Funding Nonpoint Source
Activities with the
Clean Water
State Revolving Fund
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Clean Water
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Clean Water State Revolving Fund (CWSRF) programs have funded over $40 billion of low-
interest loans through 2003—averaging $4.1 billion over the past five years—for water quality
protection projects including wastewater treatment, nonpoint source pollution control, and
watershed and estuary management.
CWSRF programs now provide assistance to over 600 projects each year to control pollution
from nonpoint sources and to protect our nation's estuaries. CWSRF projects address agricul-
tural runoff, leaking on-site septic systems, and urban nonpoint source pollution including
stormwater runoff and brownfield contamination. These expanding funding areas total more
than $1.7 billion to date.
CWSRF loans can have interest rates as low as zero percent and repayment periods up to 20
years. States have designed funding mechanisms to decrease rates and broaden eligibility for
nonpoint source projects. Over 14,000 low-interest loans have been made to communities,
nonprofit organizations, businesses, farmers, homeowners, and watershed groups. Repayment
options can include:
• Utility user fees
• Stormwater management fees
• Dedicated portion of local, county, or state taxes or fees
• Recreational or license fees
• Membership dues paid to nonprofit groups
• Fees paid by developers
• Business revenues
• Fees paid by homeowners
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CWSRF Nonpoint Source Funding / 3
What Is the CWSRF?
Through the Clean Water State Revolving Fund
(CWSRF) program, each state and Puerto Rico
maintain revolving loan funds to provide inde-
pendent, permanent sources of low-cost
financing for a wide range of water quality
infrastructure projects. The federal govern-
ment provides funds to establish or capitalize
the CWSRF programs with twenty percent state
matching funds. After more than a decade of
operation and over $40 billion in funded proj-
ects, the CWSRF program is viewed as one of
the nation's most successful environmental
infrastructure funding programs.
Much of the funding provided by the CWSRF
program has been used to build needed
wastewater treatment and collection facili-
ties. Recognizing that nonpoint source pol-
lution is a serious threat to water quality,
state CWSRF administrators have begun to
address these areas. Loans to control pollu-
tion from nonpoint sources and to protect
our nation's estuaries have increased to fund
more than $900 million in projects over the
past five years.
CWSRF-A Revolving Fund
Capitalization
Federal
Capitalization Provides
Initial Funding
CWSRF Profides
Low-Interest
Loans
Communities, Individuals,
Businesses, Nonprofits
This brochure answers the most frequently
asked questions about the CWSRF program's
ability to fund nonpoint source and estuary
protection projects. Examples from across the
country demonstrate the program's potential
for funding an array of water quality activities.
CWSRF and
Nonpoint Source Pollution
Many states are successfully using the CWSRF
loan program to fund important nonpoint
source pollution mitigation projects. The
CWSRF program provides very attractive low-
interest loans that spread project costs over a
repayment period of up to twenty years.
Repayments are cycled back into the fund and
used to pay for additional clean water proj-
ects. CWSRF programs are currently funding
projects that address agriculture runoff, leak-
ing on-site septic systems, and urban non-
point source pollution, including stormwater
runoff and brownfield contamination. Funding
of nonpoint source and estuary efforts now
reaches more than 600 projects annually.
With CWSRF as a valuable tool, state and
local governments, local watershed and agri-
cultural organizations,
and many others are
working to devise solu-
tions that address non-
point source pollution.
Each state controls its
own CWSRF program and
can determine project eli-
gibility requirements and
set interest rates.
Innovative partnership
models have made many
more nonpoint source
projects possible.
States Match
Federal Capitalization
Grants (20%)
Repayments to
CWSRF Become
Available for New Loans
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4 / CWSRF Nonpoint Source Funding
What Is Nonpoint
Source Pollution?
Nonpoint source (NFS) pollu-
tion, unlike pollution from
industrial facilities and sewage
treatment plants, flows into
our waterways from many dif-
fuse sources. NFS pollution
occurs when rainfall or
snowmelt creates runoff that
carries natural and human-
made pollutants into lakes,
rivers, wetlands, coastal
waters, and even our under-
ground sources of drinking
water. NFS pollutants include:
• Fertilizers, herbicides, and
insecticides from agricultural \9° •&*
lands and residential areas
• Oil, grease, detergents, and other chemi-
cals from city streets and gas stations
• Sediment from construction sites, crop and
forest lands, and eroding streambanks
CWSRF Assistance for
Nonpoint Source and Estuary Projects
800
700
600
500
400
300
200
100
I Millions of Dollars
| Number of Agreements
I
• Salt from irrigation practices and acid
drainage from abandoned mines
• Bacteria and nutrients from livestock and
pet wastes and from faulty septic systems
• Toxic chemical deposition from power
plants and waste incinerators
Why Fund Nonpoint Source Projects?
Nonpoint source pollution is one of the most
serious threats to our nation's water quality.
State and local governments, local watershed
and agricultural organizations, and many
others are working to devise solutions that
address nonpoint source pollution, but their
efforts are frequently underfunded. CWSRF
helps alleviate the financial hurdles facing
nonpoint source projects.
