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  • pg 1
									December 31, 2006

    EXECUTIVE SUMMARY                                               2

    INTRODUCTION                                                    3

    ADDRESSING KEY ISSUES                                           4

      BECC Programs                                                 5
      NADB Programs                                                 9

    PROJECT DEVELOPMENT                                             13

1       Prepared by the Border Environment Cooperation Commission
                 and the North American Development Bank
                                                         EXECUTIVE SUMMARY

The Border Environment Cooperation Commission (BECC) and the North American
Development Bank (NADB) are working with more than 130 communities throughout the
Mexico-U.S. border region to address their environmental infrastructure needs.

Assistance Programs
•   More than US$32.58 million has been allocated by
    BECC’s Technical Assistance Program to aid in the                        Promoting
    development of 246 environmental infrastructure
    projects related to water, sewage, and municipal waste                   sustainable
    in 136 communities on both sides of the U.S.-Mexico
    border.                                                                  development to
•   Through its technical assistance programs, the NADB                      build stronger and
    has authorized US$20.4 million in grant funding to
    carry out 207 institutional strengthening and project                    healthier border
    development studies for 97 border communities.

Project Development and Certification
•   To date, the BECC has certified 115 environmental infrastructure projects which will
    cost an estimated US$2.69 billion to build.
•   Of the projects certified, 69 are located in the United States and 46 in Mexico.
•   NADB is working with the sponsors of 98 certified projects who have requested
    financial assistance. NADB participation in these projects is estimated at US$848
    million, with approximately 39% going to projects in the U.S. and 61% to projects in
•   As of December 31, 2006, NADB participation totals US$835.4 million in loans
    and/or grant resources to partially finance 97 infrastructure projects estimated to
    cost a total of US$2.53 billion to build. Consequently, 99% of the funding requested
    for certified projects has been authorized to date.

                         BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                      2
The Border Environment Cooperation Commission (BECC) and the North American
Development Bank (NADB) were created as part of the North American Free Trade
Agreement (NAFTA). The BECC, located in Ciudad Juarez, Chihuahua, and the NADB,
located in San Antonio, Texas, constitute a binational approach to environmental
infrastructure development and financing in the U.S.-Mexico border region. Projects
assisted by the BECC and the NADB focus on improving the environment and health of
communities located within 100 kilometers (about 62 miles) north of the international
boundary in the four U.S. states of Texas, New Mexico, Arizona and California and
within 300 km. (about 186 miles) south of the border in the six Mexican states of
Tamaulipas, Nuevo Leon, Coahuila, Chihuahua, Sonora, and Baja California.

In the fall of 2000, the BECC and the NADB Boards of Directors resolved to allow the
two institutions to move forward with an expansion of their scope of activities to include
other types of environmental projects, while maintaining water, wastewater, and
municipal solid waste as a priority. The new sectors include, but are not limited to, air
quality improvement, public transportation, clean and efficient energy, and municipal
planning, development and water management.

                                 Institutional Roles

BECC                                                NADB
The primary roles of the BECC are to                The NADB's primary role is to facilitate
provide technical assistance to border              financing for the implementation of
communities        and        to  certify           projects certified by the BECC. In its
environmental infrastructure projects in            advisory role, the NADB provides
the border region for financing                     financial and managerial guidance to
consideration by the NADB and other                 communities        that    may      require
sources. Certification is based on a set            assistance with comprehensive, long-
of environmental, health, technical,                term     infrastructure    planning    and
financial, community participation and              development. As an investment banker,
sustainable      development     criteria,          the NADB works to structure affordable
through a process that ensures                      and equitable financial packages by
extensive public and local input. The               locating funding from both public and
BECC’s technical assistance helps                   private sources. The NADB provides
ensure technically sound and feasible               loans intended to fill financing gaps not
projects, master plans, project design,             covered by other sources, while its
environmental assessment and local                  guaranties are designed to encourage
institutional capacity-building.                    financing from other lenders. To help
                                                    make projects more affordable, the
                                                    NADB         also     administers     U.S.
                                                    Environmental Protection Agency (EPA)
                                                    grant resources as a complement to its
                                                    loan and guaranty program.

