ACEC Environmental Business & Indiana Finance Authority State Revolving Fund Loan Program ACEC Environmental Business & Funding Sources Conference September 19, 2018 State Revolving Fund 100 N. Senate Avenue, Room 1275 Indianapolis, Indiana 46204 wharkins@ifa.in.gov 317-234-4862

Below market interest rates 20-year repayment period SRF Programs Provide Below market interest rates 20-year repayment period (35-year for pipe projects) Disbursements as needed

SRF Programs Results as of June 30, 2018 528 Clean Water loans closed 249 Drinking Water loans closed Over 380 Communities served Over $4.6 Billion in loan closings Over $4.2 Billion disbursed to communities Over past 4 years, $272 Million interest savings

Estimated Need: Wastewater The 2008 EPA CW Needs Congressional Report identifies over $7.8 Billion in CW infrastructure needs over the next 20 years in Indiana. The most substantial needs occur in: Combined Sewer Overflows New Collector Sewers Advanced Treatment Sewer Rehabilitation Treatment Plan upgrades

Estimated Need: Drinking Water The 2016 IFA Water Study identifies over $2.3 Billion in immediate infrastructure needs and an additional $815 Million needed annually to maintain utilities into the future. The most substantial needs occur in: Transmission and Distribution Treatment Storage Source

Strategies for Addressing Affordability Interest Rates Low Interest Rates Incentives: Lead Line Replacement Green Project Reserve Nonpoint Source Additional Subsidy ETF DRAFT! (obviously )

SRF Interest Rates Wastewater SRF Interest Rates User Rates (Over $50) SRF Rates July 1, 2018 to September 30, 2018 Wastewater SRF Interest Rates User Rates (Over $50) ($30 to $50) (Under $30) Tier III (MHI: under $40,346) 2.00% 2.12% Tier II (MHI: $40,347 to $50,432) 2.37% Tier I (MHI over $50,433) 2.62% Drinking Water SRF Interest Rates User Rates (Over $45) ($25 to $45) (Under $25) Tier III (MHI: under $40,346) 2.00% 2.12% Tier II (MHI: $40,347 to $50,432) 2.37% Tier I (MHI over $50,433) 2.62%

Lead Service Line Replacement Financing Project Example Utility develops plan to replace distribution mains and service lines in service area. Identify lines and secure easements. Complete lead service lines only (no partials).

Loan Structured with Lead Line Rate Reduction Illustration of SRF Cost Savings Lead Line Replacement Incentive Utility ABC’s Financing Cost Original Loan Structured with Lead Line Rate Reduction Loan Debt Service New SRF Loan $10,000,000 $ 12,500,000 Interest Rate 2.25% 0.00% $12,500,000 Amount available for lead line project $ 2,500,000 Interest rate savings will allow Utility to apply $2,500,000 towards costs associated with lead line replacement project at no additional costs to rate payers. Similar methodology is applied to GPR projects.

More information at: https://www.in.gov/ifa/srf/2385.htm SRF Incentive Programs More information at: https://www.in.gov/ifa/srf/2385.htm

What is the SRF Extended Term Financing Program? The Indiana SRF can offer Extended Term Financing with loan terms up to 35 years to all water and sewer projects having a useful life equal to the loan term.

Why is Extended Term Needed? Studies conducted showed underinvesting in infrastructure projects leads to a higher risk of deterioration of the quality of service, reliability of service and shifting costs to future generations.

Interest Rate Increase Interest Rate for Extended Term An SRF project with an extended loan term will experience a slightly higher interest rate as shown: Loan Term Interest Rate Increase 21-25 +0.1% 26-30 +0.2% 30-35 +0.3%

New Indiana Law Indiana Code 5-1.2-10-16 CW and DW Recipients must demonstrate that they have developed or are in the process of developing an asset management program as defined in the guidelines of the authority.

An Asset Management Plan (AMP) is important for the following reasons: Asset Management Planning An Asset Management Plan (AMP) is important for the following reasons: Utility assets provide an essential customer service. Proper O&M and scheduled replacement of these assets is essential for public health and safety. These assets represent a major public investment.

Asset Management Program Memorandum Asset Management Program Guidance SRF AMP Guidance Documents Available: Asset Management Program Memorandum Asset Management Program Guidance Asset Management Program Checklist Asset Management Program Certification Asset Management Program Guidelines 

More information at: https://www.in.gov/ifa/srf/2376.htm SRF AMP Guidance More information at: https://www.in.gov/ifa/srf/2376.htm

Questions? Bill Harkins Director 317-234-4862 wharkins@ifa.in.gov www.srf.in.gov