United States Office of Water EPA-816-R-00-023 Environmental Protection (4606) November 2000 Agency

The State Revolving Fund Financing America’s Drinking Water

DWSRF

—A Report of Progress Financing America’s

The Environmental Protection Agency’s (EPA) Drink- ing 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 “As a result of this program, low-interest loans totaling more we now provide safer than $2.3 billion for needed drinking water to over 2,000 drinking water infrastructure projects to meet public health and people. We would not have compliance objectives. gotten this far without the

: Seventy-five percent of all loans Drinking Water State have gone to small water systems. Revolving Fund.” : States have reserved $445 million for activities that support their —Stan Bullard drinking water programs, enhance Vice President of Camp Verde the management ability of water Arizona Water System which received a loan to address high systems, and protect sources of arsenic levels in its drinking drinking water. water source A New Era in Drinking Water Financing

roviding safe, clean drinking water to EPA distributes DWSRF funds to each of Pthe 254 million people served by the 50 states and Puerto Rico in the form of approximately 54,000 community water capitalization grants. To date,* EPA has systems in the United States is an important awarded more than $2.7 billion in DWSRF goal of federal, state, and local officials. grants for drinking water projects and state While our drinking water is among the and local activities. States use the grants to safest in the world, the owners and operators capitalize revolving loan funds from which of the nation’s public water systems know low-cost loans and other types of assistance that they must make significant infrastruc- are provided to eligible systems to finance ture improvements to continue supplying the costs of infrastructure projects. States safe drinking water to their customers. A must provide matching funds equal to at 1995 EPA survey of drinking water infra- least 20 percent of each grant. To date, state structure needs identified a 20 year need of matching funds have added more than $540 more than $138 billion. Approximately one- million to the program. Loan repayments quarter ($37.2 billion) of this total national made by assistance recipients return to the need is for small systems, which serve up to revolving 3,300 people. loan fund and provide Many public water systems, particularly a continuing small water systems, have difficulty obtain- source of ing affordable financing for infrastructure financing for improvements. Recognizing this fact, infrastruc- Congress established the Drinking Water ture projects. State Revolving Fund (DWSRF) program as part of the The 1996 SDWA Amendments also (SDWA) Amendments of 1996. Congress included new regulatory requirements and authorized $9.6 billion in new federal grants other provisions that emphasize comprehen- to help ensure that the nation’s drinking sive public health protection through water remains safe and affordable. The preventing drinking water contamination DWSRF program was modeled, in part, problems. To give states the financial after the Clean Water State Revolving Fund resources for this new emphasis, each state (CWSRF) program initiated in the late was given the flexibility to set aside up to 31 1980s under the . The percent of its DWSRF grant to fund CWSRF program has provided more than activities that support its drinking water $30 billion in assistance from $18 billion in program, enhance the managerial capabili- federal funds for projects addressing waste- ties of water systems, and protect sources of water treatment and non-point sources of drinking water. 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

tates have loaned more than $2.3 Eligible projects are those needed to main- Sbillion to eligible water systems for tain compliance with health-based standards projects ranging from the installation or or otherwise further the public health upgrade of treatment facilities to the protection goals of the SDWA, such as DWSRF Loans Made creation of new installation and replacement of failing water systems treatment and distribution systems. As needed to EPA’s survey of drinking water infrastruc- address public ture needs showed, there is a tremendous health con- need associated with drinking water projects cerns. Since throughout the country. In New York the first loan alone, more than 1,250 projects totaling was made to $4.6 billion have been identified by systems the Town of that have indicated an interest in receiving Williamsburg, funds. To ensure that the most critical Pennsylvania in infrastructure needs are met, each state has April 1997, developed a priority system for funding approximately projects. States must give priority to eligible 1,200 loans projects that: (1) address the most serious have been risks to human health, (2) are necessary to made. Seventy-five percent of these loans ensure compliance with the requirements of were made to small systems (40 percent of total assistance). More than one-third of Eligible the projects receiving loans have been Project Categories completed, and communities nationwide Treatment Projects to maintain compliance with regulations are enjoying the benefits of a safer, more for contaminants that cause acute and chronic affordable supply of drinking water as a health effects. result. Transmission and Distribution Installation or replacement of transmission and distribution mains. Eligible Systems and Source Projects Rehabilitation of wells or development of sources to replace contaminated sources. Publicly and privately owned community Storage water systems and nonprofit noncommu- Installation or improvement of eligible storage nity water systems can receive DWSRF facilities. funding. To focus on the needs of small Consolidation Consolidation of water supplies if a water supply systems, Congress required that states has become contaminated or if a system is provide a minimum of 15 percent of their unable to maintain technical, financial, or managerial capacity. funds to systems serving 10,000 people or Creation of New Systems less. Most states have far exceeded this Creation of new community water systems to replace contaminated sources or to consolidate minimum requirement. existing systems that have technical, financial, or managerial difficulties.

