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Agenda 06/26/2012 Item #16C 5H. 6 EXECUTIVE SUMIyIAR -1' Recommendation to approve the communication of support from the Collier County Water -Sewer District by letter, under the signature of the Chair of the Board of County Commissioners, Ex- Officio the Governing Board of the Collier County Water -Sewer District, for the Water Infrastructure Financing Innovation Act, to our Federal House and Senate representatives, and to encourage them to sign on as original co- sponsors of the legislation. OBJECTIVE: To communicate the support of the Collier County Water -Sewer District for the Water Infrastructure Financing Innovation Act ( WIFIA) to our Federal House and Senate representatives, and to encourage them to sign on as original co- sponsors of the legislation, as the WIFIA concept was approved by the Finance Committee in the June 5, 2012 meeting. CONSIDERATION: Congressman Bob Gibbs, chair of the House Subcommittee on Water Resources and Environment, is actively addressing water infrastructure finance issues. He held a hearing on February 28, 2012, to review innovative finance tools, and is now preparing to introduce the WIFIA. The WIFIA would create a finance mechanism modeled after the Transportation Infrastructure Finance and Innovations Authority (commonly called TIFIA), and provide access to lower -cost capital for investments in water infrastructure. WIFIA would access funds from the U.S. Treasury at Treasury rates, and use those funds to support loans and other credit mechanisms for water projects at or near Treasury rates. Although interest rates fluctuate, such rates are currently significantly better than municipal bond rates. The benefit to local communities of lower interest rates can be significant. The WIFIA would — • Increase the availability of federal loans for large -scale (over $20 million) water infrastructure investments that may not be suitable for assistance through the existing Drinking Water and Clean Water State Revolving Fund (SRF) programs. • Reduce the cost of financing large water infrastructure projects by reducing the cost of borrowing to Treasury rates. • Reduce the cost of leveraging for SRF programs by lending to them directly. A federal water infrastructure finance authority could lend to those SRFs wishing to leverage their capitalization grants at the lowest possible interest rates. • Be available for potable water, wastewater, and stormwater capital investment programs. Packet Page -1183- The Count, Finance Committee unanimously approved the concept of in: VIIF1 ir: IE meeting on June �, 2012. Staff will continue to monitor progress of this legislation. Staff has prepared four letters requesting Senator Bill Nelson, Senator Marco Rubio, Congressman David Rivera, and Congressman Connie Mack to sign on as original co- sponsors of the WIFIA legislation drafted by Congressman Bob Gibbs. FISCAL IMPACT: While there is no immediate fiscal impact associated with this item, there is potential for a positive fiscal impact by lowering borrowing costs associated with large water and wastewater capital projects. Although the Public Utilities Division has been adhering to the pay -as -you go approach, this could provide a vehicle to finance future capital projects, if the need arises. This program can also be a financial resource for stormwater projects. GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this item. LEGAL CONSIDERATIONS: This item has been reviewed and approved by the County Attorney's Office, is legally sufficient for Board action and only requires a majority vote for approval —SRT. RECOMMENDATION: Approve the communication of support from the Collier County Water -Sewer District by letter, under the signature of the Chair of the Board of County Commissioners, Ex- Officio the Governing Board of the Collier County Water - Sewer District, for the Water Infrastructure Financing Innovation Act, to Federal House and Senate representatives, and to encourage them to sign on as original co- sponsors of the legislation. Prepared by: Laura Zautcke, Senior Management & Budget Analyst, Public Utilities Operations Support Attachments: WIFIA Issue Paper Discussion Draft of WIFIA Letters to Senator Nelson, Senator Rubio, Congressman Rivera and Congressman Mack. Packet Page -1184- COLLIER COUNTY Board of County Commissioners Item Number: 16.C.5. Item Summary: Recommendation to approve the communication of support from the Collier County Water -Sewer District by letter, under the signature of the Chair of the Board of County Commissioners, Ex- Officio the Governing Board of the Collier County Water -Sewer District, for the Water Infrastructure Financing Innovation Act to our Federal House and Senate representatives, and to encourage them to sign on as original co- sponsors of the legislation. Meeting Date: 6/26/2012 Prepared By Name: ZautckeLaura Title: Management Analyst, Senior, Utility Finance Ops. 6/8/2012 10:22:11 AM Submitted by Title: Management Analyst, Senior, Utility Finance Ops. Name: ZautckeLaura 6/8/2012 10:22:13 AM Approved By Name: HapkeMargie Title: Operations Analyst, Public Utilities Date: 6/8/2012 10:41:50 AM Name: HapkeMargie Title: Operations Analyst, Public Utilities Date: 6/8/2012 11:02:34 AM Name: WidesTom Title: Director - Operations Support - PUD,Utilities Fina Date: 6/11/2012 1:25:56 PM Name: MarcellaJeanne Title: Executive Secretary,Transportation Planning Packet Page -1185- Date: 6/13/2012 8:32:26 AM Name: TeachScott Title: Deputy County Attorney,County Attorney Date: 6/13/2012 9:18:22 AM Name: YilmazGeorge Title: Administrator, Public Utilities Date: 6/13/2012 10:20:44 AM Name: GreenwaldRandy Title: Management/Budget Analyst,Office of Management & B Date: 6/14/2012 9:55:54 AM Name: KlatzkowJeff Title: County Attorney Date: 6/15/2012 11:31:53 AM Name: OchsLeo Title: County Manager Date: 6/17/2012 8:14:52 AM Packet Page -1186- nment r ,ople® A Water Infrastructure Financing Innovation Act (WIFIA) and Other Infrastructure Financing Tools Action Requested: • From House members, contact Congressman Bob Gibbs, chair of the House Subcommittee on Water Resources and Environment, and tell him you want to be an original cosponsor of his Water Infrastructure Finance Innovation Act. • From senators, contact your respective leadership and leadership of the Committee on Environment and Public Works and let them know you would like to see WIFIA legislation