Jun 16, 2021

EPA Invites Communities to Apply for Water Infrastructure Financing

Fifth-round funding applications are open; $6.5 billion available for eligible prospective borrowers

EPA WIFIA financing is open for applications. This funding was used for water infrastructure in Louisville, Kentucky. (Photo Courtesy: U.S. EPA)
EPA WIFIA financing is open for applications. This funding was used for water infrastructure projects at the Louisville and Jefferson County Metropolitan Sewer District’s Morris Forman Water Quality Treatment Center. (Photo Courtesy: U.S. EPA)

In communities across the nation, drinking water, wastewater, and stormwater systems provide essential public health and environmental protection while supporting economic growth. 

As water infrastructure ages and new challenges to vital water services emerge, local communities may face significant financial challenges renewing their systems. EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) loan program is an effective and flexible financing tool that can help reduce the cost of much needed water infrastructure upgrades.

Communities have financing options to pay for water infrastructure projects. A Congressional Budget Office report shows most drinking water and wastewater projects are funded by system funds or state and local government sources, such as municipal bonds and taxes. To implement critical water infrastructure projects, community leaders must carefully consider financing options available. Since debt is mostly repaid by residents, it is important to balance maintaining affordable rates and reliable water infrastructure systems. 


The Value of the WIFIA Program

Since the WIFIA program became a financing option, WIFIA loans are now an important tool to upgrade the nation’s infrastructure, saving communities money. Since 2018, EPA has closed 50 WIFIA loans providing more than $9 billion to support water infrastructure while creating more than 49,000 jobs and saving communities more than $4 billion with low interest rates and flexible repayment terms.

In 2020, the city of San Mateo closed two WIFIA loans to pay for wastewater treatment upgrades. 

“Our partnership with the EPA has been a lifeline to ensure our city’s much-needed infrastructure improvements can be achieved,” said Brad Underwood, city of San Mateo public works director. “The EPA’s support means our ratepayers feel less of the burden while we make our environment cleaner for all residents of the city, and the fish, birds, and mammals that call the San Francisco Bay home.” 


Borrower-Focused Plans

The WIFIA program is borrower-focused, with customized loan terms to stimulate investment while minimizing costs for ratepayers. The program’s flexible structuring features include loan terms that are up to 35 years after completion of project construction. Repayments can be tailored to match the specific needs of a project and deferred for up to five years after completion of project construction. Repayment schedules can include interest-only payment periods. 

In addition, borrowers can draw funds as needed without penalty for prepayment.  Interest rates are set at closing based on the Treasury rate and are not impacted by credit rating. With $4 billion in savings to date, these benefits save borrowers money they can pass on to customers through continued service improvements from additional infrastructure investment or greater rate stability throughout the life of the loan.

The Louisville and Jefferson County Metropolitan Sewer District improved their biosolids treatment center through a WIFIA loan that closed in 2021. 

“The WIFIA loan with its extraordinarily low interest rate and long repayment schedule will save MSD ratepayers about $15 million in interest costs. We could not get this rate from any other lending institution,” said Tony Parrott, Louisville MSD executive director. “The improvements to our solids handling process will result in a win for our customers and the environment for generations to come.” 


Accelerated Water Infrastructure Investment

With more than 70 additional loans totaling almost $12 billion in the pipeline and $6.5 billion in financing available this year, the WIFIA program will continue to accelerate investment in vital water infrastructure projects. WIFIA loans are an important tool for communities undertaking significant infrastructure investment because they have distinct benefits not readily available from other water infrastructure financing alternatives. 

Through WIFIA, eligible public and private borrowers can finance a wide variety of water infrastructure projects. These projects include replacing lead pipes and service lines, upgrading and modernizing drinking water, wastewater, and stormwater systems, addressing  emerging contaminants in drinking water, supporting clean water infrastructure across rural America, and increasing water system resiliency. 

Small Systems WIFIA Opportunities

Recognizing the extraordinary circumstances surrounding small communities, the WIFIA program is now offering to finance a larger share of the cost for projects serving small communities with a population of 25,000 or less. By increasing financing to small community borrowers, the WIFIA program aims to make its loans and their benefits more accessible to borrowers of all sizes.


Apply for Fifth Round WIFIA Funding

EPA’s WIFIA program recently opened its fifth round of funding, making available approximately $6.5 billion to eligible prospective borrowers, including municipal entities, tribes, corporations, and partnerships, and state infrastructure financing authorities. 

The WIFIA program has approximately $5.5 billion to lend and the state infrastructure financing authority WIFIA (SWIFIA) program has an additional approximately $1 billion available exclusively for state infrastructure financing authorities. In selecting projects for funding this round, EPA is prioritizing projects in five areas:

  • Supporting economically stressed communities;
  • Protecting water infrastructure that is vulnerable to climate change-related weather events;
  • Reducing exposure to lead and addressing emerging contaminants, such as per- and polyfluoroalkyl substances (PFAS);
  • Updating aging infrastructure; and
  • Implementing new or innovative approaches, including cybersecurity and green infrastructure.

To be considered for WIFIA or SWIFIA funding, eligible prospective borrowers must submit a letter of interest. The deadline to submit the letter of interest is June 25, 2021, for SWIFIA loans and July 23, 2021, for WIFIA loans. 

Contact [email protected] to schedule a meeting with EPA’s WIFIA team if you have questions about financing a project or want to learn more about the program. More information can be found at: www.epa.gov/WIFIA.

Andrew Sawyers is the director of the U.S. EPA Office of Wastewater Management. Sawyers can be reached at [email protected].