Clean Water State
2006 Annual Report
Reaching Communities, Achieving Success.
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For the past 20 years, the Clean Water State Revolving Funds in 50 States and Puerto Rico have
made a unique, lasting and significant contribution to achieving and maintaining water quality
benefits in our nation's waters. The CWSRFs have grown to become a steady and reliable source
of affordable financing of sustainable water infrastructure needed by communities throughout
the country. I commend to you their Annual Report of 2006 that documents the performance
and underscores the promising benefits of the CWSRFs.
Benjamin H. Grumbles
Assistant Administrator
Office of Water
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PAYING FOR
SUSTAINABLE
WATER — '
INFRASTRUCTURE \ / Clean Water
State Revolvin Fund
INNOVATIONS for the 21st CENTURY % PRO^ State Revolving Fund
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Table of Contents
CWSRF PROGRAM: REACHING COMMUNITIES, ACHIEVING SUCCESS
CWSRF OUTREACH: ENHANCED COMMUNICATIONS
MEASURING AND COMMUNICATING ENVIRONMENTAL BENEFITS
FUNDING ENVIRONMENTAL BENEFITS
STATE AGENCIES THAT MANAGE CWSRF PROGRAMS
CWSRF PISCES AWARDS: PERFORMANCE AND INNOVATION IN THE SRF
2006 PISCES AWARD WINNERS: PERFORMANCE AND INNOVATION
CREATING ENVIRONMENTAL SUCCESS
CWSRF 2006 PERFORMANCE HIGHLIGHTS
2006 FINANCIAL PERFORMANCE OVERVIEW
NEW CWSRF INITIATIVES FOR 2007
CWSRF AT-A-GLANCE
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CWSRF Program:
Reaching Communities, Achieving Success
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For nearly twenty years, the Clean Water State
Revolving Fund (CWSRF) program has been a
model of financial integrity and environmental
success. Comprised of 51 individual state
programs, the CWSRF has provided over $57
billion in assistance with almost 18,000 loans
since its inception in 1988. 2006 marks an
important milestone in the CWSRF: it is the
first time that over $5 billion in assistance has
been provided in any one year.
Borrowers have benefited from billions of dollars in interest
savings through the CWSRF program's low-interest loans.
Recent efforts to develop a nation-wide environmental
benefits reporting system have helped the CWSRF program
quantify the environmental impact of its investments. Since
reporting began in early 2005, states have entered data on
over 3,500 projects totaling $11.3 billion. The information
shows that CWSRF loans are helping communities restore
and protect aquatic wildlife, recreational uses, and drinking
water sources. The reporting also underscores the fact that
CWSRF assistance benefits millions of people throughout
the United States. This 2006 Annual Report will highlight
these advances in benefits reporting, as well as other
accomplishments and new developments from the past year.
Going forward, many CWSRF borrowers will have the
opportunity to achieve even greater benefits from their loans
through lower interest payments. In 2006, the Office of
Water issued a statement affirming EPA's policy on extended
term financing for CWSRF assistance. The policy allows
some borrowers the option to have an assistance repayment
term that is greater than 20 years, which results in lower
annual payments.
In the past year, the national CWSRF program increased
support for state CWSRF outreach efforts to ensure that
program benefits are being effectively communicated to
communities and others that can gain from low-cost SRF
project financing. All state CWSRF programs conduct
outreach to their potential borrowers, with each program
employing techniques that are customized for its state. EPA
is working with individual states to facilitate an exchange of
useful communications strategies and to develop additional
outreach tools to help states achieve their programmatic
goals, such as attracting new borrowers and targeting
priority environmental needs. Several of these tools have
already been implemented by states, and EPA will track their
effectiveness.
The CWSRF continued to recognize outstanding
performance and innovative strategies within the program
with the PISCES Awards (Performance and Innovation
in the SRF Creating Environmental Success). In 2006,
Awards were given to individual projects for the first time;
these projects are creative and innovative models for other
communities to follow.
The year 2007 will mark the 20th anniversary of the
passage of the Clean Water Act amendments that authorized
the CWSRF program. The CWSRF has helped thousands
of communities throughout the United States achieve
cleaner and healthier water. The program staff are always
considering how to further expand the benefits of the
CWSRF to more communities and more people. By making
loans more affordable through extended term financing,
promoting investment in sustainable infrastructure, and
encouraging greater creativity in project planning and
development, the CWSRF will remain an important
financing tool for many years to come.
2006 marks an
important milestone in
the CWSRF: it is the first
time that over $5 billion
in assistance has been
provided in any one year.
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Clean Water State Revolving Fund National Performance Summary Statement
Statement of Fund Activity ($ Millions)
Annual Fund Activity
Federal Capitalization Grants
State Matching Funds
New Funds Available for Assistance
Project Commitments (Executed Loan Agreements)
Project Disbursements
Cash Draws from Federal Capitalization Grants
Cumulative Fund Activity
Federal Capitalization Grants
State Matching Funds
Funds Available for Assistance
Project Commitments (Executed Loan Agreements)
Project Disbursements
Cash Draws from Federal Capitalization Grants
2006
928.5
223.9
4,648.4
5,034.4
4,357.8
1,064.1
24,180.2
5,049.2
60,956.1
57,698.1
49,514.1
22,194.3
2005
1,355.6
209.4
4,209.1
4,834.7
4,595.8
1,305.7
23,251.6
4,825.3
56,307.7
52,663.6
45,156.4
21,130.2
Source: EPA's CWSRF National Information Management System (June 30, 2006).
Note: 2005 data were revised from the 2005 Annual Report to incorporate updated state information.
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CWSRF Outreach:
Enhanced Communications
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The Clean Water State Revolving Fund
program has funded important water quality
projects since 1988. SRF managers have
implemented innovative and successful loan
assistance options to address their states'
most pressing environmental and public
health needs. Enhancing service and reaching
out to communities with priority projects is
an ongoing effort in the CWSRF program.
Over the years, many states have increased
the level of outreach they conduct and have
implemented new approaches to providing
information about the CWSRF program.
Several states have recently begun new efforts
to evaluate how their primary customers
- local communities - perceive their state's
CWSRF program so they can adjust outreach
approaches or modify assistance programs to
meet local needs.
