United States
                     Environmental Protection
Office of Water
Washington, DC 20460
September 1997
                           Protecting Wetlands  with  the
                           Clean  Water State Revolving Fund
What's In It For You?

The  51  Clean Water State  Revolving Funds
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.  Based on the serious threats  to wetlands
resources across the country, EPA would like to see
the SRF  become a  major  source of funding for
wetlands protection.

 Since its creation in 1987, the Clean Water
 State Revolving Fund (CW-SRF) has had
 the potential to fund virtually any type of
 wetlands project.  This capacity  has yet to be

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.  Today, the SRF  provisions in
the Clean Water Act give no more preference to one
category or type of project than any other.

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
banks and these assets are used to make low or no-
interest loans for important water quality projects.
Funds are then repaid to the SRFs over the term of
the loan - which may be as long as twenty years.
Repaid  funds  are then  recycled  to fund other
important water quality projects.
 The CW-SRFs have in excess of $24 billion in assets
 and have issued more than $20 billion in loans since
 1988.  Currently, the SRFs are funding nearly $3
 billion worth of water quality projects each year.
 That's more than 200 times the available EPA
 grant funding for the wetlands program.

 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 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. A 0% SRF loan will cost 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 other
 50% (match) is financed at market rate).

 Third,  Streamlined   Federal  Requirements.
 Financing a project with an SRF loan means fewer
 federal requirements than  any other federal grant.
 Plus, the 51 CW-SRF programs are experienced in
 helping  applicants through  the  loan  application
 process  and  providing  all  sorts  of technical

Wetlands and the SRF
Challenges Ahead
The CW-SRF has three major categories of eligible
projects: 1. Publicly-owned wastewater treatment
facilities, 2. Nonpoint source projects (publicly or
privately owned), 3. Estuary management projects
(publicly or privately owned).

Wetlands projects typically fall under approved state
nonpoint source management plans or are included
in national estuary management plans. Constructed
wetlands  may  be  considered  wastewater  or
storm water  management  projects and  are also
eligible for funding.  SRF fundable projects include:

      Wetlands restoration - cleanup, enhancement
      Wetlands protection - buffer zones, wetlands
       purchases, nonpoint source BMP
      Constructed wetlands -  for treatment of
       stormwater or wastewater (could include
       adequate capacity to ensure habitat values as
       well as treatment of effluents)

So  far,  the  SRF programs have not received
proposals for capitalizing wetlands mitigation banks
with an SRF loan.  EPA would like to encourage
states, locals, and other entities to work together to
develop viable options for wetlands mitigation banks
that could be funded with  SRF loans.

Sources of Repayment

Though finding a source  of repayment may prove
challenging,   it  need   not  be  unnecessarily
burdensome.   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:

      Fees paid by developers on other lands
      Recreational fees (fishing license,  entrance
      Dedicated portion of local, county, or state
       taxes or fees
      Property owner's ability to pay (determined
       during loan application)
      Donations or dues made to nonprofit groups
      Stormwater management fees, wastewater
       user charges
We need to make better use of the CW-SRF for
important wetlands protection projects. Hopefully,
increased understanding of the tremendous buying
power and advantages of SRF loans will increase use

Currently, most states use their SRF resources to
finance large municipal wastewater systems.  As
such, we need to work with them to increase their
familiarity with wetlands issues and experience in
issuing loans to those interested in protecting or
restoring wetlands.   A few states have legislative
barriers to funding non-public entities which could
restrict the variety of fundable wetlands projects at

  How to Get More From the CW-SRF

        Share information on wetlands priorities
        with SRF managers
        Learn how the SRF works
        Become involved in the annual SRF
        priority setting process
        Encourage loan applications
        Help to modify state laws and
        regulations where appropriate
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 based on water quality problems.   Those
interested in wetlands protection must seek out their
SRF programs and gain an understanding of how the
program works in their state and participate in the
annual process that  determines which  projects are

For more information, contact your Clean  Water
State Revolving Fund Program 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

EPA Clean Water State Revolving Fund Regional Contacts
Area Covered
New England
New York, New Jersey,
Puerto Rico
North Central
South Central
Mountain States
Ralph Caruso
Robert Gill
Les Reed
Sheryl Parsons
Gene Wojcik
Velma Smith
Donna Moore
Brian Friel
Juanita Licata
Lee Daniker
Phone Number