2 the SDWA, and (3) assist systems most in additional assistance to complete a project. need on a per household basis. States rank The DWSRF program provides states with the projects and then offer loans to those additional flexibility to address these with the highest priority. systems. A state may take Financing Tools Available an amount equal to 30 Through the DWSRF Flexible Financing Tools percent of its capitalization Low-interest loans between 0 percent and the Promote Results grant to provide additional market rate with a 20 year repayment period. A wide range of tools to fund infrastructure loan subsidies (e.g., Refinance or purchase local debt to reduce a projects are available to states through the principal forgiveness, community’s cost of borrowing.

DWSRF program. The most significant negative interest rate loans) Purchase insurance or guarantee local debt advantage of the DWSRF program is that it to communities which are to improve credit market access or reduce interest rates. allows states to offer loans to water systems classified as “disadvan- at below-market interest rates. The savings taged” based on Leverage program assets by issuing bonds to increase the amount of funds available for from lower interest rates can be significant affordability criteria projects. for a community. For example, a water developed by the state. A Provide disadvantaged assistance by taking system receiving a $5 million loan at a 2 state may also extend loan an amount equal to 30 percent of a capitaliza- tion grant for loan subsidies or extending the percent interest rate, as opposed to a 6 terms for these systems to repayment period to up to 30 years. percent interest rate, would save $2.5 up to 30 years. Another million over the course of its 20 year method for making loans more affordable is repayment period. to coordinate DWSRF funds with other sources of funding. Other federal financial Using program assets as security, a state can assistance programs (e.g., the U.S. Depart- also issue bonds to “leverage” its program. ment of Agriculture’s (USDA) Rural Over time, leveraging can generate a Development program and the U.S. significant amount of additional funding Housing and Urban Development’s (HUD) for projects. More than ten states are using Community Development Block Grant the assets of the program to leverage in their program) are available to assist water DWSRF programs so that they can meet systems in addressing drinking water the demand for financial assistance. For infrastructure needs. Many states also have example, leveraging has enabled New York their own assistance programs for drinking to make more than $460 million in loans water improvements. Public water systems while receiving only $200 million in federal benefit from state DWSRF programs that grants, and Kansas has made more than $82 have fostered cooperation with other million in loans using its $45 million in funding sources because they get an afford- grants. able funding package that covers the total project costs. The DWSRF program and Many systems serving disadvantaged other funding programs benefit because communities are not able to afford even the coordination allows their funds to go low-interest rate loans made available further. through the DWSRF program and require

