Just noticed this updated version of a Congressional Research Service report (5 April 2017) originally written by Claudia Copeland: Water Infrastructure Financing: The Water Infrastructure Finance and Innovation Act (WIFIA) Program by Jonathan L. Ramseur and Mary Tiemann.
In recent years, policymakers have considered several legislative options to help finance water infrastructure projects, including projects to build and upgrade wastewater and drinking water treatment systems. This report examines one particular option, a “Water Infrastructure Finance and Innovation Act” (WIFIA) program, which Congress included in the Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121).
The WIFIA concept is modeled after a similar program that assists transportation projects, the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Proponents of the WIFIA approach, including water utility organizations, cite several potential benefits:
WIFIA could provide credit assistance to large water infrastructure projects that otherwise have difficulty obtaining financing.
WIFIA would access funds from the U.S. Treasury at Treasury rates, thus lowering the cost of capital for borrowers.
WIFIA assistance would have much less of a federal budgetary effect than conventional project grants that are not repaid, because only the subsidy cost of a loan (representing the presumed default rate on loans) would be scored. Thus, if only an average 10% subsidy cost is charged against budget authority, a $20 million budgetary allocation theoretically supports $200 million in loans.
To be eligible for assistance, projects must be determined to be creditworthy with a revenue stream for repayment, thus limiting the federal government’s exposure to default and also encouraging private capital investment.
On the other hand, opponents of the WIFIA approach, including organizations that represent state environmental agency officials, have cited several concerns:
Under WIFIA, decisionmaking for financing of water infrastructure projects shifts from the state and local level to federal officials.
Federal funding for a WIFIA program could have a detrimental effect on federal support for established and successful State Revolving Fund (SRF) programs that provide the largest source of water infrastructure assistance today.
While WIFIA is intended to assist large and costly projects, the majority of water infrastructure needs are for smaller projects. If WIFIA funding resulted in a decrease in SRF assistance, these smaller projects would face significant financing challenges.
The Congressional Budget Office has warned that the costs of a WIFIA program to the federal budget may be underestimated.
For each of FY2015 and FY2016, Congress appropriated $2.2 million for EPA to design and stand up the WIFIA program. In the Further Continuing and Security Assistance Appropriations Act, 2017 (P.L. 114-254) in December 2016, Congress appropriated the first funds to cover the subsidy cost of the program. Using the $20 million in that act, the Environmental Protection Agency (EPA) expects to issue its first WIFIA loans in 2017.
WIFIA has also been considered as a model for other infrastructure financing programs. Several bills in the 114th Congress proposed to establish a WIFIA-type program for water reclamation and reuse projects in western states. None of these proposals, which were included in S. 176/H.R. 291, S. 1837, S. 1894, S. 2533/H.R. 5247, and H.R. 6022, were enacted.
"But it's all right now, I learned my lesson well. You see, you can't please everyone, so you got to please yourself." - Rick Nelson, Garden Party