Water Infrastructure Finance Authority
SFY 2016 Clean Water
Intended Use Plan

Arizona Clean Water State Revolving Fund

INTRODUCTION
The WIFA Board of Directors is pleased to release Arizona’s Clean Water State Revolving Fund (CWSRF)
Intended Use Plan (IUP) for the State Fiscal Year (SFY) 2016 funding cycle. The CWSRF IUP describes
WIFA’s plan to utilize various sources of funds to finance clean water infrastructure and support related
activities during the SFY 2016 funding cycle from July 1, 2015 through June 30, 2016. This IUP is a
required element of the grant application documentation to obtain the FFY 2015 grant award. Arizona
herewith submits its IUP for the FFY 2015 funds available to Arizona for the purposes of continuing the
development, implementation and administration of the CWSRF program in Arizona.
The Arizona CWSRF Loan Program provides funds for publicly-owned municipal wastewater systems.
Eligible projects include planning, design and construction of new wastewater treatment plants,
improvements and upgrades to existing wastewater treatment plants, sewer collection systems, water
reclamation and reuse facilities, and stormwater infrastructure. The program places an emphasis on
small and disadvantaged communities and on projects that promote sustainability through water
efficiency, energy efficiency, green stormwater infrastructure or other environmentally innovative
activities. Loans made under the program currently have interest rates of less than 4 percent. Loan
repayments to the State will provide a continuing source of infrastructure financing into the future.
Section 1: Short Term Goals
For the purposes of this IUP, a short-term goal is an activity intended to be initiated and, in some cases,
completed within a year.
• WIFA will make wastewater infrastructure loans more accessible and affordable to small
communities by subsidizing all loans and providing below market rate interest.
• WIFA will provide additional assistance to communities who are identified as disadvantaged.
WIFA may provide up to 20% of the Capitalization Grant amount as additional subsidization in
the form of forgivable principal. If any funds set aside for forgivable principal are not committed
at the end the fiscal year, WIFA may transfer the funds to the loan fund.
• WIFA will provide 10% of the Capitalization Grant amount (as required by the terms of the
Capitalization Grant) for sustainable construction efforts such as water efficiency, energy
efficiency, green stormwater infrastructure or other environmentally innovative activities.
Section 2: Long Term Goals
For purposes of this IUP, long-term is defined as the life of the program. The following are the long-term
goals of the loan program:
• Award WIFA’s resources in accordance with the needs of Arizona’s citizens;
• Maintain the fiscal integrity of WIFA’s funds and assure continuous enhancement for future
generations;
• Facilitate access to and efficiently deliver financial and technical assistance to Arizona’s
wastewater facilities; and
• Coordinate with other funding agencies through the Rural Water Infrastructure Committee
(RWIC).
Section 3: Important Program Changes
WIFA plans to adjust the interest vs. fee ratio of the Combined Interest and Fee Rate (CIFR) during SFY
2016. WIFA has implemented a policy providing guidance on the application of additional subsidies
which includes how communities who cannot otherwise afford projects (including disadvantaged
communities) and green projects may receive forgivable principal.
Section 4: Agreement to Enter Data into CBR and NIMS
WIFA agrees to enter data into CBR and NIMS.
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Section 5: Description of Public Notice Process and Actions Taken to Address Public Comments
Public review and written comment period of this IUP will be conducted from June 1, 2015 through June
16, 2015.
WIFA will solicit public review and comment on the draft SFY 2016 CWSRF IUP and Project Priority List
(PPL) according to the following schedule:
June 1, 2015

Distribution and Web posting of the draft CWSRF IUP and PPL to all
interested parties.

June 15, 2015

Public Hearing – 1110 West Washington, Room 130, Phoenix, Arizona
85007 from 1:00 P.M. to 2:00 P.M.

June 16, 2015
June 17, 2015
July 1, 2015

Deadline for public comments on the draft CWSRF IUP and PPL.
The WIFA Board of Directors to adopt the final draft CWSRF IUP and PPL.
IUP will then be sent to EPA for final approval.
Begin implementation of the Approved CWSRF IUP and PPL.

