WRRDA’s Effect on Clean Water State Revolving Fund Projects

The implementation of the Water Resources and Reform Act of 2014 (WRRDA) will provide new opportunities for utility capital projects. While WRRDA’s full impact will be wide-ranging, there are four items that may have an immediate impact on utilities:

  • WRRDA imposes a water and energy efficiency mandate on all Clean Water State Revolving Fund (SRF) projects to repair, replace or expand treatment infrastructure. After October 2014, SRF projects must evaluate and implement water and energy conservation efforts prior to being funded. The conservation mandate strengthens in July 2016 when all wastewater and stormwater infrastructure projects will be expected to “maximize” water efficiency and reuse as part of their design.
  • WRRDA formally expands loan forgiveness programs to stormwater management projects that include water or energy efficiency goals. In addition to loan forgiveness, projects could be eligible for negative interest rates. By expanding these two key programs, smaller financially-challenged communities may find it possible to enhance their stormwater management practices.
  • WRRDA continues with the theme of expanding eligibility to new projects by authorizing the administrator of the U.S. Environmental Protection Agency (USEPA) to provide federal loan guarantees for innovative water infrastructure projects. This includes projects that enhance energy efficiency in the operation of a public water system or publicly owned treatment works. While guidance for this aspect is not finalized, such an expansion may allow for exciting new projects to become reality and help cities across the country find new ways to manage water infrastructure.
  • WRRDA includes $8.2 billion for the creation of a Water Infrastructure Finance Innovations Authority (WIFIA). In addition to the aspects of WIFIA previously covered in The Source, this section of WRRDA allows SRF programs to extend the term of loans to 30 years from the previous term of 20 years if they choose. In addition, SRF programs may now access WIFIA financing themselves by combining the costs of several smaller projects to reach a combined loan amount of $20 million or more. Overall, WIFIA will hopefully provide more flexibility to SRF programs to provide financing at terms that meet a community’s needs.

If you have questions about SRF projects, contact Ryan Graf, AE2S Nexus Financial Analyst, at Ryan.Graf@ae2s.com or 701-746-8087.