3 Infrastructure Project Highlights

he DWSRF program is playing a Treatment Rule requires filtration of surface T significant role in providing assistance water sources to remove microbiological to public water systems to ensure compli- contaminants. Gold Beach, Oregon ance with the SDWA and address the most received a $500,000 DWSRF loan to build serious risks to human health. The projects a filtration plant to ensure that the surface presented here show how states are making water source for the town’s drinking water loans to help water systems meet the meets the requirements of the Surface Water challenge of providing safe and affordable Treatment Rule. The new filtration plant drinking water to all of their customers. also helped to ensure inactivation of Giardia which is common in coastal Oregon Funding Public Health and waterways. Concord, New York received a Compliance $47,713 DWSRF loan to replace a private A 1995 EPA survey of drinking water water system that was vulnerable to micro- infrastructure needs found that $12.1 bial contaminants due to aging private billion was needed to address current septic systems in the area. The project SDWA requirements. Approximately involved building a new storage tank, 84 percent of that need was for pumping station, and distribution mains to improved treatment for microbial ensure a safe and reliable water supply for contaminants regulated under the the town’s 100 residents. Surface Water Treatment Rule and the Total Coliform Rule. The remaining Nitrates needs were associated with nitrates, In some small rural communities, ground which can cause acute health effects in water is impacted by high nitrate levels as a children, and other contaminants result of agricultural practices or failing such as radionuclides that pose septic systems. High nitrate levels can cause chronic health risks. The following serious health problems, especially for projects show how the DWSRF infants whose ability to absorb oxygen can Scanning electron micrograph be inhibited by nitrate (i.e., blue baby of Giardia lamblia. Giardia and program is providing assistance to address other microbial contaminants these contaminants. syndrome). In Quartzite, Arizona, can cause severe illness. DWSRF assistance was combined with Microbial contaminants other sources of funding to address ground More than 167 million people receive water contaminated by failing septic drinking water from surface water sources systems. Quartzite’s water system was under such as rivers and lakes. Microbial contami- a Consent Order from the Arizona Depart- nants such as Giardia, Cryptosporidium, and ment of Environmental Quality for high Coliform bacteria that can be present in nitrate levels and was first on the state’s surface water must be removed to ensure priority list. The project, serving 2,000 public health protection. These contami- people, will complete an extension of the nants can lead to gastrointestinal illness and, town’s distribution service to 85 percent of in extreme cases, death. The Surface Water the community and consolidate more than

4 50 public water systems. Due to ongoing Several states have established programs for problems with high nitrate levels in the disadvantaged communities and many ground water, Spivey, Kansas received a others have expressed interest in doing so. $78,000 loan from the DWSRF program to extend pipelines and connect to a safe : With a median household income of public water system to serve its 99 residents. $19,712, the small coastal community of Winter Harbor, Maine qualified for Radionuclides disadvantaged assistance for much-needed Radionuclides are man-made or natural infrastructure improvements to its water elements that emit radiation. Radionuclides system. The community had created a can increase the risk of cancer depending on water district by purchasing its system from the radionuclide a person is exposed to a private owner. At the time of the pur- through drinking water consumption. In chase, the households served by the system Jackson, Nebraska, DWSRF assistance was were under a boil water order and the combined with other sources of funding to system was out of compliance with the address municipal wells with high radionu- Surface Water Treatment Rule, had a source clide levels (i.e., radium and alpha particles) of questionable quality, no filtration, and that were in violation of the Nebraska Safe inadequate disinfection. The water system’s Drinking Water Act. The project involved rates were $300 per household per year installing a new well and constructing a new which was substantially above the state’s treatment plant. With 75 percent grant goal rate of $276 per year (based on 1.4 assistance, Jackson was able to afford the percent of median household income). The project and provide safe drinking water to gap between the goal rate and the actual rate its 230 residents. qualified Winter Harbor for maximum disadvantaged assistance. DWSRF assis- Funding Disadvantaged tance was combined with assistance from Communities the Maine Rural Development Council to To help meet the unique needs of economi- fund the construction of a new well, a cally distressed communities, states have the pump station with treatment, a transmis- flexibility to establish disadvantaged sion line, and a storage tank. A $1.1 community programs as part of their million loan from the DWSRF program DWSRF programs. Through a disadvan- included principal forgiveness for 75 taged community program, a state may percent of the requested loan amount, with provide additional subsidies such as princi- the remaining loan amount at a 0 percent pal forgiveness or extend loan repayment interest rate. Financial assistance made it periods to up to 30 years. This additional possible for Winter Harbor to switch its assistance can make a substantial difference water supply from a non-potable surface in terms of improving system compliance, water source to a ground water source with getting needed projects underway, and adequate disinfection and storage while maintaining affordable water service. offering affordable rates to the community.

