August is National Water Quality Month, a perfect time to take a look at some of the ways that regions can use the Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) to support local water infrastructure improvements.
What are the State Revolving Fund (SRF) Programs?
The CWSRF and DWSRF are programs which function through a federal-state partnership that uses federal funds matched with state funds to capitalize water infrastructure banks in all 50 states and Puerto Rico.
Money from these state banks is distributed for loans, refinancing, purchasing, guaranteeing local debt, and purchasing bond insurance. Recipients who receive money at low interest rates return payments to the fund, allowing it to “revolve.”
SRF Funding Provides a Good Value for Communities
SRF loans are typically provided at lower interest rates and with more flexibility than other financing options can provide.
According to the EPA’s DWSRF fact sheet:
- In 2018, the average DWSRF loan had an interest rate of 1.8%.
- Loan terms can be extended up to 30 years.
- Repayment begins up to 18 months after project completion.
CWSRF funds can be used for:
- Municipal wastewater facility construction,
- Control of nonpoint sources of pollution,
- Construction of decentralized wastewater treatment systems,
- Green infrastructure projects,
- Estuary protection, and
- Other water quality projects.
DWSRF Funds can be used for:
- Drinking Water Treatment,
- Pipe Installation/Replacement,
- Source Water Protection,
- Well Construction/Rehabilitation,
- Storage, and
- Other water quality projects.
How Can Regions Councils Get More Involved With SRFs?
Regional councils, as “intermunicipal agencies,” are eligible to directly borrow from SRFs. Regional councils can also coordinate borrowing for their members and for groups of members and other entities with projects that extend beyond state borders.
Regional Councils as “Intermunicipal Agency” Borrowers
As “intermunicipal agencies,” regional councils can receive SRF funding for individual members or for the council itself.
The EPA’s “Financing Options for Nontraditional Eligibilities in the Clean Water State Revolving Fund Programs” highlights several loans provided directly to regional councils:
- $1.0 million to the Missouri Association Councils of Government (MACOG) for capitalization of the Missouri On-Site Wastewater Improvement Grant-Loan Program. MACOG directed this funding in a pass-through arrangement to homeowners for the repair or replacement of on-site wastewater treatment systems.
- $3.5 million to the Association of Bay Area Governments (ABAG) divided among four assistance agreements for projects which included trash capture devices for catchment basins.
- $2 million to the Delaware Valley Regional Planning Commission (DVRPC) for green infrastructure projects focused on addressing non-point source pollutant loads.
Regional Councils as Coordinators for Smaller SRF Borrowers
Project management and reporting requirements can be a challenge for smaller entities that are interested in borrowing SRF funds. Regional Councils can help these smaller borrowers by supporting some of this work.
Idaho is an example of a state that encourages this type of coordination. According to the Idaho State Department of Environmental Quality, “to help many of the smaller DWSRF borrowers comply with this requirement, Idaho has encouraged them to coordinate with Councils of Government. This arrangement seems to be paying dividends in terms of oversight and compliance.”
Interstate projects present another opportunity for regional councils to operate as SRF coordinators. In these cases, regional councils can apply for loans on behalf of multiple municipalities in different states who are working together on a project whose geographic scope extends past state lines.
SRF Program Details Vary by State
Each state administers their revolving fund individually and project and borrower eligibility varies significantly. For details regarding your state’s SRFs, contact your state SRF contacts.