Clean Water
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Cleaning Up Polluted Runoff with the
Clean Water State Revolving Fund
What's In It For You?
The Clean Water State Revolving Fund (CWSRF)
program has become a major source of funding to
address polluted runoff. To date, 30 of the 51
CWSRF programs have provided funding for
nonpoint source and estuary protection projects.
Today annual funding to address polluted runoff
exceeds $200 million. CWSRF loans are issued at
below market rates (zero percent to less than market),
offering borrowers significant savings over the life of
the loan.
History
In creating the CWSRF program, Congress ensured
that it would be able to fund most types of water quality
projects, including nonpoint source, wetlands, estuary,
and other types of watershed projects, as well as more
traditional municipal wastewater treatment systems. The
CWSRF program provisions in the Clean Water Act give
no more preference to one category or type of project
than any other.
Capacity of the CWSRF
The 51 CWSRF programs work like banks (each state
and Puerto Rico has one). Federal and state
contributions are used to capitalize or set-up the
programs. These assets are used to make low-interest
loans for important water quality projects. Repaid
funds are then recycled to fund other important water
quality projects.
The CWSRF programs have in excess of $42 billion
in assets and average funding for the past three years
exceedes $4 billion annually. The funding of polluted
runoff projects with the CWSRF is gaining momentum.
Since 1989, the CWSRF program has funded 3,400
projects, investing more than $1.6 billion in polluted
runoff projects.
Who May Qualify?
Included in a long list of eligible loan recipients are
communities, citizens groups, businesses, farmers,
homeowners, watershed groups, and nonprofit
organizations. Since the program is managed largely by
the states, proj ect eligibility may vary according to the
priorities within each state. Contact your state's CWSRF
program for details.
Polluted Runoff and the CWSRF
The CWSRF can fund virtually any type or category
of polluted runoff that is included in a state approved
nonpoint source (NFS) management plan.
Polluted runoff occurs when rainfall, snowmelt, or
irrigation runs over land or through the ground, picks up
pollutants, and deposits them into surface or ground
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State Revolving Fund
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water. For instance, polluted runoff from agricultural
sources is the leading contributor to water quality
impairments in rivers, degrading over 60% of impaired
river miles.
Terraces, conservation tillage and conservation buffers save soil and
improve water quality
Here are a few actual project examples from states that
demonstrate what the CWSRF can do:
• California - Stormwater management
facilities, including sediment basins and
constructed wetlands. Purchasing
easements for wetland protection
• Delaware - Animal waste management
facilities, including manure storage facilities
and dead chicken composters
• Massachusetts - Septic system improvements
and replacement
• Minnesota - Agricultural best management
practices (BMPs) to prevent and reduce
runoff. Purchasing conservation tillage
equipment and implementing soil erosion
controls
• New York - Purchasing land and easements for
source water protection proj ects
• Washington - Rehabilitation of streambanks,
riparian corridors and buffers
Wisconsin - Water protection and
improvement proj ects on brownfield
redevelopment sites
Wyoming - Removal of leaking underground
storage tanks and remediation of contaminated
ground water and soil
State of the art lagoon animal waste management system
These are just a sample of the proj ects that have been
funded. Contact your state or visit the CWSRF web site
for more examples and information (www.epa.gov/owm/
cwfinance/index.htm)
Benefits of Loans
First, Funds are Available. CWSRF loans can usually
be obtained much faster than grants and each year over
$200 million is spent on nonpoint source projects.
Second, No Cash Up-Front. Most grant programs
require significant cost shares (as much as 40 percent or
more). A CWSRF loan can cover 100 percent of project
costs with no cash up-front.
Third, Significant Cost Savings. CWSRF loans
provide significant cost savings over the life of the loan.
The total cost of a zero percent CWSRF loan will be
approximately 50 percent less than the same project
financed by a commercial loan at 7.5 percent.
Fourth, Loans can Complement other Funding
Sources. It may be possible to combine a CWSRF loan
with grant dollars from other sources. Check with your
state.
