Administrative Rule 74:05:11 | South Dakota Legislature

(1) "Act," "Safe Drinking Water Act," the federal Safe Drinking Water Act, 42 U.S.C. § 300f to 42 U.S.C. § 300j-26, inclusive, including the Safe Drinking Water Act Amendments of 1996, as amended to July 1, 2013; Public Law 111-88, enacted October 30, 2009; Public Law 112-10, enacted April 15, 2011; Public Law 112-74, enacted December 23, 2011; Public Law 113-6, enacted March 26, 2013; Public Law 113-76, enacted January 17, 2014; Public Law 113-235, enacted December 16, 2014; Public Law 114-113, enacted December 18, 2015; Public Law 114-322, enacted December 16, 2016; Public Law 115-31, enacted May 5, 2017; Public Law 115-141, enacted March 23, 2018; Public Law 115-270, enacted October 23, 2018; Public Law 116-6, enacted February 15, 2019; Public Law 116-260, enacted December 20, 2019; Public Law 116-93, enacted December 27, 2020; Public Law 117-58, enacted November 15, 2021; and Public Law 117-103, enacted March 15, 2022;

(2) "Affordability criteria," the expected annual residential water rate, based on five thousand gallons usage per month for municipalities and sanitary districts and seven thousand gallons usage per month for all other systems, divided by the median household income;

(3) "Assistance," financial assistance awarded by the Board of Water and Natural Resources for drinking water works pursuant to SDCL 46A-1-60.1 to 46A-1-60.3, inclusive;

(4) "Board," the Board of Water and Natural Resources acting as that board or as the South Dakota Conservancy District;

(5) "Community water system," a water system that has at least fifteen service connections for year-round residents or that serves at least twenty-five year-round residents;

(6) "Construction," any of the following procedures for drinking water works projects: preliminary planning to determine project feasibility; engineering, architectural, legal, fiscal, environmental, or economic studies, surveys, designs, plans, working drawings, specifications, or procedures; rehabilitation or development of new water sources; other necessary actions for the erection, building, acquisition, alterations, remodeling, improvement, or extension of drinking water works; the purchase of equipment; the acquisition of land integral to a project; and the inspection or supervision of any of these procedures;

(7) "Department," the South Dakota Department of Agriculture and Natural Resources;

(8) "Disadvantaged community," the service area of a community water system that meets the following criteria:

(a) For municipalities and sanitary districts:

(i) The median household income is below the state-wide median household income; and

(ii) The monthly residential water bill is forty-five dollars or more for five thousand gallons usage or thirty dollars or more for five thousand gallons usage for projects that will receive loan proceeds from the Drinking Water State Revolving Fund Emerging Contaminants funding or the Drinking Water State Revolving Fund Lead Service Line Replacement funding made available through Public Law 117-58; or

(b) For all other applicants:

(i) The median household income is below the state-wide median household income; and

(ii) The monthly water bill for rural households is seventy dollars or more for seven thousand gallons usage or fifty-five dollars or more for seven thousand gallons usage for projects that will receive loan proceeds from the Drinking Water State Revolving Fund Emerging Contaminants funding or the Drinking Water State Revolving Fund Lead Service Line Replacement funding made available through Public Law 117-58;

(9) "Drinking water works," a community water system to provide piped water for human consumption;

(10) "Emerging contaminants," perfluoroalkyl and polyfluoroalkyl substances or any contaminant in the U.S. EPA, Contaminant Candidate List 5 - Final, 87 Fed. Reg. 68060, 68063-67, (Nov. 14, 2022);

(11) "Facilities plan," an engineering evaluation that describes the need for the proposed supply, treatment, storage, or distribution project based on present conditions and future needs; evaluates the costs and adequacies of appropriate alternatives; identifies potential environmental impacts of the proposed project; and provides the selection and justification of a final alternative;

(12) "Intended use plan," a document prepared annually which describes how the board intends to use available funds for the year to meet the objectives of the Act and includes the amount of funding that will be allocated to the set-asides and a list of potential projects showing the rating for each project;

(13) "Interim financing," a loan for a term not to exceed five years which is to be repaid from the proceeds of a federal grant or loan to be made by an agency or instrumentality of the United States government for a project;

