United States
Environmental Protection
"Agency
Office ol Water
(WH-550)
EPA/812-R-92-001
May 1992
&EPA
Ah Overview of Existing State
Alternative Financing Programs:
Financing Drinking Water System
Capital Needs in the 1990's
Printed on Recycled Paper
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INTRODUCTION
This report provides an overview of alternative financing programs in twelve states. These programs were desiened
to provide financial assistance to local entities for the construction, enhancement, and rehabilitation of drinkina water
treatment facilities as well as other state infrastructure needs. Each state outline includes information on the development
of the program, their specific objectives, criteria for funding projects, and a description ontoow each program has been
implemented.
A lack of available funding has prompted many State Legislatures to create loan and grant programs sponsored by
state agencies and authorities, in order to meet local drinking water infrastructure needs. These programs aid localities in
compliance with Federal and state drinking water standards. In 1991 Nevada and Oregon became the latest states to pass
legislation, setting up dedicated infrastructure funds to help systems meet drinking water capital requirements.
There are a variety of innovative approaches being taken to establish state sponsored financial proarams. States
have created loan and bond programs to improve local government access to credit. Three states have given their authorities
the power to finance private water systems. Each state program is creatively tailored to meet the particular needs and statutes
of a State.
The Map and Current Status table on the following pages outline a variety of methods and fundina sources as well
as the date of establishment for these drinking water financing programs. " '
The Comparative Matrix summarizes and compares the principal characteristics of the twelve state assistance
programs. Providing more detailed information, each annotated outline uses the same format to allow easy comparison
between programs for any particular issue. Some significant programmatic similarities and differences described in the matrix
include:
• Program capitalization varies from State to State. Legislative appropriations are commonly used to initiate
programs, and to subsidize a lower interest rate on loans. Bonding authority is often extended to these
programs to allow capitalization through the issuance of general obligation and/or revenue bonds. In
several proarams dedicated revenues from a portion of the State sewer and water, excise, real estate, and
mineral severance taxes are also used.
Several of the programs are designed to be self-sustaining, using loan repayments for additional loans and
for the retirement of outstanding bonds. Others receive periodic infusions of capital from legislative
appropriations, revenues, or State bond proceeds.
Eligible entities for the majority of the surveyed programs include political subdivisions of the State such
as: municipalities, towns, counties, cities, public authorities, or public service districts. However, three
state programs have the authority to finance drinking water development projects within the private sector.
* Several hardship loan and grant programs have been designed to aid small or economically disadvantaced
communities unable to fund on their own. State funding programs, in some cases, offer refinancing loans
for existing indebtedness related to water development projects and systems. Other innovative procranis
include financing for emergency grants, planning loans, capital improvement planning loans, and research
and development grants.
Five of the sun-eyed state assistance programs are administered jointly by two or more separate agencies
within each state. Responsibilities for each step of the loan and grant process are delegated among the
state agencies according to expertise, with a few performing only an advisory role to the'fundine aaencv.
However, the final approval of loan and grant applications is usually done in conjunction.
For additional information, please contact the Drinking Water Hotline at (SOO) 426-4791 or contact James Bourne
Office of Ground Water and Drinking Water, at (202) 260-5557-.
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Current Status of Surveyed States
State
Date Established
Tvoe of Program . Funding Smtrm
Loans/Grants - Bonds/Appropriations
Loans/Grants - State Bonds
Loans only - Bonds
Loans only - State Bonds
Loans only - State Bonds/Appropriations
i
Loans/Grants - Bonds
Loans/Grants - Bonds
Loans/Grants - State Bonds/Appropriations
Loans/Grants - Bonds
Loans only - Dedicated State Revenues
Loans only - Bonds/Appropriations
Loans only - Dedicated State Revenues
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1
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Arkansas Soil and Water Conservation Commission
Summary
four Ending programs created
systems. Most assistance K ^L to ^K^^S^Sf"0^ °f W3tCr SUpply ***
economically depressed communities. Act 496 of 1981 au£orS?he CoT ^ 3 S^aU amount of g"1"5 lo
Development General Obligation Bond Program to iLue upTsiSS ^SSS^S^^ *"" ReSOUrCCS
million issued in any biennium. P muuon in bonds with no more than $15
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Arkansas Soil and Water Conservation Commission
Program Annotated Outline
I. Program Description
The Arkansas Soil and Water Conservation Commission administers four funding proerams created
to provide financial assistance to local entities in the State of Arkansas for construction^ water
supply and distribution systems.
A. Organization
1. Scope
The Arkansas Soil and Water Conservation Commission is authorized to apply bond
proceeds for the purpose of providing or assisting in providing for the acquisition,
development, and expansion of water treatment facilities and distribution systems as
weU as other necessary projects. Most assistance is in the form of low-interest loans
with a small amount of grants to economically depressed communities.
2. Agencies Involved
The ASWCC operates several funding programs which include: the Arkansas Water
Resources Development General Obligation Bond Program (AWRDBPV the Water
Development Fund Program (WDFP); the Water Resources Cost Share Revolving
Fund Program (WRRF); and the Water, Sewer, and Solid Waste Manaeemem Svstem
rrogram (WSSW).
B. Establishment
1. Options initially considered.
A lack of funding prompted the legislature to create loan programs funded by state
appropriations and bond issues to adequately finance the needed water development
projects within the State of Arkansas.
2. ' Political and legal considerations
Each financing program was initiated by a separate act under the general laws of the
State of Arkansas and the ASWCC. The WSSW was established by Act 274 of 1975
and was originally administered by the Dept. of Local Services. 'Act 764 of 1981
transferred the administration of the program to the ASWCC. The WDFP proeram
was established by Act 217 of 1969. The WRRF was established in 1989 by Act 257
Act 496 of 1981 established the WRDBP.
3. Statutory and constitutional restrictions
Act 496 of 1981 authorizes the Commission under the Water Resources Development
General Obligation Bond Program to issue up to $100 million in bonds with no more
than $15 million issued in any biennium.
4. Subsequent program modifications • None
5. Future Picture
After the $100 million has been exhausted, it is anticipated that other issues will be
requested of the Arkansas voters by referendum.
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II.
Administration
B.
Staff size/Skill mix
Currently there are 8 staff members. The staff consists of an engineering supervisor a law
two engineers, two loan coordinators, an accountant, and an adininistrative iS? Mu
training is required due to the staffs extensive experience with bond issues Mu"mai
Administrative costs/Operating budget
Administrative costs and budget are funded mostly from state appropriations The annual
operating budget totals approximately $45,000. i«««Hujns. me annual
HI. Operating Funds
Fund capitalization
1.
3.
4.
5.
6.
Funds from previous program - None
Federal funds - None
State funds - The Water Development Fund Program (WDFP) and the WSSW receive
approximately $1 million each through state appropriations each biennium.
Bonds/borrowed funds - Act 4% of 1981 authorized the ASWCC to issue a
total of $100 million in general obligation bonds. Two $15 million bond issues were
made in 1985 and 1989. Another issue of at least $15 million is planned forlateJ991
Loan repayments/Internal funds - Repayment of loans from the WRDBP funds are
used to finance other projects and retire outstanding bonds,. The funds from the
repayment of loans under the WDFP and the WSSW Programs are recycled to the
revolving fund source. '
o hanisms - Under the approval standards for applications, the
ASWCC considers the feasibility and availability of alternative sources of revenue which
could be obtained and utilized for project financing either aparit from or in conjunction
with loan assistance. }
7. Leveraging capability - None
B. Forms of Assistance
1. Loans
Program description
The Arkansas Soil and Water Conservation Commission (ASWCC) administers
several loan programs. Over the past 18 years, the WSSW and the WDFF have
made approximately 325 loans totalling over $23 million. For the last two $15
million bond issues in 1985 and 1989, a total of 78 loans were made with
approximately $29.1 million hi bond proceeds.
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T^ Wat« Resources Development General Obligation Bond
Program (WRDBP) authorizes the ASWCC to apply bond proceeds
tor the purpose of providing for the acquisition, development, and
expansion of water treatment and storage facilities for the use and
d°mestic' '^cultural, and
« Devel°Pment Fund Program (WDFP) authorizes the
AiWCC to assist/support any water development in cooperation with
any political subdivision or agency of the state, provided it be made
a part of the State Water Plan.
The Water Resources Cost Share Revolving Fund (WRRF) provides
grants and loans to the State of Arkansas and its political subdivisions
for the purpose of funding the non-federal share of water resources
development projects. This fund has been established, but has not yet
been implemented in the financing of water projects.
J^SS^' SeWCr' and SoUd Waste Management Systems Program
(WSSW) assistsaties, towns, improvement districts, water associations,
and counties in financing the construction of facilities for water, sewer
and solid waste svstems. '
b. Borrower considerations
1. Eligibility - Financial assistance is made available for an elieible project
by any duly constituted and existing political subdivision of the State
including but not limited to counties, cities, towns and municipalities,'
any special purpose improvement district, rural development authority
and any existing public trust or authority.
2. Eligibility costs -Applications for financial assistance under the Water
Resources Dev. General Obligation Bond Proeram (WRDBP) shall
be accompanied by an application and review fee equal to the greater
of: 1) $500, or 2) 5% of the amount of financial assistance requested.
3-& 4' j^ap'enns/lnterest rates - The Water Dev. Fund Proeram and the
WSSW offers loans at 5% interest for 10-20 years or deferred loans
with 10 year deferral and 20 year payment at 5% interest. The Water
Resources Dev. General Oblg. Bond Program monies are currentlv
loaned at 7.75% over 30 years. Loans from the Water Resources Cost
Share Revolving Fund shall be repaid in full at an interest rate up to
the maximum allowed under Article 19, sec.13 of the State Constitution
with the repayment term not to exceed fifty years.
5. Loan security - The nature and amount of security to be pledged to
secure the applicant's repayment obligations to ASWCC include- real
or personal property and current statement of all outstanding liabilities
against such properties; an estimate of annual revenues to be
derived from.the project; and a statement reflectine the availability
to applicant of reserve or contingency funds which could be used to
meet actual project costs.
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6. Maximum borrowing amount - The WSSW will not make a loan in
an amount greater than 50% of the total waiter resource development
project cost.
7. Small community exception - None
. "•
8. Hardship exception - Under the WDFP lam program, the
ASWCC may approve a loan with no interest charge if the Commission
is convinced that an applicant is financially unable to pay interest.
Eligible applicants with "special needs" (i.e. high rates of:
unemployment, low income status, and elderly population) as
determined by the ASWCC will receive priority consideration in the
application approval process.
