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WIFIA
PROGRAM
HANDBOOK
April 2018
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WIFIA Program Handbook
Table of Contents
EXECUTIVE SUMMARY 4
CONTACT INFORMATION 6
INTRODUCTION TO WIFIA 7
ELIGIBILITY REQUIREMENTS 10
TERMS AND CONDITIONS OF WIFIA CREDIT ASSISTANCE 19
APPLICATION PROCESS SUMMARY 23
PROJECT SELECTION 29
PROJECT APPROVAL 36
NEGOTIATION AND CLOSING 47
POST-CLOSING ACTIVITIES AND MONITORING 49
APPENDIX A: ACRONYMS 52
APPENDIX B: DEFINITIONS 53
APPENDIX C: SELECTION CRITERIA 55
APPENDIX D: FEE SCHEDULE 67
APPENDIX E: COMPLIANCE REQUIREMENTS 68
APPENDIX F: CONFIDENTIAL BUSINESS INFORMATION (CBI) 71
APPENDIX G: LETTER OF INTEREST TIPS 73
APPENDIX H: NEPA APPLICABILITY OVERVIEW 77
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EXECUTIVE SUMMARY
The WIFIA Program Handbook, written for prospective borrowers, describes how the U.S. Environmental
Protection Agency (EPA) administers the Water Infrastructure Finance and Innovation Act (WIFIA)
program (the WIFIA program).1 This handbook provides prospective borrowers with the information and
resources needed to understand the requirements and procedures for obtaining WIFIA credit assistance
and remaining in compliance with WIFIA program rules and regulations.
This handbook consists of eight sections and eight appendices as follows:
Section 1 - Introduction to WIFIA provides background information on the WIFIA program, introduces
the WIFIA program's objectives, and describes the administration and organization of the WIFIA
program. This section helps the reader understand the mission of the WIFIA program, the legislative
actions that created and fund the WIFIA program, and the different parties within the government that
are involved in administering the WIFIA program.
Section 2 - Eligibility Requirements lists the statutory eligibility requirements that projects and entities
applying for WIFIA credit assistance must meet, as well as the compliance requirements for borrowers
receiving WIFIA credit assistance. This section helps the reader determine whether it is eligible to apply
for WIFIA credit assistance and what successful borrowers must do to remain in compliance.
Section 3 - Terms and Conditions of WIFIA Credit Assistance presents the terms of WIFIA credit
assistance required by statute, as well as key credit policies governing the WIFIA program.
Section 4 - Application Process Summary provides an overview of the process by which WIFIA credit
assistance is awarded. It provides a high-level understanding of the major steps and milestones involved
in obtaining WIFIA credit assistance and the order in which those steps occur.
Section 5 - Project Selection describes the selection phase of the application process, including the
letter of interest submission and evaluation. This section helps prospective borrowers understand how
to submit a complete letter of interest for WIFIA credit assistance and the process used by the WIFIA
program to select projects to invite to submit applications.
Section 6 - Project Approval describes the approval phase of the application process, including
application submission, evaluation, and approval. This section helps prospective borrowers understand
how to submit a complete application for WIFIA credit assistance and what process and criteria the
WIFIA program will use to evaluate and approve projects to receive WIFIA credit assistance.
Section 7 - Negotiation and Closing describes the closing process, which occurs after projects have
been approved for WIFIA credit assistance, the WIFIA program's requirements for proceeding to closing,
and the structure and purpose of the credit agreement.
1 Electronic copies of this program handbook, application materials, and additional information regarding the
WIFIA Program are located on the WIFIA website: http://www.epa.gov/wifia.
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Section 8 - Post-Closing Activities and Monitoring Requirements explains the activities and
requirements that follow closing, including the process by which disbursements and loan servicing
occur, as well as the general requirements that borrowers must fulfill to maintain good standing within
the WIFIA program.
Appendix A - Acronyms spells out the acronyms used in the handbook.
Appendix B - Definitions defines key terms used throughout the handbook.
Appendix C - Selection Criteria describes the selection criteria and the way the WIFIA program will
evaluate each criterion.
Appendix D - Fee Schedule outlines EPA's final fee schedule.
Appendix E - Compliance Requirements lists laws and regulations with which borrowers receiving
WIFIA credit assistance must comply.
Appendix F - Confidential Business Information provides information about the ability to make a
business confidentiality claim
Appendix G - Letter of Interest Tips provides tips on correctly filling out each section of a letter of
interest
Appendix H - NEPA Applicability Overview presents the criteria EPA uses to make a preliminary NEPA
assessment for the proposed project
Application Materials, including letter of interest and application forms for the WIFIA program, are
available on the WIFIA website at www.epa.gov/wifia.
WIFIA Legislation and Regulations, including the statute, the implementation rule, and the fee rule, are
available on the WIFIA website at www.epa.gov/wifia.
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CONTACT INFORMATION
EPA welcomes questions and inquiries concerning the WIFIA program. The WIFIA program can be
contacted at:
WIFIA program
wifia(5)epa.gov
202-564-2992
http://www.epa.gov/wifia.
Courier address:
Director, WIFIA Program
US EPA William Jefferson Clinton West Building-room 6210 A
1301 Constitution Ave, NW
Washington, DC 20004
Hearing- and speech-impaired persons may use TTY by calling the Federal Information Relay Service at
1-800-877-8339.
To receive announcements from the WIFIA program, sign up at https://tinyurl.com/wifianews.
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SECTION 1
INTRODUCTION TO WIFIA
The Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) established a federal credit
program (referenced hereafter as the WIFIA program) administered by the U.S. Environmental
Protection Agency (EPA). The WIFIA program accelerates investment in water and wastewater
infrastructure of national and regional significance by offering creditworthy borrowers loans2 for up to
49 percent of eligible project costs.
WIFIA authorizes EPA to provide secured (direct)
loans and loan guarantees to eligible water
infrastructure projects. Prospective borrowers will
submit a letter of interest that demonstrates their
projects' eligibility, financial creditworthiness,
engineering feasibility, and alignment with WIFIA
selection criteria. Using the information provided
in the letter of interest, EPA will evaluate and
select projects based on criteria described in
Section 5 of this handbook. For the selected
projects, prospective borrowers will be invited to
apply to EPA. In the application, selected
prospective borrowers provide EPA with materials
necessary to underwrite the proposed WIFIA
assistance and to develop, through negotiation,
individual credit agreements between the
applicant and EPA.
WIFIA loans have distinct benefits that are not readily available in the capital markets. The WIFIA
program can act as a patient investor and offer credit assistance with extended maturities due to the
federal government's long-term investment horizon. It can offer borrowers the advantage of developing
customized terms, including sculpted repayment terms to match the specific needs of a project. Finally,
the WIFIA program lends at a low, fixed interest rate equal to the Treasury rate for a comparable
maturity.
EPA recognizes the importance of capital markets in developing and improving water and wastewater
infrastructure throughout the nation. The WIFIA program is intended to complement existing funding
resources rather than supplant them. All projects that receive WIFIA credit assistance must be co-
financed with other sources of funding, including tax-exempt or taxable bonds, loans, grants, and equity.
WIFIA
The Water Infrastructure Finance and
Innovation Act (WIFIA) program
accelerates investment in our
nation's water and wastewater
infrastructure by providing long-
term, low-cost, supplemental credit
assistance under customized terms
to creditworthy water and
wastewater projects of national and
regional significance.
2 WIFIA authorizes EPA to provide loans or loan guarantees. The term "loans" will be used throughout this
handbook in place of "loans or loan guarantees."
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EPA balances the distinct credit advantages that the WIFIA program offers with prudent lending
practices. The WIFIA program will only fund projects that it finds to be creditworthy during the
evaluation process.
1.1 LEGISLATIVE REFERENCE
Congress enacted the WIFIA program as part of the Water Resources Reform and Development Act of
20143 (WRRDA). WIFIA was subsequently amended by The Fixing America's Surface Transportation
(FAST) Act of 20154 and the Water Infrastructure Improvements for the Nation Act of 20165. Chapter 52
of Title 33 of the United States Code6 codifies WIFIA, with supporting regulations appearing in 40 C.F.R.
35 subpart Q. These documents are provided on the WIFIA program website at www.epa.gov/wifia.
1.2 FUNDING OF WIFIA CREDIT ASSISTANCE
The WIFIA program is governed by The Federal Credit Reform Act of 19907. Therefore, EPA is required
to estimate the long-term credit subsidy cost of each WIFIA loan, account for this cost with an
appropriation by Congress, and set it aside in a reserve. EPA must estimate and set aside this reserve
before it can close or disburse WIFIA credit assistance. Congress appropriates funding to cover the
credit subsidy cost of WIFIA credit assistance. Congress may also set a loan limit on the total amount of
WIFIA credit assistance that can be extended under each appropriation.
1.3 PROGRAM ADMINISTRATION
The WIFIA program provides credit assistance to eligible borrowers. It is housed in the Water
Infrastructure Division in the Office of Wastewater Management within the Office of Water and led by a
Program Director.
3 P.L. 113-121.55 5022-5035
4 P.L. 114-94
5 P.L. 114-322
6 33 U.S.C. 55 3901-3914
7 2 U.S.C. 5 661 et eq.
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FIGURE 1-1: WIFIA PROGRAM ORGANIZATIONAL STRUCTURE
Program Director
Program Origination and Portfolio Credit Policy and
Management Underwriting Management ngineering ega |y|anagement
As displayed in Figure 1-1, the WIFIA program is led by the Program Director and comprised of six teams:
Program Director manages the WIFIA program, develops program policy, and leads interaction with the
Credit Council and EPA leadership.
Program Management team provides comprehensive program support. Functions include
communication, project selection, organizational operations, and program evaluation.
Origination and Underwriting team focuses on individual transactions from the receipt of the letter of
interest to loan closing. Its functions include determining preliminary creditworthiness, leading
individual transactions through the WIFIA application process, leading the WIFIA team through
individual transaction evaluations, and negotiating loan terms and agreements.
Portfolio Management team manages assets and monitors the financial compliance of approved
projects. Its responsibilities include disbursement processing, loan monitoring, loan amendments, and
loan workouts.
Engineering team assesses the project's technical assumptions, as well as its construction and operating
feasibility. This team is also responsible for determining eligible project costs and ensuring borrower
compliance with Federal requirements, such as National Environmental Policy Act (NEPA) and
crosscutters.
Legal team supports the WIFIA program in structuring, reviewing, guiding, and documenting credit
transactions. The team also provides opinions and recommendations to the WIFIA program on legal
issues affecting WIFIA transactions, including compliance with WIFIA statute and rules as well as other
applicable Federal laws.
Credit Policy and Risk Management team takes a portfolio view of credit risks and programmatic
policies. Its tasks include determining transactional credit risk and how that is quantified in the subsidy
model, tracking programmatic repayment risk, controlling credit subsidy estimation, and maintaining
and recording office credit and policy decisions.
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SECTION 2
ELIGIBILITY REQUIREMENTS
This section outlines the requirements that entities applying for and receiving WIFIA credit assistance
must satisfy, as defined by the WIFIA statute, regulations, and EPA policy. Should a letter of interest or
application demonstrate that the prospective borrower or project is not eligible, the WIFIA program will
not continue evaluating the letter of interest and will not consider the project for WIFIA credit
assistance. If you have eligibility questions, contact the WIFIA program prior to submitting a letter of
interest.
2.1 ELIGIBLE BORROWERS
The entity applying for WIFIA credit assistance must be one of the following:8
A corporation.
A partnership.
A joint venture.
A trust.
A federal, state or local government entity, agency, or instrumentality.
A tribal government or consortium of tribal governments.
A State Revolving Fund (SRF) program as defined by the Clean Water Act and the Safe Drinking
Water Act.9
2.2 ELIGIBLE PROJECTS
Prospective borrowers may only apply for WIFIA credit assistance with the purpose of undertaking one
or several of the following eligible projects.10
1. Wastewater projects that are eligible for the Clean Water SRF as described under section 603 of
the Federal Water Pollution Control Act,11 notwithstanding the public ownership requirement
under paragraph (1) of that subsection. The Clean Water State Revolving Fund website provides
additional eligibility information for this project type.
8 33 U.S.C. §3904(1-7)
9 33 U.S.C. § 1383 and 42 U.S.C. 55 300i-12(a)(2)
10 33 U.S.C. 5 3905(2-10)
11 33 U.S.C. 5 1383
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2 Drinking water projects that are eligible for the Drinking Water SRF as described in section
1452(a)(2) of the Safe Drinking Water Act.12 The Drinking Water State Revolving Fund website
provides additional eligibility information for this project type.
3 Projects that enhance energy efficiency in the operation of a public water system or a publicly
owned treatment works.
4, Projects for repair, rehabilitation, or replacement of a treatment works, community water
system, or aging water distribution or waste collection facility (including a facility that serves a
population or community of an Indian reservation).
5, A brackish or sea water desalination project, including chloride control, a managed aquifer
recharge project, a water recycling project, or a project to provide alternative water supplies to
reduce aquifer depletion.
6, A project to prevent, reduce, or mitigate the effects of drought, including projects that enhance
the resilience of drought-stricken watersheds.
7, The acquisition of real property or an interest in real property. The acquisition must either be
integral to an eligible project described above, or would mitigate the environmental impacts of
water resources infrastructure projects otherwise eligible for WIFIA assistance, as determined
by the Administrator.
8 A combination of eligible wastewater or drinking water projects, as defined in the first and
second bullet above, for which a SRF program submits a single application.
9 A combination of eligible projects, described in paragraphs 1-7 above, secured by a common
security pledge, for which a single eligible entity, or a combination of eligible entities, submits a
single application.
For clarity, eligible projects, including combinations of projects, will be referred to as a single project in
this document.
DEFINITION OF PROJECT
An individual project consists of all the construction necessary to complete the building or work
regardless of the number of contracts or sources of funding involved so long as all contracts and sources
of funding are closely related in purpose, time, and place. This precludes the intentional splitting of
projects into separate and smaller contracts with separate sources of funding to avoid federal
requirement compliance on some portion of a larger project, particularly where the activities are
integrally and proximately related to the whole. However, there are many situations in which major
construction activities are clearly undertaken in separate phases that are distinct in purpose, time, or
place, in which case, WIFIA credit assistance for one or more phases would carry separate requirements
from non-WIFIA funded phases.
In general, a project should involve new construction or work. This does not mean that a project can
only involve brand new infrastructure that did not previously exist. Rather, new construction or work
12 42 U.S.C. §§ 3QQi-12(a)(2)
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can relate to existing infrastructure. For example, repair, rehabilitation or replacement of an existing
plant or pipes would involve new construction and would be considered an eligible project. In addition,
projects such as water conservation and surface water protection and restoration are eligible for WIFIA
funding. Such projects may include land purchases and programmatic expenses and may not include
construction.
WIFIA can also fund more than one discrete construction projects through a single loan. The multiple
discrete projects will be considered a single "project" for purposes of determining project size, loan size
and other requirements. For ease of implementation during the due diligence process, the WIFIA
program recommends taking the following into consideration when identifying a combination of
individual projects to include in one loan application:
The loan for a combination of projects must be secured by a common security pledge.
All projects should serve a common purpose.
« All projects should have similar construction time frames.
These considerations do not apply to a combination of projects submitted to EPA by an SRF program
under a single application. SRF programs are allowed by statute to submit an application for a
combination of projects. In effect, an SRF program receiving a WIFIA loan is capitalizing its program
through the addition of WIFIA loan proceeds to its base program. By its nature, SRF programs lend to a
variety of different projects with different security pledges, purposes, and construction time frames.
Therefore, SRF programs do not have to adhere to the same requirements as other borrowers for
purposes of this section.
2.3 COST THRESHOLD
For a project to be eligible for WIFIA credit assistance, the project's eligible costs, as defined in Section
2.6, must be reasonably anticipated to be at least $20 million.13 This threshold is lower for projects
serving small communities. Small community projects must be reasonably anticipated to total at least $5
million. The statute defines projects in small communities as drinking water and wastewater projects, as
defined in numbers 1 and 2 of the eligible project list in Section 2.2, that serve a community of not more
than 25,000 individuals.14
2.4 PUBLIC SPONSORSHIP
Eligible projects carried out by private entities must be publicly sponsored. To satisfy this requirement,
the prospective borrower must demonstrate that it has consulted with and gained the support of the
affected state, local, or tribal government in which the project is located.15 The prospective borrower
can show support by including a certified letter signed by the approving State, tribal, or municipal
department or similar agency; governor, mayor or other similar designated authority; statute or local
ordinance, or any other means by which government approval can be evidenced.
13 33 U.S.C. § 3907(a)(2)(A)
14 33 U.S.C. § 3907(a)(2)(B)
15 33 U.S.C. § 3907(a)(4)
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2.5 CREDITWORTHINESS
Projects applying for WIFIA credit assistance must demonstrate a reasonable assurance of repayment of
the credit instrument over the term of the requested assistance. In determining a project's
creditworthiness, the Administrator considers the following:
The terms and conditions of the proposed financing.
The financial structure and security features of the proposed financing.
The dedicated revenue sources that will secure or fund the project obligation.
The financial assumptions upon which the project is based.
The financial soundness, credit history, and outlook of the prospective borrower.16
2.6 ELIGIBLE COSTS
Not all costs associated with eligible projects are eligible project costs. To determine whether a project
meets the eligibility threshold for minimum project size, the WIFIA program must verify the eligibility of
the project costs and calculate the total amount of eligible project costs included in the project. The
WIFIA program must also ensure that the amount of WIFIA credit assistance as a percentage of total
eligible project costs does not exceed the maximum percentage allowed under the statute, budget
authority, and funding legislation. Eligible project costs are costs associated with the following activities,
as defined in the statute:17
« Development-phase activities, including planning, feasibility analysis (including any related
analysis necessary to carry out an eligible project), revenue forecasting, environmental review,
permitting, preliminary engineering and design work, and other preconstruction activities.
« Construction, reconstruction, rehabilitation, and replacement activities.
« The acquisition of real property or an interest in real property (including water rights, land
relating to the project, and improvements to land), environmental mitigation (including
acquisitions that would mitigate the environmental impacts of water resource infrastructure
projects otherwise eligible for WIFIA credit assistance), construction contingencies, and
acquisition of equipment.
9 Capitalized interest necessary to meet market requirements, reasonably required reserve
funds, capital issuance expenses, and other carrying costs during construction. Capitalized
interest on WIFIA credit assistance may not be included as an eligible project cost.
Additionally, indirect costs allocable to the development, oversight, or management of a project are
generally eligible, subject to a Federally negotiated cost rate.