3                       BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
                                                 ADDRESSING KEY ISSUES

In carrying out their mission, the BECC and NADB face the following fundamental
challenges on both sides of the border:
   •   Lack of comprehensive master plans and inadequate preparation of
       proposed projects.
   •   Limited financial, administrative, commercial and operating capabilities of
       some local agencies responsible for providing water, sewage and
       sanitation services.
   •   High cost of projects and insufficient community resources.
   •   Inadequate revenue for the sound operation and maintenance of existing
       systems, coupled with resistance to user fee increases.
   •   Insufficient interest and limited success with private sector participation.

The BECC and NADB seek to assist communities in addressing these challenges by
pursuing a strategy with the following components to address the communities’ specific
needs in project development and finance.
   •   Ensuring broad community support for environmental infrastructure
       projects that meet the principles of sustainable development.
   •   Assisting in the improvement of the operating efficiency and capabilities of
       public utilities by strengthening their institutional capacity to formulate and
       execute projects effectively.
   •   Continuing to develop, in coordination with international, federal, state and
       local authorities and community sponsors, programs and projects that are
       adequately designed and financially feasible.
   •   Identifying additional sources of capital, credit, and grant funds; and
       structuring financial packages based on the reasonable capacity of
       communities to service debt and cover operation and maintenance costs.
   •   Promoting structural changes that are essential to the long-term success
       of projects, including proposals for reforming the legal and institutional
       frameworks in which they are developed.

The BECC and the NADB are participating in efforts for greater coordination among U.S.
and Mexican agencies involved in environmental matters, in order to develop border
projects as efficiently as possible. The two institutions co-chair a quarterly project
coordinating committee with representation from EPA, the Mexican National Water
Commission (CNA), and both sections of the International Border and Water
Commission (IBWC). The BECC and NADB also coordinate with authorities in affected
states and localities. The expansion and strengthening of these coordination efforts are
essential for the successful development of future projects.

                        BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                4
                                                PROGRAM DEVELOPMENT

BECC Programs
BECC’s Technical Assistance Program provides assistance to border communities in
planning and designing water supply, wastewater treatment, solid waste and other
improvement projects along the U.S.-Mexico border. To date, the BECC has approved
more than US$32.58 million to assist 136 communities in the development of 246
infrastructure projects.

This technical assistance is intended to help communities prepare project proposals for
certification that allows them to become eligible for funding consideration from the NADB
and other funding agencies. The program coordinates with all levels of government and
local communities to foster integrated regional master planning, strong project
development and local institutional capacity-building. Communities may receive
technical assistance for:
       •   Environmental assessment studies (EAS)
       •   Technical, economic and financial feasibility studies
       •   Preliminary and final design studies
       •   Evaluation of social and sustainability aspects of projects
       •   Public participation programs
       •   Operation and maintenance
       •   Capacity building needs

To be eligible for any of the following assistance programs, a project sponsor must
demonstrate the intention of obtaining BECC certification for the proposed project and
meet BECC basic criteria.

A. Project Development Assistance Program (PDAP). This program, funded by EPA,
   has been designed to assist communities in projects related to water and wastewater
   treatment. Through this program the BECC has approved US$28.72 million to assist
   134 communities with 163 projects. During the fourth quarter of 2006, technical
   assistance funding was approved for the following studies:
       1) La Grulla/ Starr County, TX: Final design;
       2) Rio Bravo and Nuevo Progreso, Tamps.: Additional activities for the
          transboundary environmental assessment;
       3) Mier, Tamps.: Transboundary environmental assessment.

B. Technical Assistance with BECC Funds. To aid project sponsors BECC has a
   limited amount of funds available from its operations budget to support project
   development activities required to achieve certification. A total of US$3.86 million in
   BECC funds has been invested in various new sector projects, particularly water
   conservation and air quality improvement, as well as in the traditional sectors of
   water, wastewater and solid waste.

