2008  ANNUAL   REPORT

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2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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                                CWSRF PROGRAMS: CLEANING OUR WATERS, RENEWING OUR COMMUNITIES, CREATING JOBS
The Clean Water State Revolving Fund (CWSRF) pro-
vides attractive low-cost funding for projects that improve
water  quality, renew  infrastructure, and  support local
economies. Initiated by Congress in 1987 and implemented
by EPA and states, the CWSRF reflects a national com-
mitment to  the protection and restoration of rivers, lakes,
and estuaries that are essential to communities and wildlife.
Through 2008, the CWSRF has provided $69 billion in cu-
mulative assistance for wastewater infrastructure, nonpoint
source, and estuary projects. It has also brought significant
cost savings  to assistance recipients.  By using the CWSRF
in 2008, borrowers saved 20 percent over the life of a typi-
cal 20-year loan when compared to conventional financing.

It takes billions of dollars each year to protect and improve
the quality of water in our rivers, lakes, and streams. The
CWSRF is widely recognized as a critical source of funding
that enables communities to renew aging municipal infra-
structure and restore at-risk aquatic ecosystems.  Perform-
FIGURE i 1 How the CWSRF Program Works

STATE
GOVERNMENT
1 	 1 State
 1 1  ....
BOND HOLDERS
1 1 1 t 1
 X a 1 
! T S  Ti Loan
      EPA
 CLEAN WATER
STATE REVOLVING
    FUND
                                     Repayment
                                    Low-Interests
                                      Loans    ASSISTANCE
                                            RECIPIENTS
ance tracking reports show that more than one-hundred mil-
lion people have benefited from CWSRF funded projects.
CWSRF assistance also supports local economies through
job creation during project construction and by helping to
ensure that water resources are available for use by businesses.

The CWSRF is comprised of 51  independent revolving
loan funds in all 50 states and Puerto Rico. These programs
are unique because they represent a collaborative partner-
ship at the federal and state level. To date, the federal gov-
ernment has contributed more than $26 billion and states
have added another $5.6 billion in required matching
funds. Although there is EPA oversight, the states have the
lead role in structuring and managing the programs. States
have used this flexibility to create unparalleled environ-
mental and economic benefits.

By providing assistance to a wide variety of eligible water
quality projects in the form of low interest loans, CWSRF
               programs function as environmental infra-
               structure banks. As principal and interest
               repayments are recycled back into individ-
               ual programs, they become available to
               fund additional projects. This revolving
               structure means  that the  programs  not
               only replenish themselves  over time, but
               grow in financial capacity  as loan repay-
               ments are made. States can also choose to
               issue bonds backed by CWSRF assets to
               provide additional assistance. To date, 27
               states have done so, raising an additional
               $22.4 billion to help meet the  environ-
               mental needs of communities. Figure 1 il-
               lustrates how the programs operate.
CLEAN WATER STATE REVOLVING FUND  PROGRAMS   2008 ANNUAL REPORT

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CWSRF PROGRAMS: CLEANING OUR WATERS, RENEWING OUR COMMUNITIES, CREATING JOBS
  FIGURE 2  I   CWSRFs Return 2.41 Times the Federal Investment as of 2008
        1988  1989   1990  1991  1992   1993   1994  1995  1996   1997   1998  1999  2000   2001  2002  2003  2004   2005  2006  2007  2008
        Federal Outlays are the amount of cash drawn from the U.S. Treasury into the CWSRF.
        CWSRF Disbursements are the actual cash paid out from the CWSRF to assistance recipients
                                                                         Federal Outlays
                                                                                           CWSRF Disbursements
Responsible fiscal management and the programs' ability to
revolve over time have resulted in a remarkable return on
federal investment. As of 2008, for every federal dollar con-
tributed, $2.41 has been provided in assistance  (see Figure
2). This return is expected to  increase as loan repayments
are used to fund new projects, and states maintain strong,
directed program management. Increased funding
capacity is important because of rising needs,
due both  to construction cost inflation
and the number of existing plants that
are reaching the end of their  useful
life. The continued growth of the
programs ensures that funding will
be available for projects that im-
prove and maintain water quality
well into the future.

There are many factors that make
the CWSRF programs stable fund-
ing sources for environmental  protec-
tion. Wastewater infrastructure is one of
the safest investments due to the financial
strength of local communities and the depend-
ability of water and sewer revenues. Fitch Ratings esti-
mates show that during the time period between 1979 and
1999, which included several recessions, the default rate on
municipal water and sewer bonds was only 0.04 percent1.
                                                          Adding to this is a proven track record of federal and state
                                                          financial oversight. For example, states conduct reviews of
                                                          assistance recipients during the application process to eval-
                                                          uate their financial condition and to ascertain whether they
                                                          have established a dedicated revenue source for loan repay-
                                                          ment. This means that future lending capacity is extremely
                                                                   secure,  and CWSRF funding will be available
                                                                        even when access to other financing sources
                                                                           may be limited. This also permits states
                                                                             that choose to raise additional funds by
                                                                               issuing bonds  to retain high  credit
                                                                               ratings, allowing them to receive the
                                                                                 most favorable interest rates offered
                                                                                 in the credit markets.
                                                                                 The  revolving  nature  of  the
                                                                                 CWSRF  programs means  that
                                                                                when a community repays a loan it
                                                                               has received, it is supplying funding
                                                                             that will be used to help another com-
                                                                           munity clean its waters and revitalize its
                                                                        infrastructure. Each project ultimately helps
                                                                     mprove water quality across the state and coun-
                                                            try. By choosing CWSRF funding, communities are im-
                                                          proving their  own water  quality while  simultaneously
                                                          sharing in a commitment to renew neighboring communi-
                                                          ties and protect shared water resources.
' Fitch Ratings. Financial Guaranties Special Report: Bond Insurers Transcend Municipal Market. 1999.
                                                                                                                3
                                             2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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                                CWSRF PROGRAMS: CLEANING OUR WATERS, RENEWING OUR COMMUNITIES, CREATING JOBS
Flexibility is a hallmark of the CWSRF programs. The
Clean Water Act gives states a broad array of financing op-
tions  beyond  traditional and very popular low-interest
CWSRF loans. CWSRF programs may also offer local debt
guarantees or insurance for local debt and even provide guar-
antees for local borrowing that is used to create "sub-state"
revolving funds. States can use a combination of these assis-
tance options to maximize the impact of available funds.

