Understanding WIFAUnderstanding WIFA

Presented by:Presented by:

Steve WeneSteve Wene

Moyes Sellers & HendricksMoyes Sellers & Hendricks

Overview of WIFAOverview of WIFA

• State agency

• Finances construction or rehabilitation– Drinking water– Wastewater reclamation

• Must by publicly owned

• Governed by a Board of Directors – 7 to 12 members

Loans and GrantsLoans and Grants

• Clean Water Revolving Fund Loans

• Drinking Water Revolving Fund Loans

• Technical Assistance Grants – $35,000 per project– Usually requires local match funding (40%)– Exception for “Green Projects”

WIFA ProcessWIFA Process

• File a Project Priority List Application• Secure debt authorization

– Public via resolution or bond election– Private ACC finance application approval

• File a Project Finance Application• WIFA Project Finance Committee reviews• WIFA Board acts• WIFA and Borrower close loan

WIFA Financial Keys WIFA Financial Keys

• Debt Service Coverage– Ensures enough cash flow to pay

• Principal• Interest• Fees• Reserves of 20%

– First 5 years is debt reserve– Years 6 to 20 is repair and replacement reserve

WIFA Issues to ConsiderWIFA Issues to Consider

• Subordination

• Security – all property

• Davis Bacon – Labor must be paid “prevailing local wages”

• Timing – Public bodies 6 months– Private bodies 18 months

• Assumes a rate and finance case is needed

Issues with ACC FinancingIssues with ACC Financing

• Usually need rate and finance application– 18 month process

• How will debt service get paid?– Through authorized rates

• Using depreciation and operating cash flow

– Through surcharge• Reserve payment may not be covered• May not let company rate base plant

QuestionsQuestions