oB>A
WIFIA
PROGRAM
HANDBOOK
April 2021
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WIFIA Program Handbook
EXECUTIVE SUMMARY 6
CONTACT INFORMATION 8
SECTION 1: INTRODUCTION TO WIFIA 9
1.1 Legislative Reference 10
1.2 Funding of WIFIA Credit Assistance 10
1.3 Program Administration 10
SECTION 2: ELIGIBILITY REQUIREMENTS 13
2.1 Eligible Borrowers 13
2.2 Eligible Projects 13
MULTIPLE PROJECTS UNDER A SINGLE LOAN 15
MULTIPLE PROJECTS UNDER A MASTER AGREEMENT 15
COMBINATION OF PROJECTS SUBMITTED BY STATE INFRASTRUCTURE FINANCE AUTHORITIES 16
2.3 Cost Threshold 16
2.4 Public Sponsorship 16
2.5 Creditworthiness 16
2.6 Eligible Costs 17
2.7 Federal Compliance Requirements 18
SECTION 3: STATUTORY TERMS AND CONDITIONS 24
3.1 Statutory Terms and Conditions 24
SECTION 4: APPLICATION PROCESS SUMMARY 27
SECTION 5: POST-CLOSING ACTIVITIES AND MONITORING 31
5.1 Disbursements 31
5.2 Loan Servicing 31
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5.3 Loan Monitoring 32
5.4 Single Audit and CFDA 35
SECTION 6: BASE PROGRAM CREDIT POLICIES 36
6.1 Credit Policies 36
SECTION 7: BASE PROGRAM PROJECT SELECTION 37
7.1 Notice of Funding Availability (NOFA) 37
7.2 Letter of Interest Submission 3 7
7.3 Letter of Interest Evaluation 39
7.4 Project Selection 42
7.6 Review Timeline 43
SECTION 8: BASE PROGRAM LOAN REVIEW, NEGOTIATION, AND CLOSING 44
8.1 Pre-Application 44
8.2 Application Submission 44
8.3 Application Evaluation 47
8.4 Negotiation 52
8.5 Approval 54
8.6 Closing 54
8.7 Review Timeline 55
SECTION 9: SWIFIA CREDIT POLICIES 57
9.1 SWIFIA indenture requirements 57
9.2 SWIFIA standard terms 57
9.3 Right to Replace 58
SECTION 10: SWIFIA PROJECT SELECTION 60
10.1 Notice of Funding Availability (NOFA) 60
10.2 Letter of Interest Submission 60
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10.3 Letter of Interest Evaluation 61
10.4 Project Selection 63
10.6 Review Timeline 63
SECTION 11: SWIFIA LOAN REVIEW, DOCUMENTATION, AND CLOSING 65
11.1 Pre-Application 65
11.1 Application Submission 65
11.2 Application Evaluation 69
11.4 Documentation 70
11.5 Approval 70
11.5 Closing 71
11.6 Review Timeline 71
APPENDIX A: ACRONYMS 73
APPENDIX B: DEFINITIONS 74
APPENDIX C: BASE PROGRAM SELECTION CRITERIA 76
APPENDIX D: FEE SCHEDULE 88
APPENDIX E: COMPLIANCE REQUIREMENTS 89
APPENDIX F: CONFIDENTIAL BUSINESS REQUIREMENTS 92
APPENDIX G: BASE PROGRAM LETTER OF INTEREST TIPS 94
APPENDIX H: NEPA APPLICABILITY OVERVIEW 97
APPENDIX I: RE-EXECUTION OF WIFIA LOAN AGREEMENT 102
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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 eleven 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 - Statutory Terms and Conditions 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 - Post-Closing Activities and Monitoring 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.
Section 6 - Base Program Credit Policies describe policies that influence the structuring of project
financing plans for the base program and guide the WIFIA program's creditworthiness determination.
Section 7 - Base Program Project Selection describes the base program 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 8 - Base Program Project Review, Negotiation, and Closing describes the final phase of the
base program process through loan closing. 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. This section also
1 Electronic copies of this program handbook, application materials, and additional information regarding the
WIFIA Program are located on the WIFIA website.
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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 loan agreement.
Section 9 - SWIFIA Credit Policies describe policies that influence the structuring of project financing
plans for the SWIFIA program and guide the WIFIA program's creditworthiness determination.
Section 10 - SWIFIA Project Selection describes the SWIFIA 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 SRFs to invite to submit applications.
Section 11 - SWIFIA Project Review, Documentation, and Closing describes the final phase of SWIFIA
process through loan closing. 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. This section also 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 loan
agreement.
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 - Base Program 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.
WIFIA Legislation and Regulations, including the statute, the implementation rule, and the fee rule, are
available on the WIFIA website.
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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@epa.gov
202-566-1868
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
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 loans2 to creditworthy borrowers for up
to 49 percent of eligible project costs.
WIFIA authorizes EPA to provide direct loans and loan
guarantees to eligible borrowers for 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. 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 an
individual loan agreement between the applicant and
EPA.
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.
EPA's WIFIA program is authorized to provide loans through 2 programs:
• WIFIA Base Program: The base program is available to a diverse set of borrowers to finance
water infrastructure projects.
• State Infrastructure Financing Authority WIFIA (SWIFIA) Program: In section 4201 of America's
Water Infrastructure Act (AWIA) of 2018, Congress authorized EPA to establish a loan program
exclusively for State infrastructure financing authority borrowers to finance combination of
State Revolving Fund (SRF)-eligible wastewater or drinking water projects submitted in a single
application.
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. In the WIFIA Base Program, it can offer borrowers
the advantage of developing customized terms, including sculpted repayment terms to match the
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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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.
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 section 1445 of Fixing America's Surface
Transportation (FAST) Act of 20154, section 5008 of Water Infrastructure Improvements for the Nation
(WIIN) Act of 20165, and section 4201 of America's Water Infrastructure Act (AWIA) of 2018s. Chapter 52
of Title 33 of the United States Code7 codifies WIFIA, with supporting regulations appearing in 40 C.F.R.
35 subpart Q. These documents are provided on the WIFIA program website.
1.2 FUNDING OF WIFIA CREDIT ASSISTANCE
The WIFIA program is governed by The Federal Credit Reform Act of 1990s. 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 WIFIA
Management Division in the Office of Wastewater Management within the Office of Water and led by a
Director.
3 P.L. 113-121. §§ 5022-5035
4 P.L. 114-94
5 P.L. 114-322
6 P.L 115-270
7 33 U.S.C. §§ 3901-3914
8 2 U.S.C. § 661 et eq.
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FIGURE 1-1: WIFIA MANAGEMENT DIVISION ORGANIZATIONAL STRUCTURE
As displayed in Figure 1-1, the WIFIA Management Division is led by the Director and Deputy Director
and comprised of two branches and six teams:
Director manages the WIFIA program, develops program policy, and leads interaction with EPA
leadership.
Deputy Director supports the management of the WIFIA program with a focus on administrative
functions such as budgets, contracts, human resources, and communication.
Program Management Team provides comprehensive program support. Functions include
communication, project selection, organizational operations, and program evaluation.
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.
Credit Analysis Branch
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.
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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.
Technical Support Branch
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 Federal 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.
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SECTION 2: ELIGIBILITY REQUIREMENTS
SECTION 2: ELIGIBILITY REQUIREMENTS
This section outlines the requirements that entities applying for and receiving WIFIA loans 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 its evaluation 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:9
• 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 infrastructure financing authority as defined by the Clean Water Act and the Safe
Drinking Water Act.10
The entity applying for SWIFIA credit assistance must be a State infrastructure financing authority.
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.11
1. Wastewater projects that are eligible for the Clean Water SRF as described under section 603 of
the Federal Water Pollution Control Act,12 notwithstanding the public ownership requirement
under paragraph (1) of that subsection. The Clean Water SRF website provides additional
eligibility information for this project type.
9 33 U.S.C. §3904(1-7)
10 33 U.S.C. § 1383 and 42 U.S.C. §§ 300i-12(a)(2)
11 33 U.S.C. § 3905(2-10)
12 33 U.S.C. § 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.13 The Drinking Water SRF 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).
> 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.
/ 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 State infrastructure financing authority 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.
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 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 this
case, WIFIA credit assistance for one or more phases would carry separate requirements from non-
WIFIA funded phases.
13 42 U.S.C. §§ 300i-12(a)(2)
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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
can relate to existing infrastructure. For example, repair, rehabilitation or replacement of an existing
plant or pipe 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.
MULTIPLE SINGLE LOAN
The WIFIA program can also fund multiple discrete construction projects through a single loan if they are
secured by a common security pledge. By statute, WIFIA cannot fund a single loan consisting of multiple
projects secured by various independent streams of revenue. For example, a single loan to finance (1) a
wastewater project supported by the streams of wastewater revenue and (2) a land acquisition project
supported by property tax revenue of the city, would not be allowed. WIFIA will consider a loan with
multiple projects pledged by various sources of revenue if these streams are cross-collateralized.
When multiple construction projects are in a single loan, the WIFIA program considers them either a (1)
program of projects or (2) combination of projects.
A program of projects should serve a common purpose, include similar work for the projects (e.g. pipe
rehabilitation or manhole replacements), and have similar construction time frames, generally limited to
five years. A program of projects may have broad geographic area where work will take place, and the
specific project locations do not need to all be defined before the closing of the loan. A program of
projects should reach substantial completion no later than five years post loan closing or five years after
the start of project construction.
A combination of projects should serve a common purpose and be completed in a set timeframe,
generally limited to five years. A combination of projects may have similar construction starting and
finishing timeframes or be sequential phases of a larger program. Each project in the loan should have
defined locations and defined scopes of work at loan closing. In general, the WIFIA program prefers that
all projects achieve substantial completion within 5 years of loan closing or the start of project
construction.
MULTIPLE MASTER AGREEMENT
Borrowers seeking WIFIA financing for a combination of projects under a single WIFIA Letter of Interest
may benefit from a Master Agreement. A Master Agreement is an umbrella contract between EPA and a
borrower, providing an up-front commitment of loan proceeds and a common set of legal and financial
terms under which a borrower can close multiple WIFIA loans over time. Borrowers execute loans under
the Master Agreement as projects are ready to proceed and environmental documentation is complete.
A Master Agreement may be beneficial when the phasing, cost, scope, schedule, and location of some
projects may change as the project develops, or when the borrower wishes to finance multiple projects
over time that do not share a common purpose. Borrowers may request a master agreement in their
letters of interest or application, or EPA may offer it.