Section 6: Assurances and Specific Proposals
WIFA intends to comply with the following:
• WIFA will comply with its environmental policy as approved by EPA;
• WIFA will notify its borrowers of the requirement to comply with the Davis-Bacon requirements
outlined in the Capitalization Grant Terms and Conditions;
• WIFA will notify its borrowers of the requirement to comply with the American Iron and Steel
requirements outlined in the Capitalization Grant Terms and Conditions; and
• WIFA will make every effort to comply with EPA’s guidance for timely and expeditious use of
funds.
WIFA agrees to the remaining required assurances and proposals in the grant application and the IUP.
Section 7: Disadvantaged Community Program
WIFA is committed to providing assistance to wastewater systems serving Disadvantaged Communities.
The Board may designate an applicant as a Disadvantaged Community if the applicant satisfies one of
the following:
1. The community is a designated “colonia” community through the federal government, or
2. The community received 60 or more Local Fiscal Capacity points on the CWSRF PPL.
WIFA intends on providing up to 20% in additional subsidy as forgivable principal to communities who
cannot otherwise afford projects (including disadvantaged communities). WIFA’s Disadvantaged Policy
allows for extended term, reduced interest or a combination.
Section 8: Criteria and Methods for Distribution of Funds (Priority Setting Criteria)
• Project Priority List and Fundable Range
o Project Priority List (PPL): On an annual basis, WIFA develops a statewide priority list of
projects. Currently, WIFA’s CW PPL has three project priority list applications totaling
$51,160,204. The Sources and Uses table provides approximately $120M for new CW
loans and are in discussions regarding other CW projects that should be added to the
PPL list during the year.
o Fundable Range: The Fundable Range includes the applicants ready to receive design or
construction financial assistance.
• Project Priority List Updates
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•

The WIFA Board of Directors may update the CW PPL by adding or deleting projects or adjusting
the fundable range for design or construction projects. The decision to update the CW PPL may
be based on a project’s readiness to proceed, refined project cost estimates, availability of other
funding sources or other new information affecting the expansion or contraction of the PPL and
Fundable Range. The WIFA Board of Directors adopts the updated CW PPL at a public meeting
and the updates are posted on the WIFA website.
Project Readiness to Proceed
Applicants accrue readiness to proceed points based on the following criteria:
o Approved debt authorization has been submitted to WIFA.
o Plans and specifications are complete.
o Local and state permits have been obtained.
o The bid or solicitation process has been initiated.

Section 9: Bypass Procedures
The Fundable Range process is used to bypass projects that are not ready to proceed. As part of this
process, readiness to proceed points are awarded for each of the criteria identified above, with a project
needing to accrue at least 40 points out of 100 possible. Projects which have not received at least 40
points are bypassed, allowing projects which are ready to proceed to move forward with obtaining
financing.
Section 10: Sources and Uses Table
Arizona CWRF Sources & Uses for SFY 2016 (FFY 2015)
Federal
Contributions
Funding Sources
Estimated fund balance as of 7/1/2015
New funds expected in SFY 2016
Total Funding Sources
Funding Uses
Financial Assistance Loans
Clean Water Programs (ADEQ)
Technical Assistance
Administration
Forgivable Principal $1,895,800

WIFA
Revenues

WIFA
Loan Accounts

Total

$
$
$

- $
9,479,000 $
9,479,000 $

1,936,723 $ 46,756,990 $ 48,693,713
1,525,274
61,632,341 $ 72,636,615
3,461,996 $ 108,389,331 $ 121,330,328

$

8,930,084 $

$

$
548,916 $

1,895,800 $ 108,389,331 $ 119,215,215
$
400,000
$
400,000
514,899
$
1,063,815

Green Infrastructure $947,900 (10%)
Total Funding Uses
$
9,479,000 $
2,810,699 $ 108,389,331 $ 120,679,030
State match can be WIFA bond proceeds, WIFA CW fees or state general fund monies.

