water resources development commission recommendation committee

WATER RESOURCES DEVELOPMENT COMMISSION

RECOMMENDATION COMMITTEEWATER RESOURCES

DEVELOPMENT REVOLVING FUND

CONCEPTUAL REVENUE SOURCESMay 16, 2011

May 16, 2011

WATER RESOURCES DEVELOPMENT COMMISSIONFINANCE WORK GROUP

HB 2692 Passed in 2007

Authorized the establishment of water resource development revolving fund to be administered by the Water Infrastructure Finance Authority (WIFA)

Authorized the formation of Water Resource Development Fund Committee within WIFA

May 16, 2011


RULES ADOPTED BY WIFA October 2010

Article 4 Water Supply Development Fund (R18-15-401 through R18-15-408) and

Article 5 Technical Assistance, R18-15-505

May 16, 2011


Committee Consists 13 Members

1. Director of ADWR Chairs Committee2. Director of ADEQ Vice Chair of Committee3. Chairman of ACC4. State Treasurer 9 MEMBERS APPOINTED BY GOVERNOR1. 1 member representing municipalities with population ≥ 50,000, and <100,000.2. 1 member representing municipalities with a population <50,000 from a county with a population

<500,000.3. 1 member representing counties with populations <200,000.4. 1 member representing counties with populations ≥200,000, and <1,000,000.5. 1 member representing counties with populations ≥ 1,000,000.6. 1 member representing cities with populations of > 100,000 from counties with populations

>1,000,000.7. 1 member from a public service corporation that serves 1,850 people or more.8. 1 member from a public water system that serves < 1,850 people.9. 1 member representing Indian Tribes.

May 16, 2011


Water Development Fund Financial Provisions Bonds Appropriations Federal Government Loan Payments, Interest and Penalties Investment Income Gifts, Grants and Donations

May 16, 2011


Who is Eligible to Apply? A.R.S. § 49-1273 C, Monies in the water supply

development revolving fund CANNOT be used to provide financial assistance to a water provider, other than an Indian tribe, unless :

The water provider is located inside an AMA, OR The water provider is located in a City or County

outside of an AMA that has adopted the mandatory adequate water supply requirement for new subdivisions

May 16, 2011


MONIES IN THE WATER SUPPLY DEVELOPMENT REVOLVING FUND MAY ONLY BE USED FOR:

Making loans to water providers for water supply development purposes.

Making grants or loans up to $100K to water providers for the planning or design of water supply development projects.

Purchasing or refinancing debt obligations of water providers if the debt obligation was issued for a water supply development purpose.

Providing financial assistance to water providers with bonding authority to purchase insurance for local bond obligations incurred by them for water supply development purposes.

Providing linked deposit guarantees through third party lenders by depositing monies with the lender.

May 16, 2011


Length of Term for Loans?

30 Years

May 16, 2011


Problem Statement/Questions How Can the Water Resources Development

Fund be Funded? Bonds, Appropriations, Federal Grants, Gifts Other?

How Much Money is Necessary for an Adequate Revolving Loan Fund? Will Statutory Provisions Be Enough?

May 16, 2011


Considerations The Sources of Revenue must be:

Matched to the Size of the Fund Matched to the Timing of Loans

If a large number of projects are expected over a long period, the revenue should be permanent, dependable and sufficient for a long period.

May 16, 2011


Conceptual Principles For Revenue Sources

Dependability and Predictability

Adequate Funding

Mix of Sources

Beneficiaries Need to Contribute

May 16, 2011


Potential Alternative Revenue Sources Ad Valorem Taxes Water Withdrawal Fees Transaction Privilege Tax Bottle Water Tax Impact Fees

Building Permits Well Permits

General Fund Appropriations Other?

