State of Newater 

Clean Water State Revolving Fund 

Intended Use Plan Fiscal Year 2012 

Version: October 2012 

DRAFT EXAMPLE IUP 

FOR ILLUSTRATION PURPOSES AND BEST PRACTICES 
Preface

The following Draft Example CWSRF Intended Use Plan was developed to demonstrate how new CWSRF

policies and requirements could be incorporated into an IUP as well as to illustrate best practices for

requirements that may not have been a focal point to date.  This Draft Example CWSRF IUP includes

both required and optional items.  It is not intended as a guide for how States should be managing their

SRF programs, what types of projects they should be funding, or the types of assistance they should be

providing, but rather as a guide for how new policies and best practices can be incorporated into the

IUP.

Items that may be new to many States are denoted with an arrow:  

The items that reflect new policies or best practices include:  

 Figure 1 ‐ List of Projects to be Funded (page 4):  The List of Projects to be Funded should include

sufficient information in the project description to allow EPA to determine whether the project

is eligible and, if it is known at the time that the project will be included in the Green Project

Reserve, what elements are being counted towards GPR.  If known at the time of developing the

List, information on projects that implement the EPA Sustainability Policy, additional subsidy and

the Green Project Reserve should be denoted.  As always, the actual projects funded (as

described in the Annual Report) may differ from the List of Projects to be Funded found in the

IUP, because some projects will fall through for various reasons; however, states should make a

best effort to identify those projects most likely to proceed to funding when developing their

IUPs.  Figure 1 reflects a best practice for a List of Projects to be Funded, in terms of the amount

and type of information that is provided.

 Short and Long Term Goals (page 6):  The Short‐Term Goals include measurable outcomes, a

best practice.  A new short term goal to expedite project development reflects an

Administration priority for capitalization grants to be awarded in the first year of availability and

have all Federal funds drawn as soon as possible.  

 Allocation of Funds ‐ Disadvantaged Community and Sustainability Policy (page 9):  The FY2011

Grant Conditions include a provision on sustainability, which reflects the EPA Clean Water and

Drinking Water Sustainability Policy.  This section in the Example CWSRF IUP includes specific

project examples that would implement the Sustainability Policy.  Note that it does not include a

comprehensive list of project examples.  

 Financial Management ‐ Anticipated Cash Draw Ratio (page 11):  As indicated in the EPA

Memorandum, “Procedures for Implementing the Fiscal Year 2011 Full‐Year Continuing

Appropriation Act Affecting the Clean Water and Safe Drinking Water State Revolving Fund

Programs” (May 20, 2011), the IUP must include the cash draw ratio that States plan on using.  

In addition, EPA Memorandum, “Clarification of Cash Draw Rules for Leveraged SRF Programs”

(August 26, 2011) clarifies cash draw procedures for leveraged SRF programs that do not use

their Federal capitalization grants to secure their leveraged bonds.  The Example CWSRF IUP

illustrates how both memoranda may be implemented for this hypothetical state.  Note that

States may have different cash draw ratios and leveraging procedures.  

 Figure 3 ‐ Sources  and Uses (page 12):  Best practices for the Sources and Uses table are to (a)

include both cumulative and annual data and (b) use language that would be easy to understand
for stakeholders outside EPA.  Also note that if there are sufficient projects available, the

Sources should equal the Uses. If the Sources exceed the Uses, the IUP must include a plan

which details how and when the remaining funds will be used.   

 Program Management – Federal Requirements (page 14): The Intended Use Plan should

describe which projects will be used to comply with the Federal requirements.  The Example

CWSRF IUP provides an example of how this may be indicated in an IUP.

We appreciate your comments and suggestions on this Draft Example CWSRF IUP.

George Ames

Clean Water State Revolving Fund Branch
Table of Contents

I. Introduction ..........................................................................................................................................2

II. Fiscal Year 2012 Project Funding .......................................................................................................... 2

III. Short and Long Term Goals............................................................................................................... 6

IV. Allocation of Funds ........................................................................................................................... 7

a. Criteria and Method for Distribution of Funds................................................................................. 7

b. Types of Projects to be Funded and Financing Rates ....................................................................... 8

V. Financial Management........................................................................................................................11

a. Source of State Match..................................................................................................................... 11

b. Fee Income......................................................................................................................................11

c. Program Administration..................................................................................................................11

d. Anticipated Cash Draw Ratio .......................................................................................................... 11

e. Transfer of Funds from the Drinking Water State Revolving Fund................................................. 11

f. Estimated Sources and Uses........................................................................................................... 11

g. Financial Management Strategies................................................................................................... 12

VI. Program Management.................................................................................................................... 14

a. Assurances and Specific Proposals.................................................................................................. 14

b. Federal Requirements..................................................................................................................... 14

c. Davis‐Bacon Wage Rates................................................................................................................. 15

d. Audits and Reporting ...................................................................................................................... 15

VII. Public Review and Comment .......................................................................................................... 15

Appendix

A. Project Priority List

B. Financial Planning

a. Proposed Payment Schedule

b. Binding Commitment Schedule

c. Financial Projections

C. Public Review

a. Meeting Minutes

b. Comment Letters and Responses

D. Project Ranking Criteria

E. Project Application

    Note: This Example CWSRF IUP was developed by US EPA as an illustration of best practices for

information that can be included in an IUP – both required and optional items.  It is not intended as

guide for how States should be managing their CWSRF programs, the types of projects they should be

funding or the types of assistance that should be provided.
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 2

I. Introduction

The State of Newater’s Intended Use Plan (IUP) for the Clean Water State Revolving Fund (CWSRF) is

prepared in accordance with the provisions of Title VI of the Clean Water Act of 1987, and the Federal

Fiscal Year (FY) 2012 Appropriations Act, Public Law 888‐22, which was signed into law on June 25, 2011.  

