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The Oregon State Revolving Fund Intended Use Plan - 2005 Uvdate #2 proposes funding <br />projects in the three areas listed above. The State's Priority List now includes 136 projects from <br />96 communities or district for a total of $318.9 million in requested funding. MWMC has one <br />project ($3 million for acquisition of property for a dedicated biosolids land application site) <br />pending on the priority list. The application for that project was originally submitted in 1999 and <br />is currently ranked as priority number 92out of the 136 projects. <br />Potential Use: States are starting to apply the revolving loan fund concept to other needs, such <br />as biosolids reuse. <br />Advantages: The CWSRFs are able to provide localities with extremely low-interest loans at <br />favorable terms. They can be considerably more flexible than commercial banks, as states can <br />adjust interest rates and other~loan terms to suit localities' ability to pay. <br />Limitations: The competition among applicants for access to revolving loan funds is intense in <br />some states. Project costs can be increased, due to Federal "cross-cutting" requirements that <br />apply. in using CWSRF monies. Some small communities may not be able to afford any loan. <br />Loan terms are currently limited to 20 years, although there have been legislative proposals to <br />extend them to 30 years. <br />Applicability: This could be an appropriate fmancing tool for MWMC because it would be <br />simpler to administer than a revenue bond and there would not be the requirements of a bond <br />indenture to monitor. Availability of funds on a timely basis would be the biggest concern. <br />Internal Borrowing <br />Description: Internal borrowing occurs when funds are borrowed from a reserve account in <br />another fund, department or agency of the local utility or government. <br />Potential Use: Internal fund borrowing is a viable option only if an analysis of the affected fund <br />indicates sufficient funds are available and the use of these funds will not impact the fund's <br />operations in the short term. Given those conditions, internal fund borrowing may be <br />implemented for a variety of purposes. <br />Advantages: <br />1. Better financing rates are often obtained through internal borrowing, compared to <br />borrowing from outside the organization or having third parties borrow on behalf of the <br />utility. <br />2. Internal funds can be made available at low or no interest. They involve fewer <br />transaction costs. <br />3. Funds are usually available when needed. <br />4. All savings are returned to the entity. <br />5. The entity can choose to do as much or as little external financing as required. <br />6. Riskier projects, or those that have lower rates of return, can still be funded from capital <br />budgets. <br />7. With internal support and recognition for the work that needs to be done, it can be much <br />easier to secure commitment, resources and support for internally funded work. <br />Limitations: <br />1. Using internal funds may delay or defer implementation of other projects. <br />2. Internal funds could be invested in financial vehicles that may provide a better rate of <br />return. <br />2005 MWMC Financial Plan - Appendix II Page 37 <br />