OUR VISION To guide our resources to communi es with the greatest need to maintain and enhance Arizona’s quality of life. OUR MISSION To maintain and improve water quality in Arizona by providing financial and technical assistance for basic water infrastructure. OUR COMMITMENT To ensure that we can con nue to carry out our mission, WIFA manages each of the State Revolving Funds in a manner that fosters con nued long‐term growth of program assets and promotes pla orm stability. This strategy provides long‐term viability to meet Arizona’s water financing needs. 2 WIFA Board (12 members) Execu ve Director Administra ve Services Financial Services/Opera ons Creation and Purpose The Arizona Legislature established the Water Infrastructure Finance Authority of Arizona (WIFA) in 1992. WIFA, an independent agency of the state of Arizona, works to maintain and improve water quality in the state by financing the construction, rehabilitation and improvement of drinking water and wastewater facilities. Maintaining water quality in Arizona requires communities to make large investments in drinking water and wastewater infrastructure. State revolving funds are the primary tools for helping communities meet their continuing and significant water infrastructure needs. WIFA maintains Arizona’s revolving loan fund programs, capitalized by the Environmental Protection Agency (EPA), to provide low cost financing for water quality infrastructure projects. Fiscal/Loan Servicing Cash Flow WIFA operates as a “bond bank” and is able to issue water quality bonds on behalf of communities for 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. WIFA’s principal means for providing low interest financial assistance include the Clean Water Revolving Fund (for publicly-held wastewater treatment facilities) and the Drinking Water Revolving Fund (for both publicly and privately-held drinking water systems). Both funds were established by the EPA 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. 3 Sustainable Infrastructure The effective management of water infrastructure is one of the main challenges faced by water systems across the nation and in Arizona. Sustainable infrastructure and systems are essential to ensuring the environmental and economic sustainability of communities. The goal can be achieved through strong infrastructure planning and management practices. To help communities in Arizona, WIFA finances design, improvement, construction and acquisition for wastewater and drinking water projects. A grant program is available for planning and design. WIFA’s loan program, where most funding is directed, can assist with both the design and construction phases. A wide variety of drinking water and wastewater projects can be financed through WIFA (see Example projects, upper right). Example projects include storage tanks, meters, wells and booster pumps, arsenic treatment systems, distribution line rehab, well drilling, solar, sewer rehabilitation, wastewater plant upgrades, and upgrades for reclaimed water, sewer rehab and replacement. Strength of WIFA’s Loan Portfolio $300 $301 $267 Millions of Dollars $250 $200 $150 $100 FY11 FY12 Figure 1: Funds Invested. Dollars invested are primarily used to originate loans to WIFA borrowers and provide security to WIFA’s bond por olio. Interest generated from the invested funds helps subsidize WIFA borrower rates. WIFA maintained “AAA” credit ratings (the highest level of ratings) from Moody’s Investors Service, Standard and Poor’s, and Fitch. The ratings are based on:  Program structure that provides significant over-collateralization to the bonds  Strong credit quality of the local borrowers  Loan portfolio and investments (Figure 1) with the ability to withstand substantial losses to revenue  Large size and diversity of loan portfolio  Strong management practices and policies These ratings reduce WIFA’s cost of borrowing from investors when WIFA issues bonds. In turn, this allows WIFA to pass on the benefit to its borrowers and the citizens of Arizona in the form of low interest loans. WIFA is able to maintain a diverse portfolio of borrowers by balancing the needs of low-credit borrowers with high-credit borrowers (Figure 2). The presence of strongly rated borrowers within the portfolio benefits all program participants. Figure 2: Pledged Loan Por olio by Ra ng Category. Total Ac ve Pledged Loans = 177 Total Principal Outstanding = $1,195,111,375 Another indicator of WIFA’s responsible fiscal fund management is the annual audit performed by Henry & Horne, LLP (see WIFA’s 2012 Audited Financial Statements, provided under separate cover and also available on WIFA’s website www.azwifa.gov). 4 50 45 Financing Water & Wastewater Projects 40 35 30 25 20 Highlights: 15  300 WIFA provides grants and below-market interest rate loans for water and wastewater infrastructure improvements to ensure safe, reliable drinking water and proper wastewater treatment.  WIFA is making a difference in Arizona. Over $1.8 billion has been invested in the state since WIFA’s inception in 1992.  WIFA has funded more than 350 projects across the state, which has resulted in the creation of thousands of jobs. 250 In 2012... 