WIFA 2010 Annual Report Water Infrastructure Finance Authority of Arizona Water Infrastructure Finance Authority of Arizona The Water Infrastructure Finance Authority of Arizona (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 projects. WIFA operates as a “bond bank” and has the authority 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 offers borrowers below market interest on loans for one hundred percent of eligible project costs. WIFA’s primary tools for providing low-interest loans include the Clean Water Revolving Fund created in 1987 by the Environmental Protection Agency (EPA) for public 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 protect public health. WIFA has funded 363 projects providing over $1.95 billion of investment in Arizona’s communities since 1992. WIFA received the 2009 Award for Sustainable Health Protection for Innovative and Effective use of SRF Financing Mechanisms from EPA. From EPA Pacific Southwest Region, WIFA received recognition for Outstanding Performance and Achievements in Managing the Clean Water and Drinking Water State Revolving Funds and the American Recovery and Reinvestment Act Funds of 2009. WIFA also received the 2009 Director’s Excellence Award from ADEQ’s Director Benjamin H. Grumbles for exemplary service and extraordinary contribution. Water Infrastructure Finance Authority of Arizona WIFA 2010 Annual Report Table of Contents I. Goal and Performance Measures A. Goal 1: Award WIFA’s resources in accordance with the needs of Arizona’s Citizens…. ...............................................................................................................1 B. Goal 2: Maintain the fiscal integrity of WIFA’s funds and assure continuous enhancement for future generations….....................................................................5 C. Goal 3: Effectively and efficiently deliver financial and technical assistance.........7 D. Goal 4: Coordinate with other funding sources, technical assistance resources, regulatory authorities, and private sector legal and financial counterparts…. ......13 II. American Recovery and Reinvestment Act 2009 (ARRA)…. ....................................13 III. Statement of Finances A. Statement of Financial Position…. ........................................................................15 B. Statement of Revenues, Expenses, and Changes in Fund Net Assets…................16 C. Statement of Net Assets .........................................................................................17 IV. WIFA Board of Directors…. .......................................................................................18 V. WIFA Staff...................................................................................................................19 VI. WIFA Loans and Grants FY 2010 Map……………………………………………...20 Section I. Goal and Performance Measures Goal 1: Award WIFA’s resources in accordance with the needs of Arizona’s Citizens WIFA continues to provide financial assistance to a diverse range of communities with various levels of infrastructure needs. WIFA balances a community’s environmental health and financial needs, while providing assistance to the most significant public health and water quality problems. During FY 2010, WIFA executed 29 CW loans, of which 13 were base program loans and 16 were ARRA program loans (see Table 1: Executed Clean Water Financial Assistance Agreements (Loans) in FY 2010). Table 1: Executed Clean Water Financial Assistance Agreements (Loans) in FY 2010 Loan Amount $12,000,000.00 ARRA Project Project Name Central Buckeye WWTP Upgrades and Expansion - Phase 2 Collection System Additions and WWTP Upgrade City of Coolidge 2 MGD Water Reclamation Facility City of Douglas, WWTP Compliance and Facility Improvements El Mirage Road to Olive Sanitary Sewer Extension Tertiary Treatment of South Plant and Engineering for System Expansion Wastewater Facility Expansion & Rehabilitation Loan Recipient Buckeye, Town of Downtown WWTP upgrade Kingman, City of Lake Havasu City Wastewater System Expansion PY 8 Palm Tree Stimulus Sewer Area project Lake Havasu, City of $87,734,728.00 Lake