funding cycle

2006

Water Infrastructure
Finance Authority of Arizona

Arizona’s Drinking Water Revolving Fund
Intended Use Plan
April 20, 2006

www.azwifa.gov

Table of Contents

Executive Summary ....................................................................................................................... i
Intended Use Plan
Section 1: Introduction.........................................................................................................1
Section 2: Funding Sources and Uses..................................................................................1
Section 3: Goals ...................................................................................................................3
Section 4: Method and Criteria for Distributing Arizona’s DWRF.....................................3
Section 5: Public Review and Comment .............................................................................5
Section 6: Assurances ..........................................................................................................5
Exhibit A: 2006 Funding Cycle Priority List
Exhibit B: 2006 Funding Cycle Fundable Range for Design
Exhibit C: 2006 Funding Cycle Fundable Range for Construction
Exhibit D: Public Review and Comment

EXECUTIVE SUMMARY
The Water Infrastructure Finance Authority of Arizona (WIFA) Board of Directors is pleased to release
Arizona’s Drinking Water Revolving Fund (DWRF) Intended Use Plan (IUP) for the 2006 funding
cycle. The DWRF IUP describes WIFA’s plan to utilize various sources of funds to finance drinking
water infrastructure and support related program activities during the 2006 funding cycle from January
1, 2006 through December 31, 2006.
Included as Exhibit A of the DWRF IUP is the 2006 Funding Cycle Priority List (PL). The PL shows
communities and water systems seeking financial assistance from Arizona’s DWRF. At the release of
this report, communities and water systems throughout Arizona submitted 41 applications requesting
$120,015,393 in financial assistance.
From January 1, 2006 through December 31, 2006, the WIFA Board of Directors will use the PL as a
guide to allocate financial assistance from Arizona’s DWRF to communities and water systems listed on
the PL. Each board meeting, the WIFA Board of Directors may revise the PL and modify the fundable
range for construction based on project readiness to proceed and other new information. WIFA staff
will post the revised PL on the WIFA Web site ( www.azwifa.gov ).
Overall, the financial assistance and related program activities supported by Arizona’s DWRF share the
same objectives: protect public health, ensure safe and sustainable drinking water, and guarantee
the affordability of basic water infrastructure. Arizona’s DWRF also support the national program
goal of Clean and Safe Water and the national program objective to protect public health and assist
water systems in providing water safe to drink (EPA IFMS PRC: 201B81E).

i

SECTION 1: INTRODUCTION

During the 2006 funding cycle, Arizona’s DWRF capacity will depend on the:
1.

Amount of state contributions to Arizona’s DWRF;

2.

Amount of federal contributions to Arizona’s DWRF;

3.

Financing structure needs of water systems;

4.

Interest rate on the DWRF financial assistance; and,

5.

Availability of other state funds to support financial assistance activity.

6.

Amount of leveraged bond capacity.

7.

Leveraging capacity of fund.

Arizona’s DWRF supports the national program objective to protect public health and assist
water systems in providing water safe to drink (EPA IFMS PRC: 201B81E).
SECTION 2: FUNDING SOURCES AND USES
Arizona’s DWRF is capitalized by state contributions and by contributions appropriated by the
United States Congress. Once capitalized, Arizona’s DWRF provides, in perpetuity, financial
assistance to drinking water systems throughout Arizona.
Through active portfolio and financial management, WIFA’s lending capacity could be
increased during the funding cycle by leveraging the revolving fund and by issuing water
quality bonds.
During the 2006 funding cycle, Arizona’s DWRF will rely on the funding outlined in Table 1 to
provide financial assistance to communities, support WIFA’s operations, and support related
program activities administered by WIFA and/or the Arizona Department of Environmental
Quality (ADEQ). Each of the intended uses of funding is more fully described in Table 1.
Table 1: Arizona DWRF Sources and Uses for 2006 Funding Cycle
Federal
Contributions