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COMBINATION OF PROJECTS SUBMITTED BY STATE INFRASTRUCTURE FINANCE
AUTHORITIES
These considerations do not apply to a combination of projects submitted to EPA by a State
infrastructure financing authority under a single application for either the WIFIA base program or the
SWIFIA program. State infrastructure financing authorities are allowed by statute to submit an
application for a combination of SRF-eligible projects. In effect, they are capitalizing their SRF programs
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, State infrastructure financing authorities do not have to adhere to the same requirements as
other borrowers for purposes of this section.
The SWIFIA project is a combination of Clean Water and Drinking Water SRF-eligible, as defined in the
first and second bullet above, for which a State infrastructure financing authority submits a single
application. The SWIFIA project includes all the SRF loans being included in the request for credit
assistance. This includes both the SRF loans that will be financed with the SWIFIA loan (up to 49% of
SWIFIA Project costs) and the SRF loans that will be financed by other sources.
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.14 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 community projects as projects eligible for the Clean Water
and Drinking Water SRFs, 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.15
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.16 The prospective borrower
can show support by including a certified letter signed by the supporting 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.
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:
14 33 U.S.C. § 3907(a)(2)(A)
15 33 U.S.C. § 3907(a)(2)(B)
16 33 U.S.C. § 3907(a)(4)
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» 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.17
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:18
» 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.
» Capitalized interest necessary to meet market requirements, reasonably required reserve
funds, capital issuance expenses, and other carrying costs during construction.
Interest during construction: Eligible costs include interest during construction on
capital market bonds and notes, SRF loans, and other similar debt to be approved on a
case-by-case basis.
Debt Service Reserve Funds: Eligible costs include the initial funding of a debt service
reserve fund for a WIFIA loan, capital market bonds, SRF loans, and other similar WIFIA
Project debt as approved on a case-by-case basis. Debt service reserve funds must be
sized to capital market standards. The initial balance may be funded after financial
close and through multiple disbursements of the WIFIA loan.
Capital issuance expenses: Eligible costs include capital issuance expenses. These
generally include costs of financial, legal, and other professional services; costs of
issuing WIFIA Project debt, such as fees, transaction costs and other customary charges
17 33 U.S.C. § 3907(a)(1)(B)
18 33 U.S.C. § 3906
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imposed by lenders; and the cost of obtaining credit rating letters for the WIFIA loan
and other WIFIA Project debt
Major Maintenance or Capital Expenditure Reserve Funds: The WIFIA program will
consider the eligibility of spare major essential items that are included in the
construction contract on a case-by-case basis. For project financings, eligible costs
generally include the initial cash funding of Major Maintenance or Cap Ex Reserve
Funds.
The following are not eligible project costs: debt principal payments; capitalized
interest on WIFIA credit assistance; Construction Contingency Reserve Fund for cost
overruns during construction; retainage from payments to designers or constructors;
and Operating and Maintenance Reserve Funds are not eligible project costs.
Additionally, indirect costs allocable to the development, oversight, or management of a project are
generally eligible.
Prospective borrowers may request that costs incurred prior to receipt of credit assistance, including the
value of any integral in-kind contributions, be included as a part of eligible project costs. The WIFIA
program will approve such requests on a case-by-case basis.
Previously incurred 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 borrower of the proposed 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.
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 AND STEEL (AIS) REQUIREMENT
The statute requires borrowers receiving WIFIA credit assistance to use iron and steel products
produced in the United States.19 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
19 33 U.S.C. § 3914
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restraints, valves, structural steel, reinforced precast concrete, and construction materials.20 Equipment
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 the EPA Clean Water State Revolving
Fund's website.
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
» National Product Waiver for Pig Iron and Direct Reduced Iron
» De Minimis Waiver
Each of these national waivers can be found on the EPA Clean Water State Revolving Fund's website.
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.21 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.
Projects selected to apply for WIFIA and SWIFIA 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 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
20 33 U.S.C. § 3914(b)
21 33 U.S.C. § 3909(e)
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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 review stage, each proposed project must be assessed for its impact on the
environment under the guidelines set forth by the NEPA.22 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 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 an 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.
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).
WIFIA Programmatic Environmental Assessment: WIFIA and SWIFIA projects may also be eligible for
coverage under the WIFIA Programmatic Environmental Assessment (PEA). The PEA analyzes the
potential environmental impacts related to the issuance of credit assistance under WIFIA. The PEA is an
innovative approach to environmental review covering a group of projects that are similar in scope,
scale, and magnitude, and that have similar types of impacts, rather than a singular project. Projects
covered under the PEA do not require an additional public notification or public comment period. The
PEA provides a streamlined NEPA compliance path for water and wastewater infrastructure projects and
will make compliance with NEPA straightforward using an environmental questionnaire. WIFIA credit
assistance projects qualify for coverage under this PEA when:
22 42 U.S.C. §4321
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The impacts from their projects are within the scope of those considered in Section 4 of the PEA,
Proper supporting documentation is provided, and
A memorandum to the record is developed by EPA using the PEA Questionnaire for WIFIA Credit
Assistance Projects in Appendix A or Questionnaire for WIFIA Credit Assistance SRF Programs in
Appendix B.
Environmental Information Document: If EPA determines that the project does not qualify for a CATEX
or the PEA, EPA will likely ask the applicant to submit an EID to EPA to provide information about the
project and its 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 or the PEA, 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, the PEA 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.
EPA has compiled additional information included in Appendix H to provide an overview of how EPA will
evaluate the appropriate level of NEPA review.
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
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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
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)).23
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
23 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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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.
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SECTION 3: STATUTORY TERMS AND
CONDITIONS
SECTION 3: STATUTORY TERMS AND CONDITIONS
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, loans 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 statutory terms and conditions that apply to WIFIA secured loans in both
the WIFIA base program and the SWIFIA program. These terms and conditions support the requirement
that projects must be deemed creditworthy by the Administrator to be eligible for WIFIA credit
assistance. Credit policies established by EPA for the WIFIA base program are available in Section 6 and
for the SWIFIA program are in Section 9.24
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 2.6.25,26 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).27
Maximum Federal Involvement: Total federal assistance for any project may not exceed 80 percent of
total project costs.28
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
24 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.
25 33 U.S.C. § 3908(b)(2)(A)
26 The statute authorizes EPA to use up to 25 percent of its budget authority appropriated through Fiscal Year 2019
to provide credit assistance to one or more projects of up to 80 percent of the total costs of any given project. EPA
will use this authority only in extraordinarily exceptional circumstances. Opportunities to request more than 49
percent may be outlined in the NOFA.
27 33 U.S.C. § 3908(b)(2)(B)
28 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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the WIFIA credit assistance on the date of execution of the loan agreement.29 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.30 In limited circumstances the program and the borrower may re-execute the
WIFIA loan to re-set of the interest as described in Appendix I.
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).31 If the borrower is a State infrastructure financing authority, 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.32 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 State infrastructure financing authority, 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.33 The WIFIA program interprets "dedicated revenue sources" to include
such sources as taxes, rate revenue, transfers pledged from state or local governments, municipal
general obligation pledges, general recourse corporate financing, project revenues, or other revenues
that are pledged for the purpose of paying debt service on the WIFIA credit instrument.
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 features supporting the project obligations.34
29 33 U.S.C. § 3908(b)(4)
30 The SLGS tables can be found online.
31 33 U.S.C. § 3908(b)(5)(A)
32 33 U.S.C. § 3908(c)(2)
33 33 U.S.C. § 3908(b)(3)(A)
34 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.35 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.
35 33 U.S.C. § 3908(c)(4)(B)
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SECTION 4: APPLICATION PROCESS
SUMMARY
SECTION 4: APPLICATION PROCESS SUMMARY
This section provides a high-level overview of the application and approval process for both Base
program and SWIFIA loans. EPA reviews projects in two phases as illustrated in Figure 4-1. Detailed
information about the Base program and SWIFIA program processes are provided in sections 7 and
sections 10 respectively.
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.
Phase 2: Project Review, Negotiation/Documentation, and Closing: Each invitee must submit an
application for WIFIA credit assistance. Using this information, the WIFIA program conducts a detailed
evaluation of the project. For the Base program, the EPA proposes terms and conditions for the project
and negotiates with the applicant until they develop a mutually agreeable term sheet and loan
agreement. For the SWIFIA program, the EPA develops the term sheet and loan agreement by either
accepting the applicant's existing indenture or using the SWIFIA template term sheet and loan
agreement. Prior to closing, the WIFIA program must receive approval from the Administrator or his
designee and the Office of Management and Budget (OMB). At closing EPA and the applicant executes
the loan agreement, which is the binding legal document that allows the borrower to receive WIFIA
funds.
Table 4-1 describes the steps that are undertaken during each phase of the application process.
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.
FIGURE 4-1: WIFIA PROGRAM APPLICATION PROCESS
A
• Letter of Interest (LOI) Submission
• LOI Evaluation
• Project Selection
• NOFA
• Application Submission
• Application Evaluation
• Project Recommendation
• Approval
• Closing Activities
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Table 4-1: WIFIA Program Application Process
Notice of Funding Availability (NOFA)
Submit NOFA to Federal Register
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 LOI
evaluation; OMB will review all
projects for federal scoring
Project Selection
Select eligible projects to invite to apply
based on letters of interest
Invite prospective borrowers to apply
Responsible Party
Administrator
Prospective borrower
WIFIA program, OMB, 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
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
Approve the loan, sign the term sheet and
loan agreement
Inform the prospective borrower of the
Administrator's decision, and provide
the signed term sheet and loan
agreement
Closing Activities
Demonstrate fulfillment of conditions
precedent to closing.
Execute loan agreement
Applicant
WIFIA program
WIFIA program and applicant
WIFIA program
OMB
Credit Council and WIFIA program
Administrator
WIFIA program
Applicant
Administrator or designee and
applicant
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Figure 4-2: WIFIA Program Project Selection and Approval Entities
WIFIA Program Handbook
Administrator
•Approves applications for WIFIA credit assistance
•Executes credit agreement (authority may be delegated to
Assistant Administrator for the Office of Water)
OMB
•Approves credit subsidy estimates and gives EPA authority to
commit resources
•Reviews and scores projects for federal project determination
Credit Council
•Reviews creditworthiness determination of projects
•Recommends projects for approval to the Administrator
Selection
Committee
•Selects projects to invite to submit applications
•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 a
•Monitors the WIFIA loan portfolio
J
The EPA Administrator grants final approval of applications for WIFIA credit assistance and executes the
loan agreement at closing (execution of the loan 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.
