Drinking Water Revolving Fund
General Information

The Drinking Water Revolving Fund (DWRF) provides below market rate loans for public water system improvements. The first step for obtaining a loan is to place a project on the Project Priority List (PPL). The Instructions for placing projects on the PPL as well as the Dates to Know can assist you with how to submit a proposal. Once a project is listed on the PPL the water system will also need to send a request to the Minnesota Public Facilities Authority to place the project on the Intended Use Plan (IUP). A water system can apply for the PPL and IUP in the same fiscal year. There is no obligation to obtain a loan if a project is listed. Likewise, there is no guarantee that every listed project will be funded.

Funding priority goes to projects that:

• protect public health,
• provide adequate water supply, and
• assist communities with financial needs.

Systems eligible for loans include:

• Community Water Systems that are:
  • Publicly owned municipal type systems.
  • Regional water systems.
  • Privately owned condominium and manufactured home park systems.
• Nonprofit Noncommunity Systems such as:
  • Schools, day care centers, churches, retreat centers.

For information on federal funding through the Infrastructure Investment and Jobs Act, and what it means for Minnesota, visit Federal Funds for Drinking Water Infrastructure (PDF).

Loans are most often used to replace or upgrade wells, treatment plants, water towers, or distribution systems. Projects have also included consolidating water systems, water meters, computerized monitoring and control systems, and extending public water services to properties with contaminated private wells. Loans may not be used for economic expansion or enhancements primarily intended for fire suppression.

Interest rates are excellent, the average interest rate for fiscal year 2016 was 1.08%. Loan terms are typically 20 years, but can be extended to 30 years based on the financial need of the community. Drinking water infrastructure projects funded by the DWRF are usually greater that $100,000 and averaged $1.84 million in 2016. Approximately $39 million can be provided in loans annually.

Two state entities work together to provide this program. They are the Minnesota Department of Health (technical engineers), and the Minnesota Public Facilities Authority (bankers). Funding is provided from a combination of sources, including federal funds through the U.S. Environmental Protection Agency, state matching funds, loan repayments and the Public Facilities Authority revenue bond proceeds.