Water Infrastructure Finance Authority
2011 Annual Report
July 1, 2010 through June 30, 2011

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Water Infrastructure Finance Authority of Arizona
WIFA is an independent agency of the state of Arizona and was established to finance
construction, rehabilitation, and improvement of drinking water, wastewater, wastewater
reclamation, and other water quality facilities/projects.
WIFA operates as a “bond bank” and is able to issue water quality bonds on behalf of
communities for basic water and wastewater infrastructure. Through an active portfolio and
sound financial management, WIFA provides significant savings to borrowers by offering loans
with below market interest rates for one hundred percent of eligible project costs.
WIFA‟s principal means for providing low interest financial assistance include the Clean Water
Revolving Fund (for publicly-held wastewater treatment projects) and the Drinking Water
Revolving Fund (for both publicly and privately-held drinking water system projects). Both
funds were established by the Environmental Protection Agency and are funded by federal
capitalization grants, state matching funds, and WIFA bond proceeds.
In addition to loans, WIFA also offers a Technical Assistance (TA) program. The TA program
provides planning and design grants to eligible wastewater and drinking water systems. The
purpose of the TA program is to help prepare water and wastewater facilities for future
infrastructure project construction.

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Water Infrastructure Finance Authority of Arizona

2011 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…. ....................................................................3
C. Goal 3: Effectively and efficiently deliver financial and technical assistance .........5
D. Goal 4: Coordinate with other funding sources, technical assistance resources,
regulatory authorities, and private sector legal and financial counterparts…. ........9
II. American Recovery and Reinvestment Act of 2009 (ARRA)…. ................................10
III. Statement of Finances
A. Statement of Financial Position…. ........................................................................11
B. Statement of Revenues, Expenses, and Changes in Fund Net Assets… ................14
C. Statement of Net Assets .........................................................................................15
IV. WIFA Board of Directors…. .......................................................................................16
V. WIFA Staff...................................................................................................................17
VI. WIFA Loans and Grants FY 2011 Map……………………………………………...18

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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 2011, WIFA executed six Clean Water loans for a total of $70,050,290, and 12
Drinking Water loans for a total of $23,477,732. See Tables 1 and 2 below for project details.
Table 1: Executed Clean Water Financial Assistance Agreements (Loans) in SFY 2011
Project Name
Expansion of Wastewater System

Loan Recipient
Quartzsite, Town of

Loan Amount
$1,000,000.00

Willcox WWTP Renovation / Reconstruction

Willcox, City of

$1,000,000.00

Virginia Street & Penn Alley Sewer Replacement Project

Prescott, City of

$2,070,000.00

Sundog Filter Replacement and Denitrification

Prescott, City of

$1,635,870.00

Downtown WWTP Upgrade and Solar

Kingman, City of

$18,541,667.00

Airport WWTP Upgrades - 3.75 MGD

Prescott, City of

$45,802,753.00

Totals

6 Projects

$70,050,290.00

Table 2: Executed Drinking Water Financial Assistance Agreements (Loans) in SFY 2011
Project Name
Park Water Company Well Deepening

Loan Recipient
Park Water Company, Inc.

Loan Amount
$198,000.00

WWSE - Water Service Line Replacement / Water Main
Replacement
Transfer Water Service from Alpine Water Systems to Alpine
DWID
8" to 16" Water Line Replacement

Lake Havasu, City of

$11,400,000.00

Arsenic Removal Equipment for Well #1 & #5

Big Park Water Company

Small Water Mains Projects

Prescott, City of

System Acquisition and Upgrades

Tonto Hills DWID

Pump and Motor Replacement

Mirabell Water Company

Casa Grande West Arsenic Removal

Casa Grande West Water Company

System Consolidation

Show Low, City of

$3,800,000.00

Flagstaff Shallow Wells Project

Flagstaff, City of

$1,833,828.00

Valle Verde Water System Consolidation & Upgrades

Valle Verde Water Company

$1,278,238.00

Totals

12 Projects

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Alpine Domestic Water Improvement
District
Cave Creek, Town of

$1,367,292.00
$1,400,000.00
$415,000.00
$1,018,796.49
$497,000.00
$10,243.00
$259,335.00

