Technical Assistance


Water & Development Finance


As a vast majority of our physical water infrastructure was built in the late 19th century, much of our infrastructure today is aging, outdated and insufficient. With a large part of our infrastructure in need of costly repair, many local municipalities are searching for flexible, innovative water infrastructure financing tools to improve the infrastructure and services for drinking water and wastewater. Listed below are the many financing tools that can be used for water projects on the local, state, and federal level.

State and Local Programs

Local and state entities may take advantage of particular development finance tools to finance water-specific projects. Some examples include stormwater infrastructure projects, wastewater infrastructure projects, and other sustainable infrastructure projects. There are many types of financing tools available for water infrastructure projects, including:
Public-Private Partnerships, otherwise known as P3, are a useful tool for developing water projects. Government agencies can contract with private partners to renovate, construct, operate, maintain, and/or manage a water facility or system that provides a public service. P3’s may also be used in conjunction with bonds to accomplish projects.

Bonds, in the form of Government Bonds or Private Activity Bonds, are useful tools for water financing at the local and state level. Government Bonds may be used for projects which serve a public purpose as an essential government function, such as sewer infrastructure. Similarly, Private Activity Bonds can provide capital for projects that generally serve a public purpose but benefit private entities.

Water-specific Revolving Loan Funds are financing tools capitalized by the Federal Government that local and state entities may benefit from. The United States EPA provides two RLFs, the Clean Water State Revolving Loan Fund and the Drinking Water State Revolving Loan Fund, with the broad goal of providing capital assistance for water infrastructure projects, such as watershed protection, upgrades to drinking water quality, managing stormwater runoff, and more.

Federal Programs

The United States EPA administers the Water Infrastructure Finance and Innovation Act of 2014 (WIFIA), a federal credit program for eligible water and wastewater infrastructure projects. WIFIA offers low-interest loans to government entities, partnerships, corporations, and trusts. Long repayment periods with customizable repayment schedules allow for borrowers to match their anticipated revenues and expenses for the life of the loan.

The U.S. EPA and the USDA offer grants under which water infrastructure projects may be applicable. For example, the USDA offers various rural development water and environmental programs including disposable loans, grants, loan guarantees, revolving loan funds, and technical assistance.

Case Studies

The South Suburban Joint Action Water Agency (SSJAWA)

The South Suburban Joint Action Water Agency (SSJAWA) revealed plans to construct an independent water system from Lake Michigan to Chicago’s southern suburbs, including a new intake structure, a raw water pump station with transmission to Illinois, a new water treatment facility, and finishing a water transmission system to local towns. The independent system is owned, maintained, and controlled by the SSJAWA with rates independent of the City of Chicago.

In development, the SSJAWA negotiated with the City of Hammond, Indiana to allow SSJAWA access to the lake, waive permit fees and provide assistance in the form of a public-private partnership.

In order to finance the project, SSJAWA issued attractive water revenue bonds to investors with each member of SSJAWA agreeing to purchase water requirements from its customers. Other financing tools included debt service reserve funds, a rate covenant, and member default coverage. Financing the upfront costs required a strong commitment from Agency members; funding agreements, support of a small bond issue, and low floated bonds of $5.5 million.

The Virginia Clean Water Revolving Loan Fund Program (VCWRLF)

The Virginia Clean Water Revolving Loan Fund Program (VCWRLF) is a self-refilling loan fund that provides low-interest financing for Virginia cities, towns, and wastewater authorities for the upgrade, expansion, extension, replacement, repair, rehabilitation, and/or additions to publicly owned wastewater collection and treatment facilities. Since 1987, the VCWRLF has provided more than $3 billion in low-interest loans for wastewater projects in Virginia localities. Benefits of the CWRLF include:
  • Below-market interest rates
  • 1% below prevailing rates
  • 0% loans for some localities meeting eligibility criteria
  • No bond issuance costs
  • Payment waiver during construction
  • The Department of Environmental Quality administers the program and policy aspects of the fund on behalf of the State Water Control Board. Virginia Resources Authority serves as the financial manager of the fund: underwriting loans, issuing bonds, investing monies, closing loans, making disbursements, and maximizing economic benefits.

    The scope of the VCWRLF now includes low-interest loans for publicly owned wastewater treatment facilities, as well as, brownfield remediation and open space preservation related to water quality issues.

    The United States EPA Water Infrastructure Finance and Innovation Act (WIFIA)

    In November 2018, the United States EPA closed its fifth WIFIA loan providing $614 million to the City of San Diego for a new purified water treatment facility. The new facility will be able to produce 30 million gallons of purified water per day.

    The loan comes as a part of the EPA’s multi-year Pure Water Program which has the goal of cleaning non-potable water into high-quality drinking water. This loan will bring EPA’s total to over $1.5 billion in WIFIA credit assistance.

    For San Diego, the project includes a pump station and pipeline for wastewater, expansion of the current North City Water Reclamation Plant, a new North City Pure Water Facility, an onsite Pure Water pump station and pipeline for purified water, and infrastructure improvements to the Miramar Reservoir Pump Station.

    The total overall $1.4 billion investment, with WIFIA financing nearly half, will help the City of San Diego save nearly $184 million. The project will also create 480 construction jobs.

    Helpful Links

    Water Finance Resource Center
    Case Studies on Water Finance
    View All Water Finance Resouces

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