Colorado’s Disadvantaged Community Definition and Scoring Criteria
- Policy Category: State Revolving Funds, Water Funding
- State: Colorado
- Date Implemented: 2023
2023
Colorado Drinking Water Revolving Fund Rules: “In Senate Bill 95-083, the Colorado General Assembly created the Drinking Water Revolving Fund to provide financial assistance to certain drinking water projects in the State of Colorado. The fund is held and administered by the Colorado Water Resources and Power Development Authority (hereinafter referred to as the “Authority”), which is authorized to issue bonds to finance the program. Moneys in the fund may be used to provide financial assistance to projects included on a Project Eligibility List. The statute at C.R.S. 37-95-103 and C.R.S. 37-95-107.8 directs the Colorado Board of Health (‘Board of Health’) to submit additions and modifications to the Project Eligibility List annually for adoption by the General Assembly by Joint Resolution signed by the Governor.”
“Disadvantaged Community” Definition and Tiered Principal Forgiveness Eligibility
Colorado Drinking Water Revolving Fund defines a disadvantaged community as having a population of 10,000 or less and with three other primary factors. 1) Community median household income (MHI) is equal to or less than 80 percent of state MHI, 2) Community median household value (MHV) is less than 100 of state MHV, and 3) A.) County 24-month unemployment average is greater than the state average plus 1 percent. OR B.) Loss in the number of jobs in the county over 10-year period. Secondary factors include assessing whether a community’s current and projected debt per tap to median home value is more than the median Colorado municipality, as well as the revenue per tap to MHI necessary to cover operations and depreciation for a system.
The state produced a helpful explainer on DACs which you can find here. The Water Pollution Control Revolving Fund follows a similar definition and scoring process on the clean water side.
Each community seeking funding is put through a “starting scenario” to determine their status as a DAC. Depending on their “category” or severity of “disadvantaged”, they are eligible for different low interest rates for 20- or 30-year terms.
According to the DWRF 2025 IUP, applicants that qualify as “category 1” may receive up to $3 million in principal forgiveness per project, with an interest rate of 2.5% for a 20-year term, while a “category 2” applicant may receive up to $3 million in principal forgiveness per project, with an interest rate of 1.5% for a 20-year term (both categories increase the interest rate by 0.25% for a 30-year loan term).
Overall, Colorado’s scoring criteria considers affordability, water quality and public health, and CPDWR compliance to determine tired of principal forgiveness. Ranging between less than 100 points to more than 170 points, projects are eligible for between a maximum of 20% and 80% principal forgiveness.
Additional Subsidy for DACs
Colorado provides additional subsidies to eligible disadvantaged communities in the form of principal forgiveness, and a portion of this is directed towards design and engineering costs to prepare for construction. Design and engineering projects up to $300,000 can be funded. DACs can also receive a planning grant up to $10,000 per project to complete needs assessments, environmental assessments, energy audits, etc.
Find further detail in the Intended Use Plan (IUP) and this Defining Disadvantaged Communities: Providing Resources for Drinking Water and Wastewater Infrastructure Projects, State Revolving Fund (published 2023)
- Action Agency(ies): Colorado Water Resources and Power Development Authority, Colorado Department of Public Health and Environment, and Colorado Department of Local Affairs, Division of Local Government
- Read the full policy language
