Infrastructure Financing Plan Gets a Hearing

Representatives from many of the principal water and wastewater utility organizations testified on Tuesday before the House Transportation & Infrastructure Subcommittee on Water Resources and the Environment. The subject was potential innovative financing tools to better enable local communities to finance infrastructure needs to meet state and Federal regulations.

In the first of two scheduled hearings (the second is set for March 21st), the Subcommittee solicited input on three principal subjects: a to-be-introduced measure called the Water Infrastructure Finance and Innovation Act (WIFIA), a water trust fund as proposed in HR 3145 (that also includes CWSRF reauthorization language), and modifications to the tax code to remove state caps on the use of private activity bonds (PABs). As a proposed alternative or supplemental funding mechanism, WIFIA received nearly universal support from the witnesses, as did lifting restrictions on private activity bonds. Absent actual legislative language, it appears that WIFIA would (according to testimony offered):

• Provide loans, loan guarantees, and other credit support for large water infrastructure projects and those with national or regional importance;
• Provide loans, loan guarantees, and lines of credit to SRFs for a group of smaller projects combined to meet a $20 million minimum threshold;
• Have a minimal cost to the Federal government while complementing existing financing mechanisms;
• Eliminate arbitrage restrictions; and
• Streamline the SRF application process.

Most witnesses felt that WIFIA should complement the existing SRF process rather than supplant it. However, it was less clear how that scenario would be avoided. In addition, some witnesses – notably National Association of Clean Water Agencies and the Water Infrastructure Network – supported continued financing for the SRFs, the creation of a WIFIA program, and the addition of a water trust fund.

In terms of process, most witnesses concurred that loans should be made at Treasury rates and repaid with interest; applications should be made by the utility rather than a private participant in the project; and that Federal “cross-cutter” requirements (e.g., compliance with the Endangered Species Act) should be avoided to the maximum extent possible. Eligible projects would include drinking water, wastewater, stormwater, water reuse, and desalination, as well as associated infrastructure rehabilitation and replacement.

Witnesses included representatives from the American Water Works Association, Water Environment Federation, National Association of Clean Water Agencies, National Association of Water Companies, the Water Infrastructure Network, U.S. Conference of Mayors, and two municipal finance specialists.

You can view an archived video of the two hour hearing by going to www.transportation.house.gov/ and clicking on “hearings & legislation” in the banner.