The CWSRF programs can also fund a wide range of proj-
ect types, including those that contain sustainable, low-im-
pact, and climate change mitigation design components.
EPA encourages innovation across CWSRF programs. The
annual Performance and Innovation in the SRF Creating En-
vironmental Success (PISCES) Awards recognize projects
and programs that creatively and effectively use CWSRF
funding to meet the environmental needs of communities.

This latitude allows states to direct CWSRF funding to the
most deserving projects, which are evaluated according to
state-defined priority ranking systems that may be altered
to reflect new priorities and new project types. Many states
have modified their priority  setting process over time and
now have integrated priority systems that include evalua-
tion criteria to assess all types of projects. New priorities
such as green infrastructure,  energy conservation, and cli-
mate change impact  can  be  incorporated  into  state
CWSRF priority systems as states respond to new fund-
ing opportunities.

As Figure 3 demonstrates, states have proven to be ex-
tremely successful at structuring their programs so funds
are  directed towards pressing environmental problems.
Through 2008, the CWSRF  programs have committed
over 98 percent of the $70 billion in cumulative funds
available. This exceptional rate of fund utilization demon-
strates continued strong demand for CWSRF financing,
and  is a direct result of the large number of important
needs, the attractiveness of below market  interest rates,
the flexibility of financing options, and sound state pro-
gram management.
  FIGURE 3  I   98% of CWSRF Funds Committed to Projects as of 2008
             1989  1990  1991  1992   1993  1994  1995  1996  1997   1998  1999  2000  2001  2002  2003  2004  2005   2006  2007  2008
                                                   Cumulative Funds Available
                                                                             Cumulative Assistance Provided
CLEAN  WATER STATE REVOLVING FUND PROGRAMS    2008 ANNUAL REPORT

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CWSRF PROGRAMS: CLEANING OUR WATERS,  RENEWING OUR COMMUNITIES, CREATING  JOBS
In addition to their significant environmental contribu-
tions, the CWSRF programs play an important role in im-
proving local economies. Numerous jobs across multiple
sectors are created through the construction and renova-
tion of wastewater infrastructure. Many are directly related
to the projects being funded, covering planning, design,
and construction.  Others  are indirect, resulting from
spending associated with project implementation, such as
the production of raw materials like steel and concrete.

Several private and  public studies conducted over the past
several years estimate that 20,000 - 60,000 jobs are
created for every  $1 billion in federal invest-
ment in wastewater infrastructure.2 This
number is likely low for the CWSRF
programs, because  unlike  standard
grant-based federal infrastructure in-
vestment programs, CWSRF dol-
lars  are  spent repeatedly as loan   ,
repayments   are  recycled  back
through the program. The Council
of Infrastructure  Financing Au-
thorities  estimated in 2005 that
600,000  construction  jobs   and
116,000 additional jobs resulted from
CWSRF funding over the programs'
first seventeen years.3

Once  projects are completed,  economic benefits
continue, as water is an important resource and commod-
ity for businesses  across the country. In 2000, the agricul-
ture industry used more than fifty trillion gallons of water
for irrigation of fields and  another two trillion gallons to
support livestock and aquaculture.4 Another seven trillion
gallons of fresh water were used  for industrial purposes
such as fabricating a product or cooling during manufac-
turing. Water is also essential for industries including the
$50 billion/year water-based recreation industry and the
$300  billion/year coastal tourism industry.5 CWSRF
funded projects greatly aid these substantial components of
the national economy by protecting and restoring the
water that they need to operate.

The economic impact of CWSRF funding is enhanced
      through  partnerships between assistance recipients
            and local businesses. Some communities work
               with sources of industrial waste, such as
                  local manufacturing, to figure out ways
                     to most effectively deal with  waste
                      streams.  For  example, Le Center,
                       Minnesota made a landmark deal
                       with  a  local manufacturing com-
                       pany, which agreed to install an
                       oil/water separator and monitoring
                       station if the city would expand its
                       treatment facility to accept the re-
                      sulting wastewater. Le Center re-
                     ceived  a  CWSRF  loan  for this
                   expansion. Other communities find that
                local businesses can make use of effluent
             instead of drawing from stressed public water
       supplies. Eastern Idaho Regional Wastewater Au-
thority received a CWSRF loan to build a new treatment fa-
cility and the effluent from the plant will be supplied to a
manufacturing  company for reuse. This will protect the local
aquifer while simultaneously supporting local business.
  Council of Infrastructure Financing Authorities (CIFA). The Clean Water State Revolving Fund (CWSRF): State Report 2005. 2005; Federal Highway Administration. High-
  way Infrastructure Investment and Job Generation. 1996; National Utility Contractors Association. A Report on Clean Water Investment and Job Creation. 1992; Natural
  Resources Defense Council. All Dried Up: How Clean Water is Threatened by Budget Cuts. September 2004; RTI International/Global Insight, Inc. Estimating Employment
  Impacts of Water Infrastructure Funding, A Report to Congress. September 2004.
  Council of Infrastructure Financing Authorities (CIFA). The Clean Water State Revolving Fund (CWSRF): State Report 2005.
  United States Geological Survey. Estimated Use of Water in the United States in 2000.
  Water Infrastructure Network.  Water Infrastructure Now: Recommendations for Clean and Safe Water in the 21st Century. February 2001.
                                               2008 ANNUAL REPORT    CLEAN WATER STATE  REVOLVING  FUND PROGRAMS

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                                             STRATEGIC MANAGEMENT: A CONTINUED COMMITMENT TO MEETING NEEDS

Since being established, the CWSRF programs have been very successful in reaching and serving communi-
ties across the country. More than 22,000 loans have been made, with 66% going to communities with a pop-
ulation  of fewer than 10,000 people. Recognizing the  importance of addressing newly identified or unmet
needs, states have directed CWSRF funding towards a variety of traditional and innovative water quality proj-
ects. States are also engaging in better planning that considers new eligibilities, financial assistance terms,
and repayment sources.
EPA is actively exploring and promoting strategic manage-
ment to assist CWSRF programs as they continue to clean
our water and renew our communities. During the past year,
EPA has encouraged states to take a fresh look at program
eligibilities and consider what new funding solutions might
be implemented to respond to new and continuing water
quality issues. Concurrent with state efforts, EPA has un-
dertaken a comprehensive re-examination of financing op-
tions and project eligibilities allowed by the Clean Water
Act with the draft white paper "The Clean Water State Re-
volving Fund Program: Tapping its Untapped Potential."
Together, these strategic management efforts enhance the
ability of the CWSRF to meet current and future needs.
STRATEGIC PLANNING

Many CWSRF programs periodically evaluate their struc-
ture to ensure funds are being used efficiently over time.
States across the country, including California, Texas, Mis-
souri, New Mexico, Arizona, and Hawaii, have undertaken
strategic management and planning assessments with EPA
support. These and other states, such as Ohio, are examin-
ing their program mission and objectives, reaching out to
communities with the greatest financial needs, and stream-
lining processes to reduce the time and  effort it takes to
fund a project through the CWSRF.

