How to Apply for DWSRF Principal Forgiveness

Principal forgiveness is an additional-subsidy ask, not a second listing. The Drinking Water State Revolving Fund still starts with the state's Intended Use Plan. Getting onto that list is a different page: How to get on your state DWSRF Intended Use Plan. This page is what you do after you are on the IUP, or while the state is ranking you, when you want the state to forgive some or all of the principal instead of collecting it as a loan.

There is no national form, no national amount, and no federal guarantee that a listed project receives principal forgiveness. The state writes the disadvantaged-community test, the additional-subsidy policy, and the set-aside that matches the work. Confirm the current policy and the current contact with your state DWSRF program. Wyoming, the District of Columbia, and tribal systems ask the EPA region that runs the program. This isn't legal advice.

What additional subsidy actually is

DWSRF assistance is usually a loan. Additional subsidy is the share of that assistance the state does not collect as principal. States deliver it as principal forgiveness, as a grant-like forgiveness term inside the loan agreement, or as another written concession the capitalization grant allows. Operators shorten all of that to "principal forgiveness." The legal object is the same: the state agrees, in the assistance agreement, that some or all of the principal will not be repaid.

Federal capitalization grants require states to reserve a portion of each grant for additional subsidy. Those reservations are real. They are also state-scored. Being eligible under the federal statute does not mean your project receives the subsidy. The only document that converts an ask into a term is the state's assistance agreement.

You ask after you are on the IUP, not instead of it

Listing is the gate. The IUP post is how a small system gets through that gate. This page assumes you already have, or are about to file, the state's ranking form for a defined project. If you have not done that, stop and do it. A principal-forgiveness email with no project on the list is a comment, not an application.

Some states score additional subsidy on the same questionnaire that ranks the project. Some have a second form, or a disadvantaged-community addendum, that you file after the project priority list is draft. Some decide the subsidy share at loan closing, using income, population, and a state affordability index you cannot see from the federal file. Ask which of those you are in before you write a narrative.

Rural Development Water and Waste Disposal, emerging-contaminant small-community assistance, and the state's own construction grants are different programs. They can layer with DWSRF on the same project. Filing one of them does not file the principal-forgiveness ask, and the principal-forgiveness ask does not file them. Keep those packets separate. This page does not restage those posts.

What states typically want in the ask

Build one file. Put the PWSID on the first page. If you need the identifier, use PWSID lookup. Typical contents:

• PWSID, system name, and system type. Community or non-transient non-community, and the population the state uses. A name-only letter is how you attach the ask to the wrong system.
• The ranked project. The same one-sentence project that is on the IUP or the ranking form. "Replace the 1978 high-service pumps and add a second so we can take one offline" is a project. "We need help" is not. If the project changed since listing, say so and ask whether you must re-rank.
• The disadvantaged-community test the state actually uses. States define this themselves. Common inputs are median household income, a user-rate or affordability screen, population, and whether the project is in a state-designated disadvantaged area. Some states also look at unemployment or a sanitary-survey or violation history. Use the state's definition, not a neighboring state's, and not a federal poverty table you found on your own.
• The evidence for that test. Census or state income figures the DWSRF program already accepts, the current rate sheet, the board resolution that authorizes the project, and any disadvantaged designation the state has already given you. Do not claim a status the state has not used for you.
• The compliance facts that belong to the project. An open MCL, a lead inventory with unknowns, or a treatment-technique finding is part of the problem statement when the project addresses that finding. Funders pull SDWIS. See How to read your SDWIS violation record. Do not hide an open row. Do not invent a closeout. If a row is still open, say what you have sent the primacy agency: How to close an open SDWIS violation.
• Which set-aside you think the project sits under. Base DWSRF, lead service line replacement, or emerging contaminants. Ask. Do not guess a set-aside because a webinar used those words. The set-aside changes who can get additional subsidy and what the state can offer.

Keep the packet short. The state already has the IUP questionnaire. The additional-subsidy file is the disadvantaged-community proof and a clear ask: principal forgiveness on this ranked project, under this year's policy, in the amount the state can offer. You do not name a figure the state has not published. You ask to be scored.

Who to ask

The state DWSRF or additional-subsidy contact, not a general grants inbox and not the sanitary-survey inspector. The drinking-water program page is the usual place to find the name. If the contact on file with the primacy agency is stale, fix that first: How to keep your primacy contact current.

Keep the first call short:

• Name the PWSID, the town, and the population.
• Read the one-sentence project and say whether it is already on this year's IUP or on the draft project priority list.
• Ask whether this project type is eligible for additional subsidy this year, and which set-aside it should sit under.
• Ask for this year's disadvantaged-community policy and the form or addendum they want.
• Ask when they decide the subsidy share: at ranking, at a draft IUP hearing, or at loan closing.
• Ask whether a board resolution is required before they will score the ask.

Then do the form they named, by the date they named. Scoring happens on the state's calendar.

Amounts and set-asides are state-specific

Do not copy another system's forgiveness share and treat it as yours. The share moves with the state's disadvantaged-community points, how much additional subsidy is left in that set-aside this year, and whether the project is base DWSRF, lead service line work, or emerging-contaminant work. Those pots do not automatically substitute for each other. If the state publishes a range in the IUP, use that published range. If it does not, tell the board the ask is to be scored under this year's policy. There is no federal guarantee of a share, and there is no national percentage you can quote at a meeting.

A draft IUP that lists your project with principal forgiveness is still a draft. Projects fall off when they cannot finish environmental review, plans, or a loan agreement in the IUP year. Listing plus a spoken "you should get forgiveness" is not a closing.

FAQ

Is principal forgiveness a federal award we apply for in Washington?

No. EPA capitalizes the state revolving fund. The state scores additional subsidy under its own IUP and its own disadvantaged-community policy. You ask the state DWSRF contact, with the PWSID and the ranked project.

We are not on the IUP yet. Can we still ask for principal forgiveness?

Ask the state contact how they want it sequenced. Most states will not score additional subsidy on a project they have not ranked. File the IUP form first. See How to get on your state DWSRF Intended Use Plan.

The town next to us received forgiveness. Does that mean we will?

No. Their score, their set-aside, and that year's remaining additional subsidy are not yours. Use the state's current policy and your own evidence.

Check my system at /find-my-system.

Orevant provides compliance information tools. This page isn't legal advice. Confirm the current IUP listing, the disadvantaged-community test, the additional-subsidy form, and any offer with your state DWSRF program.