. Interest Rates/State Financing Plan 20
VIII. Current and Five Year Projection of Water Needs 21
IX. Ten and Twenty Year Projection of DWSRFNeeds 22
X. Detailed Financial Report 22
XI. Cross Collateralization of the DWSRFand CWSRF 22
XII. Transfer Authority Between Drinking Water and Clean Water SRFs 23
XIII. DWSRF Program Changes 23
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October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
Tables
Table 1: Available Funds 2
Table 2: Set-aside Activities for FFY2009 Capitalization Grant 3
Table 2a: Set-aside Activities for FFY2009 ARRA Cap Grant 3
Table 3: DWSRF Project Information 15
Table 4: Binding Commitments 16
Attachments
Attachment 1 DEQIOWRB Interagency Agreement for SFY 2010
Attachment 2 SFY 2010 Intended Use Plan and Amendment #1 & #2
Attachment 3 DWSRF Program Final Audit Report for SFY 2010
Attachment 4 Drinking Water Treatment Loan Administrative Fund (DWTLAF)
Audit Report for SFY 2010
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October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
I. Background
Title 82, Oklahoma Statutes, Section 1085.82(2) requires "submission of an annual joint
report by the Department of Environmental Quality (DEQ) and the Oklahoma Water
Resources Board (OWRB) to the Governor and to the Speaker of the House of
Representatives and the President Pro Tempore of the Senate within one-hundred-twenty
(120) days of the end of each state fiscal year concerning the Drinking Water Revolving
Loan Account and implementation of the provisions of this Act. The report shall contain
information to show the actual use and the recipients of loans made from the Drinking
Water Revolving Loan Account. In addition, the report shall contain five-year projections
as to possible funding needs for drinking water projects which may be eligible for financial
assistance under this act." This report was prepared to fulfill this requirement.
The United States Congress authorized the DWSRF as part of the Safe Drinking Water Act
(SDWA) in August of 1996. The DWSRF allows each state, which successfully applies for
and receives a capitalization grant, funding for loans to public water supply systems to
make infrastructure improvements in order to achieve compliance with national primary
drinking water regulations or otherwise further the public health protection objectives of the
SDWA. In Oklahoma, OWRB provides low-interest loans to eligible public water supply
systems according to the project priority system developed by DEQ. In addition, Congress
provided funding for set-aside activities to administer the DWSRF program and benefit
water supply systems in meeting the requirements of the SDWA.
DEQ and OWRB herewith submit the State Fiscal Year (SFY) 2010 DWSRF Report to the
Governor, the Speaker of the House of Representatives, and the President Pro Tempore of
the Senate.
For the purpose of this report and future reports on the DWSRF, the reporting period will
be the state's fiscal year ending June 30th. The reporting period for this document is from
July 1, 2009 through June 30, 2010.
II. DWSRF Summary
In anticipation of federal re-authorization of the SDWA and creation of the DWSRF, H.B.
2426 was signed into law, creating the Drinking Water Treatment Revolving Loan Account
on May 10, 1994. Re-authorization of the SDWA was accomplished August 6,1996, and
H.B.·1084 was signed into law, amending the previous action to implement Section 1452 of
the SDWA.
Table 1 is a summary of federal and state matching funds available to the DWSRF from
1997 through 2010 as a result of federal capitalization grants authorized to be awarded to
the State of Oklahoma. Provided the federal SDWA is re-authorized and appropriations
are allocated to the program, capitalization grants from the federal government are
expected to continue beyond 2010. -
However, due to the deficit reduction measures taken by Congress, the amount of future
capitalization grants may be less than funds projected.
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
TABLE 1
Federal Federal 20% State Total Reserved for Total
Fiscal Appropriation Match Set-asides Available for
Year Assistance
(FFY)
1997 $ 17,561,900 $ 3,512,380 $ 21,074,280 $ 5,444,189 $ 15,630,091
1998 $ 10,224,200 $ 2,044,840 $ 12,269,040 $ 3,169,502 $ 9,099,538
1999 $ 10,716,000 $ 2,143,200 $ 12,859,200 $ 3,321,960 $ 9,537,240
2000 $ 11,137,000 $ 2,227,400 $ 13,364,400 $ 1,781,920 $ 11,582,480
2001 $ 11,183,000 $ 2,236,600 $ 13,419,600 $ 2,247,253 $ 11,172,347
2002 $ 12,446,500 $ 2,489,300 $ 14,935,800 $ 3,236,090 $ 11,699,710
2003 $ 12,371,700 $ 2,474,340 $ 14,846,040 $ 2,845,491 $ 12,000,549
2004 $ 12,833,800 $ 2,566,760 $ 15,400,560 $ 3,336,788 $ 12,063,772
2005 $ 12,806,700 $ 2,561,340 $ 15,368,040 $ 3,009,575 $ 12,358,465
2006 $ 13,285,600 $ 2,657,120 $ 15,942,720 $ 3,141,612 $ 12,801,108
2007 $ 13,285,600 $ 2,657,120 $ 15,942,720 $ 3,383,424 $ 12,559,296
2008 $ 13,151,000 $ 2,630,200 $ 15,781,200 $ 3,534,820 $ 12,246,380
2009 $ 13,151,000 $ 2,630,200 $ 15,781,200 $ 6,074,218 $ 9,706,982
ARRA $ 31,481,000 $ - $ 31,481,000 $ 1259,240 $ 30,221,760
2010 $ 16,863,000 $ 3,372,600 $ 20,235,600 $ 5,227,530 $ 15,008,070
TOTAL $212498000 $ 36,203400 $ 248,701400 $ 51,013612 $197687788
Table 1 is a summary of federal capitalization grants and state matching funds projected to
be available to the Oklahoma DWSRF from 1997 to 2010.
Federal capitalization grant funds were awarded to DEQ during SFY 2010. DEQ applied
for the FFY 2009 capitalization grant on June 9,2009, and EPA awarded $13,151,000 to
DEQ on September 30, 2009. A bond issue was processed in February 2010 which
included the state matching funds for the FFY 2009 capitalization grant which was used
during SFY 2010. DEQ applied for the FFY 2009 ARRA grant on June 1,2009, and EPA
awarded $31,481,000 on July 14, 2009. No state match was required for the ARRA grant.
A. Set-asides
Section 1452 of the SDWA authorizes four set-asides to enable states to implement
requirements of the SDWA. DEQ reserved 31% of the 2009 capitalization grant. Also,
DEQ reserved 4% of the ARRA grant for the Administration set-aside only. The
following is a description of the four set-aside account activities and the ARRA grant
administration set-aside account activities.
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Table 2
Set-Aside Activities for 2009 Capitalization Grant
FFY 2009 Capitalization Grant-
$13,151,000
Grant/Use Set-Asides
Specified in
Work Plans
Administration $526,040 $526,040
Small System Technical Assistance $263020 $263020
State Prooram Manaoement $1315100 $1 315100
State Program Management-Reserved $1,997,408 $1,997,408
Local Assistance & Other State Programs $1,972,650 $1,972,650
Table 2a
Set-Aside Activities for 2009 ARRA Capitalization Grant
FFY 2009 ARRA Capitalization
Grant-$31,481,000
Grant/Use Set-Asides Specified in
Work Plans
Administration $1,259,240 $1,259,240
Small System Technical Assistance $0 $0
State Proqrarn Manaoement $0 $0
Local Assistance $0 $0
1. DWSRF Administration
Funds equal to 4% of the 2009 federal capitalization grant were set-aside to offset
administrative costs incurred by DEQ and OWRB during SFY 201 O. Administrative
tasks include loan portfolio management; debt issuance; financial, management,
and legal consulting fees; technical tasks, which include the review of planning and
design documents, construction documents, and project inspection. A copy of the
DEQ and OWRB Interagency Agreement for SFY 2010 is included as Attachment 1.