9. Refinancing - None
10. Application Process - See IV. Materials available
11. Local financial participation - None required.
2. Grants
Under the Water Development Fund Program (WDFP) and the Water, Sewer, and
Solid Waste Fund (WSSW), the Commission is authorized to make grants for
eligible projects demonstrating an exceptional benefit to the State. Grants may also
be approved when the eligible entity cannot, in the Commission's judgement, repay a
loan. The Commission determines this status through "special needs'' and
hardship criteria.
3. Rate subsidies - None
•4. Bond insurance - None
5. Loan guarantees • None
6. Other credit enhancement - None
7. Technical assistance • None
C. Fund accounts
For every bond issue, two large accounts are formed. One account, the Construction Fund
Account, is the large account from which each loan is made. The second account, the Collection
Account, is set up to receive interest and repayments from outstanding loans used to retire the
bonds to the state.
D. Evaluation of program effectiveness
The ASWCC submits evaluation reports detailing the program's projects and loan and grant
recipients to the legislature for the biennial session. The ASWCC must submit legislative audits
each year for review.
E. Private sector participation
Thus far, two projects have involved the upgrading of privately owned water distribution systems.
The ASWCC gains ownership of the facility, provides funds for the construction, and
subsequently transfers the systems to the city/county jurisdiction.
F. Program issues or problems • None
IV. Relation to Federal Programs and Legislative Proposals - None
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V. Recommendations to Other States
VI. Materials Available
A. Enabling legislation
B. Rules and regulations
C. Application package
D. Annual report
E. Other
MI. State Contact
Mr. David G. Meador
Chief, Water Resources Development
Arkansas Soil and Water Conservation Commission
101 E. Capitol. Suite 350
Little Rock, AR 72201
(501) 682-3978 FAX (501) 682-3991
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California Department of Water Resources
Summary
The California Department of Water Resources administers the California Safe Drinkine War^
Program which prowdes state loans and grants for the construction, improvement, or rXuitation
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California Department of Water Resources
Program Annotated Outline
I- Program Description
The California Department of Water Resources administers the California
Organization
1. Scope
The California Department of Water Resources (DWR't offers state loan* fhm,,»», 5rc
loan programs to eligible entities for the financing of domesticwater«££,?£^
comph'ance with federal and state drinking watef stand" i ***** '° CDSUre
2. Agencies involved
o pan
B. Establishment
1. Options initially considered
The CSDWBL of 1976 was enacted in response to anticipated need for the State
2. Political and legal considerations
SeSSS? S!fC D??dng T^ B°Dd UW (CSDWBL) is established under the
general terms and conditions of the State General Obligation Bond Law.
3. Statutory and constitutional restrictions
Regulations and the 1986 Tax Reform Act.
4. Subsequent program modifications
The program initially made loans up to $1.5 million per entitv The CSDWBI nf IORA
revised the program to allow up to $5 million in loL to SibTe eSkfe^A
modification ,« the proposed 1992 Bond Law would restrict sfate funding to S5 000 ner
service connection. Currently, there is no limit to funding per connection. ^
5. Future picture
The State's ability to issue and service general obligation bonds is limited If aooroverf
£e California Safe Drinkmg Water Bond Law of 1992 would provide « SddtSfiS
mdhon for purposes of financing safe drinking water and drought relief >ograms
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IK
Administration
A.
Staff size/SUH mix
The CSDWBL program is administered within the Bond Financing and Administration >
in the DWR, which is staffed by 12 full-time equivalent employees. DHSSSTdivided
^Tnwi?111"1"^ ^"^Jrtemplpyees from a small headquarters Enancial AssLance Unit
The DWR provides central financial, administrative, and legal support to the proeram DHS
provides for engineering, water quality, and related technical support,, "
B. Administration costs/Operating budget
T^e DWR Bond Laws limit the State administrative costs to a specified percentage ranguw from
3% to 5% of bond proceeds authorized by the most recent bond law. This amount ^shared
equally between the DWR and the DHS. auurcu
HI. Operations
A. Fund capitalization'
1. Funds from previous program - None
2. Federal funds - None
3. State funds - None
4.
5.
6.
Bonds/Borrowed funds - The entire assistance program is funded solely through the
sale of state general obligation bonds. From Bond Laws of 1916,1984.1986 anefl988
a total of $425 million in bond proceeds has been available for loans and grants '
Unused funds from the 1976,1984,1986, and 1988 bond acts are used underine terms
and conditions of the most recent bond issue.
Loan repayments/Internal funds - The program does not operate as a revolving fund
Loan principal repaid and interest charged is deposited in the State General Fund. '
Alternative financing mechanisms - Alternative financing mechanisms, such as statewide
water use tax and loan portfolio management, are under consideration but are currently
not in use.
B.
7. Leveraging capability - None
Forms of Assistance
1. Loans
a. Program description
The DWR's Loan Program offers State loans to eligible entities to finance the
construction, improvement, or rehabilitation of domestic water systems to
ensure compliance with federal and state drinking water standards.
As of August 2,1991,292 loans totalling approximately $320 million have been
made under the CSDWBL programs.
b. Borrower considerations
1.
Eligibility - Eligible applicants must own or operate a public or private
domestic water system and be subject to State or county enforcement
(a minimum of fifteen service connections).
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. ap?licant ^ enters mto a contract or a o
charged an administrative fee in the amount of 4% of the
requested Joan.
3. Loan terms- The maximum term of a loan is 35 years The term is
not to exceed the useful life of the project. rnetennis
4. Interest rates - Beginning in 1984, interest rates for loan applicants
Loan security - Loan security is mainly in the form of dedicated
revenues from user fees. Privately owned systems also record the
States hen against real property. Investor owned utilities need
authorization from the California Public Utilities CommissioT
6-
7. Small community exception - There is no stated exception for small
to!TBr> "* DWR ***** smaa Communities who would
with the recently enacted drinking water
8. Midship exception - The DWR makes no special provisions for
hardship cases. However, if an applicant is determined to be of
hardship status, the grant program becomes available.
9. Refinancing - None
10. Application process - See VI. Materials available.
11. Local financial participation - None required
2. Grants
a. Program description
All applicants for the CSDWBL program applv for the needed financial
assistance in loans. The DWR and the DHS determine the affbriSuSrfSS
proposed project and economic status of the applicant. Public agencies unabk
^SSSSiff e requeste,d loan finan*ng' may be eu^ble £S£
up to $400,000. Improvement and assessment districts mav apply sepamelv
from the parent Astnet Terms, exceptions, and legulaticM- JJ5252
same as those for loans. As of August 2, 1991, the DWR has made a totalof
176 grants under the CSDWBL programs totalling approximately $105 Son.
3. Rate subsidies
s£e" tSm21g£f STSt ™te °D *£"* W3S 100% Of the true interest «»t for the
bt Se IS Ge^haieFrdmtereSt "^ *" ^^ * 5°
4. Bond insurance - None
5. Loan guarantees - None
6- Other credit enhancement - None
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Technical assistance •
The State provides no direct technical assistance through this program However
'355'5131106 ma "investiSative study" 'oans and grants 'up
7.
C. Fund accounts
There is only one fund administered by the DWR, the California Saife Drinking Water Fund
All proceeds from the sale of bonds are deposited into this large general fund for purposes of
administering the program. There are no separate accounts within the fund, since loan
repayments are deposited directly in the State General Treasury.
D. Evaluation of program effectiveness
The Legislature provides oversight of the program through the enactment of bills authorizing
grants to specific public agency applicants, submission of annual reports bv the DWR and
periodic review by the Legislative Analyst's Office. " 1
E. Private sector participation
Privately owned water systems are eligible for financial loan assistance.
F. Program issues or problems
The State's ability to issue and service general obligation bonds is limited. Demand for
assistance far exceeds the availability of funding. Federal and State enforcement pressures are
clearly rising, while the ability of small communities to afford upgrades to compliance anuears
to be diminishing. «*•*"-«" a
IV. Relation to federal programs and legislative proposals
There is no relation of the CSDWBL programs to federal programs or proposals.
V. Recommendations to other states
The California Safe Drinking Water Bond Law loan and grant program is unique in that there is a
division of responsibilities between two separate but equal state agencies. The agencies have maintained
good relations and have served each other in advisory roles for the scope of their respective affairs.
VI. Materials Available
A. Enabling legislation
B. Rules and Regulations
C. Application Package - Available from DHS.
D. Annual Report - Available from DWR.
MI. State Contacts
Barbara L. Cross, Chief
Bond Financing and Administration Office
Department of Water Resources
1416 Ninth Street
P.O. Box 942836
Sacramento, CA 94236-0001
(916) 653-9497
Peter A. Rogers, Chief
Office of Drinking Water
Department of Hesdth Services
601 N. 7th Street
P.O. Box 942732
Sacramento, CA 94234-7320
(916) 323-6111
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Colorado Water Resources and Power Development Authority
Summary
The Colorado Water Resources and Power Development Authority provides financing through
for water supply and treatment facilities, stream flow improvement; dams, reservoir! ^nfa
water wells, and pumping station facilities. The Authority, established in 1981, receives funds for the bat
programs from the issuance of tax-exempt revenue bonds. Since the implementation of the Water Suodv
Program in 1988, the Authority has made eleven loans totalling approximately $15 8 million
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Colorado Water Resources and Power Development Authority
Program Annotated Outline
Program Description
The Colorado Water Resources and Power Development Authority was created ito provide the State with
a mechanism to finance the construction, maintenance, reparation, and operation of water proiects for
the protection, preservation, conservation, and utilization of the water resources of Colorado
1. Scope
The Colorado Water Resources and Power Development Authority provides financing
through loans to localities for water supply and treatment facilities, stream flow
improvement, dams, reservoirs, water transmission lines, water wells, and Dumoine
station facilities. r r e
2. Agency involved
The Colorado Water Resources and Power Development Authority
II.
B. Establishment
1. Options initially considered
The Authority was created by the General Assembly in 1981 as a political subdivision
of the State to provide Colorado with a mechanism to finance water projects through
the issuance of revenue bonds. The loan program for the financing of water facilities
was implemented in 1989, and in 1990, the Water Supply Program initiated the" first
loans for water development projects.
2. Political and legal considerations
Projects greater than $10 million funded by the Authority must have the approval of
the Legislature.
3. Statutory and constitutional restrictions • None
4. Subsequent program modifications
Since the passage of the Safe Drinking Water Act of 1986, emphasis has shifted from
financing large water development projects to the greater coordination and utilization
of existing resources and to the renovation of the existing water supply infrastructure.
5. Future picture
In the next five years of operation, the Authority expects appratixnately $50 million in
loan requests for water project financing through the program.
Administration
A. Staff size/Skill mix
The Governor appoints nine persons, one from each major river basin in Colorado and one
from the City and County of Denver, to serve on the Board of Directors for the Authority
These appointees are approved by the Senate. Currently, there are six full-time employees
including an executive director, who staff the Authority.
