The funding includes $2m grant, $3.1m in interest-free financing will help provide clean water to Letchworth State Park.
The new system will supply safe drinking water to comfort stations, shower buildings, the Glen Iris Inn and all park operations in the southern portion of the park.
The $7.336m project includes construction of new wells, storage upgrades, and distribution main replacements within the village.
Construction of project for the village system will commence soon and is expected to be completed by December 2012.
EFC president and CEO Matthew Driscoll said, "The new system will also serve the hundreds of thousands of people who annually visit Letchworth State Park."
The financing comes from the state Drinking Water State Revolving Fund, which is jointly administered by the Health Department and EFC.
EFC has also approved a $3.4m in NY Works funding to connect to the village of Castile’s water supply, install 45,000ft of new transmission mains, modernize reservoirs and save money by avoiding the need to construct and maintain new water-treatment facilities within the park.