The DWSRF Administration Set-aside from the 2009 capitalization grant was
$526,040. This entire amount was specified for staff salaries, to provide travel and
training necessary for the adequate performance of staff, to pay DWSRF audit
costs, and to provide equipment and supplies necessary to meet the needs of the
administration of the DWSRF during SFY 2010. A total of $346,040 for SFY 2010
was budgeted for DEQ expenses associated with administration of the DWSRF and
$180,000 was budgeted for OWRB expenses associated with administration of the
DWSRF.
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DWSRF Annual Report
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Also, the DWSRF Administration Set-aside from the FFY 2009 ARRA grant was
$1,259,240. This is the only set-aside that was taken from the ARRA grant. These
funds were utilized to administer the additional projects funded by the ARRA grant
including staff salaries, travel, training, equipment, supplies and one professional
services contract for engineering.
DEQ and OWRB expended $433,470 from the FFY 2009 grant Administration Set-aside
during SFY 2010. DEQ expended $807,327 from the FFY 2009 ARRA grant
Administration Set-side.
Unexpended Administration Set-aside funds from the FFY 2009 Capitalization Grant
and FFY 2009 ARRA Capitalization Grant will be utilized to cover expenses during
SFY 2011. In accordance with EPA's DWSRF Set-aside Management Policy that
was announced on February 9, 1999, DEQ will reserve the authority to specify the
transferred funds from future capitalization grants, if they are needed. Set-aside
amounts are listed in Tables 2 and 2a.
In the future, administrative funds utilized to administer the program may be paid
from the 0.5% administration fee collected on DWSRF loans. As authorized by H.B.
1084 (May 1998), administrative fees collected by OWRB will be held outside the
DWSRF account in the Drinking Water Treatment Administrative Fund (DWTAF).
During SFY 201 0, fees of $1,341,396, were invoiced and collected. Additionally, the
DWTAF earned $74,719 for SFY 2010, in interest. During SFY 2010, $471,636 was
expended from the DWTAF for staff training, CIFA workshop registration,
publications, accounting and software maintenance fees, and payroll.
2. Small System Technical Assistance
Funds equal to 2% of the 2009 federal capitalization grant were set-aside to fund
small system technical assistance during SFY 201 o. These funds were reserved to
provide technical assistance to public water supply systems serving populations of
10,000 or fewer. In Oklahoma, during SFY 2010, 97% (1537) of the water supply
systems met the definition of a small system and served 1,254,626 Oklahomans.
This technical assistance is accomplished by DEQ personnel and through contracts
with organizations that possess expertise in the operation of small water supply
systems.
The Small System Technical Assistance Set-aside from the 2009 capitalization
grant was $263,020. This entire amount was specified for staff salaries and related
expenses and contracts.
The Small System Technical Assistance Set-aside fund expended $194,444 from
the 2009 capitalization grant during SFY 2010.
Unexpended Small System Technical Assistance Set-aside funds from the FFY
2009 Capitalization Grant will be utilized to cover expenses during SFY 2011. In
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DWSRF Annual Report
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accordance with EPA's DWSRF Set-aside Management Policy that was announced
on February 9, 1999, DEQ will reserve the authority to specify the transferred funds
from future capitalization grants if they are needed. Set-aside amounts are listed in
Table 2.
Efforts funded by the Small Systems Technical Assistance Set-aside include
assistance to small water supply systems in preparation and application for DWSRF
loan projects and to systems deemed in need of improved operational controls.
DEQ Public Water Supply District Representatives accomplished much of this effort.
Ten (10) staff members devoted time to this assistance activity.
Other technical assistance to the defined small systems is provided through the
Program Management Set-aside described in the following section.
In addition to activities performed by DEQ personnel, DEQ contracted with the
Oklahoma Rural Water Association (ORWA) and Utility Assistance and Services,
Inc. (UAS) for services to provide additional on-site technical assistance to small
water systems. A summary of these contracts are described below in Section 4
"Local Assistance and Other State Programs".
3. State Program Management
Funds equal to $1,315,100 (10%) of the 2009 federal capitalization grant were set
aside to fund a portion of the Public Water Supply Supervision (PWSS) Program
during SFY 2010. The FFY 2009 funds were reserved to provide technical
assistance and other non-enforcement activities of the PWSS program. The PWSS
program as administered by the Water Quality Division (WQD) of DEQ regulated
1,587 water supply systems during SFY 2010. The required tasks of the Program
Management Set-aside were accomplished by WQD staff, in particular the Public
Water Supply District Representatives.
The Program Management Set-aside from the FFY 2009 capitalization grant was
specified for staff salaries and related expenses and contracts during SFY 2010.
During SFY 201 0, the Program Management Set-aside expended $1,291,736 from
the 2009 capitalization grant.
DEQ applied for "banked or "reserved" unspecified State Program Management
funds from the FFY 2009 capitalization grant. The amount was $1,997,408. The
State Program Management "banked" funds set-aside expended $538,607 from the
2009 capitalization grant.
Unexpended State Program Management Set-aside funds from the FFY 2009
Capitalization Grant will be utilized to cover expenses during SFY 2011. In
accordance with EPA's DWSRF Set-aside Management Policy that was announced
on February 9, 1999, DEQ will reserve the authority to specify the transferred funds
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DWSRF Annual Report
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from future capitalization grants if they are needed. Set-aside amounts are listed in
Table 2.
During SFY 2010, WOD staff accomplished the following activities through Program
Management Set-aside funding:
(a) Tracking and technical assistance associated with the Synthetic Organic
Chemical rule; Quantity was 202 systems with current SOG schedules in SFY
2010.
(b) Tracking and technical assistance associated with the Volatile Organic
Chemical rule; Quantity was 680 systems with current VOG schedules in SFY
2010.
(c) Tracking and technical assistance associated with the
Disinfectants/Disinfection By-product Rule Stage 1; Quantity was 597
systems with current DBP schedules in SFY 2010.
(d) Tracking for systems that fluoridate and systems that purchase from systems
that fluoridate; Quantity was 42 systems actively feeding fluoride, and 236
systems that purchased fluoridated water from them in SFY 2010.
(e) Tracking and technical assistance associated with nitrate rule; Quantity was
946 systems with current Nitrate schedules for SFY 2010.
(f) Updating latitudes and longitudes for surface water intakes and public water
supply wells; Quantity was 248 new locations and 89 updatedlcorrected
locations in SFY 2010.
(g) Reviewed and evaluated the eligibility of projects and compliance issues
surrounding each system that requested placement on the DWSRF project
priority list; Quantity was 18 for SFY 2010.
(h) Tracking and database maintenance for systems affected by drought
conditions; Quantity was zero (0) systems for SFY 2010.
(i) Tracking and database maintenance for systems required to collect lead and
copper samples; Quantity was 709 systems with current PbGu schedules for
SFY 2010.
(j) Performance of comprehensive performance evaluations (CPEs); Quantity
was one (1) CPE for SFY 2010.