B. Administrative costs/Operating budget
Operating expenses for the administration of the Water Supply Proeriun for the fiscal year
ending December 31, 1990, were approximately $225,000.
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III. Operations
A. Fund Capitalization
1. Funds from previous program - None
2. Federal funds - None
3.
State funds - At the inception of the Water Supply Program, the Leeislature authorized
the Authority to utilize up to $9 million of Authority fesources There hav^ bee^o
additional state funds used in the program. '
£5 fo TWCd ?rt ' ^ AUth°rity i™ies Aaa/AAA insured, tax-exempt revenue"
bonds for the combined amount requested by the pool of borrowers As of 1QQ1 thl
* ""^ w»»
5
6. Alternative financing mechanisms - None
7. Leveraging capability - The Authority currently has a leveraging ratio in -he Water
Supply Program of approximately 10 to 1 in terms of loans to^ebt se^a rie^S
B. Forms of Assistance
1. Loans
a. Program description
!,ni^,!;faeAut^ri*e-xec^
under the new Financing Program for Small Water Resources Projects The
01 » 1989 *** tfa*
roecs e
» 1989 *** tfa* Pilose of financing the expansion
vn t » MStmg W3ter SUpply facUilies- The Authorirv hi^fade
eleven loans totaUing approximately $15.8 miUion for the financing of water
development projects. s waicr
b. Borrower considerations
1. Ehgibihty - All governmental entities with a population greater than
1000 or a customer base greater than 650 are eligible for the
Authority's loan programs, including cities/counties, towns, and
districts. - ' -
2. Eligibility costs - Each applicant's pro rata share of the cost of
issuance and bond insurance of the respective bond issue is deposited
into a Cost of Issuance fund. These costs are presently capped at2 9%
of the loan amount with the Authority paying for cost's above this cap!
3. Loan terms - Loan terms range from one year to the life of the facility
Thejnaximum loan 'era is 30 years. Standard loans are usually 20
Interest rates - Interest rates on water supply loans are set at the
market rate received on the bond issue.
4.
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5. Loan security - Applicants must pledge either their unlimited taxing
power (general obligation) or the revenues from the water system."
6. Maximum borrowing amount - The Authority is authorized to finance
water resource projects of up to $10 million in construction costs, witn
{he minimum borrowing amount set at $30(3,000.
7. Small community exception - None
8. Hardship exception - None
9. Refinancing - Refinancing is offered by the Authority in an amount
of up to 50% of the loan request.
10. Application process - See VI. Materials available.
11. Local financial participation - None required.
2. Grants - None
3. Rate subsidies
There are two methods in which the Authority provides subsidies for applicants. The
Authority provides the required debt service reserve fund for the bond which reduces
the cost of issuance. In addition, the Authority limits the cost of issuance plus bond
insurance to no more than 2.9% of the loan amount.
4. Bond insurance
Bond insurance is provided through Financial Guaranty Insurance Corp. which
unconditionally guarantees the payment of that portion of the principal and interest
which has become due for payment, but has not been paid by the Authority by reason
of default.
5. Loan guarantees - None
6. Other credit enhancement - None
7. Technical assistance
The Authority offers limited technical assistance to applicants, but assists in the financial
advisory aspects to the borrower's staff, councils, and boards. This is particularly helpful
to small entities who rarely issue debt in the bond markets, and who may benefit from
complimentary loan/grant programs of the state or federal government.
C. Fund Accounts
With each bond resolution, the Authority sets up various funds for the administration of the loan
programs. These funds include the Project Fund, Revenue Fund. Cosl; of Issuance Fund, Debt
Service Fund, Debt Service Reserve Fund, and the General Fund.
D. Evaluation of Program Effectiveness
The financing programs of the Authority are subject to state- annual audit procedures. The
Authority is required by the legislature to submit an annual report.
E. Private Sector Participation • None
F. Program Issues or Problems
Making local governments more aware of the loan programs offered by the Authority and the
benefits under these programs has been one problem the Authority has encountered.
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IV. Relation to federal programs and legislative proposals
-"•— ——- ^SWjjg-E1 ?:%pTct"—l~« <=•*»-* » ** »
K^SSs^J^-i!?^,?.^^^^*,^
^^
V. Recommendations to other States
subsidized calculation of arbitrage Yebatt
VI. Materials available
A. Enabling legislation
B. Rules and regulations
C. Application package
D. Annual Report
VII. State contact
Lester A. Willson
Finance Manager
Colorado Water Resources & Power Development Authority
Logan Tower Bldg., Suite 620 '
1580 Logan Street
Denver. CO 80203
(303) 830-1550
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I
Honda State Bond Loan Program
Department of Environmental Regulation
Summary
Honda's State Bond Loan Program, jointly administered by the Department of Environmental
the Dmsum of Bond Rnanting, offers funding to local governmental agenciebSteSSSSi
SETS rJ^ ^fa
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Florida State Bond Loan Program
Department of Environmental Regulation
Program Annotated Outline
I. Program Description
The purpose of the State Bond Loan Program is to assist local governmental aeencies in financine the
construction of water supply and distribution facilities, storm water control air and water oollution
control and abatement, and solid waste disposal facilities. pvmuuuu
A. Organization
1. Scope
The Department of Environmental Regulation (DER) and the Division of Bond Finance
of the Department of General Services (DBF), in conjunction with each other are
authorized to make loans to any municipality, county, district, or public authority to
finance or refinance the construction of water supply and distribution facilities water
treatment facilities, water pollution abatement, and other eligible facilities.
2. Agencies involved
Three State agencies participate in the approval of each State Bond Loan The DER
has the authority to approve or reject the proposed projects. The Division of Bond
Finance (DBF) of the Department of General Services determines the amount of the
loan to be made and the issuance of State bonds to supply this amount The State
Board of Administration determines the sufficiency of each proposed bond issue and
administers debt service on the bonds.
B. Establishment
1. Options initially considered
The State Bond Loan Program was established in 1970 in order to complement the
current federal construction grants program.
2. Political and legal considerations
The State Board of Administration, consisting of the Governor. Treasurer and
Comptroller, gives the formal approval of the loan and executes the State Bond'Loan
Agreement to issue bonds to fund the projects.
3. Statutory and constitutional restrictions
Current legislation specifies that the two State agencies administering the proeram the
DER and DBF, may issue up to but not exceeding $300 million of Pollution Control
Bonds to finance water and other eligible projects in each fiscal year.
4. Subsequent program modifications
After the establishment of the program in 1970. the scope of elieible projects was
expanded to include drinking water and storm water facilities. The annual funding limit
has been raised from $200 million to $300 million per fiscal year.
5. Future picture
Funding sources for State construction projects have been diminishing in the last
several years. It is expected that as the sources become limited, requests for state loan
assistance will increase.
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1
II. Administration
B.
Staff size/Skill mix
The Department of Environmental Regulation (DER) and the Division of Bond Finance
Department of General Services (DBF) jointly employ approximately ij»
permitting, compliance, engineering, environmental, bond development, and
support. However, only about five full time employees are required to administe
progTciin.
Administrative costs/Operating budget
Approximately $200,000 to $300,000 is incurred in operating expenses per year in the
administration of the State Bond Loan Program. y
HI. Operations
A, Fund Capitalization
1. Funds from previous program - None
2. Federal funds - None
3. State funds • None
4. Bonds/Borrowed funds - The entire loan program is funded throueh the issuance of
State Bonds. A total of $485 million in bonds have been issued since the inception of
the program. In 1983 the Series N $45 million bond issue was used solelv for stable
w?1t.(rr P"?"1 loans: At,th? end of flscal year 1991, the Series X bond "issue of $45
million will be used solely for water system improvements.
5. Loan repayments/Internal funds - Semi-annual loan repayments are made by each
loan applicant directly to the State through an escrow account as the bonds mature.
6. Alternative financing mechanisms - None
B.
7. Leveraging capability - None
Forms of assistance
1.
Loans
a.
Program description
The State Bond Loan Program assists in the financing or refinancing of the
construction of water supply and distribution facilities, water treatment facilities
and other eligible projects. At the end of fiscal year 1991, the State Bond Loan
Program will have funded over $90 million in potable water projects and water
system improvements.
Eligibility - Eligible entities for loan assistance include any Honda
municipality, county, district, authority, or agency.
Eligibility costs - In each fiscal year, each approved applicant will pay
a proportional share of the administrative expense incurred by the
DER and DBF while administering and sen/icine the State Bond
Program. This amount is not to exce~ed .25% of the~initial loan of the
applicant.
1.
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4-
5.
_
Loan security -For loan security, applicants must pledge revenues in
an amount sufficient to maintain a 133% coverage of the estimated
debt service on the proposed loan in each and every year the loan
remains outstanding.
6. Maximum borrowing amount - The annual amount of new loans to
all applicants is limited to a total of $300 million.
7. Small community exception - None
8. Hardship exception - None
B°°d ^^ PrOgram offers "financing loans
10. Application process - See VI. Materials Available.
11. Local financial participation - None required
2. Grants - None
3. Rate Subsidies - None
4. Bond Insurance - None
5. Rate Subsidies - None
6. Other credit enhancement - None
7. Technical assistance - None
C. Fund Accounts
Immediately upon the sale of the State bonds, the several funds and accounts are established
and maintamed in the Treasury of the State of Florida for loan distribution. TheselnSSbfe
ind rh J r? ^tru.ctlo° Trust Fund- B°"
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I
V. Recommendations to Other States
Due to decreasing funding available at the federal level for the financing of state infrastructure each
state should consider implementing a bond loan program. These programs fund needed projects at
reasonable rates to communities which may not be able to acquire funding at reasonable rates on their
own. In addition, limiting the bureaucratic review process for approval of the loans would expedite the
funding process and add a greater incentive for communities to utilize these funding programs.
VI. Materials Available
A. Enabling Legislation
B. Rules and Regulations
C. Application Package
VII. State Contact
Mr. Don Berryhill
Bureau of Local Government Wastewater Financial Assistance
Florida Department of Environmental Regulation
2600 Blair Stone Road
Tallahassee, FL 32399-2400
(904) 488-8163
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Georgia Environmental Facilities Authority
Water and Wastewater Loan Program
Summary
The Georgia Environmental Facilities Authority (GEFA) was organized in 1986 under the Official Code of
Georgia Annotated with the stated purpose "to assist local governments in constructing, extending, rehabilitatine.
repairing and renewmg environmental facilities and to assist in the financing of such needs by providing fon&
hrough loans, bonds and other assistance of local governments". The Authority currently manages a $170000 000
tarn fund which makes low cost capital available to cities, counties, and water and sewer authorities throughout
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Georgia Environmental Facilities Authority
Water and Wastewater Loan Program
Program Annotated Outline
I. Program Description
A. Organization
1. Scope
The Georgia Environmental Facilities Authority (GEFA) is an agency of Georgia state
government with the responsibility of providing financial assistance for all types of water supply
and wastewater projects for local governments.
