Clean Water State Revolving Fund

Picture of part of wastewater system.

Leveraged Loans for Construction of Public Wastewater Systems

This program is made available in cooperation with the Missouri Department of Natural Resources and the Environmental Improvement and Energy Resources Authority (EIERA).

As in prior years, the SRF Leveraged Loan program will provide financing at below market rates and finance 100 percent of eligible planning, design and construction. Loans with a maximum 20-year repayment term from completion of first contract and subsidized interest rates will be made available to eligible applicants meeting the minimum credit criteria.

Every effort will be made to encourage participation in the leveraged loan program due to the limited amount of funds available under other department programs. The interest subsidy in FY 2005 will be 70 percent. This subsidy will reduce the interest paid to 30 percent of the market rate at closing.

Interim Direct Loan

For the purpose of accelerating a project, applicants on the leveraged loan fundable list are eligible for the Interim Direct Loan Program. The direct loan will be paid in full upon origination of the leveraged loan.

Questions About Funding Public Wastewater Systems Through the SRF Leveraged Loan Program and Interim Direct Loan

Q. What is the Missouri State Revolving Fund - leveraged loan program?
Q. What is an Interim Direct Loan?
Q. How does the Missouri SRF leveraged loan program work?
Q. Is this the only reserve providing benefits to the participant?
Q. What will be the cost of SRF financing for a community?

Q. What is the Missouri State Revolving Fund - leveraged loan program?

A. The Missouri SRF leveraged loan program is a revolving loan fund established pursuant to the federal Clean Water Act of 1987. It was developed by the Missouri Department of Natural Resources and the State Environmental Improvement and Energy Resources Authority (EIERA) in cooperation with the Missouri Clean Water Commission, and provides subsidized low interest rate loans to qualifying applicants.

Q. What is an Interim Direct Loan?

A. For the purpose of accelerating a project, applicants on the leveraged loan fundable list are eligible for the Interim Direct Loan Program. The direct loan will be paid in full upon origination of the leveraged loan.

Q. How does the Missouri SRF leveraged loan program work?

A. The Missouri SRF leveraged loan program is a subsidized low interest loan program. The loan recipient must vote General Obligation and/or Revenue bonds to secure the applicant's debt. These bonds are purchased by, and resold nationally by, the EIERA. At present the EIERA bonds are rated as AAA. Funds generated from the sale are deposited with a trustee in the applicants' name and are used for construction. As construction costs are incurred, state and federal funds are deposited into a reserve account in an amount equal to 50 percent or more of the construction cost. The reserve is funded at 70 percent of the construction cost. Interest earned on the reserve is credited to the interest portion of the debt service charge on the bonds and provides the interest subsidy to the recipient.

Q. Is this the only reserve providing benefits to the participant?

A. Several interest earning reserves or accounts are established under the
program. All deposits are collateralized and all interest earnings are credited to the interest portion of debt service on the bonds.

Q. What will be the cost of SRF financing for a community?

A. Currently, SRF subsidized interest rates equal 30 percent of market rate plus a 0.5 percent administrative fee on the outstanding bond balance for a 20-year financing. This structure produced a net cost of borrowing of 1.34 percent in April 2001. Additionally, communities will be responsible for other direct costs to participate, such as application fees and costs of issuance, i.e., underwriting and legal expenses. The costs of issuance may vary depending upon several factors, including the number of participants in the program at the time of the financing. Costs of issuance may be financed through the program. The administration fee and a small trustee fee are paid from city funds on an annual basis.

To receive additional information on the SRF leveraged loan program see the Contact Information.