$23,477,732.49

Of WIFA‟s SFY 2011 Clean Water loans, 100% of WIFA‟s financing ($70 million) was
provided to communities serving fewer than 50,000 people. $64.3 million of the total went to
communities that qualified as disadvantaged. Of the 2011 Drinking Water loans, nine out of a
total of 12 loans (75%) were provided to systems serving less than 10,000 people. In dollars, this
was $9.2 million out of a total of $23.5 million. $1.4 million of that amount assisted communities
that qualified as disadvantaged.
To further assist very small drinking water systems facing financial challenges, WIFA continues
to maintain a dedicated fund to provide loans to systems serving fewer than 3,300 people and
1,000 connections at an interest rate of 1%. More detail on WIFA‟s very small drinking water
system program is provided later in this section.
One of WIFA‟s primary objectives is to address facility non-compliance, which also ensures
protection of public health and water quality. In total for Drinking Water, $15 million out of $23
million was provided to maintain or achieve compliance. Of WIFA‟s Clean Water loans, five out
of six loans were provided to maintain compliance, and one to achieve compliance.
Marketing to Stimulate Demand:
WIFA continued to extend marketing and outreach efforts across Arizona by participating in the
Arizona Water Association Water Reuse Conference, Rural Water Infrastructure Committee
(RWIC) funding forums and project meetings, Arizona Water Association Annual Conference,
Rural Water Association of Arizona Annual Conference, 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 governmental entities and the prevailing prime-rate plus 2% for
non-governmental 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 SFY 2011 averaged 2.94% for governmental
entities and 3.52% for non-governmental entities, representing average discounts from the base
interest rates of 27% and 25% respectively.
WIFA also created a program that provides 1% interest loans to very small drinking water
systems. The program was implemented in SFY 2010 and stimulates demand for financial
assistance from these small systems. During this fiscal year, Alpine DWID utilized these funds.
See Table 3.
Table 3. Very Small Drinking Water Systems
Borrower
Loan Number Loan Amount
Alpine DWID
920203-11
$1,367292

Loan Closing Date
9/16/10

Number of System Users
282

Including Alpine DWID, WIFA estimates that $1,123,346 has been provided of the $2,000,000
designated for very small drinking water systems.
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Goal 2: Maintain the fiscal integrity of WIFA’s funds and assure continuous
enhancement for future generations
WIFA has maintained “AAA” credit ratings from Moody‟s Investors Service, Standard and
Poor‟s, and is currently preparing to request updated credit ratings. WIFA continues to maintain
the highest level of 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 and the citizens of Arizona.
During this fiscal year, WIFA adjusted the subsidy rate table (see Attachment 4, Subsidy Rate
Tables), set a flat rate of 1% for design loans, set a „floor‟ for interest rates (3.50% for
governmental and 4.00% for non-governmental) and established a new prepayment policy.
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.
Figure 1: Funds Invested

Millions of Dollars

$300
$250

$267

$200
$176
$150
$100

FY11

FY10

In addition to maintaining fiscal integrity, WIFA invests its monies to ensure its growth. Figure 2
below, compares SFY 2010 and SFY 2011 investments. WIFA‟s loan interest revenues and loan
fees increased due to a higher number of loans in repayment status.

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Figure 2: Fiscal Year Income
FY10

$25.0
$22.3

$23.1

FY11

Millions of Dollars

$20.0
$14.8

$15.0

$13.2
$11.7
$10.9

$10.0

$5.0

$0.0
Non-Program
Revenues

Loan Interest

Loan Fees

During SFY 2011, 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. The
presence of strong borrowers within the portfolio benefits all program participants.
Figure 3: SFY 2011 Funds Committed Applicant Ratings

46%
54%

0% (Category B)
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

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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 shows the decrease in applications received in SFY 2011 which was expected after the
increase created by the American Recovery and Reinvestment Act and the downturn in the
Arizona economy.
Table 4: Applications for Financial Assistance

Fiscal Year

CW
Apps

Amount Requested

DW
Apps

Amount Requested

2010

40

$192,818.013

82

$261,893,962

2011

21

$141,985,253

49

$111,073,964

Figures 4 and 5 depict the dollar amount of disbursements and the number of disbursements
approved for SFY 2010 and SFY 2011. The average number of days required by WIFA to
process a disbursement request in SFY 2011 was 5.7 business days.
Figure 4: Amounts Disbursed

$300
$275.7

Millions of Dollars

$250

$200

$150

$153.5

$100

$50

$-

FY10

FY11

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Figure 5: Number of Disbursements
450

