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Drinking Water State Revolving Fund
Loan Terms

 

The repayment period for loans is 20 years, and 30 years for financially disadvantaged communities. The interest rate is 60% of the market rate as established using the "Bond Buyer 20 - Bond General Obligation Bond Index". The rate does not change over the life of the loan. Repayment in equal semiannual amounts begins six months after project work is scheduled to be completed.  The repayment revenue source must be identified; most commonly a pledge of water and sewer utility revenues is, 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.

Last updated: January 17, 2013

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