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S.3626 - Water Infrastructure Finance and Innovation Act of 2012
A bill to provide financing assistance for qualified water infrastructure projects, and for other purposes.
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SECTION 1. SHORT TITLE.
SEC. 2. FINDINGS.
(1) it is in the national interest to encourage the timely and cost-effective rehabilitation and replacement of aging water and sewer infrastructure and to support investments in innovative, cost-effective, and sustainable infrastructure approaches to protect public health and clean water;CommentsClose CommentsPermalink
(4) the municipal bond market and State revolving fund programs are the primary long-term means for financing water infrastructure projects, but upfront investment needs are too high to be met with those traditional means alone;CommentsClose CommentsPermalink
(6) the growing funding gap demonstrates the need to invest in innovative and cost-effective approaches such as green infrastructure, water efficiency, and source water protection to obtain the greatest environmental and public health benefits per dollar invested;CommentsClose CommentsPermalink
(A) addressing the gap in funding for large, regionally and nationally significant projects by making available direct loans and loan guarantees to reduce borrowing costs and accelerate water infrastructure investment;CommentsClose CommentsPermalink
(C) promoting clean and safe water through compliance with the Federal Water Pollution Control Act (
(10) because loans, loan guarantees, and other credit instruments only incur long-term costs if subsidized or in the event of default, this Act can help to meet the water infrastructure needs of the United States at minimal long-term cost to the Federal Government.CommentsClose CommentsPermalink
SEC. 3. DEFINITIONS.
(4) COST OF A DIRECT LOAN; COST OF A LOAN GUARANTEE- The terms ‘cost of a direct loan’ and ‘cost of a loan guarantee’ mean the ‘cost of a direct loan’ and ‘cost of a loan guarantee’, respectively, as those terms are used in section 502 of the Federal Credit Reform Act of 1990 (
(i) an entity (other than a State or local agency with jurisdiction over highways or roads) that owns or operates a treatment works that serves the general public, including a municipal or regional separate storm sewer system management agency;CommentsClose CommentsPermalink
(v) any entity eligible to receive a loan or loan guarantee under a State water pollution control revolving fund established under title VI of the Federal Water Pollution Control Act (
(vi) any entity eligible to receive a loan or loan guarantee under a State drinking water revolving loan fund established under section 1452 of the Safe Drinking Water Act (
(B) INCLUSIONS- The term ‘eligible entity’ includes a public-private partnership, except that only the public entity-owned or investor-owned utility shall receive assistance under this Act, not the private financing or development partner.CommentsClose CommentsPermalink
(ii) to reduce the energy consumption needs of a treatment works or a community water system, including the implementation of energy efficient or renewable generation technologies;CommentsClose CommentsPermalink
(I) the repair, replacement, or upgrading of a treatment works or sewage collection system in a community that exists on the date of enactment of this Act to address an adverse environmental condition existing on that date of enactment;CommentsClose CommentsPermalink
(II) the construction of an advanced decentralized wastewater treatment system, including planning, design, associated preconstruction planning activities (as defined in section 212 of the Federal Water Pollution Control Act (
(III) implementation measures to control, manage, reduce, treat, infiltrate, or reuse municipal stormwater, the primary purpose of which is the protection, preservation, or enhancement of water quality to support public purposes (including decentralized or distributed stormwater controls, low-impact development technologies and nonstructural approaches, stream buffers, and wetlands restoration and enhancement, the procurement and use of equipment to support minimum measures, such as street sweeping and storm drain system cleaning, and acquisition of other land and interests in land to meet the needs of existing development that are necessary for those activities and measures);CommentsClose CommentsPermalink
(xii) to carry out water conservation or efficiency projects, the primary purpose of which is the protection, preservation, or enhancement of water quality to support public purposes;CommentsClose CommentsPermalink
(xiv) to carry out water, rainwater, and wastewater reuse, reclamation, recycling, and rainwater harvesting projects, the primary purpose of which is the protection, preservation, or enhancement of water quality to support public purposes; andCommentsClose CommentsPermalink
(10) STATE INFRASTRUCTURE FINANCING AUTHORITY- The term ‘State infrastructure financing authority’ means the State entity established or designated by the Governor of a State to receive a capitalization grant provided under, or to otherwise carry out the requirements of, title VI of the Federal Water Pollution Control Act (
SEC. 4. ESTABLISHMENT.
The Administrator may make a direct loan, including a subordinated loan, or a loan guarantee to an eligible entity to carry out activities for an eligible project in accordance with this Act.CommentsClose CommentsPermalink
SEC. 5. APPLICATIONS.
