Proven 

Integrity 

and 

Performance 

Office of Water • April 2005 • EPA-832-R-05-001 

Mexico Environment • New of 

Authority 

/ 

Alabama Department of Environmental Management • Alaska Department of 

Environmental Conservation • Arizona Water Infrastructure Finance Authority • 

Arkansas Development Finance Authority • Arkansas Soil and Water Conservation 

Commission • California State Water Resources Control Board • Colorado 

Department of Local Affairs • Colorado Department of Public Health and 

Environment • Colorado Water Resources and Power Development Authority • 

Connecticut Department of Environmental Protection • Connecticut Office of the 

Treasurer • Delaware Department of Natural Resources and Environmental Control 

• Florida Department of Environmental Protection • Georgia Environmental Facilities 

Authority • Hawaii Department of Health • Idaho Department of Environmental Quality 

• Illinois Environmental Protection Agency • Indiana Department of Environmental 

Management • Indiana State Budget Agency • Iowa Department of Natural Resources 

• Iowa Finance Authority • Kansas Department of Administration • Kansas Department 

of Health and Environment • Kansas Development Finance Authority • Kentucky 

Division of Water • Kentucky Infrastructure Authority • Louisiana Department of 

Environmental Quality • Maine Department of Environmental Protection • Maine 

Municipal Bond Bank • Maryland Department of the Environment • Massachusetts 

Department of Environmental Protection • Massachusetts Water Pollution Abatement 

Trust • Michigan Department of Environmental Quality • Michigan Municipal Bond 

Authority • Minnesota Department of Agriculture • Minnesota Pollution Control 

Agency • Minnesota Public Facilities Authority • Mississippi Department of 

Environmental Quality • Missouri Department of Natural Resources • Missouri 

Environmental Improvement and Energy Resources Authority • Montana Department of 

Environmental Quality • Montana Department of Natural Resources and Conservation 

• Nebraska Department of Environmental Quality • Nebraska Investment Finance 

Authority • Nevada Department of Conservation and Natural Resources • New 

Hampshire Department of Environmental Services • New Jersey Department of 

Environmental Protection • New Jersey Environmental Infrastructure Trust • New 

Department York Department Environmental 

Conservation • New York State Environmental Facilities Corporation • North Carolina 

Department of Environment and Natural Resources • North Dakota Department of 

Health • North Dakota Municipal Bond Bank • Ohio Environmental Protection Agency 

• Ohio Water Development Authority • Oklahoma Water Resources Board • Oregon 

Department of Environmental Quality • Pennsylvania Infrastructure Investment 

• Pennsylvania Department of Environmental Protection • Puerto Rico 

Environmental Quality Board • Puerto Rico Infrastructure Financing Authority • 

Rhode Island Clean Water Finance Agency • Rhode Island Department of 

Environmental Management • South Carolina Budget and Control Board • South 

Carolina Department of Health and Environmental Control • South Dakota 

Department of Environment and Natural Resources • Tennessee Comptroller of the 

Treasury • Tennessee Department of Environment and Conservation • Texas Water 

Development Board • Utah Department of Environmental Quality • Vermont 

Department of Environmental Conservation • Vermont Municipal Bond Bank • Virginia 

Department of Environmental Quality • Virginia Resources Authority • Washington 

Department of Ecology • West Virginia Department of Environmental Protection • West 

Virginia Water Development Authority • Wisconsin Department of Administration • 

Wisconsin Department of Natural Resources • Wyoming Department of Environmental 

Quality • Wyoming Office of State Lands and Investments 

Clean Water State Revolving Fund Programs 2004 Annual Report 
/ 

Robert Gill (1946 - 2004) 

’s 

’s dedication to 

of Contents 

Proven Integrity and Performance 

– –

–

– 

’

Clean Water State Revolving Fund Programs 2004 Annual Report 

Dedication 

We would like to dedicate this report 

to the memory of Robert Gill, EPA 

Region 2. Bob had many accomplishments working first with Ohio

water program and then with EPA. 

From the very beginning of the 

CWSRF program, Bob

public service and his personal 

integrity helped ensure that the proTable 

CWSRF Programs A Tradition of Integrity and Performance ..........................2 

CWSRF Programs Getting the Job Done ..........................................................4 

The Annual CWSRF Funding Process Structured for Effectiveness and Integrity ....6 

2004 Focus Measuring Environmental Results ..................................................8 

Innovative Financing for Water Quality Projects ................................................11 

Achievements in National Clean Water Financing ............................................12 

CWSRF 2004 Performance Highlights ................................................................14 

CWSRF Program 2004 Financial Performance Overview ..................................18 

EPAs Business Plan to Support the CWSRF Program ......................................23 

gram would achieve the highest level 

of performance. He provided leadership and highly valuable guidance 

that is truly missed by all of his state 

and EPA colleagues. 

1 
3 

/ 2 

waters. 

CWSRF’

The CWSRF has 

accomplished this feat without expeThe next page summarizes 

the CWSRF’

’s integrity ’s most 

ance. 

state considers applicant communities’ 

tive importance of the affected 

helped thousands of communities 

than 10,000 people. 

’

testing this system. 

– 

2004 2003 

1,092.8 1,251.3 

State Matching Funds 241.7 260.0 

5,227.4 4,548.6 

4,605.9 4,738.3 

4,308.8 3,835.4 

1,415.3 1,329.6 

21,896.4 20,803.6 

State Matching Funds 4,614.6 4,372.9 

52,052.4 46,825.0 

47,905.4 43,299.4 

40,705.5 36,396.6 

19,825.5 18,410.2 

Proven Integrity and Performance

Clean Water State Revolving Fund Programs 2004 Annual Report 

Congress created the Environmental 

Protection Agency’s Clean Water 

State Revolving Fund (CWSRF) 

program in 1987 to serve as a longterm funding source for projects 

that clean and protect the nation’s 

Seventeen years of integrity 

and performance have proven the 

s reputation as an efficient, 

innovative federal-state program. 