An important aspect of strategic planning is the periodic
assessment of the project priority setting system to ensure
that  it adapts to changing state water quality priorities.
States have the flexibility to structure priority setting cri-
teria so that they address state-specified water quality
goals. A well conceived priority system is an important
step  in ensuring that program funding reaches both re-
gionally important projects and small, disadvantaged com-
munities. States may also consider how best to partner
CWSRF assistance  with other federal or state funding
CLEAN WATER  STATE REVOLVING FUND PROGRAMS    2008 ANNUAL REPORT

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STRATEGIC MANAGEMENT: A CONTINUED COMMITMENT TO MEETING NEEDS
programs to create the most attractive funding solution for
loan applicants.

Another important step in CWSRF strategic planning and
management is streamlining the loan process to
make it as efficient as possible. Many small
and disadvantaged communities find fi-
nancial and environmental require-
ments complicated, so working to
reduce the number of steps in
the application process is a key
to reaching these types of bor-
rowers. For  example,  some
states have worked with other
public lenders to create a com-
mon application, making it eas-
ier for communities to  find the
funding source that is right for
them.  Others have  assigned state
staff to assist borrowers as they move
through the loan process. Making the pro-
grams easier for communities to  navigate helps ensure
that those with the greatest need are able to apply for and
receive assistance.

CWSRF programs are  also interested in getting commu-
nities to start planning well in advance of construction, in
order to facilitate a continuous  pipeline of new projects
ready to receive funding. Many states provide planning and
design loans to help with pre-construction costs. Commu-
nities are then encouraged to apply for CWSRF financing
                       when they  are ready to  begin
                           construction.   A  project
                            pipeline helps to ensure
                              that states have high pri-
                               ority projects ready to
                               go each year that will
                               take  full advantage of
                              program assistance.
EPA SUPPORT OF STATE EFFORTS TO
REEXAMINE EXISTING ELIGIBILITIES

By identifying water quality needs and priorities, states can
     pursue projects that will best address water quality
            concerns. To support these efforts, the draft
                white paper lists  many types of water
                   quality and infrastructure projects el-
                     igible for CWSRF assistance. The
                      white paper includes several new
                       project types which have yet to
                        be  funded (see box below). It
                        also  explores  the forms of fi-
                        nancial assistance that may be
                        offered by CWSRF programs
                       in addition to traditional loans,
                      including guarantees,  insurance,
                    and the purchase of local bonds.

               To  incorporate comments from stake-
          holders,  a second draft of the white paper  is
being developed. The new draft will include additional fi-
nancial  innovations  that can  augment the amount of
CWSRF funding available to protect and restore our wa-
    Project types identified in the white paper that
    are yet to be funded by a CWSRF include:

     Energy audit of public wastewater treatment
     facility or system.
     Generation of pollution control credits.
     Control of source of atmospheric deposition
     that adversely affects water quality.
     Estuary projects outside of current National
     Estuary Program (NEP) study areas but within
     estuarial watershed (requires expansion of NEP
     study areas).
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                                              STRATEGIC MANAGEMENT: A CONTINUED COMMITMENT TO MEETING NEEDS
 ters.  Information on eligibilities is being restructured so
 that states can easily evaluate whether a proposed project
 can receive CWSRF financing. Finally, the new version of
 the white paper will have a greater emphasis on strategic
 management, demonstrating that the environmental im-
 pact of the programs can be maximized when various proj-
 ect eligibilities are coordinated with the possible financial
 innovations.

 EPA is seeking feedback from a variety of sources to en-
 sure that the draft white paper is a truly useful  document.
 The paper will continue to be discussed at EPA sponsored
 regional training workshops, biannual EPA/State Work-
 group meetings,  and regional roundtables.   Many of the
 programs' best ideas and innovations have been developed
 at the state and regional level and EPA is committed to in-
 cluding them in the new draft of the white paper.
 FOCUS ON ALTERNATIVE
 PROJECTS

 Many of the alternative project types identified in the draft
 white paper have already been funded by states. Several
 programs are  focusing on sustainable infrastructure and
 projects that use low impact development practices because
 these types of projects can provide effective solutions that
 responsibly address long-term environmental needs. Other
 states are funding projects which contribute to national ef-
 forts to promote climate change mitigation and adaptation.
 Effective management of water resources will require the
 CWSRF programs to seriously consider these  innovative
 areas while maintaining their commitment to  traditional
 pipe and plant projects.  Several examples include:

     Sustainable infrastructure projects. Sustainable infra-
     structure projects include green infrastructure, water
     reclamation, and water reuse projects and  have been
     funded by  states throughout the country. Orange
County,  California and  Madison,  Wisconsin  have
funded projects specifically designed to recharge the
water supply in depleted aquifers  and watersheds.
Other assistance recipients, such as Grand Lake, Okla-
homa, plan to use effluent from new wastewater treat-
ment facilities for other purposes,  including the
irrigation of local recreational areas.

Low-impact projects, A number of states have focused
on ways to lessen the impact of wastewater treatment
facilities on the environment as well as the surrounding
community. For example,  an Arizona community used
CWSRF funds to convert underused oxidation ditches
into highly efficient sludge processors, and a commu-
nity in Maine constructed a new treatment facility on
the site of old, derelict buildings that had become  com-
munity  eyesores.  Seattle,  Washington  received  a
CWSRF  loan  to implement  low-impact urban
storm water management  projects, including rain gar-
dens and porous pavement, in  order to protect water
quality in an urban creek with an endangered salmon
population.

