Army Corps Begins Taking Applications for New Dam Loan Program

The U.S. Army Corps of Engineers has announced that it has begun taking applications for $7.5 billion in credit assistance from a new program that aims to help nonfederal government agencies, municipalities and other dam owners address flooding risks to dam infrastructure in need of upgrading and repair.

The application notice, which the Corps announced on Sept. 20, marks a step forward for the first loans under the Corps Water Infrastructure Infrastructure Financing Program.

Loans are limited to safety improvements to dams that are not federally owned or operated.

Lt. Gen. Scott A. Spellmon, the Corps commanding general, said in a statement, “This program will have a huge impact on the nation’s dam infrastructure and will help save local ratepayers and taxpayers by providing long-term, low-cost financing,”  

The program seeks to address the increased risks posed by aging dam infrastructure in the face of extreme weather. It supplements $3.1 billion for dam safety under the 2021 Infrastructure Investment and Jobs Act.

The investment comes at a critical time for dam and reservoir safety. Recent international events highlight the tragic consequences of poorly maintained dams after downpours from Storm Daniel breached two dams and inundated a town in Eastern Libya, causing an estimated 4,000 deaths with more than 9,000 missing, according to the United Nations.

There are more than 91,000 dams in the U.S. and their average age is 57 years. The American Society of Civil Engineers has identified 4,400 dams that have hydraulic or structural deficiencies that make them susceptible to failure.

Dam owners also face rising costs to rehabilitate deficient dams and upgrade older infrastructure to meet new safety standards for protecting downstream communities.

A ‘Mountain’ of Dam Infrastructure Needs

report issued in April by the Association of State Dam Safety Officials (ASDSO) estimated it would cost $157 billion to rehabilitate non-federal dams, including $34 billion for high-hazard dams.

The overall price tag is more than double the year-earlier estimate.

“It’s a huge mountain to climb,” said Lori Spragens, ASDSO’s Executive Director, who says the new Corps loan program will help. “It’s going to make a huge difference,” she said.  

The newly announced funding is intended to address dam safety, community resilience to flooding and improved environmental quality by reducing flood damage, restoring aquatic ecosystems and improving navigation in inland and intracoastal waterways and coastal inland harbors.

Through the loan program, dam owners and operators–including tribal, state and local governments, municipalities and private entities–can apply for long-term, low-cost financing for projects that exceed $20 million.   

Eligible costs may include planning and development-phase activities, construction, reconstruction, rehabilitation and replacement, acquisition of property used to mitigate environmental impacts of eligible projects and carrying costs, such as capitalized interest, reserve funds and issuance costs.

Dam removal projects are also eligible for funding.

Dams are classified by hazard potential; a high-hazard categorization means that if failure were to occur, the resulting consequences would lead to direct loss of human life and extensive property damage.

According to the most recent American Society of Civil Engineers infrastructure report card, there are 15,000 high-hazard dams, which can put people and property in danger of flooding from extreme rainstorms that can overwhelm poorly maintained infrastructure. 

Loan Program Details

Successful loan applicants must demonstrate a plan to repay loans through taxes, fees or dedicated revenue source and an operations and maintenance plan for the remainder of the infrastructure’s useful life.

The maximum credit assistance for eligible projects is 49% of costs; for projects that serve economically disadvantaged communities the maximum financing is 80% of costs.

All projects must be reviewed as technically sound, economically justified and environmentally acceptable and comply with all environmental laws and regulations.

Applications are available online and prospective borrowers are encouraged to contact USACE with questions about the program. The initial application period runs from now until Dec. 19, 2023