The Ohio Water Development Authority and the Ohio Department of Natural Resources have joined to create two loan programs to assist the state's dam owners in funding safety related repairs and improvements. Public agencies will utilize the Ohio Water Development Dam Safety Loan Program and private or corporate owners may borrow through the Ohio Water Development Link Deposit Program. Both programs are discussed in detail below.

  The Ohio Water Development Authority (OWDA) is an independent agency created by the State of Ohio in 1968 to provide financing to local governments for projects related to solid waste, water supplies, and water pollution control. The Authority administers a variety of programs for financing the planning and construction of wastewater collection and treatment facilities, water supply and distribution facilities, storm water control facilities, and solid waste facilities.

  The Authority finances projects that comply with regulations on a first-come, first-served basis. Any Ohio project is eligible to receive financing if it meets applicable Ohio Environmental Protection Agency requirements, and local rate legislation is enacted to ensure that revenues are adequate to meet loan repayments. Costs eligible for financing include engineering and design fees, construction costs, and legal and inspection fees. It also issues tax exempt private activity bonds for sewage facilities, solid waste facilities, facilities that furnish potable water, and facilities for the disposal of hazardous waste.

  The goals of the Ohio Water Development Authority are to provide Ohio communities with access to reasonable financing for facilities needed to protect Ohio's natural resources and the environment and improve the quality of life for all Ohio residents.

  The Ohio Department of Natural Resources (ODNR), Division of Water regulates dam safety in Ohio. The purpose of the division's dam safety program is to protect Ohio's citizens and their property from the catastrophic failure of dams. The program began in 1963 when Ohio's General Assembly and governor enacted the first law requiring a permit for the construction of a new dam. An additional law requiring the periodic inspection and repair approval for existing dams came about in 1968. Under these statutes, the Division of Water has regulatory authority and responsibility for nearly 1800 dams throughout the state.

 

The Ohio Water Development
Dam Safety Loan Program (DSLP)

  The Ohio Water Development Authority offers local governments (city, village, county, state agency, water/sewer/conservation district) loans to finance design and construction of improvements and repairs to dams as mandated by the Ohio Department of Natural Resources. Any such project is eligible to receive OWDA financing, provided plans have been approved by and an inspection report has been obtained from ODNR. The local government must dedicate a source of repayment and have user charges or other appropriate revenues in place adequate to meet annual loan repayments to OWDA.

  Loans are approved by the Authority each month based upon a contract interest rate which is determined by adding 50 basis points to the average of the Bond Buyer 20-Year General Obligation Bond Index for the eight weeks prior to the three-month period for which the interest rate is set. The term of the loan can be from 5 to 25 years with the first repayment beginning on either January 1 or July 1 following completion of the project but no later than 29 months. The Authority also has a 5-year planning loan for planning and design of eligible projects. These loans are due in full at the time of construction or at the end of five years, whichever comes first.

  Before approval of a construction loan by the OWDA Board, the local government must have:

• Received bids and tentatively approved contract awards.
• Passed legislation authorizing signing of the Cooperative Agreement.
• Completed any necessary assessments or rate legislation.
• Prepared an amortization schedule projecting revenues, debt service obligations, and operation and maintenance costs over the term of the OWDA loan.

  Had plans approved and obtained an Inspection Report by ODNR, with language such as, "Please be advised that this approval may qualify you for a loan from the Ohio Dam Safety Loan Program administered by the Ohio Water Development Authority (OWDA).

  To find out more about the program, please contact OWDA's Loan Officer, Sue Farmer, at 614-466-5822.

  Before approval of a planning loan by the OWDA Board, the local government must have:

• Contracted with a professional engineer.
• Passed legislation authorizing signing of the Cooperative Agreement.
• Prepared an amortization schedule projecting revenues, debt service obligations, and operation and maintenance costs over the term of the OWDA loan.
• Obtained an Inspection Report by ODNR, with language such as, "Please be advised that this report may qualify you for a loan from the Ohio Dam Safety Loan Program administered by the Ohio Water Development Authority (OWDA).

  To find out more about the program, please contact OWDA's Loan Officer, Sue Farmer, at 614-466-5822."

  When the loan has been approved, the Authority can then certify the availability of funds to the local government so that planning or construction contracts can be signed. The agreement provides for OWDA to pay all construction costs, which have been approved for payment by the local government and ODNR, directly to the contractor. All other costs, such as engineering, legal, and inspection are reimbursed directly to the local government. The Authority charges a one-time administrative fee of .35% (.0035) of the total loan amount. Interest charges during construction will be at the same rate as the contract interest rate. The principal amount to be financed over the selected term of the loan consists of total project costs disbursed by the Authority plus interest charges during construction.

The Ohio Water Development
Dam Safety Linked Deposit Program (DSLDP)

  The Ohio Water Development Authority's Dam Safety Linked Deposit Program provides lower than market rate loans to individuals, private organizations, and businesses for improvements and repairs to dams as mandated by the Ohio Department of Natural Resources. Necessary steps for the dam owner to obtain financial assistance from OWDA are:

  A dam owner, working with the Department of Natural Resources, Division of Water, develops a plan for repair or improvement to the dam and obtains approval from the Division.

  The dam owner obtains a plan approval letter and an approved set of plans from ODNR identifying the proposed repairs and improvements to the dam structure that are eligible for the Dam Safety Linked Deposit Program. This approval letter should contain language such as, "Please be advised that this approval may qualify you for a loan from the Ohio Dam Safety Linked Deposit Program administered by the Ohio Water Development Authority (OWDA). To find out more about the program, please contact any of the participating banks listed with the attached information, or contact Mark Ogden at ODNR, 614-265-6727.

  The dam owner applies for a loan from one of the local area banks participating in the Dam Safety Linked Deposit Program. After the dam owner presents the Inspection Report, the bank evaluates the credit-worthiness of the dam owner using its criteria. It these criteria are met, the bank then enters into a loan agreement with the dam owner. The bank then sends an investment request form, which identifies the dam owner and the terms of the loan, and a copy of the dam owner's Inspection Report to OWDA.

  Upon approval by the bank, OWDA deposits with the bank, through a certificate of deposit, funds equal to the face value of the loan to the dam owner. The term is equal to the term of the bank's loan with the dam owner. The interest rate on the certificate of deposit is discounted by a predetermined percentage below the bank's normal cost of funds. This rate is up to 3% with an interest rate of the loan to the owner not to fall below the current OWDA interest rate for loans to public agencies. The CD interest rate prior to discount is determined by a comparison to the interest rates of comparable U.S. Treasury notes and bonds. The bank's repayment schedule in the certificate of deposit contains semi-annual payments of principal and interest to OWDA. The interest rate of the bank's loan to the dam owner is reduced by the same amount as the discount the bank receives from OWDA.

Contacts for Additional Program or Loan Information

  For Ohio Water Development Authority Dam Safety Loan Program Loan information:

Sue Smith Farmer, Loan Officer
Ohio Water Development Authority
88 East Broad Street, Suite 1300
Columbus, Ohio 43215-3516
phone: 614-466-5822
fax: 614-644-9964
e-mail: sue@owda.org