&EPA
United States
Environmental Protection
Agency
Office of Water
(4204)
Washington, DC 20460
EPA 832-F-98-005
October 1998
CLEAN WATER
ACTION PLAN
Funding Estuary Projects Using the
Clean Water State Revolving Fund
The Estuary/CWSRF Connection
To counteract the serious threats to estuaries across the
country, EPA would like to see the Clean Water State
Revolving Fund (CWSRF) become a major source of
funding for estuary protection. The 51 CWSRF
programs currently issue about $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.
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.
History
In creating the CWSRF in 1987, Congress envisioned
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.
Use of the CWSRF for estuary projects and activities is
specifically addressed under Sec. 601, Title VI of the
Clean Water Act.
Capacity of the CW-SRF
The 51 CWSRF programs (one in each state and Puerto
Rico) are set up like banks. Federal and state
contributions are used to capitalize or "set-up" the banks.
These assets, in turn, are used to make low or no-interest
loans for water quality projects. Funds are then repaid to
the CWSRFs over terms as long as twenty years. Repaid
funds are then recycled to fund other water quality
projects.
The CWSRF has more than $25 billion in assets and has
issued more than $20 billion in loans since 1988.
Currently, th&JGWSRF_is-fo^^gjKacrIy $3 billion worth
of water quality projects annually. That is more than
100 times the available EPA grant funding for the
National Estuary Program (NEP).
Loans vs. Grants
Many people believe they would rather have a grant.
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 upfront. 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. An SRF
loan at 0% interest will cost approximately 5 0% less than
the same project funded by a grant program where the
50% cost share (match) is financed by a commercial
loan at the market rate of 7.5%.
Third, Streamlined Federal Requirements. Financing
a project with an SRF loan means fewer federal
requirements than most federal grant programs. Plus, the
CWSRF program staff are experienced in helping
applicants through the loan application process. They
can also provide a vast amount of technical assistance.
The National Estuary Program and the SRF
The National Estuary Program (NEP) was established by
the Clean Water Act Amendments of 1987 (section 320)
to protect nationally significant estuaries threatened by
pollution, development, and/or overuse. There are
currently 28 estuaries in the NEP nationwide. Each local
NEP was nominated by their state governor(s) and
consists of representatives from the government agencies,
citizens, businesses,land the scierSififeScommpiit^.
Together, these stakeholders identify :Jhe; priority
problems in the estuary and develop ^Comprehensive
7 Conservation ajadManagement Plaic(CCMP) to address
Hie problems. Common issues among the NEPs include
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excess nutrients, toxic chemicals, habitat loss and
degradation, pathogens, declines in fish and wildlife
populations, and alteration of natural flows.
^;,--. _=!r..
Projects or activities listed in an approved CCMP are
eligible for funding under the CWSRF. Funding of
estuary management projects are one of three major
categories of projects (others include publicly-owned
wastewater treatment facilities and nonpoint source
projects) eligible for funding under the CWSRF. The
EPA has been encouraging the states to expand the use
of their CWSRF to include the widest variety of water
quality projects consistent with the highest priority water
quality problems. Current nonpoint source and estuary
protection projects/activities being funded include:
conservation tillage equipment, structural erosion
controls, agricultural waste compost facilities, habitat
restoration, riparian zone protection, conservation district
stormwater controls, and septic system upgrades.
Success Stories
Washington State has been a forerunner in funding
estuary projects using their CWSRF. Specifically, they
have earmarked 10% of their CWSRF for estuary
conservation and management. Another 10% is allocated
for nonpoint source projects addressing problems such as
stormwater runoff, inadequate septic systems, excessive
nutrient loads, and other contaminants which may also
contribute to estuary cleanup. This allocation was
established in 1989 underthe Washington Administrative
Code as a result of a number of factors, including the
efforts of interest groups in the Puget Sound Basin.
Their CWSRF program is managed by the Washington
State Department of Ecology. However, the Puget
Sound Action Team (PSAT), which oversees
implementation of the Puget Sound Plan under the
National Estuary Program, has a role in the selection of
estuary projects. The PSAT provides comments on the
Puget Sound Management Plan to the Department of
Ecology. These comments are considered in the
development of priorities by Ecology's regional offices,
which, in turn, are considered in the development of
statewide priorities.
Washington State has been exemplary in demonstrating
many uses of the CWSRF for estuary projects. In all,
Washington has funded 16, with more than $7.5 million
in SRF loans. Their pursuit of nontraditional CWSRF
projects ranges from stormwater system enhancement
and septic system upgrades to wetlands purchases.
Projects include:
The City of Kent constructed a standard flow restriction
structure with their $1.5 million CWSRF loan. This
presettling basin was designed to reduce suspended solids
and to capture floatables and other debris. A wet pond
within the main detention pond will further reduce
turbidity and will remove additional suspended solids and
heavy metals, thus providing opportunities for nutrient
uptake through planted vegetation and for infiltration.
Island County Public Works Department intends to
replace the Glendale Creek's lower reach system that was
damaged during a storm in December 1996. The Creek's
lower reach conveyed by 600 feet of pipe and catch
basins through the Glendale Beach community to Puget
Sound ruptured and is being replaced with an open
channel with the County's $784,000 SRF loan. The
concerns included in this project are nonpoint source
pollution, flood protection, and removal offish passage
barriers.
The City of Port Townsend is well-known for using
their $500,000 SRF loan to purchase the valuable
Winona Wetlands. SRF funds will be used for land
acquisition and related activities to preserve the Winona
Wetlands, its buffers, and the critical drainage corridor
between Winona Wetlands and the Chinese Gardens
Lagoon. This wetland is part of a larger system of
hydrologically connected wetlands discharging into the
Strait of Juan DeFuca.