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CWSRF Nonpoint Source Funding / 5
What are the Advantages
of CWSRF Loans?
Significant Source of Financing
Since 1988, CWSRF programs have funded
over $40 billion in water quality projects,
including $4.7 billion in 2003. Nonpoint
source projects have historically comprised
close to four percent of the total CWSRF funds
available in a given year. Spending for non-
point source projects has steadily increased,
growing by $1.5 billion since 1995. In 2002,
CWSRF funding for NFS improvements peaked
at $240 million. Many of these projects
would not have found other financial support.
Flexibility to the States
The Clean Water Act gives states the opportu-
nity to implement a variety of assistance
options in their CWSRF programs, including
direct loans, refinancing, purchasing, or guar-
anteeing local debt and purchasing bond
insurance. State administrators can set loan
terms, interest rates—from zero percent to
market rate—and repayment periods up to
twenty years. States have the flexibility to
target CWSRF resources to their particular
water quality needs, including contaminated
runoff from urban and agricultural areas, wet-
lands restoration, groundwater protection,
brownfields remediation, estuary management,
and wastewater collection and treatment.
States may also customize loan terms to meet
the needs of small and disadvantaged commu-
nities. In 2003, 65 percent of all loans (20
percent of funding) were made to communi-
ties with populations less than 10,000. In
addition, some states offer lower interest
rates or greater subsidies for disadvantaged or
financially strapped communities.
Favorable Borrowing Terms
CWSRF programs offer attractive, low inter-
est rates to borrowers that may be as low as
zero percent. Many states reduce rates for
nonpoint source projects. Repayment of a
CWSRF loan begins within one year of proj-
ect completion. The repayment term may be
as long as twenty years.
In 2003, the CWSRF interest rate averaged
2.2 percent. A low-interest CWSRF loan can
be viewed as being equivalent to a partial
grant. For example, when the market rate is
5.0%, a 2.0% CWSRF loan for a $1 million
project is equivalent to a $240,000 grant
plus a $760,000 market rate loan. The
grant amount represents the interest savings
due to the lower rate.
Administrative Ease
CWSRF recipients will obtain assistance
when applying for loans and throughout
project implementation, ensuring a smooth
process even for first-time borrowers.
Environmental Results
Limited funding sources often stall important
water quality projects. By creatively apply-
ing CWSRF funding, many more environmen-
tally beneficial projects can be undertaken.
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6 / CWSRF Nonpoint Source Funding
Which Projects are
Eligible for CWSRF Funds?
A broad array of nonpoint source projects
can receive CWSRF funds. To be eligible, a
project must help implement the state's
2003 Nonpoint Source CWSRF Loans
Nonpoint Source Management Plan (319
Plan) under the Clean Water Act or be con-
sistent with actions and priorities contained
in a National Estuary Program Comprehensive
Conservation Management Plan (CCMP).
On-site/ Decentralized
Sewage Treatment (219)
Agricultural Cropland (211)
Silviculture (1)
Hydromodification (20)
Ground Water (Unknown Source) (13)
Urban (13)
Sanitary Landfills (16)
Brownfields (1)
Storage Tanks (7)
Agricultural Animals (155)
MASSACHUSETTS SEPTIC PROGRAM-
COMMUNITY PASS-THROUGH LOANS TO HOMEOWNERS
The Massachusetts Community Septic Management Program has made loans through local
municipalities to fund repair and replacement of failing septic systems since 1995. The pro-
gram has funded more than 3,000 projects across the state with the cooperation of local
municipalities and the CWSRF.
Participating communities can borrow hundreds of thousands of dollars from the CWSRF pro-
gram, but must first develop a septic management plan and an administrative structure for
the loan program. Septic management plans identify and prioritize areas with septic systems
that require monitoring, maintaining, and upgrading. Massachusetts provides grants of up to
$20,000 to municipalities to support planning activities and program administration.
Qualifying communities receive loans from the CWSRF program for twenty years at zero per-
cent interest. They typically borrow $200,000. Homeowners receive twenty-year loans
from communities at two to five percent interest. Municipalities can use interest accrued on
the loans to support the administrative costs of the loan programs. After dispersing CWSRF
loan proceeds, a community has one year to begin repayment.
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CWSRF Nonpoint Source Funding / 7
NEW YORK AIRPORT RUNOFF MANAGEMENT PROJECT
Stormwater runoff and deicing runoff from the Albany airport discharged into local water bodies
and threatened drinking water sources for nearby towns. The New York State Environmental
Facilities Corporation (NYSEFC) imposed a maximum allowable glycol—the chemical used to deice
planes—level of 1 mg/L and used their CWSRF to finance the Deicing Runoff Improvement Project.
During the winter, a new collection system pumps deicing runoff to tanks. Then a high concentra-
tion anaerobic waste treatment system reduces pollutant concentration to 0.3mg/L (and produces
close to four times the energy that the system consumes). A portion of the treated runoff is recy-
cled into the airfield irrigation system for the summer months. The Albany County Airport
Authority pays a lower treatment fee for the remainder, which flows to the county treatment plant.
