QUARTERLY STATUS REPORT

Transcription

1 NORTH AMERICAN DEVELOPMENT BANK AND BORDER ENVIRONMENT COOPERATION COMMISSION QUARTERLY STATUS REPORT

2 TABLE OF CONTENTS 1. Summary of Financial and Operational Activity Project & Financing Activity Loan Program Grant Programs Community Assistance Program (CAP) Border Environment Infrastructure Fund (BEIF) Water Conservation Investment Fund (WCIF) Technical Assistance & Capacity Building NADB-BECC Technical Assistance Program Project Development Assistance Program (PDAP) Border 2020: U.S.-Mexico Environmental Program Funding Partnerships Project Closeout & Results Measurement Project Closeout Reports Impact Assessment Annex Active Projects by State

3 1. Summary of Financial and Operational Activity SUMMARY OF PROJECT AND FINANCING OPERATIONS (US$ Thousands) Project Certification 3rd Qtr Total projects certified By Sector Water Waste management Air quality Basic urban infrastructure Clean and efficient energy By Financing Type Loans NADB-funded grants NADB-administered grants Lending Operations Loans approved $ 273,186 $ 96,876 $ 239,177 $ 323,670 $ 273,242 Loans contracted 229, , , , ,881 Loans disbursed 65, , , , ,964 Grant Operations NADB-funded grants 4 Approved $ - $ 3,100 $ 1,000 $ 765 $ 2,183 Contracted 1,500 1,600 1, ,183 Disbursed ,694 1, NADB-administered grants 6 Approved 2,880 25,022 20,274 24,936 6,104 Contracted 14,535 21,231 16,219 12,047 7,658 Disbursed 7,058 10,228 8,698 14,673 17,459 Technical Assistance 7 Approved $ 1,137 $ 972 $ 2,124 $ 1,320 $ 1,369 Disbursed 667 1,267 1,933 1,008 1,123 1 Project certification and financing proposals are approved simultaneously by the Board of Directors. 2 This category includes street paving, other roadway improvements, industrial emissions reduction and public transportation. 3 These projects consist of works from various sectors, such as roadway improvements, water and sewer lines, storm drainage, and public lighting. 4 Grants funded from designated retained earnings of the Bank for certified infrastructure projects (excludes technical assistance). 5 Includes both grant disbursements and expenditures for project supervision for Grants funded by EPA and administered by NADB through the Border Environment Infrastructure Fund (BEIF). 7 Includes project development activities, training seminars and sector studies funded by NADB and BECC. 2

4 NADB FINANCIAL SUMMARY (US$ Thousands) 3rd Qtr Balance Sheet Data Cash and investments $ 830,232 $ 511,558 $ 504,861 $ 442,954 $ 545,525 Loans outstanding 2 1,383,540 1,411,296 1,324,777 1,185,514 1,011,212 Total assets 2,157,047 1,812,866 1,780,599 1,633,369 1,573,076 Borrowings outstanding, gross 1,495,613 1,187,505 1,190,550 1,059,953 1,046,386 Total liabilities 1,533,416 1,208,832 1,215,017 1,090,683 1,054,422 Total equity 623, , , , ,654 Callable capital 2,351,667 2,351,667 2,295,000 2,295,000 2,295,000 Income Statement Data Total interest income $ 50,266 $ 59,012 $ 51,246 $ 43,710 $ 39,543 Loans 42,490 52,427 45,892 38,487 35,149 Investments 7,776 6,585 5,354 5,224 4,394 Interest expense 22,634 19,950 15,101 13,548 10,838 Net interest income 27,632 39,061 36,145 30,163 28,705 Total operating expenses 3,828 17,934 18,143 10,816 19,451 Provision for loan losses (3,852) 5,134 8,559 2,199 10,544 Total non-interest income (expense) 2,574 (369) 2,388 (1,093) (888) Income before program activity 26,378 20,758 20,389 18,254 8,366 Net program expenses 3 1,097 1,088 4,873 2,077 1,145 Net income 25,282 19,670 15,516 16,177 7,221 Ratios Total equity / loans outstanding 45.1% 42.8% 42.7% 45.8% 51.3% Gross debt / callable capital 63.6% 50.5% 51.9% 46.2% 45.6% Gross debt / total equity 239.8% 196.6% 210.5% 195.3% 201.8% Interest coverage 4 1.9x 2.3x 2.8x 2.6x 2.8x Liquid assets / total assets 36.0% 25.3% 25.3% 23.8% 31.3% Income before program activity / total equity 4.2% 3.4% 3.6% 3.4% 1.6% Income before program activity / average assets 1.3% 1.2% 1.2% 1.1% 0.6% Credit Ratings Moody s Investor Service Aa1/P-1 Aa1/P-1 Aa1/P-1 Aa1/P-1 Aaa/P-1 Fitch Ratings AA/F1+ AA/F1+ AA/F1+ AA/F1+ AA/F1+ 1 Excludes the U.S. domestic program (see Note 8 of the consolidated financial statements). 2 Before allowance for loan losses, unamortized fees, and effect of foreign exchange adjustments and hedged items. 3 Program expenses include grant financing and technical assistance funded from the Bank's retained earnings. 4 Interest coverage ratio is defined as interest income minus operating expenses less provision for loan losses divided by interest expense. 3

