Water Infrastructure Finance Authority of Arizona Arizona’s Clean Water Revolving Fund Intended Use Plan Funding Cycle 2005 Governor Janet Napolitano WIFA Chairman Stephen A. Owens WIFA Executive Director Jay R. Spector January 2005 Table of Contents Executive Summary................................................................................................................ i Intended Use Plan Section 1: Lending Capacity ........................................................................................ 1 DRAFT Section 2: Funding Sources and Uses ......................................................................... 1 Section 3: Goals ............................................................................................................ 2 Section 4: Method and Criteria for Distributing Arizona's CWRF ........................... 2 Section 5: Public Review and Comment..................................................................... 4 Section 6: Assurances................................................................................................... 4 Exhibit A: 2005 Funding Cycle Priority List Exhibit B: 2005 Funding Cycle Fundable Range for Design Exhibit C: 2005 Funding Cycle Fundable Range for Construction Exhibit D: Public Review and Comment Intended Use Plan EXECUTIVE SUMMARY The Water Infrastructure Finance Authority of Arizona (WIFA) Board of Directors is pleased to release Arizona's Clean Water Revolving Fund (CWRF) Intended Use Plan (IUP) for the 2005 funding cycle. The CWRF IUP describes WIFA's plan to utilize various sources of funds to finance water reclamation, wastewater, and related water quality infrastructure during the 2005 funding cycle from January 1, 2005 through December 31, 2005. Included as Exhibit A of the CWRF IUP is the 2005 Priority List (PL). The PL shows communities seeking financial assistance from Arizona's CWRF. At the release of this report, communities throughout Arizona submitted 27 applications requesting $313,345,357 in financial assistance. From January 1, 2005 through December 31, 2005, the WIFA Board of Directors will use the PL as a guide to allocate financial assistance from Arizona's CWRF to communities listed in 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 rela ted program activities by Arizona’s CWRF supports the national program goal of Clean and Safe Water and the national objective to protect and improve water quality (EPA IFMS PRC: 202B80E). i SECTION 1: LENDING CAPACITY During the 2005 funding cycle, the lending capacity of Arizona's CWRF will depend on the: 1. Amount of state contributions to Arizona's CWRF; 2. Amount of federal contributions to Arizona's CWRF; 3. Financing structure needs of communities; 4. Interest rate on the CWRF financial assistance; and 5. WIFA’s ability to partner with other funding sources to jointly-finance projects. Available funding for funding cycle 2005 has increased in comparison to funding cycle 2004 due to WIFA’s 2004 bond sale and the proceeds received from that sale. Overall, the financial assistance and related program activities by Arizona’ s CWRF supports the national program goal of Clean and Safe Water and the national objective to protect and improve water quality (EPA IFMS PRC: 202B80E). SECTION 2: FUNDING SOURCES AND USES Arizona's CWRF is capitalized by state contributions and by contributions appropriated by the U.S. Congress. Once capitalized, Arizona's CWRF provides, in perpetuity, financial assistance to communities 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 2005 funding cycle, Arizona's CWRF will rely on the funding outlined in Table 1 to provide financial and technical assistance to communities and support WIFA's operations. Each of the intended uses of funding is more fully described after Table 1. Table 1: Arizona CWRF Sources and Uses for 2005 Funding Cycle Federal State WIFA Loan Contributions Contributions* Accounts Total Funding Sources Financial Assistance Funds $66,681,076 $66,681,076 2005 Funds $7,343,330 $1,788,372 $9,131,702 Total Funding Sources $7,343,330 $1,788,372 $66,681,076 $75,812,778 $7,049,597 $1,788,372 $66,681,076 $75,519,045 Funding Uses Financial Assistance Administration $293,733 Total Funding Uses $7,343,330 $293,733 $1,788,372 *State match may be either WIFA bonds or state general fund monies. 