DiNapoli: Environmental Facilities Corp. faces significant funding backlog for essential water infrastructure projects

Submitted by the Office of New York State Comptroller Thomas P. DiNapoli

New York State’s Environmental Facilities Corp. (EFC) has provided financing for over 2,000 essential local water infrastructure projects totaling more than $23.7 billion since 1990, but the estimated capital improvement needs for water and sewer projects far exceeds this amount, and tens of billions of dollars in local projects remain in the pipeline, according to a report by New York State Comptroller Thomas P. DiNapoli. 

“The Environmental Facilities Corp. serves a critical role in financing improvements to New York’s water infrastructure,” DiNapoli said. “New York has spent more on clean water and drinking water projects than any other state, but the resources needed to address aging infrastructure and related challenges remain significant. The state should build on its efforts to help communities access funding to ensure the success of these programs continues.”

EFC is a public benefit corporation that provides financing assistance through grants, loans, and technical expertise to state and local entities, as well as some businesses. The corporation receives state and federal funds and allocates them to participating entities. Major programs include the Clean Water State Revolving Fund (CWSRF) and the Drinking Water State Revolving Fund (DWSRF), which are federally supported. EFC uses these resources along with state funds to provide subsidized loans and grants to municipalities for drinking water, wastewater treatment, and other projects, with interest and loan repayments used to finance additional projects.

Between 1990 and 2022, New York has spent $18.2 billion for the CWSRF and $5.5 billion for its DWSRF, topping California, Texas, Florida and Pennsylvania. New York’s cumulative CWSRF spending almost doubled that of California ($10.6 billion), the next highest spender, and was more than other large states on DWSRF project assistance disbursed, and for project starts and completions.

The federal Infrastructure Investment and Jobs Act of 2021 is estimated to make $2.5 billion available for these programs and will target projects that address emerging contaminants, climate change, bioterrorism, disadvantaged communities, and replacement of lead water service lines. Additional funding ($5.4 billion) has come from state grant appropriations since 2015, of which $1.4 billion has been spent.

Despite these investments, funding needs for New York’s aging water infrastructure systems remain significant. The most recent U.S. Environmental Protection Agency (EPA) assessments estimated 20-year capital improvement needs of $28.7 billion for clean water projects and $35.1 billion for drinking water projects in the state. The EPA also estimated that New York has more than 494,000 lead service lines in need of replacement, among the highest in the nation.

While the revolving fund programs have financed many vital projects, EFC’s 2024 intended use plan shows a CWSRF backlog of 876 projects with estimated costs of $17.9 billion, and a DWSRF backlog of 1,004 projects with estimated costs of $8.3 billion, together totaling $26.1 billion.

DiNapoli said more transparency is necessary on the state’s water infrastructure programs. While eligible projects are listed in EFC’s intended use plan, and awards are announced, EFC does not report on completed projects and no list is publicly available to track project spending and the communities that have benefitted. In addition to providing a comprehensive list, description, and location of projects funded and completed, the state should evaluate new methods of assisting local governments in accessing revolving funds and grant resources by streamlining application processes and providing technical assistance.

Steps should also be taken to improve the timeliness of both awards and state funding for water quality improvement projects. EFC should investigate why some spending has lagged and assess how to encourage more communities to apply for project funding.

DiNapoli called on federal policymakers to increase funding for the revolving funds, ensure that funding continues based on traditional allocations, and allow for more access to hardship grants.

See also: Report: Environmental Facilities Corporation: An Overview of Major Water Quality Improvement Programs