Performance Audit and Sunset Review: Water Infrastructure Finance Authority

The Water Infrastructure Finance Authority was created in 1997 and provides financial assistance, through below-market interest rate loans, for the construction, rehabilitation, and improvement of clean water and drinking water facilities in Arizona. However, the interest rate determination process that WIFA uses includes a project’s priority ranking compared to other, unrelated projects, which can lead to higher interest rates for some projects and, therefore, reduced cost savings for some borrowers. In addition, the process WIFA uses to determine interest rates is unique to 19 states surveyed by auditors. We recommend that WIFA revise its interest rate determination process so that rates are not dependent on unrelated projects, and test and evaluate it prior to implementation to ensure that it allows WIFA to continue operating without State General Fund appropriations.