This IUP is a required part of the process to request the Federal Fiscal Year 2012 Capitalization Grant,

which will be matched with 20 percent in state matching funds.  The FY2012 capitalization grant

allotment for the State of Newater is $10,300,000. This IUP describes Newater’s intended uses for all

funds available in the CWSRF program for FY2012, including the projects that Newater expects to

provide financial assistance to in fiscal year 2012 and an overview of how the state will comply with

federally mandated requirements.     

The Newater CWSRF was established pursuant to the Clean Water Act of 1987 and the Newater Water

Quality Financing Act, Title II, to provide below market interest rate financing to local governments and

eligible private entities for certain water quality projects. The CWSRF operates through a partnership

between the Newater Department of Environmental Quality (DEQ) and the Newater Financing Authority

(NFA).  The DEQ administers the technical and environmental aspects of the program and the NFA

manages the financial capability review and disbursement process, as well as all bonds issued for CWSRF

implementation.  The State of Newater Clean Water State Revolving Fund (CWSRF) provides low‐cost

financial assistance for high priority wastewater system, stormwater and nonpoint source projects.     

Since the program’s authorization in 1989, Newater has awarded over $1.1 billion in assistance to over

3,000 borrowers, including small and large municipalities, farmers, and nonprofit organizations. In

FY2012, Newater expects to fund $69 million in high‐priority water quality projects.   

How the CWSRF Program Operates

Every year since the inception of the CWSRF program, the federal government has appropriated funds

for the CWSRF.  These capitalization grants are distributed to states using a formula outlined in the

Clean Water Act Amendments of 1988.  Since 1989, the Newater CWSRF has received over $260 million

in federal capitalization grants.  In addition, as required by the legislation, the state of Newater has

provided matching funds equal to 20 percent of the capitalization grants.  In some years, Newater’s

CWSRF leverages its program using municipal bonds.  The bonds allow Newater to fund more projects

sooner by making additional funds available.    

American Recovery and Reinvestment Act

In fiscal year (FY) 2010, Newater received additional capitalization of $29.5 million through the American

Recovery and Reinvestment Act of 2009 (ARRA), the federal stimulus bill.  Forty‐two additional projects

received low‐cost financing through ARRA.  Thirty‐five projects have completed construction as of

October 1, 2011.  The remaining projects are expected to complete construction by July 31, 2012.  

II. Fiscal Year 2012 Project Funding  

Newater’s FY2012 federal capitalization grant is $10,300,000.  Congress mandated that at least 10

percent of this amount (at least $1,030,000) be put towards projects that qualify under the Green

Project Reserve.  In addition, the Appropriations Act requires that between 20 and 30 percent of the

national CWSRF appropriation over $1 billion be provided as additional subsidy.  For Newater, between

$665,200 and $997,800 is required to be put towards providing an additional subsidy to borrowers;

Newater plans to provide $864,700 in subsidy as principal forgiveness.  Further, CWSRF projects funded

in FY2012, regardless of funding source, must pay their workers the federal Davis‐Bacon wage rates for

their job classification.  
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 3

In FY2012, Newater expects to finance thirteen wastewater and stormwater infrastructure and nonpoint

source projects for $69,047,600.  These include:  

 Seven projects that will receive principal forgiveness.   These projects are either characterized as

“fix it first” projects or take place in communities that could not otherwise afford financing.     

 Four projects that are expected to qualify for the Green Project Reserve.  Funding for these

projects totals $4.8 million, or 46 percent of the capitalization grant.   

Figure 1 includes Newater’s project funding list, or fundable list.  These are the projects that Newater

expects to fund in FY2012.  An expanded Project Priority List can be found in Appendix A.  Integrated

project priority (IPPS) ranking criteria can be found in Appendix D.   

