2008 Annual Report Water Infrastructure Finance Authority of Arizona Janet Napolitano Governor Stephen A. Owens Chairman Water Infrastructure Finance Authority of Arizona Judy Navarrete Executive Director The Governor of Arizona The President of the Senate The Speaker of the House of Representatives And the Citizens of the State of Arizona We are pleased to provide the Water Infrastructure Finance Authority of Arizona’s 2008 Annual Report, pursuant to A.R.S. 49-1204. The Water Infrastructure Finance Authority of Arizona (WIFA) protects Arizona’s water quality by helping communities address their water infrastructure needs. WIFA continues to be recognized as a premier financial institution in Arizona as well as nationally by providing below market low interest loans financed from the sale of AAA rated revenue bonds. In this fiscal year the Board approved over $300 million in loans to assist communities in the development and improvement of their wastewater and drinking water facilities. Infrastructure projects are an economic investment in Arizona because they provide job opportunities to local communities, help create the infrastructure for sustainable practices, and provide long-term solutions for Arizona’s wastewater and drinking water challenges. WIFA accomplishes its mission through its financial and technical assistance programs that help maintain and improve water quality in Arizona. This year WIFA provided $12.1 million in low interest loans to the Yavapai-Apache Nation for wastewater and drinking water infrastructure and improvements. WIFA also provided technical assistance grants to the Navajo Nation Tribal Utility Authority to conduct a water distribution loss study and another grant to the Sipaulovi Village to conduct a water infrastructure assessment. WIFA’s financial and technical assistance programs and commitment to service will continue to benefit the citizens of Arizona by enhancing public health and quality of life. Stephen A. Owens, Chairman WIFA, Board of Directors WIFA working for Arizona WIFA was the first DWSRF to lend funds to a tribal nation Over $1 billion of investment in Arizona’s communities since 1992, resulting in approximately 40,000 jobs Funded more than 222 projects across the state since inception Impacted communities throughout Arizona in FY 2008 by investing over $300 million through 37 low- interest loans WIFA’s Standards Customer Service WIFA recognizes that customer service is our highest priority. We remain professional, courteous and accountable throughout the process. Cooperation WIFA works with local, state and federal agencies and various nongovernmental organizations to find the best financing options to meet local needs. Dedication WIFA is committed to creating financing solutions to meet the water infrastructure needs of Arizona’s communities. WIFA is an independent agency of the state of Arizona established to finance the construction, rehabilitation, and improvement of drinking water, wastewater, wastewater reclamation, and other water quality facilities/projects. Generally, WIFA offers borrowers below market interest on loans for one hundred percent of eligible project costs. WIFA operates as a “bond bank” and is able to issue bonds on behalf of communities for basic water infrastructure. Through an active portfolio and sound financial management, WIFA provides significant savings through low-interest loans. WIFA’s principal tools for providing low-interest loans include the Clean Water Revolving Fund created in 1987 by the Environmental Protection Agency for publicly-held wastewater treatment projects, and the Drinking Water Revolving Fund created in 1997 to provide states with funding to address important drinking water projects that are necessary to ensure public health. How the WIFA Loan Program Works Arizona EPA Clean Water Loans Water Infrastructure Finance Authority State Revolving Fund Bond Holders Drinking Water Loans Water Infrastructure Finance Authority of Arizona WIFA 2008 Annual Report Table of Contents I. Goal and Performance Measures A. Goal 1: Award WIFA’s Financial Resources in Accordance with the Water Quality Needs of Arizona’s Citizens…. ........................................... 1 B. Goal 2: Manage WIFA’s Loan and Bond Portfolio and Maintain WIFA’s Fiscal Integrity to Meet the Water Quality Funding Needs of Arizona’s Future Generations…. ............................................................... 