Just as the era of cheap water is ending in Florida, the Polk Regional Water Cooperative is being flooded with money.
The cooperative, an association of Polk County and most of its cities, recently received confirmation of a $305 million federal loan. That amount will cover more than half of the anticipated costs of two projects that involve drilling deep into the Floridan Aquifer and piping treated water throughout Polk County. Deep-Well Pump
The Polk Regional Water Cooperative scheduled a celebratory gathering for Wednesday afternoon at the Lake Myrtle Sports Park in Auburndale. Representatives from the federal Environmental Protection Agency were expected to attend and present Eric DeHaven, the executive director of the cooperative, with a symbolic, oversized check.
The $305 million loan comes through the Water Infrastructure Finance and Innovation Act, an EPA program that supports local water and wastewater projects. DeHaven said the cooperative received a low-interest loan with delayed repayment over a period of more than 30 years.
Polk County Commissioner George Lindsey, the chairman of the PRWC board of directors, called the loan “a game-changer.”
Lindsey listed the cooperative’s other sources of funding, including a substantial pledge from the Southwest Florida Water Management District as well as money from Florida’s State Revolving Fund program, short-term commercial loans and contributions from the member cities and Polk County.
“And this is kind of a crescendo that allows for a low-interest loan for a very extended period of time, which keeps the cost down, long-term, for our customers going forward,” Lindsey said of the WIFIA loan.
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Formed in 2017, the Polk Regional Water Cooperative is a nonprofit, special district devoted to planning and delivering future drinking water supplies. It acts as a regional utility funded by contributions from 16 member governments.
The cooperative coordinates with the Southwest Florida Water Management District, the state entity that oversees water permits for most of Polk County and all or parts of 15 other counties.
The district, known as Swiftmud, has warned that Florida is approaching the limit of water that can be withdrawn from the Upper Florian Aquifer, the state’s main source of drinking water, without causing hydrological damage. As part of the Central Florida Water Initiative, which includes Polk County, the district is limiting most water withdrawals to the levels needed to meet projected demands for 2025.
The CFWI’s 2020 Regional Water Supply Plan concluded that member governments will need to develop alternative water sources beyond what they draw from the Upper Floridan Aquifer to meet demands through 2045.
To that end, the PRWC is pursuing two projects, well fields drilling as deep as 2,000 feet into the Lower Floridan Aquifer. Preparation began last fall on the Southeast Wellfield, north of Frostproof, and construction is under way. The West Polk Wellfield, in the Lakeland area, is scheduled to begin construction in 2025.
The water in the Lower Floridan Aquifer is brackish, containing higher levels of salt and minerals than water nearer the surface. That will necessitate treatment of the withdrawn water by reverse osmosis, one of many factors that will significantly increase the cost for governments and, ultimately, for local residents and businesses.
Both Polk County sites will contain separate wells to inject brine, a byproduct of the water treatment, deep underground for storage. The Southeast Wellfield will have five main wells that are projected to generate as much as 12.5 million gallons of water a day, DeHaven said. The West Polk Wellfield is expected to produce 10 million gallons a day.
The PRWC will construct a 61-mile network of underground pipes to deliver water from the wellfields to connections with local utility networks. DeHaven expects the water to be flowing by early 2027.
The total projected cost of the projects is $566 million, which includes land acquisition for the transmission lines.
As Lindsey told The Ledger in April, “The bottom line is there is no more cheap water.”
Swiftmud has entered agreements with the PRWC to contribute nearly $111 million for the Southeast Wellfield and about $76 million for the transmission system. That money will be reimbursed to member governments as the projects proceed.
The cooperative will receive about $22 million in low-interest State Revolving Fund loans, DeHaven said. The Florida Legislature also allocated $8.5 million in next year’s budget that DeHaven said will be used for the two wellfields.
Funding the projects is a juggling act of different funding sources, and the federal loan is a crucial element, DeHaven said. Congress passed the Water Infrastructure Finance and Innovation Act in 2014, authorizing the EPA to provide loans to municipal and regional entities for water projects.
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A group of consultants, known as Team One, handled much of the work in applying for the federal loan, DeHaven said.
