EPA Program Hopes To Infuse $1B Into Water Infrastructure Projects
By Mary Scott Nabers
Whether it’s a drinking water contamination issue such as the one in Flint, MI, or the need for water retention projects in New Orleans to help reduce neighborhood flooding, communities throughout the U.S. are facing longstanding water infrastructure needs. Yet, few, if any, of those communities have the required funding to undertake those projects. The result is deteriorating water infrastructure problems nationwide…and many of the problems are now at a critical stage.
For some communities, that will change soon. Funding assistance for local water infrastructure projects is expected to grow by $1 billion, which experts hope will stimulate about $2 billion in total infrastructure investment. The U.S. EPA recently announced that approximately $1 billion in credit assistance will be made available to eligible borrowers via long-term, low-cost credit assistance through direct loans and loan guarantees. The Water Infrastructure Finance and Innovation Act (WIFIA) provided the initial funding for the program.
That’s good news on many fronts for U.S. communities of all sizes. While competition for this funding will be fierce, many communities will get funding for projects that have been neglected for entirely too long. The funding will allow public officials to address critical water infrastructure needs and the projects will provide contracting and subcontracting opportunities for private-sector firms. That will translate into more jobs and an economic boost to local communities.
The $17 million in WIFIA program budget funds can be leveraged at a ratio of greater than 50 to one, according to EPA. The end result could be a $2 billion infrastructure investment. Although the credit assistance offered through the EPA cannot exceed 49 percent of eligible project costs, other funding options are also available, such as bonds and State Revolving Fund programs and even private-sector capital.
Of particular interest to small communities is that WIFIA requires the EPA to set aside 15 percent of this program’s budget authority for credit assistance to communities that serve a population of 25,000 or less. These smaller communities will be eligible for funding for projects with a minimum cost of $5 million.
While the minimum project size for small communities is $5 million, project size for large communities is a minimum of $20 million. WIFIA can fund up to 49 percent of eligible project costs, but total federal assistance from WIFIA and other federal funding options cannot exceed 80 percent of eligible costs of a project.
In addition to local, state, tribal, and federal government subdivisions, other entities that can apply for funding include partnerships and joint ventures, corporations and trusts, and state infrastructure financing authorities. Cash-strapped communities could use the funding to help finance a wide range of eligible projects that address wastewater treatment facilities, drinking water treatment and distribution, enhanced energy efficiency at wastewater and drinking water facilities, drought-related projects that include prevention and mitigation, water recycling projects, and desalination projects.
The EPA has indicated priority will be given to certain projects. Projects that address extreme weather and climate change through efforts such as enhanced infrastructure resiliency and water recycling and reuse are among the priority projects. Energy efficiency in areas such as water treatment facilities, public water systems, and delivery systems move to the top of the consideration list, as do green infrastructure projects and plans that would repair, replace, or upgrade water infrastructure and delivery systems.
Each approved project must have a dedicated source of revenue for repayment of loans, and entities receiving funding will have ample time to pay back those loans. Funding recipients will have up to 35 years from the time of substantial completion of their projects to repay the loan, with an option for a deferred repayment plan that can extend for five years after substantial completion.
EPA anticipates the likelihood of two selection rounds for this competitively-awarded funding program. Letters of interest are currently being accepted by the EPA through April 10. If all of the funds are not distributed in the first round, a second round in which letters of interest will be accepted will begin Aug. 1 and run through Sept. 29.
Make no mistake — $1 billion dollars is a lot of money. But when applied to the approximately $660 billion — and growing — water infrastructure spending deficit in this country, it is a prime example of the proverbial “drop in the bucket.” That $660 billion is how much the EPA estimates should be invested in the U.S. over the next 20 years to address the country’s aging drinking water, wastewater, and stormwater infrastructure.
The $1 billion in funding assistance through EPA is a good first step. But much more is needed. Communities with water and other infrastructure needs are eagerly awaiting details of the Trump administration’s highly touted federal infrastructure plan. They all hope that there will be incentives that boost available funding. The president has said that his program will rely heavily on public-private partnerships, or private-sector capital. Additional capital, from whatever source, will be a welcome relief and more capital investment will boost economic vitality even more.
In the meantime, public officials with qualifying water projects should move quickly to seek consideration by the EPA for participation in its credit assistance program.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S.