Brown and Caldwell's Infrastructure Funding page

Monitoring water infrastructure's role in the economic stimulus program

John Salo

John Salo
Senior VP
Business Consulting Practice

Other resources

American Recovery
and Reinvestment Act of 2009
•  Report
•  Summary
•  House bill (HR 1)
•  Senate bill (SB 336)
•   Side-by-side comparison
of House-Senate stimulus bill

How-To Guide for Getting
Your Piece of the Infrastructure Pie

Liquid Assets

Blueprint America MainStreet Economic Recovery Report
•  Programs by City

America 2050: Rebuilding and Renewing America'



AWWA's Streamlines

ACS report: GlobalChallenges, Chemistry Solutions

National Association of Clean Water Agencies

American Rivers Green Water Infrastructure

Water Infrastructure Network

Water Is Life

Year of Water at SAIS


Water Efficiency: The Journal for Water Conservation Professionals

Spotlight pages

Asset Management
Sustainable Water

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The House and Senate have agreed on a final $789 billion economic recovery package that includes significant funding for clean water infrastructure. Back-up information that is beginning to circulate indicates that a total of $6 billion is included for clean water and drinking water infrastructure. In addition, $1.38 billion will go to USDA for rural water and wastewater assistance.

Some of the details that are important to water utilities include:

• Priority will be given to projects that are ready to go within 12 months.

• At least 50% of the funding would be in the form of grants or grant equivalence.

• Up to 20% is designated for green infrastructure and energy conservation.

This level of funding is an important first step in what the water industry hopes will be long-term sustainable funding for water infrastructure.

Political and public debate continues on the economic stimulus bill. Yesterday, an $838 billion bill backed by the White House made it through a preliminary vote and the Senate is expected to vote on the full package today. That will presumably be followed by negotiations to bring about the necessary compromises between the House and Senate versions of the bill, with the hope that the bill will be brought to President Obama to sign before the President's Day recess.

Last week, I was at the winter conference of the National Association of Clean Water Agencies (NACWA), which was attended by more than 150 wastewater utility leaders, along with consultants and attorneys who are involved in the water sector. As you can imagine, the economic stimulus bill was discussed at every turn.

One of the lingering concerns that utility leaders have is the states' ability to process the funding once it is allocated, given the limited resources that many of the states SRF organizations have. It also was clear among the conference attendees that although funding for infrastructure that could come from the bill will be important to get key projects moving and generate jobs, the funding will be only a first step in addressing the massive water and wastewater infrastructure problems facing the country.

However, the debate on the stimulus bill has helped significantly raise the profile of these infrastructure challenges and could potentially be a positive first step in providing long-term sustainable funding for infrastructure, which is absolutely critical to the country. To keep its members informed, NACWA will be holding a webcast later this month to discuss implementation of the economic stimulus funding.

Intense activity related to the proposed economic stimulus package is occurring on two fronts:

Senate debate: President Obama said Monday that "very modest differences" over the stimulus package should not delay its swift passage, making a fresh appeal to Congress as the Senate worked on its version (see "Latest Headlines" at right). With regard to infrastructure funding, Senate Democrats Patricia Murray of Washington and Dianne Feinstein of California offered an amendment — which the Republicans blocked — that would have added up to $25 million for highways, public transportation and water projects; investments in water and sewer infrastructure would be increased by $7 billion for a total of $13 billion, generating an additional 154,000 jobs.

WEF webcast: Many of the water sector professional organizations are providing guidance to their members as to how the stimulus funding will be implemented. For example, Monday, the Water Environment Federation sponsored a webcast on stimulus funding for water infrastructure, "How Much Is Available and What Could It Mean for My Community?” The webcast featured several speakers, including Jim Hanlon, director of the Office of Wastewater Management for U.S. EPA, offered more than 800 links, received dozens of questions and answered more than 30 inquiries during the 90-minute session.

The Q&A helped clarify many issues on the minds of the participants. Through an effort spearheaded by American Rivers, 250 ready-to-go green infrastructure projects were identified to help support the request to designate 15% to 20% of the water infrastructure funding for green infrastructure. This list (which is not intended to be all-inclusive) will be posted on WEF's website (see link at left).

