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The bill would create a new federal water infrastructure funding source to supplement the SRFs. A water infrastructure fund (WIF) has the advantage, because of the way the fund would be structured, of having a minimum claim on new federal spending which is, of course, an anathema to Congress in these days of an emphasis on reducing federal spending.
A Water Innovation Fund would borrow money from the Treasury at low Treasury Department interest rates and then lend that money to cities and counties for important regional water infrastructure projects likely to cost more than $20 million. Those interest rates could be a tad higher than the interest rates offered by state SRFs; but SRF loans are generally available to small and medium-sized projects only. The water fund would be based on an existing Transportation Infrastructure Finance and Innovation Act (commonly called TIFIA). The beauty of these infrastructure funds is that Congress only has to appropriate enough money to cover the "subsidy" cost of providing the low-interest Treasury loan.
Rep. Bob Gibbs (R-OH), chairman of the House Water Resources and Transportation Subcommittee, held two hearings last winter on a draft bill he prepared but he never introduced a formal version. That wasn't a good sign. Tommy Holmes, legislative director for the American Water Works Association, says he is more optimistic a WIFIA bill will move through this new Congress. That is because Sen. Barbara Boxer (D-CA), chairman of the Senate Environment and Public Works Committee, has committed to including the Merkley bill as an amendment in a broader bill approving new spending on dams, levees and ports. That larger bill is called the Water Resources Development Act (WRDA). The bill authorizes critical water infrastructure projects and programs of the U.S. Army Corps of Engineers, including those related to levees and flood safety, innovative project financing, inland waterways, dam safety, ports and ecosystem restoration. But Holmes acknowledges any WIFIA amendment will have a hard time staying in a final WRDA bill since the House is unlikely to approve any new federal spending programs.