Havasu, City of $4,900,833.02 Energy Efficiency for Reclaimed Water Delivery Mesa, City of $254,844.00 Rehabilitate Old Sulfide Stations Mesa, City of $1,072,368.00 Wastewater Collection System Replacement Project Development Beardsley Water Reclamation Facility Upgrades Miami, Town of $1,600,000.00 Peoria, City of $4,545,000.00 Northern and 95th Avenues Trunk Sewer Repairs Section A Trunk Sewer Repairs B & C and Solar Upgrades Peoria, City of $1,359,950.19 √ Peoria, City of $4,021,623.00 Broadway Road Sewer Main Improvements, Segment 2B Small Diameter Sanitary Sewer Rehabilitation Phoenix, City of √ √ 3RPI09 ROMP Plant Interconnect Pima County PCCDWID Wastewater Pond and ADOT Stormwater Control Project North Prescott Regional Force Main Replacement Wastewater Treatment Plants Plan and Design Project Pine Creek Canyon Domestic Water Improvement District Prescott, City of $6,573,506.00 Prescott, City of $1,386,334.00 Camp Verde Sanitary District $1,902,000.00 Coolidge, City of $3,000,000.00 Douglas, City of $9,000,000.00 El Mirage, City of $788,230.00 Florence, Town of $1,300,000.00 Goodyear, City of $8,000,000.00 Phoenix, City of 1 √ √ √ √ $2,500,000.00 $18,250,000.00 $2,400,000.00 $10,002,383.00 $90,000.00 √ √ √ √ √ √ Table 1: Executed Clean Water Financial Assistance Agreements (Loans) in FY 2010 Project Name Manhole Rehabilitation Loan Recipient Show Low, City of Loan Amount $500,000.00 Expansion of Existing SBR Waste Water Facility Somerton, City of $2,274,268.00 Litchfield Road Reclaimed Water Booster Station (Project #20726) Tolleson WWTP Solids Handling Facilities Expansion Tolleson WWTP Solids Handling Facilities Expansion Beaver Dam WWTF Upgrades and Expansion Surprise, City of $1,500,000.00 Tolleson, City of $5,600,000.00 Tolleson, City of $6,000,000.00 Avenue B&C Colonia Sewer Collection System Virgin River Domestic Wastewater Improvement District Yuma County Improvement District Totals 29 Projects ARRA Project √ √ √ $343,000.00 $1,437,915.00 $200,336,982.21 WIFA executed 51 DW loans, of which 23 were base program loans and 28 were ARRA program loans (see Table 2: Executed Drinking Water Financial Assistance Agreements (Loans) in FY 2010). Table 2: Executed Drinking Water Financial Assistance Agreements (Loans) in FY 2010 Project Name 16-inch Waterline Pinnacle Peak Road/ 82nd to 77th Avenues (UT00278) Airport Zone North and South Loops Water Mains Arsenic Treatment System Loan Recipient Peoria, City of Blue Hills - Arsenic Remediation System Willhoit Water Company, Inc. Camino De Manana Waterline Project Marana, Town of $5,250,000.00 Citywide Automatic Meter Reading Installation Phoenix, City of $8,000,000.00 Congress DWID Capital Improvement $1,850,000.00 Cottonwood Water Line Replacement Congress Domestic Water Improvement District El Mirage, City of Dysart at Thunderbird Water Line Extension El Mirage, City of Evergreen 2 Well Site Construction Prescott, City of Appaloosa Water Company Loan Amount $1,780,000.00 $3,591,880.00 ARRA Project √ √ $200,000.00 $70,000.00 √ $298,587.23 √ $189,879.85 √ Valencia Water Company, Inc. $2,562,500.00 √ Existing Water Infrastructure Improvements Phase 1 Ft. Tuthill Well Tie-In Oro Valley, Town of $3,403,000.00 Flagstaff, City of $1,000,000.00 GCWUA Water System Improvements $1,600,000.00 Glendale Oasis Groundwater Treatment Plant Groom Creek Water Users Association Glendale, City of Gravity Flow System Project Pineview Water Company $142,000.00 √ Holiday Hills Improvement Project Holiday Hills Domestic Water Improvement District Tempe, City of $200,000.00 √ $14,045,799.00 √ J.G. Martinez Water Treatment Plant Upgrades - Gravity Plate Settlers / Gravity Thickeners Joseph City Utilities Reservoir Meter Replacement Program $6,340,000.00 Joseph City Utilities $520,000.00 Willow Valley Water Company, Inc. $435,000.00 2 √ √ Table 2: Executed Drinking Water Financial Assistance Agreements (Loans) in FY 2010 Project Name Metro DWID Nitrate Treatment Project Loan Recipient Metro Domestic Water Improvement District Mt. Lemmon Domestic Water Improvement District Picacho Peak Water Company North Toltec Water Distribution Improvements Eloy, City of Payson