Applications for EPA WIFIA funding are now being accepted. The Morris Forman Water Quality Treatment Center of the Louisville and Jefferson County Metropolitan Sewer District received this cash for water infrastructure upgrades. Stormwater, wastewater, drinking water systems preserve public health and the environment while promoting economic growth in towns around the country.
Local communities may confront major financial issues renewing existing systems as water infrastructure grows and new challenges to crucial water services emerge. The EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) lending program is a cost-effective and flexible funding option for much-needed water infrastructure improvements.
Water infrastructure projects can be paid for by using several financial methods available to communities. According to a report by the Congressional Budget Office, most wastewater and drinking water projects are paid through system money or state and local government sources like municipal bonds and taxes.
According to PaydayNow, this Instant Approval notes that, Local officials must carefully assess the various financial choices available to accomplish important water infrastructure projects. Because people are responsible for the majority of debt repayment, it is critical to strike a balance between maintaining reasonable rates and ensuring the reliability of water infrastructure systems.
The WIFIA Program’s Importance
WIFIA loans have become a vital tool for upgrading the nation’s infrastructure and saving municipalities money since the initiative became a financing option. Since 2018, the EPA has closed 50 WIFIA loans. It totals more than $9 billion in funding for water infrastructure. This has led to the creation of over 49,000 jobs and a $4 billion savings for communities due to flexible repayment terms and low-interest rates.
San Mateo finalized two WIFIA loans in 2020 to pay for wastewater management projects. “Our cooperation with the EPA has been a lifeline for ensuring our city’s much-needed infrastructure improvements,” said Brad Underwood, public works director for the city of San Mateo. “With the EPA’s help, our ratepayers will bear less of the burden while we clean up our environment for all city residents. It will also benefit the birds, fish, and mammals which consider the San Francisco Bay their home.”
Plans centered on the borrower
The WIFIA program is geared at borrowers, with tailored loan terms designed to encourage investment while lowering costs for ratepayers. Loan lengths of up to 35 years following project completion are one of the program’s flexible structuring elements. Repayments can be adjusted to a project’s specific demands and postponed for up to 5 years following the project’s completion. Interest-only payment periods might be included in repayment arrangements.
Borrowers can also withdraw funds as required without incurring prepayment penalties.
Interest rates are established at the end of the day using the Treasury rate and are unaffected by credit ratings. These benefits have saved borrowers $4 billion to date, which they can pass on to customers in the form of improved service through more spending on infrastructure or greater rate stability over the life of the loan.
A WIFIA loan helped the Louisville and Jefferson County Metropolitan Sewer District upgrade its biosolids treatment center, which was completed in 2021. “The WIFIA loan will save MSD ratepayers roughly $15 million in interest charges due to its extremely long repayment schedule and low-interest rate.”
“We couldn’t get this rate from every lender,” said Tony Parrott, executive director of the Louisville MSD. “Our solids handling process innovations will benefit our clients and the ecosystem for centuries to come.”
Investing in Water Infrastructure at a Faster Pace
The WIFIA program will continue to speed investment in critical water infrastructure projects, with more than 70 new loans totaling over $12 billion in the process and $6.5 billion in funds sources this year.
WIFIA loans are an essential tool for regions looking to invest in a large infrastructure. This is because they offer unique benefits not seen in other water infrastructure funding options.
Eligible public and commercial borrowers can use WIFIA to fund a wide range of water infrastructure investments shown below.
- Replace lead pipes and service lines
- upgrade and modernize stormwater, wastewater, and drinking water systems
- address emerging pollutants in drinking water
- promote clean water infrastructure across rural America
- improve water system resiliency
Small-scale systems WIFIA Possibilities
Recognizing the unique circumstances that exist in small towns, the WIFIA initiative is now willing to fund a bigger portion of the cost for projects that serve towns of 25,000 or fewer people. The WIFIA program intends to make its loans and perks more affordable to consumers of all sizes by boosting funding to small community borrowers.