On January 10, 2017, the U.S. Environmental Protection Agency (EPA) announced the availability of $1 billion in credit assistance for water infrastructure projects under the new Water Infrastructure Finance and Innovation Act (WIFIA) program. See 82 Fed. Reg. 2933 (Jan. 10, 2017). Congress enacted WIFIA in order to provide low-cost, long-term credit assistance through direct loans or loan guarantees. The program supplements other traditional forms of water infrastructure financing such as State Revolving Fund (SRF) programs and bonds.
Entities interested in applying for WIFIA funding must act fast. In order to be considered in the current round of funding, prospective borrowers must submit formal letters of interest to EPA no later than April 10, 2017. EPA will host informational webinars explaining the process of submitting and evaluating letters of interest on February 9 and March 7, 2017.
- Eligible Borrowers
- Local, state, tribal, and federal government entities and instrumentalities
- Partnerships and joint ventures
- Corporations and trusts
- State infrastructure financing authorities
- Eligible Projects
- Wastewater conveyance and treatment
- Drinking water treatment and distribution
- Enhanced energy efficiency projects at drinking water and wastewater facilities
- Brackish or seawater desalination, aquifer recharge, alternative water supply, and water recycling
- Drought prevention, reduction, or mitigation
- Acquisition of property if it is integral to the project or will mitigate the environmental impact of a project
- A combination of projects secured by a common security pledge or submitted under one application by an SRF program
- Key Program Features
- $20 million – Minimum project size for large communities
- $5 million – Minimum project size for small communities (population of 25,000 or less); WIFIA requires EPA to set aside 15 percent of its budget authority for small communities.
- 49 percent – Maximum portion of eligible project costs that WIFIA can fund
- Total federal assistance may not exceed 80 percent of a project’s eligible costs
- 35 years – Maximum final maturity date from substantial completion
- Five years – Maximum time that repayment may be deferred after substantial completion of the project
- Interest rate will be equal to or greater than the U.S. Treasury rate of a similar maturity at the date of closing
- Projects must be creditworthy and have a dedicated source of revenue
Letters of Interest and Applications for Funding
Prospective borrowers must first submit a letter of interest to EPA by April 10, 2017. The primary purpose of the letter of interest is to: (i) validate the eligibility of the prospective borrower and the prospective project; (ii) perform a preliminary creditworthiness assessment; (iii) perform a preliminary engineering feasibility assessment; and (iv) evaluate the project against the selection criteria and identify which projects EPA will invite to submit applications.
EPA will invite selected prospective borrowers to submit an application based on preliminary engineering feasibility findings, a preliminary creditworthiness assessment, the amount of budget authority necessary to provide credit assistance, and the scoring of the eligibility criteria. EPA expects that it “will only invite projects to apply if it anticipates that those projects are able to obtain WIFIA credit assistance.”
EPA has identified the following project priorities, in addition to geographic and project diversity:
- Adaptation to extreme weather and climate change including enhanced infrastructure resiliency, water recycling and reuse, and managed aquifer recovery;
- Enhanced energy efficiency of treatment works, public water systems, and conveyance systems, including innovative, energy-efficient nutrient treatment;
- Green infrastructure; and
- Repair, rehabilitation, and replacement of infrastructure and conveyance systems.
Within the priorities, selection criteria (and relative weight) for this round of funding include:
- National or regional significance with respect to the generation of economic and public health benefits – 10 percent
- The likelihood that WIFIA assistance would enable the project to proceed at an earlier date than without – 5 percent
- Use of new or innovative approaches (energy-efficient parts and systems, renewable or alternate sources of energy, green infrastructure and alternate sources of drinking water through desalination, aquifer recharge or water recycling) – 10 percent
- Protection against extreme weather events, such as floods or hurricanes, as well as the impacts of climate change – 10 percent
- Maintenance or protection of the environment or public health – 10 percent
- Service of regions with significant energy exploration, development, or production areas – 5 percent
- Service of regions with significant water resource challenges, including water quality concerns, significant flood risk, issues identified in existing regional, state, or multistate agreements, and water resources with exceptional recreational value or ecological importance – 10 percent
- Responds to identified municipal, state, or regional priorities – 5 percent
- Readiness of the project to proceed toward development, including a reasonable expectation that the construction of the project can commence no later than 90 days after the date on which a federal credit instrument is obligated – 5 percent
- Inclusion of public or private financing in addition to assistance under WIFIA – 5 percent
- Reduction of other federal assistance to the project – 5 percent
- The needs for repair, rehabilitation, or replacement of a treatment works, community water system, or aging water distribution or wastewater collection system – 10 percent
- Service to economically stressed communities, or pockets of economically stressed rate payers within otherwise non-stressed communities – 10 percent
Letters of interest must be submitted no later than April 10, 2017. Prospective borrowers should take action immediately to evaluate their potential WIFIA eligibility and to begin preparing a letter of interest. Developers, designers, program managers, and contractors may want to help identify eligible cities and projects.