The program also places an emphasis on small and disadvantaged communities and on programs that emphasize prevention as a tool for ensuring safe drinking water. The amount of funding each State was eligible to receive in 1997 was based on a formula used to award State program grants under the Public Water System Supervision program. Eligible projects include installation and replacement of failing treatment facilities, eligible storage facilities and transmission and distribution systems. Projects to consolidate water supplies may also be eligible. Determining Funding Priority States develop a priority system for funding projects based on three criteria from the Act.
States rank the projects and then offer loans to systems based on their ranking order.
States must provide information about their program and the projects they intend to fund in an Intended Use Plan that is made available to the public for review and comment prior to award of the capitalization grant from EPA to the State. The needs facing small communities are considerable. However, many public water systems serving these small communities, particularly those with populations fewer than 10,000, often find it difficult to obtain favorable interest rates when applying for loans to make infrastructure improvements. This assistance can take the form of lower interest rates, principal forgiveness, or negative interest rate loans. The State may also extend repayment terms of loans for disadvantaged communities to up to 30 years.