introduced and passed in the Senate. • From both House and Senate, support funding of the drinking water and clean water state revolving loan fund (SRF) program, at least at the previous year's appropriated levels. The SRF is a vital tool in the toolbox of water infrastructure finance, particularly for small to medium -sized systems. Background: High - quality drinking water and wastewater systems are essential to public health, business, and quality of life in the United States. The American Water Works Association (AWWA), Water Environment Federation (WEF) and others have documented that our water and wastewater infrastructure is aging and that many communities must begin to increase their levels of investment in the repair and rehabilitation of water infrastructure in order to protect public health and safety and to maintain environmental standards. In addition, having a reliable water supply and a means of treating wastewater before returning it to the environment are necessary to economic development. Rehabilitating and replacing that infrastructure produces jobs. The U.S. Department of Commerce has estimated that every dollar spent on water infrastructure generates $2.62 in the private economy. For every job added to the water workforce, abut 3.68 jobs are added nationally. In February 2012, AWWA released its latest report on drinking water infrastructure needs, "Buried No Longer: Confronting America's Water Infrastructure Challenge." This report reveals that the country will need to spend $1 trillion over the next 25 years to maintain our current level of water service. This figure does not count above - ground infrastructure, such as tanks or improvements to water treatment necessary to meet new standards. Nor does it include wastewater infrastructure needs, which have been shown to be as large as drinking water needs. Financing Water Infrastructure: AWWA and WEF have long believed that Americans are best served by water and wastewater systems that are self sustaining through rates and other local charges. However, we recognize that at present, some communities need assistance due to hardship or special economic circumstances. In addition, the need to replace or upgrade existing infrastructure may require access to a large amount of capital in a relatively short time frame, placing great stress on local rates and charges. Packet Page -1187- Although 95 percent of spending on water and wastewater has beer fro,:, local sources the feaeaa. government can play an important role by lowering the cost of capital for water and wastewater investments. Almost 70 percent of American communities use bonds to finance local infrastructure. They pay billions of dollars in interest costs each year. Lowering the cost of borrowing for water and wastewater infrastructure is an important way to leverage local funding and help America rebuild and rehabilitate our aging water infrastructure. A Novel Approach: The Water Infrastructure Finance Innovation Act Congressman Bob Gibbs, chair of the House Subcommittee on Water Resources and Environment, is actively addressing water infrastructure finance issues. He held a hearing on February 28 to look at innovative finance tools, and is now preparing to introduce a Water Infrastructure Finance and Innovation Act. The act would create a finance mechanism modeled after the successful Transportation Infrastructure Finance and Innovations Authority (commonly called TIFIA) and provide access to lower -cost capital for investments in water infrastructure. This mechanism would have no or little long -term effect on the federal budget deficit. As in TIFIA, WIFIA would, under the Federal Credit Reform Act, only require appropriated funding sufficient to cover the subsidy cost, or risk, of loans. Fitch Ratings, a top credit rating agency, calculates that the historical default rate on water bonds is 0.04 percent. Indeed, water service providers are among the most fiscally responsible borrowers in the United States. Moreover, those states that leverage their SRF programs all have AAA or AA bond ratings and no history of defaults, placing them among the strongest credits in the country. WIFIA would access funds from the U.S. Treasury at Treasury rates and use those funds to support loans and other credit mechanisms for water projects at or near Treasury rates. Although interest fluctuates, such rates are currently significantly better than municipal bond rates. The benefit to local communities of lower interest rates is significant. Lowering the cost of borrowing by 2.5 percent on a 30 -year loan reduces the lifetime project cost by almost 26 percent, the same result as a 26- percent grant. WIFIA loans would be repaid to the Authority — and thence to the Treasury — with interest. Consequently, WIFIA — because it would involve loans that are repaid — would involve minimal risks and minimal long -term costs to the federal government. The Water Infrastructure Finance Innovations Act would create a mechanism to: • Offer loans, loan guarantees, and other credit support for large water infrastructure projects and those with national or regional importance. These projects often find it difficult or impossible to access loans from the existing SRF program, due in part to inadequate capitalization of the SRFs. Reduce the cost of leveraging for SRF programs by lending to them directly. A federal water infrastructure finance authority could lend to those SRFs wishing to leverage their capitalization grants at the lowest possible interest rates. This would allow SRFs to make more loans and would increase their ability to offer special assistance to hardship communities if they chose to do so. Currently, 31 states leverage their SRF programs on the bond markets. WIFIA loans to an SRF would offer an additional option to accomplish the same goal and, by lowering the cost of capital, make such a practice more attractive to additional states. America faces the need to begin a significant and sustained increase in its investment in water and waste water infrastructure, or risk deteriorating water and waste water services. The tenets outlined in this paper provide a path towards truly sustainable water infrastructure for all Americans. A more detailed description of WIFIA and a copy of AWWA's report, "Buried No Longer" are included in this packet. AWWA 1300 Eye St. NW WEF Suite 701W 601 Wythe St. Washington, DC 20005 Alexandria, VA 22314 202 628 -8303 800 666 -0206 www.awwa.oro Packet Page - 1188 -2 How W.. IFIA Workj Wotw I husWarhm At cv mW I= --ad n Avdwft US Thmoury Si aft P&vWng Loan Finds Packet Page -1189- [DISCUSSION DRAFT] 112m CONGRESS 2D SESSION H. R. To provide financing assistance for qualified water infrastructure projects, and for other purposes. IN THE HOUSE OF REPRESENTATIVES M_. introduced the following bill; which was referred to the Committee on 0 A BILL To provide financing assistance for qualified water infrastructure projects, and for other purposes. 