United States
Environmental Protection
Agency
Office of Water
(4204)
Washington, DC 20460
EPA 832-F-99-057
October 1999
DA Funding of Small Community
•^"* Needs Through the Clean
Water State Revolving Fund
Program Overview: How SRF Works
The Clean Water State Revolving Fund (SRF) pro-
gram was authorized by Title VI of the Clean
Water Act (CWA) Amendments of 1987. The SRF
program replaced the long-running Federal
Construction Grants program providing indepen-
dent and permanent sources of low-cost assistance
Did you know ... ?
• The following states distributed the most
SRF funding to small communities since
1988 (in millions):
Pennsylvania
Ohio
Texas
New Jersey
New York
$376.7
$334.5
$321.2
$219.6
$214.5
Small communities have received about 23
percent ($5.2 billion) of the total available
SRF funding since 1988.
3,897 assistance agreements (loans) have
been awarded to small communities since
1988.
States in EPA Regions 3 and 5 have awarded
the most assistance agreements to small
communities; 953 and 741 respectively.1
for water quality infrastructure projects. EPA pro-
vides "seed money" to all 50 states and Puerto
Rico to capitalize state loan funds. States adminis-
ter the SRF program to provide financial assis-
tance to local communities.
Low interest loans are the primary form of SRF
financial assistance, which can also include pur-
chasing insurance or guaranteeing loans. The
"revolving" nature of the SRF is such that as loan
payments are made, funds are recycled to support
additional water quality projects. Total assets of
the SRF program exceeded $27 billion in 1998.
SRF funding allows states to address their highest-
priority water quality needs. Funding is most com-
monly used to support wastewater treatment sys-
tems (including decentralized systems), nonpoint
source controls, and estuary protection activities.
Funding Trends
Since 1988 the SRF has lent $22.9 billion to com-
munities nationwide. Small communities (10,000
or fewer people) account for $5.2 billion. Very
small communities (3,500 or fewer people) have
received 44 percent of that $5.2 billion. Table 1
provides a state-by-state summary of loan dollars
and agreements. This information was compiled
from the SRF database maintained by EPA.
Figure 1 summarizes the distribution of SRF dol-
lars to small communities relative to total SRF
1 EPA Region 3 States: Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, and West Virginia. Region 5 States: Illinois,
Indiana, Michigan, Minnesota, Ohio, and Wisconsin.
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Figure 1. Relationship Between SRF Dollars to Small
Communities and Total SRF Dollars
53,500
53,000
52,500
52,000
51,500
.51,000
S500
SO
Reporting Year
funding during the past 11 years. Certain states
may provide a higher percentage of their total state
allocation to small communities, but their total
SRF allocation is smaller than other states. Small
communities averaged 23 percent of total SRF
funding with some annual variability; since 1993
small communities have received from 18 to 29
percent of the total on an annual basis. SRF fund-
ing to small communities has nearly doubled from
$456 million in 1993 to $866 million in 1998.
SRF assistance to small communities also may be
evaluated in terms of the number of assistance
agreements (loans). Only two states had capital-
ization grants in SRF's inaugural year (1988) and
only three agreements were awarded that year.
More states applied in 1990 and, as Figure 2 illus-
trates, the number of agreements has risen steadi-
ly since then. In 1998, 1,139 SRF assistance
Agreements were awarded, with 701 of those
going to small communities. A total of 3,897 of
6,816 SRF assistance agreements has been award-
ed to small communities since 1988.
While small communities received about 23 per-
cent of SRF dollars, they account for 57 percent of
SRF agreements awarded between 1988 and 1998.
Small communities have never received less than
50 percent of the total number of loans. The appar-
ent disparity between percentage of agreements
and percentage of dollars indicates that loans to
small communities are usually for lesser amounts
of money than loans to large ones. A possible
explanation for the smaller awards is that relative-
ly smaller and less expensive wastewater treat-
ment systems are being built for communities of
10,000 or fewer people.
Although SRF funds a portion of wastewater treat-
ment needs,of small communities, their needs are
relatively large. EPA's 1996 Clean Water Needs
Survey (CWNS) says the total documented need
for wastewater treatment and collection systems
for small communities amounts to $13.8 billion.
The 1990 U.S. Census Bureau data indicate that
more than 80 percent of the houses in the United
States without access to wastewater treatment are
in small communities. Figure 3 shows the costs
associated with specific categories of need (as
they are defined by the Needs Survey) and reveals
that small communities clearly have the greatest
need for new collector sewers and secondary treat-
ment. Each of these needs will require approxi-
mately $4 billion of small community funding
nationwide.
The Needs Survey states that small communities
with limited financial, technical, administrative,
and legal resources encounter difficulties qualify-
ing for and repaying SRF loans. Small financial
bases limit the ability of small and rural commu-
nities to finance wastewater projects. Many of
these communities also lack access to private
credit markets. Consequently, these communities
may delay addressing their needs.
Figure 2. Relationship Between SRF Agreements with
Small Communities and Total SRF Agreements
1400
1200
1000
800
600
400
200
0
Reporting Year
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Figure 3. Documented Needs of Small Communities by Clean
Water Needs Survey Need Category
z
CM
O
I
SB
u
Combined Sewer Overflows
New Interceptor Sewers
New Collector Sewers
Sewer Replacement/Rehabilitation
Infiltration/ Inflow Correction
Advanced Treatment
Secondary Treatment
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Cost in millions, Jan. 1996
Future SRF Direction for Small
Communities
Despite their comparatively weak economic sta-
tus, small communities still must comply with the
CWA requirements for wastewater collection and
treatment and must continue to address human
health risks. In recognition of financial constraints
on small communities, President Clinton's Clean
Water Initiative of 1994 proposed the establish-
ment of special subsidies to make loans more
affordable for small communities as part of the
reauthorization of the CWA. These potential sub-
sidies may include zero or negative (down to neg-
ative two percent) interest rates on loans, exten-
sion of the loan repayment period from 20 to 30
years, or loan forgiveness.
