Planning a Drinking Water System Project - PUB2649

Steps in a Drinking Water System Project

1. Hire an engineer.
2. Evaluate existing system and needed improvements.
3. Evaluate and select a preferred alternative.
4. Hold a bond election.
5. Apply for construction approval.
6. Initiate construction
7. Complete construction.
8. Apply for a permit to dispense or permit transfer

This fact sheet provides drinking water system owners an overview of the steps generally involved in a drinking water infrastructure project. It is not a comprehensive description of every requirement. A drinking water infrastructure project starts with an evaluation of existing infrastructure, and identification and prioritization of needed improvements. All plans and reports to accomplish these tasks need to be signed and sealed by an engineer registered in the state of Missouri, so the first step is to hire an engineer.

Financial Assistance Opportunities for System Evaluation and Pre-Project Planning

Engineering Report Grant Application (if applicable): 

Community drinking water systems meeting minimum eligibility criteria may apply for a grant from the department’s Public Drinking Water Branch to address the costs to hire an engineering firm and develop an engineering report. Matching funds may be required. Minimum eligibility criteria can be found in the grant informational materials posted as grant funds become available. Funding for this program cannot be used as reimbursement for services provided prior to grant award contract. For procurement of an engineer, the qualifications-based selection process must be used and documented to be eligible for this grant. For more information, please contact the Public Drinking Water Branch Permits and Engineering Section at 573-751-5924.

Step 1. Hire an Engineer

All engineering reports, plans and specifications must be signed, sealed, and dated by a Missouri professional engineer. The procurement of planning and design services is one of the most important steps in the design or upgrade of wastewater systems. The procurement of engineering services should be in accordance with sections 8.285 through 8.291, RSMo.

Qualifications-based selection is a recommended process to negotiate procurement of an engineering firm based on qualifications and competence relative to the work to be performed. Qualifications-based selection information is provided by the American Council of Engineering Companies. Failure to properly procure engineering services can lead to ineligibility for funding provided by the department and other government agencies. If a community intends to request funding assistance, the community is encouraged to contact the funding agency to ensure they have the latest requirements.

Professional engineers registered in Missouri can be found on the Missouri Division of Professional Registration website. 

Step 2. Evaluate Existing System and Needed Improvements

Evaluate Treatment, Distribution and Storage: An engineering evaluation and report on existing drinking water facility infrastructure and needed improvements should be developed in order to prioritize and estimate costs for needed system improvement alternatives. Once alternatives are determined, an evaluation of the system’s financial capabilities and rate structure should be conducted to determine if solutions are economically practical and feasible (more detail below). The engineering report should include discussion, documentation and rationale indicating the preferred alternative is the most reasonable and sustainable option in accordance with 10 CSR 60.3.010(1)(A), (2)(B) and 10 CSR 60.10.010(1). The engineering evaluation should also anticipate future rules and regulations.  Guidelines for engineering reports, plans and specifications for construction authorization permits can also be found in the Minimum Design Standards For Missouri Community Water Systems, chapter 1; or the Standards For Noncommunity Water Systems, chapters 1 and 2.

Communities that intend to seek plan, specification and construction funding assistance from the department are encouraged to apply and coordinate early to reduce any duplication of effort and ensure department requirements are met during early planning stages. 

Evaluate Water Loss: Unaccounted-for water loss, caused by leaks and unbilled or unknown uses, can significantly increase the cost of system operation through excessive power usage, wear and tear or damage to equipment, increased operational repair costs, potential emergency response costs, etc. Water loss often goes unchecked through unmetered use and production as well as aging meters. The evaluation of water loss can be accomplished  a number of ways, including: observing and documenting flow through meters, using valves to isolate sections of line and observing pressure changes across valves, performance of a water audit for detailed water loss information, etc.  Once the evaluation has been completed, prioritization of work and a detailed cost estimate for distribution system improvements can be determined.  

Evaluate Rate Structure: During the system evaluation, the existing user rate/ revenue structure, potential infrastructure improvements and needed revenue for improvements will need to be evaluated. The Financial Assistance Center created a tool, 

to help systems evaluate and determine user rates. 

Evaluate Bylaws, Policies, Ordinances (etc.): Bylaws, policies and ordinances should prevent excess cost to the public drinking water system in response to matters including: non-remittance of customer fees, system failures, emergencies, etc. The department offers an online customizable Drinking Water State Revolving Fund User Charge Ordinance and Drinking Water State Revolving Fund User Ordinance.

Identify Existing Debt:  Existing debt should be taken into consideration along with infrastructure improvement costs to determine project limitations and feasibility of improvements. Reserve accounts should exist for emergency equipment needs, debt service and operational maintenance needs. 

Determine Bonding Capacity: After the engineering evaluation and cost estimate for the system have been completed and improvement alternatives are identified the system should identify their bonding capacity and limitations. If no current bonding capacity is available and the community is able to increase their bonding capacity, the community should be ready to proceed with the bond election.  

Step 3: Evaluate and Select a Preferred Alternative   

The system uses the engineering report to select a improvement projects.  