1 Be it enacted by the Senate and 1:16use of Representa- 2 tines of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 4 (a) SHORT TITLE. —This Act may be cited as the S "Water Infrastructure Finance and Innovation Act of 6 2012 ". 7 (b) TABLE OF CONTENTS. —The table of contents of 8 this Act is as follows: See. 1. Short title; table of contents. See. 2. Findings. tAVHLC \0222121022212.001.xm9 (515445119) February 22, 2012 (9:16 a.m.) packet Page -1190- P: \1;ivI:,�N1�2\ ANJ?\FTNf�NuING\V,�IYLC._OO l7 x ussior Dra l n TITLE WATER INFRASTRUCTURE FINed\TCE ANT` INNOVATION Sec. 101. Definitions. Sec. 102. Authority to provide assistance. Sec. 103, Application. Sec. 104. Entities eligible for assistance. Sec. 105. Projects eligible for assistance. Sec. 106. Activities eligible for assistance, Sec. 107. Selection among eligible projects. Sec. 108. Credit evaluation. Sec. 109. Terms and conditions. Sec. 110. Program administration. Sec. 111. Technical assistance. Sec. 112. Threshold for assistance. Sec. 113. Funding. TITLE II— PRIVATE ACTIVITY BONDS Sec. 201. Exempt - facility bonds for sewage and water supply facilities. 1 SEC. 2. FINDINGS. 2 Congress finds the following: 3 (1) It is in the national interest to encourage 4 the timely and cost effective rehabilitation and re- 5 placement of aging water and sewer infrastructure. 6 (2) The Environmental Protection Agency re- 7 nnrf z- 8 (A) , $334,000,000,000 is needed to invest 9 in infrastructure improvements over 20 years to 10 ensure the provision of safe water; and 11 (E) $202,500,0007000 is needed for pub - 12 liely owned wastewater systems- related infra - 13 structure needs over 20 years. 14 (3) Customer rates and local charges are and 15 will remain the primary means of paying for water 16 service and infrastructure. f:WHLC \022212 \022212.001.xm( (515445119) February 22, 2012 (9 :16 a.m.) Packet Page -1191- WIM" 'Ussior_ Drra *ft - v (4) The municipal bone marker an State Rc- 2 volving Fund programs are the primary long -term 3 means for financing water infrastructure projects, 4 but upfront investment needs are simply too high to 5 be met with these traditional means alone. 6 (5) Financing constraints make it particularly 7 difficult for State Revolving Funds to support large 8 water infrastructure projects of regional and na- 9 tional significance. 10 (6) Current financing mechanisms do not suffi- 11 ciently catalyze private sector investment, while the 12 capital markets, including pension funds, and other 13 investors have a growing interest in infrastructure 14 investment. 15 (7) This Act will substantially benefit the Na- 16 tion's drinking water and wastewater systems by- 17 (A) addressing the gap in funding for 18 large, regionally, and nationally significant 19 projects by making available direct loans and 20 loan guarantees to reduce borrowing costs and 21 accelerate water infrastructure investment; 22 (B) enhancing the capacity of State Re- 23 volving Fund programs to assist other projects; f: \VHLC \022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1192- : \I `..uvi;' , �f:NDIL�TIvAN�INv14d'IFif._QiFl t ussior. ira' -Y (C) tacintatmg private Sector 1nvestmeni. in 2 drinking water and wastewater infrastructure; 3 and 4 (D) promoting compliance with the Federal 5 Water Pollution Control Act and the Safe 6 Drinking Water Act. 7 (8) As the historical default rate on water and 8 sewer bonds is 0.04 percent, the risk of default on 9 Federal assistance provided under this Act is mini - 10 mal. 11 (9) Because loans, loan. guarantees, and other 12 credit instruments only incur long -term costs if sub - 13 sidized or in the event of default, this Act can help 14 to meet the Nation's water infrastructure needs at 15 minimal long -term cost to the Federal Government. 16 TITLE I- -WATER INFRASTRUC- 17 TUBE FINANCE AND INNOVA- 18 TION 19 SEC. 101. DEFINITIONS. 20 In this title, the following definitions apply: 21 (1) ADMINISTRATOR. —The term "Adminis- 22 trator" means the Administrator of the Environ- 23 mental Protection Agency. f.WHLC\022212\022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1193- H :il ivy: \i�ii2\Tt�h'JZ N —Ii�TG \Z;�Ti L' (2) BopmowEP�. —Tine. term "borrower" mean.: 2 an eligible entity that owes payments of interest or 3 principal on a credit instrument. 4 (3) COMMUNITY WATER SYSTEM. —The term 5 "community water system" has the meaning given 6 such term in section 1401 of. the Safe Drinking 7 Water Act (42 U.S.C. 300(f)). 8 (4) COST OF A DIRECT LOAN; COST OF A LOAN 9 GUARANTEE. —The terms "cost of a direct loan" and 10 "cost of a loan guarantee" mean the "cost of a di- 11 reet loan" and "cost of a loan guarantee ", respec- 12 tively, as those terms are used in section 502(5) of 13 the Federal Credit Deform Act of 1990 (2 U.S.C. 14 661.a(5)). 15 (5) CREDIT INSTRUMENT. —The term "credit 16 instrument" means a direct loan made under this 17 title or a loan or other debt obligation that is subject 18 to a loan guarantee under this title. 19 (6) DIRECT LOAN. —The term "direct loan" - 20 (A) means a "direct loan ", as such term is 21 defined under section 502(l) of the Federal 22 Credit Reform Act of 1990 (2 U.S.C. 661a(1)); 23 and 24 (B) includes a Government purchase of a 25 bond. f:1VHLC\022212 \022212.001.xm1 (515445118) February 22, 2012 (8:16 a.m.) Packet Page -1194- F: \KM�,\M712iTANDI\FI ANCIN3 \Wlt-- 11,- 001]li'A mssior. Draf". E 1 (7) LOAN GUARI0\TTEE. —Tile terin "ioari gua- - 2 antee" has the meaning given such term under sec - 3 tion 502(3) of the Federal Credit Reform Act of 4 1990 (2 U.S.C. 661a(3)). 5 (8) STATE INFRASTRUCTURE FINANCING AU- 6 THORITY. —The term "State infrastructure financing 7 authority" means the State entity established or des - 8 ignated by the Governor of a State to receive a cap - 9 italization grant provided by, or otherwise carry out 10 the requirements of, title VI of the Federal Water 11 Pollution Control Act (33 U.S.C. 1381 et seq.) or 12 section 1452 of the Safe Drinking Water Act (42 13 U.S.C. 300j-12). 