POU Funding

The 1996 SDWA Amendments include a number of provisions specifically intended to help minimize the impact that new regulations will have on small systems. The EPA Administrator has testified before Congress that EPA will make the exemptions and POU provisions as useful as possible to allow water systems all the flexibility provided by the SDWA.

The estimated compliance costs per system are considerably lower for small systems than for large systems. However, the burden on small system households will be significantly higher because the costs must be absorbed by a much smaller customer base. EPA estimates that the average annual household water bill for systems out of compliance may increase by $32 per year, but that the cost will be substantially higher (ranging from $58-$327) for systems serving fewer than 3,300 people.

There are currently a number of financial assistance programs that are available to small drinking water systems working to comply with the arsenic rule. Many state departments of commerce have infrastructure grant and loan programs. The drinking water primacy agency in each state can also help small water utilities identify state funding opportunities.

Some of these programs include:

• EPA Drinking Water State Revolving Fund (DWSRF) The DWSRF was established to provide financial assistance to CWSs, Non-profit non-community water systems, Publicly-owned water systems; and Privately-owned water systems. Additionally:
  
  • The DWSRF has received federal appropriations averaging $880 million per year for fiscal year 1997 to fiscal year 2002.
    
  • Provides capitalization grants and loans to states for implementation of these drinking water projects.
    
  • Many small systems have already been inquiring about and benefiting from the funding from DWSRF
    
  • Loans made under the program can have interest rates between 0% and the prevailing market rate and repayment terms of up to 20 years. Repayments should provide a continuing source of infrastructure financing into the future.
    
  • For more information, see http://www.epa.gov/safewater/dwsrf.htm l, or call the Safe Drinking Water Hotline at 1-800-426-4791.

• United States Department of Agriculture Rural Utilities Service (RUS) grant and loan program which provides loans and grants for drinking water projects, totaling on average $750 million annually. Assistance from the RUS program is targeted for small systems serving fewer than 10,000 people. Additionally:
  
  
  • Funds may be used to construct, repair, modify, expand, or improve water supply and distribution systems
    
  • Pay costs such as legal and engineering fees when necessary to develop the facilities.
    
  • Loans must be paid back within 40 years or before the end of the useful life of the financed facilities, whichever is earlier.
  • USDA uses three interest rates. They are set periodically based on an index of current market yields for municipal obligations. These rates are 4.5% for poverty interest rate, Intermediate interest rate of 4.875% and standard market rate of 5.25% based upon regional percentages of median household income and Statewide Non metropolitan median household income.
    
  • For more information, see the RUS Web page at http://www.usda.gov/rus/water .

• Additional Federal programs such as the Housing and Urban Development's (HUD's) Community Development Block Grants (CDBGs)
  
• Market-oriented solutions such as CoBank, which specializes in cooperative, agribusiness, rural utility, and Farm Credit association financing.

References: EPA http://www.epa.gov/safewater/ars/presentations/train3-implementation.pdf