“It’s a fairly difficult process, but it's probably a little bit more difficult because of the PRWC being a relatively new organization,” he said. “We don't have any sort of credit established or anything like that. So we're relying upon the members’ credit to secure the loan, for the most part. So there were a lot of questions on that regard, and there were a lot of documents we needed to create.”
The application process typically lasts about a year for an established entity, DeHaven said, and it took two years for the PRWC. Both DeHaven and Lindsey said they expected that the EPA would deny the first application and offer suggestions on submitting a new proposal.
“We had a great consulting team, and we also had some guidance from those who have been part of the process, a similar process, in the past,” Lindsey said. “So, honestly, no one expected to get it the first time around. We were hopeful and thought we had a great package and a great story to tell. And obviously it was convincing and an incredible, viable project that received great scores and resulted in the successful allocation.”
The federal program offers generous terms for borrowers. DeHaven said the PRWC won’t have to start repaying the loan until 2032 and then has more than 30 years to complete payments.
“So it's a long-term loan that basically allows the membership to pay it back through time,” he said. “So it's not such a hit on, say, water rates right on the outset.”
During the lengthy application process, DeHaven said conditions became a bit less favorable. The interest rate on the loan is about 4%, compared with rates below 3% when the PRWC first applied. But he said the EPA allows borrowers to refinance loans later if they haven’t drawn on the principal.
DeHaven said that Truist Bank has provided the PRWC with a $155 million loan, which he called “a loan against the WIFIA loan” to be used for near-term needs. The PRWC also has a $15 million line of credit with Wells Fargo Bank, he said.
“The private sector has really been behind us pretty heavily as well,” DeHaven said. “And that’s kind of the intent for (Wednesday’s) celebration is to acknowledge and celebrate all the help the PRWC has gotten, not only from the federal government, which is the biggest source, but from the water management district, the state through the SRF, the Legislature's Heartland funds, the private sector, Truist and Wells Fargo.”
He said that Swiftmud, which has forged agreements with other regional entities, has been forced to stretch out the period of funding for the PRWC projects.
“So we will have some form of a cash flow problem for a couple of years where we are spending the money quicker than the water management district is able to reimburse us,” DeHaven said. “So we'll have to come up with some short-term, interim financing products. But right now, we can essentially say we're fully funded.”
Contractors have completed 60% of the design for the Southeast Wellfield and are moving into the final design phase, DeHaven said. The PRWC has hired a construction manager, Florida Water Partners, a joint venture of Garney Construction and general contractors Wharton-Smith, to build the treatment facility and pipeline.
The cooperative is in the process of hiring a company to serve as operator of the well facilities, DeHaven said.
The PRWC has completed the purchase of the Southeast Wellfield site from Polk County and has transitioned its water use permit from South Florida Water Management District to Swiftmud. The well site is in the small section of eastern Polk County overseen by the South Florida District.
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The PRWC has begun consulting with property owners, particularly in the Lake Wales area, on permissions to dig transmission lines, he said.
While planning for the West Polk Wellfield is about a year behind that of the Southeast Wellfield, DeHaven said the PRWC has secured a 50-year permit from Swiftmud that will allow pumping of 10 million gallons a day. The cooperative is close to choosing a location for a final test well in the Lakeland area, near Interstate 4, he said.
Most cities in Polk County have agreed to pay into the PRWC and have requested to receive water from the regional utility. Three cities — Lake Wales, Mulberry and Fort Meade — are project associates but not participants, DeHaven said. Those cities could decide later to receive water and would have to catch up on payments to the cooperative.
Frostproof is part of the cooperative but not a contributing member of any projects.
Lindsey emphasized that the PRWC formed because Polk County and its cities have more power to address water needs collectively than individually. He said the recent progress, and especially the federal loan, bear that out.
“I repeat the same mantra that the strength of us together makes these resources available that individually would have never been available,” Lindsey said.
He added: “There are those who have questioned the seriousness of the water shortage. But whether it's this year or next year, the fact of the matter is there will be a water shortage at the rate we're going. So even if we are a couple of years early, it's still going to be a necessary endeavor.”
Fountain Pump Gary White can be reached at gary.white@theledger.com or 863-802-7518. Follow on Twitter @garywhite13.