5 Funding Small Water : Before receiving a DWSRF loan, the low- Systems income community of Mendon, Vermont, Approximately 93 percent of community which is home to approximately 100 year water systems are small systems, many of round residents, received untreated surface which serve fewer than 3,300 people. water from a system that had been on a boil Almost one-half of these systems are water order since 1971. In 1988, EPA privately owned. Small systems have certain issued a final Administrative Order to the characteristics that make compliance with system requiring that corrective action be minimum standards difficult without taken. Mendon applied for and received a outside assistance. These characteristics loan that included disadvantaged assistance include very small staff, extremely limited to extend a water main from the nearby city financial resources, of Rutland to serve the community’s homes. and a small, The disadvantaged assistance resulted in a widely-distributed $180,000 subsidy to the community, with customer base. the remaining loan amount at a 0 percent These systems interest rate. The water main extension has often need finan- been completed and is fully operational. cial assistance to Operations at the privately owned system provide safe water serving Braddock Heights, Maryland were to their communi- revoked by the Public Service Commission, ties, but find it and the Maryland Department of the difficult to obtain Environment ordered Frederick County to favorable interest take over the aging system. The Frederick rates when County Water Authority received a $4.4 applying for loans million DWSRF loan to design and build a to make infra- new water treatment plant, storage tank, structure improve- and distribution system for the community ments. With its of about 350 homes. Comfrey, Minnesota, ability to offer population 433, was one of the first cities low-interest rate included on the state’s DWSRF priority list loans, the DWSRF for improvements to its water treatment program is an plant due to a copper exceedance problem. important source However, during the loan application of affordable process, the city was devastated by a series funding for small of tornadoes. All but 15 of the 250 homes With a DWSRF loan, an aging water system in Braddock Heights systems. were damaged, and most of the city’s was abandoned and replaced with a new system

6 infrastructure and municipal facilities were : In Jefferson County, Florida, initial destroyed. Covering costs to replace the interest in creating an area-wide drinking "This is a problem I damaged infrastructure through traditional water system grew out of a request from a have identified for bond methods would have been very small private utility for an expansion of its many years and have difficult since there was essentially no tax service area. Area residents in the rural base remaining in the wake of the storms. community served by private wells attended been trying to take As a result, the DWSRF program provided a series of meetings asking to be included in action to do some- $575,262 in funding ($375,025 of it in a new area-wide water system because over thing about ... (I) principal forgiveness) for the needed 400 samples from their wells tested positive drinking water infrastructure repairs. The for Coliform bacteria and the potential for credit (Ms.) Couver project was an important part of the city’s surface runoff contamination caused and other community efforts to rebuild the community and genuine concern for disease outbreaks. In volunteers with protect public health. addition, leaking underground storage tanks helping build support had contaminated area aquifers with Funding Consolidation to gasoline, and a chemical plant leak had for the new water Improve System Capacity contaminated an aquifer near one of the system by spreading Capacity development is an important part small communities. As a disadvantaged the word about con- of the DWSRF program’s focus on prevent- community, Jefferson County received a $6 tamination prob- ing contamination problems in drinking million financial assistance package which water. All systems receiving DWSRF included 85 percent in principal forgiveness lems." program assistance must demonstrate that from the DWSRF program and grant —Dan MacDonald they have the technical, financial, and assistance from the USDA Rural Develop- Jefferson County managerial capacity to ensure compliance ment program. The multi-community Health Depart- with the SDWA over the long-term. When water system will provide safe, reliable ment as quoted in the Tallahassee a public water system is unable to provide a drinking water to almost 900 families and Democrat safe and reliable supply of drinking water will consolidate over 30 small, unreliable due to any number of problems with systems into one reliable system operated by capacity, often the most economic and cost- a nonprofit cooperative at a monthly cost of effective solution is consolidation with about $25 per customer. Ottowa County, neighboring systems. Consolidation may Ohio received a $21.2 million loan to involve the construction of an entirely new consolidate seven public surface water system or the expansion of an existing treatment plants and more than 115 system. Many state DWSRF programs give privately owned ground water systems that bonus points in their priority systems to had significant problems with contamina- projects that will consolidate systems. tion. 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 State DWSRF Programs (Based on data through June 30, 2000)