14 (9) TREATMENT vvomm. —The term "treatment 15 works" has the meaning given such term under sec - 16 tion 212 of Federal Water Pollution Control Act (33 17 U.S.C. 1292). 18 SEC. 102. AUTHORITY TO PROVIDE ASSISTANCE. 19 The Administrator may make a direct loan (including 20 a subordinated loan) or a loan guarantee to an eligible 21 entity for eligible activities associated with an eligible 22 project, in accordance with this title. 23 SEC. 103. APPLICATION. 24 (a) IN GENERAL. —To receive assistance under this 25 title, an eligible entity shall submit to the Administrator f 1VHLC\022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1195- '2- 00- _]M+e^ ussiou. Draft" r 1. an application, at such time, in such manner, and con - 2 taining such information as the Administrator may re- 3 quire. 4 (b) COMBINED PROJECTS. —In the case of a project 5 eligible for assistance under section 105(8), the Adminis- 6 trator shall require from the eligible entity a single appli- 7 cation for the combined group of projects. 8 SEC.. 104. ENTITIES ELIGIBLE FOR ASSISTANCE. 9 (a) INT GENERAL. —For the purposes of this title, the 10 following are eligible entities: 11 (1) An entity (other than a State or local high - 12 way or road department or agency) that owns or op- 13 erates a treatment works that serves the general 14 public, including a municipal or regional separate 15 storm sewer system management agency. 16 (2) An entity that owns or operates a commu- 17 nity water system. 18 (3) Any grouping or combination of the above 19 that may be cooperating on an eligible project. 20 (4) A State infrastructure financing authority, 21 for the purposes of providing assistance to an eligi- 22 ble project under section 105(8). 23 (b) PUBLIC - PRIVATE PARTNERSHIPS. —In the case of 24 an entity that is a public- private partnership, a public en- 25 tity -owned or investor -owned utility shall be the entity eli- Aaw f:1VHLC\022212\022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m) packet Page -1196- �i .X_ F: \i;1vF: \ li! i2\ TANDII� 'IN�.JvT�ING \WI`ri�:_OOTlssior: I}raf:; 1 glblc; for assistant+:, under ti1.1 title, and no': tnE prl'trat 2 financing or development partner. 3 SEC. 105. PROJECTS ELIGIBLE FOR ASSISTANCE. 4 For the purposes of this title, the following are eligi- 5 ble projects: 6 (1) A capital project to construct, replace, or 7 rehabilitate a treatment works or a community 8 water system. 9 (2) A capital project to increase the security of 10 a treatment works or a community water system. 11 (3) A capital project to reduce the energy con - 12 sumption needs of a treatment works or a commu- 13 nity water system, including the implementation of 14 energy efficient or. renewable generation tech - 15 nol.ogies. 16 (4) A capital project to increase water effi- 17 ciency, reduce the demand for water, or reduce the 18 demand for treatment works or community water 19 system capacity. 20 (5) A capital project to manage or control 21 stormwater. 22 (6) A capital project to reuse municipal waste - 23 water or stormwater. f: \VHLC \0=12N022212.001 Amt (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1197- _00 Mfeussior.. Dra:t-: Q 1 (7) A capital project for the consolidation o-" 2 two or more treatment works or community water 3 systems. 4 (8) A group of projects described in any of 5 paragraphs (1) through (7) that are combined for 6 purposes of receiving a single direct loan or loan 7 guarantee. 8 SEC. 106. ACTIVITIES ELIGIBLE FOR ASSISTANCE. 9 For the purposes of this title, eligible activities with 10 respect to an eligible project include the following: 11 (1) Development phase activities, including 12 planning, feasibility analysis, revenue forecasting, 13 environmental review, permitting, and other 14 preconstruction engineering and design work. 15 (2) Construction, reconstruction, rehabilitation., 16 and replacement required for the project. 17 (3) Acquisition of real property (including inter - 18 ests in real property), environmental mitigation, con - 19 struction contingencies, and acquisition of equip - 20 ment. 21 (4) Funding mechanisms necessary to meet 22 market or affordability requirements, reasonably re- 23 quired reserve funds, capitalized interest issuance 24 expenses, and other carrying costs during construc- 25 tion of the project. f:\VHLC\022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1198- f:WHLQ0.22212 \022212.OD1.xml (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1199- la k r: \E�M:.11Yi i2 \T'ANDPFT1vt�T�INvli� ?EE"i�:_O:i � �zssion iuraf€: 1 (5) Refinancing of interini. consTruCti0n nnanc- 2 ing, long term project obligations, or direct loans or 3 loan guarantees made under this title. 4. SEC. 107. SELECTION AMONG ELIGIBLE PROJECTS. 5 (a) IN GENERAL. —The Administrator shall select eli- 6 Bible projects to receive assistance under this title based 7 on the following criteria: 8 (1) The significance of the infrastructure needs 9 addressed by the project, including the economic, en- 10 vironmental, and public health benefits of the 11 project. 12 (2) The creditworthiness of the project under 13 consideration, including the terms, conditions, finan- 14 vial structure, and security features malting up, the 15 proposed financing, and the financial assumptions 16 upon which the project is based. 17 (3) The need for Federal assistance, including 18 the likelihood that the provision of assistance by the 19- Administrator under this title will cause the project 20 to proceed more promptly and with lower costs for 21 financing than would be the case without such as- 22 sistance. 23 (4) The degree to which the project financing 24 plan includes public and private financing in addi- 25 tion to assistance under this title. f:WHLQ0.22212 \022212.OD1.xml (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1199- �Aj .ZINC VV, _00jm)siz:ussior: irrLi; i 1 (5) The cost of the direct loan or loan guar- 2 antee to the Government for the project. 3 (6) The extent to which the project is nationally 4 or regionally significant. 5 (b) SPECIAL RULE FOR COMBINED PROJECTS. —In 6 the case of a project eligible for assistance under section 7 105(8), the Admimstrator shall consider only the criteria 8 described in paragraphs (1), (2), (3), and (5) of subsection 9 (a). 10 (e) REASONABLE ASSURANCE OF PAYMENT.