Prospective borrowers may request that costs incurred prior to submission of an application for credit
assistance, including the value of any integral in-kind contributions, be included as a part of eligible
16 33 U.S.C. § 3907(a)(1)(B)
17 33 U.S.C. §3906
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project costs and be credited toward the 51 percent of project costs to be provided by sources of
funding other than from the WIFIA program. The WIFIA program will approve such requests on a case-
by-case basis. This provides WIFIA borrowers the opportunity to include costs incurred prior to loan
closing, including in-kind contributions, in the calculation of total eligible costs to calculate the size of
the loan. Because WIFIA loan proceeds are fungible and are not tied to specific eligible costs, any
eligible costs included in the calculation of total eligible project costs may be reimbursed with WIFIA
loan proceeds. This also applies to the eligible costs that were previously-incurred to be credited toward
the 51 percent of the eligible project costs provided by non-WIFIA sources.
The WIFIA program will consider funding project costs incurred up to 5 years prior to the date of the
application for WIFIA assistance for purposes of sizing a WIFIA loan. These costs must be directly related
to the development or execution of the project including preliminary design, right-of-way acquisition,
and NEPA compliance related costs. WIFIA will only reimburse costs incurred prior to financial close to
the public obligor that will be the direct recipient of the proposed WIFIA loan. In addition, the WIFIA
program will only reimburse such costs in an amount up to 50 percent of the value of the WIFIA loan.
WIFIA will not refinance completed projects. Projects are required to be pre-construction or under
construction at the time of loan closing. The WIFIA program retains the right to ask for appropriate
documentation to evidence such costs for both sizing the WIFIA loan and reimbursement.
Expenses associated specifically with the WIFIA application process that are not necessary for the
issuance of other debt, are not eligible activities and may not be included in the total eligible project
costs. However, fees charged by the WIFIA program, as described in Section 6.1, may be financed by the
WIFIA credit assistance and are included in the calculation of eligible project costs.
2.7 FEDERAL COMPLIANCE REQUIREMENTS
Projects receiving WIFIA credit assistance must comply with all relevant federal laws and regulations.
The following subsections describe four requirements that are of particular importance to the WIFIA
program. Appendix E lists additional compliance requirements, but is not intended as a comprehensive
inventory. Appendix H provides prospective borrowers an overview of how EPA will assess the
appropriate level of National Environmental Policy Act (NEPA) review for an individual project. This is
provided for informational purposes.
AMERICAN IRON AMD STEEL (AIS) REQUIREMENT
The statute requires borrowers receiving WIFIA credit assistance to use iron and steel products
produced in the United States.18 Borrowers may not use WIFIA credit assistance for the construction,
alteration, maintenance, or repair of a project eligible for assistance unless all the iron and steel
products used in the project are produced in the United States. Therefore, even iron and steel products
not purchased or financed by WIFIA, must comply with this requirement. By statute, "iron and steel
products" means the following products made primarily of iron or steel: lined or unlined pipes and
fittings, manhole covers and other municipal castings, hydrants, tanks, flanges, pipe clamps and
restraints, valves, structural steel, reinforced precast concrete, and construction materials.19 Equipment
18 33 U.S.C. §3914
19 33 U.S.C. § 3914(b)
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employed in construction but which does not become part of the project is not an "iron and steel
product" for the purposes of this requirement.
Guidance developed for compliance with AIS requirements for EPA's SRF programs applies to projects
receiving WIFIA credit assistance. Such guidance can be found on EPA's website at:
https://www.epa.gov/cwsrf/state-revolving-fund-american-iron-and-steel-ais-requirement.
EPA may grant waivers for a case or category of cases upon request from the borrower. EPA will grant a
waiver if it finds that (i) applying these requirements would be inconsistent with the public interest; (ii)
iron and steel products are not produced in the US in sufficient and reasonably available quantities and
of a satisfactory quality; or (iii) inclusion of iron and steel products produced in the US will increase the
cost of the overall project by more than 25 percent. Prospective borrowers should contact the WIFIA
program with any questions regarding AIS requirements and waivers.
The following national waivers issued by EPA apply to projects receiving WIFIA credit assistance in the
same manner as they apply to projects receiving assistance under the Clean Water and Drinking Water
SRF programs:
Short-Term National Product Waiver for Stainless Steel Nuts and Bolts Used in Pipe Couplings,
Restraints, Joints, Flanges, and Saddles
« One-Year Extension of the Short-Term National Product Waiver for Stainless Steel Nuts and
Bolts Used in Pipe Couplings, Restraints, Joints, Flanges, and Saddles
« One-year Extension of the Short-Term National Product Waiver for Stainless Steel Nuts and
Bolts Used in Pipe Couplings, Restraints, Joints, Flanges, and Saddles
National Product Waiver for Pig Iron and Direct Reduced Iron
De Minimis Waiver
Each of these national waivers can be found on EPA's website at: https://www.epa.gov/cwsrf/american-
iron-and-steel-requirement-approved-national-waivers-O.
DAVIS-BACON Wl iNT
The statute requires WIFIA borrowers pay all laborers and mechanics employed by contractors or
subcontractors wages at rates not less than those prevailing for the same type of work on similar
construction in the immediate locality, as determined by the Secretary of Labor.20 This is commonly
referred to as the Davis-Bacon wage requirement. This requirement applies to all laborers and
mechanics working on a project, not only those paid from WIFIA credit assistance. Further guidance can
be found on the Department of Labor's website at: https://www.dol.gov/whd/govcontracts/dbra.htm.
NATIONAL ENVIRONMENTAL POLICY ACT OF 1969
Projects selected to apply for WIFIA loans are required to comply with the National Environmental Policy
Act (NEPA) of 1969, 42 U.S.C. § 4321 etseq., which mandates that Federal agencies consider the effects
of their actions, including programs, regulations, policies, and grant-funded specific projects, on the
20 33 U.S.C. § 3909(e)
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quality of the human environment. The Council of Environmental Quality has established NEPA
implementing regulations at 40 C.F.R. part 1500 for meeting these requirements, and each Federal
agency has developed its own implementing procedures specific to its mission. NEPA requirements do
not apply at the letter of interest stage, and therefore compliance with NEPA is not a prerequisite for
submitting a letter of interest.
During the project approval stage, each proposed WIFIA project must be assessed for its impact on the
environment under the guidelines set forth by the NEPA.21 EPA will not obligate funds for a loan prior to
completing its NEPA review.
The applicant must provide information to the WIFIA program about the project and its potential
environmental effects. The program and the applicant will discuss the scope of information to be
provided to the program in its application. This information may include the project description and
potential environmental impacts of the proposed project, its purpose and need, project details and
design, and costs. EPA is responsible for the NEPA review. In carrying out its responsibilities, EPA will
take the following actions:
Review the information submitted by the applicant.
Determine the adequacy of the information submitted for making a decision on the
appropriate level of environmental review under NEPA.
Prepare the appropriate environmental review document (Categorical Exclusion determination,
Environmental Assessment, or Environmental Impact Statement) or review and adopt
environmental review documents prepared by the applicant, other federal agency, or a third-
party contractor and ensure its accuracy.
If necessary, issue a EA or draft/final EIS and take public comment.
If necessary, complete the NEPA process through preparation of the appropriate decision-
making document such as a final finding of no significant impact (FONSI) or ROD.
EPA has compiled additional information included in Appendix H to provide an overview of how EPA will
evaluate the appropriate level of NEPA review. Figure 2-1 below provides a flowchart for WIFIA NEPA
compliance.
Categorical Exclusion (CATEX): The applicant can review EPA's list of actions that may be categorically
excluded at 40 C.F.R. § 6.204 to determine if the project fits within an established CATEX. An applicant
who concludes that the project may qualify for a CATEX may request a CATEX determination from EPA;
or EPA may determine that a proposed project may be eligible for a CATEX during initial discussions with
the applicant about the proposed project. If EPA determines the project does not qualify for a CATEX,
the applicant will provide EPA with more detailed information on the proposed project in the form of an
Environmental Information Document (EID).
Environmental Information Document: If EPA determines that the project does not qualify for a CATEX,
EPA will likely ask the applicant to submit an EID to EPA to provide information about the project and its
2142 U.S.C. §4321
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potential environmental effects, if a previously completed EID was not already provided to EPA. The EID
provides basic project information including a detailed description of the proposed project and
evaluates the environmental impacts and alternatives to the proposed project. The scope and level of
detail of the EID should be commensurate with the magnitude and significance of the proposed project.
The applicant should consult with EPA to obtain information on the processes to follow when preparing
an EID and the information that should be included. If the applicant holds one or more public meetings
as part of preparing the EID, a description of the process and any additional documentation should be
included in the EID. Please be aware that EPA may request additional information from applicant if
insufficient information has been provided for EPA to conduct the NEPA review.
Environmental Assessment (EA): If EPA determines that the proposed project does not qualify for a
CATEX, EPA may evaluate the proposed project in an EA. The prospective borrower's role in the EA
process is to provide sufficient information in the EID submitted to EPA. In some cases, the prospective
borrower may submit a draft EA and supporting documents in lieu of an EID. EPA may contact the
prospective borrower during the EA preparation process to request additional information on the
project or its potential impacts. If the EA results in a FONSI, the prospective borrower may also be asked
to assist EPA in conducting any public review process. The prospective borrower should consult with EPA
for the exact processes to follow.
Environmental Impact Statement (EIS): If EPA determines that the applicants proposed project does not
qualify for a CATEX or EA, or an EA has concluded that significant impacts will occur, EPA may evaluate
the proposed project in an EIS. EPA may enter into a third-party agreement with the applicant to hire a
consulting firm to prepare the EIS. As the project's proponent, the applicant may be asked to assist EPA
(e.g., by providing project information, assisting with public meetings or hearings, and helping to
respond to comments that require project changes). After the EIS is complete, EPA will make a decision
on the action it will take and formalize it in a ROD.
NATIONAL HISTORIC PRESERVATION ACT (NHPA)
The National Historic Preservation Act (NHPA) embodies a long-standing national policy to preserve
historic sites, buildings, structures, districts and objects of national, state, tribal, local, and regional
significance and, among other things, to protect such historic properties from adverse impacts caused
by activities undertaken or funded by federal agencies. NHPA expanded the scope of the 1935 Historic
Sites Act (Pub. L. No. 74-292) by establishing the National Register of Historic Places, a listing of
historical and cultural resources maintained by the U.S. Department of the Interior (DOI).
The fundamental responsibilities of federal agencies are expressed in Section 106 of the Act, which
reads:
The head of any Federal agency having direct or indirect jurisdiction over a proposed or
federally assisted undertaking in any State and the head of any Federal department or
independent agency having authority to license any undertaking shall, prior to approval
of the expenditure of any Federal funds on the undertaking or prior to the issuance of
any license, as the case may be, take into account the effect of the undertaking on any
district, site, building, structure, or object that is included in or eligible for inclusion in
the National Register. The head of any such Federal agency shall afford the Advisory
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Council on Historic Preservation established under title II of this Act (16 U.S.C. § 470i et.
seq.) a reasonable opportunity to comment with regard to such undertaking (16 U.S.C. §
470(f)).22
The NHPA is administered by the DOI and the Advisory Council on Historic Preservation (the Council).
The Council implements Section 106 of the NHPA and has promulgated regulations for consultation
regarding how to determine the effects of federal agency undertakings on historic properties (36 C.F.R.
Part 800). Although under certain circumstances the Council may become directly involved in such
consultations, the procedures generally call for consultation between the federal agency and relevant
state or tribal historic preservation officers (SHPOs and THPOs) and other interested parties, including
applicants for federal assistance (who may be authorized to initiate consultation with the SHPO/THPO
and others - 36 C.F.R. § 800.2(c)(4)). The consultation process generally involves a series of
determinations regarding the area of potential effect of the undertaking, whether there are historic
properties (defined as any prehistoric or historic district, site, building, structure, or object included in,
or eligible for inclusion in, the National Register of Historic Places - 36 C.F.R. § 800.16(1)) within such
area, and, if so, whether such properties may be affected and how to address any adverse effects.
EPA, in consultation with the Advisory Council or SHPO/THPO, as well as other interested parties, must
first determine whether a project might affect historic properties that are included or eligible for
inclusion on the National Register. This step is done by identifying whether there are historic properties
in the project area. EPA reviews background information, consults with the SHPO/THPO and others,
seeks information from knowledgeable parties, and conducts additional studies as necessary. Unlisted
properties are evaluated against the National Park Service's published National Register criteria, in
consultation with the SHPO/THPO and any Indian Tribe or Native Hawaiian organization that may attach
religious or cultural importance to them.
If EPA finds that historic properties are present, the next step is to assess possible adverse effects. Again,
consultation must occur with the SHPO/THPO and other interested parties. If they agree that there will
be no adverse effect, the agency proceeds with the undertaking and any agreed upon conditions. If the
parties cannot agree or they find that there is an adverse effect, the agency begins consultation to
identify ways to avoid, minimize, or mitigate adverse effects. This process also requires consultation
with the SHPO/THPO and others, including Indian Tribes and Native Hawaiian organizations, local
governments, and members of the public. If, because of disagreement among the appropriate parties,
the agency cannot issue a determination that no historic or cultural properties are in the project area,
that resources do exist in the project area but will not be adversely affected, or that adequate mitigating
measures will be taken to avoid or reduce adverse effects to resources in the project area, the agency
will then enter into consultations with all parties to resolve the dispute.
22 Under relevant Section 106 implementing regulations, undertaking means a project, activity, or program funded
in whole or in part under the direct or indirect jurisdiction of a federal agency, including: those carried out by or on
behalf of the agency; those carried out with federal financial assistance; and those requiring a federal permit,
license, or approval (36 C.F.R. § 800.16(y)).
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SECTION 3
TERMS AND CONDITIONS OF WIFIA CREDIT ASSISTANCE
To meet its mission, the WIFIA program can structure WIFIA credit instruments to provide low cost,
long-term, supplemental credit assistance under customized terms to qualified projects. To access these
benefits, credit assistance must comply with all statutory terms and conditions and programmatic credit
policies. The statute authorizes the WIFIA program to provide both secured loans and guarantees on a
loan or other debt obligation issued by a borrower and funded by a third-party lender.
This section summarizes the terms and conditions that apply to WIFIA secured loans, including those
required by the statute and by credit policies established by the WIFIA program.23 These terms and
conditions support the requirement that projects must be deemed creditworthy by the Administrator to
be eligible for WIFIA credit assistance.
3.1 STATUTORY TERMS AND CONDITIONS
The statute mandates several terms and conditions for WIFIA credit assistance. These requirements
represent threshold inputs to the development of a finance plan and are as follows:
Maximum Amount: The amount of WIFIA credit assistance may not exceed 49 percent of the reasonably
anticipated eligible project costs, as defined in Section 2.6.24,25 WIFIA credit assistance may not exceed
the amount of the project's senior obligations unless the WIFIA credit instrument receives an
investment-grade rating from a Nationally Recognized Statistical Rating Organization (NRSRO).26
Maximum Federal Involvement: Total federal assistance for any project may not exceed 80 percent of
total project costs.27
23 The WIFIA program does not anticipate immediate demand for the loan guarantee instrument based on
experience from comparable government credit programs. Information about loan guarantee terms will be added
in a subsequent version of the handbook. Prospective borrowers interested in a loan guarantee should contact the
WIFIA program for additional information.
24 33 U.S.C. § 3908(b)(2)(A)
25 The statute authorizes EPA to use up to 25% of its budget authority appropriated through Fiscal Year 2019 to
provide credit assistance to one or more projects of up to 80% of the total costs of any given project. EPA will use
this authority only in extraordinarily exceptional circumstances, such as where a project would be unable to
proceed to closing absent such additional assistance due to unforeseen events. Unforeseen events that could
prevent a project from going to closure may include, but are not limited to: unexpected cost revisions, unexpected
loss of other sources of financing, increased cost of capital, or acts of nature. In such an event, EPA will reexamine
the creditworthiness of the project and only provide funding if the project can still meet all requirements of the
program. EPA will not entertain requests for use of this authority in a letter of interest or application.
26 33 U.S.C. § 3908(b)(2)(B)
27 The maximum federal involvement does not apply to certain rural water projects that are authorized to be
carried out by the Secretary of the Interior, include federally-recognized Indian tribes among the beneficiaries and
for which the authorized Federal share of the total project costs is greater than 80%. 33 U.S.C. § 3908(b)(9)(B).
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Interest Rate: The WIFIA program offers fixed-rate credit instruments. The interest rate of the WIFIA
credit instrument will be no less than the yield on U.S. Treasury securities of a similar maturity to that of
the WIFIA credit assistance on the date of execution of the credit agreement.28 To establish the interest
rate on the date of the loan closing, the WIFIA program will identify the Treasury rates through use of
the daily rate tables published by the Bureau of the Public Debt for State and Local Government Series
(SLGS) investments. The WIFIA program will then add one basis point to the SLGS rate as this is equal to
the Treasury rate. To estimate the yield on comparable Treasury securities, the WIFIA program will use
a maturity that is closest to the weighted average loan life of the WIFIA credit assistance, measured
from first disbursement.29
Maturity Date: The final maturity date of the WIFIA credit instrument must be the earlier of 35 years
after the date of substantial completion of the relevant project, or the useful life of the project (as
determined by the Administrator).30 If the borrower is a SRF program, the final maturity date of WIFIA
credit assistance must be no later than 35 years after the first disbursement of funds.
Debt Service Payment Terms: Scheduled payments on the WIFIA credit instrument must commence no
later than five (5) years following substantial completion of the project.31 The debt service payment
schedule may be sculpted to accommodate the projected cash flow from project revenues and other
sources. If the borrower is a SRF program, scheduled payments shall commence no later than five (5)
years after the date of the first disbursement.
Dedicated Source of Repayment: WIFIA credit assistance must be repaid using a dedicated source of
repayment or security pledge that is the same in all material respects as the security pledged to the
project's senior obligations.32 The WIFIA program interprets "dedicated revenue sources" to include
such levies as taxes, rate revenue, transfers pledged from state or local governments, dedicated taxes, a
municipal general obligation pledge, revenues that are pledged for the purpose of retiring debt on the
project, and general recourse corporate undertakings.
Deferrals: Debt service payments on the WIFIA credit instrument, in accordance with the debt service
payment schedule, may be deferred on a case-by-case basis at the sole discretion of the Administrator.
The Administrator may grant a deferral only if there remains a reasonable assurance of repayment of
the WIFIA credit instrument and the final maturity of the WIFIA credit instrument remains unchanged.
Under a deferral, any unpaid principal and interest will be added to the outstanding balance of the
WIFIA credit instrument.
