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) 2018 IUP was reviewed and adopted by the Board of Environmental Quality in May 2017. The fiscal year (FY) 2019 IUP was reviewed and adopted by the Board of Environmental Quality in May 2018.

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 2018 Loan Recipients

  • Kootenai County Water District #1 ($395,000): Funding will be used to complete a facility plan with an environmental review and repair or place existing pipes, pumps, and water meters.
  • City of Weston, Franklin County ($2.2 million): Funding will be used to construct a new water storage tank, a new well, well house, and transmission line.
  • City of Iona, Bonneville County ($3.9 million): Funding will be used to install a new generator and transmission lines and construct a new storage tank and well.
  • City of Sugar City, Madison County ($3.7 million): Funding will be used to help pay for a new well, a booster pump, a storage tank, a generator, distribution piping, and a radio read system for water meters.
  • City of Mountain Home, Elmore County ($2.7 million): Funding will be used to construct a new 2-million gallon storage tank and overflow pond near an existing tank
  • City of Preston, Franklin County ($1 million): Funding will be used to replace aging distribution piping and extend a distribution line.
  • City of Rigby, Jefferson County ($2 million): Funding will be used to install a new generator and to construct a storage tank, booster pump station, and computer control software.
  • City of New Meadows, Adams County ($1.5 million): Funding will be used to repair and/or replace the storage tank, booster pumps, and distribution piping and to drill a new well.
  • City of White Bird, Idaho County ($85,000): Funding will be used to investigate the cause of the drinking water system’s depressurization and make a distribution system repair to fix the proximate cause of the depressurization. Costs to fill and flush the system are also considered eligible.

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DEQ State Office

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

Staff Contacts

Loan Programs Manager
Tim Wendland
(208) 373-0439

Loan Programs Coordinator
MaryAnna Peavey
(208) 373-0122

Loan Officer
Charlie Parkins
(208) 373-0577

Environmental Analyst
Adam Oliver
(208) 373-0406

Outreach and Environmental Planner
Rocky Kharel
(208) 373-0556

DEQ Resources

State Rules

Rules for Administration of Drinking Water Loan Program

Related Pages

Public Water System Planning Grants