Operating in all 50 states and in 

Puerto Rico, the CWSRF has made 

nearly 15,300 loans for projects 

through 2004, and now has over $50 

billion in funds available for assistance. Due to continuing federal 

support and impressive state-level 

management, annual funding has 

increased at a compound rate of 15 

percent per year. 

averaged $4.4 billion in annual assistance since 2000. The program has 

riencing any loan losses. Given 

these strong financial conditions, 

state CWSRF programs have 

achieved high regard in the banking 

industry. 

s funding levels for 

investment in water quality. 

The CWSRF program

stems from its unwavering commitment to address the nation

pressing clean water needs and to 

achieve strong financial performFrom an environmental perspective, the CWSRF program has 

been a sound investment for states 

and the federal government. EPAapproved, state-level priority systems 

direct funds to high priority projects. 

When creating the priority list, each 

current regulatory compliance 

status, imminent public health and 

environmental threats, and the relawaterbodies. CWSRF assistance has 

implement important projects by targeting funding to where it is most 

needed. Since 1996, over 60 percent 

of all CWSRF loan agreements have 

been made to communities of fewer 

This 2004 Annual Report provides an 

overview of this year s CWSRF program accomplishments and status 

and forecasts its plans for continued 

success. The report also highlights 

the effort now underway to implement a new reporting system to better communicate the environmental 

results of CWSRF program assistance. Twenty-eight states are now 

CWSRF Programs A Tradition 

of Integrity and Performance 

Annual Fund Activity 

Federal Capitalization Grants 

New Funds Available for Assistance 

Project Commitments (Executed Loan Agreements) 

Project Disbursements 

Cash Draws from Federal Capitalization Grants 

Cumulative Fund Activity 

Federal Capitalization Grants 

Funds Available for Assistance 

Project Commitments (Executed Loan Agreements) 

Project Disbursements 

Cash Draws from Federal Capitalization Grants 

Source: EPA's CWSRF National Information Management System. 

Clean Water State Revolving Fund 

National Performance Summary Statement 

Fund Activity - Estimated ($ Millions) 

The CWSRF program’s integrity stems from its unwavering 

commitment to address the nation’s most pressing clean 

water needs and to achieve strong financial performance. 
Exhibit 1: 

• Loans 

• Refinancing 

• Bond insurance 

• Guarantees 

(Bond issuance) 

• Sub-state funds 

Proven Integrity and Performance 

5 

/ 4 

foundation. 

’s 

experience and ingenuity in the 51 

states significant flexibility to design 

states also “ ” using their 

other fund assets as security for taxsignificantly expanding their ability 

Meet the Challenge 

state associations including the 

Maine Municipal Bond Bank 

– –––

–––

North Dakota Department of Health 

North Dakota Municipal Bond Bank ––

State Selected Options 

– 

CWSRF Assistance Options 

• Leveraging 

Clean Water State Revolving Fund Programs 2004 Annual Report 

Lasting success rises from a strong 

The CWSRF program

achievements build on the breadth of 

state CWSRF programs. 

The Clean Water Act of 1987 gave 

financing programs that best meet 

their water quality infrastructure 

needs. The CWSRF is primarily a 

low-interest loan program, though 

states can and do offer a wide range 

of other assistance options. These 

are outlined in Exhibit 1. Many 

leverage,

federal capitalization grants and 

exempt bonds. Since the start of the 

CWSRF program, 27 states have 

raised $16 billion by issuing debt, 

to make low-interest loans. State 

programs have not only provided key 

funding for wastewater treatment, 

but have also funded important 

water quality projects on farms, 

stream cleanups at abandoned 

mines, and land purchases to protect 

drinking water sources. 

States Organize to 

Each state has effectively organized 

its CWSRF program to address its 

financial and environmental program 

management objectives. In addition, 

Council of Infrastructure Financing 

Authorities and the Association of 

State and Interstate Water Pollution 

Control Administrators serve a vital 

role through capacity building programs that train members and support their efforts to overcome state 

program management challenges. 

As the CWSRF expands, state programs complete more work each 

year. Annually, states as a whole 

process thousands of CWSRF financial transactions for active loans, provide assistance to hundreds of loan 

applicants and loan recipients, develop detailed annual program plans 

and reports, work with state legislators and governors on program 

design and operation, and coordinate efforts with multiple state-level 

financing programs. It is through 

the hard work of dedicated employees that the CWSRF has reached its 

current status as a notable environmental finance program. The next 

page arrays the many organizations 

that dedicate resources to the mission of the CWSRF program. 