Cragin Surface Water Project Phase I Payson, Town of PCCDWID Water Supply Augmentation and Emergency Power PCCDWID Water Supply Augmentation and Emergency Power additional funding Purchase of Thim Water Systems Pine Creek Canyon Domestic Water Improvement District Pine Creek Canyon Domestic Water Improvement District Metro Domestic Water Improvement District Flagstaff, City of Middle Sabino 6 Red Gap Ranch - Water Rights Legal Fees & Aquifer Study Red Gap Ranch Pipeline Feasibilty Study Loan Amount $13,900,000.00 ARRA Project $1,204,075.48 $150,000.00 $4,000,000.00 √ $10,585,000.00 √ $625,000.00 √ $200,000.00 $3,950,000.00 $800,000.00 Flagstaff, City of $2,100,000.00 Redrill Old Downtown Well Mesa, City of $1,001,598.00 √ Replacement of Aging Water Lines in Downtown Mesa Rim Trail Surface Water Filtration Plant Replacement and Water Plan Security Fencing of Sweetwater & Hole In The Hill Well St. Johns Well #3 and Water Transmission Line Project Stimulus - Sinagua Well Connection & Well Building Expansion Storage Capacity Mesa, City of $1,430,000.00 √ $145,000.00 √ $82,113.00 √ Storage Tank / BDWC#2 Beaver Dam Water Company $104,283.00 Supplemental Water source Interconnect Construction SWC Arsenic Treatment Plant SoHi Domestic Water Improvement District Sahuarita Water Company, LLC $800,000.00 √ $4,694,523.00 √ Thunderbird Farms DWID Arsenic Removal and Additional Storage Project Thunderbird Meadows - Storage Tank Replacement Tubac Arsenic Removal Thunderbird Farms Domestic Water Improvement District Willhoit Water Company, Inc. $1,500,000.00 Arizona American Water Company $2,006,976.00 √ Water Main Replacement Hope VI Project Area Phoenix, City of $1,906,658.00 √ Waterlines, Station Upgrades, Well Rehab Peoria, City of $8,484,204.20 √ Well #4 Arsenic Treatment Cave Creek, Town of $235,000.00 Well , Pump and Spring Project Mt. Tipton Water Company, Inc. $140,000.00 Well Equipping and Upgrade Program Tucson, City of Well No.5 Arsenic Treatment System Western Canal Water Line Maricopa Domestic Water Improvement District Tempe, City of Yavapai Estates - Arsenic Remediation System Willhoit Water Company, Inc. Zone 39 Water Mains, Pump Station & Water Tank Prescott, City of Totals 51 Projects Rim Trail Domestic Water Improvement District Taylor, Town of St. Johns, City of Flagstaff, City of Dells Water Company 3 $1,105,000.00 $775,000.00 √ $30,000.00 $145,877.00 √ $2,750,000.00 $928,430.00 √ $4,084,503.00 √ $280,042.00 $8,998,096.00 $130,620,024.76 √ Of WIFA’s FY 2010 Clean Water loans, $161 million out of a total of $200.3 million was provided to communities serving fewer than 50,000 people. Of that amount, $6.9 million assisted communities serving less than 10,000 people. More than half of the total Clean Water assistance was provided to communities considered to be “hardship communities.” Of the 2010 Drinking Water loans, WIFA provided $18.6 million out of a total of $130.6 million to communities serving fewer than 10,000 people. Of that amount, $1.6 million assisted communities that WIFA considers to be disadvantaged. To further assist very small drinking water systems facing financial challenges, WIFA established a dedicated fund to provide loans to systems serving fewer than 3,300 people and 1,000 connections (further information on this program is provided in “Marketing to Stimulate Demand” below). One of WIFA’s primary objectives is to address facility non-compliance, which also ensures protection of public health and water quality. Approximately $10.2 million of WIFA’s 2010 Drinking Water loans were provided to 14 systems to achieve compliance. Seven of these loans funded arsenic treatment systems. Of WIFA’s Clean Water loans, $103.5 million (over half of the total assistance provided) went toward achieving facility compliance. WIFA’s largest loan went to Lake Havasu City ($87.7 million) to continue sewering the city and eliminating a large source of pollution to groundwater as well as Lake Havasu. Unless otherwise stated, this report combines base program loans and ARRA program loans as work completed during this reporting period. Section II of this report provides additional