New Law Makes Significant Changes to Clean Water State Revolving Fund

New Law Makes Significant Changes to Clean Water State Revolving Fund

This past June, President Obama signed the Water Resources Reform and Development Act (WRRDA) into law. According to the American Society of Civil Engineers, it is “the first major water resources bill in seven years and is being applauded by organizations across the spectrum.”

The law funds projects to maintain America’s ports, levees, dams, and harbors and authorizes the Army Corps of Engineers to construct water projects for mitigating storm and hurricane damage, restoring ecosystems, and improving flood management.

Asset Management to Become a Universal Clean Water State Revolving Fund Requirement

The WRRDA also includes significant changes to the Clean Water State Revolving Fund (CWSRF) program.

There are several new requirements, which will be phased in by 2016.

The first to hit and potentially the most expensive is the requirement that a borrower have an asset management (AM) plan as a prerequisite to a loan. The AM requirement will apply to loans issued after October 1, 2014. The EPA is developing guidance, which it will issue later this year.

Several states already have requirements for AM elements in their SRF program, but this will make the AM requirement universal and standard. The CWSRF is the primary means for many municipalities and utilities to fund stormwater and wastewater projects, and this requirement will impact many communities.

This requirement makes good sense. Organizations are investing trillions of dollars in infrastructure to improve the lives of residents and create healthy environments. Often these investments are not supported by adequate maintenance and sustainable asset management practices. A systematic AM program will discover assets that have degraded or operate inefficiently. In addition, a thorough risk assessment will assure that assets are not replaced before the end of their useful lives, costing communities millions in lost value. Proper asset management is the foundation for sound long-term capital improvement planning.

Additional Significant Conditions and Changes

The new SRF provisions also provide extended loan repayment periods of up to 30 years and lower interest rates. “Economically distressed” areas will receive additional assistance. Furthermore, SRF funds may now be used for:

  • “Watershed partnerships” between municipalities and property owners to address non-point sources of pollution;
  • Integrated water resource plans (read more about integrated planning on our blog);
  • Municipal stormwater management plans that identify effective stormwater management approaches;
  • Technical assistance at small- and medium-size treatment works; and
  • Efforts to increase resilience of treatment works from future risks and vulnerabilities to man-made or natural disasters.

Beginning in fiscal year 2016, states will be required to fulfill two important conditions for funding. The recipient will be required to study and evaluate the “cost and effectiveness of the processes, materials, techniques, and technologies” included in the funded project. Furthermore, the project will need to maximize energy conservation and efficient water use, reuse, recapture, and conservation.

Next Steps for Municipalities Seeking CWSRF Assistance

As noted above, the EPA is developing guidance that will clarify the new requirements and outline how the requirements will be phased in prior to 2016. Organizations that anticipate applying for an SRF loan after the AM Plan requirement is in place should reach out to our funding and asset management experts. We have helped many utilities and communities develop and implement asset management plans and have successfully helped many more qualify for SRF loans. Contact Seth Garrison with AM questions, and Mary McCrann or Jessica Richard with any funding questions.

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