EPA Region 1 – Boston, Massachusetts 

Connecticut Department of Environmental Protection 

Connecticut Office of the Treasurer 

Maine Department of Environmental Protection 

Massachusetts Water Pollution Abatement Trust 

Massachusetts Department of Environmental Protection 

New Hampshire Department of Environmental Services 

Rhode Island Clean Water Finance Agency 

Rhode Island Department of Environmental Management 

Vermont Department of Environmental Conservation 

Vermont Municipal Bond Bank 

EPA Region 2 New York, New York 

New Jersey Department of Environmental Protection 

New Jersey Environmental Infrastructure Trust 

New York State Environmental Facilities Corporation 

New York Department of Environmental Conservation 

Puerto Rico Environmental Quality Board 

Puerto Rico Infrastructure Financing Authority 

EPA Region 3 Philadelphia, Pennsylvania 

Delaware Department of Natural Resources 

and Environmental Control 

Maryland Department of the Environment 

Pennsylvania Infrastructure Investment Authority 

Pennsylvania Department of Environmental Protection 

Virginia Department of Environmental Quality 

Virginia Resources Authority 

West Virginia Department of Environmental Protection 

West Virginia Water Development Authority 

EPA Region 4 Atlanta, Georgia 

Alabama Department of Environmental Management 

Florida Department of Environmental Protection 

Georgia Environmental Facilities Authority 

Kentucky Infrastructure Authority 

Kentucky Division of Water 

Mississippi Department of Environmental Quality 

North Carolina Department of Environment and Natural Resources 

South Carolina Department of Health and Environmental Control 

South Carolina Budget and Control Board 

Tennessee Department of Environment and Conservation 

Tennessee Comptroller of the Treasury 

EPA Region 5 Chicago, Illinois 

Illinois Environmental Protection Agency 

Indiana Department of Environmental Management 

Indiana State Budget Agency 

Michigan Department of Environmental Quality 

Michigan Municipal Bond Authority 

Minnesota Public Facilities Authority 

Minnesota Pollution Control Agency 

Minnesota Department of Agriculture 

Ohio Environmental Protection Agency 

Ohio Water Development Authority 

Wisconsin Department of Natural Resources 

Wisconsin Department of Administration 

EPA Region 6 Dallas, Texas 

Arkansas Soil and Water Conservation Commission 

Arkansas Development Finance Authority 

Louisiana Department of Environmental Quality 

New Mexico Environment Department 

Oklahoma Water Resources Board 

Texas Water Development Board 

EPA Region 7 Kansas City, Missouri 

Iowa Department of Natural Resources 

Iowa Finance Authority 

Kansas Department of Health and Environment 

Kansas Department of Administration 

Kansas Development Finance Authority 

Missouri Department of Natural Resources 

Missouri Environmental Improvement 

and Energy Resources Authority 

Nebraska Department of Environmental Quality 

Nebraska Investment Finance Authority 

EPA Region 8 Denver, Colorado 

Colorado Water Resources and Power Development Authority 

Colorado Department of Public Health and Environment 

Colorado Department of Local Affairs 

Montana Department of Environmental Quality 

Montana Department of Natural Resources and Conservation 

South Dakota Department of Environment and Natural Resources 

Utah Department of Environmental Quality 

Wyoming Department of Environmental Quality 

Wyoming Office of State Lands and Investments 

EPA Region 9 San Francisco, California 

Arizona Water Infrastructure Finance Authority 

California State Water Resources Control Board 

Hawaii Department of Health 

Nevada Department of Conservation and Natural Resources 

EPA Region 10 Seattle, Washington 

Alaska Department of Environmental Conservation 

Idaho Department of Environmental Quality 

Oregon Department of Environmental Quality 

Washington Department of Ecology 

State Agencies that Manage CWSRF Programs 

CWSRF Programs Getting the Job Done 
Exhibit 2: ••

goals 

••

as needed 

•

application 

• ••

• 

document compliance 

• Close on loan •

eligible costs 

• 

• ...

Proven Integrity and Performance 

7 

• 

• Community size – 

small communities that find it difconstruction and implementation of 

chart to right). 

Provide Oversight ’s ten 

’s 

performance for the national CWSRF 

other publications such as , 

CWSRF National Information 

information. 

/ 6 

ment outlines the state’s short and 

long-term goals and shows its comtors including: 

• – • – 

• – 0 

2,000 

4,000 

6,000 

8,000 

10,000 

12,000 

14,000 

16,000 

198819891990

1991

199219931994199519961997199819992000

2001

20022003 2004

Annual 

CWSRFs Fund 15,300 

– 

CWSRF Funding Process 

1. Develop Intended Use Plan 

 Identify/prioritize projects 

 Revise short and long-term 

 Show compliance with federal 

CWSRF requirements 

2. Apply for federal funding 

(if available) 

 Update operating agreements 

 Develop capitalization grant 

Apply to EPA for award 

 Receive award 

3. Award CWSRF loans 

 Review full loan applications 

Work with communities to 

4. Provide and track loan 

funding, monitor construction 

 Review invoices and distribute 

funding to loan recipient for 

Track project implementation 

5. Collect repayments 

Track loan principal and 

interest repayment 

Cycle continues with new 

planning and IUP development 

Watershed protection ­

Will the project address pollutants 

that are detrimental to the local 

watershed or water basin? 

Will the project direct funds to 

ficult to afford such investments? 

The federal government has provided capitalization grants to the 

CWSRF program each year since 

1988, a total of nearly $22 billion. 

When states apply for the federal 

grant funds through their Intended 

Use Plan, they include a list of projects that are eligible for funding. 

After receiving the grant awards, the 

state programs enter into loan 

agreements with communities and 

work closely with them throughout 

the funded projects. In 2004, 

CWSRF programs funded 1,290 

projects, and since 1988, they have 

provided nearly 15,300 loans (see 

Repayments from these loans recycle 

back into the state programs and 

become available for new loans. In 

2004, net principal from loan repayments alone totaled over $1.3 billion 

and net interest earnings added an 

additional $0.46 billion. It is clear 

that the CWSRF program will be a 

significant and continuing source of 

funding for important water pollution control projects. 

EPA’s Role – 

and Support 

Federal employees in EPA

regional offices work side-by-side 

with state program managers. The 

regional offices review the state 

applications and award the federal 

CWSRF capitalization grants. They 

conduct the annual reviews of each 

state program as required by the 

Clean Water Act, then develop annual program evaluation reports. EPA

annual oversight helps states ensure 

ongoing fiscal integrity and strong 

program. 

Beyond conducting oversight, EPA 

actively supports the state programs, providing a broad range of 

financial and programmatic training 

and direct technical support. The 

Agency acts as a clearinghouse for 

new ideas and effective management techniques through fact 

sheets, state activity reports, and 

SRF’s Up

the newsletter for clean water and 

drinking water state revolving fund 

managers and other interested parties. EPA also maintains the 

Management System, a database 

that contains state-level CWSRF 

Clean Water State Revolving Fund Programs 2004 Annual Report 

The annual funding process is consistent among all 51 constituent 

CWSRF programs. The approach 

follows the Clean Water Act and 

assures efficient use of CWSRF 

resources (Exhibit 2). 

First, each state develops an 

Intended Use Plan (IUP). This docupliance with federal and state 

requirements. Next, the IUP 

addresses the status and use of all 

available funding. Funding levels 

reflect available federal capitalization 

grants, state contributions used to 

match these grants, any additional 

state funds, repayments from existing loans, interest earnings, and, 

when applicable, bond proceeds. 

