Drinking Water State Revolving Fund

Helping Protect America's Public Health Since 1997

2020 Annual Report


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A Message from the Office Director

•%

I am pleased to present the Drinking Water State Revolving Fund's 2020 Annual
Report. This report is an opportunity to highlight the past year's accomplishments.

In 2020, we funded more than $3.6 billion in new drinking water infrastructure projects
to communities of all sizes and disbursed $3.1 billion to communities for ongoing
construction projects. We also funded $183 million for critical activities including water
system capacity development, operator certification, and source water protection.

We experienced several impacts related to COVID-19 during 2020. Even through
these challenges, we had one of our strongest years as a program. State Drinking
Water State Revolving Fund (DWSRF) programs and communities found innovative ways to continue our
program's critical mission, even during work-from-home orders and staff furloughs. This demonstrates the
resiliency of the DWSRF programs that the states have built over the last 23 years.

Furthermore, we realize that small and disadvantaged communities face unique challenges maintaining their
drinking water infrastructure. We applaud the various mechanisms states use to assist these water systems:
additional subsidization, extended-term loans, lower interest rates, priority ranking points, and technical
assistance through the DWSRF set-asides. We are committed to working with our state partners to continue
addressing challenges and ensuring DWSRF assistance reaches communities in need.

I welcome this opportunity to share our accomplishments with you and thank you for your commitment to the
work ahead.

Jennifer L. McLain Ph.D., Director

Office of Ground Water and Drinking Water

Office of Water

United States Environmental Protection Agency

2

2020 Annual Report


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1.

About the Drinking Water State Revolving Fund

4

II.

Highlights From 2020

5

III.

How States Used DWSRF Infrastructure Funds

10

IV.

2020 Financial Overview

1 1

V.

DWSRF Set-Asides

16

VI.

DWSRF AQUARIUS Project Highlights

18


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I. About the Di nking Water State Revolving Fund

The 1 996 Amendments to the Safe Drinking Water
Act (SDWA) created the Drinking Water State
Revolving Fund (DWSRF) to help communities finance
infrastructure improvements needed to protect public
health and ensure compliance with drinking water
standards. Each of the 50 states and Puerto Rico
operate their own DWSRF programs and receive
annual grants from EPA, which in turn provide low-
interest loans and other types of assistance to public
water systems. The DWSRF programs are managed
or co-managed by the state agencies that oversee
drinking water systems and can therefore effectively
prioritize infrastructure funding needs to protect
public health.

The SDWA directs states to give priority for the use
of DWSRF project funds to:

•	address the most serious risks to human health,

•	ensure compliance with the requirements of the
SDWA, and

•	assist systems most in need on a per household
basis according to state affordability criteria.

Not all drinking water problems, however, can be
solved through capital financing of infrastructure
improvements. With that in mind, Congress gave
states the option to take a portion of their federal

capitalization grant for "set-asides." Set-asides can
be used to administer state programs, provide
technical assistance and training for water systems,
and fund other activities that support achieving the
public health protection objectives of the SDWA. The
programs and activities supported by set-asides
include DWSRF administration, water system capacity
development, operator certification, source water
protection, small systems technical assistance, and
support for the state Public Water System
Supervision (PWSS) program. Each state determines
the appropriate balance between water
infrastructure projects and set-asides for their unique
circumstances.

Through June 30, 2020, more than $44.7 billion has
been signed into approximately 16,300 DWSRF
loans by the state programs to water systems to fund
critical infrastructure needs. Furthermore, nearly $3.7
billion has been provided to states and water systems
to support the non-infrastructure set-asides programs.

The DWSRF is an exceptionally versatile tool, in
2020, the DWSRF loan program improved the lives
of nearly 38 million Americans, returning water
systems to compliance and maintaining systems with
aging infrastructure, while also focusing on small
water systems that are most at risk. Water systems
serving fewer than 1 0,000 people accounted for 75
percent of the loans signed by state programs.

4

2020 Annual Report


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II. Highlights From 2020

A. Strong Demand, Making Loans of All Sizes

In 2020, states provided over $3.6 billion in new
infrastructure loans, which is a record (with the
exception of American Recovery and Reinvestment
Act [ARRA] funding) and a 28% increase from last
year. This follows an upward trajectory over recent
years, as states adopt cash flow management and
conduct more effective outreach to water systems.
Exhibit 1 demonstrates this trend. Additionally, states
disbursed more than $3.1 billion in 2020. This is a
16% increase from last year and an all-time DWSRF
record. This increase in disbursements shows that
states provided more lending in the last few years,
and those projects are now being constructed and
requesting reimbursement.

