State Revolving Fund Loans Finance/Administration Committee June - - PowerPoint PPT Presentation

State Revolving Fund Loans

Finance/Administration Committee June 28, 2016

Funding the Capital Improvement Program

• Four funding mechanisms

– PAYGO (Revenue Funded) – Municipal Bonds – Grants – State Loans

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• Federal Government, through the States, offers low-interest

loans to fund water and wastewater infrastructure projects

– Clean Water State Revolving Fund (CWSRF) for wastewater and recycled water projects – Drinking Water State Revolving Fund (DWSRF) for potable water projects

State Revolving Fund Programs

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• Rate: Loans are made at

approximately half the State’s general obligation bond rate.

• Limit: No upper limit on loan

amounts

• Term: CWSRF loans are 30 years;

DWSRF loans are 20 years

Pros and Cons of SRF Loans vs Conventional Bonds

Pros

• Lower interest rate

Cons

• Water Loans for shorter term – 20 years
• Higher administrative burden for application

and administration (e.g. NEPA review)

• Project specific; bond proceeds can be used

more flexibly

• Possible American Iron and Steel (AIS)

requirements; can increase project costs

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Costs and Savings of SRF Loans

• For CWSRF (wastewater and recycled

water), 30 year SRF loan is lowest cost financing

• For DWSRF (water), every $10M of

capital projects:

5 Per $10 Million of Capital 20 year SRF 30 year Revenue Bond* Loans Compared to Bonds Average Annual Debt Service $588K $548K $40,000 more per year for 20 years Total Debt Service $11.76M $16.44M Long-Term Savings of $4.67M Rate ** 1.60% 3.57% 2% less

* Rates as of 5/10/16 ** All-in-TIC

Annual Debt Service and Total Debt Service (per $10M of capital projects)

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SRF Funding as part of District’s Long-Range Financing Plan

• SRF funding decreases total debt service
• ver time, and in some cases decreases

annual debt service

• Most Capital Improvement Projects

qualify for loans

• Project selection criteria
• Finance, Engineering, and Operations

and Maintenance for both Water and Wastewater are working together to identify appropriate projects

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Current Loans

• Upper San Leandro Hypolimnetic

Oxygenation System (DWSRF)

– $2.2M original principal – $1.1M currently outstanding – Payments began in 2003 – Final payment in 2023

• East Bayshore Phase 1A (CWSRF)

– $20.1M original principal – $13.9M currently outstanding – Payments began in 2008 – Final payment in 2028

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The District has had several prior SRF Loans

• North Richmond Water Reclamation

Plant (CWSRF)

– $22.3M – Payments began in 1993 – Balance paid in full in 2012

• Wet Weather Facilities (various loans)

(CWSRF)

– $78.8M – Payments began from 1989-2000 – Balance paid in full in 2012

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South Reservoir Replacement Project

• $17.7 million

replacement of an existing reservoir

• Reduce size of

reservoir to remove water quality concerns

• Loan application

was submitted on March 1, 2016

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Macarthur Davenport Pipeline Replacement Project

• $11.3 million

replacement of an existing pipeline

• 90 year old potable

water transmission pipeline

• Pipeline crosses the

Hayward fault

• Loan application was

submitted on April 25, 2016

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Schedule / Next Steps

• Track applications
• Advocate for 30 year DWSRF loans
• Submit additional applications as

appropriate

• Board would approve financing

agreements if loans go forward

• Ongoing updates to Board

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