- The 11 Administrator may select an eligible project for assistance 12 only if the Administrator rinds that there is a reasonable 13 assurance that all payments will be made on the credit 14 instrument. 15 SEC. 108. CREDIT EVALUATION. 16 (a) IN GENERAL. —The Administrator shall develop 17 and implement a credit evaluation process before pro- 18 viding any assistance under this title. 19 (b) PRELIMINARY RATING OPINION LETTER. —For 20 purposes of determining creditworthiness under section 21 107(a)(2), the Administrator may require an eligible enti- 22 ty to provide a preliminary rating opinion letter from at 23 least one rating agency, or may use an alternative (includ- 24 ing an internal) credit rating process. f:\VHLC\022212\022212.001.Xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1200- �-. .a ,7. F:\ I: M:.\ iv1���LAJ��I\ ni�t?�I .NG1vdiFIf._OO�I�ii'e�.ussaar 1'b..ra� (c) RULE FOIE, OFmn COMBINED 'ROJEC`S. —xs 2 the case of an eligible project under section 105(8) for 3 which a State infrastructure financing authority is the eli- 4 Bible entity, in addition to the creditworthiness consider- 5 ation under section 107(x)(2), the Administrator shall 6 evaluate the creditworthiness of each entity represented by 7 the State infrastructure financing authority that will be 8 carrying out any project described under paragraphs (1 ) 9 through (7) of section 105 that will be part of such eligible 10 project. 11 SEC. 109. TERMS AND CONDITIONS. 12 (a) IN GENERAL.— Direct loans and loan guarantees 13 made under this title shall be on such terms and condi- 14 tions and contain such. covenants, representations, warran- 15 ties, and requirements (including requirements for audits) 16 as the Administrator may prescribe. 17 (b) INTEREST RATE. - 18 (1) IN GENERAL. —The interest rate applicable 19 to a credit instrument shall be the rate that is set 20 by reference to a benchmark interest rate on mar - 21 ketable Treasury securities with a similar maturity 22 to such credit instrument, as of the date of execu- 23 tion of the agreement. 24 (2) HIGHER INTEREST RATES. —The Adminis- 25 trator may charge a higher interest rate on a direct f:WHLM022212 \022212.001.xmi (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1201- fAVHLC\022212\022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1202- I loar, if the Administrator determines the: risk profile 2 of the project indicates a higher interest rate is nee - 3 essary to protect the interests of the United States. 4 (c) TERM of LOAN. —The Administrator may provide 5 assistance under this title only with respect to a credit 6 instrument the final maturity date of which is not later 7 than 35 years after the date on which funds are disbursed. 8 (d) SEcuRiTY FEATURES. —The Administrator'shall 9 require a borrower receiving assistance under this title to 10 use a rate covenant, coverage requirement, or similar secu- 11 city feature supporting the project obligations to ensure 12 repayment. 13 (e) DIr.ECT LOAN REPAYMENTS.- - 14 (1) SCHEDULE. —The Administrator shall es- 15 tablish a repayment schedule for each direct loan 16 under this title based on the projected cash flow 17 from project repayment sources. 18 (2) COMMENCEMENT.— Scheduled repayments 19 of principal or interest on a direct loan made under 20 this title shall commence not later than the earlier 21 of- 22 (A) 5 years after the date of substantial 23 completion of the project, as determined by the 24 Administrator in a manner set forth at the time 25 the direct loan is made; or fAVHLC\022212\022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1202- #:\VHLC \022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1203- : \i;1l L1M221iAI�IDI\rlitAl�l�I:1�\ 'Il ir:_OJ �t szs�zor Draft' (P; [— years after the d aye on which the. 2 direct loan is made. 3 (3) DEFERRAL OF PA'i'1VIENTS.- 4 (A) IN GENERAL. —If the Administrator 5 determines that a borrower lacks the resources 6 to make scheduled payments on a direct loan 7 made under this title based on circumstances 8 not foreseeable at the time the direct loan is 9 made, the Administrator may allow for the de- 10 ferral of such payments. 11 (B) INTERESTS. —Any payment deferred 12 under subparagraph (A) shall- 13 (i) continue to accrue interest until 14 fully repaid; and 15 (ii) be scheduled to be amortized over 16 the remaining term of the direct loan. 17 (C) CRITERIA. Any payment deferral 18 under subparagraph (A) shall be contingent on 19 the project meeting criteria established by the 20 Administrator, which shall include standards 21 for reasonable assurance of repayment, 22 (4) PREPAYMENT. --- Payments on the direct 23 loan may be made in advance with no penalty. 24 (f) SPECIAL RULES FOR LOAN GUARANTEES.— #:\VHLC \022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1203- f:1VHLC10222121022212.001.xm1 (515445119) February 22, 2012 (9:18 a.m.) Packet Page -1204- 1� T ;1) TERMS. —The terms o' a credit instrument; 2 that is the subject of a loan guarantee under this 3 title shall be consistent with the terms set forth in 4 this title for a direct loan, except that the interest 5 rate and any pre - payment features on such credit in- 6 strument shall be negotiated between the borrower 7 and the lender, with the consent of the Adm.inis- 8 trator. 9 (2) INTEREST RATE. —The Administrator may 10 make a loan guarantee under this title only if the 11 Administrator determines that the interest rate on 12 the credit instrument that is subject to such loan 13 guarantee is appropriate, taking into account the 14 prevailing rate of interest in the private sector for 15 similar obligations. 16 (3) ELIGIBLE LENDER. —The Administrator 17 may not make a loan guarantee under this title un- 18 less the lender of the loan or purchaser of the debt 19 security that will be the subject of the loan guar - 20 antee is a non - Federal qualified institutional buyer 21 (as defined in section 230.144A(a) of title 17, Code 22 of Federal Regulations (or any successor regula- 23 tion)), including - 24 (A) a qualified retirement plan (as defined 25 in section 4974(c) of the Internal Revenue Code f:1VHLC10222121022212.001.xm1 (515445119) February 22, 2012 (9:18 a.m.) Packet Page -1204- �: �Ii�, �U�i?.'; �t�NZ�r�i�� ,��Tcz1�c��Tz>✓z�_uo��i.,s�v�: ����; 1e i of 19 5 6) that is a. non-Federal qualizzee_ instiv,! - 2 tional buyer; and 3 (B) a governmental plan (as defined in 4 section 414(d) of the Internal Revenue Code of 5 1986) that is a non - Federal qualified institu- 6 tional buyer. 