The Denton Public Utilities Board on Feb. 10 approved payment of a $100,000 application fee to pursue a Water Infrastructure Finance and Innovation Act (WIFIA) loan from the U.S. Environmental Protection Agency. The board’s vote was unanimous.

City officials said the application seeks $770,970,583.07 in WIFIA funding, which would cover up to 49% of the city’s planned water and wastewater capital improvement program over a five-year period. “This morning, we're gonna discuss … our opportunity to submit our application for the U.S. Environmental Protection Agency's WIFIA program,” said Stephen Gay, general manager for water utilities and street operations, during his presentation.

The WIFIA financing would be structured as a master loan agreement so the city could draw funds as projects and costs are incurred, officials said. “WIFIA gives us significant flexibility in when we go back into repayment and what that looks like,” Jessica Williams, Denton’s chief financial officer, told the board. Williams said the city would draw funds only as needed and that WIFIA’s credit terms, which follow Treasury rates, could yield savings relative to issuing debt in the public market.

Staff described a two-phase program: phase 1 would include capacity upgrades at treatment plants (named in the presentation as the Epicor Creek Water Reclamation Facility, Clear Creek Water Reclamation Facility and the Ray Roberts water treatment facility) and distribution and collection system expansions; phase 2 would add lift station, sewer main and water main replacements. Officials said the total request includes about a 20% contingency at EPA’s suggestion.

Williams said the city already has secured some matching funds that count toward the 51% local match required by EPA; she noted a previously announced award from the Texas Water Development Board counting toward that match. She also said the finance team has completed a retail-rate study and expects a wholesale-rate study soon to plan long-term rate impacts.

On process and timing, staff said Denton submitted a letter of interest in April 2024, received an invitation to apply in May 2024, must submit a full application by May 10, 2025, and anticipates the first loan approval in the third quarter of 2025. Williams said the city has been coordinating closely with EPA staff and with the city’s financial advisor and bond counsel.

Board members asked about disbursement practices and whether WIFIA reimburses project costs or disburses funds up front; Williams said disbursements would be treated like reimbursements, with the final 49/51 calculation made at loan closing, and that the city plans to set aside identified local-match resources (impact fees, grants, bond proceeds) as projects progress. When asked about the city’s likelihood of approval, staff said they believe Denton’s prospects are strong and described recent outreach with the EPA team.

The board’s formal motion approved the $100,000 application fee only; any subsequent loan terms, environmental reviews, or borrowing decisions would return to the board and council for further action.

Votes at a glance: PUB vote to authorize payment of the $100,000 WIFIA application fee — unanimous approval.