Additional copies of this Fact Sheet may be obtained by contacting the Office of Water Resources Center in EPA at (202) 260-7786 and
referring to the document number EPA 832-F-99-057. You may also visit our Website (http://www.epa.gov/OWM/smallc.htm) to obtain
other summaries of this information. •
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Table 1. State Clean Water SRF Assistance in Dollars and Number of Agreements by
Community Size (Fiscal Years 1988 through 1998)
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Totals
420.8
97.4
188.1
205.8
1,269.0
260.3
643.0
65.9
849.4
280.8
150.7
80.2
803.8
225.8
215.3
255.2
249.5
186.8
175.6
345.9
1,356.9
746.4
645.5
193.8
658.8
49.8
91.4
95.5
179.1
1,019.2
78.7
3,519.3
308.0
82.3
1,217.9
206.5
273.2
460.8
190.9
117.5
165.1
90.9
346.9
2,004.3
114.5
62.1
504.4
295.1
238.1
573.4
64.9
22,920.5
Amount of SRF Assistance
(Millions of Dollars)
Population < 10,000
$
56.3
32.4
47.7
80.5
70.4
85.8
172.6
23.1
70.7
130.4
74.8
29.4
174.5
112.7
107.2
60.3
131.4
50.9
84.4
80.3
81.9
147.0
187.9
58.7
129.0
29.7
45.8
20.0
28.5
219.6
15.4
214.5
107.1
20.3
334.5
42.1
109.2
376.7
97.5
3.8
53.8
32.2
96.6
321.2
38.2
31.4
228.8
118.8
166.7
149.0
33.5
5,215.2
Percent
ofTotal
13.4
33.2
25.4
39.1
5.5
33.0
26.8
35.1
8.3
46.5
49.7
36.6
21.7
49.9
49.8
23.6
52.6
27.2
48.1
23.2
6.0
19.7
29.1
30.3
19.6
59.7
50.1
20.9
15.9
21.5
19.6
6.1
34.8
24.7
27.5
20.4
40.0
81.8
51.1
3.2
32.6
35.4
27.8
16.0
33.4
50.6
45.4
40.3
70.0
26.0
51.7
22.8
Population < 3,500
$
17.3
10.8
21.2
27.5
25.8
38.5
40.1
2.8
16.8
39.9
65.3
21.3
65.4
76.5
31.0
42.8
58.8
8.9
12.7
34.6
20.5
84.5
114.8
28.4
48.3
21.0
29.4
4.9
8.7
78.3
2.7
88.6
55.1
18.6
154.9
21.7
23.5
203.6
69.8
0.0
5.1
25.4
26.6
146.0
12.5
19.7
91.9
49.7
111.7
55.7
7.5
2,287.1
Percent
ofTotal
4.1
11.1
11.3
13.4
2.0
14.8
6.2
4.2
2.0
14.2
43.3
26.6
8.1
33.9
14.4
16.8
23.6
4.8
7.2
10.0
1.5
11.3
17.8
14.7
7.3
42.2
32.2
5.1
4.9
7.7
3.4
2.5
17.9
22.6
12.7
10.5
8.6
44.2
36.6
0.0
3.1
27.9
7.7
7.3
10.9
31.7
18.2
16.8
46.9
9.7
11.6
10.0
Number of SRF Agreements
Total
Number
108
51
31
80
146
60
119
318
198
87
30
44
255
48
119
114
125
48
67
131
525
139
465
97
114
41
61
20
57
152
35
334
98
69
512
54
127
371
64
86
40
101
113
287
35
65
127
177
157
68
46
,816
Population < 10,000
Number
59
25
18
58
27
43
70
315
50
54
19
28
113
35
90
81
95
20
43
77
137
54
196
40
71
32
47
8
25
57
18
158
58
53
319
34
79
329
50
5
16
69
66
156
15
55
92
127
140
34
37
3,897
Percent
ofTotal
54.6
49.0
58.1
72.5
18.5
71.7
58.8
99.1
25.3
62.1
63.3
63.6
44.3
72 9
75.6
71.1
76.0
41.7
64.2
58.8
26.1
38.8
422
41.2
62.3
78.0
77.0
40.0
43.9
37.5
51.4
47.3
59.2
76.8
623
63.0
62.2
88 7
78.1
5.8
40.0
68.3
58.4
54.4
42.9
84.6
72.4
71.8
89.2
50.0
80.4
57.2
Population < 3,500
Number
34
12
11
37
11
29
29
313
15
24
12
20
61
29
62
68
64
7
13
54
48
33
138
24
46
24
39
3
12
30
12
102
35
50
244
23
48
269
40
0
4
59
35
86
7
25
63
77
117
21
10
2,629
Percent
ofTotal
31.5
35.5
46.3
48.3
24.4
98.4
7.6
27.6
40.0
45.5
23.9
60.4
52.1
59.6
51.2
14.6
19.4
41.2
9.1
23 7
29 7
24.7
40.4
63.9
15.0
21.1
19.7
34.3
30.5
35.7
72 5
47.7
42.6
37.8
72 5
62.5
0.0
10.0
58.4
31.0
30.0
20.0
38.5
49.6
43.5
74.5
30.9
21.7
38.6
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