Financial Assistance Funds for Loans
Eligible projects include planning, design and construction or replacement of wastewater
facilities, sewer collection systems, reclamation, and recharge, and stormwater infrastructure. A
minimum of 10% of the federal grant will be used to finance sustainable projects that emphasize
water efficiency, energy efficiency, green stormwater infrastructure or other environmentally
innovative activities. See the Arizona CWSRF Sources & Uses for SFY 2016 (FFY 2015) Funding
Cycle Table for detail.
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Section 11: Identify Types of Assistance Provided and Terms (Principal Forgiveness, Extended Terms)
Technical Assistance
Technical Assistance available from WIFA includes planning and design assistance and professional
assistance.
1. Planning and Design Technical Assistance Program
WIFA will use up to $100,000 for planning and design assistance. WIFA solicits applications from
Arizona’s political subdivisions and Indian communities. The purpose of WIFA’s Planning and
Design Technical Assistance Program is to help prepare systems for construction of capital
improvement projects. Typically, awards are made to facilities with limited resources that need
assistance in completing the planning and/or design phase of an infrastructure project. The
request for applications issued establishes the scoring criteria on which the applications are
evaluated. Awards are capped at $35,000 per project.
2. Professional Assistance
Professional assistance includes studies, surveys and other types of reports that provide benefit
to a range of wastewater systems statewide. This year, WIFA will provide $20,000 for the
wastewater portion of the annual Water and Wastewater Residential Rate Survey. This effort
includes a survey of approximately 500 utilities, updates to the Rates Dashboard by the
University of North Carolina’s Environmental Finance Center, survey analysis and final report.
WIFA has allocated $230,000 for the 2016 Clean Watersheds Needs Survey. An additional
$50,000 may also be used to provide technical, managerial and financial capacity development
assistance.
Throughout the Funding Cycle and as circumstances require, WIFA may fund additional Professional
Technical Assistance projects. The Board will act to add Professional Technical Assistance projects at a
public meeting of the Board.
Program Administration (4% Set-Aside plus WIFA Fees)
Section 603(d)(7) of the revised FWPCA, allows the greatest of a maximum of 4% of all grant awards to
such fund under this tile , $400,000 per year, or 1/5 percent per year of the current valuation of the fund
based on the most recent audited financial statements to cover the reasonable costs of administering
the fund.
In the last financial audited statement WIFA’s Total Net Position was $274,457,931. This allows WIFA an
amount equal to $548,915.86 to be used for our administrative costs (274,457,931 * .002). These funds
will be used to pay salaries and associated expenses of program personnel devoting time to the
administration of the funds.
Forgivable Principal
WIFA may provide additional subsidization in the form of forgivable principal for up to 90% of the loan
amount, based on financial need and/or projects eligible under the green project reserve.
The FFY 2015 Consolidated and Further Continuing Appropriations Act, 2015 - P.L. 113-235 allows that
not more than 30 percent of the national CWSRF appropriation over $1 billion can be provided as
additional subsidy. For Arizona, the amount of additional subsidy from the FFY2015 cap grant is
$2,843,700 that can be put towards providing an additional subsidy to borrowers. There is no minimum
additional subsidy required amount. WIFA may provide up to 20% or S1,895,800 in subsidy as principal
forgiveness to projects.
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Financial Terms of Loans
1. Subject to the limitation in item 2 of this list, all loans for the financing of projects will be for a
term not to exceed 20 years from loan closing date, except that under certain conditions
including loans to disadvantaged communities project financing may be made for a period of up
to 30 years.
2. Loan terms are not to exceed the useful life of the project.
3. Terms of financial assistance to publicly-owned wastewater systems serving disadvantaged
communities are addressed in Section 7.
4. Repayment of loan principal must begin within 12 months of project completion based on the
construction schedule available at the loan closing date or actual completion date or three years
from the date of the initial principal advance, whichever is earlier.
5. Loan disbursements are to be made on a cost reimbursement basis.
6. The decision to leverage will be based on demand on the loan fund for projects to address
public health concerns, market conditions and long-term impact to the fund.
7. A maximum of $1,895,800 of the FFY 2015 Capitalization Grant funds will be provided as
forgivable principal. A minimum of $947,900 will be provided for green projects (water
efficiency, energy efficiency, green stormwater infrastructure or other environmentally
innovative activities), unless these numbers are adjusted by EPA.
8. All contracts for construction financial assistance will require the borrower to comply with the
Davis-Bacon Act regardless of the source of funding.
9. All contracts for construction financial assistance will require the borrower to comply with the
Use of American Iron and Steel as described in WIFA’s Capitalization Grant regardless of the
source of funding.
10. WIFA will assess income from the Standard Combined Interest and Fee Rate (CIFR) as either fee
income or interest income in accordance with the following table.
Combined Interest and Fee Rate (CIFR) for 20 Year Loans
Financial Structure
CIFR
Governmental

