Massachusetts Water Pollution Abatement Trust

 

Who manages the Trust?

Who should I call for questions regarding issues related to project design, planning or construction?

Who should I call with financial questions related to my project?

Where are the offices of the Trust located?

After my project receives a Project Approval Certificate (PAC) from the Massachusetts Department of Environmental Protection, what else is required before I can draw interim funding for my project?

Who may execute the loan documents on behalf of my community?

How do I know what the debt service on my project will be?

Once I have received an interim loan or a permanent loan to finance my project, how do I draw funding from the MWPAT for costs incurred on my project?

What is the rate charged for Interim Loans and how is that paid?

What fees and other costs am I responsible for?

When are projects permanently financed?

When do I pay debt service on my loan?

What is the interest rate charged by MWPAT on loans that are permanently financed?

How is my loan subsidized?

What other opportunities do I have to learn more about MWPAT and the financing process?


 


Who manages the Trust?

The Trust is an independent agency that is governed by a Board of Trustees. The Treasurer of the Commonwealth serves as Chair, the Secretary of the Executive Office of Administration and Finance (EOAF) serves as Vice Chair, and the Commissioner of the Massachusetts Department of Environmental Protection (DEP) is the third Trustee. Each of these Trustees has the authority to send a designee in his/her place. An Executive Director manages the business of the Trust. The Executive Director chairs an Executive Committee made up of a representative from EOAF and DEP, which typically meets weekly and is responsible for reporting to the Board of Trustees. The Trust Treasurer also attends meetings of the Executive Committee. Including the Trust Treasurer, the Executive Director manages a 10 person staff. The current Executive Director of the Trust is Ms. Susan Perez. In addition, staff of the Trust work very closely with staff of DEP, who approve, oversee and manage the projects that are ultimately financed by the Trust. The person at DEP who is in charge of this work is Steven McCurdy. Top of Page


Who should I call for questions regarding issues related to project design, planning or construction?

Either the DEP project manager your community is working with on the project, or Steven McCurdy (617) 292-5779. Top of Page


Who should I call with financial questions related to my project?

If you have financial questions related to your project, contact Ms. Susan Perez, Executive Director. She may be reached at (617) 367-9333 x 816 or via email: sperez@tre.state.ma.us during the hours of 9:00am to 5:00pm, Monday through Friday. Top of Page


Where are the offices of the Trust located?

Correspondence may be directed to: Massachusetts Water Pollution Abatement Trust, 3 Center Plaza, Suite 430 Boston, MA 02108 Top of Page


After my project receives a Project Approval Certificate (PAC) from the Massachusetts Department of Environmental Protection, what else is required before I can draw interim funding for my project?

After a project receives a PAC, DEP submits this document to the Trust. At a meeting of the Board of Trustees, the Trust votes to approve a loan commitment for the project, a copy of the commitment is executed by the Executive Director and transmitted to the borrower along with a loan questionnaire. Following the transmittal of the loan commitment document to the borrower, the completed questionnaire must be returned to the Trust. Additionally, a legal opinion from the borrower's counsel -"green light letter" must be submitted by counsel. The next step is for DEP to issue a Project Regulatory Agreement (PRA). DEP issues a PRA following the solicitation of bids and the award of a contract by the community for construction of the project. DEP submits the PRA to the Trust. At a meeting of the Board of Trustees, the Trust votes to approve a loan to the community for the project. The Trust then mails a loan agreement package to the borrower for execution. If the borrower desires interim funding from the Trust, this documentation (included in the loan agreement package) must be completed and submitted to the Trust along with an origination fee (nominal depending upon the principal amount needed). Following execution of the loan agreement documents and their return to the Trust, assuming everything is in order and there is no threatened or potential litigation that might affect the project's completion, the borrower is eligible for interim funding. Top of Page


Who may execute the loan documents on behalf of my community?

This depends on the loan documents, the governmental structure of the borrower and local bylaws, ordinances and authorizing votes. The Treasurer is typically authorized to sign most loan documents. If you are uncertain as to which officials are authorized to sign a particular document, you should consult your local bond counsel. Top of Page


How do I know what the debt service on my project will be?

Attached to the loan agreement documents, the Trust includes what is called a draft "Schedule C". This provides an estimate of the total debt service on the principal amount of the loan being issued. When the project is permanently financed with proceeds of bonds issued by the Trust, the Trust provides the borrower with a final Schedule C based upon the actual amount financed and the debt service the Trust is required to pay on the bonds if issued to fund the loan. Top of Page


Once I have received an interim loan or a permanent loan to finance my project, how do I draw funding from the MWPAT for costs incurred on my project?