2. Agencies Involved
a. Georgia Environmental Facilities Authority
The GEFA is governed by an eleven member board, eight of whom are appointed by the
Governor and three who serve ex-offitio. Three of the eight appointees must be municipal
officials, three must be county officials and two are appointed from the state at large. The
three ex-officio members are the Commissioner of the Georgia Department of Industry and
Trade, the Commissioner of the Georgia Department of Community Affairs, and the State
Auditor. ' —
b. Georgia Department of Natural Resources, Environmental Protection Division (EPD)
The EPD performs all environmental project reviews, assesses significant points in the
Authority's Rating and Selection System for applicants, and performs all project construction
inspections on behalf of the Authority.
B. Establishment
1. & 2. Options initially considered/political and legal considerations
In 1983 Governor Joe Frank Harris and the Georgia General Assembly, acting on the 1982
recommendations of the Environmental Facilities Study Commission, created the Environmental
Facilities Program and placed it in an existing agency - the Georgia Development Authority. The
findings of the study commission identified the widening gap between local environmental
infrastructure needs and the necessary financial resources. The Georgia General Assembly
created the GEFA in 1986 and transferred all of the environmental facilities program assets and
functions from the Georgia Development Authority to the GEFA.
Statutory and constitutional restrictions
In 1986 voters approved in a statewide referendum the ability of the state to sell general
obligation bonds and use the proceeds to make loans to local governments. Statutory restrictions
limit the use of the bond proceeds for the funding of water/sewer projects only. Bond funding
began in the third year of the program. During the first two years the programs of the GEFA
were funded by cash appropriations.
4. Subsequent program modifications
A rating and selection system and a comprehensive credit analysis system were implemented hi
the second year of the program.
5. Future picture
The GEFA has received a commitment from the Governor of Georgia, that, starting in August,
1992, the Authority will receive the proceeds from four $50 million state guaranteed revenue bond
issues.
3.
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II. Administration
A. Staff size/Skill mix
The Authority employs eight full-time staff members which include-
1. Executive Director
2. Assistant Executive Director/Chief Financial Officer
3. Principal Accountant
4. Accountant
5. Project Development Manager (water & wastewater programs)
6. Project Development Specialist (solid waste programs)
7. Administrative Secretary
8. Secretary/Receptionist
All engineering analysis and inspection of projects are done by the EPD staff.
B. Administrative Costs/Operating Budget
The annual operating budget for the Authority is approximately $550 000 ThP ««;„ „• «• u
operatmg budget is funded by appropriations from the Geo5aSa?LImbly J ***** °f "*
III. Operating Funds
A. Fund capitalization
1. Funds from previous program - None
2. Federal funds - None
3. State Funds - The Authority was appropriated a total of $40,000,000 in fiscal vears 1985 and 1986
the
'
6. Alternative financing mechanisms - None
7. Leveraging capability - None
B. Forms of Assistance
1. Loans
a. Program description
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b. Borrower considerations
1. Eligibility - All cities, counties, and water/wastcwater authorities are eligible for fundine
regardless of project or community size. ' iunumg
2. Eligibility costs - No application fees or costs were charged in the first six years of the
E10?^0^ of.ls&?an<*™*1 1* Proportionately shared by the borrowers of the revenue
bond funds bennnmcr in 10O5 •tvsuue
bond funds beginning in 1992.
3. Loan terms
Loan Amount Loan Term
$0 - $100,000 Ten Years
$100,000 - $500,000 Fifteen Years
$500,000 - loan cap Twenty Years
4. Interest rates - Rates have ranged from 53% to 6.8% depending on the interest rate on the
bond issue furnishing the capital for that year's program. The Authority is committed to
providing a rate as close to the actual cost of funds as possible. All borrowers are chareed
the same rate. vu«uScu
5. Loan security - The Authority has no.set loan security requirement, however, all applicants
are subjected to a comprehensive credit and financial analysis based on projected revenues
Irom the proposed project and ability to meet the loan schedule.
6. Maximum borrowing amount - The maximum loan is $2,000,000.
7. Small community exceptions - None
8. Hardship exceptions - None
9. Refinancing - None
10. Application Process - The Authority has completed six loan application and commitment cycles
since its beginning. A rigorous multistage process is in place to evaluate loan applications and
make loan awards. (See IV. Materials available).
11. Local financial participation - None required.
2. Grants - None
3. Rate subsidies - None
4. Bond insurance - None
5. Loan guarantees - None
6. Other credit enhancement - None
7. Technical assistance
The Authority provides technical assistance to borrowers and potential borrowers in the areas of
system management and financial management. The Authority also provides iaformation concerning
rates from a comprehensive water and sewer rate data base.
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C. Fund Accounts
D. Evaluation of Program EfTectiveness
E. Private Sector Participation - None
F. Program Issues or Problems
IV. Relation to Federal Programs and Legislative Proposals
--"S^^^
V. Recommendations to Other States
VI. Materials available
A. Enabling legislation - Official Code of Georgia Annotated 50-23.
B. Program policies
C. Application package
D. Annual financial report
VII. State Contact
Timothy J. Grogg
Assistant Executive Director
Georgia Environmental Facilities Authority
Suite 2015, The Equitable Building
100 Peachtree Street. NW
Atlanta. GA 30303-1901
(404) 656-0938 FAX (404) 656-9792
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Ohio Water Development Authority
Summary
The Ohio Water Development Authority (OWDA) administers loans to Ohio communities for the construction
and enhancement of drinking water treatment facilities, conveyance systems, and water supply facilities. The loan
programs of the OWDA are funded through the issuance of revenue bonds. In 1989 and 1990, the OWDA made
25 loans for water projects through the regular loan program and two loans through the hardship drinking water
program totalling $40.5 million and $138 million, respectively. The OWDA also made twelve planning loans
totalling approximately $2.1 million in the same period.
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Ohio Water Development Authority
Program Annotated Outline
I. Program Description
The Ohio Water Development Authority (OWDA) provides financing to Ohio communities for the
establishment and enhancement of drinking water and water supply facilities. ramumues r?r me
e • t
A. Organization
1. Scope
The Ohio Water Development Authority administers loans to local governments
for the construction of drinking water treatment facilities, conveyance
systems, and water supply facilities.
2. Agencies involved
All applicants for OWDA's loan and grant programs must receive technical and
enwonmental approval by the Ohio EPA. The Hardship Drinking Water Pr^^anfS
jointly administered by the OWDA and the Ohio EPA. "ogram is
B. Establishment
1. Options initially considered
The OWDA was created in 1968 by the Ohio General Assembly to loan funds to local
governments. The program was originally created to provide the match for federal
wastewater treatment grants and was designed largely to aid small communitiesunable
to fund on their own. The initial program was modified in 1974 to include drinkine
water projects. The program is now termed the Safe Water Program. "
2. Political and legal considerations
The OWDA does not have the authority to finance projects for a township because
townships in Ohio do not have the authority to levy Taxes for water and
thereby not meeting OWDA's eligibility requirements.
3. Statutory and constitutional restrictions
of a bond
4. Subsequent program modifications
In 1980 the OWDA established planning loans to finance the planning and design of
T «J£atvr ^?Fply and distribution facilities as well as wastewater treatment facilities
WAI?!! rr^ est.ablisned the Hardship Drinking Water Program with the Ohio
tFA which offers low-interest loans to economically disadvaiitaged communities.
5. Future picture
In the Spring of 1992, a bond issue in the amount of $50 to S75 million is proposed to
fund the regular OWDA loan programs. "H^wi 10
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II. Administration
A. Staff size/Skill mix
B. Administrative costs/Operating budget
The operating budget for the OWDA for 1990 was approximately $987,000.
HI. Operations
Fund Capitalization
1. Funds from previous program - None
2. Federal funds - None
5
6. Alternative financing mechanisms - None
B. Forms of Assistance
1. Loans
a- Program description
proves regular loans at market rates, and the Hardship Drintog Water
Program which provides low-interest loans for economically distressed
communmes. In 1989 and 1990, 25 loans for water projects were approved
X ^ loj* P^g™ ^tailing approximately $40.5 million.
$ P 3ter Pr°JeCtS WCre made t0talHng a
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The OWDA also administers a planning loan program that assists Ohio
communities in financing the planning and design of infrastructure. In 1989
and 1990, twelve planning loans were approved touidling approximately $21
million. • . •
b. Borrower considerations
1. Eligibility - Eligible entities for loan assistance are local government
agencies, cities, counties, and special districts.
2. Eligibility costs - Eligible applicants are subject to an administrative
fee of 35% of the construction cost amount
3. Loan terms - The loan terms for the regular and hardship construction
loan programs range from 10 to 25 years. The planning loans must
be paid within five years or they may be refinanced with construction
loans.
4. Interest rates - Interest rates for the regular loan program are set at
the market rate obtained at the issuance. Based on an economic
analysis, hardship loans receive a blended rate between the market
rate and the 2% minimum. All planning loams are set at the market
rate.
5. Loan security - As part of the loan agreement, the applicant pledges
to maintain user charge rates sufficient to operate the project and
repay the loan amount.
6. Maximum borrowing amount - The maximum loan offered to any one
local government agency by the OWDA is S75 million.
7. Small community exception - None
8. Hardship exception - For economically distressed communities,
hardship loans are available.
9. Refinancing - Refinancing is not available once the applicant has signed
the loan agreement. However, with prior agreement, the OWDA will
allow the applicant to finance short term debt and arrange for long
term financing after the construction process is complete.
10. Application process - The application process for the OWDA is unique
in that, once the project is planned, approved, and ready to' proceed,
the applicant signs a "letter of agreement" which serves as the loan
contract.
11. Local financial participation - None required;
2. Grants
The OWDA has made small grants up to $450,000 through the Hardship
Loan Program for research and development projects to aid Ohio communities. The
OWDA has no defined grant program as such and has made only two small
research grants for drinking water projects thus far.
3. Rate subsidies
The Hardship Loan Program offers below market rate loans to hardship communities.