Project costs totaled $8.7 million. The New York CWSRF program was able to fund $3 million
of the project interest free for twenty years because the anaerobic treatment component was
selected as an Innovative Technology Demonstration Project by NYSEFC. A second CWSRF
twenty-year, low interest loan funded $5.4 million more of the project. To repay the loans, the
airport authority issued revenue bonds to NYSEFC.
Each state determines which nonpoint source
projects receive funding through its CWSRF
program. Contact your state CWSRF adminis-
trator for eligibility requirements. To date,
36 states have funded nonpoint source pollu-
tion mitigation with CWSRF funds. Projects
funded fall into the following categories:
• Decentralized treatment or septic system
rehabilitation or replacement
• Stormwater best management practices (BMPs)
• Agriculture and Forestry BMPs
• Conservation easement purchases or land
acquisition for riparian protection
• Wetland protection and construction
• Underground storage tank remediation
and removal
• Monitoring, capping, and on-site treatment
at brownfield sites and sanitary landfills
• Remediation of mining sites
Decentralized Treatment or Septic
System Rehabilitation or Replacement
In 2003, about a third of CWSRF nonpoint
source funding supported decentralized
treatment or septic system projects. Twenty-
one states are using CWSRF funds to replace
or rehabilitate faulty tanks, or to connect
septic users to a municipal or decentralized
sewer system.
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8 / CWSRF Nonpoint Source Funding
Stormwater Best Management
Practices (BMPs)
Seventeen states use the CWSRF for stormwa-
ter BMP projects. Funded projects include
treatment options and pollution prevention
strategies. Street sweepers remove sediment
and chemical residues for treatment, while
vegetative plantings stabilize soils and
increase infiltration of precipitation.
Sediment traps and basins, often combined
with catch basin vacuum vehicles, contain
and treat runoff much like a natural wetland.
CWSRF funds support built stormwater man-
agement methods not covered in a phase I or
II stormwater permit. Wetland construction,
including flood guards around existing wet-
land areas, can also receive funding.
Wetland acquisition and restoration funding
is also available in several states.
Agriculture and Forestry BMPs
Fifteen states use the CWSRF for agriculture
or forestry BMPs. Projects focus on livestock
waste management, erosion control, and
chemical use reduction. CWSRF programs
often share management responsibilities
with the Natural Resource Conservation
Service or local soil and water conservation
districts. Farm buildings, equipment, or in
some cases water rights can be used as
collateral.
Minnesota's Agricultural Best Management
Practices Loan Program, with 4,500 pollution
reduction project loans totaling $51 million
since 1994, illustrates eligibility and partner-
ship structure. Almost every county is a
pass-through partner in the AgBMP program.
Local Comprehensive Water Plans guide a
funding process that has successfully paired a
simple application process with a three per-
cent interest rate. Manure basins and spread-
ers are eligible, as are water diversions to
avoid feedlots. Conservation tillage equipment
leaves crop residues covering 15 to 30 per-
cent of the ground after seeding to prevent
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CWSRF Nonpoint Source Funding / 9
ARKANSAS AGRICULTURE WATER QUALITY LOAN PARTNERSHIP
The Arkansas Soil and Water Conservation Commission (ASWCC) has employed the Arkansas
Revolving Loan Fund primarily to mitigate point source pollution. In an effort to address non-
point source pollution, the state focused on the Beaver Reservoir and Illinois River watersheds,
two of the top three on the state priority list. Northwest Arkansas covers more than two million
acres, contains more than 7,000 farms, and is one of the fastest growing metropolitan areas in
the U.S. ASWCC determined that approximately 80 percent of the pollutant loading originated
from nonpoint sources.
Aiming for rapid implementation of an NPS program, ASWCC looked to state and local organiza-
tions that already had relationships with local landowners. A partnership with the Natural
Resources Conservation Service emerged. NRCS works with local conservation districts to help
landowners develop conservation plans and implement Best Management Practices (BMPs).
NRCS also administers the Environmental Quality Incentives Program (EQIP), a grant program
that helps farmers implement BMPs. Conservation districts were receiving numerous applica-
tions for a limited amount of EQIP funding. The Arkansas Revolving Loan Fund provided funding
to cover the demand.
Arkansas signed agreements with seven banks in the four-county area. These banks have made
over $500,000 in loans to local farmers to implement BMPs such as stacking sheds, fencing,
compost sheds, and trenching.
WISCONSIN MAKES CWSRF LOANS TO BROWNFIELDS
The Wisconsin legislature allocated twenty million dollars of its CWSRF funds to municipal proj-
ects that address water quality impacts of brownfield sites. Using CWSRF loans with interest
rates that are 55 percent of the municipal bond market rate, Wisconsin has funded two brown-
field cleanup projects for $1.9 million.
One successful project was the City of Plymouth landfill closure. Plymouth used this site for
the disposal of construction debris, commercial waste, and industrial waste from 1955 through
1990. A $1.3 million CWSRF loan supported investigation and remediation of the site. The
city capped and covered the landfill and installed groundwater monitoring equipment. The
twenty-year loan has a zero percent interest rate.