Climate change projects. Projects that aim to lessen the
impact of climate change often have additional bene-
fits, such as long-term cost savings when compared to
traditional alternatives. A township in Michigan re-
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 CLEAN WATER STATE REVOLVING FUND PROGRAMS   2008 ANNUAL REPORT

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STRATEGIC MANAGEMENT: A CONTINUED COMMITMENT TO MEETING NEEDS
    ceived a CWSRF loan to add methane capture energy
    production to its solid waste treatment facility, which
    will save the municipality approximately $30,000 a year
    in energy costs. In Arkansas, a community funded a
    project to restructure its collection system, replacing
    several pump stations with gravity lines, reducing its
    carbon emissions and saving the community significant
    energy and maintenance costs.
TARGETED OUTREACH

CWSRF programs are only as effective as the projects they
fund, so outreach to prospective borrowers has become an
increasingly important part of strategic management ef-
forts. Several states, including Iowa and Missouri, are re-
examining their outreach strategies to ensure that projects
they target help achieve state water quality goals. Outreach
efforts  often go hand in hand with strategic planning.

States  first contact current and potential borrowers, col-
lecting information on how those communities
perceive the CWSRF as well  as how mu-
nicipalities make financial decisions.
Gathered through interviews and
focus groups, this  information
helps programs identify places
where  improvements  can be
made.  States then work with
experienced   communication
professionals to determine ways
to improve the impressions com-
munities have of the CWSRF
programs. EPA then assists states in
using this information to develop  and
execute marketing plans.

Iowa exemplifies these efforts as it begins implementing its
2008 outreach plan. Activities highlighted include the cre-
ation of a set of ads for magazines that target government
employees, the production of a new brochure that will be
distributed at industry events, and the development of a
new website that will make  it easier for communities to
learn about the CWSRF. EPA will be working with Iowa
to monitor the success of these new outreach tools.
USING CWSRF ENVIRONMENTAL
RESULTS DATA

EPA is supporting states as they develop tools to assist in
planning and outreach efforts, often taking advantage of
data that states input into the CWSRF Benefits Reporting
(CBR) system. Some states use this data to enhance out-
reach, while others use it to  evaluate  their success in ad-
dressing state water quality priorities. One example of using
CBR data for management and outreach purposes is to use
CBR data entries when developing maps that include
CWSRF funded project information.

       Several states including Iowa, Maryland, New
            York, Ohio, and Oklahoma have begun to de-
               velop state mapping capabilities.  While
             v     each state's mapping system is different,
                   they all display the locations of proj-
                    ects funded by the CWSRF together
                    with other environmental and eco-
                     nomic  information for the state.
                     Oklahoma's maps show the location
                    of projects within  specific  water-
                   sheds, counties, and congressional
                  districts (see Figure 4). Iowa's  system
                focuses  on comparing the location of
             funded nonpoint source projects to priority
          areas within the state, for example showing agri-
  cultural best management practice projects on the same
map as the location of open feedlots. Maps are an accessi-
ble way for CWSRF managers to demonstrate the  cumu-
                                                                                                            *
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                                                STRATEGIC MANAGEMENT: A CONTINUED COMMITMENT TO MEETING NEEDS
 lative, long-term positive effects that years of CWSRF
 funding have had on local water bodies.

 Efforts have also been undertaken to combine the infor-
 mation collected by the CBR system with other national
 water quality data. The CBR data has been added to the
 Office of Water's Watershed Assessment, Tracking & En-
 vironmental ResultS (WATERS), which is a publicly avail-
 able EPA platform for storing  and  viewing  national
information on nutrient criteria, water quality standards,
and impaired waters. Through the Expert Query tool, the
WATERS platform allows users to search for  and sort
through projects based on loan and project details. WA-
TERS also includes a mapping application, EnviroMap-
per, which can display CWSRF project locations on maps
together with information from other EPA datasets, such
as 303(d)  listed impaired water bodies. WATERS can be
accessed online at http://www.epa.gov/waters.
   FIGURE  4   I   Oklahoma CBR Mapping
         Map showing CWSRF project locations, rivers, and counties within the Lake Eufaula watershed in Oklahoma.
10
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THE 2008 PISCES AWARDS: PERFORMANCE AND INNOVATION
                                         THE CWSRF
               2008  CWSRF  PISCES  AWARDS
                         ERFORMANCE AND  INNOVATION
                                                                IN THE  SRF
  The CWSRF programs are dedicated to

 funding projects that protect and improve

  the environment without burdening  the

 financial capacity of local communities.

  The 2008 PISCES Awards (Performance

  and Innovation in the SRF Creating

  Environmental Success) recognize assistance

  recipients  across the county  that  have

  showed   exemplary   leadership  and

  innovation in project planning, design, and

  implementation to further EPA water

  quality protection goals.
In 2008, states identified 34 outstanding assistance recipi-
ents to receive PISCES Awards. Each state had the oppor-
tunity to nominate one or more projects that demonstrated
high-quality performance, financial integrity, and Clean
Water Act compliance. Nominees also had to demonstrate
performance in at least one of seven key areas:

Better management practices
Full-cost pricing
Efficient water use
Watershed-based planning
Innovation in financing
Innovation in project implementation
Creative use of partnerships

One recipient from  each state was selected to receive the
Award. Winners were announced at the national meeting
of the  Council of Infrastructure Financing Authorities
(CIFA) in Providence, RI in October 2008.

The recipients of the Fourth Annual PISCES Awards are
examples of the types of projects that best represent the
CWSRF's commitment to innovative and sustainable water
quality financing.

In effectively meeting local and state water quality goals,
they demonstrate that creative planning and design can bal-
ance environmental needs with fiscal responsibility.
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                                              THE 2008 PISCES AWARDS: PERFORMANCE AND INNOVATION
                                                                                                  THE CWSRF
   2008
   PISCES

   AWARD
 REGION 8
Sioux Falls, South Dakota: Funded a
cost share contribution to the Central Big
Sioux River Watershed Restoration project
in addition to the construction of a new
sanitary sewer.

Alpine, Wyoming: Replaced an existing
wastewater treatment facility with a new,
larger facility and a new sewage collection
system.
REGION 5
Fox Metro Water Reclamation District,
Illinois: Installed energy saving systems, in-
cluding a heat exchange system and a sludge
drier, to improve treatment plan efficiency.

Peru, Indiana: Doubled treatment plant
capacity by converting the existing anaerobic
digestion process to aerobic/anaerobic
sequencing digestion.