1 $66,681,076 $75,812,778 The sources and uses for the 2005 funding cycle shown in Table 1 are based on the FY 2005 budget. The federal budget for the CWRF in 2005 is $609 million of which .6737 percent is available to WIFA. Financial Assistance: $75,519,045 WIFA will provide cash funded loans for financial assistance. Administration: $293,733 WIFA intends to use four percent (4%) of the 2005 federal contributions to offset the costs of administering Arizona's CWRF and assist communities to conceive, develop, expedite, construct, and finance technically sound and sustainable water reclamation, wastewater and related water quality infrastructure. 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 2004-2005 Strategic Plan. For additional detail on goals, ongoing objectives and annual objectives, please request a copy of the 2004-2005 WIFA 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. Goal 4: Coordinate with other funding sources, technical resources, and regulatory authorities, and private sector legal and financial counterparts. Goal 5: Actively pursue a leadership role in water 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 D ISTRIBUTING ARIZONA’S CWRF Lending Capacity for 2005 Funding Cycle – If there are insufficient projects ready to proceed during the 2005 funding cycle, WIFA will apply funds to the FY 2006 funding cycle project priority list. If additional funding becomes available during the fiscal year, WIFA will expand the fundable range of the 2005 funding cycle project priority list. Each board meeting, the WIFA Board of Directors may update the CWRF 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 CWRF PL and fundable ranges at public meetings and will distribute the updates to all CWRF PL applicants and other interested parties via WIFA’s Web site. 2 Priority List, Exhibit A – On Wednesday, Oct. 27, 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 CWRF award criteria. All eligible applications received appear on the 2005 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 percent and 100 percent of tax-exempt interest or prime rates. The WIFA Board of Directors will set interest rates/subsidies on individual loans pursuant to the: ü Priority of the project; ü Local fiscal capacity of the area served by the system requesting assistance; and, ü Lending capacity of Arizona’s CWRF. Local fiscal capacity will be measured by the area’s median household income, user rates and charges, and the community’s outstanding debt. Binding Commitments – The WIFA Board of Directors will allocate financial assistance in accordance with CWRF funds available, the CWRF PL, financial assistance requested, a community’s financial capacity, and project readiness to proceed. Once on the CWRF 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. If 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. 3 SECTION 5: PUBLIC REVIEW AND COMMENT WIFA solicited public review and comment on the draft 2005 CWRF IUP and PL according to the following schedule of activities: November 4, 2004 Distribution and Web posting of the draft CWRF IUP and PL to all interested parties. November 16, 2004 Public Hearing – 1110 West Washington, Room #250, Phoenix, Arizona 85007 10 a.m. November 23, 2004 Deadline for public comments on the draft CWRF IUP and PL. December 8, 2004 The WIFA Board of Directors adopts the final CWRF IUP and PL. January 3, 2005 Final CWRF IUP and PL become effective. Distribution and Web posting of Final CWRF 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 CWRF records will be made available in accordance with the Arizona public records law. WIFA will retain the official project files and other CWRF files in accordance with 40 CFR Part 31. Expeditious and Timely Expenditures – In accordance with 40 CFR 35-3135 (d), WIFA will expend CWRF funds in a timely and expeditious manner. First Use of Funds – In accordance with 40 CFR 35-3135 (e), WIFA has satisfied all applicable first use requirements. Environmental Review Requirements – In accordance with 40 CFR 35-3140, WIFA will continue to conduct environmental reviews pursuant to applicable federal and state statutes and rules. 