DWSRF

The Drinking Water State

Revolving Fund

Financing America’s Drinking Water

—A Report of Progress

United States Office of Water EPA-816-R-00-023

Environmental Protection (4606) November 2000

Agency
Financing

“As a result of this program,

we now provide safer

drinking water to over 2,000

people. We would not have

gotten this far without the

Drinking Water State

Revolving Fund.”

—Stan Bullard

Vice President of Camp Verde

Arizona Water System which

received a loan to address high

arsenic levels in its drinking

water source

The Environmental Protection Agency’s (EPA) Drinking Water State Revolving Fund (DWSRF) program is a

significant tool available to states to fund high-priority infrastructure

projects and state and local activities needed to ensure the provision

of safe and affordable drinking water. The DWSRF program is well on

its way toward meeting the goal of helping to ensure that permanent

institutions exist in each state to provide financial support for drinking

water needs for many years to come. Through June 30, 2000:

 EPA has provided more than $2.7 billion in grants to all 50 states

and Puerto Rico to capitalize revolving loan funds for infrastructure

projects and to fund state and

local activities.

 States have made close to 1,200

low-interest loans totaling more

than $2.3 billion for needed

drinking water infrastructure

projects to meet public health and

compliance objectives.

 Seventy-five percent of all loans

have gone to small water systems.

 States have reserved $445 million

for activities that support their

drinking water programs, enhance

the management ability of water

systems, and protect sources of

drinking water.

America’s
A New Era in

EPA distributes DWSRF funds to each of

the 50 states and Puerto Rico in the form of

capitalization grants. To date,* EPA has

awarded more than $2.7 billion in DWSRF

grants for drinking water projects and state

and local activities. States use the grants to

capitalize revolving loan funds from which

low-cost loans and other types of assistance

are provided to eligible systems to finance

the costs of infrastructure projects. States

must provide matching funds equal to at

least 20 percent of each grant. To date, state

matching funds have added more than $540

million to the program. Loan repayments

made by assistance recipients return to the

revolving

loan fund

and provide

a continuing

source of

financing for

infrastructure projects.

The 1996 SDWA Amendments also

included new regulatory requirements and

other provisions that emphasize comprehensive public health protection through

preventing drinking water contamination

problems. To give states the financial

resources for this new emphasis, each state

was given the flexibility to set aside up to 31

percent of its DWSRF grant to fund

activities that support its drinking water

program, enhance the managerial capabilities of water systems, and protect sources of

drinking water.

Drinking Water Financing

Providing safe, clean drinking water to

the 254 million people served by

approximately 54,000 community water

systems in the United States is an important

goal of federal, state, and local officials.

While our drinking water is among the

safest in the world, the owners and operators

of the nation’s public water systems know

that they must make significant infrastructure improvements to continue supplying

safe drinking water to their customers. A

1995 EPA survey of drinking water infrastructure needs identified a 20 year need of

more than $138 billion. Approximately onequarter ($37.2 billion) of this total national

need is for small systems, which serve up to

3,300 people.

Many public water systems, particularly

small water systems, have difficulty obtaining affordable financing for infrastructure

improvements. Recognizing this fact,

Congress established the Drinking Water

State Revolving Fund (DWSRF) program as

part of the Safe Drinking Water Act

(SDWA) Amendments of 1996. Congress

authorized $9.6 billion in new federal grants

to help ensure that the nation’s drinking

water remains safe and affordable. The

DWSRF program was modeled, in part,

after the Clean Water State Revolving Fund

(CWSRF) program initiated in the late

1980s under the Clean Water Act. The

CWSRF program has provided more than

$30 billion in assistance from $18 billion in

federal funds for projects addressing wastewater treatment and non-point sources of

pollution.

