Joe Crossland Finance Director Office of Drinking Water

Office of Drinking Water’s Mission To protect the health of the people of Washington State by ensuring safe and reliable drinking water.

Drinking Water State Revolving Fund Management Background The Drinking Water State Revolving Fund (DWSRF) loan program provides low interest, capital loans and technical assistance to local utilities for drinking water infrastructure projects DWSRF first implemented in 1997 —The Department of Health (Health) did not yet have the financial capacity to run the entire DWSRF program —The Department of Commerce (Commerce) entrusted with the financial management of the program —Capacity was to be developed at Health

Drinking Water State Revolving Fund Management Current State Financial management capabilities fully developed at Health Health has gradually taken on more DWSRF duties Health using a lifecycle approach to managing projects Preconstruction and consolidation grant program Developing loan programs to be fully managed at Health

Drinking Water State Revolving Fund Management Need for Efficiency Federal funding decreasing Have accelerated our program significantly using more aggressive cash management —$25-40 million/FY to $180 million/FY in 2013 —Predict ongoing loan cycles of $60-80 million 18th year of program designed to sunset after 20 years Joint administration cumbersome and challenging since inception New federal requirements and increased scrutiny

Drinking Water State Revolving Fund Management Proposed Changes DWSRF program to include: —Single point of contact at Health —Expand loan programs to include preconstruction loans —Flexibility in loan agreements Transition financial management of the program to Health over a three-year period Increased investment in preconstruction technical assistance and coordination with the Public Works Board (PWB) and Commerce

Drinking Water State Revolving Fund Management Efficiencies Gained Aligns program responsibility and oversight with primacy agency Reduce the coordination necessary to implement the program Consistent with LEAN principles Ongoing cost savings equivalent to $431,000/FY reduction

Drinking Water State Revolving Fund Management Enhancements Replacing 4.8 FTE at Commerce with 4.5 FTE at Health for direct project management Creation of a “one stop shop” for customer access to managerial, engineering, and technical expertise Increased flexibility to provide incentives for efficient and effective use of loan funds

Drinking Water State Revolving Fund Management Request and Transition Timeline Takes place over a three-year period Provides bridge funding to retain Commerce/PWB contract capacity Allows for a thoughtful and deliberate transition Flexible to allow for a slower or quicker transition if necessary

Drinking Water State Revolving Fund Management Request and Transition Timeline Agency request legislation – 2015 legislative session Fall of 2015 – Implementation of preconstruction loans and consolidation loans programs at Health Fall of 2016 – All new DWSRF project loans managed by Health July 1, 2017 (SFY18) – Legacy DWSRF loans begin to transfer to Health (flexible)

Drinking Water State Revolving Fund Management Points of Contact Joe Crossland – Office of Drinking Water Clark Halvorson – Office of Drinking Water