Shearman & Sterling represented the US Environmental Protection Agency (USEPA) in connection with the extension of a US $614 million secured loan to the City of San Diego to fund a portion of the Pure Water San Diego Program. The loan, issued under the Water Infrastructure Finance and Innovation Act (WIFIA) program, will fund approximately 49 percent of the $1.25 billion first phase of Pure Water San Diego, a multi-year program that will use proven water purification technology to recycle up to 83 million gallons of wastewater per day to produce safe, high-quality drinking water.
The first phase of Pure Water – scheduled to begin construction in 2019 and open in 2021 – will expand the City’s potable water production capacity by 30 million gallons per day to replace the use of imported water. It calls for new construction of a new water purification facility (the North City Pure Water Facility), upgrades to existing facilities and construction of new pump stations and pipelines. The City of San Diego expects the project to create 480 jobs during construction and to generate approximately $184 million in interest savings through use of the WIFIA loan compared to a comparable market rate financing.
The loan to the City of San Diego is one in the initial round of projects selected for WIFIA funding and follows the closing earlier this year of the first ever WIFIA loan to King County, Washington, for which Shearman also served as counsel to USEPA. On November 1, 2018, USEPA announced a second set of 39 projects invited to apply for approximately $5 billion in WIFIA loans to help finance over $10 billion in water infrastructure investments nationally.