SRF’S UP

News aNd ideas for the Next 20 years of the CleaN water srf | S U M M E R 2 0 0 8

Tapping the Untapped

Potential of the CWSRF

2007 was another great year for the Clean Water State Revolving Fund (CWSRF)! The

program provided $5.3 billion in assistance (2,050 loans)—the highest ever—and

cumulative assistance provided is now $63 billion (20,700 loans). After 20 years of growth and

success, EPA is engaging states in a discussion to explore what more might be done to further

improve the already successful program. To encourage discussion the Clean Water SRF Branch

recently issued the draft white paper entitled: “The Clean Water State Revolving Fund Program:

Tapping its Untapped Potential.” One goal of the white paper is to explore CWSRF financial

flexibilities and project eligibilities with the intent of encouraging states to make greater use of

the CWSRF program to solve their water quality problems. The paper introduces regions, states

and assistance recipients to a wide range of projects and financial structuring approaches that

are possible under the CWSRF program, highlighting the types of eligible assistance that have

remained relatively unexplored by states to date and the financial structures that make it

possible to do more without jeopardizing the repair and replacement of our aging infrastructure.

The paper is not new policy or guidance; it simply aims to take a fresh look at the potential of

the program after 20 years of successful wastewater infrastructure financing.

The white paper is available at the CWSRF Discussion Forum under the “Tapping the Untapped

Potential” topic. The discussion forum can be accessed at http://cwsrf.invisionzone.com/.

The examples below present a sampling of what is eligible under the broad scope of the Clean

Water State Revolving Fund Program. The white paper provides a compilation of possible uses

of CWSRF funds under existing statutory authority. To view the full list of program eligibilities

supported under the CWSRF, please read the white paper in its entirety.

Program Eligibilities

Projects are eligible for CWSRF funding under three different sections of the Clean Water Act

(CWA): §212 for Publicly Owned Treatment Works (POTW), §319 for Implementation of a Nonpoint Source Management Plan, and §320 for Development and Implementation of a National

Estuary Comprehensive Conservation Management Plan (CCMP). EPA took a close look at

each CWSRF authority to identify untapped funding opportunities to meet pressing water

quality and public health needs.

A Newsletter for the Clean Water SRF

U.S. ENVIRONMENTAL PROTECTION AGENCY

EPA 832-N-08-001

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Welcome to the new and improved

SRF’s Up newsletter! The CWSRF

celebrated its 20th anniversary in

2007 so this newsletter will focus

on the next 20 years of the Program.

This edition of SRF’s Up highlights

EPA’s recently released draft white

paper “The Clean Water State Revolving Fund Program: Tapping its

Untapped Potential,” that discusses

the full range of program eligibilities

and assistance options available

under the CWSRF. The newsletter

also explores CWSRF strategic management and marketing activities

that will help states reach high priority

water quality projects and make the

program even more accessible to

potential assistance recipients.

TABLE OF CONTENTS

Tapping the Untapped 1

Potential of the CWSRF

Marketing Your CWSRF: 4

Why Is It Important?

The 2007 PISCES Awards 6

Updates and Initiatives 7

Upcoming Events 8

Feedback 8
2 CWSRF SRF'S UP NEWSLETTER | SPRING 2008

Highlights of program eligibilities under sections 212

and 319 include:

• Publicly owned municipal stormwater projects

under section 212 and both publicly and privatelyowned stormwater projects under section 319. In

addition to traditional pipe, storage and treatment

systems, green infrastructure and wetland protection and restoration can also be funded. Land is

eligible only if it will be an integral part of the

treatment process.

Rockville, MD received a CWSRF loan to fund the

planning, design, and restoration of a stream, which

included the stabilization of eroding stream banks

and enhancement of existing wetlands.

• Water conservation and reuse. In addition to that,

effluent can be treated to whatever level of reuse a

system desires, even to drinking water standards.

Cheyenne, Wyoming used a CWSRF loan to renovate

and upgrade water reclamation facilities to remove

ammonia, and used the reclaimed water to irrigate ball

parks, golf courses, and greenways in the community.

