Whether working with federal, state or private entities for funding assistance, it’s important for municipal and other organizations to identify the loan and/or grant that most appropriately matches their financial constraints and liabilities as well as the needs of their environmental restoration or water system improvement project. Depending on the agency or non-profit, most grants and loans have different qualification limits, application processes and project reporting requirements.
Grants are often need-based, very competitive and can require matched funding. Applicants may have to meet strict requirements in terms of financial need as well as environmental goals. For instance, many U.S. Department of Agriculture grants are awarded to projects located in areas that do not exceed a specified median household income, which varies based on the branch and region. Even so, competition is stiff and meeting need-based qualifications does not guarantee a grant award. Efforts that are large in size, notable from an achievement or public awareness/acceptance standpoint and serve an extreme need or poverty-stricken area often have a distinct advantage. Many agencies have developed a formal scoring system to evaluate applications. For example, the Maryland Department of the Environment focuses on results, rating projects with more widespread impacts, over smaller, more concentrated efforts.
The most obvious benefit of grants is that they do not have to be paid back, but most come with strict reporting requirements and many organizations expect awardees to match at least a portion of the funds; although, in-kind work is often suitable to meet matching obligations. Grants may also require projects to follow a formal bidding process using pre-set wage rates that can drive up construction costs. Funding disbursements must be justified through invoices and other rigid documentation requirements.
There are many opportunities to secure low-interest loans for water-related improvements. Rates are more competitive (as low as 2%) versus interim private financing. Applications require detailed financial statements, and municipal organizations should be prepared to explain payment strategies, including any subsequent tax increases. Loans require less reporting for disbursements, often only basic quarterly reports, and offer more flexibility in terms of supplemental funding to help with unforeseen circumstances that are often encountered during construction. Some loans come with bidding and wage rate requirements similar to grants, while others allow for the recipient to determine and negotiate delivery methods, which can help keep costs down.
One thing that is standard across funding streams is a “first come first served” process. Those interested in identifying and applying for appropriate funding assistance should do their homework, have the needed information prepared, and watch closely for application advertisements and submission schedules, especially in the beginning of the year. It’s also a good idea to check back with agencies towards the close of the calendar when the “use it or lose it” approach can create opportunities for streamlined financing.
Sometimes, the best solution is a combination of a loan and grant, offering inherent flexibility, balancing construction costs and restrictions, while minimizing debt. These could come from the same or different organizations. As part of the overall restorative strategic plan for Grand Lake St. Marys in Ohio, KCI helped our clients apply for both a loan and grants to support individual improvements projects. A low-interest loan from the Ohio Revolving Water Trust Fund was the main funding vehicle for alum treatments (used to bind soluble reactive phosphorous thereby limiting available nutrients that fuel algal and mycrotoxin development) over multiple years. The team also secured EPA 319 grants that are administered by state regulatory officials to design and build several treatment trains, which are “engineered ecosystems” that address water quality degradation through removal of dissolved and particulate nutrients via a series of interlinked engineered, bio-technical and natural treatment systems.
Next week I will wrap up this three-part series by offering several tips to help you through your grant and/or loan application process.