Funding the Clean Water Act

“Our treatment plant is on the National Historic Register; it dates back to the mid-1800s,” she continues. “Without any provision for ongoing federal funding of Clean Water Act mandates, local taxpayers and ratepayers are bearing the vast majority of these costs. Protecting our clean water infrastructure is essential. But funding it on the backs of only those taxpayers who happen to live in these older communities can’t be the best approach.” In response to these funding challenges, NBC has crafted creative strategies to pay for the close to $1 billion required to bring water-related infrastructure from its origins in the 1800s to the twenty-first century. But Samons’s point resonates: Who bears the cost?Members of the Water Infrastructure Network (WIN), which include the American Public Works Association (APWA), have lobbied Congress to increase federal investment in the nation’s water and wastewater infrastructure. Clean & Safe Water for the 21st Century (available on WIN’s Web site at www.win-water.org ) documents significant improvements in water utility and public health associated with America’s investments in water and water infrastructure. However, it also documents an unprecedented financial problem: Over the next 20 years, America’s water and wastewater systems will have to invest $23 billion a year beyond current levels to meet the national environmental and public health priorities in the Clean Water Act and Safe Drinking Water Act and to replace aging and failing infrastructure.Adam Krantz, managing director of government and public affairs for the Association of Metropolitan Sewerage Agencies (AMSA), founded in 1969, elaborates. “Across the board, uniform agreement exists among EPA, the Congressional Budget Office, the General Budget Office, and collaborative organizations like the Water Infrastructure Network, a coalition organization of drinking-water and wastewater organizations, including labor and environmental agencies, created in 1990 as a response to declining federal funds available for Clean Water Act compliance.” The consensus? “Hundreds of billions of dollars over the next 20 years must be invested to upgrade aging infrastructure nationwide–pipe repair and replacement in addition to answering ever-increasing regulatory requirements. Moreover, that’s just the regulatory prong of what lies ahead–and a good example is the massive regulatory upgrades that Providence, Rhode Island, has undertaken. However, if you are a larger municipality–New York or Chicago, for example–you are also wrestling with old urban infrastructure precisely at a time when resources, tax dollars, and growth have moved or are still moving out to the suburbs. Your rate base is diminishing, and your aged infrastructure needs replacing simultaneously.“Municipalities don’t need less infrastructure just because their population or industrial base has declined. Existing infrastructure nationwide needs to be replaced,” Krantz points out. “Though the newer infrastructure of the suburbs pays for itself at this point, you just can’t turn off pipes in poorer and older areas. What we have is an infrastructure aging gap and currently no foreseeable way of financing the closing of that gap.”Professionals who are grappling with water-related infrastructure challenges spoke to us for this article. Some of the challenges they’re facing are inherent to Phase I and II National Pollutant Discharge Elimination System (NPDES) compliance. Especially in the older urban municipalities of Eastern America, cities are beset with the task of how to pay for it all. Funding Providence’s CSO Upgrades: Creative, Comprehensive, and CourageousThe historic city of Providence (pop. 173, 618), Rhode Island’s largest and one of its oldest, is blessed with abundant and sustainable quality drinking water. But it’s also faced with challenges arising from the combined sewer overflow (CSO) mandates of NPDES Phase I.“To my knowledge, we are the only wastewater treatment authority in the country that is regulated by a state public utility commission,” says NBC’s Samons. “The simple act of adjusting our rates takes about a year to go through the approval process from start to finish, including public hearings.” Boyce Spinelli, deputy engineer with the Providence Water Company, adds, “We are a regulated utility overseen by the Rhode Island Public Utilities Commission [PUC] but are also a true enterprise fund of the City of Providence. We are considered employees of the city with a few differences: We pay for all our health care costs, for example. Additionally, we have a greater degree of autonomy than typical city departments operate under but have several masters we must serve: the PUC, the city, and our own board of directors, which consists of two mayoral appointees, two city council members, and the current finance director of the city. All are full-fledged board members with full voting privileges.“We don’t just serve the City of Providence,” continues Spinelli, “but rather serve over 600,000 consumers with over 72,000 meters in nearby communities like Johnston and Cranston, representing the ëretail’ side of our operations with ëwholesale’ relationships marketing water to nearby water authorities. Our total revenue comes in at $50 million annually. Several years ago, it was recognized that major reinvestments needed to be made in our treatment infrastructure.” PUC acknowledged the work needed to be done, and the company is currently raising $12.5 million through rate increases. The money goes into a restricted fund for the required infrastructure improvements. “To ëpay as we go’ or borrow against that will eventually total $100 million.”As Paul J. Gadoury, P.E., director of engineering for the Providence Water Supply Board, points out, “We have a very clean and very