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4. Bond insurance - None
5. Loan guarantees - None
6. Other credit enhancement • None
7. Technical assistance • None
C. Fund Accounts
* ™* a *•
D. Evaluation of program effectiveness
E. Private Sector Participation
No privatization projects have been funded by the OWDA.
f • Program Issues or Problems
IV. Relation to Federal Programs or Legislative Proposals - None
V. Recommendations to Other States - None at this time.
VI. Materials Available
A. Enabling legislation
B. Rules and Regulations
C. Annual Report
D. Application Package
VII. State Contact
Ronald M. Shankman
Controller
OVVDA
Suite 1425 Le Veque Tower
50 West Broad Street
Columbus, OH 43215
(614) 466-5822
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Oklahoma Water Resources Board
Summary
The mission of the Oklahoma Water Resources Board
loans and grants from bond proceeds to qualified entiti
or to refinance : existing indebtedness related to
84 loans and 241 grants totalling $90,139,540 and $14,898,195, respectiwly
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Oklahoma Water Resources Board
Program Annotated Outline
I- Program Description
(FAP) administered by the Oklahoma Water RcsonirceTBoard.3 **** -mancial ^^ance Program
A- Organization
1. Scope
exisung indebtedness related to water systems. The Board's maS accoun?
£ I«±? f Development Revolving Fund, provides the sounSof funds for
the Board s loan programs and emergency grants.
Agency involved
The Oklahoma Water Resources Board
B. Establishment
Opt'ons initially considered/Political and legal considerations
^"foSS^ P"""6 of to6 Board's Financial Assistance Program (FAP) was formed
in 1979 with the passage of SB 215. This bill authorized the OWRB toTuel^mS
ass -** - -
3. Statutory and constitutional restrictions
The OWRB can not lend financial assistance to cities in Oklahoma
statutes. Applicants eligible for assistance are counties. iwtJr^
public works authorities, school districts, rural water, sewer and
•1. Subsequent program modifications
5. Future picture
After the available funds from the $50 million bond issue in 1989 have been exhausted.
^ ^ be requested- Aaatbef t— £S£t
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1
Administration
A. Staff size/Skill mix
The. OWRB's Board consists of 9 members appointed by the Governor for a 7-year term with
the advice and consent of the Senate. One member is appointed to renrewnr ~£L
.
the Congressional Districts as they existed in 1957, with
staff of seven administers the OWRBFAP
within the agency. The staff consists of
extensive experience in water and sewer projects as well aTin the financial!
B. Administrative costs/Operating budget
For fiscal year 1991, the OWRB's actual expenditures in the Planning
were approximately $605,061. TTese funds were generated «JSSK
HI. Operating Funds
A. Fund capitalization
1. Funds from previous program - None
2. Federal funds - None
3'
fn^lSS" I* " ^ m *?£* investme,.nt m sccuring Oklahoma's water development future
in 1982 the Second Session of the 38th Legislature appropriated $25 million from
JHSUrt T *? ^^ StatCWide Water ^elopment RevolvVng
SWDRF^' g 8nm Pr0gram COmCS fr°m the interest Darned on
4. Bonds/borrowed funds
There have been three major OWRB bond issues since the program's inception- two
011 ^ 1985' 3nd N°VCmber 14' 1989< m(1 » $41'65 °
5"
J^Tf5™611!:57111116"1^1 ^A' L°an reP"y»«its are in the form of revenues
collected from the operation of the projects. These payments are used to
retire the bonds of the respective bond issue.
6. Alternative financing mechanisms - None
7. Leveraging capability
The OWRB currentiy applies leveraging to its bond programs.
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B. Forms of assistance
1. Loans
a. Program description
b. Borrower considerations
1. Eligibility - Eligible projects for financing include anv project related
to water system improvements or refinancing of the^pro^i such
Sd ™rr ^ 'eservoirs' Borage tanks, water treatment system^
and water dismbution systems. Eligible entities are political
towns' «
2. Eligibility costs - Loan applications for the water programs
£1^*5^SS?SS£'"""Bomi"""
3. Loan terms - Currently, loan terms range from 6 months to 28 years.
4. Interest rates - Each loan applicant has the option of either a fixed
or variable rate loan. The interest rate for loJos are determinedby
the current 6 month period, as bonds are being re-marketed every 6
months. Loans may also be closed at a fixed rate of interest or
converted to a fixed rate subsequent to closing. Interest rates onloads
have averaged approximately 5.997% since Sept. 1,1986. The currenl
interest rate for the 6 month period ending February 29, 1992,
5. Loan security - The borrower is required to capitalize, at loan closing.
a debt service reserve of approximately 10% of the total loan amount!
In addiuon^ project revenues and other forms of operational revenues
are pledged as security. A mortgage may also be obtained as security.
6. Maximum borrowing amount - There is no limit on the amount of a
loan per applicant.
7. Small community exception - None
8. Hardship exception - None
9. Refinancing - None at this tune.
10. Application process - See VI. Materials available.
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11. Local financial participation - In order to achieve the maximum benefit
from the funds avadab e, the Board encourages applicants to provide
the largest amount of local participation possible, so that the
Board can help a greater number of applicjints.
Grants
a.
Program description
Many smaller entities with aging water and sewer system simplv cannot afford
the costs associated with replacement or renovation. The OWRB Emeraencv
Grant Program is designed to rescue the state's small communities from
financial crises posed by dilapidated systems, advense weather, and a weak
economy The OWRB has been authorized to make grants to eligible projects
5S-S51, * £ August 10j 1?S?41 **"* totauine iUiSS
$14,898195 have been approved. Funding comes from interest earned on
monies in the Water Development Fund. c«micu un
2.
3.
4.
5.
6.
b. Grantee considerations
1. Eligibility - Qualified entities include all political subdivisions of the
state, special purpose districts, public trusts, and water and sewer
districts.
Eligibility costs - None
Grant terms - All applicants must comply with OWRB Rules and
Regulations.
Grant monetary limits - No more than $100,000 may go to a qualified
applicant during any fiscal year.
Small community exception • None
Hardship exception - There is no stated hardsliip exception, however
in order to administer the Emergency Grant Program, the Board
adopted a grant priority system based on hardship. The basis of the
priority formula has been developed from the enacting legislation. The
two primary statutory criteria are: first, a grant can only be approved
in case of an emergency, which is defined as a life, health, or property
threatening situation; second, a grant can only be awarded when the
applicant cannot reasonably finance the project with out assistance
from the state.
Application process - See VI. Materials available
Local participation - Local participation is not required, but
encouraged. The amount of funds available for grants is limited, thus
more priority points are awarded to the applicant with the smallest
grant amount requested.
3. Rate subsidies - None
4. Bond insurance - None
5. Loan guarantees - None
7.
8.
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6. Other credit enhancement • None
7. Technical assistance - None
C. Fund Accounts
There is one main fund account, the Statewide Water Development Revolving Fund,
D. Evaluation of program effectiveness
Under the provisions of 82 O.S. Supp. 1986 the OWRB » M. . j
OkUnon* Ugi^ a proposa, JJfS SS^ "*"*'" ""
E. Private sector participation - None
F. Program issues or problems - None at this time.
IV. Relation to federal programs and legislative proposals
*•" 4 ™ ••»-• • vr*««r*vu *TQfcbi L/J 1
r supply storage contracts between the
are necessitated by the declining federal role
V. Recommendation to other states - None at this time.
VI. Materials available
A. Enacting legislation
B. Rules and regulations
C. Application package
D. Other
VII. State Contact
Walid T. Maher. Chief
Planning & Development Division
OWRB
600 N. Harvey Ave.
P.O. Box ISO'
Oklahoma City, OK 73101-0150
(405) 231-2621
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PENNVEST
Pennsylvania Infrastructure Investment Authority
Summary
1^2ta!tt9S* Mrasl^auze Investment Authority (PENNVEST)
created in 1988 to provide loan assistance to Pennsylvania wat" su
systems, both public and private. Initially capitalized^^ Son doEs
m appropriations and loans, PENNVEST has made loans totattb
nulhon through fiscal year 1990. As lenders to water supply
to provide nearly **
r^m^r pwas 10 provwe nearly soo million in revolving funds at subsided
interest rates of one to six percent. Additionally, PENNVEST operate!;!
small grants program for economically disadvantaged commSties^
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PENNVEST
Pennsylvania Infrastructure Investment Authority
Program Annotated Outline
I. Program Description
The Pennsylvania Infrastructure Investment Authority (PENNVEST) is a r»«r.i«n« it.,
Organization
1. Scope
,:^^^Tis ,an indePendent state agency with the responsibilitv of
: through
systems.
-. Agencies Involved
Office of the Budget • Department of Community Affairs
* Department of General Services
B. Establishment
1. Options initially considered
135 outstanding loans have been absorbed by PENNVEST. eliminated and the
2. Political and legal considerations
3. Statutory and constitutional restrictions
4. Subsequent program modifications
There have been no major modifications to the program since 1988.
5. Future picture
The authority plans to spend the initial $1 billion in funding in about six wan thn. . »•
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H. Administration
A. Staff size/Skill mix
Pennvest's current staff size is 19. There are 4 Project Specialists with
government finance. Top officiak have extensive t^^S
have skills in finance, government operations, andrelated fiekfc
performed by the State Controller, Tr^asurerand the Bu^et Office
B. Administrative Costs/Operating budget
*«
A L •
Au^onty
III. Operating Funds
A. Fund capitalization
Pennyest began in 1988 with anticipated funding of over $990 million with sources including
appropriations, grants and relocations, and voter approved bonds. including
1. Funds from previous program
$?SlmmioinbOIld aUthorization from ^ Water FadUties ^an Board, the previous program, totaled
the
2. State funds
Direct state appropriation to the program was $25 million. In
totaled $150 million. Grants are funded through general fund
3.
Bonds/Borrowed funds
najio° h siate
4. Loan repayments/Internal funds
The PENNVEST Fund includes repayments of revolving loans, appropriations from the
SSr1 on revp^ *r? investnient !-««.««« the irof
RedemP»°° Fund includes payments of non-revolving loans and
5. Alternative financing mechanisms - None
6. Leveraging capability
Leveraging capability consists of revenue bonds for state loan programs.
B. Forms of assistance
1. Loans
a. Program description
The first loans were approved in June, 1988. Through the end of fiscal vear 1991 the tot- d lnan
amount was $436 miUion for 259 water supply systems. Projects withCpkted Ta
"^!i? 3t — 0f/OUr yeafly Board mcetinss- FundinS » Provided b^=d on a
on the priority list developed by the staff.
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b. Borrower considerations
(1) for fondbg^ OWDCr °f OPCrat0r °f "* drinking W3ter System' Public or P^ate, is eligible
(2) SSSS? " *pplicants « fsfcfc for UP to 10°% of project costs, including planning
and engineering, however, no refinancing or repayment of previous expensesTp^ISttei
(3) Loan terms - The maximum life of most loans is twenty years.
^
County Unemployment
as percent of First Five Years Remaining Term
Statewide Unemployment
>140%
100%-140%
,<100%
Bond Issue Rate
*m.w* waL
30%BIR
60%BIR
interest
25%ofBIR*
60%BIR
75%BIR
(5)
1^ " ^ t*^? * established d*00^ a Joan agreement between PENNVEST
en n0mTg "^ However, PENNVEST may require additional securirv &Sm^
hen on user charge revenues, guaranty of municipality, or municipal taxing powe?
