Funding 101 – Where to Find Money for Critical Water and Wastewater Projects

Funding 101 – Where to Find Money for Critical Water and Wastewater Projects

When communities grow and expand, utilities must do the same while keeping up with quality and regulatory requirements. With aging infrastructure and limited capital dollars, utilities must find alternative ways of funding crucial projects. Fortunately, several state and federal agencies realize this pressing issue and are collectively helping utilities and private organizations procure the resources they need. While making decisions on which projects and issues to be addressed first may be challenging, acquiring the capital to complete these projects is available – if you know where to look.

Drinking Water State Revolving Fund (DWSRF)

The newly completed 8.0 mgd DAF Long Pond Water Treatment Plant in Falmouth, MA was funded through the DWSRF program.

The EPA’s DWSRF can be used for infrastructure improvements in drinking water systems. The DWSRF emphasizes funding to small and economically disadvantaged communities, allowing them to finance improvements needed to comply with the Safe Drinking Water Act and to address the most serious risks to human health. The DWSRF authorizes the EPA to make grants to states each year to which each state must match 20% of its grant and develop intended use plans indicating how the allotted funds will be used. The six categories of projects that are eligible to receive DWSRF assistance include the following:

  • Treatment: Projects to install or upgrade facilities to improve drinking water quality to comply with SDWA regulations.
  • Transmission and Distribution: Rehabilitation, replacement, or installation of pipes to improve water pressure to safe levels or to prevent contamination caused by leaky or broken pipes.
  • Source: Rehabilitation of wells or development of eligible sources to replace contaminated sources
  • Storage: Installation or upgrade of finished water storage tanks to prevent microbiological contamination from entering the distribution system.
  • Consolidation: Interconnecting two or more water systems.
  • Creation of New Systems: Construction of a new system to serve homes with contaminated individual wells, or consolidation of existing systems into a new regional water system.

Public water systems are eligible to receive DWSRF assistance if they have the capacity to ensure compliance with the Safe Drinking Water Act or meet certain conditions to return to compliance. Systems owned by federal agencies are not eligible.

Clean Water State Revolving Fund (CWSRF)

The Lyndon, VT wastewater treatment plant upgrade project received over $7.2 million in CWSRF and USDA Rural Development funding.

The CWSRF program is a federal-state partnership with the EPA that provides communities a permanent, independent source of low-cost financing for a wide range of water quality infrastructure projects. The EPA provides grants to all 50 states plus Puerto Rico to capitalize state CWSRF loan programs. These programs function like environmental infrastructure banks by providing low interest loans to eligible recipients for high priority water quality activities. Projects that are eligible for DWSRF funding include the following:

CWSRF funding for public, private, and nonprofit entities:

  • National Estuary Program Projects: Development and implementation of a conservation and management plan
  • Nonpoint Source: Implementation of a state nonpoint source pollution management program
  • Stormwater: Measures to manage, reduce, treat, or recapture stormwater or subsurface drainage water
  • Decentralized Wastewater Treatment Systems: Construction, repair, or replacement of decentralized wastewater treatment systems that treat municipal wastewater or domestic sewage
  • Watershed Pilot Projects: Development and implementation of watershed projects
  • Security Measures at Publicly Owned Treatment Works: Measures to increase the security of publicly owned treatment works
  • Water Reuse: Projects for reusing or recycling wastewater, stormwater, or subsurface drainage water

CWSRF funding for municipalities, inter-municipal, interstate, or state agencies

  • Water Conservation, Efficiency, and Reuse: Measures to reduce the demand for publicly owned treatment works capacity through water conservation, efficiency, or reuse
  • Construction of Publicly Owned Treatment Works: Construction of publicly owned treatment works
  • Energy Efficiency: Measures to reduce the energy consumption needs for publicly owned treatment works

CWSRF funding for qualified nonprofit entities:

  • Technical Assistance: Provide technical assistance to owners and operators of small and medium sized publicly owned treatment works to plan, develop, and obtain financing for CWSRF eligible projects and to assist each treatment works in achieving compliance with the CWA.