(k) Tracking of consumer confidence reports (CCRs); Quantity was 1,104
systems with CCR schedules for SFY 2010; and training on how to prepare
CCRs; Quantity was 63 people trained for SFY 2010.
(I) Tracking of bacteriological (bac-t) violations; Quantity was 863 TCR violations
by 448 different systems for SFY 2010.
(m) Tracking and data maintenance for Radio nuclides; Quantity was 502
systems with Rad schedules for SFY 2010.
(n) Tracking of systems that are required to report turbidity; Quantity was 204
systems reporting turbidity for SFY 2010, and
(0) Tracking of public notice; Quantity was 2,156 public notices requested for
SFY 2010.
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4. Local Assistance and Other State Programs
Funds equal to $1 ,972,650 of the 2009 federal capitalization grant was reserved for
wellhead protection and capacity development activities during SFY 2010. Under
Section 1453 of the SDWA, DEO is required to delineate all water supply systems
and to conduct source inventory vulnerability assessments. Funds for Section 1453
activities were only available from the 1997 capitalization grant. DEO submitted a
work plan to EPA that describes the performance of the tasks over a five-year
period (SFY 98 through SFY 02).
The required tasks of the local Assistance and Other State Programs Set-aside
were accomplished by WOO staff, and Environmental Complaints and local
Services (EClS) staff.
During SFY 02, the Source Water Program completed its initial analysis for water
systems in the State. The initial steps have included delineation of areas of concern
around water supplies, contaminant source inventory, and susceptibility
assessments. Further, we proceeded forward to complete the wellhead protection
program by assisting nearly 500 systems to complete contingency and management
plans to protect their drinking water sources. Reports and quality control/quality
assurance measures were conducted during SFY 03 and 04, and continue to be
conducted on an annual basis to ensure as accurate assessment as possible for
each system. Additionally, the protection reports developed by the DEO have been
substantially revised to assist in the completion of the wellhead protection program.
The EClS staff conducted site visits/inspections for "Substantial Implementation"
purposes during SFY 2010. It was found that 26 systems completed Substantial
Implementation this SFY. EClS provided technical assistance to those systems
that have not completed Substantial Implementation. There were 6 systems that
met partial requirements this SFY.
In 1993, the DEO established a citizen complaint and spill reporting Hotline that is
operated 24/7/365. The Hotline is manned with DEO personnel who have been
schooled in environmental jurisdictional issues. The Hotline received more than
3,500 citizen reported environmental complaints during SFY201 O. The Hotline also
received 301 spill reports from the regulated community ranging from listed
substances to milk. EClS investigated 20 spills that were within wellhead
protection areas but only 10 were onto the soil. The majority of those spills involved
hydrocarbons and all spill sites were remediated without impact to ground water.
Additionally, local staff discussed the spills with the appropriate community as well
as the potential impact to their water supply had cleanup not occurred.
EClS developed a monthly informational newsletter, the Wellhead Word, during
SFY 2009. The newsletter is geared toward helping communities understand what
they can do to better protect their wellhead. During SFY 2010 EeLS increased the
number of articles contained within the Word and began sending the newsletter
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quarterly. Many articles focused on potential impact to systems by PSOCs with
examples of specific small community systems in Oklahoma that overcame
contamination issues. EClS developed a power point presentation that could be
modified to a particular community or audience. Additionally, EClS developed bill
inserts for communities to use to help raise public awareness on such issues as
water conservation. To date, we have provided inserts to a dozen communities and
interested businesses to use as handouts or to add with their monthly statements.
In the SFY 2010 work plan, contracts and software/hardware items were listed as
potential purchases to be funded during the year. The contracts are listed as
follows:
1.) GIS/STORET Application Design contract. This item was listed for $125,000.
This contract was not awarded in SFY 2010.
2.) GIS/GPS Application Training contract. This item was listed for $10,000.
This contract was not awarded in SFY 2010.
3.) Database Development Imaging contract. This contract was listed for
$75,000. This contract was not awarded in SFY 2010.
4.) Oklahoma Rural Water Association (ORWA) to train water system operators,
managers, boards, and/or councils in improved operation and management
and provide for water plant optimization for small water systems. This
contract was listed for $100,000. A contract was awarded by Purchase Order
(PO) #2929011134, for $100,000, for SFY 2010. The contract required
ORWA to provide technical assistance to systems which were referred by
DEQ at no cost to the system. The assistance to the water supply systems
resulted in:
(1) Improved compliance with drinking water standards,
(2) Improved compliance with monitoring and reporting
requirements,
(3) Improved quality of service to customers,
(4) lrnproved quality of water supply system management,
(5) Increased knowledge of efficient water supply system
operation by board members,
(6) Evaluation of intake and raw water quality,
(7) Evaluation of coagulants and dosages,
(8) Evaluation of settling efficiencies,
(9) Evaluation of filtration practices and efficiency, and
(10) Evaluation of disinfectants and disinfection practices.
Services were provided to systems identified by DEQ as needing assistance.
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During SFY 201 0, ORWA billed DEQ for $92,907 and provided assistance to
38 systems with 176 site visits.
5.) Utility Assistance and Services, Inc. (UAS) contract was listed for $150,000.
A contract was awarded by PO #2929011138 for $150,000. The contract
required UAS to provide managerial and financial capacity review for small
systems referred by DEQ. The referred systems may come from the following
lists: the DEQ Consent Order List; eligible projects with a population less
than 10,000, requesting funding from the DWSRF; or new public water
systems that are beginning initial operations.
During SFY 2010, UAS billed DEQ for $150,000 and provided assistance to
45 small water systems, most of which were on the DEQ Consent Order List
and had multiple problems.
6.) Oklahoma Rural Water Association (ORWA). This contract was listed for
$133,000. An agreement was made with ORWA, Purchase Order (PO)
#2929011131 for $133,000. The contract required ORWA to provide
Operator Certification Training for operator certification training, performing
training on disinfection and disinfection byproducts, enhanced water
treatment groundwater rule or other drinking water regulations, and
conducting training sessions on security and emergency response. During
SFY 2010, ORWA billed DEQ for $133,000 and provided:
36 Renewal classes
18 Certification classes
12 Security/Emergency Response classes
12 Drinking Water Regulation classes
4 Lab Certification classes
The following software/hardware items were planned to be utilized to support the
implementation of the contract information listed above:
a. GIS/GPS Upgrades. This item was listed for $30,000. This item was not
purchased in SFY 2010.
b. GPS Field Receivers. This equipment was listed for $30,000 (6 receivers @
$5,000 each). Six (6) GPS field receivers were ordered and received in SFY
2010, and the total amount was used.
c. Geospatial Digital Data Sets. This item was listed for $25,000. This item
was not purchased in SFY 2010.
d. ESRI Supplies and Maintenance. This item was listed for $32,000. A
purchase order was processed for $30,200. This amount was expended on
the purchase of this item. This software provided access to technical support
on the use of ESRI GIS software and provided version upgrades for existing
ESRI software.
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DWSRF Annual Report
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A new program, the Engineering, Planning and Design Grant Program, was initiated
during SFY 2010. This grant program will use funds from 1) Local Assistance and
other State Programs and 2) banked (reserved or unspecified funds) from the FFY
1997 and 1998 capitalization grants. The total amount available was $1,930,021.