8 9 Financing Set-aside Activities

ach state has the flexibility to set aside tance of preventative measures and have E up to 31 percent of its capitalization reserved a portion of their grants to conduct grant to conduct activities and establish and activities that support their drinking water implement programs that place a strong programs. To date, approximately 16.5 emphasis on preventing contamination percent ($445 million) of the total amount problems through source water protection of funds that have been provided to states and encourage better system operations through capitalization grants ($2.7 billion) through enhanced water system manage- has been allocated to set-aside activities. ment. There are four general set-aside categories—each of which carries a limit on States are using set-asides to directly fund the amount of the capitalization grant that state programs, including managing the can be used for activities eligible under that DWSRF. Approximately $55 million of the category. $106 million reserved for state program management activities is being used to Although the need to address infrastructure support public water system supervision projects through the revolving loan fund is (PWSS) programs which must prepare to great, all states have recognized the impor- implement new regulations addressing contaminants in drinking water. States are Set-aside Categories and Eligible Activities Maximum also using funds to develop and implement new state programs required by the 1996 Administration and Technical Assistance 4% SDWA Amendments. For example, each Administer the DWSRF program and provide technical assistance to public water systems. state is required to develop or revise pro- grams for the certification of drinking water Small System Technical Assistance 2% Provide technical assistance to small systems. system operators and to implement a

State Program Management 10%* capacity development program to ensure Administer the state PWSS program. that new and existing systems demonstrate Provide technical assistance through source water that they have the adequate technical, protection programs. financial, and managerial capacity to Develop and implement a capacity development strategy or an operator certification program. operate safely.

Local Assistance and Other State Programs 15%** Delineate and assess source water protection areas. The SDWA Amendments also require each Provide loans to systems to acquire land or state to assess potential sources of contami- conservation easements. nation at all public water systems within the Provide loans to systems to assist in voluntary, incentive-based source water protection measures. state. Approximately $115 million of the Make expenditures to establish and implement $193 million reserved for local assistance wellhead protection programs. activities is being used to delineate source Provide assistance to systems as part of a capacity development strategy. water protection areas for public water systems and assess potential sources of *States must provide a dollar-for-dollar match for expenditures made under this set-aside. **No more than 10% per activity per capitalization grant. contamination. States are also providing

10 direct assistance to systems to address source DWSRF Set-Asides water protection by, for example, imple- (in millions of $) menting 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 capac- ity. States have reserved $40 million for technical assistance activities that specifi- cally target systems serving 10,000 people or less.

State Program Management Set-Aside Local Assistance Set-Aside (in millions of $) (in millions of $)

11 Set-Aside Activity Highlights

he DWSRF program offers states the Implementing wellhead protection T flexibility to fund a wide range of programs activities using set-asides to help support Nearly 80 percent of community water their drinking water programs. Three areas systems use ground water for their primary in which states are focusing their efforts are: source of supply. Wellhead protection (1) addressing source water protection, (2) promotes pollution prevention and manage- facilitating partnerships, and (3) enhancing ment techniques to protect ground water the technical, financial, and managerial sources of drinking water. Ohio has capacity of public water systems. reserved more than $3.5 million to imple- ment its wellhead protection program Addressing Source Water (WHPP). The state is using funds to Protection delineate wellhead protection areas, assist In the past, water suppliers generally directed public water systems in conducting poten- their resources toward treating water from tial contaminant source inventories, com- rivers, lakes, and under- plete susceptibility analyses, disseminate Benefits of Source ground sources before assessment results, and promote implemen- Water Protection supplying it to the public as tation of protection activities as assessments

✔ Protects public health drinking water. However, are completed. Three of the other Great there is a growing recognition Lake states are also using funds to develop ✔ Offers common sense approach with an economic benefit that taking positive steps to and implement WHPPs. Michigan has manage potential sources of developed a program to ensure safe aban- ✔ Protects the environment contamination and prevent- donment of wells, Minnesota is funding ing pollutants from reaching staff to work with community and noncom- sources of drinking water munity systems on their WHPPs, and often can be more efficient Wisconsin is expanding education and and cost-effective than outreach efforts to encourage systems to treating drinking water later. participate in the WHPP.

