United States
Environmental Protection
Agency
Office of Water
(4204)
Washington, DC 20460
EPA 832-F-98-006
October 1998
&EPA
Funding Brownfield Remediation with
the Clean Water State Revolving Fund
Brownfields
Many areas across the country that were once used for
industrial and commercial purposes have been abandoned or
are under-used. Some are environmentally contaminated or
perceived to be contaminated. Because developers,
municipalities, and other stakeholders fear that involvement
with these sites may make them liable for cleaning up
contamination they did not create, they are more attracted to
developing sites in pristine areas, called "greenfields." The
result can be blighted areas rife with abandoned or under-used
industrial or commercial facilities that create safety and health
risks for residents, drive up unemployment, and foster a sense
of hopelessness. These areas are called "brownfields."
Brownfields/Clean Water State
Revolving Fund Collaboration
Brownfields sites that suffer from water quality
impairment can use the CWSRF as a powerful
financial instrument for planned corrective action.
There are currently 51 Clean Water State Revolving Fund
(CWSRF) programs (one in each state and Puerto Rico), which
operate like banks. They are capitalized through Federal and
state contributions. These assets, in turn, are used to make
low or no-interest loans for important 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. These CWSRF resources can help
augment the limited financial resources currently available
under the Brownfield Initiative's pilot program to clean up
these sites. Brownfield mitigation to correct or prevent water
quality problems may be eligible for CWSRF funding which
includes
1. Abatement of Polluted Runoff
2. Control of Stormw ater Runoff
(Stormwater activities subject to National Pollutant
Discharge Elimination System (NPDES) permitting are
considered to be a point source and, thus, would have to
be publicly-owned in order to qualify for CWSRF
assistance.)
3. Correction of Groundwater Contamination
4. Remediation of Petroleum Contamination
(Includes assessment and cleanup of petroleum
contamination and underground storage tanks, which are
not covered under Brownfields/Superfund funding.)
Getting a Project Funded
The list of brownfield projects that may be eligible for CWSRF
funding includes, but is not limited to
4 excavation and disposal of underground storage tanks
4 constructed wetlands (filtering mechanism)
4 capping of wells
4 excavation, removal, and disposal of contaminated soil
or sediments
4 tunnel demolition
4 well abandonment
4 Phase I, Phase II, and Phase III assessments
Brownfield showcase communities and pilots with such
projects are also eligible for CWSRF funding.
The first step in securing CWSRF funding is to get your
project/remediation plan on your state's Nonpoint Source
Management Plan (NSMP) (Section 319 of the Clean Water
Act). Contact your state's CWSRF program for details
(requirements, NSMP development, scheduling, restrictions,
etc.).
Capacity of the CWSRF
The CWSRF has in excess of $27 billion in assets and has
issued almost $23 billion in loans since 1988. Currently the
CWSRF is funding nearly $3 billion worth of water quality
projects annually.
Who May Qualify
Included in a long list of eligible loan recipients are
communities, municipalities, individuals, citizen groups, and
nonprofit organizations. Since the CWSRF program is
managed largely by the states, project eligibility may vary
according to the priorities within each state. Contact your
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state's CWSRF program for details.
CWSRFHistory
In creating the CWSRF, Congress ensured that it would be
able to fund a wide range of water quality projects, including
nonpoint source, wetlands, estuaries, and watershed projects,
as well as 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. However,
States ultimately determine funding priorities and project
approvals.
Sources of Loan Repayment
Each state must approve a source of loan repayment as part of
the application process. Though finding a source of repayment
may prove challenging, it does not have to be unnecessarily
burdensome. Many users of the CWSRF have demonstrated a
high level of creativity in developing sources of repayment.
The source of repayment need not come from the project itself.
In fact, in the case of a Brownfields redevelopment, the
repayment source should not be based on the speculative
success of a real estate development project.
Some potential repayment sources include
4 fees paid by developers on other lands
4 recreational fees (fishing licenses, entrance fees)
4 dedicated portions of local, county, or state taxes or fees
4 property owner ability to pay (determined during loan
application)
4 donations or dues made to nonprofit groups
4 stormwater management fees
4 wastewater user charges
Learning by Example
The Grant Realty Company of Ohio received a CWSRF loan
for the cleanup of a 20-acre industrial site in Cleveland to
prepare the area for commercial reuse. The project involved
the remediation of contaminated groundwater and soils using
vapor extraction and dual phase vacuum extraction
technologies. Their dedicated source of repayment is the
income stream from a tank cleaning operation, with a personal
loan guarantee and a second position mortgage as collateral.
Grant Realty participated in the Voluntary Action Program
(VAP) administered by the Ohio EPA, which allows voluntary
cleanup of contaminated property in exchange for a release
from further cleanup activities.
The Barberton Laundry and Cleaning, a small company
located in Barberton, Ohio, used CWSRF financing to
undertake phase II site assessment work. The project involves
soil and groundwater sampling to determine the extent of any
existing contamination and the scope of any remedial activities
needed to prepare the site for reuse. Their dedicated source of
loan repayment is the revenue stream from accounts receivable.
Private lenders were unwilling to finance this work. This
assessment was a critical first step in redeveloping the site.
The State of Wisconsin is laying the groundwork for future
Brownfields/CWSRF collaboration. They have passed
legislation that will allocate $20 million of their CWSRF
(Land Recycling Loan Program) to municipalities to help clean
up contaminated properties. Planned interest rates will be
55% of the market rate. Award priority will be based on the
project's potential to reduce environmental pollution, threats
to public health, and development of pristine land. Currently
they are developing their priority ranking system.
Challenges Ahead
EPA has been encouraging the states to open their CWSRFs to
the widest variety of water quality projects while still
addressing their highest priority projects. Those interested in
cleaning up a brownfield site should seek out their CWSRF
program, gain an understanding of how their state program
works, and participate in the annual process that determines
which projects are funded.
For the list of Clean Water State Revolving Fund
state contacts or more information, contact:
The Clean Water State Revolving Fund Branch
U. S. Environmental Protection Agency
401 M Street, SW (Mailcode 4202)
Washington, DC 20460
Phone: (202) 260-7359 Fax: (202) 260-1827
internet: www.epa.gov/OWM
For more information on Brownfields, contact:
Outreach and Special Projects Staff
Office of Solid Waste and Emergency Response
U. S. Environmental Protection Agency
401 M Street, SW (Mailcode 5101)
Washington, DC 20460
Phone: (202) 260-4039 Fax: (202) 260-6606
internet: www.epa.gov/brownfields
Clean Water
State Revolving Fund
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