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. In addition, OMB reviews and scoring projects for federal project determination.
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.
A Selection Committee chooses projects to invite to submit applications for WIFIA credit assistance.
Office of Water senior managers, including representatives from both the Office of Wastewater
Management and the Office of Ground Water and Drinking Water, serve on the Selection Committee.
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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 loan agreements to ensure that the government's interest is protected and estimating the
credit subsidy for the projects. After loan closing, the WIFIA program monitors all the loans in its
portfolio until final repayment.
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SECTION 5: POST-CLOSING ACTIVITIES AND
TORING
SECTION 5: POST-CLOSING ACTIVITIES AND MONITORING
Following closing, borrowers must meet several requirements to receive funding and remain in
compliance with the loan agreement. This section describes the post-closing activities involving WIFIA
borrowers in three categories: disbursements, loan servicing, and loan monitoring. The executed loan
agreement will identify specific requirements pertaining to each credit instrument.
5.1 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. To receive a disbursement,
borrowers must submit a requisition form that will require borrowers to verify continued compliance
with the loan agreement. The requisition form includes certification that the disbursements are being
made against incurred eligible project costs and in accordance with the terms of the loan agreement. It
may also include confirmation that there have been no changes to the project plan or any material
events and that the representations and warranties included in the loan agreement are still true and
correct, among other items.
Each request for disbursement must include supporting documentation to ensure that the Portfolio
Management Team can evaluate the costs for program eligibility, project allocability, and
reasonableness. Examples of supporting documents include: signed and approved applications for
payments (Note: Schedule of Items/Bid Tabulation is not necessary but may be requested at the
discretion of the Portfolio Manager); approved Invoices; contractor Form G702 (Application and
Certificate for Payment) or equivalent, signed by the borrower, borrower's consulting engineer (A/E) or
authorized agent.
Borrowers may request WIFIA funds disbursements as frequently as once per month. The WIFIA
program's goal is to have disbursement available in the borrower's account 15 calendar days after
receiving a disbursement request. Disbursements will be on the 1st or 15th of the month as specified in
each loan agreement.
5.2 LOAN SERVICING
The WIFIA program charges borrowers an annual fee for loan servicing activities associated with each
WIFIA credit instrument, such as credit accounting, collections, maintenance of documents, and
financial reporting. In the period prior to substantial completion of the project the annual servicing fee
will range from approximately $10,000 for loans under $100 million to approximately $26,000 for loan
greater than $400 million. After substantial completion the annual servicing fee will be approximately
$8,000 for all borrowers. For State infrastructure financing authority borrowers, the annual service fee
will be approximately $8,000-$ll,000. Loan servicing fees are updated periodically based on inflation.
The WIFIA program may retain outside assistance to perform loan servicing for WIFIA loans.
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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 an Extraordinary Expenses Fee 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.
5.3 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. 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 way the
WIFIA program plans to implement these requirements.
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
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 t ITORING
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 loan 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 AIS statutory
requirement, the Davis-Bacon wage requirement, environmental statutes (e.g., NEPA), and other
requirements as set forth in the credit agreement. The Portfolio Management team is responsible for
coordinating periodic—but not less than once a year—site visits and performing documentation audits
to verify that projects receiving WIFIA funding comply with AIS and Davis-Bacon provisions. To the
extent possible these site visits occur at the same time as construction inspections. Typical compliance
requirements verification that the WIFIA program will undertake include:
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AIS: Inspect certification records and spot-check installed products for compliance.
Davis-Bacon: Collect certifications of compliance forms, ensure that the borrower has collected
weekly payroll reports , examine payroll reports to ensure consistency with project size and
progress, ensure that laborers and mechanics and being paid weekly, ensure that job types
seem consistent with project type and phase of construction, ensure that the borrower has
collected statements of compliance for all weeks of construction, review completed interview
forms, ensure that apprentices and trainees are verified to be registered in acceptable
programs, ensure that wage determinations and Davis-Bacon posters are posted in an
appropriate location.
NEPA: Verify the implementation of environmental mitigation measures.
As part of compliance management, the WIFIA program reviews and approves 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 collects data from borrowers that will enable the assessment of the program's outputs (e.g.,
loans issued, disbursements), outcomes (e.g., interest payments savings, private sources leveraged,
accelerated projects), and impacts (e.g., pounds of pollution prevented, additional safe drinking water
generated
PERIODIC REPORTING
The WIFIA program requires that borrowers submit financial condition reports to:
Provide an oversight tool for ensuring each borrower's compliance with the provisions of the
credit agreement,
Monitor the overall status of the project and the WIFIA program, and
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 (e.g., annual, monthly, quarterly, or project milestone)
reporting requirements, as well as any other periodic reporting requirements. These reporting
requirements are included in the loan agreement and are tailored to the characteristics and risks of the
project and the borrower. Examples are presented in Table 5-1.
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TABLE 5-1: OVERSIGHT AND MONITORING DOCUMENTATION
Example of Loan Monitoring Documentation*
Annual Financial Planning and Report 1
•
Updates to the project or system financing plans
•
Updated financial model or pro-forma
•
Audited financial statements
•
Rating opinion letter (as available)
•
Project Oversight and Monitoring (typically quarterly)
•
Updates on project development, design and construction
•
Amount of total project costs expended and estimated to be required to complete the project
•
Assessment of the overall construction progress
•
Changes to the substantial completion date
•
Updates to the project schedule
| Timely Updates on Material Events |
*Specific reporting requirements will be negotiated with the WIFIA program and stated explicitly in the loan
agreement.
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
loan agreement to provide ongoing financial and project information not only during construction, but
so long as the WIFIA credit instrument is outstanding and/or until the debt obligation to the federal
government is fully repaid. In each loan 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.
CONSTRUCTION MONITORING SITE VISITS
The WIFIA program will conduct site visits following the execution of the credit agreement. These site
visits will primarily monitor construction progress made by WIFIA borrowers and will also serve to verify
compliance with overall federal requirements and loan-specific requirements in the loan agreement.
Any risks or issues identified during site visits will be documented and used to update the EPA's ongoing
risk assessment of the borrower. Projects will undergo three types of visits:
Initial visit: The timing of this visit will depend on the stage of the project being financed. For
projects that have not had a construction kick-off meeting then EPA will plan to attend the kick-
off meeting. For projects that are already underway then EPA will schedule the initial visit soon
after loan closing.
Periodic construction monitoring: Every project will be visited at least on an annual basis during
construction but if the WIFIA program identifies problems or high risks with the schedule, scope,
budget, or compliance then more frequent visits will be scheduled.
Substantial completion: EPA will conduct a last site visit at substantial completion.
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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.
5.4 SINGLE AUDIT AND CFDA
According to the OMB Circular A-133 and Uniform Guidance, 2 CFR 200.501(a), non-Federal entities that
expend $750,000 or more in a year in Federal awards shall have a single or program-specific audit
conducted for that year in accordance with the provisions of these parts. Single audits are not collected
by the WIFIA program, but borrowers are responsible to submit single audits to the Federal Audit
Clearinghouse. The WIFIA Program's Catalog of Federal Domestic Assistance (CFDA) number is 66.958.
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SECTION 6: BASE PROGRAM CREDIT POLICIES
SECTION 6: BASE PROGRAM 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.
6.1 CREDIT POLICIES
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.
Additional Debt: If the financial structure permits future additional indebtedness, EPA will require an
additional indebtedness 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 overtime, and other existing and potential demands on project cash
flows over the term of the WIFIA credit instrument.
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SECTION 7: BASE PROGRAM PROJECT
SELECTION
SECTION 7: BASE PROGRAM PROJECT SELECTION
This section describes the first phase of the WIFIA program application process for the base program,
which includes the release of the 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 (wifiaffiepa.gov) or by phone
(202-566-1868) during this phase of the application process.
A
7.1 NOTICE OF FUNDING AVAILABILITY (NOFA)
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. Each NOFA will specify the amount of funding available to support WIFIA credit
assistance, EPA's priorities for the selection round, 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.
7.2 LETTER OF INTEREST SUBMISSION
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 enough 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
Supply the WIFIA program with information to evaluate the project against the selection
criteria defined in the NOFA.
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The letter of interest contains the following sections:
Key Loan Information: In this section, the prospective borrower provides a general description
of the project, purpose, loan amount, total eligible project costs, application submission date,
loan close date, and population information. The prospective borrower also includes
information such as its legal name, address, website, Dun and Bradstreet Data Universal
Number System (DUNS) number, and employer/taxpayer identification number. In the case of a
project that is 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 project that the entity is undertaking must be publicly sponsored. 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.
Engineering & Credit: In this section, the prospective borrower provides any technical reports or
written information relevant to evaluating the project and a high-level schedule of dates for
each of the project or projects included as part of the Letter of Interest. To evaluate
creditworthiness, the prospective borrower will provide the preferred lien priority for the WIFIA
loan, a current rating letter. If the prospective borrower does not have a current rating letter,
they may provide a pro-form or financial statements and a budget.
Selection Criteria: In this section, the prospective borrower describes the potential policy
benefits achieved using WIFIA assistance with respect to each of the WIFIA program selection
criteria. These criteria and their weights are enumerated in Section VII of this NOFA and further
explained in the WIFIA program handbook.
Contact Information: In this section, the prospective borrower identifies the point of contact
with whom the WIFIA program should communicate regarding the LOI. To complete the EPA's
evaluation, the WIFIA program staff may contact a prospective borrower regarding specific
information in the LOI.
Certifications: In this section, 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.
SRF Notification: In this section, the prospective borrower acknowledges that the EPA will notify
the state infrastructure financing authority in the state in which the project is located that it
submitted a LOI and provide the submitted LOI and source documents to that authority. The
prospective borrower may opt out of having its LOI and source documents shared.
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Prospective borrowers should use the letter of interest form provided on the WIFIA website 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.
Prospective borrowers must submit the letter of interest and all referenced source documents to EPA by
the deadline stated in the 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:
Preferred method: 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@epa.gov. Requests to upload documents must be made in advance of the deadline as
outlined in the NOFA; or
Email the documents as attachments to wifia@epa.gov.
Upon receipt, EPA will provide a confirmation email. In addition, the program will post a list of the
letters of interest it receives, with all prospective borrowers and a short project description.
7.3 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 loan 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.
Upon receipt of a letter of interest, the WIFIA program validates that the prospective borrower is an
eligible entity as described in 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.
