Drinking Water State Revolving Fund Loan Program

Drinking Water State Revolving Fund (DWSRF) loans are available for the Planning, Design, and Construction Phases of drinking water facilities. The funds may be used for all three phases or in any combination. Applicants for DWSRF loan funding must submit a request for funding along with a project description, cost estimate and project justification. As required by SDWA, projects are prioritized by risk to human health and compliance with SDWA. Upon a request for funding, projects are evaluated and assigned from 20 to 100 points depending on the health and compliance problems addressed by the project. Projects demonstrating the greatest risk to human health will receive the highest priority followed by projects addressing compliance problems and then projects addressing other needs. Seven categories of projects have been established which should cover all types of drinking water projects. These categories include water quality problems, source or capacity, water storage, leakage problems, pressure problems, replacement or rehabilitation projects, and water line extensions.

Projects that are not eligible for DWSRF loan funding include dams, reservoirs, purchase of water rights, laboratory fees for monitoring, operation and maintenance (O&M) expenses, and projects primarily intended for future growth, economic development, and fire protection. DWSRF loans cannot be used provide assistance to any system that is in significant noncompliance with any national drinking water regulation or variance unless the State conducts a review and determines that the project will enable the system to return to compliance and the system will maintain an adequate level of technical, managerial and financial capability to maintain compliance.

DWSRF loan applicants must pledge security for loan repayment, agree to adjust user rates as needed to cover debt service and fund depreciation, and maintain financial records that follow governmental accounting standards. DWSRF loan interest rates range from zero percent to market rate depending on the community´s per-capita income, taxable sales, and taxable property values. Most DWSRF loan recipients qualify for interest rates between 2 and 4 percent. Interest rates are fixed for the life/term of the loan. The maximum loan term is 20 years or the design life of the proposed drinking water facility, whichever is shorter.

The State Revolving Fund Loan Program (SRF Loan Program) maintains a Priority Ranking List for funding the planning, design, and construction of drinking water facilities. The Priority Ranking List forms the basis for funding eligibility and the subsequent allocation of DWSRF loans. DWSRF loans are awarded to those projects that have met the DWSRF technical, financial, and administrative requirements, possess the highest priority rank on the Priority Ranking List, and are ready to proceed.

Because DWSRF loans include federal funds, each project requires a fiscal review, the development of a Facilities Plan, an environmental review, opportunities for minority and women business participation, a capacity development review, and interim and final construction inspections to be conducted by the SRF Loan Program´s technical staff.