SFY 2017
Clean Water Intended Use Plan

Water Infrastructure
Finance Authority of
Arizona

Table of Contents
INTRODUCTION ............................................................................................................................................. 1
Section 1: Short Term Goals.......................................................................................................................... 1
Section 2: Long Term Goals........................................................................................................................... 1
Section 3: Important Program Changes ........................................................................................................ 1
Section 4: Agreement to Enter Data into CBR and NIMS.............................................................................. 1
Section 5: Description of Public Notice Process and Actions Taken to Address Public Comments.............. 2
Section 6: Assurances and Specific Proposals ............................................................................................... 2
Section 7: Disadvantaged Community Program ........................................................................................... 2
Section 8: Criteria and Methods for Distribution of Funds (Priority Setting Criteria) .................................. 2
Section 9: Bypass Procedures ....................................................................................................................... 3
Section 10: Sources and Uses Table .............................................................................................................. 3
Section 11: Identify Types of Assistance Provided and Terms (Principal Forgiveness, Extended Terms) .... 4
Section 12: State Match Sources .................................................................................................................. 5
Section 13: Identification of Overmatch ....................................................................................................... 5
Section 14: Anticipated Cash Draw Ratio (proportionality) or Statement of Match Drawdown then
Federal .......................................................................................................................................................... 5
Section 15: Estimated Disbursement Schedule ............................................................................................ 5
Section 16: Identification of any Intended Transfers between Funds .......................................................... 5
Section 17: Identification and Explanation of any Cross Collateralization ................................................... 6
Section 18: Combined Interest and Fee Rate (CIFR) ..................................................................................... 6
Section 19: Fees Charged if Applicable and Uses of Fees ............................................................................. 6
Section 20: Overview of Program Financial Status and Management ......................................................... 6
Section 22: Binding Commitment Schedule ................................................................................................. 6
Section 23: Grant Payment Schedule ........................................................................................................... 6
Sections 24‐33: Fundable List ....................................................................................................................... 8

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) 2017 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 2017 funding cycle from July 1, 2016 through June 30, 2017. This IUP is a
required element of the grant application documentation to obtain the FFY 2016 grant award. Arizona
herewith submits its IUP for the FFY 2016 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 and
nonpoint source projects. 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, stormwater infrastructure and nonpoint
source projects. 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. 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 will provide between 10% and 20% of the Capitalization Grant amount as additional
subsidy in the form of forgivable principal.
 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;
 Effectively and efficiently deliver financial and technical assistance;
 Market agency programs and advocate the importance of safe, reliable water through
presentations, networking and outreach.
Section 3: Important Program Changes
WIFA plans to adjust the interest vs. fee ratio of the Combined Interest and Fee Rate (CIFR) during SFY
2017. 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 was conducted from May 30, 2016 through June
14, 2016.
WIFA solicited public review and comment on the draft SFY 2017 CWSRF IUP and Project Priority List
(PPL) according to the following schedule:
May 30, 2016

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

June 13, 2016

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

June 14, 2016
June 15, 2016
July 1, 2016

Deadline for public comments on the draft CWSRF IUP and PPL.
The WIFA Board of Directors adopted 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% of the capitalization grant 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
$25,863,448. The Sources and Uses table provides approximately $120 million for new
CW loans, and staff 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 which are ready to receive
design or construction financial assistance.
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



Project Priority List Updates
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, 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 WIFA’s 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.
Arizona CWRF Sources & Uses for SFY 2017 (FFY 2016)
Federal
Contributions
Funding Sources
Estimated fund balance as of 7/1/2016
New funds expected in SFY 2017
Total Funding Sources
Funding Uses
Financial Assistance Loans
Clean Water Programs (ADEQ)
Technical Assistance
Administration
Forgivable Principal $1,803,000

WIFA
Revenues

WIFA
Loan Accounts

Total

$
$
$

- $
9,015,000 $
9,015,000 $

1,967,393 $ 188,347,774 $ 190,315,167
1,128,516
3,687,839 $ 13,831,355
3,095,909 $ 192,035,613 $ 204,146,522

$

8,654,400 $

$

$
360,600 $

1,803,000 $ 110,000,000 $ 120,457,400
$
170,000
$
170,000
718,100
$
1,078,700

Green Project Reserve $901,500
Total Funding Uses
$
9,015,000 $
2,691,100 $ 110,000,000 $ 121,706,100
State match can be WIFA bond proceeds, WIFA CW fees or state general fund monies.

