What's New with the SRF? - Iowa League of Cities · What’s New with the SRF? Lori Beary, Iowa Finance Authority Patti Cale-Finnegan, Iowa Department of Natural Resources Iowa League

What’s New

with the SRF?

Lori Beary, Iowa Finance Authority

Patti Cale-Finnegan, Iowa Department of Natural Resources

Iowa League of Cities 2012 Annual Conference & Exhibit

Handouts and presentations are available online at www.iowaleague.org

What’s New with the

STATE

REVOLVING

FUND?

Patti Cale-Finnegan

Department of Natural Resources

Lori Beary

Iowa Finance Authority

1. What’s New

2. What’s Not Really New

But That You Might Be

Interested In

Today’s Topics

What’s New: Interest Rates

•Current interest rate

is 3%.

•Interest rate for 20

year loans will be

reduced to 1.75% on

September 28, 2012.

What’s New: Fees •Origination fee

recently reduced from

1% to 0.5%

•Servicing fee 0.25%

Only charged on

outstanding balance.

Billed twice/year with

interest

What’s New: Savings $1,000,000 20 year SRF loan

OLD COSTS NEW COSTS SAVINGS

1% origination fee $10,000 .5% origination fee $5,000 $5,000

3% interest $344,462 1.75% interest $193,782 $150,680

servicing fee $31,405 servicing fee $27,683 $3,722

$385,867 $226,465 $159,402

What’s New: Savings $5,000,000 20 year SRF loan

OLD COSTS NEW COSTS SAVINGS

1% origination fee $50,000 .5% origination fee $25,000 $25,000

3% interest $1,721,964 1.75% interest $969,213 $752,751

servicing fee $156,975 servicing fee $138,459 $18,516

$1,928,939 $1,132,672 $796,267

What’s New: Savings $10,000,000 20 year SRF loan

OLD COSTS NEW COSTS SAVINGS

1% origination fee $100,000 .5% origination fee $50,000 $50,000

3% interest $3,604992 1.75% interest $2,032399 $1,572,593

servicing fee $338,888 servicing fee $290,343 $48,545

$4,043,880 $2,372,742 $1,671,138

What’s New: Extended Financing

“As an alternative to the traditional

30-year mortgage, we also offer an

interest-only mortgage, balloon

mortgage, reverse mortgage, upside

down mortgage, inside out

mortgage, loop-de-loop mortgage,

and the spinning double axel

mortgage with a triple lutz.”

What’s New: Extended Financing

• Up to 30 years based on useful life.

•DWSRF – must be disadvantaged based on CDBG

criteria.

•CWSRF – available to all projects. Non-

disadvantaged community interest rate is 2.75%.

•DWSRF and CWSRF – disadvantaged rate is 1.75%.

What’s New: CWSRF

Disadvantaged Status

•Communities must be determined to be disadvantaged based on

criteria in Iowa Code section 455B.199B, Disadvantaged

Communities Variance, as amended by Senate File 407 on April

28, 2011.

•DNR currently working on rules to implement the statute.

•SRF will use draft forms to establish disadvantaged status for

purposes of allowing reduced interest rate.

What’s New: “WRR” Projects

•Water Resource Restoration “sponsored

projects”

•Nonpoint source project (e.g. green

infrastructure, watershed protection)

paired with wastewater loan

•City borrows more, repays same amount,

gets two projects for the cost of one

•Currently doing pilot project, working on

application process

CurrentCWSRF Loan

CWSRF Loanwith WRR

Project

ServicingFees

Interest

Principal

What’s New: SRF Has Loaned $2

Billion to Iowa Communities

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

Drinking water

Nonpoint

Wastewater

What’s Not Really New

SRF Background

The SRF is one of Iowa’s primary sources of financing for drinking water and wastewater infrastructure, storm water quality, and nonpoint source protection

SRF programs

authorized by Clean Water Act and Safe Drinking Water Act and administered by U.S. Environmental Protection Agency

What’s Not Really New

SRF Background

What’s Not Really New

SRF Background

• Iowa Department of Natural Resources – Program planning and prioritization

– Project planning and permitting

– Environmental review

– Federal compliance

• Iowa Finance Authority – Financial management

– Bond issues

– Loan processing

– Loan disbursements

What’s Not Really New

SRF Background

Terry Branstad,

Iowa Governor

Chuck Gipp, Department of Natural

Resources Director

Environmental

Services

Administrative

Services

David Jamison,

Iowa Finance

Authority Director

Bill Northey, Iowa

Secretary

of Agriculture

Department of

Agriculture and

Land Stewardship

Water Supply

Engineering

DNR SRF Coordinator and

Team Leader

NPDES

Permitting

Local Water

Protection, Livestock

Water Quality Facilities,

Storm Water Quality

CWSRF Project

Managers

DWSRF Project

Managers

State Revolving Fund Organizational Structure -- Iowa

Admin.

