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

Transcription

1 NORTH AMERICAN DEVELOPMENT BANK AND BORDER ENVIRONMENT COOPERATION COMMISSION QUARTERLY STATUS REPORT MARCH 31, 2016

2 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 TABLE OF CONTENTS Quarterly Project & Financing Activity... 2 I. Certification and Financing Approvals... 2 II. Financing Agreements Signed... 2 III. Disbursements... 2 IV. Loan Repayments... 3 V. Loan Portfolio Statistics... 3 VI. Grant Financing Programs... 4 VII. Project Implementation... 6 Project Development... 8 I. Certification Applications Received... 8 II. Public Participation Processes... 9 Technical Assistance & Capacity Building I. NADB-BECC Joint Technical Assistance Program II. Project Development Assistance Program (PDAP) III. U.S.-Mexico Border 2020 Program IV. Funding Partnerships Project Closeout & Results Measurement I. Project Closeout Reports II. Impact Assessment Annexes Annex 1: NADB Financial Statements as of (unaudited) Annex 2: Chart of Active Projects by State 1

3 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Quarterly Project & Financing Activity I. CERTIFICATION AND FINANCING APPROVALS During the first quarter of 2016, the SEPV Imperial Solar Park in Dixieland, California was certified to receive a loan for up to US$11.0 million. This project will help reduce the demand for electricity generated by fossil-fuel-based power plants, thus displacing related harmful emissions. Specifically, the project is expected to displace more than 4,319 metric tons/year of carbon dioxide (CO2) and seven metric tons/year of nitrogen oxides (NOx). II. FINANCING AGREEMENTS SIGNED During the same three-month period, NADB signed two financing agreements totaling US$4.33 million, as follows: Project NADB Financing (US$ Millions) Date Signed 1 Water System Improvements Project in Mesilla, BEIF grant $ Feb-16 NM 2 Wastewater Collection System and Residential BEIF grant Mar-16 Connections in FM Colonias, in Brownsville, TX TOTAL $ 4.33 BEIF = Border Environment Infrastructure Fund. III. DISBURSEMENTS During the past three months the Bank disbursed US$5.30 million, including the initial disbursement of the Community Assistance Program (CAP) grant for a wastewater project in Tecate, Baja California. Of the funds disbursed, approximately US$3.55 million were in loans for two projects; US$1.59 million in grants from the Border Environment Infrastructure Fund (BEIF) for seven projects; US$0.08 million in CAP grants for three projects and US$0.07 million of a grant from the Water Conservation Investment Fund (WCIF) for one project. At the end of the quarter, approximately 97% of all contracted financing was disbursed, leaving a balance of approximately US$84.0 million in signed loan and grant commitments pending disbursement or financial closeout, as detailed in the table. Program No. of Contracts Total Pending Disbursement (US$ Millions) Loans 7 $48.27 BEIF grants CAP grants WCIF grants $

4 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 IV. LOAN REPAYMENTS On, NADB received the final payment for a US$1.15 million loan contracted in February 2008 by the water utility (CESPT) in Tijuana, Baja California, to help finance improvements to the water and wastewater system in Playas de Rosarito. For the year to date, the Bank has received just over US$9.51 million in principal payments, which represents an average of US$3.17 million a month. Conversely, loan disbursements for the same period averaged US$1.18 million a month. V. LOAN PORTFOLIO STATISTICS NADB closed the first quarter of 2016 with an outstanding loan balance of US$1.318 billion, a decrease of 0.5% compared to the balance at the end of 2015 (US$1.324 billion). 1 A breakdown of the current loan portfolio by environmental sector, region and borrower type is shown in the following table. Breakdown of Outstanding Loan Portfolio As of No. Amount (US$) % Public / Private Public 40 $ 298,699, % Private ,843, % Public-private 5 91,274, % 70 1,318,818, % Country U.S ,745, % Mexico ,073, % 70 1,318,818, % Project Type Air quality 8 108,800, % Basic urban infrastructure* 3 36,726, % Wind energy ,039, % Solar energy ,872, % Other clean energy** 2 4,225, % Public transportation 1 3,509, % Storm drainage 2 57,091, % Water / Wastewater ,142, % Water conservation 1 7,410, % 70 $ 1,318,818, % * Basic urban infrastructure consists of a mix of works from various sectors, such as street paving, water and sewer lines, storm drainage and public lighting. ** Other clean energy currently includes two biogas projects. 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. 3

5 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Additionally, the Bank had US$48.27 million in contracted loans pending disbursement, as well as approved loan commitments totaling an estimated US$ million for seven projects. Consequently, loans outstanding and loan commitments at the end of March totaled US$1.59 billion, as show in the following table. LENDING ACTIVITY (US$ Millions) 3/31/ /31/2015 Outstanding balance, beginning of year* $ 1, $ 1, Loan disbursements Principal repayments (9.51) (110.29) 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. Of the 97 loans contracted to date, all 97 have been partially or fully disbursed, 24 have been repaid in full, and three have been partially or fully written off. Detailed information about all NADB loans and approved loan commitments as of, is provided in the Annex 2. VI. GRANT FINANCING PROGRAMS The status of grant financing and grant-funded projects at the end of the first quarter of 2015 is summarized in the following tables. Border Environment Infrastructure Fund (BEIF) Through this program, NADB administers grant resources provided by the Environmental Protection Agency (EPA) for the implementation of water and wastewater infrastructure projects on both sides of the U.S.-Mexico border. 4