400

407

358

350

300

FY10

FY11

WIFA continuously strives to improve the loan application process and to effectively deliver
financial assistance in a timely and convenient manner. Measuring from Board action (loan
resolution approval) to distribution of loan documents, WIFA averaged 1.6 weeks.
As shown in Figures 6 and 7, WIFA has been very successful reaching out and assisting small
communities.
Figure 6: Clean Water Assistance by Population Size

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Figure 7: Drinking Water Assistance by Population Size

Technical Assistance:
WIFA‟s Technical Assistance (TA) Program provides funding to drinking water and wastewater
facilities for three types of assistance.
Project Assistance - Planning and Design Assistance Grants – 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 privately-owned 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 this case, WIFA waives or reduces the matching fund requirement.
In SFY 2011, WIFA awarded three clean water project grants for a total of $100,000 (See Table
5 for details) and 13 drinking water grants for a total of $296,268 (See Table 6 for details).
Recipients have 18 months to draw the grant funds, so many projects are still in progress.
Staff Assistance (Drinking Water only) – WIFA provides funding for ADEQ‟s Capacity
Development Program. Through the use of third-party state-approved contractors, this program
provides a system evaluation and/or operations and maintenance package for public drinking
water systems serving 10,000 people or fewer, at no cost to the system owner.
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The Capacity Development 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. The system evaluation can identify future
infrastructure needs that the facility may pursue through WIFA‟s grant or loan programs.
Professional Assistance – WIFA provided funding for the annual water and wastewater
residential rate study in SFY 2011 for a total of $15,000, the Drinking Water Needs Survey for
$100,000, and a Sustainability Assessment for $100,000. The Arizona Department of Water
Resources‟ Sustainability Assessment was developed to interpret and evaluate water resource
vulnerability and sustainability in Arizona‟s communities. This effort is intended to improve
water planning and management decisions at the state, regional and local levels in order to
reduce water system vulnerability and support development of sustainable water supplies. The
report is in currently in draft form and will be finalized in January 2012.

Table 5: SFY 2011 Clean Water Project Technical Assistance Awards

Applicant Name
Alhambra Mobile Home Park &
Storage LLC
City of Surprise
Buckskin Sanitary District

Project Name
AMHP Wastewater Improvement District
Formation
Reclaimed Recharge Wells at South Water
Reclamation Facility
Buckskin Wastewater Master Plan Update
Total

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Amount
$30,360
$35,000
$34,640
$100,000

Table 6: Fiscal Year 2010 Drinking Water Project Technical Assistance Awards

Applicant Name

Project Name

Amount

Pineview Water Company Inc.

Scotts Pine Main Line Replacement

Mt. Tipton Water Company

Proposed Well Project
Old Concho Water Infrastructure Upgrades
Phase I

$15,606

Town of Clarkdale
Tonto Basin Water Company
Inc.
Mayer Domestic Water
Improvement District

Twin 5’s Main Replacement and Relocation

$35,000

Cactus Forest Arsenic Treatment Project

$23,280

Final Engineering for Fairmist Avenue

$35,000

Oak Creek Valley P.O.A.
Tierra Buena Water Company
Inc.
Apache Junction Water Utilities
Community Facilities District

Arsenic Removal Design

$15,000

Arsenic Removal Design

$27,100

SCADA Planning and Design

$35,000

Diamond Valley DWID

Infrastructure Improvements (Water Loss)

$15,600

Ray Water Company
Marana Domestic Water
Improvement District

Replacement Well Design

$30,300

Avra Water Co-op, Inc.

Energy Audit/Pumping System Assessment

Old Concho Water Users Corp.

$35,000

Leak Detection Study

$3,395

$6,987
Total

$19,000
$296,268

During SFY 2011 WIFA staff completed another update of WIFA‟s loan agreement documents,
developed a new contract packet for borrowers, and developed a Davis-Bacon inspection form
for post-ARRA projects.