FISCAL YEAR 2020 OMB BUDGETARY SCORING DETERMINATION
In order to comply with Public Law 116-94, a project selected for WIFIA financing using funding
appropriated in FY 2021 will be assessed using two initial screening questions and sixteen scoring
factors. These questions will help OMB determine compliance with budgetary scoring rules, a process
that will be conducted in parallel to EPA's LOI evaluation process outlined in the NOFA. The questions
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may be found in federal register publication: Water Infrastructure Finance and Innovation Act Program
(WIFIA) Criteria Pursuant to Public Law 116-94. If the prospective borrower has additional
documentation that would help EPA make this determination, the prospective borrower may submit it
as an attachment to the LOI. EPA may contact prospective borrowers after the LOI is submitted if
clarification is needed to answer the OMB budgetary scoring determination questions.
PRELIMINARY CREDITWORTHINESS ASSESSMENT
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.
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, and cost estimates. While
additional supporting materials such as alternatives analysis or 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 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.
As part of the of the preliminary engineering assessment, the WIFIA program will also evaluate a
project's readiness to proceed toward development, including loan closing and when construction will
begin.
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
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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. Table C-
1, located in Appendix C, provides a crosswalk between the Letter of Interest and the questions in
Section C and the selection criteria outlined below. 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 (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; or (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).
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 addresses emerging contaminants. 40 C.F.R. § 35.10055(b).
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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).
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).
Criteria scores are supplemented by the 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).
Criteria scores are supplemented by the 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).
7.4 PROJECT SELECTION
At the end of the WIFIA program staffs analysis, the program calculates a final score for each eligible
project. Based on the scores, the WIFIA program recommends projects to invite to apply to the Selection
Committee. Recommended projects will be from the pool of eligible letters of interest received before
the selection round due date. Projects will be selected in order of score, subject to the requirement to
ensure a diversity of project types and geographical locations. To ensure diversity, the WIFIA program
will establish a ceiling for each project type and geographical location. Then, it will select projects in rank
order up until the point that the ceiling is reached. Thereafter, the next highest project that adds
diversity will be selected. There is no threshold score that must be achieved to be selected.
The WIFIA program will provide prospective borrowers written notifications 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
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scheduling a debrief call to discuss their letter of interest and how it can be improved for future
selection rounds.
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. It is expected that EPA
will only invite projects to apply if it anticipates that those projects can obtain WIFIA credit assistance.
At the discretion of the Selection Committee, EPA may decide add projects to a waitlist. The Selection
Committee will decide how many projects that fall below WIFIA's funding line will be waitlisted each
round. A waitlisted project can remain on that funding round's waitlist until the earlier of the following
two scenarios: (i) funding becomes available for that project within one year from the date of initial
waitlist notification by WIFIA or (ii) that project applies for and is selected for a new funding round (in
which case it is automatically withdrawn from the waitlist at the time of selection of the new round).
7.6 REVIEW TIMELINE
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 approximately 90 days after which
invitations to apply are sent to the selected projects. Figure 7-1 shows the anticipated timeline for the
project selection process.
Figure 7-1: Project Selection Process
A
Notice of Funding
Availability (NOFA)
Letter of Interest
Submission
Letter of Interest
Evaluation
Project Selection
60 - 90 days
90 Days
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SECTION 8: BASE PROGRAM LOAN REVIEW,
NEGOTIATION, AND CLOSING
SECTION 8: BASE PROGRAM LOAN REVIEW, NEGOTIATION, AND CLOSING
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. This section also describes negotiation and closing during which the WIFIA
program will finalize the terms of credit assistance to an applicant.
After WIFIA notifies the prospective borrower that they are invited to apply, the prospective borrower
will begin working with a transaction team consisting of an underwriter, engineer, and attorney. The
underwriter is the primary point of contact and will lead the WIFIA program's overall efforts. The
underwriter schedules an introductory call and regular check-in calls to discuss the project, explain the
WIFIA application process, and answer any questions. The prospective borrower will also provide the
transaction team with a timeframe for when they plan to submit the application. This team and the
prospective borrower will work together pre- and post- application submission to ensure a successful
WIFIA loan closing.
The second phase of the application review process begins when a prospective borrower who has been
invited to apply for WIFIA assistance submits a complete application, including a preliminary rating
opinion letter and the application fee. 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 and the engineering due
diligence, including federal compliance.
~
8.1 PRE-APPLICATION
8.2 APPLICATION SUBMISSION
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Applicants may wish to assert a business confidentiality claim covering part or all 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 may be submitted in two ways. The applicant may email
the completed application with attachments to wifia@epa.gov or upload to WIFIA's SharePoint site. To
be granted access to the WIFIA SharePoint site, the applicant may email the WIFIA Underwriter assigned
to the applicant with the names and emails of all staff that need access.
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:
Key Applicant and Loan Information: The applicant provides basic information such as its legal
name, project name, estimated total projects costs, requested WIFIA loan amount, anticipated
closing date, and contact information. The applicant also provides information about jobs,
savings, Dun and Bradstreet Data Universal Number System (DUNS) number, and
employer/taxpayer identification number.
Applicant Background: Materials submitted under this section detail the applicant's legal
authority to apply for a WIFIA loan and to undertake the project and disclose any current,
threatened, or pending litigation. The applicant provides customer concentration analysis,
water and sewer rate information, capital improvement planning process information, any
accounts receivable outstanding information, the latest condition assessment report or a
master plan
Financing Plan: The applicant 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 applicant also submits a preliminary rating letter from a NRSRO indicating the
potential 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.
Federal Requirements Compliance: The applicant describes the status of the environmental
review and the status of the State Revolving Funds (SRF) environmental review, if applicable.
The applicant also identifies any cross-cutter consultations that have been undertaken and any
major permits or approvals required.
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Contract Information: The applicant fills out a separate Excel spreadsheet with specific
contract information including contract components, project information within each contract,
the project delivery method, and filenames of technical reports. The applicant also provides
information about costs, schedules, operations and maintenance plans, and final or draft bid
specifications for the project(s).
Certifications: The applicant 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.
As a measure of a project's creditworthiness, WIFIA requires each applicant to provide, at the time of
application, a preliminary rating opinion from at least one 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.36 The WIFIA program will not consider an application complete until an applicant has
provided a preliminary rating opinion letter, or preferably, a detailed rating article from an NRSRO
website. For the preliminary rating, WIFIA accepts an existing rating on bonds that are on parity with the
proposed WIFIA loan.
The preliminary rating opinion letter is a 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 application, 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 negotiation.
The statute requires that prior to execution of the loan agreement, each applicant provide the WIFIA
program with final rating opinions from two NRSROs indicating that the senior obligations of the project
have an investment-grade rating.37 State infrastructure financing authority applicants are only required
to submit one NRSRO rating opinion. The WIFIA implementation rule at 40 C.F.R. § 35.10040(b) further
clarifies that the rating should provide commentary on the default risk of the WIFIA loan. 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 should preferably 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 on the senior obligations
and the WIFIA loans. The NRSROs will be able to answer questions concerning fees, timing of
36 33 U.S.C. § 3907(a)(l)(D)(i)
37 33 U.S.C. § 3907(a)(l)(D)(ii
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assessments, information requirements, and surveillance practices associated with obtaining
preliminary opinion letters, credit ratings, periodic rating updates, and credit surveillance reports.
The WIFIA program requires each applicant to reimburse the federal government for the its cost of
providing credit assistance and the costs of retaining expert firms, including legal, engineering, and
financial advisory services needed to review its application materials, negotiate, and close the loan
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-$350,000 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 loan
agreement. It reimburses EPA for its costs to provide credit assistance, including retaining
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 $100,000-$300,000 per applicant, a portion of which may be waived at
the discretion of the WIFIA program. If 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:
• 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
if sufficient budget authority is not otherwise available. This fee will only be charged upon
agreement by an applicant.
8.3 APPLICATION EVALUATION
After receiving a complete application, the WIFIA transaction team conducts financial, technical, and
environmental reviews of the project, the borrower, and the borrower's financing framework. The
WIFIA program may 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 to underwrite the loan that exceed the application fee.
38 The fee rule can be found in the Federal Register.
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The WIFIA program will first validate that applications submitted by applicants contain all 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.
By statute, every project and borrower that receives a WIFIA loan must be creditworthy. During the
creditworthiness review, the WIFIA transaction team evaluates the risk to the government to lending to
the prospective borrower with the requested loan structure and contemplates potential mitigants to
bring the risks to an acceptable level. Since EPA will likely hold the loan to its maturity, the WIFIA
program needs to consider risks that could emerge throughout the repayment term. To do this, the
team reviews the detailed information provided, undertakes quantitative analysis using a financial
model, and develops its own internal risk rating.
The WIFIA program will base the creditworthiness determination on a review of all 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.
DETERMINATION OF CREDIT TYPE AND CREDIT INSTRUMENT ATTRIBUTES
Given the WIFIA program's ability to accommodate 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.
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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.
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 reasonably insulated from 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.
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• Management and Counterparties: 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.
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.
ENGINEERING DUE DILIGENCE
The WIFIA program will analyze the project and the system condition to determine if there are major
technical risks that could impact the project or the pledged revenue stream. It 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 project plans and
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design assumptions adherence 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.
• 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 applicants 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 over a time period equal or greater than the length of the proposed
credit assistance. The WIFIA program will assess the applicant'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.
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8.4 NEGOTIATION
Negotiation is an iterative process between the applicant and the WIFIA program. The WIFIA transaction
team will propose terms and conditions for the loan considering requests in the application, its
evaluation of potential risks through the life of the loan, and WIFIA program requirements, like certain
reporting requirements and the delivery of credit ratings. The applicant should consider its ability to
accept the WIFIA program's proposed terms and may respond with a counterproposal explaining what
preferred or needed changes to the terms. The WIFIA program will work with the applicant to develop
highly customized terms for your organization's needs. However, extensive negotiation could slow the
process and result in a later closing date and a higher credit processing fee.
TERM SHEET DEVELOPMENT
The term sheet is an 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. A term sheet template can be found at https://www.epa.gov/wifia.
CONTENTS
The term sheet will include terms required for WIFIA credit assistance, which are described in the
statute39 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 WlFIA-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 loan agreement and disbursement
» Auditing requirements
39 33 U.S.C. § 3908
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» Covenants such as limitations on additional bonds, minimum coverage ratios, and any required
reserve funds
» Projected disbursement and repayment schedule
LOAN AGREEMENT DEVELOPMENT
The loan 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.
