States Wary Of WIFIA Funding For Public Utilities

State officials want more sway over which public water utility projects the U.S. EPA approves for water infrastructure funding.

At issue is financing under the Water Infrastructure Financing Innovations Act, or WIFIA program, which has yet to be implemented, according to a report from Bloomberg BNA, which cited Alexandra Dunn, executive director for the Environmental Council of States.

“The states want to receive not only applications for project financing under WIFIA, but also applications for financing the same project under the drinking water and clean water state revolving fund programs. This is to ensure that both states and the EPA get the ‘same opportunity’ to respond to projects seeking financing,” the report said.

The WIFIA program was created as part of the Water Resources Reform and Development Act of 2014, according to the EPA, which manages WIFIA.

“In FY 2014 and FY 2015, Congress provided $2.2 million to EPA to establish the WIFIA program, including hiring qualified staff, developing regulations, guidance and application materials, and developing a credit subsidy model. When Congress appropriates funds for the program, EPA will begin offering WIFIA loans for water infrastructure projects,” the EPA explains.

“The program is intended to allow water utilities to obtain Treasury-backed credit to secure loans for infrastructure projects worth at least $20 million,” Bloomberg BNA reported.

As the program marches toward implementation, state officials are worried about the potential impacts of financing public water utility projects through WIFIA, according to BNA Bloomberg. Dunn expressed these concerns:

Dunn is echoing the perceptions of states concerned that the newly created, yet-to-be implemented WIFIA program would supplant the existing state revolving fund programs and take away their appropriations. To appease states, Congress inserted “right-of-first-refusal” language that would require the EPA to notify states when water utilities seek funding under WIFIA, and states would then have 60 days to decide whether to fund the project under the state revolving fund programs or to let it be funded under WIFIA.

Dunn wants utilities to receive a state response before they can access WIFIA financing.

“Utilities shouldn’t merely be required to check off on a form or letter of interest to the EPA, which would be charged with providing loans under the WIFIA program. [She argued that they should be required to wait for a response from the states],” the report said.

The EPA, for its part, told Bloomberg BNA that it will share information with the state revolving fund programs. Water utilities say the EPA already plans to share more with the states than the law requires.

“There is no requirement that water utilities seek financing under state revolving fund programs or that they submit applications for the same project to state revolving fund programs,” Dan Hartnett, director of legislative affairs for the Association of Metropolitan Water Agencies, told Bloomberg BNA.

State officials are not the only ones to take issue with WIFIA. Activists have questioned which stakeholders will benefit from the program. The public interest group Food & Water Watch published this criticism of the WIFIA program:

We already have a mechanism in place to fund community water systems. They’re called the State Revolving Funds (SRFs), and they prioritize communities whose water systems need the most help in order to address serious risks to human health and to make sure those systems are meeting water quality standards. The problem is that federal funding to the SRFs has dwindled over the years. Since 1977, federal funding for water infrastructure has been cut by 74 percent in real dollars. But WIFIA is more about allocating federal funding to commercial development and private corporations.

For more about how water utilities access capital visit Water Online’s Funding Solutions Center.