May 16, 2011


Conceptual Funding Sources Transaction Privilege Tax

5 to 10 Cents per Thousand Gallons (Estimate: $24 to $48 million per year)

Impact Fees $250 to $500 per new Building Permit (Estimate:

$1.5 to $3 million per year) Well Impact Fees: $50 for New Wells $10 Annual

Fee for Existing (New Wells $150K & Existing Wells $1.5M)

May 16, 2011


Conceptual Funding Sources General Fund Appropriation

$100,000,000 AWBA Interstate Fund (Estimate: $10 million per year originally planned for between 2009 and 2018 currently on hold)

Bottle Water Tax 2¢ and 5¢ per bottle (Estimate: $15.2 Million to

$38 Million annually)

May 16, 2011


Projected Revenue Assuming 3% ReturnLow Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

*Well Impact Fee $ 19 M $ 62 M $ 192 M $ 1.0 B

Transaction Privilege Tax

(5¢ per 1kgal)$ 285 M $ 907 M $ 2.8 B $ 15 B

Impact Fee($250 per lot & 6K lots)

$18 M $ 56 M $ 174 M $ 938 M

Bottle Water Tax 2¢ per bottle

$188 M $ 599 M $ 1.9 B $ 10 B

*$50 per new well & $10 per well annually

May 16, 2011


Projected Revenue Assuming 3% ReturnLow Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

General Fund $ 118 M $ 376 M $ 1.2 B $ 6.3 B

Total $ 628 M $ 2.0 B $ 6.2 B $ 33.3 B

May 16, 2011


Projected Revenue Assuming 3% ReturnHigh Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

Well Impact Fee $ 39 M $ 124 M $ 383 M $ 2.1 B

Transaction Privilege Tax

(10¢ per 1kgal)$ 570 M $ 1.8 B $ 5.6 B $ 30.2 B


$35 M $ 113 M $ 349 M $ 1.9 B

Bottle Water Tax

(5¢ per bottle)

$449 M $ 1.4 B $ 4.4 B $ 23.8 B

*$100 per new well & $20 per well annually

May 16, 2011


Projected Revenue Assuming 3% ReturnHigh Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

General Fund $ 118 M $ 375.5 M $ 1.2 B $ 6.3 B

Total $1.2 B $ 3.9 B $ 11.9 B $ 64.3 B

May 16, 2011


Projected Impact to Individual/Family Low Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

Well Impact Fee($10 annually)

$100 $250 $500 $1000

Transaction* Privilege Tax

(5¢ per 1kgal)$60 $150 $300 $600


$250 $250 $250 $250

**Bottle Water Tax (2¢ per bottle)

$23/$92 $58/$230 $115/$460 $230/$920

*10,000 gallons per month per family of 4

**115 bottles per person annually per family of 4

May 16, 2011


Projected Impact to Family of 4 Low Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

General Fund $ 0 $0 $0 $0

Total $502 $ 880 $ 1,510 $ 2,770

May 16, 2011


Projected Impact to Individual/Family High Projections

Revenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

Well Impact Fee($20 annually)

$200 $500 $1000 $2000

Transaction* Privilege Tax(10¢ per 1kgal)

$120 $300 $600 $1,200


$500 $500 $500 $500

**Bottle Water Tax (5¢ per bottle)

$58/$230 $144/$576 $288/$1,152 $576/$2,304

*10,000 gallons per month per family of 4

**115 bottles per person annually per family of 4

May 16, 2011

WATER RESOURCES DEVELOPMENT COMMISSION

FINANCE WORK GROUP Projected Impact to Family of 4

Low ProjectionsRevenue Source

10 years

(2021)

25 years

(2036)

50 years

(2061)

100 years

(2111)

General Fund $ 0 $0 $0 $0

Total $1,050 $1,876 $3,252 $ 6,004

May 16, 2011


Projected Percentage Mix of Projected Total Revenue Generation

Low Projections High Projections

Well Impact Fee 3% 3%

Transaction Privilege Tax 45% 47%

Impact Fee 3% 3%

Bottle Water Tax 30% 37%

General Fund 19% 10%

Total 100% 100%

water resources development commission recommendation committee

Documents

orthe water provider

adequate revolving loan

financial assistance

revenue sourcesdependability

federal grants

technical assistance

long period

bonding authority