Operating Criteria of the
Wyoming Water Development Program
New Development Program

C. Procedures

1. Application Procedures

An applicant seeking funding and project assistance from the WWDC and representatives from the WWDC, assigned to review the application, shall comply with or address the following:

a. An application fee of One Thousand Dollars ($1,000.00) must be submitted with each application. The application fee shall be deposited into Water Development Account No. 1. Acceptance of the fee does not obligate the Water Development Commission or State of Wyoming to fund a study or provide construction funding for any proposed project or purpose. If the application is denied, then seventy-five percent (75%) of the application fee shall be refunded to the applicant. The authority to require an application fee is provided by W.S. 41-2-118(a)(xii).

b. A certified original of a resolution passed by the council or other governing body of the sponsoring entity shall be provided with an application for a Level II study or Level III construction project. If the applicant is in the process of forming a public entity, this requirement may be deferred until the formation process is completed. A public entity must be in place before the study or the construction project can commence.

c. The WWDO project manager assigned to review the application shall advise teh applicant of the timetable for project review and evaluation.

d. While the Water Development Program provides for loans and grants, the willingness and ability of project sponsors to assume responsibility for repayment of project costs shall be a factor in the selection of projects to receive state assistance.

e. For governing bodies representing special districts, e.g., improvement and service districts and water and sewer districts, that are responsible for water service to those rural subdivisions approved by Boards of County Commissioners on or after July 1, 1997, the Department of Environmental Quality's comments and recommendations filed pursuant to W.S. 18-05-306 must be submitted with the application.

f. To become eligible for funding, the WWDC shall require sponsor certification related to compliance pursuant to public water system rate requirements as set forth in W.S. 15-7-602 and W.S. 16-1-108.

2. Eligibility Criteria

The due date for project applications and application fees is September 15 of each year. The application must include a description of the project, a listing of available information pertinent to the project, and information describing the financial capabilities of the sponsor. A representative of the WWDC shall inspect the proposed project site. The WWDC shall develop their preliminary recommendations on new applications during their November meeting. The acceptance of the project application for incorporation into the program shall be based on the following criteria:

a. The proposed project must be consistent with the goals and objectives of the Wyoming Water Development Program as outlined in W.S. 41-2-112 and these criteria.

b. The Water Development Program must be the most appropriate source of funds for project study and construction.

c. There must not be any apparent economic, legal, environmental or technical problems that would impair or prohibit project development.

d. The project sponsor shall be a public entity that can legally receive state funds, incur debt, generate revenues to repay a state loan, hold title and grant a minimum of a parity position mortgage on the existing water system and on improvements appurtenant to the project or provide other, adequate security for the anticipated state construction loan.

e. The proposed projects must serve twenty (20) or more municipal/domestic water taps and have installed individual water meters for each tap, 2,000 or more acres of irrigated crop land, or must rehabilitate watershed infrastructure, which will develop or preserve the beneficial use of water in a watershed. The watershed rehabilitation projects must possess an estimated minimum useful life span of twenty-five (25) years and demonstrate that sufficient public benefits will accrue to justify construction of the anticipated improvements. If they do not, the project applicant shall be given the opportunity to make a formal presentation to the WWDC relative to that applicant's ability and willingness to pay for the project, the need for the project, the direct and indirect benefits of the project and any other information the applicant deems as reasons the project should be approved. The formal presentation shall be made at the WWDC's November meeting. However, if the request is denied or tabled, the sponsor may request that a public meeting be held in the project area to gather added information. In this case, the sponsor shall be provided the opportunity to make the formal presentation at the Commission's December/January meeting.

f. There shall be a comparison of the project area median household income to the state median household income as reported by the U.S. Bureau of Census and Department of Housing and Urban Development (HUD) and a comparison of the median household income to the state average utility rate. This information shall be used in the ability and willingness to pay analysis and to assist in the determination of whether there is justification for the Commission to recommend a deviation from the loan/grant mix set forth in Chapter III, Paragraph 8 c. below or the interest rate set forth in Chapter III, Paragraph 8 d. below.

