GOVERNMENT LEADERS ARE BEGINNING TO TURN TO COLLABORATIVE JOINT VENTURES FOR WATER PROJECTS - Guest Blog by Mary Scott Nabers
Water utilities in the United States were once operated almost completely by private companies. That began to change when Boston, New York, Los Angeles and other large cities expanded in the late 19th century. Water utilities failed to manage the increased demand and government leaders stepped up to assume responsibility for adequate water resources. That’s been the case for decades, but now water problems are critical again. Most water experts believe another change is imminent.
Today, privatization and collaborative ventures are the norm for airports, roads, bridges and seaports but the water sector has been largely overlooked. The city of Baltimore has even considered changing its charter to prevent public-private partnerships (P3s) related to water. How strange is that?
America definitely has water problems and there’s no argument about whether there is adequate government revenue available to remedy the problems. Yet, government leaders appear fearful of alternative funding when it comes to large water projects. Most believe their fears are related to a lack of support from ratepayers who fear increases. Few stop to remember that rates are set by governmental entities and there are regulatory authorities to protect taxpayers.
The misconceptions about alternative funding need to be corrected and it is time to move on to realistic ways to ensure clean water resources. Of the country’s 160,000 drinking water systems, only 2,000 are operated through a P3. That means that 158,000 water systems are operated by public entities. Their upkeep, expansion and guarantee of clean drinking water are almost entirely in the hands of cities, counties and states that are struggling and suffering with budgets that cannot be stretched any further.
Last week, Sens. Bob Menendez (D-NJ) and Mike Crapo (R-ID) reintroduced the Sustainable Water Infrastructure Investment Act which would stimulate $43 billion in incremental private water infrastructure investment and $20 billion for water P3s. This, the proposed statute points out, could be made possible by eliminating the volume cap on water infrastructure private activity bonds. There’s no way to tell yet whether the proposed bill can gain enough support to be passed.
• In the few short years between now and 2025, at least two-thirds of the world’s population is expected to live in water-stressed areas;
• Public water supplies in 42 states are currently contaminated with 141 unregulated chemicals; and
• By 2020, the average American pipeline will be 45 years old, and some will have been in the ground for as many 150 years.
Those are staggering facts…but there is more. A major overhaul of America’s water supply systems is estimated to cost approximately $300 billion. State and federal government coffers cannot begin to provide that kind of funding.
There’s a list no state leader wants to make but, unfortunately, it is important to get a reality check. States with the highest number of drinking water violations include Louisiana, Missouri, Kentucky, Alabama, New York, Minnesota, Georgia, Colorado, Maine, Michigan, Virginia, West Virginia, New Jersey, Oklahoma, North Carolina, Texas, New Mexico, Arkansas and Nebraska. The three states with the lowest number of drinking water violations are Iowa, Maryland and Illinois.
Here’s an example of what could happen with collaborative joint efforts between public and private partners. After an Environmental Protection Agency (EPA) order that demanded Burbank, California, improve its water system, the city entered into a joint venture with private-sector investors and contractors. Through a partnership, the private-sector group has, for decades, operated and maintained a 9-million-gallon-per-day water reclamation facility that serves 100,000 residents. The city’s safety record is better than the national average and has achieved EPA compliance.
Another example - population growth and drought left Tampa, Florida, with consumer demand for water that was outpacing the supply. Rather than continuing to rely on ground water, the city decided to be more visionary. City leaders found a private-sector partner to build, operate, finance and maintain the largest desalination plant in North America. The plant now supplies up to 25 million gallons of fresh water per day. It also supplies the city with water for less than a penny per gallon and is under contract to do that for the next 30-50 years.
Because of these and other successes, many local government leaders are turning to alternative funding and private-sector partnerships. That will result in an abundance of opportunities in the near future.
The Pittsburgh Water and Sewer Authority (PWSA) needs $2 billion to replace outdated and failing water infrastructure. Rather than turning to the authority’s 80,000 ratepayers, city leaders decided to explore alternative funding and a public-private partnership. PWSA has received more than a dozen unsolicited proposals to build a new water treatment plant and the authority is expected to issue a solicitation by the end of this month.
Sandy Springs, Georgia, currently shares a water system with Atlanta. However, Sandy Springs is not satisfied with the partnership and wants another option. The city hopes to gain local control and then move to privatize its water system.
Projections are that in the very near future, collaborative joint ventures related to water projects will be the norm. Government leaders, with the help of partners, will again step forward to ensure clean and adequate water resources for all citizens.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
Welcome to my first blog post as President of Parkview Advisors. It’s an overview of the problems facing our water systems, and a few suggestions on how to address them.
