&EPA
United States
Environmental Protection
Agency
Office of Water
(4204)
Washington, DC 20460
EPA 832-F-98-001
March 1998
Cleaning Up Polluted Runoff with the
Clean Water State Revolving Fund
What's In It For You?
Based on the serious threats to water sources across the
country, EPA would like to see the SRF become a major
source of funding to address polluted runoff (nonpoint
source) problems. The 51 Clean Water State Revolving
Fund (CW-SRF) programs currently issue approximately
$3 billion in loans annually. SRF loans are issued at
below market rates (0% to less than market), offering
borrowers significant savings over the life of the loan.
History
In creating the CW-SRF, Congress ensured that it would
be able to fund virtually any type of water quality project,
including nonpoint source, wetlands, estuary, and other
types of watershed projects, as well as more traditional
municipal wastewater treatment systems. The SRF
provisions in the Clean Water Act give no more
preference to one category or type of project than any
other.
CW-SRF Buying Power
The CW-SRF will invest 10% of its fund on
polluted runoff projects by 2001
--Clean Water Action Plan
Capacity of the CW-SRF
The 51 SRF 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 CW-SRFs have in excess of $24 billion in assets.
Currently, the SRFs are funding approximately $3 billion
in water quality projects each year. The funding of
polluted runoff projects with the SRF is gaining
momentum. Since 1989 the SRF program has funded
900 projects, investing more than $650 million in
polluted runoff projects.
billions
$3.0
$1 .5
$-
SRF
$ 3.0 Billion
Nonpoint Wetlands CW-SRF Loan
Source Grants Activity
Grants
Loans vs. Grants
Many people believe they would rather have a grant than
a loan. Most state and local water quality officials are
more familiar with grants and, consequently, many
misconceptions persist. In fact, a loan may be a better
deal. Why?
First, No Cash Up-Front. Most grant programs require
significant cost shares (as much as 40% or more). An
SRF loan can cover 100% of project costs with no cash
up-front.
Second, Significant Cost Savings. SRF loans provide
significant cost savings over the life of the loan. The total
cost of a 0% SRF loan will be approximately 50% less
than the same project financed by a commercial loan at
7.5%. Additionally, a 0% SRF loan is equivalent to
receiving a 50% grant (where the matching 50% is
financed at market rate).
Third, Streamlined Federal Requirements. Financing
a project with an SRF loan means fewer federal
requirements than with a federal grant. Plus, the 51 CW-
SRF programs are experienced in helping applicants
through the loan application process and providing a
variety of technical assistance. Also, it may be possible
to combine an SRF loan with grant dollars from other
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sources. Check with your state.
Who May Qualify
Included in a long list of eligible loan recipients are
communities, individuals, citizens groups, and nonprofit
organizations. Since the program is managed largely by
the states, project eligibility may vary according to the
priorities within each state. Contact your state's SRF
program for details.
Polluted Runoff and the SRF
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
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.
The CW-SRF can fund virtually any type or category
of polluted runoff that is included in a state approved
NFS management plan.
Here are a few examples of possible projects:
4 Implementation of agricultural BMPs to
prevent and reduce runoff
conservation tillage equipment
soil erosion controls
4 Animal waste facilities
manure storage facilities
dead chicken composters
4 Rehabilitation of streambanks, riparian
corridors and buffers
4 Stormwater management facilities including
sediment basins and constructed wetlands
4 Septic system improvements and replacement
Sources of Repayment
Many users of the CW-SRF have demonstrated a high
level of creativity in developing sources of repayments.
The source of repayment need not come from the project
itself. Some possible sources include:
Property owner's or business's ability to pay
(determined during loan application)
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
Challenges Ahead
We need to make better use of the CW-SRF for
important water quality projects. Greater understanding
of the tremendous buying power and advantages of SRF
loans should dramatically boost their use.
How to Get More From the CW-SRF
- Share information on polluted runoff
priorities with SRF managers
Work to enhance SRF programs to include
funding of polluted runoff projects
Become involved in the annual SRF
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 SRF to
address these significant problems.
EPA has been encouraging the states to open their SRFs
to the widest variety of water quality projects and to use
their SRFs to fund the highest priority projects in targeted
watersheds. Those interested in cleaning up polluted
runoff must seek out their SRF 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, contact your Clean Water
State Revolving Fund Program (listed on Internet)
or contact::
The Clean Water State Revolving Fund Branch
U.S. Environmental Protection Agency
401 M Street, SW (Mailcode 4204)
Washington, D.C. 20460
Phone: (202) 260-7359 Fax: (202) 260-1827
Internet: http://www.epa.gov/OWM/finan.htm
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