3. Recommendation Process

If the WWDC approves the project for inclusion in their recommendations to the Select Water Committee, a budget shall be developed to perform either a Level I or Level II study. For Level III construction projects the budget estimates compiled during the study process will be incorporated in the WWDC's recommendations. These recommendations are included in the WWDC's annual legislative program, which is subject to a series of internal, public, and legislative reviews. The WWDC prepares draft legislation, the Omnibus Water Bill - Planning, to appropriate funds to finance Level I and Level II studies and prepares draft legislation, the Omnibus Water Bill - Construction, to appropriate funds to finance Level III construction projects. The projects can commence, once the bills are approved by the legislature.

4. Level I Study Description

Level I studies are preliminary analyses and comparison of development alternatives.

a. The typical Level I study shall identify or provide the following:

i. Development options;

ii. Potential project beneficiaries and the benefits each option could provide;

iii. Factors that could impair or prohibit the development of any identified option including legal constraints;

iv. An analysis of water rights including identification of conflicting prior rights; and

v. Option comparisons based on physical and legal water availability, technical, economic, legal, and environmental considerations.

b. Level I sudies shall be performed in sufficient detail to identify projects or project options, if any, that should be pursued. In evaluating projects that could be advanced to Level II, the following considerations shall be made:

i. Whether there is an opportunity to economically develop water for Wyoming's use and benefit;

ii. Whether there are viable solutions to resolve technical, legal and environmental problems; and

iii. Whether the sponsor is a public entity that can receive state funds, incur debt, generate revenues to retire that debt, possess title to the project and the existing system or provide security to repay anticipated state construction loans, and demonstrate operational and managerial capability.

c. After the Level I studies are completed the WWDC shall initiate its review process to determine if the project should proceed to Level II. During its November meeting, the Commission shall review the findings of the report, consider the sponsor's input, and make its preliminary recommendations. The project sponsor shall be notified of the preliminary recommendation and will be given the opportunity to comment either through written correspondence or through an oral presentation to the Commission at the November meeting. The Commission may choose to hold public meetings prior to its December/January meeting to obtain input for its final recommendation. At the December/January meeting, the Commission shall finalize their recommendation. If the recommendation is favorable, a budget shall be adopted and the project will be included in the WWDC's recommended legislative program.

5. Level II, Phase 1 - Study Description

The Level II process consists of two phases, which serve first to address project feasibility and then, if the project is determined feasible, to refine the project to the status necessary for a Level III funding request.

a. A Level II Phase 1 investigation shall provide the following.

i. A reasonable quantification of the amount of water that can physically and legally be developed;

ii. A determination of water needs that could be served by the project;

iii. A determination of technical feasibility including a safety analysis and for dam and reservoir projects (including stock ponds) a geotechnical and basin geomorphology analysis;

iv. A general configuration depicting preliminary physical characteristics of the project;

v. A preliminary project operation plan;

vi. Cost estimates for construction, consultant services, and operation and maintenance;

vii. Identification of direct and indirect benefits that result from the implementation of the project;

viii. Identification of costs and benefits that would result by incorporating recreation, hydropower generation, and flood control functions into the project operation;

ix. A definition of economic, legal, environmental, and administrative problems and identification of alternate solutions to those problems;

x. Identification of lands that may be affected by the project; and

xi. An analysis of the project sponsor's ability to pay.

b. Once all Level II phase 1 investigation has been completed, the WWDC will evaluate the results and will consider the sponsor's need for the project, interest in the project, and willingness and ability to financially participate in the project, to determine if the project should proceed to Level II Phase II.