State
Contributions*

WIFA
Revenue

WIFA
Loan Accounts

Total

Funding Sources
Financial Assistance Funds**
2006 Funds
Total Funding Sources

$
$

$
23,630,000 $
23,630,000 $

- $
4,740,820 $
4,740,820 $

719,755 $
- $
719,755 $

63,000,000 $
- $
63,000,000 $

63,719,755
28,370,820
92,090,575

Funding Uses
Financial Assistance Loans
Public Water System Supervision
Capacity Development
Wellhead Protection
Administration
Total Funding Uses

$
$
$
$
$
$

21,330,050
719,750
255,000
380,000
945,200
23,630,000

4,740,820
4,740,820

719,755
719,755

63,000,000
63,000,000

89,070,870
1,439,505
255,000
380,000
945,200
92,090,575

$
$
$
$
$
$

$
$
$
$
$
$

$
$
$
$
$
$

* State match can be either WIFA bonds or state general fund monies.
** During the funding cycle, WIFA may sell water quality revenue bonds of which the proceeds will used increase WIFA's lending capacity

1

$
$
$
$
$
$

The sources and uses for the 2006 funding cycle shown in Table 1 are based on the FY 2006
federal budget. The 2006 DWRF federal budget allocation is $850 million of which Arizona
receives 2.78%.
Financial Assistance: $89,070,870
WIFA will provide cash funded loans for financial assistance. WIFA will reserve a
minimum of 15% for water systems that serve less than 10,000 persons.
Forgivable Principal: $450,000 – WIFA may award forgivable principal to disadvantaged
communities in accordance with WIFA Policy 1.013 – Disadvantaged Drinking Water
Systems. Funds not awarded for this will revert to loans effective December 31, 2006.
Public Water System Supervision (PWSS): $2,024,505
During state FY 2006, ADEQ will use this funding for the PWSS Program, which encompasses
all of the various activities involved in implementing the Safe Drinking Water Act requirements
in Arizona. These activities include operator certification, source water assessment and
protection, development of regulatory guidance and assistance documents, assisting systems in
obtaining the technical, financial, and managerial capability to comply with drinking water
regulations, and technical consultations on water system and treatment system design.
Additionally, WIFA may use capacity development funds to assist water systems throughout the
state.
Administration: $945,200 – During state FY 2006, WIFA will use the funding to administer
Arizona’s DWRF and assist drinking water systems to conceive, develop, expedite, construct,
and finance technically sound and sustainable water infrastructure.
Technical and Local Assistance will be addressed in the Technical Assistance (TA) Intended
Use Plan (IUP). The TA cycle begins July 1, 2006 and ends June 30, 2007. Please visit
WIFA’s Web site (www.azwifa.gov) for more information about WIFA’s technical assistance
programs.
SECTION 3: GOALS
WIFA adopts an annual strategic plan listing goals, ongoing objectives, and annual objectives.
The goals listed below are taken directly from the WIFA 2005-2006 Strategic Plan. For
additional detail on goals, ongoing objectives, and annual objectives, request a copy of the WIFA
2005-2006 Strategic Plan from WIFA’s Communications Director, (602) 364-1314.
Goal 1: Award WIFA’s resources in accordance with the needs of Arizona’s citizens.
Goal 2: Maintain the fiscal integrity of WIFA’s funds and assure continuous enhancement for
future generations.
Goal 3: Facilitate access to and efficiently deliver financial and technical assistance.