Assistant

Program

Specialists

Water Quality

Bureau

Water Supply

Operations

Wastewater

Engineering

Environmental

Review

IFA SRF Coordinator

SRF Finance

Officer

On-Site

Wastewater

DNR Grants

Manager

LOW-INTEREST LOANS

FOR

Water and wastewater

infrastructure only

1989 - 2002

2003 - Present

Water and

Wastewater Planning and Design

Urban Stormwater

Soil, Sediment, and Nutrient

Management

Onsite

Septic

Systems

Source

Water

Protection

Brownfield Cleanup

Landfill Closure

Lake and Wetland Restoration

Energy and Water Efficiency

Loan

Forgiveness

Drinking Water SRF • Loans for:

– Improvements to public water supply systems

– Consolidations and connections

– Source water protection

• DWSRF set-asides fund technical assistance, capacity development, state drinking water program, SWP

Clean Water SRF • Loans for:

– Publicly owned wastewater treatment facilities

– Sewer system rehabilitation

– New systems for unsewered communities

– Stormwater management for water quality

– Nonpoint source pollution control

Types of Loans

• Planning & design

• Construction

• Source water

protection

• Stormwater BMPs

• Watershed protection

Planning & Design

• 0% financing for up to 3 years

• Can be rolled into SRF loans or paid off with

other permanent financing

• Get projects ready for applications to CDBG,

Rural Development, or other funding

Construction Loans

• Cities and

counties

• Community water

supplies

• No reserve

requirement

Environmental Review

• Environmental

review specialist

assists with ER

process

• SRF pays for

preliminary

archeology

Source Water Protection

• 0% interest rate

• Up to 20 year term

• For purchase of land or easements, or to fund SWP practices

• Based on approved SWP plan

Stormwater BMPs

• For public or private

• Must protect or restore water quality

• Must be for non-permitted practices

• No Davis-Bacon or environmental review required

Other Nonpoint Source

• Brownfield clean-up

• Landfill closure

• Wetland restoration

• Lake restoration

• Other

Agriculture Loans

• Work with local Soil and Water

Conservation Districts and

IDALS

• Financing through participating

lenders

• Soil and sediment control,

manure management

• Can be used with cost-share,

EQIP, other grants

On-Site Wastewater Loans

•Help rural homeowners

replace inadequate septic

systems

•Projects reviewed by

county sanitarians

•Loans through

participating lenders

Special Requirements • Changes from base SRF

programs started with ARRA in

2009

• Green projects, loan

forgiveness, Davis-Bacon

carried over through FFY 2010 -

FY 2012 appropriations

• Not sure what FY 2013 will allow

Green Projects • Energy efficiency, water

efficiency, green storm water

infrastructure, environmentally

innovative

– Goal is to go above and beyond

traditional or regulated

approaches to gain more

environmental sustainability

• Eligibility determined through

EPA guidance

Green Projects • Equivalent of at least 20% of

capitalization grant amounts

must be used for green

projects

• Offered loan forgiveness to all

green projects

• Can still fund green projects

but may not have loan

forgiveness

Loan Forgiveness • 20% to 30% of federal grant equivalent

• Three categories

– Disadvantaged communities

– Green projects

– Public health (DWSRF)

• Individual communities receiving 20% to

60% of SRF amount as loan forgiveness

How the SRF Helps • “The SRF allowed the City of

Stacyville to make the

necessary improvements to

our infrastructure when it was

needed. ”

Harlan Bisbee

City Clerk, Stacyville

How the SRF Helps

• “The SRF provided the lowest

rates available for the City of

Shenandoah to finance

improvements to the Waste

Water Treatment Facility. ”

Marcia McKay, City

Clerk/Treasurer

Shenandoah

How the SRF Helps • “The City of Ankeny really

appreciated being able to

use SRF funding for our

brownfield cleanup project,

as well as the guidance

provided by the DNR and

IFA staff.”

Jolee Belzung

Director of Municipal Utilities,

Ankeny

How the SRF Helps • “The low-interest loan made

a huge difference in my

livestock water quality

project. The people I worked

with were helpful and the

paperwork was simple. ”

Justin Rozeboom

Sioux County

How the SRF Helps

• “This was our first experience

with the SRF. We appreciated

all the assistance we received

for our many questions!”

Lyon-Sioux Rural Water

For more information

Patti Cale-Finnegan

Iowa Department of Natural Resources

515-725-0498

[email protected]

Lori Beary

Iowa Finance Authority

515-725-4965

[email protected]