AWWA Testifies That WIFIA Should Supplement, Not Replace, Existing Water Infrastructure Funding

Loan program ‘allows communities to do more with less, and to rebuild American infrastructure at lower cost to our customers'

Washington, D.C. — A proposed federal water infrastructure loan program would supplement, not replace, existing State Revolving Funds (SRFs), allowing the nation to build more infrastructure at a lower cost to consumers, according to congressional testimony today from the American Water Works Association (AWWA).

Speaking in the second day of hearings before the U.S. House Subcommittee on Water Resources and the Environment, David Weihrauch, a treatment plant manager for the City of Oxford, Ohio, who testified on behalf of AWWA, stressed that draft legislation to create a Water Infrastructure Finance and Innovation Authority (WIFIA) would make loans available for larger projects that SRFs cannot address.

"Being able to lower the interest rate by even a small amount in a multi-million-dollar, 30-year loan adds up to significant savings in the cost of an infrastructure project," Weihrauch said. "It allows communities to do more with less, and to rebuild American infrastructure at lower cost to our customers."

AWWA's testimony answered several questions about WIFIA that were raised during a Feb. 28 hearing on water infrastructure funding. Weihrauch pointed out that WIFIA and SRFs are "different tools which need to be deployed in different ways." Key points in today's testimony included:

• Because WIFIA as drafted would be a federal program and not run through states, administrative costs would be reduced, and savings would be passed on to consumers.
• WIFIA would specificially address larger projects that are too big for most SRFs to fund.
• States would be able to aggregate smaller projects into a single WIFIA application.
• Both municipal and investor-owned utilities would be eligible for WIFIA loans, assuring all water customers benefit from the low-interest loans.
• Private firms entering into concession agreements with a utility could access WIFIA funds with the sponsorship of the utility.

AWWA, the world's largest association of water professionals, on Feb. 27 released an extensive analysis that showed the cost of repairing and expanding U.S. drinking water infrastructure will top $1 trillion in the next 25 years and $1.7 trillion over 40 years. The report, "Buried No Longer: Confronting America's Water Infrastructure Challenge", demonstrates that delaying necessary investment in water infrastructure results in higher costs to customers.

WIFIA would lower the cost of local water infrastructure projects at little or no long-term cost to the federal taxpayer. The mechanism would access U.S. Treasury funds to provide low-interest loans, loan guarantees, or other credit support to local communities. Loan repayments – with interest – and guarantee fees would flow back to WIFIA and into the Treasury – again, with interest. Eligible water infrastructure projects would include water, wastewater, and wet weather related projects.

"We are very excited about such an innovative new financing tool, and we urge the Subcommittee to see this bill introduced and moved through the legislative process as soon as possible on a bipartisan basis, without changes that would dilute its value to the nation's water and wastewater systems," Weihrauch testified.

SOURCE: AWWA

See also:
The Johnson Foundation Testifies Before Congress On Financing Sustainable Water Infrastructure

Grumbles Testifies On Innovative Approaches For Financing Infrastructure