Section 10: Sources and Uses Table
During SFY2016, WIFA received an unusually high dollar amount of loan prepayments primarily due to
the City of Lake Havasu prepaying all of the City’s outstanding WIFA CW debt (in excess of $200 million).
To date in SFY2016, WIFA has closed $65,744,432 in CW loans. The Sources and Uses table provides
approximately $120 million for new CW loans. The SFY2017 CW PPL includes $25,863,448 in new
applications. WIFA is continuing its efforts to market the WIFA program to prospective borrowers, staff
are in discussions regarding other CW projects that should be added to the PPL list during the year. We
are also in discussions with a City to finance a $40 million wastewater project. Finally, WIFA has begun
to defease outstanding bond debt when it makes fiscal sense.
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Financial Assistance Funds for Loans
Eligible projects include planning, design and construction or replacement of wastewater facilities,
sewer collection systems, reclamation, recharge, nonpoint source 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 2017 (FFY 2016) Funding Cycle Table for
detail.
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. 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.
WIFA will use $360,600 (4%) for administrative costs. 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 required additional subsidization under the FY 2016 Enacted Appropriation is 10% ($901,500 for
Arizona) of the capitalization grant. Between 0% and 30% of the capitalization grant may be provided as
additional subsidy consistent with WRRDA provisions. This amount is separate from what is required by
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the FY2016 Enacted Appropriation. In addition to the 10% requirement, WIFA may provide a total of up
to 20% ($1,803,000) in subsidy as principal forgiveness to projects.
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 $1,803,000 of the FFY 2016 Capitalization Grant funds will be provided as
forgivable principal. A minimum of $901,500 will be provided for green projects (water
efficiency, energy efficiency, green stormwater infrastructure or other environmentally
innovative activities).
8. Contracts for financial assistance for all CWSRF treatment works projects will require the
borrower to comply with Davis‐Bacon wage rates.
9. All contracts for construction financial assistance with the exception of nonpoint source projects
will require the borrower to comply with the Use of American Iron and Steel requirements.
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 2016
Capitalization Grant.
Section 13: Identification of Overmatch
As of June 30, 2015, WIFA has overmatched by $29,600,075. As of April 2016, WIFA has overmatched by
$28,003,831.
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 2017, providing match to the
federal grant and administration of the SRF. WIFA is currently in discussions with EPA HQ and Region 9
on the inclusion of fees in the retained earnings calculation. After these discussions have been
concluded, WIFA will be in a position to estimate program versus non‐program fees to be collected.
Section 20: Overview of Program Financial Status and Management
With the FFY 2016 Federal Capitalization Grant, WIFA will have received 27 Capitalization Grants
(including ARRA) totaling $277,471,273. In addition WIFA has received and passed through three SAAP
grants totaling $9,621,347 for a total federal investment of 30 grants totaling $287,092,620.
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.
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.
Section 21: Leveraging Plan
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 287% 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.
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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 treatment works
projects funded in SFY2017, regardless of funding source, to pay their workers the federal Davis‐Bacon
wage rates for their job classification, and to 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 required that WIFA develop “Affordability Criteria” for additional subsidization by September
30, 2015. The criteria were made available for public comment and incorporated into WIFA’s Additional
Subsidy Procedure on August 27, 2015.
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 is implementing this requirement for all projects funded on or after October 1,
2015.
WRRDA Section 602(b)(14) requires that for any capitalization grant awarded after October 1, 2014, all
architectural and engineering (A/E) contracts must comply with the federal procurement processes for
A/E services as identified in 40 U.S.C. 1101 et. seq., or an equivalent State requirement. WIFA has
elected to apply the federal A/E requirements to equivalency projects only.

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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 CWSRF projects, with the exception of FFATA and the
requirement of federal procurement processes for A/E contracts. Both are treated on an equivalency basis. The project(s) in yellow is identified as potential
equivalency project(s). It is unknown at this time which projects will be awarded forgivable principal.
Arizona’s Clean Water Revolving Fund Project Priority List – 2017 Funding Cycle
PPL
Rank

Applicant

Population

County

Permit
Number

Yavapai

NA

Wastewater System
Centralization
Project Phase 1

Gila

NA

Tri-City Regional
Sanitary District

NA

Mariposa Drive and
Kerkes/
Hassayampa
School Stormwater
Drainage
Improvements

2

1

Prescott,
City of

35,752

Project Name

Description
The Sundog Force Main and Lift Station
project will construct a lift station and
force main at the Sundog WWTP to
move flows and process solids to the
Airport WRF. The Sundog Trunk Main
project includes the replacement/
realignment of 28,000 LF of deteriorated
and undersized sewer trunk main up to
24" with new mains up to 36”. The
Airport Trunk Main Sewer Improvement
project is for the sewer line upsize to
achieve the single WWTP centralization.
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.
Mariposa Drive – Culverts and roadway
embankment were undermined along
with significant erosion of the
downstream channel during an extreme
storm event. The culverts,
embankment, head and wing walls will
be reconstructed, and erosion protection
will be installed. Kerkes/Hassayampa
School Drainage - This area has
experienced repeated damage from
stormwater causing erosion damage
and heavy metal and oil transport to the
Hassayampa River. This project will
incorporate approximately 250 LF of
vegetated swale to allow for stormwater
infiltration and to reduce erosion.

1

2

Tri-city
Regional
Sanitary
District

4,014

2

3

Wickenburg,
Town of

6,363

Maricopa

Total:
Eligible for disadvantaged community designation
2
Eligible for Green Project Reserve

Project
Number

Amount
Requested /
Probable
Green Amount

Subsidy

001 2017

$21,600,000.00 /
$200,000

80%

003 2017

$3,263,448.00

70%

002 2017

$1,000,000.00

85%

$25,863,448.00

1

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