Commerce and DNRC brief panel on target-rate rules, regional water projects and a $10 million DNRC request

Helena — At a Subcommittee F hearing on House Bill 11, Montana Department of Commerce staff laid out how the agency calculates "target rates" — a financial benchmark used to evaluate a community’s ability to pay for water and wastewater projects — while officials from the Department of Natural Resources and Conservation described multi-jurisdiction regional water systems and requested state support.

Becky Anseth of the Department of Commerce told members the department relies on American Community Survey median-household-income data and recurring DNRC rate surveys to compute a community’s target rate. The target rate determines whether a town is eligible for specific tiers of grant support: 500,000, 625,000 or 750,000 grants presented in testimony. Anseth said the department typically uses a five-year ACS estimate so communities and consultants can plan consistently across several-year project cycles.

"If they are not currently at that rate, we require them to raise their rates throughout the project," Anseth told the committee, explaining that eligibility often carries conditional requirements for rate increases tied to the total grant and loan package.

Autumn Coleman, deputy administrator at DNRC’s Conservation and Resource Development Division, provided an overview of regional water systems and said DNRC is seeking up to $10 million in HB 11 to support construction, administration and interim financing for four regional systems. DNRC staff provided maps and a short status update: Fort Peck Dry Prairie is near construction completion, Rocky Boy’s North-Central project is authorized and in early stages, the Dry Red regional feasibility study is ongoing with a Bureau of Reclamation feasibility due in late 2025, and the Central Montana Regional Water System has delivered treated water to Harlowton and is completing pipeline work to Roundup.

Bob Church, representing the Central Montana Regional Water Authority, told the committee the project will deliver high-quality drinking water to as many as 10 communities and about 250 rural users. Church said federal feasibility work shows a positive benefit-cost ratio and that state match is critical to letting some phases proceed: "The federal government actually determined that it had a benefit-to-cost ratio of like 1.3 to 1," he said.

Committee members asked Commerce and DNRC for more detailed calculations, and staff said they will present the full target-rate math and SRF/loan interactions at a later session. The committee also asked applicants to supply up-to-date user-rate tables and municipal mill-levy figures to confirm each community’s capacity to carry loan debt and meet program match requirements.

Why it matters: The target-rate calculation is the department’s primary tool for assessing grant eligibility and for sizing loan-forgiveness packages. The DNRC regional requests — if funded — would accelerate projects joining many communities to shared treated water supplies and could reduce long-term household costs in areas now relying on poor-quality or insufficient local sources.

What’s next: Commerce will provide the subcommittee a deeper presentation of the target-rate methodology; DNRC will provide more detail on the requested $10 million and the phasing and costs of regional-system phases.