(a) In General- As a condition of receiving assistance under this Act, an eligible entity shall submit to the Administrator an application at such time, in such manner, and containing such information as the Administrator may require.CommentsClose CommentsPermalink
(b) Combined Projects- In the case of an eligible project described in section 3(8)(C), the Administrator shall require from the eligible entity a single application for the group of projects.CommentsClose CommentsPermalink
SEC. 6. USE OF ASSISTANCE.
(A) development phase activities, including planning, feasibility analysis, revenue forecasting, environmental review, permitting, and other preconstruction engineering and design work;CommentsClose CommentsPermalink
(3) to provide for any funding mechanisms necessary to meet market or affordability requirements, reasonably required reserve funds, capitalized interest issuance expenses, and other carrying costs during construction of the project; andCommentsClose CommentsPermalink
SEC. 7. SELECTION AMONG ELIGIBLE PROJECTS.
(2) the creditworthiness of the project under consideration, including the terms, conditions, financial structure, and security features making up the proposed financing, and the financial assumptions upon which the project is based;CommentsClose CommentsPermalink
(3) the need for Federal assistance, including the likelihood that the provision of assistance by the Administrator under this Act will cause the project to proceed more promptly and with lower costs for financing than would be the case without the assistance;CommentsClose CommentsPermalink
(7) whether the project, to the maximum extent practicable, incorporates environmentally sustainable approaches, including conservation, efficiency, reuse, source water protection, energy efficiency, green infrastructure, and other innovative techniques;CommentsClose CommentsPermalink
(3) a financing plan that factors in all lifecycle costs and describes the sources of revenue from ratepayers, grants, bonds, loans, and other sources designated to meet those lifecycle costs;CommentsClose CommentsPermalink
(7) a demonstration of consistency with State, regional, and municipal watershed plans, water conservation and efficiency plans, or integrated water resource management plans.CommentsClose CommentsPermalink
(c) Special Rule for Combined Projects- For an eligible project described in section 3(8)(C), the Administrator shall consider only the criteria described in paragraphs (1), (2), (3), and (5) of subsection (a).CommentsClose CommentsPermalink
(d) Reasonable Assurance of Payment- The Administrator may select an eligible project for assistance only if the Administrator finds that there is a reasonable assurance that all payments will be made on the credit instrument.CommentsClose CommentsPermalink
SEC. 8. CREDIT EVALUATION.
(c) Rule for Certain Combined Projects- For an eligible project described in section 3(8)(C) for which a State infrastructure financing authority is the eligible entity, in addition to the creditworthiness consideration under section 7(a)(2), the Administrator shall evaluate the creditworthiness of each entity represented by the State infrastructure financing authority that will be carrying out any eligible project described in section 3(8)(A) that will be a part of the eligible project.CommentsClose CommentsPermalink
SEC. 9. TERMS AND CONDITIONS.
(a) In General- Each direct loan and loan guarantee made under this Act shall be on such terms and conditions and contain such covenants, representations, warranties, and requirements (including requirements for audits) as the Administrator may prescribe.CommentsClose CommentsPermalink
(1) IN GENERAL- The interest rate applicable to a direct loan shall be the rate that is set by reference to a benchmark interest rate on marketable Treasury securities with a similar maturity to that direct loan, as of the date of issuance of the direct loan.CommentsClose CommentsPermalink
(2) HIGHER INTEREST RATES- The Administrator may charge a higher interest rate on a direct loan if the Administrator determines that the risk profile of the eligible project indicates a higher interest rate is necessary to protect the interests of the United States.CommentsClose CommentsPermalink
(c) Term of Loan- The Administrator may provide assistance under this Act only with respect to a credit instrument the final maturity date of which is not later than 35 years after the date on which funds are disbursed.CommentsClose CommentsPermalink
(d) Security Features- The Administrator shall require a borrower receiving assistance under this Act to use a rate covenant, coverage requirement, or similar security feature supporting the project obligations to ensure repayment.CommentsClose CommentsPermalink
(1) SCHEDULE- The Administrator shall establish a repayment schedule for each direct loan under this Act based on the projected cash flow from project repayment sources.CommentsClose CommentsPermalink
(2) COMMENCEMENT- Scheduled repayments of principal or interest on a direct loan made under this Act shall commence not later than 5 years after the date of substantial completion of the project, as determined by the Administrator in a manner set forth at the time the direct loan is made.CommentsClose CommentsPermalink
(A) IN GENERAL- If the Administrator determines that a borrower lacks the resources to make scheduled payments on a direct loan made under this Act based on circumstances not foreseeable at the time the direct loan is made, the Administrator may allow for the deferral of the payments.CommentsClose CommentsPermalink