All 51 CWSRF programs conduct outreach to their local
communities through websites, meetings, newsletters, or
other methods. Many states have developed sophisticated
and comprehensive outreach strategies in order to meet
various goals, such as encouraging more nonpoint source
projects, maintaining or increasing the fund utilization
rate, or educating decision-makers about the benefits of the
CWSRF.
The states' communications efforts pay off. In 2006,
the program entered into 1,858 loans or assistance
agreements for eligible projects, the largest number in
CWSRF history and almost 400 more than the previous
The greatest outreach
tool is the CWSRF itself.
year. More than half of the loans or assistance agreements
went to communities with a population below 3,500.
Furthermore, 1,183 nonpoint source projects were funded
in 2006.
There can be challenges in communicating the benefits
of the CWSRF to communities. Staff turnover at the
community level means that outreach involves a frequent
reeducation process. At the same time, staffing resources
available for outreach in state CWSRF programs can be
limited. In addition, some communities do not have the
capacity to analyze all of their financing options. They
may therefore choose an option that they have used in the
past, even though it may not be the most cost-effective
alternative.
The greatest outreach tool is the CWSRF itself. Borrowers
save millions of dollars in interest each year compared with
other sources through the Fund's below-market interest
rates. There is also significant flexibility in the types of
projects that can be financed with the CWSRF. In 2006,
the Office of Water issued a statement affirming EPA's
policy on extended term financing for CWSRF assistance.
The policy allows financing to extend beyond twenty years,
making payments more affordable for many communities.
A 2005 survey conducted by the U.S. Conference of
Mayors found that almost 40 percent of the 414 cities
polled used the SRF, with small and medium cities (less
than 100,000 population) using the SRF for most or all of
their water infrastructure projects."'
In a new effort to help states take their outreach efforts
one step further, EPA has made itself available to assist
states in developing outreach plans and other tools that
may enhance their efforts. Some of the products that EPA
is developing include:
COMMUNICATIONS PLANS
EPA is tapping experienced communications professionals
with expertise in state and federal environmental programs
* Richard R Anderson. "Major Capital Investment in Water and Wastewater
Infrastructure: City Practices and Attitudes Concerning the State Revolving
Fund Program." U.S. Conference of Mayors, Mayors Water Council.
Washington, D.C.July 25, 2006.
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to assist CWSRF programs. EPA
will be working with at least two
states to develop and implement
comprehensive CWSRF outreach
plans in 2007. Each state will begin
by gathering information on existing
and potential borrowers. Through
interviews and focus groups, the state
will learn how communities perceive
the CWSRF program and how they
make financing decisions.
options. The Financing Alternatives
Comparison Tool (FACT) will give
users the flexibility to input and
compare information for any number
of basic financing options, including
CWSRF, tax-exempt bonds, grant/
loan combinations, bank loans, and
more. In addition to entering their
financing terms and construction and
design costs, users will be able to
input the other expenses associated
Over the years, many states
have increased the level of
outreach they conduct and have
implemented new approaches to
providing information about the
CWSRF program.
Armed with this information, the
states will work with communications
professionals to set programmatic
goals and develop an outreach plan
to help achieve those goals. The
states, with EPA assistance, will
work towards implementing the
communications plan and monitoring
the outcomes.
Strategies and case studies will be
shared with other state CWSRF
programs, along with suggestions
on how they may be implemented
elsewhere.
FINANCING ALTERNATIVES
COMPARISON TOOL
EPA recently developed a financing
calculation tool that will allow
communities to compare the cost of
SRF financing with other financing
with each financing option, including
legal fees, financial advisory fees,
and reporting costs. This tool allows
communities to compare their
various financing options in a more
comprehensive way than has been
possible to date.
LEARNING FROM CWSRF
PROGRAMS' EXPERIENCES
EPA is also seeking to improve
communications across CWSRF
programs by encouraging all staff to
share ideas and case studies. EPA
has launched an online message
board (http://cwsrf.invisionzone.
com) where users can ask questions,
share ideas and discuss issues. The
message board is available to all
CWSRF staff in states and EPA. In
addition, in 2007, the CWSRF will be
re-launching the SRF's Up newsletter.
The newsletter will provide state and
regional CWSRF staff with regular
updates on policy changes, case
studies, and other useful information.
AWARDS
States and communities can use the
PISCES Awards (Performance and
Innovation in the SRF Creating
Environmental Success) to publicize
local successes and case studies,
informing potential borrowers of
the types of innovative projects
that can be funded with CWSRF
dollars. Media reports on PISCES
Award winners also bring new
attention to the program and its
successes. In 2006, awards were
given for individual projects. More
information on the 2006 PISCES
Awards and the winners can be found
on page 13.
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Outstanding Examples of State Outreach Activities
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Florida: Florida's SRF program
holds an annual two-day workshop
for consultants, water and
wastewater facilities managers,
and financial managers. The
workshop covers SRF program
requirements and updates, and
provides some information on
other financing options. Over 200
people attended the event in 2006,
a substantial portion of whom had
no prior knowledge of the SRF. It
has proven to be an effective way
to inform community leaders and
consultants in Florida about the
benefits of the SRF.
New Jersey: The New Jersey
Environmental Infrastructure Trust
runs a 30-second television spot on
the state public television station,
which is the main source for state
government news. The Trust also
sends all community decision-
makers information about their
programs three times per year.
Arizona: The Water Infrastructure
Finance Authority staff members
spend a large part of their time
traveling to communities to
discuss the SRF program. They
also organize "large check"
ceremonies with the state governor
in borrower communities whenever
possible.
Indiana: Indiana implemented
a nonpoint source sponsorship
program in 2005 which provides
borrowers with a 0.5 percent
interest rate reduction if they
do a nonpoint source project
in conjunction with a public
treatment works project. By
spreading the word through fact
sheets, newsletters, and meetings
with communities and consultants,
the state was able to make $74
million in nonpoint source loans in
only two years.
Montana: In 2005, Montana's
SRF program produced a short
informative and amusing video on
the process involved in obtaining SRF
financing. It is sent to any community
that applies for a state planning grant.
In the year since it was released, over
100 copies of the videos have been
distributed throughout the state.