The DWSRF supports water systems and projects of
all sizes across the country. While the median loan

size was about $1.1 million this year, the program's
loans ranged from less than ten thousand dollars to
hundreds of millions of dollars (see Exhibit 2). The
State of Idaho made the nation's smallest loan, for
$8,400, to Swan Valley Elementary School, with
about 500 people served, to address lead
contamination. New York made the nation's largest
loan, a $1 83 million agreement, to New York City for
a construction phase of the Croton Filtration Plant.
This project will serve nearly 1 million people.

Visually demonstrating the DWSRF program's broad,
nationwide reach, Exhibit 3 on the next page shows
counties with DWSRF-funded projects in State Fiscal
Year (SFY) 2020 (in blue) and between SFY 2010
and SFY 201 9 (in gray).

Exhibit 1: DWSRF National Assistance Provided (Loans Signed)

$4.0

$3.5

$3.0

$2.5

$2.0

$1.5

$1.0

$0.5

$0.0

2014

2015	2016	2017	2018	2019	2020

5

2020 Annual Report


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Exhibit 2: Distribution of DWSRF Loan Amounts in SFY 2020

All 16 loans reflected in the mode are from the State
of Oregon. These loans funded a variety of studies,
including those for consolidation alternatives, leak
detection, and water system feasibility.

Average: $4,300,000

Mode: $20,000

Largest: $183,000,000

-Median: $1,100,000

w

Smallest: $8,400

Exhibit 3: Map of Counties with DWSRF Projects in SFY 2020 and Between March 2010 to SFY 201 9























AK

Data Source March 2010 to 12/30/2019
DWSRF Database, data pull 1/7/21
Data Source: 7/1/19 - 6/30/20 projects: NIMS
Database,

data pull (7/1/19 - 6/30/20)

Data includes projects that have location

information.

Additional projects not incorporated.
North_America_Equidstant_Conic
Map produced on 2/18/21
EPA OW-OGWOW - DWPD

I I Counties with DWSRF Projects from SFY 2010 to SFY 2019
Counties with DWSRF Projects in SFY 2020

State Fiscal Year 2020 DWSRF Projects

2020 Annual Report


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B. Leveraging and Co-Funding Expand Program's
Reach

Increasing the amount of money available through
the DWSRF is important to meeting our nation's
drinking water needs. The state DWSRFs have
several ways to quickly raise additional money to
meet immediate needs where there are more projects
than funds available. The first is for the state
DWSRFs to borrow money on the bond market. In
2020, nine state DWSRF programs borrowed $925
million to assist projects that needed immediate
financing. The second way involves borrowing money
from EPA's Water Infrastructure Finance and
Innovation Act (WIFIA) program.

Exhibit 4 below shows leveraging in the past seven
years. Note the significant increase in the last four
years. Leveraging is at a state's discretion and must
be paired with an effective outreach strategy to
increase customer demand. After evaluating cash
needs, some states choose to leverage nearly every
year, and others episodically. Regardless of
approach, state managers must carefully design their
leveraging structure to minimize idle funds.
Optimally, states will leverage when the amount of
cash needed to pay construction invoices is greater

than actual available cash on hand. With the ability
to access the bond market when cash is needed in the
future, states can confidently make more loans to
communities in the near-term, expanding the reach of
public health protection from the program.

Another way to expand the DWSRF's reach and
benefits is through co-funding. Approximately 16
percent of the 2020 projects were co-funded with
another source, including funds from the United States
Department of Agriculture's Rural Utilities Service
Water and Environmental Programs and other state
and private sources.

Exhibit 4: Annual Net Leveraged Bonds Issued

$1,200

$1,000

$800

$600

$400

$200

$0

2014	2015

2016

2017

2018

2019

2020

2020 Annual Report


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Drinking Water infrastructure

Needs Survey and
Assessment

The upcoming Drinking Water Infrastructure
Needs Survey and Assessment (DWINSA) will
be the seventh since 1995 and will be of the
broadest scope to date. For this Survey, EPA
will be sampling all sizes of community water
systems, as well as tribal systems and not-for-
profit non-community water systems. The
Survey will include supplemental questions
about lead service lines, operator workforce
sustainability, and critical iron and steel
component needs. EPA conducted numerous
DWINSA stakeholder meetings and trainings
in 2020 and has now begun data collection
through 2021.

C. Helping Water Systems Achieve Compliance

The DWSRF has been instrumental in helping the
nation's community water systems achieve and
maintain compliance with health-based standards
under the SDWA. Of the water systems receiving
DWSRF loans in 2020, approximately one-fifth
(146) were out of compliance with a health-based
SDWA standard in the previous five years. Exhibit
5 below maps the locations of these 146 water
systems.

State DWSRF managers, partnering with their state
PWSS program colleagues, utilize the program's
extraordinary flexibility to tailor assistance through
the loan and set-aside portions of the Fund to
address a broad array of local needs.