7 (4) ADEQUATE SERVICING PROVISIONS RE- 8 QUIRED. —No loan guarantee may be made under 9 this title for a loan unless the Administrator deter - 10 mines that the lender with respect to such loan is re- 11 sponsible and that adequate servicing provisions 12 have been made for the loans that are the subject 13 of such loan guarantee that are reasonable and pro- 14, tect the financial interest of the United States. 15 SEC. 110. PROGRAM ADMINISTRATION. 16 (a) IN GENERAL.-The Administrator shall establish 17 a uniform system to service the direct loans and loan guar - 18 antees made under this title. 19 (b) AsszsTANCE FROM ExPERT FIRMS. —The Ad- 20 mirdstrator may retain the services of expert firms, includ- 21 ing counsel, in the field of municipal and project finance 22 to assist in the underwriting and servicing of direct loans 23 and loan guarantees made under this title. 24 (c) FEES FOR ADMIMSTP,ATIVE ExPENTSES.— fAVHLC\0222121022212.001.xm1 (515445119) February 22, 2012 (9:18 a.m.) Packet Page -1205- 18 SEC. 111. TECHNICAL ASSISTANCE. 19 The Administrator may use funds appropriated under 20 this title to provide technical assistance to applicants and 21 prospective applicants in constructing financing packages 22 that leverage a mix of public and private funding sources. f:1VHLC1022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1206- 1r IN GFNFr,AL. —Ir:. providing assistance- - 2 under this title, the Administrator may collect fees 3 for .administrative expenses, including premiums for 4 loan guarantees, at a level that is sufficient to cover 5 the costs of services of expert firms and all or a por- 6 tion of the costs to the Federal Government of serv- 7 icing the direct loans and loan guarantees made 8 under this title and, as provided in advance in ap- 9 propriations acts, use such amounts to cover such 10 expenses. 11 (2) LEVEL OF FEES. —The Administrator shall 12 set such fees at a level that will minimize the cost 13 to the Federal Government and maximize the assist; 10 14 an.ce that can be provided under this title, while pro - 15 viding competitive credit terms to eligible projects, in 16 order to lower borrowing costs and accelerate water 17 infrastructure investment. 18 SEC. 111. TECHNICAL ASSISTANCE. 19 The Administrator may use funds appropriated under 20 this title to provide technical assistance to applicants and 21 prospective applicants in constructing financing packages 22 that leverage a mix of public and private funding sources. f:1VHLC1022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1206- fAVHLC\022212\022212.001_xml (515445119) February 22, 2012 (9 :16 a.m.) Packet Page -1207- F :1I�ML \Ci21i'/.IJI�I� 1�T�IN�r1vtLF1�_c�OiCxsskt>r D'r'aft) 1 SEC. 1-12. THRESHOLD FOP. ASSISTANCE. 2 The Administrator may provide assistance under this 3 title only with respect to a credit instrument in an amount 4 of $20,000,000 or more. 5 SEC. 113. FUNDING. 6 (a) AUTHORIZATION OF AI.'PROPRIATIONS.- 7 (1) DIRECT LOANS AND LOAN GUARANTEES.- 8 There are authorized to be appropriated for the cost 9 of providing direct loans and loan guarantees under 10 this title - 11 (A) [$ ] for fiscal year 12 2013; 13 (B) [$ ] for fiscal year 14 2014; 15 (C) [$ ] for fiscal year 16 2015; and 17 (D) [$ ] for fiscal year 18 2016, and each fiscal year thereafter. 19 (2) ADMINISTRATIVE EXPENSES. —There are 20 authorized to be appropriated amounts equal to any 21 fees collected under section 110, and in addition 22 there are authorized to be appropriated for adminis- 23 trative expenses under this title - 24 (A) [$ . ] for fiscal year 25 2013; fAVHLC\022212\022212.001_xml (515445119) February 22, 2012 (9 :16 a.m.) Packet Page -1207- r:\ i> 1vI�1i�: 2\?' ANJi��INt :N�?I�IG\WI�E:_0{3�i�Fe:issian Ltra t ;C I (B) U 1 for fiscal year 2 2014; 3 (C) [$ ] for fiscal year 4 2015; and 5 (D) such sums as may be necessary for fis- 6 cal year 2016, and each fiscal year thereafter. 7 (b) PAYMENT OF SUBSIDY COST. —A borrower may 8 pay for the cost of a direct loan or loan guarantee under 9 this title, along with the appropriate amount of related 10 administrative expenses, and the Administrator may use 11 such payment, as provided in advance in appropriations 12 Acts, instead of using funds authorized under subsection 13 (a), to make such direct loan or loan guarantee to the bor- 14 rower. 15 TITLE II-- PRIVATE ACTIVITY 16 BONDS 17 SEC. 201. EXEMPT - FACILITY BONDS FOR SEWAGE AND 18 WATER SUPPLY FACILITIES. 19 (a) BONDS FOR WATER AND SEWAGE FACILITIES 20 EXEMPT FROM VOLUME CAP ON PRIVATE ACTIVITY 21 BoNDs. Paragraph (3) of section 146(8) of the Internal 22 Revenue Code of 1986 is amended by inserting "(4), (5)," 23 after "(2), ". 24 (b) CONFORMING CHANGE.— Paragraphs (2) and 25 (3)(B) of section 146(k) of the Internal Revenue Code of f:\VHLC1022212 \022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1208- lap­ Draft, 2C, 1. 1980' are both aniendec_.� lb�- strikill!:1 "(4,. anC_. 2 inserting "(6)" 3 (c) EFFECTrvE DATE.—The amendments made by 4 this section shall apply to obligations issued after the date 5 of the enactment of this Act. fAVHLC\022212\022212.001.xm1 (515445119) February 22, 2012 (9:16 a.m.) Packet Page -1209- a. M, ... Board of Collier County Commissioners Donna Fiala Georgia A. Hiller, Esq. Tom Henning District 1 District 2 District 3 June 14, 2012 Senator Bill Nelson 716 Senate Hart Office Building Washington, DC 20510 Re: Water Infrastructure Finance and Innovation Act Dear Senator Nelson: Fred W. Coyle Jim Coletta District 4 District 5 While 95 percent of spending on water and wastewater has been from local sources, the federal government can play an important role by lowering the cost of capital for water and wastewater investments. The need to replace or upgrade existing infrastructure requires access to a large amount of capital in a relatively short time frame, placing great stress on local rates and charges. Almost 70 percent of American communities use bonds to finance local infrastructure. Collectively, we pay billions of dollars in interest costs each year. Lowering the cost of borrowing for water and wastewater infrastructure is critical to Collier County as we search for ways to leverage local funding for such projects as the Immokalee Stormwater project, the Orange Tree Public Works expansion, and our Regional Water Interconnections. The House Subcommittee on Water Resources and Environment is actively addressing water infrastructure