Financial Assistance Opportunities for Construction Project Funding

Communities that intend to seek funding assistance from the agencies listed below are encouraged to apply and coordinate early. Financial assistance programs often have additional engineering, environmental, and financial requirements the community must meet.

The department's Financial Assistance Center provides funding to communities for certain water and wastewater infrastructure projects with the programs listed below.

• Drinking Water State Revolving Fund program is a partnership between the U.S. Environmental Protection Agency and the state of Missouri to provide funding for drinking water projects that address present violations or prevent future violations of the health-based drinking water standards. Funding may be provided for planning, design and construction of eligible projects. The SRF program is primarily a subsidized loan program but grants may be available depending on annual appropriations by Congress. The SRF program offers loans with up to a 70% interest rate subsidy and loan terms up to 20 years or the expected life of the project, whichever is less.
  
  SRF applicants are required to submit an application that must be postmarked by Feb. 15, prior to the fiscal year for which SRF assistance is being sought. Applications received after the deadline will still be considered for funding to the extent funds are available. The Missouri Safe Drinking Water Commission adopts an intended use plan each year, typically in early October, showing how the SRF dollars are intended to be allocated. Projects allocated funding in the plan still must meet the program requirements and the community must undergo a due diligence review for legal, institutional, managerial and financial capability prior to the department entering into a binding funding agreement for the project. Projects are funded once they are ready to proceed with construction.
  
  If a system intends to seek funding through the Drinking Water SRF program, it is encouraged to apply and coordinate early in the engineering evaluation process. Systems are also encouraged to use the Facilities Plan Submittal Checklist to compose and submit an engineering report or facility plan. 

• Small Borrower Loan is a state-funded program with a $100,000 loan limit, available to communities or public water districts with a population under 1,000. This loan does not require bonding capacity and provides up to a 70% interest rate subsidy. 

U.S. Department of Agriculture Rural Development Loans and Grants help very small, financially distressed rural communities finance drinking water source, treatment, storage and distribution improvements to serve rural areas and towns. For more information, contact the USDA-RD Missouri office at 573-876-0976.

Missouri Department of Economic Development’s Community Development Block Grant offers grants to small Missouri communities to improve local facilities, address critical health and safety concerns, and develop a greater capacity for growth. For more information, contact the Missouri Department of Economic Development at 573-751-3600.

Step 4. Hold Bond Election

During the course of evaluating the current system and alternatives, the community should be ready to proceed with a bond election to the extent funding of that type is available and necessary. Prior to the bond election the community should make every attempt to advertise the need to pass the bond during the election. If the community is seeking state or federal financial assistance, contact the appropriate agency to learn about specific bond election requirements associated with each funding program. Expect that the funding programs will require the community have a debt instrument (i.e., bonds) in place in order to be eligible for loans or grants.

Step 5. Apply for Construction Approval

Construction authorization from the department is necessary prior to the start of work.  Information about construction authorization can be found on the Public Drinking Water Branch's permits and engineering webpage or by calling 573-751-5924. In order to receive construction authorization for proposed improvements, a construction authorization application, the engineering report, plans, specifications and supporting documentation must be submitted to the Public Drinking Water Branch’s Permits and Engineering Section in accordance with 10 CSR 60.3.010(1)(A), (2)(B) and 10 CSR 60.10.010(1) and (2). Guidelines for engineering reports, plans and specifications for construction authorization can also be found in the Minimum Design Standards For Missouri Community Water Systems, or the Standards For Noncommunity Water Systems.

Once the department approves construction, a construction authorization is issued in accordance with 10 CSR 60-3.010(1)(A). A construction authorization is valid for two years from the date of approval. If the community determines more time is needed prior to construction of the project, or if there is a halt in construction of more than two years, the community may ask for an extension or may resubmit an updated application. If the system fails to submit a request for extension before the construction authorization expires, a new construction authorization application will need to be obtained.

Step 6. Initiate Construction

Construction of the selected drinking water system improvements should begin to take place once construction authorization is granted. If the community has received SRF funding, construction should be completed in a timely manner and will be subject to at least quarterly inspection by the department.

Step 7. Complete Construction

A statement of work should be submitted to the department by the engineer when the construction is complete, in accordance with 10 CSR 60-10.010, together with any necessary documentation that is required if the department provided funding for the project. The department conducts a final inspection. Final construction approval or a written interim approval to operate must be obtained from the department before the project is placed into service.

Step 8. Apply for a Permit to Dispense or Permit Transfer (if new owner or new system)

Community and noncommunity drinking water systems, including systems serving subdivisions are required to have a permit to dispense water in accordance with 10 CSR 60-3.010(3). If needing to transfer ownership, a Permit to Dispense Transfer Application must be submitted.

Where to Find Help

Each Department of Natural Resources regional office is staffed with a community services coordinator. The community services team offers assistance to local governments by answering questions and providing one-on-one assistance on specific environmental issues, helping communities find resources such as technical assistance, grants and loans and training, and assisting small, technically- and financially-challenged communities with developing a comprehensive plan to address current and future environmental needs. If your community would like to seek assistance from the department, contact the department at 800-361-4827.

References

Drinking Water State Revolving Fund
Drinking Water State Revolving Fund Checklist.