reliable source of water, a 40-billion-gallon nonrecreational reservoir, and control the 100,000-acre watershed around it, owning 15,000 acres ourselves. Though technically we don’t deal with stormwater management but rather focus on the quality-drinking-water side of the equation, all of our customers are mutual customers.” Samons explains further: “NBC owns the large interceptors within the municipalities. Think of those as highways in our overall water conveyance system. The laterals are owned by the 10 municipalities, including Providence, that NBC serves and are like roadways that provide specific conveyance off of highways. Currently with over 350,000 users, NBC was created in 1980 to rehabilitate the City of Providence treatment plant. That facility was beautiful–on the National Historic Register, built in 1901–but at the time was the victim of decades of deferred maintenance. Let’s be honest, not a lot of water treatment could go on with full-sized trees growing out of its floors.”NBC was created by the State General Assembly. “Trust me,” says Samons, “in a state famous for each of its 37 different cities and towns traditionally operating with extremely high degrees of municipal self-management, it was a big deal at the time for the state to intercede. But we had over 19 different waste treatment plants in a tiny state trying to cope in the 1970s with the implications of the Clean Water Act. What happened in our biggest city Providence was critical.” Most problematic were the three “CSO communities” in Rhode Island–Providence, Pawtucket, and Central Falls–which coincidentally were the oldest communities. “We had over 80 overflow points in these three CSOs wreaking havoc on our shellfish industry,” says Samons. “Early in the 1990s a plan was finalized for remote treatment facilities, but it was extraordinarily expensive, and residents weren’t very happy either.” NIMBY strikes again. A ‘Chunnel’ Borer and a Hefty Bill“EPA revised CSO rules in 1994,” continues Samons, “so we revisited our CSO plans.”  Forty stakeholders, representing government agencies, environmental organizations, and taxpayers, met three hours a month for 18 months, examining 18 different alternatives. The one that won their endorsement? “A series of deep rock tunnels–a total of about 6 miles of tunnels, 26 feet in finished diameter, 200 feet deep.” During large storms, water flows into the tunnels and later is pumped to wastewater treatment plants, which don’t have the capacity to treat large flows during the storm event itself.  “We invested in a tunnel-boring machine–like the one used for Europe’s famous ëChunnel,'” says Samons. The first phase of the project, the largest public works project ever in the state, addressed 40% of the overflows at a cost of $318 million. The total price tag, Samons says, was $800 million for all three phases over 20 years.The question nags, how does one pay for a project of this magnitude? Samons emphasizes, “Current mandates under the Clean Water Act are unfunded.” So this is where it has gotten creative. “We are fortunate in that our taxpayers, whenever there is an environmental issue on the ballot, overwhelmingly support it. Seventy percent of the state is bordered by water. Between the bay and urban tributaries, no taxpayer is very far from water, and they overwhelmingly support public health and environmental issues. To date, we’ve received $25 million from state general obligation bonds left over from when the state created NBC. In addition, we have received leveraged monies from the federal government for no-interest loans. Our crackerjack congressional delegation has procured over $9 million from four federal grants. The balance comes from sewer-bill rate increases–25%, 25%, and 16% increases over the past three years.” Complicated but Functional“Another wrinkle in the funding equation exists for us. The rate increases fund debt service. We take those loans out from the Rhode Island Clean Water Finance Agency [RICWFA]. But they don’t have the lending capacity to pay for the 17-plus other statewide projects in addition to ours. We had to look at ways to at least temporarily underwrite this debt on the open market. Downside–no 0% rates. Fortunately we have a Standard & Poor’s A+ rating, which positions us for low-cost rates and tax-exempt commercial paper. Bottom line, we take out short-term paper to finance whatever stage of our overall plan we are currently working on, and as money becomes available from RICWFA, we pay back the short-term paper and refinance at 0% with RICWFA.” Convoluted but functional. “I think at this point we have financed $70 million with RICWFA, and the rest of our financing has come from short-term paper after grants and so forth. Amazingly enough, it works. We even won a national award from the Association of Metropolitan Sewerage Agencies Public Works in the mid-1990s.” Trenton, NJ, Rides Waves of RegulationsJoe McIntyre, general superintendent for the City of Trenton Sewer Utility, speaks with impressive candor when asked how his municipality is wrestling with financing. His city (pop. 85,403) is one of the oldest manufacturing cities in America. His concerns primarily lie in the complexity of interdepartmental cooperation; his frustrations arise from the consecutive waves of regulations from first state and then federal agencies. Relative to the famously stringent and progressive environmental requirements of New Jersey, he says his municipality has done very well. “We were the first New Jersey municipality to achieve CSO compliance, and ahead of the game relative to our state’s requirements. But, to be honest, it’s frustrating. You get this behind you–this big push to comply with state requirements–and now we face a whole other set, this time on a federal level. Don’t get me wrong, our different departments