  
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan 

Rank

Community

Name/Project

Sponsor

NPDES

permit

number

Needs

Category

*

Project Description Total Assistance Interest Rate Term Principal Forgiveness Amount Sustainability Policy Disadvantaged Community Am

1 Franklin County BC0075431 III‐B

Franklin County is not meeting its effluent limits. Treatment plantrenovations include construction of a raw sewage pump stationand influent force main, pretreatment facilities, activated sludge

basin modifications, clarification tanks, aerobic sludge digesters,

and various additions/modifications to existing piping and

electricalsystems. $20,635,000 2.6% 30 

2 City of Clinton BC0092705 III‐A

Testing has revealed areas with significant infiltration and inflow

problems. Project will repair and rehabilitate approximately

10,000 linear feet of pipe, hydraulic capacity overloads to the

WWTP and collection system will be alleviated, reducing

treatment costs. An asset management program will also be

developed. $2,165,600 2.60% 20 $100,000

Fix It First

Project

3 City of Greenville BC0068421 VII‐H

Repairs and upgrades at the Greenville Sewer Authority Central

Treatment Facility. Project includes the rehabilitation and

replacement of aeration and sedimentation tanks, extending their

useful life. $4,420,000 2.60% 20 $100,000

Fix It First

Project

4 Milton County BC0059740

Perform a study on 1,100 miles of sewage lines to identify defectsand losses. Results will be used to develop a plan for repair and

replacement of the infrastructure. $280,000 2.60% 20 $28,000

Planning to

Improve TFM

Capacity 

5 Town of Marion BC0048906

Development of a Clean Water Action Plan for the Town of

Marion, incorporating upgrades for the wastewater treatment

systems and approaches for green infrastructure. $350,000 2.60% 20 $35,000

System

Planning 

6 Salem County IV‐A

Over 50% of the on‐lotseptic systems in the county are

malfunctioning. Project involves the installation of 8,800 linear

feet of 8 inch gravity collection sewers and 5,250 linear feet of 15

inch gravity interceptor sewers. Sewage will be conveyed to the

Salem County Pollution Control Authority for treatment. Project

meets Newater CWSRF criteria as a disadvantaged community.

$2,267,000 0.00% 30 $226,700

Disadvantaged

Community

7 Fairview City BC0014538 V

Fairview City is served by a combined sewer system. During

heavy rainfall events, untreated sewage discharges into the

Franklin River. Project will add 85,000 linear feet of 10, 8 and 6

inch wastewater main, as well as related appurtenances and

restoration. The old system will deliver stormwater only. $18,050,000 2.60% 20 

Additional Subsidy 

Figure 1: List of Projects to be Funded, FY2012

Note: List of Projects to be Funded is for illustration purposes to indicate “best practices” for the level of information to be prov

expected to change their process for ranking projects and determining financing provided based on this example.
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan 

Rank

Community

Name/Project

Sponsor

NPDES

permit

number

Needs

Category

*

Project Description Total Assistance Interest Rate Term Principal Forgiveness Amount Sustainability Policy Disadvantaged Community Am

8 City of Madison BC0026784 III‐B

The City of Madison is continuing its systematic sewer line repair

and maintenance work. This project will repair 8,100 linear feet

of sewer mains that are over 30 years old to prevent future main

breaks. $1,250,000 2.60% 20 $125,000

Fix It First

Project

9

Town of

Georgetown BC0034721 II

The Georgetown Sewage Treatment Plant will install a new

influentscreen facility, a new effluent disc filter facility and a new

post aeration facility, to help bring it into compliance with its

permit. Project meets Newater CWSRF criteria as a

disadvantaged community. $3,000,000 0.00% 30 $250,000

Disadvantaged

Community

10

Town of

Springfield VI‐C

Springfield is retrofitting two main streets through its downtown

using green design to reduce stormwater runoff to Three Mile

Run, a local waterbody on the 303(d) list for sediment

impairment. Public parking lots and sidewalks will be repaved

using permeable pavement. Four government buildings,

including a library and fire station, will be retrofitted for green

roofs, and water‐saving fixtures will be installed. Project includes

restoration of the streambank and addition of natural features

surrounding the stream. $3,520,000 2.00% 20 $87

11 Arlington County BC0058612 II

Arlington will be upgrading the Arlington Wastewater Treatment

Plant for prepare effluent for land application. This is the first

known use of land application in the State of Newater. $2,800,000 2.00% 20 $80

12 Oxford County BC0032665 I, II

Projects to implement findings from an energy audit at the

Oxford Treatment Works: replacement of all lighting with energy‐

efficient flourescent and LED lights, implementation of fine bubble

diffusers and variable frequency drive blowers and pumps.

3,00,000 kWh in annual energy savings and a 6 year payback

period are expected. Other upgrades (not GPR‐eligible) are the

constuction of two new aeration basins and supporting

infrastructure. $4,760,000 2.00% 20 $1,8

13 City of Dayton BC0053006

III‐B, V,

VI‐A, VI‐

C

Large rain events result in flooding in a distressed area in Dayton

2‐3 times per year. Project will install 2 miles of new stormwater

pipeline and repair existing sewage lines. Stormwater drainage

systems will be repaired and green infrastructure will be utilized

to reduce runoff, including green roofs on 2 municipal buildings.

