(1) The department may award a DWSRF loan to create a new Group A public water system that will meet the requirements under chapter 246-290 WAC when the project is complete if:

(a) The project resolves high priority public health problems caused by unsafe drinking water provided by an individual well or surface water source. The project is limited in scope to the geographic area directly affected by contamination; or

(b) The project creates a new regional community public water system by restructuring existing systems that have system capacity difficulties. The project is limited in scope to the service area of the public water systems being restructured.

(2) The applicant shall submit documentation with the application required in WAC 246-296-120(1) to show that:

(a) The applicant gave the public and potentially affected parties at least sixty days notice prior to submitting the DWSRF loan application to the department. At a minimum, the applicant shall post a legal notice of the intent to create a new public water system in the local newspaper;

(b) The applicant considered alternative solutions to address the problems;

(c) The project is a cost-effective solution to the public health problems being addressed; and

(d) The project is intended to protect public health, and not primarily to accommodate future population growth.