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107 CWSRF Nonpoint Source Funding
soil loss. Sediment control basins, terraces,
diversions, buffer and filter strips, rip-rap-
ping, cattle exclusions, windbreaks, and gully
repair stabilize stream banks. Other qualify-
ing projects may include well sealing, chemi-
cal and petroleum storage containment struc-
tures, chemical spray equipment, irrigation
systems, and education programs.
Brownfields and LIST Remediation
Many states are considering the use of
CWSRF loans to fund brownfield remediation
and underground storage tank (UST)
removal. Brownfield projects eligible for the
CWSRF include site assessments, UST removal
and disposal, contaminated soil or sediment
removal and disposal, capping wells or soil,
remediation of stormwater runoff (including
wetland construction), and monitoring
groundwater and surface water for contami-
nants. Although real estate and construc-
tion firms are often reluctant to pay for
brownfield remediation, tax revenues from
site redevelopment may indirectly fund loan
repayments.
Land Acquisition and
Conservation Easements
CWSRF programs in several states support
purchase of land or conservation easements
to preserve riparian ecosystems and to pro-
tect waterways from nonpoint source pollu-
tion. Runoff from farms and from residential
and commercial development carries warm
water, sediment, organic matter, bacteria,
and chemical residues into waterbodies.
Without riparian habitat to buffer these pol-
lutants, water quality can quickly degrade.
Conservation easements are deed restrictions
that can limit development or clearing of
part or all of a property. CWSRF programs
make loans to municipalities, parks authori-
ties, or land trusts to purchase easements
on riparian lands or wetlands. A water utili-
ty may also buy development rights as part
of a source water protection (SWP) program
for public water supply. These loan recipi-
ents work with landowners to establish
clear, enforceable restrictions and a moni-
toring procedure. Property owners are com-
pensated for their land rights and receive
property and estate tax breaks because they
have reduced the commercial value of their
land. The same parties can also borrow
CWSRF monies to fund direct purchase of
wetlands, riparian corridors, or groundwater
recharge lands. Land acquisition is simple
when compared to deed restrictions, but
easements allow conservation of additional
riparian habitat because they can effectively
protect waterways while preserving existing
land uses.
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CWSRF Nonpoint Source Funding 711
CALIFORNIA LAND ACQUISITION WITH THE CWSRF
California has used over $112 million of the state's CWSRF funds, combined with grant funding,
to acquire over 29,000 acres of land for protection of sensitive species and preservation of
unique habitats.
Residential housing development in many areas of California has raised water quality concerns
among citizens and local planners. Grading and conversion of natural vegetation to impervious
soils increases sediment and polluted runoff to already stressed streams and rivers. CWSRF
land acquisitions have addressed nonpoint source pollution by precluding urban/suburban
development, protecting and enhancing estuary resources, and protecting and restoring unique
habitats for endangered and other listed species.
The Nature Conservancy and other nonprofit environmental groups in California have played a
vital role in securing CWSRF funding for land acquisition and have provided repayment sources
for the loans. Groups such as TNC and the Audubon Society dedicate a portion of their mem-
bership fees to loan repayment. Some groups have also conducted community fundraising
drives and dedicated grant money for loan repayment. CWSRF has funded eight key land acqui-
sition projects in California:
• Howard Ranch Acquisition, Sacramento County - 13,000 acres, $8 million of $14.3 million
• Bahia Acquisition, Marin County, CA - 654 acres, $800,000 of $5.3 million
• Ramona Grasslands, San Diego County - 8,000 acres, $15 million
• Lakeside Land County Parcel, San Diego County - 4.1 acres, $1.2 million
• East Elliot Acquisition, San Diego City - 2,120 acres, $46.2 million
• Napa River/Napa Creek Flood Protection & Estuary Restoration Project - 720 acres,
$34 million of $200 million
• Sacramento Prairie Valley Vernal Pool - 2,500 acres, $1.5 million
• Cuyamaca Watershed Protection Project, San Diego County - 2,117 acres, $5.3 million
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127 CWSRF Nonpoint Source Funding
Acid Mine Drainage Treatment
and Runoff Control
As groundwater and surface runoff flows
through mines and tailings piles, it reacts
with minerals to form sulfuric acid, which
then leaches toxic metals into local streams,
lakes, and aquifers. Over 9,000 miles of U.S.
streams are polluted by acid mine drainage
(AMD). More than 1.1 million acres of aban-
doned coal mine lands and hundreds of hard
rock mining sites have left dangerous
embankments, retaining walls, and surface
impoundments. Mining companies have
often gone out of business, leaving no
responsible party to manage toxic, highly
acidic waste ponds. In some locations,
streams run through old mines, exacerbating
the problem. EPA, USGS, and other federal
agencies are working with West Virginia and
Pennsylvania to develop an interstate abate-
ment approach. Pennsylvania is the first
state to fund AMD cleanup projects with its
CWSRF program.