In addition, the program conducts
three SRF workshops around the
state each year, which draw 100 to
150 attendees. Events are publicized
through mailings to all public works
directors and mayors. As a result
of the video and workshops, the
SRF program has found that its
applications and projects are of higher
quality.
Iowa: Iowa's SRF program
recently made the decision to assist
communities with the environmental
review. To inform them of this
change and other services, the
Department of Natural Resources
hosted five workshops around
the state in the fall of 2006. The
workshops were primarily aimed at
consulting engineers and councils
of governments. The Iowa Finance
Authority also runs ads in magazines
aimed at local governments and
utility managers.
Michigan, Alaska: Michigan's and
Alaska's SRF programs conducted
surveys in 2006 of their current and
potential borrowers. The survey
results help them understand how
the programs are perceived and how
communities make infrastructure
financing decisions.
New Mexico, Texas: Both states
have recently completed marketing
plans, which outline programmatic
goals and the activities to help
achieve those goals. Some of their
strategies include reaching out to
non-compliant communities and
marketing to consulting engineers.
Pennsylvania: PENNVEST hosts a
comprehensive website that allows
potential borrowers to register
for the application process and
enter basic information about
their system. Users can take the
information entered and compare
PENNVEST funding with any
other funding scenario. The
agency also hosts approximately
six workshops around the state
annually to help communities learn
more about how they can fund
infrastructure through PENNVEST.
Another important outreach tool
is a requirement for each approved
loan recipient to attend a training
session that details the settlement,
draw-down, and close-out
processes.
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Measuring & Communicating
Environmental Benefits
In recent years, the CWSRF program has
undertaken an ambitious effort to add
outcome-based performance information
to its strong financial record. 2005 was a
productive year for this effort, featuring the
debut of a CWSRF benefits reporting system
and a suite of environmental indicators
for measuring water quality and public
health effects. With the help of these tools,
states can now demonstrate the measurable
contributions of the CWSRF program to
supporting Clean Water Act goals.
The benefits reporting system is the product of a
collaborative effort between states and EPA. Although
participation is voluntary, in 2005 all 51 states began
tracking indicators linking CWSRF project assistance to
environmental benefits. The indicators convey four areas
of achievement: providing subsidy to borrowers, providing
service to the general population, addressing water quality
problems, and protecting and restoring waterbody uses.
In FY 2006, states reported the preliminary results of
these indicator measures for their CWSRF projects. The
measures are based on water quality program data that
are already collected through permits, standards, and
other sources, so they present the environmental value
of the CWSRF while minimizing the reporting burden to
states. From these reports, states and EPA can track the
CWSRF's progress in helping water systems meet and
maintain compliance with Clean Water Act regulations.
The information also allows CWSRF program managers
to measure the effectiveness of every loan dollar used
to protect and restore fisheries, recreational areas, and
drinking water sources.
The CWSRF benefits reporting system currently contains
project-level data for almost 2,000 loans. Data fields
connect expected water quality improvements to the
waterbodies they affect. Users can choose from a
customized list of designated surface water uses for the
affected waterbodies and input the population served by
the project. Due to its accessibility, the CWSRF benefits
reporting system acts as a communication conduit between
state-level program managers and EPA Regions. The
system generates customizable reports at the state, regional
and national level, giving program managers a strategic
view of the ways the CWSRF program is addressing water
quality issues. This one-screen data entry system is a
straightforward way to track the environmental and public
health contributions of the CWSRF program.
The projects listed on the next page were taken from
the CWSRF benefits reporting system to demonstrate
how loans can be tracked in conjunction with the
environmental and public health needs that they serve.
The information will allow CWSRF program
managers to measure the effectiveness of every
loan dollar used to protect and restore fisheries,
recreational areas, and drinking water sources.
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Stamford, Connecticut used a
$73,561,481 loan at a 2 percent
interest rate for modernization of
a wastewater treatment facility to
accomplish denitrification. The
73,848 people"' directly served
by the facility are now enjoying
the benefits of water quality
improvement in the Stamford
Harbor, a marine fish, shellfish
and wildlife habitat used for
commercial shellfish harvesting.
New York, New York used a $32
million CWSRF loan at 2.34
percent interest to construct a
facility to eliminate combined
sewer overflows into the Paerdegat
Basin. As a result of the project,
more than 8 million people"' will
benefit from improved water
quality in the Jamaica Bay Wildlife
Refuge.
Worcester County, Maryland used
a CWSRF loan for the replacement
of lagoon aeration and lagoon
fencing to improve water quality
in the Chincoteague River, a
threatened waterbody. The project
will help preserve the river for
recreation, aquatic life, industrial
water supply, and agricultural
water supply.
In Gary, North Carolina, a
$5,000,000 CWSRF loan at
2.2 percent interest funded an
Environmental Impact Statement
and preliminary design for a
project at Western Wake County
Regional Water Reclamation
Facility. The project will
contribute to water quality
improvement in the Cape Fear
River, used as a Class IV and V
water supply for the community.
Fortville, Indiana used a
$1,630,000 loan at a 3.4 percent
interest rate for sewer separation
to reduce combined sewer
overflows impacting the Fall Creek
- Flatrock Creek tributaries. The
project will serve a population of
3,000 people"' and will contribute
to water quality improvement in
the tributaries, used for full-body
contact recreation and warm water
aquatic habitat.
In Beebe, Arkansas, a $750,000
CWSRF loan at 3.75 percent interest
was used to construct interceptors
and a new pump station to eliminate
manhole overflows affecting the
White River and Cypress Bayou.
The project will contribute to
water quality maintenance in the
waterbodies, used for recreation and
domestic water supply.
Clinton, Missouri used a CWSRF
loan to fund a collection system
extension and rehabilitation, as
well as manhole rehabilitation.
The project contributes to water
quality improvement in the South
Grand River, allowing the 10,050
people"' served by the project to
continue to use the waterbody as
a warm water fishery and drinking
water supply.
In Kalispell, Montana, a $3.9
million CWSRF loan was used to
construct a wastewater treatment
plant. The project will improve
water quality in Ashley Creek
and Flathead Lake, benefiting the
18,400 people"' who rely on the
waterbodies for drinking water
supply.
