Congress Passes Water Resources Bill Supporting Public-Private Partnerships For Water Treatment

A key provision of the WRRDA bill establishes the Water Infrastructure Finance and Innovation Act (WIFIA), a five-year pilot federal loan program for water projects.

Water infrastructure projects across the nation may soon have access to innovative financing programs and increased public-private partnership (P3) opportunities, according to Sutherland Asbill & Brennan LLP, a law firm with offices throughout the U.S. House Bill 3080 (2013) or the Water Resources Reform and Development Act (WRRDA), passed the U.S. Senate on May 22 by a vote of 91 to 7. This action comes two days after the U.S. House of Representatives approved the bill 412 to 4. The bill now goes to President Obama for his expected signature before becoming law. When signed, WRRDA would be the first comprehensive water resources measure to become law since November 2007.

A key provision of the bill establishes the Water Infrastructure Finance and Innovation Act (WIFIA). WIFIA is a five-year pilot federal loan program for water projects. It will provide low-interest federal loans to communities to reduce the cost of financing large water and wastewater infrastructure projects.

WIFIA authorizes the Army Corps of Engineers and the Environmental Protection Agency to provide financial assistance to carry out pilot projects to develop critical water resources infrastructure. Eligible projects include, for example, a project for flood control or hurricane and storm damage reduction, activities described in Section 603(c) of the Federal Water Pollution Control Act and Section 1452(a)(2) of the Safe Drinking Water Act, or a project for enhanced energy efficiency in the operation of a public water system or a publicly owned treatment works. WIFIA, modeled on the Department of Transportation’s Transportation Infrastructure Finance and Innovation Act (TIFIA) program, stretches federal dollars by leveraging non-federal funds. The program will be launched with $350 million in direct federal aid over five years.

If TIFIA is any indicator of success, WIFIA has the potential to facilitate more public-private partnerships throughout the nation. The TIFIA program similarly provides federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects. The program is designed to leverage private co-investment by providing projects with supplemental or subordinate debt. TIFIA has 42 approved projects nationwide and provides assistance in the amount of $15.9 billion. Sutherland continues to closely monitor the state of P3s. Once H.R. 3080 is signed by the President and becomes law, the construction industry may see significant opportunities for P3 development in water and wastewater projects with state, county, city, and other municipal authorities.