5                       BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
       1. Technical Assistance for Water and Wastewater Projects. To date, the
          BECC has assisted 18 projects in nine communities with US$711,308 of its
          own funds.

       2. Technical Assistance for Solid Waste Projects. BECC helps develop
          projects dealing with all aspects of solid waste management, including waste
          collection, transfer, recycling and disposal. To date, BECC has assisted 46
          communities with approximately US$2.94 million for the development of 55
          solid waste projects. During the fourth quarter of 2006, technical assistance
          funding was approved for the following studies:
                 1) Rio Bravo, Tamps.: Final design and Mexican environmental
                 2) Ascensión, Coah.: Additional activities for the Mexican environmental

       3. Technical Assistance for New Sector Projects. In December 2001 the
          BECC Board of Directors approved a proposal to allow the BECC to certify
          infrastructure projects in other environmental sectors, including water
          conservation, hazardous waste, air quality, clean energy, etc. The BECC is
          providing technical assistance for the development of projects in these new
          sectors using its own resources. As of December 2006 a total of US$207,191
          has been approved for seven projects in six communities, three in the United
          States and three in Mexico.

   The projects, communities and total funding provided through the PDAP program
   and with BECC’s own resources are summarized in the table below.

              Country             Communities*             Projects                              Percent
        Mexico                           64                    139                $11,801,123      36%
        United States                     72                   107                $20,774,889      64%
                    Total                136                   246                $32,576,012     100%
       * A community may have several projects; communities are not duplicated in total count.

   Of the total amount of technical assistance used thus far by BECC, US$17.56 million
   has been invested in the development of 90 projects that are now certified. To date,
   US$14.07 million has been approved for the development of 152 additional projects
   (see chart above).

C. Special Grants. The administration of special grants begins with the planning or
   development of a strategy to meet a special need within BECC’s mission. Follow-up
   is then provided for the use and administration of the grants until completion of the
   specific task for which the funds were requested. A total of US$1.82 million has been
   approved as special grants for various projects.

D. Public Participation. One of the BECC’s greatest successes is its public
   participation activities to ensure broad community support for projects that are being
   considered for certification. The establishment of active, local steering committees is
   a key element of this process that ensures the transparency of project information,
   the involvement of local organizations in the decision-making process, and the
   presentation of projects in public forums for discussion. Also as part of its public

                             BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                             6
    participation strategy and in coordination with project sponsors, citizen committees
    and the community, a regional video is produced of the projects to be certified and
    the benefits of projects in operation. To support these efforts, BECC developed the
    Public Participation Manual, a complete and systematic guide for conducting public
    participation activities. It also provides a strong link between U.S.-Mexico border
    communities and the agencies involved in the BECC certification process.

    In December 2006 a local citizen committee was formed for the solid waste project in
    Starr County, Texas. The following table summarizes the public participation
    activities undertaken by the BECC at the close of 2006.

                          Public Participation                    Mexico     U.S.
             Citizen committees formed                              54        78
             Local organizations contacted (estimated)             562       582
             Public meetings held (required & others)              178       204
             Project videos produced                                20        26
             Total projects certified                               46        69

E. Sustainable Development Program. One of BECC’s main objectives is the
   practical application of the methodology of sustainable development, aimed at
   conserving and protecting natural resources; using appropriate technologies, and
   promoting financial and socio-economic sustainability, community development and
   public participation, as well as building and strengthening institutional and human
   capacities. For this purpose, BECC has defined tangible and practical actions for
   meeting its sustainable development requirements that can be incorporated into the
   activities associated with satisfying all the other criteria. The first such action
   occurred in 2002 with the Board’s approval of 14 minimum performance indicators
   that must be met to comply with BECC’s project certification criteria. These
   requirements allow BECC staff to conduct a systematic review of projects at an early
   stage to identify technical components that can be enhanced to achieve a greater
   level of sustainability. The second action was the publication of a booklet for applying
   the sustainable development methodology entitled, “How to Comply with the
   Sustainable Development Certification Criteria,” which is available on BECC’s
   website, as well as upon request.

