As Congress returns from its August recess, join us in urging lawmakers to change a law that is stemming the flow of critical funding to desperately needed water infrastructure projects all over the country. Urge Congress to repeal the ban on co-financing Water Infrastructure Finance and Innovation Act (WIFIA) projects with tax-exempt bonds.

Here’s a little background. Congress established the WIFIA loan program in June 2014 to provide low-cost loans to a broad range of larger water infrastructure  projects. This program was designed to complement State Revolving Fund programs and serve as a key additional source of direct Federal support for water infrastructure; the program recognized that SRF funds are simply inadequate to fully address our nation’s enormous water infrastructure needs. Congress has given the program a preliminary vote of confidence, including WIFIA administrative funds in the House and Senate FY16 Interior-EPA spending bills approved by each chamber’s Appropriations Committee this year. But here’s the  problem. Currently, there is a statutory ban on the use of tax-exempt bonds to co-finance WIFIA projects, a ban that undermines WIFIA’s potential to attract needed investments, because tax-exempt bonds are the most cost-effective source of the required non-WIFIA share of project costs. The ban artificially inflates the cost of using WIFIA by requiring project sponsors to rely on more costly co-finance options like taxable debt, or else forgo WIFIA assistance altogether.

As we have noted before, tax-exempt bonds are a significant component of the successful Transportation Infrastructure Finance and Innovation Act (TIFIA) on which WIFIA is based; roughly 65 percent of all surface transportation projects receiving TIFIA assistance have also relied on tax-exempt bonds.

The ban on co-financing WIFIA projects with tax-exempt bonds frustrates the WIFIA loan program’s goals of reducing project costs and leveraging limited public resources to accelerate water infrastructure investment, and there is no good reason for it – the ban was included in WIFIA at the last minute simply to secure a neutral budget score for the legislation when no revenue offset could be identified.

Given our country’s staggering water infrastructure investment needs (we have reported before on the nearly $2 trillion needed over the next 25 years to restore our deteriorating drinking water and wastewater infrastructure and to expand our water systems), we at CWC feel that this ban is an unconscionable and unnecessary obstacle to raising those funds, and we will be lobbying Congress to remove it. Delaying needed investments is resulting every day in infrastructure failures – service interruptions, contaminated drinking water, damage to roads and businesses, disruptions to Americans’ lives. Federal assistance in all forms is necessary.

The Senate Committee on Environment and Public Works did take an important step towards repealing this ban in July when it unanimously passed the “Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act,” which included a provision repealing the tax-exempt bond limitation. Congress now needs to continue the important work this Committee began. The DRIVE Act, which is the Senate version of the Highway Trust Fund reauthorization, is likely to be considered as the current extension comes close to expiring in October. CWC urges you to contact your Congressional representative to ensure that this provision is included in any HTF action Congress takes.