• Energy conservation and efficiency, including

power production onsite at a Publicly Owned

Treatment Works (POTW), green energy production

at a POTW, and the pro-rata share of capital costs

of offsite publicly owned clean energy facilities used

to power a POTW.

Atlantic County, NJ used a CWSRF loan to install 2,700

solar panels at five locations across a wastewater

treatment facility and now has a projected energy

cost savings of $115,000 per year.

• Water quality trading. Funding can be provided for

projects at POTWs or nonpoint source projects that

generate water pollution control credits.

• Water quality related Best Management Practices

(BMPs) at animal feeding operations (AFOs) that are

not regulated as point sources.

Missouri’s Nonpoint Source Animal Waste Disposal

Project loans money to small and medium sized

farmers for implementation of agricultural BMPs.

• Where there is a causal link between manmade air

pollution and water quality, projects with a direct

water quality benefit that prevent the emission of

air pollutants in excess of Clean Air Act requirements

are eligible.

Project eligibilities under §320 of the CWA represent

significant opportunities for the CWSRF program. As

discussed in the draft white paper, CWSRFs can fund

projects located within a National Estuary’s watershed

study area if provided for in the §320 Comprehensive

Conservation Management Plans (CCMP). If a broader

geographical scope than the study area typically defined

in existing CCMPs is allowed, §320 projects potentially

are eligible within the entire watershed of a National

Estuary. The CCMP would need to be revised to reflect

Watts Branch in Rockville, MD. The restoration of Watts

Branch was funded with CWSRF dollars.

The Atlantic County Utilities Authority used CWSRF funds

to install solar panels at its wastewater treatment facility.
3 SPRING 2008 | CWSRF SRF'S UP NEWSLETTER

this change by describing any new activities or water

quality problems addressed by these eligibilities. This

could allow a wide range of publicly or privately-owned,

point source or nonpoint source projects to be eligible for

CWSRF assistance. Additional information on those areas

that have been designated as participating in the National Estuary Program is available at http://www.epa.gov/

owow/estuaries/. States interested in additional information should contact Sheila Platt at platt.sheila@epa.gov.

Financial Options and Incentives

In addition to highlighting program eligibilities, the white

paper evaluates how states can gain greater benefit from

the CWSRF program by implementing strategic financing

options. There are a number of unused or underutilized

approaches that demonstrate the flexibility of the

CWSRF and ways in which the program can leverage its

financial position to increase lending capacity, including:

• Tiered interest rates to encourage more projects

that help meet state water quality needs;

• Loan fees that can be used with fewer restrictions

than standard funds, such as for providing planning

and design loans or grants;

• Extended term financing to allow for longer term

financing than 20 years for the

purchase of local debt obligations;

• Alternative loan structures, such

as linked-deposit loans and

sponsorship programs;

• Loan guarantees or insurance

to significantly expand the

assistance provided by CWSRFs

and to reduce the cost

of conventional bank loans;

• Refinance or purchase local debt.

The inherent flexibility of the

CWSRF is a hallmark of the program, but EPA recognizes that

many of the options discussed

above may not be feasible or even

appropriate for every state. The

goal of the white paper is to present the broadest view of what is

eligible for CWSRF funding, so

states can continue to ensure that

money is directed to the highest

priority water quality projects in

the most efficient way.

The Columbia River is part of the Lower Columbia River National Estuary.

DID YOU KNOW?

• in 2006, Massachusetts combined an srf

loan with a section 319 nonpoint source

grant to pay for the installation of 45 rain

gardens and several vegetated swales in

the City of Cohasset to treat stormwater

runoff prior to it entering the town's

stormwater collection system.

• Maine provides Cwsrf loans for environmentally friendly logging equipment

through the Maine forestry direct link

Program. applicants must be certified

sustainable loggers and abide by Maine

forest service BMPs. this linked deposit

program has generated $2,600,000 in

loans since april 2007.
OVERthe last 20 years, the CWSRF has experienced significant growth and success.