Delhi Charter Township, Michigan:
Rehabilitated a wastewater treatment plant
  WINNERS
   Eastern Idaho Regional Wastewater
   Authority, Idaho: Connected four cities to
   a new wastewater treatment facility which
   will produce effluent to be supplied to local
   industry for reuse.

   Community of Rieth, Umatilla County,
   Oregon: Constructed a new collection
   system, pump, and sewer line to connect
   wastewater to a neighboring sewer system.
   REGION  9
   Prescott Valley, Arizona: Converted
   underused oxidation ditches to activated
   sludge processors, replacing existing, lesser
   quality filters.

   Orange County, California: Implemented
   a groundwater replenishment system
   designed to return highly treated waste-
   water to the County's groundwater supply
   through a series of recharge basins.

   Hawaii, Hawaii: Replaced existing
   cesspools at publicly owned facilities with
   onsite wastewater systems.
 REGION 7
Charles City, Iowa: Expanded and
upgraded the existing water pollution
control plan to address capacity needs.
Hutchinson, Kansas: Constructed a
facility to pump water from a contaminated
local aquifer and treat it befor
to the aquifer.
: it before returning it
 REGION  6
Beebe, Arkansas: Replaced several pump
stations in its wastewater system with energy
and maintenance saving gravity lines.

Lafourche Sewer District No. i,
Louisiana: Upgraded the local wastewater
system to meet advanced treatment criteria.

Grand Lake Public Works Authority,
12
 CLEAN WATER  STATE REVOLVING FUND PROGRAMS   2008 ANNUAL REPORT

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        THE 2008 PISCES AWARDS: PERFORMANCE AND INNOVATION
                                                                        THE CWSRF
so that the biosolids it produces can be used
for methane capture energy production.

Le Center, Minnesota: Partnered with local
industry to ensure that increasing levels of
waste will be effectively processed.

Madison Metropolitan Sewerage
District, Wisconsin: Constructed an
effluent force main to return treated waste-
water to the Sugar River basin to augment
stream flows.
                                                       REGION  1
Point O'Woods Association,
Connecticut: Replaced onsite septic
systems and a seasonal water system with
sanitary sewer and year-round water
distribution systems.

Bucksport, Maine: Constructed a new
combined sewer overflow treatment
facility utilizing low-energy swirl
concentrator technology.

Cohasset, Massachusetts: Implemented a
low impact stormwater runoff management
system, including forty rain gardens, to
protect drinking water supply.

Middletown, Rhode Island: Purchased
forty-five acres of agricultural land in
order to prevent it from being developed,
thereby protecting the local drinking
water reservoir.

Colchester, Vermont: Capitalized a local
homeowner septic system revolving fund.
 Oklahoma: Protected Grand Lake by
 replacing a large number of residential
 septic systems with a new secondary
 treatment facility.

 Eagle Pass, Texas: Expanded regional
 wastewater treatment capacity to treat
 waste from previously un-served areas of
 Maverick County.
                                                       REGION  3
                                                      Lewes, Delaware: Expanded the city's
                                                      wastewater treatment plant to meet
                                                      additional system capacity needs.

                                                      Easton, Maryland: Capped nutrient
                                                      load discharge to the Chesapeake Bay
                                                      through the installation of enhanced
                                                      nutrient removal technologies in the
                                                      existing wastewater system.

                                                      Schuylkill Valley Sewer Authority, Penn-
                                                      sylvania: Built a regional wastewater treat-
                                                       REGION  4
Marathon, Florida: Implemented a compre-
hensive approach to wastewater management,
including the construction of an innovative
vacuum wastewater collection system.

Gainesville, Georgia: Expanded reclama-
tion facilities to include energy efficient
membrane filtration as part of a watershed-
wide water quality plan.
                                                                                                 REGION  2
                                                                                                Rahway Valley Sewerage Authority, New
                                                                                                Jersey: Upgraded the city's wastewater
                                                                                                treatment facility, including the installation
                                                                                                of a new UV disinfection system.

                                                                                                Rockland County Sewer District No. i, New
                                                                                                York: Replaced septic systems with a new
                                                                                                collection system and advanced treatment plant
                                                                                                designed to protect the local aquifer.
                                         ment facility to replace direct discharge of
                                         residential sewage and stormwater runoff.

                                         Abingdon, Virginia: Upgraded a reclama-
                                         tion facility to include capacity to treat
                                         septic tank wastewater, grease, and other
                                         special wastes.

                                         Morgantown, West Virginia: Reconstructed
                                         an existing wetland to improve stormwater
                                         detention and implemented natural stream
                                         restoration to stabilize stream banks.
Brunswick County, North Carolina:
Constructed a regional tertiary wastewater
reclamation system capable of producing
reuse-quality effluent.

Lexington County, South Carolina:
Replaced septic tanks with a sewer
connection to an existing treatment system.
                                                            2008 ANNUAL REPORT   CLEAN  WATER STATE  REVOLVING FUND PROGRAMS

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                                                                      STATE AGENCIES THAT MANAGE CWSRF PROGRAMS
 STATE  AGENCIES THAT  MANAGE  CWSRF PROGRAMS
 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
14
 CLEAN WATER STATE  REVOLVING FUND PROGRAMS    2008 ANNUAL REPORT

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ONGOING CWSRF INITIATIVES IN 2008
New

                    ives
for 2009
EPA will  pursue many activities during

2009 that focus on professional develop-

ment,  promoting  effective management

and oversight, and expanding marketing

and outreach. Designed to provide CWSRF

staff with  the resources they need to max-

imize program performance and to docu-

ment  and  share   best  management

practices, these  initiatives show EPA's

commitment to the continued improvement

of the CWSRF programs.
PROFESSIONAL DEVELOPMENT

EPA is committed to providing CWSRF staff with the resources nec-
essary for effective program management. In addition to holding
training workshops in five regions, EPA will implement several new
training tools in 2009:

New Employee Training Workshop
EPA is conducting a three-day training workshop for new federal em-
ployees, covering basic oversight of the CWSRF programs. Partici-
pants will be shown  how to review core  CWSRF documents,
including intended use plans and annual reports. The proper procedure
for conducting annual onsite reviews will also be covered. The train-
ing workshop will be held in Chicago, Illinois from May 5-7, 2009.

CWSRF Training Videos
EPA is developing a series of videos presenting basic programmatic in-
formation as well as more advanced topics. Basic CWSRF program
overview and CWSRF Benefits Reporting System training videos
were released in 2008. Additional videos planned for 2009 will cover
program structures, requirements, and documentation,  as well as
strategic marketing.

