The first month of President Donald Trump’s second term has so far included some executive orders and memorandums that targeted diversity, equity and inclusion (DEI) policies, environmental justice and energy policies misaligned with the new administration. Consequently, some of these executive orders and memorandums temporarily paused or threatened to pause federal funding for water infrastructure programs including grants and loans. While water funding programs do not appear to be a target of the administration’s cutbacks, the back-and-forth, freezing and unfreezing of funds has caused confusion and concern.
At the time of this issue’s publication, it was the interpretation of industry associations including the Association of Metropolitan Water Agencies and WateReuse that water funds administered by departments and agencies like the Bureau of Reclamation and U.S. Environmental Protection Agency (EPA) will not be frozen under Trump’s recent executive orders. However, grantees and other funding recipients may face delays in the coming weeks in project award processing and fund disbursements.
As we know, applying for and implementing federal funding for water projects can be complex as it is. Despite the boost in federal funding in recent years thanks to the Bipartisan Infrastructure Law, for example, navigating the rules on federal grant and loan applications is tedious. On top of that, funding agencies review many applications for project funding – and if you want federal dollars, it’s important your application is done correctly. In addition, the application process can be a huge administrative task for public utilities, many of which typically don’t employ in-house experts on the federal funding submittal process. We thought it would be a good time to review some best practices.
Last fall at WEFTEC in New Orleans, we caught up with Emily Platt, Lead Grants Analyst at Carollo Engineers, who works with communities and water and wastewater systems, to discuss some of these challenges. Platt specializes in writing and submitting grant and loan applications and coordination with federal and state agencies. Below is a snippet of our conversation in which she walks us through some tactics, tips and reminders for applying for these funds.
Water Finance & Management: Do you work with clients on both grant and loan applications?
Platt: Yes, grants and loans. We can help clients with the very first part of the process, such as writing a letter of intent or developing a needs survey, all the way through to finalizing an application, which in some cases can take a whole year. Grants are typically shorter turnarounds in terms of actually writing them. In many cases, the Notification of Funding Opportunity comes out, at shortest, 60 days before the application is due – so, you may only have two months to write a 40-page application. The goal is to be prepared and get started on the right foot in those cases.
WF&M: What types of situations lend themselves to grant funding? Are grants or loans a more sustainable source of long-term funding for water utility projects?
Platt: Loans are in fact a far more sustainable, long-term source and can also be much larger capacity. WIFIA, for example, which has been around since 2018, has funded billions of dollars of infrastructure projects even though WIFIA funds are limited to 49% of eligible project costs. With WIFIA, you can package multiple projects together under one loan, so that may be attractive for a long-term option.
The SRFs are also very longstanding programs, and they have some principal forgiveness which you don’t get with WIFIA. We’re also seeing states having to cap their per-project maximum. In Colorado, with the Water Pollution Control Revolving Fund, the project cap is at $18 million, so you wouldn’t be able to get any more than $18 million even if you have a $60 million project.
In general, a grant may not be the ideal long-term solution, but you can partner a grant with a loan to offset the cost. There are, however, larger grants that come from the U.S. Bureau of Reclamation. For example, projects that cost more than $500 million are eligible under their Large-Scale Water Recycling Programs and some have received nearly $60 million. Generally, grant funding is also great for planning or design to help kick a project off. There are also ways to stack and combine various funding sources to make it work out long term.
WF&M: For utilities, accessing federal dollars can increase project costs given the various requirements and the need for consultation. What are the costs v. benefits to securing this funding?
Platt: The cost for [consultants] to do the work is going to vary. But a lot of utilities aren’t going to have someone who specializes in grant and loan applications, so despite the costs, it may still be a benefit to hire outside consultation. Utilities don’t have the manpower to focus on this because they typically need to focus on critical, on-the-ground issues. Sometimes an entity, such as a utility, has these critical projects and they will never get done if they don’t have grant funding. If there is a cost and even if you have budget constraints, if you think you can comply with reporting requirements, trying to obtain that funding can be worth all of those efforts to see your project through to fruition.
WF&M: Which tools are available to utilities to help connect them with available funding opportunities and to help them manage these efforts internally?
Platt: In terms of searching for available funding opportunities, many states have grant libraries, or online portals. The California Grants Portal is a great example. It’s a digital tool that consolidates all the open grant applications and you can filter and search by grant category, timeline, projects, open/closed and upcoming programs, etc. Not all of them are like California’s but it’s a good example. Grants.gov does have a search capability, but it can be a little clunky. If you can find an external library, such as a grants portal, that is going to be your best option to search for funding whether it’s a state that has created it or a nonprofit.
