Intended Use Plan for FY-2012 - Water Resources Board - State of ...

Transfer Authority Between Clean Waterand Drinking Water SRFsIn accordance with the Safe Drinking Water Act (SDWA) SRF funds transferprovisions (Section 302), the state hereby reserves the authority “to transferan amount up to 33 percent of the FY 2012 Drinking Water SRF programcapitalization grant[s] to the CWSRF program or an equivalent amount fromthe CWSRF program to the Drinking Water SRF program.” During FY2012, Oklahoma may request to transfer funds in order to assure adequatecapacity to meet funding demands for both programs. Prior to any transfer offunds, the capitalization grant agreement will be amended if necessary, a copyof the previously obtained Attorney General’s opinion certifying that state lawpermits the state to transfer funds will be submitted; and transfers will be madeby direction of the Governor, in accordance with SDWA Section 302.The OWRB deems it to be in the best interest of Oklahoma to fully meet thefunding demands of both the CWSRF and the DWSRF loan programs duringFY 2012. Therefore, a transfer of funds from the CWSRF to the DWSRF, ifnecessary, represents the best use of CWSRF and DWSRF program funds. Ifthe entire unused reserved amount of transfer authority is transferred fromthe CWSRF to the DWSRF during FY 2012, the following impacts on theCWSRF are expected:1. The transfer of funds is not anticipated to impair the OWRB’s abilityto fund all projects on the FY 2012 CWSRF Project Priority List. Thetransfer of funds will have no impact on set-aside funds;2. The long-term impact on the CWSRF may result in a reduction ofleveraging capacity, meaning at some future date the OWRB maynot have adequate program funds to meet the total demand forCWSRF funding, unless funds are transferred back from the DWSRF.Currently, the SDWA requires states to request transfer authority ona year-to year basis, limiting the ability to transfer funds in futureyears. Funds transferred between programs during FY 2012 or infuture years may not be available for return to the SRF fund of originif a permanent extension of transfer authority is not granted.Cross-Collateralization of the CWSRF andDWSRF Revenue Bond StructureThe Master Trust Agreement dated as of October 1, 2003, provides a bondstructure that allows for cross-collateralization of the CWSRF and the DWSRFin order to provide additional bond security and ratings enhancement for bothprograms. With cross-collateralization, excess CWSRF revenues (revenuespledged to repayment of CWSRF bonds over and above what is needed tomake actual debt service payments) would be available to cure any DWSRFbond payment default or reserve fund deficiency (Appendix C). Likewise,excess DWSRF revenues would be available to cure any CWSRF bondpayment default or reserve fund deficiency. Pursuant to federal regulations,cross-collateralization support cannot extend to debt specifically issued forthe purpose of providing state matching funds.21