WIFIA Solutions for Rising Costs

I am worried about rising costs.

Undertaking large water infrastructure projects in the current environment can be challenging as communities face pressure from higher interest rates, construction bid prices, and material costs. Cost uncertainty can make it difficult to get buy-in for large projects and can make planning for them daunting. Concerns about loans and the associated interest rates can deter communities from seeking necessary financing for projects.

How Can WIFIA Funding Help?

Rising costs are valid concerns but do not need to prevent implementing necessary water infrastructure improvements. The WIFIA program has several options to help communities accelerate their water infrastructure projects while mitigating the impacts of rising costs. These benefits provide up-front funding certainty and post-closing flexibility.

• Locked-in Interest Rate: Borrowers lock in their interest rate on the date of loan closing. This is advantageous because it allows borrowers to immediately lock in their rate for the entire multi-year construction project and only draw funds as needed.
• Interest Rate Reset: Even with the locked-in interest rate, borrowers may want additional flexibility, given the ever-changing interest rate environment. If rates go down in the future prior to the WIFIA loan being drawn, borrowers may request a one-time interest rate reset to lower the WIFIA loan interest rate.
• Amortization and Draw Schedule Adjustments: After loan closing, changes during project construction can impact financing plans. Borrowers might be interested in adjusting their loan amortization and draw schedules to address these changes. To maximize flexibility, the WIFIA program offers automatic restructuring of amortization and draw schedules if there are changes to project costs, schedule, or funding sources. This option helps borrowers wrap WIFIA loans around other funding sources and create a flexible repayment schedule that meets their needs.
• Ability to Change Projects Within a Loan: There may be a need to add, drop, or swap projects included in a WIFIA loan due to project cost increases after loan closing. If construction bids come in higher than expected and project changes are necessary, the WIFIA program allows the addition, removal, or swap of projects under the WIFIA loan.

Hear What Our Borrowers Are Saying:

“It will take us over a decade to plan, design, and construct our regional drinking water infrastructure system. The expenditures will be great, but we are building infrastructure that will last for generations. With our WIFIA loan, we have access to the capital we need when we need it, without accruing interest until funding is needed. Our sculpted WIFIA loan repayment also allows us to spread the costs of the infrastructure over many years without placing undue burden on our current customers. No other financing option could match our project needs and give us this drawdown and repayment flexibility at such a low cost.” – Allison Swisher, Director of Public Utilities (2023), City of Joliet, Illinois