Security Features: WIFIA credit assistance shall include a rate covenant, coverage requirement, or
similar security feature supporting the project obligations.33
28 33 U.S.C. § 3908(b)(4)
29 The SLGS tables can be found online at https://www.treasurvdirect.gov/GA-SL/SLGS/selectSLGSDate.htm.
30 33 U.S.C. § 3908(b)(5)(A)
31 33 U.S.C. § 3908(c)(2)
32 33 U.S.C. § 3908(b)(3)(A)
33 33 U.S.C. § 3908(b)(3)(B)
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Prepayment Conditions: A borrower may prepay WIFIA credit assistance in whole or in part without
penalty at any time.34 WIFIA credit assistance may not be prepaid using federal funds.
Lien Priority: A WIFIA loan may not be subordinated in security and priority to other debt obligations
such as bonds or SRF loans used to fund the project. A WIFIA loan may, on a case by case basis, be
subordinate in priority and security to previous or future debt obligations an eligible entity may incur for
other purposes unrelated to the WIFIA project. Such cases will generally be limited to highly rated public
agency borrowers with on-going debt issuance programs (such as through a preexisting indenture)
where the WIFIA loan is rated in the A category or higher.
Fees: All WIFIA credit assistance is subject to fees, as described in Appendix D, to cover all or a portion of
EPA's costs associated with providing credit assistance.
Non-Federal Share: The proceeds of a secured loan under this section may be used to pay any non-
federal share of project costs required if the loan is repayable from non-federal funds.
3.2 CREDIT POLICIES
EPA must deem a project creditworthy for it to be eligible for WIFIA credit assistance. In support of this
requirement, the WIFIA program has established credit policies. These policies influence the structuring
of project financing plans and guide the WIFIA program's creditworthiness determination. The credit
policies are as follows:
Disbursement Timing: The WIFIA program will disburse proceeds of the WIFIA credit instrument to
reimburse eligible project costs incurred based on submitted invoices and receipts. Disbursements may
be scheduled as often as once per month.
Credit Rating Opinions: Credit ratings from NRSROs will supplement but not supplant the WIFIA
program's evaluation and determination of creditworthiness.
Federal Appropriations: The WIFIA program will not consider proposals for financial assistance from
prospective borrowers whose creditworthiness is significantly dependent on future federal
appropriations.
Interest Capitalization: WIFIA credit assistance may capitalize interest as warranted by the cash flow
profile of the project. The WIFIA program will review the transaction's resulting capital structure,
creditworthiness, and uses of any excess cash prior to accepting any proposed interest capitalization
periods that are post substantial completion of the project.
Amortization Requirement: The WIFIA program will seek to amortize the WIFIA credit instrument over
the useful life of the project. In some instances, the WIFIA program may require borrowers to prepay
the WIFIA credit instrument with excess revenues, refinancing proceeds, or trapped cash flow, as
appropriate.
Variable Rate Interest Exposure: The WIFIA credit instrument will not be exposed to material amounts
of variable rate debt in the borrower's capital structure.
34 33 U.S.C. § 3908(c)(4)(B)
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Additional Debt: If the financial plan contemplates future additional indebtedness, EPA will require an
additional bonds test to ensure that such issuances do not weaken the creditworthiness of the WIFIA
credit instrument over the long term.
Useful Life of Projects: In determining the useful life of a project, EPA will consider the operational life
of the key asset(s) being financed, the capability of the project to generate cash flow over time, the
certainty of project cash flows over time, and other existing and potential demands on project cash
flows over the term of the WIFIA credit instrument.
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SECTION 4
APPLICATION PROCESS SUMMARY
This section provides an overview of the application and approval process. EPA's review of projects can
be categorized into three phases as illustrated in Figure 4-1.
FIGURE 4-1: WIFIA PROGRAM APPLICATION PROCESS
Phase 1: Project Selection: EPA announces the amount of funding it will have available and solicits
letters of interest from prospective borrowers. In the letter of interest, prospective borrowers
demonstrate their project's eligibility, creditworthiness, engineering feasibility, and alignment with
EPA's policy priorities. Based on this information, EPA selects projects which it intends to fund and
invites them to continue to the application process. More details are provided in Section 5.0.
Phase 2: Project Approval: Each invitee submits an application for WIFIA credit assistance. Using this
information, the WIFIA program conducts a detailed financial and engineering review of the project.
Based on that review, the WIFIA program proposes terms and conditions for the project and negotiates
with the applicant until they develop a mutually agreeable term sheet. The Administrator demonstrates
project approval by executing the project's term sheet. More details are provided in Section 6.0.
Phase 3: Negotiation and Closing: Based on the term sheet, the WIFIA program finalizes the terms of
credit assistance to a prospective borrower. At closing, the Administrator or his designee and the
applicant execute the credit agreement, which is the binding legal document that allows the borrower
to receive WIFIA funds. More details are provided in Section 7.0.
Table 4-1 describes the steps that are undertaken during each phase of the application process. Section
5.0 through Section 7.0 of this handbook describe each of the three phases in greater detail.
During the WIFIA credit assistance selection and approval process, the WIFIA program interacts with
entities both within and outside EPA. These entities are listed in Figure 4-2 and described below.
A
Project Selection
Project Approval
Negotiation and Closing
NOFA
Letter of Interest (LOI)
Submission
LOI Evaluation
Project Selection
Application
Submission
Application Evaluation
Project
Recommendation
Approval
Closing Activities
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Table 4-1: WIFIA Program Application Process
Phase Step Responsible Party
Notice of Funding Availability (NOFA)
Submit NOFA to Federal Register Administrator
Letter of Interest Submission
Prepare the letter of interest and submit it to the WIFIA
program
Letter of Interest Evaluation
Confirm eligibility of projects and prospective borrowers,
perform preliminary creditworthiness evaluation,
determine project feasibility, and evaluate project
against selection criteria
Project Selection
Select eligible projects to invite to submit applications
based on letters of interest
Invite prospective borrowers to apply
Prospective borrower
WIFIA program and Office of
Water Staff
Selection Committee
WIFIA program
Application Submission
Prepare and submit the application, including a
preliminary rating opinion letter and the application
fee, and present the project to the WIFIA program
Application Evaluation
Evaluate and determine creditworthiness of the
applications
Develop mutually agreed-upon terms and conditions for
WIFIA credit assistance
Project Recommendations
Prepare and present a recommendation for the project to
the Credit Council
Review and approve credit subsidy estimation
Prepare and present a recommendation for the project to
the Administrator
WIFIA Credit Assistance Approval
Decide on the approval of the project, execute the term
sheet, and authorize the subsequent negotiation of a
credit agreement
Inform the prospective borrower of the Administrator's
decision, and provide term sheet and closing date
Applicant
WIFIA program
WIFIA program and applicant
WIFIA program
OMB
Credit Council and WIFIA program
Administrator
WIFIA program
Closing Activities
Negotiate and draft the final credit agreement with the
prospective borrower
Demonstrate fulfillment of conditions precedent to
closing.
Execute credit agreement
WIFIA program
Applicant
Administrator or designee and
applicant
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Figure 4-2: WIFIA Program Project Selection and Approval Entities
Approves applications for WIFIA credit assistance
Administrator Executes credit agreement (authority may be delegated to
Assistant Administrator)
Approves credit subsidy estimates and gives EPA authority to
commit resources
Reviews creditworthiness determination of projects
Recommends projects for approval to the Administrator
Selection
Selects projects to invite to submit applications
Committee
r ^
Evaluates the eligibility of the project, borrower, and costs
Manages the letter of interest and application review process
Conducts credit, legal, and engineering due diligence on each
WIFIA Program
project
Negotiates credit agreements
Estimates the credit subsidy for each project
L j
Monitors the WIFIA loan portfolio
J
The EPA Administrator grants final approval of applications for WIFIA credit assistance and executes the
credit agreement at closing (execution of the credit agreement may be delegated to the Assistant
Administrator for the Office of Water). The Administrator sets policy and priorities for EPA and for the
WIFIA program.
The Office of Management and Budget (OMB) reviews and approves the final credit subsidy cost before
the Administrator can approve any application for WIFIA credit assistance. In addition, OMB gives EPA
the authority to commit resources via an apportionment.
A Credit Council serves in an advisory capacity to EPA. It reviews the findings of the WIFIA program, and
advises the Administrator or his designee regarding the creditworthiness of applications. It also advises
the Program Director and approves the WIFIA program's credit policies, which influence the terms and
conditions offered for WIFIA credit assistance.
OMB
Credit Council
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A Selection Committee chooses projects to invite to submit applications for WIFIA credit assistance.
Senior Office of Water managers, including representatives from both the Office of Wastewater
Management and the Office of Ground Water and Drinking Water, serve on the selection committee.
The WIFIA Program coordinates the letter of interest selection process, including evaluating the
eligibility of the project, borrower, and costs. It also manages the application review process, including
negotiating credit agreements to ensure that the government's interest is protected and estimating the
credit subsidy for the projects, feasibility. After loan closing, the WIFIA program monitors all the loans in
its portfolio until final repayment.
4.1 REVIEW TIMELINE
PROJECT SELECTION
The project selection process, from publishing the NOFA through inviting prospective borrowers to
submit an application takes approximately six (6) months. This process is the same for all prospective
borrowers. After the NOFA is published, prospective borrowers typically have 60-90 days to submit a
letter of interest. EPA examines and reviews letters of interest beginning immediately after the
submission deadline. Evaluating and selecting projects takes another 90 days after which invitations to
apply are sent to the selected projects. This process is described in detail in Section 5. Figure 4-3 shows
the anticipated timeline for the project selection process.
Figure 4-3: Project Selection Process
1
Project Selection
Negotiation and
Closing
Project Approval
Notice of Funding
Availability (NOFA)
Letter of Interest
Submission
Letter of Interest
Evaluation
Project Selection
60 - 90 days
90 days
PROJECT APPROVAL
After entities are invited to apply, they should submit an application within one year. For most selected
projects, applying should take significantly less time. When the application and required fee are
received, EPA begins the project evaluation and approval process. Application evaluation is a
cooperative process that involves back-and-forth discussion between EPA and the applicant. The goal of
this process is to provide sufficient information for EPA to recommend approval and adequate
negotiation to develop a term sheet. Depending on the project's complexity and financing structure,
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evaluation and development of a term sheet should take between 90 and 180 days. After a term sheet
has been agreed upon between EPA and the applicant, it must be approved by the Administrator, which
should take an additional 30 days. This process is described in detail in Section 6. Figure 4-4 shows the
general timeline for the project approval process.
Figure 4-4: Project Approval Process
Project Selection
Project Approval
Application
Submission
Application
Evaluation
Term Sheet
Development
Application
Approval
90 -180 Days
30 Days
NEGOTIATION AND CLOSING
After a project is approved through the execution of the term sheet, EPA and the applicant begin the
process of negotiating the final loan documents. Depending on the complexity of the agreed upon
terms, the negotiations may be quick or may be extensive. This process can take between 60 and 90
days. Upon final agreement of the loan terms and drafting of the loan documents, EPA will schedule the
loan closing. Figure 4-5 shows the general timeline for the negotiation and closing process.
Figure 4-5: negotiation and closing process
~ Project Selection
~ Project Approval
Negotiation and
Closing
Negotiation
60 -150 Days
Closing
The WIFIA program can provide customized loan terms and work with applicants to develop innovative
credit structures to help get projects off the ground. Each transaction's review will be tailored to reflect
the complexity and risk of the project's credit. If an applicant opts for a straightforward financial, legal
and technical project and generic loan characteristics, it can anticipate a shorter approval, negotiation
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and closing process. Conversely, if an applicant's project is more complex financially, legally, and
technically, and requires significant negotiations to craft mutually agreeable terms, it can anticipate a
longer approval, negotiation and closing process.
Projects that may experience a shorter review and approval process have a few key attributes:
A straightforward capital structure.
A highly rated revenue source not dependent upon construction.
High-value collateral.
An active debt issuance program within an existing indenture or trust agreement.
A willingness to accept WIFIA's standard credit and legal terms.
No complicating cross-cutter compliance issues.
Project concept is conventional and relatively low risk.
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SECTION 5
PROJECT SELECTION
This section describes the first phase of the WIFIA program application process, which includes the
release of the Notice of Funding Availability (NOFA), the submission of letters of interest, the evaluation
of letters of interest, and the selection of projects to invite to apply.
Prospective borrowers may contact the WIFIA program either by email (wifia(5)epa.gov) or by phone
(202-564-2992) during this phase of the application process. In addition to answering the prospective
borrower directly, the WIFIA program will compile the questions and their responses into a frequently
asked questions (FAQ) document posted on its website.
The initial phase commences with the issuance of a NOFA. A NOFA notifies the public that new funding
is available, typically after funds are appropriated by Congress, and EPA is ready to accept letters of
interest from prospective borrowers. EPA will publish the NOFA in the Federal Register and on the WIFIA
program website (https://www.epa.gov/wifia). Each NOFA will specify the amount of funding available
to support WIFIA credit assistance, EPA's priorities for the funding round(s), the weight given to each
selection criterion, and instructions for submitting a letter of interest. EPA may also include in the NOFA
additional eligibility requirements, set-asides, or priorities as mandated by the appropriating legislation.
EPA may announce multiple selection rounds in a single NOFA. For each selection round, the NOFA will
identify a deadline by which letters of interest must be submitted to be considered for funding in that
selection round.
Prospective borrowers must submit a letter of interest by the deadline articulated in the NOFA to be
considered for WIFIA credit assistance in a selection round.
In the letter of interest, prospective borrowers provide the WIFIA program with sufficient information
to:
Validate the eligibility of the prospective borrower and the proposed project;
Perform a preliminary creditworthiness assessment;
Perform a preliminary engineering feasibility analysis; and
Project
Approval
Negotiation
and Closing
Project Selection
~
5.1 NOTICE OF FUNDING AVAILABILITY (NOFA)
5.2 LETTER OF INTEREST SUBMISSION
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Supply the WIFIA program with information to evaluate the project against the selection
criteria defined in the NOFA.
COMPONENTS
The letter of interest contains the following eight (8) sections:
Prospective Borrower Information: In this section, the prospective borrower provides basic
information such as its legal name, address, website, employer/taxpayer identification number,
Dun and Bradstreet Data Universal Number System (DUNS) number, and type of entity. In
addition, it describes the project's organizational structure, risk allocation if multiple parties are
involved, and readiness to proceed.
If the project will be undertaken by an entity that is not a State or local government or an
agency or instrumentality of a State or local government, or a tribal government or consortium
of tribal governments, the prospective borrower must demonstrate public sponsorship for the
project. Public sponsorship means that the prospective borrower can demonstrate, to the
satisfaction of the EPA, that it has consulted with the affected State, local, or tribal government
in which the project is located, or is otherwise affected by the project and that such
government supports the proposed project. A prospective borrower can show support by
including a certified letter signed by the approving State, tribal, or municipal department or
similar agency; governor, mayor or other similar designated authority; statute or local
ordinance, or any other means by which government approval can be evidenced.
- Project Plan: The prospective borrower provides a general description of the project, including
its name, permit number, website, location, population served, description, purpose, design
features, project delivery method, and development schedule. In addition, it includes other
relevant information that could affect the development of the project, such as community
support, pending legislation, litigation, and permitting. Also, the prospective borrower submits
project documents including preliminary engineering analysis, alternative analysis or business
cases conducted, project plans and specifications, project schedule, and a system master plan,
as available.
Project Operations and Maintenance Plan: The prospective borrower describes its plan for
operating, maintaining, and repairing the project post-completion, discusses the sources of
revenue used to finance these activities, and provides an estimate of the economic useful life
of the project.
Financing Plan: The prospective borrower details the estimated eligible project costs and
requested amount of the WIFIA loan. Also, it provides the sources and uses table for the
construction period. The prospective borrower should discuss proposed financial structure, any
existing ratings from NRSROs on the security pledged for repayment of the WIFIA loan if
available, or a description of how the senior debt obligations will garner an investment-grade
rating(s). It should describe the proposed credit terms for the WIFIA assistance and the its
financial condition.
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In addition to the information provided in the form, the prospective borrower should provide a
financial pro forma and year-end audited financial statements for the past three years, as
available. A sample pro forma is provided on the WIFIA website at
https://www.epa.gov/wifia/wifia-application-materials-and-resources. The pro forma should
be submitted in as editable electronic files, not in PDF or "values" format.
Selection Criteria: The prospective borrower describes the potential policy benefits achieved
through the use of WIFIA assistance with respect to each of the WIFIA program selection
criteria. These criteria and their weights are enumerated in the NOFA. Appendix C of the
handbook also contains a detailed discussion of the selection criteria.
Contact Information: The prospective borrower identifies the points of contact with whom the
WIFIA program should communicate regarding the letter of interest. For the purpose of
completing its evaluation, WIFIA program staff may contact a prospective borrower regarding
specific information in the letter of interest.
Certifications: The prospective borrower certifies that it will abide by all applicable laws and
regulations, including NEPA, the Federal Water Pollution Control Act, the American Iron and
Steel requirements, and Federal labor standards, among others if selected to receive funding.
c SRF Notification: The prospective borrower acknowledges that EPA will notify the appropriate
SRF program in the state in which the project is located that it submitted a letter of interest
and provide the submitted letter of interest and source documents to that authority. The
prospective borrower may opt out of having its letter of interest and source documents shared.
Prospective borrowers should use the letter of interest form provided on the WIFIA website
(https://www.epa.gov/wifia/wifia-application-materials-and-resources) to complete their letters of
interest. In cases where there are differences between the guidance in this document and the guidance
on the electronic form, the latter should dictate the prospective borrower's response.
5.3 LETTER OF INTEREST SUBMISSION
Prospective borrowers must submit the letter of interest and all referenced source documents to EPA by
the deadline stated in the Notice of Funding Availability (NOFA). Source documents may be draft or
preliminary. Please provide the most recent version available at the time of submission. Prospective
borrowers may wish to assert a business confidentiality claim covering part or all of the information
included in the letter of interest form or referenced source material. Further information, including a
definition of "confidential business information (CBI)," the process for asserting confidentiality, and the
information EPA will require from a prospective borrower to substantiate the claim, can be found in
Appendix F. Please be aware that EPA reserves the right to request substantiation at any time following
a business confidentiality claim.
The documents may be submitted in two ways:
Email the documents as attachments to wifia(5)epa.gov.
- Upload the documents to EPA's SharePoint site. To be granted access to the SharePoint site,
prospective borrowers must request access to SharePoint by emailing wifia(5)epa.gov.
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Requests to upload documents must be made in advance of the deadline as outlined in the
NOFA.
Upon receipt, EPA will provide a confirmation email. In addition, the program will post a list of all
prospective borrowers with a short project description.
5.4 LETTER OF INTEREST EVALUATION
The WIFIA program will select projects to be invited to apply based on submitted letters of interest. EPA
will only select projects which are reasonably anticipated to be able to meet the eligibility requirements
and for which the WIFIA program has sufficient budget authority. This helps to ensure the potential
borrowers do not expend time and financial resources, including incurring fees associated with applying,
for a project that is not likely to proceed to financial close.
