United States
Environmental Protection
Agency
Office of Water
(4204)
Washington, DC 20460
EPA832-F97-017
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
utilized.
History
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
assistance.
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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
fees)
• 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
dramatically.
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
present.
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
funded.
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
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EPA Clean Water State Revolving Fund Regional Contacts
Region
1
2
3
4
5
6
7
8
9
10
Area Covered
New England
New York, New Jersey,
Puerto Rico
Mid-Atlantic
Southeast
North Central
South Central
Central
Mountain States
West/Southwest
Northwest
Contact
Ralph Caruso
Robert Gill
Les Reed
Sheryl Parsons
Gene Wojcik
Velma Smith
Donna Moore
Brian Friel
Juanita Licata
Lee Daniker
Phone Number
(617)565-3617
(212)637-3884
(215)566-2320
(404)562-9337
(312)886-0174
(214)665-7153
(913)551-7741
(303)312-6277
(415)744-1948
(206)552-1380
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