6 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Border Environment Infrastructure Fund Annual Activity and Program Status (US$ Millions) * Cumulative EPA funding allocations:** $ 6.80 $ - $ For projects 6.65 (0.57) For program administration Grants approved Grants contracted Grants disbursed Cancellations*** (10.64) - (65.93) Contracted grants, not yet disbursed $ Additional approvals, not yet contracted 4.62 Funding available for projects in development * As of. ** In 2016, EPA Region 9 transferred funds from projects to program administration. *** Unused funds deobligated from completed or cancelled projects and returned to the BEIF program for future projects. Of the 112 projects with BEIF grants contracted, 101 have been completed, seven are in various stages of construction, three are in bidding or preparing to begin bidding and one was under review by EPA. 2 Community Assistance Program (CAP) Grant financing from the Bank s retained earnings for critical environmental infrastructure projects in low income-communities is available for projects in all eligible sectors eligible, with priority given to drinking water, wastewater, water conservation and solid waste infrastructure. Community Assistance Program Annual Financing Activity and Program Status (US$ Millions) * Cumulative Retained earnings allocated $ - $ - $ Funds allocated for supervision Grants approved Grant s contracted Grants disbursed** Cancellations*** (0.26) - (0.26) Contracted grants, not yet disbursed $ 1.66 Additional approvals, not yet contracted - Funding available for future projects 7.39 * As of. ** Includes project grants and superv ision disbursements. ** Unused funds deobligated from completed projects and returned to the CAP program for future projects. 2 There are 106 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 112 water and wastewater projects. 5

7 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Of the nine projects funded with CAP grants, four projects have been completed, three are under construction, and two were in bidding or preparing to begin bidding. With respect to the cancelled Water Conservation Investment Fund (WCIF), one of the last three projects completed construction during the quarter and the other two were under construction. The grant agreements for those three projects total US$2.84 million, of which 66% (or US$1.88 million) has already been disbursed, leaving approximately US$0.96 million in contracted grants pending disbursement. VII. PROJECT IMPLEMENTATION During the first quarter of 2016, two BECC-certified projects funded by NADB were reported as having completed construction. Cameron County Irrigation District No. 6 in Texas. In February 2016, upgrades to the Los Fresnos-Santa Rita Pump Station were completed, which included the installation of two supplemental pumps and motors and construction of a pipeline to connect the pumps to the canal system. The pump station, which is located on the Rio Grande about 5.5 miles northwest of Brownsville, TX, was built in the early 1900 s. In addition to providing irrigation services to its agricultural users, the District also supplies water to the city of Los Fresnos and the Olmito Water Supply Corporation, as well as diverts water for two other irrigation districts and the Brownsville water utility. By increasing pump efficiency and flow rates, water will spend less time in the canals, thus reducing losses from seepage and evaporation, as well as increasing water availability and service reliability for its users. The new pump equipment is also expected to significantly reduce electricity requirements, with estimated energy savings of US$35,480 annually. 6

8 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Mexicali, Baja California. In January 2016, work was completed on the replacement of deteriorated sewer lines in the Loma Linda subdivision, thus completing the entire certified project, which also included replacement of deteriorated sewer lines in the Esperanza subdivision. The wastewater collection system in both subdivisions was constructed 45 years ago with concrete and clay pipes, which had begun suffering frequent collapses. The new sewer lines are eliminating the risk of water pollution and waterborne diseases from sewage spills and leaks, directly benefitting an estimated 2,230 residents as well as preventing the possible contamination of shared water bodies, such as the New River. Specifically, an estimated 132,600 gallons a day of wastewater is being safely collected and conveyed to wastewater treatment plant. As of, a total of 56 certified projects were in various stages of construction or pending closeout. NADB has contracted approximately US$747.0 million in loans and grants to support those projects, which represent a total investment of US$2.46 billion. Information on the status of certified projects that are currently in the process of being implemented or pending financial closeout as of, is provided in Annex 2. For more detailed information on the construction status of these active projects, see the report entitled Status of Active Projects on the Bank s website at the following link: 7

9 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Project Development I. CERTIFICATION APPLICATIONS RECEIVED During the first quarter of 2016, ten certification and financing applications were received: Energy efficiency and water conservation project in U.S. border region (PACE) Wastewater project in General Trevino, N.L. Water project in Huachuca City, AZ Water project in Los Herreras, N.L. Water project in Soto la Marina, N.L. Solar energy project in Villaldama, N.L. Solid waste project in Ahumada, CHIH (CAP grant request) Solid waste project in Nuevo Casas Grandes, CHIH (CAP grant request) Solid waste project in Madera, CHIH (CAP grant request) Water project in Ensenada, B.C. BECC continued to work, in coordination with project sponsors, NADB and other agencies, on the review and development of 43 projects representing a total estimated investment of US$ million, including the new applications received. A breakdown of these applications by environmental sector, state and country is presented in the following table. State Total Environmental Sector AQ ENE SW BEIF W/WW Non-BEIF California Arizona New Mexico Texas USA Baja California Sonora Chihuahua Coahuila Nuevo Leon Tamaulipas Mexico TOTAL AQ = Air quality; ENE = Clean and efficient energy; SW = Solid waste; W/WW = Water/wastewater BEIF = Border Environment Infrastructure Fund 8