*Data included in this report are from a wide variety of sources, including: DWSRF program information (through June 30, 2000); EPA’s 1995

Drinking Water Infrastructure Needs Survey (EPA 812-R-97-001); and the Safe Drinking Water Information System (SDWIS) FY99Q4 Frozen

Database (national data for community water systems).
Financing

Infrastructure Projects

States have loaned more than $2.3

billion to eligible water systems for

projects ranging from the installation or

upgrade of treatment facilities to the

Eligible projects are those needed to maintain compliance with health-based standards

or otherwise further the public health

protection goals of the SDWA, such as

installation and replacement of failing

treatment and distribution systems. As

EPA’s survey of drinking water infrastructure needs showed, there is a tremendous

need associated with drinking water projects

throughout the country. In New York

alone, more than 1,250 projects totaling

$4.6 billion have been identified by systems

that have indicated an interest in receiving

funds. To ensure that the most critical

infrastructure needs are met, each state has

developed a priority system for funding

projects. States must give priority to eligible

projects that: (1) address the most serious

risks to human health, (2) are necessary to

ensure compliance with the requirements of

2

Treatment

● Projects to maintain compliance with regulations

for contaminants that cause acute and chronic

health effects.

Transmission and Distribution

● Installation or replacement of transmission and

distribution mains.

Source

● Rehabilitation of wells or development of sources

to replace contaminated sources.

Storage

● Installation or improvement of eligible storage

facilities.

Consolidation

● Consolidation of water supplies if a water supply

has become contaminated or if a system is

unable to maintain technical, financial, or

managerial capacity.

Creation of New Systems

● Creation of new community water systems to

replace contaminated sources or to consolidate

existing systems that have technical, financial, or

managerial difficulties.

Eligible

Project Categories

creation of new

water systems

needed to

address public

health concerns. Since

the first loan

was made to

the Town of

Williamsburg,

Pennsylvania in

April 1997,

approximately

1,200 loans

have been

made. Seventy-five percent of these loans

were made to small systems (40 percent of

total assistance). More than one-third of

the projects receiving loans have been

completed, and communities nationwide

are enjoying the benefits of a safer, more

affordable supply of drinking water as a

result.

Eligible Systems and

Projects

Publicly and privately owned community

water systems and nonprofit noncommunity water systems can receive DWSRF

funding. To focus on the needs of small

systems, Congress required that states

provide a minimum of 15 percent of their

funds to systems serving 10,000 people or

less. Most states have far exceeded this

minimum requirement.

DWSRF Loans Made
the SDWA, and (3) assist systems most in

need on a per household basis. States rank

the projects and then offer loans to those

with the highest priority.

Flexible Financing Tools

Promote Results

A wide range of tools to fund infrastructure

projects are available to states through the

DWSRF program. The most significant

advantage of the DWSRF program is that it

allows states to offer loans to water systems

at below-market interest rates. The savings

from lower interest rates can be significant

for a community. For example, a water

system receiving a $5 million loan at a 2

percent interest rate, as opposed to a 6

percent interest rate, would save $2.5

million over the course of its 20 year

repayment period.

Using program assets as security, a state can

also issue bonds to “leverage” its program.

Over time, leveraging can generate a

significant amount of additional funding

for projects. More than ten states are using

the assets of the program to leverage in their

DWSRF programs so that they can meet

the demand for financial assistance. For

example, leveraging has enabled New York

to make more than $460 million in loans

while receiving only $200 million in federal

grants, and Kansas has made more than $82

million in loans using its $45 million in

grants.

Many systems serving disadvantaged

communities are not able to afford even the

low-interest rate loans made available

through the DWSRF program and require

3

● Low-interest loans between 0 percent and the

market rate with a 20 year repayment period.

● Refinance or purchase local debt to reduce a

community’s cost of borrowing.

● Purchase insurance or guarantee local debt

to improve credit market access or reduce

interest rates.

● Leverage program assets by issuing bonds to

increase the amount of funds available for

projects.

● Provide disadvantaged assistance by taking

an amount equal to 30 percent of a capitalization grant for loan subsidies or extending the

repayment period to up to 30 years.

Financing Tools Available

Through the DWSRF

additional assistance to complete a project.

The DWSRF program provides states with

additional flexibility to address these

systems. A state may take

an amount equal to 30

percent of its capitalization

grant to provide additional

loan subsidies (e.g.,

principal forgiveness,

negative interest rate loans)

to communities which are

classified as “disadvantaged” based on

affordability criteria

developed by the state. A

state may also extend loan

terms for these systems to

up to 30 years. Another

method for making loans more affordable is

to coordinate DWSRF funds with other

sources of funding. Other federal financial

assistance programs (e.g., the U.S. Department of Agriculture’s (USDA) Rural

Development program and the U.S.

