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New funding now available for water infrastructure projects

Posted by Mary Scott Nabers on Wednesday, August 2nd, 2017

Written by Mary Scott Nabers
President and CEO, Strategic Partnerships Inc.
Mayor Kevin Faulconer at the Advanced Water Purification Facility. Photo by Chris Jennewein

Created three years ago and finally funded this year, the Environmental Protection Agency’s Water Infrastructure Finance and Innovation Act (WIFIA) program may soon announce the first round of funding for water infrastructure projects. The agency has $1.5 billion in available funds and it is all designated for water projects.

The EPA announced that 12 of the 43 public entities submitting letters of interest for project funding from the WIFIA program have been approved.  These applicants may now move through the program and apply for low-interest loans.

The WIFIA program offers communities another funding option for water projects. The program provides low-interest loans that will eventually be paid back with interest, so the federal government will incur no additional debt.

Getting approval to proceed with their applications were projects related to wastewater collection and treatment, drinking water distribution and treatment, stormwater management and water recycling projects. However, getting approval to proceed with the program application does not necessarily guarantee final approval for a loan.

The wish lists come from nine different states – Florida, California, Missouri, Nebraska, Indiana, Maryland, Washington, Maine and Tennessee. The projects, which would improve water quality for 20 million Americans in rural and urban communities, seek total loan funding of $2.3 billion, with individual loan requests ranging from $22 million to $625 million. The loans would support $5.1 billion in total project costs that range from $45 million to $1.3 billion.

Among the projects is a $492 million loan request from the city of San Diego, Calif., toward its $1.2 billion water recycling project to build a pure water facility. The plant would produce 30 million gallons per day of purified water by 2021. The city of Baltimore is seeking a $200 million loan to help defray the $573 million cost of  projects to repair, rehabilitate, replace and upgrade its wastewater collection and treatment, water treatment and distribution and stormwater management systems.

Another project seeks funds to create a state revolving fund. The Indiana Finance Authority is asking for a loan of $436 million toward an $890 million project to expand its Clean Water and Drinking Water State Revolving Fund programs and fund dozens of additional projects in communities statewide. (Summaries of all of the projects can be viewed here.)

When the project review and approval process is completed, negotiation and closing on the projects that are approved for loans will follow.

Even with WIFIA loans and local assistance, there will still be a gap in funding needs. However, because these are large, complex projects, they will be attractive to private-sector partners. That’s good because private capital will be required. In fact, the EPA estimates that private investment in these 12 projects alone could reach $1 billion.

It’s not surprising that nearly 50 applicants demonstrated interest in the loan program. The American Society of Civil Engineers’ 2017 Infrastructure Report Card gave America’s water infrastructure an average grade of “D.” The critical needs related to water infrastructure creates a constant funding challenge for government officials.

The U.S. Water Alliance reports a water infrastructure funding gap of approximately $82 billion annually. The group also reports that an investment of $123 billion per year in water infrastructure will likely be needed over the next 10 years. That makes the WIFIA program a much-welcomed option.

Photo courtesy of Times of San Diego: Mayor Kevin Faulconer at the Advanced Water Purification Facility. Photo by Chris Jennewein

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. Follow Mary on Twitter.

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