F. State Inter-institutional Coordinating Committees Program. The purpose of
   these committees is to coordinate the development of BECC projects and ensure
   effective use of available funds from the various agencies. These coordinating
   committees involve public agencies such as the EPA, CNA, USDA, U.S. Public
   Health Service, IBWC/CILA, state utility authorities, governors’ offices, state
   environmental agencies, municipal authorities, and local community steering
   committees. They have been established in Arizona, Baja California, California,
   Chihuahua, New Mexico, Sonora, Tamaulipas and Texas.

G. BECC's Participation in the Border 2012 Program. The BECC is playing a key
   support role in the Border 2012 Program developed by EPA and its Mexican
   counterpart, Secretaría de Medio Ambiente y Recursos Naturales (SEMARNAT).
   This ten-year plan is aimed at addressing existing environmental and public health
   needs in the U.S.-Mexico border. The main tasks to be undertaken by BECC are to
   provide support to the workgroups concerning infrastructure planning and
   development and the securing of resources and financing; and assist program

7                        BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
members in arranging the National Coordinators Meeting, as well as developing
mechanisms to ensure appropriate public participation in this and all other meetings.

   1. Grant Administration. BECC continued its partnership with Border 2012 by
      establishing agreements with EPA-Region 9 that outline BECC’s participation
      in a number of efforts, including the administration of special grants for the
      evaluation of technical aspects of projects. To date, BECC has received a
      total of US$2.37 million to carry out 32 special technical projects.

       BECC staff also continued to hold meetings and teleconferences with EPA-
       Region 6 officials and personnel from the National Health and Environmental
       Effects Research Laboratory, to define BECC’s role in the development of
       baseline environmental health indicators on the border, using resources
       channeled through BECC.

   2. Logistics. During the fourth quarter of 2006, logistical support was provided
      for the following activities:
           •   A regional meeting of co-chairs and co-leaders of the Chihuahua-New
               Mexico-Texas Regional Task Force was held on November 9, 2006,
               in Sunland Park, NM.
           •   The annual public meeting of the Chihuahua-New Mexico-Texas
               Regional Task Force was held on November 14, 2006, in Santa
               Teresa, NM
           •   A meeting of the Regional Taskforce on Environmental Education, a
               subgroup of the Chihuahua-New Mexico-Texas Regional Task Force,
               was also held on November 14th at the offices of the municipal
               research and planning institute, Instituto Municipal de Planeación
               (IMIP), in Ciudad Juárez, Chih.
           •   Region 6 hosted a series of four hazardous waste workshops along
               the border: in El Paso, TX, on November 2nd; Laredo, TX on
               November 8th; in Brownsville, TX on November 9th; and in Ciudad
               Juárez, Chih. on November 16th.

                    BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006              8
NADB Programs
In order to accomplish its objectives and facilitate project financing, the NADB has
developed the following programs and resources. Detailed information about NADB
programs and other activities is also available via the NADB website, at www.nadb.org.

Financing Programs

A. Loan Program. Through this program the Bank provides direct financing in the form
   of loans for the construction of BECC-certified environmental projects. In October
   2001, the Bank established the operating guidelines for the Low Interest Rate
   Lending Facility (LIRF), which gives it the flexibility to offer loans at lower-than-
   market rates.

    During the past quarter, three new loans were approved, totaling US$30 million, as
       •   A US$28.04 million loan for Ciudad Juarez, Chihuahua, to help finance its air
           quality improvement project by paving streets in residential areas;
       •   A US$1.52 million loan for the water and wastewater project in Rosarito de
           Playas, Baja California; and
       •   A US$436,463 loan for the Anapra wastewater treatment and reuse project in
           Juarez, Chihuahua.

    During the same period, NADB signed three loan agreements totaling US$8.83
    million, as follows:
       •   A US$5.56 million loan was signed on October 19, 2006, for the water and
           wastewater project in Nuevo Laredo, Tamaulipas;
       •   A US$2.27 million loan was signed on November 16, 2006, for the air quality
           and paving project in Puerto Peñasco, Sonora; and
       •   A US$1 million loan was signed on December 22, 2006 for the air quality and
           paving project in Sonoyta, Sonora.