Following the incurrence of eligible costs associated with the construction of the project, the borrower submits a disbursement request to DEP. DEP reviews this request, approves it and then submits it to the Trust for payment. Once the Trust receives the approved disbursement request from DEP, the payment request is processed on a weekly basis. Top of Page


What is the rate charged for Interim Loans and how is that paid?

The Interim Loan Interest Rate as referred to in the Trust's Financing Agreements shall be a rate equally to fifty percent (50%) of the "MMDT Index" published in the MMDT Cash Portfolio using the most recently available rate (commencing January 1 and July 1) in which the Financing Agreement is executed. The "MMDT Index" for April 30, 2013 is 0.21%, fifty percent of which is 0.11%.  Top of Page


What fees and other costs am I responsible for?

Before a loan is permanently financed, if the borrower desires an interim loan, the borrower is responsible for payment of an origination fee, charged at the time of the issuance of an Interim Loan - this fee is 1/10 of one percent of the interim loan amount, subject to a minimum of $500 and a maximum of $1,000.

After a loan is permanently financed, aside from the local and allocated costs of issuance, the borrower is responsible for paying an annual administrative fee of .075% on the outstanding principal amount of the loan (this amount is paid in two installments at each semi-annual debt service payment date).

In addition, the borrower is responsible for all local costs of issuance; these include any fees incurred for the borrower's bond counsel and financial advisor, for example. The borrower is also responsible for a pro-rata amount of the Trust's cost of issuance at the time the Trust issues bonds to permanently finance the borrower's loan. The costs of issuance typically incurred by the Trust when it issues bonds include, for example, expenses related to legal and financial advisory services provided to the Trust, the underwriter's discount (i.e. fee for underwriting the Trust's bonds), the cost of printing the official statement, fees paid to rating agencies etc. Loan agreements permit the financing of costs of issuance of up to a maximum amount of 2.6% of the borrower's loan obligation. However, the actual costs of issuance charged to borrowers typically has not exceeded 0.75% of the borrower's loan obligation. Top of Page


When are projects permanently financed?

The Trust issues bonds as needed. If your community has executed loan agreements with the Trust, your project will be permanently financed in the next upcoming bond issue of the Trust, assuming that the construction schedule for work on the project has not been significantly interrupted or delayed. The Trust requires that borrowers expect to complete construction on the project by the two year anniversary of the project's permanent financing. Top of Page


When do I pay debt service on my loan?

Debt service is due February 1 and August 1. Several weeks prior to these payment dates, you will receive payment instructions from the Trust identifying the amount you must pay by a date certain at least 5 days in advance of either the upcoming February 1 or August 1. These payment instructions typically include two letters: one giving you instruction as to the payment of the administrative fee due to the Trust, and the other giving you instruction relating to the debt service payment due and how/where it must be paid. Top of Page


What is the interest rate charged by MWPAT on loans that are permanently financed?

For projects first appearing on DEP's Intended Use Plan in 2002 and forward, the borrower's net debt service is structured to result in the financial equivalent of a loan with an annual interest rate of 2%. Top of Page


How is my loan subsidized?

The actual debt service on your community's loan depends upon the interest rate received by the Trust on the bonds it issues to permanently finance your community's loan. Since 2002, Trust loans have been set by the Massachusetts Legislature at 2%. The loan subsidy is equal to the difference between the market rate on the bonds and the 2% that borrowers pay. The borrower is legally obligated to repay the total debt service on the loan. Under state law, however, the Trust is required to apply subsidies against a portion of this debt service obligation. The amounts applied by the Trust to subsidize loans come from two sources: (1) the investment of debt service reserve funds pledged to secure the loan (and received originally by the Trust in the form of federal and state matching grants), and (2) contract assistance payments contributed by the Commonwealth via annual appropriation from the Commonwealth's General Fund. Top of Page


What other opportunities do I have to learn more about MWPAT and the financing process?

Staff of the Trust and DEP conduct presentations annually for new (and returning) borrowers seeking financing from the Trust for eligible projects. In addition, staff of the Trust conduct presentations for borrowers in preparation for closing its annual financing (these usually are scheduled at least a month or two in advance of the closing of the Trust's bond issue). Further, staff of the Trust and DEP often present at conferences and meetings of local and state organizations and associations, and are available to meet on a one-on-one basis with officials and other staff of your community or organization. Top of Page