Water and Environmental Programs (WEP)

USDA Rural Development provides funding for the construction of water and waste facilities in rural communities and also provides funding to organizations that provide technical assistance and training to rural communities in relation to their water and waste activities. WEP is the only Federal program exclusively focused on water and waste infrastructure needs of rural communities with populations of 10,000 or less. WEP is administered through National Office staff in Washington, DC, and a network of field staff in each State. Types of grants offered by WEP funding include the following.

  • Emergency Community Water Assistance Grants: Helps eligible communities prepare for, or recover from, an emergency that threatens the availability of safe, reliable drinking water for households and businesses. Emergencies include drought or flood; earthquake; tornado; hurricane; disease outbreak; chemical spill, leak, or seepage; or other disasters.
  • Water & Waste Disposal Loan & Grant Program: Provides funding for clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and stormwater drainage to households and businesses in eligible rural areas. This program assists qualified applicants that are not otherwise able to obtain commercial credit on reasonable terms.
  • Water & Waste Disposal Predevelopment Planning Grants: Assists low income communities with initial planning and development of an application for USDA Rural Development Water and Waste Disposal direct loan/grant and loan guarantee programs.

Community Development Block Grant (CBDG)

The Town of Palmer, MA benefited from a CBDG for a recent water main project.

CDBG funds are generally used for long-term community needs, including mitigation. Beginning in 1974, the CDBG program is one of the longest continuously run programs at the Department of Housing and Urban Development (HUD). The CDBG program provides annual grants on a formula basis to 1209 general units of local government and States. Utilities can use these grants to buy, construct, or fix public facilities such as water and sewer systems. They can also match FEMA grants. Grantees may fund activities that meet urgent community development needs. CDBG funds may be allocated for many different activities including the following:

  • Construction or reconstruction of water and sewer facilities, streets, and other public works
  • Relocation and demolition
  • Rehabilitation of public and private buildings
  • Planning activities
  • Activities relating to energy conservation and renewable energy resources

Public Works Program

 The U.S. Economic Development Administration’s (EDA) Public Works Program helps distressed communities revitalize, expand, and upgrade their physical infrastructure. This program enables communities to attract new industry, encourage business expansion, diversify local economies, and generate or retain long-term, private-sector jobs and investment through the acquisition or development of land and infrastructure improvements needed for the successful establishment or expansion of industrial or commercial enterprises. EDA invests in public works projects, including water and sewer systems improvements, that meet the following criteria:

  • The project’s demonstrated alignment with at least one of EDA’s current investment priorities
  • The project’s potential to promote job creation and private investment in the regional economy
  • The likelihood that the project will achieve its projected outcomes
  • Ability of the applicant to successfully implement the proposed project, including financial and management

OF NOTE: Funding Programs Targeted by Trump’s FY18 Budget

Trump’s proposed FY18 budget includes deep cuts to the nation’s major infrastructure programs. Both the DWSRF and CWSRF, funded by the EPA, are slated for drastic reduction under Trump’s budget, while the CBDG program is marked for elimination. In fact, Trump’s budget proposes to completely eliminate 66 federal programs including not only CBDG but also the United States Department of Agriculture’s Rural Water and Waste Disposal Program, and the Northern Border Regional Commission, which is a Federal-State partnership for economic and community development within the most distressed counties of Maine, New Hampshire, Vermont, and New York. Without these funding programs, some communities may not be able to implement needed system improvements.

In Conclusion

Utilities face an uphill battle when it comes to keeping their distribution systems up to date and running efficiently. Both public and private entities are seeing the increase in demand outpacing capital, threatening crucial projects. Fortunately, state and federal funding is available to help alleviate the financial burden facing many communities, while capital efficiency planning helps communities prioritize projects. Sufficient funding and planning today can assure efficiency and deliverability for future generations.

