EPA
                                           Clean  Water
                                           State Revolving Fund


 ACTIVITY   Ohio's Restoration Sponsor Program Integrates
 UPDATE   Point Source & Nonpoint Source Projects
  Communities in

   Ohio that take

 advantage of this

program recognize

  that wastewater

 treatment system

 improvements and

restoration projects

are working toward

  the same end -

  improved water

      quality
,P,
    Contact:
    Bob Monsarrat
    Ohio EPA
    614-644-3655
       With funding through the
       USEPA's Office of Water, Clean
   Water State Revolving Fund
   (CWSRF) loan program, the Ohio
   EPA has worked to fund both point
   and nonpoint source projects through
   a newly developed Water Resource
   Restoration Sponsor Program
   (WRRSP). As a result of this
   innovative program, communities in
   Ohio have used $24 million of
   CWSRF loan funds to protect and
   restore 1,850 acres of riparian lands
   and wetlands and 38 miles of Ohio's
   stream corridors in the last two years.
   The WRRSP offers communities very
   low interest rates on loans for
   wastewater treatment plant
   improvements if the communities
   also sponsor projects that protect or
   restore water resources.

   Although Ohio has addressed many
   of its worst water quality problems,
   the state's best available data indicate
   that nonpoint source runoff, habitat
   degradation, and watershed
disturbances are impeding future
improvements and threatening past
successes. In response, Ohio designed
the WRRSP to help prevent the loss of
biological diversity and ecological
health. To date, the WRRSP has
supported projects that have acquired
wetlands and riparian lands, acquired
conservation easements, restored
habitat, and modified dams. The
WRRSP restoration plans ensure that
projects undertaken result in protection
or restoration of valuable watershed
resources.

Linking Wastewater Treatment with
Water Resource Restoration

To participate  in the Water Resource
Restoration Sponsor Program, a
community applies to the CWSRF
program for a  loan to support
wastewater treatment system
improvements and also for WRRSP
assistance for water resource restoration
activities. If the CWSRF program
determines that the restoration action
meets program eligibility criteria of
either fully restoring or protecting water
resources already attaining their
designated uses, and the water resource
project ranks in the fundable range on a
priority list of restoration projects, the
CWSRF provides financial support for
both projects. To reward the community
for sponsoring the restoration project,

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   ; Clean Water
   State Revolving Fund
  After reviewing

     cashflow

    projections

  completed by a

 financial advisor,

Ohio has decided to

allocate $15 million

    to the Water

     Resource

    Restoration

 Sponsor Program

     each year
the CWSRF reduces the community's
interest rate on the total borrowed for
both projects so that repayments are
slightly lower than they would have
been with a standard CWSRF loan for
only the wastewater treatment project.
However, the interest rate on the total
loan is always greater than zero percent.

A community that participates in the
WRRSP does not typically implement a
restoration project itself. A community
typically enters into a sponsorship
agreement with an implementing
partner, such as a land trust or a park
district, that develops and implements a
habitat protection and restoration plan.
                       ACTIVITY
                       UPDATE

The sponsorship agreement requires
that the implementing partner develop
and implement this plan to permanently
and fully restore watershed resources,
but it does not require the implementing
partner to make any repayments on the
CWSRF loan. The sponsoring
community makes all repayments to the
CWSRF (Fig. 1).

Communities in Ohio that take
advantage of the WRRSP recognize that
wastewater treatment system
improvements and restoration projects
are working toward the same end-
improved water quality. By considering
water quality problems in an integrated
                  Ohio's Water Resource
             Restoration Sponsor Program
          Community and
          implementing partner
          enter into sponsorship
          agreement
CWSRF provides funding to
  community for wastewater
  treatment and restoration
                projects
                              CWSRF
                                                     
                                    Community
                                      Sponsor
                                           Restoration Project
                                          Implementing Partner
                               Community provides
                               CWSRF funding for
                               sponsored restoration
                               project
                                              Community repays
                                                low-interest loan
                                                    to CWSRF


                       Figure 1. Ohio's Water Resource Restoration Sponsor Program

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ACTIVITY
UPDATE
                                          ; Clean Water
                                          State Revolving Fund
               How Does Ohio Set Interest Rates for a Joint Project?

                    Example: $1 million for a wastewater treatment project and
                                 $393,442 for a resoration project
  1) Given: If this community did not participate in the WRRSP program, the $1,000,000 wastewater
  treatment project would receive a 3.8% loan. This scenario would result in a total loan repayment amount
  of $1,436,707 over the course of the repayment term.

  2) However, if the community undertakes both projects, $1,000,000 for the wastewater treatment project
  and $393,442 for the restoration project, the CWSRF could reduce the interest rate to 0.3% so the
  community would suffer no hardship and still repay only $1,436,707 over the course of the loan repayment
  term.

  3) However, the CWSRF provides still further incentive by reducing the community's interest rate from
  0.3% to 0.2%.

  4) In this scenario, the community completes a wastewater treatment project, supports a watershed
  restoration project, and saves $14,514.
fashion, communities will be better able
to address the water quality problems of
the future.

Monitoring the Program's Impact on
CWSRF Funding Capacity

Since the Water Resource Restoration
Sponsor Program offers loans with
interest rates as low as 0.2 percent, the
lack of interest earnings affects the
future funding capacity of Ohio's
CWSRF program. CWSRF program
management has considered these
impacts.  After reviewing cash flow
projections completed by a financial
advisor, Ohio has decided to allocate
$15 million (about 7.5 percent of the
funds available for 2002) to the Water
Resource Restoration Sponsor Program
each year. The CWSRF program will
develop new cash flow projections each
year to reassess the impact of WRRSP
assistance on funding capacity.

A Precursor of the Future?

Ohio's Water Resource Restoration
Sponsor Program reinforces the idea
that wastewater treatment plant
improvements and water resource
restoration projects are complementary
efforts. Although strongly induced by
the state, communities that participate in
the WRRSP program provide the first
examples of how wastewater user fees
can support water resource restoration
projects.  In the future, other
communities around the country may
consider this model as they search for
funding sources for a wide variety of
water quality projects.

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 For more information about the Clean Water Revolving Fund, or for a program representative in your State,
                                        please contact:
                             Clean Water State Revolving Fund Branch
                               U.S. Environmental Protection Agency
                          1201 Constitution Avenue, NW (Mailcode 4204M)
                                     Washington, DC  20004
                           Phone: (202) 564-0752 Fax: (202) 501-2403
                                Internet: http://www.epa.gov/owm
                                     Clean Water
                                     State Revolving Fund
Office of Water                             June 2002                  EPA 832-F-02-001

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