Water Infrastructure Finance Authority of Arizona Sara Konrad Western States Water Council Spring Meeting March 2019 WATER INFRASTRUCTURE FINANCE AUTHORITY

Topics Clean Water State Revolving Fund Drinking Water State Revolving Fund Technical Assistance Small Drinking Water System Fund Water Supply Development Fund Thank you so much for having me here today. I know you’ll be hearing a lot more about Arizona’s programs from Tom Buschakse and Trevor Baggiore on Thursday, so I’ll be brief. I work for the Water Infrastructure Finance Authority of Arizona, aka WIFA, a separate agency – not part of ADEQ or ADWR. Our primary function is to administer both the CW and DW state revolving funds but we do administer a couple smaller programs too. I’m assuming you’re all familiar with the state revolving fund programs, so I’ll just mention a few areas where Arizona’s SRF is unusual compared to other states, and then I will speak briefly on the technical assistance and other funds we administer.

Arizona’s Revolving Funds Receive annual capitalization grants from EPA $10 million Clean Water $20 million Drinking Water WIFA provides 20% match (no state appropriation) Leveraged program Borrow money (issue bonds) at the best rates available (AAA rated) Arizona gets a $20M DW cap grant and $10M CW cap grant No state appropriation Leverage – about half of states leverage Because of this, we have a lot of funds available to lend, and our borrowers are not in competition against each for our funding.

State revolving funds offer Low interest rates Forgivable principal available for disadvantaged communities Financing available year-round No application deadlines No competition No minimum or maximum loan amount No application fees or closing costs To that point, there is no competition, and there is no maximum loan amount. We have plenty of cash on hand, and if needed we can go out to the bond market to get more. Another thing at only a portion of state revolving funds do, is– board meets every two months to approve new loans and to add projects to the Project Priority List., No annual deadline It means borrowers have multiple opportunities throughout the year to obtain funding. - flexibility

Eligible borrowers Cities, towns, tribal entities and special districts: Own a public water system Own a wastewater facility County, state and federal entities are NOT eligible ACC-regulated private water companies For profit and nonprofit Nonprofit and private wastewater companies not eligible for AZ’s Clean Water SRF First state revolving fund in the country to lend to a tribe To date, four loans to tribal entities Two more loans set to close within a few weeks As far as eligibility criteria for who can borrow from the SRF, we have Differences from other states: Private water companies - Define ACC as public utilities commission Although federal law now allows private and nonprofit entities to borrow from the CWSRF in certain circumstance, Arizona’s statutes say that only public entities for wastewater

ADEQ Technical assistance Portion of DWSRF set-asides goes to ADEQ’s Capacity Development Program Free technical, managerial and financial assistance Small public water systems (<10,000 population) Selection criteria based on system’s technical, managerial and financial capabilities and identifies where they may need assistance Alternately, the water system can request technical assistance ADEQ hires third party contractors to prepare: Planning for Consolidation, Acquisition and/or Regionalization System Evaluation Treatment Selection & Design Operations Optimization Management & Financial Planning Permitting Documentation Switching gears from SRF loans to the TA that WIFA offers We partner a lot with ADEQ. ADEQ provides free technical, managerial and financial assistance to small public water systems using skilled professionals. Help can be provided by experienced ADEQ staff and/or third party contractors. On-site Assistance Below is a partial list of the assistance services that can be provided to small public water systems System Evaluation (e.g., TMF review of the entire water system with recommendations for improvements) Treatment Selection & Design (e.g., arsenic, nitrate or radionuclide treatment design) Operations Optimization Management & Financial Planning (e.g., budget prep, rate analysis, board training, asset management) Preparing Permitting Documentation (e.g, Approval to Construct, Design Report, Approval of Construction) Planning for Consolidation, Acquisition &/or Regionalization Who’s Eligible? Any community or non-profit, non-transient/non-community water system, serving 10,000 or fewer persons are eligible for TA services How does the Program Work? There are two ways water systems can be identified for technical assistance. Each spring, ADEQ develops its Master Priority List (link to FY19 MPL) of public water systems to target for technical assistance using criteria (link to criteria) that help measure the system’s technical, managerial and financial capabilities and identify where they may need assistance. Alternately, the water system can request technical assistance by contacting the technical assistance program or through their compliance assistance coordinator (link to map or CAC cheat sheet) Drinking water technical assistance is provided either by experienced ADEQ staff or through 3rd party contractors. A scope of work is developed for the water system Service is provided on pre-arranged dates or on nights or weekends depending on the system’s availability Deliverables vary from a system evaluation and recommendations for operational improvements to design of a needed treatment system and permitting applications Is there a Cost of this Service? There is no cost for providing TMF assistance services. However, in order to improve the system’s operations, some expenditures may result from implementation of program recommendations. ADEQ staff can provide assistance with potential funding opportunities.

