Cadiz, Inc. (the “Company”) today announced that the U.S. Environmental Protection Agency (“EPA”) has selected the Mojave Groundwater Bank – Northern Pipeline (“MGB–NPL”) Project to submit an application for a low-interest loan of up to $194 million under the federal Water Infrastructure Finance and Innovation Act (“WIFIA”) program. Established by Congress in 2014, WIFIA is designed to accelerate investment in nationally significant water and wastewater infrastructure projects.
In November, the Lytton Rancheria of California, a federally recognized tribe, committed up to $51 million as the first tranche of a potential $450 million in total equity capital for the Mojave Groundwater Bank. This investment is convertible into Mojave Water Infrastructure Company LLC (“MWI”), the special-purpose entity formed by Cadiz to construct, own, and operate the Project.
EPA’s selection administratively reserves $194 million for the Company’s Northern Pipeline Project and invites the Company to submit a formal WIFIA loan application. The funding will remain reserved while the Company progresses through the WIFIA underwriting process.
“We appreciate EPA’s selection of the Mojave Groundwater Bank for the WIFIA process,” said Don Bunts, General Manager of Fenner Gap Mutual Water Company. “This is an important milestone as we finalize project financing and advance construction of the Mojave Groundwater Bank.”
The Company plans to fund the Project through a combination of equity capital, government grants, municipal financing, and low-interest debt programs such as WIFIA. If approved, WIFIA financing will complement private equity and other funding sources for the construction of the Mojave Groundwater Bank, which includes the Northern Pipeline and the planned 43-mile Southern Pipeline connection to the Colorado River Aqueduct. Additional WIFIA funding will be sought separately for the Southern Pipeline and other project components.
“The public-private partnership model is the most effective way to finance large-scale water infrastructure today,” said Susan Kennedy, Chair and CEO of Cadiz. “By leveraging both public and private funding, we can build major infrastructure efficiently and reduce costs for ratepayers.”
With water supply agreements in place for the Northern Pipeline, the Company began construction financing activities last year and is currently in due diligence with private equity investors to secure up to $400 million for MWI. Simultaneously, Cadiz is advancing key permitting, engineering, procurement, and construction milestones toward execution of a definitive agreement.