| WIFIA loan helping Great Lakes city access drinking water supply
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WIFIA loan helping Great Lakes city access drinking water supply

Wisconsin’s largest drinking water project is getting a federal funding boost from a Water Infrastructure Financing Innovation Act (WIFIA) loan, saving customers money while solving a major concern over the future quantity and quality of the city’s source water.

Dan Duchniak“We’ll have a sustainable water supply for the long term,” said Dan Duchniak (pictured right), general manager of Waukesha Water Utility. “It helps our community, and it’s beneficial for our ratepayers that we were able to obtain this loan. On larger projects, it’s definitely worth going through the federal loan process.”

Late last year, Waukesha Water Utility obtained a $137.1 million WIFIA loan to help finance the $286 million Great Water Alliance. The effort will bring Lake Michigan water 15 miles west to Waukesha before treating and returning 100% of the volume to the Great Lakes.

Waukesha, a municipal utility that serves 72,000 people, relies on a confined ground water aquifer that has become depleted and contaminated with naturally occurring radium. Two decades ago, the utility began looking for sustainable, long-term water supply solutions for its community.

Waukesha Water crews at workBut building 36 miles of pipe and corresponding infrastructure is not cheap, and officials didn’t want to hit customers with sharp bill increases year after year. (Pictured left, Waukesha Water crew works on Great Water Alliance project)

In 2019, while attending an American Water Works Association (AWWA) utility management conference in Tennessee, Duchniak met with officials from several water utilities that had been successful in obtaining WIFIA financing. Discussion about the loan’s flexible payback schedule and low interest rate caught his attention.

The U.S. Environmental Protection Agency’s WIFIA program was established in 2014 to help accelerate investment in the nation’s water and wastewater infrastructure. It provides long-term, low-cost supplemental loans for nationally and regionally significant projects. To date, the program has closed 45 loans for a total of $9 billion in financing. 

Before learning about this program, Waukesha officials had planned to fund the project with general obligation debt, water revenue bonds, safe drinking water loans and other traditional financing methods. At best, the utility had planned on 3% interest rates with traditional financing. With the WIFIA loan, on the other hand, the utility locked in a 1.16% rate over 38 years for about half of the project’s costs. 

“Are our water rates going to go up? Absolutely. But they were going to go up no matter what solution we came up with,” Duchniak said. “Now we’ll have a sustainable water supply for the long term.”

Joe CiurroObtaining the WIFIA loan will save the average Waukesha household roughly $40 each year, or a total of $1 million annually in interest costs, said Joe Ciurro (pictured right), the utility’s administrative services manager. 

“We’re trying to make the impact as minimal as possible from year to year,” Ciurro said. “The more you can flatten those rate increases, the better. This loan is helping us do that. We saved $38 million overall by using WIFIA versus market debt. That’s a substantial amount for our ratepayers.”

Because Waukesha had been planning this project for so many years, officials had plenty of research and documents to establish the city’s need. That, and having strong support from the city’s congressional delegation and community leaders, helped the utility begin the WIFIA application process on strong footing. 

Ciurro stressed that because utilities can customize their payback schedule, capital project planning is important. The more you know about future debt needs — not just the project you’re applying for, but other major plans as well — the more prepared you’ll be to negotiate an effective long-term loan. And he suggested utility officials attend conferences, webinars and classes to meet others with WIFIA experience and learn more about the program. 

Waukesha work crewWaukesha broke ground on the Great Water Alliance in early December and expects to begin moving water through the system in 2023, ending decades of concern about an unreliable and contaminated water supply.

“We’re full steam ahead, and it’s incredible all the work that’s happening throughout the entire region,” Duchniak said. “It’s impressive when you drive in and see 10 dump trucks lined up and you know it’s part of this project. We’re looking forward to the day when water will be going through that pipeline.” 

(Photos courtesy of Waukesha Water Utility)