ITEM 4G. FUNDING FOR Safe Drinking. State. its stated position. Revolving. wastewater and. requirements. Background and. Rationale.

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1 ITEM 4G TO: FROM: SUBJECT: DATE: APWAA Board of Directors William E. Spearman, III, PE, Director-At-Large Environmental Management Approval of Amendments to the Funding for Water, Wastewater, and Stormwater Facilities Advocacy Statement October 21, 2016 EXECUTIVE SUMMARY As part of the Water Resources Management Committee s annual review of position statements, it was agreed that an update to the Funding for Water, Wastewater, and Stormwater Facilities Advocacy Statement is warranted. The Government Affairs Committee has reviewed and recommends board approval. PROPOSED ACTION (MOTION): Move to approve the updates to the Funding for Water, Wastewater, and Stormwater Facilities Advocacy Statement Advocacy Statement. SUPPORTING RATIONALE: The committee updated the statement to reflect current issuess regarding the use of State Revolving Funds (SRF) for capital investmentt in drinking water, wastewater, and stormwater systems. The update also includes support for additional grant funding programs such as the Community Development Block Grant program and 319 Grant Program. It also includes clarifying wording about the Financial Capability Assessment network and an extensive update to the community analysis off funding gaps. FINANCIAL IMPLICATIONS: None IMPLEMENTATION: Government Affairs staff will use this statement as a guiding eference for legislativee and regulatory agency inquiries about this issue andd it will be posted on the appropriate APWA webpages.

2 Washington Office 1275 K St., NW, Suite 750 Washington, DC /Fax ITEM 4G Advocacy Position Statement FUNDING FOR WATER, WASTEWATER AND STORMWATER FACITILITES Safe Drinking & Clean Water Acts Statement of Purpose The American Public Works Association (APWA) seeks to inform elected officials, regulators, policy-makers on Federal funding for water, wastewater and stormwater facilities and infrastructure element investment. Statement of Position The American Public Works Association (APWA) supports actions that create and decision-makers and the public at-large of its stated position increased funding for capital investment in water, wastewater and stormwater infrastructure. APWA supports the implementation continued authorization of the State Revolving Fund for capital investment in drinking water, wastewater and stormwater systems to continue to protect the public health. The SRF is essential for the protection of public health. APWA supports all efforts to establish increased infrastructure construction grant funding opportunities for water, wastewater and stormwater treatment system enhancements with particular emphasis on funding priority for small to moderate and rural systems, or those currently operating under administrat ive orders related to the Safe Drinking Water and Clean Water Acts. APWAA supportss the Water Infrastructure Network (WIN) coalition efforts to address the widening funding gap in wastewater infrastructure through the establishment of a National Clean Water Trust Fund and supports the creation of the ongoing implementationn of the Water Infrastructure Finance and Innovation Act. APWA supports additional professional development training effort initiatives funded under the Safe Drinking and Clean Water Acts. Additionally, water, wastewater and stormwater utilities, through their managers, need to promote and champion public information activities that describe program capital and operational requirements. Background and Rationale Protection of public health and the environment is vital to sustainable communities. Water supply and distribution systems, wastewater collection, treatment and reuse systems and stormwater facilities are in need of financial 1

3 assistance to improve drinking water facilities, capabilities for wastewater treatment and treatment of urban runoff. The needs are clear. Pipes, stormwater ponds, sanitary sewers and water treatment plants nationwide Nationwide, these systems are overburdened by demand or deteriorating and agingand/or deteriorating due to age. Continued improvements and reassessments of monitoring requirements, contaminant selection criteria, resource allocation, technology approval and mandates, and compliance schedules are needed to assure increased public confidence in water resource management systems. Improvements in the administration of the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA) are needed to make these programs more efficient, cost-effective and understandable and to provide for continued public health and environmental protection. Critical to the success of implementation and administration of the SDWA and the CWA is the investment in the infrastructure for drinking water, wastewater and stormwater treatment and conveyance to address contaminants that are a real health and environmental concern. State Revolving Funds and direct grant funding sources are important to ensuring the viability of all treatment facilities and the protection of sources of drinking water supplies. Increased federal investment to address the projected shortfall in infrastructure funding is essential to addressing the backlog of critical clean water projects, meeting unfunded federal mandates, improving utility management based on state determined priorities and continuing to provide American s with safe, reliable water infrastructure systems nationwide. The CWA should be amended to: make compliance costs for public facilities a permit consideration include sustainability as a requirement in all CWA decisions include a cost-effectiveness component to permit conditions Thoughtful consideration must be given to the costs and benefits of any initiative to ensure that it can and should be supported by public money and staffing resources at any governmental level. To this end, APWA should continue its participation in the Water Infrastructure Network (WIN). Consumer costs associated with water, wastewater and stormwater systems are rapidly approaching a point where daily operations and maintenance expenses exceed the low and moderate income level families ability to keep up with ever increasing rate structures. Finally, water, wastewater and stormwater managers must answer the call to their communities and elected officials in communicating funding and project requirements to progressively advance their infrastructure funding needs. Providing this insight is vital to provide a complete and accurate picture of a community s water, wastewater and stormwater infrastructure investment needs. In establishing these needs, managers and elected officials must recognize that a properly funded and maintained infrastructure system is vital to the country s 2