(14) "Loan," the lending of funds by the board to an eligible applicant pursuant to a financing agreement through the purchase or acquisition of any evidence of indebtedness or other obligation which is issued by the applicant and which is payable from taxes; from rates, revenues, charges, or assessments; from distributions of revenue pursuant to a state appropriation or statutory or constitutional provision; or from pledge of property or other sources;

(15) "Median household income," as identified in the U.S. Census Bureau, American Community Survey, DP03 Selected Economic Characteristics 2020: 5-Year Estimates Data Profiles, or by other statistically valid income data supplied by the applicant and acceptable to the board;

(16) "Minimum established rate," a rate charged to residential users of a water system that meets the following criteria:

(a) For municipalities and sanitary districts the monthly residential water bill is forty-five dollars or more for five thousand gallons usage; or

(b) For all other assistance recipients the monthly residential water bill is seventy dollars or more for seven thousand gallons usage;

(17) "Project," the actual erection, building, acquisition, alteration, remodeling, improvement, or extension of drinking water works, including the necessary planning, design, acquisition of land integral to the project, and purchase or installation of equipment; and

(18) "Secretary," the secretary of the Department of Agriculture and Natural Resources.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 28 SDR 95, effective December 19, 2001; 29 SDR 58, effective November 6, 2002; 30 SDR 100, effective December 23, 2003; 30 SDR 170, effective May 10, 2004; 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013; 41 SDR 173, effective May 11, 2015; SL 2021, ch 1, §§ 8, 19, effective April 19, 2021; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.2, 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Reference: DP03 Selected Economic Characteristics 2020: 5-Year Estimates Data Profiles information is available at no cost over the internet at https://danr.sd.gov/Funding/EnvironmentalFunding/docs/2020_MHI.xlsx.

74:05:11:02. Eligible systems. A facility is eligible for funding under the drinking water state revolving fund loan program, established in SDCL 46A-1-60.1, if the facility is:

(1) Included in the state water plan before the submittal of the application;

(2) On the intended use plan and the project priority list; and

(3) Sponsored by one of the following entities:

(a) A water user district organized under SDCL chapter 46A-9, a watershed district organized under SDCL chapter 46A-14, a water project district organized under SDCL chapter 46A-18, a sanitary district organized under SDCL chapter 34A-5, and any other lawful special purpose governmental entity that may construct drinking water works;

(b) A state agency, instrumentality, or political subdivision of the state;

(d) A nonprofit corporation or cooperative; or

(e) Any other public water system that will receive loan proceeds from the Drinking Water State Revolving Fund Emerging Contaminants funding or the Drinking Water State Revolving Fund Lead Service Life Replacement funding made available through Public Law 117-58.

A facility is eligible for interim financing under the drinking water state revolving fund program if the project sponsor provides evidence, in a form satisfactory to the board, that an agency or instrumentality of the United States government has committed to make a federal grant or loan for the project, and the proceeds of the grant or loan will be assigned to repay the interim loan.

An applicant seeking funding solely for the expenses associated with the design of a facility and preparation of plans and specifications may receive funding without the facility being included in the state water facilities plan.

A facility that has been funded by the board is deemed to remain in the state water facilities plan for purposes of a request by the sponsor for additional funding for the facility.

Source: 23 SDR 195, effective May 25, 1997; 30 SDR 170, effective May 10, 2004; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.2, 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Rule 74:05:11:03 Annual public hearing on proposed intended use plan.

74:05:11:03. Annual public hearing on proposed intended use plan. Preparation of the intended use plan begins after the state water plan application deadline of October 1 of each year. After completion of the proposed intended use plan by the secretary, the board shall conduct a hearing to receive oral and written comments from the public on the proposed intended use plan. The secretary shall give at least 20 calendar days' notice of the public hearing in at least three newspapers of general circulation in the state.

The board shall accept written comments during this period. After all comments are received and within 30 days after the hearing, the board shall compile and adopt the intended use plan.

Source: 23 SDR 195, effective May 25, 1997; 33 SDR 106, effective December 26, 2006.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:04 Amendment of intended use plan.

74:05:11:04. Amendment of intended use plan. The board may amend the intended use plan at any board meeting if the proposed action is included on the agenda posted for the meeting.

Source: 23 SDR 195, effective May 25, 1997; 33 SDR 106, effective December 26, 2006.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:05 Project priority determined by points.

74:05:11:05. Project priority determined by points. The secretary shall award points according to § 74:05:11:06 to determine the priority of construction needs for a drinking water works project. The priority list shall be part of the intended use plan.