2

Goal 4: Coordinate with other funding sources, technical resources, and regulatory authorities,
and private sector legal and financial counterparts.
Goal 5: Actively pursue leadership in infrastructure finance.
Goal 6: Efficiently administer WIFA within a positive work environment.
Goal 7: Facilitate and encourage board of directors’ involvement in WIFA.
SECTION 4: METHOD AND CRITERIA FOR DISTRIBUTING ARIZONA’S DWRF
Lending Capacity for 2006 Funding Cycle – If there are insufficient projects ready to proceed
during the 2006 funding cycle, WIFA will apply funds to the FY 2007 funding cycle project
priority list. If additional funding becomes available during the fiscal year, WIFA will expand
the fundable range of the 2006 funding cycle project priority list.
Each board meeting, the WIFA Board of Directors may update the DWRF PL, fundable range
for design and fundable range for construction based on project readiness to proceed, refined
project cost estimates, availability of other funding sources, and other new information affecting
the expansion and contraction of the PL and fundable ranges. The WIFA Board of Directors will
adopt the updated DWRF PL and fundable ranges at public meetings and will distribute the
updates to all DWRF PL applicants and other interested parties.
Priority List, Exhibit A – On Thursday, Nov. 3, 2004, WIFA staff convened a scoring
committee including members from the Arizona Department of Environmental Quality, Arizona
Department of Water Resources, Arizona Corporation Commission and U.S. Department of
Agriculture Rural Development. The committee scored and ranked priority list applications
submitted by communities pursuant to WIFA's DWRF award criteria. All eligible applications
received appear on the 2006 funding cycle priority list.
Fundable Range for Design, Exhibit B – Includes the highest ranking applicants ready to
receive design assistance during the funding cycle.
Fundable Range for Construction, Exhibit C – Includes the highest ranking applicants ready
to receive construction assistance.
Market Loan Rate – The WIFA Board of Directors has established a target interest rate ranging
between 70% and 100% of tax-exempt interest or prime rates. The WIFA Board of Directors
will set interest rates/subsidies on individual loans pursuant to the:
9 Priority of the project;
9 Local fiscal capacity of the area served by the system requesting assistance; and,
9 Lending capacity of Arizona’s DWRF.
Local fiscal capacity will be measured by the area’s median household income, user rates and
charges, and the community’s outstanding debt.

3

Binding Commitments – The WIFA Board of Directors will allocate financial assistance in
accordance with DWRF funds available, the DWRF PL, financial assistance requested, a
community’s financial capacity, and project readiness to proceed.
Once on the DWRF PL, an applicant will submit a project finance application to request
financial assistance. WIFA staff will review the project finance application, analyze the
applicant’s legal, technical, managerial, and financial capability, and provide recommendations
to the WIFA Board of Directors. The WIFA Board of Directors approves an applicant’s
financial assistance request, WIFA staff will prepare and circulate financial assistance documents
to evidence the binding commitment in accordance with applicable federal requirements.

4

SECTION 5: PUBLIC REVIEW AND COMMENT
WIFA solicited public review and comment on the draft 2006 DWRF IUP and PL according to
the following schedule of activities:
November 9, 2005

Distribution and Web posting of the draft DWRF IUP and PL to all
interested parties.

November 29, 2005

Public Hearing – 1110 West Washington, Room #145, Phoenix, Arizona
85007 at 1 p.m.

November 29, 2005

Deadline for public comments on the draft DWRF IUP and PL.

December 21, 2005

The WIFA Board of Directors adopts the final DWRF IUP and PL.

January 1, 2006

Final DWRF IUP and PL become effective. Distribution and Web posting
of Final DWRF IUP and PL.
SECTION 6: ASSURANCES

Files and Records Retention – WIFA will receive and review project documents from financial
assistance applicants. These documents will be filed in official project files maintained by
WIFA. The project files and other DWRF records will be made available in accordance with the
Arizona public records law. It is expected that EPA will review the files on a sample basis in
conjunction with on-site visits scheduled as part of WIFA’s annual review or other monitoring of
the state’s management of DWRF funds.
WIFA will retain the official project files and other DWRF files in accordance with federal and
state requirements.
Expeditious and Timely Expenditures – WIFA will expend DWRF funds in a timely and
expeditious manner.
Environmental Review Requirements – In accordance with applicable federal requirements,
WIFA will continue to conduct environmental reviews pursuant to applicable federal and state
statutes and rules.