Finally, the IUP includes the list of 

projects that are eligible to be funded 

during the next fiscal year. 

To create this list of eligible projects, 

each state uses its project priority 

system, which considers critical 

water quality factors, to rank the 

projects by need and impact. This 

system ensures that CWSRF funding 

is directed to the highest priority 

projects. Typically, state programs 

assign priority based on several facPublic health protection 

Is the facility discharging into a 

public drinking water source? 

 Facility permit compliance 

Is the facility meeting required 

discharge permit requirements? 

Condition of impacted waters 

Is the receiving or impacted water 

body meeting required state 

standards? 

Number of Assistance Agreements 

Cumulative 

Assistance Agreements: 1988-2004 

The Annual CWSRF Funding Process 

Structured for Effectiveness and Integrity 
Proven Integrity and Performance 

9 

/ 8 

indicators to show how their CWSRF 

lic health (see map below). 

will be able to link assistance to onfinancial performance. 

when a need to communicate beneCWSRF managers (Arizona, 

tem that is effective and that miniExhibit 3: 

’

management plans? 

uses in the nation’

– 

CWSRF funding impacts compliance, 

(Exhibit 3). 

tion to communicate the CWSRF 

’

Clean Water State Revolving Fund Programs 2004 Annual Report 

In 2004, EPA and state programs 

inaugurated a new era of performance assessment for the CWSRF. 

Starting in 2005, 28 states will begin 

using a pilot set of environmental 

projects impact water quality and pubFor the first time, program managers 

the-ground results. They will know, for 

example, how much funding helped to 

protect cold water fisheries and how 

many projects helped to restore 

streams for swimming. Financing 

these Clean Water Act goals is at the 

heart of the CWSRF programs. With 

these environmental measures, states 

will demonstrate their support for 

water quality alongside their proven 

Together, the states and EPA developed this approach to assess environmental results. The efforts began 

fits to policymakers led to increased 

attention on performance measurement in states and within the Agency. 

Georgia and Washington took the 

lead, designing their own systems to 

document program results. EPA 

learned from these and other efforts, 

including a workshop of Region 9 

California, Hawaii, and Nevada) and 

a state-led study in Oklahoma to 

evaluate environmental results 

through water quality monitoring. 

Taking the next step, EPA began 

working with the Association of 

State and Interstate Water Pollution 

Control Administrators and other 

state representatives to assemble the 

pilot measures. This group designed 

a measurement and reporting sysmizes the burden on the states. The 

measures use existing data sources 

and the science behind water quality 

Twenty-eight States Piloting the New 

CWSRF Environmental Benefits Reporting System 

Tracking Environmental Results 

For each project, the measures will capture the CWSRF s reach and water quality contribution. 

Subsidy 

What savings did borrowers realize through the CWSRF program? 

Population Served 

How many people will have improved wastewater services and better local water quality? 

Wastewater Treated 

How much sewage and polluted runoff were treated thanks to CWSRF financing? 

Impaired Waterbodies 

Where did CWSRF projects affect discharges to impaired or threatened rivers, streams, and lakes? 

Strategic Watershed Planning 

When do projects reduce pollutant loadings to address total maximum daily loads or watershed 

Protection and Restoration of Waterbody Uses 

How much CWSRF financing helps to protect and restore swimming, fishing, and other designated 

s waterbodies? 

2004 Focus 

Measuring Environmental Results 

standards and effluent discharge permits to convey project benefits. Data 

is readily available to state water quality and CWSRF programs. The result 

is a set of measures that show how 

water quality, and designated uses 

States and EPA will use this informaprogram s environmental accomplishments. Furthermore, these 

measures establish a tool that will let 

states examine, challenge, and 

improve their own funding decisions. 

Some states have already suggested 

that they want to know even more 

about the environmental impact of 

their CWSRF programs and will consider adding their own measures to 

the core set. 
Proven Integrity and Performance 

11 

/ 

10 

Economic Benefits 

The CWSRF’

quality has substantial economic 

lakes to be clean and beaches to be 

Our nation’

of beaches and contributes to at least 

ment—

—the CWSRF will 

economic impact—specifically the 

impact on jobs—

’

models to gauge short-term adjustconcluded that a sustained one biljobs depending on economic condi­

’s estihealth gains. 

•

•

•

• $12.5 million in shellfish landings (2003) 

•

•

•

CWSRF’s flexibility to maximize the 

loans totaled $176 million in 2004. 

While this only accounts for 4 pertion districts to identify effective 

States also use CWSRF financing to 

nation’

“

than any grant program.”

Clean Water State Revolving Fund Programs 2004 Annual Report 

s investment in water 

impacts. Tourism requires rivers and 

healthy. s waterways 

sustain commercial and recreational 

fisheries that attract over 25 percent 

of the population. And irrigated 

agriculture, public water utilities, and 

industry depend on clean water. 

But water use is growing to the point 

where, according to a 2003 report by 

the General Accounting Office, 36 

states will experience freshwater 

shortages by 2013 in non-drought 

conditions. Maintaining and 

improving water quality is an important part of managing this valuable 

resource and attracting economic 

development. For example, microbial contamination closes hundreds 

a half-million cases of illness a year 

from impure drinking water. As a 

financial engine for wastewater treatand dramatic increases in 

infrastructure needs are projected for 

the next 20 years

provide important economic benefits. 

