Adding a 55-year term and a limited buydown to WIFIA loan features will be useful to CWIFP’s overall mission for large-scale water management and dam rehabilitation projects.

But the removal of obsolete dams, especially the smaller ones, might benefit from a few additional features.  While dam rehabilitation will presumably result in a continuing infrastructure asset with some identifiable economic benefits (e.g., electricity generation, water supply, flood control, etc.), dam removal will primarily result in environmental restoration – a very different kind of asset, closer to a pure public good with social, not necessarily economic, value.  Federal financing towards that objective might have a unique role to play, which justifies consideration of additional features.

Here are three quick ideas for special dam removal loan features, based (as always) on existing federal financing precedents:

• 75-Year Term:  Ecological and environmental restoration to the status quo ante presumably has a useful life of – forever, right?  A loan term of 75 years will have lower debt service requirements than the currently proposed 55-year term for long-lived economic infrastructure.  The DOT’s TIFIA already offers 75-year terms for some transportation assets.  It’s even more justifiable for environmental restoration assets.

• 10-Year Debt Service Deferral:  WIFIA currently permits the program to delay debt service payments for up to five years after project completion.  That’s 14% of the current maximum loan term of 35 years.  The same percentage for a 75-year term is about 10 years.  The practical purpose is to allow the community to see environmental restoration in a very long-term perspective, with minimal short-term impact on the local budget.

• Loans to Small Dam Removal Revolving Funds:  WIFIA’s ability to lend to clean and drinking water state revolving funds was made explicit and slightly enhanced with the addition of various features collectively called SWIFIA.  SRFs are very important to smaller projects that can’t access market financing efficiently or need extra, non-market support.  SWIFIA loans allow the SRFs to leverage their capabilities, so that grant funding goes further.  Analogously, CWIFP could be explicitly permitted (even encouraged?) to do the same for loans to revolving funds that could be established, perhaps using a combination of federal, state, and philanthropic grants, specifically for small dam removal.  There’s also an important separate rationale in this case — the availability of CWIFP loans might be a key factor in getting such funds established in the first place.