6. Level II, Phase II - Study Description

a. A Level II Phase II investigations shall include the following design and technical services:

i. Hydrological investigations;

ii. An operating plan that addresses water management during and after construction;

iii. A conceptual design and general configuration of the project.

iv. The identification of state and federal permits and clearances necessary to construct the project.

v. An environmental analysis, including environmental assessments, environmental impact statements, etc., of the proposed project's operation and configuration, including:

1. The identification of anticipated impacts on or improvement to the water quality which may occur as a result of the project, i.e. total dissolved solids or total suspended solids, etc;

2. An assessment of the longevity of dam and reservoir projects, including stock ponds, with respect to sediment loading and hydrologic events;

3. Identification of the potential to develop wetlands eligible for Wyoming's Wetland Banking Program; and

4. The performance of a cultural resource survey of the general project area, as applicable;

vi. The identification of applications and appraisals needed to purchase or obtain easements on public or private lands;

vii. The development of a detailed schedule of the activities necessary to complete the project;

viii. The preparation of an itemized project budget that includes costs for design engineering, permitting, land acquisition, construction, construction engineering, operation, maintenance and replacement; and

ix. The preparation of a socioeconomic analysis of the costs and benefits of the proposed project. This analysis shall include the net present value of the stream of benefits and costs associated with the project. The net present value shall be calculated using a discount rate based on a real rate of return as opposed to a market or nominal rate of return. Sociological and environmental consequences of the project shall be described where values are difficult to place on either benefits or costs.

7. Level III Approval Considerations

Projects shall not progress to Level III construction status unless the sponsor and state are committed to complete the project. Issues that shall be considered and addressed in the development of Level III recommendations include:

a. Whether the project yields a water supply capable of meeting present needs;

b. Whether the project will yield a reserve water supply to meet future needs;

c. Whether the project is affordable given the existing status of the water development account and prior commitments to the account;

d. Whether the project appears to be a good investment for the State of Wyoming considering primary and secondary or indirect project benefits;

e. Whether the applicant is a public entity that can receive state funds, incur debt, generate revenues to retire that debt, possess title to the project and the existing water system and provide security for anticipated state construction loans;

f. When all project costs are considered, including debt retirement, costs for consultant services and land acquisition, costs for mitigation of environmental impacts, and operation and maintenance costs, whether the project is economically feasible for the sponsor; and

g. Whether the project sponsors and/or beneficiaries are willing to assume financial responsibility for the project. Whether the project sponsors understand the scope of the project. Whether the project will meet the sponsor's needs. Whether the project sponsors understand they are obligated to assure that the project must be designed and inspected by registered professionals; i.e. licensed engineers and geologists. If the sponsors wish to pursue construction using their own manpower and equipment, whether they understand the funding limits established by the state. Once construction is initiated, whether the project sponsor understands that they cannot voluntarily abandon the project without repaying state grants and loans, including lost interest-earning opportunities.

After the Level II analysis and report have been completed, the Commission shall determine if the project should be elevated to a Level III construction status.

After other funding sources have been considered, the Water Development Program's per tap or per acre investment shall be compared to the sponsor's ability to pay. The project sponsors shall be given the option of making a formal presentation to the WWDC relative to that sponsor's ability and willingness to pay for the project if the Commission determines that the project should not advance due to high repayment costs. The need for the project, the direct and indirect benefits of the project, and any other information the sponsor deems, as reasons the project should be advanced or funded shall be included in the presentation. The formal presentation shall be made at the WWDC's November meeting. If the request is denied or tabled, the sponsor may request that a public meeting be held in the project area to gather added information. The sponsor shall then be provided the opportunity for a presentation at the Commission's December/January meeting.

8. Level III Funding Considerations

At their November meeting, the Commission shall consider the project specific information and sponsor input, when developing their preliminary recommendations. If it is determined that the project should proceed to Level III, the following shall also be addressed in the Commission's recommendations.

a. The project budget, which shall include costs associated with project permitting, design, land acquisition, construction engineering, and construction.

b. Level I and Level II Study Cost Sharing

The WWDC shall determine if the sponsor should be required to pay a portion of the Level I or Level II study costs incurred to develop the recommended alternative needed to secure funding for Level III construction. Typically, the WWDC is the lead agency in developing Level I and Level II reports. The Commission solely funds the studies to insure the reports are unbiased and performed in such a manner as to determine whether the state should invest in the project. This procedure was also established because the project is better served if the sponsor uses its financial resources to fund their share of the project or to service the debt associated with the construction loan. However, in those exceptional cases where the sponsor assumes the role of lead agency in Level I and Level II studies, it shall share in the costs of those studies. Further, if through the Level II process, a groundwater well is developed that will be used as the water source for a Level III project; the sponsor shall share in the cost of the well.

