WIFIA Funding Eligibility

The U.S. Environmental Protection Agency (USEPA) recently announced it is accepting letters of interest (LOI) for credit assistance for water infrastructure projects under the new Water Infrastructure Finance and Innovation Act (WIFIA) program. The WIFIA program will provide long-term, low-cost credit assistance in the form of direct loans and loan guarantees to creditworthy water projects.

USEPA will collect LOI in two selection rounds in FY 2017. The first LOI submittal period will end at midnight in the time zone of the prospective borrower on April 10, 2017. The second LOI submittal period, if needed, will begin on August 1, 2017 and end at midnight in the time zone of the prospective borrower on September 29, 2017.

Prospective borrowers must submit all LOI electronically via email at: wifia@epa.gov. USEPA says prospective borrowers will receive a confirmation email and are advised to request a return receipt to confirm transmission.  Prospective borrowers can access additional information, including the WIFIA program handbook and application materials, on the WIFIA website.

WIFIA provides another option for financing large infrastructure projects in addition to the State Revolving Funds (SRF) and bond market. USEPA estimates that funds appropriated to the WIFIA program can be leveraged at a ratio greater than 50 to one, which means the $17 million program budget could allow USEPA to make approximately $1 billion in loans and stimulate about $2 billion in total infrastructure investment.

The U.S. Environmental Protection Agency outlines WIFIA eligibility requirements on its website.

Eligible borrowers

-Federal, state or local government entities

-Partnerships and joint ventures

-Corporations and trusts

-Tribal governments or consortium of tribal governments

-State Clean Water and Drinking Water SRF programs

Eligible projects

-Wastewater conveyance and treatment projects that are eligible for the Clean Water SRF

-Drinking water treatment and distribution projects that are eligible for the Drinking Water SRF

-Enhanced energy efficiency at drinking water and wastewater facilities

-Brackish or seawater desalination, aquifer recharge, and water recycling projects

-Acquisition of property if it is integral to the project or will mitigate the environmental impact of a project

-Bundled SRF projects submitted under one application by an SRF program

-A combination of projects secured by a common security pledge

Eligible activities

-Development phase activities, including planning, preliminary engineering, design, environmental review, revenue forecasting, and other pre-construction activities.

-Construction, reconstruction, rehabilitation, and replacement activities.

-Acquisition of real property or an interest in real property, environmental mitigation, construction contingencies, and acquisition of equipment.

-Capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses and other carrying costs during construction.

Important Program Features

-Projects must cost at least $20 million for large communities and $5 million for small communities (population of 25,000 or less).

-WIFIA assistance may not exceed 49% of a project’s eligible costs.

-Total federal assistance may not exceed 80% of a project’s eligible costs.

-The interest rate on the loan will not be less than the yield on U.S. Treasury securities of a similar maturity at the date of closing.

-Loans may have a repayment schedule of up to 35 years or the useful life of the project, whichever is shorter. There is no repayment obligation until five years after substantial completion of the project.

-The project must have a dedicated source of revenue and be deemed creditworthy. The senior obligation of the project must receive an investment grade rating. A preliminary rating opinion letter is required at the time of application, and two final rating opinion letters are required prior to closing.

-NEPA, Davis-Bacon, American Iron and Steel, and all other federal cross-cutter provisions apply.

Meanwhile, the USEPA is proposing to establish fees related to the provision of federal credit assistance under WIFIA. According to the USEPA proposal on the National Register, WIFIA authorizes USEPA to charge fees to recover all or a portion of the Agency’s cost of providing credit assistance and the costs of retaining expert firms, including financial, engineering, and legal advisory services, in the field of municipal and project finance to assist in the underwriting and servicing of Federal credit instruments. The agency is seeking comment on all aspects of this proposal. Click here to view the USEPA’s entire proposal and submit a comment on the Federal Register. The deadline for comments is February 17, 2017.