Water Infrastructure
Funding Options
For a Sustainable Future
          United States
          Environmental Protection
          Agency New England

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(photo 1)
Deer Island Water Treatment Facility, MA
AlexySergeve

(photo 2)
Stock, Getty images

(photo 3)
Charles River - Boston, MA
Jonathon Britt

(photo 4)
Jamestown, Rl - New Storage Tank

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Water  Infrastructure  Funding   Options
    Introduction
   The construction and operation of wastewater and drinking water treatment facilities, as well as the corresponding wastewater collection and
   water distribution systems, have been responsible for the significant gains in water quality and public health achieved over the past 40 years.
   In New England, a majority of the existing wastewater and drinking water infrastructure was built following World War II, and continues to
   age and slowly deteriorate.
       Water infrastructure improvements can be expensive, yet given the potential magnitude of impacts resulting from failure, it makes fiscal
   sense to ensure proper maintenance. If a system is well maintained, it can operate safely over a long period of time. Municipalities and utilities
   are ultimately responsible for the on-going process of oversight, evaluation, maintenance and replacement of water infrastructure assets to
   maximize and extend the useful life of system components, and more importantly, protect water quality and public health.
       There are significant present and future water infrastructure funding challenges. EPA's 2002 Clean Water and Drinking Water Infrastructure
   Gap Analysis study presented findings illustrating deficiencies in how municipalities and  utilities have been and are investing in their water
   infrastructure. For example,  over a 20-year period (2000-2019) in a "no revenue growth" scenario (comparing projected needs  to current
   spending levels), the study reported a total funding gap of $1226 for wastewater and $1026 for drinking water in unmet capital needs. In a
   revenue growth scenario (assuming spending will increase by 3 percent every year) over the same 20-year period, the funding gap  is reduced
   to $216 for wastewater and $456 for drinking water in unmet capital  needs.
       Other, more recent EPA publications also depict large infrastructure needs throughout the country. The 2003 Drinking Water Infra-
   structure Needs Survey and the 2004 Clean Watersheds Needs Survey project a 20-year national need. The need for drinking water infra-
   structure is estimated at more than $2766 (2003 dollars) while the national wastewater infrastructure need is over $2026 (2004 dollars).
   The New England regional needs reported in these documents are  over $8.56 for wastewater and over $11.46 for drinking water.  The
   Gap Analysis below illustrates the regional gap based on the information contained in these surveys and other available information from
   the Clean Water and Drinking Water National Information Management Systems. Although  the figures are staggering, it is critical that our
   nation invest in infrastructure for the long-term
   protection of public health, our environment
   and the economy.
       EPA is committed to promoting  sustainable
   practices that will help reduce the gap between
   funding needs  and spending  at the local level.
   EPA believes that better management practices,
   efficient water and energy use, the full cost pricing
   of services,  and using a watershed approach
   when making funding decisions can all help
   responsible municipalities and utilities operate
   more sustainably, now and in the long-term.
       The purpose of this document is to provide
   municipalities with  information on potential
   sources of federal and state financial assistance
   to help build, rehabilitate and maintain  critical
   water infrastructure.
Gap Analysis*
          * based on most recently available data
                SRF Funds
                                  New England Regional Needs
          Clean Water
   Clean Water data was taken from the
   2004 National Information Management
   System reports and the Clean Watersheds
   Needs Survey 2004 Report to Congress
    Drinking Water
Drinking Water data was taken from the 2003
National Information Management System
reports and the 2003 Drinking Water Infrastructure
Needs Survey and Assessment

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                   Water Infrastructure
                   Federal Funding
U.S.  Department of Agriculture
Rural Development
The 1972 Rural Development Act established the Rural Development
Insurance Fund under the Department of Agriculture to provide loans
for wastewater and drinking water infrastructure.

Today, Rural Development's Water and Environmental Programs (WEP)
provides loans, grants and loan guarantees for drinking water, sanitary
sewer, solid waste and storm drainage facility improvements  in rural
areas  and cities and  towns with populations of 10,000 or less. Public
entities,  non-profit organizations, and recognized Indian tribes may
qualify for assistance. Rural Development has a number of funding and
loan programs under  its WEP umbrella. These include: (1) Direct Water
and Waste Disposal Loan Program; (2) Water and Waste Disposal Grant
program; and (3) Guaranteed Water and Waste Disposal Loan program.
Nationally, these three programs accounted for over $1.436 in federal
financial assistance to small cities and towns during FY2007. Of the
available $1.436, nearly $87M was provided to New England communities
in FY2007.

