Municipalities could have much lower borrowing costs because Congress lifted the ban on the use of tax-exempt bonds in combination with federal loans provided by the Water Infrastructure Finance and Innovation Act (WIFIA) pilot program, according to the global ratings agency Fitch Ratings.
Fitch said in December that utilities already are facing significant costs stemming from much-needed expansions and upgrades. Moreover, “the legislation could also temper the need of some issuers to obtain rate increases related to capital.”
Congress enacted the legislative fix to the WIFIA pilot as part of the five-year highway bill by striking a provision from the Water Resources Reform and Development Act of 2014 (WRRDA) that barred cities from combining the two financing mechanisms. WRDDA set up WIFIA, which is designed to provide Treasury-backed loans for up to 49 percent of a water infrastructure project that costs at least $20 million.
AMWA has established a link to the Fitch statement at www.amwa.net/Zki.