information on the ARRA funded projects. Marketing to Stimulate Demand: WIFA continued to extend its marketing and outreach efforts across Arizona by participating in the Arizona Water Association Water Reuse Conference, Rural Water Infrastructure Committee (RWIC) project meetings, Arizona Water Association Annual Conference, Rural Water Association of Arizona Annual Conference, Arizona Water Association Young Professionals Technical Lunch Series, North American Development Bank/Utility Management Institute training, Rural Community Assistance Corporation and WIFA’s Planning and Design Grant workshops. In determining the interest rate for a loan, WIFA provides a 5% to 30% discount on the taxexempt AAA Bond Rate for government entities and the prevailing prime-rate plus 2% for nongovernment 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 the cost-effectiveness of the project. The final interest rates for the loans closed in FY 2010 averaged 2.83% for governmental entities and 3.68% for non-governmental entities, representing an average discount from the base interest rates of 26% and 30% respectively. 4 WIFA also created a program that provides 1% interest loans to very small drinking water systems which is expected to stimulate demand for financial assistance from small systems. This program was implemented in FY 2010. Projects funded in FY 2010 under this program included: Borrower Mt. Lemmon DWID Wilhoit Water Company – Yavapai Estates Loan Number Loan Amount 920190-10 920186-10 $1,204,075.48 $280,042.00 Loan Closing Date 12/11/09 3/8/10 Number of System Users 282 95 Goal 2: Maintain the fiscal integrity of WIFA’s funds and assure continuous enhancement for future generations In FY 2009, WIFA again was awarded “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 the most sought after. These ratings reduce the cost of borrowing from investors when WIFA issues bonds. This also allows for WIFA to establish its loan rates as low as possible, thereby passing on the savings to its borrowers. An essential 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 2010, WIFA’s below-market interest rates saved Arizona’s communities millions of dollars over the term of their loans. Figure 1: FY 2009 & 2010 Funds Invested $200 $190 $180 $183 $176 Millions of Dollars $170 $160 $150 $140 $130 $120 $110 $100 FY10 FY09 5 The dollars invested are primarily used to originate loans to WIFA borrowers and provide additional security to WIFA’s bond portfolio. Additionally, interest generated from the invested funds helps to subsidize WIFA borrower interest rates (see Figure 1 above). In addition to maintaining fiscal integrity, WIFA invests its monies to ensure its growth stays on pace with inflation. Figure 2 compares FY 2009 and FY 2010 investments: • Additional investment income led to a small increase 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: FY 2009 & 2010 Income by Fiscal Year FY09 $25.0 $22.30 FY10 $20.00 Millions of Dollars $20.0 $15.0 $12.60 $10.60 $13.20 $10.90 $10.0 $5.0 $Non-Program Revenues Loan Interest Loan Fees During FY 2010, 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 32% of funds committed through loans in FY 2010 were to borrowers with a credit rating of ‘A’ or better. The presence of strong borrowers within the portfolio benefits all program participants. 6 Figure 3: FY 2009 Funds Committed Applicant Ratings 32% 33% 35% 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 WIFA performs on-site observations throughout the construction period. The determination of when a site observation is required is set forth in the loan documents. When a disbursement request is received and it is determined a site observation is required, one is done prior to the release of funds. Site observations are correlated to disbursement requests so that the site is observed prior to the release of funds. WIFA also performs an annual loan review of all active loans. Goal 3: Effectively and efficiently deliver financial and technical assistance Financial Assistance: Table 4 depicts the huge increase in applications received in FY 2009 as a result of the enactment of the Recovery Act. WIFA