Commonwealth of Massachusetts
Water Infrastructure Finance Commission Meeting
In a meeting duly posted, the Massachusetts Water Infrastructure Finance Commission convened at ten am on November 9, 2011 in the Senate Reading Room at the State House.
Members Attending: Senator Jamie Eldridge, Representative Carolyn Dykema, Martin Pillsbury, William Callahan, Thomas Walsh, Enrique Zuniga, Michael Martin, David Terry (DEP Commissioner’s designee), Becky Smith; Ned Bartlett, Philip Jasset, Paul Niedzwiecki, Tom Tilas, Bruce Tobey, Robert Zimmerman
Guests: Nate Keenan (WPAT); Bruce Maki, Who Decides Gloucester; John Clarkeson (EOEEA); Jennifer Pederson (MWWA); Maggie Atarasov (MWRA); Valerie Nelson; Leah Robins, Sally Schnitzer; Neel Chaudhury; Thomas Philbin (MMA), Lester Black (Salem News); Hanna Heycke (EEA intern); Tippi Julek (ADS ventures); Grace Morris (Who Decides); David Cole (Westport); Representative Paul Schmid; Roslyn Frontiero (Who Decides), Ann Rhinelander (Who Decides),, Ana Alakija Waddey (Who Decides), and Grace Morris from Corporate Accountability.
The Minutes of October 3, 2011 were approved.
Senator Eldridge introduced the draft recommendations that have been prepared by the staff. Since the last meeting, the offices of Senator Eldridge and Representative Dykema have worked to prepare the draft for the Commission’s consideration, based on the votes taken at our workshop in July and on the continuing work of the Commission and its working groups.
Changes since the September draft include reordering, reorganization, editing and condensing of the recommendations. In section 5b, changes were made to reflect our conversation at the last meeting on SRF interest rates. In sections 5c and 5e, specific target numbers for revenues were added. In section 5e, a general list of potential revenue sources is listed, rather than picking one preferred source, such as the “mil.” In sections 13 and 14, some but not all recommendations of working group two on project delivery and privatization are proposed, based on their extensive work product of September. Some edits from Working Group Three were incorporated.
The Commission made several amendments to the draft as follows:
Mr. Tobey said that the MMA wants to eliminate a reference to a statewide charge on water rates from the list on page 2, section 5e. Towns can raise their own rates at the town level; we don’t want the state to use this as a state-wide revenue source. Mr. Tilas wondered if we could specify that towns that are using full cost pricing would be exempt from the charge. After some discussion, Mr. Tobey moved that 5e (4) be struck, and instead the following be inserted: “The Commission has extensively discussed the possibility of instituting a statewide water surcharge (the “mil”). Given the absence of consensus on whether or how the institution of such a surcharge might occur, we make no finding on such an option at this time, but instead recommend further consideration of the matter.” The motion carried. Three members abstained from the vote: Mr. Terry, Mr. Zuniga, and Mr. Bartlett. Mr. Tilas was opposed.
Several members spoke in favor of adding various other revenue source to the list on page 2, section 5e. Some of the items mentioned included revenues from casinos, the rooms tax, the lottery. It was agreed to add a fifth item to the list: “Other revenues from statewide sources that may or may not need legislative approval.” The motion carried with two members abstaining: Mr. Terry and Mr. Zuniga.
Mr. Bartlett stated that AIM is very concerned that dedicated funds always seem to get raided. AIM can’t support these proposals without guarantees that the funds are dedicated with safeguards against being taken for other purposes or the General Fund. The suggestion was made to change the words “dedicated fund” to “dedicated trust” which more strongly suggests that these revenues would be entrusted to the purposes for which they are raised. The motion carried with Mr. Zuniga and Mr. Terry abstaining.
Because Ms. Dykema has to leave for another meeting, the Commission turned its attention to a handout for the Gap Analysis.
A primary charge of the Commission is to examine the needs of the Commonwealth for the next 25 years as they relate to the funding gap between water infrastructure needs and available sources of funding. The model used to calculate the Massachusetts gap is a shorthand approach of the state-level gap analysis used by the State of Pennsylvania.
The analysis finds that over the next 20 years, the Commonwealth conservatively faces a $10.2 billion gap in resources for drinking water and an $11.2 billion gap in resources for clean water projects. It is further estimated that costs to address federally mandated stormwater regulations could reach $18 billion over the next 20 years.
There are many factors that could reduce the estimate, including decreasing labor costs due to integration of services, regionalization of services, asset management strategies, technology innovations, and energy efficiency.
There are also factors that could increase the estimate, including increasing costs of chemicals and power, increasing regulatory requirements, population growth, economic expansion, and increased borrowing rates.