WF&M: What about tips for writing an application? What can a utility or consultant expect when writing and submitting these applications?
Platt: There are really no tools or software for application writing – it’s people who need to write it at the end of the day. But there are some best practices you can follow. There are very specific questions you need to answer, and a programs application is designed to gather an overall narrative and perspective about your project. You’re answering questions that the funding agency has asked you to answer and you need to answer very clearly. Some people think you need to use a lot of fluff – no. Be clear, concise and consistent. Your funding agency just wants you to get to the point. Consistent and clear applications are what are going to go through because reviewers will better understand your project. If you’re inconsistent, a reviewer can get confused and decrease your points. Take the time to do it accurately. In addition, sometimes there are benefit-cost ratios and other numerical statistics you may be asked to provide in your application.
WF&M: In applying for grants/loans, what are some requirements that applicants should be ready for? Are there any recurring challenges you are seeing?
Platt: On the front end, when you’re writing a grant application, there are so many prescriptive requirements that you need to adhere to – even specific things like using 12-pt font size, for example. If you don’t have it in 12-pt font, it can get thrown out and that little mistake can take you out of the running completely.
On the back end, after you receive the funding, if there is a federal dollar tied to a project, you need to comply with federal “cross cutters.” Federal “cross cutters” are specifically mandated regulations that are the conditions for all projects or programs receiving funds (Smith, 2006). Build America, Buy America (BABA) is a recent critical cross cutter that was implemented along with the Bipartisan Infrastructure Law, but there are many others. As a municipality, you need to be very aware of that because sometimes people hear “State Revolving Fund” and don’t realize its funded by the EPA. Yes, the state budgets do provide some funding, but you’re going to be getting funding that has passed through the EPA, and you need to comply with those cross-cutters since there will be federal dollars connected to your loan.
Another “cross-cutter” example is the need to comply with the National Environmental Policy Act (NEPA) requirements, which can be an additional cost. Your funding agency may require a full NEPA evaluation depending on the location of the project and if it’s in an undeveloped area, for example. If the project is inside the fence, environmental requirements may be a little easier. BABA requirements are newer which also have cost implications, but they are still evolving.
It’s important to remember that your funding agencies are there to assist you through the process. Even if it’s daunting and confusing, the people who are your representatives for your grant agreement can help you through that, and they can help you find waivers or direct you to suppliers. If you get the funding, you don’t need to be alone in figuring these things out. Talk to your program representative. But overall, complying with federal “cross-cutters” can be an administrative burden.
WF&M: On the other hand, what are some characteristics of applicants that “coast” through the process?
Platt: From the beginning, consistency is key. You may have a good understanding of your design, cost, scope and schedule of your project, and as long as you can be consistent in the application that you write to the funding entity and in your engineering report, which you may use for backup, then you are already starting off on the right foot because the funding agency can see that you are prepared. On the back end when you’re doing the reporting and the reimbursement requests, it’s also all about preparation. There are timeline implications. You may turn in an application, and you may not hear back for six months. But in the meantime, you should be preparing for those requirements that will come. The grant agreement will spell out all of your requirements. Again, ask your funding agency questions if you have them and understand what your reporting needs are.
Get organized and set up a process to do that reporting, whether it be quarterly or monthly. Get your team together to understand the requirements. There’s a big scheduling component to being successful on the back end, such as coordination with contractors, etc.
Being organized when it comes to reporting will work in your favor. Your funding agency will want to fund you over someone else that may have had inaccurate reporting in the past. At the end, audits are possible with the award of any federal dollars to an entity.
WF&M: Any other tips or thoughts you can leave us with?
Platt: There are always going to be match requirements. You’re never going to have a fully, 100% funded project using federal money because there are caps, so you will always need to match some funding.
Internal and external communication is important. Internally, you should talk to city council on down to the staff at the wastewater treatment plant, etc., and make sure they are aware of funding opportunities that could impact their projects. Be proactive and have conversations about what kind of funding you intend to pursue.
External communication is critical too – engage your community in the project prior to the application. This could be community meetings to review projects the public would like to see in their neighborhood. This will help you prioritize based on the needs of the community.
Funding agencies also like letters of support. One good example would be to show letters of support from community nonprofits, for example, that perhaps work with individuals in the community that support your project. That gives your funding agency even more insight into the criticality of the project. Community engagement is important to show funding agencies and is generally a best practice.
Andrew Farr is managing editor of Water Finance & Management and has covered the U.S. water utility industry for 13 years for publisher Benjamin Media, Inc., based in the Cleveland, Ohio, area.
Great information from Emily! Thanks