Reno, Nevada used an $11 million
CWSRF loan to replace and
rehabilitate sewers, benefiting
150,000 people."' The project
will maintain water quality in the
Truckee River for recreation and
aquatic life.
In Anchorage, Alaska, a $2 million
dollar CWSRF loan at 1.5 percent
interest was used to make process
improvements at the John Asplund
Water Pollution Control Facility.
The project will protect the Cook
Inlet from wastewater discharge,
benefiting 260,000 people."'
*Total users of utility systems where reported
CWSRF projects occur.
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The benefits reporting system is the product of a
collaborative effort between states and EPA.
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Funding Environmental Benefits
The $11.3 billion in CWSRF loans
reported in the environmental
benefits effort have financed over
3,500 projects that serve more
than 75 million people. Over 1,300
borrowers have used CWSRF loans
to clean up rivers, lakes, and streams
for swimming and fishing. In 2006
alone, $3.7 billion in loans served 36
million people and provided low-
interest financing to 500 borrowers.
The following graphs show how the
CWSRF targets a variety of impaired
water sources in support of Clean
Water Act goals.
CWSRF Assistance Supports Surface Waterbody
Designated Uses
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10
9
8
7
6
5
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Assistance
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Aquatic Life Recreation Fish& Drinking Agriculture Industrial
& Wildlife & Aesthetics Shellfish Water Supply
Consumption
Protect Waterbody Designated Uses
Restore Waterbody Designated Uses
ADVANCING CLEAN WATER ACT
GOALS
The measures show that the CWSRF directly
supports the goals of the Clean Water Act by
restoring or protecting the beneficial uses of
a river, lake, or stream. Over 75 percent of
the total funding reported goes to projects
that aim to preserve water quality for aquatic
life, provide for water recreation, and protect
drinking water. The CWSRF assistance used
to protect and restore these priority uses
- $7.6 billion for aquatic wildlife, $8.7 billion
for recreational and aesthetic uses, and $2.2
billion for drinking water sources - directly
benefits the millions of people who rely on
clean waterbodies for health and enjoyment.
In addition to preserving surface waterbody
uses, the CWSRF provides financial support
for Clean Water Act goals by passing on
interest rate savings to municipalities and
utility customers.
1400
1200
flOOO
_
ll 800
•5
£ 600
3
Z
400
200
0
Projects
I II
Aquatic Life Recreation Fish & Drinking Agriculture Industrial
& Wildlife & Aesthetics Shellfish Water Supply
Consumption
Protect Waterbody Designated Uses
Restore Waterbody Designated Uses
Note: Graphs represent the cumulative data submitted by states in the CWSRF benefits
reporting system to date.
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SERVING THE PUBLIC
In addition to serving the public through lower utility
bills and improved wastewater services, the CWSRF
also improves local water quality. Projects that clean up
polluted streams, rivers, lakes, and estuaries will improve
drinking water supplies for 14 million people, preserve
recreational waters for over 68 million, and provide for
safer fish and shellfish consumption for 31 million."' In
addition, more than 45 million people will enjoy protected
and restored fish and wildlife habitats as a result of
CWSRF projects."' Because water quality improvements
also benefit downstream water supplies, the total
population served by CWSRF projects is even greater than
the numbers shown here.
1O
Impaired Waterbody Protection and Restoration: Population Served
Drinking Water
Other
Secondary Contact Recreation
Fish & Shellfish Consumption
Primary Contact Recreation
Aquatic Life & Wildlife
10
20 30
Millions of People
40
50
Note: Graph represents the cumulative data submitted by states in the CWSRF benefits reporting system to date.
CWSRF Projects Address Public Health
Number of Projects (thousands)
Subsidy Dollars (billions)
Assistance Dollars (billions)
Projects Impacting Human Health
Projects Impacting other Waterbody Uses
Note: Graph represents the cumulative data submitted by states in the CWSRF benefits reporting system to date.
*Total users of the utility systems where reported CWSRF projects occur.
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FUNDING PRIORITY WATER PROJECTS
CWSRF programs rank all project applications for funding
according to public health and compliance criteria. The
ranking systems, developed by the states, ensure that
CWSRF funding goes first and foremost to projects with
the greatest impact on human health and the environment.
The benefits data indicate that the majority of funding is
used to help impaired or threatened waterbodies achieve
compliance with Clean Water Act regulations. Projects to
improve water quality received $8.2 billion, far exceeding
the $2.2 billion spent on projects to maintain the current
water quality.
CWSRF Assistance Helps Maintain and Improve Water Quality of Receiving Waterbodies
Loan Dollars to Maintain/Improve Water Quality
Loan Dollars to Achieve/Maintain Compliance
Improve Water Quality
Maintain Water Quality
Achieve Compliance
Maintain Compliance
Note: Graph represents the cumulative data submitted by states in the CWSRF benefits reporting system to date.
ECONOMIC BENEFITS
The CWSRF's investment in water quality goes beyond
environmental benefits to provide significant, documented
economic benefits as well. Cleaner drinking water and
better wastewater treatment improves the health of the
general public, resulting in fewer sick days and increased
productivity. The CWSRF also provides significant
economic benefits to the cities, towns, and municipalities
receiving low-interest loans. Because the interest rate on
CWSRF loans is lower than the market rate, the savings
to borrowers constitutes a substantial subsidy. According
to the cumulative data recorded in the benefits reporting
system to date, the CWSRF has saved borrowers more
than $3.7 billion in interest costs. In 2006 alone, the
CWSRF provided almost $1.3 billion in interest subsidies
to help borrowers improve their water resources at an
affordable cost. In addition, the CWSRF aids economically
disadvantaged communities through flexible financing
options such as zero percent interest rates and extended
financing terms.
