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Funding the Capital Improvement Program
• Four funding mechanisms
– PAYGO (Revenue Funded)
– Municipal Bonds
– Grants
– State Loans
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• Federal Government, through the States, offers low-interest loans to fund water and wastewater infrastructure projects
– Clean Water State Revolving Fund (CWSRF) for wastewater and recycled water projects
– Drinking Water State Revolving Fund (DWSRF) for potable water projects
State Revolving Fund Programs
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• Rate: Loans are made at
approximately half the State’s
general obligation bond rate.
• Limit: No upper limit on loan
amounts
• Term: CWSRF loans are 30 years;
DWSRF loans are 20 years
Pros and Cons of SRF Loans vs Conventional Bonds
Pros • Lower interest rate Cons • Water Loans for shorter term – 20 years • Higher administrative burden for application
and administration (e.g. NEPA review) • Project specific; bond proceeds can be used
more flexibly • Possible American Iron and Steel (AIS)
requirements; can increase project costs 4
Costs and Savings of SRF Loans
• For CWSRF (wastewater and recycled water), 30 year SRF loan is lowest cost financing
• For DWSRF (water), every $10M of capital projects:
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Per $10 Million of Capital20 year
SRF30 year
Revenue Bond* Loans Compared to Bonds
Average Annual Debt Service $588K $548K $40,000 more per year for 20 years
Total Debt Service $11.76M $16.44M Long-Term Savings of $4.67M
Rate ** 1.60% 3.57% 2% less* Rates as of 5/10/16
** Al l -in-TIC
SRF Funding as part of District’s Long-Range Financing Plan
• SRF funding decreases total debt service over time, and in some cases decreases annual debt service
• Most Capital Improvement Projects qualify for loans
• Project selection criteria
• Finance, Engineering, and Operations and Maintenance for both Water and Wastewater are working together to identify appropriate projects
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Current Loans
• Upper San Leandro Hypolimnetic Oxygenation System (DWSRF) – $2.2M original principal
– $1.1M currently outstanding
– Payments began in 2003
– Final payment in 2023
• East Bayshore Phase 1A (CWSRF) – $20.1M original principal
– $13.9M currently outstanding
– Payments began in 2008
– Final payment in 2028 8
The District has had several prior SRF Loans
•North Richmond Water Reclamation Plant (CWSRF) – $22.3M
– Payments began in 1993
– Balance paid in full in 2012
•Wet Weather Facilities (various loans) (CWSRF) – $78.8M
– Payments began from 1989-2000
– Balance paid in full in 2012 9
South Reservoir Replacement Project
• $17.7 million replacement of an existing reservoir
• Reduce size of reservoir to remove water quality concerns
• Loan application was submitted on March 1, 2016
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Macarthur Davenport Pipeline Replacement Project
• $11.3 million replacement of an existing pipeline
• 90 year old potable water transmission pipeline
• Pipeline crosses the Hayward fault
• Loan application was submitted on April 25, 2016
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