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EPA’s WIFIA Program to Provide Credit Assistance for Water Infrastructure Projects

With the Trump administration in full gear, hopes are high the new president and Congress will enact legislation supporting and expanding investment in U.S. infrastructure. While the two political parties may disagree on the details of President Trump’s $1 trillion infrastructure plan, the overarching goal of putting Americans to work through the construction of highways, bridges, rail, airports, tunnels and other projects is a rare area in which bipartisan compromise might be achieved.

With these debates expected to carry on into 2017, the U.S. Environmental Protection Agency (EPA) is in the midst of implementing a new and innovative program—authorized by the Water Infrastructure Finance and Innovation Act (WIFIA)—that provides credit assistance for water infrastructure projects. The WIFIA program is modeled on a U.S. Department of Transportation program, the Transportation Infrastructure Finance and Innovation Act (TIFIA), which provides low-cost, long-term credit assistance for qualifying transportation projects. Because WIFIA and TIFIA are loan programs, they are able to get a big bang for each appropriated buck. For example, the EPA expects that the current $20 million in WIFIA funding will support approximately $1 billion in credit assistance.

This funding comes at a time of great need. EPA surveys indicate approximately $660 billion will be needed to meet certain water infrastructure needs in the next 20 years. In a 2012 report, the American Water Works Association estimated that maintenance and expansion of water systems to serve existing and expanding populations could cost $1 trillion during the next 25 years.

The EPA is moving expeditiously to implement WIFIA and to get projects off the ground. In late 2016 and early 2017, the EPA published regulations and guidance establishing the rules of the road for the WIFIA program, and it hosted informational webinars explaining the application process on Feb. 9 and March 7, 2017. Several aspects of the WIFIA program stand out, including the following:

Project Eligibility

Program eligibility is broad, with corporations, partnerships, local and state governments, tribes and state infrastructure financing authorities all qualifying.

Project Type

Projects eligible for funding include:

  • wastewater conveyance and treatment;
  • drinking water treatment and distribution;
  • enhanced energy efficiency projects at drinking water and wastewater facilities;
  • desalination;
  • aquifer recharge;
  • alternative water supply;
  • water recycling;
  • drought prevention, reduction or mitigation; and
  • acquisition of property if it is integral to the project or will mitigate the environmental impact of a project.

Project Size

For large communities, the minimum project size is $20 million, and for small communities (i.e., with a population of less than 25,000), the minimum size is $5 million. WIFIA requires the EPA to set aside 15 percent of its budget authority for small communities.

Project Selection Criteria

Congress and the EPA have established more than a dozen selection criteria which include, but are not limited to, the following:

  • Use of new or innovative approaches, including 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);
  • Protection against extreme weather events, such as floods or hurricanes, as well as the impacts of climate change;
  • Service of regions with significant energy exploration, development, or production areas;
  • 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;
  • Inclusion of public or private financing in addition to assistance under WIFIA; and
  • Service to economically stressed communities, or pockets of economically stressed rate payers within otherwise non-stressed communities.

Project Terms and Conditions

The terms and conditions of WIFIA loans include:

  • a loan may not fund more than 49 percent of eligible project costs, and total federal assistance may not exceed 80 percent of eligible costs;
  • the maximum final maturity date (from substantial completion) is 35 years;
  • repayment may be deferred for up to five years after substantial completion;
  • the interest rate will be equal to or greater than the U.S. Treasury rate of a similar maturity at the date of closing; and
  • projects must be creditworthy and have a dedicated source of revenue.

Prospective borrowers were required to submit letters of interest for the first round of funding by April 10. Based on its review of these letters, the EPA will invite selected prospective borrowers to submit an application. The EPA expects it “will only invite projects to apply if it anticipates that those projects are able to obtain WIFIA credit assistance.” The EPA has not yet announced when the next round of funding will occur.

The WIFIA program is off and running. Developers, designers, program managers and contractors may want to help identify eligible entities and projects, as well as track and evaluate the EPA’s implementation of the WIFIA program to ensure it is efficiently and economically meeting the needs of those responsible for the nation’s water infrastructure.

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