Indiana Pooled Loans Lower Water Borrowing Costs

Water and wastewater utilities in Indiana can borrow at the state's AAA rating through pooled loans, a model the EPA has now recognized nationally.

Updated on Nov. 4, 2026 in Utilities

Indiana Pooled Loans Lower Water Borrowing Costs

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The U.S. Environmental Protection Agency recognized the Indiana Finance Authority as a national model for water infrastructure financing through its new State Excellence Recognition Program. Utilities and municipalities borrowing for water and wastewater projects are the operators most directly affected by the program's financing structure.

Why it matters

Aging water systems across the country are driving rising infrastructure costs, and Indiana's pooled loan structure lets communities borrow at the state's AAA credit rating rather than their own, often lower, ratings. The EPA's recognition signals that state-run financing models are gaining federal attention as a template for managing those costs.

The Indiana Finance Authority closed 82 State Revolving Fund loans totaling $877.5 million in the fiscal year ending June 30, a figure the state links to an estimated $659 million in interest savings for borrowing communities. Indiana's federal return on investment in the program is 480%, though the source does not specify the baseline used to calculate that figure.

The players

Indiana Finance Authority

A state financing agency that administers the State Revolving Fund and pooled loan programs for water, wastewater and housing infrastructure across Indiana.

U.S. Environmental Protection Agency

The federal agency that oversees water quality rules and administers the State Revolving Fund programs that states use to finance water infrastructure.

Moody's Ratings

A major credit-rating agency whose June report confirmed Indiana's AAA rating, a benchmark that drives the borrowing costs of communities using the state's pooled loan program.

The details

Through its pooled loan program, Indiana lets smaller communities borrow at the state's AAA rating, a rating Moody's confirmed in June and that the state has held from all three major agencies since 2010. Communities that would otherwise pay higher rates on their own credit can therefore secure financing well below what most municipalities could obtain independently. The Residential Infrastructure Fund extends similar terms to housing-related infrastructure, with loans since 2024 totaling $86.3 million and supporting an estimated 4,000 homes.

Indiana began maintaining AAA ratings from all three major agencies in 2010.
The Residential Infrastructure Fund's first loans closed in 2024.
The Indiana Finance Authority's fiscal year closed June 30 with 82 State Revolving Fund loans.
Moody's confirmed Indiana's AAA rating in June.

Market Landscape

The State Revolving Fund, created under the Clean Water Act, is the main federal channel through which states finance water and wastewater upgrades. Indiana's pooled loan model, which lets smaller communities borrow at the state's credit rating, represents one of several structures states can use to stretch that federal money.

Utilities and municipal water operators in Indiana should evaluate whether pooled state loan programs could lower their borrowing costs for upcoming system upgrades. Finance and procurement teams should compare those terms against their current financing options before committing to new capital projects.

The takeaway

Water and wastewater operators planning capital projects should compare pooled state loan terms against their own borrowing options. Discuss any financing decision with a qualified municipal finance advisor or accountant before committing.