Exhibit 5: Public Water Systems with SFY 2020 Loans that had a Health-Based Violation in the Past 5 Years

Population

•	< 500

•	500 - 3,000

•	3,000 - 10,000

•	10,000 - 100,000
0 > 100,000

8

2020 Annual Report


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D. COVID-19 impacts on the DWSRF Program

The DWSRF programs experienced several impacts
from the COVID-19 pandemic. Many state DWSRF
staff were furloughed during calendar year 2020.
Many DWSRF borrowers were concerned with their
customers being able to pay their water bill. Even
with these challenges, the DWSRF had one of its most
successful years in terms of assistance provided and
disbursements.

Furthermore, because of stay-at-home mandates and
increased teiework options, several states
modernized portions of their DWSRF programs to
better serve communities during the pandemic. Some
of these improved processes include virtual public
meetings, electronic signatures for loan documents,
and virtual project inspections. These examples show
how dedicated the DWSRF programs are to keeping

projects moving and ensuring public health protection
throughout their states, even during a pandemic.

. » -n

• . 		

Pi#

m

9

2020 Annual Report


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III. How States Used DWSRF Infrastructure Funds

Exhibit 7: Assistance by Project Type (Millions of Dollars)
SFY 2020

In 2020, the DWSRF provided more than $3.6
billion in assistance and entered into 837 loans.
Since 1997, the DWSRF has provided more than
$44 billion in assistance, and 34 percent of this
assistance has been directed to communities with
populations of 1 0,000 or fewer.

In 2020, the DWSRF facilitated loans with a broad
diversity of communities, emphasizing a strong focus
on communities serving 1 0,000 individuals or fewer.
Approximately 75 percent of the 2020 loans
provided were given to these smaller water
systems. Principal forgiveness was a key tool
utilized in these agreements; approximately 75
percent of water systems serving populations of
500 or fewer received principal forgiveness, with
44 percent of those water systems receiving
principal forgiveness for the full loan amount. As the
charts in Exhibit 6 show, the proportion of assistance
going to small systems in 2020 is similar to historic
program values.

For the third consecutive year, nearly half of the
DWSRF's funding went to transmission and
distribution projects (Exhibit 7). This more closely
aligns with water systems' needs demonstrated in
the Sixth DWINSA. The Survey confirmed that
nearly two-thirds of the nation's drinking water
infrastructure needs over the next two decades are
for these types of projects. EPA anticipates
sustained, growing demand in distribution system
projects over the coming years.



. r

$258

(Source)

$1,507

(Transmission
and Distribution)

$289

(Storage)

—$87

(Other)



SFY 1997-2020

$2,603

(Source)

$4,581

(Storage)

$1,369

(Other)

¦

Treatment

_

Transmission



and Distribution

¦

Source



Storage

¦

Other

Exhibit 6: Assistance by Community Size

Millions of Dollars

Number of Loans



1,137



64





3,575



152









165





3,037























5,286



288













3,226



168









¦

>100,000

¦

10,001 to 100,000



3,301 to 10,000



501 to 3,300

¦

<501

SFY 1997-2020

SFY 2020

SFY 1997-2020

SFY 2020

10

2020 Annual Report


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IV. 2020 Financial Overview

A. Financial Success

The fundamental purpose of the DWSRF is to provide
low-cost capital to finance sustainable, long-term
public health protection. The Fund's ability to assist
projects that protect public health is dependent on
three pillars:

•	continued federal capitalization;

•	innovative, intelligent, and effective state
management; and

•	maintaining the Fund's growth and revolving
nature.

Since the DWSRF's inception, Congress has
appropriated more than $22 billion into the Fund.
These funds have gone both to the revolving loan
fund and the state set-asides. Together, the 51 state
DWSRF programs have effectively leveraged these
funds to provide $44.7 billion in loans to the nation's
water utilities and approximately $3.7 billion to both
states and utilities for set-aside programs to support
capacity development, source water protection, and
operator training and certification. For the loan

program, this translates into $2 in disbursements for
every $1 drawn from the U.S. Department of
Treasury.

From the 2010 appropriation onward, Congress
mandated that a certain portion of the federal
capitalization grant be provided to borrowers as
additional subsidy. This change allowed states to aid
communities most in need and incentivize particular
types of projects. Because this subsidy comes from the
federal dollars, continued federal support is needed
to maintain this benefit and continue growing the
fund.

B. Financial Reports

The Single Audit Act designates the threshold for
auditing federal programs. Most DWSRF programs
receive a program-specific audit in addition to
auditing required under the Single Audit Act. Because
the 51 DWSRF programs are independent state-level
entities, no nationally-audited DWSRF program
financial reports are available. Developed using
EPA's National Information Management System,
national aggregate financial statements, best viewed
as non-audited cash flow-based reports, are shown
on the following pages.