At this important milestone, several states have been

reevaluating the role of the CWSRF. They are asking

themselves whether the CWSRF is achieving maximum positive impact on water quality. This process

led to the EPA white paper, which highlights wellestablished as well as relatively unexplored CWSRF

program eligibilities and financing options. Planning

and marketing efforts can provide the ideal opportunity

to consider how the CWSRF’s program eligibilities and

financial options can be beneficial to a state’s Program.

Actively reaching out to communities and encouraging

these types of projects can help states achieve greater

gains in water quality. EPA is currently developing

a comprehensive marketing guide to help states

develop enhanced strategic planning and marketing

approaches for their CWSRF programs.

While all states market their CWSRF through websites,

presentations and brochures, several states have

begun to take a more comprehensive look at their

outreach activities. They are using marketing as a tool

to direct their funds to the water quality issues and

the communities where it is most needed.

Some of the objectives of a comprehensive marketing

approach are to:

• Increase demand for CWSRF financial assistance so

that available funds are fully used;

• Reach more entities eligible for assistance by

promoting the wide variety of funding options,

particularly those highlighted in the white paper, and

by building awareness of the benefits of the CWSRF;

• Direct funds so they achieve state water quality

goals by increasing awareness of the types of

projects eligible for financing under the CWSRF;

• Publicize successes to community leaders, citizens

and legislators;

MARKETING YOUR CWSRF:

WHY IS IT IMPORTANT?

Since 2006, several states have undertaken efforts to

better understand current and potential borrowers

and to develop new outreach techniques. In a number

of these states, the efforts have begun with a survey

or focus group of current and potential borrowers. In

the last two years, 10 states have conducted surveys

or focus groups to better understand the perceptions

that stakeholders have of their CWSRF. These information

gathering exercises have resulted in new outreach

strategies (to be highlighted in this and future issues

of SRF’s Up). This issue covers Iowa’s focus group, New

Mexico’s marketing plan, New Jersey's website, and

Arizona's one-stop shop. In addition, there are other

examples of interesting activities and tools

being used in some states. For more information on

marketing in your CWSRF program, contact Sheila

Platt at EPA at platt.sheila@epa.gov.

Iowa: Putting Program Improvements

to Work

In recent years, Iowa’s CWSRF has implemented several

improvements to their program. They added 0% planning and design loans, rolling applications, assistance

with the environmental review, and extended term

financing to their program offerings. In addition, they

recently updated their outreach materials, including

designing new brochures, which were sent to all

communities in the state, and reformulating the

Intended Use Plans and Annual Reports to serve as

comprehensive documents aimed at the wider

public, rather than just EPA.

The program, which is jointly managed by the Iowa

Department of Natural Resources (DNR) and the Iowa

Finance Authority (IFA), was looking for new opportunities to market the program and its recent improvements. In July 2007, IFA and DNR, with EPA’s assistance,

held a half-day focus group of potential borrowers.

The seven focus group participants were community

leaders who have decision-making authority for water

and wastewater infrastructure financing.

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Focus group participants discussed their perceptions

of the CWSRF, the criteria upon which they base their

financing decisions, and the best ways to reach

communities about the opportunities provided by

CWSRF financing. CWSRF managers learned that many

communities were unaware of the recent program

improvements, were surprised by the range of assistance

types available through the CWSRF, and were eager to

learn more about requirements, timeline and other

features of the programs. A summary of the findings

from the focus group can be found on the CWSRF

Discussion Board, http://cwsrf.invisionzone.com.

Focus group participants were impressed by IFA’s new

marketing materials and thought they were eye-catching

and professional. IFA’s new brochures, one of which

includes a “calculator” that displays the cost savings of

the CWSRF compared to bonds, received high marks

from the group. The brochures contain marketing

messages that are thought to be effective in motivating

potential borrowers to pursue CWSRF loans and

financing, such as “below-marketing interest rates”

and “30-year terms.”