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State Agencies that
Manage CWSRF Programs
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EPA REGION 1 - BOSTON, MASSACHUSETTS
Connecticut Department of Environmental Protection
Connecticut Office of the Treasurer
Maine Municipal Bond Bank
Maine Department of Environmental Protection
Massachusetts Water Pollution Abatement Trust
Massachusetts Department of Environmental Protection
New Hampshire Department of Environmental Services
Rhode Island Clean Water Finance Agency
Rhode Island Department of Environmental Management
Vermont Department of Environmental Conservation
Vermont Municipal Bond Bank
EPA REGION 2 - NEW YORK, NEW YORK
New Jersey Department of Environmental Protection
New Jersey Environmental Infrastructure Trust
New York State Environmental Facilities Corporation
New York Department of Environmental Conservation
Puerto Rico Environmental Quality Board
Puerto Rico Infrastructure Financing Authority
EPA REGION 3 - PHILADELPHIA, PENNSYLVANIA
Delaware Department of Natural Resources and Environmental Control
Maryland Department of the Environment
Pennsylvania Infrastructure Investment Authority
Pennsylvania Department of Environmental Protection
Virginia Department of Environmental Quality
Virginia Resources Authority
West Virginia Department of Environmental Protection
West Virginia Water Development Authority
EPA REGION 4 - ATLANTA, GEORGIA
Alabama Department of Environmental Management
Florida Department of Environmental Protection
Georgia Environmental Facilities Authority
Kentucky Infrastructure Authority
Kentucky Division of Water
Mississippi Department of Environmental Quality
North Carolina Department of Environment and Natural Resources
South Carolina Department of Health and Environmental Control
South Carolina Budget and Control Board
Tennessee Department of Environment and Conservation
Tennessee Comptroller of the Treasury
EPA REGION 5 - CHICAGO, ILLINOIS
Illinois Environmental Protection Agency
Indiana Department of Environmental Management
Indiana State Budget Agency
Indiana Finance Authority
Michigan Department of Environmental Quality
Michigan Municipal Bond Authority
Minnesota Public Facilities Authority
Minnesota Pollution Control Agency
Minnesota Department of Agriculture
Ohio Environmental Protection Agency
Ohio Water Development Authority
Wisconsin Department of Natural Resources
Wisconsin Department of Administration
EPA REGION 6 - DALLAS, TEXAS
Arkansas Soil and Water Conservation Commission
Arkansas Development Finance Authority
Louisiana Department of Environmental Quality
New Mexico Environment Department
Oklahoma Water Resources Board
Texas Water Development Board
EPA REGION 7 - KANSAS CITY, MISSOURI
Iowa Department of Natural Resources
Iowa Finance Authority
Kansas Department of Health and Environment
Kansas Department of Administration
Kansas Rural Water Finance Authority
Kansas Development Finance Authority
Missouri Department of Natural Resources
Missouri Environmental Improvement and Energy Resources
Authority
Nebraska Department of Environmental Quality
Nebraska Investment Finance Authority
EPA REGION 8 - DENVER, COLORADO
Colorado Water Resources and Power Development Authority
Colorado Department of Public Health and Environment
Colorado Department of Local Affairs
Montana Department of Environmental Quality
Montana Department of Natural Resources and Conservation
North Dakota Department of Health
North Dakota Public Finance Authority
South Dakota Department of Environment and Natural Resources
Utah Department of Environmental Quality
Wyoming Department of Environmental Quality
Wyoming Office of State Lands and Investments
EPA REGION 9 - SAN FRANCISCO, CALIFORNIA
Arizona Water Infrastructure Finance Authority
California State Water Resources Control Board
Hawaii Department of Health
Nevada Department of Conservation and Natural Resources
EPA REGION 10 - SEATTLE, WASHINGTON
Alaska Department of Environmental Conservation
Idaho Department of Environmental Quality
Oregon Department of Environmental Quality
Washington Department of Ecology
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CWSRF PISCES Awards:
Performance and Innovation in the SRF
As a flexible and reliable municipal finance
tool, the CWSRF program provides an
opportunity for borrowers to pursue creative
nonpoint source and wastewater infrastructure
projects. In 2005, the inaugural PISCES
Awards (Performance and Innovation in
the SRF Creating Environmental Success)
recognized one state in each EPA Region
where project managers had best exemplified
the potential of the CWSRF program through
effective and innovative program management.
The 2006 PISCES Awards highlight
organizations and civic bodies that have used
their expertise in planning, management, and
financing to successfully further EPA water
quality protection goals. The important work
demonstrated by award winners is vital for
reconciling the mounting challenges of water
infrastructure funding with ever-pressing state
and local needs.
In addition to recognizing the performance and ingenuity
of featured borrowers, the PISCES Awards act as a
showcase for innovative uses of the CWSRF program.
The CWSRF has financed many projects to improve the
sustainability of wastewater infrastructure and improve the
environmental health, recreational resources, and economic
well-being of cities, towns, and municipalities across the
country. The 2006 PISCES Awards honor borrowers who
have used CWSRF funds to go above and beyond what
has been achieved in the past. By providing a forum for
pioneering practices to be shared, the PISCES Awards
encourage standard infrastructure financing practices to
evolve to a new level of efficiency.
In 2006, states identified a total of 30 outstanding
borrowers to receive the Second Annual PISCES Awards.
Each state had the opportunity to nominate a borrower
that demonstrated high-quality performance, financial
integrity, and Clean Water Act compliance. Each nominee
was also required to demonstrate outstanding performance
in at least one of the following four areas: innovation in
financing, innovative approach to project implementation,
creative use of partnerships, and promotion of sustainable
infrastructure.
The 30 recipients of the 2006 PISCES Awards are
exemplary models of resourcefulness and vision in the
CWSRF program. Winners were recognized at the
national meeting of the Council of Infrastructure Financing
Authorities (CIFA) in Philadelphia, Pennsylvania in
November 2006.
