March 29, 2012 Minutes

Commonwealth of Massachusetts
Water Infrastructure Finance Commission

Working Group Three

Innovative water systems, technologies, and infrastructure

Approved minutes: March 29, 2011
Ten am in Room 109
State House

Boston MA

In a meeting duly posted, Working Group Three (innovative water systems, technologies, and infrastructure) convened at approximately ten am in room 109 at the State House in Boston.

Members Attending:  Ned Bartlett (Chair), Becky Smith, Dave Terry, Tom Walsh,

Also attending:  Brendan Jarboe, Leah Robins, Sally Schnitzer, Lauren Dennis (Clean Water Action intern), Valerie Nelson (Coalition for Alternative Wastewater Treatment).

Minutes:  The Working Group Approved minutes for meetings held on December 7 2010 , December 14 2010, January 18 2011, and March 1 2011.

There was a brief discussion about the Open Meeting Law and how to pull together draft reports.

Ms. Smith introduced Lauren Dennis, who has been serving as an intern for Clean Water Action in Washington DC.  She has been working with Valerie Nelson, and her task has been to catalog the availability of many revenue streams that might be applicable to Massachusetts water infrastructure projects – particularly those that use innovative water technologies and approaches.

Ms. Nelson stated that we tend to rely too much on SRF, while at the federal level there are many options and many agencies.  And, in Massachusetts, there are additional programs with the potential for innovation in green energy and sustainable technology.

Ms. Dennis has prepared a handout, which the Working Group spent some time reviewing.  She listed a half dozen case studies of facilities in Massachusetts that have worked on  innovatively financed green projects – typically by creatively mixing numerous sources of funds.

For example, the Whitman Hanson Regional High School used funds from the Massachusetts School Building Authority, combined with design and technology grants from the Massachusetts Technology Collaborative, Keyspan, and municipal funding to build a new high school with an underground rain water  storage tank that will be used to flush toilets.  This will reduce potable water use in the school by 30% and is expected to pay for itself in seven years.

Massachusetts is one of the few states that have standards known as “the Collaborative for High Performance Schools Criteria”.  This is a state program to encourage the design and construction of high performance, green schools across the state.   Following these criteria, a school can save up to 40% of its operational costs through energy and water efficiency.   This program is already yielding results, with at least 19 schools having green projects registered with CHPS.

In another example, the Blackstone Valley Regional Vocational Technical High School recently retrofit its existing building to update much of its aging electrical and ventilation system.  The project included solar arrays and a solar thermal heating system.   Part of the project was paid for by an SEP, or “Supplemental Environmental Project” where in a company that owes the commonwealth fines for environmental infractions can opt to invest a portion of it in a green project in lieu of part of the penalty payment to DEP.  In this case, approximately $100,000 came from a company that owed fines for C02 emissions and a wetlands fine.   The School also received funding from the Massachusetts Renewable Energy Trust, now part of the Clean Energy Center, to incorporate sustainable design and renewable energy.

Ms. Dennis reported on several more examples of creative mixed financing, including the successful Lorusso Building, recently completed at Cape Cod Community College, the Trolley Square affordable housing project in Cambridge, the Spaulding Rehabilitation hospital being built in Charlestown, and the Rehabilitation Hospital of the Cape and Islands.

In all these examples, creative financing enabled the use of alternative or innovative technology that will reduce the consumption of energy and/or water over the life of the building, often while simultaneously addressing stormwater issues.

Ms. Dennis then spoke about several statewide policy initiatives.  In December, Secretary Ian Bowles of EOEEA released the Massachusetts Clean Energy and Climate Plan for 2020, cataloguing a suite of policies to reduce greenhouse gas emissions.  Some of these policies, including a tree retention and planting policy, the leading by example program, and others may offer a portal for water innovation.  The Commission might want to look at these and other state policies, such as the Smart Growth Tool Kit to make sure that language supporting water technologies is adequate.

Ms. Dennis has completed three out of four “catalogs” of funding sources and will be finishing the last three by May.

The Working Group congratulated Ms. Dennis and Clean Water Action on her efforts and report.  A spirited discussion followed, with a number of ideas being put forward:

