Senate Approves Water Funding Measure; House in Question

By Patrick Crow, Washington Correspondent

Alacrity is uncommon in the committee chambers of Congress, which made a Senate panel's quick approval of the Water Infrastructure Finance and Innovation Act (WIFIA) all the more notable.

Under the $500 million WIFIA program, the Environmental Protection Agency and the Army Corps of Engineers each could offer $50 million per year in low-interest loans for major water infrastructure projects.

The pilot program would complement, not replace, the Clean Water and Drinking Water state revolving funds (SRFs). The WIFIA assistance, which would not be allocated by state, would only be available to projects (or combinations of projects) costing more than $20 million.

Although WIFIA was introduced too late in the last session of Congress to make any progress, this year it was appended to the Water Resources Development Act (WRDA), which the Senate Environment and Public Works Committee approved easily. WRDA was expected to get a similar reception on the Senate floor, since the bill authorizes an array of politically popular Corps of Engineers water projects.

American Water Works Association Executive Director David LaFrance applauded the good start. "WIFIA would help communities repair more critical water infrastructure at a lower cost. Ultimately, WIFIA would benefit everyone who pays a water bill," he said.

Last year AWWA estimated that the nation needs more than $1 trillion over the next 25 years to repair and expand existing drinking water infrastructure. The association's report said although the customers of utilities would bear those expenses through higher water rates, federal programs such as WIFIA could lower the financing costs.

AMWA was pleased that the bill did not favor utilities that supplement WIFIA loans with private financing, did not require the use of "green infrastructure," and did not limit the range or number of eligible projects. It will ask Congress to change provisions limiting WIFIA loans to no more than 49% of project costs and requiring construction projects to follow Davis-Bacon prevailing wage rates.

Prospects for WIFIA passage appeared favorable in the House of Representatives, although the current WRDA bill in that chamber does not include the pilot funding project.

Tommy Holmes, AWWA legislative director, said, "There's no WIFIA bill yet in the House but we're cautiously optimistic. We believe that it will have a lot of appeal there too."

The merits of WIFIA were touted when the House Appropriations Subcommittee on Interior, Environment and Related Agencies explored SRF budgetary needs at a hearing in March.

Aurel Arndt, general manager of the Lehigh County Authority in Allentown, PA, testified for AWWA.

He urged Congress to retain the tax-exempt status for municipal bonds, eliminate annual volume caps for private activity bonds for water projects, maintain SRF funding, and enact WIFIA.

Howard Neukrug, Water Commissioner of the Philadelphia Water Department, spoke for the National Association of Clean Water Agencies. He also supported the tax exemption for municipal bonds and asked that communities be given more flexibility to meet competing Clean Water Act requirements.

"Although we need the federal government to remain a reliable partner in improving our water infrastructure, the reality is that the Clean Water SRF only accounts for 3% of the total investment need. Knowing this, utilities have had to get smarter and look for ways to stretch each dollar," he said.

As a backdrop to the WIFIA debate, Congress has approved a fiscal 2013 spending bill that trimmed the Drinking Water SRF $10.6 million to $908.7 million, the Clean Water SRF by $17 million to $1.452 billion, and rescinded $20 million in unobligated SRF funds. Those cuts were in addition to a budget sequestration that will reduce funding another $140 million by the end of the fiscal year on Sept. 30.

Also, the American Society of Civil Engineers (ASCE) issued its annual report card on the nation's infrastructure. It gave the drinking water industry a grade of D, up from D minus last year. It said although the quality of the nation's drinking water throughout the nation remains high, significant capital investments are still needed.

LaFrance said WIFIA's low-interest loans would help ease the problem.

"The sooner WIFIA becomes reality, the closer we will be to meeting the pressing water issues identified in ASCE's report," he said.