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1 1 (April 26, 2019)

handle is hein.crs/govzmn0001 and id is 1 raw text is: April 26, 2019 WIFIA Program: Background and Recent Developments To promote development of and private investment in water infrastructure projects, the 113th Congress authorized the Water Infrastructure Finance and Innovation Act (WIFIA) in the Water Resources Reform and Development Act of 2014 (P.L. 113-121, Title V; 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-secured or direct loans-for a range of water infrastructure projects. The 115th Congress made several changes to the WIFIA program in America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270), enacted on October 23, 2018. Capital improvements for drinking water and wastewater systems seek to protect public health and support local economies, and typically require major investments. In its most recent compilation surveys, EPA estimated that the capital cost of wastewater and drinking water infrastructure needed to meet Clean Water Act (CWA) and Safe Drinking Water Act (SDWA) 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 statutory 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. USACE-Administered WIFIA Program Eligible projects for the authorized USACE-administered WIFIA program include water resources projects for flood reduction projects, environmental restoration, coastal and harbor navigation improvement, among other purposes. The USACE-administered WIFIA program has not advanced into implementation. In the conference report for USACE FY2019 appropriations (H.Rept. 1 15-929), Congress directed USACE to develop its proposal for WIFIA. WIFIA complements two EPA-administered programs: the Clean Water State Revolving Fund (SRF) and Drinking Water SRF. For FY2019, combined appropriations for the SRF programs totaled $2.85 billion. In both programs, EPA uses funds to provide grants to states to capitalize their SRF loan programs. States use their federal grant to leverage resources (e.g., issue bonds) and to provide assistance (primarily subsidized loans) to public water systems and publicly owned wastewater utilities for projects that support statutory objectives. Program Design Annual WIFIA appropriations primarily cover long-term credit subsidy costs, which are calculated to cover the risk that the loan will not be repaid. As such, relative to its budget authority (e.g., $68 million in FY2019), WIFIA appropriations may provide a large amount of credit assistance (e.g., estimated at $7.31 billion for FY2019). WIFIA assistance, which is repaid to the U.S. Treasury, is intended to have less of a federal budgetary effect than the SRFs as states do not repay capitalization grants to the federal government. 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. WIFIA borrowers can structure the repayment schedule to align with anticipated receipt of revenue. Initial payments of WIFIA assistance may be deferred up to five years after the project's completion and the repayment period may be extended up to 35 years after completion. WIFIA loans may be combined with other sources of debt-financing. For more information, see CRS Report R43315, Water Infrastructure Financing: The Water Infrastructure Finance and Innovation Act (WIFIA) Program. Eligibility The range of eligible projects for the EPA-administered WIFIA program is broader than the SRF programs. WIFIA eligible projects include SRF projects as well as desalination, 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, tribal government or instrumentality. Unlike the Clean Water SRF, 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 generally must exceed $20 million. For small communities (defined as 25,000 people or less), eligible projects must exceed $5 million. WIFIA directs EPA to set aside 15% of each WIFIA ittps:/crsreports.congress go

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