Data Visualization for WIFIA Loan Benefits

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The U.S. EPA’s Water Infrastructure Financing and Innovative Act (WIFIA) loan program delivers a lot of financial value to qualified water infrastructure projects. Could some of that value be used beyond the project itself for innovative initiatives that address local water-related issues — water equity and affordability, climate and environmental justice, workforce training and other community concerns?

WIFIA has been very successful since operations began in 2017, closing a total of more than 40 loans aggregating over $9 billion to date with an additional $10 billion currently in process. The program’s borrowers are primarily relatively large public water systems with geographically diverse service territories. The benefits of a WIFIA loan will vary in each case, but a median estimate of their value is about 7 percent of project cost, or over $10 million for a typically sized project. The estimate of aggregate value delivered to date or currently pending is already well over $3 billion — and there’s more on the way from future annual funding rounds.

Can Innovative WIFIA Features Help Expand SRF Loan Capacity?

Under current law, the borrowed proceeds of a WIFIA loan must be spent on the project itself. But the benefits of a WIFIA loan — primarily, the cash savings on debt service relative to the borrower’s alternatives — are not restricted as to usage. In most cases, as you would expect, the cash savings are used by public water systems to keep rates lower. That’s great, but if some of these savings were allocated to help fund development of innovative local initiatives, the outcomes from a WIFIA loan might be even better.

Innovation requires inspiration but starts with data. The first step is data that can connect community concerns with WIFIA loan benefits. The key elements here are data about current and selected WIFIA projects (there’s plenty of that online from EPA and local water systems), data that might be relevant to the affected communities (ranging from economic statistics to climate exposure — also widely available) and estimates of the financial value of WIFIA loan benefits connected to the project’s financing.

This last part of the data set defines the funding that might be available for innovative initiatives, so it’s obviously the core element of inspiration for any realistic plan. But estimates for the actual value of WIFIA loan benefits are not directly available. Press releases for WIFIA financings often include simple totals of interest rate savings, but this is not the same as the type of value required to establish additional funding capacity, which is the real point. In any case, press releases are (understandably) not going to follow a rigorous or consistent methodology in the numbers they report.

Fortunately, however, since the relevant WIFIA borrowers are all highly rated public water systems, there’s plenty of raw material from publicly available financial information to model WIFIA loan value estimates accurately, if not precisely. A standardized model, with specific project and borrower data input for the variables, will provide a uniform and consistent approach. It’s also a practical and efficient way to generate value numbers for the dozens of individual projects involved. This part of the exercise, though it involves an extra step, is pretty straightforward too.

Data Visualization

Piles of statistics and financial numbers are…well, not exactly the best material to spark fires of innovation, however important they might be for actual implementation and consensus-building. But since a WIFIA financing is ultimately grounded in a physical project, with a specific real-world location and a clearly defined zone of impact, the piles of data can be anchored around a physical place. The obvious way to start with data visualization in this case — the kind of presentation that does spark innovation — is a map overlay. The graphic at the top of this article shows what some elements might look like. The base layer is the geographic area that will be influenced by the WIFIA project. The top layer is the estimated WIFIA loan benefit value for that project. The layers in between – all the relevant information about community social, economic and environmental concerns – are where the inspiration and innovation can happen.

This update was compiled by John Ryan, principal of InRecap LLC and a frequent contributor to WF&M on water finance topics and EPA’s WIFIA loan program.

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