Water, Wastewater and Stormwater Infrastructure Funding Toolkit

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American Rescue Plan Act of 2021: How Local Governments Can Fund Water, Wastewater and Stormwater Infrastructure Projects

Local Fiscal Recovery Fund Toolkit for Water, Wastewater and Stormwater

Background on the Statewide Need

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.

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Use of ARPA Funding for Water Infrastructure

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 Interim Final Rule published in the 86 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II Eligible Uses (D) Investments in Infrastructure (1) Water and Sewer Infrastructure and will be codified in 31 CFR 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.

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State of Missouri Planned Use of ARPA Funds

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. 

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Examples of Eligible Projects under ARPA

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 86 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information (see II(D)(1)).

Drinking Water

  • 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

Wastewater

  • 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

Urban Stormwater and non-point source pollution control

  • 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
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Considerations & Disclaimers

ARPA has fewer requirements compared to other federal funding sources (e.g. National Environmental Policy Act (NEPA),3 Davis-Bacon Act,4 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 Interim Final Rule 86 Fed. Reg. 26804-26806 (May 17, 2021) Supplementary Information: II(D)(1)
3Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions 6.4
4 Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions 6.17

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ARPA Resources

 

Disclaimer:   The U.S. Department of Treasury has not published the Final Rule on the State and Local Fiscal Recovery Funds. Information shared in this toolkit is subject to change pending final rulemaking and subsequent guidance and/or FAQs published by Treasury.