Commonwealth of Massachusetts
Water Infrastructure Finance Commission Public Hearing

Wednesday, October 20
10 am
Forbes Municipal Building
45 West Main St, 2^nd Floor, Room 23/24
Westborough, MA  01581

The Commission convened at 10 am.

Commission Members Attending:

Senator Jamie Eldridge, Representative Carolyn Dykema, William Callahan, Phil Jassett, Ned Bartlett, Becky Smith, David Terry (for Commissioner Burt).   Guest of the Commission:  Senator Michael O. Moore

Senator Eldridge opened the hearing, and welcomed everyone to Westborough.

Notes from the Testimony (please note: what follows is not an official transcript.)

David Terry
Department of Environmental Protection

The public doesn’t appreciate the full value of infrastructure.  The EPA Needs assessments point to the very large investments that need to be made in the Commonwealth, both for drinking water and for clean water (sewer treatment).  We are still waiting for the federal guidance on stormwater, so these Needs Assessments don’t yet include the very large number that will be needed for storm water work.   The MWRA leak last spring brought into the public eye the magnitude of the issue.  Fortunately, we were able to maintain pressure in the lines during that crisis, which kept up fire protection and basic running water needs.  It could have been much worse.  Fire protection is an under-noticed need.  The lesson:  well managed water infrastructure is essential to modern life, and a crucial investment.

Jeff Weise
Chairman
Holliston Board of Water Commissioners

Our water system has 100 miles of outdated concrete/asbestos pipe that we will need to update at some time.  We have iron/manganese issues that color the water in our system.  Another issue for us is the possibility of over-pumping our wells if we don’t find new sources.  It costs $650,000 to $800,000 per mile to replace pipes.  We have a DEP mandate to upgrade our well site.  Major borrowing is not an option in the current fiscal situation.  We have 14,000 residents. Emergency situations also arise.  We try to plan our pipe work with necessary highway projects, which limits our planning.   We pay administrative costs to town hall for indirect costs.  We have begun working with a consultant on an asset management study.  What we would like to do is to have a plan to spend a more constant amount of money each year and trigger investments according to the asset management index.  The analysis shows we are losing ground at the rate we are going.

Christine Millhouse
City of Attleborough

It is frustrating to operate facilities that are falling behind in investments.  Just last night we had to make emergency repairs.  Right now, user rates are the only source of funding.  One issue we struggle with is how to set our rates to encourage conservation without leading to a decline in our revenues.  The current SRF is not adequate.  We need grants, zero percent loans.  The program should NOT disadvantage towns that invest in improvements.  The cost of not replacing/fixing our assets leads to emergency repairs, and unsafe roads while repairs are underway.  We are concerned about using innovative techniques as we invest in our infrastructure, since failure of those investments would be devastating to us.  Another problem we have is unfunded mandates.  Requirements to upgrade our plants are leading us to huge investments.  No sooner do we finish one investment than we are asked to comply with a new requirement.  We invested 30 million in an upgrade 4 years ago, and now need to invest another 50 million in order to comply  with nutrient reduction requirements.

Representing ACEC:
Fran Yanuskiewic
Jennifer Lachmayr
Malcolm Pirnie, Inc
Wakefield, MA

Communities are not keeping up with their investments.  There is fierce competition with other priorities for the General Fund (property tax revenues).

Regarding the quantifying of needs, I urge the committee to look at several sources of information.  In addition to the EPA Needs Survey, there are also the priority lists for the SRF program, as well as the ARRA list from 2009.    When the latter was put together, there were 1000 projects listed for the Commonwealth, including 500 for drinking water, 410 for clean water, and 128 for storm water, with a total of $4 billion in needed funds.

On the EPA Needs survey, not every community is represented.  But for clean water alone, the anticipated need is $8.2 billion.

The SRF priority list for 2009 had 100 million in projects, while the 2010 list had 90 million.

Regarding stormwater, the MS4 permits are the new issue.  Some data is available on the EPA site.  In Massachusetts, only 171 communities responded, with the other 30% not reporting.   Nationwide, we are aware of about 600 storm water utilities.  In Massachusetts, there are about five.  Enabling legislation would make it easier for towns to set these up and may be something the Commission should take a look at.  One issue, the estimates of cost per acre widely vary.