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1. Statement of Fund Activity

As shown in Exhibit 8 below, in SFY 2020, DWSRF programs
executed more than $3.6 billion worth of loans. Overall for
SFY 2020, assistance provided as a percent of funds
available ("pace of funds provided") was roughly 100
percent, indicating that states have successfully directed
federal funding to drinking water infrastructure projects. This
robust percentage of funds utilization also demonstrates a
high demand for DWSRF funding. A portion of the disbursed
funds are used to provide principal forgiveness to
disadvantaged communities or to help finance specific water
systems meeting the criteria for state priority funding; in SFY
2020, more than $279 million was provided in the form of
principal forgiveness.

The amount of new funds includes new investments, net
leveraged bonds, and loan principal and interest repayments.

Exhibit 8: Statement of Fund Activity (Millions of Dollars)

Annual Fund Activity

SFY 2019

SFY 2020

Federal Capitalization Grants

1,068.5

1,207.5

State Matching Funds

203.3

224.6

New DWSRF Funds Available for Assistance

3,262.0

3,588.9

Project Commitments (Executed Loan Agreements)

2,831.9

3,638.4

New Set-Aside Funds Available for Assistance

243.9

253.4

Project Disbursements from the Fund

2,707.2

3,145.7

Cash Draws from Federal Capitalization Grants (Fund)1

787.3

885.8

Cash Draws from Set-Asides1

197.6

182.1

Cumulative Fund Activity





Federal Capitalization Grants

21,069.4

22,276.9

State Matching Funds

4,109.8

4,334.4

DWSRF Funds Available for Assistance

43,144.2

46,733.1

Project Commitments (Executed Loan Agreements)

41,101.3

44,739.7

Set-Aside Funds Available for Assistance

3,464.0

3,3,717.6

Project Disbursements from the Fund

35,978.4

39,124.1

Cash Draws for Fund

17,304.2

18,190.0

Cash Draws for Set-Asides

3,166.2

3,348.3

Loan Principal Forgiven

(306.4)

(279.9)

1 This includes funds drawn from previous grants.





12

2020 Annual Report


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2.	Statement of Revenues, Expenses, and Earnings

This statement, Exhibit 9, is a useful tool to view the
sources of funds and the expenses of the DWSRF
program nationally, and how those impact net assets.
For 2020, interest earnings exceeded expenses,
adding to the growth of the program. From 2019 to
2020, operating expenses increased by $13.9
million, with an increase in DWSRF funds used for
refunding. DWSRF net assets increased by
approximately $1.7 billion, reflecting the steady
increase in assets since the program's inception.

3.	Statement of Cash Flow

This statement (Exhibit 1 0) is a useful tool to view the
impact of DWSRF activities on cash on hand. DWSRF
programs require a reserve to maintain their

programs. With the program reaching milestones
under the Unliquidated Obligation (ULO) strategy of
spending down built up federal funds, it is expected
that states will need to draw heavily from state cash
reserves in the near future to pay invoices from the
high level of lending at which they are operating.
State match bond proceeds increased by $15.2
million while gross leveraged bond proceeds added
$866.5 million to program cash flows. In SFY 2020,
states paid $691.5 million in principal and interest on
leveraged bonds and state match bonds,
demonstrating an increase of $89.7 million from the
previous year. Bond issuance is one method by which
states may balance their loan demand with the need
to maintain the long-term sustainability of their
revolving funds.

Exhibit 9: Statement of Revenues, Expenses, and Earnings (Millions of Dollars)

Operating Revenues

Interest on Fund Investments

Interest on DWSRF Loans

Total Operating Revenues

Operating Expenses

Bond Interest Expense

DWSRF Funds Used for Refunding1

Amortized Bond Issuance Expense

Total Operating Expenses

Non-Operating Revenues and Expenses

Cash Draws from Federal Capitalization Grants2

State Contributions3

Loan Principal Forgiven

Transfers from (to) CWSRF

Total Non-Operating Revenues (Expenses)

Increase (Decrease) in Net Assets

Net Assets

Beginning of Year

End of Year

1	Refunding occurs when outstanding bonds are retired with newly-issued bonds.

2	This includes funds drawn from previous grants.

3	This includes state match but excludes state match bonds.

SFY 2019

143.8

320.6
464.4

163.1
21.3
4.5

188.9

787.3

124.7

306.4
(2.0)

1,216.3
1,491.9

21,979.0
23,470.9

SFY 2020

137.7
332.4

470.0

194.1
4.0
4.7

202.8

885.8

130.9
279.9
165.9

1,462.5
1,729.7

23,470.9
25,200.6

13

2020 Annual Report


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Exhibit 10: Statement of Cash Flow (Millions of Dollars)

Operating Activities

SFY 2019

SFY 2020

Loan Disbursements to be Repaid

(2,400.8)

(2,865.8)

