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Funding for Project Available, If you Know Where to Look

Kyle Leonard
Communities across the country have aging and inadequate water infrastructure. Most of our underground water infrastructure was built 50 or more years ago, in the post-World War II era. In some older urban areas, many water mains can even be a century or more old. It is estimated $2.6 billion is lost as water mains leak treated drinking water. In addition, billions of gallons of raw sewage are discharged into local surface waters from wastewater conveyance systems.

While funding for Transportation Infrastructure projects is uncertain, the he good news is that funding for water projects is a tap just waiting to be turned on. Through a combination of federal and state funding mechanisms, both small and large municipalities can receive much needed help in funding vital water related projects.

Nationally, on January 16th the administration announced the launching of a new Water Finance Center at the Environmental Protection Agency. The Center will work with states to maximize the benefits of more than $3 billion in annual federal water investments.

While funding for Transportation Infrastructure projects is uncertain, the he good news is that funding for water projects is a tap just waiting to be turned on.
The Administration also announced a new set of infrastructure tax proposals that will level the playing field for projects that combine public and private investment so that local and state governments can more easily work with the private sector to advance the public interest. The Center will work closely with municipal and state governments, utilities and private sector partners to use federal grants to attract more private capital into projects and promote models of public-private collaboration that can address the real needs of cities and towns to provide safe water, rebuild sewer systems and keep streams and rivers clean.

The Administration has proposed creating an innovative new municipal bond, Qualified Public Infrastructure Bond (QPIB). Today, public-private partnerships that combine public ownership with private sector management and operations expertise cannot take advantage of the benefits of municipal bonds. QPIBs will extend the benefits of municipal bonds to public-private partnerships, like partnerships that involve long-term leasing and management contracts, lowering the cost of borrowing and attracting new capital.

A similar existing program, Private Activity Bond (PABs), has already been used to support financing of more than $10 billion of roads, tunnels, and bridges. QPIBs will expand the scope of PABs to include financing for airports, ports, mass transit, solid waste disposal, sewer, and water, as well as for more surface transportation projects. Unlike PABs, the QPIB bond program will have no expiration date, no issuance caps, and interest on these bonds will not be subject to the alternative minimum tax.

These latest developments follow the signing into law of The Water Resources Reform and Development Act of 2014 (WRRDA) that provides $12.3 billion over 10 years for water, sewer, and inland waterway projects. The action doesn’t just provide money however, but overhauls how the U.S. Army Corps of Engineers (USACE), the federal agency that oversees 12,000 miles of inland waterways, spends it; and provides a new financing mechanism for water, sewer, and stormwater utilities.

WRRDA attempts to streamline project delivery and make that process transparent:

  1. No more earmarks, reconnaissance studies, or reviews of the cost-effectiveness of project designs.
  2. Environmental reviews are limited to three years, $3 million, and must be conducted simultaneously by all three (district, division, and headquarters) USACE levels.
  3. A new process for prioritizing projects by requiring the USACE to give Congress a list of recommended federal, state, and local projects every year.
  4. Integrated planning can be extended up to seven years

The USACE web site contains a Planning Community Toolbox which includes a wealth of information for planners and project delivery teams, including the policy, guidance, processes, and tools that are used every day in planning.

State Initiatives

States themselves are also taking the lead in promoting both potable water and wastewater treatment projects.

Last November, voters in California, Florida and Maine approved ballot measures authorizing their states to spend increased resources on water conservation, water treatment plants, pollution cleanup and river restoration. The following states have also taken their own measures to fund much needed infrastructure improvements.

  • Texas

Texas is distributing water infrastructure loans from a $2 billion fund approved by voters in 2013. Pipes, wells, reservoirs and treatment plants are among the projects to be funded. The Texas Water Infrastructure Coordination Committee (TWICC) is a collaborative effort by government agencies and technical assistance organizations to identify water and wastewater infrastructure and compliance issues. TWICC encourages financial, managerial and technical assistance to water and wastewater service providers. TWICC also promotes an efficient process for affordable, sustainable and innovative funding strategies for water and wastewater infrastructure projects that protect public health with the efficient use of resources in Texas. Additional information can be found here or contact HR Green’s Steve Sparks (713.338.8008).

  • Illinois

In Illinois, funding from the Illinois Clean Water Initiative (ICWI) will be doubled to $2 billion in 2015 and wet weather/stormwater management infrastructure projects will also be eligible for low-interest loans as well as drinking water and wastewater treatment plants and distribution and collection systems. ICWI was launched in the fall of 2012 and has created several thousand jobs in communities across Illinois. The additional funding will come from repayments of existing loans that support the sale of “AAA” rated bonds and require no additional state funds. With a rolling application process, this program opens up more chances for municipalities to fund needed projects. More information can be found here or contact HR Green’s Ajay Jain (815.759.8331).

  • Minnesota

In 2008, Minnesota voters approved the imposition of a three-eighths of one percent tax on themselves for 25 years, until 2034, to pay for cleaner water, healthier habitat, better parks and trails and sustaining our arts and cultural heritage. Today, five years later, that tax has generated more than a billion dollars for Legacy projects, many of which involve water related projects.

The Clean Water Fund is being used to:

  1. protect drinking water sources;
  2. protect, enhance, and restore wetlands, prairies, forests, and fish, game, and wildlife habitat; and
  3. protect, enhance, and restore lakes, rivers, streams, and groundwater.

Additional information on these grants can be found here or contact HR Green’s Alison Sumption (651.659.7725).

  • Iowa

In late December, the Iowa Department of Natural Resources announced that 22 cities would receive a total of $27.2 million in State Revolving Fund loans for water quality projects. The State Revolving Fund is made up of two funds, one for drinking water improvement and one for wastewater and pollution control. The fund provides cities with zero percent loans and a low-cost construction financing option to assist with first-phase expenses.

Iowa law allows sewer utility revenues to finance a new category of projects, called “water resource restoration sponsored projects.” This includes locally directed, watershed-based projects to address water quality problems. Prior to 2009, utility revenues could only be used for construction and improvements for the wastewater system itself. Now, wastewater utilities can also finance and pay for projects within or outside the corporate limits that cover best management practices for nonpoint source pollution control.

As of fiscal year 2015, sponsored projects have been approved on $230 million worth of wastewater loans. This includes 39 sponsored projects in 34 communities and one state park. Learn more about the Iowa efforts here or contact HR Green’s Andrew Marsh (319.841.4393).

HR Green has been successful in finding revenue sources for our clients from state and federal sources. We constantly gather information on available grants & funding opportunities and we invite you to use us as a resource while researching projects that may be eligible for local and/or federal funding assistance.


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