Program of the Month
The Virginia Clean Water Revolving Loan Fund supports construction projects at wastewater treatment plants, such as the Western Virginia Water Authority wastewater treatment plant(shown above)in Roanoke. DEQ's Construction Assistance Program, with assistance from the Virginia Resources Authority, manages the fund, which offers low interest loans for projects that will improve water quality.
Construction Assistance Program
Many times the solution to improving water quality includes significant construction projects such as upgrading wastewater treatment plants or improving animal waste systems on farms. Since these projects often come with hefty price tags, the Virginia Clean Water Revolving Loan Fund is available to local governments, farmers, businesses and other organizations to help cover the cost.
The Department of Environmental Quality’s Construction Assistance Program, with assistance from the Virginia Resources Authority, manages the fund, which offers low interest loans for projects that will improve water quality. The authority handles the financial administration of the loans, and DEQ manages the day-to-day activities of the program.
“Our primary goal is to bring impaired waters back into compliance with the water quality standards by providing financial and technical assistance,” said Walter Gills, DEQ manager of the Construction Assistance Program.
The fund has four focus areas:
- The wastewater loan program for upgrades, expansions, extension or repairs to public wastewater treatment plants and collection systems.
- The agricultural best management practices loan program for farmers to implement projects (such as animal waste holding facilities or fencing to keep cattle from entering streams) to prevent or reduce pollution of waterways from agricultural sources.
- The brownfield loan program for the cleanup of contamination at neglected or abandoned industrial or commercial properties.
- The land conservation loan program for acquiring property or conservation easements to protect water quality.
Since the fund began in 1988, DEQ “has given out nearly one and a half billion dollars in loans,” Gills said.
The fund receives money from federal and state governments, and loan repayments – the primary source of money. The agricultural and brownfield loan programs have a set amount in each – $15 million for the agricultural loans and $3.5 million for the brownfield loans. The wastewater and land conservation loans are based on requests.
DEQ presents loan applications for wastewater, brownfields and land conservation projects to the State Water Control Board for approval following each loan application’s due date. Staff members also meet once a month to approve agricultural loans.
DEQ’s central office receives and reviews the loan applications, determines who qualifies for the loans, determines loan amounts and approves all disbursements. Project engineers in DEQ regional offices conduct the engineering document review and perform monthly onsite inspections of the projects.
During the review process for agricultural loans, DEQ works with regional soil and water conservation districts to help review and rank each proposed project. For wastewater loans, the agency also completes a performance review a year from the state date of a project that certifies it is meeting the loan requirements.
| Type of loan | Amount availalbe | Loan applications due | Interest rate | Loan terms |
|---|---|---|---|---|
| Wastewater | Based on requests | July | 0 to 1% below AA bond market | 20 years |
| Agricultural | $15 million | Continuous | 3% | 5-10 years |
| Brownfields | $3.5 million | January, July | 3% | 10-20 years |
| Land conservation | Based on requests | July | 3% below prime | \10-20 years |
The wastewater loan program is by far the largest focus area with loans totaling “more than 95 percent of the total fund,” Gills said.
This loan program is one of two sources of DEQ funding for localities needing to upgrade their wastewater treatment plants to comply with Virginia’s new nutrient reduction regulations. The regulations set limits on the amount of nutrients discharged into waterways from wastewater treatment plants within Virginia’s portion of the Chesapeake Bay watershed. Excess nutrients impair water quality in the Bay and create algae blooms that rob the waters of vital oxygen and sunlight that are needed for aquatic life to thrive.
DEQ estimates that it will take about $1.2 billion to upgrade wastewater treatment plants to meet the requirements of the new regulations. Localities will also be able to apply for grants from the Virginia Water Quality Improvement Fund in addition to the Revolving Loan Fund for loans.
Gills said he expects the new regulations will have a significant effect on the program.
“Projects aimed at nutrient reduction will be a top priority,” Gills said. “Our charge is to be able to fund the local share of those projects.”
Gills and his team have already seen an effect from the new regulations. In December 2005, the State Water Control Board approved funding for 18 loan requests totaling $193 million, with $119.7 million slated for projects that include nutrient reduction efforts. This year’s requests were the largest ever for the fund.