A recent independent study of the 

of water infrastructure funding validated CWSRF program benefits. The authors, tasked 

by EPAs water policy staff in the 

Office of Water to answer a 

Congressional request, used three 

ments and longer-term employment 

and GDP trends. The economists 

lion dollar increase in debt-financed 

water infrastructure, such as CWSRF 

funding, would permanently add 

approximately 5,000 jobs over the 

next ten years. An initial increase 

would range from 16,000 to 22,000 

tions. Forecasts show that the 

majority of employment gains occur 

in local infrastructure projects and in 

water infrastructure equipment manufacturing. Overall, the study

mates of economic benefits are conservative because the authors stop 

short of projecting the employment, 

production, and productivity impacts 

of valuable water quality and public 

Clean Water: An Annual Economic Snapshot 

 5 billion instances of water-based recreation 

 1 billion coastal visits generate over $50 billion 

 600,000 jobs from freshwater fishing (2001) 

 $82 million of agricultural products from irrigated farms (2002) 

 7 trillion gallons of water to industry (2000) 

 12 billion gallons of water make $58 billion of soft drinks (2001) 

State CWSRF program financing 

innovations have opened the doors 

to thousands of projects with 

important water quality benefits. 

States have taken hold of the 

environmental impact of its funding. 

They continue to finance wastewater 

utility upgrades and rehabilitation; 

at over 90 percent of loan volume, 

municipal utility borrowers are well 

served. CWSRF program managers 

have also reached out to smaller 

borrowers to curtail water pollution 

from farms, septic systems, and 

urban sources. Nonpoint source 

cent of total funding, it represents 

26 percent of assistance agreements. 

CWSRF programs have a track 

record of designing new financing 

approaches for nonpoint source 

projects. To rehabilitate or replace 

leaking septic tanks, states often set 

up linked-deposit programs with 

local banks. The banks then make 

affordable loans to residents, limiting costs and risks to the CWSRF. 

Agricultural loan programs regularly 

involve partnerships with conservaprojects. Reducing sediment, nutrient, and pesticide runoff to waterbodies usually means increasing 

resource efficiency on the farm. 

Some states also reward utilities that 

invest in nonpoint source projects in 

conjunction with infrastructure projects by further reducing the interest 

rate on the CWSRF loan. 

purchase land to protect in-stream 

habitats and drinking water aquifers. 

They fund wetland mitigation 

banks, acid mine drainage cleanup, 

stream bank restoration projects, 

and an array of stormwater management practices and treatment techniques. This final category, a mix of 

combined and sanitary sewer overflows and nonpoint source impacts 

that large and small communities 

are struggling to contain, shows 

how the CWSRF responds to the 

s clean water agenda. The 

following two pages show examples 

of the range of CWSRF projects and 

financing approaches. 

Innovative Financing for

Water Quality Projects 

The CWSRF has put more conservation on the ground 

Rich Baden, Executive 

Director, Spokane County Conservation District (WA) 
12 

Achievements in National Clean Water Financing


Fall River, MA 

Portland, Oregon 

$12.4 million in CWSRF loans extended sewer lines to replace septic tanks, 

converted a treatment plant from chlorine gas to sodium hypochlorite to 

address security concerns, and funded 

50 watershed revegetation projects. An 

innovative program of reduced interest 

rates encouraged the utility to support 

habitat restoration. 

Montana 

To reduce nutrient-laden agricultural 

runoff, the CWSRF program has 

made 175 loans to farmers and 

ranchers, most for center-pivot 

irrigation equipment, which cuts 

water use by half. With $15 million 

loaned since 2000, demand is 

increasing thanks to partnerships 

with local conservation districts. 

Iowa 

The CWSRF established a 

special program to make 

loans for residential septic 

tank repair and replacement. Working through 

approximately 150 local 

banks, the effort has made 

195 loans for over a million 

dollars in just two years. 

Kent, Ohio 

Dam modifications have gone a long 

way toward restoring fish habitat and 

migration routes in the Cuyahoga 

River. $3.9 million in incentives from 

an innovative CWSRF program 

allowed several local wastewater utilities to“sponsor”the work in conjunc-

$89.5 million in CWSRF funding has 

helped build a 3-mile long, 20-foot 

diameter tunnel to control combined 

sewer overflows. Once operational, the 

tunnel will improve water quality in 

Mount Hope Bay. 

Monmouth County, New Jersey 

A comprehensive upgrade to a wastewater 

plant serving 80,000 people and treating 

nearly 12 million gallons per day received 

a $52 million CWSRF loan. New pumps, 

Bisbee, Arizona 

To tackle severe inflow and infiltration 

problems and to restore compliance at 

the wastewater treatment plant, the 

city, state, USDA Rural Development, 

and North American Development 

Bank agreed to finance $30 million in 

improvements, over one third from the 

CWSRF program. 

Clean Water State Revolving Fund Programs / 2004 Annual Report 

Stillwater, Oklahoma 

A sewage treatment plant upgrade and 

expansion protected stream habitat and 

drinking water intakes. At $14.2 million, 

all from the CWSRF, the project was 

under budget and won the American 

Public Works Association (Oklahoma 

Chapter) Environmental Project of the 

Year award in 2003. 

Willard, New Mexico 

A $63,000 CWSRF loan leveraged over 

$400,000 in federal and state funds to 

install decentralized treatment clusters 

and new septic tanks. To stem nitrate 

leaching to the sole drinking water 

source, the village of 240 people established a wastewater management utility to maintain these systems. 

tion with infrastructure projects. 

Owensboro, Kentucky 

$26 million in CWSRF funds 

installed new technology at a sputtering treatment plant and extended 

the collection system to eliminate 

18 smaller facilities and many failing septic tanks. Regionalization 

minimized combined sewer overflows to protect the Ohio River. 

screens, aeration basins, pumping stations, 

sludge thickeners, biofilters, and more 

were operational in 2003. 

Greene County, Pennsylvania 

Billions of gallons of highly acidic, toxic mine water 

threatened a major tributary of the Monongahela River. A 

$4.3 million CWSRF loan financed treatment and proper 

effluent discharge to protect drinking water supplies and 

recreational uses and preserved 100 local jobs. 

Clayton County, Georgia 

Constructed wetlands are the final 

step at the sewage treatment facility, 

cleaning the effluent so it can be 

reused. A $9 million CWSRF loan 

supported this efficient use of natural 

biological processes. 