    As of December 31, 2006, NADB is providing a total of US$260.7 million in loans to
    finance 37 projects. Of those loans, 27 have been contracted for a total of $120.4
    million and more than US$94.2 million have been disbursed to 22 projects.

B. COFIDAN. This limited-purpose financial institution was established by NADB in
   1998 to facilitate its financing of environmental infrastructure projects sponsored by
   public entities in Mexico. In October 2006, COFIDAN became a non-regulated,
   multipurpose financial institution—known by its Mexican acronym as a “SOFOM”—
   which will allow it to carry out its mandate while streamlining its administrative
   processes and requirements. Consequently, as of the above date, the company’s
   name was modified to Corporación Financiera de América del Norte, S.A. de C.V.

    To date, 19 loans totaling almost US$90.3 million have been contracted through
    COFIDAN, including the three loans signed during the past quarter.

9                       BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
C. Border Environment Infrastructure Fund (BEIF). Designed to make projects
   viable and affordable for border communities, this program administers grant
   resources provided by EPA for water and wastewater infrastructure projects. BEIF
   grants may be applied directly to construction costs (construction assistance),
   including residential hookups and construction management, or to system debt,
   thereby allowing user fees to be increased gradually over time (transition

   During the past quarter, EPA approved two new BEIF grants totaling US$4.63 million
   for the following projects:
       •   A US$3.04 million grant to extend wastewater services to six subdivisions in
           Playas de Rosarito, Baja California; and
       •   A US1.59 million grant for the construction of the Anapra wastewater
           treatment and reuse project in Juarez, Chihuahua.

   As of December 31, 2006, a total of US$493.9 million in BEIF grant funds have been
   authorized for 55 water and wastewater projects. Of those funds, a total of US$486.9
   million has been contracted, and US$291 million has been disbursed.

D. Water Conservation Investment Fund (WCIF). In August 2002, the NADB Board
   of Directors approved the creation of a Water Conservation Investment Fund to
   provide grant financing for water conservation projects in the border region and
   allocated US$80 million of the Bank’s retained earnings for that purpose, with US$40
   million specifically reserved for each country. As of December 31, 2006, NADB has
   approved and contracted 19 WCIF grants totaling US$76.4 million, of which US$70
   million has been disbursed.

E. Solid Waste Environmental Program (SWEP). Funded with US$5 million of the
   NADB’s net earnings, this grant program provides financing that may be used for the
   construction and equipment components of solid waste projects, as well as for
   closure of substandard disposal sites.

   In October 2006, the Bank approved a US$500,000 grant to support the solid waste
   equipment purchase project in Tijuana, Baja California. Thus, to date, NADB has
   authorized nine SWEP grants totaling US$4.49 million. Grant agreements have been
   signed with the sponsors of eight projects and US$2.95 million has been disbursed.
   The sponsors of 11 projects in Mexico and the United States that have initiated the
   BECC certification process have expressed interest in accessing SWEP funding.

Specific information regarding the current status of all infrastructure projects financed by
NADB can be found in the quarterly report entitled “Summary of Project Financing
Activities,” which is available on its website, as well as upon request.

Technical Assistance & Training Programs
NADB uses a portion of its retained earnings to offer technical assistance and training to
project sponsors through three separate programs aimed at strengthening the financial
performance of utilities and ensuring the long-term sustainability of their infrastructure.
Each program targets a specific type of assistance: a) studies to identify, evaluate, and
correct inefficiencies in utility systems; b) assistance for planning and designing

                        BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                10
infrastructure projects aimed at improving the systems; and c) training to reinforce the
management capabilities of those responsible for running the systems.

     A. Institutional Development Cooperation Program (IDP). Designed to work in
        conjunction with the BECC Technical Assistance Program, this program is
        intended to ensure long-term project viability by assisting communities with
        studies necessary for the proper management and development of utility
        systems. To date, NADB has authorized US$16.73 million in assistance for a
        total of 175 studies in 80 communities on both sides of the border: 140 studies
        have been completed and 35 studies are in progress—either under way, being
        bid or under final formulation.