Source: (l)USDA website-http://www.usda.gov/rus/water/index.htm and (2) USDA-RD
Water and Environmental Programs FY2007 Annual Activity Report
U.S.  Department of Housing and
Urban Development
In 1974, the Department of Housing and Urban Development initiated the
Community Development 6lock Grant (CD6G) Program. There are two
available funding programs: (1) Community Development 6lock Grant
-  Entitlement Communities Grants; and (2) State Administered CD6Gs
which  enable local and state governments to target their own economic
development priorities. The rehabilitation of affordable housing has been
the  largest single use of these grants, with the CD6G  program as an
important catalyst for job growth and business opportunities for lower
income families and neighborhoods. The programs identify a wide range
of eligible activities, including the construction of public facilities and
improvements, such as water and sewer infrastructure. It is estimated
that roughly 10-20 of such block grants are utilized to support water and
wastewater infrastructure.

Source: (1) HUD website-http://www.hud.gov and (2) EPA July 2003 Report to Congress
- Paying for Water Quality
New Water Treatment Plant Filters and Distribution System in the Town of
Newbury, VT.
 Wet Weather CSO Facility Construction in Nashua, NH.
                                                             -2-

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U.S.  Environmental Protection Agency
The Clean Water and  Drinking Water  State Revolving  Loan Fund Programs -
Federal  and State  Partnerships
Clean Water State Revolving Fund Program
The Clean Water Act Amendments of 1987 authorized the Clean Water
State Revolving Fund (CWSRF) Program, an innovative method of financing
for a range of water quality/wastewater environmental projects. Under
the program, the EPA provides grants or "seed money" to all 50 states
plus Puerto Rico to capitalize state loan funds. The states, in turn, use
these funds in addition to a 20% match provided by the states to make
low interest rate loans to communities for high priority water quality
projects. As money is paid back into the revolving fund, new loans are
made to other recipients enabling them to maintain the long-term integrity
of their wastewater treatment and collection infrastructure.

At the end of FY2007, CWSRF programs had funded over $63B, providing
over 20,700 low interest loans nationally to fund water quality protection
projects for wastewater treatment, non-point source pollution control,
and watershed  and estuary  management. As  of April  2008, over
$1.9B  in CWSRF capitalization grants  have been  provided to the six
New England states resulting  in over $5.6B in loans awarded to New
England communities for water quality and wastewater infrastructure
improvements to protect public health and the environment.
Drinking Water State Revolving Fund Program
On a similar path, the Safe Drinking Water Act (SDWA) Amendments
of 1996 authorized the Drinking Water State Revolving Fund (DWSRF)
Program. Like the CWSRF program, the DWSRF allows states to make
low interest loans with  capitalization  grant dollars and state match
funds to public water systems for drinking water related infrastructure
projects. By funding these infrastructure projects, the DWSRF program
supports the goals of the SDWA by assisting  public water systems
achieve and maintain compliance with drinking water standards. This,
in turn, helps to ensure a safe drinking water supply for the protection
of public health nationwide.

As of the end of FY2007, the DWSRF Program had provided over $688M
in capitalization grants to the six New England states. Of this amount,
over $1.2B has been provided in loan assistance to public water systems
in New England for drinking water infrastructure projects.

State contacts for the CWSRF and DWSRF programs are listed below.
                      Clean Water SRF
                      CT     William Hogan	(860) 424-3753
                      MA    Steve McCurdy	(617) 292-5779
                      ME    Steve McLaughlin 	(207)287-7768

                      Drinking Water SRF
                      CT     Ted Dunn	(860) 509-7333
                      MA    Steve McCurdy	(617) 292-5779
                      ME    NateSaunders	(207)287-5684
         NH  Gretchen Rich	(603) 271-3448
         RI   Jay Manning	(401) 222-3961
         VT   Larry Fitch	(802) 241-3742
         NH  Rick Skarinka	(603) 271-2948
         RI   Gary Chobanian.. (401) 222-7768
         VT   Eric Blatt	(802) 241-3425
                                                              -3-

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Wastewater Infrastructure  Funding in New England
State

CT



CWSRF

Loans
at 2%.


