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Tax-Exempt Bonds OK with WIFIA By Tommy Holmes YYoouurr FFllooww Meetteerr SSoouurrccee PROUDLY MADE IN THE USA The Perfect Fix Repairs for McCrometer and Water Specialties Flow Meters • Your single source for reliable service Rapid Turn Around • TechnoFlo gets you back in business faster with less downtime Large Repair Parts Inventory • In-stock and ready to go for less hassle Flow Testing to AWWA Specs • NIST traceable flow lab to do your annual certifications www.ca-nv-awwa.org 23 A PROVISION REMOVING THE BAN on using tax-exempt financing in conjunction with loans under the Water Infrastructure Finance and Innovation Act (WIFIA) was passed by Congress in December 2015, as part of the long-term surface transportation bill. H.R. 22 was imme-diately signed into law by the President. The day after the bill was signed, American Water Works Association (AWWA) CEO David LaFrance said, “By removing the ban on using tax-exempt bonds with WIFIA loans, Congress has freed WIFIA to do its important work in ad-dressing America’s enormous water infrastruc-ture challenge.” Seeing the Need Prior to WIFIA, the only federal aid to water utilities was state revolving loan funds (SRF) under separate programs for drinking water and waste-water. AWWA observed that the largest drinking water SRF loan made nationally is typically not more than $20 million, the average drinking water SRF loan being about $2.6 million and the average wastewater SRF loan only a little more than that. AWWA conceived WIFIA to finance projects that fall outside the SRF program because of their size and cost and, in some cases, their purpose. SRF drinking water loans must be prioritized to first assist water projects that bring communities into compliance with federal water quality rules or address immediate risks to public health. Replac-ing aging infrastructure to prevent health risks becomes a lower priority. In addition, the drinking water SRF cannot be used to support system ex-pansion to accommodate population growth. The Legislative Roadblock In June 2014, President Obama signed the com-prehensive water resources bill that created WIF-IA, which was largely modeled on the successful transportation program known as TIFIA. Like TI-FIA, WIFIA would finance up to 49 percent of the cost of eligible projects of $20 million or more. (The original concept was financing 100 percent of a project’s costs.) When congressional staff responsi-ble for giving budget scores for bills saw this, they assumed that the other 51 percent would be fund-ed with tax-exempt bonds and concluded that this would be a net hit on the U.S. Treasury. AWWA and others pointed out that these proj-ects would be replacing and rehabilitating the nation’s aging water infrastructure and helping utilities comply with regulations. In other words, they would be taking place regardless, but with-out WIFIA, they would be financed 100 percent with tax-exempt finance, meaning a larger hit on the Treasury. However, in order to keep the bill budget neutral, Congress decided to ban the use of tax-exempt finance for the 51 percent of a proj-ect’s costs not financed by WIFIA. AWWA and other groups, including the U.S. Conference of Mayors and the National League of Cities, urged Congress to repeal the ban on tax-exempt finance, arguing that interest on WIFIA loans would be based on long-term U.S. Treasury rates. Through WIFIA’s repayment terms and Treasury interest rates, the federal government could lower the overall cost of bor-rowing for large water infrastructure projects, TechnoFlo Systems • 559-783-1207 • www.technoflo.com C M Y CM MY CY CMY K TenchoFloMcCrometerRepair3.5x4.5.pdf C o1n ti n1u2e/d5/ o14n p a3g:e0 02 8PM WIFIA


SOURCE - Winter 2016
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