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Funding Assistance to Meet Water and Wastewater Infrastructure Needs

Water and Wastewater Infrastructure

Water and Wastewater Infrastructure Infographic courtesy of WaterIsLife.net
Water and Wastewater Infrastructure Infographic courtesy of WaterIsLife.net

The vast and intricate network of pipes buried beneath our feet is one of the key contributors to the economic success of our nation. Unfortunately, much of our water infrastructure was installed prior to WWII, with some east coast pipes dating back to the late 1800s. Also, many of our nation’s wastewater treatment plants were built in response to the passage of the 1974 Clean Water Act and are now 30-40 years old. Therefore, much of our nation’s water and wastewater infrastructure has reached the end of its useful life and requires repair or replacement.

The ASCE gave both Drinking Water and Wastewater a “D” grade in its 2013 Report Card for America’s Infrastructure; and because water has been so historically undervalued in America, municipalities simply do not have the funds to make the required improvements. In fact, a 2002 US EPA study titled Clean Water and Drinking Gap Analysis Report compared America’s drinking water and wastewater infrastructure needs to the available revenues of utilities. Without including exacerbating factors such as population growth or climate change, the report showed a projected gap in funding over the next 20 years of over $500 billion.

Certainly, our nation must find a way to bridge the funding gap, which will require rate increases and, therefore, community education on conservation practices as well as the value of water. And while these rate increases will provide a portion of the necessary funding, utilities and consumers alone cannot carry the full burden of the funding gap. Thankfully, there are myriad funding opportunities available to assist communities with critical water and wastewater improvements, some of which are listed below:

USDA Rural Development Water & Waste Disposal Loan & Grant Program

Burst water main
Burst water main

The USDA Rural Development (RD) Water & Waste Disposal Loan & Grant Program provides funding for clean and reliable drinking water systems, sanitary sewage disposal, sanitary solid waste disposal, and stormwater drainage to households and businesses in eligible rural areas. This program assists qualified applicants that are not otherwise able to obtain commercial credit on reasonable terms. Areas that may be served include rural areas and towns with fewer than 10,000 people, tribal lands in rural areas, and colonias.

USDA RD funding provides long-term, low-interest loans which may be combined with grants if necessary to keep user costs reasonable. Funds may be used to finance the acquisition, construction, or improvement of drinking water sourcing, treatment, storage and distribution; sewer collection, transmission, treatment, and disposal; solid waste collection, disposal and closure; and stormwater collection, transmission, and disposal.

Clean Water State Revolving Fund (CWSRF) Program

stormwater drainEstablished by the 1987 amendments to the Clean Water Act, the CWSRF Program is a federal-state partnership that provides a permanent, independent source of low-cost financing to communities for a wide range of water quality infrastructure projects. The program is a powerful partnership between EPA and the states that gives states the flexibility to fund a range of projects that address their highest priority water quality needs.

Using a combination of federal and state funds, state CWSRF programs provide loans to eligible recipients for many types of water infrastructure projects, including construction of publicly owned treatment works; nonpoint source; national estuary program projects; decentralized wastewater treatment systems; stormwater; water conservation, efficiency, and reuse; watershed pilot projects; energy efficiency; water reuse; security measures at publicly owned treatment works; and technical assistance.

Drinking Water State Revolving Fund (DWSRF) Program

Water storage tank in Somersworth, NH
Water storage tank in Somersworth, NH

The DWSRF Program is a federal-state partnership to help ensure safe drinking water. Created by the 1996 Amendments to the Safe Drinking Water Act (SDWA), the DWSRF is a financial assistance program to help water systems and states achieve the health protection objectives of the SDWA. The program is a powerful partnership between EPA and the states. Building on a federal investment of over $17.3 billion, the state DWSRFs have provided more than $27.9 billion to water systems through 2014. This assistance was provided through over 11,400 assistance agreements for improving drinking water treatment; fixing leaky or old pipes (water distribution); improving source of water supply; replacing or constructing finished water storage tanks; and other infrastructure projects needed to protect public health.