        In addition, the NADB Board of Directors agreed to set aside US$5 million from
        the Bank’s retained earnings to provide technical assistance for the development
        and implementation of water conservation projects in Mexico. These funds are
        being administered under the auspices of the IDP. As of December 31, 2006,
        NADB has committed US$4.96 million of those funds through the IDP to finance
        21 studies.

     B. Project Development Program (PDP). This program was created in August
        2002 to assist communities in the planning and design of infrastructure projects
        in all environmental sectors in which the NADB operates. Grants from this
        program can be applied towards project development costs, such as needs
        assessments, feasibility studies, facility plans, environmental assessments, final
        designs, BECC-related documents or requirements, etc. To date, a total of 32
        projects benefiting 38 communities have been authorized to receive US$3.68
        million in PDP funding: 10 studies have been completed and 22 are in progress
        or procurement.

     C. Utility Management Institute (UMI). This IDP-funded training program offers an
        annual series of seminars aimed at providing practical instruction in the financial
        administration and planning of water utilities. The basic program is presented
        twice a year to U.S. and Mexican utility professionals at the University of the
        Incarnate Word in San Antonio, as well as on site to regional groups. In addition,
        the UMI offers ongoing educational opportunities to participants who have
        attended all four modules of the basic program through intensive seminars.

        To date, a total of 1,001 utility professionals, representing 127 border
        communities in Mexico and the U.S., have participated in the basic program,
        either in San Antonio or in local on-site modules. Of those participants 503 have
        attended all four modules thereby earning a certificate from the University of
        Incarnate Word in San Antonio, Texas. UMI will begin its eighth year of seminars
        in January 2007.

        In addition, during the past quarter, NADB launched the first two manuals in a
        series of publications that it is developing aimed at strengthening the
        administrative and financial capacities of utilities in the U.S.-Mexico border
        region. Through UMI and in cooperation with the Graduate School of Public
        Administration and Policy at the Instituto Tecnológico y de Estudios Superiores
        de Monterrey (ITESM), and through the center for public policy analysis, Centro
        de Análisis de Políticas Públicas (CAEP) and the center for water studies, Centro

11                       BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
       de Estudios del Agua (CEA), two studies were performed in Mexico and
       published in Spanish:

           •   Mejores prácticas de Servicios de Agua y Drenaje de Monterrey (SADM).
               This manual documents various successful practices in proper water
               management used by the Monterrey water utility, SADM, that can serve
               as a guide for solving problems commonly found in other communities
               and help improve operational and administrative practices. The common
               denominator in these cases is better development and management of
               water resources through actions aimed at strengthening the utility’s
               operations. These experiences illustrate the improvements that can be
               achieved through various programs focused on finances, engineering,
               operations and administration of water utilities, based on the principles of
               proper management.

           •   Análisis comparativo de costos y tarifas de agua potable entre
               organismos operadores de servicios de agua y drenaje en la frontera
               México-EUA. This manual presents a comparative analysis of costs and
               rates using quantitative criteria to identify opportunities for improving the
               costs of water utilities located in the Mexican border states, so that
               operational inefficiencies do not affect user fees. The methodology used
               in this study clearly indicates cases where a rate increase is warranted to
               strengthen the financial position of the utility, as well as cases where
               reducing costs through better operational, commercial or administrative
               efficiencies is a necessary condition for achieving self-sufficiency in the

       Both documents are available in Spanish, in PDF format, on the Bank’s website
       at www.nadb.org.

Specific information about projects funded through the IDP and PDP is reported in the
Technical Assistance Status Report, which is available upon request, as well as via the
Bank’s website.

Outreach Activities
The NADB actively seeks to keep the general public informed about its activities,
programs and projects through brochures, quarterly status reports, and news releases,
which are available upon request or via the its web page. In addition, the NADB
publishes two electronic newsletters via e-mail:
   •   Connections, which provides updates on Bank-assisted infrastructure and
       technical assistance projects, event announcements, and guidance on how to
       fully utilize the Bank’s programs and resources; and
   •   NADBank News, which provides up-to-date information on all project-related
       bidding and procurement opportunities.