finance issues and is now preparing to introduce a Water Infrastructure Finance and Innovation Act ( WIFIA). The act would create a finance mechanism modeled after the successful Transportation Infrastructure Finance and Innovations Authority and would provide access to lower -cost capital for investments in water infrastructure. This mechanism would have little to no long -term effect on the federal budget deficit. As in TIFIA, WIFIA would, under the Federal Credit Reform Act, only require appropriated funding sufficient to cover the subsidy cost, or risk, of loans. WIFIA would increase the availability of federal loans for large -scale (over $20m) water infrastructure investments that may not be suitable for assistance through the existing Drinking Water and Clean Water State Revolving Fund (SRF) programs. The legislation would reduce the cost of financing large water infrastructure projects by reducing the cost of borrowing to Treasury rates, as well as leveraging limited federal funding, which would have the effect of substantially increasing the amount of available 3299 Tamiami Trail East, Suite 303 • packet Page -1210- 239- 252 -6097 • FAX 239 - 252 -3602 financing to be made available to communities and the State Revolving Funas. The benefit tc local communities of lower interest rates is significant. Lowering the cost of borrowing by 2.5 percent on a 30 -year loan reduces the lifetime project cost by almost 26 percent, the some result as a 26- percent grant. WIFIA loans would be repaid to the Authority — and then to the Treasury — with interest. Accordingly, WIFIA — because it would involve loans that are repaid — would involve minimal risks and minimal long -term costs to the federal government. America faces the need to begin a significant and sustained increase in its investment in water and waste water infrastructure, or risk deteriorating water and waste water services. Please sign on as an original co- sponsor of the WIFIA legislation that Rep. Gibbs has drafted. We believe the more original co- sponsors this legislation can attract, the more momentum the bill will have in Congress. cc: Senator Marco Rubio Sincerely, Fred W. Coyle, Chairman Ex- Officio, the Board of the Collier County Water -Sewer District Packet Page -1211- Board of Collier County Commissioners Donna Fiala Georgia A. Hiller, Esq. Tom Henning District 1 District 2 District 3 June 14, 2012 Senator Marco Rubio 317 Senate Hart Office Building Washington, DC 20510 Re: Water Infrastructure Finance and Innovation Act Dear Senator Rubio: Fred W. Coyle Jim Coletta District 4 District 5 While 95 percent of spending on water and wastewater has been from local sources, the federal government can play an important role by lowering the cost of capital for water and wastewater investments. The need to replace or upgrade existing infrastructure requires access to a large amount of capital in a relatively short time frame, placing great stress on local rates and charges. Almost 70 percent of American communities use bonds to finance local infrastructure. Collectively, we pay billions of dollars in interest costs each year. Lowering the cost of borrowing for water and wastewater infrastructure is critical to Collier County as we search for ways to leverage local funding for such projects as the Immokalee Stormwater project, the Orange Tree Public Works expansion, and our Regional Water Interconnections. The House Subcommittee on Water Resources and Environment is actively addressing water infrastructure finance issues and is now preparing to introduce a Water Infrastructure Finance and Innovation Act ( WIFIA). The act would create a finance mechanism modeled after the successful Transportation Infrastructure Finance and Innovations Authority and would provide access to lower -cost capital for investments in water infrastructure. This mechanism would have little to no long -term effect on the federal budget deficit. As in TIFIA, WIFIA would, under the Federal Credit Reform Act, only require appropriated funding sufficient to cover the subsidy cost, or risk, of loans. WIFIA would increase the availability of federal loans for large -scale (over $20m) water infrastructure investments that may not be suitable for assistance through the existing Drinking Water and Clean Water State Revolving Fund (SRF) programs. The legislation would reduce the cost of financing large water infrastructure projects by reducing the cost of borrowing to Treasury rates, as well as leveraging limited federal funding, which would have the effect of substantially increasing the amount of available financing to be made available to communities and the State Revolving Funds. The benefit to local 3299 Tamiami Trail East, Suite 303 • packet Page -1212- 239- 252 -8097 • FAX 239 - 252 -3602 communities of iower interest rates is significant. Lowering the cost of borrowing by 25 percent on a 30 -year loan reduces the lifetime project cost by almost 26 percent, the same result as a 26- percent grant. WIFIA loans would be repaid to the Authority — and then to the Treasury — with interest. Accordingly, WIFIA — because it would involve loans that are repaid — would involve minimal risks and minimal long -term costs to the federal government. America faces the need to begin a significant and sustained increase in its investment in water and waste water infrastructure, or risk deteriorating water and waste water services. Please sign on as an original co- sponsor of the WIFIA legislation that Rep. Gibbs has drafted. We believe the more original co- sponsors this legislation can attract, the more momentum the bill will have in Congress. cc: Senator Bill Nelson Sincerely, Fred W. Coyle, Chairman Ex- Officio, the Board of the Collier County Water -Sewer District Packet Page -1213- Board of Collier County Commissioners Donna Fiala Georgia A. Hiller, Esq. Tom Henning District 1 District 2 District 3 June 14, 2012 Congressman David Rivera U. S. House of Representatives 417 Cannon House Office Bldg. Washington, DC 20515 Re: Water Infrastructure Finance and Innovation Act Dear Congressman Rivera : Fred W. Coyle Jim Coletta District 4 District 5 While 95 percent of spending on water and wastewater has been from local sources, the federal government can play an important role by lowering the cost of capital for water and wastewater investments. The need to replace or upgrade existing infrastructure requires access to a large amount of capital