5 C. Goal 3: Facilitate Access to and Efficiently Deliver Financial and Technical Assistance................................................................................. 8 D. Goal 4: Coordinate with other Funding Sources, Technical Resources and Regulatory Authorities….......................................................................... 14 II. What’s New and Looking Ahead…................................................................ 16 A. WIFA Funds Distributed by District in FY 2008 ....................................... 18 III. Statement of Finances A. Statement of Financial Position…............................................................ 19 B. Statement of Revenues, Expenses, and Changes in Fund Net Assets… 20 C. Statement of Net Assets…. ...................................................................... 21 IV. WIFA Board of Directors and WIFA Staff…................................................... 22 V. WIFA Assisting Arizona in FY 2008 .............................................................. 25 Goal 1: Award WIFA’s Financial Resources in Accordance with the Water Quality Needs of Arizona’s Citizens WIFA continues to provide financial assistance to a diverse number of communities with varying levels of water quality and infrastructure needs. During Fiscal Year (FY) 2008, WIFA executed 17 Clean Water (CW) and 21 Drinking Water (DW) loans (see Table 1 and 2). By balancing a community’s relative environmental health and financial needs, WIFA was able to provide and expedite project funding in an efficient and timely manner. WIFA continues to maintain its level of assistance directed to the most significant public health and water quality problems. Table I: Executed Clean Water Financial Assistance Agreements (Loans) in FY 2008 Committed Amount Applicant Name Project Name Chino Valley, Town of Chino Meadows Sewer Project $ 4,853,000.00 Clarkdale, Town of Town of Clarkdale Broadway Water Reclamation Facility $ 728,290.00 Douglas, City of $ 4,500,000.00 Eagar, Town of City of Douglas, Wastewater Treatment Plant and Facility Improvements Town of Eagar Sewer Expansion Project $ 1,967,000.00 El Mirage, City of WWTP Contact Chlorination Station $ 1,900,000.00 Kingman, City of Hilltop Wastewater treatment plant upgrades $ 4,200,000.00 Lake Havasu, City of Lake Havasu City Wastewater System Expansion $ 53,285,000.00 Oro Valley, Town of Reclaimed Water System Phase 2 $ Peoria, City of Butler Drive Water Reclamation Facility $ 42,741,541.00 Peoria, City of Butler Drive Water Reclamation Facility $ 8,575,253.00 Prescott, City of 2007 CIP Wastewater System Improvement Projects $ 4,703,000.00 Safford, City of Safford Sewer collection reconfiguration $ 1,246,423.97 Safford, City of Safford Sewer collection reconfiguration $ 1,948,576.03 Sahuarita, Town of Wastewater Capacity Upgrades $ 28,350,000.00 Sahuarita, Town of Wastewater Capacity Upgrades $ 4,375,525.00 Williams, City of Williams WWTP - Phase II $ 7,529,561.00 Yavapai-Apache Nation Tunli and Clarkdale Wastewater Infrastructure $ 8,767,067.25 Total: 17 6,000,000.00 $185,670,237.25 Page 1 Table II: Executed Drinking Water Financial Assistance Agreements (Loans) in FY 2008 Applicant Name Committed Amount Project Name Ashcreek Water Company Cave Creek, Town of Transmission Improvement Project--Flush Lines $ 8,600.00 $ 5,500,000.00 $ 5,500,000.00 Douglas, City of Water System Improvements - Phase 2 Cave Creek Water Company Treatment Plant Improvements City of Douglas, Arsenic Compliance Program $ 1,500,000.00 Eagar, Town of Town of Eagar Water System Expansion $ 929,000.00 El Mirage, City of Mandated Water System Improvements $ 4,040,000.00 Gila Bend, Town of Water System Improvements $ 1,000,000.00 Green Valley DWID Storage Tank Rehab and New Pipelines $ 700,000.00 Metro DWID Phase II of $28,000,000 Capital Improvement Program $ 12,625,000.00 Naco Water Company Naco Water Co. - Phase II $ 1,160,000.00 Oak Creek Utility Corp. New Storage Tank $ 40,000.00 Prescott, City of 2007 CIP Drinking Water System Improvement Projects $ 9,854,000.00 Queen Creek, Town of Water Company Acquisition $ 40,000,000.00 Safford, City of TMT rehab. and placement of water storage tanks $ 6,349,268.07 Safford, City of TMT rehab. and placement of water storage tanks $ 1,260,731.93 Tucson, City of Valley Utilities Water