For multi-community applications, the loan agreement will be with a single borrower bnt
inter-junsdicuonal agreements must be in place prior to loan approval °°"OWet' bnt
(6) Maximum borrowing amount - Loans are limited to $11 million per project When two
communities are involved the cap is raised to $20 million and o/wTlT8 " PEN*VEST ^ not Pr™de refinancing for projects under construction
a -taJ^S! • l?e'*m fmandng *C*dy arranged ^ Board mav hoSS
loi L app°oveTJ m CmergeDCy SUUaUOnS l° aU°W constructi°n '0 begin befor
(10)Apph'c?tion process - See VI. Materials available
(ll)LocaJ I financial participation - Up to 100% of project financing is available however
Board may also require local financial participation from communities !a!55S
2. Grants
a. Program description
The first grants were made in fiscal year 1989. Through fiscal year 1990, 83 grants t
mdhon have been made._ pperations 'are available only on a hardship basis.
funded by direct appropriations by the state legislature
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b. Grantee considerations
(1) Eligibility - Grants are available to economically depressed cpmmwnides with no reasonable
expectations of repaying a loan. The Board may examine such featuresL' meS
household income, existing and anticipated user fees, financial condition of the'atrolicanL
5?±r±± CCOn°miC C°nditi0nS °f "* «•*«• "d «* of aPPU«"< ^«cure
(2) Eligible costs - The grant may cover up to 50% of project costs.
(3) Grant terms - None
(4) Grant monetary limits - The maximum grant award is $500,000 or 50% of project costs
whichever is lower. i»vicw costs,
(5) Small community exception - None
(6) Hardship exception - The grant program is available only to hardship communities
(7) Application process - See VI. Materials available
(8) Local participation - None required
3. Rate subsidies - None
4. Bond insurance - None
5. Loan guarantees - None
6. Other credit enhancement - None
7. Technical assistance • None
B. Fund accounts
1. Fund description
PENNVEST individual funds follow the original source of revenues with relevant restrictions
applied.
2. Interaction between accounts
Inter-fund borrowing is allowed for cash-flow needs.
C. Evaluation of program effectiveness
PENNVEST is seen as a highly effective, very popular program especially among small communities.
E. Private sector participation
$40.6 million in funding was provided for 63 private projects, involving privately owned drinking water
faohties and water distribution companies. Private investment in 13 PENNVEST projects has totaled
X766 million. Other government aid to these projects totaled $11.7 million.
F. Program issues or problems
At the end of the Authority's 25 year planned fife, $2.4 billion in identified infrastructure needs will
oe unfunded. Additional money now would help fund those needs.
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™- ReJ?Jf ?n *° federaj Programs and legislative proposals
V. Recommendation to other states
VI. Materials available
A. Enabling legislation
Pennsylvania Infrastructure Investment Authority Act, Act. No. 1988-16.
B. Rules and regulations
Ch^erlg ^"^ <— °< A«hority Fmanclal Assistance: Regulations Title 25, Pan VI,
C. Application package
Pennsylvania Infrastructure Investment Authority Financial Assistance Application
D. Annual report
PENNVEST: Clean Water for a Better Pennsylvania 1989-90 Annual Report.
E. Other
VII. State contact
Tom Kelchner
Public Information Officer
PENNVEST
22 S. Third Street
Harrisburg, PA 17101 (717) 787-8137
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Texas Water Development Board
Summary
fron""Waler ••"* Accom of *
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Texas Water Development Board
Program Annotated Outline
I. Program Description
A. Organization
1. Scope ''
The Texas Water Development Board (TWDB) has two principal functions- 1) to
provide financial assistance for the planning, design, and construction of water soppfe
and regional water faoUties, and 2) to collect basic hydrologic data, perform SS,
ofwater resources of the state, and plan for the long-term water resourced?*
2. Agencies involved
The Texas Water Development Board
B. Establishment
1. Options initially considered
The State's plan for an agency that would oversee the development of its water
B^nd g* * TK W^dCgislative 3Ct «-ttd the Texas Water l££££
Board and I authored the TWDB to administer a Water Development Fund ofS200
SS £ , Pn ? i commumu" devel°P ™« Applies. The amendment created the
31 revolviag *- to
Political and legal considerations
The Texas legislature must approve additional bond authorizations in the form of an
*Dtata- Fou°wtag "•'**•
3. Statutory and legal constrictions
**
4. Subsequent program modifications
rnrS«r-f ^T ^"^ WCrC extended to ™lude non-profit Water Supply
Corporations and abond msurance program was established. In 1987 legislation^
passed to give the TWDB authority to issue revenue bonds. In 1989 the TWDB wit
given the audionty to finance retail water distribution lines and estabush ti£
Economically Distressed Areas Program (EDAP). esiaousn tne
f- Future picture
Major goals of the TWDB include: to finance 75% of all of Texas' annual water
SSCfStl° ^^ fand?8 °D rCSearch Which enhances operation of water systems!
and to develop comprehensive management information svstems which provide
managers with appropriate data on research and development for better decision
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II.
Administration
B.
Staff size/Skill mix
The TWDB is composed of 260 individuals, of which 26 are engineers. 29 are
hydrologists/geologists, eight are financiers, three are attorneys, and eight arelccountanti The
remaining personnel consist of executive and support staff. Generally the fields of exnertise
represented include: engineering, hydrology, geology, economics, finance, law, and accounting
New employees are trained by the Board Staff. * v^.,*..^.
Administrative costs/Opemtiog budget
For 1991, the operating budget totals $11,400,018. This budget is funded in part by state
III.
Operations
Fund capitalization
1.
2.
3.
4.
5.
6.
7.
Funds from previous program - None
Federal funds - None
State funds - The TWDB administers the Water Assistance Fund (WAF), which was
created in 1981, with an initial appropriation of $40 million. The Economically
Distressed Areas Program (EDAP) had an original appropriation of $10 million. '
Bonds/borrowed funds - Since 1957, seven amendments have been approved authorizine
the issuance of up to $2.48 billion in Texas Water Development bonds. -^
Loan repayments/Internal funds - Loan repayments in the Water Assistance Fund are
used to make additional loans. Loan repayments in the Water Development Fund
are used to pay debt service on Water Development Bonds.
Alternative financing mechanisms - None
Leveraging capability - The TWDB has the authority to apply leveraging to its revenue
bond programs and is currently studying the feasibility of doing so.
B. Forms of Assistance
1.
Loans
a.
Program description
The TWDB manages several major funds that offer fbancial assistance to
localities for the planning, design, and construction of water supply and regional
water facilities. Two of these funds are the Texas Water Development Fund
and the Water Assistance Fund. Under the WAF, the TWDB administers the
subfund, the Water Loan Assistance Fund which is used to finance construction
of the same water supply projects the Board has traditionally financed from
the Water Development Fund. Another subfund was created within the WAF
in order to fund water projects for hardship cases, the Economically Distressed
Areas Program (EDAP). As of June 1,1991, the TWDB has made 15 WAF
loans totalling $15,809,000, and 360 loans totalling $501,782.013 from the Water
Supply Account within the Texas Water Development Fund.
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b. Borrower considerations
1. Ehgibdity- All applicants must be either political subdivisions or non-
profit Water Supply Corporations of the State of Texas. Applicants
to the Water Assistance Fund and the Water Supply Account must
quahfyunder one of the following conditions: the applicant is a
hardship issuer; the project involves ti?e conversion from ground to
surface water; or the project is regional in nature. EDAP applicants
must be located in an affected county in an economically distressed
Grants
area.
Eligibility costs - None
3. Loan terms - The maximum loan period allowed by law is 50 vears.
However, the Board of the TWDB generally limits loans terras to
twenty years.
4" ^™l rates " The mterest rate « based uP°n ike rate that the
TWDB attains when it issues bonds, plus fiftv basis points- subiect to
change at the discretion of the TWDB. '
5. Loan security - Applicants must offer a security pledee in the form
of taxes, system revenues, a combination of both, "or contracted
revenues.
6. Maximum borrowing amount - 100 % of eligible project costs.
7. Small community exception - None
8. Hardship exception - For the Water Supply and WAF, an applicant
may apply based on the assertion that it could not borrow project
funds at a reasonable interest rate without TWDB assistance. EDAP
applicants arc assigned an interest rate based on their ability to repay
the loan amount.
9. Refinancing - The TWDB's water loan programs can be used to
refinance debt where there is a substantial benefit to the applicant.
10. Application process - See VI. Materials available.
11- Local financial participation - EDAP applicants must offer •<
match of the costs of the facility engineering plans, of which
be cash and the remaining 50% may be in-kind services.
a. Program description
Under the Water Assistance Fund, the TWDB created a subfund, the Research
and Planning Fund, which was established to provide 50% grant funding for
water research and regional water supply plans. The TWDB's grant program
involves both matching funds and solely grant assistance to help qualified local
governments, utilities, and research entities in the development of regional
water feasibility studies-and water-related research studies. The grant program
has operated since December 15, 1982. As of May 1, 1991, there have been
48 water-related research grants totalling $7,782.019, and 81 regional water and
wastewater feasibility study grants totalling $6,214,070.
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b. Grantee considerations
EhgibElity - Applicants for Regional Water Feasibility Grants must
demonstrate a need for funds, must have legal auSorirTto Sal
develop and operate the regional utility, and mi invoke one or more* -
political jurisdictions or service areas. Applets for Water ?.*—
Research Grants must also demonstrate a need for fund.
contribute to the enhancement of practical knowledge i
going relevant studies.
5S?*JSf" ; FM *" TWDB gmit pr°8riluns' •« r^vant study,
travel, and materials costs, except those abated with pemS
ro
3-
provide 50% matching local funds or in-ldwd services, except for
hardshiPcases,developandimplementwater«mervationanSouJh[
management plans, and must notify neighboring political jurisdictions
the TWDB provides up to 100% of funding. *"" """*'
4. Grant monetary limits - None, except two biennial spending caps
unposed the by Texas Legislature, which are typically in the^aS
$2 million over the biennium. *
5. Small community exceptions - None
6. Hardship exceptions - The Board may approve up to 75% of total
regional planning costs if all of the foUo\wng provisions are me° S
unemployment rate exceeds 50% of state average, and per capita
income for the last reporting period is less than 60% of statVaverage.
7. Application process - See VI. Materials available.
8. Local participation - Research and Planning Grants are 50-50 matehine
grants where the applicant must provide the second half.
3. Rate subsidies
S nDE? PfovidK"rale subsidies J°EDAP applicants that can demonstrate that they
do not have the ability to pay for their proposed loan at the TWDB's standard rite
The applicant is assigned a lower interest rate that reflects an annual debTseSce
payment that residents are capable of paying.