c. Financial Plan - Loan Grant Mix

The WWDC's preliminary grant recommendation shall be no more than fifty percent (50%) for proposed Level III projects.

d. Financial Plan - Terms of the Loan

i. Statutory guidelines establish a minimum rate of four percent (4%) for program loans unless public benefits warrant a lower rate. The WWDC shall utilize the same interest rate as the Wyoming State Lands and Investment Board. Those sponsors who feel a more favorable interest rate is warranted due to a limited ability to pay shall make a formal presentation to the WWDC documenting their case. Sponsors electing to pursue this option shall be made aware that the WWDC is reluctant to deviate from this interest rate and such requests will be denied unless they are clearly documented and justified.

ii. W.S. 41-2-121 specifies the term of the loans cannot exceed fifty years after substantial completion of the project. Further, the term of the loan should never exceed the economic life of the project. The sponsor's method of loan repayment (water rates, taxes, bonds, etc.) shall also be considered in establishing the term of the loan.

iii. The statutes allow the WWDC to recommend that the payment of interest and principal be deferred up to five years after substantial completion of the project. This special condition shall be granted only on a limited basis. The sponsor's method of repayment and the longevity of the sponsor's existence as a legal entity should be key considerations in determining if this deferment should be granted. In no event can the deferment and term of the loan exceed fifty years.

e. State/Local Partnership

The program has a philosophy that water development can be achieved through state/local partnerships. The sponsor can complete a water supply project with state funding assistance. If the sponsor uses all of the water, the project basically belongs to the sponsor. However, if there is the opportunity to sell water for other purposes, the sponsor and state share in the revenues. This insures that a project sponsor will not receive a "windfall" from the sale of water that was made available, in part, from a state grant. Therefore, if the project develops a new water supply, the WWDC shall establish the terms of the program's participation in the future sale of water in its preliminary recommendations.

When considering funding for new storage projects, the WWDC shall seek alternative sources of funding for the proportionate share of the construction cost associated with storage space reserved for reservoir fishery or instream flow purposes. If instream flow and fishery interests are financially incapable of funding the proportionate share of the costs for the storage space reserved for fishery or instream flow purposes, the WWDC will review whether this proportionate cost should be borne entirely by the Water Development Program. If the WWDC determines that sufficient benefits will accrue to the public, they will recommend to the legislature that the space reserved for instream flow and fishery purposes should be borne entirely by the Water Development Program. Language reflecting this condition will be reflected in the project specific legislation. Whether the WWDC will recommend that this expense should be borne by the Water Development Program, will be determined on a case-by-case basis.

9. Notification and Hearing Process

After the November meeting, the project sponsor shall be notified of the WWDC's preliminary recommendation. A public hearing shall be held at which time a description of the project and the WWDC's preliminary recommendation will be presented for the purpose of obtaining public input. At its December/January meeting, the WWDC shall finalize its project recommendations. Reports on the input received at the public hearing will be considered. Project sponsors shall be given the opportunity to formally present its input to the WWDC, either through written correspondence or an oral presentation at the meeting. After the WWDC has finalized its recommendation and if the recommendation is favorable to the project, it shall be included in the WWDC's annual proposed legislative program. The Level III process does not commence until the Legislature approves project specific legislation, which identifies and defines the project financing plan and budget.