After the term sheet is drafted and sent to the borrower for comments, the WIFIA program will begin
drafting a loan agreement. The WIFIA program and the applicant will negotiate the specific language of
the loan agreement to accurately represent WIFIA program requirements. The WIFIA program will seek
to structure the final loan 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, re-evaluate the project's creditworthiness, and assess the availability of additional budget
authority if required. The timeframe for developing the loan agreement is dependent on the complexity
of the agreement and progress of the negotiations.
In some cases, EPA and the borrower may enter into a Master Agreement. A Master Agreement is an
umbrella contract between EPA and a borrower, providing an up-front commitment of loan proceeds
and a common set of legal and financial terms under which a borrower can close multiple WIFIA loans
over time. The borrower may request or the WIFIA program may offer a Master Agreement when the
phasing, cost, scope, schedule, and location of some projects may change as the project develops, or
when the borrower wishes to finance multiple projects over time that do not share a common purpose.
The loan 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, loan 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
» Borrower covenants (e.g., rate covenants)
» Annual disbursement schedule and conditions for draws
» Financial plan requirements
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» Monitoring and reporting requirements
The loan 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.
8.5 APPROVAL
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
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.
EPA's Office of Water senior management must review and recommend the loan for the Administrator's
approval. EPA's Office of General Counsel must concur with the term sheet and loan agreement prior to
closing.
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 requires review and approval by
OMB.
Once the Credit Council, OMB, and EPA's Office of General Counsel approve the loan, the Assistant
Administrator for the Office of Water will provide a recommendation to the Administrator, who retains
the final authority for approval of WIFIA assistance. The Administrator approves a project by signing the
term sheet and the credit agreement.
Concurrent to the EPA approval process, the applicant will complete its approval process.
8.6 CLOSING
For the WIFIA program to execute the loan agreement and disburse funds, the applicant must satisfy at
a minimum any conditions precedent to closing, including but not limited to:
» The project's receipt of its Record of Decision (ROD), Finding of No Significant Impact (FONSI),
or Categorical Exclusion under NEPA.
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Compliance with other federal laws, regulations and applicable planning requirements.
Final ratings as described in Section 8.2.
Applicable financing documents.
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 loan agreement, which is the binding legal document that
allows the applicant to receive WIFIA funds. Upon execution of the loan agreement, the applicant, now a
borrower, must pay the credit processing fee, described in Section 8.2. The WIFIA program will make a
public announcement and post information about the loan on the WIFIA program's website soon after
closing.
8.7 REVIEW TIMELINE
Figure 8-1 outlines the steps required to close a loan with the WIFIA program.
Figure 8-1: Project Review, Negotiation, and Closing Process
1. Pre-Application
3. Application Evaluation
4. Negotiation
5. Approval
7. Post-Closing
Up to 1 year
1-3 months
2-6 months
1-3 months
Life of loan
Average Time = 6 months
2. Application Submission 6. Closing
After an entity is invited to apply, it has one year to apply. However, most selected projects should be
able to apply in significantly less than a year. The WIFIA transaction team will regularly communicate
with applicants during the pre-application period. When the application, preliminary rating letter, and
required fee are received, the WIFIA program begins the application evaluation process. Application
evaluation is a cooperative process that involves back-and-forth discussion between the WIFIA program
and the applicant. Depending on the project's complexity and financing structure, application evaluation
will take approximately 1-3 months.
Following this evaluation, the WIFIA program and the applicant will negotiate the terms and conditions
for the loan resulting in a mutually acceptable term sheet and loan agreement. This process may be
quick or may be extensive. 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 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:
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» 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 that is conventional and relatively low risk.
Upon final agreement of the loan terms and drafting of the loan documents, EPA will schedule the loan
closing.
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SECTION 9: SWIFIA CREDIT POLICIES
SECTION 9: SWIFIA CREDIT POLICIES
In addition to the terms and conditions and credit policies outlined in Sections 3 and 6, the SWIFIA
program has additional credit policies. This allows EPA to offer a streamlined approach for State
infrastructure financing authorities to access loans. SWIFIA loans must be senior, on parity with all other
debt incurred by the SWIFIA borrower for the perpetuity of the SWIFIA loan.
The SWIFIA program offers two loan structure options:
1. EPA adopts the State infrastructure financing authority's existing indenture; or
2. The State infrastructure financing authority accepts EPA's standard terms.
State infrastructure finance authority borrowers seeking customized terms must apply to the Base
program as described in Section 2.1.
9.1 SWIFIA INDENTURE REQUIREMENTS
The following topics should be addressed in the borrower's debt instrument (e.g., indenture):
Flow of funds
Distribution or use of excess cash flows
Maintenance of debt service accounts
Voting for material amendments to debt instrument
Mergers and acquisitions of the borrower
Cures and/or remedies for borrower's failure to satisfy coverage covenant
Adequate enforcement mechanics (the WIFIA Lender cannot be required to indemnify any
party)
9.2 SWIFIA STANDARD TERMS
EPA offers the following standard terms to State infrastructure financing authority borrowers without
existing bond indentures or that select the standard terms loan structure in their applications.
Additionally, a template term sheet is available on the WIFIA website at
https://www.epa.gov/wifia/resources-wifia-borrowers.
DEDICATED SOURCE OF DEBT SERVICE PAYMENT
The borrower's existing and future loan principal and interest (P & I) repayments must be pledged for
the payment of debt service. At least 90 percent of existing and future loan portfolio is pledged for the
payment of all debt service.
The structure will vary depending on whether all the borrower's bond series are secured by the same
pool versus secured on a series-by-series level. For example:
1. If all the SWIFIA borrower's bond series are secured by a large pool of pledged loans in parity,
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the SWIFIA bond security will also be the P&l repayments from that "large pool" of pledged
loans.
2. If SWIFIA borrower's bonds are issued as stand-alone series and secured by certain underlying
pledged loans, the SWIFIA bond "primary" security will be the P&l repayments from the
underlying pledged loans that SWIFIA supports. This primary security will be exclusive to SWIFIA.
The "secondary" security will be the excess P&l repayments from all the other loans in the SRF's
portfolio, after payment of Debt Service on other bond series, if any.
DEBT SERVICE COVERAGE RATIO AND ADDITIONAL BONDS TEST
The minimum debt service coverage ratio and additional bonds test is 1.0. The SWIFIA borrower must
demonstrate that it meets this requirement by providing a projected revenue certificate (PRC) showing
annual debt service coverage over the life of all outstanding debt.
A debt service reserve is not required unless is it offered to other lenders.
SWIFIA DEBT SERVICE PAYMENT DATES
Debt service payments must be either annual or semi-annual.
USE OF TRUSTEE/PAYING AGENT FOR SWIFIA DEBT SERVICE
Use of a trustee or paying agent for SWIFIA debt service is optional.
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Have received a final Environmental Determination under NEPA or, in cases where the borrower
conforms with the WIFIA PEA, the replacement SRF loan must also conform to the PEA; and
Not reasonably be expected to result in a Material Adverse Effect as defined in the credit
agreement.
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SECTION 10: SWIFIA PROJECT SELECTION
SECTION 10: SWIFIA PROJECT SELECTION
This section describes the first phase of the SWIFIA program application process, which includes the
release of the 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 (wifiaffiepa.gov) or by phone
(202-566-1868) during this phase of the application process.
A
10.1 NOTICE OF FUNDING AVAILABILITY (NOFA)
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. Each NOFA will specify the amount of funding available to support SWIFIA credit
assistance, 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.
10.2 LETTER OF INTEREST SUBMISSION
State infrastructure financing authority 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 enough information to:
Validate the eligibility of the prospective borrower and the proposed project; and
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 four (4) sections:
Loan Information: In this section, the prospective borrower provides its legal name, address, website,
Dun and Bradstreet Data Universal Number System (DUNS) number, and employer/taxpayer
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identification number. It also indicates its requested SWIFIA loan amount, the estimated total costs of
the SWIFIA project, whether the projects are Clean Water SRF and/or Drinking Water SRF projects, and
its requested loan structure.
Supporting Documents: The prospective borrower provides the most recent version of its Intended Use
Plan (IUP), SRF Operating Agreements, documentation of the priority setting system, and the bond
indenture (if applicable).
Contact Information: In this section, the prospective borrower identifies the point of contact with whom
the WIFIA program should communicate regarding the LOI. To complete the EPA's evaluation, the WIFIA
program staff may contact a prospective borrower regarding specific information in the LOI.
Certifications: In this section, 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 financing.
Prospective borrowers should use the letter of interest form provided on the WIFIA website 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.
Prospective borrowers must submit the letter of interest and all supporting documents to EPA by the
deadline stated in the NOFA.
The documents may be submitted in two ways:
Preferred method: 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@epa.gov. Requests to upload documents must be made in advance of the deadline as
outlined in the NOFA; or
Email the documents as attachments to wifia@epa.gov.
After completing its intake process, EPA will provide a confirmation email. In addition, the program will
post a list of the letters of interest it receives, with all prospective borrowers and a short project
description.
10.3 LETTER OF INTEREST EVALUATION
The WIFIA program will invite SWIFIA prospective borrowers 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 only offers a loan amount for which the WIFIA program has enough budget authority.
EPA will assess letters of interest by performing an eligibility screening and an evaluation of the
selection criteria.
Upon receipt of a letter of interest, the WIFIA program validates that the prospective borrower is an
eligible entity as described in Section 2.1, the proposed SWIFIA project is an eligible project as described
in Section 2.2, and the borrower is creditworthy.
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HSCAL YbAR 2020 OiVlB BUDCifc"! ARY SCORING Ofc'1 fcRIVlINA"! ION
In order to comply with Public Law 116-94, OMB will assess all projects requesting SWIFIA financing
using funding appropriated in FY 2021 using two initial screening questions and sixteen factors. These
questions will help OMB determine compliance with budgetary scoring rules, a process that will be
conducted in parallel to EPA's LOI evaluation process outlined in the NOFA. The questions may be found
in federal register publication: Water Infrastructure Finance and Innovation Act Program (WIFIA) Criteria
Pursuant to Public Law 116-94. If the prospective borrower has additional documentation that would
help EPA make this determination, the prospective borrower may submit it as an attachment to the LOI.
EPA may contact prospective borrowers after the LOI is submitted if clarification is needed to answer
the OMB budgetary scoring determination questions.
As required by statute, the WIFIA program evaluate SWIFIA projects using the following ten (10)
selection criteria:
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; or (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).
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).
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 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).
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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).
