On May 22, 2023 the United States Army Corps of Engineers (USACE) reached a very important milestone for financing non-Federal dam infrastructure; the final implementation rule was published in the Federal Register. This achievement allows USACE to begin to formally seek applicants to deploy the estimated $7.5 billion loan capacity, which will support approximately $15 billion in critical dam safety projects across the United States.
In the coming weeks, USACE will be publishing a Notice of Funding Availability (NOFA) in the Federal Register to solicit preliminary applications from prospective borrowers. This competitive solicitation will be open for 90 days and is a no-cost opportunity for non-Federal project sponsors to request financing from USACE to support safety projects to maintain, upgrade, and repair non-Federal dams.
The Corps Water Infrastructure Financing Program (CWIFP) will facilitate local investments in projects that enhance community resilience to floods, promote economic prosperity, and improve environmental quality.
CORPS WATER INFRASTRUCTURE FINANCING PROGRAM ELIGIBILITY
Broadly, projects to maintain, upgrade, and repair dams identified in the National Inventory of Dams owned by non-Federal entities are eligible. This can include state-of-good-repair work, dam removals, and upgrades which improve the overall condition of dam or reduce safety risks on downstream dams.
Projects must also be deemed creditworthy, technically sound, economically justified, environmentally acceptable, cost $20 million or more (project sponsors may bundle smaller projects together to reach $20 million minimum), comply with relevant federal laws and regulations, and receive public sponsorship if undertaken by a private entity.
CWIFP can fund loans up to 80% of projects costs for most borrowers. However, for projects that do not serve economically disadvantaged communities in some way, CWIFP loans are limited to 49% of project costs.
- Local, state, and Tribal government entities
- Partnerships and joint ventures
- Corporations and trusts
- State revolving fund programs
- Multiple entities may apply under a single application with a common security pledge
- Development-phase activities
- Construction, reconstruction, rehab, and replacement activities
- Acquisition of property used to mitigate environmental impacts of eligible projects
- Financing costs during construction
BENEFITS TO BORROWERS
CWIFP offers benefits to its borrowers that other traditional financing sources often cannot. The program provides below-market interest rates as well as flexible repayment schedules that enable municipal, regional, and state-level borrowers to save on interest payments, spreading the repayment of initial investment costs across the useful life of the asset.
CWIFP financing benefits:
- Low interest rates: Rates are equal to U.S. Treasury rates and are not impacted by borrower credit or loan structure.
- No interest rate risk: Rates are locked at the time of loan closing and fixed for the life of the loan.
- No negative arbitrage: Interest accrues only once funds have been disbursed. CWIFP disbursements reimburse costs and directly match the borrower’s use of funds.
- Customized repayment schedules: Repayment schedules can be structured to match anticipated cash flows over the life of the loan.
- Long repayment periods: Repayment periods of up to 35 years after completion of construction.
- Deferred payments: Payments can be deferred through the construction period up to 5 years after completion of the project.
- No prepayment penalty: Loans can be prepaid at any time without penalty.
These benefits can potentially save prospective borrowers more than 20% over other financing options.
UNDERSTANDING THE APPLICATION PROCESS
The Notice of Funding Availability for CWIFP, which is expected to be published on June 23, 2023, will announce the timeframe for the 90-day preliminary application period. Preliminary applications are at no cost to the applicant.
To provide more information about the preliminary application process, USACE will be offering webinars to interested Tribal Governments on June 14, and then to all interested parties on June 15, June 29, and July 20. Information on how to register for these webinars will be emailed to interested parties soon. If you are not able to attend, the program website is also great resources to stay up to date on program.
Email CWIFP at CWIFP@usace.army.mil if you wish to be added to the email list, inquire about the program, or to set up a call to discuss your project’s applicability.