draft

develop innovative approaches to financial management.

• Goal: Implement programs that effectively address water system needs and target appropriate audiences.

Objective: During SFY 2023 SRF staff will continue to educate users and potential users about the program offerings through presentations, displays, program materials, and the IowaSRF.com website. Current and Projected Financial Capacity of the DWSRF Appendix A of this DWSRF IUP (the Estimated Sources and Uses table) shows that available funds are sufficient to fund current loan requests. SRF staff has analyzed the future financial capacity of the DWSRF. Assuming that Iowa continues to receive Cap Grants and the full 31% set-asides, and that the DWSRF Program continues to grant 26% loan forgiveness, and the same interest rates, it is projected that the DWSRF could loan an average of approximately $155 million per year over the next 10 years, or a total of $1.55 billion. If Iowa does not receive any additional Cap Grants but keeps the same interest rates and the other assumptions, the DWSRF could loan an average of approximately $130 million per year over the next 10 years. These figures would increase with an increase in interest rates. Financial Management Strategies The DWSRF Project Priority List (Attachment 1) shows total loan requests for water supply projects. Because many of these projects are in the planning phase, they are not expected to sign a binding loan commitment during this fiscal year. The projected timing and demand for loan draws is reflected in Appendix A. The cash draw procedure used is the direct loan method. The Iowa DWSRF program uses its equity fund to originate loans. When a sufficient number of loans have been made, the SRF program issues bonds and uses the bond proceeds to replenish the equity fund. Iowa’s bonds are cross-collateralized across both the Clean Water and Drinking Water SRF accounts. State match bonds are typically issued at the same time that leveraged bond issues are done for greater cost effectiveness. State match is fully disbursed prior to drawing EPA Cap Grant funds. The EPA Cap Grant funds will be drawn at a 100% proportionality ratio. Iowa issued bonds in 2019, which included the state match for FFY 2019 and FFY 2020 Cap Grants. Bonds were issued in February 2020 which included state match for future Cap Grants so no additional state match funds were included in the May 2021 bond issue. The program issued bonds in May 2022, which included the required state match obligations for the FFY 2022 Cap Grants (base program and supplemental). SFY 2022 Project Priority List The management of the DWSRF program, including development of a Project Priority List for financing assistance, was developed according to Part 567 of the Iowa Administrative Code (IAC), Chapter 44. This IUP indicates the intent to provide funds to projects ranked in priority order according to scoring criteria contained in Chapter 44 of the IAC. The Iowa SRF Program is able to fund all eligible projects. Projects are added to the Project Priority List to be funded based on the State’s implementation rules for the DWSRF program in 567 IAC Chapter 44. Projects will be funded as they become ready to proceed to construction. Adjustment to the list of fundable projects will be made, if necessary, to assure that at least 15% of the project funds are available to systems serving fewer than 10,000 persons as specified in Section 1452(a) (2) of the Safe Drinking Water Act. Financing may be provided for up to 100% of project costs if the costs are eligible for funding based on engineering, environmental, and financial review and project readiness to proceed as described above. Due to the project workload and for planning purposes, the DWSRF staff may evaluate projects that have been on the IUP list for more than three years. A notification will be sent to the applicants that their project may be dropped if there is no progress in the six months following the notice. If a project is dropped, the applicant may reapply when the project is ready to move ahead. For program planning purposes, the fundable projects are further identified as “R - ready for loan” (indicating that the

IOWA SRF INTENDED USE PLANS 2023 - DWSRF | Page 32