If you would like to receive either of these newsletters via e-mail, please visit our website
at www.nadb.org to register.

                         BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                12
                                                  PROJECT DEVELOPMENT

As an initial stage in project development, certification by the BECC is designed to verify
the technical feasibility and environmental integrity of infrastructure projects seeking
financial assistance from the NADB and other sources, as well as to ensure public
support for such projects.

On October 26, 2006, the joint BECC-NADB Board of Directors met in Ciudad Juarez,
Chihuahua, and certified the following two projects:
     •   a US$6.24 million project for the construction of a wastewater collection,
         treatment and reuse system in the Anapra residential development in Juarez,
         Chihuahua; and
     •   a US$10.02 million project to extend the water distribution and wastewater
         collection systems to unserved areas in Playas de Rosarito, Baja California.

Consequently, to date, BECC has certified a total of 115 projects, 69 in the U.S. and 46
in Mexico, which are estimated to cost a total of US$2.69 billion to construct and will
benefit about 50 percent of the border population. The table below provides a
breakdown of the certifications by project type.

                              BECC Project Certifications
                               as of December 31, 2006
                        Projects                 Total         U.S.         Mexico
              Water and wastewater                 71           45            26
              Solid waste                          14            4            10
              Air quality                           9            0             9
              Water conservation                   21           20             1
                         Total                    115           69            46

The sponsors of 98 of these projects have requested financial assistance from the
NADB. During the past quarter, the NADB authorized loans and grants totaling
approximately US$35 million to partially finance four infrastructure projects: three loans
totaling $30 million; two BEIF grants totaling US$4.63 million; and one SWEP grant for
US$500,000. Thus, to date, NADB is participating in 97 projects with a total of US$835.4
million in loans and grants. A breakdown of NADB funding by country is shown in the
following table.

13                      BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006
                       NADB Financing as of December 31, 2006
                                         (Millions of dollars)

                                                         Total             U.S.       Mexico
  Projects requiring NADB financing                        98                  58        40
  Projects with approved financing                         97                  58        39
     Total project costs                            $2,530.4            $925.8      $1,604.6
     Total NADB participation                         $835.4            $330.4       $505.0
         Total financing contracted                   $687.6            $323.2       $364.4
         Total financing disbursed                    $458.3            $202.8       $255.5

With the signing of three loan agreements for approximately $8.8 million during the past
quarter, the Bank has contracted a total of US$687.6 million in loans and grants, which
represents 82% of all approved funding. Moreover, NADB disbursed almost US$25.3
million over the last three months for a total of US$458.3 million at the end of the
quarter. Thus, 67% of all the contracted funds have been disbursed.

Of the projects certified by the BECC, 50 have been completed, 38 are currently under
construction or in various stages of completion, and 17 are in the design or bidding
stage. Consequently, 77% of the projects certified by BECC are either under
construction or have already been completed. For the construction and financing status
of each BECC-certified project as of December 31, 2006, refer to the attached chart.

                           BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006                   14
                                               CONTACT INFORMATION
For more information on BECC and NADB assistance programs, status and
other reports and to learn more about addressing key environmental
concerns along the United States-Mexico border, please contact us at:

       Border Environment                                   North American
     Cooperation Commission                                Development Bank

            P.O. Box 221648                            203 S. St. Mary’s, Suite 300
           El Paso, TX 79913                             San Antonio, TX 78205
                                                            Tel:       (210) 231-8000
      Blvd. Tomás Fernández #8069                           Fax:       (210) 231-6232
           Fracc. Los Parques
        Ciudad Juárez, Chihuahua                                 INTERNET
           MEXICO, C.P. 32470                               http://www.nadb.org

       Tel: 011 [52] (656) 688-4600
      Fax: 011 [52] (656) 625-6999


19                 BECC-NADB JOINT STATUS REPORT ♦ DECEMBER 31, 2006

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