EPA will assess letters of interest by performing an eligibility screening, a preliminary creditworthiness
assessment, a preliminary engineering feasibility analysis, and an evaluation of the selection criteria.
ELIGIBILITY ' NG
Upon receipt of a letter of interest, the WIFIA program validates that the prospective borrower is an
eligible entity as described Section 2.1 and the proposed project is an eligible project as described in
Section 2.2. Eligible projects are concurrently reviewed for creditworthiness, engineering feasibility, and
selection criteria evaluation, as described below.
PRE LIMIN A R Y C R E DIT W O RT LI I MESS I
Following the determination of eligibility, the WIFIA program will perform a preliminary
creditworthiness assessment. The preliminary creditworthiness assessment has two purposes:
To evaluate whether the credit assistance requested by the prospective borrower has
reasonable assurance of repayment.
To estimate the amount of budget authority necessary to fund such WIFIA credit assistance.
Prospective borrowers are encouraged to provide the WIFIA program with as much information about
the proposed credit request as possible in response to the letter of interest and through attachments.
Whenever possible, the prospective borrower should include existing credit ratings on the proposed
source of repayment. The WIFIA program will use this information to determine historic financial
performance (for established entities) as well as the strength of the proposed revenue pledge by
evaluating revenue and expense projections including coverage ratios and growth trends.
PRELIMINARY FEASIBILITY ANALYSIS
The WIFIA program will perform a preliminary engineering review to evaluate whether the project is
technically feasible based on the information submitted with the letter of interest. The purpose of this
review is not to provide input on project design but to ensure the project can be completed on time and
within budget. In addition, the WIFIA program will estimate the impact of compliance with federal
requirements, such as NEPA, on the project cost and schedule. The WIFIA program will evaluate the
reasonableness of the project development schedule, environmental review, cost estimates, and
operations and maintenance plan. While additional supporting materials such as alternatives analysis or
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master plans are not required, the prospective borrower can make a stronger case for a well thought
out, documented, and prioritized project by providing the WIFIA program with such information.
At the letter of interest phase, EPA will make a preliminary assessment of potential environmental
impacts, what environmental assessments and consultations will need to be conducted should the
proposed project be invited to apply for WIFIA funds, and make a preliminary determination of the level
of NEPA assessment most applicable to the proposed project. Please refer to Appendix H for an
overview of EPA's steps to assessing the appropriate level of NEPA review.
SELECTION CRITERIA
The statute requires that the WIFIA program evaluate projects using selection criteria. The statute
established eleven (11) criteria, to which the implementation rule adds two (2) additional criteria. The
rule also allows EPA to add criteria in a NOFA. EPA is using this authority to add one (1) additional
criterion. The WIFIA selection criteria are divided into three categories that represent critical
considerations for selecting projects: Project Impact, Project Readiness, and Borrower Creditworthiness.
Each criterion within a category will be assigned a point value in the NOFA. For the Project Readiness
and Borrower Creditworthiness categories, criteria scores are supplemented by points awarded from
the preliminary engineering feasibility analysis and preliminary creditworthiness assessment, described
in the preceding sections. The WIFIA program evaluates the criteria as described in Appendix C. The
WIFIA program selection criteria are as follows:
PROJECT IMPACT;
The extent to which the project is nationally or regionally significant, with respect to the
generation of economic and public benefits, such as (1) the reduction of flood risk; (2) the
improvement of water quality and quantity, including aquifer recharge; (3) the protection of
drinking water, including source water protection; and (4) the support of international
commerce. 33 U.S.C. § 3907(b)(2)(A); 40 C.F.R. § 35.10055(a)(1).
- The extent to which the project uses new or innovative approaches. 33 U.S.C. § 3907(b)(2)(D);
40 C.F.R. § 35.10055(a)(3).
The extent to which the project (1) protects against extreme weather events, such as floods or
hurricanes; or (2) helps maintain or protect the environment: 33 U.S.C. § 3907(b)(2)(F); 40
C.F.R. § 35.10055(a)(4); 40 C.F.R. § 35.10055(a)(5).
The extent to which the project serves regions with significant energy exploration,
development, or production areas: 33 U.S.C. § 3907(b)(2)(G); 40 C.F.R. § 35.10055(a)(6).
The extent to which a project serves regions with significant water resource challenges,
including the need to address (1) water quality concerns in areas of regional, national, or
international significance; (2) water quantity concerns related to groundwater, surface water,
or other water sources; (3) significant flood risk; (4) water resource challenges identified in
existing regional, State, or multistate agreements; and (5) water resources with exceptional
recreational value or ecological importance. 33 U.S.C. § 3907(b)(2)(H); 40 C.F.R. §
35.10055(a)(7).
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The extent to which the project addresses identified municipal, State, or regional priorities. 33
U.S.C. § 3907(b)(2)(l); 40 C.F.R. § 35.10055(a)(8).
The extent to which the project addresses needs for repair, rehabilitation or replacement of a
treatment works, community water system, or aging water distribution or wastewater
collection system. 40 C.F.R. § 35.10055(a)(12).
The extent to which the project serves economically stressed communities, or pockets of
economically stressed rate payers within otherwise non-economically stressed communities.
40 C.F.R. § 35.10055(a)(13).
The extent to which the project reduces exposure to lead in the nation's drinking water
systems or ensures continuous compliance with contaminant limits. 40 C.F.R. § 35.10055(b).
PROJECT READINESS
The readiness of the project to proceed toward development, including a demonstration by the
obligor that there is a reasonable expectation that the contracting process for construction of
the project can commence by not later than 90 days after the date on which a Federal credit
instrument is obligated for the project under [WIFIA], 33 U.S.C. § 3907(b)(2)(J); 40 C.F.R. §
35.10055(a)(9).
- Preliminary engineering feasibility analysis score. 33 U.S.C. § 3907(a)(2); 33 U.S.C. § 3907(a)(6);
40 C.F.R. § 35.10015(c); 40 C.F.R. § 35.10045(a).
BORROWER CREDITWORTHINESS
The likelihood that assistance under [WIFIA] would enable the project to proceed at an earlier
date than the project would otherwise be able to proceed. 33 U.S.C. § 3907(b)(2)(C); 40 C.F.R. §
35.10055(a)(2).
- The extent to which the project financing plan includes public or private financing in addition to
assistance under [WIFIA], 33 U.S.C. § 3907(b)(2)(B); 40 C.F.R. § 35.10055(a)(10).
The extent to which assistance under [WIFIA] reduces the contribution of Federal assistance to
the project. 33 U.S.C. § 3907(b)(2)(K); 40 C.F.R. § 35.10055(a)(ll).
The amount of budget authority required to fund the Federal credit instrument made available
under [WIFIA], 33 U.S.C. § 3907(b)(2)(E).
Preliminary creditworthiness assessment score. 33 U.S.C. § 3907(a)(1); 40 C.F.R. § 35.10015(c);
40 C.F.R. § 35.10045(a)(1); 40 C.F.R. § 35.10045(a)(4); 40 C.F.R. § 35.10045(b).
5.5 PROJECT SELECTION
Once all letters of interest for a selection round have been evaluated, the Selection Committee will
select which prospective borrowers to invite to apply. The Selection Committee will choose projects
from the pool of active letters of interest received before the selection round due date. The Selection
Committee will select projects based on selection score, while also taking into consideration the
diversity of project types and geography within the portfolio. Due to the diversity requirement, it is
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possible that higher scoring projects will be skipped in favor of lower scoring projects to ensure such
diversity. There is no threshold score that must be achieved in order to be selected.
The WIFIA program will provide prospective borrowers written notification either inviting them to
submit an application for WIFIA credit assistance or notifying them that they have not been selected.
Selected entities will receive information about the location of the latest application materials.
Prospective borrowers that are invited to apply and do not plan to submit an application for WIFIA
credit assistance are asked to notify the WIFIA program immediately to allow other prospective
borrowers to be invited. Prospective borrowers that were not selected will receive information for
scheduling a debrief call to discuss their letter of interest.
An invitation to apply for WIFIA credit assistance does not guarantee EPA's approval, which remains
subject to a project's continued eligibility, including creditworthiness, the successful negotiation of
terms acceptable to EPA, and the availability of funds at the time at which all necessary
recommendations and evaluations have been completed. However, the purpose of EPA's letter of
interest review is to pre-screen prospective borrowers to the extent practicable. In doing this, it is
expected that EPA will only invite projects to apply if it anticipates that those projects can obtain WIFIA
credit assistance.
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SECTION 6
PROJECT APPROVAL
This section describes the process by which EPA approves projects for WIFIA credit assistance. This is the
second phase of the application review process. It includes a description of the steps that prospective
borrowers follow to submit an application for WIFIA credit assistance. It also describes the WIFIA
program's detailed evaluation review and approval process, which culminates in the execution of a term
sheet by the Administrator.
The second phase of the application review process begins when a prospective borrower who has been
invited to apply for WIFIA assistance submits its application. EPA anticipates that prospective borrowers
will need less than one year to complete applications. The WIFIA program will only review applications
submitted in response to an invitation to apply.
In the application, a prospective borrower updates information submitted in the letter of interest and
provides the WIFIA program with the materials necessary to evaluate the creditworthiness of the
prospective borrower and project for the proposed WIFIA credit assistance.
Applicants may wish to assert a business confidentiality claim covering part or all of the information
included in the application or referenced source material. Further information, including a definition of
"confidential business information (CBI)," the process for asserting confidentiality, and the information
EPA will require from an applicant to substantiate the claim, can be found in Appendix F. Please be
aware that EPA reserves the right to request substantiation at any time following a business
confidentiality claim.
Applicants should submit completed applications that include all components on the application
checklist. The completed application package, including both hard copy and electronic files, should be
sent to the attention of:
Director, WIFIA Program
US EPA William Jefferson Clinton West Building-room 6210 A
1301 Constitution Ave, NW
Washington, DC 20004
Applicants should provide electronic files of the entire application and all exhibits on a USB drive, CD, or
EPA's SharePoint site. Exhibits IX, X, and XI should be provided as editable electronic files, not in PDF or
A
Project
Selection
Negotiation
and Closing
Project Approval
~
6.1 APPLICATION SUBMISSION
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"values" format. Applicants are advised to use an express mail or courier delivery service to ensure
delivery confirmation of the package.
COMPO J
The following list outlines the elements of an application. However, it is not an exhaustive list of the
items that may be required of the applicant. Additional items may be requested on a case-by-case basis.
The application contains the following components:
Applicant Information: The applicant provides basic information such as its legal name, project
name, address, website, Dun and Bradstreet Data Universal Number System (DUNS) number,
and employer/taxpayer identification number. The applicant also submits information
identifying and describing its organizational history, ownership, structure, and customer base.
The applicant must also describe its legal authority to apply for WIFIA credit assistance and to
undertake the project, and disclose any current, threatened, or pending litigation.
Detailed Project Information: Materials submitted under this section detail the applicant's plan
for project construction, including estimated project costs, plans and specifications or
procurement documents, and project schedules. The applicant provides project development
reports and documents such as the plans and specifications, contractor selection materials,
alternatives analysis, system engineer's report, environmental review status, the floodplain
management plan, project management and compliance monitoring plan, and risk and
mitigation strategies. Applicants requesting credit assistance under a non-recourse project
finance structure include milestone schedules, and construction contract terms, including
performance security. The prospective borrower submits an analysis of the risks that may be
encountered during construction and steps that the prospective borrower will take to minimize
those risks.
Operations and Maintenance Plan: The applicant submits materials supporting its plan to
operate the project after construction. The operations and maintenance plan must extend
throughout the entire duration of the requested WIFIA assistance and include an estimate of
the associated costs and requirements. The applicant also submits materials describing
contractual arrangements that it has already made or plans to make.
Financing Plan: The prospective borrower submits a comprehensive plan describing how the
project will be financed and how financing will be repaid over the tenor of the requested WIFIA
credit assistance. This includes a detailed financial model covering all periods through final
maturity of the WIFIA credit assistance, the sources and seniority of other financing, a
description of the dedicated sources of repayment, rate covenants, and security for the
requested WIFIA credit assistance. The prospective borrower also submits a preliminary rating
letter from a NRSRO indicating the possibility of the project's senior obligations obtaining an
investment-grade rating. This rating on the senior debt should include an analysis of the
proposed WIFIA loan and the rating letter should specify the default risk of the WIFIA
instrument as well. The applicant also provides its proposed terms and conditions for the WIFIA
credit assistance.
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Certifications: The prospective borrower certifies that it will abide by all applicable laws and
regulations, including NEPA and the Davis-Bacon wage rules, as described in Section 2.7 and in
Appendix E.
PRELIMINARY OR INDICATIVE RATING
As a measure of a project's creditworthiness, WIFIA requires each applicant to provide, at the time of
application, a preliminary rating opinion letter from at least one Nationally Recognized Statistical Rating
Agency (NRSRO) indicating that the senior obligations of the project (which may be the federal credit
instrument) have the potential to achieve an investment-grade rating.35 The WIFIA program will not
consider an application complete until an applicant has provided a preliminary rating opinion letter. The
preliminary rating opinion letter is a conditional credit assessment from an NRSRO that provides a
preliminary indication of the project's overall creditworthiness and specifically addresses the potential
of the project's senior debt obligations to achieve an investment-grade rating and the default risk of the
WIFIA loan. Since the indicative rating is performed at an early stage of project development, the credit
analysis is not expected to include comprehensive information about the loan structure. Instead, the
indicative rating should provide an opinion about the potential to reach a credit rating based on a set of
assumptions. The indicative rating may be based on the best information available and assumptions
provided by the applicants that may change during the course of negotiation.
USE OF EXISTING RATING
The WIFIA program values recently issued public credit assessments on the revenue being pledged to
repay the WIFIA loan. To streamline the credit review process, the WIFIA program may accept an
existing rating in place of a new, indicative rating on a case-by-case basis. In evaluating whether a
previous rating letter for transactions with existing indentures can be accepted in lieu of the new
preliminary rating, the WIFIA program will assess whether the following criteria are met:
The existing credit rating is less than a year old or is actively maintained or monitored;
« The WIFIA additional debt does not materially change the credit quality of the revenue pledge;
The existing indenture thoroughly addresses the long-term capital funding or potential sources
of financing for future system investments;
The existing credit rating opines on the lien proposed for the WIFIA loan; and
The existing credit rating is longstanding and high investment grade.
FINAL RATING
The statute requires that prior to execution of the credit agreement, each applicant provide the WIFIA
program with final rating opinion letters from two NRSROs indicating that the senior obligations of the
project have an investment-grade rating.36 The WIFIA implementation rule at 40 C.F.R. § 35.10040(b)
further clarifies that the rating letters should provide commentary on the default risk of the WIFIA loan.
35 33 U.S.C. § 3907(a)(l)(D)(i)
36 33 U.S.C. § 3907(a)(l)(D)(ii)
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Since the final rating is issued after terms and conditions are established and when final documents are
drafted, the rating should reflect the specific credit terms of the transaction.
The final rating letters must both be public ratings. The credit assessment should specifically evaluate
the WIFIA loan's default risk and should contemplate the full life of the WIFIA credit instrument
Applicants should contact the WIFIA program with any questions regarding the rating process and the
requirements for preliminary and final investment-grade credit rating opinion letters on the senior
obligations and the WIFIA loans. The NRSROs will be able to answer questions concerning fees, timing of
assessments, information requirements, and surveillance practices associated with obtaining
preliminary opinion letters, credit ratings, periodic rating updates, and credit surveillance reports.
FEES37
The WIFIA program requires each applicant to reimburse the federal government for the costs of
retaining expert firms, including legal, engineering, and financial advisory services needed to review its
application materials, negotiate, and close the credit agreement. These fees can be financed by the
WIFIA loan as eligible project costs.
The WIFIA program will require the following fees from applicants as part of the application process.
Total fees associated with the application process are estimated to be between $250,000-$500,000 per
application. These fees will be updated in the Federal Register, as appropriate.
Application Fee: For projects serving communities of less than 25,000 people, the application
fee is $25,000. For all other applicants, the application fee is $100,000. The application fee is
payable upon submission of the application, without which the application will not be
evaluated. The application fee is non-refundable and is credited to the credit processing fee.
Credit Processing Fee: The credit processing fee is payable upon the execution of the Credit
Agreement. It reimburses EPA for costs in excess of the application fee incurred by EPA due to
legal, financial, engineering, and other expert contractor services. Due to the nature of this fee,
the amount is expected to vary between applicants. However, the WIFIA program estimates
these costs at between $250,000-$500,000 per applicant, a portion of which may be waived at
the discretion of the WIFIA program. In the event that an application is rejected or withdrawn,
the applicant is still required to reimburse costs incurred to EPA.
In addition to the fees required as part of the application process, the WIFIA program may charge the
following fees when deemed necessary:
Loan Servicing Fee: The WIFIA program may retain outside assistance to perform loan servicing
for WIFIA credit instruments, including credit accounting, collections, maintenance of
documents, and financial reporting. The WIFIA program will charge borrowers an annual fee for
loan servicing activities associated with each WIFIA credit instrument, which will be adjusted
periodically based on inflation.
37 The fee rule can be found at: https://www.federalregister.gov/documents/2017/06/28/2017-13438/fees-for-
water-infrastructure-project-applications-under-wifia.
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Extraordinary Expenses Fee: In the event that a borrower experiences difficulty relating to
technical, financial, or legal matters or other events (e.g., engineering failure or financial
workouts) which require the WIFIA program to incur time or expenses beyond standard
monitoring, EPA will be entitled to payment in full from the borrower of additional fees in an
amount determined by the WIFIA program and of related fees and expenses of its independent
consultants and outside counsel, to the extent that such fees and expenses are incurred
directly by the WIFIA program and to the extent such third parties are not paid directly by the
borrower.
Optional Supplemental Fee: Although it is unlikely that a scenario will arise under which it
would assess this fee, the WIFIA program will allow an applicant to "buy down" the budget
authority required for the credit instrument. This could allow an applicant to proceed to closing
in the event that sufficient budget authority is not otherwise available. This fee will only be
charged upon agreement by an applicant.
6.2 APPLICATION EVALUATION
Upon receipt of a complete application, the WIFIA program will initiate its evaluation of the request for
credit assistance. The WIFIA program will evaluate the feasibility of the project through engineering due
diligence and the creditworthiness of the project by assessing the project's risks and risk mitigation
strategies.
The WIFIA program will retain the services of financial advisors, outside legal counsel, and engineering
firms during the application evaluation through closing. Through the credit processing fee, the applicant
will reimburse EPA for the cost of these services that are in excess of the application fee.