13 
Proven Integrity and Performance 

15 

/ 

14 

A Growing Source 

of Project Financing 

lative assistance to nearly $48 billion 

nation’

Projects 

accounted for $176 million of total 

funding in 2004. 

Communities 

communities with populations of 

all loans went to communities with 

populations below 10,000. 

10 

20 

30 

40 

50 

0 

198819891990

1991

19921993

1994

199519961997199819992000

2001

20022003 

2004

40% 

17% 

10% 

9% 

96% 

4% 

1% 

Secondary 

SSO 

CSO 

Storm 

POTW 

Nonpoint Source 

and Estuary 

CSO: Combined Sewer Overflow 

SSO: 

New 

Sewers 

19% 

55% 

24% 

10% 

11% 

14% 

48% 23% 

14% 

Number of 

100,000 and above 10,000—99,999 

3,500—9,999 Under 3,500 

CWSRF 2004

Clean Water State Revolving Fund Programs 2004 Annual Report 

In 2004, the CWSRF program funded 

$4.6 billion in projects, raising cumusince 1988. The program funds an 

estimated 10 to 20 percent of the 

s annual wastewater capital 

projects. Municipalities, states, and 

other federal programs provide the 

remaining funding. 

Funding Critical 

In 2004, the CWSRF continued to 

fund a broad range of projects. 

Wastewater system projects accounted for 96 percent of the total funding 

and 74 percent of the total number 

of agreements. 

Funding for nonpoint source pollution control projects remains strong. 

Projects such as agricultural controls 

to reduce runoff and measures to 

protect drinking water sources 

Serving All 

The CWSRF program has traditionally funded many small and medium 

sized communities. In 2004, 48 percent of all loan agreements went to 

fewer than 3,500, and 62 percent of 

Assistance, Annual Assistance, Cumulative 

Billions of Dollars 

CWSRF Cumulative Assistance Reaches $47.9 Billion in 2004 

Treatment 

Advanced 

Treatment 

Water 

POTW: Publicly Owned Treatment Works 

Sanitary Sewer Overflow 

CWSRFs Fund $47.9 Billion in Clean Water Needs through 2004 

Dollar Amount 

Assistance Agreements (1,290) of Assistance ($4.6 Billion) 

Population: 

Communities Served by CWSRFs in 2004 

Performance Highlights 
Proven Integrity and Performance 

17 

/ 

16 

Communities 20 

financing costs. 

2 

3 

4 

5 

6 

7 

8 Percent 1991 1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003 

2004

CWSRF Disbursements 

0 

5 

10 

15 

20 

25 

30 

35 

40 

45 

$19.8 

$40.7 

1988

1989

1990 

1991

19921993

1994

19951996199719981999

2000

2001

2002

2003

2004

0 

10 

20 

30 

40 

50 

60 

$52.1 

$47.9 

1988

19891990 

1991

1992

1993

1994

199519961997199819992000

2001

2002

2003

2004

Used for New 

ing continues to be in high demand. 

“

”

Clean Water State Revolving Fund Programs 2004 Annual Report 

CWSRF Loans Save 

Percent on Average 

According to a popular municipal 

borrowing index, the typical municipal borrowing rate was 4.8 percent in 

2004. The average CWSRF interest 

rate offered on loans was 2.3 percent. The average cost savings realized by CWSRF borrowers represented a 20 percent savings on 

High Return on 

Federal Investment 

The ratio of CWSRF project disbursements (i.e., total cash out to 

pay invoices) compared to total federal outlays for projects (cash drawn 

from federal funds) is a measure of 

return on the federal investment to 

date. Currently 2.05, the rate of 

return on federal investment is 

growing and will continue to grow 

due to the revolving nature of the 

CWSRF program. 

Market Rate * CWSRF Interest Rate 

* Market rate is measured as the Bond Buyer Index for 20-year, Aa-rated GO bonds. 

CWSRF Loans Save Communities 20% (2004 Average) 

Federal Outlays 

Billions of Dollars (Cumulative) 

CWSRFs Return 2.05 Times the Federal Investment in 2004 

Assistance Provided Funds Available 

Billions of Dollars (Cumulative) 

Available CWSRF 92% of CWSRF Funds Committed to Projects in 2004 

Funds are Quickly 

Project Assistance 

Due to low interest rates and broad 

financing eligibilities, CWSRF fundIn 2004, 92 percent of all available 

funds were committed to new projects. This efficient rate of fund utilization is one reason that the return 

on federal investment will continue 

to grow impressively over time. 

The SRF program is one of the most cost-effective programs in government. For every 

dollar the federal government invests, more than two dollars is made available for 

environmental improvements. John J. Duncan, Jr., U.S. representative from 

Tennessee, Water Resources and Environment Subcommittee Chairman 
18 

Proven Integrity and Performance

/ 

2004 Financial Statement Highlights 

Statement of Net Assets 

• •

• 

• •

• ••

Clean Water State Revolving Fund Programs 2004 Annual Report 

CWSRF Program 

2004 Financial Performance Overview 

Total assets increased by $4.3 billion. 

 CWSRF program equity (also called net assets) totals $26.5 billion. 

Program liabilities increased by $2.2 billion, reflecting the net growth in CWSRF bonds 

outstanding for state matching funds and leveraged program financing. 

Statement of Revenues, Expenses, and Earnings 

Total program revenues exceeded expenses by $2.0 billion, an 11 percent increase from 2003. 

 Interest earnings from loans and investments totaled more than $1.2 billion. 

Administrative expenses were 3.5 percent of operating revenues. 

Statement of Cash Flows 

 Loan principal repayments to CWSRF programs were greater than $2.0 billion. 

 Leveraged bond proceeds added $3.0 billion to program cash flow. 

The Clean Water Act requires the Statement of Revenues, 

51 state-level CWSRF programs to Expenses, and Earnings 

undergo an annual financial audit. This statement describes the perEach state and Puerto Rico, or EPA’s formance of the CWSRF fund over 

Office of Inspector General, conducts the reporting period. The statement 

these audits according to the gener- of revenues, expenses, and earnings, 

ally accepted auditing standards reports on the overall performance 

established by the Governmental of the fund during the reporting 

Accounting Standards Board period. 

