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STEPS TO COMPLETING STEPS TO COMPLETING THE SRF LOAN PROCESSTHE SRF LOAN PROCESS
June 2011
Enrique Zuniga Steven McCurdy
Drew Smith Joe Delaney
Nate Keenan John Felix
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What’sWhat’s NewNew for 2011for 2011
o Davis Bacon wage rates applicable to all 2011 construction projects
o A portion of the federal grant must provide additional subsidyo Environmental Justice Communities
o Renewal Energy Projects
o 20% of federal grant must go towards “Green” projects
o New Disadvantaged Business Enterprise (DBE) Goals
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Additional SubsidyAdditional Subsidy
o Clean Water - $4.6 milliono Drinking Water - $5.2 milliono Projects must be under contract by April 1, 2012o ~3% estimated principal forgiveness for CW
projectso ~10% estimated principal forgiveness for DW
projects
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The SRF Is An The SRF Is An Intergovernmental Partnership Intergovernmental Partnership
State Revolving Fund
Project Development and Management
Water Pollution Abatement Trust (State Treasurer)
Department of Environmental Protection
Administration and Loan Management
Local Treasurer Local Project Manager
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Steps to FinancingSteps to Financing
o Intended Use Plan - Done
o Local Authorization- by June 30, 2011o Loan Application to DEP – Oct. 14, 2011o Project Approval Certificate - MassDEP
o Loan Commitment from MWPAT
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Steps to FinancingSteps to Financing
o Procurement Process- Authorization to Award - MassDEP
o Project Regulatory Agreement - MassDEPo Loan Agreement – MWPATo Loan Closing - MWPAT
o Short Term Loans (Interim loans)
o Permanent Loans
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Town Meeting/City Council Vote: Must be voted by June 30, 2011o General Obligation Pledged as Securityo Authorization to Borrow
oUse suggested language written by MWPAT Bond Counsel
o AppropriationoMake sure you ask for enough. Include:
oEligible + Ineligible costsoConstruction Management FeesoPolice DetailsoInflation
Local AuthorizationLocal Authorization
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Article To see if the Town will vote to appropriate a sum of money for the [construction] [planning] of (insert description of the water pollution abatement project); to determine whether this appropriation shall be raised by borrowing from the Massachusetts Water Pollution Abatement Trust or otherwise; and to take any other action relative thereto.
Vote Voted: that $ is appropriated for the purpose of financing the [construction] [planning] of (insert description of the water pollution abatement project) including without limitation all costs thereof as defined in Section 1 of Chapter 29C of the General Laws, as most recently amended by St. 1998, c.78; that to meet this appropriation the Treasurer with the approval of the Selectmen is authorized to borrow $ and issue bonds or notes therefore under (Chapter 44 of the General Laws or insert reference to other applicable general or special law governing the issuance of local bonds) and/or Chapter 29C of the General Laws, as most recently amended by St. 1998, c.78; that such bonds or notes shall be general obligations of the Town unless the Treasurer with the approval of the Selectmen determines that they should be issued as limited obligations and may be secured by local system revenues as defined in Section 1 of Chapter 29C, as most recently amended by St. 1998, c.78; that the Treasurer with the approval of the Selectmen is authorized to borrow all or a portion of such amount from the Massachusetts Water Pollution Abatement Trust established pursuant to Chapter 29C, as most recently amended by St. 1998, c.78; and in connection therewith to enter into a loan agreement and/or security agreement with the Trust and otherwise to contract with the Trust and the Department of Environmental Protection with respect to such loan and for any federal or state aid available for the project or for the financing thereof; that the (Board of Selectmen, Board of Public Works or other appropriate local body or official) is authorized to enter into a project regulatory agreement with the Department of Environmental Protection, to expend all funds available for the project and to take any other action necessary to carry out the project.