10 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Of the applications received, 18 were submitted specifically for CAP grants and include nine water and/or wastewater projects and nine solid waste projects. Additionally, BECC works with project sponsors prior to the submittal of a formal application in order to assist them in strengthening their proposal for consideration in the certification and financing process. II. PUBLIC PARTICIPATION PROCESSES On February 2, 2016, a public meeting was held in Reynosa, Tamaulipas, for a wastewater collection and treatment project. Additionally, the public comment period was completed for the following three projects proposals: Border-wide Financing Program to Improve Water and Energy Efficiency in the United States sponsored by CleanFund Commercial PACE Capital, Inc. Anthony Lift Station Replacement Project in Anthony, New Mexico Wastewater Collection and Treatment Project in Reynosa, Tamaulipas With respect to the two wastewater projects, no comments were received. With respect to the PACE energy efficiency project, comments in support of the project were received from two government agencies: the Chihuahua state water agency, Junta Central de Agua y Saneamiento (JCAS); and the Secretary of Urban, Land and Water Management of the State of Coahuila. As of, no public comment periods were pending. 9

11 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Technical Assistance & Capacity Building I. NADB-BECC JOINT TECHNICAL ASSISTANCE PROGRAM During the first quarter of 2016, the Technical Assistance Committee approved a total of US$633,000 in technical assistance grants to support the following activities, including various seminars through the Utility Management Institute (UMI). BECC-NADB TECHNICAL ASSISTANCE AWARDED Community / TA NADB BECC Description Sponsor Type* (US$) (US$) 1 Hermosillo, SON CB UMI/World Bank webinar: Turn Down the Heat: Why a 4 C Warmer World Must be Avoided (5 sessions) 20, Monterrey, N.L. CB UMI Basic Program, Monterrey, NL (5 (ITESM) sessions) 150, Hermosillo, SON CB UMI: Business Management of Water Utilities 40, La Joya, TX PD Data collection and final design for a residential sewer hookup project 25,000 25,000 5 Reynosa, Tamps. PD Additional funds for analysis of alternatives for using the return flows of the El Morillo Agricultural Drain 6,500 6,500 6 San Antonio, TX CB Energy Forum with the Mexican entrepreneurs association (AEM) 10, Border-wide CB III Green Infrastructure Forum 50,000 50,000 8 Hermosillo, SON SS Emerging and Sustainable Cities Initiative 250,000 0 TOTAL: 551,500 81,500 * Technical assistance may be provided in three categories: project development (PD); sector development (SD) to identify needs, promote sound public policy or generate knowledge about a new sector or technology; and institutional strengthening through training or other capacity-building measures (IS). As of, there were 23 studies in process or under development. The total grant commitment for those studies was US$1.96 million. During the past quarter, NADB facilitated a group session of the webinar, Climate Change and its Consequences: Why a 4 C Warmer World Must be Avoided in Hermosillo, SON, through the massive open online course (MOOC) platform offered by the World Bank. Turning the individual webinar into a group session facilitated by a climate change specialist enriches the experience for the participants, as they are able to discuss and exchange ideas with a focus on topics key to their region. The 40-hour course was presented in five sessions beginning in January and ending in March and covered the potential effects of greenhouse gases and global warming, as well as options and initiatives for adapting or mitigating their impact. The program also included a workshop on estimating greenhouse gas emissions for projects in Mexico and a conference with economic and environmental experts from the World Bank, who talked about climate resilience 10

12 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 in water planning and policy options for advancing climate actions in state and local governments, among other topics. The course was attended by 150 participants, including personnel from the Sonora State Water Commission, the Sonora Environmental and Sustainable Development Commission, and professors and students from various state universities including the University of Sonora (UNISON), Sonora Institute of Technology (ITSON), Sonora State University (UES), Universidad Kino, as well as water utility authorities and professionals. II. PROJECT DEVELOPMENT ASSISTANCE PROGRAM (PDAP) During the first quarter of 2016, US$115,071 in PDAP grants funded by the U.S. Environmental Protection Agency (EPA) were awarded to support the development of five projects. Community / Sponsor Project Type Description 1 Presidio, TX W Additional activities related to the environmental information document for water system improvements 2 Niland, CA WW Additional activities related to the preliminary engineering report for wastewater treatment plant improvements 3 Douglas, AZ WW Additional activities related to the final design of wastewater system improvements 4 Pomerene, AZ W Drawing of easements and right-of-ways for water quality improvements 5 Tecate, BC WW Analysis of alternative sites for a wastewater treatment plant W = Water; WW = Wastewater PDAP Amount (US$) $ 40,995 28,560 17,930 2,690 24,896 TOTAL: $115,071 11