5

Exhibit A:
2006 Funding Cycle Priority List
Arizona’s Drinking Water Revolving Fund

Arizona's Drinking Water Revolving Fund
2006 Funding Cycle – Priority List for Drinking Water Revolving Fund
April 20, 2006
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

Applicant
Population
Naco Water Company
1,086
Camp Verde Water System
2,500
Livco Water Company
1,100
Watco, Inc.
790
Valley Utilities Water Company
4,500
Flagstaff Ranch Water Company
400
Ashcreek Water Company
250
Ashcreek Water Company
250
Ashcreek Water Company
250
Ashcreek Water Company
250
Ashcreek Water Company
250
Sue Juan Water Company
120
Livco Water Company
1,100
Livco Water Company
1,100
Ashcreek Water Company
250
Tacna Water Co.
450
Shepard Water Company
500
Oak Creek Utility Corp.
50
Abra Water Company
1,586
Tucson Water Department
690,000
Tucson Water Department
690,000
Tucson Water Department
690,000
Maricopa County Municipal Water Distric200,000
Las Quintas Serenas Water Company
4,000
Valle Escondido DWID
650
Community Water Company of Green Va 16,000
Livco Water Company
1,100
Livco Water Company
1,100
Yarnell Water Improvement Association 1,700
Livco Water Company
1,100
Mohawk Utility Company
500
Clear Springs Utility Company
1,142
Town of Florence
13,966

Project Title
Phase II of System Upgrades
Mongini Arsenic Plant
Old Concho/Concho Valley Consolidation
SLE/BR Storage/Tie Line Project
Arsenic Remediation
Arsenic Adsorption Package Treatment System
Closing of Loop in Distribution Lines
Increase of Water Storage Capcity with New Tank
Mohave System Distribution Line Upgrade / Replacement
Phase II of System Upgrades
Well Transmission
Arsenic Removal and Treatment (POU or well head)
Water Storage Capacity Expansion
Replace Asbestos Pipline
Installment of Transmission Valves and Flushing
Arsenic Control Plant and New Water Source
Martinez Lake Well Site Arsenic Treatment
New Storage Tank
Arsenic Removal
New Production Wells for Blended Water
South Avra Valley Storage & Recovery Project
South Avra Valley Storage & Recovery Project - Raw Water Delivery Pipeline
White Tanks Regional Water Treatment Plant
Arsenic Remediation
New Well and Reservoir Project
Design/Construction of Arsenic Treatment Facilities
Well #4 Activate Inactive Well
Upgrade/Replace Old Water Meters
Back Up Well Project
Upgrade/Replace Well Casings
Upgrade of Plant and Expansion of Storage
Repairs and Upgrades to Distribution and Booster Pumps
Potable Water System Improvements

Project #
030 2006
028 2006
010 2006
014 2006
032 2006
043 2006
016 2006
021 2006
017 2006
020 2006
018 2006
001 2006
009 2006
012 2006
019 2006
042 2006
041 2006
040 2006
045 2006
033 2006
034 2006
035 2006
029 2006
044 2006
005 2006
003 2006
006 2006
011 2006
004 2006
007 2006
013 2006
038 2006
027 2006

Requested Rate Index
$ 1,400,000
70%
$
750,000
70%
$
200,000
70%
$
599,000
70%
$ 1,776,100
70%
$
202,500
70%
$
41,990
70%
$
19,440
70%
$
25,450
70%
$
100,000
70%
$
19,750
70%
$
50,000
70%
$
250,000
70%
$
120,000
70%
$
5,700
70%
$
260,268
70%
$
200,000
75%
$
50,000
70%
$
250,000
70%
$ 1,500,000
75%
$ 3,000,000
75%
$ 4,000,000
75%
$ 55,000,000
80%
$ 1,648,750
80%
$ 1,000,000
70%
$ 2,000,000
75%
$
60,000
70%
$
75,000
70%
$
250,000
70%
$
45,000
70%
$
75,000
70%
$
69,212
75%
$
483,690
80%

34 City of Flagstaff
35 Livco Water Company
36 City of Williams
37 Forest Lakes DWID
38 City of Holbrook
39 City of Holbrook
40 Double G Mobile Park
41 City of Flagstaff
42 City of Holbrook
43 City of Holbrook
44 Delta City Improvement District
45 City of Peoria