  • Mr. Jarboe repeated a suggestion made in the past that there be a “one stop shop” at the agency level for proponents of developments to visit in order to get advice on possible funding pipelines, match- ups, and a catalog of which technologies have been approved and how they are operating.   (possible Working Group Recommendation)
  • Mr. Bartlett noted that many of the items listed by Ms. Dennis were “volitional” initiatives not regulatory requirements.   In many cases, these success stories also involved real leadership and creativity to put together a package of funding.
  • It was noted that the various state policies on smart growth, efficiency, and sustainability should be written to include water issues.  (possible Working Group Recommendation)
  • Mr. Terry noted that DOR information may soon become helpful in tracking reductions in energy use.  DOR is required to track various reductions and in a year or so it will be easier to see how some of these new systems are working.
  • It was noted that so far Ms. Dennis had focused on public buildings, schools, hospitals, etc.  Mr. Bartlett noted that in private initiatives there is also a rich story to tell.  In one example, a private entrepreneur has paid for the up-front capital costs of retrofitting sterilizers in hospitals.  There is a five year payback.  Ms. Schnitzer noted the TURA program which now has a program element for water efficiency.
  • Ms. Nelson mentioned the Title V tax credit as a powerful tool, and also a possible model.  Right now, if you upgrade your septic system, you can claim a tax credit.  Could we recommend a parallel program if you upgrade your home to reduce water use, or to deal with storm water issues?  (Possible Working Group Recommendation)
  • Ms. Smith noted that some towns are doing rate rebates for homes that use low flow toilets.
  • Mr. Bartlett noted that a powerful concept is using criteria as “gateways” to funding.  If you are going to get state money, you need to qualify to access those grants.  Our Working Group can offer additional suggestions for criteria to be used as gateways to state money.   Doug Foy, when he was Director of Commonwealth Development, used this idea powerfully to create what is now the Commonwealth Capital rating system.  This is possible to accomplish through an executive order. (Possible Working Group Recommendation).
  • Ms. Smith noted that transportation dollars were used successfully at the Peabody Square project in Dorchester.  Low impact development and stormwater treatment.
  • Mr. Walsh questioned what impediments might have been experienced for all these examples in getting building permits?  Were there any roadblocks on that end?   Mr. Bartlett noted that this can be a real issue.  Working with the building inspector early on in the process in each community is essential, but the process actually leaves the building permit to the very end.  Developers can work for two years to get all their permits only to find that the innovations don’t pass code.  Ms. Schnitzer remarked that at our last meeting with Mr. Kulik and Mr. Clerico, they had mentioned that New York City has set up an office to consider waivers to building codes for sustainability.  Should we look at something like that?  Mr. Terry noted that DEP is going to be taking a look at its regulations and how to streamline them.  Perhaps the appropriate agent or agency who oversees the building codes might be encouraged to do the same thing.  (Possible Working Group Recommendation)
  • Another “gateway” hurdle used in the Green Communities act is that you must update your building codes to qualify as a Green Community in order to get access to green community funding.  This could be a model for “Blue Communities”.   This could encourage the updating of local building codes so the building inspector issue is alleviated.  (Possible Working Group Recommendation)
  • Mr. Jarboe:  the big picture is that we need to reduce the “delta” between our needs and our available funding.  Ms. Dennis’ work is invaluable in helping us to do that.
  • Mr. Jarboe:  another big picture is that we provide incentives to encourage parties (municipalities, developers, landowners,) to do the right thing.
  • Ms. Nelson noted that in other countries, we can build innovative things without all the regulation.  Can we do something to encourage more pilot authorization, with a feedback loop so that high performing innovations then become allowed in the codes?  (Possible Working Group Recommendation)

Ms. Smith noted that on April 14, at the church on the hill, there will be a speaker Claus Dunkleberg, from the Milwaukee Water Council, discussing how to move Milwaukee to be a technological “water hub”.

The meeting concluded with Mr. Bartlett asking for volunteers/suggestions for writing assignments, based on the  February 7 draft outline of Working Group Three, highlighted as follows:

Preamble:  Bob Zimmerman and Becky Smith

  1. Watershed Management Approach. (Use materials already produced by Working Group Two – Tom Walsh) The planning and management of water infrastructure should be done on a watershed basis, rather than along political boundaries.
  • Comments from the public hearings indicate a need for education on what it means to manage water resources on a watershed basis.
  • If the WIFC decides to include managing water resources on a watershed basis, an explanation of the concept should be included in the report.
  • Anticipate recommending that the WIFC report contain regulatory and non-regulatory tools to integrate a watershed management approach – education/outreach will be one of the non-regulatory tools.
  1. Decentralized Infrastructure with Centralized Management.  (Paul Niedzwiecki and/or Becky Smith)  In order to increase economies, decentralized infrastructure should be managed centrally managed on a regional/watershed basis.
  • The regionalization concept reflects the concerns raised by numerous municipalities at the public hearings about cost issues.
  • Some Working Group members raised the issues that decentralized infrastructure with centralized management is not intended to imply a preference for or continued reliance on the current/conventional water infrastructure systems utilized in many towns.
  1. Risk Management.  (Ned Bartlett and Tom Walsh)  Greater adoption of innovative technologies require managing regulatory compliance and third party litigation to eliminate economic risk to the regulated community in the instance of failure.
    1. The WIFC received numerous comments at the public hearings about the current process to evaluate and approve alternative technologies.
    2. The WIFC also received numerous comments on water reuse/reclaimed water and numerous alternative technologies for management of stormwater.
    3. Approval of alternative/innovative technologies is now at the discretion of EPA and DEP.
    4. The working group plans to evaluate the existing approval processes and may recommend changes to this approval process.
    5. Any approval method must assure the safety and health of water utility users and the environment.
  1. Economic Value of Innovative or “Green Technologies”.  (Ned Bartlett) While environmental and public health benefits are very important, the economics of a transition to innovative or “green technologies” will result in widespread adoption if it can be demonstrated that these technologies have value and are more resilient.
  • Reaffirm ecological/environmental and social value of using green technologies.
  • Recognize that the economic value will be a large factor in the decision to use alternative technologies.
  • Consider one or more case studies for the WIFC report where a use of an alternative technology has benefited the “Triple Bottom Line”.
  1. Systematic Approach to Demonstration Projects.  (Bob Zimmerman and/or Brendan Jarboe)  That this Committee, through the Water Infrastructure Finance Commission, seeks a program for financial assistance to evaluate and test demonstration projects of various innovative technologies for application more broadly based on positive results.
    1. The group discussed potential recommendations to evaluate alternative technologies, including establishing pre and post demonstration evaluation criteria and establishing an entity that is charged with evaluating applications for demonstration projects.
    2. The group also discussed different financial mechanisms to fund demonstration projects.
    3. Some suggestions included putting the onus to demonstrate the technology’s effectiveness on the entity that would profit from its adoption and the possible creation of a quasi-public entity funded in part or in whole by a fee system.
  1. Challenges of Home Rule.  (Ned Bartlett and/or Sally Schnitzer)  This Committee recognizes that Massachusetts Home Rule, and potentially other Commonwealth laws, impede the above goals.
  • The WIFC received testimony on the challenges of home rule and other regulatory requirements that those testifying believed impaired the development and implementation of alternative technologies.

The meeting was adjourned shortly after noon.

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