Company, Inc. CAVSARP Booster Expansion, W571 $ 17,800,000.00 Replacement well for well #6 $ 250,000.00 Silver Lake Estates & Bourden Ranch Estates Storage & Tie-line $ 600,000.00 WUCFD Mesa Interconnect $ 5,000,000.00 Tunli and Clarkdale Drinking Water Infrastructure $ 3,453,487.00 Cave Creek, Town of WATCO, Inc Water Utilities Community Facilities District Yavapai-Apache Nation $117,570,087.00 Total: 20 WIFA continues to promote funding projects that assist communities in meeting regulatory compliance. In FY 2008, over 30% of the loans were awarded to communities with compliance issues. Compliance Related Projects Fiscal Year CW DW Total 2007 3 7 10 2008 6 6 12 Page 2 In determining the interest rate for a loan, WIFA provides a 5% to 30% discount on the tax-exempt AAA Bond Rate for government entities and the prevailing prime-rate plus 2% for non-government entities. The percentage of the discount is based on the community’s local fiscal capacity, which is measured by the area’s median household income, user rates and charges; the community’s outstanding and proposed debt; and cost effectiveness of the project. The final interest rates for the loans closed in FY 2008 averaged 3.285% for governmental entities and 5.492% for non-governmental entities, representing an average discount from the base interest rate of 24% and 27% respectively. “Over the past several years we have worked with WIFA to obtain Technical Assistance and place our projects on the Priority List. Our experience with the WIFA staff has overall been very positive and we look forward to good working relations in the future. The WIFA employees have always assisted and answered our questions in a timely manner.” Gregory T. Henry, P.E., City Engineer City of Kingman, Arizona Consistent with WIFA’s Strategic Plan goals and ongoing objectives, WIFA used its resources in accordance with the needs of Arizona's citizens by funding projects that consolidate water and wastewater systems, reuse/recharge treated effluent, reduce the reliance on non-renewable water supplies and protect groundwater contamination from septic systems. Page 3 Clean Water Revolving Fund (CWRF) • 6 of the 17 CW loans awarded in FY 2008 were used in part to replace decentralized systems with centralized systems. • 8 of the 17 CW loans awarded in FY 2008 addressed recycled water distribution needs. Drinking Water Revolving Fund (DWRF) In response to the recently promulgated federal arsenic maximum contaminant level of 10 ppb, WIFA has been committed to providing financial and technical assistance to both publicly and privately owned drinking water facilities in meeting the compliance standard. In this fiscal year, 6 of the 20 drinking water loans had at least some component related to meeting the new standard which included: • • • System consolidation, Surface water blending, or Well-site treatment technologies. WIFA continued to expand its co-funding and assistance to small rural communities by leading the Rural Water Infrastructure Committee (RWIC). The RWIC serves as a “OneStop Funding Source” for small rural communities (< 10,000 population). The RWIC is working towards developing new ways to cooperate in assisting Arizona’s small rural communities. More detail is provided on the RWIC in Goal 4. “This is the first time Oro Valley has used WIFA and it has been a pleasure to work with WIFA staff and we appreciate their knowledge and professionalism. We look forward to working with WIFA on future projects." Philip C. Saletta, P.E. Town of Oro Valley Water Utility Director Page 4 Goal 2: Manage WIFA’s Loan and Bond Portfolio and Maintain WIFA’s Fiscal Integrity to Meet the Water Quality Funding Needs of Arizona’s Future Generations. Through FY 2008, WIFA maintained “AAA” credit ratings from Moody’s Investors Service, Standard and Poor’s, and Fitch. WIFA continues to maintain these ratings due to its demonstrated commitment to responsible fiscal fund management. These ratings are among the highest awarded and reduce WIFA’s cost of borrowing from investors when WIFA issues bonds. This allows WIFA to establish its loan rates as low as possible, thereby passing on the savings to its borrowers. A vital measure of the benefit WIFA loans provide to communities throughout Arizona is the savings to Arizona tax payers when compared to traditional market financing. In FY 2008, WIFA’s below-market