The size of a water or wastewater project can sometimes dwarf the entire budget for the town. There are a variety of sources out there for funding for rural water and wastewater projects, but the rewards to go to the swift, the persistent, and those tolerant of paperwork. Here’s an overview.
HOUSING AND URBAN DEVELOPMENT
Community Development Block Grants can be used for water and wastewater projects.
HOW MUCH: $1.2 million available for smaller communities; 20 percent of that can be used for water and wastewater.
THE ASTERISK: There’s not a lot of money here, and communities have to be low- or moderate-income.
ENVIRONMENTAL PROTECTION AGENCY
There’s money here from the Clean Water Act (for wastewater) and from the Safe Drinking Water Act (for drinking water).
CLEAN WATER ACT (wastewater)
Funding here used to be in the form of grants to cities and other localities. Now this money is used to subsidize states’ Revolving Loan Funds. (So no grants from here for wastewater projects.)
HOW MUCH: For FY2010, funding was $2.1 billion.
THE ASTERISK: Rural areas have no special priority when competing for funds. Some rural areas have had difficulty qualifying for and repaying these loans.
SAFE DRINKING WATER ACT (water)
Funding goes to states’ Revolving Loan Funds, but states also receive some money to give as grants.
HOW MUCH: For FY2010, funding was $1.4 billion.
THE ASTERISK: Rural areas have no special priority when competing for funds. Grants go to economically disadvantaged communities.
USDA WATER AND WASTE DISPOSAL PROGRAMS
Grants and loans for both water and sewer projects are available from the Rural Utilities Service (RUS), which is part of the Rural Community Advancement Program. Funds are limited to rural communities (those with 10,000 residents or fewer), so no competition from urban localities with more grant-writing resources. RCAP also offers technical assistance.
HOW MUCH (FOR ALL PROGRAMS UNDER RUS): Funding for FY2010 was $551 million, which should support $1.6 billion in program activity.
THE ASTERISK (FOR ALL PROGRAMS UNDER RUS): Communities have to have been denied credit through normal channels. All this is funded through the Farm Bill, so future funding is uncertain.
WATER AND WASTE DISPOSAL GRANTS
Grants for development costs of water and wastewater projects. Projects serving populations of fewer than 5,500 get priority.
THE ASTERISK: Has to go to a rural area that’s not likely to decline in population. Grants typically provide 35-45 percent of project costs, so other funding is still necessary.
EMERGENCY AND IMMINENT COMMUNITY WATER ASSISTANCE GRANTS
Helps residents where a significant decline in quantity or quality of water exists or is imminent. Grants range from $10,000 to $500,000 and can pay for 100 percent of the project cost.
THE ASTERISK: Many communities’ water problems are “serious” but not “significant.”
WATER AND WASTE DISPOSAL LOANS
Helps for all types of water and wastewater projects. Once communities can get funding from commercial sources, they are required to do so.
THE ASTERISK: Income restrictions apply.
Find more information on federal funding sources here: http://www.nationalaglawcenter.org/assets/crs/98-64.pdf
STATE REVOLVING LOAN FUNDS (for both the Clean Water Act and Safe Drinking Water Act)
States receive funds from the EPA and loan them out to localities. See the EPA section for details.
BANK OF NORTH DAKOTA
The bank administers a community water facility loan program with 3 percent interest. Loans are given in connection with federal funding.
NORTH DAKOTA RURAL WATER FINANCE CORPORATION INTERIM FINANCING PROGRAM
Since federal money can take time to arrive, this program was created by North Dakota Rural Water Systems to help projects get started more quickly. It is only for projects that have received a loan commitment from the USDA.
NATIONAL RURAL WATER ASSOCIATION REVOLVING LOAN FUND
This fund helps with pre-development costs of proposed water and wastewater projects. It can also cover small capital projects, like replacement equipment. Funds go only to rural entities (10,000 or fewer residents). Loan amounts can’t be more than $100,000, and they can only cover up to 75 percent of the project cost.
Water districts may sell bonds directly to a local bank.
Some regional underwriters may purchase water district bonds and resell the bonds to their investors.
Rate increases are generally part of the funding formula for major projects, especially if significant loans are required to fund the project.