Vermont’s Clean Water State Revolving Fund (CWSRF) is a federal-state program that provides communities with a permanent and independent source of low-cost financing for a wide range of water quality infrastructure projects. This is the third in a series of VLCT News articles tracing the evolution of the CWSRF, an outcome of Act 185, which became law last May. In January, we wrote about how the program has expanded to include private entities. Last month, we wrote about the program’s new flexibility to fund a broad range of projects with clean water benefits. This month, we explore the Water Infrastructure Sponsorship Program, which can provide financial resources for natural resource projects sponsored by municipalities.
The Water Infrastructure Sponsorship Program, more familiarly known as WISPr, encourages pairing a municipal water pollution control project, such as a wastewater treatment facility upgrade or green stormwater infrastructure, with a natural resource project, such as a floodplain restoration or dam removal. Under WISPr, the same loan funds both the municipal project and the natural resource project. The cost of the natural resource project can be no more than 10 percent, or a 1:10 ratio of the cost of the sponsoring municipal project. A reduced administrative fee over the life of the loan will cover the total value of the sponsored natural resource project.
For example, a town could take out a $1 million loan for a pipe replacement project and sponsor a conservation easement for $100,000. The total cost of the projects would be $1.1 million. Instead of paying back a loan at 2 percent interest per year for 20 years, the municipality would pay it back at 1 percent over 20 years. In other words, the municipality would still spend a total of $1.1 million, but it would save $100,000 worth of administrative fees over the life of the loan. This means that the sponsored natural resource project is, in practical terms, “free.” A municipality’s annual debt service payment would be the same for a $1 million standard project (one without a sponsored natural resource project) as it would be for a $1.1 million WISPr project.
WISPr is designed to provide a funding source for restoration and conservation projects that otherwise wouldn’t be pursued because of the hefty price tag. The CWSRF has traditionally focused on funding wastewater treatment facilities which account for a relatively small percentage of pollution in our surface waters. The program is only available to municipalities and nonprofit organizations. The municipality provides the sponsorship funding mechanism and the municipality or nonprofit is responsible for the long-term control and maintenance of the natural resource project.
Act 185 is silent on whether there needs to be a geographic or watershed connection between the sponsoring municipal project and the natural resource project. Therefore, the natural resource project can be in different watersheds or parts of the state. The program leaves it up to the municipality to decide which natural resource projects to sponsor. The Vermont Department of Environmental Conservation maintains a “Match-ready List” (that is, natural resource projects ready for matching) as well a “Hopper List” (or natural resource projects still in the planning stage). As of this writing, these lists are a little spare, but as WISPr catches on, we expect that to change.
More on WISPr is posted at dec.vermont.gov/facilities-engineering/water-financing/cwsrf/WISPr. Questions? Please contact WISPr Project Lead Ashley Lucht at 802-585-4904 or firstname.lastname@example.org.