The maximum amount of the grant to each system is $125,000. The sub-grantees
have one (1) year to complete all of the tasks to receive the maximum amount
available. It is possible that some systems will not be able to use the maximum
amount. At the end of SFY 2011, the results from a review of this new program will
be available.
Following are the sub-grantees, listed by the quarter in which they received the
award:
1st Quarter (July 2009 - September 2009)
1. Pawnee PWA
2. Osage CO RWD #20 (Hulah)
3. Salina PWA
4. Sardis Lake WA
2nd Quarter (October 2009 - December 2009)
1. Locust Grove PWA
2. City of Shidler
3. Grandfield PWA
4. Weleetka PWA
3rd Quarter (January 2010 - March 2010)
1. Beggs PWA
2. Mcintosh CO RWD #8 (Texanna)
3. Longtown RW&S District #1
4. Osage CO RWD #21
4th Quarter (April 2010 - June 2010)
1. Stroud UA
2. Barnsdall PWA
3. Town of Carmen
4. Cleveland MA
During SFY 2010, the Local Assistance and Other State Programs' Set-aside
expended $1,058,273 from the 2009 capitalization grant.
During SFY 2010, DEQ did not transfer any unexpended Local Assistance and
Other State Programs Set-aside funds from past capitalization grants to the project
loan fund. Set-aside amounts are listed in Table 2.
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B. State Matching Funds
The SDWA requires state matching funds equivalent to 20% of each capitalization grant.
The state match must be received before capitalization grant project fund payments can
be accepted. The state matching funds for the 2009 capitalization grant was provided
by the 2010 bond issue. The ARRA capitalization grant did not require a state match.
C. Project Activities
DEQ and OWRB provide DWSRF assistance to the eligible projects of highest priority
that are ready to proceed with their project. If the highest priority system is not ready to
proceed, it may be bypassed in order to fund the next highest priority system that is
ready to proceed. The Intended Use Plan for SFY 2010 is included as Attachment 2.
During SFY 2010, DEQ closed loans with thirty-one (31) systems totaling approximately
$175 million. The following information describes these projects:
McCurtain Co. RWD #8 CARRA)
New microfiltration membrane process water treatment plant and a new clearwell
Duncan Public Utilities Authority (IV) CARRA)
Automated meter reading system, raw water pump replacement, new recycle pump
station at the water treatment plant, and other various pump station improvements
Norman Utilities Authority CARRA)
Water treatment plant improvements including a new solids contact clarifier and influent
flow control vault, replacement of media and underdrains in filters, installation of a new
electrical building, demolition of existing lime paste slaking system and installation of a
new batch lime slaking system, improvements to the existing Alum storage and feed
system, mod ification of the existing Carbon Dioxide feed system, new electrical service
throughout the water treatment plant site, and a back-up power generator
Bartlesville Municipal Authority (IV) CARRA)
Two (2) new storage tanks, new water transmission line, renovation of the Indiana
Pump Station, installation of emergency generators at various pump stations, and
demolition of the old Water Treatment Plant
Henryetta Municipal Authority CARRA)
Water treatment plant improvements including: two (2) new clarifier units, new clarifier
building, new chemical feed building and equipment, new high service pump, new
generator, finished water transmission line, a new intake, and citywide water line
replacement
Logan Co. RWD #2 CARRA)
Two (2) new water wells, new waterlines, and a new water storage standpipe
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Wagoner Public Works Authority (ARRA)
Water line replacement-citywide
Central Oklahoma Master Conservancy District (COM CD)
Replacing electrical power, pumps and motors with higher efficiency technology
Healdton Municipal Authority (ARRA)
Two (2) new wells and new water transmission lines
Guymon Utilities Authority (II) (ARRA)
Construction of three (3) new wells and various waterlines
Bryan Co. RWD #2 (III) (ARRA)
Upgrades at the water treatment plant, including emergency generators, pumps,
electrical system and security fence
Oklahoma City Water Utilities Trust (ARRA)
Various water distribution system improvements
Bixby Public Works Authority (ARRA)
Bore under the Arkansas River, construction of a water main and waterlines
Enid Municipal Authority (ARRA)
Automated meter reading system
Stillwater Utilities Authority (II) (ARRA)
Automated meter reading system, water line replacements, various pump station
improvements, rehabilitation of a storage tank, and an emergency generator
Tulsa Metropolitan Utility Authority (ARRA)
Construction of various waterline projects
Rogers Co. RWD #7 (ARRA)
New water transmission line, an automated meter reading system, and
repairing/repainting of three (3) water storage tanks
Lawton Water Authority (III) (ARRA)
Construction of various waterline projects
Elk City Public Works Authority (ARRA)
New raw water transmission line from the well field to the city
Sand Springs Municipal Authority (ARRA)
Automated meter reading system
12
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
Washington Co. RWD #3 (ARRA)
Water treatment plant expansion
Newcastle Public Works Authority (ARRA)
Various waterline replacements
Ponca City Utility Authority (ARRA)
Drill two (2) replacement water wells, new lime feed and slaking system at the water
treatment plant, and rehabilitation of the raw water transmission lines
Mayes Co. RWD #3 (ARRA)
New clearwell, new backwash pumps, new distribution pumps and a new filter building
Frederick Public Works Authority (ARRA)
Water treatment plant improvements, a new clearwell, and replacement waterlines
Broken Arrow Municipal Authority (II)
Engineering design costs only for proposed water treatment plant upgrades/expansion
EI Reno Municipal Authority (III)
Various waterline projects, a clearwell renovation and piping improvements, and an
automated meter reading system
Sallisaw Municipal Authority
New water transmission line, and a clearwell
Perry Municipal Authority
Modifications/upgrades to the water treatment plant
Tahlequah Public Works Authority
New water treatment plant and water transmission line
Shawnee Municipal Authority
Replace raw water transmission line and rehabilitate water intake structure.
Project information is further detailed in Table 3.
During SFY 201 0, DEQ issued Letters of Binding Commitment to thirty-one (31) systems
which included: Bartlesville MA for $9,820,000, Bryan Co. RWD #2 (III) for $382,000,
McCurtain Co. RWD #8 for $7,038,410, Norman UA for $14,000,000, Washington Co.
RWD #3 for $17,394,645, Logan Co. RWD #2 for $950,000, Healdton MA for
$1,075,000, Wagoner PWA for $1,200,000, Stillwater UA (II) for $11 ,645,000, Central
Oklahoma Master Cons. Dist. (COMCD) for $1,500,000, Frederick PWA for $4,500,000,
Sand Springs MA for $7,000,000, Enid MA for $8,345,000, Henryetta MA for
]3
October 28,2010
DWSRF Annual Report
State Fiscal Year 2010
$9,500,000, Oklahoma City WUT for $10,000,000, Duncan PUA (IV) for $13,355,000,
Tulsa Metro UA for $6,670,000, Lawton WA (IV) for $6,210,000, Ponca City UA for
$3,355,000, Rogers Co. RWD #7 for $759,000, Bixby PWA for $3,070,000, Newcastle
PWA for $2,463,227, Guymon UA (II) for $1,915,000, Mayes Co. RWD#3 for $976,000,
Elk City PWA for $9,375,000, Perry MA for $640,000, Broken Arrow MA (II) (Eng.) for
$4,000,000, Sallisaw MA for $7,285,000, EI Reno MA (III) for $3,112,327, Tahlequah
PWA for $16,320,000, and Shawnee MA for $13,924,607.
