This bill revises rules for state revolving loan funds to ensure wastewater treatment assistance helps ratepayers maintain access to services, while setting new limits and minimum requirements for providing extra financial subsidies.
Frederica Wilson
Representative
FL-24
The Clean Water Affordability Act revises how states utilize their Water Pollution Control Revolving Loan Funds to ensure ratepayers maintain access to wastewater treatment services. It establishes new, flexible formulas for states to determine the maximum amount they can dedicate to providing extra financial assistance beyond standard low-interest loans. Furthermore, the bill mandates that states must dedicate a minimum percentage of their federal capitalization grants toward this subsidization if sufficient eligible applications exist.
Water Bill Mandates 20% Minimum Subsidy for Ratepayers—But Zero-Interest Loans No Longer Count
The “Clean Water Affordability Act” is all about making sure that the money states use to fund wastewater treatment projects—specifically through the Water Pollution Control Revolving Loan Funds—actually helps keep water bills manageable for the people paying them. The bill explicitly clarifies that when states hand out assistance, the goal is now to help ratepayers “maintain access to wastewater treatment services.” It’s a direct nod to the fact that rising utility costs are hitting household budgets hard.
The New Rules for Financial Lifelines
The biggest changes here are around “additional subsidization.” Think of subsidization as extra financial help beyond a standard low-interest loan, like principal forgiveness or grants. The bill completely rewrites the rules for how much of this extra help states can offer annually. On the upside, it raises the ceiling: states can now use the larger of two amounts—either 50% of their annual federal grants, or a complex calculation based on their historical state contributions. This means states could potentially offer a lot more direct financial relief than before.
Crucially, the bill also establishes a minimum requirement: if there are enough eligible applications, states must use at least 20% of their yearly federal grants for this direct financial help. For a family struggling to pay a $200 water bill, this 20% minimum means there should be more money available for direct assistance programs, such as principal reduction or grants, which can really lower the cost of infrastructure projects passed down to consumers.
The Zero-Interest Loan Paradox
Now for the fine print that could complicate things. The bill states that if a loan has an interest rate of 0 percent or higher, it is not counted as “additional subsidization” for the purpose of meeting these new maximum and minimum requirements. This is a structural shift. Historically, 0% interest loans were often a key tool for affordability, especially for smaller, cash-strapped municipalities, and they frequently counted toward a state’s subsidy allocation.
By excluding 0% loans from the subsidy calculation, the bill forces states to offer actual grants or principal forgiveness to meet that new 20% minimum. While this sounds good—it guarantees more direct cash relief—it also removes a major mechanism for affordability. For example, a small town that previously relied on a 0% loan to upgrade its aging pipes and keep residential rates low might now find that the state fund is less flexible, potentially pushing them toward a higher-interest loan or fewer affordability options, which could ultimately drive up rates for their residents. It’s a trade-off: more guaranteed grants for the neediest, but less flexibility for local governments trying to finance projects affordably.