10 5 0 Number of Loans 1999 21 2000 15 2001 23 2002 29 2003 28 2004 13 2005 18 2006 21 2007 19 2008 37 2009 ARRA 2010 20 46 35 2011 18 2012 16 Figure 3: Number of Loan Origina ons by FY. 350  200 150  100 50  0 1999 Loans (in million $) 13.4 2000 36 2001 65.5 2002 120 2003 147 2004 39 2005 2006 2007 2008 2009 2010 2011 164 114.5 201 303.3 161 330.9 93.5 2012 37.2  Figure 4: Amount of Loan Origina ons by FY.   $160 $153.5 $140 Millions of Dollars $120  $100 $80 $68.8 $60  $40 $20 $- FY11 (358 disbursements) FY12 (252 disbursements) Figure 5: Dollar Amount and Number of Disbursements Approved for FY 2011 & 2012. Note that in FY2011 WIFA completed disbursement of all American Recovery and Reinvestment Act funds and is now in the process of closing the grants. 100%  Approved 16 new loans and provided more than $37 million in financial assistance to cities, towns, districts and private water companies (Figures 3 & 4) Maintained “AAA” credit ratings (the highest level of ratings) due to demonstrated commitment to responsible fiscal fund management Financed three projects for disadvantaged communities who received $2,550,000 in forgivable principal Funded five sustainable (“green”) construction projects focused on energy efficiency (nearly $4 million) Co-financed eight projects with contributions from other agencies and local entities Processed loans, on average, in 1.45 weeks - from Board action (loan resolution approval) to distribution of loan documents Processed nearly $70 million in disbursements (Figure 5) and administered disbursement requests, on average, in six business days Provided $12 million in funding to maintain or achieve compliance, including a loan to achieve compliance with arsenic water quality standards Reached out and assisted small communities - 100% of clean water loans for wastewater projects ($6.7 million) were provided to communities serving fewer than 50,000 people (Figure 6). - 79% or 11 of the 14 drinking water loans ($8.5 million of the $30.5 million total) were provided to systems serving less than 10,000 people (Figure 7). 0.0% 100% 90% 33.3% 80% 90% 50.0% 80% 42.9% 70% 70% 60% 60% 33.3% 0.0% 50% 40% 7.1% 25.0% Less than 3,500 3,500 to 10,000 66.7% 30% 10,001 to 100,000 50.0% 100,001 and above 50% 40% 16.7% 28.6% 30% 20% 20% 10% 10% Less than 501 501 to 3,300 3,301 to 10,000 10,001 to 100,000 100,001 and above 7.1% 25.0% 0% 0.0% FY11 0.0% FY12 Figure 6: Clean Water Assistance by Popula on. 0% 14.3% 0.0% FY11 FY12 Figure 7: Drinking Water Assistance by Popula on. 5 Loans Executed in FY 2012 Borrower Clarkdale, Town of Somerton, City of Maricopa Mountain Domestic Water Improvement District Tucson, City of Oak Creek Water Co., No. 1 Eloy, City of Pinetop Water Community Facilities District Highland Pines Domestic Water Improvement District Winslow, City of Eagar, Town of Parker Springs Water Company Tucson, City of Somerton, City of Gila Bend, Town of Cerbat Water Company Orange Grove Water Company Total Clean Water Total Drinking Water Total DW & CW Project Title Loan Amount Executed in FY 12 Broadway Water Reclamation Facility 208 kW Solar - Wastewater Treatment Facility Well #1 Treatment Facility SAVSARP Reservoir, Booster, and Interconnect Pipeline Oak Creek Water Infrastructure Houser/Toltec Waterline Improvements System Automation Water Main Replacement Project – Continued Replacement Well # 7 Kennedy Well Purchase Replacement Well, Storage and Water Line Renovation SAVSARP Collector Pipelines 272 kW Solar - Water Treatment Facility Solar and R/O Facility Improvements Well Purchase, Repairs to Well Pump, Backup Well Emergency Generator for Backup Well Table 1: Executed Clean Water and Drinking Water Financial Assistance Agreements (loans) in FY 2012. Green projects Green Project Reserve WIFA reserves a portion of the EPA capitalization grant for sustainable construction efforts such as water efficiency, energy efficiency, green stormwater infrastructure or other environmentally innovative activities. WIFA offers a financial incentive for projects, or a portion of a project, that qualifies as green according to EPA guidelines. $5,500,000 $1,187,080 $724,110 $16,000,000 $440,000 $2,000,000 $100,000 $600,000 $1,583,750 $350,000 $271,000 $4,000,000 $2,046,854 $2,050,000 $332,698 $30,000 $6,687,080 $30,528,412 $37,215,492 6 Grants Awarded in FY 2012 Grantee Bisbee, City of Wickenburg, Town of Yuma County El Mirage, City of Pinal Sanitary Water District Country Home MHP Whetstone DWID Show Low, City of Douglas, City of Safford, City of Sunrise Water Company Park Water Company Flagstaff, City of Jeddito Community Water System Snowflake, Town of Kachina Village DWID Valley Pioneers Water Company Total Clean Water Total Drinking Water Total CW & DW Project Sewer Lateral Mapping and Evaluation Project Wastewater Treatment Plant Solar Project Gila Acres District Formation and Septic to Sewer PER Dewatering Efficiency Improvements Special Assessment Process for Septic to Sewer Planning Interconnect to Buckeye for Nitrate Compliance PER for Infrastructure Improvements Lake Surface Water Treatment Plant Planning Project Water System Mapping Morris Wells Solar Energy Project Arsenic Remediation Well #2 Infrastructure Improvements