These letters notified the applicants that OWRB had approved their applications and
concurred in awarding DWSRF loans. Before issuance of these letters, the projects
were reviewed in accordance with DEQ's EPA approved State Environmental Review
Procedures (SERP). Project information is further detailed in Table 3.
Of these thirty-one (31) binding commitments, DEQ closed loans with all of the systems
listed above by June 30, 2010.
During SFY 2010, six (6) DWSRF projects were completed. The projects were Central
Oklahoma Master Conservancy District (COMCD), Checotah PWA, Cherokee
Development Authority (II), Coweta PWA, Wagoner Co. RWD #5 (II) and Skiatook PWA.
Binding commitments must be made in an amount equal to each grant payment that is
deposited into the loan fund and state match within one year of receipt of each grant
payment. As of June 30,2010, DEQ had entered into binding commitments for 361%
over the required binding commitment amount. Oklahoma's binding commitments are
displayed in Table 4.
14
Environmental
Decision Loan Project Component
SFYof
Transmission & Loan Binding Interest Admin. Treatment Source Storage
re Closing Pop. Date Type Commit. Amount Rate Fee Start Const. Distribution
o. RWD #8 2010 5,037 212212007 FaNSI 7/30/2009 $7,038,410 3.290% 0.50% 8/26/2009 $7,038,410 $0 $0 $0
(IV) 2010 29,700 5/6/2009 Cat Ex 8/19/2009 $11,245,000 2.790% 0.50% 8/26/2009 $0 $9,954,910 $1,290,090 $0
2010 91,526 5/6/2009 GatEx 8/3/2009 $14,000,000 2.780% 0.50% 9/10/2009 $14,000,000 $0 $0 $0
~A (IV) 2010 43,371 5/29/2009 FaNSI 7/30/2009 $7,620,000 2.770% 0.50% 10/5/2009 $927,717 $6,692,283 $0 $0 ~ 2010 8,248 4/30/2009 FaNSI 9/10/2009 $9,500,000 2.570% 0.50% 11/30/2009 $4,340,875 $2,497,749 $2,661,376 $0
WD#2 2010 1,781 7/15/2009 FaNSI 9/10/2009 $920,000 2.520% 0.50% 10/19/2009 $0 $109,030 $348,704 $462,266
IA 2010 8,699 6/12/2009 GalEx 9/10/2009 $1,200,000 2.550% 0.50% 10/19/2009 $0 $1,200,000 $0 $0
. Master Cons. Dist. 2010 168,592 5/22/2007 GatEx 9/25/2009 $1,500,000 2.280% 0.50% 2/2/2007 $0 $1,500,000 $0 $0
2010 2,786 7/10/2009 FaNSI 9/10/2009 $1,075,000 2.850% 0.50% 11/20/2009 $0 $608,477 $466,523 $0
(II) 2010 12,100 8/5/2008 FaNSI 1112/2009 $1,255,000 2.690% 0.50% 12/20/2009 $0 $293,019 $961,981 $0
ND#2 (III) 2010 8,656 5/14/2009 GatEx 9/10/2009 $382,000 2.710% 0.50% 11/18/2009 $152,191 $229,809 $0 $0
tyWUT 2010 949,361 3/4/2009 GatEx 9/10/2009 $7,634,177 3.070% 0.50% 11/17/2009 $0 $7,634,177 $0 $0
2010 20,475 10/27/2009 FaNSI 10/6/2009 $2,160,000 2.730% 0.50% 2/22/2010 $0 $2,160,000 $0 $0
2010 49,889 6/5/2009 GalEx 9/10/2009 $8,345,000 2.730% 0.50% 2/18/2010 $0 $8,345,000 $0 $0
(II) 2010 40,800 6/5/2009 GatEx 9/10/2009 $11,645,000 2.840% 0.50% 2/8/2010 $0 $11,459,463 $0 $185,537
iolitan UA 2010 504,613 6/5/2009 GatEx 10/6/2009 $5,225,000 2.820% 0.50% 4/3/2010 $0 $5,225,000 $0 $0
,WD#7 2010 2,800 7/8/2009 FaNSI 9/22/2009 $759,000 2.630% 0.50% 1/5/2010 $0 $576,246 $0 $182,754
III) 2010 114,387 4/28/2009 GatEx 10/6/2009 $4,725,000 2.640% 0.50% 11/30/2009 $0 $4,725,000 $0 $0
\ 2010 10,510 12/7/2009 FaNSI 10/6/2009 $8,825,000 3.090% 0.50% 2/15/2010 $0 $8,825,000 $0 $0
sMA 2010 22,223 6/12/2009 GatEx 12/16/2009 $5,630,000 2.610% 0.50% 2/15/2010 $0 $5,630,000 $0 $0
Go. RWD #3 2010 14,137 2/25/2009 FaNSI 2/16/2009 $17,394,645 2.990% 0.50% 1/5/2010 $17,394,645 $0 $0 $0
WA 2010 8,931 5/14/2009 GatEx 9/25/2009 $1,946,368 2.550% 0.50% 1/6/2010 $0 $1,946,368 $0 $0
IA 2010 29,273 6/15/2009 GatEx 9/2/2009 $2,990,000 2.560% 0.50% 1/19/2010 $1,879,767 $615,808 $494,425 $0
:WD#3 2010 2,400 6/12/2009 GatEx 10/6/2009 $900,000 2.560% 0.50% 1/26/2010 $888,292 $0 $11,708 $0
VA 2010 4,915 9/9/2007 FaNSI 12/16/2009 $4,500,000 2.580% 0.50% 2/1/2010 $3,172,061 $411,651 $0 $916,288
v MA (Eng.) 2010 81,730 N/A N/A 12/16/2009 $4,000,000 2.610% 0.50% N/A N/A N/A N/A N/A
(III) 2010 19,682 1211512009 GatEx 111412009 $2,405,000 2.590% 0.50% 31112010 $495,747 $1,909,253 $0 $0
2010 9,951 9/512009 GatEx 1212112009 $5,360,000 2.580% 0.50% 5131/2010 $2,080,346 $0 $3,279,654 $0
2010 6,430 5/8/2009 GatEx 12/2112009 $640,000 1.840% 0.50% 6/1/2010 $640,000 $0 $0 $0
WA 2010 18,431 11113/2009 FaNSI 1/1112010 $16,320,000 2.990% 0.50% 3/8/2010 $8,503,926 $6,994,128 $821,946 $0
\ 2010 32,168 3/1512010 GatEx 311512010 $7,780,000 2.650% 0.50% 918/2010 $0 $7,288,304 $491,696 $0
$174,919,600 $61,513,977 $96,830,675 $10,828,103 $1,746,845
TABLE 3 Project and Loan Details
TABLE 3 1 Total Percentage of Small Systems Funded
nmitments FY Pop. Small Large
2001 $22,548,975 $ 25,989,280.00
2005 $14,465,983 $ 117,672,718.00
2009 $92,587,219 $ 136,496,850.00
AA (IV) - 7/14/09 2010 43,371 $9,820,000
WD #2 (III) - 7114109 2010 8,656 $382,000
o. RWD #8 - 7114109 2010 5,037 $7,138,410
-7/14/09 2010 91,526 $14,000,000
Go. RWD #3 - 7/14109 2010 14,137 $17,394,645
WD #2 - 8/11109 2010 8,248 $950,000
\ - 8/11109 2010 2,786 $1,075,000
VA - 8/11109 2010 8,699 $1,200,000
,(II) - 8111/09 2010 40.800 $11,645,000
. Master Cons. Dist. (GaMGD) - 8/11/09 2010 168,592 $1,500,000
VA - 8/11/09 2010 4,915 $4,100,000
sMA - 8/11109 2010 22,223 $7,000,000
11/09 2010 49,889 $8,345,000
A -8111/09 2010 8,248 $9,500,000
UT - 811/09 2010 949,361 $10,000,000
\ (IV) -8111/09 2010 29,700 $13,355,000
UA - 918109 2010 504,613 $6,670,000
(IV) - 9/8/09 2010 114,387 $6,210,000
JA - 9/8/09 2010 29,273 $3,355,000
"WD #7 - 9/8/09 2010 2,800 $759,000
·9/8109 2010 20,475 $3,070,000
WA- 9/8/09 2010 8,931 $2,463,227
(II) - 918109 2010 12,100 $1,915,000
iW D #3 - 918109 2010 2,400 $976,000
~ - 918109 2010 10,510 $9,375,000
1110/09 2010 6,430 $640,000
N MA (II) (Eng.) - 11110/09 2010 81,730 $4,000,000
- 11110/09 2010 9,951 $7,285,000
(III) -12/8/09 2010 19,682 $3,112,327
'W A - 1218/09 2010 18,431 $16,320,000
