On Dec. 20, 2018, the Environmental Protection Agency revealed plans to loan $47.7 million to the Metropolitan St. Louis Sewer District. Funded by the Water Infrastructure Finance and Innovation Act program, the loan will help finance the MSD’s Deer Creek Sanitary Tunnel and Sanitary Relief project.

The funding will allow the MSD to build a new pump station and replace or repair more than three miles of sanitary sewers. Improvements will help ease wastewater overflows and decrease basement backups for the 1.4 million people in the MSD service area. Additionally, it will help improve the water quality in Deer Creek.

In total, the project is expected to cost approximately $97 million — more than half of which will be financed by the EPA. Thanks to the WIFIA program’s low-interest rate loans, the MSD is expected to save an estimated $15 million, compared with standard bond issuance.

Deer Creek Sanitary Tunnel and Sanitary Relief Project Benefits

No doubt, the project is a major undertaking, and it’s expected to produce key results, including:

  • Reducing surcharges, basement backups, and five constructed sanitary sewer outfalls
  • Dewatering the tunnel, a major storage facility that will control the flow of sanitary water into the River Des Peres foul water system
  • Serving as part of a series of projects that will ultimately result in the removal of 19 constructed SSO outfalls
  • Reducing the financial burden of the Metropolitan St. Louis Sewer District by $15 million, thanks to financing from the WIFIA loan, as noted above

Beyond these benefits, the project is expected to create 70 new jobs to the area. Construction will begin in 2019 and is currently slated for completion in 2023

About the WIFIA Program

Although it’s a separate entity, the WIFIA program works in conjunction with the State Revolving Fund programs to offer subsidized financing for large dollar-value projects. Eligible borrowers include local, state, tribal, and federal government entities; partnerships and joint ventures; corporations and trusts; and SRF programs.

Loans offered through the WIFIA program have low, fixed interest rates and flexible financial terms. This allows borrowers and their customers to save a significant amount of money. A few key features include:

  • Interest rate equal to the U.S. Treasury rate of a similar maturity
  • Customized repayment schedules
  • Deferred payment.
  • Subordination
  • Ability to combine WIFIA loans with other funding sources

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