One approach to consider is regional stormwater districts.  Take a look at Long Creek, in South Portland Maine.  In this model, a mix of landowners made investments as a district and cooperatively pay for the costs.

EPA is piloting an effort in towns around Franklin, Ma.   Also look at Chicopee, Newton, and Reading.

Our recommendations:

1. Affordability
2. Small projects
3. Look at the requirements for SRF – make sure the process is as “user friendly” as possible.
4. Current tax credits – to encourage smart investments
5. Betterment law – need changes in the way costs are shared.   Look at some of the recent home rule petitions for creative ideas.

Matt Pearson
Grafton Water District

The Grafton water district serves a population of 10,000 and is located in central Massachusetts.  The system has gravel packed wells and one treatment plant.  The water rates are presently $4.57 per thousand gallons with a $12.50 minimum charge.  The average bill is $126.75 per quarter.  The rates have not been raised in 7 years due to political pressures.   We have contracted with Chris Woodcock to recommend a rate structure.  An increase to meet future needs would require an increase to $7.26 per thousand, increasing the average bill to $194.00 per quarter.  The rates would have to be increased by approximately 59% to meet the depreciation/asset needs of the system.  We do not have an enterprise fund, so we need to ask Town meeting for every appropriation.

Because of the downturn in the economy, the district has experienced a significant increase in water shutoffs during the last year, increasing from an average of 30 to 100 this past year.  We have more and more customers unable to pay at the end of the 90 days.

Grafton benefited from USDA grant money in the past, but is no longer eligible due to an increase in our population.

Charlie Roberts
Boston Society of Civil Engineers (BSCES)
The Engineering Center

We have stressed watersheds with 1970′s infraxtructure.  Our recommendations include:

1. Long term low interest loans for use of MWRA communities
2. Protect against man made natural disasters
3. Educate the public on the value of long range investments
4. Give rate incentives to reduce the use of H20
5. Make engineering costs eligible for SRF
6. Encourage reuse of water
7. Establish dedicated maintenance accounts, and fund annually

Jane Madden
Camp Dresser Mckee

I am here today to speak for the Mass Coalition for Water Resource Stewardship.  My recommendations:

1. Do more pilot projects, like the DEP pilot program for green infrastructure.  In particular, we need “seed money” in state or federal grants to evaluate process improvements that could be implemented at water and wastewater treatment facilities to reduce power consumption, chemical use, etc.  The return on investment can be on the order of 5 years for these types of improvements compared to longer ROI for some renewable energy projects.  For example, replacing less efficient positive displacement blowers with newer technology blowers was found to have a seven year return on investment.  Other ideas include recycle pumps in an activated sludge system to impart denitrification which results in a net savings in power due to reduced oxygen demand and chemical savings.
2. Use Adaptive Management in NPDES permitting.  There is a need to see how receiving waters respond to reduction in nutrients prior to instituting further reductions.  Too often, limits are successively reduced before a community has had time to adapt to limits in previous NPDES permits.   How do we recognize when we are reaching a point of diminishing returns on nutrient reduction?
3. Require a cost benefit analysis, not only of actual dollar amounts, but also in terms of indirect environmental impacts of reduced limits and carbon footprints, for any reduction in the nutrient limits.  Often these reductions result in a significant increase in power use, chemical use, sludge disposal impacts, or air emissions impacts.
4. Consider optimizing the treatment capabilities of existing infrastructure prior to constructing new infrastructure.
5. This is a detail, but the TMDL assessments are based on readings of “orthophosphorous” but regulators translate that value into total phosphorous. The insignificant differences between these two become significant at the range of phosphorous limits.  We are at the limit of technology when it comes to phosphorous removal.  Chemical addition to achieve these extremely low limits is significant, and that chemical addition translates to additional sludge production.

Todd Melanson
Environmental Compliance Manager
Chelmsford Water District

Chelmsford established a rural district in 1913.  We have 140 miles of main and serve 25,000 people.  Our district commission is elected.  We have issues staying in compliance with various orders and permits.  We managed to reduce our per capita water use from 70 gpd to 62 gpd to meet the state requirement.  We need to replace our mains, which were  never intended to carry such a load.  We are working with UMA Lowell to find efficiencies in our energy use, chemical use, and water use.