\ - 219110 2010 32,168 $13,924,607
$166,070,814 $441,170,427
GE 27.3% 72.7%
Page 15
TABLE 4
Binding Commitment Financial Summary
Loan Payments
%of
Cumulative Cumulative Binding
Set-Aside Total Qtr Cumulative Binding Binding Binding Binding Commit Commit
FFY QTR 2006 Grant 2007 Grant 2008 Grant 2009 Grant ARRAGrant Payments Payments Loan Payments CommitReq CommitReq Proj Commit Actual Actual Req
1997-2006 $94,953,067 $94,953,067 $102,345,273 $102,345,273 $282,451,518 $282,451,518
2007 1st $785,402 $0 $94,953,067 $150,479 $102,495,752 ($1,098,990) $281,352,528 275%
2nd $785,404 $0 $94,953,067 $150,479 $102,646,231 $4,638,549 $285,991,077 279%
3'd $785,404 $0 $94,953,067 $13,776,901 $116,423,132 $6,715,456 $292,706,533 251%
4th $10,143,986 $845,856 $10,529,760 $105,482,827 $2,790,398 $119,213,530 $16,155,000 $308,861,533 259%
2008 1st $845,856 $0 $105,482,827 $157,080 $119,370,610 (ai) $1,995,861 $310,857,394 260%
2nd $568,221 $845,856 $568,221 $106,051,048 $157,081 $119,527,691 (aj) $15,900,000 $326,757,394 273%
3'd $9,902,176 $845,856 $9,902,176 $115,953,224 $157,081 $119,684,772 (ak) $10,896,402 $337,653,796 282%
a" $883,705 $0 $115,953,224 $12,804,883 $132,489,655 (al) $32,337,499 $369,991,295 279%
2009 1st $883,705 $0 $115,953,224 $169,171 $132,658,826 (am) $18,176,583 $388,167,878 293%
2nd $9,616,180 $883,705 $9,616,180 $125,569,404 $851,036 $133,509,862 (an) ($490,000) $387,677,878 290%
3'd $386,253 $883,705 $386,253 $125,955,657 $12,051,782 $145,561,644 (ao) ($87,935) $387,589,943 266%
4th $7,076,782 $7,555,440 $1,833,365 $14,632,222 $140,587,879 $176,741 $145,738,385 (ap) $147,298,281 $534,888,224 367%
2010 1st $7,555,440 $1,833,365 $7,555,440 $148,143,319 $176,741 $145,915,126 (aq) $23,383,646 $558,271,870 383%
2nd $7,555,440 $1,833,365 $7,555,440 $155,698,759 $11,716,157 $157,631,283 (ar) $12,554,607 $570,826,477 362%
3'd $7,555,440 $1,833,363 $7,555,440 $163,254,199 $640,245 $158,271,528 $570,826,477 361%
4th $1,396,771 $0 $163,254,199 $17,925,339 $176,196,867 $570,826,477
Total $10,712,207 $10,288,429 $9,616,180 $7,076,782 $30,221,760 $163,254,199
Page 16
$176,196,867 $570,826,477
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
D. Prospective Loan Projects
During SFY 201 0, eighteen (18) projects were added to the DWSRF Project Priority List.
Based on the SFY 2010 Intended Use Plan (IUP), the DWSRF Priority List contained
ninety (90) projects. All of these projects were on the planning portion of the list and are
working to comply with DWSRF planning and design requirements. All of these projects
were on the fundable portion of the list and were expected to receive letters of binding
commitment during SFY 2010. Of the ninety (90) projects, thirty-one (31) of them
received letters of binding commitment during SFY 201 O. The remaining projects are at
various stages in the planning process. The SFY 2010 IUP and Amendment #1 and
Amendment #2 are included as Attachment 2.
During SFY 201 0, environmental decisions were finalized for nine (9) DWSRF projects.
The breakdown of these decisions is as follows: seven (7) Categorical Exclusions, and
two (2) Environmental Assessments.
III. DWSRF Goals Attained
A. Project Accomplishments
The DWSRF loans made to projects during SFY 2010, were specifically directed at
achieving the goals of the DWSRF program and were accomplished as follows:
1. To assist public drinking water systems in maintaining the health
objectives of the SDWA; Assisted public drinking water systems in
maintaining the health objectives of the SDWA by monthly inspections of
systems under construction and training sessions which included
consulting engineers, system officials, and other agencies.
2. To rehabilitate or replace contaminated drinking water sources; Initiated
construction on four (4) projects.
3. To install or upgrade treatment that improves the capability of public
drinking water systems to comply with primary or secondary drinking
water standards; Initiated construction on thirteen (13) projects.
4. To install or upgrade storage facilities to prevent contamination from
entering the drinking water system; Initiated construction on four (4)
projects.
5. To install or replace transmission and distribution facilities to prevent
contamination; Initiated construction on twenty (20) projects.
6. To assist in consolidation or interconnection of water supply systems to
improve service; Initiated construction on zero (0) projects.
7. To assist public drinking water systems to insure quality water at an
affordable cost; Initiated construction on thirty-one (31) projects.
8. To assist in acquisition of land needed to locate an eligible project from a
willing seller who receives fair market value for the land; Initiated
construction on one (1) project.
9. To assist in costs of planning, design, and other related costs of eligible
projects; Initiated construction on twenty-nine (29) projects in which
these costs were reimbursed.
17
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
10. To provide loans to assist public drinking water systems in meeting
compliance deadlines; Initiated construction on six (6) projects.
11. To provide loans to assist public drinking water systems that are under
enforcement actions in attaining compliance by established deadlines;
Initiated construction on six (6) projects.
12. To provide loans to assist public drinking water systems in eliminating
drinking water deficiencies and to improve the quality of drinking water in
the state; Initiated construction on thirty-one (31) projects.
13. To provide loans to assist public drinking water systems in constructing
water facilities needed to maintain quality drinking water; Initiated
construction on thirty-one (31) projects.