New WW Plant or Treatment
Plant Upgrade
20% grant of all project costs (in
conjunction with CWSRF loan at 2%).
Nitrogen removal portion is at 30%
grant.
Regional Wastewater
Treatment Authority
25% grant of all initial
project costs
(in conjunction with
CWSRF loan at 2%).
Small Community
Wastewater Project
25% grant of all project
costs (in conjunction
with CWSRF loan at
2%).
CSO Projects

50% grant of all
project costs (in
conjunction with
CWSRF loan at:
 State
CWSRF
    Municipal Construction Grants Program
 Small Community Grant Program
          CSO
          Grar
 ME
Loans at
2% below
equiv. tax
exempt rate.
    Up to 80% grant of the expense of a municipal or quasi-
    municipal pollution abatement construction program.  Very
    limited funds; only hardship communities eligible (user
    charge near 2% MHI).
 Amount of grant varies. Only for
 pollution control projects costing
 $1 00,000 or less (usually individual
 septic systems).
          25% c
          CSO
State
MA
CWSRF
Loans
at 2%.
Other Wastewater Grant Programs
None. However, the Commonwealth of MA leverages the federal SRF capitalization grants through the sale of bor
depending on needs in a given year, can be up to 3:1 . The state also appropriates funds each year (known as "cc
subsidize the market interest rate down to 2% for all SRF project loans.
State
NH
CWSRF
Loans. Interest rate
current market rate
basec
&the
on percentage of
term of the loan.
Wastewater Grants
20% grants for all eligible wastewater treatment
rates above the state median. Up to 50% grant
facilities projects.
costs and
of eligible
an extra 1 0% grant for i
project costs for increas
State
Rl
CWSRF
Loans at a 33% reduction of the recipients market rate of borrowing.
Wastewater Interceptor Bond/Grant Fund
Up to 50% grant (capped at $500,000) for eligible interce
 State
CWSRF
New WW Plant or Treatment Plant Upgrade or
Refurbishment
New Phosphorus
Removal Requirements
Dry Weather
Pollution Abate
 VT
Loans
at 0%.
50% grant on sludge and septage train including septage
receiving facilities.  State establishes criteria for receiving grant
(plant size, volume of septage received).
100% grant of the eligible
cost of phosphorus
treatment.
35% grant of eligi
project costs.
                                                      -4-

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                             Drinking Water Infrastructure  Funding in New England

2%).
Waste water
Facilities
Planning
55% grant if funding
is available (in
conjunction with
CWSRFIoanat2%).

                              State    DWSRF
                              CT
Abatement Planning
it Program
grant of eligible costs for
Facilities Plans.
                              ME
ids. The leverage ratio,
intract assistance") to
                               MA

communities with sewer
ed septage handling
iptor installation projects.
                              NH

;ment
ble


CSO Projects

25% grant of
eligible project
costs.
                               Rl

                              VT
         Loans. Interest rates vary
         based on current market
         rate & the term of the loan.
                                  Small Town Economic Assistance Program (STEAP)
               Up to $500,000 per year for towns with a population less
               than 30,000. Can only be used for capital projects, including
               drinking water and wastewater infrastructure projects.
                              State    DWSR
                                                               Other Drinking Wate
                                                               Grant Programs
         Loans at 2% below equivalent tax exempt rate.
         Disadvantaged loan subsidies available for eligible recipients
         meeting the states criteria.
                                                               None.
State    DWSRF   Other Drinking Water Grant Programs
         Loans
         at 2%
None. However, the Commonwealth of MA leverages the federal SRF
capitalization grants through the sale of bonds. The leverage ratio, depending on
needs in a given year, can be up to 3:1. The State also appropriates funds each
year (known as "contract assistance") to subsidize the market interest rate down to
2% for all SRF project loans.
                              State    DWSRF
                                           Filtration Grant
                                           Program
         Loans at 2% below equivalent tax
         exempt rate. Interest rates vary based
         on current market rate & the term of
         the loan. Disadvantaged loan subsidies
         available for eligible recipients meeting
         the states criteria.
                        Up to 30%
                        reimbursement for the
                        cost of compliance
                        with the Surface Water
                        Treatment Rule.
                                              System
                                              Interconnection
                                              and Groundwater
                                              Investigation Program
25% reimbursement of
design and construction
costs for interconnection of
two or more public water
supplies.
                                                                          Water Facilities Assistance Program
         Loans at a 25% reduction of the
         recipients market rate of borrowing.
         Disadvantaged loan subsidies are
         available for eligible recipients
         meeting the states criteria.
                        Up to 50% grant for design/construction cost for new
                        public water supply facilities, system improvements,
                        and emergency interconnections.