13 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 III. U.S.-MEXICO BORDER 2020 PROGRAM The following Border 2020 and special grants projects were completed during this period. No. Project Location Goal* Region 6 (Texas, Tamaulipas, Nuevo Leon, Coahuila, New Mexico, Chihuahua) 1 Characterization of drayage activities and emissions in Laredo, TX and Nuevo the Laredo/Nuevo Laredo air-shed Laredo, TAMPS 1 2 Hazardous materials first responders binational training McAllen, Mission, Pharr, TX and Reynosa, TAMPS 4 Region 9 (California, Baja California, Arizona, Sonora) 1 Imperial Valley Child Asthma Program Imperial, CA 4 * 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). In addition, a Symposium on Children s Health Issues along U.S.-Mexico Border was held on January 27 and 28 in San Diego, California. The two-day symposium was sponsored by EPA, in collaboration with the Agency for Toxic Substances and Disease Registry, BECC, the U.S.- Mexico Border Health Commission, the California Department of Public Health, and other partners. The key issue discussed at the symposium was the environmental health risks to children commonly found in communities located within the California/Baja California and Arizona/ Sonora regions. The symposium featured sessions focused on environmental health issues in the border region, how prenatal and childhood exposure can impact children s health and development, and what participants can do to address or mitigate environmental health risks to children. The following table shows projects initiated during this period and their corresponding Border 2020 program goal. 12

14 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 No. Project Location Goal* Region 6 (Texas, Tamaulipas, Nuevo Leon, Coahuila, New Mexico, Chihuahua) 1 Workshop on energy efficiency in public lighting systems Reynosa, TAMPS 1 2 Comprehensive solid waste management project Valle Hermoso and Río Bravo, TAMPS 3 3 Comprehensive electronic-waste management project Piedras Negras, COAH and Eagle Pass, TX 3 4 Rio Grande/Río Bravo water quality initiative Laredo, TX 2 5 Fat, oil and grease (FOG) public outreach campaign Brownsville, TX 2 6 Educational campaign to expand the recycling program Pharr, TX 3 7 Electronic-waste management project Ciudad Acuna, Piedras Negras and Guerrero, COAH 4 8 Decision-making tool (DMTG) for storm water in the Weslaco, TX Lower Rio Grande Valley in Texas 2 9 Green infrastructure in public spaces (Valle del Sol Ciudad Juarez, CHIH Avenue) 2 Region 9 (California, Baja California, Arizona, Sonora) 1 Pilot program for solid waste composting Tijuana Baja, CA 3 2 Electronic-waste management in laboratories Nogales, SON 3 3 HAZMAT training program Arizona-Sonora border region 4 * 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). The following table shows projects under development and the corresponding goal of the Border 2020 Program, to be completed during the second quarter of No. Project Location Goal* Region 6 (Texas, Tamaulipas, Nuevo Leon, Coahuila, New Mexico, Chihuahua) 1 Conservation of Arroyo Las Vacas Acuna, COAH 2 2 Planning model for an environmental and health Piedras Negras, COAH 2 Texas/Mexico border information exchange program 3 Promotora-led environmental health education for children Eagle Pass, TX 4 4 A holistic approach to improvements in the solid waste Alamo, TX 3 recycling system 5 Ysleta del Sur Pueblo Community Collection Center El Paso, TX 3 6 Hazardous rail car leak mitigation Doña Ana, NM, El Paso, TX 4 and Juarez, CHIH Region 9 (California, Baja California, Arizona, Sonora) 1 Restoration of the upper Tijuana River corridor Tijuana, B.C. 2 * 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). 13

15 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 As of, EPA has authorized approximately $11.8 million in grant funding for BECCmanaged special projects under the Border 2020 Program and other initiatives. To date, a total of 280 projects have been supported under the existing agreements between BECC and EPA Regions 6 and 9, most of which are related to scrap-tire management, water, soil, air, environmental health and emergency preparedness/response. Of these, 223 projects have been completed, 27 cancelled and 30 are under development. Additionally, BECC continues to manage EPA funds to provide logistical support for various groups and committees of the Border 2020 program. IV. 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. KfW Under the framework of the US$50 million line of credit from 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. Subsequently the contract with GITEC was amended to include additional tasks that will add value to the initiative. During the past quarter, GITEC focused its efforts on reviewing projects to determine their eligibility for financing through the KfW line of credit. Several potential projects were identified in the communities of Baja California, Tamaulipas and Chihuahua. Under the energy efficiency network for 14 water and wastewater utilities in Coahuila, the consultant also continued working on the development of water audits, including conducting field visits, collecting data from each participant and presenting workshops. These efforts are also being supported with technical assistance funding from the German corporation GIZ, through an agreement executed with BECC in To support the energy efficiency network in Coahuila, BECC executed a cooperation agreement with Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH, México (GIZ), a non-profit corporation funded by the German government to provide technical assistance to states and municipalities for activities related to sustainable development and environmental awareness. The agreement also included the Coahuila Water and Wastewater Commission and approximately 14 water utilities from that state. The objective is to assist the participating utilities in setting up an energy efficiency education network and implementing several measures to reduce the energy costs associated with the operation of their facilities. GIZ developed the learning network model to generate savings in the management and use of natural resources and is launching it worldwide to foster international cooperation in advancing sustainable development. BECC will act as moderator for the network. 14

