When the Environmental Protection Agency (EPA) released its list of 39 projects invited to apply for federal funding for water-related projects last month, the California WaterFix Project (WaterFix) was conspicuously absent from that list.
The Water Infrastructure Finance and Innovation Act (WIFIA) program is a federal loan and guarantee program administered by the EPA that is intended to accelerate investment in the water infrastructure by providing long-term, low-cost supplemental loans for regionally and nationally significant projects. The EPA announced in April that up to $5.5 billion was available and invited prospective borrowers to submit a letter of interest (LOI) to be considered as a recipient of a portion of those funds.
“Through WIFIA, EPA is playing an integral role in President Trump’s efforts to improve and upgrade our nation’s water infrastructure and ensure all Americans have access to clean and safe water,” wrote EPA acting Administrator Andrew Wheeler in a press release. “This year, EPA will help finance over $10 billion in water infrastructure investments that will create up to 155,000 jobs, upgrade aging infrastructure, reduce lead exposure and improve the lives of millions of Americans across the country.”
The Delta Conveyance Finance Authority (DCFA), the agency formed in July for the purpose of securing funding for WaterFix, submitted an LOI seeking an initial $1.6 billion in funding for the project’s design and construction. The LOI pegged the cost of WaterFix at $19.9 billion and stated that the members of the DCFA were interested in discussing opportunities to secure up to 49 percent of the project’s total eligible costs through WIFIA loans.
“While California WaterFix was not selected to advance through the application process this round, the DCFA fully intends to resubmit next year as the project moves forward,” wrote Brian Thomas, DCFA interim executive director, in a press release. “Funds made available through WIFIA were limited this year, and there was interest from several applicants that were closer to construction. Given the regional significance of this project, we remain optimistic that next year’s application will be favorably considered to supplement funding for this much-needed upgrade to California’s aging water infrastructure.”
DCFA’s letter caught the attention of WaterFix opponents for a number of reasons. The LOI provided a revised estimate for the cost of WaterFix that reflected an increase of roughly $3 billion. Thomas explained the increase as an accommodation for inflation.
Barrigan-Parrilla, executive director for Restore the Delta, agreed that the new cost figure does account for inflation but expressed concern that the public had not been made aware of the impact on the project’s total cost.
“The project costs have jumped to $19.9 billion,” said Barrigan-Parrilla. “This is due to inflation – not overruns – and is baked into their previous cost discussions. However, the public is not being made aware of the inflationary costs. And the project is only 10 percent designed. Costs will increase as design advances.”
The LOI also stated that construction permits would be issued by the State Water Resources Control Board (SWRCB) on Dec. 14 and construction of the tunnels would begin the following day. This statement was made while hearings regarding those permits were still underway and a decision on the construction permits is still outstanding. A representative from the SWRCB denied that board had provided the DCFA any information upon which that assumption may have been made while Thomas referred to it as DCFA’s best estimate of a construction schedule.
Principal stakeholders in WaterFix offered only sparse comments regarding EPA’s decision. A representative from the Metropolitan Water District of Southern California had no comment while a representative from the Department of Water Resources said they did not expect the decision to impact WaterFix in terms of support or construction.
“After all borrowers are formally notified of their selection status and the WIFIA program has completed its public announcement, the program offers debriefs to all non-selected borrowers,” said Tricia Lynn with the EPA’s Office of Public Affairs. “This debrief provides more details as to the stronger and weaker parts of the LOI and what can be improved if the borrower wishes to submit another LOI in a future round.”
Thomas indicated DCFA’s intent to gain feedback from WIFIA and EPA and resubmit the next funding request.
“I think that’s how we’re approaching it,” he said. “The project is still moving forward.”