STATE REVOLVING FUNDLOAN PROGRAMS

SRF CALL FOR PROJECTS TRAINING

OCTOBER 11, 2010 Bowling Green

OCTOBER 12, 2010 Morehead

What Do We Do?

Fund Infrastructure Projects

Using Loans and Grants

Facilitate Water and Wastewater Planning

Statewide Planning

• SB409 mandates KIA to perform statewide planning

• Role of planning will become more critical

• Statewide planning is ready to be taken to the next level

• Sound planning requires a wide range of available information

Prioritization of Projects

• There are two prioritization process– ADD rankings– SRF rankings

• ADD ranking Process– Planning areas– Define need– Rank projects based on planning area needs

Grants

• No New Bond Funded Projects

• New SSC Projects– 39 Water and Wastewater Projects– $13.2 Million

• Open Grant Projects– 26 grants totaling $4.9 million without project

identified– 73 grants totaling $21.7 million without AA

KIA Has 4 Loan Programs

• Clean Water State Revolving Fund (Fund A)• Infrastructure Revolving Loan/Grant (Fund B)

– State Funded– Interest Rates Currently 3%, 2%, and 1%– Repayment Terms from up to 30 Years

• Governmental Agencies Program (Fund C)– Bond Funded– Interest Rates from 3% to Market Rate– Repayment Terms from up to 30 Years

• Drinking Water State Revolving Fund (Fund F)

Fund B and Fund C

• State Funded program for infrastructure projects, primarily water and sewer, broadband and possible financing for brownfields remediation

• Low interest rate

• Limited availability of funds to loan

• Minimal Requirements– WRIS number (WX or SX)– Uniform System of Accounts and Cost Based Rates– E-Clearinghouse– Adequate Revenue to Repay the Loan– Replacement Reserve Requirement– Loan Servicing Fee of 0.2%– Principal and Interest Repaid Monthly– Submit Audited Financial Statements

What is a State Revolving Fund (SRF)?

IT’S A LOAN PROGRAM

• Created and Funded by the Federal Government– Clean Water Act (Fund A)– Safe Drinking Water Act (Fund F)

• Administered by the State – Kentucky Infrastructure Authority (KIA)

• KIA receives grant from EPA• KIA provides 20% State Match• Financial and Administrative Responsibility

– Division of Water (DOW)• Environmental Responsibility• Technical Responsibility

Eligible Borrowers

• Governmental Agency– City– County– Special District

• No Federal Agencies

• Project MUST BE listed on the SRF Priority List. (Different from Water Management Council Priority List)

Kentucky’s SRF Programs

• Fund A• Clean Water State Revolving Fund• Established in the Clean Water Act

• Fund F• Drinking Water State Revolving Fund• Established in the Safe Drinking Water Act

• Loans for planning and design (A1 or F1) are available to expedite a project, which may be rolled into a construction loan.

2012

• Green Projects – 20% of the federal funds received will go to “Green” Projects.

• Principal Forgiveness - All systems that qualify for 1% interest rate loans will receive principal forgiveness– 30% principal forgiveness will be offered to CWSRF borrowers.– 35% principal forgiveness will be offered to DWSRF borrowers.

• Davis-Bacon Act – Federal wage rates could apply– Currently applies to SRF loans – Expires September 30, 2010– Could be reinstated when Congress passes new federal budget

FUND A

CLEAN WATER STATE REVOLVING FUND

Fund A

WE HAVE APPROXIMATELY

$143 Million for SFY 2011AVAILABLE IN FUND A

FOR LOW INTEREST WASTEWATER INFRASTRUCTURE LOANS.

~ $80 - $90 Million for SFY 2012

ELIGIBLE PROJECTS - CWSRF

– Wastewater Collection, Conveyance, & Treatment Facilities

– Storm Water Collection, Conveyance, & Treatment Facilities

– Implementation of Nonpoint Source Pollution Control Management Programs;

– Purchase of Wastewater System

INELIGIBLE PROJECTS - CWSRF

– Laboratory Fees and Other Monitoring Expenses

– Operation and Maintenance Expenses

FUND F

DRINKING WATER STATE REVOLVING FUND

FUND F

WE HAVE APPROXIMATELY

$43 Million for SFY 2011 AVAILABLE IN FUND F

FOR LOW INTEREST DRINKING WATER INFRASTRUCTURE LOANS.

~ $25 - $30 Million for SFY 2012

ELIGIBLE PROJECTS - DWSRF

– Replace Inadequate/Aging Infrastructure– Upgrade Treatment Facilities– Install or Upgrade Storage– Rehab Wells or Develop Source Water– Consolidation/Purchase of Water Systems– Extension of Service to Existing Homes to

Address Quantity and Quality Issues– Security Measures

INELIGIBLE PROJECTS - DWSRF

– Compliance Monitoring– Operation and Maintenance– Reservoirs (raw water)– Dams or Dam Rehabilitation– Water Rights– Growth– Fire Protection

WHERE TO START?

• Project Profile• Call for Projects

IMPORTANT DATES:

October 1, 2010- DW & CW Call by KIA &DOWJanuary 4, 2011 – Call for Projects ClosedJanuary 7–14, 2011 – Project Submittal VerificationMarch 31, 2011- DOW Project Ranking CompleteJune 1, 2011- Draft IUP and Priority ListJuly 1, 2011- Beginning of Funding Cycle

HOW IS THIS DIFFERENT ?

