WATER POLLUTION CONTROL
REVOLVING LOAN FUND
By ALBERT E. GARVER, Grant Administration Section, Illinois Environmental Protection Agency
BACKGROUND
The Environmental Protection Agency has been
providing low interest loans for wastewater facilities
from the Water Pollution Control Revolving Fund
(WPCRF) since 1989. The Fund is capitalized with federal funds authorized under the Clean Water Act plus
a mandatory 20% state match. This program has
proven to be a popular successor to the various grant
programs administered by the Agency and although
the levels of assistance are obviously less, they are still
significant. Over $540M has been loaned for construction of 188 wastewater facilities. By providing
these funds at a relatively low interest rate, the rebuilding of part of the State's wastewater infrastructure to maintain compliance and provide for economic growth has been achieved at a reduced cost to people within these communities. This fund not only
leverages five dollars of federal funds for every dollar
of state funds but also provides a funding mechanism
in perpetuity. As loans are repaid, the funds are reloaned to other communities. Revolving the fund over
a twenty-year period actually provides in excess of four
dollars in loans for construction for every state and
federal dollar deposited into the loan program.
ISSUE
In March 1995, the Illinois EPA received $55 million in federal capitalization funds for the WPCRF
contingent upon the state providing the required 20%
match. To date, the General Assembly has failed to appropriate the necessary $11 million in state matching
funds. This failure has left many communities anxious
about the potential for low interest loans. Far more serious is the possibility that Illinois may lose the $55
million in federal funds already awarded to the state if
the $ 11 million state match is not provided. Under the
terms of the capitalization grant, all funds must be
committed by December 1996. If funds are not obligated by this date, the Agency loses this grant money
under the provisions of the Clean Water Act. The
funds will be re-directed to other states.
FUTURE
The President's budget for FY96 and proposals for
reauthorization of the Clean Water Act (CWA) include
additional capitalization of the low interest wastewater
loan program. Authorizing legislation for a new loan program for drinking water is also being seriously considered. Additional state match beyond the current request
of $ 11 million will be needed.
The governor has proposed $29 million in the
FY1997 budget (the $11 million match for the existing
$55 million grant plus $18 million for an anticipated
FY1996 federal capitalization grant of $90 million) for
state matching funds. This budgeted amount has been introduced as HBS'713. Proposed authorization/appropriation of state funds for match to the WPCRF has impacts
beyond those communities that are applying for loans
this year, because these funds will be repaid and subsequently reloaned in perpetuity. Additionally the subsequent loss of jobs and state income associated with these
construction projects will be significant.The table below
reflects the projected funding which may be provided to
further capitalize the Wastewater Loan Fund.
BACKLOG SITUATION AND
RAMIFICATIONS OF NO MATCH
There are over 40 projects in various stages of completing their loan applications in anticipation of receiving a loan using WPCRF monies in FY1996 and FY1997.
Only eight of these projects will be funded with repayment monies if the State fails to provide match for the
new capitalization grant funds available from the federal
government. Until the match problems arose last year,
there were sufficient loan funds available for all eligible
projects that were ready to proceed with construction. If
we are able to take advantage of federal capitalization
funds that are anticipated over the next several years, the
revolving nature of the fund should provide adequate resources to address the vast majority of the long term
wastewater infrastrucutre needs of Illinois communities.
However, without additional capitalization funding repayments generated from existing loans are expected to
meet only 20% to 30% of total project needs.
|
FY'95
|
FY'96
|
FY'97
|
FY'98
|
FY'99
|
FY'00
|
TOTAL
|
Fed ($M)
|
55
|
90
|
100
|
100
|
100
|
100
|
545
|
State ($M)
|
11
|
18
|
20
|
20
|
20
|
20
|
109
|
Total ($M)
|
66
|
108
|
120
|
120
|
120
|
120
|
654
|
Page 26 / Illinois Municipal Review / July 1996