The $300,000 CWSRF loan issued to the Bremerton-
Kitsap County Health District is being used to provide
financial assistance to homeowners to repair failing
sewage disposal systems and to small farms to implement
best management practices for protecting water quality.
The area of assistance will be county-wide, with priority
being given to protection of drinking water and marine
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shoreline areas. Costs of the program will be covered by
a combination of permit fees and interest collected on
loans.
Other Innovative CWSRF Projects ...
These projects do not fall under an estuary management
plan, but help demonstrate the flexibility inherent to the
CWSRF program.
California has also pursued some creative, nonpoint
source funding projects using their CWSRF. The Napa
County Resource Conservation District (Napa RCD)
received a loan that will fund their Huichica Creek
Vineyard Sustainable Agricultural Project. The
project's goal is to develop an outdoor classroom
designed to encourage best management practices in
perennial crops. The loan will be used to:
• install surface drainage improvements
• restore wetland areas between vineyard blocks,
including construction of weir, planting native
vegetation, and habitat structures for waterfowl and
raptors
• stabilize creek beds
• restore riparian vegetation
The overall project incorporates techniques that include
long-term monitoring of water quality, soil nutrition,
insect pest populations, biodiversity changes, and the
economics of the vineyard. In addition to the CWSRF
loan, the Napa RCD received a CWA §319 (h) grant to
assist in implementing the project.
Oregon also has taken advantage of its CWSRF for
many nontraditional projects. In the Town of Lakeview,
the CWSRF is financing a project to expand and upgrade
a lagoon wastewater treatment system. Included in this
project is the construction of a wetland to improve the
natural treatment system. The CWSRF funded the
construction of a wetland in the City of Mount Angel to
further treat effluent from another lagoon treatment
system. The City of Woodburn used the CWSRF to
fund the construction of a wastewater treatment system
using a poplar plantation for phytoremediation.
Conservation Easement Purchase
The Ohio EPA recently awarded a low-
interest SRF loan to the Nature Conservancy to
foster creek bank conservation. The Nature
Conservancy received the $110,000 loan to
purchase a permanent conservation easement
along Brush Creek in Adams County, Ohio.
This is the first time the Nature Conservancy
has obtained financing for stream restoration
and protection from a State Revolving Fund.
Ohio EPA's water quality standards
classify this section of Ohio Brush Creek as
almost achieving the exceptional warm water
aquatic habitat classification. The Creek is a
significant state-wide water resource and is
known to contain four endangered aquatic
species, including the club shell mussel.
The Nature Conservancy will purchase a
154-acre permanent conservation easement on
property immediately adjacent to Brush Creek.
Conservation easements allow owners to
voluntarily place permanent restrictions on how
their property will be used. "Conservation
easements are an effective way to protect the
quality of streams and their adjacent areas,"
said Ohio EPA Director Donald R.
Schregardus. "Restoring and preserving these
riparian areas is an important part of controlling
contaminated runoff that threatens water quality
and stream habitat. This type of loan is a new
tool for protecting and preserving Ohio's water
resources. We hope other state and local
organizations will consider using the [SRF] loan
program in their areas to help protect our
Sources of Loan Repayment
Many users of the CWSRF have demonstrated a high
level of creativity in developing sources for their loan
repayment. The source of repayment need not come
from the project itself. Some possible sources include:
• fees paid by developers on other lands
• recreational fees
• dedicated portion of local, county, state tax fees
• property owner's ability to pay
• donations or dues made to nonprofit groups and
associations
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stormwater management fees
wastewater user charges
"" Some examples: The Nature
;. Conservancy in Ohio is
.., repaying their loan through
•• their general operating
account, which includes
membership dues and
Vr fundraising assets. The City
•' of Port Townsend,
••\;' Washington used part of their
:V;, $5 per household stormwater
utility fee.
Challenges
Most states use their CWSRF resources primarily to
finance large municipal wastewater systems. As the
CWSRF steps up its effort to fund projects from the
National Estuary Program, several challenges have
emerged, including:
• Misconceptions and lack of public outreach
regarding the use of SRF for estuary projects
• Inexperience in issuing loans for estuary projects
To overcome some of these limitations, Washington
State's Department of Ecology actively markets the
CWSRF to local governments. Before each funding
cycle, the Department conducts statewide workshops to
describe whatprojects are eligible, what kinds ofprojects
have been most successful, and how to fill out loan
applications.
• Restrictive state legislation or administrative
provisions. Several states have laws prohibiting
loans to individuals.
Once again, it pays to be innovative. For example,
Washington State developed a system where they lend
CWSRF money to counties. These counties, in turn,
conduct outreach, develop plans, and eventually disperse
the loan money to various projects within their
geographic area, much like a "mini-SRF" program. The
counties are responsible for paying back the loan to the
state. Given that the legislative burden is less rigorous
on the county level, this process allows greater flexibility
in distribution of loan funds.
EPA has been encouraging the states to use their
CWSRF resources to finance the widest array of water
quality projects as appropriate to effectively address the
highest priority problems in targeted watersheds. Those
interested in receiving CWSRF funds for estuary projects
must learn how their state CWSRF program works, and
participate in the state's annual process that determines
which projects are funded.
For the Clean Water State Revolving Fund list of
state contacts or more information, 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
E-mail: srf info@epamail .epa.gov
Internet: www.epa.gov/OWM
For a list of National Estuary Program contacts or
more information, contact:
The Coastal Management Branch
U. S. Environmental Protection Agency
401 M Street, SW (Mailcode 4504F)
Washington, DC 20460
Phone: (202) 260-6502 Fax: (202) 260-9960
Internet: www.epa.gov/owow/estuaries/nep .html
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