13
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I
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REGION 10
Anchorage Water and Wastewater Utility, AK:
Constructed a remote supervision facility to ensure
proper operation of unsupervised facilities
Farmers Irrigation District, Hood River, OR:
Implemented a multifaceted sustainability plan that
improved flow in the Hood River and increased
hydroelectricity generation
LOTT Wastewater Alliance, Olympia, WA:
Coordinated the cities of Lacey, Olympia, and
Tumwater to create a wastewater resources
treatment plan
REGION 8
~1 Fort Collins, CO: Upgraded the city's stormwater
system using innovative methods and materials
while retaining much of the original system
Missoula, MT: Converted a sludge treatment
system to a biological nutrient removal process,
reducing nitrogen and phosphorus loading
Pickerel Lake Sanitary District, Grenville, SD:
Constructed a septic tank effluent pump collection
system and artificial wetland treatment system
Cheyenne, WY: Renovated and upgraded water
reclamation facilities, allowing the reclaimed water
REGION 6
14
8
Pi
REGION 9
The Nature Conservancy, San Francisco, CA:
Purchased and conserved three watershed
properties, protecting the land from overgrazing
and urban encroachment
Bullhead City, AZ: Completed the third phase
contamination to the Colorado River
Maui Department of Public Works and
Environmental Management, HI: Installed new
Washoe County, NV: Collaborated with Reno and
Sparks to purchase water rights to a river and lake.
and dedicate the water to instream flows
Henderson, LA: Constructed a wastewater
treatment and collection system with $25/month set
fees for this previously unsewered community
Rio Rancho, NM: Upgraded the city's wastewater
treatment plant and implemented a water resources
management plan to promote conservation
Tulsa Metropolitan Utility Authority, OK:
Rehabilitated the sewage system to correct illegal
discharges and eliminate excess flows
High Island Independent School District, Galveston
County, TX: Replaced inadequate septic systems
with a low pressure pump station and wetlands
treatment system
The Nature Conservancy, Little Rock, AR:
Purchased 4,361 acres of wetlands, then restored,
reforested and sold the property to the U.S. Fish
and Wildlife Service
,
•'
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2006 PISCES Award Winners:
Performance and Innovation Creating Environmental Success
REGION 5
Evanston, IL: Eliminated combined sewer
overflows by building capacity to access an existing
reclamation plant
West Lafayette, IN: Modified a wastewater
treatment plant to treat fats, oils, and grease,
generating methane for electricity
Dearborn, MI: Used a treatment shaft design to
treat and divert combined sewer overflows at
seventeen outfalls along the Rouge River
Bayfield and Pike's Bay Sanitary District, WI: Built
70 percent fewer pollutants than typical plants
REGION 4
Holloway Technology Inc., Leesbur
methods
Hartselle Utilities, Hartselle, AL: Initiated an
inflow/outflow mitigation program that has reduced
sewer overflows
Jumpertown, MS: Constructed a collection system,
lift station, pump station, and treatment facilities in
this previously unsewered community
Wilson, NC: Created a water reclamation system
and improved the city's solids processing, reducing
land application costs by 30 percent
REGION 1
Greenville Estates Village District, NH: Replaced
failing septic systems with a sewer collection and
pumping system
REGION 2
Atlantic County Utilities Authority, NJ:
Implemented a photovoltaic generation system to
produce electricity at the wastewater treatment
REGION 3
~1 Rockville, MD: Enhanced and restored existing
wetlands to reduce nonpoint source pollution in the
Chesapeake Bay
Lynchburg, VA: Used sewer separation, rainleader
disconnection, and interceptor replacement to
reduce combined sewer overflows
AMD Reclamation, Dunkard Township, PA: Built
an acid mine drainage treatment facility and outfall
sewer, protecting surface water from raw mine
discharge
15
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CWSRF 2006 Performance Highlights
CWSRF Cumulative Assistance Reaches $57.7 Billion in 2006
60
so
o
Q
"5 30
i 20
10
-Jjj
$57.7
$5.03
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Annual Assistance
Cumulative Assistance
16
A GROWING SOURCE OF PROJECT
FINANCING
In 2006, the CWSRF program funded $5 billion in
projects, raising cumulative assistance to nearly $58
billion. The program provides financing to approximately
10 to 20 percent of the nation's annual wastewater capital
projects (muncipalities, states, and other federal programs
provide the remaining funding).
FUNDING CRITICAL PROJECTS
In 2006, the CWSRF continued to fund a broad range
of projects. Wastewater system projects accounted for
96 percent of the total funding. While nonpoint source
projects accounted for just 4 percent of total funding, they
received over $370 million in 2006, an increase of almost
$138 million from 2005.
CWSRFs Fund $57.7 Billi
Clean Water Needs through 2006
Nonpoint Source and Estuary 4%
Stormwater / Recycled Water 1%
POTW: Publicly Owned Treatment Works CSO: Combined Sewer Overflow SSO: Sanitary Sewer Overflow
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SERVING ALL COMMUNITIES
Since its inception, the CWSRF program has provided
substantial funding to many small and medium-sized
communities. In 2006, 56 percent of all assistance
agreements went to communities with populations of
3,500 or fewer, and over $1 billion went to communities
with fewer than 10,000 people.
CWSRF LOANS SAVE COMMUNITIES 20
PERCENT ON AVERAGE
According to a popular municipal borrowing index, the
average municipal borrowing rate was 4.5 percent in 2006.
The average CWSRF interest rate available for eligible
loans was 2.0 percent. The typical cost savings realized
by CWSRF borrowers represented a 20 percent savings on
financing costs.
Communities Served by CWSRFs in 2006
Dollar Amount of Assistance ($5.0 Billion)
Number of Assistance Agreements (1,858)
Population:
Less than 3,500
3,500 to 9,999
10,000 to 99,999
100,000 and above
CWSRF Loans Save Communities 20 Percent (2006 Average)
17
4.5%
2.0%
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
» CWSRF Interest Rate —•— Market Rate* *Mai*et Rate is measured as the Bond Buyer Index for 20-Year, M-Rated GO Bonds
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HIGH RETURN ON FEDERAL INVESTMENT
The ratio of CWSRF project disbursements (i.e., total
cash out to pay invoices) compared to federal outlays for
projects (cash drawn from federal funds) is a measure
of return on the federal investment to date. Currently,
the rate of return is 2.23, higher than the 2005 rate of
2.14 and the 2004 rate of 2.05. The return on federal
investment is growing and will continue to grow due to the
revolving nature of the program.
THE CWSRF MAINTAINS A STRONG RATE
OF FUND UTILIZATION
Due to below-market interest rates and flexible financing
options, CWSRF funding continues to be in high demand.
As of 2006, 95 percent of all available funds were
committed to new projects. This efficient rate of fund
utilization is one reason the return on federal investment
will continue to grow over time.
