Drinking Water State Revolving Fund

The 1996 amendments to the Safe Drinking Water Act (SDWA) established the Drinking Water State Revolving Fund (DWSRF). It is a financial assistance program with the intent of helping water systems and states achieve the objectives of the SDWA.

Congress appropriates funding for the DWSRF, then the U.S. Environmental Protection Agency (EPA) awards grants to each state (all 50 states plus Puerto Rico) based on the most recent Drinking Water Infrastructure Needs Survey and Assessment . Each state contributes an additional 20% match to the federal grants.

How does the DWSRF work?

The 51 DWSRF programs provide low interest loans to eligible public water systems (PWS) for drinking water infrastructure projects. As money is paid back, the state makes new loans to other recipients. The fund “revolves” as repayments of loan principal and interest earnings are made.

What's the Process for Issuing DWSRF Loans?

In Kentucky, drinking water infrastructure project profiles are submitted by PWSs to their local Area Development District. From there, a prioritized list is submitted to the State during the annual Call for Projects (usually open between October and December). The Division of Water (DOW) and the Kentucky Infrastructure Authority (KIA) work together through an interagency agreement to review and provide DWSRF loans for eligible projects. Once the DOW has ranked the projects into a Project Priority List based on the Priority System Guidance Document, KIA will release the Intended Use Plan/Project Priority List around May of each year with the list of funded projects.

DWSRF Eligible Projects

Treatment

Projects to install or upgrade facilities to improve drinking water quality to comply with SDWA regulations

Transmission and distribution

Rehabilitation, replacement, or installation of pipes to improve water pressure to safe levels or to prevent contamination caused by leaky or broken pipes

Source

Rehabilitation of wells or development of eligible sources to replace contaminated sources

Storage

Installation or upgrade of finished water storage tanks to prevent microbiological contamination from entering the distribution system

Consolidation

Interconnecting two or more water systems

Creation of new systems

Construct a new system to serve homes with contaminated individual wells
Consolidate existing systems into a new regional water system

Planning and Design for eligible projects (which may be rolled into a subsequent construction loan)

DWSRF Ineligible Projects

X Construction or rehabilitation of dams

X Purchase of water rights, unless the water rights are owned by a system to be purchased for consolidation as part of a capacity development strategy

X Construction or rehabilitation of reservoirs, except for finished water reservoirs and those reservoirs that are part of the treatment process and are on the property where the treatment facility is located

X Projects needed primarily for fire protection

X Projects needed primarily to serve future population growth

Congress specifically directed that DWSRF program will not be available to finance the expansion of any public water system in anticipation of future population growth.

Systems Not Eligible for SRF Financial Assistance

X Federally-owned public water systems

X For-profit non-community water systems

X Systems that lack the technical, managerial, or financial capacity needed to maintain compliance with the Safe Drinking Water Act (SDWA), unless the assistance will ensure compliance and the owner or operator of the system agrees to undertake feasible and appropriate changes in operation to ensure compliance over the long term (see Drinking Water Planning for more information on achieving technical, managerial, and financial capacity).

X Systems in enforcement, unless:

The funding assistance directly addresses the cause of the non-compliance issue, and the assistance will ensure that the system returns to compliance.
The funding assistance is unrelated to the cause of the non-compliance issue, but the system is under an Agreed Order (for maximum contaminant level and/or treatment technique violations) to return to compliance.

Project Has Been Approved - Now What?

Once a project is listed on the Intended Use Plan/Priority Project List, the PWS can either accept the loan or reject it. If the system chooses to accept DWSRF assistance, the next steps are:

If not already completed, the PWS begins the cross-cutter scoping process (including eClearinghouse, U.S. Fish and Wildlife Service, National Resources Conservation Service, U.S. Army Corps of Engineers, Kentucky Department of Fish & Wildlife Resources, and Kentucky Heritage Council reviews).
Once the cross-cutters have been submitted, DOW will conduct an Environmental Review of any potential impacts of the proposed project.
Upon completion of the Environmental Review by DOW, the system is notified of the determination. Depending on the findings of the Environmental Review, additional information may be required.
The PWS submits plans and specifications for the project to the DOW for review and approval. To streamline the process, the DOW recommends waiting to submit plans until all the requirements of the Environmental Review have been satisfied.

Project Construction

During the construction process, the DOW is also responsible for reviewing the engineering and construction procurement and payment requests, issuing construction permits, and monitoring the construction process.