Suggested Form of Town
Hall Meeting Article and Vote
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Ordered: that $ is appropriated for the purpose of financing the [construction] [planning] of (insert description of the water pollution abatement project) including without limitation all costs thereof as defined in Section 1 of Chapter 29C of the General Laws, as most recently amended by St. 1998, c.78;
that to meet this appropriation the Treasurer with the approval of the (Mayor or Manager) and the (Auditor, Finance Committee or other appropriate local body or official) is authorized to borrow $
and issue bonds or notes therefore under (Chapter 44 of the General Laws or insert reference to other applicable general or special law governing the issuance of local bonds) and/or Chapter 29C of the
General Laws, as most recently amended by St. 1998, c.78; that such bonds or notes shall be general obligations of the City unless the Treasurer with the approval of the (Mayor or Manager) and the (Auditor,
Finance Committee or other appropriate local body or official) determines that they should be issued as limited obligations and may be secured by local system revenues as defined in Section 1 of Chapter 29C,
as most recently amended by St. 1998, c.78; that the Treasurer with the approval of the (Mayor or Manager) [and the (Auditor, Finance Committee or other appropriate local body or official)] is authorized
to borrow all or a portion of such amount from the Massachusetts Water Pollution Abatement Trust established pursuant to Chapter 29C, as most recently amended by St. 1998, c.78; and in connection therewith to enter into a loan agreement and/or a security agreement with the Trust and otherwise to
contract with the Trust and the Department of Environmental Protection with respect to such loan and for any federal or state aid available for the project or for the financing thereof; that the (Mayor or Manager) is authorized to enter into a project regulatory agreement with the Department of Environmental Protection, to expend all funds available for the project and to take any other action necessary to carry out the project.
SUGGESTED FORM OF CITY SUGGESTED FORM OF CITY
COUNCIL LOAN ORDERCOUNCIL LOAN ORDER
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BorrowerBorrowerLoanLoan ApplicationApplication
o Due to MassDEP October 14, 2011 o Loan Application has three parts
o Applicant Information - Authorized Representative, Local Appropriation etc.
o Project Requirements - Plans and Specifications, Cost, Schedule, etc.
o Supplemental Requirements - Permits, Planning, Professional Services Agreement, etc.
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MassDEP Project MassDEP Project Approval Certificate (PAC)Approval Certificate (PAC)
o PAC Issued by MassDEP to the MWPAT
o A copy is sent to Community
o PAC certifies project eligibility, costs, and lists conditions
Sample- Project Approval CertificateSample- Project Approval Certificate
Project Number
and Project
Description
Loan Number
Loan Amount
and Interest
Rate
LoanCertification
Sample- PAC Special Conditions PageSample- PAC Special Conditions Page
Detailed conditions
listed on the PAC
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MWPAT Loan MWPAT Loan Commitment PackageCommitment Package
o Board Vote creates Commitment to Borrowero Board meets on the first Wednesday of every montho Board consists of:
o State Treasurer Steven Grossman, Chairo Secretary of Executive Office of Administration and Finance, Jay
Gonzalezo Commissioner of Department of Environmental Protection, Kenneth
Kimmell
o Includes Requirements Letter outlining the step by step process to close the loano Loan Questionnaireo Green Light Letter – from local bond counsel
o Return One (1) Signed Questionnaire to MWPAT
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Loan QuestionnaireLoan Questionnaire
o City or town provides: o Updated, accurate information in order for MWPAT to
comply with bond rules
o One (1) completed questionnaire during loan process and one (1) before pool closing
o Accurate wiring instructions for loan disbursements
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Green Light Letter & BondGreen Light Letter & Bond
o Borrowers Bond Counsel prepares:o“Green Light Letter” to MWPAT certifying the local
vote is legal.
oLocal bond and Interim Loan Note for delivery to MWPAT for interim and permanent loan.
oMWPAT does not finance local costs for bond counsel.
Sample Green Light LetterSample Green Light Letter
Loan Number and Borrower Name
Maximum Principle Loan Amount Approved
The Town vote or City loan order that you provide to Bond Counsel which outlines your borrowing authority.
