AWWA and WEF propose new funding mechanism for water infrastructure projects

I have blogged previously about the funding challenges facing water utilities and the myriad ways that water utilities are using to fund critical water projects, for example, projects to reduce combined sewer overflows resulting from EPA consent decrees.

The American Water Works Association (AWWA) and the Water Environment Federation (WEF) have proposed the creation of a Water Infrastructure Finance Innovations Authority (WIFIA), whose purpose would be to lower the cost of infrastructure investments by increasing access to low-cost capital.   WIFIA would be modeled on the Transportation Infrastructure Finance and Innovations Authority (TIFIA). AWWA/WEF argue that WIFIA could lower the cost of capital for water utilities while having negligible effect on the federal budget.  WIFIA would offer low interest loans and guarantees for large water infrastructure projects and those with national or regional importance.

Since water utilities providers are among the most fiscally responsible borrowers in the United States, with a tiny default rate of  0.04 percent, AWWA/WEF argue that WIFIA involves minimal risks and minimal long-term costs to the federal government.