EPA announces $62M WIFIA loan to City of Morro Bay

March 12, 2020
Funds issued will support replacing the City’s aging wastewater treatment plant with a new treatment and water recycling facility.

WASHINGTON, DC, MARCH 12, 2020 -- The U.S. Environmental Protection Agency (EPA) announced a $62 million Water Infrastructure Finance and Innovation Act (WIFIA) loan to the City of Morro Bay, Calif., to replace the City’s aging wastewater treatment plant with a new treatment and water recycling facility. The new facility will reduce discharges into the ocean, increase water supply, and support flood resilience. Morro Bay (population 10,600) is the first small community nationwide to receive a WIFIA loan.

“This WIFIA loan will help improve water quality in Morro Bay, while using advanced water reuse technology to help provide an enduring source of water to the small community of Morro Bay,” said EPA Administrator Andrew Wheeler. “Through WIFIA, EPA is playing a key role in President Trump’s efforts to improve and upgrade our nation’s water infrastructure in communities both large and small. With this loan closing, EPA has now issued 17 WIFIA loans totaling $3.7 billion in credit assistance to help finance $8.4 billion for water infrastructure projects while creating more than 16,000 jobs.”

The existing Morro Bay-Cayucos Wastewater Treatment Plant is over 60-years-old. The City of Morro Bay will replace this treatment plant to help supplement the city’s water supply, reduce reliance on imported water and improve groundwater quality with the addition of highly treated water. In addition, the new facility will be moved inland to increase its resiliency and reduce the risk of flooding.

“Communities like Morro Bay experience real, on-the-ground benefits when they are able to improve critical infrastructure for clean water and flood protection,” said EPA Pacific Southwest Regional Administrator John Busterud. “EPA is committed to continuing our support through low-interest, flexible financing that improves quality of life and protects the environment.” 

"In Congress, I was proud to help advocate for this Morro Bay water federal funding and I am thrilled that our community is receiving this EPA loan to improve our wastewater infrastructure," said Rep. Carbajal. "The importance of a sustainable water source in Morro Bay cannot be overstated—with these funds, we will be able to modernize our wastewater treatment, better prepare for the impacts of flooding, become more resilient and improve the lives of Central Coast residents."

This water reclamation project will cost $126 million. EPA’s WIFIA loan will finance nearly half of that figure — up to $62 million. Additionally, the California State Water Resources Control Board will finance approximately $64 million from its Clean Water State Revolving Fund Loan Fund. The WIFIA loan will save the City of Morro Bay an estimated $29 million compared to typical bond financing. Project construction and operation are expected to create 403 jobs.

“Securing this low-interest federal funding is a sound financial decision for the City,” said Morro Bay Mayor John Headding. “Signing the agreements now means that we will lock in near-historic low interest rates and ensure maximum benefit for our rate payers.”

Water reuse, using technologies like those planed for Morro Bay, represents a major opportunity to support our nation’s communities and economy by bolstering safe and reliable water supplies for human consumption, agriculture, business, industry, recreation and healthy ecosystems. On February 27, 2020, EPA and its partners announced the National Water Reuse Action Plan to help strengthen the sustainability, security and resilience of our nation’s water resources.

For more information about the WIFIA program, visit https://www.epa.gov/wifia.