Source: 23 SDR 195, effective May 25, 1997; 36 SDR 208, effective June 28, 2010; 41 SDR 173, effective May 11, 2015.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

74:05:11:06. Project priority rating system. Each potential drinking water works project is assigned points based on the criteria in the following table:

Priority Criteria			Priority Points

(1) Occurrences of nitrates, fecal coliform, or E. Coli bacteria in samples within the past three years have exceeded the allowable limits as defined in chapter 74:04:12, and this project will address the suspected cause of these occurrences;


			150 points
or
occurences of an emerging contaminant in samples within the past three years, and this project will address the suspected cause of these occurrences or provide an alternative water source to replace a source or sources contaminated with an emerging contaminant;			100 points
or
occurrences of chronic primary drinking water contaminants in samples within the past three years have exceeded the allowable limits as defined in chapter 74:04:12 or the system is in violation of a treatment technique, and this project will address the suspected cause of these occurrences or correct the treatment technique violation;


			100 points
			(Maximum
			Points = 150)

(2) Affordability criteria:			75 points

(a) Greater than 1.0 percent for community water systems whose median household income is less than or equal to $54,000; or
(b) Greater than 1.5 percent for community water systems whose median household income is more than $54,000;

(3) Consolidation of facilities where:

(a) One or more community water systems consolidate with another community water system and the consolidation is cost effective;			50 points
(b) A community water system will receive water from another community water system but will continue to operate its water system in some capacity;			25 points

(4) Occurrences of secondary drinking water contaminants in samples within the past three years have exceeded the guidelines, and this project will address the suspected cause of these occurrences. The specific contaminants and the maximum contaminant level are:			2 points per contaminant (up to a maximum of 10 points)

	chloride	250 mg/L
	color	15 color units
	fluoride	2.0 mg/L
	foaming agents	0.5 mg/L
	iron	0.3 mg/L
	manganese	0.05 mg/L
	odor	3 threshold odor number
	pH	range: 6.5 to 8.5
	silver	0.1 mg/L
	sulfate	250 mg/L
	total dissolved solids	500 mg/L
	zinc	5 mg/L

(5) Occurrences of total coliform in samples within the past three years have exceeded the allowable limits, and this project will address the suspected cause of these occurrences;			25 points

(6) Rehabilitation of contaminated drinking water sources or development of sources to replace contaminated sources;			25 points

(7) Development of sources if existing sources are unable to supply the peak day demand or unable to supply the peak day demand with the largest source out of service;			15 points

(8) Installation of water meters if:

(a) The meters are being installed on services that were previously not metered; or			50 points
(b) The meters being installed are replacing existing meters;			10 points

(9) Replacement of transmission lines for the following reasons (points are additive as they apply):

(a) Removal of lead piping;			30 points
(b) Decrease in water loss volume by 10% or more;			15 points
(c) Looping of lines that will result in improved water quality;			10 points
(d) Eliminating cast iron or asbestos cement pipe;			5 points

(10) Construction of storage for a system with capacity less than an average day demand or to address low pressure problems within the system, where low pressure is defined as less than twenty pounds per square inch at ground level at any point in the distribution system under all conditions of flow;			15 points

(11) The construction, upgrade, or replacement of a water treatment plant or its components to assure compliance with upcoming or existing regulations;			50 points

(12) Population points according to the following schedule based on the population of the applicant as reported by the 2020 census as prepared by the Bureau of Census, Department of Commerce:

	1 to 200 persons		2 points
	201 to 500 persons		3 points
	501 to 1,000 persons		4 points
	1,001 to 2,500 persons		5 points
	2,501 to 5 ,000 persons		6 points
	5,001 to 10,000 persons		7 points
	10,001 to 30,000 persons		8 points
	30,001 and greater		10 points.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 28 SDR 95, effective December 19, 2001; 29 SDR 58, effective November 6, 2002; 30 SDR 100, effective December 23, 2003; 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013; 41 SDR 173, effective May 11, 2015; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Rule 74:05:11:06.01 Repealed.

74:05:11:06.01. Green infrastructure priority points. Repealed.

Source: 36 SDR 208, effective June 28, 2010; repealed, 41 SDR 173, effective May 11, 2015.

Rule 74:05:11:07 Priority list bypass procedures.