5 2. Project & Financing Activity 2.1. Loan Program Lending Activity. During the third quarter of 2017, the Board of Directors approved the certification of the Orejana Solar Park in the municipality of Hermosillo, Sonora, and approved a loan for up to US$50.0 million to help finance its implementation. The megawatt (MW) solar park is expected to generate electricity equivalent to the annual consumption of more than 47,410 households, thereby preventing the release of up to metric tons/year of sulfur dioxide (SO 2), 571 metric tons/year of nitrogen oxides (NOx) and 163,808 metric tons/year of carbon dioxide (CO 2) emissions generated by conventional fossil fuel-based energy production. During the same three-month period, four loan agreements totaling US$ million were contracted. Project Contracted Loans (US$ Millions) Date Signed 1 El Mezquite Wind Farm in Mina, N.L. $ Sep-17 2 Vicente Guerrero Wind Farm in Güémez, TAM Sep-17 3 Santa Maria Solar Park in Galeana, CHIH Sep-17 4 Orejana Solar Park in Hermosillo, SON Sep-17 TOTAL $ With respect to disbursements, during the past three months, US$23.74 million in loans was disbursed to support the implementation of five projects, including the full disbursement of the loan increase for the desalinization plant in Ensenada, Baja California, and the final disbursement of the loan for the Rocksprings Wind Farm in Val Verde County, Texas. In the case of the Ensenada desalination project, the peso-denominated loan increase was estimated at US$9.63 million ($ million pesos) at the time of approval in June The actual dollar value of this fully disbursed loan tranche was US$9.58 million, which is US$48,194 less than estimated. The contracted and approved amounts for this loan have been adjusted to reflect the actual dollar value of the peso loan. With respect to the Rocksprings Wind Farm, the short-term construction loan for up to US$40.0 million was approved in March 2017, and a loan agreement for up to US$37.8 million was contracted that same month. The final disbursement was made on September 15, 2017, leaving an unused balance of just over US$5.11 million. Consequently, the final loan amount for this project was reduced to US$32.69 million. The contracted and approved amounts for this loan have also been adjusted to reflect the final loan amount. Lastly, in August 2017, the project for the construction of a wastewater treatment plant in Delicias, Chihuahua, was cancelled. In August 2015, the Board certified the project and approved a loan commitment for up to $80 million pesos (US$5.33 million) for the concessionaire awarded the build-operate-transfer (BOT) agreement to carry out the Project. In 2016, the Municipal 4

6 Government changed and, after an extensive review of the project, decided to cancel the BOT agreement and explore other options for carrying out the project. Therefore, in August 2017, the loan commitment for this project was cancelled. For the year to date, new loans totaling US$ million have been approved for five certified projects; loan agreements totaling US$ million have been signed with the sponsors of seven projects and US$65.62 million have been disbursed to support the implementation of seven projects. Principal Payments. On September 28, 2017, NADB received the full repayment of the US$32.69 million short-term loan contracted in March of the same year for the Rocksprings Wind Farm project in Val Verde County, Texas. For the year to date, the Bank has received just over US$93.38 million in principal payments, including the prepayment of one loan totaling US$7.57million and the liquidation of a short-term loan for US$32.69 million. Excluding the prepaid and liquidated loans, principal payments averaged US$5.90 million a month, while loan disbursements for the same period averaged US$7.29 million a month. Status of Loan Portfolio. NADB closed the third quarter of 2017 with an outstanding loan balance of US$1.384 billion, a decrease of 1.97% compared to the balance at the end of 2016 (US$1.411 billion). 1 A breakdown of the current loan portfolio by environmental sector, region and borrower type is shown in the following table. 1 These figures do not take into account allowances for loan losses, foreign exchange adjustments, unamortized loan fees and the fair value of hedged items. 5

