Water Infrastructure: Cities

by Bill Eller

Water Infrastructure:

Cities Shouldering Most Of The Cost

Water utilities are struggling with water loss, aging water infrastructure and rising maintenance costs across the country.

Bill Eller, senior vice president of business development at HomeServe, recently interviewed Carolyn Berndt, National League of Cities (NLC) legislative director of sustainability, about the unique challenges facing water utilities.

“Water loss is an inefficiency in the system, and beyond the loss of the actual water, it also means increased energy use for the utility to pump water that isn’t getting delivered to a paying customer,” she said. “This boils down to extra costs for the utility and, ultimately, the rate payers.”

Water loss is linked to aging infrastructure, with much of U.S. infrastructure dating back to shortly after World War II. Some dates back more than 100 years and even some Civil War-era plumbing has been found in modern times.

Why is so much of this vital infrastructure so old? Local governments are making significant investment in local infrastructure, but the federal government is not matching the level of commitment.

“Local governments are responsible for funding 95-98% of the investments in water and sewer infrastructure,” Carolyn said. “Local governments have invested more than $2.3 trillion dollars between 1993 and 2019, and that is not adjusted for inflation. In 2019 alone, local governments spent $134 billion. And, even with this significant investment by local governments, many

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*https://www.infrastructurereportcard.org

communities struggle to upgrade their drinking water and wastewater systems.”

In addition to funding most of the water and wastewater infrastructure improvements, local governments are limited in how they can raise money for those improvements. Smaller systems also have challenges in applying for federal funding and meeting federal grant requirements.

“If you look at the infrastructure funding gap, the federal loan and grant assistance to local governments has continued to decline in real dollars over the past decades for water infrastructure,” Carolyn said. “This really means that local governments are spending more of their own funds for water infrastructure improvements, and, again, because it’s funded largely from ratepayers and municipal bonds, this really falls on those ratepayers in terms of the cost.”

During that same 1993 to 2019 period, the federal government appropriated $2 billion annually for the Clean Water and Drinking Water State Revolving Funds, so the passage of the bipartisan infrastructure bill, with its billions set aside for drinking water and wastewater infrastructure and lead water line replacements, represents one of the largest federal investments in the vital infrastructure.

“The White House has resources to help local leaders and cities, towns and villages navigate the funding opportunities under the bill and to understand what the programs are, the timeline and who to contract,” Carolyn said. “They released a playbook1 specifically for small and rural communities to identify the programs and sources of funds with specific set-asides for rural communities and some of the key flexibilities and benefits for rural communities. The National League of Cities is going to be there every step of the way for local leaders to help them find the programs that best suit their communities and maximize and leverage this historic opportunity.”

The NLC has partnered with Bloomberg Philanthropies to create a local infrastructure hub to aid small and mid-sized cities in applying for federal grants.

Learn more about the water infrastructure, affordability and scarcity challenges facing local governments and the innovations that can help address these obstacles in Bill and Carolyn’s 20-minute interview. The video can be found here: https://servicelinepartner. com/water-infrastructure-citiesshouldering-most-of-the-cost/

Projects such as line inventories and line replacement, can be funded under the Bipartisan Infrastructure Law (BIL). The law reauthorizes the Drinking Water State Revolving Fund capitalization grant allotment and expands the Drinking Water State Revolving Fund program with three new sources of supplemental funding in Federal Fiscal Years (FFY) 2022 through 2026. Missouri’s estimated Drinking Water State Revolving Fund allotment over the next five years is approximately $747 million. These funds will be split as follows for various uses: • Drinking Water State Revolving Fund base program – FFY 2022 through 2026, approximately $223.3 million • Drinking Water State Revolving Fund supplemental – FFY 2022 through 2026, approximately $200.1 million • Drinking Water State Revolving Fund Lead Service Line Replacement –

FFY 2022 through 2026, approximately $255.6 million • Drinking Water State Revolving Fund Emerging Contaminants – FFY 2022 through 2026, approximately $68 million Note: Water systems that wish to take advantage of this funding for lead service line revisions must complete inventories by Oct. 16, 2024, to be eligible for the funding.

What are other available funding sources for water infrastructure (both clean water and drinking water)?

In addition to the Bipartisan Infrastructure Law, there are numerous other sources of funding to assist with infrastructure issues related to water. The Missouri Department of Natural Resources (MoDNR) provides subsidized loans and additional subsidization (grant and principal forgiveness loans) through the Clean Water and Drinking Water State Revolving Fund programs. The EPA provides financing through the Water Infrastructure Finance and Innovation Act Program. The U.S. Department of Agriculture – Rural Development has funds available through various programs in their agency. Community Development Block Grants administered through the Missouri Department of Economic Development (MoDED) are another source of infrastructure funding. The American Rescue Plan Act (ARPA) is a valuable source of funding and $2.6 billion was allocated by the federal government to the state of Missouri, as well as funds that were allocated to each county and each municipality in the state. The Governor’s budget recommendation appropriated $410 million in state ARPA funds to invest in Missouri’s water infrastructure through community grant programs administered by MoDNR. This was appropriated by the General Assembly in spring of 2022. The Missouri Department of Natural Resources will offer four grant programs; wastewater, drinking water, storm water and lead service line inventories. Other state agencies may also have additional federal and state funds for municipal projects.

Bill Eller is senior vice president of business development at HomeServe. Learn more about HomeServe at www.servicelinepartner.com.

End Notes: 1https://www.whitehouse.gov/build/rural/