How EPA WIFIA Program Saved Drinking Water Ratepayers $18 Million

Vicente Sarmiento, Director, Orange County Water District, Fountain Valley, CA

Today Vicente Sarmiento, Board of Director, Orange County Water District (OCWD), Orange County, California testified before the US Senate Committee on Environment and Public Works. We found his testimony exemplary in showcasing the financial benefits of  the Environmental Protection Agency’s (@EPA) Water Infrastructure Finance and Innovation Act (#WIFIA) Program by saving Orange County drinking water ratepayers at least $18 million.

Excerpt from Mr Sarmiento’s testimony

(Excerpt from) Testimony of Vicente Sarmiento, Board of Directors, Orange County Water District (OCWD), Orange County, California to the US Senate Committee on Environment and Public Works, July 11, 2018.

….OCWD was one of twelve original applicants selected to seek Water Infrastructure Finance & Investment Act (WIFIA) assistance. We submitted a WIFIA application, because it provided us with the ability to reduce the overall costs of financing the final phase of our Groundwater Replenishment System (GWRS), with an estimated cost of $270 million. The GWRS takes treated wastewater that otherwise would be sent to the Pacific Ocean and purifies it using a three-step advanced process to produce high-quality water that meets or exceeds all state and federal drinking water standards.

OCWD received approval of their application and expects to close on a WIFIA assistance loan within the month of July 2018. We are excited with this prospect.

Savings To Ratepayers = $18 Million

Our WIFIA loan will provide up to 49%, or approximately $135 million, of the project’s cost. As of the end of June, the borrowing rate on this assistance is approximately 3%. By comparison, our highly rated agency could issue tax-exempt bonds at around 3.8%, almost a full percentage point higher. The real life translation of this is a net cost savings of as much as $18 million.

But you need to factor in the extended repayment terms of up to 35 years, the ability to repay at any time, the subordination of the assistance to other OCWD issued debt (with a bankruptcy exception), funding flexibility in the use of the loan, and the opportunity to use the loan with other assistance like the SRF for the remaining 51% of the project’s cost. Each of these elements enhanced the project’s viability.

It is fair to say that WIFIA’s savings made it much easier to paint a financial picture to proceed with the project. If WIFIA had not been available, it is unclear how we would have proceeded with the project’s financing given the oversubscription of California’s SRF. It is highly likely we would have proceeded, but the costs of the project would have grown, putting pressures on the ratepayers.

In short, WIFIA is creating a savings for the ratepayers and the federal government is receiving a return on its investment through loan repayment and the dividends created in the development of a sustainable water supply that will support robust economic growth and improved public health.


OCWD takes the limited water supply found in nature and supplements it to provide water for more than the 2.5 million citizens that live and work in Orange County, California. OCWD has been entrusted to guard our precious and limited water resources and specifically the groundwater basin that serves as the crucial source of water supply for our region.

OCWD not only manages the basin, we have led the way on water supply and demand innovation; most prominently with the Groundwater Replenishment System or GWRS that has been internationally acclaimed, receiving the Stockholm Water Prize and Lee Kwan Yew Prize, among other international and domestic recognitions.

OCWD manages Orange County’s Groundwater Basin, which is a large underground aquifer that through OCWD’s careful management, supplies approximately 75% of the water supply for north and central Orange County. To replace the groundwater that is pumped out, OCWD has a proactive program to refill and protect the basin to ensure a reliable water supply.

To read Vicente Sarmiento’s testimony in its entirety click here.

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