7 Outstanding Loan Portfolio As of September 30, 2017 No. % Amount (US$) % Public / Private Public % $ 265,612, % Private % 1,020,588, % Public-private 5 6.9% 97,338, % % 1,383,539, % Country U.S % 593,368, % Mexico % 790,170, % % 1,383,539, % Project Type Air quality % 97,626, % Basic urban infrastructure* 3 4.2% 35,954, % Other clean energy** 2 2.8% 4,396, % Public transportation 2 2.8% 27,610, % Solar energy % 292,987, % Storm drainage 2 2.8% 53,030, % Water / wastewater % 173,806, % Wind energy % 698,128, % % $ 1,383,539, % * These projects consist of components from various sectors, such as street paving, water and sewer lines, storm drainage and public lighting. ** Other clean energy currently includes two biogas projects. Additionally, at the end of the quarter, the Bank had US$ million pending disbursement in contracted loans for 14 projects, as well as approved loan commitments totaling an estimated US$ million for six projects, for which part of the funding has already been contracted. Consequently, loans outstanding and loan commitments at the end of the quarter totaled almost US$1.74 billion. ANNUAL LENDING ACTIVITY (US$ Millions) 9/30/ /31/2016 Outstanding balance, beginning of year $ 1, $ 1, Loan disbursements Principal repayments (93.38) (49.73) Outstanding balance, end of year 1, , Loans contracted, pending disbursement Loans approved, pending contracting Total loan commitments Outstanding loans & loan commitments $ 1, $ 1, Oustanding balances, before allowance for loan losses, unamortized fees, and effect of foreign exchange adjustments and hedged items. 6

8 Of the 107 loans contracted to date, 103 have been partially or fully disbursed, 28 have been repaid in full, and three have been partially or fully written off. At the end of the quarter, one of the 72 loans outstanding was classified as non-performing with a balance of US$14.38 million, representing 1.0% of the loan portfolio. Detailed information about all NADB loans and approved loan commitments as of September 30, 2017, is provided in Annex 1. Project Implementation: During the past quarter, two certified projects funded with NADB loans began construction. Orejana Solar Park A 158- megawatt solar park using photovoltaic modules mounted on a single-axis tracker system in a rural area west of the city of Hermosillo, Sonora. Santa Maria Solar Park A 179-megawatt solar park using photovoltaic modules mounted on a single-axis tracker system in a rural area of the municipality of Galeana, Chihuahua about 30 miles southeast of Nuevo Casas Grandes, Chihuahua. At the end of the quarter, 27 certified projects partially funded with NADB loans were under construction or pending closeout. Information on the status of these projects as of September 30, 2017, is provided in Annex 1 Projects in Development: During the past quarter, no new loan projects were identified, and the Bank had four projects in development. Two projects a desalination plant in Playas de Rosarito, Baja California, and a project to expand and improve the water and water systems in San Luis Rio Colorado, Sonora have been submitted to the Board for consideration and were pending a decision at the end of the quarter. Based on current information, the loan projects which could potentially be submitted for approval to the Board during the fourth quarter of 2017 are: Desalination plant in San Quintin, Baja California; and Puerto Libertad Solar Park (181 MW) in Pitiquito, Sonora Grant Programs Community Assistance Program (CAP) Through this program, NADB provides grant financing from its retained earnings for critical environmental infrastructure projects in low income-communities. Grants are available for projects in all sectors eligible for NADB financing, with priority given to drinking water, wastewater, water conservation and solid waste infrastructure During the third quarter of 2017, no new projects were certified to receive a CAP grant. However, a total US$231,480 in CAP grants was disbursed for the implementation of two projects, including the initial grant disbursement for the water distribution project in Nogales, Arizona. 7

9 In August, the Bank closed out the financing agreements for the wastewater project in Piedras Negras, Coahuila, and the storm water project in Santiago, Nuevo Leon, both of which were completed without using all the CAP grant funds. A total of US$173,691 in unused grant funds was cancelled and returned to the CAP program for projects in development, as follows: Piedras Negras, COAH $ 133,979 Santiago, N.L. 39,712 $ 173,691 Annual financing activity and the overall status of the CAP program as of September 30, 2017, is summarized in the table below. Community Assistance Program Annual Financing Activity and Program Status (US$ Millions) Cumulative Retained earnings allocated $ - $ 2.00 $ Funds allocated for supervision Grants approved* Grants contracted* Grants disbursed** Cancellations*** - (0.17) (0.43) Contracted grants, not yet disbursed $ 3.94 Additional approvals, not yet contracted - Funding available for future projects**** 6.13 * Annual figures less unused funds deobligated from completed projects. ** Ex cludes disbursements for superv ision. *** Unused funds deobligated from completed projects and returned to the CAP program for future projects. **** Allocated retained earnings less approv ed grants and funds allocated for superv ision. Project Implementation: In August, construction was completed on the installation of a new water distribution main on Crawford Street in Nogales, Arizona, which also included the replacement of 50 water connections and meters, as well as seven fire hydrants. The old line, consisting of 4-inch cast iron pipe with lead fittings and 6-inch cement asbestos pipe, was built in 1918 and was experiencing frequent breaks, causing water losses, interrupting service and posing a potential risk for water quality and public safety issues. The new 8-inch PVC waterline has increased the reliability and safety of drinking water services for approximately 1,178 residents and is preventing water losses in this drought prone area. 8