Housing and Urban Development’s (HUD)

Community Development Block Grant

program) are available to assist water

systems in addressing drinking water

infrastructure needs. Many states also have

their own assistance programs for drinking

water improvements. Public water systems

benefit from state DWSRF programs that

have fostered cooperation with other

funding sources because they get an affordable funding package that covers the total

project costs. The DWSRF program and

other funding programs benefit because

coordination allows their funds to go

further.
Infrastructure

Project Highlights

4

Treatment Rule requires filtration of surface

water sources to remove microbiological

contaminants. Gold Beach, Oregon

received a $500,000 DWSRF loan to build

a filtration plant to ensure that the surface

water source for the town’s drinking water

meets the requirements of the Surface Water

Treatment Rule. The new filtration plant

also helped to ensure inactivation of Giardia

which is common in coastal Oregon

waterways. Concord, New York received a

$47,713 DWSRF loan to replace a private

water system that was vulnerable to microbial contaminants due to aging private

septic systems in the area. The project

involved building a new storage tank,

pumping station, and distribution mains to

ensure a safe and reliable water supply for

the town’s 100 residents.

▼ Nitrates

In some small rural communities, ground

water is impacted by high nitrate levels as a

result of agricultural practices or failing

septic systems. High nitrate levels can cause

serious health problems, especially for

infants whose ability to absorb oxygen can

be inhibited by nitrate (i.e., blue baby

syndrome). In Quartzite, Arizona,

DWSRF assistance was combined with

other sources of funding to address ground

water contaminated by failing septic

systems. Quartzite’s water system was under

a Consent Order from the Arizona Department of Environmental Quality for high

nitrate levels and was first on the state’s

priority list. The project, serving 2,000

people, will complete an extension of the

town’s distribution service to 85 percent of

the community and consolidate more than

The DWSRF program is playing a

significant role in providing assistance

to public water systems to ensure compliance with the SDWA and address the most

serious risks to human health. The projects

presented here show how states are making

loans to help water systems meet the

challenge of providing safe and affordable

drinking water to all of their customers.

Funding Public Health and

Compliance

A 1995 EPA survey of drinking water

infrastructure needs found that $12.1

billion was needed to address current

SDWA requirements. Approximately

84 percent of that need was for

improved treatment for microbial

contaminants regulated under the

Surface Water Treatment Rule and the

Total Coliform Rule. The remaining

needs were associated with nitrates,

which can cause acute health effects in

children, and other contaminants

such as radionuclides that pose

chronic health risks. The following

projects show how the DWSRF

program is providing assistance to address

these contaminants.

▼ Microbial contaminants

More than 167 million people receive

drinking water from surface water sources

such as rivers and lakes. Microbial contaminants such as Giardia, Cryptosporidium, and

Coliform bacteria that can be present in

surface water must be removed to ensure

public health protection. These contaminants can lead to gastrointestinal illness and,

in extreme cases, death. The Surface Water

Scanning electron micrograph

of Giardia lamblia. Giardia and

other microbial contaminants

can cause severe illness.
5

50 public water systems. Due to ongoing

problems with high nitrate levels in the

ground water, Spivey, Kansas received a

$78,000 loan from the DWSRF program to

extend pipelines and connect to a safe

public water system to serve its 99 residents.

▼ Radionuclides

Radionuclides are man-made or natural

elements that emit radiation. Radionuclides

can increase the risk of cancer depending on

the radionuclide a person is exposed to

through drinking water consumption. In

Jackson, Nebraska, DWSRF assistance was

combined with other sources of funding to

address municipal wells with high radionuclide levels (i.e., radium and alpha particles)

that were in violation of the Nebraska Safe

Drinking Water Act. The project involved

installing a new well and constructing a new

treatment plant. With 75 percent grant

assistance, Jackson was able to afford the

project and provide safe drinking water to

its 230 residents.

Funding Disadvantaged

Communities

To help meet the unique needs of economically distressed communities, states have the

flexibility to establish disadvantaged

community programs as part of their

DWSRF programs. Through a disadvantaged community program, a state may

provide additional subsidies such as principal forgiveness or extend loan repayment

periods to up to 30 years. This additional

assistance can make a substantial difference

in terms of improving system compliance,

getting needed projects underway, and

maintaining affordable water service.