Water and wastewater Rates dashboard Interactive rates and financial benchmarking tool Created by University of North Carolina’s Environmental Finance Center Designed for utility managers, finance directors, board members, general public/ratepayers Allows comparison of user rates Presents cost recovery ratio Updated every other year WIFA uses some of the set-aside In process of updating dashboard. Will be updated in Aug/Sept dashboards.efc.sog.unc.edu/az

Water loss control audit Partnership between WIFA and ADWR Based on the American Water Works Association’s (AWWA) Manual for Water Audits and Loss Control Programs (M36) Contract with consultant with expertise on M36 and training (Cavanaugh) Provide free technical assistance to complete the water audit using free M36 software Pilot in FY18 6 small to medium systems Phase 2 in FY19 25 small to medium systems www.azwifa.gov/water-loss-control Finishing up Phase 2 – expecting final report in April

WIFA Technical assistance Funding Available for FY2019 Drinking water: $300,000 Wastewater and stormwater: $150,000 Up to $50,000 per project available WIFA construction loan requirement www.azwifa.gov/technical-assistance-program Water Infrastructure Finance Authority

Types of Technical Assistance Project Design Support for Federal Requirements Requirements Service population of ≤10,000, OR Meets WIFA’s criteria as a disadvantaged community No population requirement Only available if required as a condition of WIFA funding Types of Assistance Design of an infrastructure project Selection of design alternative Environmental Assessment Cost and Effectiveness Analysis Fiscal Sustainability Plan 1. Because we are continuing to prioritize resource allocation to communities with the greatest need, the Project Design type of TA is limited to small or disadvantaged communities. 2. Fed – these are requirements that come down from Congress, because our funds are from the federal government. We recognize that these requirements can be burdensome for any borrower, so there is no population limit We’ll be talking about Disadvantaged community status later on in the presentation.

Small Drinking Water Systems Fund Grants for repairs, replacement or upgrades related to compliance issues Small drinking water systems (10,000 or less) Multi-agency partnership: WIFA administers funds ADEQ recommends system/project ACC concurs FY17 $500,000 appropriated 6 projects FY20 $500,000 expected Separate from SRF Two funds established in statute. In DEQ’s statute From $9K to $178K Still $12K from FY17 appropriation

Water supply development Fund Loans to water providers for water supply development Acquisition of water/water rights Contracts for water to augment the water supply Development of facilities for: Conveyance, storage or recovery of water Reclamation and reuse of water Replenishment of groundwater Grants for planning and design (up to $100,000) Established in 2007 but to date unfunded Can fund growth which DWSRF cannot

Rural water infrastructure committee Informal partnership of federal and state agencies that provides loans, grants and technical assistance Serves as a “One-Stop Shop” for rural communities (population of less than 10,000) Drinking water or wastewater needs Water quality compliance Water quantity problems Infrastructure Quarterly meetings Project sponsors present briefly with project specifics Funding and technical assistance agencies respond how they can assist

Sara Konrad skonrad@azwifa.gov 602-364-1319 Thank You Sara Konrad skonrad@azwifa.gov 602-364-1319 www.azwifa.gov