|FREQUENTLY ASKED QUESTIONS
GENERAL1.) What is the Environmental Infrastructure Financing Program (EIFP)?
The EIFP includes the Clean Water State Revolving Fund (SRF) and Drinking Water SRF Programs, and other funds established under State bond acts. Through these programs, borrowers can receive low-cost financing for projects that protect water quality and improve drinking water facilities.
Borrowers participating in the program generally receive their loan in two equal parts: Approximately half comes from the Clean Water or Drinking Water Funds maintained by the Department of Environmental Protection. The other half comes from the proceeds of highly rated tax-exempt revenue bonds sold by the Trust. The DEP loan is interest-free - the Trust loan carries the same interest rate the Trust obtains when it sells its bonds. The result to the borrower is a loan with half the interest rate of traditional financing.
2.) Why are our rates so low?
Projects funded through the EIFP receive half of their loan at a 0% interest rate and the other half at market rate. Recently, this has resulted in rates as low as 2.02%.
Are lower rates available?
In 2003, the loan program was modified for projects located in Urban Centers and approved Urban Complexes, open space acquisitions and combined sewer overflow repair projects. Borrower’s for these projects can get up to 75% of their loan at 0% and the remaining 25% at market rate. Projects funded in 2004 under this program received a loan interest rate of 1.01% for 20 years.
3.) What types of projects are eligible for EIFP funding?
The following types of projects are eligible for EIFP funding:
2. Capitalized interest during construction period.
3. 1/4 to 1/2 market rate loans.
4. Long term loans - up to 20 years.
5. AAA Bond Rating.
6. No hassle financing.
7. No bond insurance required.
8. No secondary disclosure.
9. No arbitrage concerns.
10. No wait for funding or interest payments during construction.
Financing program eligibility is limited to municipal and county governing bodies; municipal, county and regional water, sewer and utility authorities; county improvement authorities, certain state authorities and private water purveyors.
6.) Does the EIFP offer any grants?
No. All programs under the EIFP are loan programs.
1.) What is the interest rate?
Recent rates have been as low as 1.01% for Smart Growth projects located in Urban Centers and approved Urban Complexes, open space acquisitions and combined sewer overflow repair projects. The remainder of projects funded through the EIFP received a rate of 2.02% last year.
2.) How much money is available? How much is a typical loan?
The amount of money available for loans varies each year, however, qualifying borrowers have never been turned away since the program’s inception in 1987. Loans have ranged from $50,000 to $214 million.
3.) What is the maximum loan term?
The maximum loan term for EIFP loans is 20 years. Loans with shorter terms are available.
4.) Do we receive funding up front?
When you borrow from the EIFP, funding is not up front. Funds are released on a cost incurred basis. Up to one half of planning and design allowances can be disbursed at loan closing.
5.) What is the Construction Loan Program Cycle?
The EIFP has an annual cycle. Click here to view the annual schedule.
6.) Can leftover funds be used for something else?
Loan funds may only be used for eligible activities as approved by the DEP. Unused Trust funds are used to pay back bond debt service. However, leftover funds can be applied to an approved project, provided the amendment supports the original purpose of the loan.
7.) Are EIFP loan recipients required to follow competitive bid laws?
Loan recipient’s must comply with applicable municipal contract requirements. However, private water systems follow their normal procurement process.
8.) How long do you have to use the funds?
The EIFP Construction Loan program allows up to 36 months for construction and repayments begin thereafter. If delays occur, a borrower may be required to start repayments before construction is completed.
9.) How are Construction loan funds disbursed?
Costs associated with Planning and Design may be drawn immediately upon loan execution. All other costs are paid as construction proceeds and expenses are incuurred, reviewed and approved by the Department. At construction completion, any retainage amounts may be released.
10.) What about Pre-Award Approval? Can construction start prior to loan award in November?
Borrowers that must commence construction prior to the November loan closing can request a pre-award approval. To qualify, borrowers must 1) be on the DEP priority list, 2) possess all necessary permits and approvals, and 3) meet the financial requirements of the Trust.
