Serious, Perhaps Fatal, Issues

Here’s a summary of the serious issues facing the WIFIA Loan Program, as outlined in two recent WFM articles and various posts:

Explaining the Decline in WIFIA Loan Volume: Part 1

• Dramatic 63% decline in loan volume 2022-2024, completely unrelated to Trump 2.0.

• Decline is most likely the result of displacement by two other federally subsidized sources of water infrastructure finance.

Explaining the Decline in WIFIA Loan Volume: Part 2

• WIFIA growth 2018-2021 was also likely due to displacement by the Program of the other two federally subsidized sources, with no apparent real-world impact on US water capex.

• Overlap of WIFIA loan features with those of SRF loans and tax-exempt bonds, a concern when the Program was being developed in 2014, appears to have been confirmed by actual history 2018-2024.

• Displacement and overlap are not consistent with OMB’s standard policy for federal credit programs as specified in Circular A-129.

WIFIA Mandatory Spending

• WIFIA’s mandatory spending for FCRA interest rate re-estimates is now over $2 billion, or 9% of the Program’s current $22 billion portfolio. Another $600 million is likely to be required in 2026.

• This amount is far in excess of WIFIA’s discretionary funding. Although FCRA re-estimates are highly technical, the cost to taxpayers is real and the scale could be the basis of a Solyndra-type narrative.

• Large mandatory spending was a predictable result of the way WIFIA borrowers were using the Program’s interest rate management features, especially in 2019-2021.

The Time Has Come for Major Reform

After eight years of operational results, the time has come for WIFIA stakeholders and policymakers to recognize the reality of WIFIA’s position and begin a process of major reform. The Program has immense potential, not only for the US water sector but as a model for federal infrastructure credit in general. This potential, or perhaps even the Program’s continued existence, will not be realized without fundamental reform.

Reform is the context in which the recently re-introduced Water Infrastructure Finance and Innovation Act (WIFIA) Amendments of 2025 bill should be viewed. Major reform was not the intent, nor will this bill address many of WIFIA’s issues. But its enactment would be a recognition of the need for statutory improvement, a statement of broad stakeholder support and, perhaps most importantly, a visible first step in the process.