Jessica Strunkin
Paul Matthews
495/Metrowest Partnership

Thank you to the Senator and Representative for your leadership in creating this Commission, and thank you to the members for your service.  This is a pressing need, and the examination is long overdue.  There are economic and residential growth pressures in our region, and across the Commonwealth.

We have aging infrastructure, but we also have companies leading the sector in innovation and green solutions.  Our private sector has also been in the leadership in applying these new solutions…. The Wrentham Malls, Intel, and EMC are among the major construction projects that are using the new technologies.

We would like to raise several major issues for your consideration:

1. Residual designation authority (“primacy”) is an issue with long term consequences and should be looked at by the Commission.
2. Our SRF program is a leader among states, but there are ways to modernize the program to keep up with demand.  The 2% interest rate is not working for many towns.
3. Water withdrawal issues are important.  In some towns where there is a valid economic development project, the state withdrawal permit may preclude the development because there is inadequate supply.  See Shrewsbury.
4. Regional solutions are needed.

Eric Johnson
Town of Framingham

In Framingham, we have 250 miles of roads, the oldest of which date to the 1880′s, and many of which were installed post World War II.  We serve a population of 67,000.  Between 1980 and 2004, we invested a total of 37 million dollars in capital improvements to our system.  Between 2004 and 2009, we began investing a whopping $179 million as required by our permits.

Construction is not only expensive, it is intrusive.  There are impacts on small business, our roads, etc.  We had to hire temporary staff, we worked on 140 separate easements, each of which involved survey, appraisal, and negotiation.

We know that we can’t deal with all of this overnight.  We are developing a plan.

Our recommendations are as follows:

1. We like the SRF but it is laborious.  It costs the town $20,000 for each application!
2. We like working with the DEP staff, who are very capable.
3. Borrowing is a difficult way to go, as we are always paying for what was already spent.  We would be better served to retain some earnings to pay forward.
4. State procurement laws are very difficult.  Can we be more like a business?
5. Storm water utilities are looming on the horizon.

Rep Dykema asked Mr. Johnson to forward his comments on how to improve the SRF and the procurement process.

Valerie Nelson
Coalition for Alternative Wastewater Treatment

I served on the City Council in Gloucester in the 1990′s.  Now I work nationally and internationally on water issues.   This is a turbulent moment of opportunity with many emerging ideas.

The crisis is aging infrastructure.  Most people think the answers are in allocating more money at the federal level, privatization, asset management, and rate structures.

But I am looking for a fundamental, futuristic shift in how we think about water.  The new bywords are “integrated systems, decentralized, closing loops”.  There are major think tanks in Washington who are thinking about this transition.

Look at Newsweek, September Science magazine, the Aspen Institute, and EPA summits.

Bob Moylan
City of Worcester

I am a commissioner of the public works department in Worcester, and Chair of the Upper Blackstone Water Pollution District.  I am also a member of the Coalition for Water Resources Stewardship.

In Worcester, we have a water enterprise account overseen by the city council.  (The Upper Blackstone is a freestanding sewer district).

We have a strong environmental record.  In the 1970′s, we had a good partnership between the state and federal government, with 75% funding for our treatment plants from the state, and 15% from the state.  The city invested 10%.  In the 1980′s, the federal government changed its approach, and came up with the loan program, that puts all the burden on local entities.  This doesn’t work because regulators don’t share in the investment.  They are out of touch with reality and the fiscal challenges of municipalities.

The NPDES permits amount to an unfunded mandate.  Our sewer rates have increased 500% in 2 years.   We no sooner have finished one upgrade, now we are being required to meet a new, lower goal.  The system is broken.  We should get what we can out of the plant we just finished.

My recommendations:

1. Restore a grant program
2. Make cost benefit analysis part of the decision process
3. Sustainability (carbon footprint) should be part of the process
4. Longer permit terms, so to amortize the costs of each permit cycle.
5. Peer review of the science of all permits.