1. WELCOME
INNOVATIONS IN SRF

2. SRF Trends: How Programs are Evolving, Adapting and Innovating
Over the last 25 years, SRF Programs across the country have been models of evolution and innovation as programs’ fiscal resources have strengthened and environmental challenges and community needs have increased over time.  Four state SRFs (Illinois, Indiana, Massachusetts and Wisconsin) will discuss how they have responded with different program initiatives and financial incentives to address multiple challenges including funding for:
Longer term (35 year) loans
Non-traditional technologies
Providing incentives for green infrastructure
Funding construction loans and interim financing
Strategies to address concentration issues with large borrowers
Using cashflow funding to size and structure debt financings
Tackling affordability issues among different communities
Addressing critical health needs such a lead service line replacement
Join the conversation as we all seek to learn from one another to identify Best Practices in the field.. 2

3. PANELISTS Gary Bingenheimer, Illinois Environmental Protection Agency
Kevin Bryant, Illinois Environmental Protection Agency
Jim McGoff, Indiana Finance Authority
Nate Keenan, Massachusetts Clean Water Trust
Robin Schmidt, Wisconsin Department of Natural Resources
Diana Hamilton, Sycamore Advisors (Moderator) 3

4. Wisconsin Department of Natural Resources Robin Schmidt Deputy Director
Picture taken by Jeanne Cargill, Environmental Loans Program,
near Ashland Drinking Water Project

5. Making SRF Relevant to Today’s Needs
Identify needs
Close collaboration with regulatory programs
Human Health/Environment Challenges
Sufficiently significant to justify workload?
Legal language
Database reprogramming
Outreach
Policy/Guidance development/public comment
Assess Programmatic Limitations and Opportunities
Federal and State Statutes, Regulations and Codes
CWA/SDWA/WRRDA/WIIN
Review State/EPA Operating Agreement/Intended Use Plan
Confer with Regional EPA Program Manager 5

6. Private Lead Service Line Replacement Program
WI Public Service Commission:
Rate payer funds cannot be used to pay for work done on private property
Need:
Significant number of lead service lines and knowledge that partial replacement increases lead levels in water
Mechanism for assisting with replacement of private LSLs
Opportunity:
If private LSL funds are awarded solely as principal forgiveness, then they are not a debt incurred by the municipality and rate payer fees are not used on private property 6

7. Private Lead Service Line Replacement Program
Program Requirements
Project must result in full lead line replacement
No reverse partial replacements
Municipality must qualify as “Disadvantaged” per Affordability Criteria
Federal requirements – Davis Bacon not applicable on properties owned by individual homeowners
Used previous unused PF authority
2010/2011 allowed 100% of cap grant to be awarded as PF
WI chose to award a subset of that amount
Re-opened cap grants to designate ~ $20 million as PF
Determined sufficient funding for 2 year program
35 participating municipalities - SFY 2017
$13.7 million awarded
30 municipalities eligible - SFY 2018
$13 million available for allocation 7

8. Milwaukee Metropolitan Sewer District
2035 Vision
Zero basement backups, zero overflows, and improved water quality
2035 Vision Goal
Capture the first 0.5 inch of rainfall on impervious surfaces, the equivalent of 740 million gallons of stormwater storage.
MMSD Planning Area
Seven Unique Watersheds • 411 Square Miles • 91 Square Miles of Impervious Area • 6 Percent Combined Sewer Area • 94 Percent Separate Sewer Area 8

9. MMSD Green Infrastructure
Need: Reduction of stormwater
Opportunity: Making SRF funding relevant for MMSD
Challenges
Term of loan (design life of projects)
BMP Public vs private ownership
Application uniqueness
Disbursement processes/timelines 9

10. Massachusetts Clean Water Trust
Nate Keenan
Deputy Director

11. Massachusetts Clean Water Trust
Use of Equity Funds to provide 0% Construction Funding for communities
30 year Loans
EPA approval process
Focus on funding larger projects
Project Useful life measure
Addressing concentration issues with largest borrower (MWRA) 11

