Consultant's Corner: How To Prepare Your Utility For WIFIA

By Lee Odell, P.E., CH2M HILL, Water Treatment Global Technology Lead

WIFIA Legislation

Senate Bill 335, the Water Infrastructure Finance and Innovation Act (WIFIA), sponsored by Senator Jeff Merkley (D-Ore.) was presented to the Senate Environment and Public Works (EPW) Committee on February 14, 2013.  In March, the EPW Committee approved a $500 million pilot program as Title X of Senate Bill 601; the Water Resources Development Act (WRDA).  The House is expected to vote on a version of the WRDA in April.

The WIFIA Bill is expected to significantly benefit drinking water and wastewater systems of the United States by addressing funding gaps in large regionally- and nationally-significant projects.  The loans and loan guarantees provided in the Bill would be distributed through existing State Revolving Loan Funds.  The Bill allows the use of credit instruments only greater or equal to $20,000,000.

ASCE Infrastructure Report Card

Also in March, the American Society of Civil Engineers (ASCE) released their latest report card grade on the condition of America’s infrastructure at http://www.infrastructurereportcard.org/  giving a grade of D+.  ASCE has been instrumental in helping to build a wide base of support for WIFIA, and it is worth taking a closer look at what is in Senate Bill 335 to help utilities prepare for potential future funding opportunities.

Eligible Entities

Targeted entities in the Bill are drinking water, stormwater and wastewater utilities.  Eligible entities are defined in the Bill as:

• An entity (other than a State or local agency with jurisdiction over highways or roads) that owns or operates a treatment works that serves the general public, including municipal, tribal or regional storm sewer system management agency;
• An entity, including an Indian tribe, that owns or operates a community water system; or
• Entities in the two categories above that are cooperating on an eligible project.

Eligible entities include public-private partnerships, except that only the public entity owned, or investor owned utilities can receive funding, and not the private financing or development partner.

Eligible Projects

Eligible projects include capital projects such as:

1. Replacement or rehabilitation of treatment works,
2. Energy reduction, energy efficiency and renewable energy projects at a treatment works,
3. Water efficiency and water demand reduction projects,
4. Stormwater management and control projects,
5. Wastewater and Stormwater reuse projects,
6. Consolidation of treatment works and community water systems,
7. Source water protection projects,
8. Repair and rehabilitation of treatment works or sewage collection to address an adverse environmental condition,
9. Advanced decentralized wastewater treatment systems
10. Implementation of projects that manage, control, reduce, treat, infiltrate or reuse stormwater,
11. Implementation of management programs established under section 319 of the Federal Water Pollution Control Act (33 U.S.C. 1329)[i],
12. Development and implementation of conservation and management plans in section 320 33 U.S.C. 1329,
13. Security projects for wastewater treatment works and community water systems,
14. Water conservation and efficiency projects that enhance water quality,
15. Integration of water resource planning and implementation,
16. Water, rainwater and wastewater reuse, recycling, and rainwater harvesting projects that preserve or enhance water quality,
17. Capital projects that monitor combined or sanitary sewers

Some non-capital costs associated with the projects listed above or that promote sustainability, and water efficiency retrofits are also eligible.

Selection Criteria

The bill also describes selection criteria for choosing among eligible projects.  These criteria include;

• The significance of the infrastructure needs addressed by the project; including the economic, environmental and public health benefits.
• The creditworthiness of the project,
• The need for Federal assistance, especially if the assistance causes the project to be completed more quickly and at a lower cost than without the assistance,
• The degree to which the project leverages other public and private financing,
• The cost to the Federal Government,
• Whether the project incorporates environmentally sustainable approaches,
• Whether the project is consistent with section 603(g) of the 33 U.S.C. 1383(g)[ii] and section 1452(b)(3) of U.S.C. 300j-12(b)(3)[iii], and,
• The priority System described below.

Priority System

A priority system is the driver for innovation under the Bill.  The priority system gives greater weight to eligible projects if the applicant has:

1. An inventory of assets and condition assessment of the treatment works or community water system.
2. A schedule for replacement of assets.
3. A financing plan that factors in lifecycle costs and describes the sources of funds designated to meet the entire lifecycle costs.
4. A description of options for restructuring the treatment works or community water systems
5. The use of new models or techniques that treat or minimize sewage or stormwater discharges
6. The use of water efficiency and conservation to generate cost effective new sources of water
7. A demonstration of consistency with State, regional, and municipal watershed management plans, water conservation and efficiency plans, or integrated water resource management plans. 

Getting Ready for Funding Opportunities

As with past funding opportunities like the American Recovery and Reinvestment Act of 2009 (ARRA), those utilities and projects that best mesh with the requirements in the funding criteria will be in the best position to receive funding. With a pilot project gaining momentum this year, it is not too early to consider the implications of a fully funded WIFIA.

What can you do to help prepare your utility for WIFIA funding?  A few suggestions are provided below:

Think Big:  Funding for small projects would be excluded under this program, with a minimum loan amount of $20 million.  Regionally and nationally important projects meet the stated intent of WIFIA, so participation in regional planning groups and National Associations like the American Water Works Association (AWWA) and the Water Environment Federation (WEF) could be critical in building support for your projects.

Know the Condition of your Assets:  Demonstrating the condition of your utility assets and developing a replacement and rehabilitation strategy for the entire lifecycle cost of your utility assets will put you in the high priority list. Having a structured asset management program in place to help prioritize needs will provide evidence that your utility has taken steps to become aware of asset condition.

Get your projects in the Pipeline:  While not a stated eligibility or priority criteria in WIFIA, having projects ready to construct by doing much of the groundwork for a project helps them have confidence that the project will get completed within the typical three year time frame.  If land is purchased, permits are obtained and studies are in ahnd when you apply for funding, the easier it is to demonstrate that you will successfully complete the project.

Be Sustainable:  Incorporating sustainability features into your project, to the maximum extent possible, will help with the funding agencies give your project the go-ahead.

Consolidate:  Projects that consolidate treatment works and community water systems could potentially be eligible for principal forgiveness amounts, if the implementation follows current SRF trends that reward those efforts.

Innovate:  Projects that use innovative models and techniques, especially for minimizing sewer and stormwater discharges (reuse, decentralized treatment, infiltration) get priority under the Bill.

WIFIA offers new opportunities for utilities that have not historically been eligible for low-cost funding through state revolving loan funds. By taking a creative look at how services are provided, utilities can improve their place in line for this new pot of money.