11.) Can I access capital before my long-term loan closing in November?
Yes. The Trust can provide “Interim Financing” if all DEP approvals have been granted and a pre-award approval has been issued by both the Trust and the DEP.
Interim loans are available beginning in January each year. There is a maximum allowable $10 million dollars per project. All interim loans are converted to permanent financing during the regular loan closing schedule in November.
12.) Can loans be made to private owners of public water systems?
Loans can be made to most publicly owned water systems, and also to private owners of community water systems (manufactured home parks and homeowner associations), and nonprofit owners of noncommunity water systems (schools, day care centers, retreat centers, camps, homeowners associations and churches).
1.) How Do I Apply for a Loan?
Loans are awarded each November at the end of a 13-month cycle. The key date is October 1 – the deadline for placing projects on DEP’s priority list. A commitment letter is required before a project can be placed on the priority list. If you plan to apply for a loan, you should first meet with the Municipal Finance and Construction office (well before the October 1 deadline).
2.) Should I bother placing a project on the Project Priority List if I’m Pursuing a grant or loan elsewhere?
Keep your options open. List the project if you hope to obtain a government grant or below market rate loan, no matter what agency you hope to get it from. The best financial package may not be initially apparent.
3.) Should a consultant write the planning documents for a project?
Community personnel can easily write the proposal. Advance planning, data gathering, and decision making are required, however, so communities frequently obtain outside assistance. Most communities have a consultant engineer write the proposal because they typically have the experience and will be involved with the project through to completion.
Some communities utilize a grant consultant to write a proposal, again because of their experience. Other communities have done an excellent job writing their own proposal.
Under the drinking water program, small systems serving less than 3,300 customers can use a pre-approved list of consultants for help in completing applications. For more information, call (609)-292-5550.
4.) How much detail must be in a planning document?
Proposals should be specific and to the point.
5.) What is an environmental review?
Environmental reviews help identify the potential effect of proposed projects on environmental and cultural resources. An environmental review must be completed before a loan can be secured.
There are 3 levels (types) of environmental reviews, with 1 being for minimal impacts and 3 for projects posing the greatest impacts (Only a small number of projects have received a level 3 review).
Some projects are exempt from an environmental review. Examples include: equipment purchases, open space acquisition, pipe rehabilitation/replacement and television examinations of existing pipes.
Depending on the complexity of a project, DEP reviews typically require one to four months.
6.) What is the Intended Use Plan (IUP)?
The Intended Use Plan (IUP) is a booklet published annually that contains information about the use of monies expected to be available to the CWSRF and DWSRF programs through a certain period of time and a list of projects that are expected to be funded. A project must be listed in the IUP in order to receive funding. To be listed in the IUP, applicants complete a project ranking form.
7.) What should be done if a project changes after the description was submitted for the Project Priority List but before the project is designed?
Write letter to inform the DEP and follow-up with revised design documents that describe the changes. DEP staff are responsible for verifying that final projects design documents match those approved during planning.
The key to approving a change is its consistency with the project scope identified in the planning process. (For example, an alternative treatment process may ultimately be better; a well may be rehabilitated rather than being replaced.) Also, at some point changes are significant enough that they lead to a new project, and a new PPL proposal must be submitted.
8. Where can I find information about the requirements for Socially and Economically Disadvantaged businesses?
Click here for more information or call the Office of Equal Opportunity and Public Contract Assistance at (609) 984-9742.
9.) Where do I submit loan application documents?
Loan Documents are now e-filed at www.njeit.org/njeifp
10.) How can I find out more about Environmental Infrastructure Financing Program?
New Loan Request Forms
January 2011 Financial Strategy to Legislature SFY2012
Proposed 2011 Project Priority System SFY2012
Trust News Releases
The Tributary Newsletter
Upcoming Events & Meetings
Smart Growth Financing - Our Lowest Rates!
National Water News
Direct Loans for Small Borrowers
Top 10 Reasons to Borrow from the Trust
View Our NJN TV Commercial
New Jersey Environmental Infrastructure Trust
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Last Update: July 7, 2010