has seen FY 2010 return to a more normal flow of applications. Table 4: Applications for Financial Assistance Fiscal Year CW Apps Amount Requested DW Apps Amount Requested 2009 126 $556,906,184 219 $656,307,481 2010 40 $192,818.013 82 $261,893,962 7 Figures 4 and 5 demonstrate the dollar amount of disbursements and the number of disbursements approved for FY 2009 and FY 2010. The median number of days required by WIFA to process a disbursement request in FY 2010 was 5.4 business days. Figure 4: FY 2009 & 2010 Amount Disbursed $300 $275.72 Millions of Dollars $250 $200 $156.91 $150 $100 $50 $- FY09 FY10 WIFA continuously strives to improve the loan application process and to efficiently deliver financial assistance in a timely and convenient manner. Measuring from Board action (loan resolution approval) to distribution of loan documents, WIFA averaged 3.2 weeks. Figure 5: FY 2009 & 2010 Number of Disbursements 450 407 400 350 300 247 250 200 150 100 50 0 FY09 FY10 8 As seen in Figures 6 and 7, WIFA continues to assist small communities and strives to help them obtain the best possible funding package available. Figure 6: FY 2009 & 2010 Clean Water Assistance by Population Size 100% 90% 13.8% 33.3% 3.4% 25.0% 55.2% 80% 70% 60% 50% Less than 3,500 3,500 to 9,999 10,000 to 99,999 100,000 and above 40% 30% 41.7% 20% 27.6% 10% 0.0% 0% FY09 FY10 Figure 7: FY 2009 & 2010 Drinking Water Assistance by Population Size 100% 12.5% 15.7% 90% 80% 70% 25.5% 50.0% 60% 9.8% 50% 40% 12.5% 29.4% 30% 20% 10% 12.5% 12.5% 19.6% 0% FY09 FY10 9 Less than 501 501 to 3,300 3,301 to 10,000 10,001 to 100,000 100,001 and above Technical Assistance WIFA’s Technical Assistance (TA) Program provides funding to drinking water and wastewater facilities for three types of assistance. (See Table 5 for TA budget.) Project Technical Assistance – WIFA awards grants to individual drinking water and wastewater systems for pre-design and design projects. The purpose of these grants is to enhance readiness to proceed with project construction in circumstances where resources are otherwise limited or lacking. For wastewater projects, project technical assistance grants may be awarded to local governments and districts. Grants for drinking water projects are available to privatelyowned companies in addition to districts and local governments. The cap on individual grant awards is $35,000. Recipients are required to contribute a local match, unless WIFA determines the project qualifies as “green” in accordance with EPA guidance. In 2010, WIFA awarded 12 Clean Water project grants for a total of $290,000 (See Table 6 for details) and 25 Drinking Water grants for a total of $661,820 (See Table 7 for details). These amounts are less than what was stated in the Intended Use Plan, because a few recipients chose not to accept their grant award. Recipients have 18 months to draw the grant funds, so many projects are still in progress. Operational Technical Assistance (Drinking Water only) – WIFA provides funding for the ADEQ’s Capacity Development Program. This program has been valuable for small drinking water systems, which may not need funding for a particular design project but are instead in need of technical, managerial, and financial capacity development. Through the use of third-party state-approved contractors, the Capacity Development Program can provide a system evaluation, operations and maintenance package, or energy audit for public drinking water systems serving 10,000 people or fewer, at no cost to the system owner. The system evaluation can identify future infrastructure needs that the facility may pursue through WIFA’s grant or loan programs. In 2010, the Capacity Development Program funded system evaluations and operations and maintenance packages for a total of 40 drinking water systems. Further details can be found in ADEQ’s Set-Aside Report provided to EPA. Policy Technical Assistance –WIFA provided funding for the annual water and wastewater residential rate study again in 2010 for a total of $15,000. 