10 Crawford Street Water Main in Nogales, Arizona Of the 16 projects funded with CAP grants, eight have been completed, one is under construction and seven were in bidding or preparing to begin bidding at the end of the quarter. Information on the status of certified projects that are currently in the process of being implemented or pending financial closeout as of September 30, 2017, is provided in Annex 1. Projects in Development: BECC continued to work with eight communities to complete development activities related to their water and/or wastewater infrastructure projects. Two projects have completed the development activities required to be ready for certification. Submittal of projects for certification and financing approval is subject to the annual budget for program disbursements Border Environment Infrastructure Fund (BEIF) Through this program, NADB administers grant resources provided by the Environmental Protection Agency (EPA) for the implementation of priority water and wastewater infrastructure projects. During the past quarter, no new projects were certified to receive a BEIF grant. However, on July 10 th, the Bank signed a US$5.26 million BEIF grant agreement to support the expansion of the water and wastewater systems to the southwest area of Nogales, Sonora. Moreover, during the past three months, the Bank disbursed US$2.11 million in BEIF grants for the implementation of ten projects, including the initial disbursements for the wastewater projects in Brownsville, Texas and Willcox, Arizona. Annual financing activity and the status of the BEIF program at the end of quarter is summarized in the following table. 9

11 Border Environment Infrastructure Fund Annual Activity and Program Status (US$ Millions) Cumulative EPA funding allocations: $ 9.56 $ 8.82 $ For projects For program administration Grants approved* Grants contracted* Grants disbursed Cancellations** - - (65.93) Contracted grants, not yet disbursed $ Additional approvals, not yet contracted 1.08 Funding available for projects in development*** * Less funds deobligated from completed or cancelled projects. ** Unused funds deobligated from completed or cancelled projects and returned to the BEIF program for projects in development. *** EPA funding allocations for projects less grants approved. During the quarter, EPA Regions 6 and 9 allocated an additional US$7.65 million to the BEIF program: US$6.83 million for project construction and US$823,182 for program administration. Consequently, at the end of the quarter, there was just over US$13.68 million available for projects in development. Project Implementation: In September, construction was completed on works related to the new arsenic treatment facility (ATF) in Tornillo, Texas, which began operations in February Tornillo, an unincorporated community of about 3,500 residents, is located approximately 30 miles southeast of El Paso and obtains its water supply from the Hueco Bolson Aquifer. Naturally occurring arsenic in the aquifer regularly exceeds regulatory limits for potable water allowed by the U.S. Clean Water Act. The ATF has the capacity to treat 600 gallons per minute (gpm) to reduce Arsenic Treatment Facility in Tornillo, Texas 10

12 arsenic concentrations to permitted levels, as well as remove iron and manganese ions, which can give water an unpleasant taste, odor and color. In addition, the alignment of the ATF waste line provided an opportunity to incorporate new wastewater connections, giving first-time access to sewer service to 19 households along HR Hemley Street, Fourth Street and Drake Street. The new sewer connections will collect approximately 5,600 gallons per day of wastewater for proper treatment. During the quarter, construction also began on a new package wastewater treatment plant with the capacity to treat 1 million gallons a day of wastewater for the communities of Sunland Park and Santa Teresa, New Mexico. Of the 119 projects funded with BEIF grants, 104 have been completed and/or closed out, 11 are in various stages of construction or pending closeout, and four are in bidding or preparing to begin bidding. 2 Information on the status of certified projects that are currently in the process of being implemented or pending financial closeout as of September 30, 2017, is provided in Annex 1. Projects in Development: At the end of the quarter, there were 14 previously prioritized projects in development: ten in EPA Region 6 and four in EPA Region 9. Based on current information, BEIF projects that could potentially be submitted for certification by the Board of Directors during the fourth quarter of 2017 are: Rehabilitation of the Collector Poniente in Tijuana, Baja California; Wastewater Infrastructure Project in Marathon, Texas; and Wastewater Collection Project in Loma Blanca, Chihuahua Project Application and Prioritization Process. On July 15 th, EPA Region 6, in coordination with BECC, NADB and the Mexican National Water Commission (CONAGUA), announced a new project application and prioritization cycle for drinking water and wastewater infrastructure projects located within 100 km of U.S.-Mexico border in the states of Texas, New Mexico, Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas. The deadline for submitting an application for BEIF financing, as well as technical assistance through the Project Development Assistance Program (PDAP), is October 1 st. The EPA Region 9 application process for projects closed on August 1 st, with a total of 27 eligible applications received: nine from Arizona, three from California, twelve from Baja California and three from Sonora. The total construction cost represented by these applications is estimated to be more than US$158.5 million. The evaluation process for prioritizing these projects will be completed during the fourth quarter of There are 113 certified projects with BEIF funding contracted; however, one of those projects (the Texas Plan) consists of seven individual projects with seven individual grants, for a total of 119 water and wastewater projects. 11

