As communities assess their water system’s needs for replacing or building new infrastructure, the reality quickly sets in: It’s going to be expensive. The burden of obtaining financing is often greater for small communities because they cannot access or raise large amounts of capital as easily as larger towns and cities that have broader customer bases.
Getting outside help is always a possibility, but you need to keep in mind that money is not freely handed out. With government resources at all levels – federal, state and local – shrinking, the competition for funds is getting tougher. Government agencies assisting community water systems are making a big push toward sustainability these days, which communities should take to mean in one way that they need to become more self-supporting in a financial sense.
This is not a comprehensive guide to all sources of funding for communities needing financing for water infrastructure but is to help you understand what to expect when seeking funding.
Loans and grants are available for critical and urgent capital projects and for treatment upgrades. Utilities should consider grant funds as a bonus, not as a substitute for good management skills.
Some federal funding sources for small water and wastewater treatment systems include the following:
- The U.S. Department of Agriculture (USDA) Rural Development’s Water and Environmental Programs [1] (WEP) provide loans and grants to drinking water, wastewater, stormwater and solid-waste facilities in rural areas and in towns with populations of fewer than 10,000. USDA also has a grant program for emergency community water assistance, which assists with water quality or quantity problems.
- The U.S. Environmental Protection Agency (EPA) has several web pages devoted to grants and other funding under the Safe Drinking Water Act (SDWA) [2].
- Drinking Water State Revolving Fund (DWSRF) [3]. This page also contains links to state websites [4].
- Clean Water State Revolving Fund (CWSRF) [5]. Decentralized systems are eligible for this funding too. State contacts [6]. Information on water-quality cooperative agreements [7]
- Financial assistance related to capacity development [8]
- Watershed, wetland and beach preservation grants [9]
- RCAP provides financing nationwide through the RCAP Revolving Loan Fund (RLF) [10]. The fund is available to assist communities with pre-development costs for capital improvements or to help pay for small projects and improvements.
As you seek out and pursue funding sources, also keep in mind that government agencies providing loans and grants have many requirements as part of their application processes. These can include:
- income surveys to determine the ability of rate payers to support a loan
- employing professionals, such as an attorney and an engineer, to perform certain tasks or reviews
- completing an environmental review
Note that meeting many of these requirements takes time and themselves also come with a cost. Lining up various funding sources to come to fruition at the same time and the right time is a challenge in itself. Another major requirement for government loan programs is that applicants be financially sound. The lender wants to be sure you can pay your taxes, handle operating costs and pay back the loan.
In short, you should expect to put forth a lot of work and effort if you hope to secure any outside funding. Fortunately, there are assistance providers like RCAP that can help communities in the complex process of securing funds. Find RCAP assistance in your area [11]. Someone with the knowledge of government agencies and experience in preparing communities to approach them for funding can help you navigate the process and avoid pitfalls.