Loan Principal Forgiven

306.4

279.9

Loan Principal Repayments

1,290.9

1,507.8

Interest Received on Loans

320.6

332.4

State Contributions1

124.7

130.9

Cash Draws from Federal Capitalization Grants2

787.3

885.8

Total Cash Flows from Operating Activities

429.2

270.9

Non-Capital Financing Activities





Bond Issuance Expense

(7.8)

(7.1)

Interest Paid on Leveraged and State Match Bonds

(163.1)

(194.1)

DWSRF Funds Used for Refunding3

(21.3)

(4.0)

Principal Repayment of Leveraged Bonds

(382.8)

(410.9)

Principal Repayment of State Match Bonds

(55.9)

(86.5)

State Match Bond Proceeds

78.5

93.7

Cash Received from Transfers with Clean Water State Revolving Fund
(CWSRF)

(2.0)

165.9

Gross Leveraged Bond Proceeds

985.5

866.5

Total Cash Flows from Non-Capital Financing Activities

431.1

423.6

Investing Activities





Cash Flows from Capital and Related Financing Activities

0

0

Interest Received on Fund Investments

143.8

137.7

Deposits to Debt Service Reserve for Leveraged Bonds

50.6

36.3

Total Cash Flows from Investing Activities

194.4

174.0

Net Increase (Decrease) in Cash and Cash Equivalents

1,054.7

868.4

Cash and Cash Equivalents





Beginning of Year

8,195.7

9,250.4

End of Year

9,250.4

10,1 18.8

1	This includes state match but excludes state match bonds.

2	This includes funds drawn from previous grants.

3	Refunding occurs when outstanding bonds are retired with newly-issued bonds.





14	2020 Annual Report


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4. Statement of Net Assets	total 2019 net assets. This reflects the overall health

of the DWSRF program, which has shown a net asset
Total assets increased by $2.19 billion, while total growth of at least 5 percent per year over the past
liabilities increased by $292.5 million; therefore, net 1 i years (Exhibit 1 1).
assets increased by $2.0 billion, or 6.9 percent of

Exhibit 1 1: Statement of Net Assets (Millions of Dollars)

Assets

SFY 2019

SFY 2020

Cash and Cash Equivalents

9,250.4

10,1 18.8

Debt Service Reserve - Leveraged Bonds

545.2

509.0

Loans Outstanding

1 9,243.2

20,601.2

Unamortized Bond Issuance Expenses'

68.3

70.8

Total Assefs

29,107.1

31,299.7

Liabilities





Match Bonds Outstanding

302.6

309.9

Leveraged Bonds Outstanding

5,409.7

5,694.9

Total Liabilities

5,712.3

6,004.8

Net Assets





Federal Contributions

20,262.2

21,147.9

State Contributions

3,001.2

3,132.1

Transfers - Other SRF Funds

(2.0)

165.9

Other Net Assets

209.5

754.6

Total Net Assets

23,470.8

25,200.6

Total Liabilities & Net Assets

29,183.1

31,205.4

1 Unamortized bond issuance expenses are costs that have been incurred but have not been fully recognized (amortized). These costs
will be recognized (amortized) over the remaining life of the bonds outstanding, similar to a pre-paid expense.

1 5	2020 Annual Report


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Asset Management

The 201 8 America's Water Infrastructure Act
(AWIA) requires state drinking water
programs to consider and include, as
appropriate, asset management into their
state capacity development strategies.
Consistent with this statutory change, state
drinking water programs are expected to
revise their capacity development strategies
to include a description of how asset
management will be promoted. States are
expected to submit their revised capacity
development strategy to EPA by December
31, 2021. The DWSRF set-asides can be used
to assist state drinking water programs in
revising their capacity development
strategies and to assist drinking water
systems with implementing asset management
planning.

V. DWSRF Set-Asides

States may reserve a portion of their annual
capitalization grants to fund non-infrastructure
programs supporting safe drinking water. Set-asides
expand the impact of DWSRF by helping to ensure
that water systems have the necessary technical,
managerial, and financial capacity to get the
greatest public health protection from their drinking
water infrastructure investments. Each of the four
DWSRF set-aside categories has a different
focus on public health. Upon receiving
capitalization grants, states may reserve funds under
each of the four categories at their discretion and up
to the maximum allowable limit. This section provides
an overview of the four set-asides and a breakdown
of set-aside usage in 2020 and cumulatively.

Administration and Technical Assistance (4% Set-Aside)

States may set aside the greatest of $400,000, 0.2
percent of the current Fund value, or 4 percent of the
capitalization grant to administer their DWSRF
programs and to provide technical assistance to
water systems of any size. For example, states may
use these funds to hire staff or to assist water systems
with project plans or loan applications.

