Hoping to address billions of dollars of necessary water infrastructure maintenance and improvements, the U.S. Senate passed the Water Resources Development Act (WRDA) on May 15, 2013. Among other things, the WRDA would authorize approximately $100 million annually to fund certain water infrastructure improvement projects through a new program called the Water Infrastructure Finance and Innovation Authority (WIFIA).
WIFIA would be a five-year pilot program modeled after the highly successful Transportation Infrastructure Finance and Innovation Authority (TIFIA) that is administered by the Federal Highway Administration. The program would authorize loans or loan guarantees through the U.S. Environmental Protection Agency (EPA) and Army Corps of Engineers (COE) for certain eligible projects. Such projects would include desalination, pipe replacement or rehabilitation, and new water supply facilities projects. The EPA and COE would each be authorized to provide up to $50 million annually to support eligible projects, with the option also to jointly fund certain projects such as reservoirs.
The minimum size for a project would be $50 million. The WIFIA loans or loan guarantees would be offered at U.S. Treasury rates, could cover up to 49 percent of total project costs, and would be paid back over 35 years from the date of substantial project completion. Eligible projects would be selected based on a number of factors, including whether funding has been secured from local resources and/or public-private partnership (P3) funds.
The WRDA also would create a special P3 program aimed at modernizing the country’s lock and dam system. This program would authorize up to 15 eligible improvement projects that have not, to date, received federal funding.
The next step for the WRDA is passage by the House of Representatives. If enacted, the WRDA could provide a mechanism to address the nation’s water infrastructure backlog by streamlining the project approval process, speeding infrastructure construction, and reducing financing costs.
Ballard Spahr’s P3/Infrastructure and Public Finance Groups will continue to monitor developments on the WRDA. If you have questions, please contact P3/Infrastructure Practice Leader Brian Walsh at 215.864.8510 or walsh@ballardspahr.com, Steve T. Park at 215.864.8533 or parks@ballardspahr.com, or Kimberly D. Magrini at 215.864.8365 or magrinik@ballardspahr.com.