• DOW will use the information from the Project Profile to Rank the SRF Projects.

• You DO NOT have to complete an SRF Project Questionnaire Form.

• You DO have to get your project endorsed by the Water Management Council

• A project submittal verification will be completed in January.

Basic Process

1. Environmental Review• Includes E-Clearinghouse

2. Plans Review

3. Financial Administration

SRF Process FlowchartKIA Board Approval & Binding Commitment

Invitation

Application

Environmental Review

Plans and Specs Review

Bid Opening

Pre-Construction Conference

Start Construction/ Construction Contract

Enter into Assistance Agreement

Initial Pay Request

Construction Complete

Closeout

KIA Board Approval & Binding Commitment

E-CLEARINGHOUSE REVIEW

• Obtain E-Clearinghouse Comments– US Fish & Wildlife Comments– State Historic Preservation Office (SHPO)

Comments– Natural Resources Conservation Service (NRCS)

Comments

DOW - ENVIRONMENTAL REVIEW

A project will require a “SERP”(State Environmental Review Process) and a DOW FONSI:

• Categorical Exclusion (CE)• Environmental Assessment (EA)• Environmental Impact Statement (EIS)

The National Environmental Policy Act (NEPA) requires agencies that receive federal funds to integrate environmental values into their decision making processes by considering the environmental impacts of their proposed actions and reasonable alternatives to those actions.

DOW - PLANS REVIEW

• Issue plans approval• Issue permits• Approve change orders • Conduct construction inspections• Supplemental General Conditions must

accompany all plans for SRF projects

KIA - FINANCIAL ADMINISTRATION

• Invite the high ranking projects to apply for SRF• Process loan application• Examine the financial credibility of the applicant• Ensures that the contracts and engineering services

are procured correctly• Ensure compliance with federal “crosscutters”• Distribution of funds

Federal Cross Cutters

• ENVIRONMENTAL AUTHORITIES

• National Environmental Policy Act

• National Historic Preservation Act

• Archeological and Historic Preservation Act

• Protection of Wetlands 

• Flood Plain Management

• Farmland Protection Policy Act

• Coastal Zone Management Act

• Coastal Barriers Resources Act

• Wild and Scenic Rivers Act

• Endangered Species Act

• Clean Air Act

• Safe Drinking Water Act

• SOCIAL AUTHORITIES

• Anti-Discrimination Provisions:

– Civil Rights Act of 1964

– Section 13 of the Federal Water Pollution Control Act Amendments of 1972

– Rehabilitation Act of 1973

– Age Discrimination Act of 1975

• Environmental Justice

• Equal Employment Opportunity

• Minority/Women/Small Businesses

Federal Cross Cutters

• ECONOMIC AND MISCELLANEOUS AUTHORITIES

• Effective Administration – Clean Air Act

– Clean Water Act

• Debarment and Suspension • Demonstration Cities and Metropolitan Development Act • Uniform Relocation Assistance and Real Property Acquisition Act• Lobbying Disclosure

FINANCIAL ADMINISTRATION

THREE AREAS

1.Before Construction

2.During Construction

3.After Project Closeout

Before Construction

• Obtain and submit loan application to KIA• Satisfy DOW environmental requirements• Satisfy DOW technical requirements• KIA prepares credit review• Obtain loan commitment from KIA Board• Borrower accepts Commitment Letter• Obtain construction bids• Submit Final Documentation• Execute the Loan Assistance Agreement

During Construction

• Send the Draw Request to KIA and DOW– Include Supporting Invoices

• Submit by 5th of month to receive funds by 19th

• Change Orders have to be approved by DOW• DOW sets Initiation of Operations• All funds must be expended within 6 months of

I/O date.• KIA bills interest June / Dec on funds drawn

After Project Closeout

• Certificates of Completion are signed• Final Loan amount is established• Final Amortization Schedule is prepared• Exhibit F is executed by Borrower and KIA• Principal and Interest Repayments are due

each June 1 and December 1• Borrower submits annual audited financial

statements to KIA

CURRENT SRF RATES

Interest Rate set annually by the KIA Board.– Standard Rate is 3.0% (MHI at or above $33,672)

– Non-Standard Rate (a) is 2.0% (MHI between $33,672 & $26,938)

– Non-Standard Rate (b) is 1.0% (MHI at or below $26,938)

– Criteria for Non-standard Rates based on:• MHI of Jurisdiction• MHI of service area• Regionalization• Orders or Judgments• Public Health or Safety Issues• Environmental Concerns• Financial Considerations

REPAYMENTS TERMS Repayment Period

CWSRF – 20 YearsDWSRF – 20 Years (may be 30 years if

hardship community)

Financing Expenses

CWSRF – 0.2% Servicing FeeDWSRF – 0.25% Servicing Fee

Debt Service Reserve: None

Replacement Reserve: 2.5% of project amount funded over 10 years

AGENCY CONTACTSDOW

Shafiq AmawiWater Infrastructure Branch

Branch Manager

Buddy GriffinProgram Administration Section

Supervisor

Amanda YearyDWSRF Coordinator

Anshu SinghCWSRF Coordinator

Phone 502-564-3410

KIA

John CovingtonExecutive Director

Sandy Williams Financial Analyst

Kasi WhiteFinancial Analyst

Phone 502-573-0260

For more information contact:

Kentucky Infrastructure Authority1024 Capital Center Drive, Suite 340

Frankfort, KY 40601(502) 573-0260

www.kia.ky.gov