CWSRF Financial Accreditation Program: Module II
The CWSRF Financial Accreditation Program is designed to ensure
that personnel are familiar with financial and statutory topics essen-
tial to the proper oversight and management of the CWSRF pro-
grams. Through a series of open book exams, the Accreditation
Program allows staff to enhance their skills as they relate to the fi-
nancial requirements of the programs  and practices commonly found
in the municipal finance industry. Module I was released in late 2007
and the intermediate level Module II is currently being developed.
Module II will include more advanced questions on cash  draw rules
and reporting and auditing requirements, as well as subjects such as
                                                                                                   15
                                        2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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                                                                              ONGOING CWSRF INITIATIVES
                                                                                                         2008
 municipal bond issuance and financial management and
 planning. Module I and updates on the status of Module II
 of the Accreditation Program can be found on the CWSRF
 discussion forum at http://cwsrf.invisionzone.com.

 EFFECTIVE MANAGEMENT AND OVERSIGHT

 It is important to not only highlight examples of strategic
 management and  other best practices throughout the
 CWSRF community, but to also provide effective oversight
 of the programs. To this  extent, EPA is developing:

 CWSRF Standard Operating Procedures
 EPA is creating a series of Standard Operating Procedures
 (SOPs) which will outline the various components of the
 annual EPA Regional review of state programs. The first
 SOP, "Transaction Testing for Erroneous Payments," was
 released in 2008, and additional SOPs are expected in 2009.
 SOPs are intended to streamline the review process for re-
 gional staff by establishing a clear set of guidelines for re-
 views.  Additionally,  SOPs  will clearly explain to state
 programs what is expected  of them. Both measures will
 make the annual review process more efficient, help ensure
 state programs conform to CWSRF statute, and maximize
 the use of program resources.

 2009 CWSRF Conference
 The  CWSRF's  2009 National Conference, "Strategic
 Management of the Clean Water State Revolving Fund
 Programs: The Next 20 Years," is scheduled  to be held in
 Chicago, Illinois from July 14 - 15, 2009. The  conference
 will bring managers and senior staff from throughout the
 country together to discuss CWSRF program strategic
 management in an interactive discussion format. The con-
 ference will  address management of CWSRF environ-
 mental and financial performance, and present practices
 and solutions to enhance state efforts to address  the na-
 tion's current and future  water quality problems. Meeting
 materials will be made available  as a resource for states to
 use when considering the implementation of new manage-
 ment strategies. Potential topics to be discussed include:

   Major  trends affecting the strategic direction of the
   CWSRF programs.
   Progress and opportunities presented by stimulus funding.
   Opportunities in managing financial resources to meet
   long-term  water quality and public health goals.
   Positioning the CWSRF to play an effective role in in-
   tegrated water quality planning and management.
   Utilizing data management  and communication for
   improved CWSRF outreach and marketing.
16
  Funding green infrastructure projects with the CWSRF.
  Issues and opportunities presented by potential CWSRF
  reauthorization.
Updated information on the Conference, including regis-
tration details, can be found at: http://www.cwsrfconfer-
ence.net.

EXPANDING MARKETING AND OUTREACH

Marketing and outreach are very important for the contin-
ued success of the CWSRF programs. For 2009, EPA will
assist these efforts by producing the following:

SRF's Up Newsletter
SRF's Up is a. biannual newsletter presenting up-to-date pro-
gram news and examples of state innovation. It is designed to
highlight new and creative practices, allowing states to learn
about what other CWSRF programs are doing. It is also a
great way to showcase the programs' achievements in a for-
mat  accessible to the general public. In 2008, two issues of
SRF's Up were published, addressing the draft white paper,
program marketing, and strategic management and planning.
Additional issues are planned for 2009, with information on
topics such as the American Recovery and Reinvestment Act
of 2009 and the 2009 CWSRF Conference.

Activity Updates
CWSRF Activity Updates focus on financial or program-
matic innovations being implemented in the CWSRF pro-
grams, and each includes several specific examples of states
that  have successfully adopted  these new strategies. They
are great resources for states that are looking to learn from
the successes of other CWSRF  programs. Several new Ac-
tivity Updates are planned for 2009, including one on map-
ping data in the CWSRF Benefits Reporting system.

FACT-Lite
The  Financing Alternatives Comparison Tool (FACT) al-
lows users to compare the  annual and cumulative costs of
different financing options. In response to feedback, EPA
is improving FACT by adding Fact-Lite, an analysis op-
tion  that simplifies this tool by reducing the amount of in-
formation users must enter to conduct a comparison. A
comprehensive user guide is also being developed. The new
version of FACT will be more accessible to small commu-
nities and will  serve as an effective marketing tool by
demonstrating the cost savings of pursuing CWSRF fi-
nancing when compared  to funding alternatives.  It is
scheduled to be released in the  spring of 2009.
 CLEAN WATER STATE REVOLVING FUND PROGRAMS    2008 ANNUAL REPORT

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CWSRF 2008 PERFORMANCE HIGHLIGHTS
                                               CWSRF  2008  PERFORMANCE  HIGHLIGHTS
A Continued Source of Project Financing

In 2008, the CWSRF programs funded over $5.8 billion in
projects, raising cumulative assistance to nearly $69 billion
over the last 21 years. This number is projected to continue
growing in the coming years, as interest earnings and re-
payments of outstanding loan principal increase, and states
with high demand continue to leverage by issuing revenue
and general obligation bonds.
Saving Communities Money

According to a popular municipal borrowing index, the av-
erage municipal borrowing rate was 4.6 percent in 2008. The
average CWSRF loan received a rate of 2.2 percent. This
means that communities that borrowed from the CWSRF in
2008 will save an average of 20 percent over the life of a typ-
ical 20-year loan. SRF interest rates continue to provide sig-
nificant subsidies to communities across the country.
  FIGURES   I  CWSRF Cumulative Assistance Reached $68.8 billion through 2008
                                                                                                     $68.8
                                                                                                     $5.8
           1989  1990  1991  1992  1993  1994  1995  1996  1997
                                                        1999  2000  2001  2002   2003  2004  2005  2006  2007  2008
                                                                 Annual Assistance     I Cumulative Assistance
  FIGURES   I  CWSRF Loans Save Communities 20 Percent
        1989  1990  1991   1992  1993   1994  1995   1996  1997
                                                     1999   2000  2001   2002  2003   2004  2005   2006  2007   2008
        * Market Rate is measured as the Bond Buyer Index for 20 Year, AA-Rated GO Bonds
                                                                      CWSRF Interest Rate      Market Rate*
                                           2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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                                                                             CWSRF 2008 PERFORMANCE  HIGHLIGHTS
Funding a Broad Range of Project Types