16 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 U.S. Agency for International Development (USAID) In collaboration with the public-private partnership Green Hub/MDB Advisors LLC and USAID, through its Global Development Alliance, energy audits were completed for water utilities throughout the state of Baja California. BECC and NADB are now working with those utilities, the Baja California state water commission and USAID to promote projects based on the audit recommendations. Specifically, BECC, NADB and USAID are supporting technical development tasks needed to advance three projects: replacement of the old pumps in the Colorado River aqueduct in Tijuana; solar power and facility improvements at the Las Arenitas Wastewater Treatment Plant in Mexicali; and improvements to the El Naranjo Wastewater Treatment Plant in Ensenada. USAID is funding technical studies for the Las Arenitas project, while BECC-NADB technical assistance was authorized for a thorough field study of energy efficiency options in the aqueduct, which is scheduled to be completed in the second quarter of 2016 and is expected to support technical development activities for improvements at the El Naranjo Plant. Based on this original initiative, BECC and NADB have continued promoting the energy efficiency program to water utilities on both sides of the border, including in Tamaulipas, Coahuila and several U.S. border communities. These efforts are supported through synergies with KfW and programs such as Border 2020 and the U.S.-Mexico Border Water Infrastructure Program. USAID also provided funding from its Mexico Low Emissions Development Program (MLED) to match BECC funding for development of Phase 2 of the State Climate Action Plans (SCAP) for Baja California and Coahuila. During the last quarter of 2015, a presentation on the results of the Baja California SCAP was made to the Governor of Baja California. During the first quarter of 2016, the State of Baja California continued analyzing several actions based on the SCAP results, including initiatives related to improving energy efficiencies in industrial facilities. A presentation to the state s Climate Change Committee has been rescheduled due to the change of several state officials. The Coahuila SCAP was completed in December, with a total of 17 public policies prioritized and approved. BECC and USAID are currently working on the process and schedule for formal delivery of the SCAPs to Coahuila. Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB) 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. The total project cost is estimated at US$790,000, with IDB contributing around US$462,000 and EPA, through the Border 2020 Program, up to US$100,000. Of the US$215,000 that BECC will be required to contribute, 50% can be an in-kind contribution. The tasks covered with EPA funds (mainly an information campaign and training events) have already been concluded, and the final report has been approved. 15

17 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 During the first quarter of 2016, the baseline information was defined with support from UABC, several workshops on e-waste management at a residential level were conducted, and an analysis of waste flows at the regional level was completed. 16

18 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 Project Closeout & Results Measurement I. PROJECT CLOSEOUT REPORTS At the beginning of 2016, BECC and NADB jointly defined the project closeout pipelines for the year. The pipeline for NADB-funded projects includes five projects carried over from 2015 to be completed in 2016, along with 13 new projects, for a total of 18 projects targeted for close-out activities during the current year: 14 loan projects and four grant projects. The following tables present the close-out pipeline for NADB-funded projects in LOAN PROJECT CLOSEOUT PIPELINE FOR 2016 Community / Sponsor Project Certification Date In process Global Alternative Fuels, LLC (GAF) Biodiesel production Mar-08 Mexicali, B.C. Wastewater collection (Mexicali IV) Oct-07 Tijuana, B.C. Paving rehabilitation (white-topping) Jul-09 Pending Nuevo Laredo, TAMPS Storm drainage Jun-06 Nuevo Laredo, TAMPS Water and wastewater Jun-04 Nuevo Laredo, TAMPS Street paving program (PASO) Dec-08 Nuevo Laredo, TAMPS Roadway improvements Jul-09 Nuevo Laredo, TAMPS Basic urban infrastructure Jul-12 Astrosol Tech Park Solar energy project Jan-12 Naco, SON Paving Oct-07 Naco, SON Wastewater Feb-99 Nogales, SON Solid waste equipment Dec-07 Cd. Juarez, CHIH Air quality and urban mobility Jul-12 Reynosa, TAMPS (El Porvenir) El Porvenir wind energy Feb-12 NADB-FUNDED GRANT PROJECT CLOSEOUT PIPELINE FOR 2016 Community / Sponsor Project Certification Date Pending Brawley, CA (CAP) Lift station improvements Mar-13 Sunland Park, NM (CAP) Water meter replacement May-13 Nogales, SON (SWEP) Landfill/transfer station Dec-09 Naco, SON (SWEP) Solid waste Jul-04 In the case of BEIF projects, the close-out pipeline for 2016 includes nine projects in EPA Region 6 and four in EPA Region 9, for a total of 13 BEIF close-out reports anticipated for the year. Finally, during the first quarter of 2016, the new close-out fact sheet formats were being finalized for 40 BEIF close-out reports and 14 non-beif close-out reports, completed to date. The fact sheets will be available on the BECC s website during the second quarter of

19 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 II. IMPACT ASSESSMENT The results of the impact assessment studies at the regional level in the state of Baja California completed in December 2015, were analyzed, validated and compared to existing BECC-NADB project closeout reports for those projects in Baja California. The BECC work team also performed a comprehensive analysis of the 3,409 public opinion surveys that were applied in the urban areas benefitted by the projects in Tijuana, Playas de Rosarito, Tecate and Mexicali. In this phase of the study, the main conclusions were ratified: (a) wastewater treatment in the cities of Tijuana, Playas de Rosarito, Tecate, and Mexicali, as measured by service coverage for wastewater collection and treatment, significantly improved between 2000 and 2010, going from an average of 75% to an average of 90%; (b) between 79% and 98% of residents in the impacted areas of the four cities were connected to the collection system and eliminated their cesspools and latrines; (c) infrastructure projects developed and funded by BECC and NADB were an important factor in this achievement; (d) the opinion surveys showed a high degree of satisfaction with the operation of the wastewater systems (92%); and (e) the decrease in the incidence of gastrointestinal diseases was significant within the urban limits of three of the four cities studied. The next steps include the presentation of the study s results and conclusions to local and state authorities in Baja California and to the BECC-NADB Board of Directors, followed by dissemination of the final report to the general public by electronic media (website and webinar). 18