A*"\ ON INT-
The WIFIA program will first validate that applications submitted by applicants contain all of the
requested elements and request missing documents, as necessary. For an application to proceed to
evaluation, the applicant must pay the application fee, provide the preliminary rating opinion letter
from a NRSRO, and submit a signed application. The WIFIA program will also confirm that the
application continues to meet the eligibility requirements. The program will post basic information
about the application on its website. Such information will include a project description, requested loan
amount, total project cost, and approval status.
ORAL PRESENTATION
After submitting its application, the WIFIA program will invite the applicant to give an oral presentation
on the proposed project, followed by a discussion. The WIFIA program will arrange a time and location
for the oral presentation and provide instructions on the structure and content of the presentation. The
presentation and discussion are intended to clarify the applicant's project plans, including the financing
plan. The WIFIA program may use the discussion to request additional information and documents that
were not part of the application submission and to resolve issues related to the submitted materials.
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1INATION OF CREDITWORTHINESS
By statute, the Administrator must determine that every project that receives a WIFIA loan is
creditworthy. Therefore, an overarching goal of the creditworthiness determination process is to ensure
that each project that is ultimately offered credit assistance provides a level of risk exposure that is
deemed acceptable by the WIFIA program. To that end, the WIFIA program will evaluate applications for
financial assistance based on prudent lending practices for the long-term holding of an illiquid asset. The
Administrator will base the creditworthiness determination on a review of all of the following:
Terms, conditions, financial structure, and security features of the proposed financing.
Dedicated revenue source(s) securing the financing.
Financial assumptions surrounding the proposed project.
Financial soundness and credit history and outlook of the borrower.
Strength of the business model and project economics.
Technical merits and engineering risks of the proposed financing.
The following sections describe the process that will be used to assess the creditworthiness of a project
in greater detail. This process involves the determination of the credit type and an assessment of key
risks associated with that credit type; and an assessment of the prospective project against a general
credit assessment framework.
The WIFIA program's determination of creditworthiness must be based on realistic and probable inputs.
Additionally, the WIFIA program may conduct site visits as part of the determination of
creditworthiness.
DETERMINATION OF CREDIT TYPE AND CREDIT INSTRUMENT ATTRIBUTES
Given the WIFIA program's ability to accommodate a number of different types of applicants and uses of
funds, the determination of creditworthiness will include an assessment of each application in order to
develop a clear understanding of the following:
The applicant, including its credit history and structure.
The proposed project, including any risks that will be especially relevant.
The source or sources of repayment.
These characterizations will allow the WIFIA program to tailor its assessment of creditworthiness based
on the proposed credit instrument's specific credit attributes and the corresponding risk exposures
associated with those attributes. The WIFIA program anticipates evaluating balance sheet/general
recourse corporate borrowings, public financings, and non-recourse borrowing/project financings, and
will conduct financial and risk analyses based on the associated criteria. The following section outlines
the framework that will be used to assess each application for credit assistance.
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CREDIT ASSESSMENT CRITERIA
In general, the WIFIA program will review every proposed credit instrument based on a framework that
will focus on the five categories outlined below. As noted above, each project will have exposure to its
own distinctive combination of risks and each application will be assessed with a focus on its specific
risks. The descriptions that follow provide examples of assessment criteria, but are not meant to be an
exhaustive list:
Financial Strength: Each proposed use of funds will include a detailed financial plan and
projection of future cash flow generation. The WIFIA program will verify that the project is
expected to produce sufficient revenues to service the project's debt obligations through final
maturity. Projects must demonstrate adequate liquidity and debt service coverage under the
financial modeling assumptions and reasonable sensitivity cases. The WIFIA program may
consider the following criteria:
Each proposed use of funds should be financially sound and offer a projection of
revenue generation based upon reasonable assumptions that would provide sufficient
coverage to repay the proposed credit instrument.
By statute, the credit instrument must be repayable in whole or in part from a
dedicated source.
The capital structure for a project receiving WIFIA credit assistance should allow for
adequate net cash flow after meeting all necessary obligations to ensure that the credit
instrument is insulated from any unexpected events.
Business/Economic Considerations: Each type of credit will be influenced by its individual
business model, the product/services delivered to customers, and the economic conditions at
the site of the proposed use of funds. The WIFIA program may consider the following in the
assessment of the business characteristics and the local economy:
The structure of the applicant's business model, including an analysis of the product or
service being delivered and the appropriateness of rates with respect to the income
levels of the population served.
The predictability of the applicant's revenues, which may include a review of offtake
agreements, the service territory, or the franchise, as applicable.
The service area's resource endowments, long-term economic planning, economic
growth, labor force trends, and ability to withstand economic cycles.
Management: The WIFIA program will evaluate the applicant and any key counterparties, such
as sponsors, contractual partners, project management, and design and construction teams
based on their experience, ability to work as a team, and ability to deliver upon the proposed
financing. In its evaluation, it may consider the following criteria:
The applicant and key counterparties demonstrate technical, managerial, and financial
capacity to perform their respective responsibilities within the proposed use of funds.
All participants have sufficient assets to meet their obligations.
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All participants have a demonstrable record of success.
Management is capable of abiding by all relevant federal, state, and local regulations
during the pre-construction and construction process, and during operation.
If multiple counterparties exist, parties share the balance of risk appropriately.
Engineering Considerations: The WIFIA program will assess every proposed use of funds for
any pre-construction risk, construction risk, and technology risk through the engineering due
diligence process described below.
Loan Specific Factors: The WIFIA program will assess an applicant's other existing and
proposed credit instruments based on the terms and conditions and attendant risk to the
WIFIA credit instrument. It may include the following in its assessment:
The loan tenor, repayment profile, and lien priority of the proposed credit instrument,
given the risk profile of the credit assistance.
The strength of the proposed security features such as reserve funds, rate covenants,
and additional indebtedness restrictions.
These categories are overarching and provide a general framework for the creditworthiness assessment
of every application which can be adjusted to fit the risk profile of each proposed project. Following the
assessment of each application based on the overarching categories, and the more detailed analysis
guided by the specific attributes of the proposed project, the WIFIA program will make an initial
determination of creditworthiness.
E 3ENCE
The WIFIA program will assess the technical soundness of the project by reviewing project design plans,
specifications, procurement documents, technical reports and other associated documents. These
should be developed in accordance with professional standards and federal, state, and local
requirements. The due diligence will include the following:
Technical Soundness: The proposed project technology should be appropriate for its intended
use and consistent with the scope proposed in the letter of interest. Technical feasibility should
be demonstrated based on detailed engineering information. The WIFIA program will assess
the overall constructability and operability of the proposed project and that project plans and
design assumptions adhere to industry standards. The WIFIA program assessment does not
relieve the prospective borrower of responsibility for the project design. For Alternative Project
Delivery methods, such as Design-Build or Construction Manager-at-Risk, the WIFIA program
will review procurement documents for technical soundness in lieu of detailed design plans.
Technical Risk Factors: The project should demonstrate protection from construction
completion risk. The WIFIA program will assess potential construction and operation risks and
associated mitigation strategies. The WIFIA program will also document additional technical
reviews a project is expected to incur, such as state construction permit reviews, which further
mitigates technical risk.
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Construction Cost Estimate Assessment: Estimated project costs should be reasonable and
eligible. The WIFIA program will assess the suitability of the cost estimating methodology and
unit costs as compared to the project scope and industry standards. The cost estimate should
also include adequate contingencies as compared to the local market and escalations as
appropriate.
Construction Schedule Assessment: The project schedule should be reasonable. The WIFIA
program will assess the adequacy of the duration of the project as compared to the design
scope and project plan. In addition, the WIFIA program will review the schedule to ensure that
adequate time has been allotted for environmental permits and crosscutter compliance.
Federal Requirement Compliance: The project should comply with applicable federal
requirements, including NEPA. The WIFIA program will review application materials and work
with prospective borrowers to make NEPA determinations, conduct consultations with other
agencies, and otherwise ensure compliance. Please refer to Appendix H for an overview of
EPA's steps to assessing the appropriate level of NEPA review.
Operation and Maintenance Plan Review: Per statute, the applicant must have an operation
and maintenance plan that reasonably accounts for the expected cost of operating and
maintaining the project so that the project is fully functional over a time period equal or
greater than the length of the proposed credit assistance. The WIFIA program will assess the
prospective borrower's plan and estimated useful life of the project against industry standards
for adequacy.
Procurement Documents: Procurement documents should have a complete statement of work
to be performed and a clear explanation of the basis and method for awarding the contract. In
addition, the WIFIA program will review these documents to ensure that federal requirements,
such as David-Bacon and AIS are appropriately incorporated.
System Condition Assessment: When the WIFIA debt represents a material portion of the
overall debt load on the system and/or substantially influences the prospective borrower's
overall credit profile, the WIFIA program will ensure that the prospective borrower has
adequately planned for addressing system improvement needs during the repayment period.
The WIFIA program may conduct site visits during the application process to complete these reviews.
TERM SHEET DEVELOPMENT
The term sheet is a contractual agreement between EPA and the applicant that sets forth certain
business terms and conditions of WIFIA credit assistance for the project, including statutory
requirements. Upon reviewing the creditworthiness of the application and completing engineering due
diligence, the WIFIA program may propose terms and conditions to the applicant. The applicant and the
WIFIA program will negotiate these terms and conditions until a mutually agreeable preliminary term
sheet has been developed.
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CONTENTS
The term sheet will include terms required for WIFIA credit assistance, which are described in the
statute38 and Section 3 of this document. The term sheet will also include additional basic terms and
conditions related to EPA's provision of credit assistance that can materially influence the
creditworthiness of the project. Generally, the term sheet will include terms such as:
« Parties to the agreement (e.g., the lender and the borrower)
Type of credit instrument (i.e., secured loan)
Description of the project
Estimated total project costs and total WIFIA-eligible project costs
Maximum amount of WIFIA credit assistance
Method for establishing the interest rate
Estimated final maturity date
Source of repayment and security, including lien structure and WIFIA credit instrument priority
Requirements to reimburse the WIFIA program for credit processing fees
Conditions for execution of a credit agreement and disbursement
Auditing requirements
Covenants such as limitations on additional bonds, minimum coverage ratios, and any required
reserve funds
Projected disbursement and repayment schedule
All parties will assess the preliminary term sheet during the project recommendations step, as described
below in Section 6.3. The preliminary term sheet may be modified at any point before the Administrator
approves the application for WIFIA credit assistance.
CALCULATION OF CREDIT SUBSIDY COST
As the final step of the evaluation process, the WIFIA program will calculate the range of credit subsidy
cost of the WIFIA credit assistance based on the results of the creditworthiness evaluation and the terms
and conditions agreed upon by the applicant and the WIFIA program. This subsidy calculation will
determine the amount of budget authority that is necessary to obligate for the project. This calculation
is subject to review and approval by OMB.
6.3 PROJECT RECOMMENDATIONS
Following the evaluation step, the WIFIA program will summarize its assessment of the application and
provide a recommendation for approval in a report and presentation for the Credit Council's
38 33 U.S.C. §3908
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consideration. The Credit Council's role is to advise the Program Director regarding the creditworthiness
of the applicant and whether it provides adequate assurance of timely repayment. It will make a
recommendation to approve or deny an application for WIFIA credit assistance based on the applicant's
creditworthiness and the project's conformance to the WIFIA program's federal objectives, risk appetite,
and mission.
6.4 WIFIA CREDIT ASSISTANCE APPROVAL
The Credit Council will provide a recommendation to the Administrator, who retains the final authority
for approval of WIFIA assistance. The Administrator approves a project by executing the term sheet
developed during the evaluation process. The term sheet obligates budget authority and binds EPA and
the applicant to the specified terms. Nevertheless, the term sheet does not guarantee WIFIA credit
assistance, and remains subject to negotiation and execution of the credit agreement.
Prior to issuing a term sheet, the WIFIA program will confirm that all prerequisites for the obligation of
funds have been satisfied, including the following:
Submission of the preliminary rating opinion letter.
The project's receipt of its Record of Decision (ROD), Finding of No Significant Impact (FONSI),
or Categorical Exclusion under NEPA.
« Compliance with other federal laws, regulations and applicable planning requirements.
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SECTION 7
NEGOTIATION AND CLOSING
This section describes the final phase of the application approval process - negotiation and closing -
during which the WIFIA program will finalize the terms of credit assistance to an applicant. The section
outlines the development of the credit agreement, negotiations, and financial close.
The credit agreement is the authoritative agreement between EPA and the borrower. It specifies all
terms and conditions of the credit assistance and authorizes the disbursement of WIFIA credit assistance
to the project.
The WIFIA program and the applicant will negotiate the specific language of the credit agreement to
accurately represent WIFIA program requirements. The WIFIA program will seek to structure the final
credit agreement in a way that conforms in all material respects to the terms of the term sheet. To the
extent that deviations are required, the WIFIA program may need to modify the term sheet. In such
circumstances, the WIFIA program would re-evaluate the project's creditworthiness, assess the
availability of additional budget authority if required, and the project would follow the same approval
processes as a new application. The timeframe for developing the credit agreement is dependent on the
complexity of the agreement and progress of the negotiations.
CONTENTS
The credit agreement will include both standard provisions and transaction-specific provisions.
Depending upon the nature of the transaction, additional documents, such as an inter-creditor
agreement, may also be necessary.
In addition to the contents of the term sheet, credit agreements will generally include the following:
Security features and additional terms
Detailed description of pledged security
Flow of funds
Repayment terms, including amortization schedule and final maturity
Representations and warranties
Negotiation and
Closing
Project
Selection
Project
Approval
~
7.1 CREDIT AGREEMENT DEVELOPMENT
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Borrower covenants (e.g., rate covenants)
Annual disbursement schedule and conditions for draws
Financial plan requirements
Monitoring and reporting requirements
The credit agreement will also include the form of requisition for disbursements and the form of the
note. Each WIFIA applicant must execute a note evidencing the requirement to repay the loan.
7.2 CLOSING
For the WIFIA program to execute the credit agreement and disburse funds, the applicant must satisfy at
a minimum any requirements set forth in the term sheet. Also, the applicant must have two investment-
grade ratings on the senior debt that include a discussion on the default risk of the WIFIA loan, as
described in Section 6.1. If the WIFIA debt is intended to be the senior debt, it must receive two
investment-grade ratings. Prior to closing a WIFIA credit agreement, the applicant must submit updates
to both the financial plan and the project management and monitoring plan. The applicant must also
submit for approval final project plans, specifications, and contract documents.
The WIFIA program may request to review and approve, as appropriate, all related project documents,
including but not limited to design-build contracts, concession agreements, development agreements,
financing agreements, and funding agreements with third parties.
The WIFIA program will schedule the closing once all of the closing documentation has been finalized
and it confirms that all conditions precedent have been met. At closing, the Administrator or his
designee, and the applicant will execute the credit agreement, which is the binding legal document that
allows the applicant to receive WIFIA funds. Upon execution of the credit agreement, the applicant, now
a borrower, must pay the credit processing fee, described in Section 6.1. The WIFIA program will post
the borrower's name under a list of borrowers on the WIFIA program's website soon after closing.
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SECTION 8
POST-CLOSING ACTIVITIES AND MONITORING
Following closing, borrowers must meet several requirements to receive funding and remain in
compliance with the credit agreement. This section describes the post-closing activities involving WIFIA
borrowers in three categories: disbursements, loan servicing, and loan monitoring. The executed credit
agreement will identify specific requirements pertaining to each credit instrument.
8.1 DISBURSEMENTS
Prior to any disbursement, all conditions precedent to funding must be satisfied. The borrower may
begin submitting eligible project costs for reimbursement following closing. In order to receive a
disbursement, borrowers must submit a requisition form that will require borrowers to verify continued
compliance with the credit agreement. The requisition form may include verification that the
disbursement is being made against incurred eligible project costs, confirmation that there have been
no changes to the project plan or any material events, and confirmation that the representations and
warranties included in the credit agreement are still true and correct, among other items.
8.2 LOAN SERVICING
The WIFIA program may retain outside assistance to perform loan servicing for WIFIA credit
instruments, including credit accounting, collections, maintenance of documents, and financial
reporting. The WIFIA program may charge borrowers an annual fee for loan servicing activities
associated with each WIFIA credit instrument, which will be adjusted periodically based on inflation.
8.3 LOAN MONITORING
EPA is required to operate the WIFIA program under a robust management and oversight structure and
to monitor it in terms of programmatic goals and performance within acceptable risk thresholds. In
order to accomplish these goals, the WIFIA program performs loan monitoring functions using a variety
of tools at its disposal. The following subsections describe the purpose of these functions, as well as the
manner in which the WIFIA program plans to implement these requirements.
LOAN MONITORING FUNCTIONS
The WIFIA program monitors the credit instruments in its portfolio using three key functions: credit risk
monitoring, compliance management and monitoring, and program evaluation. These functions assess
different borrower or program characteristics and are each an essential part of the WIFIA program's
loan monitoring activities.
CREDIT RISK MONITORING
The WIFIA program monitors the credit risk of each loan within its portfolio, which enables it to quickly
detect financial deterioration and changes in the credit risk of WIFIA program borrowers. By quickly
detecting deterioration in a borrower's risk profile, the WIFIA program may make informed decisions to
address weaknesses and strengthen its position, or take preventative measures to minimize the risk
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posed to the WIFIA program. Annually, the WIFIA program must update each credit instrument's credit
risk assessment and recalculate its federal subsidy costs.
COMPLIANCE MANAGEMENT AND MONITORING
The WIFIA program ensures its integrity through compliance management and monitoring. Compliance
management and monitoring is the process through which the WIFIA program verifies that borrowers
are abiding by the terms of the credit agreement and prevailing laws and regulations. The WIFIA
program will verify that borrowers are implementing projects in a manner that is consistent with the
objectives stated in their applications and supports the WIFIA program's mission. Borrowers are
required to remain in compliance with federal requirements such as the American Iron and Steel
statutory requirement, the Davis-Bacon wage requirement, environmental statutes and other
requirements as set forth in the credit agreement. As part of compliance management, the WIFIA
program will review and approve project-related documents, as appropriate. Such documents may
include, but are not limited to, new or revised construction plans and specifications, start-up and
performance testing plans, and operations and maintenance plans.
PROGRAM EVALUATION
Program evaluation uses measurement and analysis to answer specific questions about how well a
program is achieving its outcomes and why. Program evaluation will provide a method for determining
the benefits and impacts of WIFIA projects, including economic, environmental and public health
benefits. The WIFIA program must perform periodic program evaluations to assess whether the WIFIA
program is achieving policy goals while mitigating risk and costs to the taxpayer. As such, the WIFIA
program will collect data from borrowers on an annual basis. The WIFIA program may collect data on
three levels:
Outputs: Goods and services delivered as a result of the WIFIA credit assistance.
