Several times throughout the year, VRA issues bonds through either the Virginia Pooled Financing Program or a Revolving Loan Fund and lends the proceeds to local governments at either market-based rates or subsidized rates to finance eligible infrastructure projects. Additional loan funds come from federal grants and state appropriations. These state and federal funds are used to provide rate reductions on loans for eligible projects. These below-market rate loans, some at 0%, are made available through three revolving loan funds, including the Clean Water Revolving Loan Fund, the Drinking Water State Revolving Fund, and the Virginia Airports Revolving Fund.
Virginia Pooled Financing Program
Under the Virginia Pooled Financing Program ("VPFP"), VRA sells bonds and then loans the proceeds to local governments to finance eligible infrastructure projects. The borrowers' interest rates are based on the rates that VRA obtains in the public bond market. Based in part on the use of the Commonwealth's moral obligation, VRA's high credit ratings typically result in interest rate savings for localities. This translates to reduced rates, taxes and user fees for borrowers' constituents. Further savings are realized by consolidating borrowing needs of multiple localities into one bond issue. Through economies of scale and sharing of expenses, borrowers significantly reduce issuance costs versus other methods of finance. These efficiencies do not hinder loan flexibility for individual borrowers. Each loan is customized to meet the needs and financial policies of each local government, or in the case of regional projects, group of local governments. For more information regarding the VPFP and its previous public bond issuances click here.
Clean Water Revolving Loan Fund
The Clean Water Revolving Loan Fund ("CWRLF") reduces interest rates for local governments for projects that improve water quality or prevent future water quality issues. VRA administers the program jointly with the Virginia Department of Environmental Quality ("DEQ"). DEQ manages policy aspects of the fund on behalf of the State Water Control Board. VRA serves as the financial manager of the fund: underwriting loans, issuing bonds, investing monies, closing loans, making disbursements, and maximizing economic benefits. The scope of CWRLF activity includes low-interest loans for publicly owned wastewater treatment facilities, as well as brownfield remediation and open space preservation related to water quality issues. Loans are made from bond proceeds or from United States Environmental Protection Agency ("EPA") capitalization grants, state match, or prior loan repayments as direct loans. For more information regarding the CWRLF and its previous public bond issuances click here.
Drinking Water State Revolving Fund
The Drinking Water State Revolving Fund ("DWSRF") provides low interest loans, as well as some grants, for drinking water projects to local governments and privately organized water suppliers. The fund receives EPA grants and state matching and is designed to be permanent and perpetual, similar to the CWRLF. Virginia Department of Health administers the program, while VRA acts as financial administrator and services the loans. This program has not been funded through public bond issuances.
Virginia Airports Revolving Fund
The Virginia Airports Revolving Fund ("VARF") was created in 2000 with an appropriation of $25 million from the General Assembly of the Commonwealth of Virginia to support and induce investment in public, general use airport assets. Utilizing the initial $25 million capitalization, VRA has invested nearly $90 million in below market interest rate loans to assist with over 30 projects at 20 airports. VRA partners with the Virginia Aviation Board to administer the fund. VRA administers the program jointly with the Virginia Aviation Board ("VAB"). The VAB prioritizes individual loan requests and VRA manages the financial aspects of the fund. For more information regarding the VARF and its previous public bond issuances click here.
VRA's Underwriting Criteria
The VRA Board of Directors has adopted Underwriting Criteria which staff utilize in performing each Credit Analysis, making appropriate security recommendations, and ultimately, loan approval decisions. Please find the Underwriting Criteria available here.