Municipal Market Data Index (MMD) multiplied by the Subsidy

Section 12: State Match Sources
As demonstrated in the Sources and Uses Table, WIFA revenues will provide match for the FFY 2015
Capitalization Grant.
Section 13: Identification of Overmatch
As of June 30, 2014 WIFA has overmatched by 30,964,440. As of April 2015 we have overmatched by
30,471,785
Section 14: Anticipated Cash Draw Ratio (proportionality) or Statement of Match Drawdown then
Federal
With the overmatch, WIFA will draw 100% federal funds until the overmatch is depleted. Once the
overmatch is depleted, WIFA will draw the state match equivalency prior to drawing federal funds.
Section 15: Estimated Disbursement Schedule
First Quarter
Second Quarter
20%
35%

Third Quarter
35%

Section 16: Identification of any Intended Transfers between Funds
WIFA currently has no planned transfers between the CWSRF and the DWSRF.

5

Fourth Quarter
10%

Section 17: Identification and Explanation of any Cross Collateralization
The Authority maintains the CWSRF and DWSRF as separate and distinct programs. Revenues generated
by either program will remain within that program. Any transfers between funds will be temporary in
nature and done only to alleviate short term cash shortages.
Section 18: Combined Interest and Fee Rate (CIFR)
For 20 year term loans, the WIFA Board of Directors has established a target CIFR ranging between 70%
and 95% of the tax-exempt AAA MMD Rate for governmental entities. CIFR/subsidies on individual loans
will be set pursuant to the criteria below:
• Total Priority Value Points;
• Local fiscal capacity of the area served by the system requesting assistance; and,
• Lending capacity of Arizona’s CWSRF.
Section 19: Fees Charged if Applicable and Uses of Fees
The Sources and Uses table demonstrates how fees will be used for SFY 2016, providing match to the
federal grant and administration of the SRF.
Section 20: Overview of Program Financial Status and Management
With the FFY 2015 Federal Capitalization Grant, WIFA will have received 27 Capitalization Grants
(including ARRA) totaling $268,518,273. In addition WIFA has received and passed through three SAAP
grants totaling $9,621,347 for a total federal investment of 30 grants totaling $278,139,620.
The Arizona CWSRF program supports the National USEPA Strategic Plan Goal 2 (Clean and Safe Water),
Objective 2.2 (Protect Water Quality), Sub-objective 2.2.1 (Improve Water Quality on a Watershed
Basis). Specifically, Arizona established and is managing the revolving loan fund to finance the cost of
infrastructure improvements which will achieve or maintain compliance with the Clean Water Act
requirements. Arizona CWSRF activities support USEPA Program Reporting Measure WQ-17 Fund
Utilization.
All planned and prior year loans have assisted public wastewater systems in meeting the federal and
state clean water compliance requirements. Details of Arizona’s CWSRF activities supporting the
National USEPA Strategic Plan will be included in the CWSRF Annual Report as well as in the Clean Water
Benefit Reporting system (CBR) and the Clean Water National Information Management System (CW
NIMS) and the Federal Funding Accountability and Transparency Act (FFATA) Reporting System.
The CWSRF Fund Utilization is calculated by dividing the cumulative funds provided (CWNIMS Line 110)
by the cumulative CWSRF Funds available as of June 30 2015 (CWNIMS Line 283). WIFA’s actual CWSRF
Fund Utilization rate will be submitted in the annual report.

Measure
WQ-17

Measure Text
Fund utilization rate [cumulative loan agreement
dollars to the cumulative funds available for
projects] for the Clean Water State Revolving
Fund (CWSRF).