CWSRFs Return 2.23 Times the Federal Investment as of 2006
60
so
40
Billions of Dollars (Cumulative)
$49.5
$22.2
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
• Federal Outlays
CWSRF Disbursements
95 Percent of CWSRF Funds Committed to Projects as of 2006
Billions of Dollars (Cumulative)
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Assistance Provided
Funds Available
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2006 Financial Performance
Overview
The Clean Water Act requires an annual
financial audit of the 51 state-level CWSRF
programs. Each state and Puerto Rico
conducts these audits according to the
generally accepted auditing standards
established by the Governmental Accounting
Standards Board (GASB). States often define
their CWSRF programs as ongoing enterprise
funds under the GASB definitions of funds.
The standardized financial statements used for
CWSRF programs include the following:
Statement of Net Assets
This statement describes a fund's assets and liabilities
through the end of the fiscal year. Assets include financial
assets and capital assets; liabilities include both current
and long-term liabilities. CWSRF fund assets include grant
funds that have been drawn from the federal treasury to
date, but do not include total grant awards.
Statement of Revenues, Expenses, and Earnings
This statement describes the overall performance of the
CWSRF fund over the reporting period.
Statement of Cash Flows
This statement provides a detailed accounting of the actual
flow of cash into and out of the CWSRF fund.
Because the 51 constituent CWSRF programs are
independent state-level entities, no nationally audited
CWSRF program financial reports are available. However,
using EPA's National Information Management System,
national aggregate financial statements have been
developed and are included in the following pages. The
statements are best viewed as non-audited, cash flow-based
financial reports.
FINANCIAL STATEMENT HIGHLIGHTS
• Total assets increased by $3.2 billion, a 6.7 percent
increase from 2005.
• CWSRF program equity (net assets) totals $30.1
billion, a 6.4 percent increase from 2005.
• Total program revenues exceeded expenses by
$1.8 billion, with interest earnings from loans and
investments totaling over $1.6 billion.
• Loan principal repayments to the CWSRF were
nearly $2 billion.
• Leveraged bond proceeds added more than $2.2
billion to program cash flow.
19
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Clean Water State Revolving Fund National Performance Summary Statement
Statement of Net Assets ($ Millions)
Assets
Cash and Cash Equivalents
Debt Service Reserve - Leveraged Bonds
Loans Outstanding
Unamortized Bond Issuance Expenses
Total Assets
2006
9,525.3
6,734.1
34,314.3
286.4
50,860.1
2005
9,263.8
6,191.3
31,939.9
277.7
47,672.7
Liabilities
Match Bonds Outstanding
Leveraged Bonds Outstanding
Total Liabilities
624.0
20,122.8
20,746.9
668.2
18,700.4
19,368.6
Net Assets
Federal Contributions
State Contributions
Transfers of Non-Federal Funds from (to) DWSRF
Other Net Assets
Total Net Assets
22,194.3
3,811.9
(374.1)
4,481.2
30,113.2
21,130.2
3,654.8
(354.8)
3,873.8
28,304.0
Total Liabilities and Net Assets
50,860.1
47,672.7
2O
Note: Under GASB 34 rules, "equity" is termed "net assets," and is defined as the difference between assets and liabilities.
Statement presents a compilation of reporting from 51 state programs and is not audited.
Sum of individual values may not exactly equal the total due to rounding error.
2005 data were revised from the 2005 Annual Report to incorporate updated state information.
Source: EPA's CWSRF National Information Management System (June 30, 2006).
Net Worth of the CWSRF is Increasing as Net Assets Grow Faster than Liabilities
35
30
25
20
15
10
5
$30.1
$20.7
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Net Assets
Liabilities
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Clean Water State Revolving Fund National Performance Summary Statement
Statement of Revenues, Expenses, and Earnings ($ Millions)
Operating Revenues
Interest on Investments
Interest on Loans
Total Operating Revenues
2006
749.5
901.6
1,651.1
2005
585.3
858.1
1,443.4
Operating Expenses
Bond Interest Expenses
CWSRF Funds Used for Refunding
Amortized Bond Issuance Expenses
Administrative Expenses
Total Expenses
935.0
54.1
13.9
40.7
1,043.7
911.6
2.5
13.4
42.6
970.0
Nonoperating Revenues and Expenses
Federal Contribution
State Contributions
Transfers from (to) DWSRF
Total Nonoperating Revenues (Expenses)
1,064.1
157.0
(19.3)
1,201.8
1,305.7
144.9
(44.7)
1,405.9
Increase (Decrease) in Net Assets
1,809.2
1,879.3
Net Assets
Beginning of Year
End of Year
Note: Statement presents a compilation of reporting from 51 state programs and is not audited.
Sum of individual values may not exactly equal the total due to rounding error.
2005 data were revised from the 2005 Annual Report to incorporate updated state information.
Source: EPA's CWSRF National Information Management System (June 30, 2006).
28,304.0
30,113.2
26,424.7
28,304.0
21
Interest Comprises over One Half of CWSRF Revenues
2,000
1,800
1,600
(2
I 1,200
"S 1,000
600
400
200
$1,651
$1,202
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
I Interest on Loans
I Interest on Investments
Operating Revenues
Nonoperating Revenues
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Clean Water State Revolving Fund National Performance Summary Statement
Statement of Cash Flows ($ Millions)
22
2006
Cash Flows from Operating Activities
Cash Draws from Federal Capitalization Grants 1,064.1
Contributions from States 157.0
Loan Disbursements Made to Borrowers (4,357.8)
Loan Principal Repayments 1,983.4
Interest Received on Loans 901.6
Administrative Expenses (40.7)
Net Cash Provided by Operating Activities (292.5)
Cash Flows from Noncapital Financing Activities
Gross Leveraged Bond Proceeds 2,235.0
Bond Issuance Expense (22.5)
State Match Bond Proceeds 66.8
Cash Received from Transfers with DWSRF (19.3)
Interest Paid on Leveraged and State Match Bonds (935.0)
CWSRF Funds Used for Refunding (54.1)
Principal Repayment of Leveraged Bonds (812.5)
Principal Repayment of State Match Bonds (111.0)
Net Cash Provided by Noncapital Financing Activities 347.3
Cash Flows from Capital and Related Financing Activities 0.0
Cash Flows from Investing Activities
Interest Received on Investments 749.5
Deposits to Debt Service Reserve for Leveraged Bonds (542.9)
Net Cash Provided by Investing Activities 206.7
Net Increase (Decrease) in Cash and Cash Equivalents 261.5
Beginning Balance - Cash and Cash Equivalents 9,263.8
Ending Balance - Cash and Cash Equivalents 9,525.3
Note: Statement presents a compilation of reporting from 51 state programs and is not audited.