Small Systems Technical Assistance (2% Set-Aside)

States may reserve up to 2 percent of their annual
capitalization grant to fund programs providing
assistance to drinking water systems serving 1 0,000
people or fewer. Small water systems often face
greater challenges than larger systems, and they
frequently have difficulty obtaining funding. This set-
aside helps them build their capacity and better align
their operations with current population needs.

State Program Management (10% Set-Aside)

This set-aside may be used to fund PWSS programs
overseeing all drinking water programs in individual
states. Funding from this set-aside can be used for
source water protection work, capacity development,
operator certification programs, and other activities.

Local Assistance and Other State Programs (15% Set-
Aside)

States can use up to 15 percent of their
capitalization grant (but no more than 1 0 percent for
any single activity) to provide loans for the purchase
of land to support source water protection, to
implement voluntary water quality protection
activities, or to assist water systems with their capacity
development.

16

2020 Annual Report


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Recent Set-Aside Usage

In 2020, states took a higher percentage of set-
asides than their historical average for the State
Program Management (10%) and Local Assistance

(15%) set-asides (Exhibit 12). Exhibit 13 shows how
states used each set-aside account in 2020 and
cumulatively since the DWSRF program inception in
1997.

Exhibit 1 2: Set-Asides Taken as a Percentage of Capitalization Grants

Admin & Technical Small Systems State Program
Assistance Technical Assistance Management

Local
Assistance

SFY 1997-2020

SFY 2020

Exhibit 1 3: Set-Aside Expenditures (Millions of Dollars)

Set-Aside Category

Sub-Category

SFY 2020

Cumulative (1997-2020)

















Small Systems







State Program
Management

PWSS Administration

$ 60.12

$ 943.95

SWP Technical Assistance

$ 4.56

$ 104.36

Capacity Development

$ 9.86

$ 187.83

Operator Certification Programs

$ 1.71

$ 46.72

Local Assistance

& Other State Programs

Loans for SWP Land Acquisition

$ 1.47

$ 10.42

Loans for Incentive-Based SWP Measures

$ 0.00

$ 7.75

SWP Area Delineation/ Assessment

$ 2.81

$ 131.31

Wellhead and Source Water Protection

$ 21.11

$ 360.80

Technical or Financial Assistance for
Capacity Development

$ 33.59

$ 541.94

All

TOTAL

$ 181.54

$ 3,347.08

17

2020 Annual Report


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VI. DWSRF AQUARIUS Project Highlights

The DWSRF AQUARIUS Recognition Program nationally recognizes DWSRF-funded projects for exceptional
focus on sustainability and protection of public health. The projects listed below were recognized as
"Exceptional" and are examples of the high level of innovation possible with the DWSRF. To learn more about
all the projects recognized in 2020, visit the 2020 AQUARIUS Recognition Program website.

Excellence in Innovative Financing

Florence, South Carolina:

The Town of Timmonsville received several deficiencies and Consent Orders (CO) for its public water system
between 2006-2013. The Town eventually realized their best option was to connect to the nearby City of
Florence. At that time, the Town was in default on a US Department of Agriculture-—Rural Development (USDA-
RD) loan of $6 million; this prevented the Town from receiving further grant assistance. The City took on the
Town's debt so this consolidation project could proceed.

This project was funded by the DWSRF program, the City's revenues, the US Department of Housing and Urban
Development's Community Development Block Grant (CDBG) program, the Economic Development
Administration, USDA-RD, the South Carolina Rural Infrastructure Bank, and the State Transportation
Infrastructure Bank. These seven entities worked together to fund this $7.2 million project. This project achieved
its intended goals, which were to be completed within the approved five-year time provided for by the CO,
obtain regulatory compliance, gain community trust for service provided, and maintain customer rates. This
successful consolidation project, completed in October 2019, provided the Town's residents with access to safe
and reliable drinking water and had positive impacts on the local economy. A large car manufacturing
company decided to move forward with a $45 million-dollar expansion of their Timmonsville facility, resulting in
245 new jobs and helping to stabilize the economy of the Town and Florence County.

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Excellence in System Partnerships

South Delaware County Regional Water Authority, Oklahoma:

Several communities in northeastern Oklahoma were struggling to address various drinking water challenges,
including exceeding various EPA maximum contaminant levels (MCL) and sulfur-smelling water. To address these
challenges, the communities decided to create a regional water provider who could provide safe, reliable
drinking water; this led to the creation of the South Delaware County Regional Water Authority (SDCRWA).
Once created, the SDCRWA moved forward with construction of a new surface water treatment plant to
enhance service for its current customers and extend service to other nearby communities experiencing drinking
water system challenges.

The Oklahoma DWSRF program partnered with USDA-RD, Indian Health Services, the Cherokee Nation, and
the South Delaware County Regional Water Authority (SDCRWA) to provide over $15 million in funding for the
SDCRWA's new surface water treatment plant. This project was completed in December 2019 and allows
SDCRWA to continue providing safe, reliable drinking water to several disadvantaged communities in
northeastern Oklahoma.