62,718
1,100
2,842
2,500
5,100
5,100
50
62,718
5,100
5,100
1,000
113,600

New Water Wells
Well #3 Activate Inactive Well
Water Treatment Plant Upgrades
Installation of Meters
Sun Valley Desalination Project
Heavy Industrial Park Infrastructure
New Well for Back-up on Current Well
Future Water Acquisition
Water Tank Rehabilitation and Tank Replacement
Hopi Travel Plaza Water Line
New District Connection with Existing Lines
Acquisition of Public Infrastructure

036
008
039
002
024
025
031
037
022
023
026
015

2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006

$ 8,500,000
$
40,000
$
900,000
$
450,000
$ 2,000,000
$
295,000
$
13,000
$ 15,000,000
$
702,061
$ 2,500,000
$
250,000
$ 16,200,000

80%
75%
75%
80%
80%
80%
75%
80%
80%
80%
80%
85%

Exhibit B:
2006 Funding Cycle Fundable Range for Design
Arizona’s Drinking Water Revolving Fund

Arizona's Drinking Water Revolving Fund
2006 Funding Cycle – Fundable Range for Design Financial Assistance
April 20, 2006

No borrowers requested design assistance for their projects as of the date of this report.

Exhibit C:
2006 Funding Cycle Fundable Range for Construction
Arizona’s Drinking Water Revolving Fund

Arizona's Drinking Water Revolving Fund
2006 Funding Cycle – Fundable Range for Construction Financial Assistance
April 20, 2006
Fundable
MPL
Range Rank Rank Applicant
1
16 Oak Creek Utility Corp.
2
17 Tucson Water Department
3
18 Tucson Water Department
4
19 Tucson Water Department
5
22 Community Water Company of Green Valley
6
30 City of Flagstaff
7
32 City of Williams
8
37 City of Flagstaff
9
41 City of Peoria

Project Title
New Storage Tank
New Production Wells for Blended Water
South Avra Valley Storage & Recovery Project
South Avra Valley Storage & Recovery Project - Raw Water Deliv
Design/Construction of Arsenic Treatment Facilities
New Water Wells
Water Treatment Plant Upgrades
Future Water Acquisition
Acquisition of Public Infrastructure

Project #
2006 040
2006 033
2006 034
2006 035
2006 030
2006 036
2006 039
2006 037
2006 015

Amount
Requested
$50,000
$1,500,000
$3,000,000
$4,000,000
$2,000,000
$8,500,000
$900,000
$15,000,000
$ 16,200,000

Exhibit D:
Public Review and Comment Summary
Arizona’s Drinking Water Revolving Fund

Exhibit D
2006 Funding Cycle – Public Review and Comment
February 15, 2006

Public comment was conducted November 9, 2005 thru November 29, 2005. The public review
and written comment period was advertised November 16th, 17th, and 18th in Arizona’s three
major newspapers.
A public hearing was held in Phoenix on Tuesday, November 29, 2005 at the Arizona
Department of Environmental Quality, 1110 W. Washington Street, Room 145, Phoenix, AZ
85007 from 10:00 a.m. to 12:00 p.m. No public comment was received at the hearing.
A written public comment was received from San Cruz County Supervisor John Maynard.
I sincerely hope there will be funds set aside specifically for small rural water
companies to comply with the newly updated EPA Arsenic standards. This is creating
a financial dilemma for small companies with less than 100 customers to meet the
new compliance levels. Thank you for the opportunity to comment.

On November 29, 2005, WIFA staff made several technical corrections to the IUP. Additionally,
WIFA staff increased the amount of capacity development funds, which will to be funded from
WIFA’s federal capitalization grants, located in Table 1 to have enough resources to provide
additional capacity development technical assistance.
The final TA IUP and PPLs was adopted by the Board on December 21, 2005 and became
effective on January 1, 2006.