About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (June 02, 2020)

handle is hein.crs/govdarz0001 and id is 1 raw text is: FF. , iE SE .$. - i , Updated June 2, 2020 WIFIA Program: Background and Recent Developments The Water Resources Reform and Development Act of 2014 authorized the Water Infrastructure Finance and Innovation Act (WIFIA) program to promote development of and private investment in water infrastructure projects (33 U.S.C. §§3901-3914). Initially established as a five- year pilot program, WIFIA authorizes the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (USACE) to provide credit assistance in the form of secured or direct loans for a range of water infrastructure projects. Capital improvements for drinking water and wastewater systems protect public health and support local economies. They typically require major investments. Based on its most recent surveys, EPA estimates that the wastewater and drinking water infrastructure capital investment needed to meet Clean Water Act and Safe Drinking Water Act objectives exceeds $744 billion over 20 years. This amount does not include costs to extend services to accommodate population growth or to repair infrastructure not linked to compliance and related health and environmental goals. Communities generally pay for water projects through debt financing (e.g., municipal bonds) and revenue from user fees. In 2017, state and local resources accounted for more than 96% ($108.8 billion) of the public spending on water utilities, while the federal contribution accounted for the remaining 4% ($4.2 billion), according to the Congressional Budget Office (CBO Publication 54539). WIFIA complements two EPA-administered programs: the Clean Water State Revolving Fund (SRF) and the Drinking Water SRF. For FY2020, combined appropriations for the SRF programs totaled $2.77 billion. In both programs, EPA provides grants to states to capitalize their SRF loan programs. States, in turn, use their federal grant, state match, and sources of borrowed funds (e.g., bonds) to provide assistance (primarily subsidized loans) to help communities afford water infrastructure. Eligible entities for Clean Water SRF include municipalities, state agencies, and private and nonprofit entities. Clean Water SRF assistance can support a range of projects needed for constructing or upgrading (and planning and designing) publicly owned treatment works, among other purposes. The Drinking Water SRF provides assistance to public water systems which may be publicly or privately owned for projects intended to facilitate Safe Drinking Water Act compliance or further health protection objectives. WIFIA appropriations primarily cover long-term credit subsidy costs. Under the Federal Credit Reform Act of 1990 (2 U.S.C. §661(a)), the subsidy cost of federal credit programs, such as WIFIA, accounts for potential losses to the government as a result of loan defaults. The subsidy cost is often presented as a percentage or a ratio (i.e., subsidy rate) and largely determines the amount of loans that can be made available. For example, if the subsidy cost of a WIFIA loan is 10%, a $1 million appropriation can provide $10 million of loan capacity. A lower subsidy rate would support a larger loan amount. Relative to its budget authority ($60 million in FY2020), WIFIA appropriations may provide a large amount of loans. In appropriations acts, Congress has capped the amount of loans supported by WIFIA appropriations (e.g., the cap is $11.5 billion for FY2020). WIFIA loans, which are repaid to the U.S. Treasury, have less of a federal budgetary effect than the SRFs, because states do not repay capitalization grants. Each WIFIA loan has a fixed interest rate, which is the U.S. Treasury rate for loans with a similar maturity on the date of loan execution. Borrowers can structure the WIFIA repayment schedule to align with anticipated receipt of revenue. Initial repayments of WIFIA assistance may be deferred up to five years after project completion, and the repayment period may be extended up to 35 years after completion. For more information, see CRS Report R43315, Water Infrastructure Financing: The Water Infrastructure Finance and Innovation Act (WIFIA) Program. The range of eligible projects for the EPA-administered WIFIA program is broader than for the SRF programs. WIFIA-eligible projects include SRF projects as well as desalination and alternative water projects, drought mitigation, and enhanced energy efficiency projects for drinking water systems or wastewater treatment works. Eligible entities for WIFIA assistance include (1) a state infrastructure financing authority (SIFA); (2) a corporation; (3) a partnership; (4) a joint venture; (5) a trust; or (6) a federal, state, local, or tribal government or instrumentality. Both public and private entities can use WIFIA assistance for eligible projects. Private entities must have a public sponsor to be WIFIA-eligible. WIFIA establishes broad selection criteria that EPA uses to rank projects, including the project's national or regional significance with respect to economic and public benefits, creditworthiness, and readiness. To be eligible for WIFIA, projects must generally exceed $20 million in cost. For small communities (25,000 people or fewer), eligible projects must exceed $5 million in cost. WIFIA directs EPA to set aside 15% of each WIFIA appropriation to assist projects serving small communities. If those funds remain ~dN gognpo goo g , q 'M M X 11LULANJILiM,

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most