October 4, 2018 AMERICA’S WATER INFRASTRUCTURE ACT OF 2018
By: Ian Lyle, Director of Government Relations | Water Strategies LLC
The Water Resources Development Act (WRDA) is legislation historically passed by Congress every two years. This legislation largely focuses on water projects under the Army Corps of Engineers and includes navigation and flood control policies. Over the last few years this legislation has also included limited provisions that relate to the Bureau of Reclamation.
The most recent version of 2018 WRDA bill, titled: “America’s Water Infrastructure Act of 2018”, was introduced late on September 10th. It includes Section 4301, which directs the Administrator of the Environmental Protection Agency (EPA) to enter into an agreement with the Commissioner of the Bureau of Reclamation (Reclamation) under the Water Infrastructure Finance and Innovation Act (WIFIA).
WIFIA is a low interest loan program first authorized by Congress in 2014 that provides funding for up to 49 percent of an eligible project’s costs. It allows for loans of up to 35 years, and loan repayment can be deferred for up to five years after substantial completion of the project. The interest rate for the loan is set by the current U.S. Treasury rate, which has varied from 2.78 to 3.22 percent for 30-year loans this year.
For a project to qualify for a WIFIA loan it must be credit worthy and interested parties must pay an upfront application fee that helps fund the administration of the loan program. These fees can be somewhat costly, however for projects that are looking for another low interest funding avenue they can be worth the cost.
This legislation has yet to pass Congress. However, earlier versions of this legislation enjoyed broad bipartisan support. The U.S. House of Representatives and the Senate are expected to vote on this legislation in the next few weeks, before both chambers break prior to the November elections. If the legislation is passed by both chambers and is signed by the President, the EPA and Reclamation will then have one year to work out an agreement on how the two agencies will work together to finance projects.
WIFIA is not a silver bullet that will solve every water infrastructure financing need, but it could be one more valuable tool that water users can look to as they work to develop the infrastructure our nation and its economy rely on.