EPA Just Waived $200,000 in WIFIA Fees for Small Towns — and Quietly Opened an $11 Billion Water Loan Program to Communities That Never Considered It

On June 29, 2026, the Environmental Protection Agency announced a change that reads like fine print but functions like a door being unlocked. For fiscal years 2026 and 2027, EPA will waive two fees — the $25,000 application fee and the credit-processing fee that averages roughly $156,000 per loan — for any water system serving a community of 25,000 or fewer people that applies for a Water Infrastructure Finance and Innovation Act (WIFIA) loan. Together, those waivers save an eligible applicant nearly $200,000 before a single dollar of construction is financed.

That number is the whole story, and it is easy to underestimate why it matters. WIFIA is not a grant program — it is a federal credit program with $11 billion in flexible financing available and the ability to fund up to 80 percent of a project's cost at long-term, low-cost rates pegged to Treasury borrowing. For a large city building a $500 million treatment plant, a $200,000 fee is a rounding error. For a town of 8,000 replacing lead service lines or rebuilding a failing lagoon, that same $200,000 was often the reason the application never got written. EPA has now removed exactly the barrier that kept the program's most under-served constituency out of it. "Small and rural communities are the backbone of America," said Jess Kramer, EPA's Assistant Administrator for Water, in announcing the change. The subtext is an admission: for a decade, the program built to help everyone quietly worked best for those who least needed the help.

What WIFIA actually is — and why small towns skipped it

WIFIA was created by the Water Infrastructure Finance and Innovation Act of 2014 to provide long-term, low-cost supplemental credit assistance for regionally and nationally significant water projects. In practice it is one of the cheapest sources of capital a water utility will ever find. Because the loans are backed by the federal government and priced off the Treasury rate, WIFIA financing routinely beats what a small utility can get in the municipal bond market — often by a full percentage point or more over a 30-plus-year term. On a $30 million project, that spread compounds into millions of dollars of ratepayer savings.

So why did small communities avoid it? Three reasons, and the fee was only the most visible one. First, the direct cost: nearly $200,000 in fees payable during underwriting, before the loan closed and before any savings materialized. For a utility whose entire annual capital budget might be a few million dollars, writing a six-figure check on the possibility of a loan was a non-starter. Second, WIFIA has historically required a minimum project size — traditionally $5 million for small communities (versus $20 million for larger ones) — which already narrowed the field. Third, the application demands a level of financial and engineering documentation that a utility with three staff and a part-time clerk simply cannot produce without hiring consultants, adding still more up-front cost. The fee waiver attacks the first barrier directly and, by signaling intent, softens the psychology of the other two.

Who qualifies, precisely

The waiver applies to prospective borrowers whose service population is 25,000 or fewer. That threshold is the same one EPA uses across several small-system programs, and it captures the overwhelming majority of America's water and wastewater systems by count — the country has tens of thousands of community water systems, and most of them serve small towns. The financing itself is available to a broad set of borrowers: municipal entities, water and wastewater utilities, corporations, partnerships, tribal governments, and state infrastructure financing authorities. Eligible project types are similarly wide — drinking water treatment and distribution, wastewater treatment, water recycling and reuse, desalination, drought mitigation, stormwater management, and increasingly, lead service line replacement and PFAS remediation, both of which are pressing federal priorities.

One nuance worth flagging: WIFIA is designed to supplement, not replace, other financing. It typically pairs with a State Revolving Fund (SRF) loan, municipal bonds, or local revenue. The 80-percent-of-cost ceiling means every applicant needs a plan for the remaining 20 percent. For small communities, that other 20 percent is frequently an SRF loan — which means the smartest applicants are running a WIFIA and an SRF application in parallel, using each to strengthen the other's credit narrative.

The letter of interest is the real gate

Here is the part that most coverage of the fee waiver misses. You do not "apply" for a WIFIA loan in one step. The process begins with a letter of interest (LOI) submitted in response to a Notice of Funding Availability, and the LOI — not the full application — is where most prospective borrowers are selected out or invited in. EPA evaluates LOIs against statutory and program criteria: creditworthiness, project readiness, national or regional significance, and alignment with EPA priorities. Only invited applicants proceed to the full application and underwriting stage where those (now-waived) fees would previously have come due.

This sequencing has a strategic implication. Because the LOI is the competitive filter, a small community's job is to make the LOI as strong as a large utility's — and that is achievable precisely because the LOI is a document, not a check. A well-constructed LOI demonstrates three things: a credible source of repayment (typically a dedicated rate revenue stream), a project that is genuinely shovel-worthy with engineering and permitting substantially advanced, and a clear articulation of why the project matters beyond the town's borders — regional water supply, a shared watershed, a public-health hazard like lead or PFAS. The fee waiver means a town can now afford to pursue an invitation without gambling $200,000 on getting one.

How a town of 8,000 should think about this

The mental model for a small utility should be: WIFIA is now a two-year window to lock in the cheapest long-term capital available for a project you were going to have to finance anyway. If your system faces a mandatory upgrade — a consent decree, a lead-line replacement obligation, a treatment plant at the end of its life — the question is not whether to borrow but from whom. WIFIA's rate advantage over the bond market, compounded over 30 years, will usually dwarf the cost of assembling a strong application. With the fees waived through FY2027, the up-front math that used to kill the idea no longer does.

Three concrete moves for an eligible community this year. First, confirm your project clears the small-community minimum size (historically $5 million) — projects can sometimes be bundled to reach it, and EPA has shown flexibility on aggregation. Second, start the LOI now, not next fiscal year: the waiver covers FY2026 and FY2027, but underwriting takes months, and a project that closes in FY2028 may face fees again. Third, coordinate with your state SRF program early — the WIFIA/SRF pairing is the standard structure for small systems and reviewers expect to see it. A utility that walks in with a committed SRF match and an advanced engineering package looks like a low-risk borrower, which is exactly what gets an LOI invited.

The bigger signal

Read against the broader 2026 funding environment — tightening federal grant rules, contracting discretionary appropriations, and rising expectations that recipients demonstrate documented operational need and repayment capacity — the WIFIA fee waiver is a notable counter-current. It expands access rather than restricting it, and it does so for the constituency least equipped to navigate federal finance on its own. For the thousands of small utilities that have watched WIFIA from the sidelines since 2014, the next two years are the clearest opening the program has ever offered. The fee that stopped them is gone; the $11 billion is real; and the letter of interest — the one thing a small town can produce without spending money it doesn't have — is the only thing standing between them and the cheapest water-infrastructure capital in the market.

If your community operates a water or wastewater system serving fewer than 25,000 people and faces a capital project on the horizon, Granted can help you map WIFIA against your State Revolving Fund options and identify the grant programs that can cover the non-federal share — so the 20 percent WIFIA won't finance doesn't become the reason the project stalls.