Sum of individual values may not exactly equal the total due to rounding error.
2005 data were revised from the 2005 Annual Report to incorporate updated state information.
Source: EPA's CWSRF National Information Management System (June 30, 2006).
2005
1,305.7
144.9
(4,595.8)
1,824.1
858.1
(42.6)
(505.5)
1,645.1
(23.7)
64.5
(44.7)
(911.6)
(2.5)
(807.7)
(74.8)
(155.4)
585.3
(323.2)
262.2
(398.7)
9,662.6
9,263.8
o
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New CWSRF Initiatives
for 2007
In 2007, EPA will continue its efforts to
report on environmental results, enhance
state outreach techniques, recognize the most
innovative and effective CWSRF programs and
borrowers, and conduct training events for
program staff. In addition to continuing these
efforts, EPA has several new initiatives planned
for the CWSRF program.
PAYING FOR SUSTAINABLE WATER INFRASTRUCTURE
CONFERENCE
EPA's Paying for Sustainable Water Infrastructure
Conference, scheduled to be held in Atlanta, Georgia
in March 2007, will bring together stakeholders from
all levels of government and the private sector to
explore creative methods to pay for sustainable water
infrastructure today and into the future. The Conference
will address the challenge of integrating the many
diverse tools and strategies to pay for sustainable water
infrastructure.
Participants will discuss these issues with leaders and peers
in the four tracks:
• Sustainable water infrastructure
• State and local innovations
• Federal roles in water infrastructure innovation
• International innovations in finance, technologies, and
management
REPORTING ENVIRONMENTAL BENEFITS IN WATERS
WATERS is a tool on EPA's website that gathers water
quality information from various EPA Office of Water
programs, including nutrient criteria, water quality
standards, and impaired waters. It can display this
information with maps, through the EnviroMapper
program, or reports, using queries in AskWATERS.
In 2007, EPA will begin uploading the data from the
environmental benefits reporting database (described
previously in this report) to the WATERS database. EPA will
work with the states to develop queries, graphs, and tables
that would be most useful to them. Users can run these
queries to generate reports in AskWATERS. These reports
will showcase the environmental benefits of the CWSRF to
stakeholders, and allow states and EPA to incorporate data
from other EPA programs into CWSRF reports.
CWSRF FINANCIAL ACCREDITATION PROGRAM
One of the major responsibilities of SRF personnel is
ensuring proper financial management oversight of the
SRF programs in their states. To aid in this important task,
EPA Headquarters is developing a financial accreditation
program for SRF staff members.
The accreditation program will be a self-directed
study program to enhance knowledge of the financial
requirements of the SRF and financial management
practices commonly found in the municipal finance
industry. Participation will be voluntary and open to all
EPA and state staff who work on SRF programs.
The program will consist of an open book comprehensive
exam with topics ranging from basic SRF financial
management to more advanced financial areas. A fact sheet
will provide individuals with a concise list of topics that
will be covered in the exam and a list of relevant resources
needed for study. A reference guide will also be provided,
which will catalog outside educational resources, such as
professional certification programs and continuing education
courses. The accreditation program will be an important
resource for individuals seeking to increase their knowledge
of financial analysis and management in the SRF programs.
SRF ONLINE DISCUSSION FORUM
As discussed previously, the CWSRF has launched an
online message board where SRF staff around the country
can post announcements, ask questions, and discuss
important issues. The forum is a valuable tool to increase
communication between SRF staff in different states and
EPA Regions who may not have many opportunities to
interact with one another on a daily basis. In 2007, the
CWSRF will continue to promote the discussion forum as
an important management and communication tool.
23
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CWSRF At-A-Glance
24
Funds Available for Projects (Billions of Dollars)
Total Funds
Federal Cap Grants
State Match
Net Leveraged Bonds
Net Loan Principal Repaid
Net Interest Earnings
Net Transfers with DWSRF
Less Adminsitration
2006
$4.6
0.93
0.22
1.82
1.17
0.56
(0.01)
(0.04)
1988-2006
$61.0
24.2
5.0
19.0
9.1
4.9
(0.4)
(1.0)
Assistance Provided to Projects
Return on Federal Investment = 2.23 Times
SRF Assistance as Percent of Funds Available = 95
Percent
Interest Rate in 2006 = 2 Percent (Market = 4.5 Percent)
27 States Leverage; 20 Issue Match Bonds
39 States Fund Nonpoint Source Projects
30 States Use Integrated Planning and Priority Setting
Systems
Total, Project Type
(Billions of Dollars)
Wastewater Treatment
Nonpoint Source
Not Classified
Total, Population Served
(Billions of Dollars)
< 3,500
3,500 - 9,999
10,000 - 99,999
100,000 and Above
Total, Population Served
(Number of Loans)
< 3,500
3,500 - 9,999
10,000 - 99,999
100,000 and Above
2006 1988-2006
$5.0 $57.7
4.7
0.37
0
$5.0
0.5
0.57
1.75
2.22
1,858
1,039
303
371
145
54.6
2.4
0.7
$57.7
5.9
7.1
19.3
25.3
18,611
8,995
2,950
4,668
1,998
8
40 States Fund Separate Grant / Loan Programs
1
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For more information about the Clean Water State Revolving Fund, please contact:
Clean Water State Revolving Fund Branch
U.S. Environmental Protection Agency
1201 Constitution Avenue, NW
(Mailcode 4204M)
Washington, DC 20004
Phone: (202) 564-0752
Fax: (202) 501-2403
Internet: www.epa.gov/owm/cwfinance/cwsrf
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Clean Water
State Revolving Fund
Office of Water I March 2007 I EPA-832-R-07-001
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