State has interest-free loans for municipal sewer upgrades

Staff Reports Posted 20 January 2015 at 12:00 am

‘Hardship status’ will help poorer communities access funds for projects

File photo by Tom Rivers – The Village of Albion in the past has used interest-free funding from the Environmental Facilities Corporation for upgrades at its sewer plant near the corner of Butts Road and Densmore Street.

Local municipalities eyeing improvements for their sewer plants may be able to use interest-free funding from the state for projects.

Gov. Andrew Cuomo announced the state is making it easier for municipalities with fewer than 300,000 people to obtain interest-free financing for up to 30 years to improve wastewater collection and treatment systems. The funding would come through the Environmental Facilities Corporation.

The first communities to take advantage of the new hardship program are the City of Olean in Cattaraugus County and the Village of Malone in Franklin County. The EFC Board of Directors on Jan. 15 approved a $12.7 million no-interest loan to upgrade the Village of Malone’s wastewater treatment plant, along with a $19 million loan package for the City of Olean, including $18 million interest-free, to expand and upgrade that city’s wastewater treatment plant.

With this zero-interest financing from EFC, Olean will save $425,000 and Malone $300,000 over the cost of financing these projects on their own.

“With more communities eligible for interest-free financing, we will kick-start projects that had been held up,” said EFC President and CEO Matthew Driscoll. “Interest-free loans can be a great incentive for municipalities to move forward on projects that will not only protect the environment but also could spur new opportunities for economic development. With a hardship designation, a community is also eligible to extend this interest-free financing into a long-term loan of up to 30 years, resulting in even-more savings for ratepayers.”

Under this new hardship policy, EFC is streamlining its application procedures and providing local governments with an additional month, until March 2, to apply for Clean Water loans. Now municipalities at or below the state’s Median Household Income level of $55,603 based on the 2010 census automatically qualify for a hardship, zero-interest loan.

Previously, municipalities had to demonstrate hardship status by submitting numerous financial and income measurements, in addition to the MHI, as well as design factors that calculate the hydraulic and organic loading rates in a proposed treatment system.

For eligible communities with a population of 300,000 or less and that are below the state’s Median Household Income, hardship financing will now be available. The financing can be used by qualifying local governments for projects with total costs up to $25 million, with the first $18 million in EFC financing at a zero-interest rate, and repayment of up to 30 years.

State Assemblyman Steve Hawley, R-Batavia, said the EFC change will make it easier to access funding for smaller governments and towns, allowing them to upgrade their infrastructure.

“I am excited about the availability of these new zero-percent loans,” Hawley said. “This is a case where a decision has the potential to positively impact communities and residents at the local level. Many local governments in my district struggle to keep taxes low and finance community projects due to costly state mandates and rising healthcare costs. These interest-free loans will hopefully absorb some of the financial stress placed on our local governments and allow them to finance long-term design and construction of more efficient wastewater infrastructure systems. In doing so, we can employ local construction groups, protect the environment and allow for more efficient removal and purification of our resident’s wastewater.”