4. Bond insurance
The TWDB is authorized to pledge up to $250 million of the full faith and credit of the
state to insure up to $500 million of bonds issued by political 5 ubdivisions. The amoum
of insurance extended by the TWDB is limited to $100 million per fiscal year ThTSf
is in the process of implementing the program.
5. Loan guarantees - None
6. Other credit enhancement • None
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Technical assistance
7.
10
C. Fond Accounts
SET** bfo™au°° 10 S ^ ph3T4S3SSS5
D- Evaluation of Program Effectiveness
Periodically the TWDB is subject to Sunset review by the Texas Legislature.
E. Private Sector Participation
F- Program Issues or Problems
bonds I0
rV'. Relation to Federal Programs - None
V. Recommendations to Other States
to o- ' conventional
VI. Materials Available
A. Enabling Legislation/Rules and Regulations
B. Application Package
C. Annual Report
D. The Agency's Strategic Plan and TWDB brochure
VII. State Contact
Craig D. Pedersen
Executive Administrator
TWDB
1700 N. Congress Ave
P.O. Box 13231 Capitol Station
Austin. TX 78711-3231
(512) 463-7847
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i
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Washington State
Public Works Trust Fund
Summary
of low-toes, sUtt k SyaCm' '
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II. Administration
A. Staff Size/Skill Mix
The thirteen members of the Public Works Board possess a wide ranee of exnerienc, A » , •
functions are provided by the DCD. ^^ acvwopment, and technical assistance
B. Administrative Costs/ Operating Budget
IS*™ hST"* *"* aVaJU"*° "" IO" P'°gran" 80K — * — a-tai^radv. cosu
III. Operating Funds
A. Fund capitalization
1. Funds from previous program - None
2. Federal funds - None
3. State funds - All three loan programs receive their funding from the Public Works Trim
Trust Fund is capitalized with dedicated revenues from taxes on water sewer and 2f»
and from a portion of the real estate tax. These revenues are collec ed StosSSfa
Worte Assistance Account which is managed by the State Treasurer. Durine fS
PWTB received approximately $353 million in dedicated revenues. *
4. Bonds/borrowed funds - None
5. Loan repayments/Internal funds - Repayments of past trust fund loans are recvded to fund
revM1KS
6. Alternative financing mechanisms - None
7. Leveraging capability - None
B. Forms of Assistance
1. Loans
a. Program description
The Public Works Trust Fund (PWTF) consists of three types of loan
Construction Loan Program, 2) Capital Improvement Loan ProgVam, tJy
SES 1° f St fiVC 10aD C|dcs (yCars) °f Pr0gram
offered to local governments totaling over $135 million
** Construction Loan Program - This is the standard loan program that offers low intere
JSc %£%£? laCement' rehabilitation' — tru'ctio?, or improvfm^f SgTb
Sa£a- Impr.ov5?cnt Plaani°g - As an incentive to local jurisdictions to expand the use
nrJS C3P " ""P™""6?' Planning. ^e Board has recently adopted a propose
.«f°. .mt.erest oans for long-term capital planning. These loans are kvauaWe to
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Washington State
Public Works Trust Fund
Program Annotated Outline
I. Program Description
The Washington State Public Works Trust Fund (PWTF) is a multipurpose infrastructure funding program
It emphasizes local government self-sufficiency, comprehensive planning, and allomion according ro local
management effort as well as severity of need.
A. Organization
1. Scope
The PWTF offers low-interest loans for the repair, replacement, rehabilitation, reconstruction, or
improvement of eligible public works systems to meet current standards and to adequately serve
the needs of the existing population. Eligible project categories cover most public works systems,
including domestic water.
2. Agencies Involved
a. The PWTF consists of a thirteen member Public Works Board (PWB) which directs the
offering of loans from this state revolving loan fund.
b. The Washington State Department of Community Development (DCD) annually invites all
Washington cities, counties, and special purpose districts to apply for low interest loans drawn
from the PWTF. Applications are reviewed by the DCD, PWTF, and the Washington
Legislature for approval.
B. Establishment (1985)
1.& 2. Options initially considered/political & legal considerations
The PWTF grew out of a 1982-3 statewide survey of Washington State infrastructure needs
that pointed to serious gaps in the state's financing of infrastructure. These findings prompted
the Legislature to direct the Department of Community Development (DCD) to preparea
plan for replacing and repairing local public works holdings. DCD's subsequent report
•Financing Public Works: Strategies for Increasing Public Investment", provided the deskn for
the PWTF in 1985. ^^
3. Statutory and constitutional restrictions
In order to prove its commitment to capital financing, a local government must meet two
requirements before it can be considered for a loan. First, the locality must levy at least a 0.25
percent real estate excise tax earmarked for infrastructure spending. Second, it must develop its
own Capital Improvement Plan (CIP) for the specific infrastructure category for which the loan is
being sought. '
4. Subsequent program modifications
There have been several policy changes in the PWTF since 1985. The jurisdictions must have a CIP
or equivalent for all eligible systems under ownership. In 1992, each jurisdiction is eligible for up
to $3.5 million in construction loans. This is a rise in the previous cap of $2.5 million. The loan
may be for a single project or more than one project in separate categories.
5. Future picture
The PWTF has added solid waste projects'to its funding programs, which include domestic water
bridge, road, and sanitary and storm sewer. Within six years the PWB projects it will begin to
phase out the CIP loan programs, as the PWTF has brought the vast majority of local governments
into compliance with CIP standards.
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3. Rate subsidies - None
4. Bond insurance • None
5. Loan guarantees • None
6. Other credit enhancement» None
7. Technical assistance
is
governments to help plan, apply, and qualify
for, finance, acquire, construct, repair, and maintain public fadiiitfe!!
C. Fund Accounts
The Washington State Public Works Board administers funds for
priority
?
to
D. Evaluation of Program Effectiveness
of loan applicants must receive final approval from the StaS legSature ? ^ ' evaluatlon
E. Private Sector Participation
—
F. Program Issues or Problems
^
IV. Relation to Federal Programs or Legislative Proposals - None
V. Materials Available
A. 1992 Application Package
B. Enabling legislation and rules and regulations
C. 1991 Annual Report
D. Capital Improvement Planning Manual
VI. State Contact
Pete A. Butkus
Public Works Manager
Dept. of Community Development
9th and Columbia Bldg.
MS/GH-51
Olympia, WA 98504-4151
(206) 493-2886 FAX (206) 493-9445
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Emergency Loans - In 1988, the Legislature amended Chapter 4"4 1
Public Works Board with emergency loan authority. ^pro
ass* eligible communities experiencing the loss of critical publkworks services orSies
oue to an emergency.
b. Borrower considerations
1. Eligibility - Jurisdictions eligible to apply for loans from the PWTF include: counties, cities,
which provide eligible services but are not special purpose districts are not^faible "for
funding. Eligible projects cover most public works systems, including domesticlrater.
2. Eligibility costs -Forconstruction loans the jurisdictions must commit a minimum of 10%
of project costs from locally generated revenues. Also, a local match is required for Capital
Improvement Planning Loans, consisting of one dollar for every three PWTF dollars of
local cash or eligible in-kind contribution. «uu«u» ui
3. Loan terms - For construction and emergency loans the useful life of the public works
imnrovement tc tnr> ln->n t*m u^tk •> _*..»:_.._ _«• tn *^ • .. r »••«•
4. Interest rates - The interest rates for construction loans by the PWTF in the loan cvde
°m 1 ' 3%' Individual loan rates m de'ennined by the percentage of local funds
Trust Fund Loan
Interest Rates
3%
2%
. 1%
Level of Local
Participation
10%
20%
30%
5. Loan security - None
6. Maximum borrowing amount - Each jurisdiction is eligible for up to $25 milMon in
construction loans, $15,000 per capital improvement plan, and $250,000 per emergency loan.
7. Small community exception - None
8. Hardship exception - The PWB has adopted a definition of economic distress established
by the Legislature in 1985. To receive the economic distress designation, a jurisdiction's
project must be located within a county that has a high unemployment rate of 20%
above the statewide average for the previous three years. The Board considers this
information an indicator of economic distress when approving the final priority list of
projects sent for legislative action. 3
9. Refinancing - not permitted
10. Application process - See VI. Materials available
11. Local financial participation - None
2. Grants - None
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West Virginia Water Development Authority
Summary
The West Virginia Water Development Authority funds the construction and acquisition of water development
projects from the issuance of water development bonds and state appropriations. Since inception of the loan
program in 1974, the Authority has made 13 loans through both the Construction Loan Program and the
Supplemental Loan Program for $18,621,977 and $2,938,558, respectively
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West Virginia Water Development Authority
Program Annotated Outline
I. Program Description
The West Virginia Water Development Authority is authorized to issue water development bonds in
order to finance the construction or acquisition of water development projects through loans to eSribS
local overnments and overnment aenci i eugiDie
local governments and government agencies in West Virginia.
Organization
1. ' Scope
""!? £?!? r Devel°Pmenut Authority makes loans from Legislatively appropriated funds
and bond proceeds in the financing of water development projects to municipalities
local governments, and public service districts.
2. Agency involved
West Virginia Water Development Authority
B. Establishment
1. Options initially considered
The Authority was established in 1972, forming the foundation for its programs for
sewer systems to cities, towns, and public service districts. The loan programs-began
operation in 1974. These programs provide financial assistance to local governmental
entities in meeting the requirements of State and federal water pollution control laws.
2. Political and legal considerations
The initial legislation authorizing the program was modeled aifter 4*
Ohio Water Development Authority's legislation.
3. Statutory and constitutional restrictions • None
4. Subsequent program modifications
In 1981, the Legislature expanded the powers of the Authority to include drinking water
systems as eligible projects. The number of active Board members also increased from
5 to 7 members, all appointed by the governor. In 1989, the Legislature increased the
authorized limit on bonding by the Authority from $100 million to $200 million It also
authorized the authority to refinance local governmental agencies' existing water project
development debt, provided that the refinancing does not exceed fifty percent of the
Authority's loan. "
S. Future picture
On August 27, 1991, the Authority closed its Series A bonds for $14,960,000. In the
future, the Authority plans to make additional bond issuances as needed.
II. Administration
Staff size/Skill mix
The governing Board of the West Virginia Water Development Authority consists of seven
members, including three ex-officio members: the Director of the Division of Natural Resources-
the Director of the Bureau of Public Health; and a State Officer appointed by the Governor
most responsible for economic and community development. The remaining four members are
appointed by the Governor for six year terms. The staff of the Authority consists of four
members: the Director; a certified public accountant; an Administrative Assistant, and; a
Secretary. The Authority retains experts for consulting purposes when necessary.