                               State    DWSRF
          Loans from -3% to +3%
                                     Ither Drinking Water Grant Programs
                 None.
                                                             -5-

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                  Water Infrastructure
                  State  Funding
Connecticut
Wastewater Infrastructure Grants
The state offers grants to municipalities for wastewater infrastructure projects in conjunction with obtaining a Clean Water State Revolving Fund loan.
The amount of the grant varies depending on the type of project, but generally the grants fall into the categories below:
 New Wastewater Plant/Treatment Plant Upgrade
 Regional Wastewater Treatment Authority
 Small Community Wastewater Project
 CSO Projects
 Wastewater Facilities Planning
20% grant on all project costs (30% grant on nitrogen removal component)
25% grant on all initial project costs
25% grant on all project costs
50% grant on all project costs
55% grant (if funding is available)
In FY2007, the state awarded approximately $20M in grants for various
wastewater related infrastructure projects. To continue the success of its
grant programs, the state appropriated $90M for wastewater related grants
which will be used in conjunction with CWSRF loans. More information on
these grant programs can be obtained from William Hogan at the CT DEP
at (860) 424-3753.

Small Town Economic Assistance Program (STEAP)
The Small Town Economic Assistance Program (STEAP)  funds economic
development, community conservation and quality of life projects for
localities that are ineligible to receive Urban Action (CGS Section 4-66c)
bonds. This program is administered by the State of CT's Office of Policy
and Management.
               Like Urban Action, STEAP funds are issued by the State Bond Commission
               and can only be used for capital projects. There are a wide range of
               projects that can be funded through STEAP funds, including those for
               environmental protection, wastewater infrastructure and drinking water
               infrastructure.

               Localities may receive up to $500,000 per year if (1) they are not
               designated as a distressed municipality or a public investment community,
               and (2) the State Plan of Conservation Development does not show them
               as having an urban center. For more information about this program or
               about eligibility, contact Lisa DuBois at (860) 418-6209.
Wastewater Treatment Plant in Stratford, CT.
                                                             -6-

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Maine
Municipal Construction Grants Program
State  law gives the  Maine Department of Environmental Protection
(ME DEP) the flexibility to use grant dollars with the Clean Water State
Revolving Fund  and  other sources of funding to provide affordable
financing packages  for municipal wastewater facilities. The state
may award  grants in an amount not to exceed 80% of the expense
of a municipal or quasi-municipal wastewater construction program.
Participation is limited to grants for waste treatment facilities,
interceptor systems and outfalls. At present, there is very limited funding
in this grant program  and only hardship communities (identified as those
where the user charge approaches 2% of the median household income
level)  are eligible for  this grant program.

Further  information  on this program can be  obtained from Stephen
McLaughlin  at (207) 287-7768.

Small Community Grant Program
The ME  DEP's Small  Community Grant Program provides  state grants
for pollution control projects costing $100,000 or less. The program is
suitable for  pollution  control projects constructed in rural areas of the
state.  Grants awarded to towns can be used to fund the cost of replacing
privately owned sewerage systems to abate pollution to water bodies or
shellfishing  areas, or to address public health problems resulting from
failed  systems. Only  projects  which remove a wastewater discharge
are eligible for a grant.

This grant program  was created by the Maine legislature under 38
M.R.S.A. Section 411.  It is administered by the Land and Water Bureau's
Division of Water Quality Management. The state's share of funding for
projects in this grant program comes from bond issues approved by
the voters of the state of Maine. For more information on this program,
contact Tim MacMillan at (207) 287-7765.

Combined Sewer Overflow (CSO)
Abatement Planning Grant Program
Combined sewer overflows (CSOs) occur during storm events when a
mixture of wastewater and stormwater runoff  overflows the combined
sewer collection system before receiving treatment at a  licensed
wastewater treatment facility. These discharges of diluted untreated
wastewater violate  both  state and federal water pollution laws.
Municipalities or Sewer Districts that have CSOs are required to license
them with the ME DEP. License requirements direct these communities
to evaluate their CSO problems and determine cost effective solutions
to abate them.
In 1990, voters approved a state bond issue for $2.4M to be used to
fund CSO related studies that develop recommendations for solving CSO
problems. Grants are awarded for 25% of eligible project costs.

Design and construction costs associated with CSO  remediation may be
funded by the state's CWSRF loan program or, depending on municipal/
district financial capability and grant availability, a state grant. For more
information on this grant program or the state's CSO program, contact
John True at (207) 287-7808.
                                                                 POTW Finished Clarifier in Sanford, ME.
                                                                1

