Public Wastewater System Construction Loans
The Water Pollution Control State Revolving Loan Fund provides below-market-rate interest loans to help build new or repair existing wastewater treatment facilities. Eligible wastewater facilities include treatment plants, interceptor sewers, and collector sewers. Loans of up to 100% of project costs may be awarded for facility design and/or construction projects.
Loans also may be awarded to address nonpoint source pollution control activities. Eligible nonpoint source activities include projects such as effluent trading, upgrading or replacing individual septic tanks, restoring wetlands, treating and controlling stormwater, and reducing pollutants from agricultural runoff.
Counties, cities, special service districts, governmental entities, and nonprofit corporations with authority to collect, treat, or dispose of sewage or industrial wastewater are eligible to participate in the Water Pollution Control State Revolving Loan Program.
Overview of the Loan Process
DEQ queries wastewater treatment systems and potential nonpoint source applicants annually to obtain information on projects for which loan funds can be used. Potential candidates must submit a Letter of Interest (LOI) to DEQ indicating their desire for DEQ funding and stating the improvements or expansion needed. Those systems that submit LOIs are eligible for placement on the state's priority list, which is developed through a rating and ranking process based upon public health and water quality concerns, long-term viability of the system (i.e., sustainability), and the status of the system’s compliance with state and federal regulations. The systems on the priority list are further refined based upon the entity’s readiness to proceed. The refined listing makes up the final fundable list.
Fundable projects on the priority list are placed on the Intended Use Plan (IUP), which outlines the purpose and goals of the state's wastewater loan program, explains how projects are selected for funding, and identifies priority projects eligible for state assistance. The fiscal year (FY) 2017 IUP was reviewed and adopted by the Board of Environmental Quality in May 2016.
Once funding is secured from the US Environmental Protection Agency (EPA) and the state match is provided, communities with projects on the IUP are invited to submit applications. After review of the application and satisfaction that all environmental and legal requirements have been met, a loan may be offered.
For FY 2017 (July 1, 2016–June 30, 2017), the interest rate for loans ranges from 1.50% to 3.00%. These loans must be fully repaid within 20 to 30 years of project completion. Some applicants may qualify as disadvantaged and be eligible for an interest rate as low as 0% and possible principal forgiveness.
Source of Revenue
Funding is derived from four sources. Congress appropriates funds to EPA, which then allots those funds to the states based upon set formulas. Each state is required to provide a 20% match. Idaho's match comes from a transfer to the loan account from the Water Pollution Control Account. Loan repayments and interest earnings provide the other resources for new water pollution loans.
- FY 2016 Annual Report (to EPA) for the Clean Water State Revolving Fund
- Legislative Services Office Individual Entity Audit Reports on the Idaho DEQ Drinking Water State Revolving Fund, FY 2015
Periodically, EPA conducts an audit of water pollution control revolving loan funds to ensure that monies are being appropriately allocated.