Protecting Public Health and the Environment.

Public Water System Construction Loans

DEQ's Drinking Water Revolving Loan Fund provides below-market-rate interest loans to help repair or build new drinking water facilities. Loans of up to 100% of project costs may be awarded for project design and/or construction.

Program Eligibility

Community water systems and nonprofit, noncommunity water systems are eligible to participate in the Drinking Water Loan Program. Community water systems serve at least 15 service connections used by year-round residents or regularly serve at least 25 year-round residents. Noncommunity water systems regularly serve at least 25 of the same persons over 6 months in a year.

Loan Process

DEQ queries drinking water systems annually to obtain information on projects for which loan funds can be used. Potential candidates must submit a Letter of Interest (LOI) to DEQ indicating their desire for DEQ funding and stating the improvements or expansion needed. Those systems that submit LOIs are eligible for placement on the state’s priority list, which is developed through a rating and ranking process based upon public health concerns, long-term viability of the system (i.e., sustainability), and the status of the system’s compliance with state and federal regulations. The systems on the priority list are further refined based on the entity’s readiness to proceed. The refined list makes up the final fundable list.

Fundable projects on the priority list are placed on the Intended Use Plan (IUP), which outlines the purpose and goals of the state's drinking water loan program, explains how projects are selected for funding, and identifies priority projects eligible for state assistance. The fiscal year (FY) 2019 IUP was reviewed and adopted by the Board of Environmental Quality in May 2018. The fiscal year (FY) 2020 IUP was reviewed and adopted by the Board of Environmental Quality in May 2019.

Once funding is secured from US Environmental Protection Agency (EPA) and the state match is provided, communities with projects on the IUP are invited to submit applications. After review of the application and satisfaction that all environmental and legal requirements have been met, a loan may be offered.

Interest Rate

For FY 2017 (July 1, 2016–June 30, 2017), the interest rate for loans ranges from 1.50% to 3.00%. These loans must be fully repaid within 20 to 30 years of project completion. Some applicants may qualify as disadvantaged and be eligible for an interest rate as low as 0% and possible principal forgiveness.

Source of Revenue

Funding is derived from four sources. Congress appropriates funds to EPA, which then allots those funds to the states based upon set formulas. Each state is required to provide a 20% match. Idaho's match comes from a transfer to the loan account from the Water Pollution Control Account. Loan repayments and interest earnings provide other resources for new drinking water loans.

In 2016, an audit of the Idaho State Drinking Water Revolving Fund was conducted by the Legislative Services Office of the Idaho State Legislature in 2016. The audit concluded that the DWSRF's financial statements are materially accurate and reliable, and that fiscal operations comply with laws and regulations affecting fiscal operations.

Periodically, EPA conducts an audit of state revolving loan funds to ensure that monies are being appropriately allocated.

FY 2019 Loan Recipients

  • Athol, City of ($3,286,000): Funding will be used to construct a new water system, which includes demolishing two existing water reservoirs, modifying an elevated water reservoir, constructing a standpipe and water main, and adding transmission line, electrical, pump, and building upgrades.
  • Elk River, City of ($79,500): Funding will be used to identify lead exceedance in the water system and consider different treatment options to address the source of lead contamination.
  • Mores Creek Rim Ranches Water District ($985,000): Funding will be used to construct a new water system consisting of new wells along Mores Creek, treatment building, distribution piping, and water meters.
  • Wayside Estates Association, Inc. ($648,150): Funding will be used to add a new well and well house and new water system distribution mains and meters.

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DEQ State Office

1410 N. Hilton
Boise, ID 83706
(208) 373-0502 or (866) 790-4337

Staff Contacts

Grants and Loans Bureau Chief
Tim Wendland
(208) 373-0439

Grants and Loans Supervisor
MaryAnna Peavey
(208) 373-0122

Loan Officer
Charlie Parkins
(208) 373-0577

Grants and Loans Analyst
Adam Oliver
(208) 373-0406

Grants and Loans Analyst
LaDonn Kaylor
(208) 373-0556

DEQ Resources

State Rules

Rules for Administration of Drinking Water Loan Program

Related Pages

Public Water System Planning Grants