Funding Options for Indiana Drinking Water Projects
Communities often want to upgrade their drinking water capacity but are limited by available finances. There are loan and grant options available, which allow for projects to be completed in a timely manner.
The funding agencies are aware of the challenges that small towns face. When grants are involved the agency focuses on the financial impact a project will have for a community. When a town chooses a loan option, agencies provide repayment terms that allow for a community to pay back the loan so that residents aren’t drastically impacted with their monthly utility bills.
The items below represent grant and loan options where Region 3-A can provide technical assistance to a community in getting a drinking water project funded.
OCRA
Wastewater/Drinking Water Program
The Indiana Office of Community and Rural Affairs offers funding for drinking water projects under their wastewater/drinking water program. The funds for this program come from the federal level under Housing and Urban Development (HUD). The funds come to the state as a community development block grant. The state through OCRA disburses the funds to projects that meet eligibility requirements. Communities must submit a grant application to OCRA for consideration. The grant applications are competitive. They typically have two rounds of funding per year. Below is OCRA’s matrix for determining the maximum grant amount available for a project. The local match requirement is at least 20% of the project cost.
Urgent Need
OCRA can fund projects under the urgent need designation.
There are two criteria that need to be met for OCRA to consider a project under this designation.
- The project must address an emergency situation
- The community must demonstrate that no other means of paying for the project exist and that OCRA funds are the only option.
Based on information presented at OCRA continuing education events they have stated this designation has only been used once in the last 40 years.
State Revolving Fund
The State Revolving Fund (SRF) Loan Programs provide low-interest loans to Indiana communities for projects that improve wastewater and drinking water infrastructure. The Program’s mission is to provide eligible entities with the lowest interest rates possible on the financing of such projects while protecting public health and the environment.
SRF also funds non-point source projects that are tied to a wastewater loan. Currently, SRF’s rates are in the low two-percent range.
USDA
Water and Waste Disposal Loan and Grant Program
- Loan term as long as 40 years
- Low interest rates
- Typically, a loan program, but some of the funds can be used as grant dollars to keep user costs reasonable
Emergency Community Water Assistance Grants
- Up to $500,000 available to construct water source, intake or treatment facility
- Up to $150,000 available to construct waterline extensions, or repair breaks or leaks
- No funds available currently
National Rural Water Association Rural Water Loan Fund
Eligible projects include planning costs, replacing equipment, system upgrades, and disaster recovery.
- Loan amount up $100,000 or 75% of the total project cost
- Interest rate of 3% and a 10-year term
- Emergency loans are 90-day no interest, and immediate turn around on applications
EPA – Water Infrastructure Finance and Innovation Act
Eligible projects include drinking water treatment and distribution, alternative water supply, water recycling projects, and enhanced energy efficiency at drinking water facilities.
- A single fixed interest rate is established at closing
- Interest rate is not impacted by the borrower’s credit or loan structure
- Customized repayment schedules
- Long repayment period
- Deferred payment – Up to five years
- Subordination
- Loans can be combined with various funding sources
- More Information