PREVENTING ACID MINE DRAINAGE OVERFLOW IN PENNSYLVANIA
The abandoned Shannonpin Mine Pool in Greene County, Pennsylvania contains billions of gal-
lons of highly acidic mine wastewater. Each year it comes closer to overflowing into Dunkard
Creek, a major tributary of the Monongahela River, and causing serious environmental damage.
The threat to drinking water supplies, swimming, boating, and fishing has led to a state consent
decree with Dana Mining, Inc. and the loan recipient, AMD Reclamation, Inc.
The Pennsylvania Infrastructure Investment Authority (PENNVEST) has stepped in with a $4.3
million dollar CWSRF loan to build a five million gallon per day acid mine drainage treatment
facility and an 11,000-foot outfall sewer. Combined with $2.8 million in grant funding from the
Departments of Environmental Protection and Community and Economic Development, the
money will allow dewatering and treatment of the acidic mine water. In low-income Dunkard
Township, this also results in 30 jobs preserved and 50 jobs created by Dana Mining and 20-30
construction jobs and a few permanent new jobs by AMD Reclamation, Inc. The $7.1 million in
financing will result in an initial $6 million investment in renewed mining operations by Dana.
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CWSRF Nonpoint Source Funding 713
How Does the CWSRF
Borrowing Process Work?
Communities make up a large portion of the
CWSRF borrowers, but nonprofit organiza-
tions, businesses, farmers, homeowners, and
watershed groups are eligible in many states.
Those interested should contact their state
CWSRF program to determine whether fund-
ing is available for a potential project. (See
contact information starting on page 18.)
Prospective borrowers may find specialized
programs (e.g., linked-deposit loans) in
place to make CWSRF funding more accessible.
In states that provide direct lending for NFS
pollution control and estuary protection
projects, borrowers will follow a process sim-
ilar to that used by municipalities for larger
wastewater system projects. States often
provide hands-on technical support to small
borrowers to make the application process
more user friendly.
CWSRF programs follow an annual funding
cycle. Each year interested parties with new
projects submit basic project information to
the CWSRF for inclusion in the state's annual
Intended Use Plan. Selected projects then
submit application materials to the state.
Approved funding is immediately available
to pay for costs as the project proceeds.
Loan repayment begins within one year of
project completion.
Which Repayment Sources are
Used for Nonpoint Source Loans?
The loan repayment source may reflect the
type of project undertaken (stormwater fees
for stormwater projects) or may be a non-
specific source such as local property tax
revenues. Repayment options have included:
• Wastewater system user charges
• Stormwater management fees
• Dedicated portion of local, county, or
state taxes or fees
• Recreational or license fees
• Membership dues paid to nonprofit groups
• Fees paid by developers
• Business revenues
• Fees paid by homeowners
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147 CWSRF Nonpoint Source Funding
OHIO'S WATER RESOURCE RESTORATION SPONSOR PROGRAM
Ohio established the Water Resource Restoration Sponsor Program (WRRSP) in 2000, as a
component of its CWSRF, the Ohio Water Pollution Control Loan Fund (WPCLF). State adminis-
trators realized that for WRRSP to be an effective tool for water quality improvements, it had to
address nonpoint sources of impairment in addition to providing loans to improve municipal
wastewater treatment systems.
The major recipients of WPCLF financing are municipal wastewater treatment systems. If Ohio
EPA could induce these borrowers to increase the size of their loans to fund habitat restoration
and protection, it would harness their revenue to improve not only municipal wastewater treat-
ment facilities, but also to address NPS water pollution in Ohio.
The key to establishing the WRRSP was to structure combination loans such that the municipal
wastewater treatment system would see no increase in cost from the sponsorship. Using its
authority to lower interest rates from the market rate to zero percent, Ohio EPA was able to
restructure the original wastewater treatment improvement loan so that the loan recipient,
though sponsoring an additional project to address water resource habitat issues, actually saves
money on what it would have cost to repay the original loan for the wastewater facilities alone.
Example: $1 million for a wastewater treatment project and $393,442 for a restoration project
1. If this community did not participate in the WRRSP program, the $ 1,000,000 wastewater
treatment project would receive a 3.8% loan. The total loan repayment amount would be
$1,436,707 over the course of the repayment term.
2. If the community undertakes both projects,
$1,000,000 for the wastewater treatment
project and $393,442 for the restoration proj-
ect, the CWSRF could reduce the interest rate
to 0.3% so the community would suffer no
hardship and still repay only $ 1,436,707 over
the course of the loan repayment term.
3. However, the CWSRF provides additional incen-
tive by reducing the community's interest rate
from 0.3% to 0.2%.
4. The community completes a wastewater treat-
ment project, supports a watershed restoration
project, and saves $14,514.
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CWSRF Nonpoint Source Funding 715
What Lending Options
are Available?
States use a variety of lending methods to
reach different potential borrowers. Direct
lending is just one of the options. Many
states use conduit lending (loans passed
through state agencies, municipalities, or
local banks) to reach more borrowers. These
lending methods are often called pass-
through or linked deposit lending.
