State Revolving Fund Loan Forgiveness

Your community may be eligible for grant funding towards water and wastewater improvement projects.

Clark Dietz recently learned about State Revolving Fund (SRF) principal forgiveness and other grant money initiatives coming to water and wastewater utilities from the Bipartisan Infrastructure Law (BIL) passed at the federal level last year. We would like to pass some of this information on to you so it could be useful if you are planning projects involving water, wastewater, or collection systems in the near future.

The Illinois EPA recently announced that the federal Bipartisan Infrastructure Law (BIL) would be providing additional money for wastewater projects. The key take-aways were:

• Additional Funding and Loan Forgiveness may be available to qualifying communities!
• Planning in advance is crucial to receiving these funds when you need them.
• Disadvantaged Communities could see up to a 49% loan forgiveness.
• The BIL money will add additional grant money to the system above the existing SRF money. There will be more principal forgiveness associated with this each year for the next 5 years (between $81M and $111M per year in grants). The guidance on how that additional money will be distributed has not yet been finalized.

Second, the grant funding is provided through the SRF process. The State Revolving Fund is primarily a loan program. The current interest rate is 1.11% with the small community rate 75% of that base rate. Principal forgiveness as described above. Obtaining an SRF loan is a lengthy process as described below.

Facility planning approval is the first step to be eligible for an SRF loan. Projects must be identified in a Facility Plan prepared in accordance with Illinois Administrative Code Title 35 Section 365.320. Once a community has an approved Facility Plan it is valid for 5 years and then can be resubmitted and amended as needed. Facility Plan Approval is needed no later than March 31 of a given year to make the IEPA’s intended funding list, which is issued on July 1. Then the project has to bid by the following April to receive funding in the current fiscal year.

Obtaining Facility Plan Approval is key to moving a project forward. We recommend submitting a Facility Plan no later than October – 9 months before the following year’s Intended Funding List is published to give the agency time to review and approve the plan. Delaying this step can set a project back by a full year.

The bottom line is that if your community is considering or planning a capital project in the next few years then there is likely significant principal forgiveness possible. However, to access that grant money will require an SRF loan, which needs to start with an approved Facility Plan.

Clark Dietz has significant experience in preparing Facility Plans for municipalities and sanitary districts. If you are interested in exploring how we can assist you in this process, let’s schedule a time to meet and have a discussion.