interest rates and reduced closing costs saved Arizona communities millions of dollars over the terms of their loan. Figure 1 reflects an increase in WIFA’s investment portfolio. The dollars invested are primarily used to originate loans to WIFA borrowers and provide additional security to our bond portfolio. Additionally, interest generated from the investment funds helps to subsidize WIFA borrower interest rates. Figure 1. Funds Invested $293 $300 Millions of Dollars $250 $228 $200 $150 $100 $50 $0 FY07 FY08 Page 5 In addition to maintaining fiscal integrity, WIFA invests its monies to ensure its growth stays on pace with inflation. Figure 2 compares FY 2007 and FY 2008 investments: • A downturn in market conditions lead to a decrease in non-program revenue. • WIFA’s loan interest revenues and loan fees increased due to a higher number of loans in repayment status. Figure 2: Income Fiscal Year $18 $17 FY07 FY08 $16 $15 $14 $13 Millions of Dollars $12 $12 $10 $10 $8 $8 $6 $4 $2 $0 Non-program Revenues Loan Interest Loan Fees Page 6 During FY 2008, WIFA continued to maintain a diverse portfolio of borrowers by balancing the needs of low-credit, high-priority borrowers with high-credit, low-priority borrowers. Figure 3 demonstrates that more than 50% of funds committed through loans in FY 2008 were to borrowers with a credit rating of ‘A’ or better. The presence of strong borrowers within the portfolio benefits all program participants. Figure 3: FY 2008 Funds Committed Applicant Ratings 32% 64% 4% A - funds committed to applicants with a credit rating of "A" or better. B - funds committed to applicants with a credit rating of "B" NR - funds committed to applicants without a credit rating Page 7 Goal 3: Facilitate Access to and Efficiently Deliver Financial and Technical Assistance Financial Assistance During FY 2008, WIFA received 15 applications requesting $228,512,242 in financial assistance for CW projects and 35 applications requesting $80,605,975 in financial assistance for DW projects. WIFA continues to market the use of the State Revolving Fund (SRF) program through the use of the Financial Alternatives Comparison Tool (FACT) to small communities to help them make informed decisions regarding their funding options. WIFA staff and small communities are currently participating in a beta test for a new and improved version of FACT. Figures 4 and 5 demonstrate the dollar amount of disbursements and the number of disbursements approved for FY 2007 and FY 2008. The median number of days it takes WIFA to make a disbursement is 6 working days. Figure 4: FY 2008 Amount Disbursed $300 $262.92 Millions of Dollars $250 $200 $146.26 $150 $100 $50 $- FY07 FY08 Page 8 WIFA continuously strives to improve the loan application process and to efficiently deliver financial assistance in a timely and convenient manner. WIFA processed loans in an average of 7 weeks in FY 2007, and 5.70 weeks in FY 2008. Figure 5: FY 2008 Number of Disbursements 194 200 152 150 100 50 0 FY07 FY08 “Our people on limited income would have struggled much more without WIFA’s low interest, long-term financing that did not even require individuals to qualify for credit.” “I am not sure how we could have completed our sewer without the financing from WIFA.” Pawan Agrawal, PE Public Works Director/City Engineer City of Bullhead City Page 9 Figure 6: FY 2008 Clean Water Assistance by Population Size As seen in Figures 6 and 7, WIFA continues to assist small communities by helping them obtain the best possible funding package available. 100% 11% 17% 90% 80% 22% 33% 70% 60% 50% 40% 56% 39% 30% Less than 3,500 3,500 to 9,999 10,000 to 99,999 100,000 and above 20% 10% 11% 11% 0% FY07 FY08 Page 10 Figure 7: DW Assistance by Population Size 100% 10% 90% 10% 80% 10% 30% 70% 40% 60% 20% 50% 40% 20% 30% 35% Less than 501 501 to 3,300 3,301 to 10,000 10,001 to 100,000 100,001 and above 20% 20% 10% 5% 0% FY07 FY08 “I can honestly say of all the government/bureaucratic outfits we have to deal with, the WIFA TA program has become one of the most, if not THE most user friendly processes we have encountered. The paperwork is simple and intelligible, and the staff from the top down has always been helpful, and even cheerful about it.” Thanks, Gavin Lamont Alpine Sanitary District Page 11 Technical Assistance WIFA provides technical assistance through pre-design and design