Iowa has begun implementing many of the suggestions

offered by the focus group participants. DNR and IFA

are currently:

• Developing a“brand”for their CWSRFs, which integrate

the elements and opportunities of the programs;

• Jointly designing new brochures and developing

case studies of successful and interesting projects;

• Continuing to promote DNR’s environmental review

coordinator, who reduces the applicant’s workload

by taking over the federal crosscutter process;

• Reaching out to communities by conducting

workshops around the state, and distributing the

Intended Use Plans (IUPs), Annual Reports and

brochures widely.

Iowa’s comprehensive and proactive approach to

marketing will ensure that the impact of the CWSRF

on state water quality will continue to grow. For more

information, visit Iowa’s website at www.iowasrf.com.

Rethinking Marketing in New Mexico’s

CWSRF

2006 marked the development of the first marketing

plan for New Mexico’s CWSRF program. During its

annual strategic planning meeting, the Environment

Department’s Construction Programs Bureau (CPB),

which administers the CWSRF, determined that a

successful marketing strategy was essential to the

continued growth of their program.

CPB has been focusing on implementing its marketing

strategy, a large component of which is to identify

new potential customers and improve program pace.

Some of the new activities being carried out include:

• Visiting communities to provide information about

CPB’s funding programs;

• Attending conferences and workshops;

• Coordinating with other agencies that provide

wastewater infrastructure financing; and

• Partnering with engineering firms, Councils of

Governments, professional organizations, and

other groups.

New Mexico’s efforts have been paying off so far:

CWSRF assistance as a percent of funds available (pace)

increased from 70% in 2005 to 84% in 2007. State

CWSRF managers plan to continue evaluating their

outreach efforts to ensure that they remain effective.

Effective Marketing: An Example

from New Jersey

The New Jersey Environmental Infrastructure Trust’s

website (www.njeit.org) provides a good example of

how a website can be an effective SRF marketing tool.

New Jersey’s CWSRF program is a partnership of the

NJ Department of Environmental Protection and the

Trust, and the Trust does an excellent job of promoting

the benefits of the program on its site. The most

visible feature on the home page is the description of

the significant cost benefits of an SRF loan. In addition,

5 SPRING 2008 | CWSRF SRF'S UP NEWSLETTER

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there are a number of links for more information on

requirements, case studies and contacts for those

seeking additional information. The New Jersey SRF

website is concise, clear and provides easy-to-find

information on the benefits of the program.

One-Stop Shopping in Arizona

One-stop shopping, where various funding programs

come together to coordinate financing for projects

and provide technical assistance, can be a valuable

outreach tool. One-stop shopping can bring the

CWSRF to the attention of new communities and

can result in communities receiving CWSRF financing

when they may not have thought to apply directly.

Arizona’s one-stop shopping option, the Rural Water

Infrastructure Committee (RWIC), focuses on providing

affordable funding solutions and technical assistance

to small, rural communities throughout the state.

RWIC provides a single location for potential borrowers

to find federal, state and local financial assistance

programs and to choose which program or combination

of programs is appropriate for their needs.

RWIC holds monthly meetings throughout the state

to discuss projects and allow communities to present

their projects to the committee directly. The Water

Infrastructure Finance Authority (WIFA), which

administers Arizona’s SRF programs, leads RWIC.

The RWIC funding partners work with communities

and provide practical suggestions for technical,

operational or financial issues, provide assistance with

loan applications, and provide technical assistance.

Since summer 2007, RWIC has been demonstrating

the EPA Financing Alternatives Comparison Tool

(FACT) at their meetings and making it available to

communities. To date, at least one community has

said that it chose the SRF because of FACT.

FACT can be downloaded from EPA's website at http://

www.epa.gov/owm/cwfinance/cwsrf/fact.htm.

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The New Jersey

Environmental

Infrastructure

Trust’s website

effectively markets

the state’s

CWSRF program.

The 3rd annual PISCES (Performance and Innovation in the SRF Creating Environmental Success) Awards recognized states that were

innovative and effective at advancing EPA’s goals of

performance and protection through the Clean Water

State Revolving Fund program. The award was given to

one state from each of the ten EPA regions. Winners

were recognized at the national SRF workshop hosted

by the Council for Infrastructure Financing Authorities

(CIFA) in Denver, CO in November 2007.