14. To provide loans to assist public drinking water systems to provide
affordable drinking water by building cost effective water treatment,
storage, and distribution facilities. The interest rate of these loans shall
be at approximately seventy percent (70%) of market rate for long-term
loans from the DWSRF; Initiated construction on thirty-one (31) projects.
15. To provide at least fifteen percent (15%) of each DWSRF capitalization
grant to assist small public drinking water systems to the extent that there
are a sufficient number of eligible projects to fund. Initiated construction
on twelve (12) projects that had a population of 10,000 or less.
All of the project accomplishments were achieved in SFY 2010.
B. Program Accomplishments
The application and receipt of capitalization grant funding, the provision of state
matching funds, and the proposition to provide low interest loans to eligible loan
applicants are the specific efforts required to achieve the following goals of the DWSRF
program:
1. To maintain the fiscal integrity of the DWSRF and to assure a
continuous enhancement of the loan fund for future generations; The
DWSRF program has been leveraged to meet the funding needs in the
future.
2. To maintain the fund in perpetuity; perpetuity consists of maintaining
the principal amounts of the state matching funds and capitalization
grants, less utilized set-asides, within the DWSRF; The DWSRF
program has been leveraged which will provide state matching funds
for future grants.
3. To assist the State in meeting its total drinking water funding needs by
blending DWSRF loan proceeds (capitalization grant fund and state
match) with bond proceeds from the OWRB bond program
(maintained outside the DWSRF) to provide long-term, low-interest
drinking water financing; Provided interim construction loan financing
for systems until the program was leveraged.
4. To obtain maximum capitalization of the fund for the State in the
18
October 28,2010
DWSRF Annual Report
State Fiscal Year 2010
shortest time possible; The DWSRF program has been leveraged to
meet the funding needs in the future.
5. To provide the necessary state matching funds prior to accepting
capitalization grant payments for the FFY 2010 capitalization grant.
The state matching funds for the loan portion of the capitalization grant
were provided by the Revolving Fund Revenue Bonds, Series 2010
(Master Trust).
All of the program accomplishments were achieved in SFY 2010.
IV. Capacity Development Strategy Activities
The SDWA includes requirements for states to obtain authority to: (1) ensure that new
systems have technical, managerial and financial capacity to provide safe and affordable
drinking water for now and in the future; (2) to ensure that all DWSRF loan recipients have
sufficient technical, managerial, and financial capacity prior to receiving loan funds (or that
the loan funds will allow them to receive the capacity they require); and (3) develop a
strategy to address the capacity of existing systems.
The Capacity Development Strategy document, which demonstrates that the DEO has the
statutory authority to ensure that all proposed new water supply systems have technical,
managerial, and financial capabilities to provide safe and affordable drinking water, has
been submitted to EPA and was approved on July 6, 1999. DEO revised the Capacity
Development Strategy Document in May 19, 2009 and was given concurrence by EPA on
July 7,2009. The revision updated regulatory citations and included language to facilitate
Oklahoma's new Engineering Planning and Design Grant for small water systems. The
revision also incorporated language to facilitate implementation of EPA's Sustainable
Infrastructure initiative and expansion of future DWSRF grant funding. The DEO has
authority to review and approve all planning, design documents, and applications to
construct and operate waterworks, as well as ensuring that proper technical, managerial,
and financial requirements are met during the life of the plant. The DEO jurisdiction over
the "permit to construct process" is the main control point through which all public drinking
water systems must be approved before construction can be initiated or drinking water
supplied to the public.
The Capacity Development requirements for DWSRF loan recipients are attained through
the Interagency Agreement between DEO and OWRB. The OWRB requires that the loan
recipients have adequate capacity. All loan applicants that have projects listed on the
Project Priority List have received technical assistance and are being thoroughly reviewed
to ensure that they are fully capable of operating and maintaining a public water supply
system.
The WOD maintains a complete inventory of all water supply systems, monitoring data,
and records of violations. Water supply systems with actual or potential problems are
targeted to receive technical assistance, increased monitoring, and/or legal oversight to
19
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
ensure that the problem does not continue or increase to the point that public health is
threatened.
DEQ's Existing System Capacity Development program was approved by EPA Region 6 on
August 25, 2000.
V. Operator Certification Activities
The SDWA directs the Administrator of EPA, in cooperation with the States, to specify
minimum requirements for operators of community and non-transient non-community water
systems. EPA's final guidelines were published on February 5, 1999. States had two
years from this date to adopt and implement an operator certification program that
complies with EPA's guidelines.
DEQ currently has an operator certification program that requires certification of operators
for community water systems. DEQ has amended Oklahoma's rules related to operator
certification to ensure that the program complies with EPA's final guidelines, including
required certification of non-transient non-community system operators. DEQ submitted
documentation of the revised operator certification program to EPA in August 2000. EPA
approved the program in March 2001.
VI. EPA Automated Standard Application for Payments (ASAP) Payment
System
In lieu of depositing federal capitalization grant funds directly into the DWSRF, the federal
government has implemented the ACH Payment System. The ACH Payment System is a
federal cash management tool that allows the state to draw down the capitalization grant
funds only when eligible costs are actually incurred. The ACH Payment System was
developed by the U.S. Office of Management and Budget to improve cash management of
federal payments. Since federal cash payments to the state cannot be made until costs
are incurred, this procedure eliminates any potential interest earnings between the time the
capitalization grant was awarded and the time the funds were utilized (loaned). The 20
percent state match is placed into the DWSRF prior to receiving federal grant payments.
The ACH Payment System replaced the Federal Letter of Credit, but serves the same
function as a Letter of Credit.
VII. Interest Rates/State Financing Plan
The SDWA places certain federal requirements on projects that receive assistance from
the DWSRF. These federal requirements include "cross-cutting" federal laws and
authorities. Loans below market rate are necessary to create program incentives to
comply with the federal cross-cutting measures and to reduce the cost of compliance with
the SDW A. Federal cross-cutting laws and authorities will continue to be a requirement for
all DWSRF projects utilizing federal capitalization grant funds and state matching funds.
20
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
The Oklahoma DWSRF financing plan objective is to provide (1) a pool of funds to meet
program demand, which is well above that anticipated to be available directly from the
DWSRF, (2) below market interest rate loans which provide program incentives for
Oklahoma water supply systems to become compliant with the federal SDWA, (3)
flexibility/perpetuity of the DWSRF, and (4) a strategy to assist small water systems. To
meet the program objectives of the DWSRF program in an efficient and cost effective
manner, the Oklahoma DWSRF financing plan consists of the following:
The DEQ and OWRB provide two financing plans for both small and large systems, these
are long-term DWSRF loans. The first long-term DWSRF loan matures within 20 years of
the completion of construction and bears a fixed interest rate. The interest and
administration fee is paid semi-annually as funds are drawn. The second long-term
DWSRF loan matures within 30 years and is available for communities who may be
considered disadvantaged. This loan also requires an interest and administrative fee to be
paid semi-annually as funds are drawn. Once .construction is completed, both loans
require that principal, interest and administration fee are paid semi-annually until the loan is
paid. The DWSRF provides long-term financing loans for both small and large public
drinking water systems at an interest rate equal to 70% of Municipal Market Daily (MMD)
AAA scale spot rates for each year through maturity plus 55 basis points, calculated 10
days prior to closing, plus a half point administrative fee.
