Drinking Water Revolving Fund
What it Means to Minnesota Public Water Suppliers

• Drinking Water Revolving Fund: General Information

Overview

The Drinking Water Revolving Fund provides below-market-rate loans to municipalities and other community drinking water systems—as well as to nonprofit noncommunity drinking water suppliers. Loans can be used to improve or construct treatment, storage, and distribution systems that are necessary to maintain compliance with the federal Safe Drinking Water Act and improve drinking water infrastructure.

Water is our most important resource. We are fortunate in Minnesota to have a safe and adequate supply of water. However, this will continue only if we remain vigilant and address emerging issues, such as deteriorating drinking-water infrastructures.

Many public drinking water systems in Minnesota are 50 to 100 years old. Funds are needed to upgrade or expand water systems and to remedy water quality problems and threats. The Drinking Water Revolving Fund could mean relief for these aging systems.

Enacted in the summer of 1996 as part of the reauthorized Safe Drinking Water Act, this program allows states to set up revolving-loan funds for drinking water projects similar to those already in place for wastewater treatment projects.

Elements of the Drinking Water Revolving Fund

Program Purpose: To provide financial assistance—primarily in the form of below-market-rate loans—to municipalities and other eligible public water suppliers to improve or construct water treatment, storage, and distribution systems needed to comply with the Safe Drinking Water Act and to improve drinking water infrastructure.

Eligible Applicants: All community water suppliers and nonprofit, noncommunity water suppliers, such as schools and government office buildings, are eligible for the loans. This program is not available to private well owners.

How It Works: The federal government awards funds to states to capitalize their individual revolving funds. In Minnesota, these federal funds can be leveraged through the sale of tax-exempt bonds to generate additional funds that can be loaned to municipalities for eligible drinking water systems. Upon completion of its project, the loan recipient will repay the loan. These repaid funds will then be lent to other eligible drinking water suppliers. The revolving loan fund will help water suppliers meet projected needs many years into the future.

Interest Rates: The loans will be made at below-market rates with the specific rate based on market conditions and the size and financial capability of each municipality. The interest rate will be determined by financial need for municipal water systems and by a reduction of up to two percent on bank-loan rates for eligible nonmunicipal and noncommunity water systems.

Priorities: The Safe Drinking Water Act gives priority for the use of funds to projects that address the most serious risk to human health, are necessary to ensure compliance with the requirements of the Safe Drinking Water Act, and assist the systems most in need on a per household basis according to state affordability criteria.

Money Available: Minnesota expects to finance over 30 million dollars for projects each year. If necessary, these funds can be leveraged through the sale of bonds to generate additional loan funds.

Administration: The Drinking Water Revolving Fund is being administered by the Minnesota Department of Health and the Public Facilities Authority (Minnesota Department of Employment and Economic Development). The Health Department will set priorities for the use of the revolving-fund money, review the proposed projects for technical adequacy, and provide training and technical assistance for public drinking water suppliers. The Public Facilities Authority will review the borrower’s financial capability, sell bonds to fund projects, set the interest rate, terms, and conditions of the loans, and process and award the loans.

To discuss the eligibility of a particular project, call your district engineer or public health sanitarian at the appropriate Minnesota Department of Health District Office:

Bemidji
705 5th Street NW, Suite A
Bemidji, Minnesota 56601-2933
218-308-2100 FAX: 218-308-2122

Duluth
11 East Superior St., Ste 290
Duluth, Minnesota 55802-2007
218-302-6166 FAX: 218-723-2359

Fergus Falls
1505 Pebble Lake Road, Suite 300
Fergus Falls, Minnesota 56537-3858
218-332-5150 FAX: 218-332-5196

Mankato
12 Civic Center Plaza, Suite 2105
Mankato, Minnesota 56001-7789
507-344-2700 FAX: 507-344-2723

Marshall
1400 East Lyon Street
Marshall, Minnesota 56258-2529
507-476-4220 FAX: 507-537-7194

Rochester
18 Woodlake Drive Southeast
Rochester, Minnesota 55904-5506
507-206-2700 FAX: 507-206-2711

St. Cloud
3333 West Division Street, Suite 212
St. Cloud, Minnesota 56301-4557
320-223-7300 FAX: 320-233-7348

For general information about the Drinking Water Revolving Fund program, contact:

Minnesota Department of Health
Drinking Water Protection Section
625 North Robert Street
P. O. Box 64975
St. Paul, Minnesota 55164-0975
651-201-4700 FAX: 651-201-4701

For information regarding the Public Facilities Authority’s application procedures and financial assistance available through the Drinking Water Revolving Fund, contact:

Minnesota Department of Employment and Economic Development
Public Facilities Authority
332 Minnesota Street, Suite W820
St. Paul, Minnesota 55101-1378
1-800-657-3858 or 651-259-7469
FAX: 651-296-8833