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B. Administrative costs/Operating budget
The total operating expenses for fiscal year 1991 were approximately $250.000. The operating
budget and expenses are funded from earnings of the revenue bond program.
HI. Operations
A. Fund capitalization
1. Funds from previous program - None
2. Federal funds • None
3. State funds - The Authority received State appropriations in the past, which partially
funded water development projects through the loan programs. From 1974 to 1983 the
Authority received approximately $55 million in State appropriations for both sewer and
water systems. uuuiacwwanu
4. Bonds/Borrowed funds - The Authority closed its first revenue bond issue in December
1978 for $8,105,000. Since that time the Authority has made eight additional bond
issuances totalling approximately $223.6 million. The most recent bond issue was
August 27,1991, for $14,960,000. Portions of the bond issues were used for refundine
and retiring outstanding bonds. The Authority currently has $1553 million in revenue
bonds outstanding.
5. Loan repayments/Internal funds - Loan repayments are used to retire outstanding
bonds and to fund the Supplemental Loan Program. Currently, the Supplemental Loan
Program funds are used to buy down interest rates on the loans.
6. Alternative financing mechanisms - None
7. Leveraging capability - The Authority has not used its leveraging capability in the
Revenue Bond Loan Program.
B. Forms of assistance
1. Loans
a. Program description
The Authority's loan program provides loans for eligible water development
projects to governmental agencies through the purchase of their local bonds.
The Authority's Revenue Bond Loan Program has two loan programs, the
Construction Loan Program and the Supplemental Loan Program, which are
financed through the issuance of revenue bonds and state appropriations. The
Supplemental Loan Program blends low-interest State loan funds with bond
proceeds to reduce the bterest rate for loan recipients. As of August 31,1991
the Construction Loan Program has provided 13 totalling $18,621,971 The
Supplemental Loan Program has also provided 13 loans totalling $2,938458
for the same period for drinking water systems.
1. Eligibility- Eligible applicants include counties, municipalities, sanitary
districts, public service districts, and any other governmental agencv
entity, political subdivision, having the authority to acquire, construct!
or operate water development projects within the state.
Eligibility costs - The Authority has the power to charge administrative
fees for loan applicants, but to date, the Authority has not initiated
a charge.
2.
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3. Loan terms - Loan terms are generally set by the applicant, and can
range up to a maximum of 40 years.
4. Interest rates - The Supplemental Loan Program loans carry below
market interest while the Construction Loan Program loans are at the
market rate. Currently, these loans provided by the Authority are at
7.5% interest. v
5. Loan security - Each applicant is required to fund a debt service
reserve equivalent to one year's repayment on principal and interest.
6. Maximum borrowing amount - Currently, there is no limit on the size
of a loan. Thus far, the Authority's loans have ranged from $100 000
to $7 million. '
7. Small community exception - None
8. Hardship exception - None
9. Refinancing - None
10. Application process - See VI. Materials available.
11. Local financial participation - None required
2. Grants - None
3. Rate subsidies - None, with the exception of the Supplemental Loan Program.
4. Bond insurance - None
5. Loan guarantees - None
6. Other credit enhancement - The Authority holds pre-established reserves provided by
the Authority equivalent to one year's debt service. This amount is maintained in an
account as a reserve on the bonds to ensure payment by the Authority.
7. Technical assistance - The Authority provides no technical assistance to the applicant
in the project construction process. Financial guidance and advice is offered
to the applicant throughout the loan term.
C. Fund accounts
The Authority maintains four operating funds in the administration of its loan and grant
programs. These include the Loan Fund, General Fund, Debt Service Fund, and the Rebate
Fund. In addition, with each bond issue, two special reserve funds, the Capital Reserve Fund
and Special Reserve Fund, are set up as debt service reserves for the reiirement of outstanding
bonds and as a reserve for the main accounts within the Authority.
D. Evaluation of Program Effectiveness
The Authority must submit an annual report to the Legislature and is audited annually by
independent CPA's. The Authority is also subject to be called before the Legislature for review
during the year.
E. Private Sector Participation - None
F. Program Issues or Problems - None at this time.
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IV. Relation to Federal Programs or Legislative Proposals - None
V. Recommendations to Other States
modifications. ' t""sr«un nas needed few major changes
VI. Materials available
A. Enabling Legislation
B. Rules and Regulations
C. Annual Report
D. Application Package
VII. State Contact
Daniel B. Yonkosky
Director
West Virginia Water Development Authority
1201 Dunbar Avenue
Diiabar, WV 25064
(304) 348-3612
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Wyoming Water Development Program
Summary
for tne _.
and resources. The Wyomiag Water De^lopmem ComSn!tta£ed m 19^°^ T" ^J
from state appropriations and revenue. Since the inceptiolof Se proSams!^ cSS^t kT,"!?
70 and 80 loans and grants for construction totalling approSna^v^muEo^^mmuKzon has made between
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i
Wyoming Water Development Program
Program Annotated Outline
Program Description
The Wyoming Water Development Program was established to
Organization
1. Scope
The Wyoming Water Development Program administers three funding Droerams for
the construction and development of water facilities, which included? E^
pZSS?"* °gram' ** Rehabaitation *«***• *>d the Water Resoura Planning
Agencies involved
The Wyoming Water Development Commission
B. Establishment
1. Options initially considered
The Wyoming Water Development Program was established in 1982 to serve
Political and legal considerations
3. Statutory and constitutional restrictions
?^J?°?lmiSSiSn.is D0t au^orized to administer grants to private industries or
corporations. Private entities can not receive subsidies from the State.
4. Subsequent program modifications
There have been no significant modifications to the program since its inception in 1982.
5. Future picture
As additional and more stringent regulations are enforced bv the EPA and the federal
™ dmkl WatCr ^ SUrfaCC Wa '
Water Standards- '*
prognkms ^ ^ under
II. Administration
A. Staff size/Syil mix
The Wyoming Water Development Commission consists of ten members, eight of whom
represent the four water divisions of the State, one representative of the ioinTTribai
S f^^Sn^^rmb^at'1T>TheIStaff °f ^ Water Dev^Pn>«t CommSS consists
and Develo members' who Cecily oversee Water Resource Projects "^SISB
B. Administrative costs/Operating budget
The_ Commission's annual administrative costs and operating budget total approximately Si
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III. Operations
A. Fund Capitalization
1. Funds from previous program - At the start of the program the Commission nxeived
General Fund appropriations totalling $117.6 million for the administration of die New
Development Program and the Planning Program
2. Federal funds - None.
3. State funds - The Commission receives a 15% excise tax on coal which aids in financing
the New Development Program and the Planning Program. In addition, the
Commission receives revenues from a 0.167% severance tax on oil and gas which aids
in the financing of the Rehabilitation Program. These State funds total approximately
$20 million per year. '
4. Bonds/Borrowed funds - None
5. Loan repayments/Internal funds - Loan repayments are returned to the fund accounts
for additional loans and grants,
6. Alternative financing mechanisms - None
7. Leveraging capability - None
B. Forms of Assistance
1. Loans
a. Program description
The Wyoming Water Development Commission administers three funding
programs in the utilization and preservation of State waters.
* • The New Development Program develops presently mused/unappropriated
waters of Wyoming. These projects can proceed as either sponsored projects
by municipalities, irrigation districts, or other assessment districts, or ait state
projects which serve to benefit more than one entity and are multipurpose in
nature.
* * The Rehabilitation Program provides funding assistance for the improvement
of water projects completed and hi use for at least 15 years. This program can
be used to improve an existing municipal water supply system or an agricultural
storage facility or conveyance system.
** The Water Resource Planning Program funds the planning aspects of the
framework for development strategies which serve to identify and resolve water
related issues. There are three types of plans for water development that the
Water Development Commission funds: Basin Wide Plans, Master Plans, and
Research Plans.
Since the start of the program in 1982, the Commission has made between 70
and 80 loans for construction totalling approximately $230 million.
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b. Borrower considerations
1. Eligibility - Eligible applicants for the loan programs of the
Commission include municipalities, irrigation districts, assessment
districts, and other government agencies' and entities.
2. Eligibility costs - None
3. Loan terms - The loan term is set according to the economic life of
the faculty and the ability to pay by the applicants. The maximum loan
term is 50 years.
4. Interest rates - Interest rates are currently set at 4%.
5. Loan security - Loan security is determined bv the amount of the loan
and is set by the Attorney General. " « UK wan
6. Maximum borrowing amount - There is no maximum limit on loans.
7. Small community exception - None
8. Hardship exception - The Commission offers grants of up to 75% for
hardship cases.
9. Refinancing - None
10. Application process - See VI. Materials available.
11. Local financial participation - None required.
2. Grants
a. Program description
The Commission offers grants to eligible public entities for the financing of
water supply projects. There is no limit on the amount of a grant, but the
Commission is hmited to financing up to 75% of the total costs of the project.
The remaming 25% can be financed through the regular loan program. The
standard grant consists of a 50% grant share and a 50% loan a^ement for
he applicant. The grant program is also used to provide the state match
needs' ^ funded Water suppiy pr°Jects such « dam*> and rehabilitation
3. Rate subsidies • None
4. Bond insurance - None
5. Loan guarantees - None
6. Other credit enhancement - None
7. Technical assistance - The Commission performs a feasibility studv on each water
SCt aHPphcaj10n; The PlanniBg P"*™*is ^ded and sponsored bv the ComnTissTon
which aids in developing master and basin-wide plans for water projects KSlon
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C. Fund Accounts
The Commission operates two main accounts in the administration of the loan oroerams The
Water Development Account No. 1 finances the New Development Program andtJie Water
Planning Program. The Water Development Account No. 2 finances the Rehabilitation
Program.
D. Evaluation of Program Effectiveness
The Wyoming Water Development Commission is required to submit a legislative report to the
General Assembly each year. The Commission is also subject to an iumuai State audit.
E. Private Sector Participation • None
F. Program Issues or Problems
With the more stringent regulations and standards enforced by the EPA and federal government
domestic water supply and rural water systems have come under pressure for compliance As
a result, the Commission receives more applications than it can fund each fiscal year.
IV. Relation to Federal Programs or Legislative Proposals
For water resources projects that are eligible for state and federal funding through the Farmer's Home
Administration and the Bureau of Reclamation's Rehabilitation and Betterment Program the
.Commission will on occasion provide a 50% matching fund in the financing of the project.
V. Recommendations to Other States
The existing programs of the Commission have worked remarkably well. The Commission's investments
in state infrastructure are seen as good investments for the future.
VI. Materials Available
A. Legislative Report
B. Application Package
C. Rules and Regulations
D. Other
VII. State Contact
Michael K. Purcell
Administrator
Wyoming Water Development Commission
Herschler Building
Cheyenne, WY 82202 "
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