September 2008, Vol. 20, No.9
Funding Wastewater Systems for Small Communities
Benjamin Shuman and Ken Heigel
Why does the federal government provide financial assistance to rural communities for the development of wastewater infrastructure? There are two reasons: to help meet development and economic needs, and to protect the environment. In both cases, these overlapping goals are intended to serve a variety of needs that center on community improvement, public health, and environmental protection.
The U.S. Department of Agriculture (USDA) has been assisting farmers and rural communities since the 1800s. In 1937, the U.S. Congress passed the Water Facilities Act, creating programs to provide farmers and associations loans to assist with drought conditions, but coverage was limited to 17 western states. In 1961, the Consolidated Rural Development and Farm Act was passed, expanding this program to rural communities in all states. In 1965, the program was expanded further to include wastewater projects and to allow grants.
Today, other federal programs also provide financial assistance to small communities for development of wastewater infrastructure. This list includes the Clean Water State Revolving Loan Program (U.S. Environmental Protection Agency), the Community Development Block Grant Program (U.S. Department of Housing and Urban Development), and the Economic Development Administration (U.S. Department of Commerce), as well as various regional development authorities and commissions. Each of these programs was created for a different purpose, and each comes with its own set of requirements established by Congress, the state legislatures, and the various agencies that administer the programs.
The Clean Water State Revolving Fund program and the Community Development Block Grants program work through state governments and may supplement other state programs, whereas the Economic Development Administration funds projects directly from the federal government to the community. The regional commissions, such as the Appalachian Regional Commission and the Delta Regional Authority, typically work through other agencies rather than providing funds directly to communities. The Water and Waste Program (www.usda.gov/rus/water) managed by USDA Rural Development Utilities Programs is unique in that it works only with rural communities.
The USDA program offers loans, grants, and loan guarantees, often in combination, to develop water and wastewater systems. The fiscal year 2008 program level is more than $1.5 billion, including more than $500 million in grant funding. These funds not only support the general loan and grant program but also are used to support several smaller targeted programs, including Alaskan native villages, colonias (border settlements) in the Southwest, and emergency water grants. Grant funds also are made available for the Circuit Rider Technical Assistance program, which is managed by the National Rural Water Association (NRWA; Duncan, Okla.).
A grant or loan application consists of various financial and technical documents, including a preliminary engineering report that provides analysis of alternatives and cost estimates, and an environmental report to meet the requirements of the National Environmental Policy Act and other environmental requirements. Applications are funded based on availability of funds, readiness of the application for funding approval, and a priority point-scoring system.
The technical documents and other application documents are prepared by a consulting engineer or sometimes with the aid of a technical assistance provider, such as the Rural Community Assistance Partnership (Washington, D.C.; RCAP). The selection of a consulting engineer should be completed in accordance with state laws and usually is done using the request for qualifications process, in which engineers submit statements of qualifications and selection is based on quality, with a price for services negotiated with the best-qualified firm.
Once funds are obligated, design and development of plans, specifications, and preparation of bidding documents can begin. The USDA Rural Development state engineer must concur with all final documents prior to advertisement for bids. The Rural Development state engineer is a member of the USDA federal work force and should not to be confused with the gubernatorial-appointed state water engineers in many western states. Because many small communities do not have much experience in development of wastewater facilities, USDA Rural Development and designated technical assistance providers, including RCAP and NRWA, are available to assist the communities throughout the project.
Rural Development’s role is to provide “supervised credit,” which means not only to provide financial assistance but also to provide oversight to see that tax dollars are spent appropriately during construction and once the project is complete to determine if the community is managing its new responsibilities well, and to find help for the community, if needed.
There is a great need for new and upgraded water systems in rural America, and demand currently exceeds available agency funding. In an effort to address this demand more effectively, Rural Development has developed strong partnerships with other agencies and private lenders. By leveraging Rural Development funding with other programs, Rural Development is able to ensure that more communities are served and that the mission of improving the quality of life in rural America is more effectively achieved.
In 41 states, groups of state and federal funding agencies meet regularly to discuss policy issues and even individual projects. Examples of these groups include the Small Communities Environmental Infrastructure Group in Ohio (SCEIG; www.sceig.org) and the Water, Wastewater, and Solid Waste Action Coordinating Team in Montana. Groups such as these ensure that the interests of small communities are being met through the coordinated efforts of the various agencies.
In addition to federal and state agencies, SCGEIG also includes members from technical service providers and educational institutions. The group’s subcommittees help small communities in meeting their environmental infrastructure needs.
SCEIG’s Finance Subcommittee invites communities to sit at the table with members from state and federal funding agencies to discuss all funding options available for their projects. Since the committee was formed in 1992, more than 250 projects have been presented to the committee. More than 100 of these projects have been located in an Appalachian county.
The Training Subcommittee has prepared training documents in the areas of asset, utility, and financial management. Courses for communities are being developed in the areas of planning, design, and construction. Communities attend both water system and wastewater treatment workshops to explore all the funding and technical assistance options available to them.
The Decentralized Subcommittee promotes decentralized wastewater alternatives and management options, and provides small communities with information and resources that will assist them in selecting the best treatment option.
The Appalachia Subcommittee focuses on enhanced communication between all funding and regulatory agencies for projects located in any of the 29 Appalachian counties in Ohio.
Thanks to both state and federal organizations, small communities have a multitude of resources to help fund and manage their wastewater infrastructure needs. As with any community-based project, strong leadership is the key. Community leaders planning for water system development, expansion, or upgrade should seek assistance from these agencies as early in the process as possible to maximize the opportunity for a successful project. Communities can check with local representatives of USDA and RCAP for regional opportunities, such as SCEIG.
Benjamin Shuman is senior environmental engineer at the U.S. Department of Agriculture Rural Development. Ken Heigel is chief engineer at the Ohio Water Development Authority.