13 Water Conservation Investment Fund (WCIF) At the beginning of the year, the last two projects funded through the Water Conservation Investment Fund (WCIF), were under construction or pending financial closeout. One project was completed in June 2017, leaving one project in construction at the end of the quarter. The grant agreements for these two projects total US$2.37 million, of which 63% (or US$1.49 million) has been disbursed, leaving approximately US$881,006 in contracted grants pending disbursement or financial closeout. 12

14 3. Technical Assistance & Capacity Building 3.1. NADB-BECC Technical Assistance Program To support project sponsors and border communities in the development of sustainable projects for certification and financing, NADB and BECC offer various types of technical assistance in three categories: project development, institutional capacity-building and sector studies to identify needs and generate knowledge about a new sector or technology. During the third quarter of 2017, no new technical assistance grants were approved; however, four previously approved studies were completed: Regional Water and Wastewater Service Plan for El Paso County, Texas. The existing plan was updated with a planning horizon through Wastewater Collection Project in La Joya, Texas. The final design for installing additional residential sewer connections has been completed. Technical Guidelines for Designing Green Infrastructure Elements in Mexican Municipalities. A technical manual with a very practical engineering approach was developed to be used by the Mexican municipal authorities for designing and implementing low-impact development elements in border communities, aimed at helping control storm water runoff and water conservation. Sustainable Water Utility Costs. This study, funded in equal parts by NADB and the Inter- American Development Bank (IDB), was developed in collaboration with Mexican National Water Commission (CONAGUA) and the local water utility in Piedras Negras, Coahuila. The study product is a package of standardized digital models that can be used by Mexican border water utilities to improve the efficiency of their administrative processes and help control operational, maintenance and financial costs in a sustainable manner. With respect to training and institutional strengthening activities, the five-module, diploma-level program on the basics of water utility management continued with the presentation of the third and fourth modules in August and September, respectively. These two sessions cover financial planning and leadership skills, such as negotiation and change management. The program developed in collaboration with the Latin American and Caribbean water center, Centro del Agua para América Latina y el Caribe (CDA), of the Monterrey Technological Institute (ITESM) is being presented at ITESM s North Sonora campus in Hermosillo, Sonora. About 26 representatives from 11 water utilities in Sonora, as well as the Sonora state water commission, are participating in the 13

15 program. The final module on public policy for water utilities is scheduled to be held in mid- October. For the year to date, BECC and NADB have approved technical assistance grants totaling US$1.14 million to support 12 studies or other development activities, including various seminars and forums. As of September 30, 2017, there were 14 studies in process or under development. The total grant commitment for those studies was US$1.62 million Project Development Assistance Program (PDAP) BECC administers this EPA-funded program to assist communities in the development of water and wastewater projects that have been prioritized by EPA to receive BEIF grants. During the third quarter of 2017, US$364,466 in PDAP grants were awarded to support the development of four wastewater projects, as shown in the following table. Community / Project Description Amount Sponsor Type (US$) 1 Tijuana, BC WW Alternative analysis for phase II rehabilitation $ 28,032 of wastewater collection mains 2 Tecate, BC WW Final design for the wastewater treatment 58,599 plant 3 Vinton, TX WW Environmental information document update 25,500 and public participation for the wastewater improvement project 4 Vinton, TX W Preliminary design and transboundary 252,335 environmental information document update for the potable water improvement project TOTAL: $ 364,466 W = Water; WW = Wastewater For the year to date, US$928,098 in PDAP funds have been awarded to support development of 13 wastewater projects for communities on both sides of the border Border 2020: U.S.-Mexico Environmental Program This binational program, developed by EPA and its Mexican counterpart, Secretaría de Medio Ambiente y Recursos Naturales (SEMARNAT) to improve the environment and protect the health of the millions of residents within 100 kilometers of both sides of the U.S.-Mexico border, focuses on initiatives for clean air, safe drinking water, reduced risk of exposure to hazardous waste and emergency preparedness. BECC plays a key partnership role in this program by providing logistical and administrative services to facilitate meetings, as well as identifying, contracting and managing projects and workshops funded under the program. 14