$5,550,000 2.00% 20 $1,2

Total $69,047,600 $864,700 $4,7

$10,300,000 4

VI. Stormwater Management Programs

VI‐A. Stormwater Conveyance Infrastructure

VI‐B. Stormwater Treatment Systems

VI‐C. Green Infrastructure

VI‐D. General Stormwater Management

VII. Nonpoint Source (NPS) Control

VII‐A. NPS Control: Agriculture (Cropland)

FY2012 Capitalization Grant

Additional Subsidy

* I. Secondary Wastewater Treatment

II. Advanced Wastewater Treatment

III‐A. Infiltration/Inflow Correction

III‐B. Sewer Replacement/Rehabilitation

IV‐A. New Collector Sewers and Appurtenances

IV‐B. New Interceptors Sewer and Appurtenances

V. Combined Sewer Overflow (CSO) Correction

VII‐B. NPS Control: Agriculture (Animals)

VII‐C. NPS Control: Silviculture

VII‐E. NPS Control: Ground Water Protection

VII‐F. NPS Control: Marinas

VII‐G. NPS Control: Resource Extraction

VII‐H. NPS Control: Brownfields

VII‐I. NPS Control: Storage Tanks

VII‐J. NPS Control: Sanitary Landfills

VII‐K. NPS Control: Hydromodification

VII‐M. NPS Control: Other Estuary Managemen

X. Recycled Water DistributionXII. Decentralized Wastewater Treatment Syste
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 6

III. Short and Long Term Goals

Newater has developed short‐ and long‐term goals for its CWSRF program.  The short‐term goals reflect

goals for the 2012 fiscal year.   

Short‐Term Goals

 Goal: Provide $864,700 in principal forgiveness to projects that implement EPA’s Sustainability

Policy or to communities that could not otherwise afford the project.     

EPA’s Sustainability Policy encourages states to direct additional subsidies towards projects in

communities that would otherwise not be able to afford financing and to projects that repair

existing infrastructure (“fix it first”), promote effective utility management or planning.  The

Sustainability Policy is explained further in section IV.b. of this IUP.  Newater is using these criteria to

allocate $864,700 in subsidies to seven projects.   

  

 Goal:  Fund green infrastructure, water and energy efficiency and environmentally innovative

projects in an amount that is at least ten percent of the capitalization grant.

Congress has directed that at least 10 percent of the capitalization grant be allocated towards

“Green Project Reserve” projects.  Newater effectively solicited green infrastructure, water and

energy efficiency and environmentally innovative projects for its 2012 project priority list.  The

CWSRF program will work with projects to ensure that the 10 percent threshold is met.  Newater

will require and approve business cases for projects that have been determined to not categorically

qualify for the Green Project Reserve, as described in EPA’s FY2012 CWSRF Procedures.  Business

cases will be posted on Newater’s CWSRF website (www.newater.gov/cwsrf) upon financing

approval.

 Goal: Expedite project development and construction by encouraging projects to begin construction

within one year of placement in the Intended Use Plan.

The Newater CWSRF program aims to reduce the time between project application and construction

start, and work towards having all funds are under construction within one year of capitalization

grant award.  The program will also aim to draw the federal capitalization grant as funds as quickly

as possible.  The application review and approval process will be streamlined to the extent possible,

and Newater CWSRF project engineers will work closely with applicants to ensure their projects are

ready to proceed to construction within the year time frame goal.   

 Goal:  Enhance financial modeling and form a CWSRF financial review working group.

The CWSRF will work with a consultant to update and enhance its financial modeling software, and

two financial staff persons will receive additional training in working with the model.  A working

group comprised of senior CWSRF staff, DEQ and NFA staff, and community stakeholders will meet

quarterly to review financial conditions and develop financial policies.  The financial models will play

an important role in analyzing the conditions and developing policy options.  

 Goal:  Revisit Standard Operating Procedures (SOPs) and update as applicable before February 2013.

Many of the CWSRF’s SOPs are outdated and in need up updating to reflect current operations.  

Updating the SOPs is a priority for CWSRF staff at DEQ and NFA.  The goal for the completion of the

SOP updates is February 2013.  
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 7

 Goal: Expand financing options by issuing $31,800,000 in CWSRF leveraged bonds.   

Newater periodically leverages by issuing tax‐exempt municipal bonds secured by the CWSRF to

enable funding for a greater number of projects than would otherwise have been possible.  The

CWSRF program has greater demand for funding than it would be able to service without leveraging.   

$31,800,000 in leveraged bonds are expected to be issued in FY2012.  Leveraging decisions are

made based on extensive modeling and financial analysis to ensure that they satisfy the required

needs and are in accordance with the state’s financial objectives.   

  

Long‐Term Goals

 Goal: Provide low‐cost financing for important water quality projects while maintaining the

perpetuity of the CWSRF

Newater uses a CWSRF financial planning model to guide decisions on funding levels, interest rates

and other financing terms.  Newater looks to balance the goals of maximizing subsidies while

maintaining the fund in perpetuity.  

 Goal:  Work with other state funding sources to coordinate water quality financing.

The CWSRF program meets monthly with other financing programs in Newater, including the U.S.

Department of Agriculture (USDA) Rural Development program, the Department of Housing and

Urban Development’s (HUD) Community Development Block Grant program, the Newater State

Construction Fund, and other state agencies.  The programs meet to discuss program applicants and

develop funding packages, which can maximize cost savings.  

 Goal: Use effective outreach techniques to reach important water quality priorities and maintain a

high pace level.