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Borrower Borrower Procurement ProcessProcurement Process
o Before bidding, MassDEP must give “Permission to Advertise”
o Bid Specs/Contracts must be approved by MassDEPo MassDEP Civil Rights Section reviews and approves
MBE/WBE participation.o MassDEP reviews bid results and issues
“Authorization to Award”
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MassDEP Project MassDEP Project Regulatory Agreement (PRA)Regulatory Agreement (PRA)
o Contract between MassDEP and Borrowero Establishes MassDEP control over project
o Outlines project eligibility and funding
o Establishes disbursement procedures
o Loan closeout process
o Legal requirements of Borrower
o Discusses project defaults and how to remedy
Sample PRA Exhibit A Sample PRA Exhibit A
Project Title
Project Description
Loan Agreement Amount
General Borrower
Information
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MWPATMWPATLoan AgreementLoan Agreement
o Contract between MWPAT and Borrowero Outlines MWPAT and Borrower’s responsibilitieso States how a loan default can occur and how to cure
the default o Towns Receive:
o Two (2) copies of the Project Regulatory Agreement (PRA)
o Two (2) copies of the Loan Agreement o Sign and Return:
o One (1) copy of the (PRA) o One (1) copy of the Loan Agreement to MWPAT.
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Interim FinancingInterim Financing
o Preferable to BANs o Lower interest rate
o Interest rate = ½ Market (currently 0.24%)o Loan origination fee of $500 - $1000o Bond Counsel issues interim loan note to MWPATo Become permanently financed usually within one yearo Interest accrues only on amount drawno Interest payment due at close of permanent loano Contact MWPAT and local bond counsel
Sample Interim Loan Note Sample Interim Loan Note
Interim Loan Amount
Maturity Date
Interim Loan Interest Rate
The Enabling Act which outlines the
Borrowing Authority
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Permanent FinancingPermanent Financing
o Funded by MWPAT bondso Clean water loans are amortized for 20 years, up to 30 years with
engineers’ certificationo Flexibility to amortize quickero Higher interest rate for 30 year loans
o Drinking water loans are amortized for up to 20 yearso Spend-down within 24 months
o All interim loans, active projects will be financed.o Interim Loan Interest due at close of permanent loan
o Local Bond Counsel issues Borrower’s bond to MWPATo MassDEP/MWPAT will contact each borrower regarding
schedule
Sample of a BondSample of a Bond
Trust Bond Closing Date
Principal Loan Amount
Loan Repayment Details
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Loan Terms/FeesLoan Terms/Fees
Clean WaterDrinking
WaterInterim Loan
Loan Rate2% (20 Years)
Calculated (30Years)*2%
½ Market (0.24%)
Max. Term 30 years 20 years 1 year
Admin Fee 0.15% 0.15% N/A
Effective Loan rate
2.15% (20 Years)2.15% N/A
Origination Fee (one-time)
Approx. $7.50/$1,000*
Approx. $7.50/$1,000
$500-$1,000
* Rate calculated at time of bond sale, estimated between 2.4-2.9%
* To be determined at time of bond sale to offset costs
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DisbursementsDisbursements
o Proceeds of the loan are generally disbursed to the community monthly.
o “Payment Requisition” is completed by the community and forwarded to MassDEP with the appropriate documentation
o MassDEP reviews the request and approves eligible costs
o MassDEP forwards the request to the MWPATo MWPAT wires to borrower every Thursday with
funds often available the next day
Loan Number
And
Mass DEP Project Number
Disbursement
Number
Total Interim Loan Amount
Payment Request Amount
Signed and Dated by Borrower
Approval Signature from
Mass DEP
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Loan RepaymentLoan Repayment
o Due July 15 and January 15o MWPAT will send an invoice 30 days in advance o Invoice will include wire instructions
o Debt Service Payments
o Administrative Fee Payments
o Origination Fee Payment – at first debt service payment
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Debt Service Schedule Debt Service Schedule (Schedule C)(Schedule C)
Contact InformationContact Information
o Financial
oEnrique Zuniga 617-367-9333 x493
oNate Keenan 617-367-9333 x508
oDrew Smith 617-367-9333 x501
o Program
oSteve McCurdy 617-292-5779
oJoe Delaney 617-292-5808
oJohn Felix 617-292-5523
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Website AddressesWebsite Addresses
o MassDEP: www.mass.gov/dep/water/wastewater/wastewat.htm
o MWPAT: www.mass.gov/treasury/MWPAT
