Board OKs $195 million loan cap for Washington County reuse project, approves 40-year, 0.5% terms

The Utah Board of Water Resources voted unanimously June 26 to authorize up to $195 million — equal to 47.2% of Phase 1 costs — for a multi‑phased water reuse and advanced purification project proposed by the Washington County Water Conservancy District.

The board’s action authorizes a loan at 0.5% interest amortized over 40 years, with estimated annual payments of $5,540,000. The motion passed on a roll call vote with all board members recorded as voting in favor.

The district’s plan is a multi‑phased program intended to produce roughly 24,000 acre‑feet per year of treated reuse water by 2042. Phase 1, which staff and the applicant expect to complete by about 2030, focuses on reuse for agricultural and secondary irrigation and includes more than 60 miles of new pipeline, three reservoirs, upgraded reclamation facilities and other conveyance and storage. Phase 2 would add a 21,000,000‑gallon‑per‑day advanced water purification facility, Warner Valley Dam and additional storage and pipelines to treat reuse water to drinking‑water standards when demand requires it.

Tom Cox, project manager for the Division of Water Resources staff, told the board the overall project estimate is $1,360,000,000 and that Phase 1 is estimated at $413,000,000. Cox said staff recommended the board authorize 47.2% of Phase 1 costs "up to $195,000,000." He also explained how the board’s affordability guideline informed the recommended loan terms: staff estimated the average monthly water cost per connection would be about $79.66 under the initial proposal, above the board guideline of $60.25 per month, prompting staff to propose lower interest and an extended repayment period.

Representatives of Washington County described the project as driven by rapid growth and local hydrology. Zach Renstrom, a representative of the Washington County Water Conservancy District, said the plan is part of a 20‑year strategy and stressed conservation’s role: "We’re expecting 25% of our future water use to come from conservation," he said. Renstrom described tiered rates the district uses to encourage conservation and said the district has signed agreements with most cities in the county on reuse and ownership of wet water.

Jonathan Ward, a financial consultant for the applicant, told the board the project and its requested funding structure are "unique," and discussed a request to structure the board’s funds as a revolving loan to Washington County and to offer more favorable long‑term terms to stretch the legislative allocation. Ward cited Senate Bill 277 (2023) and a state account referred to in the meeting as the water infrastructure restricted account (WAIRA) as part of the statutory context for the applicant’s funding requests. He also outlined why the applicant sought a 50‑year amortization at 0.5% and taxable structuring to preserve interest earnings in state hands; board members noted statutory constraints that currently limit typical local government bond terms to about 40 years.

Board members asked how grant funding and federal awards factor into the plan. The applicant said some federal funds have been awarded and are under contract or construction, while other large grants (for example, from the Bureau of Reclamation) remain uncertain and are not included in the conservative funding list presented to the board. The applicant said the district will continue to pursue additional federal grants targeted at reuse projects in the lower Colorado River basin.

Board members also raised policy and statutory questions. Board member Dana Van Horn said she was uncomfortable with an interpretation that would effectively reserve the legislative funds for a single county over decades, noting the possibility that other counties could later meet the statutory requirements and seek the same funding. Another member expressed legal concern that some aspects of the applicant’s revolving‑loan and 50‑year requests appeared to lie outside the "plain language of the statute."

The board’s approved motion set the loan rate at 0.5% over 40 years with repayment and affordability figures as presented by staff. Board staff recorded that no public comments were submitted online on this item.

Why it matters: Washington County is among the fastest growing counties in Utah and sits in a dry portion of the state; the project is intended to expand reuse and conservation capacity and to free higher‑quality sources for culinary use through exchanges. The scale of the plan — $1.36 billion over multiple phases — and the board’s use of state revolving funds mark a significant statewide financing decision.

What’s next: The board’s authorization commits a funding cap and loan terms but leaves details — including final bond structuring, legal reviews of revolving‑loan mechanics, and permitting — to be worked out before funds are disbursed. The applicant indicated that certain pipeline and site‑specific work can proceed where federal nexus or federal funding is not required, while other elements will require NEPA review and additional permits.