Regarding what "ready-to-go" means, the House and Senate versions of the bill have different definitions. The House bill indicates that 50% of a project must have binding commitments for construction within one year and 100% within two years. The Senate bill requires a 100% binding commitment to proceed with construction within 180 days.

One thing to keep in mind is that the infrastructure stimulus is additional funds; these funds will supplement SRF money already in place.

The distribution of funds to the states is based on current formulae. For drinking water projects, the last needs survey was 2005, which is the basis for the current formula. The clean water projects are based on the current formula, which goes all the way back to 1987 statutes.

The EPA's Hanlon outlined the timeline for completing and implementing economic stimulation as follows: the Senate will complete the legislative drafting process through its Appropriations committee, which would be followed by a full committee vote and then a full Senate vote. A conference committee between the House and Senate would be convened to come up with a final version of the bill, which then would be voted on by both the House and Senate. Then, the legislation would go to the president for approval and his signature.

The EPA would issue some type of guidance or grant regulation shortly thereafter through a Stimulus Task Force, Hanlon says. The House bill calls for funds to go to the states within 30 days; there is no specific deadline outlined in the Senate bill.

The WEF webcast is now available in PDF form. Visit the WEF web site for more updates.

Earlier this week, I participated in a panel discussion about infrastructure funding at the New England WEA annual conference in Boston. I was representing the Water Environment Federation and the other presenters included Ken Kirk, executive director of the National Association of Clean Water Agencies, and three state representatives who oversee the SRF programs in their states — Matt Millea, acting president, New York, Harry Stewart, director, Division of Water, N.H., and Brian Kavanah, director, Division of Water Quality Management, Maine.

There were three important takeaways that I received from the panel discussion.

• It is clear that states are being pro-active in gearing up for handling funding that hopefully will be coming from the stimulus package. The states are refining their procedures and are reaching out to local municipalities that may be able to benefit from the funding.

• There still is lots of discussion in Congress as the details of the package are worked out. With regard to water infrastructure funding, the key issues are: the size of the funding amount, the form in which funds will be available, i.e., loans, grants and various combinations, and the extent to which affordability factors into eligibility.

• An important benefit of getting funding for water infrastructure is that it can serve to be the first step in what ultimately needs to be a long-term sustainable source of funding. For this reason, it is important that the initial projects funded through the stimulus package be initiated and completed on the proposed schedules, be well-executed and get some good publicity.

ASCE's new 2009 Report Card for America's Infrastructure was released today, and our water and sewage systems are dreadful. Leaky pipes lose an estimated 7 billion gallons of clean drinking water every day. And aging sewage systems send billions of gallons of untreated wastewater cascading into the nation's waterways each year.

The nation's top engineers assigned the state of our infrastructure with an overall grade of D, as well as individual grades in 15 infrastructure categories (11 D's and 4 C's).

Because decades of underfunding and inattention have endangered our infrastructure, the report says that $2.2 trillion in repairs and upgrades are needed during the next five years to meet adequate conditions.






Recovery Beyond the Beltway

I ran across a terrific interactive map that shows a state-by-state breakdown of how the economic stimulus money will be allocated under the House version of the recovery bill. Click on the map and check it out.

Created by the Center for American Progress, this gives us a better idea of not only where the stimulus funds would go, but how much. For instance, California would receive about $63 billion, New York about $41 billion and Florida about $29 billion.

The map shows outlays that make up about 66 percent of the total cost of the economic recovery package. It also shows the proportion of the funds that will help each state balance their budgets. Although the data is not broken out by sector, such as water infrastructure, it does give an interesting overview of total dollars to each state.

Since the House version of American Recovery and Reinvestment Act was unveiled last week, there has been a flood of reaction and President Obama has had meetings with congressional leaders to try to gain support. Here is a sampling of some of the important activities that directly impact how water infrastructure funding will factor in to the stimulus package:

• Despite news accounts that less than half the money for infrastructure projects will be spent within the next 2 years, the Congressional Budget Office has yet to issue its report. What it has done is used part of an earlier version of the stimulus plan and extrapolated the numbers, according to the Huffington Post. Dean Baker has more. Click here to read the numbers.

