WATER & WASTEWATER FINANCING
The advantages and disadvantages of the various financial alternatives available to municipal authorities
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Every expansion, upgrade, or new construction project must be funded, and a variety of financing alternatives are available for your consideration. Each alternative will have an impact on a long-term cost of service to be paid by your users. Each one is different, and each strategy has both positive and negative aspects. So how do you know what most preferential alternative for you and your users will be?

For many authorities, finding the right source of financing presents an immediate challenge. As soon as your project becomes public knowledge, you will likely be contacted by a variety of individuals seeking to help you secure the necessary funds. In order to properly evaluate all of the various financing strategies, you must understand the strengths and weaknesses of each of the available financing vehicles.

For example, public financing through federal or state agencies at subsidized interest rates is not always the best approach, and conversely, tax exempt revenue bonds do not always represent the least preferable approach either. In a moderate interest rate environment, an authority that must undertake a project which consists primarily of the construction of Act 339 eligible facilities, may find it in their long-term best interest to find a source of financing other than PENNVEST. This is because facilities constructed with PENNVEST funds are not eligible for the annual Act 339 subsidy. Other factors such as timing, flexibility and project size may affect the selection of a financing method.

In the sections that follow, we will discuss the advantages and disadvantages of the many forms of project financing available to municipal authorities. We will also discuss financing options for homeowners who require assistance to pay their tapping fees and installation costs. Additional guidance on the selection of professional advisors is also provided.

Short-term Financing
Long-term Financing
Financing Assistance for Homeowners
The Role of Your Professional Advisors

© 2008 Herbert, Rowland & Grubic, Inc.