Goal 4: Coordinate with other funding sources, technical assistance
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
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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
All DW and CW ARRA funds have been expended. As stated earlier, Arizona was one of the
first states in the country to expend all of its EPA ARRA funds. WIFA achieved every goal
ahead of schedule including:
 submitted EPA grant application to receive the EPA ARRA DW and CW Grant Award,
 developed and implemented the ARRA Supplemental Intended Use Plans,
 provided more than the minimum 50% of ARRA funds as forgivable principal, and
 allocated more than 20% of the ARRA project funs to „green‟ projects as required by
EPA.
WIFA has consistently been in the top 10 of the EPA HQ Outlay Report. In the report on
October 20, 2010, WIFA‟s CW ARRA Outlay was 84.14% and DW ARRA Outlay was 85.71%.
WIFA received several letters of commendation from James Oberstar, Chairman of the US
House of Representatives Transportation and Infrastructure Committee for its progress in
implementing ARRA CW. WIFA also received a commendation letter on November 24th from
EPA HQ to the Arizona Governor for implementing ARRA quickly.

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Section III. Statement of Finances
Statement of Financial Position
Assets
During FY 2011, total assets continued to increase.
FY 2011

FY 2010

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Liabilities
During FY 2011, WIFA‟s total liabilities increased.
FY 2011

FY 2010

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Net Assets
During FY 2011, WIFA‟s total net assets increased, however there was a decrease in unrestricted
net assets.
FY 2011

FY 2010

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STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
PROGRAM REVENUES
Interest Income
Debt Management Fees
TOTAL PROGRAM REVENUE

$
$
$

FY11
23,123,041
14,808,090
37,931,131

PROGRAM EXPENSE
Interest Expense
Depreciation
Administration & Set Asides
Hardship Grant Expense
ARRA Financial Assistance
Technical Assistance
TOTAL EXPENSES

$
$
$
$
$
$
$

39,621,958 $ 37,769,218
$
11,663,824 $ 11,817,857
$
10,459,525 $ 31,477,252
837,783 $ 1,042,826
62,583,090 $ 82,107,153

NET INCOME

$

(24,651,959) $ (46,511,958)

NONPROGRAM REVENUES
Administrative Grants
Investment Earnings
TOTAL NONPROGRAM REVENUES

$
$
$

INCOME BEFORE CONTRIBUTIONS

$

(12,960,447) $ (35,604,136)

CONTRIBUTED CAPITAL - FEDERAL
CONTRIBUTED CAPITAL - STATE
CHANGE IN NET ASSETS

$
$
$

27,768,159 $ 69,938,550
$
14,807,712 $ 34,334,414

TOTAL NET ASSETS - Beginning of Year
TOTAL NET ASSETS - End of Year

$
$

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5,103,782
6,587,730
11,691,512

436,040,077
450,847,789

FY10
$ 22,347,120
$ 13,248,075
$ 35,595,195

$ 4,840,688
$ 6,067,134
$ 10,907,822

$401,705,663
$436,040,077

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

$
$
$
$
$
$
$
$

LIABILITIES AND NET ASSETS
LIABILITIES
Accrued Payroll
Compensation Absences
Interest Payable
Bonds Payable
Loan Reserve
TOTAL LIABILITIES

$
11,014 $
10,942
$
67,520 $
84,946
$
11,392,837 $
10,223,578
$ 1,016,875,648 $ 909,601,507
$
2,545,200 $
2,411,934
$ 1,030,892,219 $ 922,332,907

NET ASSETS
Net Assets Invested in Capital Assets
Restricted for Capitalization Grants
Unrestricted
TOTAL NET ASSETS

$
$
$
$

396,790,962
54,056,827
450,847,789

$
$ 379,482,328
$
56,557,749
$ 436,040,077

TOTAL LIABILITIES AND NET ASSETS

$ 1,481,740,008

$1,358,372,984

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FY11
FY10
151,731,543 $
71,026,374
115,352,448 $ 105,256,690
11,859,190 $
12,761,761
$
6,977,320 $
6,194,552
1,190,869,136 $1,158,137,905
4,950,371 $
4,995,702
1,481,740,008 $1,358,372,984

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.
Henry Darwin, 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
Michael J. Lacey
Represents: Arizona Department of Water Resources
Steve Olea
Represents: Arizona Corporation Commission
Kevin Donnellan
Represents: Office of State Treasurer

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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
Chief Financial Officer

Stuart Peckham
Environmental Program Specialist

Veronica Rivera
Director of Communications

Arcelious Stephens
Environmental Program Specialist

Yolanda Mendoza
Business Manager

Julie Flores
Accounting Supervisor

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

Barbara Dull
Senior Loan Officer
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

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Section VI: WIFA Loans and Grants FY 2010 Map

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