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Excellence in Community Engagement

Washington County Service Authority, Virginia:

Residents in a community using private wells and springs for their drinking water supply approached the
Washington County Service Authority (WCSA) and asked to connect to their water system after the residents'
wells and springs tested positive for bacteria. The WCSA partnered with this disadvantaged community to plan
and design a solution and assist in the search of funding options. These entities worked together to collect user
agreements, water quality data, and other funding application information. Additionally, the Mount Rogers
Planning District Commission, which serves counties in southwest Virginia, assisted in payroll reviews for the Davis
Bacon requirements.

The Virginia DWSRF and CDBG programs partnered with the WCSA to fund this $420,000 project, which
included the construction of 6,000 linear feet (LF) of water main and related appurtenances and provided
drinking water to 15 homes and a church. The DWSRF program paid for the construction of the water main, the
CDBG program paid for the installation of the service lines between the water meters and the homes, and the
WCSA funded the project planning and design. This project was completed in September 2019 and is a great
example of community engagement resulting in public health protection.

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Excellence in Public Health Protection

Cayuga, Indiana:

in 2011, the groundwater well supplying North Vermillion Community School Corporation's drinking water
exceeded EPA's nitrate MCL and was unsafe for consumption. By early 2012, the schools began using only
bottled water for cooking and drinking purposes, resulting in approximately 1,000 gallons of bottled water
used per month and a cost of approximately $41,000 over a five-year period. In 2016, the School
Corporation entered into an Agreed Order with the Indiana Department of Environmental Management
because of the ongoing nitrate contamination. The School Corporation's administrators understood that
purchasing bottled water was not a viable long-term option and decided to connect to the nearby Town of
Cayuga's water system.

The School Corporation selected this alternative because it was the most reliable and cost effective and would
bring them into compliance with the Agreed Order. Both entities collaborated on the loan application and
arranged for the School Corporation to pay the Town directly over the loan term. This $1.1 million project
consisted of 7,700 LF of water main, two water meters, two service connections, and two booster pumps. This
project was completed in August 2017 and allowed the School Corporation to provide safe drinking water to
its 750 students and staff.

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Excellence in Problem Solving

Pipestone, Minnesota:

The City of Pipestone was facing both public health and environmental challenges. In 2009, the City's drinking
water exceeded EPA's gross alpha radiation MCL. In 2014, the City was also issued a chloride limit as part of
the National Pollutant Discharge Elimination System (NPDES) permit for their wastewater treatment plant. The
chloride limit in the NPDES permit was well below their existing wastewater discharge concentration, which was
primarily caused by home water softeners that residents used to address the hardness of the City's
groundwater. The City collaborated with the state to discuss potential solutions and funding options to
simultaneously address both issues. A lime softening process was selected because it would improve the public
health for the community by reducing the gross alpha concentrations in the drinking water, while providing the
added benefit of hardness reduction so that home water softeners could be eliminated.

This project was funded with $8.4 million in DWSRF funds and a $7 million State Point Source Implementation
Grant. The project scope included the construction of a new 1,200 gallon per minute drinking water treatment
plant designed to remove gross alpha and soften the water, two new wells, and the associated raw water
mains. This project, completed in August 201 9, was one of the first in Minnesota to address a wastewater issue
by treating the drinking water supply. By taking a holistic approach to solving their problem, the City was able
to cost-effectively address both their public health and environmental concerns.

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State Agencies Managing the DWSRF

EPA Region 1

Connecticut Department of Public Health

Connecticut Office of the Treasurer

Maine Department of Human Services

Maine Municipal Bond Bank

Massachusetts Clean Water Trust

Massachusetts Department of Environmental
Protection

Massachusetts Executive Office of Administration and
Finance

New Hampshire Department of Environmental
Services

Rhode Island Infrastructure Bank
Rhode Island Department of Health
Vermont Department of Environmental Conservation
EPA Region 2

New Jersey Environmental Infrastructure Bank

New Jersey Department of Environmental Protection

New York State Department of Health

New York State Environmental Facilities Corporation

Puerto Rico Department of Health

Puerto Rico Infrastructure Financing Authority

EPA Region 3

Delaware Department of Health and Social Services

Maryland Water Quality Financing Administration

Maryland Water and Science Administration

Maryland Department of the Environment

Pennsylvania Infrastructure Investment Authority

Pennsylvania Department of Environmental Protection

Virginia Department of Health

Virginia Resources Authority

West Virginia Department of Health and Human
Resources

West Virginia Water Development Authority
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EPA Region 4