Newater’s CWSRF is committed to bringing projects to the program that address the state’s most

important water quality priorities. Various outreach techniques are used, including meetings with

watershed organizations, participation in conferences, brochures and personal visits to

communities.  The CWSRF expects to continue these efforts and to respond to evolving water

quality and environmental priorities in the state and nationally.  

 Goal:  Expand CWSRF accessibility by creating financial assistance programs that address nonpoint

source control and other nontraditional CWSRF projects.   

Newater has been successful in bringing important nonpoint source and other nontraditional CWSRF

projects to the program.  Many of these projects have special challenges in obtaining financing

(outside of grants) due to a lack of user revenues.  Financing options will be continually evaluated to

help ensure that these projects can continue to come to the program for cost‐effective financing.  

IV. Allocation of Funds

a. Criteria and Method for Distribution of Funds

Newater’s Project Priority Ranking System is attached in Appendix D.  The Priority Ranking System was

updated in February 2010 to reflect changing environmental and water quality priorities in Newater.   

The ranking criteria emphasize high priority waterbodies, projects proactively addressing needs, and

projects addressing enforcement and compliance issues.   In addition, projects receive points for

implementation of green infrastructure, energy efficiency, water efficiency and environmental

innovation.  Projects can receive bonus points for implementing criteria outlined in EPA’s Sustainability

Policy.   
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 8

After projects are ranked according to the criteria, a Project Priority List is developed (Appendix A).  

Projects are further evaluated on their readiness to proceed to a financing agreement and construction;

this is based on whether they have completed the environmental review and have obtained the

necessary permits.   Projects that are not in disadvantaged communities must have planning and design

completed in order to be considered for the IUP List of Projects to be Funded.  Projects in disadvantaged

communities may receive planning and design funding to assist them in planning their projects.  

Based on the amount available for financing, the highest ranking projects that are ready to proceed are

placed on the IUP List of Projects to be Funded (Figure 1).   

Bypass Procedures

Newater may bypass projects on the IUP List of Projects to be Funded if they are later determined to not

be ready for funding.  In those events, other projects from the Project Priority List may move to the

funding list based on their project priority ratings.   

Furthermore, a project may be bypassed if the Newater CWSRF determines that the provision of funds

from the CWSRF will be used to replace or supplant other low‐cost funds reasonably available for the

project.  The Newater CWSRF also reserves the right to provide funding for only a portion of the total

costs of a project or only a portion of the amount requested where the municipality can, based on its

ability to pay, obtain other affordable financing for the remainder of the project.   

A project may be bypassed if a different project should be funded due to an emergency condition that

can only be addressed in an immediate time frame.   

Bypassed projects that retain their priority rating will be subject to the same eligibility and funding

considerations from future allotments as other fundable projects.

All projects must be on the Project Priority List in order to receive funding. All bypasses will be

explained in the Annual Report.  

b. Types of Projects to be Funded and Financing Rates

Section 212 Projects

Projects identified as qualifying for the CWSRF under the Clean Water Act section 212 will have an

interest rate of 2.6 percent.  If a project or project component qualifies for the Green Project Reserve or

meets one or more of the elements in the Sustainability Policy, lower interest rates may apply; these are

outlined below.  

The financing term for most projects will be 20 years.  Current and new projects may request an

extended term of up to 30 years.  The length of the term will be based on the average useful life of the

project and the community’s ability to repay the financed amount.   

Nonpoint Source and Estuary Protection Projects

Nonpoint source activities (not specific projects) funded by the CWSRF must appear in the “Newater

Clean Water Act Section 319 Nonpoint Source Management Plan ‐ 2010” developed by the Newater

Department of Environmental Quality in order to be financed.    
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 9

Estuary protection activities (not specific projects) funded with the CWSRF must appear in the “Newater

Bay Estuary Comprehensive Conservation and Management Plan – 2010” developed by the Newater Bay

Estuary Program, and be located in the estuary watershed, in order to be eligible for financing.  

Nonpoint Source (NPS) and estuary projects will receive an interest rate of 2.6 percent.  If a project

qualifies under the Green Project Reserve, a different interest rate may apply, as described below.   

The financing term for most projects will be 20 years.  Current and new projects may request an

extended term of up to 30 years.  The length of the term will be based on the average useful life of the

project and the community’s ability to repay the financed amount.

Green Project Reserve

Projects that qualify (in whole or in part) for the Green Project Reserve as Energy Efficiency, Water

Efficiency, Green Infrastructure or Environmentally Innovative (as defined by U.S. EPA’s 2012 CWSRF

Procedures and posted on the Newater CWSRF website) will receive a reduced interest rate of 2.0

percent.    

If a project also qualifies as a disadvantaged or sustainability project, different financing specifications

may apply, as described below.   

Disadvantaged Communities and Sustainability Policy

In its FY2012 appropriations, Congress required states to provide additional subsidies. Newater is

required to provide between $665,000 and $997,800 as additional subsidy in FY2012. In Newater,

additional subsidy will be provided as principal forgiveness.  Congress also asked states to direct the

subsidies to disadvantaged communities and sustainability projects, to the extent possible.  Newater

plans to direct its subsidies according to Congress’ direction.   

a. Disadvantaged Communities

All projects undergo a financial capability review.  Newater collects substantial information from all

project applicants, including audited financial reports, financial projections, outstanding debt, user

rates, collection rates, tax information, and economic information such as unemployment rate and

median household income.   