Pass-Through Lending
In a pass-through loan, a CWSRF program
makes a loan to another government agency
or to a municipality that then passes the
money to private borrowers as loans for non-
point source pollution projects. The town,
county, or state agency reviews the project
and the finances of each borrower.
Pass-through loan programs benefit CWSRF
programs, pass-through partners (towns,
counties, and state agencies), and borrow-
ers. CWSRF programs can place risk and
management responsibilities with local pro-
gram partners who identify and fund high
priority projects. Towns, counties, and state
agencies receive funding for their nonpoint
source priorities. Borrowers gain from lower
interest rates. In addition, local govern-
ment agencies may have greater flexibility to
provide loans to applicants with relatively
weak credit if the borrower's nonpoint
source project is a high priority for the state
or local government agency.
Linked Deposit Lending
In a linked deposit loan approach, a state
works with local private lending institutions
to fund nonpoint source pollution control.
The state agrees to accept a reduced rate of
return on an investment (e.g., a certificate
of deposit) and the lending institution
agrees to provide a loan to a borrower at a
similarly reduced interest rate. For example,
if the typical earnings rate for a certificate
of deposit (CD) is five percent, a state
might agree to purchase a CD that earns two
percent interest, and in exchange, the lend-
ing institution agrees to provide a loan to a
borrower at an interest rate that is three
percentage points lower than the market
rate for the borrower. In this program, the
CWSRF investment (deposit) is linked to a
low-interest loan, thereby earning the
description "linked deposit loan."
Linked deposit loan programs provide bene-
fits for CWSRF programs, local financial
institutions, and borrowers. CWSRF pro-
grams can support high priority nonpoint
source projects and place risk and manage-
ment responsibilities with local lenders.
Financial institutions earn profits from the
linked deposit agreements and offer an
additional service for their customers.
Borrowers save money with low-interest
loans and can comfortably work with their
local bank or credit union.
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167 CWSRF Nonpoint Source Funding
OHIO CWSRF LINKED DEPOSIT LOANS - OVER 300 PROJECTS SINCE 1993
Ohio has used a linked-deposit loan program since 1993 to fund projects that support county
watershed management plans. This program has funded more than 300 projects, including the
repair of onsite wastewater treatment systems and the implementation of best management
practices for agriculture, forestry, stormwater, and land development. Each county's program is
developed with two concurrent steps: the county soil and water conservation district develops a
watershed management plan, and the CWSRF program and local financial institutions enter into
agreements describing requirements and procedures for linked deposit loans.
Watershed management plans identify and prioritize pollution sources, suggest mitigation
actions, identify funding sources, and establish an implementation schedule for water quality
improvements. Ohio EPA and public review lead to approval of the county soil and water dis-
trict's plan. The CWSRF program and the soil and water conservation district then sign a mem-
orandum of understanding that describes how these two entities will coordinate their implemen-
tation of the management plan. As development and review of a watershed management plan
proceeds, soil and conservation districts identify local banks that would like to participate in a
linked deposit program.
Any borrower with a project that helps to
implement the watershed management plan
is eligible for a linked deposit loan.
Participating banks review borrowers' credit
using their own credit standards. If a bank
approves a linked deposit loan, the CWSRF
program purchases a CD of equal value
from the bank. The CWSRF program
accepts a CD interest rate that is five per-
centage points lower than the rate of a U.S.
Treasury Note or Bond with the same term.
The bank reduces the borrower's loan inter-
est rate by five percentage points. The
bank makes semiannual payments of princi-
pal and interest to repay the CWSRF for its
investment in the CD, even if the borrower
defaults on the linked deposit loan.
Linked Deposit Approach
State SRF Program
SRF Deposit
(CD)
CD Interest
Earnings
Low-Interest
Loan
Repayment
SRF Eligible Project
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CWSRF Nonpoint Source Funding 717
What Kinds of Projects Have
Been Funded in My State?
To date, 36 states have funded nonpoint
source projects with CWSRF loans. Several
more states will fund projects in the near
future. Project types undertaken in each of
these states are listed on the following
pages, along with state contacts for more
information.
