PENNVEST

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National
Association of Water CompaniesDrinking Water
SymposiumOrlando, FloridaOctober 12, 2009

• PENNVEST
• FINANCING CLEAN WATER PROJECTS FOR PENSYLVANIA

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PENNVEST Objectives

• Eliminate health and safety risks to citizens of
  the Commonwealth of Pennsylvania
• Improve water quality by replacing outmoded,
  inadequate and deteriorating water and sewerage
  systems
• Promote economic development that may otherwise
  be inhibited by lack of clean water and adequate
  sewerage systems
• Promote sound land use

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What PENNVEST Provides

• Funding for Infrastructure Projects
• Drinking Water Public/Private
• Wastewater Public/Private
• Storm Water - Public
• Non Point Source
• Acid Mine Public/Private
• Brownfield Public/Private
• On-lot systems Principal Residence

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Key Benefits

• Low interest rate loans
• Financing is geared to a communitys ability to
  repay
• Regional PENNVEST representatives to assist
  project sponsors
• Coordination with regulatory agencies
• Coordination with other available funding sources

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Project Review/Priority

• Dept. of Environmental Protection
• Public Health, Safety, Environment, Compliance,
  Adequacy Efficiency
• Dept. of Community and Econ. Dev.
• Economic Development, Community Action Team
• PENNVEST
• Land Use, Infill, Financial Capability, Funding
  Offer and Collateral

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Typical Annual Funding

• 280 million in Loan Funding annually
• Water/Sewer/Storm Water/ Non-Point Source
• Supplemental Grants
• PENNVEST Growing Greener participation -
  approximately 10 - 12 million

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Sources of Funding

• Total Capitalization 3.6 Billion
• State General Obligation Bonds
• State Appropriations
• Clean Water State Revolving Fund
• Drinking Water State Revolving Fund
• Also use loan repayments and revenue bonds for
  on-going project funding, along with grant funds
  from Pennsylvanias Growing Greener program
  (landfill tipping fees)

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PENNVEST Project Approvals at a Glance

• Approvals as of July 21, 2009
• 2,395 projects
• 899 Drinking Water
• 1,334 Sewer
• 107 Storm Water
• 38 Non-point Source
• 3 Acid Mine Drainage
• 14 Brownfield
• Total Funding Approved
• 5.8 Billion

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Investor Owned Approvals 1988 - 2009

• Counting just the two largest (Aqua America and
  Pennsylvania American)
• 76 projects
• 215 million in funding, of which
• Loans 208 million
• Grants 7 million

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Grant Incentive to Eliminate Non-viable Systems

• Our funding terms, including grants, are based on
  the impact we will have on rates that users pay
  (our affordability criterion)
• Typically, for any large system, such as investor
  owned utilities, the impact of a grant is so low
  that we do not offer it, only low interest loans
• But, we do offer grants in white knight
  situations. That accounts for the 7 million in
  grants shown previously

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Stimulus Funding both Federal and State
Approved in April and July, 2009

• Funds received under ARRA - 220 million
• DWSRF 65 million
• CWSRF 155 million
• Stimulus funds added by the Commonwealth - 664
  million
• Drinking water 283 million
• Wastewater 381 million
• Total Stimulus funding provided in April and July
  - 884 million
• Drinking Water 348 million
• Wastewater 536 million

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Stimulus Project Applications vs. Approvals in
April and July, 2009
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Drinking Water Stimulus (federal and state)
funding

• Total
• 56 projects
• 283 million
• Loans 244 million
• Grants 39 million
• ARRA Green Infrastructure 18 million
• Investor owned
• 5 projects
• 19 million (all loan)

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Observations Regarding Federal Stimulus

• Reporting Requirements very substantial and
  time consuming. So far, we have incurred almost
  900 hours of overtime related to ARRA, much due
  to reporting.
• The 50 additional subsidization (principal
  forgiveness) requirement was difficult to reach
  for drinking water, but not wastewater.
• The 20 green infrastructure requirement was
  difficult to reach for drinking water, but not
  wastewater.

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Automation of PENNVEST Work Processes That Made
it Possible to Handle Increased Stimulus Workload

• Settlement process all done on-line, very few
  paper documents, standard language and
  self-generating documents save considerable time
  for Legal staff.
• Funds disbursement process also done largely
  electronically, line item information contained
  in the system facilitates tracking of information
  and generation of reports needed on jobs, project
  progress, disbursements, etc.

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Future Direction for Infrastructure Funding in
Pennsylvania Focus on Sustainability and Green
Infrastructure

• Efficient Operation
• Regionalization
• Asset Management
• Full Cost Pricing
• Maximize Non-Structural Solutions

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Drivers Behind These Initiatives

• Governor Rendells Sustainable Water
  Infrastructure Task Force
• Issued a report in November 2008 analyzing issues
  related to cost-effective and sustainable
  investment in drinking water and wastewater
  infrastructure
• Stimulus funding emphasis on Green Infrastructure
  and principal forgiveness likely to be continued

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Implications for Investor Owned (and other)
Drinking Water Systems

• Legislation being drafted that could require all
  systems in Pennsylvania to implement asset
  management and full cost pricing. This
  effectively makes all systems do what investor
  owned systems already do.

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Implications for Investor Owned (and other)
Drinking Water Systems (cont.)

• There will be more emphasis on finding more
  cost-effective, non-structural solutions.
• For example, drinking water systems should be
  looking to prevent source water contamination by
  using non-structural storm water control, rather
  than focusing simply on treatment.
• Message to Congress if we they want to
  encourage these activities, they should make our
  funding source water projection projects eligible
  under the DWSRF. As it stands now, I cannot
  offer a loan to an investor owned system for this
  purpose.

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Follow-up Questions or Comments

• Paul K. Marchetti
• 717-783-4496
• pmarchetti_at_state.pa.us
• or
• www.pennvest.state.pa.us