Alabama Department of Environmental Management

Florida Department of Environmental Protection

Georgia Environmental Finance Authority

Georgia Department of Natural Resources

Kentucky Infrastructure Authority

Kentucky Department of Environmental Protection

Mississippi State Department of Health

Mississippi State Tax Commission

North Carolina Department of Environmental Quality

South Carolina Department of Health and
Environmental Control

South Carolina Budget and Control Board

Tennessee Department of Environment and
Conservation

Tennessee Division of Fiscal Services
Tennessee Comptroller of the Treasury
EPA Region 5

Illinois Environmental Protection Agency
Indiana Finance Authority
Indiana State Revolving Fund Loan Program
Michigan Department of Environmental Quality
Michigan Municipal Finance Authority
Minnesota Public Facilities Authority
Minnesota Department of Health
Ohio Environmental Protection Agency
Ohio Water Development Authority
Wisconsin Department of Natural Resources
Wisconsin Department of Administration

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EPA Region 6

Arkansas Natural Resources Commission

Arkansas Department of Health

Arkansas Development Finance Authority

Louisiana Department of Health

New Mexico Finance Authority

New Mexico Environment Department

Oklahoma Department of Environmental Quality

Oklahoma Water Resources Board

Texas Water Development Board

Texas Commission on Environmental Quality

EPA Region 7

Iowa Department of Natural Resources
Iowa Finance Authority

Kansas Department of Health and Environment

Kansas Department of Administration

Kansas Development Finance Authority

Missouri Department of Natural Resources

Missouri Environmental Improvement and Energy
Resources Authority

Nebraska Department of Environmental Quality

EPA Region 8

Colorado Water Resources and Power Development
Authority

Colorado Water Quality Control Division

Colorado Department of Local Affairs

Montana Department of Environmental Quality

Montana Department of Natural Resources and
Conservation

North Dakota Department of Health

North Dakota Public Finance Authority

South Dakota Department of Environment and
Natural Resources

Utah Department of Environmental Quality
Wyoming Office of State Lands and Investments
Wyoming Department of Environmental Quality
Wyoming Water Development Office

EPA Region 9

Arizona Water Infrastructure Finance Authority
California State Water Resources Control Board
Hawaii Department of Health
Nevada Division of Environmental Protection
Nevada Office of Financial Assistance
EPA Region 10

Alaska Department of Environmental Conservation
Idaho Department of Environmental Quality
Oregon Health Authority

Oregon Infrastructure Finance Authority, Business
Oregon

Oregon Department of Environmental Quality
Washington State Department of Health
Washington Department of Commerce

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DWSRF At-a-Glance

Assistance Provided for Projects (Millions of Dollars)



2020

1997-2020

Total, by Project Type

3,631.2

44,710.1

Planning and Design Only

41.8

508.1

Construction





Treatment

1,414.1

16,818.8

Transmission & Distribution

1,507.0

1 8,253.4

Source

258.1

2,602.7

Storage

289.1

4,579.5

Purchase of Systems

1.4

297.5

Restructuring

28.4

182.0

Land Acquisitions

4.0

98.8

Other

87.5

1,369.3

Total, by Population Served





Less than 501

1 17.9

2,004.8

501 to 3,300

449.3

6,680.2

3,301 to 10,000

413.4

6,557.0

10,001 to 100,000

1,164.8

16,134.3

100,001 and Above

1,485.9

13,312.4

# of Loans, by Population Served





Less than 501

168

3,226

501 to 3,300

288

5,286

3,301 to 10,000

165

3,037

10,001 to 100,000

152

3,575

100,001 and Above

64

1,137

Funds Available for Projects (Millions of Dollars)



2020

1997-2020

Total Funds

3,588.9

46,733.1

Federal Capitalization Grants

1,207.5

22,276.9

State Match

224.6

4,334.4

Net Leveraged Bonds

925.9

12,028.6

Net Loan Principal Repayments

1,507.8

14,570.2

Net Interest Earnings

332.4

4,799.1

Net Transfers with CWSRF

165.9

592.8

Less Set-Asides





Other Key Statistics

•	In 2020, every $1 federal drawn to DWSRF
programs resulted in $2 disbursed.

•	The DWSRF average interest rate in 2020 was
1.35%, compared to 2.79% market-value interest
rate. This lower interest rate results in over $600
million in savings to local community ratepayers over
the life of these loans.

•	States also awarded $256 million as principal
forgiveness to communities in 2020. These grant-like
funds help keep water rates affordable for
communities.

•	25 states sell bonds to further leverage their DWSRF
programs.

For more information about the Drinking Water State Revolving
Fund, please contact us at:

Drinking Water State Revolving Fund Program
U.S. Environmental Protection Agency
1201 Constitution Avenue, NW (Mail code 4606M)

Washington, DC 20460

www.epa.gov/dwsrf

Office of Ground Water and Drinking Water

June 2021

EPA 816-R-21-001

"Siote*'

2020 Annual Report


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