Florida launches underwriter search for stormwater issues

By SHELLY SIGO

(American Banker) -- Florida has begun its search for underwriters to start up a new revolving loan program that will issue $225 million of bonds in three tranches over three years.

After July 27, the Florida Water Pollution Control Finance Corp. was set to begin supplementing cash loans already being issued to local governments by the state Department of Environmental Protection for stormwater management projects, and it will help the state prepare for stricter stormwater management rules proposed by the U.S. Environmental Protection Agency.

"We've never issued bonds to fund these projects," said Ben Watkins, director of the Division of Bond Finance, which is overseeing the request for proposals process. "So far, all the loans have been made with cash. Now we are adding leverage to the program."

The corporation is authorized to issue $50 million of bonds in its first year of operation, $75 million in the second year, and $100 million in the third year. The corporation is expected to issue bonds in the first quarter of 2001.

Much of the money raised through issuance of Florida bonds will be used to satisfy strict new rules for stormwater runoff management -- rules that apply to all states -- that are awaiting approval from Congress.

According to the EPA, despite current standards in the federal Clean Water Act, 40% of the country s waters are still polluted, mostly by runoff. States would have four years to update their inventories of polluted waters and prioritize plans to finance corrective measures.

EPA administrator Carol Browner, formerly the secretary of Florida's DEP, said her agency would work in partnership with state and local governments to develop commonsense, flexible solutions for cleaning up waterways that do not meet public-health protection goals.

The state legislature created the corporation to provide funding to help address compliance with the new federal standards, Watkins said.

While Florida traditionally offers bonds through competitive sales, Watkins said the decision to retain a negotiated underwriting syndicate, and conduct a nationwide search for bond counsel and disclosure counsel, is designed to attract experts in revolving-loan programs to inform investors unfamiliar with bonds issued by the new entity.

The board overseeing the corporation is comprised of the governor, the budget director, the comptroller, the treasurer, and the secretary of DEP.

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