The CWSRF was designed to allow state programs the
flexibility to fund projects based on state water quality pri-
orities. As a result, the CWSRF programs fund a wide
range of project types each year. In 2008, this included $2.7
billion for secondary and advanced treatment facilities, $2.9
billion for sewer construction, as well as more than $220
million for nonpoint source projects such as sanitary land-
fill and brownfield rehabilitation, hydromodification, urban
stormwater runoff management, onsite systems, and agri-
cultural best management practices.
Serving Communities of All Sizes

The CWSRF programs provide funding to environmen-
tally critical projects in small, medium, and large commu-
nities. In 2008,62 percent of all assistance agreements were
made with communities of fewer than 3,500 people and
nearly $1.2 billion went to communities with populations
below 10,000. Large communities also received consider-
able funding, including nearly $2.5 billion for projects in
communities with populations of more than 100,000.
  FIGURE 7  I   CWSRFs Provide $68.8 Billion Clean Water Financing through 2008
                    Nonpoint Source and Estuary
                            4%
                                                                                Advanced
                                                                                Treatment
                                                                          Secon
                                                                          Treatment
                                                                            41%
                             New Sewers
                                18%
    POTW: Publicly Owned Treatment Works; SSO: Sanitary Sewer Overflow; CSO: Combined Sewer Overflow
    Note: Chart on the right represents various POTW categories
                        1%
                Stormwater/ Recycled Water
  FIGURES  I   Communities Served by CWSRFs in 2008
                                                    100,000 and Above

                                                    10,000(099,999

                                                    3,500 to 9,999

                                                    Less than 3,500
            Dollar Amount of Assistance ($5.8 Billion)
        Number of Assistance Agreements (2,033)
CLEAN  WATER STATE REVOLVING FUND PROGRAMS   2008 ANNUAL REPORT

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CWSRF 2008 PERFORMANCE HIGHLIGHTS
Improving the Environment

Projected environmental benefits information is available for
$19.8 billion in CWSRF funded projects. This information
shows that these projects contribute significantly to the pro-
tection and restoration of rivers, lakes, and streams through-
out the country. For example, over $13 billion went to projects
that positively affect aquatic life and wildlife, and nearly $6
billion funded projects that help provide clean water for in-
dustry, agriculture, and public drinking water supply.
Impacting Millions of Americans

The CWSRF Benefits Reporting System demonstrates that
CWSRF funded projects have improved water quality for
millions of Americans. This includes improved access to
water for recreational purposes for over 95 million people,
improvements to water that supports fish and shellfish for
consumption for 45 million people, and improved access to
clean drinking water for more than 33 million people.
  FIGURES   I   Linking CWSRF Financing to the Protection and Restoration of our Nation's Waters
    $19.8 Billion in
    CWSRF Loans
                       $7.0 Billion of
                       Cost Savings..
                                           115 Million
                                           People Served
                                                               Funding for Clean Water Act Goals
                              .'   '*
   Based on initial reporting of recent projects that account for approximately 29% of cumulative CWSRF financing.
                                                                                                              19
                                            2008 ANNUAL REPORT   CLEAN  WATER STATE REVOLVING FUND PROGRAMS

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                                                                     2008 FINANCIAL PERFORMANCE OVERVIEW
 2008  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 enter-
 prise funds under the GASB definitions of funds. The standardized financial statements used for CWSRF programs
 include the following:
 Statement of Fund Activities

 This statement provides an overview of major indicators of
 fund activity, including the capitalization grant levels, proj-
 ect commitments, and project disbursements. Both annual
 and cumulative data are given.

 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.

 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.

 Because  the 51 constituent CWSRF programs are inde-
pendent 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 $2.9 billion, a 5.3%
    increase from 2007.

    CWSRF program equity (net assets) totals
    $33.9, a 5.8% increase from 2007.

    Total program revenues exceeded expenses by
    $1.9 billion, with interest earnings from loans
    and investments totaling almost $1.7 billion.

    Loan principal repayments to the CWSRF were
    $2.3 billion.

    Leveraged bond proceeds added more than $1.9
    billion to program cash flow.
20
 CLEAN WATER STATE REVOLVING FUND PROGRAMS   2008 ANNUAL REPORT

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2008 FINANCIAL PERFORMANCE OVERVIEW
CWSRF  NATIONAL PERFORMANCE  SUMMARY (Milli
ns of Dollars)
Fund Activity

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
                                                                                   2008
                                                                                  1,164.9
                                                                                   265.5

                                                                                  5,014.9
                                                                                  5,835.7

                                                                                  5,525.6
                                                                                  1,176.2
                                                                                26,132.4
                                                                                  5,572.8

                                                                                70,135.8
                                                                                68,781.1

                                                                                59,685.4
                                                                                24,791.6
                              2007
                              776.7
                              159.7

                            4,193.8
                            5,336.3

                            5,095.4
                            1,421.2
                           24,967.5
                             5,307.3

                           65,120.9
                           62,945.4

                           54,159.9
                           23,615.4
Revenue, Expenses, and Earnings

Operating Revenues
    Interest on Investments
    Interest on Loans
    Total Operating Revenues

Operating Expenses
    Bond Interest Expense
    CWSRF Funds Used for Refunding
    Amortized Bond Issuance Expense
    Administrative Expenses
    Total Expenses

Nonoperating Revenues and Expenses
    Federal Contribution
    State Contributions
    Transfers from (to) DWSRF
    Total Nonoperating Revenues (Expenses)

Increase (Decrease) in Net Assets

Net Assets
    Beginning of Year
    End of Year
                                                                                   2008
                              2007
733.1
956.8
1,690.0
1,010.1
135.5
14.4
44.0
1,204.0
1,176.2
206.9
(11.4)
1,371.6
765.3
919.3
1,684.6
980.3
117.1
16.2
43.0
1,156.6
1,421.2
119.1
(12.7)
1,527.6
                                                                                  1,857.6
                                                                                32,088.2
                                                                                33,945.8
                            2,055.6
                           30,032.6
                           32,088.2
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. 2007 data was revised from the 2007 Annual Report to incorporate updated state information. Source: EPA's CWSRF National Information Man-
agement System (June 30, 2008).
                                           2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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                                                                                   2008 FINANCIAL  PERFORMANCE OVERVIEW
 Net Assets