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                 State Funding (cont.)
Massachusetts
Massachusetts does not have grant programs for either wastewater or
drinking water infrastructure projects. However, the state appropriates
funding each year to subsidize market interest rates down to 2% on all
CWSRF and DWSRF loans. This allows for infrastructure projects to proceed
more affordably than they would if they had to obtain loans at market
interest rates. Currently, the interest subsidy results in a $65M annual
expense to the state. For more information about the Massachusetts SRF
programs, contact Steve McCurdy at (617) 292-5779.
          In  New England,
          a majority  of the
       existing  wastewater
       and  drinking water
         infrastructure was
            built following
        World War  II, and
      continues to age  and
        slowly deteriorate.
New Hampshire
Wastewater Treatment Facility Grant Program
This program provides financial assistance in the form of a 20% grant, or
if the community's sewer user fee is 20% higher than the state average
user fee, a 30% grant, for the planning, design and construction of
certain sewage disposal facilities by municipalities. Additionally, funds are
available to municipalities that expand, upgrade or develop new wastewater
treatment facilities to provide for septage disposal. A municipality may
be  reimbursed by the state an  additional 10%  of eligible costs, derived
from the acquisition and construction of septage treatment facilities,
which results in increased septage and/or treatment capacity to meet the
septage disposal needs of residents. The grant increases by 2% for each
municipality with which the host community holds a written agreement to
provide for their septage disposal needs. The total grant amount can equal
up  to 50%  of the eligible costs.

This program, which helped build 92 municipal treatment facilities across
the state, began modestly in the early 1960s and was expanded in 1972 with
federal Water Pollution Control Act funds. Since its inception, the program
has disbursed over $831M to New Hampshire municipalities. The program
continues to disburse, on average, $13.6M annually to communities. For
more information regarding wastewater treatment grants contact Gretchen
Rich at (603) 271-2977.

Surface Water Treatment Grants
This program provides financial assistance in the form of a 20% grant, or if
the community's sewer user fee is 20% higher than the state average user
fee, a 30% grant, for the planning, design and construction of improvements
that have been required to comply with the surface water treatment rules
of the federal Safe Drinking Water Act of 1986.

Regional Water Treatment System Grants
This grant program provides a 25% reimbursement of costs for the planning,
design and construction of piping, pumping, and  source improvements
associated with interconnection of two or more  public water systems.

Groundwater Investigation  Grants
This grant program provides 25% reimbursement of costs for investigating
wells with  detectable levels of man-made contaminants. However, this
program excludes investigation of wells contaminated with MTBE. For
more information on  surface water treatment grants, regional water
system grants or groundwater investigation grants, contact Rick Skarinka
at (603) 271-2948.

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Rhode  Island
Vermont
Wastewater Interceptor Grant Fund
The purpose of this grant program is to provide funds for wastewater
interceptor projects in order to extend sewerage to areas which should no
longer be served solely by septic systems. This program is administered
by the Office of Water Resources of the Rhode Island  Department of
Environmental Management. Interceptor projects are eligible for a 50%
grant on all eligible costs with the total amount of grant funds on any one
project being capped at $500,000. Additional funds  are not appropriated
each year by the state, and this grant program will end once all available
funds have been expended. For more information contact Jay Manning at
the RI DEM at (401) 222-3961.
Municipal  Pollution Control Grants
The Vermont Department of Environmental Conservation offers grants
fora range of water pollution control projects. Grant funding is available
for phosphorus removal projects (100% grant of the eligible project
costs); sludge and septage projects at wastewater treatment facilities
(50% grant on sludge and septage train); CSO projects (25% grant of all
eligible costs); and dry weather pollution abatement projects (35% of all
eligible costs). Further information about these grants can be obtained
from Don Robisky at (802) 241-3734.
Water Facilities Assistance Grant Program
This grant program, initiated in 1983 and administered by the Rhode Island
Water Resources Board, provided up to a 50% grant for the design and
construction of new public water supply facilities. The funds were also
available for system improvements and emergency interconnections
between systems. However,  the only funds presently available  are for
emergency interconnections, whereby a 25% grant is allowed for a
one way connection, and up to a 50% grant is available for a two way
connection. Over the course  of this grant program, over twenty major
system improvements benefiting fou rteen water districts have been fu nded.
For more information about this grant prog ram, contact Romeo Mendesat
the Rhode Island Water Resources Board at  (401) 574-8409.
    *See At A Glance table on pgs. 4-5 for summary of programs in
     each state.
Pump Station Under Construction in Orford Village, NH.
                                                               9

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       EPA CONTACTS
       Municipal Assistance Unit
       LINKS
       to EPA Region 1  Web sites
James Bourne
CWSRF Coordinator
(617) 918-1610
bourne.james@epa.gov

Mark Spinale
DWSRF Coordinator
(617) 918-1547
spinale.mark@epa.gov

Jacqueline LeClair
Manager
(617) 918-1549
leclair.jackie@epa.gov
CWSRF
http://www.epa.gov/region1/cwsrf/


DWSRF
http://www.epa.gov/region1/eco/drinkwater
              United States
              Environmental Protection
              Agency New England
                 EPA901-F-08-011
                 October 2008

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