Why the State Revolving Fund is important to water quality and conservation
With the help conservation advocates across Iowa, two amendments were made to SF 548 (formerly known as SSB 1221) before it was passed out of committee last week. The first preserved the Iowa Income Tax Credit for the Charitable Contribution of Conservation Land. The second grandfathered in use of the State Revolving Fund loan program for properties acquired before July 1, 2019, but the bill still prohibits the loans from being used in future land projects. We view these amendments as significant improvement and are thankful to the Senators who worked to change the original language of the bill.
As SF 548 moves on to the full Senate, this bill is very narrowly focused on one fundamental question: Should a private entity be allowed to access a low interest loan from the State Revolving Loan Fund (SRF) to buy land to re-sell to public entities?
Iowa Natural Heritage Foundation believes the answer is YES, conservation partners should be allowed to use this program to complete water quality projects that provide a public benefit. Here’s why:
- We encourage our legislators to support all water quality improvement tools. SRF loans should be available for all eligible water quality improvement projects. If Iowa wants to truly make progress on the Nutrient Reduction Strategy, the state sales tax should also be increased to fund the Natural Resources & Outdoor Recreation Trust Fund.
- The State Revolving Fund (SRF) is a low-interest loan program supported by federal funding for water quality projects. The SRF is established in the Clean Water Act to provide low-interest loans for water quality projects. The state does not use general funds to support SRF loans. The Iowa Finance Authority issues bonds to provide the required 20% match to 80% federal dollars to participate in the program. Borrowers must pay back 100% of the loan, plus costs and interest.
- The fund has the ability to finance all eligible water quality projects for the foreseeable future. Since its inception, the Iowa SRF has loaned out more than $3 billion to 600 different borrowers. In FY18, SRF funded about $14 million in such non-point source projects. Non-point projects amount to about 10% of the funding made available through the Clean Water SRF. In FY18, it was less than 6%. Use of SRF for land acquisition does not jeopardize other viable uses of the fund, which some proponents of the bill have argued.
- SRF projects are transparent to the public and must have a direct, unequivocal water quality benefit. IDNR and IFA set rules and jointly administer the program and each loan is vetted by the Environmental Protection Commission. Public EPC meetings provide opportunity to submit input and comments.
- The program works. INHF’s past use of SRF for public land projects has a proven record of water quality improvement projects that provide multiple benefits, including wildlife habitat, scenic beauty and increased opportunities for outdoor recreation.
Learn more about the State Revolving Fund here.