Each state has developed a Acquiring land and conservation comprehensive Source Water easements Assessment Program to assess Some communities have found that an the source of every public effective way to protect the quality of water system within the state. These assess- drinking water sources is to own or control ments must identify the geographic areas land in upstream watershed or ground water that affect a drinking water system’s supply, recharge areas where development or other inventory potential contaminant sources land activities could impair the quality of within that area, and assess the susceptibility the drinking water source. Land acquisition of the water system to contamination. and conservation easements can protect a States, water suppliers, and communities can water supply by preventing pollution- then use the results of the assessments to generating activities in critical areas and can protect their sources of drinking water. provide other community benefits such as 12 preserving wildlife areas, enhancing recre- and building structures to protect the source ational opportunities, and reducing flood by diverting contaminated runoff. damage. In Maine, the Auburn Water District and Lewiston Water Department Facilitating Partnerships received a loan for $570,000 to purchase The provision of safe drinking water relies 434 acres of land in the watershed of the on the coordinated efforts of partners who “Basin,” a small pond which drains directly can aid and benefit from each other. into Lake Auburn, which serves as a source Partnerships allow states to for the two water systems. The systems conserve resources by working Benefits of Partnerships collaborated with the Lewiston-Auburn from an existing framework to ✔ Uses existing frameworks and Watershed Commission and the provide immediate assistance expertise Androscoggin Land Trust (ALT) and rather than spending time ✔ Leverages resources by combining negotiated a joint easement under which the developing new programs that funds with other agencies or organi- zations Commission will review the landowner’s may replicate other efforts forest management plan to ensure that best within the state. Furthermore, management practices for water quality are through the consolidation of used and ALT will share overall easement financial resources, partnerships monitoring responsibilities. By protecting increase the amount of assistance land around Lake Auburn, the water that states can provide to systems will be able to maintain water systems. quality standards. Partnering with colleges, universi- Implementing source water pro- ties, and extension services tection measures Continuing education is critical in ensuring Protecting source water by preventing that owners and operators of water systems contamination is in the best interest of are knowledgeable about the newest tech- water systems. California has reserved more nologies and regulations affecting the water than $8 million from its capitalization industry. Pennsylvania considers education grants to support loans to community water to be so important that it requires each systems for source water protection projects DWSRF borrower to submit a plan every that are directly related to protecting five years during the period of loan repay- vulnerable water sources from contamina- ment (generally 20 years) detailing the tion. Types of projects that may be funded system’s continuing education plans. Other include fencing cattle and other animals mid-Atlantic states (Delaware, Maryland, from sensitive areas, restricting public access Virginia, and West Virginia) also have to critical areas in protection areas, evaluat- established relationships with technical ing agricultural practices and educating on assistance providers at educational centers to best management practices, installing signs provide continuing education credits for at boundaries of zones or protection areas, system operators.

13 Partnering with existing technical fewer than 3,300 persons and 69 percent assistance providers were to privately owned systems. In many states, there are organizations that have been providing technical assistance to Partnering with other agencies small rural water systems and districts for and environmental groups years. State affiliates of the National Rural The activities that states must undertake to Water Association (NRWA) and Rural conduct source water assessments naturally Community Assistance Programs (RCAP) lend themselves to developing partnerships. offer a critical link in helping small utilities Some assessments require expertise that may provide safe drinking water to their custom- not be readily available within a state’s ers. New Jersey is working with the state’s drinking water program to determine the RWA and the state section of the American susceptibility of source water to contamina- Water Works Association to develop an tion in areas with complex geological outreach program to help systems determine conditions. Therefore, many states are the best method of treatment, explain the partnering with the U.S. Geological Survey DWSRF program, and help to provide assistance in completing the Benefits of Enhancing System Capacity systems apply for DWSRF required assessments. Because implement- funding. In addition, many ing protection measures often begins at the ✔ Promotes greater long-term states (North Dakota, Kansas, local level, educating the public about the compliance with safe drinking water standards and Vermont to name a few) are importance of drinking water protection is entering into contracts with critical. Pennsylvania has awarded grants to ✔ Helps systems provide reliable safe drinking water in a cost- their RWA and RCAP organiza- local environmental outreach groups to effective manner tions to target assistance to small develop and implement community educa- systems. An example of the type tion programs to promote source water of activity that states are con- protection. ducting in working with these providers is the funding of Enhancing Technical, circuit riders who travel between Financial, and Managerial water systems to provide techni- Capacity cal assistance to operators. In It is important to ensure that public water Georgia, three circuit riders were systems improve their technical abilities, funded through an ongoing contract with managerial skills, and financial resources so the state’s RWA to help systems improve that they can provide safe drinking water to their technical and managerial ability to the public consistently, reliably, and cost- comply with state and federal drinking effectively. By enhancing system operations water regulations. The circuit riders made and ensuring the capacity of public water more than 640 field visits to water systems systems, states can promote greater long- during state fiscal year 2000. Ninety-four term compliance with the SDWA. percent of the visits were to systems serving