4 continued economic growth, as businesses need reliable infrastructure systems to grow/expand and the efforts to construct and improve these systems provide job opportunities for the nation s workforce. Guiding PrinciplesPolicies on Funding Opportunities and Collaboration Efforts APWA believes that municipal water, wastewater and stormwater systems will require increasinged funding to meet future needs. The following subsection describes key funding opportunities and collaboration efforts supported by APWA: and must be guided by the following principles: Source Water Protection - APWA encourages the United States Environmental Protection Agency (USEPA) to continue and expand source water protection efforts. Specific efforts to coordinate and cooperate with other federal and state agencies are encouraged to minimize conflicts between various users, state water laws, and interstate/river compacts. Addressing water quality objectives from a watershed perspective offers a comprehensive mechanism for local management. State Revolving Funds - APWA encourages USEPA and Congress to work towards continued funding of this vital source of financial assistance to water, wastewater and stormwater systems. Additionally, APWA encourages USEPA to assure that: 1) (1) Repayment interest rates to local systems are actually lower than conventional revenue and general obligations bonds; and 2) (2) The application and audit process for local systems is also comparable to conventional bond funding. 3) (3) Establishment of a national maximum interest rate for the SRF during this period of nation economic strife having caused individual state bond rate to rise where state ratings influence the interest rate of the SRF Program Funds. National Grant Funding APWA supports additional grant funding programs (as opposed to loans) and the continuation and/or expansion of existing programs such as the Community Development Block Grant (CDBG) program and the 319 Grant Program. For example, funding for the 319 Grant Program has decreased by over 30% since its peak in 2003, which is a loss of over $80M in critical nonpoint source pollution funding.. Clean Water Trust Fund APWA supports efforts seeking a dedicated, wellfunded and deficit neutral Trust Fund to address the wastewater infrastructure funding needs of the nation s communities. APWA strongly advocates for a clear articulation of the roles, responsibilities and administration of the Trust Fund by 3

5 all governmental partners to ensure the proper allocation and distribution of these monies to local communities so that they may address their wastewater funding investment priorities. Particularly the trust fund should provide 50% grants to local communities in conjunction with SRF loans to help finance projects in order to meet CWA requirements Dedicated revenue for a clean water trust fund should be from sources that are: long-term, reliable and sustainable, fair and equitable and provided from the national economy. A tax on local governments or their water, wastewater and stormwater utilities or services should be strongly opposed. Water Infrastructure Finance and Innovation Act APWA supports the innovative and new Water Infrastructure Finance Innovation Act (WIFIA) because it will offeroffers an additional vehicle for funding large projects that are often excluded from SRF funding. However, it is essential that the SRF programs are also reauthorized to continue to provide funding for those projects that would not qualify for WIFIA funding and that WIFIA be complementary to the existing SRF programs. The existing SRF programs are a proven and reliable source of funding for essential water, wastewater and stormwater infrastructure projects across the county. Strong, well-funded SRF programs in combination with alternative funding tools are vital to address the current water, wastewater and stormwater infrastructure funding crisis. Water Infrastructure and Resiliency Finance Center APWA supports the continued expansion of the EPAs new Water Infrastructure and Resiliency Finance Center, which is a key component of the Build America Investment Initiative. This initiative recognizes the trends of growing costs and increasing resource pressures on regulated communities. APWA supports the development of regional Environmental Finance Centers (EFCs) to provide environmental finance expertise and outreach to regulated communities, with the goal of creating opportunities for state and local governments and the private sector to collaborate, expand public-private partnerships, and increase the use of federal credit programs. Financial Capability Assessment Framework The Financial Capability Assessment Framework issued by EPA in November 2014 recognizes the ever increasing financial burden on regulated communities for Clean Water Act compliance. While previous financial capability assessments focused on combined sewer system, the new guidance recognizes the cost of other municipal programs, such as sanitary sewer overflows, ongoing asset management or system rehabilitation programs, separate stormwater collection systems and other CWA obligations required by state or other regulators. APWA supports the consideration of costs for all CWA obligations during the permitting or enforcement process, including the development of a definitive affordability model or regional affordability indexes.regulatory Authority for Stormwater Programs According to a survey by the National Resources Defense Council (NRDC), only half of all states have an explicit statute granting the authority of 4