grants to eligible clean water and drinking water systems with limited resources. WIFA grants were created to assist systems achieve financial, legal, managerial and technical capacity. WIFA received 16 applications requesting $570,000 in technical assistance for clean water projects; 14 technical assistance clean water projects were awarded for a total of $358,475.00. WIFA received 33 applications requesting $998,000 in technical assistance for drinking water; 24 technical assistance drinking water projects were awarded for a total of $500,000. (see table III and IV below). Table III: Awarded Clean Water Technical Assistance (Grants) in FY 2008 Applicant Name Project Name Committed Amount Alpine Sanitary District Buckskin Sanitary District Eloy, City of Environmental Impact Mitigation Master Plan $ 23,350.00 WWTP & Main Trunkline PER $ 35,000.00 Headworks Project $ 30,000.00 Fawn Brook DWID Sewer Collection System Design Project $ 25,000.00 Hayden, Town of McMullen Valley Water Conservation District Mogollon Domestic Wastewater Improvement District Parker, Town of Wastewater Treatment System Improvements $ 35,000.00 Feasibility Study $ 15,000.00 Sewer Collection System Design $ 17,500.00 Wastewater Master Plan $ 35,000.00 Sahuarita, Town of Wastewater Treatment Expansion $ 35,000.00 Santa Cruz County Feasibility Study $ 22,375.00 Somerton, City of Sanitary Sewer Model Calibration Study $ 20,000.00 Thatcher, Town of Sanitary Collection System Expansion Pre-Design Sewer Collection System & Treatment Plant Improvements $ 14,000.00 $ 16,250.00 Sanitary Sewer Project $ 35,000.00 Virgin River DWID Yuma County Improvement District Total: 14 $ 358,475.00 Page 12 Table IV: Awarded Drinking Water Technical Assistance (Grants) in FY 2008 Applicant Name Ashcreek Water Company Cochise County Project Name Committed Amount Design of Domestic Water System Improvements $ 17,277.00 District Formation Assessment $ 18,750.00 Congress DWID Transmission Line/Rate Study $ 17,500.00 Douglas, City of Arsenic Mitigation Project $ 20,000.00 El Mirage, City of Water System Electrical Optimization Project $ 30,000.00 Gila Bend, Town of DW System Improvements $ 35,000.00 Groom Creek WUA Hatch Valley Water Improvement District Holiday Hills DWID Preliminary Engineering Report $ 35,000.00 Water System Improvements $ 7,500.00 Improvement Project $ 35,000.00 Livco Water Co. Mayer Domestic Water Improvement District Naco Water Company Northern Sunrise Water Company Oak Creek Utility Corp. Water System Evaluation $ 3,500.00 System Surveying and Mapping $ 35,000.00 Hydrogeologic Assessment $ 35,000.00 System Upgrades - Design $ 25,000.00 Storage Tank Site Design $ 35,000.00 Pinedale DWID San Juan Southern Paiute Tribe So-Hi DWID Southern Sunrise Water Company St. David DWID Capacity and Usage $ 4,375.00 Hidden Springs Water System Improvements $ 10,000.00 Design of Tie End & Extension $ 35,000.00 System Upgrades $ 15,000.00 Preliminary Engineering Report $ 15,625.00 Tierra Buena Water Co. Tonto Hills Improvement Association Valle Verde Water Co. Valley Utilities Water Company, Inc. Verde Lakes Water Corporation Total: 24 Arsenic Mitigation Project $ 11,750.00 Preliminary Engineering Design $ 10,000.00 System Assessment $ 25,500.00 Nitrate Treatment Study & Master Plan $ 10,723.00 District Formation $ 12,500.00 $ 500,000.00 This past year, WIFA automated the technical assistance application and the evaluation process. This ensured that the application was processed in a timely and efficient manner and was very well received by our applicants. Page 13 Goal 4: To Coordinate with Other Funding Sources, Technical Resources and Regulatory Authorities WIFA continues its efforts to reach out to small rural communities through the Rural Water Infrastructure Committee (RWIC), an informal partnership of various federal and state agencies that provide loans, grants and technical assistance to Arizona’s rural communities. The RWIC continues to expand its partnerships, and among its newest members, is the Arizona Water Institute (AWI). Through RWIC meetings, WIFA has increased coordination with other state funding agencies as well as with technical assistance providers to bring the best possible financial options to Arizona’s small communities. In FY 2008, WIFA co-funded 12 CW and DW projects, such as: • • • City of Douglas with the North American Development Bank (Nadbank) City of Safford with U.S Rural Development (USDA RD) Gila Bend with the Community Development Block Grant (CDBG) In addition to working with the RWIC partners, WIFA continues to maintain a high level of coordination with the Arizona Department of Environmental Quality-Water Quality Division, increasing communication and information sharing by meeting on a quarterly basis and joining forces to better serve Arizona’s rural communities. As part of the coordination effort and outreach to small communities, the RWIC held a project meeting in Payson in June 2007 and another in St. David in November 2007. The RWIC also held two executive committee meetings in June 2007 and April 2008. These meetings included discussion on how to improve RWIC outreach, communication efforts and how to best meet the current needs of small communities. Page 14 The RWIC Website Message Board A message board for the RWIC website was created to increase communication efforts among committee members. The message board collects project information which is then stored in a data base, where co-funding efforts are tracked and reported. “I attended a session on the RWIC during a Arizona Small Utilities Association training Conference a few years ago. Our district was facing major replacement and upgrades to insure public health and safety and here was help. We had worked hard to budget for the work we had to do but still needed information and financing. “ “The different agencies and associations involved with the RWIC group were instrumental in facilitating the completion of over one million dollars in upgrades and improvements. We are now using their help for other systems and need them to keep up the great work.” Patricia Fitzgerald System Manager, Ponderosa Park DWID Page 15 What’s New • WIFA updated its website making it more accessible and easier to navigate. As a result a WIFA Project Priority List application can now be completed online. The option allows for applicants to update/change information on their application at any time. • Through the use of WIFA’s new loan and grants tracking system (LGTS). WIFA can now create loan documents, tract projects from concept to completion, provide timely disbursements and ensure quality control. • WIFA awarded the Yavapai-Apache Nation $12 million in loans for water projects in Yavapai County. • WIFA issued $238 million in water revenue bonds in April 2008. • WIFA traded its Chevrolet Suburban vehicle for a more cost effective and fuel efficient Toyota PRIUS. The Suburban averaged approximately 16 miles per gallon, while the Prius has averaged approximately 42 miles per gallon. • In FY 2008, WIFA provided a total of 37 loans. Almost twice as many as in FY 2007. Page 16 Looking Ahead • WIFA continues to identify processes that can be automated in support of Governor Janet Napolitano’s efficiency initiative. • WIFA has initiated, and will continue to improve, a new automated annual loan review process which will save time and improve customer service. • WIFA will soon produce an online project finance application, which will greatly reduce paper use, improve staff efficiency and improve convenience to our borrowers. • WIFA staff will be working on updating existing rules, policies and procedures to conform with recent statutory changes and to meet Arizona’s water and wastewater needs. • WIFA will be changing its evaluation process by integrating sustainability criteria to encourage fuel reduction, reduce pollution loads and increase the use of alternative energy. Page 17 Page 18 Statement of Financial Position Assets During FY 2008, assets increased due to a larger number of loans being originated. WIFA's Assets - $ 926.5M FY 07 2% 9% WIFA's Assets - $ 1.2B FY 08 2% 8% 16% 16% 74% 73% Cash & Investments Loans Cash & Investments Loans Reserves Receivables & Capital Assets Reserves Receivables & Capital Assets Liabilities WIFA’s liabilities increased from FY 2007 due to the issue of new bonds in FY 2008. WIFA's Liabilities - $ 594.8M FY 07 WIFA's Liabilities - $ 826.5M FY 08 4% 6% 94% Short Term Liabilities 96% Long Term Liabilities Short Term Liabilities Long Term Liabilities Net Assets WIFA’s net assets continue to grow; primarily the result of capital contributions and loan activities. WIFA's Net Assets - $ 331.7M FY 07 WIFA's Net Assets - $ 385.3M FY 08 17% 18% 82% Restricted Net Assets Unrestricted