If the prospective borrower requests that EPA adopt its existing indenture, the WIFIA program will
review the submitted indenture. The review will focus on identifying any elements that would preclude
the WIFIA program from accepting the indenture. The review will focus on the:
• Flow of funds and use of excess cash flow
• Additional bonds test
• Coverage requirement
• Security establishment for senior debt protection
• Defaults and remedies
10.4 PROJECT SELECTION
All eligible SWIFIA prospective borrowers will be invited to apply for a SWIFIA loan. In the case that the
SWIFIA program is oversubscribed, the amount of the SWIFIA loan for each prospective borrower will be
determined on a pro rata basis. EPA will allocate the available amount of financing among interested
prospective SWIFIA borrowers on a pro-rata basis based on the financing requests outlined in their
letters of interest.
Example: The SWIFIA program has $500 million available to lend. If state A requests $500 M, state B
requests $300 million, and state C requests $200 million (for a total requested amount of $1 billion),
then State A would receive 50 percent of the available financing, state B would receive 30 percent, and
state C would receive 20 percent.
10.6 REVIEW TIMELINE
The project selection process, from publishing the NOFA through inviting SWIFIA prospective borrowers
to submit an application, takes approximately four months. This process is the same for all SWIFIA
prospective borrowers. After the NOFA is published, SWIFIA prospective borrowers typically have 30-60
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 approximately 30-60 days
after which invitations to apply are sent to the selected projects. Figure 10-1 shows the anticipated
timeline for the project selection process.
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Figure 10-1: Timeline for SWIFIA Project Selection
A
Notice of Funding
Availability (NOFA)
Letter of Interest
Submission
Letter of Interest
Evaluation
Project Selection
30-60 days
30-60 days
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SECTION 11: SWIFIA LOAN REVIEW,
DOCUMENTATION, AND CLOSING
SECTION 11: SWIFIA LOAN REVIEW, DOCUMENTATION, AND CLOSING
This section describes the process by which EPA approves projects for SWIFIA credit assistance. This is
the second phase of the application review process. It includes a description of the steps that SWIFIA
prospective borrowers follow to submit an application for SWIFIA credit assistance. It also describes the
program's detailed evaluation review, documentation, and approval process, which culminates in the
execution of a credit agreement by the Administrator.
After the WIFIA programs notifies the prospective borrower that they are invited to apply, the borrower
will begin working with a transaction team consisting of an underwriter, engineer, and attorney. The
underwriter is the primary point of contact and will lead the WIFIA program's overall efforts. The
underwriter schedules an introductory call and regular check-in calls to discuss the project, explain the
SWIFIA application process, and answer your questions. The prospective borrower will also provide the
transaction team with a timeframe for when it plans to submit the application. This team and
prospective borrower will work together with pre- and post- application submission to ensure a
successful WIFIA loan closing.
The second phase of the application review process begins when a SWIFIA prospective borrower who
has been invited to apply for WIFIA assistance submits its complete application, including a preliminary
rating opinion letter and the application fee. EPA anticipates that prospective borrowers will need less
than one year from their invitation date to complete applications. In the application, a prospective
borrower provides additional supporting information and provides the WIFIA program with the
materials necessary to complete its evaluation. The WIFIA program will only review applications
submitted in response to an invitation to apply.
Applicants may wish to assert a business confidentiality claim covering part or all 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.
~
11.1 PRE-APPLICATION
11.1 APPLICATION SUBMISSION
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Applicants should submit completed applications that include all components on the application
checklist. The completed application package may be submitted in two ways. The applicant may email
the completed application with attachments to wifia@epa.gov or upload to WIFIA's SharePoint site. To
be granted access to the WIFIA SharePoint site, the applicant may email the WIFIA Underwriter assigned
to the applicant with the names and emails of all staff that need access.
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:
Key Applicant and Loan Information: The applicant provides basic information such as its legal
name, project name, requested loan amount, estimated total costs of the SRF loans that are
included in the SWIFIA Project, anticipated closing date, and contact information. In addition, it
provides its Dun and Bradstreet Data Universal Number System (DUNS) number, and
employer/taxpayer identification number. The applicant also provides information about the
quantitative and qualitative benefits of the SWIFIA project, such as environmental, public
health and economic benefits and cost savings. The applicant explains its legal structure, legal
authority to apply for a loan, approval process. Additionally, it also discloses any current,
threatened, or pending litigation.
Financing Plan: The applicant indicates its requested loan structure. Two options are available
for SWIFIA borrowers. Option 1 is that EPA adopts SRF program's existing indenture. Option 2 is
that SRF program accepts EPA's standard terms. The option marked must be consistent with
the option requested in the Letter of Interest. (Note: The form offers a third option, negotiated
terms, which is only available to State infrastructure financing authorities applying under the
WIFIA base program.) Based on the requested loan structure, the applicant answers the
appropriate questions. The applicant provides information about its existing indenture (if
applicable), existing debt, and additional bonds tests or other controls in place to mitigate risk.
The applicant completes the provided sources and uses table. Additionally, it indicates its
proposed terms (e.g. origination and final maturity dates, amortization and repayment
schedules) and default tolerance for the loan. The applicant also describes its overall SRF loan
portfolio size and outstanding loan debt concentration.
Supporting Documents: The applicant submits all documents referenced in the application to
support its submission.
Certifications: The applicant 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.
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
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instrument) have the potential to achieve an investment-grade rating.40 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 the
applicant's requested loan structure.
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 SWIFIA additional debt does not materially change the credit quality of the revenue
pledge;
» The existing credit rating opines on the senior lien proposed for the SWIFIA loan; and
» The existing credit rating is longstanding and high investment grade.
The statute requires that prior to execution of the loan agreement, a State infrastructure finance
authority applicant provide the WIFIA program with one final rating opinion letter from a NRSROs
indicating that the senior obligations of the project have an investment-grade rating.41 The WIFIA
implementation rule at 40 C.F.R. § 35.10040(b) further clarifies that the rating letter should provide
commentary on the default risk of the WIFIA loan. 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 letter must be a public rating. 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 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.
40 33 U.S.C. § 3907(a)(l)(D)(i)
41 33 U.S.C. § 3907(a)(l)(E)(i)
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The WIFIA program requires each applicant to reimburse the federal government for the costs of
providing credit assistance and retaining expert firms, including legal, engineering, and financial advisory
services needed to review its application materials, negotiate, and close the loan 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 approximately $150,000-
$250,000 per application. These fees will be updated in the Federal Register, as appropriate.
• Application Fee: For State infrastructure financing authority borrowers, 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 loan
agreement. It reimburses EPA for costs more than the application fee incurred by EPA to
provide credit assistance, including retaining legal, financial, 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 $150,000-$250,000 per
applicant, a portion of which may be waived at the discretion of the WIFIA program. If 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 charges borrowers an annual fee for loan servicing
activities associated with each WIFIA credit instrument, such as credit accounting, collections,
maintenance of documents, and financial reporting. Loan servicing fees are updated
periodically based on inflation. The WIFIA program may retain outside assistance to perform
loan servicing for WIFIA loans.
• Extraordinary Expenses Fee: In the event that a borrower experiences difficulty relating to
financial, or legal matters, or other events (e.g., 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
42 The fee rule can be found in the Federal Register.
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if sufficient budget authority is not otherwise available. This fee will only be charged upon
agreement by an applicant.
The fee schedule is provided as Appendix D.
11.2 APPLICATION EVALUATION
Upon receipt of a complete application, the WIFIA program will initiate its evaluation of the request for
credit assistance. The WIFIA program may retain the services of financial advisors, outside legal counsel,
and other expert advisors, as needed, during the application evaluation through closing. Through the
credit processing fee, the applicant will reimburse EPA for the cost of providing credit assistance,
including the cost of retaining these services, that are more than the application fee.
The WIFIA program will first validate that the State infrastructure finance authority's application
contains all 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 confirm that the
application continues to meet the eligibility requirements.
DETERMINATION OF CREDITWORTHINESS
By statute, every project and borrower that receives a SWIFIA loan must be creditworthy. During the
creditworthiness review, the WIFIA transaction team evaluates the risk to the government to lending to
the applicant with the requested loan structure and contemplates potential mitigants to bring the risks
to an acceptable level. Since EPA will likely hold the loan to its maturity, the WIFIA program needs to
consider risks that could emerge throughout the repayment term. To do this, the team reviews the
detailed information provided, undertakes quantitative analysis using a financial model, and develops its
own internal risk rating.
The WIFIA program will base the creditworthiness determination on a review of all 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 borrower cash flows.
» Financial soundness and credit history and outlook of the borrower.
The WIFIA program's determination of creditworthiness must be based on realistic and probable inputs.
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 source or sources of repayment.
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 creditworthiness focusing on the categories outlined below.
As noted above, each applicant and program 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 Risk Factors: The WIFIA program will consider of the applicant's financial strengths
and risk, such as weighted average default rating, default tolerance, and credit enhancements.
• Business Risk Factors: The WIFIA program will assess the strength of the applicant based on
factors such as, portfolio size and diversity, portfolio concentration, management experience
and operating history, and financial policies, procedures and internal controls.
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.
The WIFIA program will analyze the applicant's engineering review procedures to identify major
technical risks that could impact the implementation of SRF projects.
11.4 DOCUMENTATION
Following its review, the WIFIA transaction team will document the loan in a term sheet and credit
agreement. Since the SWIFIA loan structure is limited to either EPA adopting an existing indenture or the
State infrastructure financing authority accepting EPA's standard terms, the applicant should not expect
to negotiate customized terms with EPA. State infrastructure financing authority borrowers seeking a
customized WIFIA loan should apply to the Base program as outlined in Section 7 and 8.
11.5 APPROVAL
WIFIA CREDIT COUNCIL
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
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.
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EPA's Office of Water senior management must review and recommend the loan for the Administrator's
approval. EPA's Office of General Counsel must concur with the term sheet and loan agreement prior to
closing.
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 requires review and approval by
OMB.
Once the Credit Council, OMB, and EPA's Office of General Counsel approve the loan, the Assistant
Administrator for the Office of Water will provide a recommendation to the Administrator, who retains
the final authority for approval of WIFIA assistance. The Administrator approves a project by signing the
term sheet and the credit agreement.
Concurrent to the EPA approval process, the applicant will complete its approval process.
11.5 CLOSING
For the WIFIA program to execute the loan agreement and disburse funds, the applicant must satisfy at
a minimum any conditions precedent to closing, including but not limited to:
» 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.
» Final rating letter as described in Section 11.2.
» Applicable financing documents.
