FINAL BILL REPORT

HB 2309

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

C 88 L 16

Synopsis as Enacted

Brief Description: Increasing the available term of water pollution control revolving fund program loans to reflect the 2014 amendments to the federal clean water act allowing such an increase.

Sponsors: Representatives Smith, Stanford, Griffey, Haler, Wilcox, Tharinger and Moscoso; by request of Department of Ecology.

House Committee on Capital Budget

Senate Committee on Energy, Environment & Telecommunications

Background:

The Water Pollution Control Revolving Fund Loan program, also known as the Clean Water State Revolving Fund (SRF) program, was established by Congress under the federal Clean Water Act Amendments of 1987. The SRF is managed by the Department of Ecology (Ecology) under an integrated water quality program that also includes the Centennial Clean Water, the Stormwater Financial Assistance, and the Section 319 Nonpoint Source Grant programs.

The SRF program provides low-interest loans to cities, counties, special purpose districts, federally recognized Indian tribes, and other public bodies to plan, design, construct, and improve water pollution control facilities such as wastewater treatment plants, main sewers, and storm water control projects. Borrowers must repay the loans and the repayments are deposited into the SRF to be made available for future loans.

The SRF loan term has a maximum of 20 years. The standard interest rate is calculated based on 60 percent of the average market rate for tax-exempt municipal bonds. The standard interest rate charged on loans made in fiscal year (FY) 2015 was 2.7 percent for a five to 20 year term. The rates for FY 2016 and FY 2017 are 2.4 percent and 2 percent, respectively. The SRF program may also issue subsidized loans and forgivable principal loans in hardship cases.

The SRF program receives funding from four sources: (1) loan repayments; (2) an annual capitalization grant from the Environmental Protection Agency (EPA); (3) a required 20 percent state match appropriated by the Legislature; and (4) interest earnings on State Treasury investments. The 2015-17 Capital Budget appropriation for the SRF program is $203 million, of which $153 million is from loan repayments and the state match, and $50 million is from the EPA capitalization grant. Federal law prohibits the use of loan repayments for administration, but Ecology may use up to 4 percent of the EPA capitalization grant to cover its SRF program administration costs.

The SRF program portfolio, including loans awarded through FY 2016, is $1.6 billion, with 141 loans in the disbursement and negotiation phase, and 333 loans in repayment status.

Summary:

The maximum term for SRF program loans is modified from its current maximum of 20 years to the lesser of 30 years or the useful life of the project as determined by the state.

Votes on Final Passage:

House

96

0

Senate

46

0

Effective:

June 9, 2016