Water Pollution Control State Revolving Fund Loan Program
Loan Terms

 

The repayment period for loans is 20 years.  Interest rates are no longer the same for all projects. They are now calculated for each system using the Thomson Publishing Corporation's "Bond Buyer" 20-Bond GO Index and an affordability index developed specifically for the Bureau. Once the affordability index for a service area is determined (the affordability index calculator is now available), it is divided by 200 and the resulting number is multiplied by the 20-Bond GO Index. The maximum interest rate is limited to eighty percent of the market rate. The rate does not change over the life of the loan. Repayment begins six months after project work is scheduled to be completed. Payback consists of equal semiannual repayments. The revenue source to be used to repay the loan must be identified. Standard loan agreements are set up for a pledge of water and sewer utility revenues. These are commonly used but other types of revenues can be considered.

Pledged Revenues

Generally, pledged revenues resulting from the operation of water systems or water and sewer systems shall be as follows:

1. Pledged revenue shall be not less than 1.15 times the amount required to make each semiannual loan repayment.
2. In addition, for project sponsors who have not demonstrated the ability to service long term debt, special loan security provisions shall be negotiated that provide assurance that debt service requirements will be fulfilled.  

Security Provisions

For project sponsors who have not demonstrated the ability to service long term debt additional security provisions shall be negotiated to provide:

1. Additional escrowed reserve funds (equivalent to not less than five semiannual loan repayments) and a lien on the assets of the project sponsor.
2. A letter of credit from a bank or trust company and a lien on the assets of the project sponsor.
3. A personal or corporate, as applicable, obligation ensuring that all semiannual repayments can be made.
4. Other security features equivalent to those described above.