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 loan agreement, which is the binding legal document that
allows the applicant to receive WIFIA funds. Upon execution of the loan agreement, the applicant, now a
borrower, must pay the credit processing fee, described in Section 11.2. The WIFIA program will make a
public announcement and post information about the loan on the WIFIA program's website soon after
closing.
11.6 REVIEW TIMELINE
Figure 11-1: Project Review, Negotiation, and Closing Process
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1. Pre-Application
3. Application Evaluation
4. Documentation
5. Approval
7. Post-Closing
Up to 1 year
1-3 months
1-2 months
1-3 months
Life of loan
-Estimated Time = 5-6 months-
2. Application Submission 6. Closing
After a State infrastructure financing authority is invited to apply, it has up to one year to submit an
application. However, most selected projects should be able to apply in significantly less than a year.
The WIFIA transaction team will regularly communicate with applicants during the pre-application
period. When the application, preliminary rating letter, and required fee are received, the WIFIA
program begins the application evaluation process. Application evaluation is a cooperative process that
involves back-and-forth discussion between the WIFIA program and the applicant. Depending on the
project's complexity and financing structure, application evaluation will take approximately 1-3 months.
Following this evaluation, the WIFIA program will document the terms and conditions for the loan
resulting in a mutually acceptable term sheet and loan agreement. Finally, both entities will obtain
necessary approvals in order to close the loan.
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APPENDIX A: ACRONYMS
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
SRF
Record of Decision
State Revolving Fund
U.S.C.
United States Code
WIFIA
Water Infrastructure Finance and Innovation Act of 2014
WRRDA
Water Resources Reform and Development Act of 2014
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APPENDIX B: DEFINITIONS
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 eligible entity primarily liable for payment of the
principal of or interest on a Federal credit instrument
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 subsidy amount
that has been appropriated by Congress to date.
Federal Credit Instrument
A secured loan or loan guarantee authorized to be
made available under 33 U.S.C. §§ 3901-3914 with
respect to a project
Investment-Grade Rating
A rating category of BBB minus, Baa3, bbb minus, BBB
(low), or higher assigned by a nationally recognized
statistical rating organization (NRSRO) to project
obligations offered into the capital markets
Loan 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
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, other than a Federal credit instrument
Prospective Borrower
An eligible entity seeking credit assistance
Publicly Sponsored
The prospective borrower can demonstrate, to the
satisfaction of the Administrator, that it has consulted
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Term
Definition
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. Support can be shown by a certified
letter signed by the approving municipal department
or similar agency, mayor or other similar designated
authority, local ordinance, or any other means by
which local government approval can be evidenced
Secured Loan
A direct loan or other debt obligation (including a
note, bond, debenture, and sale or lease financing
arrangement) issued by a borrower and funded by the
Administrator in connection with the financing of a
project under 33 U.S.C. § 3908
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 designated portion thereof can
be used for its intended use.
Term Sheet
A contractual agreement between the EPA and a
prospective borrower (and lender, if applicable) that
sets forth the key business terms and conditions of a
Federal credit instrument
WIFIA Credit Assistance
A secured loan or loan guarantee authorized to be
made available under WIFIA
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APPENDIX C: BASE PROGRAM SELECTION
CRITIERIA
APPENDIX C: BASE PROGRAM 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. For evaluation of requested loans from the WIFIA base program, 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. To ensure diversity, the EPA will establish a ceiling for each
project type and geographical location. The EPA will select projects in rank order up until the point that
the ceiling is reached. Thereafter, the next highest project that adds diversity will be selected.
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 6.4.
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).
2. 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).
3. 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).
4. 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; or (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 addresses emerging contaminants. 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).
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).
BORROV f t? * *EDITWORTHINESS
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.
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HOW DO PROSPECTIVE BORROWERS ADDRESS SELECTION
CRITERIA?
In Section C of the letter of interest, the prospective borrower describes the potential benefits to be
achieved by the project that would be financed with 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 their best case to EPA and demonstrate how financing their projects will help the WIFIA program
meet its goals. In responding, the prospective borrowers should provide specific details, and, when
applicable, reference supporting documentation.
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).
EPA will evaluate the quality and extent to which the project can benefit the economy and public for a
region or the nation. Projects will be differentiated based on the scope of their impact.
If applicable to their projects, prospective borrowers can demonstrate improvement to economic
conditions and public benefits by providing the following information:
Number of construction jobs created by the project (Q. C-l)
Number of post-construction jobs created by the project (Q. C-2)
Economic growth supported by the project, such as increased revenues, keeping or attracting
new industries, etc. (Q. C-3)
How the project will project drinking water, such as increasing reliability of drinking water
delivery, quality, and access; reducing lead contamination from drinking water; and protecting
source water (Q. C-4)
How the project supports international commerce. (Q. C-5)
How the project protects the system, project specific asset, or community from extreme
weather events (Q. C-8)
How the project addresses water quantity concerns (Q. C-12)
How the project addresses water quantity concerns (Q. C-13)
In responding to the questions, the prospective borrower should demonstrate how the project benefits
the project's service area and, if applicable how the project or components of the project can benefit
regions which are not directly served by the project, multiple states, or the nation. Projects that have a
net negative impact on the economy and/or the public will be eliminated from further consideration.
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CRITERION 2: PROTECTION AGAINST EXTREME WEATHER EVENTS
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).
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.
If applications to their project, prospective borrowers can demonstrate protection against extreme
weather events by providing the following information:
How the project protects the system, project specific asset, or community from extreme
weather events such temperature, storms, floods, or sea level rise expected based on current
conditions. (C-Q.8)
How the project protects the system, project specific asset, or community from extreme
weather events such temperature, storms, floods, or sea level rise predicted to occur in the
future. (C-Q.9)
Extreme weather impacts can include:
» Drought: Reduced groundwater recharge, lower lake and reservoir levels, changes in seasonal
runoff and loss of snowpack.
» Water Quality Degradation: Low flow conditions and altered water quality, saltwater intrusion
into aquifers, altered surface water quality.
» Floods: High flow events and 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.
CRITERION 3: SERVES ENERGY EXPLORATION OR PRODUCTION AREAS
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).
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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.
If applicable to their projects, prospective borrowers can demonstrate serving energy exploration or
production areas by providing the following information:
How the project serves a population in a region impacted by significant energy exploration,
development, or production areas. (Q. C-ll)
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.
CRITERION 4: SERVES REGIONS WITH WATER RESOURCE CHALLENGES
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; or (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. Prospective borrowers should identify the water resource challenge(s) that their
projects address by selecting yes in one or more of the applicable questions (listed below). For each
applicable water resource challenge, they should to demonstrate how the proposed project addresses
the 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 to serve their customers, maintain or improve service levels, and/or poses a significant risk to
human health or life.
If applicable to their projects, prospective borrowers can demonstrate serving regions with water
resource challenges by providing the following information:
How the project protects the system, project specific asset, or community from extreme
weather events such temperature, storms, floods, or sea level rise expected based on current
conditions. (Q. C-8)
How the project addresses water quality concerns in areas of regional, national, or international
significance. (Q.C-12)
How the project addresses water quantity concerns related to groundwater, surface water, or
other sources. (Q. C-13)
The name of the existing regional, state, or multistate agreement that identifies the project. The
agreement should be provided as an attachment. (Q. C-14)
How the project protects water protect water resources with exceptional recreational value or
ecological importance. Note: 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
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rivers, National Estuaries, and areas of multistate collaboration, such as the Long Island Sound
(Q. C-16)
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.
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).
EPA will evaluate each project on the depth and degree to which it addresses identified municipal, state,
or regional priorities.
If applicable to their projects, prospective borrowers can demonstrate that their project addresses
municipal, State, or regional priorities by providing the following information:
» The name of the document and relevant pages/sections that identify the project as a
municipal, state, or regional priority. The document should be provided as an attachment. (Q.
C-14)
» The existing compliance issue and/or violation that the project will address and how it will
address that issue. (Q. C-17)
» The potential compliance issue or expected regulatory standards or legislative or executive
mandates that the project will address and how it will address that issue. (Q. C-18)
CRITERION 6: 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 based on how much of the project costs are for the 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 emerging 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. If the project is to construct a new infrastructure in and existing system, the
prospective borrower should explain how this project replaces aging infrastructure and/or improves
system performance.
If applicable to their projects, prospective borrowers can demonstrate that their project is for repair,
rehabilitation, or replacement of a treatment works, community water system, or aging water
distribution or wastewater collection system by providing the following information:
A clear description of the proposed project that describes how it will meet the system's repair,
rehabilitation, or replacement needs. (Q. A-4)
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Documentation, such as preliminary design/engineering report or planning document, that
demonstrates that system's repair, rehabilitation, or replacement needs that are being
addressed through the proposed project. (Q. B-l)
CRITERION 7: 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.
EPA will be evaluating this criterion for each prospective borrower using Median Household Income
(MHI) and poverty rate from the American Community Survey data - no information is required in the
Letter of Interest.
CRITERION 8: REDUCES EXPOSURE TO LEAD AND EMERGING CONTAMINANTS
The extent to which the project reduces exposure to lead in the nation's drinking water systems or
addresses emerging contaminants. 40 C.F.R. § 35.10055(b).
EPA will evaluate the project on how much of the project is reducing exposure to lead and emerging
contaminants in the nation's drinking water and wastewater.
If applicable to their projects, prospective borrowers can demonstrate that their project reduces
exposure to lead in the nation's drinking water systems or addresses emerging contaminants by
providing the following information:
» How the project or components of the project reduces exposure to lead or emerging
contaminants. (Q. C-19)
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.
» Improvements to meet or maintain drinking water quality standards.
A contaminant is considered emerging for drinking water systems if:
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• It is found on this list: https://www.epa.gov/ccl/chemical-contaminants-ccl-4 OR
• It is currently not subject to any proposed or promulgated national primary drinking water
regulations,
• it is known or anticipated to occur in public water systems, and
• it may require regulation under the Safe Drinking Water Act (SDWA).
A contaminant is considered emerging for wastewater systems if:
• The substance is a newly identified or re-emerging manufactured or naturally occurring physical,
chemical, biological, or radiological material that may be harmful to humans under certain
exposure scenarios and do not have an applicable regulatory health standard.
READINESS TO PROCEED
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).
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» The expected dates for bidding/procurement and construction for the project (Can reference
project schedule).
» 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.
Prospective borrowers should refer to Review of Section A: Q8, Q9 and Section B: Q2 in the Letter of
Interest to provide information about this criterion.