10. Level III Construction

The following activities must be addressed once the legislature appropriates funds to construct the project:

a. The project agreement, note and mortgage, which formalize sponsor and WWDC project responsibilities and the financing procedures, shall be the first activity undertaken. Funds cannot be committed for expenditure until these documents are executed. For those projects where the sponsors wish to pursue construction using their own manpower and equipment, the project agreement shall reflect that funding is only available to pay the cost of invoiced materials. Permit and easement acquisition and retaining labor, equipment, professional services are the obligation of the sponsor.

b. For projects that are funded through a combination of funding sources, the sponsors shall certify that all funding has been secured and is available for project purposes before construction can commence.

c. Professional services required for final design, permitting and construction engineering shall be secured pursuant to the requirements of the State Board of Engineers and Surveyors, the Board of Registration for Professional Geologists, and state procurement statutes.

d. Environmental Impact Statements or Assessments shall be prepared, as required.

e. Permit applications shall be prepared to secure all necessary construction permits and approvals.

f. The construction documents, including technical specifications, contract documents and bidding plans shall be prepared. This work may be performed concurrently with the permitting process if it doesn't adversely impact project feasibility.

g. Easements or fee titles necessary to construct the project shall be acquired. The scheduling of this task shall be sequenced to minimize impacts to property owners and to expeditiously construct the project.

h. Mitigation of project impacts on cultural resources shall be undertaken.

i. After the above activities are completed or there is assurance that they will be completed prior to any construction activities, the construction bidding process can be initiated.

j. Construction of the project and construction administration/inspection shall commence upon the acceptance of the bid and upon the issuance of the notice to proceed.

k. The date project benefits accrue to the sponsor, for purposes of triggering loan repayment schedules shall be determined by the Commission.

l. Once compliance regulatory permitting conditions has been achieved and reclamation and mitigation activities have been completed, project close out procedures may be initiated.

11. Legislative Process and Program Exclusions

Before water development funds can be allocated by the WWDC to any particular project, the Governor and Legislature must approve the WWDC recommendations. The Governor is given the opportunity to approve the WWDC's annual legislative program prior to each legislative session. The Select Water Committee serves to advise the WWDC and reviews the WWDC program recommendations each year. Typically, the Select Water Committee serves as the sponsor of Water Development Program legislation. The Legislature's formal approval of planning studies is documented by passage of the Omnibus Water Bill-Planning and their formal approval of Level III construction funding is documented by the passage of the Omnibus Water Bill-Construction.

a. New Development Program Exclusions

In order to further clarify the list defined under program priorities, the following are examples of projects/investments that should not be made under the program:

i. Transfer of Water Rights from One Purpose to Another -- This type of transaction could be contrary to the primary purpose of the program and may cause economic impact to the state. These types of transactions shall be completed on a willing buyer/willing seller basis but shall not be subsidized with low interest loans or grants from the program.

ii. Refinancing of Existing Projects -- Refinancing of existing projects that have been financed with non-state resources is not an allowable program expense. Further, refinancing may conflict with goals and objectives of other programs. However, the Commission may consider refinancing eligible projects, which have acquired temporary or emergency funding form the State Land and Investment Board.

iii. Wastewater Projects -- Wastewater treatment plants and/or collection systems do not meet program criteria as water development projects.

iv. Environmental Enhancement -- Although the feasibility of providing environmental improvements shall be considered on all program projects, the program does not have the resources to pursue projects that solely serve environmental enhancement purposes. There are other state and federal agencies that have the authority and funding to pursue these projects.

v. Flood Control -- Projects which deal solely with flood control is essential in many parts of the state. There are active federal funding programs that serve this purpose. Therefore, sponsors are encouraged to seek funding from these alternate sources.

vi. Distribution Systems -- For purposes of program implementation, distribution systems are considered to be those facilities whose primary purpose is to deliver water to individual users. Funding and implementation of distribution projects should be the responsibility of the sponsor. There is alternate funding available for these projects through other state and federal programs.

vii. Water Treatment Facilities -- Historically, the program has not participated in water treatment projects. Although the need for new or improved treatment facilities has been considered in the cost of water supply projects, the funding for water treatment components remains the responsibility of the sponsor. However, the legislature enacted W.S. 16-1-301 which authorizes the use of water development funds to match federal funds to address Safe Drinking Water Act compliance issues. This matching grant program is titled the "Drinking Water State Revolving Fund." It is a permanent revolving loan fund that is not included in the annual appropriations described in the omnibus water bills.

Operating Criteria Table of Contents
Water Development Commission Homepage | Search the WWDC Website