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(October 14, 2004) For the second time since June, a pending Oklahoma Water Resources Board bond issue has received an exceptionally high rating from top financial ratings services.
Last week, Standard & Poor’s, Fitch, and Moody’s assigned ‘AAA’ ratings to the OWRB’s $125 million series 2003 Drinking Water State Revolving Fund (DWSRF) revenue bonds. To obtain the lofty ranking, the Water Board had to demonstrate extremely strong bondholder security and excellent oversight of the DWSRF loan program, which funds community drinking water system improvements in Oklahoma. In June, the agency’s Bond Loan Program received a ‘AA+’ rating for a separate bond issue. The Bond Loan Program funds both water and wastewater infrastructure projects.
“We are again thrilled to receive this direct validation of our efforts to bring affordable and sound financing to Oklahoma’s cities, towns, and rural water districts,” emphasized Duane Smith, OWRB Executive Director. “This rating is especially noteworthy because it’s the highest ever achieved by an uninsured state entity that issues revenue debt in Oklahoma,” he added.
According to James Joseph, State Bond Advisor, the rating reflects
the Water Board’s strong standing in the state and national
financial community. “The rating is a credit to exceptional
management of the Drinking Water SRF program by the Water Board
and its staff and, specifically, the program’s outstanding
history of borrower repayment, with no loan ever in default,” he
pointed out. The State Bond Advisor's Office, which staffs the
Council of Bond Oversight, provides advice and assistance to
the Governor and Legislature on matters relating to capital planning,
debt issuance, and debt management.
Currently, the Board has 19 DWSRF loan applications for more
than $120 million either approved or on the 2004 project priority
list awaiting funding from the bond proceeds. An additional six
applications for $64.4 million are on the fiscal year 2005 priority
list. In addition to loan fund repayments and establishment of
reserves, the bond issue will help fund Oklahoma’s 20 percent
match required by the U.S. Environmental Protection Agency, which
sponsors the program. The OWRB’s Financial Assistance Program—consisting
of the Drinking Water and Clean Water State Revolving Fund Loan
Programs, Bond Loan Program, Emergency Grant Program, and Rural
Economic Action Plan Grant Program—is responsible for more
than $1 billion in financing for community water and sewer infrastructure
projects in Oklahoma. The effort was launched through a $25 million
dollar appropriation by the State Legislature in 1983.
Bond Loan Program Rated 'AA+'
On June 23, the Oklahoma Water Resources Board’s Bond Loan Program was issued an ‘AA+’ rating by Standard & Poor’s, making it the highest rated, uninsured state bond program in Oklahoma. According to State Bond Advisor James Joseph, the rating is higher than that achieved by the State of Oklahoma or the largest municipalities in the state, an honor reflecting the maturity of the program. Throughout its 18-year history, the loan program has had a good history of borrower repayment, strong financial management and oversight, and sound underwriting standards. This high level of proficiency has resulted in consistent and reliable water and sewer system financing for Oklahoma’s cities, towns, and rural communities. Since inception of the program, more than $600 million in bonds have been issued without a single default in OWRB bond payments.
In many cases, the OWRB’s bond loan program has been the only financing option for community water and sewer projects, especially in smaller towns that have limited resources. According to the OWRB’s Financial Assistance Division Chief, Joe Freeman, the agency’s Bond Loan Program, currently offering a 1.772 percent variable interest rate, has consistently offered interest rates low enough to allow the Water Board to contend in a very competitive marketplace.
Standard & Poor’s pointed out a mitigating factor that precluded an even higher rating: roughly 11% of the program’s portfolio of loans are non-investment-grade. The open nature of the bond pool also impacts the rating. In spite of these restrictions, the program has continued to improve.
Along with the OWRB’s
Bond Loan Program, the OWRB’s
Financial Assistance Program, launched through a $25 million
dollar appropriation by the State Legislature in 1983, consists
of the Clean Water and Drinking Water State Revolving Fund Loan
Programs, Emergency Grant Program, and Rural Economic Action
Plan Grant Program. Together these programs are responsible for
more than $1 billion in financing for community water and sewer
infrastructure projects in Oklahoma.
OWRB FY 2004 Water Pollution Control Loan Funds Available
In response to the potential availability of approximately $87.2 million in low-interest water pollution control loan funds during FY 2004, the OWRB has scheduled a public meeting on June 20. The purpose of the meeting is to receive comments on the Clean Water State Revolving Fund FY 2004 Project Priority List and Intended Use Plan. The meeting will be held at Board offices in Oklahoma City (3800 North Classen Blvd.) and will begin at 1:30 p.m.
Eligible entities include any city, town, county, State of Oklahoma, public trust, rural sewer district, political subdivision, or any combination thereof. Entities wishing to be included on the State's FY 2004 Intended Use Plan should contact the OWRB and submit a pre-application form prior to July 1, 2003.
FY 2003 Wastewater Project Funding List Now Available
The wastewater project funding list (or CWSRF Project Priority List) identifies municipal wastewater infrastructure construction and refinancing project scheduled to receive financing through the Clean Water SRF loan program during each fiscal year (beginning July 1). To be eligible to receive 60%-of-market-rate financing, eligible public entities may submit a letter describing the proposed project along with estimated project costs and design and construction schedule. Projects must be ranked and listed on project priority list. Projects ready to proceed will receive higher points.
2002 Legislature Authorizes Nonpoint Source Project Financing
The 2002 Oklahoma Legislature approved H.B. 1995, which expands the Clean Water State Revolving Fund loan program to allow non-point source water quality projects to be eligible to receive financing in addition to traditional wastewater infrastructure construction projects. Contact us for updates on program development in the coming months.
Oklahoma Infrastructure Assessment Program Launched
To better assess current and future water and wastewater infrastructure funding needs, the OWRB initiated the Infrastructure Assessment Program earlier this year. Technical staff is currently working with state agencies and local officials to implement the program. Information gathered will also provide additional security on current OWRB loans (by early, preventative identification of facility needs).
OWRB Wastewater Construction Loans & Grants Reach $1 Billion Mark
The OWRB's water and sewer loan and grant programs reached the $1 billion dollar mark on October 8, 2002 with the approval of an FAP loan to the Lexington Public Works Authority.
These programs have and will continue to provide a renewable and permanent source of affordable financing to meet Oklahoma's water and wastewater needs today and tomorrow.
Wastewater Interest Rates Hit New Low for Spring 2003
Note: A 0.5% administrative fee is added to all SRF loan rates.
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Page last updated: October 11, 2005