WIFIA Series - Article 3 of 4
The U.S. Environmental Protection Agency’s (EPA) Water Infrastructure Finance and Innovation Act (WIFIA) program is a preferred source of supplemental financing for borrowers who want to advance their water infrastructure projects while saving money. But in addition to low interest rates and long loan terms, project bundling is one of the many appealing features of the program. Borrowers can indeed finance single, large, stand-alone projects — but they can also bundle related projects together into a single request. Project bundling allows borrowers to finance a program of work that includes multiple projects sharing a common purpose and schedule. This strategy uses a single WIFIA loan agreement or an umbrella financing document, called a master agreement, to fund a combination of projects with separate WIFIA loans over a longer timeframe. Both forms of project bundling offer similar benefits to WIFIA borrowers and can offer significant advantages to a single agency or even a region working together towards watershed-scale solutions.
By combining multiple projects into a single WIFIA loan, borrowers can utilize WIFIA financing for small projects that, individually, would not meet the WIFIA program’s minimum project cost requirements—$5 million for small communities and $20 million for all other communities. This flexibility gives smaller borrowers with smaller projects access to the WIFIA financing. Bundling projects streamlines processes and saves borrowers time and money by only closing one loan, instead of separate loans for each individual project. Additionally, by locking in WIFIA financing all at once, project bundling offers borrowers funding certainty for critical water infrastructure projects. Borrowers that utilize this method of project bundling should choose projects that are secured by a common security pledge, serve a common purpose, and have similar timeframes for planning, design, and construction.
The WIFIA program also offers another form of project bundling called a “master agreement.” A master agreement is an umbrella contract between EPA and a borrower that provides an upfront commitment of loan proceeds and a common set of legal and financial terms under which a borrower can close multiple WIFIA loans over time. Master agreements are helpful for borrowers with several projects that are in different phases, have different schedules, or are in different stages of the environmental review process. Borrowers pursuing a master agreement submit one letter of interest and application, with project updates as new loans are requested in the future. The master agreement provides funding certainty for a series of future projects and can be particularly helpful when planning a large capital improvement program. By evaluating the credit and negotiating the legal framework upfront, the WIFIA program and the borrower can close each loan under a master agreement faster and for lower cost than multiple loans outside of a master agreement.
The project bundling and master agreement opportunities available through WIFIA financing have significantly benefitted borrowers in California, including the Upper Santa Ana River Watershed Infrastructure Financing Authority, which took this idea of bundling to a new regional level. The Authority was created by five Southern California water agencies to form the Watershed Connect program. This effort addresses drought, improves water reliability, and provides a sustainable water future for nearly 1 million people in the San Bernardino and Riverside Counties. The Authority received an umbrella master agreement from the WIFIA program, allowing members of the Authority to benefit from a common negotiated structure. Then, as members are ready to proceed with their Watershed Connect projects, they can receive individual WIFIA master agreements for their sets of projects. This innovative structure facilitates regional collaboration and streamlines the loan process for multiple entities simultaneously.
Watershed Connect Phase 1 Projects map identifying 17 projects being implemented by Yucaipa Valley Water District and 11 projects being implemented by San Bernardino Valley Municipal Water District as part of the Watershed Connect WIFIA program (courtesy of SBVMWD).
For example, the San Bernardino Valley Municipal Water District received a $70 million WIFIA loan under a $93 million WIFIA master agreement. With this first loan, the agency leveraged capital investments underway to serve as programmatic matching funds for a new WIFIA loan, used to build a second project. Together these two projects will expand existing stormwater capture basins and construct a new regional recycled water pipeline and recharge basins to maximize groundwater replenishment for the region. During this loan process, the San Bernardino Valley Municipal Water District used template loan and master agreement documents to streamline the loan process. Another member, the Yucaipa Valley Water District, is implementing seventeen projects through a separate loan agreement within Upper Santa Ana River Watershed Infrastructure Financing Authority umbrella program.
Construction of San Bernardino Valley Municipal Water District project (courtesy of SBVMWD).
ABOUT THE WIFIA PROGRAM
The WIFIA program is a government bank operated by the U.S. Environmental Protection Agency (EPA) that provides supplemental, flexible, low-cost credit assistance to public and private borrowers for various types of wastewater, drinking water, and stormwater projects. The WIFIA program offers long-term loans that can be combined with State Revolving Fund assistance, municipal bonds, and federal and state grants to help communities deliver more critical water infrastructure projects for a lower cost with less impact on rate payers.
Like a bank, the WIFIA program has funding available on an ongoing basis. This allows prospective borrowers to request financing on their schedule. When a prospective borrower is ready, they can submit a letter of interest to the WIFIA program to begin the financing process.
Contact the WIFIA team today to learn more about WIFIA financing and how to submit a letter of interest. Visit the WIFIA program website and contact WIFIA staff directly at wifia@epa.gov.
Jorianne Jernberg is the Director of the WIFIA Management Division. In this capacity, she is spearheading the implementation of a Federal infrastructure bank at EPA – overseeing the origination, underwriting, negotiation, and monitoring of water, wastewater, and stormwater projects around the country. Prior to joining EPA, Jorianne served as the head of risk management and financial operations at the TIFIA program within the Department of Transportation where she was responsible for a team conducting a wide range of financial, programmatic, and credit functions.
Heather Dyer, M.S., M.B.A. is the Chief Executive Officer/General Manager at the San Bernardino Valley Municipal Water District. As the CEO, she launched a transformation of the regional water agency focusing on developing a culture of empowerment, innovation, and maximum impact in the region. Prior to becoming CEO in 2019, Ms. Dyer worked as the agency’s in-house endangered species biologist, with an expertise in fisheries and river ecosystems. In the first three years as leader, she has completed the District’s first ever Strategic Plan, rebranded the nearly 70 year old organization, spearheaded regional cooperative efforts to build over $400 million of local water infrastructure, and is nearing completion of the Upper Santa Ana River Habitat Conservation Plan (HCP), a regional environmental program that will protect 22 native species of the Santa Ana River. Her priorities at the agency continue to be long-term water supply reliability by optimizing both local (Southern California) and Statewide water projects on behalf of future generations.
Ms. Dyer holds a B.S. in Resource Biology and M.S. in Marine Biology. Ms. Dyer earned an Executive MBA at the Peter Drucker School of Management, Claremont Graduate University in May 2019 and continues trailblazing new paths for her agency, the Santa Ana River watershed, and the State of California.
