TWCA Annual Convention

1. From Western Drought to the Flint Crisis:
New Innovative Federal Water Supply Funding and
Financing Tools on the Horizon
Texas Water Conservation Association
The Woodlands, Texas
March 3, 2016

2. White House Water Summit 2016
• Increase resilience of Nation’s water supplies
– Boost water sustainability through water-efficient and
water reuse technologies
– Promote and invest in breakthrough R&D on new
water supply technologies that reduce costs and
energy consumption
• Summit on March 22, 2016 in Washington
– Public private partnerships
– Private sector investments
– Research, development and application of science and
technology in water management

3. Innovative Federal Tools
• Water Infrastructure Finance and Innovation
Act (WIFIA)
• Natural Resource Investment Center –
Department of the Interior
• Drought Legislation
– RIFIA
– WaterSMART
– Title XVI Reform

4. WIFIA
• Authorized in WRRDA 2014 – pilot program based
on popular TIFIA (Transportation)
• EPA and Army Corps of Engineers - $175M each in
budget authority – five years
• EPA WIFIA program
– Program stood up in FY2016 - $2.2M budget
– FY2017 Budget request - $20M ($15M for loans/$5M
admin)
– $15M appropriation translates to $980M in federal
financing (subsidy rate = 1.53% - EPA budget request)

5. WIFIA Details
• Direct (Treasury) loans and guarantees
– Annual appropriations start at $20M – increased to
$50M by FY2019
– Finance not more than 49% of total project costs
– Up to 25% of projects can exceed 49% financing
– 35-year repayment terms
– 5-year grace period for debt service upon completion
– Low interest rate (2.69% for loans closed today)
– Total federal assistance (grants and loans) capped at
80% of a project’s cost
– Must coordinate and not compete with SRF financing

6. WIFIA Eligibility
• Eligible Projects
– Projects developed by both private and government entities
– Total project costs must exceed $20M
– Smaller projects can be bundled together
– Rural (<25K pop.) projects larger than $5M eligible
– SRF eligible projects – wastewater and drinking water
– Desalination/water recycling/aquifer storage projects
– Environmental restoration
– Based on creditworthiness and revenue sources
– Can now match with tax exempt municipal bond financing
(FAST Act)

7. Natural Resource Investment Center
• Interior Secretary Jewell announces NRIC
December 2015
• NRIC to support water, species, and habitat
conservation
– Partnerships with the private sector
– Develop creative financing opportunities
– Increase investments in water conservation,
critical water infrastructure and habitat
conservation

8. Western Drought
• Federal legislation – California drought
– H.R. 2898 Rep. Valadao (R-CA) – Passed House
– S. 2533 (S. 1894) Sen. Feinstein (D-CA) introduced
• Senate Energy and Natural Resources (ENR)
– Chairman Lisa Murkowski (R-AK) wants west-wide
drought legislation considered
– ENR Committee expected to take up drought
legislation within next two months

9. Senate Drought Bill
• Sen. Feinstein’s S. 2533 proposes
– Reclamation Infrastructure Finance and
Innovation Act (RIFIA)
– WaterSMART cost shared grant expansion
– Title XVI water recycling and reuse grant reform
– Desalination project grants
– Additional budget authority ($600M) to fund new
water storage projects – California and west-wide
• 50% cost of federal project
• 25% cost of state/local project

10. RIFIA
• Similar to WIFIA pilot program (WRRDA 2014)
– Authorize the Bureau of Reclamation to implement a
direct loan and loan guarantee program to finance new
water supply infrastructure
– $200M in new budget authority = $13.1B in loans ($26.6B
in new projects)
– Non-federally developed and owned water infrastructure
• Surface water storage
• Groundwater storage
• Hydropower
• Delivery systems
• Reuse and recycling
• Desalination

11. RIFIA Benefits
• If RIFIA was in place today:
– RIFIA interest rate = 2.69% (AA rated muni bond =
3.4%)
– 35- vs. 30-year repayment – 5-year grace period
– No requirement to borrow debt service reserve fund
(approx. 6% reserve required for muni bonds)
– Annual cash flow savings = approximately 20% - 30%
on debt service
– Ability to refinance existing infrastructure
– “Cost” to federal government = 1.53% of loan
principle
• EPA calculated risk of default on WIFIA loans for water
projects

12. WaterSMART Expansion
• New 25% cost shared competitive grant
– Maximum $20M federal share
– Non-federal projects
– Wide range of eligible projects would include:
• Small water storage
• Groundwater recharge
• Conveyance and interconnections
• Other water management improvements

13. WaterSMART Expansion
• Criteria for prioritizing new projects
– Water supply benefits to ag/urban uses
– Integrated regional projects
– Hydroelectric/flood/recreational benefits
– Environmental benefits

14. Title XVI Reform
• Title XVI water reuse and recycling grants
program
– Currently requires congressional authorization for
a reuse project to compete for grants (25% up to
$20M max.)
– S. 2533 proposes to allow all eligible projects to
compete for new grant funding
• No congressional project authorization necessary
• Would require a completed federal feasibility study

15. For more information about
RIFIA and other innovative funding tools:
f=
www.WesternWaterPriorities.org

16. Upcoming Legislation
• Senate Energy Bill (S. 2012)
• Water Resources Development Act (WRDA)
– House and Senate oversight hearings are ongoing in
support of new WRDA legislation
– Corps Sec. 7001 process
• Earmark ban still in place
– Technical fixes to WRRDA 2014
• FY2017 Appropriations process
– Regular order vs. Omnibus
• Lame Duck session after election best hope for
most controversial legislation this Congress

17. THANK YOU
Questions?