There was a brief discussion of the draft Gap Analysis and general agreement that it was acceptable to the Commission.
Further Conversation on Recommendations
Mr. Philbin wondered if the Commission would consider adding recommendations about water banking.
Mr. Bartlett moved that the words “MEPA permits” be removed from recommendations 5(e)3. The motion carried, with Mr. Terry and Mr. Zuniga abstaining.
Mr. Zuniga suggested that the words “never been utilized” be removed from recommendation 5(b)3. A motion was made and the motion carried, with Mr. Terry and Mr. Zuniga abstaining.
Mr. Jasset objected to the specificity of choosing Division of Local Services and Regional Planning Agencies to undertake technical assistance in sections 3c, 6c, and 8b. It was moved that the words be changed to “appropriate agencies” and that specific reference to Division of Local Services and Regional Planning Agencies be struck in these sections. It was so voted, with Mr. Terry and Mr. Zuniga abstaining.
Mr. Maki stood to state that Who Decides of Gloucester is hereby submitting to the Massachusetts Water Infrastructure Commission a citizen’s initiative petition to protect public water and sewer systems. Their proposal would prohibit any municipal water system, including source, watershed area and infrastructure, or municipal sewer system to be sold, leased, extracted, or transferred without meeting certain minimum requirements, including an environmental impact study conducted by DEP, a 90 day waiting period, public hearings, local approval at a regularly scheduled city or town election, 2/3 majority vote, and other safeguards. Mr. Maki would also like to see a constitutional amendment.
There was a discussion of Section 13a and 13d – to prohibit any public water supply source to be sold or leased to a private investor entity. Mr. Martin stated that the MWWA opposed these and was concerned about the home rule powers of towns. Mr. Bartlett wondered if water lands require an Article 97 vote? Mr. Martin responded that not all water lands are covered by Article 97. Ms Rhinelander spoke in favor of the recommendation. Mr. Walsh and Mr. Tobey (speaking personally) felt it was important not to sell public water supplies. Mr. Walsh stated that these resources should be held in trust for the Commonwealth. The MMA also opposes recommendation 13a, as stated in a letter they had distributed prior to the meeting. There was a motion to stike 13a and 13d. Mr. Tobey, Mr. Martin, Mr. Zimmerman all voted YES. Mr. Zuniga and Mr. Terry abstained. The motion did not carry and the provision was not changed.
There was a discussion of Section 14. The Commission agreed to clarify in the third sentence of the introduction to this portion that the implementation was of complex water and sewer system improvements with anticipated project costs of greater than five million dollars. This brings the recommendation in line with current law.
The Commission also agreed to rewording recommendation 14(h), so that the recommendation now would read: “In order to ensure a fair, open, and productive bidding for alternative project delivery methods, consider requiring municipalities to submit their proposed RFP packages and review procedures for approval by the Inspector General and the Attorney General.”
Ms. Rhinelander stated that she felt the good work of Working Group Two has been watered down. Rampant economic desperation will lead to dry aquifers and raising of rates. Economic desperation can lead to poor decisions with respect to water resources. There are many corporate pressures at work.
Mr. Martin moved that the language in 17b be removed. This language is too vague as to what minimum benchmarks would be required for SRF applications. Voting in favor: Mr. Tilas, Mr. Walsh, Mr. Tobey, Mr. Callahan, Mr. Martin, Mr. Jasset, Mr. Bartlett. Opposed: Ms. Smith, Mr. Zimmerman, Mr. Niedzwiecki, Mr. Pillsbury. The recommendation was struck.
Mr. Callahan asked that when the report is put together, there be an overarching recommendation, a sort of summary statement, that there is a GAP of a certain size, and there are a number of ways to meet it, including an increased reliance on rates, and increase of funds from the state.
Mr. Bartlett suggested that Recommendation 19a on primacy be elevated to a primary recommendation, rather than part of number 19. There was general agreement.
Mr. Walsh wondered if the Commission could continue to meet after the completion of the final report, in order to continue working on these issues. Senator Eldridge responded that was not possible, due to the short term nature of our charge.
The Senator asked for a vote on the full package of recommendations as amended. There was a motion and a second. Commissioners voting in favor: Mr. Niedzwiecki, Mr. Callahan, Mr. Zimmerman, Mr. Pillsbury, Mr. Walsh, Mr. Tobey, Ms. Smith, Mr. Tilas (8); Voting no: Mr. Bartlett, Mr. Martin (2) Abstaining: Mr. Zuniga, Mr. Jasset, Mr. Terry (3). The motion carried.
Mr. Eldridge thanked the Commission for its work on this comprehensive set of recommendations. The staff will continue to work on the Report and will distribute it to the members and set a meeting date for its consideration.
The Commission adjourned shortly after noon.