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187 CWSRF Nonpoint Source Funding
State Agency Contact Phone Number
Alaska Department of Environmental Conservation 907-465-5010
www.state.ak.us/local/akpages/ENV.CONSERV/waterhome.htm
Types of Projects: Landfill capping and closure • New landfills and leachate treatment facilities
• Monitoring existing landfills
ARIZONA
Arizona Water Infrastructure Finance Authority 602-364-1310
www.wifa.state.az.us/main.html
Types of Projects: Elimination of septic systems (extension of sewer lines)
ARKANSAS
Arkansas Development Finance Authority 501-682-5925
www.state.ar.us/adfa/programs/wwrl.html
Types of Projects: Agriculture BMPs (Linked deposit) • Land acquisition for source water protection
CALIFORNIA
State Water Resources Control Board 916-341-5250
www.swrcb.ca.gov/funding/index.html
Types of Projects: Reduction of Ag subsurface drainage - conversion to sprinkler/gated pipe irrigation
(Conservation district leases equipment to farmers) • Wetland enhancement/stormwater management
• Construction of stormwater retention/detention facilities and stormwater quality control basins •
Removal of polluted sediment from river by suction dredge • Subsurface drainage recycling project aimed
at transfering high-salt subsurface water to a storage facility and mixing these waters with fresh water
to recycle for irrigation • Demonstration & education project for sustainable vineyard • Concrete lining
for irrigation canals • Dairy farm BMPs • Silviculture BMPs (linked deposit) • Protection of rare vernal
pool habitat • Stormwater BMPs for homeowners (Tahoe linked deposit) • Septic tank rehabilitation &
replacement (linked deposit) • Purchase of land for floodplain management
COLORADO
Colorado Water Resources and Power Development Authority 303-830-1550
www.cwrpda.com
Types of Projects: Stormwater and sediment management
DELAWARE
Delaware Department of Natural Resources & Environmental Control 302-739-4860
www.dnrec.state.de.us/water2000/sections/fab/FABloans.htm
Types of Projects: Poultry Ag BMPs • Dairy BMPs • Septic tank rehabilitation & replacement • Removal
of leaking LIST, remediation of contaminated sites and groundwater, and installation of leak detection
systems on new tanks
Florida Department of Environmental Protection 850-245-8358
www.dep.state.fl.us/water/wff/cwsrf/
Types of Projects: Stormwater management • Agricultural BMPs
Georgia Environmental Facilities Authority 404-656-3824
www.ganet.org/gefa/state_revolving.html
Types of Projects: Stormwater management
Hawaii Department of Health 808-586-4294
www.state.hi.us/doh/eh/wwb/index.html#Construction
Types of Projects: Stormwater management • Septic system upgrades
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CWSRF Nonpoint Source Funding 719
State Agency Contact Phone Number
Idaho Department of Environmental Quality 208-373-0400
www.deq.state.id. us/water/waterl.htm#loan_program
Types of Projects: Animal and agriculture BMPs (Sub-revolving fund through the Soil Conservation
Commission) • Study of septic alternatives
Iowa Department of Natural Resources 515-281-5918
www.state.ia. us/government/dnr/organiza/epd/wastewtr/srloan. htm
Types of Projects: Septic system rehabilitation and replacement (linked deposit)
Maine Department of Environmental Protection 207-287-3901
www.state.me.us/dep/blwq/grants.htm
Types of Projects: Failed septic system replacement • Landfill capping and closure • Nutrient
management program for manure storage facilities
MARYLAND
Maryland Water Quality Financing Administration 410-631-3119
www.mde.state.md.us/wqfa/index.html
Types of Projects: Landfill capping and closure • Leachate treatment facilities at new landfills •
Stormwater BMPs including pond restoration (Linked deposit) • Septic tank rehabilitation & replacement
(Linked deposit) • LIST remediation (Linked deposit) • Ag BMPs (Linked deposit) • Shoreline and stream
bank restoration • Land acquisition for sourcewater protection
MASSACHUSETTS
Massachusetts Department of Environmental Protection 617-292-5500
www.state.ma.us/dep/brp/mf/srf.htm
Types of Projects: Septic tank repair and replacement (local Govt. pass-through) • Landfill capping and
closure • Stormwater management • Land acquisition for riparian protection
MINNESOTA
Minnesota Pollution Control Agency 651-296-6300
www.pca.state.mn.us/water/revolvingfund.html
Types of Projects: Animal Ag waste management (local govt. pass-through) • Conservation tillage equip-
ment (local govt. pass-though) • Structural erosion control projects (local govt. pass-though) • Septic
system rehabilitation & replacement (local govt. pass-through) • Abandoned well sealing (local govt.
