July-August 2011

Alternate Financing and Local Controls

“There is no difference really between a dollar of deficit and a dollar of unmet road funding.… We’re actually just moving one type of deficit to another. But, the problem with this second type of deficit is that you drive on it, and then it falls down.” –Ezra Klein

Ask around, and I bet you’ll come across at least one or two first-person anecdotes related to our crumbling infrastructure. Perhaps your neighbor regales you with the hazards of his morning commute where he dodges potholes and windshield-cracking debris on his way to work. Maybe your parents ruminate on the relative safety of the town’s bridges and levees. Maybe you yourself have fallen victim to the backed up sewer or bursting water pipe.

We all know that most roads, sewers, and water conveyance systems are owned and maintained by the federal, state, or local governments. With yearly repair budgets for infrastructure repair rising above the $100-billion mark, it seems reasonable to expect pothole-free roads, stalwart bridges, and leak-free water mains, but the truth is that every year we fall deeper into an infrastructure debt, no less real than our federal budget deficit. It is estimated that the real cost of infrastructure maintenance and repair is upwards of $3 trillion. With budget allocations in the billions, we are currently in the crosshairs of a $2.2- to $3-trillion shortfall (http://www.hoover.org/publications/defining-ideas/article/5366).

I am sure we can all come up with intelligent and rational reasons for the shortfall, but it does us no help to point fingers and assign blame. And while it is probably true that, over the last decade, much of the focus (and funding) of the federal government has been on national security, the voices of the infrastructure crisis are finally starting to be heard. The tide is slowly shifting as water purveyors, legislators, and local governments chum the waters for funding and maintenance alternatives. Well-maintained infrastructure should be a central component of the national security conversation.

One solution is to simply downsize water resource management so that use, treatment, and collection are all handled—and funded—at the local level. For example, in Seattle, WA, an elementary school that has taken the plunge by initiating an effort to “unplug” from the city’s municipal water and sewer system. The Bertschi School’s unplugged system combines composting toilets, stormwater catchment, and onsite water treatment to create a water recirculation system that will allow the school to manage its water supply independently of the city’s water and wastewater utilities.

Meanwhile, the US Army recently announced new net zero water goals for several installations, including Fort Riley, KS; Camp Rilea, OR; and Joint Base Lewis-McChord in Washington. Many other potential sites have also been identified, with the ultimate goal of consuming only as much energy or water as they produce, while also eliminating solid waste diversion to landfills.

Over at the capital, budget negotiations continue to exert their push-pull influence over all money matters large and small, prompting some lawmakers to proposing alternative financing options for infrastructure maintenance in general, and water conveyance in particular. Introduced by US Senators Robert Menendez (D–NJ) and Mike Crapo (R–ID), and US Representatives Bill Pascrell, Jr. (D–NJ) and Geoffrey Davis (R–KY), the Sustainable Water Infrastructure Investment Act (HR1802) lifts the state volume cap on exempt facility bonds and private activity bonds for water infrastructure projects. Removing these caps will raise water infrastructure level of funding and support already granted to areas considered “critical” to the nation’s infrastructure: airports, high-speed rail, and solid waste disposal, all of which are all currently exempt from existing caps. Additionally, the bill could generate significant tax revenue for state and local governments and generate $50 billion in private capital investment.

And then there’s Co-Op City. Co-Op City touts itself as the “largest residential development in the United States.” Located in The Bronx (New York), Co-Op City includes 15,372 residential units spread out over 35 high-rise buildings and seven clusters of townhouses on 320 acres. The city spends about $14 per year on water and sewer, a number that is expected to exceed $70 million over the next five years. As such, it’s not surprising that Co-Op City recently announced the initiation of a five-year, citywide water efficiency installation and renovation project.

We need to face the reality that we are dramatically ill-prepared to deal with the economic and infrastructure crisis looming in our future. A future of funding predicated on cooperation between public and private interests is certainly an important part of the solution, but in order to overcome the challenges we face in financing and implementing improvements and repairs to our water conveyance systems, we will have to think outside the box. Some of us will have to reduce water resource management from the macro to the micro level—including onsite water treatment and reuse, communitywide demand management, and reality-based pricing structures.

In the end, cities and local water utilities are probably in the best position to assess their water resource needs and develop successful strategies to combat supply shortages and demand increases. National policies and programs are helpful, but often ineffectual when it comes to addressing distinctive regional needs. The question is: Do we still have the time, the political will, and the resources to turn things around before it’s too late?         

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