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Water Infrastructure Sustainability Dependent On Innovative Financing, EPA Official Says
ATLANTA--Making water infrastructure sustainable is possible through a wide variety of practices and management measures, but also through pursuing innovative financing of water projects, Benjamin Grumbles, Environmental Protection Agency assistant administrator for water, said March 22.
Grumbles made his comments at a conference on sustainable water infrastructure, "Paying for Sustainable Water Infrastructure: Innovations for the 21st Century," sponsored by EPA and the Georgia Environmental Facilities Authority.
Grumbles said the Bush administration's proposal to encourage further use of private activity bonds for water infrastructure--what EPA calls water enterprise bonds--is one innovative approach. Interstate lending is another example of innovative financing, he said, as well as state revolving fund set asides for planning and design, negative interest rates, and principal subsidies.
EPA said earlier this year it would pursue legislation to remove the borrowing limit on tax-exempt private activity bonds for repairs to wastewater and drinking water utilities. That would require a revision of Section 146 of the tax code, according to the agency (24 DEN A-12, 2/6/07) .
Water enterprise bonds, he said, would "remove the artificial barrier that's in the current U.S. tax code on unified state volume caps with respect to private activity bonds.
"The administration is rallying behind this notion, which the Environmental Financial Advisory Board and ... mayors have been urging administrations to do for some time," Grumbles said. The bonds would be an additional tool to bring in "billions of dollars in new investments for water and wastewater infrastructure financing," he added.
Communities should choose how best to structure the ownership, management, and maintenance of providing water to its citizens, Grumbles said.
"We feel strongly that one important new tool should be private activity bonds that advance public/private partnerships and estimates are they will bring in literally billions of dollars in new money, new investment to address this critical need," Grumbles said.
NACWA Says Plan Falls Short
In a statement released by the National Association of Clean
Water Agencies, the group said it supports finding innovative ways to ensure
clean water. But NACWA said EPA's privatization plans, along with its promotion
of innovation, new technologies, and efficiency "will not solve the single
biggest crisis facing America's waterways--the infrastructure funding gap that
EPA estimates at $300 - $500 billion."
NACWA said it agrees with EPA's goal of sustainability, but believes the
proposals the agency has developed to close the gap fall short. "While cities
welcome a diversity of tools to finance their infrastructure needs, EPA's
proposal to raise the state cap on private activity bonds is incapable of
narrowing the gap in any meaningful way," NACWA said. "The current cap on
private activity bonds is not being met today in 49 out of 50 states.
Furthermore, municipalities have experimented with privatization in the past and
it generally hasn't worked."
Speaking to the same group March 21, EPA Administrator Stephen L. Johnson said that EPA and six major water associations will soon agree on a set of "Attributes of Effectively Managed Utilities."
"This agreement will promote suggested utility performance measures and encourage the use of these tools by utilities all around the country," Johnson said. "By establishing a common utility management framework, we can help ensure utility operations are sustainable in the future."
By Barney Tumey