Sites Project Authority was formally invited Thursday to apply for a $2.2 billion low-interest loan through the Water Infrastructure Finance and Innovation Act (WIFIA) to help bring the Sites Reservoir project closer to reality.
The loan, if approved, could “dramatically reduce the costs to participants, making it more affordable for cities, farms, and resource managers to have access to more water in dry years,” the Sites Project Authority said in a statement.
The Sites Project Authority said that Sites Reservoir is a “beneficiary pays project,” which it said means the loan will be repaid by project participants.
“The significance of this opportunity cannot be overstated,” Fritz Durst, chairman of the Sites Project Authority, said in a statement. “We thank our federal partners and the Biden Administration for supporting Sites Reservoir in such a meaningful way.”
The Sites Project Authority said the WIFIA Selection Committee selected Sites Reservoir to apply for a loan after a “robust statutorily required review process.”
Established by the Water Infrastructure Finance and Innovation Act of 2014, the WIFIA program is a federal loan and guarantee program administered by the EPA, the authority said. According to the Sites Project Authority, its aim is “to accelerate investment in the nation’s water infrastructure by providing long-term, low-cost federal loans for regionally and nationally significant projects.” The funding that is provided is meant to help finance drought resilience projects as well as clean water and safe drinking water infrastructure projects across the country, the authority said.
The Sites Project Authority said it submitted a letter of intent to apply for the loan in July 2021.
“For Sites Reservoir to be built – bringing substantial and critical environmental benefits to California – it has to be affordable for our participants. This loan can get us there,” Durst said.
Jerry Brown, executive director for Sites Project Authority, said loans from WIFIA would cover about 49 percent of the project’s total cost. He said this specific loan would cover a large portion of the local cost share. Brown said state and federal cost share is separate and apart from the WIFIA loan.
He confirmed with the Appeal that the Sites Project Authority will apply for the loan within the year.
“It’s an 18-24 (month) process to close on the loan and start receiving funds to pay project costs,” Brown said in an email. “The loan interest rate is established at close, so given the current interest rate environment there is a strong desire to act quickly to limit interest rate risk.”
The Sites Reservoir project, which has been in the works for more than 60 years, is expected to turn the Sites Valley, located 10 miles west of Maxwell where Colusa and Glenn counties meet, into a state-of-the-art off-stream water storage facility that captures and stores stormwater flows in the Sacramento River – after all other water rights and regulatory requirements are met – for release in dry and critical years for environmental use and for communities, farms and businesses statewide to utilize when it is needed, the Appeal previously reported.
“Sites is unique because it would not rely on snowpacks like Folsom and Oroville do,” Brown previously told the Appeal. “It would also bring a much needed water supply to the west side of the valley.”
Brown said, if approved, money from the loan would be received around the middle of 2024. He said the arrival of that money would coincide with the expected timeframe of initial construction for the project.
The money from the loan would be a tremendous boost for the project, Brown said.
“The impact is immediate because this loan is a significant portion of the local dollars needed to support the project. It makes the project more affordable for our participating agencies,” Brown said. “It equates to a ~10 percent cost savings, which for a project this size, is hundreds of millions of dollars. Affordability is critical to advancing Sites.”
Brown said if the Sites Project Authority is not approved for the loan, then it could have profound effects on the timetable for completing the Sites Reservoir project.
“Most likely this would set the project back 18-24 months,” Brown said. “The WIFIA process to get to this point is like a pre-qualification which means the loan approval is more a function of ‘when’ not ‘if.’ That being said, if the WIFIA loan does not come to pass, then the local cost share would need to be financed through the municipal bond market at higher interest rates which increases project costs to local agencies and jeopardizes affordability.”
Brown also outlined some of the upcoming details that still need to be worked out for the Sites Reservoir project.
“The next key steps will be submitting our water right applications next month and receiving the water right approval before the end of 2023, completing the environmental review process by the end of the year and receiving the final biological opinion and associated permits at about the same time we get the water rights completed,” Brown said.
Several regional lawmakers released statements Thursday in support of the loan and project.
“We need Sites more than ever; our state is facing another historic drought. I’ve been a strong supporter of this project for years, it will provide water for over 24 million Californians and 500,000 acres of farmland,” US Congressman Doug LaMalfa, R-Calif., said in a statement. “This loan will drastically reduce the costs for consumers and make it more affordable for taxpayers to get the water they need, even in dry years. I’m glad the EPA is moving forward in allowing the project authority to apply. I look forward to seeing them to create a stronger and more reliable water supply for our state.”
LaMalfa said he and Congressman John Garamendi, D-Calif., led a bipartisan letter with other members of a California delegation asking the EPA to allow the Sites Project Authority to apply for a WIFIA loan.
“The off-stream Sites Reservoir will bring California closer to achieving a drought-resilient water system, storing floodwater from the Sacramento River during wet years for use during dry years by farmers, our communities, and the environment,” Garamendi said in a statement . “With this $2.2 billion in additional federal financing, we have now secured the public funding necessary to start the construction of Sites Reservoir. I am now calling on Governor (Gavin) Newsom to direct the state agencies to finally complete the permitting process for the Sites Reservoir Project. After years of planning, it is time to finish the state permitting process and finish building the first major new reservoir in California since 1999.”