6 local governments to implement stormwater user fee programs. The ambiguity of state law on this issue is a hindrance for local governments to enact an appropriate fee-based funding system to pay for necessary infrastructure improvements, reduce flooding and improve water quality. APWA supports working with state legislatures to make the grant of authority more explicit such that all viable funding options are available to local governments. Guiding Principals APWA s support for the preceding programs is guided by the following principles: Financial Capability Assessment Framework The Financial Capability Assessment Framework issued by EPA in November 2014 recognizes the ever increasing financial burden on regulated communities for Clean Water Act compliance. While previous financial capability assessments focused on combined sewer systems, the new guidance recognizes the cost of other municipal programs, such as sanitary sewer overflows, ongoing asset management or system rehabilitation programs, separate stormwater collection systemsmunicipal stormwater permitting programs for water quality and other CWA obligations required by state or other regulators. APWA supports the consideration of costs for all CWA obligations during the permitting or enforcement process, including the development of a definitive affordability model or regional affordability indexes. Regulatory Authority for Stormwater Programs According to a survey by the National Resources Defense Council (NRDC), only half of all states have an explicit statute granting the authority of local governments to implement stormwater user fee programs. The ambiguity of state law on this issue is a hindrance for local governments to enact an appropriate fee-based funding system to pay for necessary infrastructure improvements, reduce flooding and improve water quality. APWA supports working with state legislatures to make the grant of authority more explicit such that all viable funding options are available to local governments. Public Awareness Efforts should be increased to educate the public and particularly those decision makers responsible for water, wastewater and stormwater systems. The use of Consumer Confidence Reports is considered to be a costly activity with limited benefit to the public and to water purveyors. USEPA should monitor the effectiveness of such programs and modify or eliminate them if it is shown that their effectiveness has declined or become counterproductive. Community Analysis of Funding Gaps APWA encourages public works and utility managers to prepare 5 to 1020 year capital expenditure master plans that are updated every 5 to 10 years forof water, wastewater and stormwater operations and maintenance and construction requirements. These plans should 5

7 be based on the use of calibrated hydraulic models that represent the most current system information that is tied to an asset management program that considers condition assessment as well as needs to meet new growth. Mmanagers should use fiscal cost/benefit analyses that considers both initial capital investments and long term life cycle costs in evaluating policy and growth issues in their communities. Discussions with community leaders and the public regarding phasing of investments and consequences of delayed investments are seen as vital to assuring meaningful incremental progress. To the extent communities lack funding for acquiring good information regarding their systems, funding should be made available through the above programs to ensure tax payer and rate payer funds are being spent wisely. Standard Setting APWA urges USEPA to address regulation of only those drinking water contaminants and pollution sources that occur or are likely to occur at levels that pose an Unreasonable Risk to Health (URTH). URTH standards should be set only after detailed studies and discussions with stakeholders, health care professionals, and system operators. Cost-benefits and fiscal impact analysis should be part of setting any standards. Conversely, standards should be relaxed or eliminated if it is shown that risks have been diminished or eliminated. Consideration should be given to extending the testing periods orn some contaminants and/or pollution sources after the initial test period shows little or no impact. Science and Peer Review - APWA urges the application of sound science and peer review as the basis of water quality criteria and standards setting. In addition to the items discussed above, APWA recommends the following: States should be allowed to modify monitoring requirements for drinking water systems based upon regional priorities. Federal and State Regulatory agencies must acknowledge that the availability of economical technical solutions is limited for small systems and small communities. USEPA should recognize that, in many instances, national standards are not appropriate and recognize regional differences. USEPA should continue stakeholder meetings and involve more system operators who have the hands-on responsibility. Congress should fund more research and development by the USEPA with special emphasis on research and development of affordable technologies. System Capacity Development and Operator Certification - APWA supports the efforts to assure that every system meets the criteria for developing or maintaining management, financial, and technical capacity within its system. Further, APWA encourages systems to provide qualified, certified operators. To that end, USEPA is encouraged to provide additional training for operators through various venues including 6

8 state programs, associations, and private industry. Sponsor: Water Resources Management Committee Updated: July