The DWSRF Program funds a wide range of drinking water infrastructure projects, including treatment projects to install or upgrade facilities to improve drinking water quality to comply with SDWA regulations; transmission and distribution rehabilitation, replacement, or installation to improve water pressure to safe levels or to prevent contamination caused by leaky or broken pipes; rehabilitation of wells or development of eligible sources to replace contaminated sources; installation or upgrade of finished water storage tanks to prevent microbiological contamination from entering the distribution system; interconnecting two or more water systems; constructing a new system to serve homes with contaminated individual wells; and consolidating existing systems into a new regional water system.

Water Infrastructure Finance and Innovation Act (WIFIA)

Business concepts - ship from dollar money on water

Enacted in 2014 as part of the Water Resources and Reform Development Act, WIFIA establishes a financing mechanism for water and wastewater infrastructure projects to be managed by EPA Headquarters. The WIFIA program provides low interest rate financing for the construction of water and wastewater infrastructure. Funded projects must be nationally or regionally significant, and individual projects must be anticipated to cost no less than $20 million.

WIFIA works separately from, but in coordination with, the State Revolving Fund (SRF) programs to provide subsidized financing for large dollar-value projects. Eligible projects include CWSRF eligible projects; DWSRF eligible projects; projects for enhanced energy efficiency at drinking water and wastewater facilities; 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; and combinations of projects secured by a common security pledge.

Northern Border Regional Commission (NBRC)

Troy-Jay, VT received $250,000 from NBRC for upgrades to the community's wastewater treatment plant pump station
Troy-Jay, VT received $250,000 from NBRC for upgrades to the community’s wastewater treatment plant pump station

The NBRC was formed by Congress in 2008 in order to help fund economic and community development projects in Maine, New Hampshire, Vermont, and New York. NBRC was formed to help alleviate distress in the hard-hit northern counties of each state.  Bordering Canada, these counties generally have higher levels of unemployment,  population loss, and lower incomes.

Eligible projects include those that develop the transportation, telecommunication, and basic public infrastructure within the region; assist the region in obtaining job skills and employment related education, as well as entrepreneurship, technology, and business development; provide basic health care and other public services for those areas that are severely economically distressed and underdeveloped; encourage resource conservation, tourism, recreation, and preservation of open spaces in a manner consistent with economic development goals; or support the development of renewable and alternative energy sources.

Other Funding Sources

Wastewater treatment plant in Flagstaff, AZ
Wastewater treatment plant in Flagstaff, AZ

In addition to those listed above, there are many other funding sources. Some of these include SWMI GrantsWater Infrastructure Assessment and Planning Grants, Community Block Development Grants (CBDG), and Watersheds & Water Quality in Massachusetts; Water Infrastructure Finance Authority of Arizona (WIFA) and Water and Wastewater Energy Efficiency Rebates through Arizona Public Service (APS) in Arizona; State Aid Grant Program (SAG) in New Hampshire; and Texas Water Development Fund (TWDF)Economically Distressed Areas Program (EDAP)Rural Water Assistance Fund (RWAF), and the State Participation Program (SPP) in Texas.

In Conclusion

Investing in water and wastewater infrastructure now is critical to the sustainability of our economy and the health of our nation. By implementing necessary rate increases and conservation techniques along with community education and robust funding assistance, our nation will have the ability to successfully to bridge the infrastructure funding gap and ensure the economic and environmental viability of our nation for both present and future generations.

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EPA Provides New England with over $165 Million for Water Infrastructure Projects

606px-Environmental_Protection_Agency_logo.svgThe U.S. Environmental Protection Agency (EPA) has awarded funds to all six New England states to help finance improvements to water projects that are essential to protecting public health and the environment. The funds will be primarily used to upgrade sewage plants and drinking water systems, as well as replacing aging infrastructure, throughout the state. Awards were made to the Clean Water State Revolving Fund (CWSRF) program in each state, which provides low-interest loans for water quality protection projects to make improvements to wastewater treatment systems, control pollution from stormwater runoff, and protect sensitive water bodies and estuaries; and to the Drinking Water State Revolving Fund (DWSRF) program in each state, which provides low-interest loans to finance improvements to drinking water systems, with a particular focus on providing funds to small and disadvantaged communities and to programs that encourage pollution prevention as a tool for ensuring safe drinking water.