4 Water Infrastructure Finance Authority of Arizona Exhibit A: 2005 Funding Cycle Priority List Arizona’s Clean Water Revolving Fund Governor Janet Napolitano WIFA Chairman Stephen A. Owens WIFA Executive Director Jay R. Spector Arizona's Clean Water Revolving Fund 2005 Funding Cycle – Priority List for Clean Water Revolving Fund December 2, 2004 Rank Project # Amount Subsidy Requested Rate Index Applicant Population Project Title 1 Lake Havasu City 7,000 Wastewater System Expansion 011 2005 $ 55,145,645 75% 2 City of Kingman 3,600 Downtown Wastewater Treatment Plant Upgrade 002 2005 $ 5,530,000 75% 3 Town of Duncan 350 Phase II Sewer Extension, Hunter Estates, McCarty Flats 029 2005 $ 300,000 70% 4 Town of Taylor 2,700 Sewer Improvements 008 2005 $ 1,500,000 70% 5 Virgin River 1,680 WW Collection and Treatment Phase I 010 2005 $ 3,500,000 75% 6 Pima County Wastewater Management Dept. 933,000 Ina Road WPCF: Denitrification 016 2005 $ 17,000,000 70% 7 Country Roads 2,600 Septic System Removal and Sewer Connection 003 2005 $ 4,500,000 75% 8 Town of Florence 11,780 WWTP Effluent Reuse 004 2005 $ 1,000,000 75% 9 City of Kingman 14,000 System Upgrade 007 2005 $ 9,000,000 75% 10 Town of Clarkdale 1,875 Wastewater Treatment Plant Improvements 005 2005 $ 6,000,000 80% 11 Pima County Wastewater Management Dept. 933,000 Ina Road Central Plant and Electrical Upgrade 014 2005 $ 12,000,000 75% 12 Buckskin Sanitary District 2,500 Wastewater System Improvements - Phase II 026 2005 $ 325,000 75% 13 Buckskin Sanitary District 2,500 Wastewater System Improvements - Phase III 027 2005 $ 250,000 75% 14 Pima County Wastewater Management Dept. 933,000 Roger Road WWTP Rehabilitation 013 2005 $ 20,000,000 75% 15 Pima County Wastewater Management Dept. 933,000 New Marana WWTP Expansion 018 2005 $ 11,464,612 75% 16 Pima County Wastewater Management Dept. 933,000 Santa Cruz Interceptor:Price to Franklin 012 2005 $ 25,487,500 75% 17 Pima County Wastewater Management Dept. 933,000 Ina Road WPCF: Laboratory and Office Building 022 2005 $ 9,000,000 75% 18 Pima County Wastewater Management Dept. 933,000 Mount Lemmon Sewage System 017 2005 $ 7,200,000 75% 19 Tucson Water 408,865 Campbell / Drexel Reclaimed Transmission Main, Phase II 025 2005 $ 2,500,000 80% 20 Pima County Wastewater Management Dept. 933,000 Tanque Verde Interceptor - Craycroft to Tucson Country Club 021 2005 $ 8,520,000 80% 21 Pima County Wastewater Management Dept. 933,000 Roger Road WWTP to Ina Road WPCF: Plant Interconnect 019 2005 $ 23,000,000 80% 22 City of Flagstaff 60,988 Wastewater Improvements 001 2005 $ 23,100,000 80% Arizona's Clean Water Revolving Fund 2005 Funding Cycle – Priority List for Clean Water Revolving Fund December 2, 2004 Rank Project # Amount Subsidy Requested Rate Index Applicant Population Project Title 23 Pima County Wastewater Management Dept. 933,000 Water Reclamation Facilities 015 2005 $ 4,000,000 80% 24 Pima County Wastewater Management Dept. 933,000 Conveyance System Rehabilitation and Repair 020 2005 $ 15,000,000 80% 25 Pima County Wastewater Management Dept. 933,000 Marana Regional Airport Sewer Connection 023 2005 $ 2,800,000 80% 26 Pima County Wastewater Management Dept. 933,000 Arivaca Junction WWTF Sewer Extension 024 2005 $ 422,600 80% 27 City of Phoenix 1,480,187 Sanitary Sewer Replacement and Relief Program 009 2005 $ 45,000,000 90% 28 Town of Cave Creek 4,100 Wastewater Treatment Plant Expansion 028 2005 $ 25,000,000 90% 29 Pinetop-Lakeside Sanitary District 15,000 Jacques Marsh Expansion 006 2005 $ 100,000 85% Water Infrastructure Finance Authority of Arizona Exhibit B: 2005 Funding Cycle Fundable Range for Design Arizona’s Clean Water Revolving Fund Governor Janet Napolitano WIFA Chairman Stephen A. Owens WIFA Executive Director Jay R. Spector Arizona's Clean Water Revolving Fund 2005 Funding Cycle – Fundable Range for Design Financial Assistance December 2, 2004 Fundable Range Rank Rank Applicant Project Title Project # Amount Requested Subsidy Rate Index Water Infrastructure Finance Authority of Arizona Exhibit C: 2005 Funding Cycle Fundable Range for Construction Arizona’s Clean Water Revolving Fund Governor Janet Napolitano WIFA Chairman Stephen A. Owens WIFA Executive Director Jay R. Spector Arizona's Clean Water Revolving Fund 2005 Funding Cycle -- Fundable Range for