(GASB). GASB offers guidelines to 

the governmental accounting profes- Statement of Cash Flows 

sion to determine the best fund This statement provides a detailed 

structures for state programs such as accounting of the actual flow of cash 

the CWSRFs. States often define into and out of the CWSRF fund. 

their CWSRF programs as ongoing 

enterprise funds under the GASB Because the 51 constituent CWSRF 

definitions of funds. The standard- programs are independent stateized financial statements used in level entities, no nationally audited 

enterprise fund reporting for CWSRF CWSRF program financial reports 

programs include the following: are available. However, using EPA’s 

CWSRF National Information 

Statement of Net Assets Management System, national 

This statement describes a fund’s aggregate financial statements have 

assets and liabilities as of the end of been developed and are included 

the fund’s fiscal year. Assets include below. The statements are best 

both financial assets and capital viewed as non-audited, cash flowassets. Liabilities include both current based financial reports. 

and long-term liabilities. CWSRF 

fund assets include grant funds that 

have been drawn from the federal 

treasury to date, but do not include 

total grant awards. Several years ago, 

a new GASB rule created the statement of net assets as a replacement 

for the balance sheet statement. The “net asset”section of the statement of 

net assets replaced the “equity”section 

of the balance sheet. 

19 
Clean Water State Revolving Fund 

National Performance Summary Statement 

Statement of Revenues, Expenses, and Earnings - Estimated ($ Millions) 

Clean Water State Revolving Fund 

National Performance Summary Statement 

Statement of Net Assets - Estimated ($ Millions) 

2004 2003 2004 2003


Assets Operating Revenues


Cash and Cash Equivalents 9,485.4 


Debt Service Reserve - Leveraged Bonds 5,868.1 


Loans Outstanding 29,334.3 


Unamortized Bond Issuance Expenses 282.3 


8,274.4 Interest on Investments 423.8 428.3 

5,049.7 Interest on Loans 830.8 785.5 

27,069.8 Total Operating Revenues 1,254.6 1,213.8 

262.0 

Total Assets	 44,970.1 40,628.9 Operating Expenses 

Bond Interest Expenses 798.5 786.0


Total Assets 44,970.1 40,628.9 Amortized Bond Issuance Expenses 12.4 10.4


Administrative Expenses 43.8 46.6


Liabilities	 Total Expenses 854.7 843.0 

Match Bonds Outstanding 642.4 


Leveraged Bonds Outstanding 17,863.9 


Total Liabilities 18,506.3 


Net Assets


Federal Contributions 19,825.5 


State Contributions 3,545.6 


Transfers of Non-Federal Funds from (to) DWSRF (286.6)


Other Net Assets 3,379.3 


636.2 

15,667.6 Nonoperating Revenues and Expenses 

16,303.8 Federal Contribution 1,415.3 1,329.6 

State Contributions 183.2 194.2 

Transfers from (to) DWSRF 8.3 (86.8) 

18,410.2 Total Nonoperating Revenues (Expenses) 1,606.8 1,437.0 

3,362.4 

(294.9) Total Operating and Nonoperating Revenues 2,006.7 1,807.8 

2,847.4 

20 Total Net Assets	 26,463.8 24,325.1 Increase (Decrease) in Net Assets 2,006.7 1,807.8 21 

Total Liabilities and Net Assets 44,970.1 40,628.9	 Net Assets 

Beginning of Year 24,862.6 23,054.8


Note: Under the new GASB 34 rules, "equity" is termed "net assets," and is defined as the difference between assets and liabilities. End of Year 26,869.3 24,862.6


Statement presents a compilation of reporting from 51 state programs and is not audited.


Source: EPA's CWSRF National Information Management System.	 Note: Statement presents a compilation of reporting from 51 state programs and is not audited.


Source: EPA’s CWSRF National Information Management System.


Clean Water State Revolving Fund Programs / 2004 Annual Report 

Proven Integrity and Performance 
/

Proven Integrity and Performance 

22 23 

partnership. 

in oversight 

Starting in 

The 

managers and to allow the content 

CWSRF’

’s Business Plan 

2004 2003 

1,415.3 1,329.6 

183.2 194.2 

(4,308.8) (3,835.4) 

2,044.3 1,666.9 

(43.8) (46.6) 

830.8 785.5 

Net Cash Provided by Operating Activities 121.0 94.3 

3,061.1 2,039.4 

58.5 65.8 

8.3 (86.8) 

(798.5) (786.0) 

CWSRF Funds Used for Refunding (31.4) (248.7) 

(734.2) (554.8) 

(52.3) (58.5) 

1,511.6 370.4 

0.0 0.0 

423.8 428.3 

(818.4) (97.8) 

Net Cash Provided by Investing Activities (394.6) 330.5 

1,238.0 795.2 

8,247.4 7,452.2 

9,485.4 8,247.4 

’s CWSRF National Information Management System.

Clean Water State Revolving Fund Programs 2004 Annual Report

To help sustain the success of the 

CWSRF program, EPA has adopted 

a comprehensive business plan that 

integrates and enhances key components of the proven federal-state 

Transparency 

Strong relationships between state 

program administrators and EPA 

managers have safeguarded the 

CWSRF programs and allowed for 

innovation. Program oversight has 

been efficient and effective. As programs become more complex and 

staff turnover increases, however, it 

becomes difficult to devote time and 

attention to all management areas. 

To improve accountability and transparency, EPA issued guidance for the 

annual program review process in 

2004. An accompanying checklist 

ensures consistency nationwide and 

encourages better preparation for the 

annual review process. 

2005, a series of standard internal 

EPA operating procedures will set 

baseline procedures for key program 

management tasks, complementing 

the annual review guidance and 

training regimen. The first will 

address cash transactions from the 

federal treasury. 