Several states have established programs for

disadvantaged communities and many

others have expressed interest in doing so.

 With a median household income of

$19,712, the small coastal community of

Winter Harbor, Maine qualified for

disadvantaged assistance for much-needed

infrastructure improvements to its water

system. The community had created a

water district by purchasing its system from

a private owner. At the time of the purchase, the households served by the system

were under a boil water order and the

system was out of compliance with the

Surface Water Treatment Rule, had a source

of questionable quality, no filtration, and

inadequate disinfection. The water system’s

rates were $300 per household per year

which was substantially above the state’s

goal rate of $276 per year (based on 1.4

percent of median household income). The

gap between the goal rate and the actual rate

qualified Winter Harbor for maximum

disadvantaged assistance. DWSRF assistance was combined with assistance from

the Maine Rural Development Council to

fund the construction of a new well, a

pump station with treatment, a transmission line, and a storage tank. A $1.1

million loan from the DWSRF program

included principal forgiveness for 75

percent of the requested loan amount, with

the remaining loan amount at a 0 percent

interest rate. Financial assistance made it

possible for Winter Harbor to switch its

water supply from a non-potable surface

water source to a ground water source with

adequate disinfection and storage while

offering affordable rates to the community.
6

 Before receiving a DWSRF loan, the lowincome community of Mendon, Vermont,

which is home to approximately 100 year

round residents, received untreated surface

water from a system that had been on a boil

water order since 1971. In 1988, EPA

issued a final Administrative Order to the

system requiring that corrective action be

taken. Mendon applied for and received a

loan that included disadvantaged assistance

to extend a water main from the nearby city

of Rutland to serve the community’s homes.

The disadvantaged assistance resulted in a

$180,000 subsidy to the community, with

the remaining loan amount at a 0 percent

interest rate. The water main extension has

been completed and is fully operational.

Operations at the privately owned system

serving Braddock Heights, Maryland were

revoked by the Public Service Commission,

and the Maryland Department of the

Environment ordered Frederick County to

take over the aging system. The Frederick

County Water Authority received a $4.4

million DWSRF loan to design and build a

new water treatment plant, storage tank,

and distribution system for the community

of about 350 homes. Comfrey, Minnesota,

population 433, was one of the first cities

included on the state’s DWSRF priority list

for improvements to its water treatment

plant due to a copper exceedance problem.

However, during the loan application

process, the city was devastated by a series

of tornadoes. All but 15 of the 250 homes

were damaged, and most of the city’s

Funding Small Water

Systems

Approximately 93 percent of community

water systems are small systems, many of

which serve fewer than 3,300 people.

Almost one-half of these systems are

privately owned. Small systems have certain

characteristics that make compliance with

minimum standards difficult without

outside assistance. These characteristics

include very small staff, extremely limited

financial resources,

and a small,

widely-distributed

customer base.

These systems

often need financial assistance to

provide safe water

to their communities, but find it

difficult to obtain

favorable interest

rates when

applying for loans

to make infrastructure improvements. With its

ability to offer

low-interest rate

loans, the DWSRF

program is an

important source

of affordable

funding for small

With a DWSRF loan, an aging water system in Braddock Heights systems.

was abandoned and replaced with a new system
infrastructure and municipal facilities were

destroyed. Covering costs to replace the

damaged infrastructure through traditional

bond methods would have been very

difficult since there was essentially no tax

base remaining in the wake of the storms.

As a result, the DWSRF program provided

$575,262 in funding ($375,025 of it in

principal forgiveness) for the needed

drinking water infrastructure repairs. The

project was an important part of the city’s

efforts to rebuild the community and

protect public health.

Funding Consolidation to

Improve System Capacity

Capacity development is an important part

of the DWSRF program’s focus on preventing contamination problems in drinking

water. All systems receiving DWSRF

program assistance must demonstrate that

they have the technical, financial, and

managerial capacity to ensure compliance

with the SDWA over the long-term. When

a public water system is unable to provide a

safe and reliable supply of drinking water

due to any number of problems with

capacity, often the most economic and costeffective solution is consolidation with

neighboring systems. Consolidation may

involve the construction of an entirely new

system or the expansion of an existing

system. Many state DWSRF programs give

bonus points in their priority systems to

projects that will consolidate systems.