12. Massachusetts Clean Water Trust
Green Bonds: MA Trust was an early adopter
New investors; pricing advantages?
Tracking Proceeds and Disclosure Issues
Use of Third Party Certifiers: ICMA, S&P, Moody’s
Funding Non-Structural Non Point Source Projects
Project Risk in Alternative Technologies 12

13. Indiana Finance Authority Director of Environmental Programs
Jim McGoff
COO
&
Director of Environmental Programs

14. New Financing Programs
Lead Service Line Replacement Program
Interest Rate Reduction to provide additional principal for LSLR projects
School Lead Testing Program
DW Set Aside funds to provide fixture testing at all Indiana Public Schools
Water Infrastructure Finance and Innovation Act (WIFIA)
Letter of Interest Accepted and invitation to apply for $436 Million
Extended Term Financing
35 year loans recently approved by US EPA for both Drinking Water and Clean Water 14

15. Extended Term Financing
Loan Terms
35 year amortization
Limited to pipe replacement infrastructure projects
Available for both wastewater and drinking water projects
EPA Approval Process
EPA Guidance ( Memo for CW & Memo DW)
Letter / Memo requesting EPA approval
Coverage Calculations (DW and WW require a different analysis) 15

16. WIFIA April 2017 IFA submitted a Letter of Interest to US EPA
July 2017 IFA was notified that it was one of 12 invited to formally apply
Application Amount - $436 Million
How determine application amount?
Capacity and Coverage
Application of funds? 16

17. Illinois Environmental Protection Agency State Revolving Fund (SRF) Loan Programs
Kevin Bryant
Water Revolving Fund Finance Manager
&
Gary Bingenheimer
Manager - Infrastructure Financial Assistance Section

18. Illinois EPA SRF Financial Issues
Financial issues Illinois SRF Loan Programs needed to address:
Large Cash Balance in the Programs
Program was being too conservative
ULO issue with Federal Grants
Issue was the result of the State not providing Match from sources outside of the Loan Funds 18

19. Results of Financial Changes at Illinois EPA Loan Programs
Annual Loan Commitments have ramped up:
FY13-16 – Average - $547M
2017 – 79 Loans - $914 M
2018 – 75 Loans - $900 M Projected
Disbursements Grant Receipts
FY – Avg. $553M - $152M
2017 – $739M - $130M
– $855M - $90M Projected 19

20. Results of Financial Changes at Illinois EPA Loan Programs
Cash Balance of Treasury Held Fund at June 30:
2013 $258M
2014 $307M
2015 $269M
2016 $ 4.7M
2017 $73.5M
2018 $110M Projected 20

21. Wastewater and Drinking Water SRF Interest Rate Tiers and 30 Year Loans
Reduced interest rates/Max 30 year loan term
Public Loan Applicant’s Only
Small Community Rate - 75% of Base Rate
Must have service population less than 25,000 and satisfy one of the three following criteria:
MHI less than state average
Unemployment rate greater than state average
Monthly User Charges greater than 1.0% of MHI
Hardship Rate – 1.0% Interest Rate
Must have service population less than 10,000 and satisfy one of the three following criteria:
MHI less than 70% of state average
Unemployment rate 3.0% greater than state average
Monthly User Charges greater than 1.5% of MHI 21

22. Wastewater SRF Principal Forgiveness Strategy
Focus on smaller (customer base) and economically disadvantaged communities
Affordability Criteria – “Points” awarded based upon criteria established in administrative rules
Median Household Income
Service Population
Unemployment
Population decline
Principal Forgiveness 0-60% of loan amount 22

23. Lead Service Line Replacement
Focus on smaller/economically disadvantaged communities and lead service line replacement
Disadvantaged Communities (DC) - Defined in administrative rules as applicants qualifying for the “Small Community” or “Hardship” rate. Principal Forgiveness offered to subset of DC
Population < 25,000 and MHI < state average
Population > 25,000 with MHI < 70% state average
Maximum of $500,000 or 50% of project
Lead Service Line Replacement
Max of $1,000,000 or 50% of project
Max of $2M if MHI < 70% of state average MHI 23

24. Summary of Select SRF Loan Rates & Fees24

25. Contact Information 25