Training 

Regional training workshops are an 

essential part of the CWSRF program. These sessions educate new 

and veteran employees, clarify legislative and policy changes, disseminate information on innovative 

funding practices and solutions to 

common problems, and provide a 

forum for discussion of new initiatives. A mature CWSRF now 

demands a more sophisticated training approach. EPA is planning a 

rotating series of introductory, programmatic, and financial training 

sessions that will include all program 

administrators every other year. 

annual Council of Infrastructure 

Financing Authorities training workshop will remain an important part 

of the program. To reach even more 

of these workshops to address the 

most current issues, the Agency is 

also developing training videos. 

Basic and more advanced sessions 

will become available over the 

Internet in the next year or two. 

Recognition 

The high level of professionalism 

among program managers has 

resulted in many innovations that 

have made the CWSRF a model government subsidy program. For 

example, they can take credit for the 

s invaluable national data 

system. To acknowledge their 

important work and its results, EPA 

will initiate awards and accreditation-like programs over the next few 

years. The awards program will first 

focus on borrowers, showcasing 

projects nationwide. It will expand 

to recognize key achievements of 

state programs and perhaps individuals. An accreditation-like program 

EPA

to Support the CWSRF Program 

Clean Water State Revolving Fund 

National Performance Summary Statement 

Statement of Cash Flows - Estimated ($ Millions) 

Cash Flows from Operating Activities 

Cash Draws from Federal Capitalization Grants 

Contributions from States 

Loan Disbursements Made to Borrowers 

Loan Principal Repayments 

Administrative Expenses 

Interest Received on Loans 

Cash Flows from Noncapital Financing Activities 

Net Leveraged Bond Proceeds 

State Match Bond Proceeds 

Cash Received from Transfers with DWSRF 

Interest Paid on Leveraged and State Match Bonds 

Principal Repayments of Leveraged Bonds 

Principal Repayments of State Match Bonds 

Net Cash Provided by Noncapital Financing Activities 

Cash Flows from Capital and Related Financing Activities 

Cash Flows from Investing Activities 

Interest Received on Investments 

Deposits to Debt Service Reserve for Leveraged Bonds 

Net Increase (Decrease) in Cash and Cash Equivalents 

Beginning Balance - Cash and Cash Equivalents 

Ending Balance - Cash and Cash Equivalents 

Note: Statement presents a compilation of reporting from 51 state programs and is not audited. 

Source: EPA
CWSRF-at-a-Glance 

2004 1988–2004 

$5.2 $52.1 

1.09 21.9 

State Match 0.24 4.6 

2.24 16.0 

1.31 6.9 

Net Earnings 0.37 3.8 

(.01) (.3) 

(.04) (.9) 

2004 1988–2004 

$4.6 $47.9 

4.37 45.2 

0.18 1.8 

Estuaries 0 0 

Unallocated 0.06 0.8 

$4.6 $47.9 

< 3,500 0.45 5.0 

3,500 - 9,999 0.51 6.0 

10,000 - 99,999 1.12 16.3 

2.52 20.6 

1,290 15,286 

< 3,500 622 7,157 

3,500 - 9,999 184 2,417 

10,000 - 99,999 298 4,005 

186 1,707 

’s CWSRF National Information Management System 

Funds Available for Projects (Billions of Dollars) 

Total Funds 

Federal Capitalization Grants 

Net Leveraged Bonds 

Net Loan Principal Repayments 

Net Transfers with DWSRF 

(Less Administration) 

Assistance Provided to Projects (Billions) 

Total, by Project Type 

Wastewater Treatment 

Nonpoint Source 

Total, by Population Served 

100,000 and Above 

# of Loans, by Population Served 

100,000 and Above 

Source: EPA

Return of 2.05 Times the Federal Investment 

92% of Funds Committed to Projects 

2.3% Average CWSRF Interest Rate in 2004, 4.8% Market Rate 

20% Average Savings over Market Rate Loans 

27 States Leverage; 20 Issue Match Bonds 

36 States Fund Nonpoint Source Projects 

27 States Use Integrated Priority Systems 

43 States Conduct Separate Audits 

40 States Fund Separate Grant or Loan Programs 

for EPA regional program managers 

will recognize the expertise involved 

in managing CWSRF programs. Redefining 

performance 

24	 Beyond strengthening its foundation, 

the CWSRF program aims to provide 

leadership for the future of water 

infrastructure finance. A focus on 

financial performance has made the 

pressure to justify funding, an environmental accounting system will 

become a key aspect of a state program’s communications strategy. 

In 2008, the CWSRF program’s 

twentieth anniversary, EPA will host 

a water infrastructure finance conference to explore these and other critical issues. The conference will bring 

together the financial, technical, 

planning, and management stakeholders who work with the CWSRF 

Clean Water State Revolving Fund Programs / 2004 Annual Report 

CWSRF programs engines for water 

quality improvement. Until now, 

there has been no comprehensive 

effort to document these results. The 

state-EPA initiative to assess environmental impacts, discussed earlier, 

comes at a time when wastewater 

infrastructure needs are mounting 

and more detailed study of waterbodies is making increasingly efficient pollution control possible. This 

environmental benefits effort, integrated priority systems, and recent 

state innovations position the 

CWSRFs to make better decisions 

about how to finance clean water 

projects in the future. With increased 

program and other water quality 

financing programs. Participants will 

focus on how to improve the performance of financing for sustainable 

water quality. 

’s 

finance America’

Phone: (202) 564-0752 

(202) 501-2403 

Internet: 

Through these current and upcoming projects and key partnerships 

with other Office of Water programs, 

federal agencies, and, most importantly, the state programs, EPA

CWSRF program will continue to 

s investment in 

clean water. 

For more information about the Clean Water State Revolving Fund, please contact: 

Clean Water State Revolving Fund Branch 

U.S. Environmental Protection Agency 

1201 Constitution Avenue, NW (Mailcode 4204M) 

Washington, DC 20004 

Fax: 

www.epa.gov/owm/cwfinance/cwsrf