16 In 2017, EPA authorized approximately US$1.54 million in grant funding to carry out 29 Border 2020 projects. The following projects were completed during this period. No. Project Location Goal* Region 9 (California, Baja California, Arizona, Sonora) 1 Environmental health and asthma awareness campaign in low-income housing communities of Imperial County Region 6 (Texas, Tamaulipas, Nuevo Leon, Coahuila, New Mexico, Chihuahua) El Centro, Calexico and Brawley, CA 1 Comprehensive electronic waste management project Piedras Negras, COAH and Eagle Pass, TX * Border 2020 Goals: 1. Reduce air pollution; 2. Improve access to clean and safe water; 3. Promote materials management, waste management and clean sites; 4. Enhance joint preparedness for environmental response; 5 Compliance assurance and environmental stewardship; Fundamental strategies (FS). 4 3 For the year to date, nine projects have been completed, and ten projects are currently in process. On May 25, 2017, BECC issued a request for proposals, in coordination with EPA Regions 6 and 9, for projects to be implemented under the Border 2020 program. Local and state governments, educational and research institutions, non-governmental organizations and tribal nations were invited to present project proposals that will help achieve the goals and objectives of Border 2020 by July 20, For Region 9, a total of 13 projects were selected: eight to be developed in the Arizona-Sonora region and five in the California-Baja California region. For region 6, a total of 16 projects were selected: eight to be developed in the Texas-New Mexico-Chihuahua region; seven in the Texas-Nuevo Leon-Tamaulipas-Coahuila region; and one project for the whole border region Funding Partnerships In carrying out their mission, BECC and NADB pursue partnerships with other public and private organizations in an effort to promote environmental initiatives and projects on the border and identify additional support for their development and implementation. Inter-American Development Bank (IDB) Emerging Sustainable Cities Initiative The IDB Emerging and Sustainable Cities (ESC) initiative directly supports governments in the development and implementation of urban sustainability plans and uses a comprehensive, multidisciplinary approach to identify, organize and prioritize urban actions to tackle the main roadblocks preventing the sustainable growth of emerging cities in Latin America. In 2016, NADB teamed up with IDB to introduce the program to Mexican border communities and selected Hermosillo as the first candidate. Once the program is successfully implemented there, NADB plans to replicate it in other communities throughout the border region. The border research institute, Colegio de la Frontera Norte (COLEF), is overseeing this project and is working with the consultant firm, IDOM Ingeniería, S.A. de C.V., which was contracted to perform the baseline studies. 15

17 The two-stage, five-phase ESC methodology was launched in August 2016, with the support of 97 government, academic and community stakeholders, who met to provide information on the main opportunities and challenges facing the community in a wide array of sectors, as well as the plans, programs and projects proposed to address them. Based on the results, 127 indicators were identified, quantified and ranked ranging from water services, waste management and vulnerabilities to natural disasters to social services, economic development and municipal finances, among many others. In addition, a general survey to determine the infrastructure priorities of the community was conducted, and the results are being included in the final report, a draft of which is currently under review. In conjunction with this effort, the Harvard University Graduate School of Design (GSD) has launched a study entitled Rethinking Hermosillo Future Vision of the City, which consists of an urban analysis of the city to identify individual projects that can be developed and executed in the short and medium term. The results will serve to complement Hermosillo s action plan in the areas of urban development, housing and land use, as well as create a vision for the future and redirect the transformation of the city towards sustainable development environmentally, economically and socially. This initiative is aimed at making Hermosillo a model city for Latin America with respect to urban planning and adapting for sustainable development and environmental vulnerability, making good use of scarce resources and, above all, involving the general public and private sector. The study has been turned into a course entitled, Emerging Urbanism: Designing Visions for the City of Hermosillo, Mexico, which is being taught during the 2017 summer semester at Harvard. IDB Multilateral Investment Fund (MIF) In December 2014, BECC signed an agreement with IDB to develop a sustainable e-waste management and recycling system in Mexicali, Baja California. The Massachusetts Institute of Technology (MIT), SEMARNAT, EPA, NADB, the Baja California Ministry of Environmental Protection and the Universidad Autónoma de Baja California (UABC) are also collaborating with this initiative, which is intended to promote the safe and efficient recycling of used electronic devices by training around 100 micro-businesses in the e-waste management industry to serve as collection points for workers in the field. The three-year project consists of four components: 1) environmental awareness and public education campaign; 2) training and certifying informal e- waste pickers and recyclers; 3) creation of a new e-waste system; and 4) knowledge management and dissemination. During the past quarter, the network of collection centers for various types of e-waste was formally set up. In Mexicali, these centers include the participation of two recycling companies. In addition, work began on organizing the first binational e-waste recycling forum, at which the results of this project will be presented so the methodology may be replicated in other cities. KfW In conjunction with the US$50 million line of credit provided by the German development bank (KfW) to NADB for water and wastewater projects in Mexico, BECC received 1 million euros from KfW for accompanying measures, including program marketing, climate screening of projects and results measurement. The German firm GITEC Consult GmbH was contracted to assist BECC in carrying out these tasks. In addition to tasks such as evaluating project eligibility for financing with 16