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 6.4. Prospective borrowers should refer to Section A: Q4 and Section B: Q1 in the Letter of
Interest to provide information about this criterion.
CRITERION 3: NEW OR INNOVATIVE APPROACHES
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).
EPA will how the project uses new or innovative approaches.
If applicable to their projects, prospective borrowers can demonstrate that their project uses new or
innovative approaches by providing the following information:
How the project will implement new or innovative technology(ies), such as using renewable or
alternate sources of energy, water recycling, or desalination. (Q. C-6)
How the project will use new or innovative approaches to plan, design, manage, and/or
implement the project. (Q. C-7)
Innovative approaches will include, but are not limited to:
» Implementation of capital projects for cybersecurity
» 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
» A novel application of an existing method or technology.
BORROWER CREDITWORTHINESS
CRITERION 1: ENABLES PROJECT TO PROCEED EARLIER
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).
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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 indicate that their project would proceed at an earlier date by receiving a
WIFIA loan by:
Selecting the appropriate description of how WIFIA funding would impact project development.
(Q. C-21)
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.
Prospective borrowers can indicate the other sources of funding for their project, including whether
they are public or private financing, by:
Completing the Sources and Uses of Funding table for the project. (Q. B-6).
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 can indicate the extent to which receiving the WIFIA loan will reduce the
contribution of Federal assistance to the project by:
Selecting yes or no. (Q. C-22)
CRITERION 4: USE OF BUDGET 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. EPA
estimates the amount of budget authority required to fund the requested WIFIA loan and uses that
amount in scoring this criterion.
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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
SELECTION CRITERIA AND LOI CROSSWALK
Table C-l provides a crosswalk between the questions in the Letter of Interest and the selection criteria
that EPA evaluates.
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Table C-l: Selection Criteria and LOI Crosswalk
SELECTION CRITERION
LOI RESPONSES
EVALUATED
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).
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 addresses emerging contaminates. 40 C.F.R. § 35.10055(b).
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).
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).
Section C: Ql, Q2, Q3,
Q4, Q5, Q8, Q12, Q13
Section C: Q6, Q7
Section C: Q8, Q9
Section C: Qll
Section C: Q8, Q12, Q13,
Q14, Q16
Section C: Q14, Q17, Q18
Review of Section A, Q4
and Section B, Ql
N/A
Section C: Q19
Review of Section A, Q8,
Q9, Section B, Q2
Review of Section A, Q4
and Section B, Ql
Section C: Q21
Section B: Q6
Section C: Q22
Evaluated as part of the
creditworthiness review
Review of credit
documents and credit
information provided
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APPENDIX D: FEE SCHEDULE
APPENDIX D: FEE SCHEDULE
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
Applies to Whom
Document
Application Fee
$100,000 or $25,000 (for
projects serving small
communities)
Application Form
Applicant
Credit Processing Fee
EPA's cost of providing
credit assistance minus
application fee
Invoice at Closing
Applicant
Optional Supplemental
As applicable by
Loan Agreement
Applicant
Fee
agreement between WIFIA
program and applicant
Loan Servicing Fee
As applicable based on
loan size and project
status. Approximately
between $8,000 and
$26,000 per year.
Loan Agreement
Borrowers
Loan Servicing Fee- State
Approximately between
Loan Agreement
State infrastructure
infrastructure financing
$8,000 and $11,000 per
financing authority
authorities
year
borrowers
Extraordinary Expenses
As applicable
Loan Agreement
Distressed borrowers
Fee
43 The fee rule can be found in the Federal Register.
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APPENDIX E: COMPLIANCE REQUIREMENTS
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-
library/assets/documents/110377
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» 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
» 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-treatv-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/fdsys/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
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» New Restrictions on Lobbying, Section 319 of Pub. L. 101-121:
https://www.epa.gov/grants/lobbying-ancl-litigation-information-federal-grants-cooperative-
agreements-contracts-and-loans
» 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
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APPENDIX F: CONFIDENTIAL BUSINESS
REQUIREMENTS
APPENDIX F: CONFIDENTIAL BUSINESS REQUIREMENTS
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.
2. 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?
3. 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?
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.
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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APPENDIX G: BASE PROGRAM LETTER OF
INTEREST TIPS
APPENDIX G: BASE PROGRAM LETTER OF INTEREST TIPS
This section provides prospective borrowers with some tips to consider while preparing and submitting
a letter of interest.
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 202-566-1868 or at wifia@epa.gov.
SECTION A - KEY LOAN INFORMATION
Loan Closing Date Tips
If possible, anticipate how federal cross-cutter requirements could impact schedule.
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 - ENGINEERING & CREDIT
Engineering:
Provide enough information for the WIFIA program to evaluate engineering feasibility,
including of scope, plan, schedule, and cost details, at the current project stage.
Submit complete documents as attachments. Identify in the letter of interest or through
annotation where relevant information is located.
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» 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.
» Include major planning, design, and construction start and end dates in the schedule.
Credit:
» Clearly present the project sources and uses and include a description of each funding source's
level of commitment.
» Propose WIFIA's lien position including whether the WIFIA loan will be subordinate to ongoing
non-project debt secured with the same pledge.
» Provide consistent, transparent, and realistic assumptions. The WIFIA program will review the
credit rating or proforma to validate these assumptions.
» Pro Forma Tips (Note: A pro forma is only required if the prospective borrower cannot provide
an existing credit rating.)
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.
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 cash flow statement and the
income statement's net income and expenses, we can determine the borrower's net
revenues and Cash Flow Available for Debt Service (CFADS), which help inform the
WIFIA review of the borrower's ability to fund debt service and other fixed 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.
» Responses should generally be one to three paragraphs long.
» Responses should focus on how the project requesting WIFIA funding relates to the question
asked.
» Reference Appendix C of this handbook which describes how each criterion will be evaluated.
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SECTION 0 - CONTACT INFORMATION
» 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 E - CERTIFICATIONS
» Make sure to read and sign all the signature boxes.
SECTIONS F - NOTIFICATION OF SRF
» Initial the opt-out line in the Notification to the SRF signature box only if LOI materials should
not be shared with the relevant state SRF program.
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APPENDIX H: NEPA APPLICABILITY
OVERVIEW
APPENDIX H: NEPA APPLICABILITY OVERVIEW
This Appendix presents the criteria EPA uses to make a preliminary NEPA assessments for proposed
projects. To learn more about project eligibility under WIFIA's Programmatic Environmental Assessment,
to http://www.epa.gov/wifia.
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?44
Answer the following questions in their entirety to make this determination.
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 may apply
44 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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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?
Does the project involve any of the following extraordinary circumstances, which would make it
ineligible for a categorical exclusion?45
If yes to any, CATEX does not apply
It is expected to have potentially significant impacts on
the quality of the human environment, either
immediately or cumulatively over time.
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.
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.
45 Refer to 40 C.F.R. § 6.204(b) for more on extraordinary circumstances.
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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.
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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 is normally required
Is 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.
If yes to any, an EIS is normally required
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?
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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?
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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APPENDIX I: RE-EXECUTION OF WIFIA LOAN
AGREEMENT
APPENDIX I: RE-EXECUTION OF WIFIA LOAN AGREEMENT
The WIFIA program offers fixed-rate loans. The interest rate of the WIFIA loan is determined on the
closing date of the loan agreement. In limited circumstances the program and the borrower may re-
execute the WIFIA loan to re-set of the interest rate to the SLGS rate (plus one basis point) on the date
of the re-execution. There are restrictions and limitations to qualify for a loan re-execution:
Re-execution is only available for loans which have not had a disbursement of funds.
This flexibility will only be available one time per loan.
Re-execution of the loan agreement does not re-open the whole loan agreement for re-
negotiation.
The terms and conditions and loan amount cannot change.
Project must be in pre-construction or under construction and the value of the eligible project
costs remaining at the time of re-execution must be more than the WIFIA loan.
The process to re-execute a WIFIA loan agreement and re-set the interest rate has five steps explained
below. Please note that the process requires work from the borrow and the program, and there will be a
cost associated with the re-execution.
OFFICIAL BORROWER REQUEST
Borrowers must submit a brief interest rate reduction request in writing to WIFIA portfolio@epa.gov.
that addresses the following items:
Demonstrated ability to obtain a better rate from alternative sources in the market on debt
comparable to the terms of the WIFIA loan and of equal lien priority. (Note: Federal and state
(e.g., SRF) lending programs do not generally charge market rates and cannot be used as
benchmark for comparison)
Explanation of how the alternative funding would translate to significant savings and
quantification of the savings.
Explanation on how the lower interest rate would bring positive impact. That is, what are the
expected benefits to the project, system, ratepayers, community, public health, and/or the
environment from re-executing your WIFIA loan beyond monetary savings.
Documentation showing that the project is in pre-construction or under construction and that
the value of the eligible project costs remaining to date is more than the WIFIA loan % share of
the total eligible project cost. In other words, the value of the eligible project costs remaining
must be equal or greater than the loan amount. (Note: The most recently provided Construction
Progress Report should generally be sufficient to satisfy this requirement)
Documentation showing that the loan amount at the time of re-execution will still be no more
49% of eligible project costs. (Note: The most recently provided Construction Progress Report
should generally be sufficient to satisfy this requirement)
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WIFIA ASSESSMENT
The WIFIA program will review the documentation submitted to verify that the conditions for
consideration are met.
LEGAL DUE DILIGENCE AND CLOSING CHECKLIST
The program, with external counsel support, will make the necessary changes to the loan agreement
and ensure that all required certifications, opinions, rating letters, resolutions, bond/note, and other
supporting documents are valid and obtain new documents whenever necessary. Prior to re-executing
the loan agreement, the parties will also complete a new closing checklist, verify that conditions
precedent to closing are satisfied, and prepare a new closing set.
LOAN AG R tit Ml fc NT Rl:-tXtCIJT10N
A new loan agreement will be signed by EPA and the Borrower, setting a new interest rate.
The program will require a credit processing fee at the time of the new closing to pay for EPA's cost to
re-execute the loan, including retaining the assistance of expert firms (e.g., legal support). The credit
processing fee will be set based on the costs incurred by EPA for that specific transaction. We anticipate
that the fee will be no more than $150,000 but it will depend on the complexity of the loan agreement
and changes that have occurred since the original loan closed. There will also be a new Servicing Set-Up
Fee and initial Construction Period Servicing Fee associated with the re-executed loan.
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oEPA
Office of Wastewater Management
Water Infrastructure Division
Washington, DC 20460
www.epa.gov/wifia
EPA-830-B-17-001
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