(C) CRITERIA- Any payment deferral under subparagraph (A) shall be contingent on the project meeting criteria established by the Administrator, which shall include standards for reasonable assurance of repayment.CommentsClose CommentsPermalink
(1) TERMS- The terms of a credit instrument that is the subject of a loan guarantee under this Act shall be consistent with the terms set forth in this Act for a direct loan, except that the interest rate and any prepayment features on the credit instrument shall be negotiated between the borrower and the lender, with the approval of the Administrator.CommentsClose CommentsPermalink
(2) INTEREST RATE- The Administrator may make a loan guarantee under this Act only if the Administrator determines that the interest rate on the credit instrument that is subject to the loan guarantee is appropriate, taking into account the prevailing rate of interest in the private sector for similar obligations.CommentsClose CommentsPermalink
(3) ELIGIBLE LENDER- The Administrator may not make a loan guarantee under this Act unless the lender of the loan or purchaser of the debt security that will be the subject of the loan guarantee is a non-Federal, qualified institutional buyer (as defined in section 230.144A(a) of title 17, Code of Federal Regulations (or successor regulation)), including--CommentsClose CommentsPermalink
(4) ADEQUATE SERVICING PROVISIONS REQUIRED- No loan guarantee may be made under this Act for a loan unless the Administrator determines that the lender with respect to the loan is responsible and that adequate servicing provisions have been made for the loan that is the subject of the loan guarantee that are reasonable and protect the financial interest of the United States.CommentsClose CommentsPermalink
SEC. 10. PROGRAM ADMINISTRATION.
(b) Assistance From Expert Firms- The Administrator may retain the services of expert firms, including counsel, in the field of municipal and project finance to assist in the underwriting and servicing of a direct loan or loan guarantee made under this Act.CommentsClose CommentsPermalink
(A) collect fees for administrative expenses, including premiums for loan guarantees, at a level that is sufficient to cover the costs of services of expert firms and all or a portion of the costs to the Federal Government of servicing the direct loans and loan guarantees made under this Act; andCommentsClose CommentsPermalink
(2) LEVEL OF FEES- The Administrator shall set the fees described in paragraph (1) at a level that will minimize the cost to the Federal Government and maximize the assistance that can be provided under this Act, while providing competitive credit terms to eligible projects, in order to reduce borrowing costs and accelerate water infrastructure investment.CommentsClose CommentsPermalink
SEC. 11. TECHNICAL ASSISTANCE.
The Administrator may use amounts made available to carry out this Act to provide technical assistance to applicants and prospective applicants in creating financing packages that leverage a mix of public and private funding sources.CommentsClose CommentsPermalink
SEC. 12. RESTRICTIONS.
(b) Refinancing- The Administrator shall make available to eligible entities for refinancing activities described in section 6(4) not more than 15 percent of the total amounts made available to carry out this Act.CommentsClose CommentsPermalink
SEC. 13. PREVAILING WAGES.
(a) In General- Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, all laborers and mechanics employed by contractors and subcontractors on projects funded directly by, or assisted in whole or in part by and through, the Federal Government pursuant to this Act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code.CommentsClose CommentsPermalink
(b) Administration- With respect to the labor standards specified in this section, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and
SEC. 14. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED GOODS.
(a) In General- Except as provided in subsection (b), none of the amounts made available under this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.CommentsClose CommentsPermalink
(2) iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; orCommentsClose CommentsPermalink
(c) Public Notice- If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written justification as to why the provision is being waived.CommentsClose CommentsPermalink
SEC. 15. FUNDING.
(1) DIRECT LOANS AND LOAN GUARANTEES- There is authorized to be appropriated for the cost of providing direct loans and loan guarantees under this Act such sums as are necessary.CommentsClose CommentsPermalink
(B) ADDITIONAL AUTHORIZATION OF APPROPRIATIONS- In addition to amounts authorized to be appropriated under subparagraph (A), there are authorized to be appropriated for administrative expenses under this Act such sums as are necessary.CommentsClose CommentsPermalink
(b) Payment of Subsidy Cost- A borrower may pay for the cost of a direct loan or loan guarantee under this Act, along with the appropriate amount of related administrative expenses, with payment the Administrator may use, as provided in advance in appropriations Acts, instead of using amounts authorized under subsection (a), to make a direct loan or loan guarantee to the borrower.CommentsClose CommentsPermalink