EFC staff has been assisting the River Basin Center at the University of Georgia in exploring the feasibility of establishing a linked deposit lending program using Clean Water State Revolving (CWSRF) Funds to finance septic system repairs in Gwinnett County. Gwinnett County, GA, has one of the highest concentrations of onsite sewage systems in the country. With about 100,000 septic systems, fecal coliform bacteria from failing tanks contaminate water in the county. There is a need for financial assistance to homeowners to repair their failing systems. A less traditional strategy would be to provide loans to homeowners through the Clean Water Act State Revolving Fund (CWSRF) program.

Usually, funds in this program are reserved for government entities and cannot be accessed at the individual homeowner level. However, several states have been able to channel this money to homeowners via a strategy called a linked deposit system. A linked deposit lending approach involves the state CWSRF partnering with lending institutions (such as a bank) to disburse loans to individual borrowers for such water quality projects as repairing septic tanks. The agency administering the CWSRF agrees to accept a reduced rate of return on an investment (e.g., certificate of deposit or note) and the lending institution agrees to provide a loan to a borrower at a similarly reduced interest rate. The linked deposit loan model has been used to finance septic system repairs in Ohio, Maryland, and Iowa. However, there is no evidence that this type of mechanism has been established before in the southeastern part of the country.

To see the complete thesis that was prepared by Amanda Worthington on this topic, click here.

In order to gauge demand for a program such as this one, a survey was developed to distribute to septic system repair permit applicants in Gwinnett County. Jeff Hughes and Stacey Isaac Berahzer at EFC helped draft the survey. Though the survey is on-going, the following charts show results up until January 22, 2007.

A total of 85 persons had completed the survey at this point. Thirty-nine (39) surveys were conducted over the phone. The remaining 46 responses were collected by staff at the Environmental Health office as homeowners came to the counter to apply for permits to repair their septic tanks.

** The respondents were asked: "If it were available, and you were found eligible, how likely would you be to take advantage of a low-cost loan to finance your septic system repair ? For example, a low cost loan might have a 5 year term and no fees or other “closing costs.”

** The respondents were asked: "How interested would you be in this low-cost loan if it were offered at the following rates?"

** The respondents were asked: Would you prefer this low cost loan to be issued by one of the following: ... ?"

 

 

Other Links:

NC Onsite Wastewater Systems: Funding and Resources