Local Fiscal Recovery Fund Toolkit for Water, Wastewater and Stormwater
Drinking water, wastewater, and stormwater infrastructure projects in Missouri are largely underfunded but are critical to protecting Missouri’s water supply. The estimated need to repair and upgrade drinking water and wastewater infrastructure in Missouri is over $20 billion1. This estimate does not include the ongoing and increasing needs of urban stormwater infrastructure. Likewise, it is difficult to estimate the current need for lead service-line replacement projects associated with upcoming changes in federal public drinking water regulations.
The American Rescue Plan Act (ARPA) Coronavirus State and Local Fiscal Recovery Funds can be used to address these underfunded areas of public infrastructure. Water infrastructure projects are eligible for ARPA funds under "the wide range of types or categories of projects that would be eligible to receive financial assistance through the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF)"2.
Full guidance for SRF eligibility can be found in the Clean Water State Revolving Fund Eligibilities and the Drinking Water State Revolving Fund Eligibility Handbook. Water infrastructure guidance can be found in the published Final Rule published in the 87 Fed. Reg. (January 27, 2022) pages 4408-4417, Supplementary Information: II Eligible Uses (D) Investments in Infrastructure (1) Water and Sewer Infrastructure and is codified in 31CFR 35.6(e)(1).
Of note, all ARPA fiscal recovery funds must be encumbered by December 31, 2024 and all projects must be completed and all funds expended by December 31, 2026.
Governor Parson has announced a financial commitment from the state's ARPA allocation for water infrastructure improvements, and he will present his plan to the General Assembly for the 2022 legislative session.
The vast majority of this money will be offered to communities in the form of grant programs for wastewater, drinking water, and stormwater infrastructure. These grant programs will favor applicants who can demonstrate financial need, propose projects that are necessary for compliance and public health protection, and provide matched local funds, preferably local ARPA, to complete the work.
As communities plan how they will use their local ARPA allocation, they should consider retaining these funds to offer as a match for State ARPA grant programs to increase their chances of being awarded funding from state grant programs in development.
The state plans to open an application period for water infrastructure grants following the approval of the ARPA State Fiscal Recovery Funds appropriations. Until then, communities can prepare for the anticipated grant application period by taking the following actions:
- Access the State of Missouri’s Local Fiscal Recovery Fund Toolkit for Water, Wastewater and Stormwater https://oa2.mo.gov/ARPAtoolkits/water-infrastructure.
- Plan to apply for projects that are “necessary to achieve or maintain an adequate minimum level of service (which may include a reasonable projection of increased need)” and that are cost-effective. Only these projects may be funded using ARPA funding according to the U.S. Treasury.
- Complete engineering reports for the project you want to submit for grant consideration (refer to 10 CSR 20-6.010(4)(B) for exemption of engineering reports).
- Identify local funds (Cash on hand or Local ARPA funds, not loans, or other agency funding) to contribute as cost share leverage for maximum project impact.
- Be mindful that all funds must be obligated by December 31, 2024 and spent by December 31, 2026.
- The Department recommends applicants for state ARPA grants carefully consider incurring costs prior to notification of grant award because there are a number of federal requirements that will apply to these projects that will be provided to selected awardees.
To be eligible for ARPA funds, water infrastructure projects should follow the eligibility criteria found in the Clean Water State Revolving Fund Eligibilities and the Drinking Water State Revolving Fund Eligibility Handbook.
These examples are derived from the 87 Fed. Reg. (January 27, 2022) pages 4408-4417, Supplementary Information II(D)(1).
- Treatment plants
- Transmission and distribution mains
- Supply sources (i.e. wells, interconnections, and surface water intakes)
- Storage facilities
- Interconnect for emergency back-up, regionalization and consolidation projects (including acquisition of an existing wastewater treatment plant)
- Water security projects, including cybersecurity projects
- New treatment plants and treatment plant improvement/ upgrades
- Acquisition of an existing wastewater treatment plant
- Sewer line extensions associated with regionalization projects
- Treatment plant decommissioning actions associated with plant replacement or regionalization projects
- Sewer line extensions to existing unsewered properties
- Combined sewer overflow and sanitary sewer overflow corrections
- Projects for reusing or recycling wastewater
- System efficiency, conservation measures, and security projects, including cybersecurity projects
- Measures to manage, reduce, treat, reuse, or recapture stormwater or subsurface drainage water
- Wetland protection and restoration measures associated with source water protection of a public water supply
- Decentralized wastewater treatment systems
- Source water protection measures
- Green infrastructure such as rain gardens and green streets
ARPA has fewer requirements compared to other federal funding sources (e.g. National Environmental Policy Act (NEPA), Davis-Bacon Act,3 etc.). As such, communities are strongly discouraged from attempting to pair ARPA funds with other federal funding sources (e.g. Community Development Block Grant, USDA Rural Development, CWSRF, DWSRF or other federal funds), because doing so may add additional effort and time to meet federal requirements to the extent that the project is unlikely to be completed by the deadlines outlined in ARPA.
These ideas have been drawn directly from available guidance from the U.S. Department of Treasury. A complete listing of current guidance is available on the U.S. Department of Treasury’s website. Please be sure to check the Treasury’s website frequently to stay up to date on current guidance and funding requirements.
Please note the U.S. Department of Treasury has specific compliance and reporting requirements associated with the use of ARPA fiscal recovery funds. For more information, please refer directly to the U.S. Department of Treasury’s website.
1 EPA 2012 Clean Watershed Needs Survey and EPA 2018 Drinking Water Infrastructure Needs Assessment
2 Final Rule 87 Fed. Reg. (January 27, 2022) pages 4408-4417, Supplementary Information: II(D)(1)
3 Final Rule 87 Fed. Reg. (January 27, 2022) page 4431 footnote 371
U.S. Department of Treasury’s website on Coronavirus State and Local Fiscal Recovery Funds (including ARPA funding): https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds
Final Rule 87 Fed. Reg. (January 27, 2022): https://www.govinfo.gov/content/pkg/FR-2022-01-27/pdf/2022-00292.pdf
Compliance and reporting information (required for use of ARPA funds): https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds/recipient-compliance-and-reporting-responsibilities