 In Jefferson County, Florida, initial

interest in creating an area-wide drinking

water system grew out of a request from a

small private utility for an expansion of its

service area. Area residents in the rural

community served by private wells attended

a series of meetings asking to be included in

a new area-wide water system because over

400 samples from their wells tested positive

for Coliform bacteria and the potential for

surface runoff contamination caused

genuine concern for disease outbreaks. In

addition, leaking underground storage tanks

had contaminated area aquifers with

gasoline, and a chemical plant leak had

contaminated an aquifer near one of the

small communities. As a disadvantaged

community, Jefferson County received a $6

million financial assistance package which

included 85 percent in principal forgiveness

from the DWSRF program and grant

assistance from the USDA Rural Development program. The multi-community

water system will provide safe, reliable

drinking water to almost 900 families and

will consolidate over 30 small, unreliable

systems into one reliable system operated by

a nonprofit cooperative at a monthly cost of

about $25 per customer. Ottowa County,

Ohio received a $21.2 million loan to

consolidate seven public surface water

treatment plants and more than 115

privately owned ground water systems that

had significant problems with contamination. The new regional water system

serviced by a 6 million gallon per day

surface water treatment plant will provide

water to approximately 23,000 people.

7

"This is a problem I

have identified for

many years and have

been trying to take

action to do something about ... (I)

credit (Ms.) Couver

and other community

volunteers with

helping build support

for the new water

system by spreading

the word about contamination problems."

—Dan MacDonald

Jefferson County

Health Department as quoted in

the Tallahassee

Democrat
8

State DWSRF Programs

(Based on data through June 30, 2000)
9
Financing

Set-aside Activities

Each state has the flexibility to set aside

up to 31 percent of its capitalization

grant to conduct activities and establish and

implement programs that place a strong

emphasis on preventing contamination

problems through source water protection

and encourage better system operations

through enhanced water system management. There are four general set-aside

categories—each of which carries a limit on

the amount of the capitalization grant that

can be used for activities eligible under that

category.

Although the need to address infrastructure

projects through the revolving loan fund is

great, all states have recognized the importance of preventative measures and have

reserved a portion of their grants to conduct

activities that support their drinking water

programs. To date, approximately 16.5

percent ($445 million) of the total amount

of funds that have been provided to states

through capitalization grants ($2.7 billion)

has been allocated to set-aside activities.

States are using set-asides to directly fund

state programs, including managing the

DWSRF. Approximately $55 million of the

$106 million reserved for state program

management activities is being used to

support public water system supervision

(PWSS) programs which must prepare to

implement new regulations addressing

contaminants in drinking water. States are

also using funds to develop and implement

new state programs required by the 1996

SDWA Amendments. For example, each

state is required to develop or revise programs for the certification of drinking water

system operators and to implement a

capacity development program to ensure

that new and existing systems demonstrate

that they have the adequate technical,

financial, and managerial capacity to

operate safely.

The SDWA Amendments also require each

state to assess potential sources of contamination at all public water systems within the

state. Approximately $115 million of the

$193 million reserved for local assistance

activities is being used to delineate source

water protection areas for public water

systems and assess potential sources of

contamination. States are also providing

Set-aside Categories and Eligible Activities Maximum

Administration and Technical Assistance 4%

● Administer the DWSRF program and provide technical

assistance to public water systems.

Small System Technical Assistance 2%

● Provide technical assistance to small systems.

State Program Management 10%*

● Administer the state PWSS program.

● Provide technical assistance through source water

protection programs.

● Develop and implement a capacity development

strategy or an operator certification program.

Local Assistance and Other State Programs 15%**

● Delineate and assess source water protection areas.

● Provide loans to systems to acquire land or

conservation easements.

● Provide loans to systems to assist in voluntary,

incentive-based source water protection measures.

● Make expenditures to establish and implement

wellhead protection programs.

● Provide assistance to systems as part of a

capacity development strategy.

*States must provide a dollar-for-dollar match for expenditures made under this set-aside.

