Hoeven Convenes Roundtable to Outline Next Steps for WIFIA Loan for Comprehensive Flood Protection in the Red River Valley
Senator Worked with EPA Administrator to Secure Access to Loan, Could Save at Least $600 Million in Interest Payments
FARGO, N.D. – Senator John Hoeven today convened a roundtable with the city leaders and the governor to determine the next steps now that the Environmental Protection Agency (EPA) has invited the Fargo-Moorhead region to apply for a Water Infrastructure Finance and Innovation Act (WIFIA) loan for comprehensive flood protection. The Diversion Authority applied for a $510 million WIFIA loan, and is eligible to apply for up to an additional 10% of the projected costs or $561 million. Hoeven announced the loan earlier today with EPA Administrator Andrew Wheeler, as well as Senator Kevin Cramer, Congressman Kelly Armstrong and Governor Doug Burgum. Hoeven has worked to fund the WIFIA program and to secure the formal invitation to apply, a critical step in allowing the project to access this low-cost, flexible funding source, which:
- Removes the risk of increasing interest rates and provides lower rates than other financing options.
- Allows the project sponsor to draw down funds as needed, enabling less debt to be carried earlier in the project.
- Provides flexibility in its payback schedule.
- Could save the project at least $600 million in interest payments over the 40-year life of the loan, according to the project sponsor.
Invitations to apply to the WIFIA program are limited through a competitive process, and selection ensures the applicant will receive a loan. Today’s announcement is part of Hoeven’s work to fund permanent flood protection and bring down the cost of the local share. To do that, the senator has:
- Secured the new Project Partnership Agreement (PPA) with an increased federal funding level of $750 million.
- Worked to advance the WIFIA program by:
- Holding a roundtable with local officials in April to outline the benefits of the WIFIA program.
- As a member of the Senate Appropriations Committee, Hoeven secured funding for the EPA’s WIFIA program in FY2019.
- Passing legislation in the FY2019 Energy and Water Development Appropriations bill directing the Corps to complete a detailed plan for implementing its WIFIA program and providing up to $6 million for this effort. While the Corps works to implement its program, the project sponsors opted to utilize EPA’s WIFIA program.
- Leading the delegation in expressing support to Wheeler in July on behalf of the project’s Letter of Interest (LOI) for the WIFIA loan. The senator also spoke with the administrator last month to further advance the project’s selection.
“Securing access to WIFIA financing is a tremendous step in advancing the construction of comprehensive flood protection in the Fargo-Moorhead region,” said Senator Hoeven. “This program provides flexibility and lower rates, which could result in at least $600 million in reduced interest payments. That’s why we’ve worked in recent years to ensure the project sponsor could apply for a WIFIA loan and sought to facilitate the project’s selection by the EPA.”
“We are grateful for the leadership of our Congressional delegation in this area. This loan would not have been possible without their vision and efforts in Washington,” Board Chair and Cass County Commissioner Mary Scherling said. “Having a low-interest loan helps solidify our financial plan. This is a critical financial step as we continue construction and bring a P3 developer on board.”
Hoeven’s work to secure access to the WIFIA program comes as the latest in his efforts to advance comprehensive flood protection in the Red River Valley. These include project authorization, new construction start and other key milestones, an overview of which can be found here. In order to continue this progress, the senator recently included the following measures in the Senate’s Fiscal Year (FY) 2020 funding legislation:
- Construction Funding: Provides a total of $233 million in funding above the President’s request for construction of flood control projects. These funds are not allocated to a specific project and will be available to support Corps priorities in the FY20 work plan, which will be released approximately 30 days after the FY20 Energy and Water appropriations bill is signed into law. This increase will empower the Corps to support more of its priorities, like comprehensive flood protection for the Fargo-Moorhead region.
- Funding for P3 Projects: Provides $100 million for construction in a new account for “Alternative Delivery” projects, including public-private-partnership (P3) projects and split delivery projects. Fargo-Moorhead would be eligible for funding from this account in addition to the construction funding the bill provides above the budget request for flood control projects.
- This is a result of Hoeven’s work to provide direct funding for P3s. P3s represent a new type of financing model for the Army Corps of Engineers and have not been included in previous budget requests.
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