Outcomes: Changes or benefits resulting from outputs.
Impacts: Long-term socioeconomic, environmental, and public health effects of the WIFIA
program.
LOAN MONITORING TOOLS
PERIODIC REPORTING
The WIFIA program requires that borrowers submit financial condition reports in order to (i) provide an
oversight tool for ensuring each borrower's compliance with the provisions of the credit agreement, (ii)
monitor the overall status of the project and the WIFIA program, and (iii) assist it in identifying any
changes to the credit risk posed to the federal government under individual credit agreements. WIFIA
credit agreements will specify scheduled annual, quarterly, and project milestone reporting
requirements, as well as any other periodic reporting requirements.
As part of its oversight and monitoring of WIFIA projects, the WIFIA program will routinely update its
information on credit quality, construction schedules, legal issues, revenue forecasts, financial
projections, and project performance. Accordingly, borrowers will be required by covenant in the WIFIA
credit agreement to provide ongoing financial and project information not only during construction, but
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so long as the WIFIA credit instrument is outstanding and/or until the debt obligation to the federal
government is fully repaid. In each credit agreement, EPA will specify the required ongoing
documentation and the frequency of such information requests.
The WIFIA program's oversight and monitoring may include periodic status meetings with the borrower,
reviews by the independent engineer (if applicable) and/or other relevant reports, and site visits
(described below). Additionally, all borrowers must notify the WIFIA program of material events that
could affect project development or the credit quality of the project.
SITE VISITS
The WIFIA program will conduct site visits following the execution of the credit agreement. These site
visits will monitor progress made by WIFIA program borrowers, including ongoing construction. Any
risks or issues identified during site visits will be documented and used to update the EPA's ongoing risk
assessment of the borrower.
HEIGHTENED MONITORING
As necessary, the WIFIA program will be authorized by the credit agreement to commence increased
monitoring and reporting to ensure the continued credit quality of the project and minimize the federal
government's risk. The purpose of such heightened monitoring activities will be to address problems
quickly and efficiently and return the project to expected performance. Borrowers subject to such
heightened monitoring requirements may be subject to additional reporting requirements, and/or
expenses for consultants and fees as documented in the credit agreement.
TABLE 8-1: OVERSIGHT AND MONITORING DOCUMENTATION
Example of Loan Monitoring Documentation*
1 Annual Financial Condition Report 1
Audited financial statements
Updates to the project financing plans
Updated budget and cash flow projections
Sources and uses of funds
Project schedules
Operating statistics
Other significant updates
Rating opinion letter (as available)
Quarterly Financial Condition Report
Key financial ratios
Financial statements
Construction progress
Significant updates
Management updates
Legislative Compliance Certifications
Timely Updates on Material Events
Programmatic Data
Capital Improvement Plan data |
*Specific reporting requirements will be negotiated with the WIFIA program and stated explicitly in the credit
agreement.
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APPENDIX A: ACRONYMS
Table A-l defines acronyms that are commonly used throughout this handbook.
TABLE A-l: ACRONYMS
Acronym
Definition
AIS
American Iron and Steel
CC
Credit Council
C.F.R.
Code of Federal Regulations
EA
Environmental Assessment
EID
Environmental Information Document
EIS
Environmental Impact Statement
EPA
United States Environmental Protection Agency
FAST
Fixing America's Surface Transportation Act of 2015
FCRA
Federal Credit Reform Act of 1990
FONSI
Finding of No Significant Impact
LOI
Letter of Interest
NEPA
National Environmental Policy Act of 1969
NOFA
Notice of Funding Availability
NRSRO
Nationally Recognized Statistical Rating Organization
OGC
Office of General Counsel
OMB
Office of Management and Budget
OW
Office of Water
P.L.
Public Law
PRA
Paperwork Reduction Act
ROD
Record of Decision
U.S.C.
United States Code
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Water Infrastructure Finance and Innovation Act of 2014
WRRDA
Water Resources Reform and Development Act of 2014
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APPENDIX B: DEFINITIONS
Table B-l defines relevant terms employed throughout this handbook.
TABLE B-l: DEFINITIONS
Term
Definition
Administrator
Administrator of the U.S. Environmental Protection Agency
Applicant
An entity selected to submit an applicant for WIFIA credit assistance following
selection by the WIFIA Selection Committee
Borrower
An entity that has obtained an executed credit agreement for WIFIA credit
assistance
Credit Agreement
A contractual agreement between EPA and the prospective borrower (and the
lender, if applicable) that formalizes the terms and conditions established in the
term sheet (or conditional term sheet) and authorizes the execution of a
secured loan or loan guarantee
Credit Subsidy Cost
"Cost" under §502(5) of the Federal Credit Reform Act of 1990 (2 U.S.C. §
661a(5)), which is the net present value at the time the obligation is entered
into. The credit subsidy cost for a given project is calculated by EPA in
consultation with OMB. The credit subsidy cost must be less than the
unobligated budget authority that has been appropriated by Congress to date.
Federal Credit Instrument
A secured loan or loan guarantee authorized to be made available with respect
to a project
Investment-Grade Rating
A rating of BBB minus, Baa3, bbb minus, BBB (low), or higher assigned by a
rating agency to project obligations
Loan Guarantee
Any guarantee or other pledge by the Administrator to pay all or part of the
principal of and interest on a loan or other debt obligation issued by a borrower
and funded by a lender
Nationally Recognized
Statistical Rating
Organization
A credit rating agency identified and registered by the Office of Credit Ratings in
the Securities and Exchange Commission under 15 U.S.C. § 78o-7
Project Obligation
Any note, bond, debenture, or other debt obligation issued by a borrower in
connection with the financing of a project
Prospective Borrower
An entity that is contemplating or is in the process of undertaking the
application process.
Publicly Sponsored
The prospective borrower can demonstrate, to the satisfaction of the
Administrator, that the prospective borrower has consulted with the affected
State, local, or tribal government in which the project is located, or is otherwise
affected by the project, and that such government supports the proposed
project
Secured Loan
A direct loan or other debt obligation issued by a borrower and funded by the
Administrator in connection with the financing of a project
State Infrastructure
Financing Authority
State entity established or designated by the Governor of a State to receive a
capitalization grant provided by, or otherwise carry out the requirements of,
title VI of the Federal Water Pollution Control Act (33 U.S.C. § 1381 et. seq.) or
section 1452 of the Safe Drinking Water Act (42 U.S.C. § 300j-12). Commonly
known as the State Revolving Fund (SRF) program.
Substantial Completion
The stage in the progress of the project when the project or designated portion
thereof is sufficiently complete in accordance with the contract documents so
that the project or a portion thereof can be used for its intended use
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Term
Definition
Term Sheet
A contractual agreement between the EPA and the prospective borrower (and
the lender, if applicable) that sets forth the key business terms and conditions
of a federal credit instrument. Execution of this document represents a legal
obligation of budget authority
WIFIA Credit Assistance
A secured loan or loan guarantee authorized to be made available under WIFIA
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APPENDIX C: SELECTION CRITERIA
WHAT ARE THE SELECTION CRITERIA AND HOW ARE THEY USED?
The WIFIA program is required by statute to evaluate projects using selection criteria as established by
statute and regulation. The selection criteria are divided into three categories that represent critical
considerations for selecting projects: Project Impact, Project Readiness, and Borrower Creditworthiness.
Following analysis by WIFIA program staff, a final score is calculated for each project. Projects will be
selected in order of score, subject, however, to the requirement to ensure a diversity of project types
and geographical locations. Due to this requirement it is possible that higher scoring projects will be
skipped in favor of lower scoring projects to ensure such diversity. Information regarding how EPA will
consider each selection criterion is announced in each NOFA. For the Project Readiness and Borrower
Creditworthiness categories, criteria scores are supplemented by points awarded from the preliminary
engineering feasibility analysis and preliminary creditworthiness assessment, described above in section
5.4.
The WIFIA program selection criteria are as follows:
PACT
The extent to which the project is nationally or regionally significant, with respect to the
generation of economic and public benefits, such as (1) the reduction of flood risk; (2) the
improvement of water quality and quantity, including aquifer recharge; (3) the protection of
drinking water, including source water protection; and (4) the support of international
commerce. 33 U.S.C. § 3907(b)(2)(A); 40 C.F.R. § 35.10055(a)(1).
- The extent to which the project uses new or innovative approaches. 33 U.S.C. § 3907(b)(2)(D);
40 C.F.R. § 35.10055(a)(3).
The extent to which the project (1) protects against extreme weather events, such as floods or
hurricanes; or (2) helps maintain or protect the environment. 33 U.S.C. § 3907(b)(2)(F); 40
C.F.R. § 35.10055(a)(4); 40 C.F.R. § 35.10055(a)(5).
The extent to which a project serves regions with significant energy exploration, development,
or production areas. 33 U.S.C. § 3907(b)(2)(G); 40 C.F.R. § 35.10055(a)(6).
The extent to which a project serves regions with significant water resource challenges,
including the need to address (1) water quality concerns in areas of regional, national, or
international significance; (2) water quantity concerns related to groundwater, surface water,
or other water sources; (3) significant flood risk; (4) water resource challenges identified in
existing regional, State, or multistate agreements; and (5) water resources with exceptional
recreational value or ecological importance. 33 U.S.C. § 3907(b)(2)(H); 40 C.F.R. §
35.10055(a)(7).
The extent to which the project addresses identified municipal, State, or regional priorities. 33
U.S.C. § 3907(b)(2)(l); 40 C.F.R. § 35.10055(a)(8).
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The extent to which the project addresses needs for repair, rehabilitation or replacement of a
treatment works, community water system, or aging water distribution or wastewater
collection system. 40 C.F.R. § 35.10055(a)(12).
c The extent to which the project serves economically stressed communities, or pockets of
economically stressed rate payers within otherwise non-economically stressed communities.
40 C.F.R. § 35.10055(a)(13).
The extent to which the project reduces exposure to lead in the nation's drinking water
systems or ensures continuous compliance with contaminant limits. 40 C.F.R. § 35.10055(b).
PROJECT READINESS
The readiness of the project to proceed toward development, including a demonstration by the
obligor that there is a reasonable expectation that the contracting process for construction of
the project can commence by not later than 90 days after the date on which a Federal credit
instrument is obligated for the project under [WIFIA], 33 U.S.C. § 3907(b)(2)(J); 40 C.F.R. §
35.10055(a)(9).
- Preliminary engineering feasibility analysis score. 33 U.S.C. § 3907(a)(2); 33 U.S.C. § 3907(a)(6);
40 C.F.R. § 35.10015(c); 40 C.F.R. § 35.10045(a).
BORROWER CREDITWORTHINESS
The likelihood that assistance under [WIFIA] would enable the project to proceed at an earlier
date than the project would otherwise be able to proceed. 33 U.S.C. § 3907(b)(2)(C); 40 C.F.R. §
35.10055(a)(2).
- The extent to which the project financing plan includes public or private financing in addition to
assistance under [WIFIA], 33 U.S.C. § 3907(b)(2)(B); 40 C.F.R. § 35.10055(a)(10).
The extent to which assistance under [WIFIA] reduces the contribution of Federal assistance to
the project. 33 U.S.C. § 3907(b)(2)(K); 40 C.F.R. § 35.10055(a)(ll).
The amount of budget authority required to fund the Federal credit instrument made available
under [WIFIA], 33 U.S.C. § 3907(b)(2)(E).
Preliminary creditworthiness assessment score. 33 U.S.C. § 3907(a)(1); 40 C.F.R. § 35.10015(c);
40 C.F.R. § 35.10045(a)(1); 40 C.F.R. § 35.10045(a)(4); 40 C.F.R. § 35.10045(b).
As noted in Section 5.2 of the Program Handbook, prospective borrowers will first submit a letter of
interest with a rationale for why a specific project meets the selection criteria above.
HOW DO PROSPECTIVE BORROWERS ADDRESS SELECTION
CRITERIA?
In Section E of the letter of interest, the prospective borrower describes the potential benefits to be
achieved using WIFIA assistance with respect to each of the selection criteria. Because the selection
criteria encompass a wide range of factors, it is not expected that most projects will be able to fully
address all of them. However, the prospective borrower should make its best case to EPA and
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demonstrate how funding its projects will help the WIFIA program meet its goals. In responding, the
prospective borrower should provide specific details, and, when applicable, reference supporting
documentation.
PROJECT IMPACT
CRITERION 1: NATIONAL OR REGIONAL SIGNIFICANCE
The extent to which the project is nationally or regionally significant, with respect to the generation
of economic and public benefits, such as (1} the reduction of flood risk; (2) the improvement of
water quality and quantity, including aquifer recharge; (3) the protection of drinking water,
including source water protection; and (4) the support of international commerce. 33 US.C. §
3907(b)(2)(A); 40 C.F.R. § 35.10055(a)(1).
EPA will evaluate the quality and extent to which the project can benefit the economy and public for a
region or the nation. Projects can be differentiated based on their impact on each variable as well as the
scope of their impact.
Prospective borrowers can demonstrate improvement to economic conditions by providing estimates of
expected economic benefits such as new jobs, tax revenues, keeping or attracting new industries,
increased commerce, etc. Public benefits can include improving water quality; increasing reliability of
drinking water delivery, quality and access; reducing lead contamination from drinking water; reducing
flood risk; protecting source water; supporting international commerce; etc. In addition, if a project
encompasses the regionalization of systems to increase efficiencies and reap the benefits of economies
of scale, that can be considered both an economic and public benefit.
For purposes of this criterion, a region can consist of a service area within a municipality, portions of a
municipality, multiple neighboring municipalities, a state or multiple states. In addition, for a project to
impact national economic or public benefits, the letter of interest should demonstrate how the project
or components of the project can benefit regions which are not directly served by the project. Projects
that have a net negative impact on the economy and/or the public will be eliminated from further
consideration.
Prospective borrowers should provide information about the following when responding to this
criterion:
« Project elements that provide economic and public benefits.
« How the project or components of the project can benefit regions which are not directly served
by the project.
How the project or components of the project can benefit the economy or public of multiple
states or the nation.
CRITERION 2: NEW OR INNOVATIVE APPRC >
The extent to which the project uses new or innovative approaches. 33 US.C. § 3907(b)(2)(D); 40
C.F.R. § 35.10055(a)(3).
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EPA will evaluate the depth and degree of how the project uses new or innovative approaches such as,
but not limited to:
Use of renewable or alternate sources of energy.
Use of energy efficient parts or systems for a significant portion of the project.
Use of green infrastructure elements.
« Development of alternate sources of drinking water and alternate water supplies through
aquifer recharge, water recycling or desalination.
« Development of distribution systems for recycled water.
« Development of biosolids or other renewable resources.
9 Addressing emerging and yet unregulated contaminants or other water quality issues.
Use of new or enhanced technologies that improve drinking water treatment efficacy and/or
reliability.
A novel application of an existing method or technology.
Prospective borrowers should provide information about the following when responding to this
criterion:
Does the project incorporate any new or innovative approaches or technologies?
Has the new or innovative approach or technology been pilot tested?
9 Has the new or innovative approach or technology been implemented at full scale levels?
9 Does the project incorporate approaches or technologies that have the potential to
significantly improve standard operations within the water and wastewater industries?
CRITERION 31 PR!; ' ON AGAIf. 5" _ TREME W . - - " ' " '
The extent to which the project (1) protects against extreme weather events, such as floods or
hurricanes; or (2) helps maintain or protect the environment: 33 IJ.S.C. § 3907(b)(2)(F); 40 C.F.R. §
35.10055(a)(4); 40 C.F.R. § 35.10055(a)(5).
EPA will evaluate projects on the depth and degree to which they protect against extreme weather
events, such as floods or hurricanes, or helps maintain or protect the environment.
Extreme weather impacts can include:
Drought: Reduced groundwater recharge, lower lake and reservoir levels, changes in seasonal
runoff and loss of snowpack.
9 Water Quality Degradation: Low flow conditions and altered water quality, saltwater intrusion
into aquifers, altered surface water quality.
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Floods: High flow events & flooding, flooding from coastal storm surges.
Ecosystem Changes: Loss of coastal landforms/wetlands, increased fire risk and altered
vegetation.
Service Demand and Use: Volume and temperature challenges, changes in water demand,
changes in energy sector needs, changes in energy needs of utilities.
Examples of project elements that can protect against extreme weather events include the following:
« Mitigation planning and risk assessments.
« Flood protection or mitigation.
« Green infrastructure which address flooding, drought, urban heat island effects, energy
demand, protection of coastal areas, etc.
Backup power.
Emergency response plans.
Enhanced infrastructure resiliency.
Water recycling and reuse.
Managed aquifer recovery.
EPA will ensure that WIFIA-funded projects include enhanced resiliency against flood, and do not
exacerbate flood risk upstream, downstream, to adjacent properties, or to populations relying on facility
services. WIFIA-funded projects will be required to meet applicable State, local, Tribal, and Territorial
standards for flood risk and floodplain management, as well as Executive Order 11988 on floodplain
management. Prospective borrowers are encouraged to describe how their project will meet applicable
standards in their response to this selection criterion or reference where such information may be found
elsewhere in their letter of interest.
Prospective borrowers should provide information about the following when responding to this
criterion:
Does the project address extreme weather events, such as 100-year floods or natural disasters
that have occurred in the past?
9 Does the project address extreme weather events, such as the 500-year flood and/or climate
change impacts for at least a 20-year planning period?
9 How does the prospective borrower intend to meet State, local, Tribal, and Territorial
standards for flood risk and floodplain management?
How does the project help improve or maintain the environment?
CRITERION 4: SERVES ENERGY EXPLORATION OR PRODUCTION AREAS
The extent to which the project serves regions with significant energy exploration, development, or
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production areas: 33 U.S.C. § 3907(b)(2)(G); 40 C.F.R. § 35.10055(a)(6).
EPA will evaluate the project on the depth and degree to which it helps support a population in a region
with energy exploration, development, or production areas.
For purposes of this criterion, a region can consist of a service area within a municipality, portions of a
municipality, multiple neighboring municipalities, a state or multiple states.
Prospective borrowers should provide information about whether or not a project serves a population in
a region with energy exploration, development, or production areas.
CRITERION 5: SERVES REGIONS WITH W.- RES>) ¦" ^ _ ^ ^ _ "<
The extent to which a project serves regions with significant water resource challenges, including
the need to address (1) water guality concerns in areas of regional, national, or international
significance; (2) water quantity concerns related to groundwater, surface water, or other water
sources; (3) significant flood risk; (4) water resource challenges identified in existing regional, State,
or multistate agreements; and (5) water resources with exceptional recreational value or ecological
importance. 33 U.S.C. § 3907(b)(2)(H); 40 C.F.R. § 35.10055(a)(7).