**No more than 10% per activity per capitalization grant.

10
direct assistance to systems to address source

water protection by, for example, implementing wellhead protection measures to

protect ground water sources of drinking

water or by providing loans to water systems

to acquire land or conservation easements to

ensure that sources of drinking water are

not impacted by land uses which could

introduce contamination to the source.

States are also using set-asides to provide

technical assistance to public water systems

directly or through a third party. Much of

this assistance is directed at small systems

which have greater problems maintaining

technical, financial, and managerial capacity. States have reserved $40 million for

technical assistance activities that specifically target systems serving 10,000 people

or less.

11

Local Assistance Set-Aside

(in millions of $)

State Program Management Set-Aside

(in millions of $)

DWSRF Set-Asides

(in millions of $)
Set-Aside

Activity Highlights

12

▼ Implementing wellhead protection

programs

Nearly 80 percent of community water

systems use ground water for their primary

source of supply. Wellhead protection

promotes pollution prevention and management techniques to protect ground water

sources of drinking water. Ohio has

reserved more than $3.5 million to implement its wellhead protection program

(WHPP). The state is using funds to

delineate wellhead protection areas, assist

public water systems in conducting potential contaminant source inventories, complete susceptibility analyses, disseminate

assessment results, and promote implementation of protection activities as assessments

are completed. Three of the other Great

Lake states are also using funds to develop

and implement WHPPs. Michigan has

developed a program to ensure safe abandonment of wells, Minnesota is funding

staff to work with community and noncommunity systems on their WHPPs, and

Wisconsin is expanding education and

outreach efforts to encourage systems to

participate in the WHPP.

▼ Acquiring land and conservation

easements

Some communities have found that an

effective way to protect the quality of

drinking water sources is to own or control

land in upstream watershed or ground water

recharge areas where development or other

land activities could impair the quality of

the drinking water source. Land acquisition

and conservation easements can protect a

water supply by preventing pollutiongenerating activities in critical areas and can

provide other community benefits such as

The DWSRF program offers states the

flexibility to fund a wide range of

activities using set-asides to help support

their drinking water programs. Three areas

in which states are focusing their efforts are:

(1) addressing source water protection, (2)

facilitating partnerships, and (3) enhancing

the technical, financial, and managerial

capacity of public water systems.

Addressing Source Water

Protection

In the past, water suppliers generally directed

their resources toward treating water from

✔ Protects public health

✔ Offers common sense approach with an

economic benefit

✔ Protects the environment

rivers, lakes, and underground sources before

supplying it to the public as

drinking water. However,

there is a growing recognition

that taking positive steps to

manage potential sources of

contamination and preventing pollutants from reaching

sources of drinking water

often can be more efficient

and cost-effective than

treating drinking water later.

Each state has developed a

comprehensive Source Water

Assessment Program to assess

the source of every public

water system within the state. These assessments must identify the geographic areas

that affect a drinking water system’s supply,

inventory potential contaminant sources

within that area, and assess the susceptibility

of the water system to contamination.

States, water suppliers, and communities can

then use the results of the assessments to

protect their sources of drinking water.

Benefits of Source

Water Protection
preserving wildlife areas, enhancing recreational opportunities, and reducing flood

damage. In Maine, the Auburn Water

District and Lewiston Water Department

received a loan for $570,000 to purchase

434 acres of land in the watershed of the

“Basin,” a small pond which drains directly

into Lake Auburn, which serves as a source

for the two water systems. The systems

collaborated with the Lewiston-Auburn

Watershed Commission and the

Androscoggin Land Trust (ALT) and

negotiated a joint easement under which the

Commission will review the landowner’s

forest management plan to ensure that best

management practices for water quality are

used and ALT will share overall easement

monitoring responsibilities. By protecting

land around Lake Auburn, the water

systems will be able to maintain water

quality standards.

▼ Implementing source water protection measures

Protecting source water by preventing

contamination is in the best interest of

water systems. California has reserved more

than $8 million from its capitalization

grants to support loans to community water

systems for source water protection projects

that are directly related to protecting

vulnerable water sources from contamination. Types of projects that may be funded

include fencing cattle and other animals

from sensitive areas, restricting public access

to critical areas in protection areas, evaluating agricultural practices and educating on

best management practices, installing signs

at boundaries of zones or protection areas,

✔ Uses existing frameworks and

expertise

✔ Leverages resources by combining

funds with other agencies or organizations

13

systems.