Section 21: Leveraging Plan
6

National
Target

Region 9
Target

Arizona
Target

94.5%

95%

100%

As a matter of practice, WIFA pays close attention to its cash position and lending capacity. This practice
includes reports to the WIFA Board of Directors at each Board meeting defining WIFA’s current cash
position and lending capacity. As a result of slow loan demand and prepayments, it appears that WIFA’s
next Bond Issue won’t be needed until late in the year or early next year.
Section 22: Binding Commitment Schedule
When the WIFA Board of Directors approves an applicant’s financial assistance request, WIFA staff
prepares and circulates financial assistance (loan) documents to evidence the binding commitment in
accordance with applicable federal and state requirements. Based on the PPL, WIFA expects to enter
into binding commitments at 540% of the federal cap grant amount (dollars on PPL vs the federal cap
grant).
Section 23: Grant Payment Schedule
WIFA will receive all payments in the first quarter available.
NOTE: Sections 34-43:
These Sections are for DWSRF, not applicable to CWSRF.
Water Resources Reform and Development Act Amendments
The Water Resources Reform and Development Act (WRRDA) requires all CWSRF projects funded in
SFY2016, regardless of funding source, must pay their workers the federal Davis‐Bacon wage rates for
their job classification, and must comply with American Iron and Steel (AIS) requirements.
WRRDA requires that Borrowers must provide a Fiscal Sustainability Plan (FSP). The requirement applies
to all loans with PPL applications submitted on or after October 1, 2014. WIFA has incorporated this
requirement into its loan application process, developed a certification form and criteria, and created a
webpage where these documents can be found.
WRRDA requires that WIFA write an “Affordability Criteria” guidance document, to be completed by
September 30, 2015. The criteria and guidance document are currently in development and once
completed will be distributed for comment through a separate public hearing process.
Also, Section 603(b)(13) of WRRDA requires WIFA obtain a certification from all applicants that the
facility planning has studied and evaluated cost effectiveness and efficiency of water and energy use,
reuse, and production. WIFA will implement this requirement for all projects funded on or after October
1, 2015.
IUP requirements in guidance:
• To the extent possible, the State should identify all equivalency projects in its Intended Use Plan.
• The State should also detail in its IUP or Operating Agreement whether it intends to satisfy this
requirement through compliance with 40 U.S.C. 1101 et seq. or through an equivalent State
requirement. In the case of the latter, the source of the requirement (e.g., existing State
legislation or regulation, etc.) must be stated, and a certification from the Governor of the State
that the State’s A/E procurement requirements are equivalent to 40 U.S.C. 1101 et seq. must
accompany the capitalization grant application. In lieu of a certification from the Governor, the
Attorney General’s certification submitted with each capitalization grant application may include
this certification.

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Sections 24-33: Fundable List
Arizona combines the Fundable and Comprehensive lists into one list. WIFA applies all crosscutters to all projects with the exception of FFATA. FFATA is treated
on an equivalency basis. See yellow highlight below. It is unknown at this time which projects will be awarded forgivable principal. The WIFA Board of Directors
approved a project with a green component of $1,209,432 on April 15, 2015. This loan will be executed in SFY 2016, and will exceed WIFA’s FFY15 GPR
requirement of $947,900. The project does not appear on the SFY 2016 PPL because it received a binding commitment in April 2015 (SFY 2015).
Arizona’s Clean Water Revolving Fund Project Priority List – 2015 Funding Cycle

PPL
Rank

Applicant

Population

County

Permit
Number

1,768 La Paz

Area 5-6
Wastewater
Conveyance &
Treatment

4,014 Gila

Tri-City Regional
Sanitary District

1

1

Buckskin
Sanitary
District

Project Name

1

2

Tri-city
Regional
Sanitary
District

1

Chino
Valley,
Town of

Center Street
Sewer from
Highway 89 to
Molly Rae and
P104236 Refinance

3
5,100 Yavapai
Total:
1
Eligible for disadvantaged community designation

Description

The District proposes to design a new
WWTF and collection facility to serve the
remainder of the District's service area,
eliminating failing septic systems along
the Colorado River.
Wastewater is currently being disposed
into septic systems and cesspools that
has caused the introduction of raw
wastewater into the environment.
Proposed project would benefit the area
and residents by disposing and treating
wastewater in a central facility.
This project will construct approximately
1 mile of sewer line from an existing
trunk line to a subdivision and result in
all future construction within the
subdivision be tied into the Town’s
sewer system. The loan will also
refinance three USDA-RD Loans totaling
approximately $4,000,000.00. These
loans from 2007 and 2008 were used to
finance construction of sewer to Chino
Meadows.

8

Project
Number

Amount
Requested /
Probable Green
Amount

Subsidy

003
2016

$915,000.00

70%

001
2016

$45,685,204.00

70%

$4,560,000.00
$51,160,204.00

80%

002
2016