Infrastructure Week Part Two: Learning to Leverage Better Loans

Infrastructure Week Part Two: Learning to Leverage Better Loans

Most Americans' water systems have been in operation for 75-100 years and municipalities and districts across the country are struggling to find the funds they need to upgrade their aging infrastructure.  While statistics like this can be sobering, it’s important to think of the people behind the agencies that are responsible for giving out loans, complying with regulations, and providing services that make these investments possible. In the end, they are people who value our work and understand the challenges we face in trying to stretch the dollars available and can be invaluable assets for our projects 

That’s why instead of simply advocating for more infrastructure investment this week, I am sharing some recent examples where unlikely communication channels helped our clients fund critical infrastructure projects. I believe that when engineers and town and district officials become empowered to no longer accept the first funding package they receive; more cost-effective and innovative solutions can be created to help our communities thrive.

Deep Dive into the Details to Demand Fair Loans

Woodard & Curran often helps clients apply for loans when we are hired to design major water and wastewater infrastructure projects. As experts in securing funding packages, we have grown accustomed to the funding cycles of various states and the type of projects different programs like to support. Loan programs like the Clean Water State Revolving Loan Fund set loan repayment terms based on the life expectancy of the infrastructure they are supporting. These terms are extremely important when a town, city, or district is considering its ability to support a project as the terms of the loan can define how much they can accomplish. While the repayment term for these loans should be 30 to 40 years, in many cases they are set to shorter time frames depending what the loan provider sees as the life expectancy of the project based on their formulas. 

While these terms may seem like non-negotiable fixtures that a project must work around, that is not necessarily the case. Recently, we were helping the Winter Harbor Utilities District, in Winter Harbor, Maine secure loans for a pump station project. Initially, the Maine Department of Environmental Project (DEP) and the Maine Municipal Bond Bank offered us no more than a 25-year payment term, but as the people who designed the system, we knew the components of the upgrade would last longer than that.

To prove our point, we used our contractor’s schedule of values to break down the different components of the project, grouped them into the components assessed by the Maine DEP, and then calculated the weighted useful life for each project component section. From this calculation, we were able to find the total useful life of the project (31.5 years) and we then sent a transparent copy of our calculations via excel over to the Maine DEP.

Seeing our due diligence and painstaking attention to detail, the Maine DEP thanked us for doing such a thorough job and accepted our request for a 30-year loan, giving our clients five extra years to pay for the project that will allow them to do all the work they need at a cost they can afford.   A great, simple example of not accepting the status quo and using engineering expertise to make a critical project available at an affordable cost.

Author

Senior Client Manager
Government & Institutional

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Robert Polys, PE
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