74:05:11:07. Priority list bypass procedures. Projects will be funded based on their project priority rating. Projects with the highest priority rating that have submitted a complete application and demonstrated adequate financial, managerial, and technical capacity to receive financial assistance shall be funded before lower-rated projects. Projects on the priority list may be bypassed if they have not demonstrated readiness to proceed by submitting an application, and the next highest priority project which has submitted an application shall be funded. The department shall exert reasonable efforts to ensure that the higher-rated projects on the priority list are funded.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:08 Amendment of priority list.

74:05:11:08. Amendment of priority list. The board may add a project to the priority list at any board meeting if the action is included on the agenda posted for the meeting. The department shall assign points to projects added to the priority list according to § 74:05:11:06.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 36 SDR 208, effective June 28, 2010; 41 SDR 173, effective May 11, 2015.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:09 Deadline for application.

74:05:11:09. Deadline for application. Applications are due on the first day of January, April, July, and October. Applications must be postmarked or delivered to the department no later than the day on which applications are due. The department shall present applications to the board after the completion of all required technical reviews and financial analyses. The department shall notify the applicant of the board meeting at which the application will be considered by the board.

Source: 23 SDR 195, effective May 25, 1997; 28 SDR 95, effective December 19, 2001; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:10 Repealed.

74:05:11:10. Drinking water-related project to be approved before construction. Repealed.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 28 SDR 95, effective December 19, 2001; 33 SDR 106, effective December 26, 2006; repealed, 40 SDR 14, effective July 29, 2013.

Rule 74:05:11:11 Amount of financial assistance.

74:05:11:11. Amount of financial assistance. The board may award less financial assistance than the amount requested in the application or may deny assistance. If the applicant is eligible for assistance from more than one program, the board may approve financial assistance under any of the programs or under a combination of more than one program, including the consolidated water facilities construction fund program under chapter 74:05:07. If financial assistance is approved from more than one program, the amount of assistance approved may not exceed the aggregate amount of funding requested. In determining any financial assistance, the board may consider an applicant's proposed activities; ability to carry out the proposed project, including the ability to repay the financial assistance; the applicant's technical, managerial, and financial ability to maintain compliance with the Act; and the availability of funds.

Source: 23 SDR 195, effective May 25, 1997; 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:11.01 Principal forgiveness as part of assistance agreements.

74:05:11:11.01. Principal forgiveness as part of assistance agreements. Assistance recipients that meet the minimum established rates may receive principal forgiveness as authorized by the Act in an amount determined by the board. Disadvantaged communities may receive principal forgiveness as authorized by the Act in an amount determined by the board.

Source: 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:11.02 Principal forgiveness amount determination.

74:05:11:11.02. Principal forgiveness amount determination. In exercising its discretion in determining the amount of principal forgiveness, the board may consider the following decision-making factors, which are set forth in alphabetical order:

(1) Annual utility operating budgets;

(2) Available local cash and in-kind contributions;

(3) Available program funds;

(4) Compliance with permits and regulations;

(5) Debt service capability;

(6) Economic impact;

(7) Other funding sources;

(8) Readiness to proceed;

(9) Regionalization or consolidation of facilities;

(10) Technical feasibility;

(11) Utility rates; and

(12) Water quality benefits.

Source: 36 SDR 208, effective June 28, 2010; 41 SDR 173, effective May 11, 2015.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

74:05:11:12. Application requirements. Any applicant for financial assistance shall submit an application to the board on forms obtained from the department. An application may not be considered by the board until the secretary has determined that the application is complete. A complete application must include:

(1) An application form to include:

(a) Certification of Drinking Water Needs Categories;

(b) Certification Regarding Debarment, Suspension, and Other Responsibility Matters;

(d) Capacity Assessment Worksheets for Public Water Systems;

(2) Two years of the most recent audit or financial statements to include specific accounting of the fund pledged for repayment of the loan;

(3) Current year's budget;

(4) Documentation of the current user rates and surcharges, if applicable;

(5) A resolution of authorized signatory for submittal of application and signing of payment requests;

(6) A draft facilities plan; and

(7) Amortization schedules for all existing debt secured by the proposed revenue pledged.

Source: 23 SDR 195, effective May 25, 1997; 28 SDR 95, effective December 19, 2001; 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013; 41 SDR 173, effective May 11, 2015; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Rule 74:05:11:12.01 Application review and completeness determination.