20 NADB-BECC QUARTERLY REPORT MARCH 31, 2016 NADB FINANCIAL SUMMARY (US$ Thousands) 1st Qtr Operational Highlights Loan commitments signed $ - $ 178,262 $ 304,323 $ 349,881 $ 559,120 Loan disbursements 3, , , , ,500 Undisbursed portion of committed loans 48,268 51, , , ,819 Balance Sheet Data Cash and investments $ 525,517 $ 504,861 $ 442,954 $ 545,525 $ 388,574 Loans outstanding 2 1,318,819 1,324,777 1,185,514 1,011, ,981 Total assets 1,839,989 1,780,599 1,633,369 1,573,076 1,302,304 Borrowings outstanding, gross 1,190,550 1,190,550 1,059,953 1,046, ,000 Total liabilities 1,259,654 1,215,017 1,090,683 1,054, ,457 Total equity 580, , , , ,848 Callable capital 2,295,000 2,295,000 2,295,000 2,295,000 2,295,000 Income Statement Data Total interest income $ 13,990 $ 51,246 $ 43,710 $ 39,543 $ 24,321 Loans 12,422 45,892 38,487 35,149 19,344 Investments 1,568 5,354 5,224 4,394 4,977 Interest expense 4,589 15,101 13,548 10,838 5,363 Net interest income 9,401 36,145 30,163 28,705 18,958 Total operating expenses 2,584 18,143 10,816 19,451 8,456 Provision for loan losses 112 8,559 2,199 10,544 - Total non-interest income (expense) 3,327 2,388 (1,093) (888) 440 Income before program activity 10,144 20,389 18,254 8,366 9,458 Net program expenses ,873 2,077 1,145 2,437 Net income 9,837 15,516 16,177 7,221 7,020 Ratios Usable equity 4 / loans outstanding 42.0% 41.1% 44.2% 50.1% 57.3% Gross debt / callable capital 51.9% 51.9% 46.2% 45.6% 31.8% Gross debt / usable equity 214.9% 218.8% 202.3% 206.7% 146.5% Interest coverage 5 2.5x 2.8x 2.6x 2.8x 3.0x Liquid assets / total assets 25.6% 25.3% 23.8% 31.3% 25.7% Income before program activity / usable equity 1.8% 3.7% 3.5% 1.7% 1.9% Income before program activity / average assets 0.6% 1.2% 1.1% 0.6% 0.9% Credit Ratings Moody s Investor Service Aa1/P-1 Aa1/P-1 Aa1/P-1 Aaa/P-1 Aaa/P-1 FitchRatings AA/F1+ AA/F1+ AA/F1+ AA/F1+ -- Standard & Poor's A+/A-1 1 Excludes the U.S. domestic program. 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 Usable equity is defined as the sum of undesignated paid-in capital, undesignated retained earnings, and reserves. 5 Interest coverage ratio is defined as interest income minus operating expenses divided by interest expense. 19

21 ANNEXES QUARTERLY STATUS REPORT MARCH 31, 2016 Annex 1: NADB Financial Statements as of December 31, 2015 (unaudited) Annex 2: Chart of Active Projects by State 20

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23 ANNEX 1 N O R T H A M E R I C A N D E V E L O P M E N T B ANK C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S A ND S U P P L E M E N T A R Y I N F O R M A T I O N (UN A U D I T E D ) M ARCH 31,

24 (NADB) Consolidated Financial Statements and Supplementary Information (Unaudited) Consolidated Financial Statements Contents Consolidated Balance Sheets... 2 Consolidated Statements of Income... 3 Consolidated Statements of Comprehensive Income... 4 Consolidated Statement of Changes in Equity... 5 Consolidated Statements of Cash Flows... 6 Notes to Consolidated Financial Statements... 7 Supplementary Information Combining Balance Sheet by Program Combining Statement of Income by Program Combining Statement of Comprehensive Income by Program Combining Statement of Cash Flows by Program

25 Consolidated Balance Sheets and December 31, 2015 Assets (Unaudited) (Audited) March 31, December 31, Cash and cash equivalents: Held at other financial institutions in demand deposit accounts $ 258,229 $ 127,078 Held at other financial institutions in interest bearing accounts 24,768,681 31,052,800 Repurchase agreements 104,200,000 83,800, ,226, ,979,878 Held-to-maturity investment securities, at amortized cost 53,747,979 53,730,753 Available-for-sale investment securities, at fair value 343,409, ,477,241 Loans outstanding 1,319,171,411 1,325,135,449 Allowance for loan losses (20,053,834) (19,941,922) Unamortized loan fees (9,527,561) (9,661,632) Foreign currency exchange rate adjustment (42,857,452) (43,446,961) Hedged items, at fair value (22,451,758) (51,606,468) Net loans outstanding 1,224,280,806 1,200,478,466 Interest receivable 13,517,319 11,226,560 Grant and other receivable 1,571, ,125 Furniture, equipment and leasehold improvements, net 247, ,012 Other assets 75,166,935 63,388,898 Total assets $ 1,841,167,886 $ 1,782,237,933 Liabilities and Equity Liabilities: Accounts payable $ 324,119 $ 1,813,084 Accrued liabilities 343, ,020 Accrued interest payable 12,368,635 9,079,465 Undisbursed grant funds 1,852 1,000 Other liabilities 8,877,910 6,210,968 Short-term debt 5,262,000 5,262,000 Long-term debt, net of discount 1,182,264,659 1,182,136,693 Hedged items, at fair value 50,215,038 10,180,086 Net long-term debt 1,232,479,697 1,192,316,779 Total liabilities 1,259,657,437 1,215,033,316 Equity: Paid-in capital 405,000, ,000,000 General Reserve: Allocated paid-in capital 2,631,044 3,027,256 Retained earnings: Designated 12,636,995 12,920,792 Reserved 99,670,943 99,671,114 Undesignated 49,463,780 39,394,125 Accumulated other comprehensive income (loss) 12,101,970 7,185,567 Non-controlling interest 5,717 5,763 Total equity 581,510, ,204,617 Total liabilities and equity $ 1,841,167,886 $ 1,782,237,933 The accompanying notes are an integral part of these unaudited consolidated financial statements. 2