EPA will evaluate each project on the depth and degree to which it serves regions with significant water
resource challenges. Water resource challenges can include:
Water quality concerns in areas of regional, national, or international significance.
Water quantity concerns related to groundwater, surface water, or other resources.
Significant flood risk.
Water resource challenges, including reducing exposure to lead and other contaminants, that
are identified in existing regional, state, or multistate agreements.
Projects dealing with water resources with exceptional recreational value or ecological
importance.
For purposes of this criterion, a region can consist of a service area within a municipality, portions of a
municipality, multiple neighboring municipalities, a state or multiple states. Where a region's water
resource challenges include source water quality, projects can address the challenge at the source or
within the drinking water system. Exceptional recreational value considers the economic value of
recreation activities and the scarcity of alternative water resources available for similar types of
recreation. Exceptional ecological importance can include water bodies designated as Tier 3 Anti
Degradation water bodies pursuant to the Clean Water Act, water bodies designated by states or EPA as
Outstanding National Resource Waters (or similar distinction), national wild and scenic rivers, National
Estuaries, and areas of multistate collaboration, such as the Long Island Sound.
Prospective borrowers are encouraged to demonstrate how the proposed project addresses a water
resource challenge and, if possible, how much of the challenge is expected to be alleviated by the
project. Prospective borrowers should also discuss how the water resource challenge affects their ability
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to serve their customers, maintain or improve service levels, and/or poses a significant risk to human
health or life.
Prospective borrowers should provide information about the following when responding to this
criterion:
How does the project address a water resource challenge?
How much of the challenge is expected to be alleviated by the project?
How does the water resource challenge affect their ability to serve their customers, maintain or
improve service levels, and/or pose a significant risk to human health or life?
What percent of the total project cost addresses the water resource challenge?
CRITERION 6: ADDRESSES IDEP 3 PRIORITIES
The extent to which the project addresses identified municipal, State, or regional priorities. 33 US.C.
§ 3907(b)(2)(l); 40 C.F.R. § 35.10055(a)(8).
EPA will evaluate each project on the depth and degree to which it addresses identified municipal, state,
or regional priorities.
Prospective borrowers are encouraged to:
Demonstrate where the project is documented as a priority by referencing documents such as
regulatory implementation plans, economic development plans, system master plans, and
asset management plans.
« Reference legislative, regulatory, or executive mandates or requirements that provide support
for the project.
« Describe whether and how the project addresses the requirements of the Clean Water Act and
the Safe Drinking Water Act and how the project improves public health levels or alleviates
public health concerns, such as the reduction of lead or other contaminants in drinking water.
How the project can impact air, water, or land pollution levels in the environment if the
prospective borrower provides supporting data and whether a project addresses existing
environmental or public health violations.
Describe whether a project is intended to meet expected or pending regulatory standards or
legislative or executive mandates.
Prospective borrowers should provide information about the following when responding to this
criterion:
Is the project identified in a municipal, state, or regional priority in a planning document or
legislative, regulatory, or executive mandate?
Do existing conditions meet regulatory requirements? Without implementing the project, could
these conditions deteriorate?
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Does the project help significantly improve environmental or public health conditions, even if
existing conditions meet regulatory requirements?
Does the project address impending or new regulatory requirements or executive or legislative
mandates?
Is the project necessary to resolve public health or environmental violations or enforcement
actions?
CRITERION 7: REPAIR, REHABILITATION, OR REPLACEMENT
The extent to which the project addresses needs for repair, rehabilitation or replacement of a
treatment works, community water system, or aging water distribution or wastewater collection
system. 40 C.F.R. § 35.10055(a)(12).
EPA will evaluate each project on the depth and degree to which it addresses needs for repair,
rehabilitation or replacement of a treatment works, community water system, or aging water
distribution or wastewater collection system. This includes repair, rehabilitation, or replacement
projects to reduce exposure to lead and other contaminants in drinking water. EPA understands the
need to repair, rehabilitate, or replace certain system assets in advance of eminent failure to achieve
cost efficiencies and maintain system service levels.
Prospective borrowers should provide information about:
The percentage of the total project cost that addresses repair, rehabilitation, and replacement.
Documentation that confirms system needs that are being addressed through the proposed
project and the larger system need. For example, if a project includes the replacement of a 10-
year old distribution pipe, the prospective borrower may wish to explain how that replacement
is part of achieving the overall repair, rehabilitation, and replacement needs of the system.
CRITERION 8: ECONOMICALLY STRESSED COMMUNITIES
The extent to which the project serves economically stressed communities, or pockets of
economically stressed rate payers within otherwise non-economically stressed communities. 40
C.F.R. §35.10055(a)(13).
EPA will evaluate the depth and degree to which the project serves economically stressed communities,
or pockets of economically stressed rate payers within otherwise non-economically stressed
communities. Access to financing for critical infrastructure projects in these communities is often lacking
or difficult to obtain.
A community or set of ratepayers can be considered economically stressed if:
The Median Household Income (MHI) from the U.S. Census Bureau's American Community
Survey is less than the state average.
« The Personal Income Per Capita (IPC) from the Bureau of Economic Analysis (BEA) is less than
the state average.
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The poverty rate or child poverty rate is more than the equivalent state measure from the U.S.
Census Bureau, Small Area Income and Poverty Estimates average.
The percent of people under the age of 5 or over age 64 is higher than the state average.
Other relevant state and local measures or indicator of affordability are met.
In addition, individuals with private wells and septic systems that cannot afford access to adjacent public
water or wastewater systems or communities with a significant need for reducing lead exposure can
also be considered an economically stressed community.
For purposes of evaluating a project for this selection criterion, a "significant portion of the population"
should be a number greater than 20 percent.
Prospective borrowers should provide information about the following when responding to this
criterion:
« Does the project serve some economically stressed communities or rate payers?
« Does the project serve a community where a significant portion of the population are
economically stressed communities?
CRITERION 9: REDUCES EXPOSURE TO LEAD
The extent to which the project reduces exposure to lead in the nation's drinking water systems or
ensures continuous compliance with contaminant limits. 40 C.F.R. § 35.10055(b).
EPA will evaluate the project on the depth and degree to which the project reduces exposure to lead in
the nation's drinking water systems or ensures continuous compliance with contaminant limits. Project
elements can include:
« Identification and replacement of lead service lines and distribution pipes, including galvanized
steel pipes.
Corrosion control optimization in the water system.
Rehabilitation of wells or development of eligible sources to replace contaminated sources.
Implementing optimized source water blends to minimize corrosion and reduce contaminants.
Rehabilitation, replacement, or installation of pipes to prevent contamination caused by leaky
or broken pipes.
9 Improvements to meet or maintain drinking water quality standards.
EPA will score this criterion based on the percent of the total project cost that addresses reducing
exposure to lead in a water system or maintains compliance with contaminant limits.
Prospective borrowers should provide information about the following when responding to this
criterion:
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Percentage of total project cost and project elements which addresses reducing lead exposure
in the water system.
Percentage of total project cost and project elements which addresses maintaining compliance
with contaminant limits.
PROJECT READINESS
CRITERION 1: READh- "O PRO,
The readiness of the project to proceed toward development, including a demonstration by the
obligor that there is a reasonable expectation that the contracting process for construction of the
project can commence by not later than 90 days after the date on which a Federal credit instrument
is obligated for the project under [WIFIA]. 33 U.S.C. § 3907(b)(2)(J); 40 C.F.R. § 35.10055(a)(9).
EPA will evaluate the project on the depth and degree to which it is ready to proceed toward
development. In doing so, EPA will assess whether there is a reasonable expectation that the
contracting process for construction of the project can commence by not later than 90 days after
obligation.
EPA will evaluate:
Where the project is in the schedule at the time of the letter of interest submittal.
Whether there are any other issues that may affect the development and financing of the
project, such as community support, pending legislation, permitting, or litigation.
« The reasonableness and level of detail provided in the projected development schedule for
specifications and bid documents for traditional project delivery methods, such as design-bid-
build.
The projected development schedule for procurement documents, such as Requests for
Qualifications and Proposals, for alternative project delivery methods, such as design-build
projects.
Prospective borrowers should provide information about the following when responding to this
criterion:
« Project delivery method (i.e. design-bid-build, design-build, public private partnership).
« The expected dates for bidding/procurement and construction for the project (Can reference
project schedule).
9 Any issues that may affect the development and financing of the project, such as community
support, pending legislation, permitting, or litigation.
Design stage at letter of interest submittal.
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CRITERION 2: PRELIMINARY ENGINEERING FEASIBILITY ANALYSIS
Preliminary engineering feasibility analysis score. 33 U.S.C. § 3907(a)(2); 33 U.S.C. § 3907(a)(6); 40
C.F.R. § 35.10015(c); 40 C.F.R. § 35.10045(a).
See section 5.4
BORROWER CREDITWORTHINESS
CRITERION!: C
The likelihood that assistance under [WIFIA] would enable the project to proceed at an earlier date
than the project would otherwise be able to proceed. 33 U.S.C. § 3907(b)(2)(C); 40 C.F.R. §
35.10055(a)(2).
EPA will evaluate the likelihood that WIFIA assistance would enable the project to proceed at an earlier
date than the project would otherwise be able to proceed. EPA will consider whether WIFIA funding
accelerates an individual project receiving a loan or, if by providing significant savings on one project,
WIFIA assistance allows a prospective borrower to accelerate additional non-WIFIA projects.
Prospective borrowers can demonstrate the effect of WIFIA funding on the project implementation
schedule and/or a Capital Improvement Plan. EPA understands that a project that is nearing its
construction phase may need to be delayed to incorporate federal cross-cutters and other program
requirements. However, even if WIFIA delays implementation of one project, it could help accelerate
other needed projects planned by the prospective borrower.
Prospective borrowers should provide information about the following when responding to this
criterion:
How does WIFIA funding affect the project development schedule?
Would WIFIA funding allow the prospective borrower to implement other high priority projects
sooner than anticipated?
« Without WIFIA funding, would the project be implemented?
CRITERION 2: FINANCING PLAN
The extent to which the project financing plan includes public or private financing in addition to
assistance under [WIFIA]. 33 U.S.C. § 3907(b)(2)(B); 40 C.F.R. § 35.10055(a)(10).
EPA will evaluate the letter of interest on the depth and degree to which the project financing plan
includes public or private financing in addition to WIFIA assistance. EPA will evaluate the project's
creditworthiness as stated in the WIFIA rule separately from the selection criteria scoring as described in
Section 6.2 of the Program Handbook.
Prospective borrowers should provide information about the following when responding to this
criterion:
The percentage of WIFIA financing requested in the letter of interest
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Non-WIFIA funding sources for the project and their certainty (i.e. received, pending, awarded)
CRITERION 3: REDUCTION OF FEDERAL ASSISTANCE
The extent to which assistance under [WIFIA] reduces the contribution of Federal assistance to the
project. 33 U.S.C. § 3907(b)(2)(K); 40 C.F.R. § 35.10055(a)(ll).
EPA will evaluate each project on the depth and degree to which WIFIA assistance reduces the
contribution of Federal assistance to the project.
Prospective borrowers should provide information about the following when responding to this
criterion:
The percentage of project financing requested of WIFIA
Whether the prospective borrower has additional Federal assistance that will be reduced if
WIFIA funding is received
ON 4: USE OF Bi AUTHORITY
The amount of budget authority required to fund the Federal credit instrument made available
under [WIFIA]. 33 U.S.C. § 3907(b)(2)(E).
The amount of budget authority required to fund a WIFIA loan is a function of the borrower's
preliminary creditworthiness assessment and the size of the requested loan. A low preliminary
creditworthiness assessment score will result in a greater use of budget authority than a similarly sized
loan with a high preliminary creditworthiness assessment score. A large loan will result in a greater use
of budget authority than a small loan with similar preliminary creditworthiness assessment scores.
CRITERION 5: PRELIMINARY CREDITWORTHINESS ASSESSMENT
Preliminary creditworthiness assessment score. 33 U.S.C. § 3907(a)(1); 40 C.F.R. § 35.10015(c); 40
C.F.R. § 35.10045(a)(1); 40 C.F.R. § 35.10045(a)(4); 40 C.F.R. § 35.10045(b).
See section 5.4
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APPENDIX D: FEE SCHEDULE39
Eligible WIFIA program prospective borrowers and borrowers will be responsible for all fees and costs
associated with the WIFIA program.
TABLE D-l: WIFIA PROGRAM FEES
Fee Type
Amount
Specified in Which
Document
Applies to
Whom
Application Fee
$100,000 or $25,000 (for projects
serving small communities)
Application Form
Applicant
Credit Processing Fee
Costs incurred to the EPA minus
application fee
Invoice at Closing
Applicant
Optional Supplemental
As applicable by agreement between
Credit Agreement
Applicant
Fee
WIFIA program and applicant
Loan Servicing Fee
As applicable
Credit Agreement
Borrowers
Extraordinary Expenses
As applicable
Credit Agreement
Distressed
Fee
borrowers
39 The fee rule can be found at: https://www.federalregister.gov/documents/2017/06/28/2Q17-13438/fees-for-
water-infrastructure-project-applications-under-wifia.
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APPENDIX E: COMPLIANCE REQUIREMENTS
Projects receiving WIFIA credit assistance must comply with all federal laws and regulations, including,
but not limited to the requirements described in Section 2.7 and the following.
ENVIRONMENTAL AUTHORITIES
Archeological and Historic Preservation Act, Pub. L. 93-291, as amended:
https://www.nps.gov/archeology/tools/laws/ahpa.htm
Archaeological Resources Protection Act, 16 U.S.C. §§ 470aa-mm:
http://www.nps.gov/archeology/tools/Laws/arpa.htm
Bald and Golden Eagle Protection Act, 16 U.S.C. §§ 668-668c:
https://www.fws.gov/midwest/midwestbird/EaglePermits/bagepa.html
» Clean Air Act, Pub. L. 95-95, as amended: https://www.epa.gov/clean-air-act-overview
« Clean Water Act, Titles III, IV and V, Pub. L. 92-500, as amended: https://www.epa.gov/laws-
regulations/summary-clean-water-act
Coastal Barrier Resources Act, Pub. L. 97-348: https://www.fws.gov/ecological-
services/habitat-conservation/cbra/Act/index.html
Coastal Zone Management Act, Pub. L. 92-583, as amended:
https://coast.noaa.gov/czm/about/
Endangered Species Act, Pub. L. 93-205, as amended: https://www.fws.gov/endangered/
Farmland Protection Policy Act, Pub. L. 97-98:
https://www.nrcs.usda.gov/wps/portal/nrcs/detail/?cid=nrcsl43 008275
Federal Actions to Address Environmental Justice in Minority Populations and Low-Income
Populations Environmental Justice, Executive Order 12898, 59 Fed. Reg. 7629, February 11,
1994: https://www.archives.gov/files/federal-register/executive-orders/pdf/12898.pdf
Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended:
https://www.fws.gov/laws/lawsdigest/fwcoord.html
« Floodplain Management, Executive Order 11988, 42 Fed. Reg. 26951, May 24, 1977, as
amended by Executive Order 13690, 80 Fed. Reg. 6425, February 4, 2015,
https://www.archives.gov/federal-register/codification/executive-order/11988.html.
https://www.whitehouse.gov/the-press-office/2015/01/3Q/executive-order-establishing-
federal-flood-risk-management-standard-and-, and https://www.fema.gov/media-
librarv/assets/documents/110377
Magnuson-Stevens Fishery Conservation and Management Act, Pub. L. 94-265:
https://www.fisheries.noaa.gov/resource/document/magnuson-stevens-fishery-conservation-
and-management-act
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Marine Mammal Protection Act, 16 U.S.C. §§ 1361-1407:
http://www.nmfs.noaa.gov/pr/laws/mmpa/
Migratory Bird Treaty Act, 16 U.S.C. §§ 703-712: https://www.fws.gov/birds/policies-and-
regulations/laws-legislations/migratorv-bird-treaty-act.php
National Historic Preservation Act, Pub. L. 89-655, as amended:
https://www.nps.gov/archeologv/tools/laws/NHPA.htm
National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq., https://www.epa.gov/nepa
Native American Graves Protection and Repatriation Act, 25 U.S.C. § 3001 et seq:
https://www.nps.gov/nagpra/
« Protection of Children from Environmental Health Risks and Safety Risks, Executive Order
13045, 62 Fed. Reg. 19885, April 21, 1997:
https://www.gpo.gov/fdsvs/pkg/FR-1997-04-23/pdf/97-10695.pdf
« Protection of Wetlands, Executive Order 11990, 42 Fed. Reg. 26961, May 24, 1977, as amended
by Executive Order 12608, 52 Fed. Reg. 34617, Sept. 14, 1987: https://www.epa.gov/cwa-404
Rivers and Harbors Act, 33 U.S.C. § 403:
http://www.sam.usace.armv.mil/Missions/Regulatorv/RegulatoryFAQ/RiversandHarborsAppro
priationActofl899.aspx
Safe Drinking Water Act, Pub L. 93-523, as amended: https://www.epa.gov/ground-water-and-
drinking-water
Wild and Scenic Rivers Act, Pub. L. 90-54, as amended: https://rivers.gov/
Wilderness Act, 16 U.S.C. § 1131 et seq.: https://wilderness.nps.gov/faqnew.cfm
ECONOMIC AND MISCELLANEOUS AUTHORITIES
Debarment and Suspension, Executive Order 12549, 51 Fed. Reg. 6370, Feb. 18, 1986:
https://www.archives.gov/federal-register/codification/executive-order/12549.html
« Demonstration Cities and Metropolitan Development Act, Pub. L. 89 -754, as amended, and
Executive Order 12372, 47 Fed. Reg. 30959, July 14, 1982:
http://portal.hud.gOv/hudportal/HUD?src=/program offices/comm planning
Drug-Free Workplace Act, Pub. L. 100-690:
https://webapps.dol.gov/elaws/asp/drugfree/screen4.htm
Labor Standards, 33 U.S.C. § 1372, https://www.dol.gov/whd/govcontracts/dbra.htm
New Restrictions on Lobbying, Section 319 of Pub. L. 101-121:
https://www.epa.gov/grants/lobbying-and-litigation-information-federal-grants-cooperative-
agreements-contracts-and-loans
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Prohibitions relating to violations of the Clean Water Act or Clean Air Act with respect to
federal contracts, grants, or loans under Section 306 of the Clean Air Act and Section 508 of the
Clean Water Act, and Executive Order 11738, 38 Fed. Reg. 25161, Sept. 10, 1973:
https://www.archives.gov/federal-register/codification/executive-order/11738.html
The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 U.S.C.