pass-though) • Street sweepers, catch basin vacuum vehicles, sediment traps and basins
MISSOURI
Missouri Department of Natural Resources 573-751-3443
www.dnr.state.mo. us/finandalopp/water_quality.htm
Types of Projects: Animal waste management (state govt. pass-though) • Septic system removal
Montana Department of Environmental Quality 406-444-5324
www.deq.state.mt.us/ppa/nonpoint/NonpointSourceProgram.asp
Types of Projects: Cropland BMPs (state govt. pass-though) • Stormwater management • Landfill closure
NEBRASKA
Nebraska Department of Environmental Quality 402-471-2186
www.deq.state.ne. us/WasteWat.nsf/Pages/CA#Secl
Types of Projects: Remediation of leaking UST (state govt. pass-though) • Silt basin for Omaha
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20 / CWSRF Nonpoint Source Funding
State Agency Contact Phone Number
Nevada Division of Environmental Protection 775-687-4670
http://ndep.state.nv.us/bwpc/srlf01.htm
Types of Projects: Purchased water rights to augment river flows to restore water quality and preserve
and protect endangered species • Septic elimination
NEW HAMPSHIRE
New Hampshire Department of Environmental Services 603-271-3503
www.des.sta te.nh.us/wwe/srf.htm
Types of Projects: Landfill capping and closure
NEW JERSEY
New Jersey Department of Environmental Protection 609-984-0058
www.state.nj.us/dep/grantandloanprograms/er_eifp.htm
Types of Projects: Stormwater management including salt storage facilities • Stream bank stabilization
and restoration • Equipment: street sweepers, outfall netting, and aquatic weed harvesters • Landfill
closures • Brownfield remediation • Land acquisition
NEW MEXICO
New Mexico Environment Department 505-827-2855
www.nmenv.sta te.nm.us/cpb/cwsrf.html
Types of Projects: Decentralized wastewater treatment • Stormwater management • Brownfield
remediation (Pending)
NEW YORK
New York State Environmental Facilities Corporation 518-402-6924
www.nysefc.org/srf/SRFhome.htm
Types of Projects: Landfill capping, closure, and monitoring • New landfill and leachate facilities
• Land acquisition to protect water quality • Brownfield remediation • Stormwater
management
NORTH DAKOTA
North Dakota Department of Health 701-328-5211
www.health. state, nd.us/ndhd/environ/mf/index. htm
Types of Projects: Landfill capping and closure • New landfills and leachate treatment facilities •
Agricultural BMPs (Irrigation)
Ohio Environmental Protection Agency 614-644-2832
www.epa.state.oh.us/defa/wpclf2.html
Types of Projects: Animal/Cropland Ag BMPs (linked deposit) • Development of BMPs • Brownfield reme-
diation • Remediation of leaking LIST • Landfill capping and closure • New landfills and leachate treat-
ment facilities
Oregon Department of Environmental Quality 503-229-6412
www.deq.state.or. us/wq/wqgrant/wqgrant.htm
Types of Projects: Stormwater management • Septic system repair & replacement (local govt. pass-through) •
Wetland restoration
PENNSYLVANIA
Pennsylvania Infrastructure Investment Authority (PENNVEST) 717-783-6798
www.pennvest.state.pa.us/pennvest/cwp/browse.asp?A=4
Types of Projects: Septic system rehabilitation & replacement • Acid mine drainage treatment and
Stormwater management • New collection systems • Forest & land acquisition (Pending)
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CWSRF Nonpoint Source Funding 721
State Agency Contact Phone Number
RHODE ISLAND
Rhode Island Clean Water Finance Agency 401-453-4430
www.ricwf.state.ri.us/programs.html
Types of Projects: Stormwater management • Land acquisition • Landfill capping and closure • New
landfills and leachate treatment facilities • Septic rehabilitation and replacement (state govt. pass-
through)
SOUTH DAKOTA
South Dakota Department of Environment & Natural Resources 605-773-4216
www.state.sd.us/denr/DFTA/WWFunding/wwfprg.htm
Types of Projects: Landfill capping and closure • New landfills and leachate treatment facilities
Texas Water Development Board 512-463-7779
www.twdb.state.tx.us/assistance/assistance_main.htm
Types of Projects: Stormwater BMPs • Constructed wetlands for wastewater mgmt. • Septic system reha-
bilitation and replacement • New collection systems
Utah Department of Environmental Quality 801-538-6146
www.deq.state.ut.us/EQWQ/Con_Asst/Con_asst.htm
Types of Projects: Animal Ag BMPs • Failing septic system replacement (Pending) • Stormwater BMPs
VIRGINIA
Virginia Resources Authority 804-644-3100
www.vra.state.va.us/project/wastewater.html
Types of Projects: Septic system rehabilitation & replacement (local govt. pass-through) •
Animal/Cropland Ag BMPs (w/ Farm Credit) • Land purchases and conservation easements • Brownfields
(Pending)
WASHINGTON
Washington Department of Ecology 360-407-6566
www.ecy.wa.gov/programs/wq/funding/index.html
Types of Projects: Septic system repair & replacement (local govt. pass-through) • Stormwater BMPs
Dairy Ag BMPs (local and state govt. pass-though) • Wetland restoration and protection • Riparian corri-
dor revegetation
WEST VIRGINIA
West Virginia Department of Environmental Protection 304-558-0637
www.dep. state. wv.us/item.cfm?ssid=ll&sslid=220
Types of Projects: Poultry Ag BMPs (Linked deposit) • Septic tank rehabilitation & replacement
WISCONSIN
Wisconsin Department of Natural Resources 608-266-2621
www.dnr.state.wi.us/org/caer/cfa/EL/elindex.html
Types of Projects: Brownfield remediation • Landfill capping and closure
WYOMING
Wyoming Department of Environmental Quality 307-777-7075
http://deq.state.wy.us/wqd/revolvingfunds.asp
Types of Projects: Remediation of leaking UST • Stormwater BMPs • New landfill water quality compo-
nents • Failing Septic system replacement (local govt. pass-though)
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Clean Water
Sir Ivin^f't
For more information about the Clean Water State Revolving Fund, please contact:
Clean Water State Revolving Fund Branch
U.S. Environmental Protection Agency
1201 Constitution Avenue, NW (Mailcode 4204M)
Washington, DC 20004
Phone: (202) 564-0752 Fax: (202) 501-2403
Internet: www.epa.gov/owm/cwfinance/cwsrf
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