FSAWWA Speaking Out—Emilie Moore

Aging Infrastructure: Bridging the Funding Gaps

Emilie Moore, P.E., PMP, ENV SP

Chair, FSAWWA

The need for upgrades to aging infrastructure has been welldocumented for many years. Since 1998, the American Society of Civil Engineers (ASCE) has estimated the investment needed to help maintain infrastructure in the United States in a state of good repair. The most recent ASCE analysis, as reported in its 2021 study, “Failure to Act” (www.asce.org/failuretoact), has identified that the long-term investment gap continues to grow, and has risen from $2.1 trillion to $2.59 trillion over 10 years. Additionally, ASCE estimates that, by 2039, continued underinvestment in infrastructure at current rates will cost $10 trillion in gross domestic product (GDP) and more than 3 million jobs, and $2.24 trillion in exports over the next 20 years.

Furthermore, ASCE reports, per the 2021 study, that the category of water/wastewater/ stormwater has the second highest infrastructure category funding gap, calculated at $434 billion, based on current trends, through 2029. Surface transportation has the highest infrastructure category funding gap, calculated at $1.2 trillion, based on current trends, through 2029. The total funding gap, based on current trends and extended to 2029, is $2.6 trillion.

AWWA Annual Survey Results

The American Water Works Association (AWWA) conducted its annual survey of issues facing the water community between October and December 2021. This survey has been conducted annually since 2004 and tracks water professionals’ perceptions of their ability to safeguard public health, support and strengthen communities, and protect the environment.

The results from the 2021 survey are documented in AWWA’s 2022 “State of the Water Industry” (SOTWI) report. A large portion (about 48 percent) of participants reported having 20 or more years of water sector experience.

The top 10 of the 20 issues identified in the report, as ranked by survey participants, are: S Renewal and replacement of aging water infrastructure S Financing for capital improvements S Long-term drinking water supply availability S Aging workforce/anticipated retirements S Public understanding of the value of water systems/services S Emergency preparedness S Watershed/source water protection S Public understanding of the value of water resources S Groundwater management and overuse S Cybersecurity issues

Per the AWWA survey, the top two water issues are renewal and replacement of aging water infrastructure and financing for capital improvements.

Additionally, the report summarizes the optimism of water professionals about the health of the water industry, as shown in Figure 1, based on a scale of 1 (not sound) to 7 (very sound). Though optimism slid from the 2021 report to the 2022 report, it still trends above the 19-year average.

National Funding Opportunities and Updates

Utilities are familiar with nationwide financial programs that help support infrastructure projects. The American Rescue Plan Act (ARPA) is a $1.9 trillion package that was signed into law in March 2021 and is managed through the U.S. Treasury Department. The ARPA has provided a path for utilities to obtain financial support for critical capital needs related to pandemic relief assistance. About $362 billion has been allocated by ARPA for state and local fiscal recovery and $10 billion for capital projects. Some eligible funding needs include investments in water infrastructure and providing premium pay for essential workers.

The U.S. Infrastructure Investment and Jobs Act was signed into law in November 2021 and is also known as the Bipartisan Infrastructure Law (BIL). It targets $1.2 trillion in spending and earmarks $82.5 billion in critical water investments, with the largest investments allocated to improving safe drinking water and sanitation. The act reauthorizes a number of existing drinking water programs, appropriates

expanded funding for water infrastructure and other programs, and commits $15 million for lead service line replacement.

The BIL offers another opportunity for utilities to access federal funding, and much of it will be distributed over five years (Fiscal Years [FY] 2022-2026) primarily through state, tribal, and territorial drinking water and clean water State Revolving Funds (SRFs). Most of the funding will be paid out by states as loans or grants via existing SRFs.

On June 13, 2022, the U.S. Environmental Protection Agency (EPA) announced the 2022 notices of funding availability for the agency’s Water Infrastructure Finance and Innovation Act (WIFIA) program and the State Infrastructure Financing Authority WIFIA (SWIFIA) program. The WIFIA program is a federal loan and guarantee program that targets the acceleration of investment in U.S. water infrastructure by providing long-term, low-cost supplemental loans for regionally and nationally significant projects.

This year’s total funding is up to $6.5 billion to support $13 billion in water infrastructure projects, while creating 40,000 jobs (EPA Announces $6.5 Billion in New Funding Available for Water Infrastructure Projects, EPA). The notice of funding availability includes $5.5 billion for the WIFIA program and an addition $1 billion for the SWIFIA program.

This funding cycle is prioritizing funding in these four areas: S Increasing investment in economically stressed communities S Making rapid progress on lead service line replacements S Addressing per- and polyfluoroalkyl substances (PFAS) and emerging contaminants S Supporting water innovation and resilience

Letters of interest may be submitted by prospective borrowers and received at EPA any time on or around Sept. 6, 2022. The submission period closes when all available funds are committed to prospective borrowers.

To date, EPA has closed 88 WIFIA loans that are providing over $15 billion in credit assistance to help finance nearly $33 billion for water infrastructure, while creating about 100,000 jobs, serving 49 million people, and saving ratepayers over $5 billion.

The Paper Trail and the Path Forward

For some utilities, obstacles to applying for funding may include administrative burdens, overly restrictive programs, or a lack of funding awareness. These funding programs often require mandatory reporting, waivers, additional provisions, and extensive paperwork. As an example, SRF programs contain the American Iron and Steel provision requiring recipients to use iron and steel products produced in the U.S.

Utilities have been successful in receiving waivers for water and wastewater treatment products not manufactured in the U.S. The BIL requires any “manufactured goods” to be sourced domestically, which will likely create some challenges and potentially increase project costs and delay project delivery if impacted by supply chain issues. Waivers and carve-outs are still a work in progress.

As we know, nothing in life is free, but as physicist and chemist Marie Curie said: “Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

Let’s go get some funding to help improve the world of aging infrastructure that we live in. S

Figure 1. State of the Water Industry 2004-2022