18 KfW funds and preparing various reports as needed, GITEC supported the development of the energy efficiency network for 14 water and wastewater utilities in the state of Coahuila. During the past quarter, GITEC concluded the climate screening for several projects and submitted its final report. The contract with GITEC is expected to be closed out in October

19 4. Project Closeout & Results Measurement 4.1. Project Closeout Reports During the third quarter of 2017, two closeout reports were completed and sent to the Board: the Astrosol Tech Solar Park in Tucson, Arizona, and the first border-wide low-emission bus program sponsored by Mercader, both of which were partially funded with a loan. The following tables present the close-out pipeline for NADB-funded projects, along with their status as of September 30, LOAN PROJECT CLOSEOUT PIPELINE FOR 2017 Community / Sponsor Project Certification Date Completed Nogales, SON Solid waste equipment Dec-07 Nuevo Laredo, TAM Water and wastewater Jun-04 Astrosol Tech Park Solar energy project Jan-12 Mercader I Pilot low-emission bus program Apr-16 In process Bryan Solar Park Solar energy project Jun-13 Cd. Juarez, CHIH Air quality and urban mobility Jul-12 Cd. Juarez, CHIH* South-South Wastewater Treatment Plant Apr-17 El Paso, TX Paisano Valley waterline replacement Nov-15 El Porvenir Wind Farm Wind energy project Feb-12 FRV Tucson Solar Park (Picture Solar energy project Dec-12 Rocks, AZ) Hermosillo, SON* Wastewater treatment plant Nov-16 Los Vientos 1A Wind Farm Wind energy project Dec-12 Los Vientos 1B Wind Farm Wind energy project Dec-12 Mercader II Second low-emission bus program Nov-16 Nuevo Laredo, TAM Storm drainage Jun-06 Tijuana, B.C. Paving rehabilitation (white-topping) Jul-09 Pending Naco, SON Paving Oct-07 Naco, SON Wastewater Abr-96 Ocotillo Wind Farm Wind energy project Jul-13 * Closeout process in collaboration with KfW. 18

20 NADB-FUNDED GRANT PROJECT CLOSEOUT PIPELINE FOR 2017 Community / Sponsor Project Certification Date In process Nogales, SON (SWEP) Landfill/transfer station Dec-09 Piedras Negras, COAH (CAP) Wastewater May-14 Santiago, N.L. (CAP) Storm water May-13 Tecate, B.C. (CAP) Water and wastewater Dec-14 Pending Naco, SON (SWEP) Solid waste Jul-04 In the case of BEIF projects, the close-out pipeline for 2017 includes seven projects in EPA Region 6 and six in EPA Region 9, for a total of 13 BEIF close-out reports anticipated for the year. The closeout report for four of the projects has been completed and submitted to EPA. Four additional reports are anticipated to be completed by year-end. Close-out activities for the additional projects are in process Impact Assessment For the next impact assessment, BECC and NADB are going to develop a study of the wastewater infrastructure projects in the sister cities of Nogales, Arizona and Nogales, Sonora, which is aimed at documenting project results in a binational context. One of the biggest challenges will be to obtain reliable statistical data in the same period for both communities in order to document the transboundary impact of wastewater and storm water management on shared water bodies. In September, BECC and NADB began working on developing the scope of work and terms of reference for the study, as well as meeting with the local utilities and authorities in both communities to present the study proposal and gain their support and cooperation. A binational work team is also being integrated with staff from NADB, the University of Arizona Tucson Campus and the Mexican research institute, Colegio de la Frontera Norte (COLEF). The kick-off date of the study is expected to be during the second half of November. 19

21 Annex Active Projects by State 20

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23 ANNEX 1 NADB-BECC STATUS REPORT NORTH AMERICAN DEVELOPMENT BANK ACTIVE PROJECTS BY STATE September 30, 2017 Project Population to Certification Total Total NADB Funding Construction Phase 2 Benefit 1 Date Cost Approved Contracted Disbursed Develop. Construct. Complete UNITED STATES ARIZONA 1 1 Douglas (Bay Acres) WW 17, Nov Nogales W 1, May Tombstone W 1, Jun Willcox WW 3, May TOTAL ARIZONA 23, CALIFORNIA 5 1 Holtville (WWTP) WW 6, Feb SEPV Solar (Dixieland) SE 6, Nov-16 Reserved TOTAL CALIFORNIA 13, NEW MEXICO 7 1 Anthony WW 8,700 6-May Mesilla W 1, Nov Sunland Park/Santa Teresa (WWTP) WW 6, Apr TOTAL NEW MEXICO 16, TEXAS 10 1 Brownsville WW 2, Nov Cameron Irrigation District No. 6 WC 16-Dec Clint WW 1, Dec El Paso County (Cuadrilla) WW 85 3-Mar El Paso County (Vista del Este) W 1, Nov Hidalgo Irrigation District No. 16 WC 19-Mar North Alamo WSC (Hidalgo County) WW 1, Jun Rocksprings Wind (Val Verde County) WE 138,399 1-Mar-17 Reserved Socorro (Cotton Valley) WW Dec Tornillo (2) W/WW 3, Aug TOTAL TEXAS 148, U.S. BORDER REGION 20 1 CleanFund PACE Program EE/WC 13-Sep TOTAL US Border TOTAL U.S. 201,