The awards are as follows:

  • Connecticut: $26 million — $17.1 million CWSRF, $8.9 million DWSRF
  • Maine: $19.6 million — $10.8 million CWSRF, $8.8 million DWSRF
  • Massachusetts: $63.7 million — $47.4 million CWSRF, $16.3 million DWSRF
  • New Hampshire: $22.7 million — $13.9 million CWSRF, $8.8 million DWSRF
  • Rhode Island: $18.2 million — $9.4 million CWSRF, $8.8 million DWSRF
  • Vermont: $15.6 million — $6.8 million CWSRF, $8.8 million DWSRF

Since the beginning of this program, EPA has awarded approximately $4.554 billion to New England states for the construction, expansion, and upgrading of clean water infrastructure resulting in decreased pollution entering waterbodies throughout the state.

As communities develop and climate patterns shift, water infrastructure needs are expected to grow. Green infrastructure is a cost-effective and resilient approach to water infrastructure needs that provides benefits to communities across the nation.

Canaan Gets $4.8 Million for Water Upgrades from USDA

Originally published in Caledonian Record, May 29, 2015
By Robin Smith, Staff Writer

USDA Rural DevelopmentCANAAN, VT, May 29, 2015 — The federal government has awarded $2.6 million grant to Canaan to address chronic drinking water problems that especially plagued this northeasternmost Vermont community this winter. The grant is part of a major package, including a $1.9 million loan, given by U.S. Department of Agriculture Rural Development Wednesday to the Canaan Fire District Number One for a major water quality upgrade.

Funds will be used to purchase and install a 150,000-gallon water storage tank and construct a new water filtration and treatment facility, as well as upgrade the existing water distribution system serving the people of Canaan and West Stewartstown, N.H. The upgrades will eliminate the use of springs located in Canada as a source and replace them with an existing groundwater well located within the district. A new storage tank will be constructed along with a new treatment/ filter facility for the removal of manganese and arsenic. Portions of the distribution system will also be replaced as part of the funded project. This winter, residents of Canaan experienced multiple incidents of water discoloration and low water pressure because of current water distribution system and treatment inefficiencies.

“This assistance from USDA Rural Development will help some of the most rural and remote communities of Northern Vermont and Northern New Hampshire ensure their residents have clean, healthy and safe water for decades to come,” said Ted Brady, director of USDA Rural Development for Vermont and New Hampshire. “USDA Rural Development has not only invested in essential water infrastructure with this project, but also in the health of Canaan’s people and our region’s economy. This project will put people to work in the Kingdom.”

Engineering for the improvements will be provided by Tata & Howard Engineering of St. Johnsbury. It is estimated the project will commence construction in May 2015 with completion of summer 2016. Canaan was able to access a portion of the $2.6 million in grant funds due to the Rural Economic Area Partnership (REAP) Zone designation accorded to three counties of the Northeast Kingdom of Vermont – Caledonia, Essex and Orleans counties. The designation provides five regions of the country additional grant resources through USDA Rural Development. Sen. Patrick Leahy spearheaded the effort to designate the Northeast Kingdom as a REAP Zone in 2000, and led in renewing the NEK REAP Zone in the newly enacted 2014 Farm Bill.

“By improving water quality, these investments will tangibly improve the quality of life in these Vermont communities,” said Leahy, Sen. Bernie Sanders and Rep. Peter Welch in a joint statement. “With the passage of the Farm Bill earlier this year, the REAP Zone program will continue to bring millions of investment dollars to the Northeast Kingdom. Partnering federal agencies and their resources with rural communities in ways like this is a catalyst for economic growth and quality of life improvements in the NEK and other rural areas.”

WEP loans and grants may be made to develop, extend or improve water and wastewater systems, including solid waste disposal and storm drainage systems, in rural communities with a population of 10,000 or less.