• Almost every professional organization representing the water sector and other infrastructure interests has issued a call for action, urging members to contact their representatives in Congress. For example, see WEF’s Action Alert.

• The House Committee on Transportation and Infrastructure held a hearing Thursday to listen to testimony related to concerns with proposed funding levels for water infrastructure projects. Read NACWA President Marian Orfeo's testimony.

• Friday, the Water Infrastructure Network (WIN), a broad coalition of 52 construction, engineering, conservation, labor, municipal and manufacturing organizations, sent a letter to the Environment and Public Works Committee supporting inclusion of $20 million for ready-to-go water infrastructure projects.

It is expected that a Senate version of ARRA will be released this week, and then the work to find common ground in a consensus package will begin. The president and congressional leaders are still determined to get legislation passed by mid-February.

The panel on This Week with George Stephanopoulos discusses the proposed stimulus package, and Nobel Prize-winning economist Paul Krugman cuts through the bull:

Follow the debate on the stimulus package in Krugman's blog.

In his inauguration speech this morning, President Obama made a strong statement regarding the need for infrastructure investment:

"Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America. For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act — not only to create new jobs, but to lay a new foundation for growth.

"We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age.

"All this we can do. And all this we will do."

Much is happening at a rapid pace in Washington, D.C., related to the proposed economic stimulus package. Take a look at the draft of the House bill and the accompanying report and summary in our Other Resources links on the left. The issue of how funds will be distributed (through the states or directly to the cities) still is alive based on comments from Akron's mayor. (See Latest Headlines)

Meanwhile, the various water sector professional organizations are working hard to ensure that funding for water and wastewater infrastructure projects remain a significant part of the overall stimulus package as it moves through Congress and on to President Obama's desk. Seven of the water associations met Jan. 6 to coordinate efforts and members agreed to prepare a joint letter advocating for significant water infrastructure funding that will be sent to congressional leaders and the new administration. Speaker of the House Nancy Pelosi says she would like to wrap up work on the stimulus package before Congress goes into recess for President’s Day recess Feb. 9.

Of the stimulus plan's $11.8 billion for water and wastewater:

  • $6 billion for wastewater projects funded through the Clean Water State Revolving Fund (CWSRF)
  • $2 billion for drinking water projects funded through the Drinking Water State Revolving Fund
  • $3.8 billion for rural water and wastewater systems
  • $500 million for western water supply projects through the Bureau Reclamation
  • $400 million for watershed protection projects through the Natural Resources Conservation Service

Note: Of the $6 billion for the CWSRF, about half would be dispersed as loans and the other half would be provided in the form of forgiveness of principal, negative interest loans and grants to municipalities for projects that are included on the state’s priority list. 80% of the grant money would be for projects that benefit municipalities that meet certain affordability criteria, and 20% would go to projects that address water and energy efficiency goals, mitigate stormwater runoff or encourage environmentally sensitive projects.

I just finished reading a terrific article in Forbes magazine about two Wharton professors who have launched new academic research on how to best provide meaningful oversight for government spending on an economic stimulus plan. From where I sit, that's good news considering we've had more or less no transparency over the $350 billion in federal bailouts to banks and other financial institutions.

After meeting with advisers to President-elect Barack Obama in Chicago last month — and briefly with Obama himself — members of the U.S. Conference of Mayors compiled a list [See link at left] of more than 15,000 "shovel-ready" infrastructure projects, estimated to cost $96 billion, that could create more than 1 million jobs.

WEF has finalized plans for its Economic Stimulus webcast Feb. 2. This is a great opportunity to get a closer look at the stimulus package. If you're like me, you probably have dozens of questions as to project eligibility, application requirements, etc. Sign up by Jan. 29.




Obama names outside economic experts to advisory panel
Los Angeles Times, Feb. 6

Virginia Tech professor highlights failing U.S. water infrastructure
VT News, Jan. 29

CWSRF hosts economic stimulus workshops in California

Great Lakes plan envisions
'blue water economy'

Iowa governor seeks $700 million
for state projects

Cash-strapped states anxiously
await federal government funds

WEAT, TACWA briefing Feb. 13

Why a tiny Alabama town wants
a big chunk of the stimulus

Americans would pay more taxes
to fix infrastructure, poll says