It is important for DEQ, VDH and VRA that the CWRLF and DWSRF keep pace with the growing needs that local governments face in serving their communities. In recent years, there has been increasing project demand in both programs. For this reason, VRA and its agency partners took active steps to address this project demand challenge by leveraging the programs with a State Revolving Fund (SRF) Revenue Bonds issue.
This was the inaugural leverage issue for the 23-year old DWSRF program and its proceeds will increase loan capacity by $50 million which is a particular boost for smaller utilities that frequently rely on the DWSRF. The CWRLF has been leveraged periodically beginning in 1999 and this bond issue will provide $70 million in increased funding in that program. VRA successfully priced the $104,980,000 SRF 2020 Bonds on September 1 and closed on September 16. The SRF bonds obtained credit agency ratings of Aaa/AAA/AAA, the highest ratings possible.
VRA’s actions to maximize lending capacity in the Clean Water and Drinking Water programs through thoughtful planning and implementing cross-collateralization of the two programs initiated in August 2019. With DEQ and VDH concurrence, the VRA Board of Directors authorized amendments to the existing Clean Water Master Trust Indenture in December 2019, which allowed for the issuance of State Revolving Fund Revenue Bonds. The cross-collateralization of assets from both programs creates a convenient and efficient approach to leveraging the DWSRF and adds diversification to the overall loan portfolio.
In short, the cross-collateralization expands the tools both programs can use to help local governments. VRA now is able to leverage the combined funds to meet increasing demand for loans in both programs that support critical infrastructure projects. In fact, it is projected that 15 projects from the DWSRF would not have received funding if VRA and its agency partners had not pursued this innovative financial solution.
More about these programs:
Local governments use these two programs to complete vital capital projects that are funded by a combination of federal grants and state matching dollars. To date, VRA has made about 500 loans from the CWRLF totaling approximately $3.3 billion and about 425 loans from the DWSRF totaling approximately $407 million.
- The Clean Water Revolving Loan Fund provides financial assistance for the construction of publicly owned wastewater treatment facilities and other eligible water pollution control projects, including brownfields remediation, installation of agricultural best management practices, open space preservation, living shorelines projects and installation of stormwater best management practices having an impact on water quality.
The Drinking Water State Revolving Fund provides financial assistance for the construction of public drinking water facilities.