 Assets
      Cash and Cash Equivalents
      Debt Service Reserve - Leveraged Bonds
      Loans Outstanding
      Unamortized Bond Issuance Expenses*
      Total Assets

 Liabilities
      Match Bonds Outstanding
      Leveraged Bonds Outstanding
      Total Liabilities

 Net Assets
      Federal Contributions
      State Contributions
      Transfers - Other SRF Funds
      Other Net Assets
      Total Net Assets

 Total Liabilities & Net Assets
   2008
 9,107.9
 7,186.5
39,799.9
   293.2
56,387.6
   572.5
21,869.3
22,441.8
24,791.6
 4,236.3
 (398.9)
 5,316.7
33,945.8

56,387.6
   2007
 9,575.2
 7,095.4
36,573.8
   288.5
53,532.8
   582.7
20,861.9
21,444.6
23,615.4
 4,029.4
 (387.5)
 4,830.8
32,088.2

53,532.8
   FIGURE 10   I   Net Worth of the CWSRF is increasing as  Net Assets Grow Faster
                                                                                                                   $33.9
                                                                                                                   $22.4
               1989  1990  1991  1992  1993   1994   1995   1996   1997   1998   1999   2000   2001   2002  2003  2004  2005  2006  2007  2008
                                                                                         Net Assets
                                                                                                         Liabilities
 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. 2007 data was revised from the 2007 Annual Report to incorporate updated state information.  Source: EPA's CWSRF National Information Man-
 agement System (June 30, 2008).

 "Unamortized bond issuance costs that have been incurred but have not been fully recognized (amortized).
  These costs will be recognized (amortized) overtime over the remaining life of the bonds outstanding, similar to a pre-paid expense, and consistent with GAAP.
22
 CLEAN WATER  STATE REVOLVING  FUND PROGRAMS   2008  ANNUAL REPORT

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2008 FINANCIAL PERFORMANCE OVERVIEW
Cash Flows

Operating Activities
    Cash Draws from Federal Capitalization Grants
    Contributions from States
    Loan Disbursements Made to Borrowers
    Loan Principal Repayments
    Interest Received on Loans
    Administrative Expenses
    Total Cash Flows from Operating Activities

Noncapital Financing Activities
    Gross Leveraged Bond Proceeds
    Bond Issuance Expense
    State Match Bond Proceeds
    Cash Received from Transfers with DWSRF
    Interest Paid on Leveraged and State Match Bonds
    CWSRF Funds Used for Refunding
    Principal Repayment of Leveraged Bonds
    Principal Repayment of State Match Bonds
    Net Cash Provided by Noncapital Financing Activities

Cash Flows from Capital and  Related Financing Activities

Investing Activities
    Interest Received on Investments
    Deposits to Debt Service Reserve for Leveraged Bonds
    Net Cash Provided by Investing Activities

Net Increase (Decrease) in Cash and Cash Equivalents
    Beginning Balance - Cash  and Cash Equivalents
    Ending Balance - Cash and Cash Equivalents
  2008
  2007
1,176.2
206.9
(5,525.6)
2,299.4
956.8
(44.0)
(930.3)
1,966.5
(19.2)
58.6
(11.4)
(1,010.1)
(135.5)
(959.1)
(68.8)
(179.0)
1,421.2
119.1
(5,095.4)
2,364.2
919.3
(43.0)
(314.6)
1,931.7
(18.3)
40.6
(12.7)
(980.3)
(117.1)
(1,180.4)
(81.9)
(418.4)
    0.0
  733.1
  (91.2)
  642.0

(467.3)
9,575.2
9,107.9
    0.0
  765.3
(348.4)
  416.9

(316.1)
9,891.3
9,575.2
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. 2007 data was revised from the 2007 Annual Report to incorporate updated state information. Source: EPA's CWSRF National Information Man-
agement System (June 30, 2008).
                                             2008 ANNUAL REPORT   CLEAN WATER STATE REVOLVING FUND PROGRAMS

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CWSRF AT A GLANCE
                                                                                           CWSRF AT A GLANCE
  Funds Available for Projects (Billions of Dollars)            Assistance Provided to Projects
                                 2008  1988-2008
 Total Funds                       5.0
  Federal Cap Grants                 1.2
  State Match                       0.3
  Net Leveraged Bonds               1.8
  Net Loan Principal Repaid           1.3
  Net Interest Earnings               0.5
  Net Transfers with DWSRF       (0.01)
  Less Administration              (0.05)

 Number of Loans in 2008 = 2,030; Total = 22,700
 Interest Rate in 2008 = 2.2% (Market = 4.6
 As of 2008
 Return on Federal Investment = 2.41 Times
 SRF Assistance as % of Funds Available = '
 27 States Leverage; 21 Issue Match Bonds
 40 States Fund Nonpoint Source Projects
 30 States Use Integrated Priority Setting Systems
 48 States Conduct Separate Audits
 40 States Fund Separate Grant/Loan Programs
70.1          Total, Project Type
 26.1          Wastewater Treatment
  5.6          Nonpoint Source
 22.4          Not Classified
 11.7
  5.7          Total, Population Served
 (0.4)          < 3,500
 (1.1)          3,500-9,999
              10,000 - 99,999
              100,000 and Above

              Wastewater Treatment
              Secondary Treatment
              Advanced Treatment
              SSO Correction
              New Sewers
              CSO Sewers
              Storm Sewers
              Recycled Water
2008
5.8
5.58
0.22
0
5.8
0.58
0.62
2.14
2.50
5.6
1.75
0.93
0.98
0.93
0.86
0.05
0.08
1988-2008
68.8
65.3
2.9
0.6
68.8
7.3
8.2
23.2
30.1
65.3
26.3
11.8
7.8
12.0
6.7
0.4
0.3
CLEAN WATER STATE REVOLVING FUND  PROGRAMS   2008 ANNUAL REPORT

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I
                             &EPA
                             OFFICE OF WATER MARCH 2009 I EPA-832-09-001
Clean Water
State Revolving Fund

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