work very well together. But mandates of this magnitude require a level of coordination and a sustained commitment between departments that are definitely beyond the norm. When I talk to people around the state, they are almost demoralized.” As municipal, stormwater, and municipal solid waste professionals, he notes, “We appreciate the need for achieving these mandates for public and environmental health.” But complying and funding compliance without accompanying support? “It’s tough.”Tough Environmental Laws Pave the Way for NPDES“Despite the city’s age,” McIntyre says, “I don’t necessarily see at this stage that we are facing big infrastructure improvements relative to surrounding areas. We’ve grappled with many environmental infrastructure upgrades already, driven by New Jersey state requirements. As the industrial revolution headed down south, a lot of the factories closed. Later, new state regulations like mid-1980s pretreatment and ëend of pipe’ standards that were specific to categorical industrial users imposed stringent standards on discharge with no ability to commingle.” Those factors combined put the “nail in the coffin” of Trenton’s manufacturing base. “Today, we no longer have any nonresidential inventory left in Trenton. New Jersey has been one of the small groups of states that have been progressive regarding environmental regulations, in the forefront with California and Florida. We feel like we are sometimes the test grounds.” The upside? Phase II NPDES standards are very much “been there, done that” to Trenton stormwater professionals.“But I can imagine unmanageable increases in the equipment and manpower, operations, and capital purchase of equipment to meet NPDES Phase II mandates” in some city departments, he continues. “The scary part for me about these Phase II requirements is that you don’t fully know what your obligations are going to be. We may need to get into areas we’ve never been required to be involved with before. In our municipality alone there are hundreds of stormwater discharge outlets.” McIntyre points out, “We are bringing in to the mix people–for example, a streets department–who have never dealt with these levels of environmental compliance before, not in the way our sewer department has. We are used to this. I see the potential for problems. Don’t get me wrong, we have great departments in Trenton, but if you’ve never dealt with intense regulatory compliance before, it’s a whole new challenge. That’s why we are looking at a third party who can help keep the lines of communication flowing and who can dedicate the enormous additional time and energy this Phase II interdepartmental compliance is going to require. I don’t know of anyone within the current structure who has the time, on top of their current positions, to manage something of this magnitude.” These are the unfunded and unanswered questions that give Trenton pause.Though McIntyre advises not to delay in dealing with these requirements, he is the first to admit that by default it can happen to even the best-intentioned. Based on his years of environmental compliance experience from the New Jersey side of the fence, he adds, “Lots of times, municipalities push off the overwhelming and pretend it’s not there. Any aspects that are unclear to you, get them cleared up ASAP from the administrators of regulations from your state. If you wait you won’t be able to pull it off.” And that’s no matter how much money you throw at it. Redevelopment: Naples, FLFollowing the migration of industry from Trenton to the south, we arrive at one of America’s fastest growth municipalities, Naples (pop. 20,900). George Archibald, the Naples public works engineering director, describes how the city is experiencing growth. “The city of Naples is going through ëregrowth.’ We aren’t growing out; we are redeveloping within our borders. We are going from single-family to multiple units. The big picture in terms of growth is Collard County, which covers over 2,000 acres. Naples represents a good portion of the 200 square miles designated as ëurban’ within the county.”He notes that the county is in more of a classic growth mode than the city of Naples. “The city is stuck with a street grid system that goes ëway back when.’ The county is in the position of incorporating the new stormwater requirements into their plans as they build; in the city, we have to retrofit. You have constraints. Not many cities have the luxury of detention ponds. We have had to step back and use the greenscape of our public greenways for conveyance and treatments.” In addition, the city has had to restore systems that have been compromised by growth and escalating land values. “People have filled in swales to make flat yards. We have to go back and re-create drainage while also reusing rights of ways and greenscapes to enhance water quality. In our case, the government has invested in creating and protecting aesthetics for improved values–we have to use those areas to get what the landscaping people want with the drainage we require. Landscapes, treescapes–we don’t want to lose any of that, so we combine old-fashioned shallow swales with drains–for example, rock-filled open drains that accomplish both. Like any community, we have created many drainage basins to maximize conveyance and water quality.” Archibald and his team have had to add aesthetics to their Phase II best management practice approaches. Taxes, Fees, and Grants: Oh My!Where does this redevelopment-mode community squeeze its NPDES compliance funding from? Archibald concedes, “We’ve been lucky on three counts. One, because we’ve incorporated the roadway and roadway drainage enhancements into our NPDES Comprehensive Plan, we are able to use our local gasoline tax funds, since they are designated for roadway and drainage enhancements. Two, we