Introduction

Section 606 of the Water Quality Act of 1987 requires the State to develop an Intended Use Plan (IUP) that identifies the uses of its Clean Water Revolving Loan Fund and to prepare a list of projects targeted for funding assistance.  Following public comment and final Board action, the list of targeted projects for financial assistance becomes the state’s yearly clean water revolving loan Project Priority List (PPL) in the IUP.

Funds Available

With substantial revenues coming in from our large loan portfolio and continued federal and state match funding, the VCWRLF continues to maintain very healthy account balances.  In addition, the Bipartisan Infrastructure Law (BIL) provided additional federal funds to the state revolving loan fund including the VCWRLF. As such, CWFAP staff reviewed an updated capacity assessment of the VCWRLF to determine the level of authorizations the fund could manage while maintaining the ability to provide funds for requests in future years. Based on this assessment, CWFAP staff determined that all projects could not be funded by the VCWRLF and proceeded to eliminate projects from the funding list based on project eligibility, compliance with Virginia Code, and previously established project bypass procedures. Final Board approval of the full project list will not be requested until the November Board meeting.

FY 2023 Program Development

On June6, 2022, Clean Water Financing and Assistance Program (CWFAP) staff solicited applications from the Commonwealth’s localities and wastewater authorities as well as potential land conservation, living shoreline, and brownfield remediation applicants. The deadline for receiving applications was July 29, 2022.  Based on this solicitation, DEQ received 69 wastewater improvement applications requesting $ 457,045,977, including fifteen (15) Southwest Virginia Pilot Program construction projects, two (2) stormwater applications requesting $11,000,000, and two (2) land conservation applications requesting $27,910,000, bringing the total amount requested to $495,955,977.

All 69 wastewater applications were evaluated in accordance with the program's Funding Distribution Criteria. In keeping with the program objectives and funding prioritization criteria, the staff reviewed project type and impact on state waters, the locality's compliance history and fiscal stress, and the readiness-to-proceed of the project. The stormwater applications were reviewed using the Board’s evaluation criteria for stormwater projects in accordance with Board guidelines and state law. The land conservation applications were reviewed using the Board’s evaluation criteria for land conservation projects in accordance with Board guidelines and state law.

All applications are considered to be of good quality and should provide significant water quality and/or environmental improvements.  The list of applications in Attachment A is shown in priority funding order based on the Board’s prioritization criteria for each project type.

In accordance with VA Code § 62.1-229.3, loans for land acquisition may be made only in fiscal years in which all loan requests from local governments for wastewater projects have first been satisfied. Additionally, in accordance with VA Code VAC § 62.1-229.4, loans for stormwater projects may be made only when loan requests for wastewater projects have first been satisfied. Therefore, the two (2) land conservation and two (2) stormwater projects were removed from the funding list. The Coalfield Water Development Fund wastewater endowment was also removed from the list because it is ineligible for funding from the VCWRLF.

In accordance with the VCWRLF Program Design Manual project bypass procedures, the Board reserves the right to bypass any project of a higher priority and make loans to those of a lower priority in any year based on the following considerations:

1. There is a limited benefit to the program and/or community to offer only a portion of the funds needed to finance a multi-million dollar project.
2. There is limit and/or no environmental benefit to state water. (Example: the sewer project need is for future land development.)
3. The loan program was established to provide assistance to communities experiencing difficulty in obtaining funding from other sources; thus, when current VRLF funding for a larger, more affluent, project would be detrimental to the funding of a smaller economically-challenged community; and, when the larger, more affluent, community can secure assistance from other sources without significantly impacting their users.
4. The Board may need to obligate special funds that have been set aside for pilot programs, innovative/alternative projects, loan/grant combinations, or grants.
5. Since readiness-to-proceed is a critical factor in maintaining the integrity of the loan program, projects should be able to move into the construction stage within 18 months of submitting an application.

Three projects were bypassed during this funding cycle based on criteria #5 – readiness to proceed – Town of Buchanan, Town of Blackstone, and Town of Glasgow. All three applicants could reapply next year and still proceed with the current project schedule provided in the application. One project was bypassed during this funding cycle based on criteria #3 – ability to secure funding from other sources – Prince William County Service Authority as the VCWRLF provided $100,000,000 for this project in the FY21 funding cycle. Finally, one loan request was reduced from $100,000,000 to $50,000,000 based on criteria #3 – ability to secure funding from other sources – Hampton Roads Sanitation District (HRSD) programmatic loan as the VCWRLF previously provided $100,000,000 for this programmatic loan in both the FY20 and FY22 funding cycles.

CWFAP staff reviewed an updated capacity assessment of the VCWRLF to determine the level of authorizations the fund could manage while maintaining the ability to provide funds for requests in future years. Based on this assessment, CWFAP staff determined that 64 of the 69 wastewater projects could be funded by the VCWRLF with the HRSD programmatic loan request for $100,000,000 reduced to $50,000,000. After an evaluation of funding availability and priority considerations, Virginia’s FY 2023 Project Priority List includes 64 projects totaling $307,577,537.

Public Participation

DEQ is presenting the draft list of targeted FY 2023 loan recipients for public review and comment.  More information on the FY 2023 project list can be found on the CWFAP website here: https://www.deq.virginia.gov/water/clean-water-financing/virginia-clean-water-revolving-loan-fund

A public meeting will be held at 10:00 AM on Friday, October 21, 2021 in the 3rd Floor Conference Room, 1111 East Main Street, Richmond, Virginia 23219. The public review and comment period will end immediately following the public meeting. Written comments should include the name, address and telephone number of the commenter.