Assistance recipients will be eligible for Disadvantaged Community financing if the household cost of

wastewater services will exceed 2 percent of median household income after the project is

implemented.   First, these projects will receive 0 percent financing and up to 30 year financing

terms, based on the useful life of the project.  If it is still determined that they will not be able to

afford the project, 10 percent of principal forgiveness will be awarded, up to $250,000.    

b. Sustainability Policy   

Newater is committed to promoting sustainable design and management of wastewater utilities and

clean water resources.   Projects that meet Newater’s sustainability criteria are eligible for up to 50

bonus points in the priority ranking system.  In addition, these projects would be eligible for 10

percent principal forgiveness, up to $100,000.   

EPA’s Sustainability Policy has identified three categories of projects that help promote sustainable

design and management of wastewater utilities.  Newater is implementing this policy as outlined.  

The categories and types of eligible projects are described below.   
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 10

o Fix it first projects.  The main principle is that projects in currently established areas, which

are still suitable for use, should be encouraged over projects in undeveloped areas.  The

repair, replacement and upgrade of this infrastructure is encouraged.  Projects that may

qualify as fix it first projects include:

 Projects that are critical to assuring continued compliance with NPDES discharge

limits in existing facilities.

 Upgrades to existing infrastructure in smart growth districts to spur development/

redevelopment in these areas, rather than in unplanned or undeveloped areas.

 Rehabilitation of existing wastewater treatment systems (without expansion beyond

a normal growth rate in the community or to service infill areas in the community).

o Effective utility management. Plans, studies and projects that help improve the technical,

managerial and financial capacity of assistance recipients to operate, maintain and replace

their infrastructure.  The principle is that improved stewardship of the existing

infrastructure will help improve their sustainability and extend the useful life.  The City of

Clinton will be using a portion of its CWSRF financing to develop an asset management plan.  

In addition, Milton County will be allocating its CWSRF financing to improve planning and

utility management.   

o Planning.  Preliminary planning, development of alternatives, and capital projects that

reflect the full life cycle cost of infrastructure, conserve natural resources or use alternative

approaches to integrate natural systems into the built environment.  Potential projects

include:

 Projects that are identified through current facility planning (or similar efforts) as

being critical to protecting long‐term investments (federal, state and local) in

Newater community wastewater treatment facilities.

 Projects consistent with local or regional land use plans.

The Town of Marion’s CWSRF project consists of the development of a Clean Water Action

Plan, qualifying it under this category of the Sustainability Policy.   

Sustainability policy projects will receive 10 percent principal forgiveness, up to $100,000, and 2.6

percent interest rate on the remaining principal.  Financing terms are 20 years or up to 30 years,

based on ability to repay and the useful life of the project.   (NOTE: EPA HAS NOT RELEASED A FIX‐IT‐

FIRST DEFINITION. ABOVE IS FOR ILLUSTRATION ONLY).

Figure 2: Financing Rates ‐ Summary Table

INTEREST RATE FINANCING TERM PRINCIPAL FORGIVENESS

Green Project Reserve 2.0 percent 20 years None

Projects in Disadvantaged

Communities 0 percent

30 years (based on the

useful life of the project)

10 percent (if necessary to

ensure affordability of

project), up to $250,000

Sustainability Policy

Projects 2.6 percent

20 years (extended term

financing may be available

based on useful life and

ability to repay)

10 percent, up to

$100,000

All Other Projects   2.6 percent

20 years (extended term

financing may be available

based on useful life and

ability to repay)

None
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 11

V. Financial Management

a. Source of State Match

Newater’s FY2012 appropriation of $10,300,000 requires state matching funds of $2,060,000 (20

percent).  Newater will be issuing $5,000,000 in state match bonds in November 2011 to be put towards

meeting state match requirements for FY2012 and future years.  The state match bonds will be repaid

using interest earnings on investments and assistance agreements.  The bonds will have a term of 10

years.  

b. Fee Income

Assistance recipients are assessed a 1% annual loan servicing fee.  The fee income is used to help cover

the costs of administration by paying for a portion of CWSRF staff salary and benefits.  In FY2012,

$690,476 in fees are expected to be deposited into the CWSRF.  

c. Program Administration

Up to 4 percent of the capitalization grant can be used for administration of the fund by DEQ and NFA.  

Newater anticipates using the full 4 percent from the FY2012 capitalization grant for program

administration. This is supplemented by a 1%annual loan servicing fee charged on outstanding principal.  