The winners of the 2007 CWSRF PISCES Awards are:

Region 1 – Rhode Island: Rhode Island has repaired or

replaced 400 failing or substandard septic systems to

date, significantly improving water quality in many of

the state’s small communities.

Region 2 – New Jersey: New Jersey has provided over

$240 million in low interest loans to private entities to

remediate more than 800 acres of land that, prior to

treatment, let thousands of gallons of leachate seep

into surrounding waters daily.

Region 3 - Virginia: Virginia initiated innovative

partnerships with Farm Credit Associations throughout

the state, providing CWSRF financing for a substantial

number of agricultural BMPs and reducing agricultural

runoff into Virginia waters.

THE 2007 PISCES AWARDS!
SRF DISCUSSION FORUM

The SRF discussion forum was developed to increase communication between States, EPA Regions, EPA Headquarters,

and other interested groups on topics related to the SRF

program. It is an online resource for the SRF community to

share information, exchange ideas, and improve communication.

There are several different topic areas: CWSRF news, marketing

and outreach, environmental benefits, SRF training, the draft

white paper, accreditation, and the Financing Alternatives

Comparison Tool (FACT). The discussion board can be

accessed at http://cwsrf.invisionzone.com. Everyone in

the CWSRF community is encouraged to register.

CWSRF BENEFITS REPORTING SYSTEM

In 2005, the CWSRF Benefits Reporting System (CBR) was

introduced. The system collects information about the

environmental and public health effects of each project

funded by a CWSRF, serving as an approximate record of

the benefits provided by CWSRF-funded projects. CBR is the

product of a collaborative effort between states and EPA.

All fifty states and Puerto Rico now use it to track the environmental impact of the projects funded. The system currently

includes information for over 4,700 projects. In 2007 alone,

CWSRF programs funded more than 946 projects designed

to protect and restore waterbodies.

Region 4 - Florida: Florida is a national leader in water

conservation and efficiency. They recently implemented

an innovative project that included the installation of

horizontal well technology to withdraw and filter surface

and groundwater for reuse.

Region 5 - Minnesota: Minnesota’s Agricultural Best Management Practices Loan Program, a subsidiary of the State's

CWSRF program, is one of the leading environmental loan

programs in the country, averaging more than two closed

loans per day for the last five years.

Region 6 - Texas: Texas is remarkable for its support of water

efficiency through water reuse and conservation; projects

include a wastewater reclamation initiative to deliver

reclaimed water from the City of Austin’s wastewater

treatment plant to two city-owned properties.

Region 7 - Missouri: Through the Missouri Agricultural and

Small Business Development Authority, Missouri lends CWSRF

funds to farmers to purchase animal waste collection equipment and to construct animal waste storage and distribution

facilities, reducing runoff into state waterways.

Region 8 - Colorado: By leveraging CWSRF funds, Colorado

has provided additional financial assistance totaling over

$440 million, directly contributing to hundreds of systems

achieving and/or maintaining compliance.

Region 9 - Nevada: Nevada has formed partnerships

with federal, state, and local agencies in order to improve

the cost effectiveness of its SRF loans, reduce workload

expenditures and increase local participation.

Region 10 - Washington: As a result of effective marketing,

Washington's program is well-known and has strong demand

to fund POTWs, nonpoint source and estuary projects.

Each year the awards alternate between recognizing

states and CWSRF assistance recipients. This year, the

PISCES Awards will honor CWSRF assistance recipients.

Each state CWSRF program will have the opportunity to

nominate one or more of its CWSRF projects. Applications

must be received by July 1, 2008. Contact Jonathan Clarke

at clarke.jonathan@epa.gov for more information.

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UPDATES AND INITIATIVES

From left to right:

Charles Unseld with the

Colorado Dept. of Local

Affairs; Donna Davis,

Colorado Dept. of

Public Health and

Environment; Daniel

Law, Colorado Water

Resources and Power

Development Authority;

and Jim Hanlon, OWM

Director, U.S. EPA.