Planning and Design Energy Audit of Water System Grant Award $35,000 $35,000 $20,300 $21,870 $34,980 $21,000 $21,600 $30,000 $17,250 $35,000 $22,409 $27,741 $35,000 Goldwater Loop Area Engineering Infrastructure and Energy Management Master Plan Energy Audit of Drinking Water System $34,800 2012 Water Master Plan Update $35,000 $34,999 $35,000 $147,150 $350,000 $497,150 Table 2: Planning and Design Assistance Grants Awarded in FY 2012. WIFA awarded five clean water grants for a total of $147,150 and 12 drinking water grants for a total of $349,799. Green projects Led by WIFA, the Rural Water Infrastructure Committee (RWIC) is an informal partnership of various federal and state agencies who provide loans, grants and technical assistance to Arizona’s rural communities. RWIC serves as a “One-Stop Funding Source” for rural communities with a population of less than 10,000. RWIC is working towards developing new ways to coordinate in assisting Arizona’s small rural communities. RWIC core members include:  WIFA One‐Stop Shopping in Arizona  USDA Rural Development (USDA-RD)  North American Development Bank (NADBank) ‐ A resource for applicants to locate federal, state  Border Environment Cooperation Commission (BECC) and local financial assistance programs.  Rural Water Association of Arizona (RWAA) ‐ Affordable funding solu ons and technical  Rural Community Assistance Corporation (RCAC) RWIC held the following meetings and training opportunities in FY 2012: assistance to small, rural communi es throughout  Rural Water Association of Arizona Conference, September 2011 Arizona.  RWIC Funding Forum, November 2012  Rural Water Association of Arizona Conference, March 2012 7 WIFA provides funds for both rural and urban communi es, and has financed projects all over the state. In FY 2012, WIFA executed two clean water loans (wastewater projects) for a total of $6,687,080 and 14 drinking water loans for a total of $30,528,412. Projects of the Year Metropolitan Domes c Water Improvement District A $4.25 million loan provided financing for the purchase of three water systems, along with several capital improvement projects, including well equipping, an arsenic treatment system, a fixed network system and automated meter reading conversion. Metro DWID provides water u lity service to approximately 70,000 customers in the Tucson area. The project achieved be er protec on of public health, improved energy efficiency through the automated meter reading project, and consolidated management of several small systems struggling to maintain compliance. Yuma County Improvement District Yuma County Improvement District’s $1.4 million loan provided financing to abandon hundreds of aging sep c systems and to connect the residents of the Avenue B & C Colonia to the City’s sanitary sewer system. WIFA partnered with USDA Rural Development, Border Environment Coopera on Commission, NADBank and the EPA to come up with the addi onal funds needed to complete the project. Those partnerships funded another $19 million in grants and $2.5 million in loans. This important project helps to protect the environment and improve the quality of life for residents of the Colonia. Big Park Water Company With funding provided by a $415,000 loan, Big Park Water Company, a first‐ me borrower from WIFA, was able to complete its final two treatment facili es and bring all of its wells into compliance with arsenic standards. Big Park provides water u lity service to approximately 3,000 customers in the Village of Oak Creek. The company was able to reduce costs by designing and construc ng much of the project in‐house. The successful comple on of this project helped maintain a safe water supply for customers. Awards are presented in recogni on of exemplary project management and commitment to public health protec on through the improvement of drinking water and wastewater infrastructure. 8 WIFA Staff WIFA’s friendly and helpful 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. From top to bottom, right to left Sandy Sutton Executive Director James Manalac Database Administrator Angelica Romero Accountant Susan Craig Communications Director Melanie Ford Technical Program Supervisor Trish Incognito Chief Financial Officer Yolanda Mendoza Business Manager Julie Flores Accounting Supervisor Ruby Hernandez Loan Processing Coordinator Sara Konrad Environmental Program Supervisor Arcelious Stephens Environmental Program Specialist Brenda Guerra Administrative Assistant Stuart Peckham Environmental Program Specialist Angie Valenzuela Senior Loan Officer Dean Moulis Infrastructure Engineer Mike Clark Controller Rebecca Gomez Accountant Chris Unnewehr Network Administrator Elmer Garcia Procurement Manager/Senior Loan Officer WIFA Board Members Henry Darwin, Chairman Paul Gardner, Vice Chairman Ron Doba Kevin Donnellan Tiffany Frechette William Garfield Stanley Gibson Mark Heberer Michael Lacey Steve Olea *There are two current vacancies. WIFA’s 12-member Board of Directors* provides leadership in setting WIFA’s administrative policies and approving loans and other assistance for borrowers. WIFA’s Board of Directors offer expertise on environment, finance, business, and government.