Additionally, the Newater CWSRF has $3,368,824 in banked administrative funds, to be used for

administration of the program at a later date.  

d. Anticipated Cash Draw Ratio

Newater uses the cash flow method of leveraging the CWSRF, and does not use the federal

capitalization grant as security on the bonds.  In FY2012, Newater will be using a cash draw ratio of 83.3

percent federal funds and 16.7 percent state match funds.  This process follows EPA Memorandum,

“Clarification of Cash Draw Rules for Leveraged SRF Programs” (August 26, 2011).  State matching funds

will be deposited to the CWSRF before or at the same time as capitalization grant funds.  

e. Transfer of Funds from the Drinking Water State Revolving Fund

Newater reserves the authority to transfer additional funds as appropriate, at some time in the future,

between the CWSRF and DWSRF program.   Transfers eligible up to 33 percent of the 2012 DWSRF

capitalization grants are possible.  In FY2010, $3,584,900 in DWSRF capitalization grant funds were

transferred to the CWSRF program to help meet the high demand for CWSRF funds in that year.  The

DWSRF financial planning model indicates that this transfer will impact the program by less than 5% of

cumulative outlays over 20 years; this was discussed further in the FY2010 Annual Report.  

The ability to transfer funds from prior and current grants will assist in meeting demand for CWSRF and

DWSRF funding.  Newater does not currently plan on transferring funds to or from the DWSRF in

FY2012.  

f. Estimated Sources and Uses

The Sources and Uses table in Figure 3 identifies the sources and the uses all of the available funds in

the CWSRF in FY2012 as well as cumulatively.  Sources of funds include federal capitalization grants and

state matching funds, as well as leveraged bond proceeds and repayments.  Investment earnings and

origination fees are sources of funds.   Newater has also transferred funds from the DWSRF.  
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 12

Figure 3: Estimated FY2012 and Cumulative Sources and Uses

In keeping with the objective of the CWSRF, the majority of the available funds are used to pay for water

quality projects.  Funds are also used to pay for administration and for debt service on leveraged and

state match bonds.  

g. Financial Management Strategies

Comprehensive financial planning is essential in a $1.5 billion program like Newater’s CWSRF.  Financial

planning is used to determine appropriate interest rates, leveraging practices, use of additional

subsidies and annual and long term financing capacity.  As indicated in the Short‐Term Goals (Section III),

the CWSRF will be enhancing its financial models this year.  Newater is always striving to balance the

need to provide as much low‐cost financing as possible while ensuring that the fund can continue to

operate in perpetuity.  Each year, Newater develops a financial plan which determines what its lending

capacity is, considering different variables for interest rates, additional subsidization and leveraging.  

Cumulative Total

through June 30,

2011

July 1, 2011 ‐ June

30, 2012 (2012 IUP)

Cumulative Total

through June 30,

2012

SOURCES

Federal Capitalization Grants $238,654,000 $10,300,000 $248,954,000

ARRA Capitalization Grant $29,462,800 $29,462,800

State Match

Appropriation/Agency Cash ‐ Committed $32,570,800 $32,570,800

Provided from State Match Bond Issues $15,160,000 $2,060,000 $17,220,000

CWSRF Bond Proceeds $382,000,000 $31,800,000 $413,800,000

Principal Repayments on Assistance Provided $425,058,527 $35,746,542 $460,805,069

Interest Repayments on Assistance Provided $169,059,631 $14,679,575 $183,739,206

Investment Earnings $165,131,378 $5,148,920 $170,280,298

Fees Deposited into the CWSRF $11,003,594 $690,476 $11,694,070

Funds Transferred From (To) DWSRF $3,584,900 $3,584,900

TOTAL SOURCES $1,471,685,630 $100,425,513 $1,572,111,143

USES

Financing Agreements Entered (Base Program) $1,100,359,432 $1,100,359,432

Projects on IUP (2012 IUP) $69,047,600 $69,047,600

ARRA Financing Agreements Executed $28,284,288 $28,284,288

Leveraged Bond Debt Service

Principal $134,955,692 $15,679,262 $150,634,954

Interest $132,695,233 $11,862,516 $144,557,749

Bond Debt Service Reserve $42,000,000 $1,210,301 $43,210,301

State Match Bond Debt Service

Principal $4,795,605 $718,405 $5,514,010

Interest $4,957,882 $722,553 $5,680,435

ARRA Administrative Expense $1,178,512 $1,178,512

Administrative Expenses (Non‐ARRA) $19,090,138 $1,184,900 $20,275,038

Banked Administrative Expenses $3,368,824 $0 $3,368,824

TOTAL USES $1,471,685,606 $100,425,537 $1,572,111,143
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 13

Newater will be adjusting its cash draw policies as needed to reflect EPA Memorandum, “Clarification of

Cash Draw Rules for Leveraged SRF Programs” (August 26, 2011).  The bond indenture, other bond

documents and other financial documentation and procedures will be reviewed and modified as needed

to reflect that the federal capitalization grant will not be used to secure leveraged bonds issued by the

CWSRF program.   

Newater leverages periodically to increase the funds available for assistance.  A bond issue of

$31,800,000 is planned in FY2012.  The leveraging capacity of the program is substantial due to the large

size of the project portfolio.  The CWSRF carefully balances the leveraging ability with the need to

ensure significant funds remain available for financing agreements in the long term, particularly if

capitalization grants were to end.  In past bond issues, Newater has received a AAA credit rating – the

highest rating available – from Standard & Poor’s and Fitch Ratings; Newater strives to maintain this

credit rating through strong financial management.    