26 Consolidated Statements of Income (Unaudited) For the Three Months Ended and 2015 For the Three Months Ended March 31, Interest income: Loans $ 12,422,238 $ 10,279,848 Investments 1,568,678 1,256,675 Total interest income 13,990,916 11,536,523 Interest expense 4,588,856 3,447,647 Net interest income 9,402,060 8,088,876 Operating expenses: Personnel 1,871,231 1,631,763 General and administrative 304, ,870 Consultants and contractors 272, ,930 Provision for loan losses 111, ,951 Depreciation 23,620 13,698 U.S. Domestic Program 52,125 54,963 Total operating expenses 2,636,382 2,859,175 Net operating income 6,765,678 5,229,701 Non-interest income and expenses: Income (expense) from hedging activities, net 3,270,511 1,377,738 Income (expense) from foreign exchange activities, net (43,450) (297,896) Fees and other income 100,000 9,014 Total non-interest income (expense) 3,327,061 1,088,856 Income before program activities 10,092,739 6,318,557 Program activities: U.S. Environmental Protection Agency (EPA) grant income 191, ,624 EPA grant administration expense (191,484) (155,624) Technical Assistance Program expense (112,761) (103,065) Community Assistance Program expense (119,396) (420,414) Water Conservation Investment Fund expense (74,941) (136,671) Net program expenses (307,098) (660,150) Income before minority interest 9,785,641 5,658,407 Net loss attributable to non-controlling interest (46) (54) Net income attributable to NADB $ 9,785,687 $ 5,658,461 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3

27 Consolidated Statements of Comprehensive Income For the Three Months Ended and Year Ended December 31, 2015 (Unaudited) (Audited) Three Months Ended Year Ended March 31, December 31, Income before non-controlling interest $ 9,785,641 $ 15,249,882 Net loss attributable to non-controlling interest (46) (242) Net income attributable to NADB 9,785,687 15,250,124 Other comprehensive income (loss): Available-for-sale investment securities: Change in unrealized gains (losses) during the period, net 1,800,246 (344,579) Reclassification adjustment for net gains included in net income - (39,995) Total unrealized gain (loss) on available-for-sale investment securities 1,800,246 (384,574) Foreign currency translation adjustment 5, ,893 Unrealized gains (losses) on hedging activities: Foreign currency translation adjustment, net 589,509 (11,501,378) Fair value of cross-currency interest rate swaps, net 2,521,161 19,117,644 Total unrealized gain on hedging activities 3,110,670 7,616,266 Total other comprehensive income 4,916,403 7,379,585 Total comprehensive income $ 14,702,090 $ 22,629,709 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4

28 Consolidated Statement of Changes in Equity For the Three Months Ended and Year Ended December 31, 2015 General Reserve Accumulated Other Paid-In Allocated Retained Comprehensive Non-controlling Total Capital Paid-In Capital Earnings Income (Loss) Interest Equity Beginning balance, January 1, 2015 $ 405,000,000 $ 4,337,076 $ 136,735,907 $ (194,018) $ 6,005 $ 545,884,970 Transfer to Targeted Grant Program of the U.S. Domestic Program - (1,309,820) (1,309,820) Net income ,250, ,250,124 Other comprehensive income ,379,585-7,379,585 Non-controlling interest (242) (242) Ending balance, December 31, 2015 (audited) 405,000,000 3,027, ,986,031 7,185,567 5, ,204,617 Transfer to Targeted Grant Program of the U.S. Domestic Program - (396,212) (396,212) Net income - - 9,785, ,785,687 Other comprehensive income ,916,403-4,916,403 Non-controlling interest (46) (46) Ending balance, (unaudited) $ 405,000,000 $ 2,631,044 $ 161,771,718 $ 12,101,970 $ 5,717 $ 581,510,449 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5

