The Agency, established in 1989 by the Rhode Island General Assembly, was created as a body politic and corporate; a public instrumentality of the State to administer certain federal and state programs relating to municipal or community wastewater and drinking water financial assistance. The Agency's operating expenses are funded solely from loan service fees generated from managing its programs. Agency staff consists of an Executive Director, an Accounting Manager, a Clean Water SRF Program Manager, a Drinking Water SRF Program Manager an Accountant and an Administrative Assistant. The SRF program is a definitive example of cooperation among Federal, State and local governments.

The Agency administers the Water Pollution Control and the Rhode Island Water Pollution Control revolving loan funds created under Title VI of the Federal Clean Water Act and its State counterpart which is know as the Clean Water State Revolving Fund (CWSRF). The Agency also administers the Drinking Water Revolving Loan Fund (DWSRF) created under the Federal Safe Drinking Water Act amendments of 1996. The Agency has established a Community Septic System Loan Program (CSSLP) as part of the Federal Clean Water State Revolving Fund. The Agency also provides conduit loans to municipalities for various water and wastewater systems improvements.

A revolving fund allows for the perpetual availability of funds to assist local governmental units in meeting water quality goals by providing loans and other forms of financial assistance. Our primary goals are to provide low-cost means to reduce pollution caused by wastewater; help provide safe drinking water; and to provide low-interest loans to cities and towns to help citizens repair failed, failing or sub-standard septic systems.

The CWSRF Program that we administer, along with the Rhode Island Department of Environmental Management (DEM) as our regulatory partner, issues loans to Rhode Island communities and the Narragansett Bay Commission (NBC). These loans fund design and construction projects for the upgrade and improvement of wastewater infrastructure around the State. The Rhode Island Water Pollution Control Revolving Fund (RIWPCRF), the "State Program", is a direct loan program established to finance water pollution abatement projects that do not qualify for the Federal Revolving Fund. The State Program is also used to make loans to municipalities and wastewater service providers for the update of facility plans as part of the Agency's Facility Plan Loan Program (FPLP).

The Agency created the CSSLP to provide loans for septic system repair or replacement to residents in communities not served by centralized wastewater treatment facilities. Additionally, the Agency conducts conduit financings as needed.

The DWSRF Program that we administer, in conjunction with the RI Department of Health (DOH) as our regulatory partner, administers the DWSRF Program and has issued subsidized loans to public and private water systems.

Financing mechanisms such as leveraged loans, direct loans, and conduit financings help to meet the unique needs of the Agency's borrowers. Bonding for leveraged loans can be conducted on either a competitive or negotiated basis, as the situation requires. Direct loans can be made with new or recycled capital. Conduit financings enable local governmental units to access the bond market.

For the CWSRF, the Agency utilizes capitalization grants from US Environmental Protection Agency (EPA) along with an irrevocable commitment from the State of Rhode Island of 20% State Match dollars to form the corpus of its financial structure.

For the DWSRF, the Agency utilizes capitalization grants from EPA coupled with State Match monies and other financing mechanisms to form the corpus of its financial structure. To date, the Agency has issued direct loans for its DWSRF. As the frequency of loan applications and loan amounts increase, the Agency is moving toward a leverage financial structure so as to maximize the dollar amount available for loans.

The Agency Board of Directors and staff are committed to maintaining a strong programmatic and financial structure as is evidenced by the confidence placed in the Agency by the three nationally recognized rating services who continue to rate Agency Bonds as follows:

• Fitch - Ibca AAA
• Standard & Poor's AAA
• Moody's AAA

These high ratings are unequaled in Rhode Island State Government and allow the Agency to issue bonds without insurance costs that are usually borne by the borrowers; thereby saving Agency borrowers additional monies.

Chapter 55 of the 2000 Public Laws, as approved by the voters in the form of Referendum Question #2 at the 2000 general election, provided the Agency with $57,000,000 to provide loans at a subsidized interest rate of zero percent and $3,000,000 to be used by the Agency to provide state match monies for federal drinking water grants. To administer loans in accordance with this Act, the Agency has caused there to be created a fund known as the Rhode Island Zero Interest Loan Fund (the "RIZILF").

In conclusion, on behalf of the Board of Directors and the Staff of the Rhode Island Clean Water Finance Agency, we thank you for your support and guidance during the past years of the Agency's existence. The Agency will continue to be a major source of subsidized and/or low-cost loans for clean water and drinking water infrastructure projects in the State. We look forward to working with those who participate in governing, and all the citizens of Rhode Island in improving the quality of our most necessary resource: clean water.

Sincerely,

James M. Hagerty, Chairman		Anthony B. Simeone, Executive Director