14 Helping systems prepare for ity. Several states are developing strategies infrastructure improvements to reduce the number of small systems by Many state DWSRF programs have seen encouraging consolidation and small systems drop out of consideration for regionalization of water systems. Utah is loans because the systems have not done using set-aside funds to implement regional adequate planning to determine what type planning for small systems on a county- of project they need to undertake to im- wide basis. As part of the regional planning prove their infrastructure. Virginia offers process, recommendations are made to planning and design grants of up to small systems to regionalize operations or to $25,000 to rural, financially stressed consolidate with neighboring systems as community water systems serving up to appropriate. 3,300 persons. The grants can be used to fund the preparation of preliminary engi- Helping systems manage their neering plans and specifications or to money undertake similar technical assistance Many small systems lack the resources to projects. New Mexico has developed a maintain adequate financial accounting team approach using staff from the Envi- systems and develop comprehensive busi- ronment Department, Finance Authority, ness plans. Comprehensive business plans regional Environmental Finance Center, can be used to generate reliable information and engineering consultants to better about costs and other issues needed to make prepare small systems for projects. The state sound decisions about a water system’s is helping systems that are targeted for future. Virginia is using funds to help small assistance prepare preliminary engineering systems develop comprehensive business plans and specifications, conduct environ- plans. The state has contracted with the mental reviews, and undertake similar Southeast Rural Community Assistance technical assistance projects. The goal is Project, Inc. (SE/RCAP) to provide hands- that these funds will assist water system on assistance in developing business plans owners in preparing applications for for existing waterworks, first targeting the assistance from the DWSRF program and high-priority, vulnerable systems. 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 capac-

15 Four Years of Progress

he past four years have seen consider- Set-aside funds are being used to help states T able progress in getting the new develop and implement new programs DWSRF program up and running. States required by the 1996 SDWA Amendments. have done an impressive job in implement- States are using funds to complete source ing their DWSRF programs. Over a short water protection assessments of public water period of time they had to obtain legislative systems and are looking to provide assis- authority, develop priority systems for tance to help systems address potential ranking projects, and begin identifying sources of contamination. The technical projects for funding. Their efforts are assistance that states are providing is helping paying off, as demonstrated by the volume public water systems improve their techni- of loans that have been made and examples cal, financial, and managerial capacity and of high priority projects addressing public prepare them to receive DWSRF assistance health protection that have been funded. to make infrastructure improvements. While states have found that many small public water systems require significant Although the DWSRF program has con- amounts of assistance to get through the tributed to the efforts to provide safe loan application process, they have been drinking water, both states and public water able to provide more than 75 percent of systems will face challenges in the future. their loans to these systems. Public water The recognition that the quality of drinking systems are using DWSRF assistance to water can be impacted by contamination address much-needed projects that they from many different sources means that may have postponed in the past due to a states will have to work closely with other lack of affordable financing. governmental entities and private business

DWSRF Program At-A-Glance (through June 30, 2000)

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)

16 owners to ensure that measures are being Continued investment in the put into place to prevent contamination. DWSRF program will help states States will also need to commit additional and public water systems ensure resources to implement new regulatory that our drinking water is safe and requirements and to provide better outreach affordable. Because every child in to water systems and the public as they any community in America should work to ensure that all citizens have access be able to turn on the tap and enjoy to safe sources of drinking water. Public a glass of safe, clean drinking water. 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 infra- structure, shifting populations, and avail- ability 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.

17 Where to go for more information about the DWSRF program

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