§ 4601 et seq.): https://www.gpo.gov/fdsys/pkg/FR-2005-01-04/pdf/05-6.pdf
CIVIL RIGHTS, NONDISCRIMINATION, EQUAL EMPLOYMENT
OPPORTUNITY AUTHORITIES
Age Discrimination Act, Pub. L. 94-135: https://www.eeoc.gov/laws/statutes/adea.cfm
Equal Employment Opportunity, Executive Order 11246, 30 Fed. Reg. 12319, Sept. 24, 1965:
https://www.dol.gov/ofccp/regs/compliance/ca 11246.htm
Section 13 of the Clean Water Act, Pub. L. 92-500: https://www.epa.gov/ocr/external-civil-
rights-compliance-office-title-vi
Section 504 of the Rehabilitation Act, Pub. L 93-112 supplemented by Executive Orders 11914,
41 Fed. Reg. 17871, April 29, 1976 and 11250, 30 Fed. Reg. 13003, October 13, 1965,
https://www.epa.gov/ocr/external-civil-rights-compliance-office-title-vi
« Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq.):
https://www.epa.gov/environmentaliustice/title-vi-and-environmental-iustice
« Participation by Disadvantaged Business Enterprises in Procurement under EPA Financial
Assistance Agreements, 73 Fed. Reg. 15904: https://www.epa.gov/resources-small-businesses
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APPENDIX F: CONFIDENTIAL BUSINESS
INFORMATION (CBI)
A prospective borrower may assert a business confidentiality claim covering part or all of the
information submitted to EPA as part of its [letter of interest] [application] in a manner consistent with
40 C.F.R. § 2.203, 41 Fed. Reg. 36902 (Sept. 1, 1976), by placing on (or attaching to) the information a
cover sheet, stamped or typed legend, or other suitable form of notice employing language such as
trade secret, proprietary, or company confidential. The prospective borrower should also state whether
it desires confidential treatment until a certain date or until the occurrence of a certain event.
Information covered by a business confidentiality claim will be disclosed by EPA only to the extent and
only by means of the procedures set forth under 40 C.F.R. Part 2, Subpart B. Information that is not
accompanied by a business confidentiality claim when it is received by EPA may be made available to
the public by EPA without further notice to the applicant.
EPA will presume that information claimed as CBI in accordance with the above procedures is entitled to
confidential treatment until it receives a Freedom of Information Act request for the information or until
further review is warranted. See 40 C.F.R. Part 2. Subpart B. EPA will then afford the prospective
borrower an opportunity to substantiate the CBI claim, i.e., demonstrate to the Agency that the release
of the information would impair EPA's ability to obtain similar information in the future, or that its
release would likely cause substantial competitive harm, before making a final confidentiality
determination on the information. Applicants may waive or withdraw CBI claims at any time. EPA
reserves the right to request substantiation at any time following a business confidentiality claim.
Confidential business information (CBI) refers to "commercial or financial information that is obtained
from a person and that is privileged or confidential." 5 U.S.C. § 552(b)(4). Information that qualifies as
CBI is exempt from disclosure under Exemption 4 of the Freedom of Information Act ("FOIA"), 5 U.S.C. §
552(b)(4), upon a finding that the information is entitled to confidential treatment. Information in the
public domain is not "confidential" and cannot qualify for confidential treatment under Exemption 4.
For each item or class of information that is claimed as CBI, the Agency will ask submitters to answer the
following questions, giving as much detail as possible. EPA will consider the comments in response to
these questions when determining whether the information has been shown to be entitled to
confidential treatment.
For what period of time do you request that the information be maintained as confidential,
e.g., until a certain date, until the occurrence of a specified event, or permanently? If the
occurrence of a specific event will eliminate the need for confidentiality, please specify that
event.
Information submitted to the EPA becomes stale over time. Why should the information you
claim as confidential be protected for the time period specified in your answer to question #1?
What measures have you taken to protect the information claimed as confidential? Have you
disclosed the information to anyone other than a governmental body or someone who is
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bound by an agreement not to disclose the information further? If so, why should the
information be considered confidential?
Is the information contained in any publicly available material such as the Internet, publicly
available databases, promotional publications, annual reports, or articles? If so, specify which.
Is there any means by which a member of the public could obtain access to the information? Is
the information of a kind that you would customarily not release to the public?
Has any governmental body made a determination as to the confidentiality of the information?
If so, please attach a copy of the determination.
For each item or category of information claimed as confidential, explain with specificity why
release of the information is likely to cause substantial harm to your competitive position.
Explain the specific nature of those harmful effects, why they should be viewed as substantial,
and the causal relationship between disclosure and such harmful effects. How could your
competitors make use of this information to your detriment?
c Do you assert that the information is submitted on a voluntary or a mandatory basis? Please
explain the reason for your assertion. If you assert that the information is voluntarily submitted
information, please explain whether the information is the kind that would customarily not be
released to the public.
Whether you assert the information as voluntary or involuntary, please address why disclosure
of the information would tend to lessen the availability to the EPA of similar information in the
future.
1* If you believe any information to be (a) trade secret (s), please so state and explain the reason
for your belief. Please attach copies of those pages containing such information with brackets
around the text that you claim to be (a) trade secret (s).
! Explain any other issue you deem relevant (including, if pertinent, reasons why you believe that
the information you claim to be CBI is not emission data or effluent data).
The prospective borrower bears the burden of substantiating a confidentiality or trade secret claim.
Generalized or conclusory statements will be given little or no weight in EPA's determination on the
confidentiality of the information you claim to be CBI.
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LETTER O
APPENDIX G:
This section provides prospective borrowers with
a letter of interest.
WIFIA Program Handbook
F INTEREST TIPS
some tips to consider while preparing and submitting
GENERAL TIPS
Read the instructions in the NOFA and the program handbook prior to completing your letter of
interest.
Answer every question and when relevant provide additional supporting material to support
your answer.
« Provide specific references when pointing to supporting documents.
« Remember your audience is learning about your system for the first time and needs contextual
information to understand your project.
« Submit early to avoid issues with large file sizes at the deadline.
Attend one of the webinars offered following the NOFA release.
Ask questions: contact us by phone at 202-564-2292 or at wifia@epa.gov.
SECTION A - PROSPECTIVE BORROWER INFORMATION
9 Private entities must demonstrate public sponsorship by including a certified letter signed by
the approving State, tribal, or municipal department or similar agency; governor, mayor or
other similar designated authority; statute or local ordinance, or any other means by which
government approval can be evidenced. The public entity must be a sponsor or regulator of the
project.
SECTION B - PROJECT PLAN
Project Description Tips
Indicate whether the project is for new construction and/or rehabilitation/replacement
of existing infrastructure.
Indicate the type of project (i.e. wastewater, drinking water, stormwater, water
recycling, desalination, habitat restoration and protection).
Include the scope, including major technical components and their size.
Projects with limited engineering documents to submit should provide a longer, more
detailed project description.
Project Purpose Tips
Project need examples include, but are not limited to: meet current or impending
federal, state or local regulatory requirements; make the system more resilient,
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reliable and efficient; inadequate water supply or quality; required to address
identified federal, state, or local priorities.
Examples of benefits to the community and the environment include: number of
people served by the system or project; characteristics of the community served; public
health impacts; environmental resources that will be affected; water quality or
quantity impact; other resources that benefit, such as air quality, habitat; economic
and recreational impacts.
Provide enough information for the WIFIA program to evaluate engineering feasibility,
including of scope, plan, schedule and cost details, at the current project stage.
Provide system master plans or asset management plans when available, because they are very
helpful in supporting the need for a project and indicate that the project is being implemented
in a well thought out manner with regard to your system needs.
Submit complete documents as attachments, but identify in the letter of interest or through
annotation where relevant information is located.
If multiple projects are included in one letter of interest, provide cost, scope (including
locations and major capacity or dimension details) and schedule information for each individual
project being proposed.
If the project proposes a new or innovative approach, a risk assessment matrix, if available, can
help with the feasibility analysis.
Schedule Tips:
Include major planning, permitting, environmental review, design, and construction
start and end dates.
Indicate whether, and in what way, WIFIA funding would speed up the schedule.
If possible, anticipate how federal cross-cutter requirements could impact schedule.
Environmental Review Plan tips:
Provide accurate and clear location information.
Describe any state or federal reviews already undertaken (i.e. State Environmental
Review Process or Army Corps of Engineers Section 404 permit).
Provide details of any cross-cutting requirement coordination that has already
occurred.
Indicate whether major cross-cutters are impacted (NEPA, NHPA, ESA, and EJ) and the
status of consultations, if applicable.
Provide draft or final environmental information documents as attachments.
Indicate whether the project could be eligible for a CATEX (40 CFR § 6.204).
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SECTION C - OPERATIONS AND MAINTENANCE PLAN
If a comprehensive plan is not available yet, provide an explanation of major topics to be
included in the final plan or a table of contents.
« Any lifecycle costs or assessments available should be submitted as attachments.
« Provide a description of experience with similar technology at another facility, if applicable.
« Note the estimated useful life of the major assets included in the project.
SECTION D - FINANCING PLAN
Project sources and uses should be clearly presented and include a description of each funding
source's level of commitment.
9 Propose a credit structure for the WIFIA loan noting the following: whether debt will be issued
under an existing or new indenture and WIFIA's lien position including whether the WIFIA loan
will be subordinate to ongoing non-project debt secured with the same pledge.
WIFIA's revenue pledge should be clear and describe long-term revenue projections or the
financial condition of the issuer of a general obligation.
Credit enhancement will be accepted to compliment the source of revenue; for example, a
general obligation pledge may backstop water system rate revenues.
9 Provide consistent, transparent and realistic assumptions. The WIFIA program will review the
financial model, credit rating letters and other supporting materials to validate.
9 A demonstration of creditworthiness for a prospective borrower's proposed capital structure
should include historical and forward looking debt coverage ratios, liquidity and leverage.
Provide supporting documents such as rate studies/increase plans and audited financial
statements.
Provide breakdown of project costs by category as requested in letter of interest form
(construction, design, planning, etc.).
9 Include detailed construction cost estimates (such as unit pricing) as attachments and provide a
basis for the determination of contingency sizing.
9 Pro Forma Tips:
A financial pro forma provides EPA with insight into the borrower's operating
performance and their ability to manage existing and future debt payments.
The pro forma focuses on four key components: Operating performance, cash available
for capital expenditures and other obligations, debt service coverage, and capital
structure.
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Income Statement Section: Provides an overview of the borrower's current and
projected operational performance and identifies key revenues and expenses,
providing a general understanding of the project's operating and net income.
Cash Flow & Debt Service Coverage Sections: Using the income statement's Net
income, Total revenue, and Subtotal-Expenses, we can determine the borrower's Net
System Revenues and Funds from Operations (FFO). FFO demonstrates how much cash
would be available for capital expenditures and debt obligations. Net System Revenues
helps inform the WIFIA reviewers of the borrower's ability to service debt obligations
with generated net revenues.
Debt Balances Section: Prospective borrowers may have existing, amortizing debt on
the balance sheet. Debt balances must be shown through the life of the loan. Illustrates
when new debt issues are planned and when existing obligations will be retired.
SECTION E T , ^
« Responses should generally be one to three paragraphs long.
« Responses should focus on how the project requesting WIFIA funding relates to the selection
criteria.
Reference this handbook which describes how each criterion will be evaluated.
SECTION F - CONTACT 1NFORP N
« To allow for quick and timely communication, list at least one staff person who works day-to-
day on the project as the contact.
SECTIONS G - )NS
9 Make sure to read and sign all the signature boxes.
SECTIONS H - NOTIFICATION OF SRF
Initialing is an opt-out of sharing letter of interest materials with the relevant state SRF
program in the Notification to the SRF signature box.
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APPENDIX H: NEPA APPLICABILITY OVERVIEW
This Appendix presents the criteria EPA uses to make a preliminary NEPA assessments for proposed
projects.
CATEGORICAL EXCLUSION
EPA determines if a proposed project qualifies for a Categorical Exclusion under 40 C.F.R. §
6.204(a)(l)(ii) or 40 C.F.R. § 6.204(a)(l)(iii), with consideration of extraordinary circumstances under 40
C.F.R. § 6.204(b). Table H-l below outlines the above referenced implementing regulations for CATEXs.
TABLE H-l: CATEX ASSESSMENT CRITERIA
Is the project eligible for a categorical exclusion?40
Answer the following questions in their entirety to make this determination.
If yes to
any,
CATEX
may
apply
Does the project involve existing infrastructure systems (e.g., sewer systems; drinking water
supply systems; stormwater systems, including combined sewer overflow systems) and involve:
Minor upgrading?
Minor expansion of system capacity or rehabilitation (including functional replacement)
of the existing system and its components (such as the sewer collection network and
treatment system; the system to collect, treat, store and distribute drinking water; and
stormwater systems, including combined sewer overflow systems)?
Construction of new minor ancillary facilities next to or on the same property as existing
facilities?
Will the project occur in unsewered communities and involve replacing existing onsite systems
with ones that do not:
Substantially increase discharge volumes or pollutant loadings from existing sources?
Relocate existing discharge?
If yes to
any,
CATEX
does
not
apply
Will the project:
Involve new or relocated discharges to surface or ground water?
Be likely to substantially increase the volume or loading of pollutants to the receiving
water?
Provide capacity to serve a population 30% greater than the existing population?
Involve actions not supported by the state (or other regional) growth plan or strategy?
Directly or indirectly involve or relate to upgrading or extending infrastructure systems
primarily for future development?
40 Refer to 40 C.F.R. § 6.204(a)(1) for more on CATEX determination. This list only references relevant CATEX
components.
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Does the project involve any of the following extraordinary circumstances, which would make it
ineligible for a categorical exclusion?41
If yes to
any,
It is expected to have potentially significant impacts on the quality of the human environment,
either immediately or cumulatively over time.
CATEX
does
not
It is expected to have disproportionately high and adverse human health or environmental
effects on any community, including minority communities, low-income communities, or
federally recognized Indian tribal communities.
apply
It is expected to significantly affect federally listed, threatened, or endangered species, or their
critical habitat.
It is expected to significantly affect national natural landmarks or any property with nationally
significant historic, architectural, prehistoric, archeological, or cultural value, including (but not
limited to) property listed on or eligible for the National Register of Historic Places.
It is expected to significantly affect environmentally important natural resource areas such as
wetlands, floodplains, significant agricultural lands, aquifer recharge zones, coastal zones,
barrier islands, wild and scenic rivers, and significant fish or wildlife habitat.
It is expected to cause significant adverse air quality effects.
It is expected to have a significant effect on the pattern and type of land use (industrial,
commercial, agricultural, recreational, residential) or the growth and distribution of population,
including a change to the character of existing residential areas.
It may not be consistent with state, local, or federally recognized Indian tribe-approved land
use plans, or with federal land management plans.
It is expected to cause significant public controversy about an environmental impact it may
have.
It is expected to involve providing financial assistance to a federal agency through an
interagency agreement for a project that is known or expected to have potentially significant
environmental impacts.
The project is expected to conflict with federal, state, local, or federally recognized Indian tribe
environmental, resource-protection, or land-use laws or regulations.
41 Refer to 40 C.F.R. § 6.204(b) for more on extraordinary circumstances.
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ENVIRONMENTAL ASSESSMENT /ENVIRONMENTAL IMPACT
STATEMENT
To determine if an environmental assessment or environmental impact statement should be prepared
for a project, EPA will consider EPA's NEPA Implementing Regulations for Environmental Assessments
(40 CFR §6.205) and Environmental Impact Statements (40 CFR §6.207). EPA will also consider additional
implementing regulations for EISs found at 40 CFR 1507.3(b)(2). EPA will consider these assessment
criteria if the proposed action does not qualify for a CATEX. Table H-2 below outlines the above
referenced implementing regulations for EAs and EISs.
TABLE H-2: EA AND EIS ASSESSMENT CRITERIA
Will the project require an Environmental Assessment (EA) and/or a more detailed Environmental
Impact Statement (EIS)?
If yes to
any, an EA
normally
required
If yes to
any, an
EIS is
normally
required
s the project expected to have environmental impacts that are not significant, or whose
significance is not known?
More specifically, will the project involve any of the following, which typically require the
preparation of an EA?
The award of wastewater treatment construction grants under Title II of the Clean
Water Act.
EPA's issuance of new source NPDES permits under Section 402 of the Clean Water
Act.
EPA actions involving renovations or new construction of facilities.
Will the project significantly affect the quality of the human environment, including actions
for which the EA analysis demonstrates that significant impacts will occur that will not be
reduced or eliminated by changes to or mitigation of the proposed action?
Does the project involve new regional wastewater treatment facilities or water supply
systems for a community with a population greater than 100,000?
Does the project involve expansions of existing wastewater treatment facilities that will
increase existing discharge to an impaired water by greater than 10 million gallons per day?
Does the project involve issuance of new source NPDES permit for a new major industrial
discharge?
Does the project involve issuance of a new source NPDES permit for a new oil/gas
development and production operation on the outer continental shelf?
Does the project involve issuance of a new source NPDES permit for a deepwater port with a
projected discharge in excess of 10 mgd?
Does the project involve discharge treated effluent from a new or modified existing facility
into a body of water and the discharge that is likely to have a significant effect on the quality
of the receiving waters?
Is the proposed action likely to directly, or through induced development, have significant
adverse effect upon local ambient air quality or local ambient noise levels?
Is the proposed action likely to have significant adverse effects on surface water reservoirs
or navigation projects?
Will the proposed action be inconsistent with state or local government, or federally-
recognized Indian tribe approved land use plans or regulations, or federal land management
plans?
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Will the proposed action be inconsistent with state or local government, or federally-
recognized Indian tribe environmental, resource-protection, or land-use laws and
regulations for protection of the environment?
Is the proposed action likely to significantly affect the environment through the release of
radioactive, hazardous or toxic substances, or biota?
Does the proposed action involve uncertain environmental effects or highly unique
environmental risks that are likely to be significant?
Is the proposed action likely to significantly affect national natural landmarks or any
property on or eligible for the National Register of Historic Places?
Is the proposed action likely to significantly affect environmentally important natural
resources such as wetlands, significant agricultural lands, aquifer recharge zones, coastal
zones, barrier islands, wild and scenic rivers, and significant fish or wildlife habitat?
The proposed action in conjunction with related federal, state or local government, or
federally-recognized Indian tribe projects is likely to produce significant cumulative impacts.
The proposed action is likely to significantly affect the pattern and type of land use
(industrial, commercial, recreational, residential) or growth and distribution of population
including altering the character of existing residential areas.
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&EPA
Office of Wastewater Management
Water Infrastructure Division
Washington, DC 20460
www.epa.gov/wifia
EPA-830-B-17-001
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