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Analysis for the state's SRF administrators to spread the dollars capital — could be identified as stronger candidates out to as many communities as possible. This allows and therefore stand a better chance of receiving many water projects to receive a piece of the funding, assistance. but also ensures that most of the pieces are small; To keep the program's focus on projects that are too through fiscal year 2010 the average DWSRF loan was large for meaningful SRF assistance, a minimum loan only $2.4 million.8 This is not an insignificant amount amount — such as $20 million per application — could of money — especially for budget-strapped small towns be established as a baseline for WIFIA eligibility. But — but it amounts to little more than a rounding error to avoid shutting out smaller communities that do not for metropolitan water systems facing infrastructure have multimillion dollar infrastructure needs, multiple upgrades that could cost hundreds of millions of dollars. utilities could be allowed to pool their smaller-scale The resulting reality is that we currently have no proposals into a single WIFIA application that meets federal program specifically designed to offer low-cost or exceeds the minimum threshold. State water financing for major water infrastructure rehabilitation officials could serve as the aggregators of these and rebuilding projects that do not rectify an imminent combined applications. This framework would ensure public health threat — the very type of project that is that water systems of all sizes and needs have an essential to modernizing much of the country's water opportunity to take advantage of WIFIA loans, while infrastructure. also recognizing that the existing This is where WIFIA comes Clean Water and Drinking Water in. Based on the successful SRFs will remain the primary Transportation Infrastructure federal loan programs for most "From a federal Finance And Innovation water infrastructure projects. budgeting perspective, Act (TIFIA) that has helped To maximize savings communities across the country opportunities for water systems WIFIA loans are likely and their ratepayers, WIFIA would finance large-scale transportation to represent a lowprojects, WIFIA could offer allow the EPA to offer project direct low-cost financing for a loans at long-term U.S. Treasury risk investment of broad range of construction, rates — which frequently beat taxpayer dollars." replacement, rehabilitation, and the interest rates available to security improvements at drinking communities on the municipal water and wastewater systems. bond market. Recipients of WIFIA Innovative energy and water loans would pay back all funds efficiency enhancements and water reuse projects to the Treasury with interest over several decades, — investments that will help build the "green" thereby replenishing federal coffers and creating a communities of the future — could also be made new base of capital that may be drawn on to issue eligible for WIFIA assistance. future loans. But again, because the borrowing As envisioned by the Association of Metropolitan costs incurred by communities would be lower than Water Agencies (AMWA) and other water sector typical bond market rates, water systems and their organizations that support WIFIA, communities ratepayers would save millions of dollars in interest and their water systems would assess their water and finance charges over the life of their WIFIA loans. infrastructure needs, develop project proposals, This will help communities stretch their own dollars and submit applications to the EPA. The agency further and make more local resources available to would vet these submissions against eligibility support additional infrastructure improvements or to criteria designed to identify the strongest and most simply ease the burden of increasing water rates on essential projects from the nationwide pool of customers. applicants. Factors considered by the EPA could From a federal budgeting perspective, WIFIA include the overall need and significance of the loans are likely to represent a low-risk investment project; its economic, environmental, and public of taxpayer dollars. The American Water Works health benefits; its creditworthiness; and the degree Association (AWWA) reports that Fitch Ratings to which it incorporates innovative techniques and calculated the default rate on water bonds issued environmentally sustainable approaches. Projects between 1979 and 1997 to be only 0.04% — making that are not completely reliant on WIFIA funding — them one of the safest investments anywhere.9 that is, those that have secured additional sources of This is not to suggest that WIFIA can be successful 32 wateronline.com ■ Water Online The Magazine