have a water collection fee on a ëper use’ or ëequivalent use’ basis, and $1.5 million per year comes into our budget from that. Three, we have been lucky in grant funding at the state level–low-interest loans for large basin improvements that included large storm drains and pump stations. We are an old community with the typically large pump stations that allowed us to manage the water in the past. Upgrading and maintaining those stations is an ongoing project. Beyond these three funding streams, you are always going to have to compete with other municipal departments for the rest of your funding, a way of thinking and doing business that all governments are stuck with. Competing for funds between departments–that won’t change. But you can maximize and leverage the funds you have to accomplish multiple objectives, not just a single purpose–like improving roadways and drainage at the same time.” Partnering With Development Archibald observes, “When you have development or redevelopment occurring, it’s a great opportunity to see what can be enhanced within the boundaries of one project. Redevelopment should be seen as an opportunity to, for example, add 1 to 2 inches of detention to your overall system. Or, when property has very high value, it’s an opportunity to demonstrate to the developer they are adding to the long-term value of that property by investing in storage capacity underneath. More and more stormwater-compliance infrastructure can be directed, funded, and justified to maintain value, not just meet standards.”A way to enhance the entire stormwater system over time, Archibald believes, is to continually “sell” stormwater enhancements to developers. “We look at development as an opportunity to improve the entire system, from detention to conveyance, from metal pipes to concrete pipes.” And, he says, more developers are willing to collaborate. “They recognize they have a vested interest in protecting not only their property drainage, but the drainage of the overall system. For example, we have a downtown that is changing in usage from commercial to mixed use. Developers have come to recognize they just can’t provide for water quality in their footprint but have to invest in downstream improvement–and be willing to pay for it–so that after storm events, there isn’t 2 feet of water pooled on their site.” For the many communities, large and small, that are facing redevelopment issues similar to Naples’s–tearing down existing buildings and rebuilding within their existing boundaries–Archibald says there should be certain priorities. Redevelopment is an opportunity to create stormwater funding opportunities and to enhance the stormwater capacity in properties around and adjacent to redevelopment sites, while also ensuring new infrastructure is compatible with what exists. He notes, “In our master plan, we analyze what contributions developers can make to effect a positive difference in their footprint. Government in this case contradicts its bureaucratic ëbad guy’ rap and instead plays a very positive role regulating and improving. The concurrency laws unique to Florida help us in government partner positively with development. Every municipality needs not only comprehensive plans for growth, but also growth management plans that include funding contingencies to allow for sustainable expansion over time. Not only do you plan, but you also have a plan of long-term action. It helps both government and development if we create value and character when we develop that protects and improves property values. Naples property values have gone up and up and up. You have to create the atmosphere where good projects that contribute to overall property values continue to happen.“A stormwater-system plan can be the kind of capital project you do little by little by little over time. It’s not one thing, at one place, at one time–it’s continual. It’s keeping that focus on small and steady gains that provide steady increases in property values over time.”  Long-Range Answers?“Long range,” Samons stresses, “the only answer for reasonably closing this infrastructure funding gap is for professionals to assertively lobby their federal representatives for the creation of a trust fund similar to what exists for highways.” Krantz concurs. “In blind polls conducted in the preñClean Water Act world of the 1970s, when rivers were on fire, when the public was asked what their top priority for the federal government was, 51% answered that ensuring the nation’s water quality was their top priority. Today, we take those massive improvements in water quality for granted. We don’t want to go back to the crisis mode of the 1970s. But we will have to ensure funding to make sure our water infrastructure is sustained.” As a model, he points to federal funding for airports and roadways. “Nothing is more important than water for humans. Our position is that dedicated federal funding sources must be created in partnership with states and municipalities; one of the reasons for the initial success of the Clean Water Act was its partnership aspects. The original impetus for the Clean Water Act still exists. We must protect our water infrastructure. Today, the federal government has taken itself out of funding this critical issue. That must change.” The solution in the estimation of stormwater professionals and water-quality activists? “A federal recommitment to the Clean Water Act, for the same reasons it passed the Clean Water Act in the first place. The house is aging that the federal government built and funded,” says Krantz. “It’s time to understand that federal funding needs to be continued again. The lesson is that rather than being just a ëonce and done,’ we all have to be in the business of funding the ongoing protection of America’s water infrastructure over the long haul.”