10 Table 5: FY 2010 Funding by Assistance Type Project Technical Assistance Operational Technical Assistance Policy Technical Assistance Clean Water Drinking Water $290,000 $661,820 -- $300,000 $7,500 $7,500 Table 6: Fiscal Year 2010 Clean Water Project Technical Assistance Awards Note: All projects are non-ARRA. Grant Recipient Queen Creek, Town of Project Name City of Prescott Bio-Retention/Drywell Systems Town of Queen Creek Reuse & Recharge Line Somerton, City of Somerton Biodegeneration Facility $35,000.00 Chino Valley, Town of Center Street Sewer Project $20,000.00 Pinal County Housing Division $23,300.00 Payson, Town of Eleven Mile Corner Wastewater Plant Town of Miami Wastewater System PER & ER Development Source Water Protection Plan and Wastewater Needs Assessment Mogollon DWID Pump Station & Highway Crossing Engineer/Design Wastewater Treatment Energy Reduction Study Green Valley Park Bank Stabilization and Stormwater Study Adonis Mobile Home Association District Formation $10,000.00 Alpine Sanitary District Alpine Wetlands and Wildlife Habitat Totals 12 Projects Prescott, City of Miami, Town of Tonto Village Domestic Water Improvement District Mogollon Domestic Wastewater Improvement District Patagonia, Town of 11 Grant Amount $34,500.00 $35,000.00 $26,700.00 $10,500.00 $10,000.00 $15,000.00 $35,000.00 $35,000.00 $290,000.00 Table 7: Fiscal Year 2010 Drinking Water Project Technical Assistance Awards Note: $500,000 of ARRA funds are committed to these projects. Grant Recipient Humboldt Water System, Inc. Lakewood Water Company Water Utility of Northern Scottsdale Project Name Humboldt Water System Infrastructure Updates and Renewable Energy Integration Lakewood Water System Upgrades Design Grant Amount $34,820.00 $21,958.00 System & Power Optimization Water Distribution System Renewal Plan $35,000.00 $23,000.00 New Saddleback Vista DWID Fluoride Removal Engineering Report Preliminary Engineering Study of the Existing Distribution System Arsenic and Uranium Treatment System Project Orange Grove Water Co. Orange Grove Water Co. $35,000.00 Pomerane Domestic Water Improvement District Pomerene Energy Efficiency Program Energy Conservation Upgrades for Booster Pumps Energy Audit of Electrical system for operation purposes Distribution System Replacement Project Antelope Run Water - Consolidation and Upgrades $31,000.00 $35,000.00 Clear Springs Utility Company First Phase of Deep Well Project CHCID Improvements and UpGrades Clear Springs Utility Consolidation and Upgrades Dateland Public Service Co. Inc. Overall Capacity Building $23,000.00 Hacienda Acres Water System $35,000.00 Verde Lee Water Co Water Master Plan ADEQ Emergency Requirements and Photovoltaic Panel Installation Parker Springs Water Company Technical Assistance Project Application Valle Verde Water - System Consolidation & Upgrades Backup Water Source/ Ehrenberg Water Department Drinking Water Arsenic Treatment Design and Construction Southside Distribution System Pressure Augmentation Arsenic Treatment Preliminary Engineering Totals 25 Projects Willow Valley Water Co. Cienega Water Company Mt. Lemmon Water District Village of Orangewood Mobile Home Park Why Utilities Company Inc. Antelope Peak DWID Antelope Run Water Company Bellemont Water Company Chandler Heights Citrus Irrigation District McNeal Water Company Parker Springs Water Company Valle Verde Water Company Ehrenberg Improvement Association Casa Grande West Water Company Maricopa Domestic Water Improvement District 12 $35,000.00 $32,000.00 $18,225.00 $35,000.00 $23,000.00 $23,042.00 $35,000.00 $24,225.00 $23,000.00 $15,000.00 $15,000.00 $35,000.00 $5,150.00 $31,000.00 $23,400.00 $15,000.00 $661,820.00 Goal 4: Coordinate with other funding sources, technical resources, regulatory authorities, and private sector legal and financial counterparts WIFA continues to provide outreach to small rural communities by heading the Rural Water Infrastructure Committee (RWIC), an informal partnership that includes several federal and state funding agencies and technical assistance providers. Through WIFA’s leadership, the RWIC has increased its visibility as an organization providing assistance and guidance to drinking water and wastewater systems throughout the state. The RWIC held an