Construction Financial Assistance December 2, 2004 Rank Amount Subsidy Requested Rate Index Applicant Project Title Project # 1 Lake Havasu City Wastewater System Expansion 011 2005 $ 55,145,645 75% 6 Pima County Wastewater Management Dept. Ina Road WPCF: Denitrification 016 2005 $ 17,000,000 70% 7 Country Roads Septic System Removal and Sewer Connection 003 2005 $ 4,500,000 75% 8 Town of Florence WWTP Effluent Reuse 004 2005 $ 1,000,000 75% 10 Town of Clarkdale Wastewater Treatment Plant Improvements 005 2005 $ 6,000,000 80% 11 Pima County Wastewater Management Dept. Ina Road Central Plant and Electrical Upgrade 014 2005 $ 12,000,000 75% 12 Buckskin Sanitary District Wastewater System Improvements - Phase II 026 2005 $ 325,000 75% 13 Buckskin Sanitary District Wastewater System Improvements - Phase III 027 2005 $ 250,000 75% 14 Pima County Wastewater Management Dept. Roger Road WWTP Rehabilitation 013 2005 $ 20,000,000 75% 15 Pima County Wastewater Management Dept. New Marana WWTP Expansion 018 2005 $ 11,464,612 75% 16 Pima County Wastewater Management Dept. Santa Cruz Interceptor:Price to Franklin 012 2005 $ 25,487,500 75% 17 Pima County Wastewater Management Dept. Ina Road WPCF: Laboratory and Office Building 022 2005 $ 9,000,000 75% 18 Pima County Wastewater Management Dept. Mount Lemmon Sewage System 017 2005 $ 7,200,000 75% 20 Pima County Wastewater Management Dept. Tanque Verde Interceptor - Craycroft to Tucson Country Club 021 2005 $ 8,520,000 80% 21 Pima County Wastewater Management Dept. Roger Road WWTP to Ina Road WPCF: Plant Interconnect 019 2005 $ 23,000,000 80% 22 City of Flagstaff Wastewater Improvements 001 2005 $ 23,100,000 80% 23 Pima County Wastewater Management Dept. Water Reclamation Facilities 015 2005 $ 4,000,000 80% 24 Pima County Wastewater Management Dept. Conveyance System Rehabilitation and Repair 020 2005 $ 15,000,000 80% 25 Pima County Wastewater Management Dept. Marana Regional Airport Sewer Connection 023 2005 $ 2,800,000 80% 26 Pima County Wastewater Management Dept. Arivaca Junction WWTF Sewer Extension 024 2005 $ 422,600 80% Water Infrastructure Finance Authority of Arizona Exhibit D: Public Review and Comment Summary Arizona’s Clean Water Revolving Fund Governor Janet Napolitano WIFA Chairman Stephen A. Owens WIFA Executive Director Jay R. Spector SECTION 1: SUMMARY OF COMMENTS FROM PUBLIC HEARINGS AND PUBLIC MEETINGS A public hearing was conducted in Phoenix at 1110 W. Washington Avenue, Room 250 beginning at 10 a.m. on Tuesday, November 16, 2004. Members of the public present: Waseem Kuan, Miller Brooks Engineering, Inc. Paul Bennett, Pima County Wastewater Management Glen E. Peterson, Pima County Wastewater Management Jonathan Bernreuter, WIFA Angelica Martinez, WIFA Christina Worden, WIFA Below are the written comments provided at the November 16, 2004 public hearing: Paul Bennett, Pima County Wastewater Management Support efforts and projects listed and within the fundable range. The Board of Directors approved and adopted the Final CWRF Intended Use Plan, Final Priority List, Final Fundable Range for Design and Fundable Range for Construction at a public meeting on Wednesday, Dec. 8, 2004. A public review and written comment period for the Final CWRF IUP and PL was publicly advertised and conducted from November 3, 2004 through November 23, 2004. Comments were due by November 23, 2004 at 5 p.m. Written comments from the Environmental Protection Agency, Region IX (EPA) were received during the public review and comment period. WIFA’s responses are noted below. SECTION 2: SUMMARY OF CHANGES TO THE DRAFT CWRF INTENDED USE PLAN The Environmental Protection Agency (EPA) provided written comments as summarized below: Page i, Section 1, Page 1: Effective January 2005, any new grant award workplan (in the case of the SRF, the IUP) must show how the grant support the Agency Goals and Objectives. Therefore, please add the following statements at the end of the last paragraph. “Overall, the financial assistance and related program activities by Arizona’s CWRF support the national program goal of Clean and Safe Water and the national objective to protect and improve water quality (EPA IFMS PRC: 202B80E).” Staff Response: Staff included the reference at the end of the paragraph.