Environmental Progress - Summer 1997

Low Interest Drinking Water Loan Program Shaping Up

New program is modeled on successful wastewater revolving loan program.

The Illinois EPA is currently putting the final touches on a new program that will make low interest loans available to public water supplies. Modeled after the highly successful Wastewater Revolving Loan program, which to date has made loans totaling $750 million to local governments for wastewater treatment improvements, the Public Water Supply Revolving Loan Fund program will provide low interest loans to publicly owned drinking water supplies to help them come into or maintain compliance with state and federal drinking water standards.

Like the wastewater program, the public water supply loan program will be 80% funded by a federal grant to the state. Recognizing both the essential importance of a safe drinking water supply and the costs of achieving it, Congress last August amended the Safe Drinking Water Act to create a program whereby states would be given capitalization grants to administer their own drinking water loan programs. On May 8, 1997, the Illinois General Assembly adopted SB 815, establishing the Illinois Public Water Supply Revolving Loan Program, to be administered by the Illinois EPA.

Administrative rules drafted by the Illinois EPA set out the details of the program including loan eligibility and application requirements; project requirements, including planning, contract award, actual construction and project completion; procedures the Agency will follow in administering the program and in establishing project funding priorities based on the relative significance of projects for protecting publice health and meeting Safe Drinking Water Act requirements.

The Agency anticipates development of its initial project priority list by mid-summer, award of federal capitalization funds by late September, and initial loan awards soon thereafter.

In the first year, the Public Water Supply Loan Program will have $40 million available for loans at approximately 3 percent interest. Senate Bill 815 requires that the public water supply loan program given priority to publicly owned water supplies that need to make capital improvements to protect human health and to achieve compliance with the state and federal primary drinking water standards. The Illinois EPA will identify these water supplies from its own compliance records and work with them through the loan program.

At this time, only publicly owner water supplies (municipalities, special districts, etc.) are eligible for loans. However, SB 815 requires that the.Illinois EPA undertake a study of the feasibility of providing loans to not-for-profit community water supplies and investor-owned utilities and report results to the General Assembly by June 30, 1998.