executive committee meeting in January 2010. The most recent example of collaboration through RWIC is a project in the City of St. Johns. The project consists of drilling a new well to supplement two existing wells. A new water transmission line will then be installed from the new well to existing storage tanks. This project is being co-funded by USDA-Rural Development and will increase drinking water supply to the area. Through the RWIC, the Rural Community Assistance Corporation offered two one-day trainings for financial managers on the topic of “rate structure” and Board training for systems managers in Prescott Valley and Casa Grande. For a second consecutive year the North American Development Bank/Utility Management Institute hosted a two-and half day training in southern Arizona. The training focused on functions and best practices of a successful utility. In addition to working with the RWIC partners, WIFA continues to maintain a high level of coordination with the Arizona Department of Environmental Quality increasing communication and information sharing by meeting on a quarterly basis and joining forces to better serve Arizona’s rural communities. Section II. American Recovery and Reinvestment Act of 2009 WIFA staff started preliminary planning for ARRA in early November 2008 and the Act was signed into law on February 17, 2009. Below is a timeline on the progress of WIFA’s ARRA program through FY 2009: • • • • • • March 3 - Draft ARRA Grant applications with attachments sent to EPA Region 9 March 6 - Response deadline for ARRA Project Priority List (PPL) Applications March 16 -Draft ARRA Intended Use Plan distributed and posted on the WIFA website March 16 -WIFA ARRA CW and DW PPLs sent to Governor’s Office March 18 -WIFA Board of Directors approved ARRA Policy 4.009 and reviewed the Draft ARRA Supplemental IUPs including Draft PPLs. April 13 - Public Meeting to receive comments on ARRA IUPs 13 • • • • • • April 15 - WIFA Board of Directors approved both DW and CW ARRA IUPs (including ARRA PPL), staff presented draft ARRA Loan Document Exhibit, ARRA 1511 Project Certifications, and discussed previously approved loan resolutions that may qualify for ARRA. April 19 - EPA Region 9 awards ARRA Capitalization Grants May 27 - WIFA Board Meeting – Board approved eight CW ARRA Loan Resolutions (Binding Commitments), and 20 DW ARRA Loan Resolutions June 24 - WIFA Board Meeting - Board approved four CW ARRA Loan Resolutions and 10 DW ARRA Loan Resolutions June 22 – ARRA TA IUP Public Meeting June 30 – EPA Region 9 approved of the ARRA TA 2010 Work Plan (IUP) Applicants were required to certify the project would retain or create jobs, to certify compliance with Fair Wage (Davis-Bacon) and American Use requirements, and to certify project milestones including construction start dates. WIFA and EPA conducted two special training sessions for ARRA recipients. The first training was conducted by the Office of the Inspector General and focused on fraud and abuse prevention. This training was held in Phoenix, Flagstaff and Tucson. The second training was conducted by Region 9 and focused on all ARRA reporting requirements, including the Buy American provision and the Davis-Bacon Act. Two loans were closed in FY 2009 with ARRA funding and the remaining 44 ARRA loans were executed in FY 2010. As of October 18, 2010, WIFA has disbursed approximately 85% of its ARRA funds. 14 Section III. Statement of Finances Statement of Financial Position Assets During FY 2010, total assets increased as a result of the Recovery Act funding. FY 2010 FY 2009 WIFA's Assets - $ 1.2B FY09 WIFA's Assets - $ 1.4B FY10 0% 1% 1% 0% 13% 86% 15% 84% Cash & Investments Loans Cash & Investments Loans Deferred Bond Costs Receivables & Capital Assets Reserve Receivables & Capital Assets Liabilities During FY 2010, WIFA’s liabilities increased due to additional bond sales. FY 2010 FY 2009 WIFA's Liabilities - $ 922.3M FY10 WIFA's Liabilities - $ 796.5M FY09 5% 1% 95% Short Term Liabilities 99% Long Term Liabilities Short Term Liabilities Long Term Liabilities Net Assets WIFA’s net assets had some growth, primarily the result of