Parkview is a company dedicated to helping water utilities make the most of every dollar. It’s how we make a living. More importantly, it’s how we serve our communities. It’s our passion to ensure that any person can get a safe drink of water from any water system anywhere in our country at any time. To learn more about Parkview Advisors, please go to our newly launched website at www.parkviewadvisorsllc.com.
Go to the website of the Centers for Disease Control and Prevention – better known as the CDC – and on it, you’ll find this impressive statement: “Clean water technologies (filtration and chlorination) are likely the most important public health intervention of the 20th Century”.
Not the development of anti-biotics. Not the eradication of diseases like polio. No, it’s the widespread provision of water that’s safe to drink! And it’s a convenience taken entirely for granted.
Every day, we habitually turn on a faucet, draw a bath, and flush a toilet with no more thought than we give to breathing or walking. Yet over the vast span of human history that unfolded prior to 1900, these commonplace household activities would have been viewed as miraculous. In fact, water was often as much a threat to human health as an essential ingredient of life.
Before the turn of the last century, water was a primary carrier of infectious diseases like typhoid, cholera, and dysentery. In the crowded conditions of a rapidly urbanizing America, this could mean a death sentence for city dwellers. For example, an outbreak of cholera that hit Memphis in September 1873 killed 2,000 out of the 7,000 who were infected, in a city with a population of 40,000.
It’s only been about 100 years since the advent of the chlorination of drinking water and the treatment of raw sewage, which virtually eliminated water as an acute public health threat. This also made possible and desirable the expansion of water and sewer networks, which by 1940 had been extended to 94 percent of urban households. It is no exaggeration that this unheralded investment in water treatment and networks is what makes modern life as we live it possible.
Sadly, such minor miracles can no longer be taken for granted. The maintenance and improvement of our nation’s water systems have been ignored for so long that we are now reaping the consequences, as these sobering statistics demonstrate:
→ 250,000 – annual number of water main breaks
→ 1.7 trillion – amount in gallons lost through these leaks
→ $2.6 billion – estimated cost of water lost through leaks
→ $1 trillion – amount estimated by the American Water Works Association that must be spent on drinking water systems over the next 20 years
Severe water quality events receive major media attention, and rightly they should. Even the most casual followers of news and current events have heard of the tragedy that struck Flint, Michigan or Charlestown, West Virginia. The statistics listed above are far less sensational but represent a slowly building crisis of deteriorating infrastructure that we cannot live without.
The magnitude of this crisis is daunting. Fixing it will not be cheap or simple. And there is no single policy, approach, or initiative that will get our nation’s water systems out of this predicament.
What will solve this problem is leadership and a plan that addresses these many challenges comprehensively. Because water systems form an integral part of the built environment and are an entrenched component of it, there are no “do overs.” Instead, getting the water systems we need will require a plan that builds on the systems we have.
The plan that follows consists of Six Pillars. It is based on lessons learned over the last 25 years building, running, improving, and thinking about water systems. The emphasis placed on them will vary over time, but they are complementary and must be pursued simultaneously for the plan to succeed. The Six Pillars are:
1. Education – This pillar is first among equals. Before this crisis can be solved, its dimensions and consequences must be known. Continuous education of and communication to customers, policy makers, the media and other stakeholders is the essential element needed to build the water systems we need.
2. Data – Water utilities generate terabytes of data daily. Harnessing it generates insights into more effective and efficient ways to operate and improve water infrastructure.
3. Efficiency – The financial needs of this sector are great, and funds are limited. To close this gap, water utilities need to make the most of every dollar.
4. Technology – The innovation in processes and systems that can benefit the water sector is unprecedented. Let’s harness them to benefit customers and disseminate innovation rapidly throughout the sector.
5. Alternative Financing – Local utilities cannot afford to address this crisis alone. They need financial assistance from all levels of government as well as the private sector through alternative contracting approaches such as P3s and concessions.
6. Local Investment – Utilities are largely funded through customer rates. Even with third-party assistance, the cost of solving this crisis will fall primarily on the backs of local ratepayers. Let’s make sure the first five pillars are addressed before any more demands are put on utility customers.
Every participant in the water sector has an important role to play in advancing these Pillars. Through a series of articles, I will be examining each of the Six Pillars, discuss their importance and showcase examples from the water sector of solutions in actual use to help solve our nation’s water infrastructure crisis.
Our civilization literally depends on it.