74:05:11:12.01. Application review and completeness determination. The secretary shall review an application for completeness in accordance with the guidelines in § 74:05:11:12. The secretary shall notify the applicant within 30 days after the application deadline that the application is complete or incomplete. If the application is incomplete, the secretary shall identify in the notice those items required to complete the application. Except as addressed in § 74:05:11:12.02, the applicant has 20 days to provide additional information intended to complete an application. The secretary shall notify the applicant whether or not the resubmission or additional information is satisfactory to complete the application.

The secretary shall conduct an overall review of the applicant's financial status criteria and the factors for principal forgiveness decision making as identified in § 74:05:11:11.02. The secretary shall prepare a summary of the applicant's financial status and may provide a copy to the board. This summary may include an analysis of all assets and liabilities and an analysis of the applicant's financial capability as documented by the most recent audit or financial statement. The secretary shall recommend approval or denial of financial assistance. The secretary's recommendation for approval of financial assistance may include awarding any combination of principal forgiveness, loan, or partial funding from this program or in combination with other programs.

Source: 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010; 40 SDR 114, effective July 29, 2013.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

74:05:11:12.02. Facilities plan submittal. Any applicant requesting financial assistance for a drinking water project must prepare a facilities plan. The facilities plan shall at minimum provide the information contained in subdivision 74:05:11:01(11). The applicant shall be notified of any deficiencies in the draft facilities plan submitted with the application. A completed facilities plan must be received by the department to initiate the environmental review process. The facilities plan is not considered complete until the following items are received:

(1) Information to address the deficiencies identified by the secretary;

(2) Receipt of evidence of advertisement of a public hearing;

(3) Minutes from the public hearing;

(4) Responses from the U.S. Fish and Wildlife Service; South Dakota Department of Game, Fish and Parks; Natural Resources Conservation Service; U.S. Army Corps of Engineers; and the State Historical Preservation Office; and

(5) Resolution of any issues identified in the public hearing or by the agencies listed in § 74:05:11:12.02(4).

Source: 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010; 40 SDR 14, effective July 29, 2013; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Rule 74:05:11:12.03 Environmental determinations.

74:05:11:12.03. Environmental determinations. For projects that pursuant to the Act require an environmental review, the environmental review process must be completed before the closing of the loan. For projects requiring a Categorical Exclusion, the process is considered complete upon publication of the Categorical Exclusion. For projects requiring a Finding of No Significant Impact determination, the process is considered complete when the 30-day comment period following the publication of the Finding of No Significant Impact has elapsed and any comments have been addressed.

Source: 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:13 Eligible use of funds.

74:05:11:13. Eligible use of funds. Financial assistance may be awarded for projects included in the intended use plan for one or more of the following uses:

(1) Any one or more of the following items for establishing, upgrading, consolidating, or protecting the water source of drinking water works:

(a) Preparation of facilities plans or other planning documents and the DWSRF loan application;

(b) Engineering, architectural, legal, fiscal, environmental, or economic studies;

(c) Surveys, designs, plans, acquisition of land integral to the project, working drawings, specifications, equipment purchases, or other necessary actions for the erection, building, acquisition, alteration, or remodeling improvement;

(d) Construction of new drinking water works or the expansion of existing drinking water works;

(e) Operation and maintenance manual preparation;

(f) Operator startup training; or

(g) The purchase of another system's capacity pursuant to a consolidation plan to bring the system into compliance, if it is the most cost-effective solution for that system, when considering the buy-in fee and user fees;

(2) Refinancing existing debts if they were incurred after July 1, 1993, and if the debts were used to fund projects identified in subdivision (1) of this section. In addition, the projects must satisfy the statutory requirements contained in the Act;

(3) Guarantee or purchase insurance for local debt obligations;

(4) Interim financing of projects identified in subdivision (1) of this section; or

(5) Capitalized interest.

Source: 23 SDR 195, effective May 25, 1997; 30 SDR 170, effective May 10, 2004; 33 SDR 106, effective December 26, 2006.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

74:05:11:14. Set-asides. Repealed.

Source: 23 SDR 195, effective May 25, 1997; 33 SDR 106, effective December 26, 2006; 49 SDR 100, effective May 22, 2023.

Rule 74:05:11:15 Financial security.

