Drinking Water State Revolving Fund (DWSRF) Loan Program

The current DWSRF Loan interest rate is 2.5%  (until 31 March 2010). 

Overview

To fund drinking water capital projects that protect public health, North Carolina makes loans at one-half of the market rate for a period of up to 20 years. The actual term of the loan is determined by the State Treasurer's Office.

Eligible projects address a threat to public health (as described in 15A N.C.A.C 01N and the Operating Agreement).  Eligible applicants include units of local government and non-profit water corporations.

Since the DWSRF is federally-seeded, the loans are subject to strict federal regulations regarding environmental review and outreach for disadvantaged business enterprises.

Application

PWSS receives applications throughout the year and considers those complete applications received as of 30 September. 

To apply for a DWSRF loan or other financial assistance offered by PWSS, contact the regional office and the funding engineer listed here for your county.

All funding programs use the same application, but each program has its own requirements.  The application and the checklist for the DWSRF program can be found on the forms page.  Follow the instruction in the application and checklist carefully.

Eligibility

Under 15A N.C.A.C. 01N.J .0202(e) and 40 CFR 35.3520 the DWSRF program can fund only the most cost-effective solution to a documented public health problem.  Therefore, the applicant must document both the existence of the problem and the costs of alternatives to address it, typically in the Preliminary Engineering Report, or 'PER.'  In particular, the PER must explicitly discuss the 'do-nothing' or 'no-build' alternative.

Under 40 CFR 35.3520(b)(2), eligible projects types include the following:

i) Treatment,
(ii) Transmission and distribution,
(iii) Source,
(iv) Storage, or
(v) Consolidation.

The DWSRF can reimburse the cost of land acquisition only from a willing seller (no condemnation). [40 CFR 35.3520(c), 1N .0202(a)]

The DWSRF cannot fund projects that are needed primarily to accommodate future growth.  [40 CFR 35.3520(e)(5)]

Eligibility is more fully described in 40 CFR 35.3520 and 1N .0300. 

Unusual Features of the Program

The DWSRF was seeded with Federal money.  Therefore applications are subject to Federal Environmental Review (even projects eligible for categorical exclusion from substantive environmental review) and contracts are subject to Federal review for outreach to Disadvantaged Business Enterprises (DBEs).

In addition to the State Environmental Policy Act (SEPA - which all public projects are subject to), DWSRF projects are also subject to the National Environmental Policy Act (NEPA).  In practice this is handled by the State Environmental Review Procedures (SERP) - a set of procedural enhancements to SEPA environmental review that makes it also comply with NEPA (it becomes 'NEPA-like'). 

Rules and Authorities

The Safe Drinking Water Act (SDWA) was originally passed by Congress in 1974 to protect public health by regulating the nation's public drinking water supply. The law was amended in 1986 and 1996 and requires many actions to protect drinking water and resources, rivers, lakes, reservoirs, springs, and ground water wells. (SDWA does not regulate private wells or systems that serve fewer than 25 individuals.)  SDWA authorizes the United States Environmental Protection Agency to set national health-based standards for drinking water to protect against both naturally-occurring and man-made contaminants that may be found in drinking water. USEPA, states, and water systems then work together to make sure that these standards are met. (Source: EPA810-F-99-008)

Congress established the Drinking Water State Revolving Fund Loan program in the 1996 amendments to provide financial assistance to public water systems to comply with the SDWA. The states are required to provide 20 percent matching funds.

The federal "interim final rule," (HTML, PDF), implements the SDWA, in particular, setting eligibility requirements. 

The statute,  N.C.G.S. 159G, establishes the DWSRF in North Carolina. 15A N.C.A.C 01N.  implements the DWSRF in North Carolina. 

The Operating Agreement between DENR and EPA governs the program's day-to-day activities.  

Each year's Intended Use Plan (IUP) describes the eligible projects and expected activities for the plan year. 

List of Previous Applicants and Awards
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