State Awards $1.3 Billion in Loans and Grants to Fund Wastewater and Drinking Water Projects
BOSTON — The Baker-Polito Administration announced that 183 projects across the Commonwealth are eligible to receive approximately $1.3 billion in low-interest-rate loans and grants to fund construction, planning and asset management projects designed to improve water quality, upgrade or replace aging drinking water and wastewater infrastructure and cut treatment plant energy use and costs.
These offerings include nearly $189 million in additional funding that Massachusetts expects to receive from federal Bipartisan Infrastructure Law (BIL) and $100 million from American Rescue Plan Act (ARPA) funds this year.
"Wastewater and drinking water facilities play a crucial role in protecting our environment and the public health, and this financing supports the efforts of our cities and towns to make upgrades and modernize this vital water infrastructure," said Governor Charlie Baker. "The Baker-Polito Administration has made it a priority to invest in our critical infrastructure, including proposed two rounds of ARPA funding, to fund important projects. These projects will increase the availability of safe, clean, and reliable water resources across the Commonwealth for many years to come."
The State Revolving Fund (SRF) financing is administered by the Massachusetts Clean Water Trust and funds projects implemented by cities and towns, regional water supply and wastewater treatment districts, and the Massachusetts Water Resources Authority (MWRA). The projects include 88 clean water projects (see Table 1) totaling approximately $963 million and 61 drinking water projects (see Table 1) totaling approximately $363 million. An additional $3.7 million will be offered by the Trust as grants for 34 Asset Management Planning projects. Communities offered SRF financing in this round must decide to move forward with the project by June 30, 2022, and secure local funding authority.
"Our communities deserve wastewater and drinking water infrastructure that fully serves their needs, protects their residents from harm, and preserves our natural resources," said Lieutenant Governor Karyn Polito. "Additionally, this State Revolving Fund financing will help stimulate local economies by building new treatment facilities and replacing outdated waterlines."
In accordance with the Clean Energy Results Program under the direction of MassDEP, 17 of the water infrastructure projects receiving financing are for renewable energy, energy efficiency or green infrastructure initiatives. Energy use at wastewater and drinking water treatment facilities is a major contributor to overall energy consumption for many cities and towns, with communities statewide spending approximately $150 million per year on electricity to treat 662 billion gallons of wastewater and drinking water. About 30 percent of municipal energy use derives from water treatment.
"I am proud to announce, in collaboration with the Baker-Polito Administration, this important investment in water infrastructure for our cities and towns. These projects are critical to the health and wellbeing of everyone here in Massachusetts," said State Treasurer Deborah B. Goldberg, Chair of the Clean Water Trust. "This increase in federal grant funding plus low interest rate loans through the Trust allows communities to finance cost-effective water infrastructure projects."
This year, 90 of the new projects are eligible to receive principal forgiveness. Principal forgiveness is awarded to renewable energy projects and for projects in communities that meet the affordability criteria established by the Clean Water Trust. The affordability criteria factors in per capita income, unemployment rate, and population trends.
The Commonwealth has also offered to reduce the SRF borrowing rate from 2 percent to 1.5 percent for communities that support the Housing Choice Initiative. Twenty-eight applicants have the Housing Choice designation: Acton, Amherst, Andover, Barnstable, Belchertown, Billerica, Boston, Brockton, Burlington, Fall River, Franklin, Framingham, Haverhill, Lawrence, Littleton, Lowell, Lynn, Medfield, Medway, Nantucket, Northampton, Orleans, Quincy, Plymouth, Swampscott, Taunton, Tewksbury and Tyngsborough.
The SRF is composed of two programs that have provided more than $8 billion to Massachusetts projects: the Clean Water Fund, first capitalized in 1989; and the Drinking Water Fund, which began operation in 1999. More information on the two SRF programs can be found here.
This year, the Clean Water SRF provides $963 million in financing for clean water projects across the Commonwealth. Approximately $898 million will finance 67 new construction projects, $41 million will be allocated towards financing four previously approved multi-year projects, $3 million has been allocated to the emergency set-aside account, $5 million will be directed to the Community Septic Management Program to remediate failed septic systems in participating communities, and $15 million will finance 17 proposed planning projects.
This year, the Drinking Water SRF provides $363 million in financing for drinking water projects across the Commonwealth. Approximately $319 million will finance 43 new construction projects, approximately $29 million will be allocated towards financing six previously approved multi-year projects, $5 million will fund an emergency set-aside account, and nearly $10 million is allocated for financing 12 planning projects.
An additional $3.7 million will be offered by the Trust as grants for 34 Asset Management Planning projects, with 27 communities qualifying with Clean Water projects and seven communities qualifying with Drinking Water projects.
Massachusetts awards subsidized infrastructure financing under the SRF, which is administered by the Trust – a joint effort of MassDEP, the Executive Office of Administration and Finance and the State Treasurer's Office.
To be eligible for Clean Water or Drinking Water SRF loans, municipalities, wastewater districts and water suppliers filed applications with MassDEP last year demonstrating that proposed projects offer significant public health or water quality benefits, have local funding authorization, and demonstrate that there is a commitment on the borrower's part to file a timely loan application. The projects on the 2022 SRF list must now file loan applications and receive MassDEP approval to obtain funding.
The next SRF project solicitation for proposals to be considered for the 2023 intended use plan will open by MassDEP no later than July 1, 2022.