VIII. Current and Five Year Projection of Water Needs
As a result of the efforts by DEQ and OWRB to establish a "lower than market rate" loan
program, several water supply systems have responded favorably by requesting that their
projects be added to the DEQ DWSRF five (5) year project priority list. The DEQ Project
Priority List for SFY 201 0 contains the current year's needs plus anticipated needs for the
next five years. The SFY 2010 Project Priority List reflects a cumulative demand of
$674,474,249 million over the next five years. The SFY 2010 Project Priority List is
included as Appendix B to the SFY 2010 Intended Use Plan. The SFY 2010 IUP is located
in Attachment 2 of this annual report.
For SFY 2010, ninety (90) projects were identified on the Project Priority List as being
potentially ready to proceed with financing and were identified in the SFY 2010 Intended
Use Plan. All projects are ranked in accordance with the DEQ priority ranking system. The
State's DWSRF Priority List and Intended Use Plan are adjusted periodically to reflect
changes in project status, new requests, and available funds. The sources of funds
necessary to finance SFY 2010 loan requests include FY 97 through FY 09 federal
capitalization grants, state match, principal and interest payments on outstanding loans,
investment earnings, and leveraged bonds. For SFY 2010, a complete breakout of the
sources of funds is included in Appendix A of the Intended Use Plan (included as
Attachment 2). It is anticipated that future federal appropriations for capitalization grants
requiring state matching funds will continue through the year 2011.
21
October 28, 2010
DWSRF Annual Report
State Fiscal Year 2010
IX. Ten and Twenty Year Projection of DWSRF Needs
Oklahoma has approximately 774 operational public water treatment facilities and
distribution systems that are eligible for DWSRF assistance. Most treatment facilities were
originally designed with a 20-year design life, whereas, the design life of a distribution
system is normally 40 years. Based on these facts, it is reasonable to assume that 5% of
all public water treatment facilities and 2.5% of all distribution systems will need to be
replaced or rehabilitated each year. Additional annual needs will occur as a result of poor
operation and maintenance.
The most current estimate of water treatment needs conducted by EPA reflects total public
water supply system needs of greater than $4.1 billion. This current estimate takes into
consideration all drinking water needs for the next 20 years. This estimate is from EPA's
Needs Survey. The current state estimate of needs does not forecast ten-year needs nor
does the state currently have a way of estimating public drinking water needs for the next
ten years. The 2007 Needs Survey was completed in 2007 and the results were published
in the Federal Register, Vol. 74, No. 101, on Thursday, May 28,2009. For Oklahoma, the
2007 Needs Survey results showed a decrease in needs from 1.61% (in 2003) to 1.24%.
The next Needs Survey will be conducted in 2011 with results becoming effective in 2012.
X. Detailed Financial Report
During SFY 2010, DEQ used the 2009 capitalization grant and the 2009 ARRA
capitalization grant to fund set-aside activities and DWSRF loans. DEQ entered into a
contract for the 11th annual financial and compliance audit of the DWSRF program for SFY
2010 which will be performed during SFY 2011. The audited financial statements can be
found in Attachment 3. Audited financial statements for the Loan Administrative Fund for
SFY 2010 are included as Attachment 4.
XI. Cross Collateralization of the DWSRF and CWSRF Revenue Bond Structure
The Master Trust Agreement dated as of October 1, 2003, provides a bond structure that
allows for cross-collateralization of the CWSRF and the DWSRF in order to provide
additional bond security and ratings enhancement for both programs. With cross-collateralization,
excess CWSRF revenues (revenues pledged to repayment of CWSRF
bonds over and above what is needed to make actual debt service payments) would be
available to cure any DWSRF bond payment default or reserve fund deficiency. Likewise,
excess DWSRF revenues would be available to cure any CWSRF bond payment default or
reserve fund deficiency. Pursuant to federal regulations, cross-collateralization support
cannot extend to debt specifically issued for the purpose of providing state matching funds.
The Master Trust Agreement provides adequate safeguards to ensure that future CWSRF
or DWSRF bond issues will comply with this limitation.
Revenues pledged to the repayment of CWSRF bonds include: principal and interest
payments received on local loans made from proceeds of the bond issue and from other
CWSRF program loans; and investment earnings on funds and accounts within the bond
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DWSRF Annual Report
State Fiscal Year 2010
indenture, including a reserve fund comprised of CWSRF program assets. The Master
Trust Agreement and each series bond indenture require that revenues be pledged
sufficient to cover the debt service requirement for each payment date at least 1.1 times.
Accordingly, a cash flow surplus is anticipated for each period absent a borrower default on
a local loan. This surplus flows through a Deficiency Fund in the Master Trust Agreement
that makes the surplus available to other series of CWSRF and DWSRF bonds. The order
of priority for surplus CWSRF pledged revenues is:
(1) Other CWSRF bond issue debt service payment deficiencies;
(2) Any DWSRF bond issue debt service payment deficiencies (but not DWSRF state
match bonds);
(3) Other CWSRF bond issue reserve fund deficiencies;
(4) Any DWSRF bond issue reserve fund deficiencies (but not DWSRF unrestricted
reserve funds that secure DWSRF state match bonds);
(5) To replenish and repay the DWSRF for any surplus DWSRF pledged revenues that
were previously utilized to cure a CWSRF bond issue debt service or reserve fund
deficiency;
(6) All remaining funds are released back to the CWSRF Loan Account.
The order of priority for surplus DWSRF pledged revenues is similarly structured, as such
any surplus CWSRF pledged revenues that are utilized to cure a DWSRF bond issue debt
service or reserve fund deficiency will ultimately be repaid to the CWSRF through operation
of the Master Trust Agreement.
XII. Transfer Authority Between Drinking Water and Clean Water SRFs
In accordance with the Safe Drinking Water Act (SDWA) SRF funds transfer provisions
(Section 302), Oklahoma reserved the authority to transfer funds between the DWSRF and
CWSRF in order to assure adequate capacity to meet funding demands for both programs.
The OWRB had previously reserved the authority to transfer $21.37M (33% of the FY
2003, 2004, 2005, 2006 and 2007 DWSRF capitalization grants). The amount was
increased after receipt of the FY 2008 and FY 2009 DWSRF capitalization grants that were
both $13M each, so the total reserved transfer authority through FY 2009 is $29.99M.
During FY 2005, $12M was transferred from the CWSRF to the DWSRF, 4.9M in FY 2007,
$4.3M in FY 2009 and a total of $8.7 M during FY 2010. No further transfers are
anticipated at this time.
XIII. DWSRF Program Changes
In future years, the Revenue Bonds will be sized, based on the amount of identified need,
and a portion of the proceeds may include funds for the purpose of providing the state
matching funds for future capitalization grants. The first series of Revenue Bonds were
issued in October 2003, the second series of Revenue Bonds were issued in October
2004, the third series of Revenue Bonds were issued in January of 201 0 in the amount of
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DWSRF Annual Report
State Fiscal Year 2010
$94,460,000.00, and another issue is being considered in 2011. The most recent bond
issue was able to fund or help fund over 20 DWSRF Loans and also provide
$5,605,000.00 in funds for the state match portion of the Capitalization Grants.
The DEQ and the OWRB remain committed to achieving the goals of the Safe Drinking
Water Act by providing the greatest amount of low-interest financing to the greatest
number of borrowers possible. The structure and size of the Revenue Bond issue will be
designed to minimize the impact of program changes on local borrowers and maintain the
DWSRF Program as a permanent and perpetual source of financing.
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