24 ANNEX 1 ACTIVE PROJECTS BY STATE NADB-BECC STATUS REPORT Project Population to Certification Total Total NADB Funding Construction Phase 2 Benefit 1 Date Cost Approved Contracted Disbursed Develop. Construct. Complete MEXICO BAJA CALIFORNIA 1 1 Ensenada W 96,000 6-Dec Mexicali (Col. Loma Linda/Esperanza) WW 2,230 3-Dec Playas de Rosarito BUI 90, May Tecate (Col. Piedra Angular) WW Dec Tijuana y Rosarito W/WW 1,373, Jul Tec.-La Gloria WWTP WW 187,036 1-Feb Tijuana WW 2014 WW 524,908 3-Dec TOTAL B.C. 1,562, CHIHUAHUA 8 1 Ahumada SW 11, Jun Cd. Juarez (South-South) WW 180, Dec Cd. Juarez (cogen) ENE-B 14-May Colonia Esperanza WW 1, Sep El Millón, Jesús Carranza & Tres Jacales WW 1,656 4-May Los Santos Solar (Ahumada) SE 21,016 1-Apr-15 Reserved Madera SW 17, Jun Nuevo Casas Grandes SW 59, Jun Praxedis W 3,641 8-Dec San Agustin W/WW 1,569 8-Nov Santa Maria Solar (Galeana) SE 195, Jun-17 Reserved TOTAL CHIH. 480, COAHUILA 21 1 AHMSA (Monclova) AQ 216, Aug-15 Reserved EDPR Wind (Gral. Cepeda) WE 384,153 5-Nov-15 Reserved Piedras Negras (2) WW 65,000 8-May Región Centro SW 345, Jun Reg. 5 Manantiales SW 77, Jun Sabinas WW 3,027 6-Nov TOTAL COAH. 1,091, NUEVO LEÓN 27 1 El Mezquite Wind (Mina) WE 432, Jun-17 Reserved Monterrey WW 3,592, Jun Santiago SD 20,000 9-May TOTAL N.L. 4,045,

25 ANNEX 1 ACTIVE PROJECTS BY STATE NADB-BECC STATUS REPORT Project Population to Certification Total Total NADB Funding Construction Phase 2 Benefit 1 Date Cost Approved Contracted Disbursed Develop. Construct. Complete SONORA 30 1 Hermosillo WW 784,342 1-Apr Hermosillo BUI 784,342 9-May Nogales (SW colonias) W/WW 16, Nov Orejana Solar (Hermosillo) SE 175,417 7-Jul-17 Reserved San Luis Rio C. SW 161, Oct San Luis Rio C. (2) AQ 178, Sep San Luis Rio C. (4) WW 16,122 8-May Sonoyta WW 12, Dec TOTAL SON. 1,167, TAMAULIPAS 38 1 Frontera Ribereña SW 67, Dec La Mesa Wind (Güémez) WE 91,127 5-Feb-15 Reserved Matamoros (2) W / WW 160, Jul Miguel Alemán (2) WW 19, Jul Nuevo Laredo (2) WW 86, Jul Reynosa (2) WW 266,853 6-May Tres Mesas Wind (Llera de Canales) WE 255, Jun-14 Reserved Vicente Guerrero Wind (Güémez) WE 224,287 8-Feb-17 Reserved Victoria Wind (Güémez) WE 92,639 5-Feb-15 Reserved TOTAL TAMP. 1,245, MEXICAN BORDER REGION 47 1 Mercader Pilot Program PT 24-Jun Mercader Bus Program PT 13-Sep TOTAL MX Border TOTAL MEX. 9,593,539 2, TOTAL NADB 9,795,535 2, Populations benefiting from more than one project are only counted once. 2 Projects in development are either under final design, in preparation for bidding or in bidding. Projects that have completed construction may still be considered active because financing is still in process (pending disbursement or deobligation). AQ = Air quality; BUI = Basic urban infrastructure; EE = Energy efficiency; ENE-B = Energy from biogas; PT = Public transportation; SD = Storm drainage; SE = Solar energy; SW = Solid waste; W = Water; WC = Water conservation; WE = Wind energy; WW = Wastewater; WWTP = Wastewater treatment plant 3