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FACT, FACT LITE, AND THE USER’S GUIDE

EPA’s Financing Alternatives Comparison Tool (FACT)

can be used to easily and quickly assess what the most

cost effective way is to finance a water or wastewater

project. Users can compare over a dozen different

financing options, including SRF, bonds, grant/loan

combinations, and more.

Two new developments are FACT Lite and the Users

Guide. FACT Lite is exactly what its name implies –

a simpler, easier version of FACT, but with the same

powerful ability to compare financing costs. The Users

Guide is a comprehensive guide on effectively using

FACT and FACT Lite. EPA plans to release FACT Lite and

the FACT Users Guide this summer. All FACT materials

can be found on EPA’s CWSRF website,

http://www.epa.gov/owm/cwfinance/cwsrf/fact.htm.

ACCREDITATION PROGRAM

EPA is pleased to announce that the CWSRF Financial

Accreditation Exam - Module 1: Basic SRF Financial

Management is now available. This is the first of

several exams that are being offered by EPA as an

accreditation program for SRF professionals. The exam

is a self-guided training tool designed to aid the

professional development of CWSRF financial analysts.

Participation is voluntary and the exam is open-book

to allow individuals to complete it at their own pace.

Module I covers topics that serve as the building

blocks of CWSRF financial management.. The exam

and all other Accreditation Program materials, such

as the exam syllabus and reference guide, can be

accessed through the CWSRF Discussion Forum at

http://cwsrf.invisionzone.com.

MARKETING GUIDE

EPA is currently developing a marketing guide to

help states develop enhanced strategic planning and

marketing approaches for their CWSRF programs.

The marketing guide will discuss the importance of

marketing in the SRF, outline effective marketing tools,

describe how marketing can be part of strategic

planning and management efforts and how to

develop a comprehensive and effective marketing

plan. The guide is slated for release this summer.

CWSRF ANNUAL REPORT

The 2007 Clean Water State Revolving Fund Programs

Annual Report is scheduled for release in June 2008.

The report coincides with the twenty year anniversary

of the Clean Water Act amendments that created the

CWSRF, and is aptly titled "Yesterday, Today and

Tomorrow: 20 Years of Progress." The report provides

historical context for the creation of the CWSRF

programs, gives an overview of the innovative

activities currently underway, and looks forward to

new initiatives that will define the next twenty years

of the CWSRF.

2009 CWSRF CONFERENCE

Planning is underway for the 2009 CWSRF Conference!

The conference will be held in Chicago in mid-July,

2009 and will focus on the future of the CWSRF

program and its strategic management. Some of the

topics that will potentially be discussed are innovative

ways to take advantage of CWSRF eligibilities, how to

get more out of the SRF through assistance options

such as credit enhancements and guarantees, and how

priority-setting systems can be improved. Stay tuned

for more information on this important event!

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• EPA White Paper Roundtables

Roundtables are taking place in EPA Regions 1, 2, 3, 4, 5, 6, 9 and 10 to

discuss the white paper. For more information, contact Jordan Dorfman

at dorfman.jordan@epa.gov.

• 2008 CIFA SRF Workshop

October 19-21, 2008 — Providence, RI. For more information please visit

www.cifanet.org/conferences.html.

• Fall 2008 State/EPA Workgroup Meeting

October 22, 2008 — Providence, RI. For more information, contact

Sheila Platt at platt.sheila@epa.gov.

UPCOMING EVENTS

FEEDBACK We would like to involve states and regions in

developing future newsletter themes and

articles. If you have ideas for topics or case studies that you would like

to see in the newsletter, please let us know by posting a message on

the CWSRF discussion forum at http://cwsrf.invisionzone.com or by

contacting Sheila Platt at platt.sheila@epa.gov.

For more information on the CWSRF program, please visit the CWSRF

discussion forum at http://cwsrf.invisionzone.com and the program’s

website at http://www.epa.gov/owm/cwfinance/cwsrf/index.htm.