1. WATER RESOURCES DEVELOPMENT COMMISSION RECOMMENDATION COMMITTEE WATER RESOURCES DEVELOPMENT REVOLVING FUND CONCEPTUAL REVENUE SOURCES May 16, 2011

2. WATER RESOURCES DEVELOPMENT COMMISSION FINANCE 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

3. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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

4. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Committee Consists 13 Members 1. Director of ADWR Chairs Committee 2. Director of ADEQ Vice Chair of Committee 3. Chairman of ACC 4. State Treasurer 9 MEMBERS APPOINTED BY GOVERNOR 1. 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.

5. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Water Development Fund Financial Provisions Bonds Appropriations Federal Government Loan Payments, Interest and Penalties Investment Income Gifts, Grants and Donations

6. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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

7. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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.

8. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Length of Term for Loans? 30 Years

9. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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?

10. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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.

11. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Conceptual Principles For Revenue Sources Dependability and Predictability Adequate Funding Mix of Sources Beneficiaries Need to Contribute

12. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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?

13. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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)

14. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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)

15. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Projected Revenue Assuming 3% Return Low 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

16. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Projected Revenue Assuming 3% Return Low 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

17. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Projected Revenue Assuming 3% Return High 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 Impact Fee ($500 per lot & 6K lots) $35 M$ 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

18. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Projected Revenue Assuming 3% Return High 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

19. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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 Impact Fee ($250 per lot & 6K lots) $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

20. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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 Total$502$ 880$ 1,510$ 2,770

21. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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 Impact Fee ($500 per lot & 6K lots) $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

22. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP 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 Total$1,050$1,876$3,252$ 6,004

23. May 16, 2011 WATER RESOURCES DEVELOPMENT COMMISSION FINANCE WORK GROUP Projected Percentage Mix of Projected Total Revenue Generation Low ProjectionsHigh Projections Well Impact Fee3% Transaction Privilege Tax45%47% Impact Fee3% Bottle Water Tax30%37% General Fund19%10% Total100%