29 Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended and 2015 For the Three Months Ended March 31, Cash flows from operating activities Net income $ 9,785,687 $ 5,658,461 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 23,620 13,698 Amortization of net premiums (discounts) on investments 336, ,145 Change in fair value of swaps and other non-cash items 4,062,496 4,174,468 Non-controlling interest (46) (54) Provision for loan losses 111, ,951 Change in other assets and liabilities: Increase in interest receivable (2,290,759) (3,918,105) (Increase) decrease in receivable and other assets (644,963) 631,571 Decrease in accounts payable (1,488,965) (932,043) Increase (decrease) in accrued liabilities (6,796) 37,805 Increase in accrued interest payable 3,289,170 2,965,392 Net cash provided by operating activities 13,178,186 9,707,289 Cash flows from lending, investing, and development activities Capital expenditures (14,063) (25,194) Loan principal repayments 9,513,342 9,277,425 Loan disbursements (3,549,304) (21,627,871) Purchase of held-to-maturity investments (1,086,000) - Purchase of available-for-sale investments (69,537,913) (43,416,036) Proceeds from maturities of held-to-maturity investments 1,075,000 - Proceeds from sales and maturities of available-for-sale investments 65,063,144 38,317,559 Net cash provided (used in) lending, investing, and development activities 1,464,206 (17,474,117) Cash flows from financing activities Proceeds from other borrowings - 3,093,649 Grant funds from the Environmental Protection Agency (EPA) 1,825,362 2,647,016 Grant disbursements - EPA (1,824,510) (2,645,463) Grant activity - U.S. Domestic Program (396,212) (162,505) Net cash provided by (used in) financing activities (395,360) 2,932,697 Net increase (decrease) in cash and cash equivalents 14,247,032 (4,834,131) Cash and cash equivalents at January 1, 2016 and ,979,878 87,656,071 Cash and cash equivalents at and 2015 $ 129,226,910 $ 82,821,940 Supplemental cash information Cash paid during the year for interest $ 5,468,750 $ 5,468,750 Significant non-cash transactions Foreign currency translation adjustment $ 589,509 $ (3,647,137) Change in fair value of cross-currency interest rate swaps, net 2,521,161 8,442,150 Change in fair value of available-for-sales investments, net 1,800,246 1,065,056 The accompanying notes are an integral part of these unaudited consolidated financial statements. 6

30 Notes to Consolidated Financial Statements (Unaudited) 1. Organization and Purpose The North American Development Bank (NADB or the Bank) was established on January 1, 1994 by an agreement between the governments of the United States of America (the United States or U.S.) and the United Mexican States (Mexico) that was signed by their respective Presidents on November 16 and 18, 1993 (the Charter). The Bank was created to finance environmental infrastructure projects in the U.S.-Mexico border region (the International Program) and community adjustment and investment projects throughout the U.S. and Mexico in support of the purposes of the North American Free Trade Agreement (NAFTA) (the Domestic Programs). On March 16, 1994, the President of the United States issued an Executive Order designating the Bank an international organization under the International Organization Immunities Act. The Bank is governed by a Board of Directors appointed by the two countries. The operations of the Bank are subject to certain limitations outlined in the Charter, as amended on August 6, The geographic jurisdiction of the International Program is within 100 kilometers north of the U.S.-Mexico border and within 300 kilometers south of the border. The Bank is located in San Antonio, Texas. Under its International Program, the Bank provides loan and grant financing and technical assistance for environmental infrastructure projects certified by the Border Environment Cooperation Commission (BECC), as appropriate, and administers grant funding provided by other entities. Under the Domestic Programs, the Bank contributed funds from its equity to establish the domestic program of each country, and continues to administer the funds of the U.S. Domestic Program (see Note 8). On June 2, 1998, the Board of Directors adopted a resolution authorizing the Bank to establish a limited-purpose financial institution (sociedad financiera de objeto limitado, SOFOL) for the purpose of facilitating Bank lending to the Mexican public sector. In January 1999, the Corporación Financiera de América del Norte, S.A. de C.V. SOFOL (COFIDAN) began operations in Mexico City and, in October 2006, COFIDAN was converted from a SOFOL to a non-regulated, multipurpose financial institution (SOFOM, E.N.R.), and its name was modified to Corporación Financiera de América del Norte, S.A. de C.V. SOFOM E.N.R. As of, COFIDAN is 99.90% owned by the Bank and 0.10% owned by the Mexican government. The accounts of COFIDAN are consolidated with the Bank, and all material intercompany accounts and transactions are eliminated in consolidation. The non-controlling interest reflected in the consolidated balance sheets and consolidated statements of income represents the ownership of the Mexican government through the Ministry of Finance and Public Credit (SHCP). 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates in Financial Statements The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and are presented in a manner consistent with that of an international organization. The preparation of financial 7

31 Notes to Consolidated Financial Statements (Unaudited) 2. Summary of Significant Accounting Policies statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates include the valuation of investments, allowance for loan losses, the fair value of derivative instruments and other real estate owned included in other assets, and the fair value of derivative instruments included in other liabilities and in long-term debt. Actual results could differ from those estimates. Basis of Presentation and Use of Estimates in Financial Statements The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and are presented in a manner consistent with that of an international organization. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates include the valuation of investments, allowance for loan losses, the fair value of derivative instruments and other real estate owned included in other assets, and the fair value of derivative instruments included in other liabilities and in long-term debt. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Bank and its subsidiary, COFIDAN. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash deposits with other financial institutions and overnight repurchase agreements. Repurchase Agreements The Bank has entered into agreements with two major financial institutions to purchase various U.S. government and federally sponsored agency securities under an agreement to resell. The purchase and resale of these securities occur daily, and the obligation to repurchase is backed by the assets of the related financial institutions. The underlying securities related to the repurchase transaction are held in the possession of the respective financial institutions. Investment Securities The Bank s investments are classified into the following categories: Held-to-maturity This category is composed of those debt securities for which the Bank has the positive intent and ability to hold to maturity. These securities are carried at amortized cost. 8