74:05:11:15. Financial security. Specific requirements to secure a loan must be included in the assistance agreement. The loan must be secured by one or more of the following:

(1) Full faith and credit of the borrower;

(2) Pledges of taxes or assessments;

(3) Pledges of facility revenue;

(4) Liens on the interest of the applicant in all real and personal property, easements, rights-of-way, water rights, and similar property rights, including leasehold interests, used in connection with the facility, whether owned at the time the loan is approved or acquired with loan funds;

(5) A security interest in the recipient's goods, machinery, inventory, equipment, and other personal property, including fixtures now owned or acquired later, together with all accessions and all substitutions and replacements; documents of title now existing or acquired later by the recipient, covering goods of any kind; accounts or contract rights now existing or arising later; instruments, documents, chattel paper, or general intangibles, including chooses in action, tax refunds, and insurance proceeds; rights to receive any payments in money or kind, or any other obligations or indebtedness owed to the recipient from any source, including guarantees of these rights; and all proceeds and products of all of the items listed in this subdivision; or

(6) For loans made for interim financing of a project, the assignment of the proceeds of the federal grant or loan to be made by an agency or instrumentality of the United States government for the project.

Source: 23 SDR 195, effective May 25, 1997; 30 SDR 170, effective May 10, 2004.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:15.01 Repealed.

74:05:11:15.01. Time restrictions. Repealed.

Source: 33 SDR 106, effective December 26, 2006; repealed, 36 SDR 208, effective June 28, 2010.

Rule 74:05:11:16 Duration of assistance.

74:05:11:16. Duration of assistance. The board shall set the repayment period for each assistance agreement. The maximum allowable repayment period is five years for interim financing, and 30 years in all other cases as permitted by the Act. The repayment period may not exceed the useful life of the facilities.

Source: 23 SDR 195, effective May 25, 1997; 30 SDR 170, effective May 10, 2004; 33 SDR 106, effective December 6, 2006; 41 SDR 173, effective May 11, 2015.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:17 Assistance agreement interest rate.

74:05:11:17. Assistance agreement interest rate. The board may set interest rates at any board meeting if the proposed action is included on the agenda posted for the meeting. The board shall set the interest rates based on the following criteria:

(1) Current market rates;

(2) Rates secured on state-issued matching funds; and

(3) Current demand for program funds.

The interest rate on the loan is 0 percent if the board determines to award a 100 percent principal forgiveness loan.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 33 SDR 106, effective December 26, 2006; 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Cross-Reference: Notice of meetings of public bodies, SDCL 1-25-1.1.

74:05:11:18. Loans to disadvantaged communities. The board may provide additional subsidies to disadvantaged communities in the form of principal forgiveness as provided under the Act. The board may set interest rates for disadvantaged communities below the rate set for other loan recipients. A loan for a disadvantaged community with a median household income less than sixty percent of the state-wide median household income may be awarded at zero percent interest.

Source: 23 SDR 195, effective May 25, 1997; 25 SDR 93, effective January 9, 1999; 28 SDR 95, effective December 19, 2001; 40 SDR 14, effective July 29, 2013; 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.2.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3; inclusive.

Rule 74:05:11:18.01 Disadvantaged loans to project sponsors acting on behalf of a disadvantaged community.

74:05:11:18.01. Disadvantaged loans to project sponsors acting on behalf of a disadvantaged community. A community water system that does not meet the disadvantaged criteria, if it is constructing a project to directly benefit a disadvantaged community, may receive a loan with the same additional subsidy in the form of principal forgiveness or interest rate and term that the disadvantaged community would receive.

Source: 28 SDR 95, effective December 19, 2001; 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

74:05:11:18.02. Loans to project sponsors subject to the Build America, Buy America Act provisions. The board may set interest rates for projects subject to the Build America, Buy America Act, Public Law 117-58, provisions below the rate set for other loan recipients.

Source: 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.2.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

74:05:11:18.03. Loans to project sponsors replacing lead service lines. A loan, or that portion of a loan, that will be used to replace lead service lines and receives loan proceeds from the Drinking Water State Revolving Fund Lead Service Line Replacement funding made available through Public Law 117-58 may be awarded at zero percent interest.

Source: 49 SDR 100, effective May 22, 2023.

General Authority: SDCL 46A-1-60.2.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3, inclusive.

Rule 74:05:11:19 Repealed.

74:05:11:19. Review of financial status. Repealed.