in a relatively short time frame, placing great stress on local rates and charges. Almost 70 percent of American communities use bonds to finance local infrastructure. Collectively, we pay billions of dollars in interest costs each year. Lowering the cost of borrowing for water and wastewater infrastructure is critical to Collier County as we search for ways to leverage local funding for such projects as the Immokalee Stormwater project, the Orange Tree Public Works expansion, and our Regional Water Interconnections. The House Subcommittee on Water Resources and Environment is actively addressing water infrastructure finance issues and is now preparing to introduce a Water Infrastructure Finance and Innovation Act ( WIFIA). The act would create a finance mechanism modeled after the successful Transportation Infrastructure Finance and Innovations Authority and would provide access to lower -cost capital for investments in water infrastructure. This mechanism would have little to no long -term effect on the federal budget deficit. As in TIFIA, WIFIA would, under the Federal Credit Reform Act, only require appropriated funding sufficient to cover the subsidy cost, or risk, of loans. WIFIA would increase the availability of federal loans for large -scale (over $20m) water infrastructure investments that may not be suitable for assistance through the existing Drinking Water and Clean Water State Revolving Fund (SRF) programs. The legislation would reduce the cost of financing large water infrastructure projects by reducing the cost of borrowing to Treasury rates, as well as leveraging 3299 Tamiami Trail East, Suite 303 • packet Page -1214- 239-252 -8097 - FAX 239 - 252 -3602 limited Tederal funding, which would have the effect of suostantially increasing the amount of avahabie financing to be made available to communities and the State Revolving Funds. The benefit to local communities of lower interest rates is significant. Lowering the cost of borrowing by 2.5 percent on a 30 -year loan reduces the lifetime project cost by almost 26 percent, the same result as a 26- percent grant. WIFIA loans would be repaid to the Authority and then to the Treasury — with interest. Accordingly, WIFIA — because it would involve loans that are repaid — would involve minimal risks and minimal long -term costs to the federal government. America faces the need to begin a significant and sustained increase in its investment in water and waste water infrastructure, or risk deteriorating water and waste water services. Please sign on as an original co- sponsor of the WIFIA legislation that Rep. Gibbs has drafted. We believe the more original co- sponsors this legislation can attract, the more momentum the bill will have in Congress. cc: Congressman Connie Mack Sincerely, Fred W. Coyle, Chairman Ex- Officio, the Board of the Collier County Water -Sewer District Packet Page -1215- Donna Fiala District 1 Board of Collier County Commissioners Georgia A. Hiller, Esq. Tom Henning District 2 District 3 June 14, 2012 Congressman Connie Mack U. S. House of Representatives 115 Cannon House Office Bldg. Washington, DC 20515 Re: Water Infrastructure Finance and Innovation Act Dear Congressman Mack: Fred W. Coyle Jim Coletta District 4 District 5 While 95 percent of spending on water and wastewater has been from local sources, the federal government can play an important role by lowering the cost of capital for water and wastewater investments. The need to replace or upgrade existing infrastructure requires access to a large amount of capital in a relatively short time frame, placing great stress on local rates and charges. Almost 70 percent of American communities use bonds to finance local infrastructure. Collectively, we pay billions of dollars in interest costs each year. Lowering the cost of borrowing for water and wastewater infrastructure is critical to Collier County as we search for ways to leverage local funding for such projects as the Immokalee Stormwater project, the Orange Tree Public Works expansion, and our Regional Water Interconnections. The House Subcommittee on Water Resources and Environment is actively addressing water infrastructure finance issues and is now preparing to introduce a Water Infrastructure Finance and Innovation Act ( WIFIA). The act would create a finance mechanism modeled after the successful Transportation Infrastructure Finance and Innovations Authority and would provide access to lower -cost capital for investments in water infrastructure. This mechanism would have little to no long -term effect on the federal budget deficit. As in TIFIA, WIFIA would, under the Federal Credit Reform Act, only require appropriated funding sufficient to cover the subsidy cost, or risk, of loans. WIFIA would increase the availability of federal loans for large -scale (over $20m) water infrastructure investments that may not be suitable for assistance through the existing Drinking Water and Clean Water State Revolving Fund (SRF) programs. The legislation would reduce the cost of financing large water infrastructure projects by reducing the cost of borrowing to Treasury rates, as well as leveraging 3299 Tamiami Trail East, Suite 303 - packet Page -1216- 239- 252 -8097 • FAX 239 - 252 -3602 limited federal funding, which would have the effect of substantiahy increasing the amour_ o� avaiiabi financing to be made available to communities and the State Revolving Funds. The benefit to local communities of lower interest rates is significant. Lowering the cost of borrowing by 2.5 percent on a 30 -year loan reduces the lifetime project cost by almost 26 percent, the same result as a 26- percent grant. WIFIA loans would be repaid to the Authority — and then to the Treasury — with interest. Accordingly, WIFIA — because it would involve loans that are repaid — would involve minimal risks and minimal long -term costs to the federal government. America faces the need to begin a significant and sustained increase in its investment in water and waste water infrastructure, or risk deteriorating water and waste water services. Please sign on as an original co- sponsor of the WIFIA legislation that Rep. Gibbs has drafted. We believe the more original co- sponsors this legislation can attract, the more momentum the bill will have in Congress. cc: Congressman David Rivera Sincerely, Fred W. Coyle, Chairman Ex- Officio, the Board of the Collier County Water -Sewer District Packet Page -1217-