Projects will need to draw on their funding at different intervals based on their construction cycles.  

These differences are used to estimate cash needs throughout the year.  This helps inform the IUP List of

Projects to be Funded as well as timing and sizing of the leveraged bond issue.  In addition, with cash

needs information, the Newater is able to invest cash in vehicles that are safe and yet have relatively

high returns.   

Figure 4 illustrates the historical and projected project disbursements based on current financing

policies.   This model is reviewed throughout the year to evaluate the potential impacts of capitalization

grant levels, financing policies and leveraging.   

Figure 4: Historical and Projected CWSRF Project Disbursements
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 14

Additional financial planning materials, including the proposed payment schedule, the binding

commitment schedule and financial projections can be found in Appendix B.  

VI. Program Management

a. Assurances and Specific Proposals

The Newater DEQ has provided the necessary assurance and certifications as part of the Operating

Agreement between Newater and US EPA.  The Operating Agreement (OA) describes the mutual

obligations between EPA and DEQ, and through a Memorandum of Understanding, with NFA.  The

purpose of the OA is to provide a framework of procedures to be followed in the management and

administration of the CWSRF.  The OA was last updated in December 2010.  

The OA addresses our commitment to key CWSRF requirements, including:

602(a) Environmental Reviews:  The CWSRF will conduct environmental reviews according to the

State Environmental Review Process developed for the SRF

603(b)(3) Binding Commitments:  The CWSRF will enter into binding commitments for 120

percent of each quarterly grant payment within one year of receipt of the payment.

602(b)(4) Expeditious and Timely Expenditures:  The CWSRF will expend all funds in the CWSRF

in a timely manner.  

b. Federal Requirements

Many federal requirements apply in an amount equal to the capitalization grant.  These requirements

are:  

 Single Audit Act (OMB A‐133)  

 Disadvantaged Business Enterprise compliance (DBE)  

 Federal environmental crosscutters

 Federal Funding Accountability and Transparency Act (FFATA) reporting

In order to minimize the burden on borrowers, the CWSRF program has selected 3 projects in non‐

disadvantaged communities to comply with these requirements.   These projects total $12,720,000,

slightly higher than the capitalization grant of $10,300,000.

Community Name/

Project Sponsor

Project Description Financing Amount

City of Dayton Repair and replacement of

stormwater lines

$5,500,000

City of Greenville Brownfields rehabilitation $4,420,000

Arlington County WWTP upgrades $2,800,000

TOTAL    $12,720,000

The assistance recipients identified will:

 Demonstrate compliance with the federal environmental crosscutting authorities during the

environmental review and project planning stage.

 Follow the EPA Office of Small Business Programs guidelines for encouraging disadvantaged

businesses to participate during the bidding process.   
DRAFT EXAMPLE IUP ‐ State of Newater CWSRF FY2012 Intended Use Plan Page | 15

 Report on executive compensation as outlined in the Federal Funding Accountability and

Transparency Act.

 Submit Single Audit reports in all years when disbursements of federal funds (both CWSRF and non‐

CWSRF federal funds) are greater than $500,000.  

These project sponsors have been informed of the requirements.  Newater will be maintaining records

of their compliance in the project files.  

c. Davis‐Bacon Wage Rates

EPA’s FY2012 Appropriations bill requires the application of Davis‐Bacon prevailing wage rates to all

treatment works projects funded in whole or in part by the CWSRF.  The Davis‐Bacon requirements do

not apply to nonpoint source or decentralized wastewater treatment projects.  Davis‐Bacon applies to

construction contracts over $2,000 and their subcontractors (regardless of the subcontract amount).

To ensure compliance with these requirements, DEQ will confirm that the correct wage determinations

are being included in the bid specifications and/or construction contracts.  DEQ will also provide

assistance recipients with the specific EPA Davis‐Bacon contract language that is to be included in bid

specifications and/or contracts.  In addition, DEQ will collect Certifications of Davis‐Bacon compliance

from assistance recipients with disbursement requests.

d. Audits and Reporting

The Newater CWSRF is committed to transparency and accountability.  To that end, program

information, Intended Use Plans, Annual Reports, and other program materials are posted on the SRF

website: http://www.newater.us/cwsrf.    

An independent audit is conducted by an outside CPA firm annually.   

Project milestones and information are reported through EPA’s Clean Water Benefits Reporting (CBR)

database and the National Information Management System (NIMS).  The Newater CWSRF commits to

entering benefits information on all projects into CBR by the end of the quarter in which the assistance

agreement is signed.   

VII. Public Review and Comment

On August 2, 2011 at 10 AM, a public hearing was held to receive comments on the CWSRF IUP for

FY2012.  The meeting was held in the DEQ office on 100 Main Street.  The meeting was advertised in

major newspapers in the state, on the CWSRF website, and through a mass mailing to all Newater

communities, consulting engineers, regional councils, watershed groups and other interested parties.    

The public comment period was open until August 15, 2011.   

Appendix C contains the following:  

 Public hearing notice

 Meeting attendance sheet  

 Meeting minutes

 Comment letters received and responses