An AMWA-backed “Water Infrastructure Finance and Innovation Act” (WIFIA) pilot program advanced through the U.S. Senate on May 15 when senators approved S. 601, the Water Resources Development Act (WRDA), by a vote of 83 – 14. The WIFIA pilot program was included as Title X of S. 601.
As approved by the Senate, Title X authorizes $100 million per year for five years – divided equally between EPA and the Army Corps of Engineers – to offer low-interest WIFIA loans for major water and wastewater infrastructure projects. EPA and the Corps would each select loan recipients through a nationwide competitive process, and the funds would not be routed through State Revolving Fund (SRF) programs.
WIFIA is based on the existing TIFIA program that offers similar low-interest loans for major transportation projects. The U.S. Department of Transportation, which operates TIFIA, reports that each federal dollar put into the program is leveraged into approximately $10 worth of project loans. Based on this leverage ratio, a $100 million appropriation to WIFIA could generate $1 billion worth of loans to support water infrastructure projects.
WIFIA encountered no strong opposition in the Senate, though senators did attach several floor amendments to the legislation:
- The Senate-approved WIFIA pilot includes a provision that would block the use of tax-exempt financing on any water infrastructure project funded by a WIFIA loan. The provision was inserted in response to a report from the Congressional Budget Office (CBO) predicting that WIFIA could reduce federal revenues (and increase the budget deficit) by prompting communities to build additional water projects. Because WIFIA would only fund a maximum of 49 percent of project costs, CBO predicted that communities would make up the difference by issuing more tax-exempt debt. However, Senate staff say the provision is not intended to become law; instead it is a temporary “band aid” that allowed WIFIA to move through the Senate in a revenue-neutral manner and will be modified before any WIFIA program is enacted.
- While most water projects would need to cost at least $20 million in order to qualify for WIFIA loans, senators unanimously approved an amendment from Sen. James Inhofe (R-Okla.) to set a lower cost threshold for WIFIA projects at rural water systems (defined as those serving 25,000 or fewer people). Under the amendment, a rural water system may receive a WIFIA loan for a project costing as little as $5 million. The amendment could attract more rural support for WIFIA, and does not change the $20 million threshold for projects at water systems serving more than 25,000 people.
- By a vote of 60 – 36, senators approved an amendment from Sen. Jeff Merkley (D-Ore.) to impose “Buy American” requirements for iron, steel, and manufactured goods used on projects funded by WIFIA loans. The amendment is similar to “Buy American” language that was part of the 2009 economic stimulus legislation, and would allow the restrictions to be waived if the government finds that American-made goods are unavailable or would increase the overall project cost by at least 25 percent. Some additional modifications to the amendment may be required, though, as it currently appears to only empower the Army Corps – and not EPA – to issue waivers.
With Senate action complete for now, the House of Representatives is aiming to consider its own WRDA legislation by the end of the summer. House leaders have not said whether they will support including a similar WIFIA pilot in their bill, but WIFIA’s presence in S. 601 should give the program a chance to be a part of the final WRDA legislation House and Senate negotiators will try to hammer out later this year.
A summary of the Senate-approved WIFIA title is available on AMWA’s Legislative Information webpage.