Net Assets 83% Restricted Net Assets Unrestricted Net Assets Page 19 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROGRAM REVENUES Interest Income Debt Management Fees TOTAL PROGRAM REVENUE FY07 $12,858,853 7,686,481 $20,545,334 FY08 $14,694,820 9,892,657 $24,587,477 PROGRAM EXPENSES Interest Expense Depreciation Administration & Set Asides Hardship Grant Expense Financial Assistance TTechnical Assistance TOTAL EXPENSES $27,674,977 7,818 3,090,719 37,058 0 819,898 $31,630,470 $26,578,875 0 4,284,082 75,354 0 516,420 $31,454,731 ($11,085,136) ($6,867,254) $1,579,386 15,671,403 $17,250,789 $1,991,818 10,034,896 $12,026,714 INCOME BEFORE CONTRIBUTIONS $6,165,653 $5,159,460 CONTRIBUTED CAPITAL - FEDERAL CONTRIBUTED CAPITAL - STATE CHANGE IN NET ASSETS $9,531,985 3,195,100 $18,892,738 $46,384,513 2,095,100 $53,639,073 $312,796,812 $331,689,550 $331,689,550 $385,328,623 NET INCOME NONPROGRAM REVENUES Adminstrative Grants Investments Earnings Total Nonprogram Revenues TOTAL NET ASSETS - Beginning of Year TOTAL NET ASSETS - End of year The financial statements for WIFA for the year ended June 30, 2008 have been audited by an independent certified public accounting firm, Henry & Horne, P.C. Copies of the complete audited financial statements are available at the WIFA website, www.azwifa.gov. Page 20 STATEMENT OF NET ASSETS THE WATER INFRASTRUCTURE FINANCE AUTHORITY OF ARIZONA STATEMENT OF NET ASSETS ASSETS Cash Investments Accrued Interest Receivable Capital Assets (net of depreciation) Debt Management Fees Receivable Loans Deferred Bond Issue Costs TOTAL ASSETS FY07 $147,499,162 80,895,835 8,702,811 0 3,723,729 682,374,856 3,300,533 $926,496,926 FY08 $195,621,994 97,100,544 10,283,905 0 5,001,451 899,221,106 4,566,212 $1,211,795,212 LIABILITIES AND NET ASSETS LIABILITIES Accrued Payroll Compensated Absences Interest Payable Bonds Payable Unamortized Bond Premiums Deferred Amount on Retired Bonds Loan Reserve TOTAL LIABILITIES 52,780 46,000 6,865,653 557,450,000 35,244,178 (7,480,204) 2,628,969 $594,807,376 3,272 65,036 8,943,764 770,260,000 51,799,488 (6,925,971) 2,321,000 $826,466,589 NET ASSETS Net assets invested in capital assets Restricted for capitalization grants Unrestricted TOTAL NET ASSETS 0 273,096,494 58,593,056 $331,689,550 0 321,576,107 63,752,516 $385,328,623 TOTAL LIABILITIES AND NET ASSETS $926,496,926 $1,211,795,212 Page 21 WIFA Board of Directors WIFA’s 12 member Board of Directors provides leadership in setting the Authority’s administrative policies and approving loans and grants for borrowers. WIFA’s Board of Directors offer expertise on environmental, financial, business, and governmental issues. Stephen A. Owens Chairman Ron Doba Municipalities >50,000 Mark Herberer Sanitary Districts from Counties <500,000 Cynthia Seelhammer Counties >500,000 Population Paul T. Gardner Water Systems >500 Customers Lisa Danka Arizona Dept of Commerce Karen Smith Arizona Dept of Water Resources William Garfield Water Systems <500 Customers Steve Olea Arizona Corporation Commission Alberta Tippeconnic Tribal Representative Mayor Stanley Gibson Municipalities <50,000 and Counties <500,000 Mark Swenson Office of State Treasurer Page 22 WIFA Staff WIFA’s staff has broad state and local government experience as well as private sector business and finance experience. WIFA’s staff is committed to providing exceptional service to Arizona’s communities. Judy Navarrete Executive Director Sandy Sutton Veronica Rivera Chief Financial Officer Communications Director Kim Marsh Angie Valenzuela Senior Loan Officer Senior Loan Officer Jon Bernreuter Bryan Christopher Environmental Supervisor Network Administrator Ruby Hernandez James Mañalac Administrative Secretary Systems Analyst Tahne Corcutt Don States Environmental Specialist Controller Angelica Romero Kari MacIsaac Business Manager Staff Accountant Yolanda Mendoza Julie Flores Assistant to the Executive Director Financial Analyst Page 23 Credits: Editor: Veronica Rivera Co-Editor: Sandy Sutton Other Contributions: James Mañalac, Yolanda Mendoza Technical Review: Judy Navarrete, Don States, Tahne Corcutt, Kim Marsh, Angie Valenzuela, Jon Bernreuter Maps: Jean Ann Rodine Water Infrastructure Finance Authority of Arizona-WIFA 1110 West Washington Street. Suite 290 Phoenix, AZ 85007 Phone: 602-364-1310 Fax: 602-364-1327 www.azwifa.gov Printed on recycled paper Page 24 Page 25