capital contributions and loan activities. FY 2010 FY 2009 WIFA's Net Assets - $ 401.7M FY09 WIFA's Net Assets - $ 436M FY10 15% 13% 85% 87% Restricted Net Assets Unrestricted Net Assets Restricted Net Assets 15 Unrestricted Net Assets STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROGRAM REVENUES Interest Income Debt Management Fees TOTAL PROGRAM REVENUE $ $ $ FY10 FY09 22,347,120 $ 20,067,050 13,248,075 $ 12,689,699 35,595,195 $ 32,756,749 PROGRAM EXPENSE Interest Expense Depreciation Administration & Set Asides Hardship Grant Expense ARRA Financial Assistance Technical Assistance TOTAL EXPENSES $ $ $ $ $ $ $ 37,769,218 11,817,857 31,477,252 1,042,826 82,107,153 NET INCOME $ (46,511,958) $ (12,297,822) NONPROGRAM REVENUES Administrative Grants Investment Earnings TOTAL NONPROGRAM REVENUES $ $ $ 4,840,688 $ 3,104,125 6,067,134 $ 7,563,645 10,907,822 $ 10,667,770 INCOME BEFORE CONTRIBUTIONS $ CONTRIBUTED CAPITAL - FEDERAL CONTRIBUTED CAPITAL - STATE CHANGE IN NET ASSETS $ $ $ 69,938,550 $ 19,465,363 $ 34,334,414 $ 17,835,311 TOTAL NET ASSETS - Beginning of Year TOTAL NET ASSETS - End of Year $ $ 401,705,663 $ 383,870,352 436,040,077 $ 401,705,663 16 $ 34,097,678 $ $ 9,428,393 $ 29,248 $ 887,248 $ 612,004 $ 45,054,571 (35,604,136) $ (1,630,052) 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 FY10 $ 71,026,374 $ 105,256,690 $ 12,761,761 $ $ 6,194,552 $ 1,158,137,905 $ 4,995,702 $ 1,358,372,984 FY09 $ 85,989,140 $ 97,118,345 $ 12,444,271 $ $ 5,790,963 $ 992,641,348 $ 4,253,609 $ 1,198,237,676 LIABILITIES AND NET ASSETS LIABILITIES Accrued Payroll Compensation Absences Interest Payable Bonds Payable Unamortized Bond Premiums Deferred Amount on Retired Bonds Loan Reserve TOTAL LIABILITIES $ $ $ $ $ $ $ $ 10,942 84,946 10,223,578 857,910,000 58,007,693 (6,316,186) 2,411,934 922,332,907 $ $ $ $ $ $ $ $ 7,040 65,090 9,052,313 742,840,000 48,603,062 (6,371,739) 2,336,247 796,532,013 NET ASSETS Net Assets Invested in Capital Assets Restricted for Capitalization Grants Unrestricted TOTAL NET ASSETS $ $ $ $ 379,482,328 56,557,749 436,040,077 $ $ $ $ 341,021,030 60,684,633 401,705,663 TOTAL LIABILITIES AND NET ASSETS $ 1,358,372,984 17 $ 1,198,237,676 Section IV: WIFA Board of Directors WIFA’s 12 member Board of Directors provides leadership in setting the Authority’s administrative policies and approving loans and other assistance for borrowers. WIFA’s Board of Directors offer expertise on environmental, financial, business, and governmental issues. Benjamin H. Grumbles, Chairman Represents: Arizona Department of Environmental Quality Paul T. Gardner, Vice Chairman Represents: Water Systems which serve more than 500 customers Ron Doba Represents: Municipalities of more than 50,000 residents Mayor Stanley Gibson Represents: Municipalities with population less than 50,000 and counties with population less than 500,000 Mark Heberer Represents: Sanitary Districts from counties less than 500,000 population Vacant Represents: Counties of more than 500,000 population William Garfield Represents: Water systems which serve less than 500 customers. Alberta Tippeconnic Represents: Tribes Tiffany Frechette Represents: Arizona Department of Commerce Karen Smith Represents: Arizona Department of Water Resources Steve Olea Represents: Arizona Corporation Commission Mark Swenson Represents: Office of State Treasurer 18 Section V: 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. Sandra Sutton Interim Executive Director Don States Controller Sara Konrad Technical Program Supervisor Trish Incognito Interim Chief Financial Officer Julie Flores Accounting Supervisor Veronica Rivera Director of Communications Arcelious Stephens Environmental Program Specialist Yolanda Mendoza Business Manager Stuart Peckham Environmental Program Specialist Brenda Guerra Receptionist Angelica Romero Accountant Angie Valenzuela Senior Loan Officer Rebecca Gomez Accountant Ruby Hernandez Loan Specialist James Manalac Database Administrator Melanie Ford Technical Program Supervisor Bryan Christopher Network Administrator 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 19 Section VI: WIFA Loans and Grants FY 2010 Map