Source: 23 SDR 195, effective May 25, 1997; 36 SDR 208, effective June 28, 2010; repealed, 40 SDR 14, effective July 29, 2013.

Rule 74:05:11:20 Assistance agreements.

74:05:11:20. Assistance agreements. If an application is approved for funding, the board shall execute an assistance agreement with the sponsoring entity. The board shall establish the terms and conditions included in the assistance agreement. Assistance agreements may include the following requirements of the recipient:

(1) To acquire all property rights necessary for the project, including rights-of-way and interest in land needed for the construction, operation, and maintenance of the facility; to furnish title insurance, a title opinion, or other documents showing the ownership of the land, mortgages, encumbrances, other liens, or title defects; and to obtain and record the releases, consents, or subordinations to the property rights for holders of outstanding liens or other instruments as necessary for the construction, operation, and maintenance of the facility;

(2) To provide security as required in § 74:05:11:15;

(3) To provide for the receipt of revenues sufficient to meet the requirements of debt service, operation, and maintenance and to establish reserves in an amount sufficient to assure that expenses and payments will be paid on time for loan installments, emergency maintenance, and replacement of assets that have a useful life less than the repayment period of the loan;

(4) To acquire and maintain insurance coverage, including fidelity bonds;

(5) To establish and maintain books and records relating to the construction and operation of the facility and its financial affairs;

(6) To provide the secretary access to all books and records relating to the facility and access to the property of the system so that the secretary may ascertain whether the sponsoring entity is complying with the provisions of this chapter and with the assistance agreement;

(7) To use funds that remain available after all costs to the facility have been paid for needed extensions, enlargements, and improvements of the facility with the written permission of the board;

(8) Not to sell, transfer, lease, or otherwise encumber the facility, any portion of the facility, or interest in the facility without the prior written consent of the board while the funding agreement is in effect;

(9) If the undertaking would obligate the source of funds pledged to repay the assistance agreement, to agree not to borrow money from any source, enter into an agreement, or incur other liabilities in connection with the facility, exclusive of normal maintenance, without the prior written consent of the board;

(10) To agree that, upon default in the payments of principal and accrued interest on the loan or in the performance of any covenant or condition, the board may, at its option, do one or more of the following:

(a) Declare immediately due and payable the entire principal amount then outstanding and the accrued interest and all costs associated with collection of the outstanding balance;

(b) For the account of the borrower, incur and pay reasonable expenses for repair, maintenance, and operation of the facility and other expenses necessary to cure the cause of default; or

(c) Take possession of the facility, repair, maintain, operate, sell, lease, or otherwise dispose of the facility to another entity; and

(11) To secure written approval from the secretary for any changes or modifications in the plans of a facility before or during construction according to conditions and specifications set forth in the assistance agreement.

The board may amend assistance agreements as it considers necessary and circumstances warrant.

Source: 23 SDR 195, effective May 25, 1997; 40 SDR 14, effective July 29, 2013.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:21 Disbursement of funds.

74:05:11:21. Disbursement of funds. The secretary shall approve all disbursements to the recipient.

Source: 23 SDR 195, effective May 25, 1997; 36 SDR 208, effective June 28, 2010.

General Authority: SDCL 46A-1-60.1 to 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

Rule 74:05:11:22 Repealed.

74:05:11:22. Retention of records. Repealed.

Source: 23 SDR 195, effective May 25, 1997; repealed, 36 SDR 208, effective June 28, 2010.

Rule 74:05:11:23 Accounting methods and audits.

74:05:11:23. Accounting methods and audits. Each recipient must maintain accounting records in accordance with applicable financial and reporting standards as set forth in the assistance agreement. Each recipient must agree to have audits performed in accordance with applicable state and federal law, as set forth in the assistance agreement. Each loan recipient must retain all accounting records, books, and supporting material for a minimum of three years after completion of the project. Each recipient of set-aside funds must retain all accounting records, books, and supporting material for a minimum of three years after the end of the assistance agreement. These accounting records must be made available for inspection by state and federal representatives upon request.

Source: 28 SDR 95, effective December 19, 2001; 31 SDR 89, effective December 27, 2004; 33 SDR 106, effective December 26, 2006.

General Authority: SDCL 46A-1-60.3.

Law Implemented: SDCL 46A-1-60.1 to 46A-1-60.3.

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