Funding and Incentives for Consolidation and Regionalization Projects

This website discusses how to fund the costs for consolidation and regionalization projects. If sufficient private capital exists to allow for self-funding, that option is typically the fastest way to consolidate, and it may be less expensive than state or federal funding, which requires additional contract requirements. Private transient and non-transient water systems that are businesses and are looking to consolidate, such as wineries, restaurants, and office buildings will need to use private capital as state funding sources are not available. However, some nonprofit non-transient non-community water systems, such as public schools, childcare facilities and eldercare facilities may be eligible.

How Does the Funding Process Work in General?

Several funding programs are available through the Division of Financial Assistance (DFA) to support consolidation. It should be anticipated that the process will involve several years. Funding is typically split into two phases -- planning and construction. A separate planning and construction application is submitted for each phase of the project. If local funds are available to fund planning work, it is possible to forego the planning funding process and then request reimbursement of planning costs upon execution of a construction funding agreement. In order to ensure reimbursement, the water system should coordinate with DFA to ensure all reimbursement requirements are met.

Submittal of all drinking water funding applications is done using the Financial Assistance Application Submittal Tool (FAAST) webpage. Each application will consist of four parts: a general application, an environmental application, a technical application, and a financial application. The required forms for both planning and construction applications and instructions are located here. Additional guidelines for consolidation projects are also available. There is a DFA "Before You Start" document that is helpful to ensure the most efficient timing on all parts of the project application. Be sure to complete the environmental section of the application quickly as this section tends to have the longest process time.

After receiving a funding agreement for the planning process, hiring an engineer to look at consolidation/regionalization options is the first part of the planning phase. The Engineering Firm Selection Process document can help summarize those items to look for when hiring an engineering consultant. The Division of Drinking Water (DDW) and DFA, working in collaboration with the water system's selected engineer, will help continue the engineering portions of the project from conception to completion, including changes such as LAFCO boundaries and water rights changes. As previously mentioned, expect that this will be a multi-year process. Typically, the receiving water system will be required to submit the construction application so keep them informed about the progress of any planning application.

If there are public health issues associated with the drinking water, for example it is above a maximum contaminant level, and it supplies a disadvantaged community, Interim Emergency Drinking Water may be available for the residents (e.g. hauled water, bottled water) until the construction project is completed.

Consolidation Funding Incentives for Receiving Water Systems

Intended Use Plan 2021-2022 Drinking Water State Revolving Fund (DWSRF) (