73-10g-502.5. Capital asset management and reserve funding analysis for public water systems.
(1) As used in this section:
(a) "Board" means the Drinking Water Board appointed under Section 19-4-103.
(b) "Public water system" means the same as that term is defined in Section 19-4-102.
(c) "Reserve analysis" means a detailed evaluation of a public water system's reserves, assessing fund balances and projected future needs to ensure sufficient money is set aside to cover repairs, replacements, or restoration of water infrastructure capital assets and operational needs to determine:
(i) the need for a reserve fund to accumulate reserve money; and
(ii) the appropriate amount of money in a reserve fund, as determined by the public water system through recognized financial practices for public water systems, such as updated rate studies, budgeting, asset management, and financing resources.
(2) By no later than July 1, 2028, as a condition of receiving state or federal financing or grants, the governing body of a public water system that is not a water conservancy district shall adopt a capital asset management plan.
(3) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the Drinking Water Board shall make rules that establish the elements of a capital asset management plan for a public water system that is not a water conservancy district.
(4) By no later than July 1, 2028, as a condition of receiving state or federal financing or grants, the governing body of a public water system shall adopt a capital asset reserve funding plan that includes:
(a) an inventory of the major capital assets identified in a reserve analysis that reasonably require reserve money;
(b) a statement of the condition and probable remaining useful life, as of the date of the reserve analysis, of each capital asset identified under Subsection (4)(a);
(c) an estimate of the cost to renew, replace, or upgrade each capital asset identified under Subsection (4)(a);
(d) an estimate of the total annual contribution to a reserve fund necessary to meet the costs identified in Subsection (4)(c) during a capital asset's useful life and at the end of a capital asset's useful life;
(e) an analysis of a reserve fund's relationship to the setting of water rates, including the setting of rates pursuant to recognized affordability metrics for nondiscretionary indoor water use for health and sanitation; and
(f) a reserve funding plan that:
(i) recommends how the public water system may fund the costs described in Subsection (4)(c), which may include long term financing strategies in addition to cash reserves such as municipal bonding when authorized; and
(ii) does not rely on obtaining grants to fund the reserve fund.
(5) The governing body of a public water system required to adopt a capital asset reserve funding plan under this section shall update the public water system's capital asset reserve funding plan every five years.
(6) The governing body of a public water system required to adopt a capital asset reserve funding plan under this section shall collect money in accordance with the capital asset reserve funding plan recommendations described in Subsection (4)(f).
(7) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the Drinking Water Board shall make rules that:
(a) provide a process under which the division may monitor a public water system's compliance with this section; and
(b) impose administrative penalties similar to the penalties imposed under Section 19-4-109 for failure to comply with this section.
Enacted by Chapter 105, 2025 General Session