▼ Partnering with colleges, universities, and extension services

Continuing education is critical in ensuring

that owners and operators of water systems

are knowledgeable about the newest technologies and regulations affecting the water

industry. Pennsylvania considers education

to be so important that it requires each

DWSRF borrower to submit a plan every

five years during the period of loan repayment (generally 20 years) detailing the

system’s continuing education plans. Other

mid-Atlantic states (Delaware, Maryland,

Virginia, and West Virginia) also have

established relationships with technical

assistance providers at educational centers to

provide continuing education credits for

system operators.

and building structures to protect the source

by diverting contaminated runoff.

Facilitating Partnerships

The provision of safe drinking water relies

on the coordinated efforts of partners who

can aid and benefit from each other.

Partnerships allow states to

conserve resources by working

from an existing framework to

provide immediate assistance

rather than spending time

developing new programs that

may replicate other efforts

within the state. Furthermore,

through the consolidation of

financial resources, partnerships

increase the amount of assistance

that states can provide to

Benefits of Partnerships
14

▼ Partnering with existing technical

assistance providers

In many states, there are organizations that

have been providing technical assistance to

small rural water systems and districts for

years. State affiliates of the National Rural

Water Association (NRWA) and Rural

Community Assistance Programs (RCAP)

offer a critical link in helping small utilities

provide safe drinking water to their customers. New Jersey is working with the state’s

RWA and the state section of the American

Water Works Association to develop an

outreach program to help systems determine

the best method of treatment, explain the

fewer than 3,300 persons and 69 percent

were to privately owned systems.

▼ Partnering with other agencies

and environmental groups

The activities that states must undertake to

conduct source water assessments naturally

lend themselves to developing partnerships.

Some assessments require expertise that may

not be readily available within a state’s

drinking water program to determine the

susceptibility of source water to contamination in areas with complex geological

conditions. Therefore, many states are

partnering with the U.S. Geological Survey

to provide assistance in completing the

required assessments. Because implementing protection measures often begins at the

local level, educating the public about the

importance of drinking water protection is

critical. Pennsylvania has awarded grants to

local environmental outreach groups to

develop and implement community education programs to promote source water

protection.

Enhancing Technical,

Financial, and Managerial

Capacity

It is important to ensure that public water

systems improve their technical abilities,

managerial skills, and financial resources so

that they can provide safe drinking water to

the public consistently, reliably, and costeffectively. By enhancing system operations

and ensuring the capacity of public water

systems, states can promote greater longterm compliance with the SDWA.

✔ Promotes greater long-term

compliance with safe drinking

water standards

✔ Helps systems provide reliable

safe drinking water in a costeffective manner

DWSRF program, and help

systems apply for DWSRF

funding. In addition, many

states (North Dakota, Kansas,

and Vermont to name a few) are

entering into contracts with

their RWA and RCAP organizations to target assistance to small

systems. An example of the type

of activity that states are conducting in working with these

providers is the funding of

circuit riders who travel between

water systems to provide technical assistance to operators. In

Georgia, three circuit riders were

funded through an ongoing contract with

the state’s RWA to help systems improve

their technical and managerial ability to

comply with state and federal drinking

water regulations. The circuit riders made

more than 640 field visits to water systems

during state fiscal year 2000. Ninety-four

percent of the visits were to systems serving

Benefits of Enhancing

System Capacity
15

▼ Helping systems prepare for

infrastructure improvements

Many state DWSRF programs have seen

small systems drop out of consideration for

loans because the systems have not done

adequate planning to determine what type

of project they need to undertake to improve their infrastructure. Virginia offers

planning and design grants of up to

$25,000 to rural, financially stressed

community water systems serving up to

3,300 persons. The grants can be used to

fund the preparation of preliminary engineering plans and specifications or to

undertake similar technical assistance

projects. New Mexico has developed a

team approach using staff from the Environment Department, Finance Authority,

regional Environmental Finance Center,

and engineering consultants to better

prepare small systems for projects. The state

is helping systems that are targeted for

assistance prepare preliminary engineering

plans and specifications, conduct environmental reviews, and undertake similar

technical assistance projects. The goal is

that these funds will assist water system

owners in preparing applications for

assistance from the DWSRF program and

other funding sources for infrastructure

projects.