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Sources of Repayment
Many users of the CWSRF program have demonstrated
a high level of creativity in developing sources of
repayments. The source of repayment need not come
from the proj ect itself. Some possible sources include:
• Fees paid by property owner or homeowner
• Fees paid by a developer
• Dedicated portion of local, county, or state
taxes or fees
• Recreational fees (fishing license, park
entrance fees)
• Stormwater management fees
• Wastewater user charges
• Donations or dues made to nonprofit groups
• Business revenues
Making Funding Accessible - Ohio Examples
The state of Ohio employs several innovative funding
methods to ensure a variety of watershed proj ects receive
funding. Two unique funding methods used in Ohio are
the Linked-Deposit Loan Program and the Watershed
Resource Restoration Sponsorship Program (WRRSP).
In both examples the state shows creativity by taking
existing institutional arrangements and modifying them to
achieve the state's goals and meet the needs of loan
recipents.
Linked Deposit Lending Program
In Ohio's linked-deposit program, the state makes
arrangements with local banks to provide loans for
agricultural BMPs and on-site wastewater treatment
proj ects. Under a linked-deposit arrangement the state
agrees to buy a bank's investment (CD) and receive a
lower than market rate of return on the investment. The
bank agrees to provide reduced interest rate loans for
eligible proj ects. The linked-deposit loan interest rate
reflects the difference between the state's reduced rate of
return on the investment and the market rate of return.
The linked-deposit approach benefits CWSRF programs
because they support high priority nonpoint source
proj ects and because they place risk and management
responsibilities with local financial institutions. Financial
institutions earn profits from the linked deposit agreements
and add an additional service for their customers.
Borrowers find linked deposit programs to be economical
and comfortable; they save money with low-interest loans,
and they are comfortable working with local financial
institutions.
For more information on linked-deposit loans see EPA's
Activity Update "Innovative Use of Clean Water State
Revolving Funds for Nonpoint Source Pollution"
(EPA 832-F-02-004) found on the CWSRF web site.
Watershed Resource Restoration Sponsorship
Program (WRRSP)
The WRRSP offers communities very low interest rates
on loans for wastewater treatment plant improvements if
the communities also sponsor proj ects that protect or
restore water resources. The end payment for the
wastewater treatment plant proj ect is the same because of
the lower interest rate and the simultaneous funding for the
restoration proj ect by the wastewater treatment plant.
The benefit of this program is water restoration proj ects
that normally would not receive funding are completed
with the help of the wastewater treatment plants.
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To date, the WRRSP program has supported projects
that have acquired wetlands and riparian lands, acquired
conservation easements, restored habitat, and removed
dams.
Over the past two years under the WRRSP, communities
in Ohio have used $24 million of CWSRF loan funds to
protect and restore 1850 acres of riparian lands and
wetlands and 38 miles of Ohio's stream corridors.
For more information on Ohio's WRRSP see EPA's
Activity Update "Ohio's Restoration Sponsor
Program Integrates Point Source and Nonpoint
Source Projects" (EPA832-F-02-001) found on the
CWSRF web site.
Challenges Ahead
With increasing emphasis on watershed-based program
management and implementation of Total Maximum Daily
Loads (TMDLs) in impaired water bodies, it will be even
more important to take advantage of the tremendous
buying power of the CWSRF program.
How to Get More From the CWSRF
Share information on polluted runoff
priorities with CWSRF managers
Work to enhance CWSRF programs to
include funding of polluted runoff projects
Become involved in the annual CWSRF
planning and priority setting process
Help market the program and encourage
loan applications
The water quality community needs to work together to
increase understanding of polluted runoff issues and
facilitate the use of the powerful resources of the CWSRF
to address these significant problems. EPA has been
encouraging the states to open their CWSRFs to the
widest variety of water quality proj ects and to use their
CWSRFs to fund the highest priority proj ects in targeted
watersheds. Those interested in cleaning up polluted
runoff must seek out their CWSRF programs, gain an
understanding of how their state program works, and
participate in the annual process that determines which
projects are funded.
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
1200 Pennsylvania Avenue, NW (Mailcode 4204M)
Washington, DC 20460
Phone: (202) 564-0752 Fax: (202) 501-2403
Internet: www.epa.gov/owm/cwfmance/index.htm
Clean Water
State Revolving Fund
Office of Water
March 2003
EPA 832-F-03-004
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