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Environmental Loans Fiscal Sustainability Plan (FSP)

Planning to use financial assistance from the Clean Water Fund Program (CWFP) for constructing your municipal wastewater treatment project? Please be aware that modifications to the Clean Water Act which were enacted in 2014 (section 603(d)(1)(E)) require a recipient of a loan for a project that involves the repair, replacement, or expansion of a publicly owned treatment works to develop and implement a Fiscal Sustainability Plan (FSP) or certify that it has developed and implemented such a plan.

Based on this definition, the CWFP is only requiring FSPs for wastewater treatment systems.

NOTE: FSPs are not required for new treatment works (unless an existing treatment works is being replaced) or for projects involving an upgrade that does not involve repair/replacement of any components of the treatment works or expansion of the treatment capacity (e.g., adding advanced treatment).

Required FSP components

A Fiscal Sustainability Plan is required, at a minimum, to include the following components:

  • an inventory of critical assets that are part of the treatment works;
  • an evaluation of the condition and performance of the inventoried assets or asset groupings;
  • a certification that the assistance recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan; and
  • a plan for maintaining, repairing, and, as necessary, replacing the treatment works and a plan for funding such activities.

FSPs are basically an asset management plan with some extra attention paid to energy and water efficiency. FSPs should be treated as "living documents" that are regularly reviewed, revised, expanded, and implemented as an integral part of the operation and management of the system.

What documentation is required?

For systems that already have the minimum required components of an FSP in place, certification that the requirement has been met is required prior to the loan closing.

For systems that do not already have the minimum required components of an FSP in place, completion of the FSP will be a condition of the Financial Assistance Agreement. A certification agreeing to this condition must be signed prior to loan closing and an additional certification that the FSP has been completed is required prior to the final loan disbursement and project closeout.

Revised form for SFY 2018 coming soon: CWFP Fiscal Sustainability Plan (FSP) Certification (includes application for funding to cover costs incurred developing FSP components). This certification also includes an application for assistance in paying for the costs of FSP development for those who are interested and qualify; see below.

Municipalities are not required to submit the FSP to the department for review. However, during site visits Environmental Loan Construction Management Engineers (CMEs) may ask to verify that: the required components of the FSP exist, the FSP contains the appropriate level of depth and complexity, and it is being implemented.

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Is there funding available to cover the costs of FSP development?

Municipalities may request CWFP financial assistance to cover costs incurred developing their FSP. Any municipality may receive loan funding to pay these costs. Note: The FSP certification and application for funding assistance is being revised and will be available online soon.

The CWFP will provide limited principal forgiveness funding (PF) for costs of FSP development to municipalities that qualify under the Affordability Criteria and Principal Forgiveness Methodology. The PF for FSP development will be a reimbursement disbursed as part of the CWFP loan. The eligible FSP development costs will be forgiven at the time of loan disbursement.

Projects with applications that are submitted at any time during the state fiscal year (SFY) are eligible to receive PF for FSP development as long as the municipality is otherwise eligible. The loan application does not need to be submitted by the Principal Forgiveness application deadline in order to qualify for FSP PF.

PF for municipalities with populations under 5,000:

  • If the municipality is eligible for PF for 30% or more of its total eligible project costs, then the CWFP would cover 100% of the FSP development costs with PF, up to a cap of $30,000.
  • If the municipality is eligible for PF of 15% to 25% of its total eligible project costs, then the CWFP would cover 50% of FSP development costs with PF, up to a cap of $15,000.
  • Any FSP development costs in excess of the caps are eligible for loan funding.

PF for municipalities with populations of 5,000 or greater:

  • If the municipality is eligible for PF for 30% or more of its total eligible project costs, then the CWFP would cover 50% of FSP development costs with PF, up to a cap of $30,000.
  • If the municipality is eligible for PF of 15% to 25% of its total eligible project costs, then the CWFP would cover 25% of FSP development costs with PF up to a cap of $15,000.
  • Any FSP development costs in excess of the caps are eligible for loan funding.

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Are there resources available to help with FSP development?

Many municipalities may already have components of an FSP as part of various documents and databases. Some potential existing sources of required components may include:

  • CMOM (Capacity, Management, Operations, and Maintenance) Program documentation
  • CMAR (Compliance Maintenance Annual Report)
  • Existing system maps
  • Replacement fund schedule (Equipment Replacement Fund (ERF))
  • Recent Focus on Energy audit
  • Capital Improvement Plans

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Asset Management Plan resources

Tools/resources to help with development of an Asset Management Plan include:

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Energy audit resources

Tools/resources available to help utilities obtain or conduct energy audits include:

  • Focus on Energy [exit DNR] offers technical assistance and financial incentives to promote energy efficiency.

  • EPA’s Energy Use Assessment Tool [exit DNR] can be used (by small- to medium-sized systems) to conduct a utility bill & equipment analysis to assess individual baseline energy use and costs.

  • The language sample [PDF, exit DNR], "Request for Proposals to Conduct a Wastewater Facility Energy Evaluation", is designed to help utilities obtain assistance for Level 3 Audits. Developed by the Maine Department of Environmental Protection (DEP).

  • USDA RD's Energy Programs [exit DNR] offer funding to complete energy audits, provide renewable energy development assistance, make energy efficiency improvements, and install renewable energy systems.

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Water conservation resources

Tools/resources available to help utilities determine how much water is being conserved include:

  • EPA’s partnership program, WaterSense [exit DNR], offers tools and resources to promote water efficiency.

  • EPA’s Water Conservation Plan Guidelines [exit DNR] contain helpful recommendations for utilities (serving various population sizes) to create and implement a Water Conservation Plan.

  • The free Water Audit Software [exit DNR] is specifically designed to help utilities perform water audits; quantify and track water losses; and determine areas for efficiency improvements. To access the free software, you must log in or register. Developed by American Water Works Association (AWWA).

  • The Water Conservation Tracking Tool [exit DNR] evaluates water savings, costs, and benefits of conservation programs for a specific water utility. Available to AWE members. Developed by Alliance for Water Efficiency (AWE).

  • Many states have sample plans and guidelines to help utilities develop their own Water Conservation Plan (WCP).

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How is “treatment works” defined by the Clean Water Act?

Section 212(2)(A) of the Federal Water Pollution Control Act, as modified by WRRDA on June 10, 2014 defines "treatment works" as follows:

“The term ‘treatment works’ means any devices and systems used in the storage, treatment, recycling, and reclamation of municipal sewage or industrial wastes of a liquid nature to implement section 201 of this act, or necessary to recycle or reuse water at the most economical cost over the estimated life of the works, including intercepting sewers, outfall sewers, sewage collection systems, pumping, power, and other equipment, and their appurtenances; extensions, improvements, remodeling, additions, and alterations thereof; elements essential to provide a reliable recycled supply such as standby treatment units and clear well facilities; and acquisition of the land that will be an integral part of the treatment process (including land use for the storage of treated wastewater in land treatment systems prior to land application) or will be used for ultimate disposal of residues resulting from such treatment, and acquisition of other land, and interests in land, that are necessary for construction.”

Based on this definition, the CWFP is only requiring FSPs for wastewater treatment systems.

Contact information
Direct questions about Fiscal Sustainability Plans (FSPs) to:
Becky Scott
Federal liaison and requirements specialist (EPA, LSL, FSP, GPR, UAIS)
EL section, Bureau of CFA
608-267-7584

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Last revised: Wednesday August 30 2017