▼ Reducing the number of small

water systems lacking capacity

Almost 60 percent of community water

systems serve fewer than 500 people. These

very small water systems often lack the

economies of scale that come with a larger

customer base to maintain adequate capacity. Several states are developing strategies

to reduce the number of small systems by

encouraging consolidation and

regionalization of water systems. Utah is

using set-aside funds to implement regional

planning for small systems on a countywide basis. As part of the regional planning

process, recommendations are made to

small systems to regionalize operations or to

consolidate with neighboring systems as

appropriate.

▼ Helping systems manage their

money

Many small systems lack the resources to

maintain adequate financial accounting

systems and develop comprehensive business plans. Comprehensive business plans

can be used to generate reliable information

about costs and other issues needed to make

sound decisions about a water system’s

future. Virginia is using funds to help small

systems develop comprehensive business

plans. The state has contracted with the

Southeast Rural Community Assistance

Project, Inc. (SE/RCAP) to provide handson assistance in developing business plans

for existing waterworks, first targeting the

high-priority, vulnerable systems.
Four Years of

Progress

16

The past four years have seen considerable progress in getting the new

DWSRF program up and running. States

have done an impressive job in implementing their DWSRF programs. Over a short

period of time they had to obtain legislative

authority, develop priority systems for

ranking projects, and begin identifying

projects for funding. Their efforts are

paying off, as demonstrated by the volume

of loans that have been made and examples

of high priority projects addressing public

health protection that have been funded.

While states have found that many small

public water systems require significant

amounts of assistance to get through the

loan application process, they have been

able to provide more than 75 percent of

their loans to these systems. Public water

systems are using DWSRF assistance to

address much-needed projects that they

may have postponed in the past due to a

lack of affordable financing.

Set-aside funds are being used to help states

develop and implement new programs

required by the 1996 SDWA Amendments.

States are using funds to complete source

water protection assessments of public water

systems and are looking to provide assistance to help systems address potential

sources of contamination. The technical

assistance that states are providing is helping

public water systems improve their technical, financial, and managerial capacity and

prepare them to receive DWSRF assistance

to make infrastructure improvements.

Although the DWSRF program has contributed to the efforts to provide safe

drinking water, both states and public water

systems will face challenges in the future.

The recognition that the quality of drinking

water can be impacted by contamination

from many different sources means that

states will have to work closely with other

governmental entities and private business

Total Funds Appropriated $3.6 billion

(Fiscal Year 1997-2000)

Total Capitalization Grants to States $2.7 billion

Percentage of Total Grants Reserved 16.5%

for Set-aside Activities ($445 million)

Total Loans Made to Systems 1,200 loans

($2.3 billion)

Percentage of Total Loans 75%

Awarded to Small Systems ($932 million)

DWSRF Program At-A-Glance

(through June 30, 2000)
17

owners to ensure that measures are being

put into place to prevent contamination.

States will also need to commit additional

resources to implement new regulatory

requirements and to provide better outreach

to water systems and the public as they

work to ensure that all citizens have access

to safe sources of drinking water. Public

water systems will need resources to comply

with existing and new regulations and

maintain their ability to provide safe

drinking water in the face of aging infrastructure, shifting populations, and availability of water.

The DWSRF program is a significant tool

available to states and water systems to meet

the challenges of the future. Addressing the

issues and great needs associated with

providing safe drinking water will require a

committed effort on the part of federal,

state, and local governments as well as

private businesses.

Continued investment in the

DWSRF program will help states

and public water systems ensure

that our drinking water is safe and

affordable. Because every child in

any community in America should

be able to turn on the tap and enjoy

a glass of safe, clean drinking water.
Visit the EPA Office of Ground Water and Drinking Water

website at www.epa.gov/safewater/dwsrf.html to find –

Policy and Guidance Documents ~ Fact Sheets ~

Reports ~ Funding Information ~ EPA & State Contacts ~

Links to State Programs

or

Contact the Safe Drinking Water Hotline at 1-800-426-4791

Where to go for

more information about

the DWSRF program