11/01/2010

September 28th Minutes

Commonwealth of Massachusetts

Water Infrastructure Finance Commission Meeting

Approved Minutes:  September 28, 2010

The Commission convened in a meeting duly posted at 10 am in the Senate Reading Room at the State House.

Members Attending:  Senator Eldridge; Representative Dykema, Philip Jasset, Bill Callahan, tom Walsh, Michael Martin, Becky Smith, Tom Tilas, Dave Hanlon, Ned Bartlett, Robert Zimmerman, Paul Niedzwiecki, Tom Philbin (for Bruce Tobey), Steve McCurdy (for DEP), Martin Pillsbury, David Reidell (for the Treasurer)

Also attending:  Jennifer Pederson, Brendan Jarboe, Sally Schnitzer, Alison Field-Juma, Mike Morris, Stephen Estes-Smergiassi, Leah Robins

Senator Eldridge opened the meeting and welcomed the members and guests.

Minutes

The Commission voted to approve the draft minutes of July 14, 2010.

Hearings

Senator Eldridge noted that the Commission will hold four regional hearings to gather comments and input on matters relative to the Commission’s charge.  The first two hearings have been set for October 13 in Boston  in Room A-2 of the State House and October 20 in the Forbes Municipal Building in Westborough Ma.  Both meetings will start at ten in the morning.  Two additional hearings will be held in November but the dates are not yet set.  One is to be held on Cape Cod and the other in the Springfield area.

Senator Eldridge urged Commission members to attend the hearings, and asked all members to spread the word about the hearings to their members and other interested parties.

Administrative Matters

Sally Schnitzer covered a number of administrative matters, reminding members that all working group meetings must be posted 48 hours in advance of the meeting at the place of the meeting as well as at the state level by Senator Eldridge’s office.   Draft minutes from all working groups should be sent to Ms. Schnitzer with a clear email title.

Working Session

Senator Eldridge asked each Working Group chair to lead a brief discussion of the issues being covered in that Group.

Group One.

Representative Dykema reported that she is the chair of Group One, (Current water infrastructure needs and long term challenges) which had held its first meeting on September 16 at the State House.  The first meeting was a very open and good discussion about how to proceed.   The first task is to define need, and there are many definitions.  The group is looking at what documents are available, and will also offer a critique of those approaches.

Representative Dykema indicated that the group sees its job as building a case for why the Commission is needed, and what the consequences will be if the Commonwealth fails to address its water infrastructure needs.   The former chairman of the Transportation Commission (Steve Silvera) had met with Working Group to discuss the Commission and Working Group process.

Group Two

Tom Walsh reported that he was selected chairman of Group Two, (Municipal Utility and water district financing) which has held two meetings, on August 23 and September 14, at the Woodbury Administration Building at the Upper Blackstone Pollution Abatement District Office in Millbury Ma.  The group has identified broad areas of inquiry, including:

  • A look at the SRF and its requirements
  • Status of municipal rates; what can be learned; innovations towns have used; decoupling; enterprise funds, etc
  • A look at the DEP permitting process
  • Stormwater utilities
  • A look at what other states are doing, including the issue of permitting, and the practice of river basin planning.

The Commission responded to this summary with some conversation about various of the items mentioned.

On Enterprise Funds:  There was a general conversation about enterprise funds and some of the issues involved.  Dave Hanlon believes that about 40% of towns now use enterprise funds, which are governed by state statute.  There is an issue relative to the tax deductability of rates paid to enterprise funds that may be functioning as a disincentive for towns to adopt enterprise funds.  There are also issues unique to large regional districts.  These should be considered by the Commission.

On Storm Water Utilities:  Several of the working groups are covering aspects of storm water utilities.   There was a general discussion of the situation in Milford, Bellingham, and Fraklin.  A few communities elsewhere in the state are trying out various financing models that we should look at.  One key question is that there are varying cost estimates.

Group Three

Ned Bartlett reported that he was selected chairman of Group Three, (Innovative water systems, technologies, and infrastructure) which held its first meeting on September 15 at the Woodbury Administration Building at the Upper Blackstone Pollution Abatement District Office in Millbury Ma.  This group has begun to work on several topics, including

  • The pros and cons of a watershed based approach to infrastructure planning and priorities
  • Economies of scale for decentralized systems
  • Regulatory obstacles to innovation
  • Role of demonstration projects
  • Challenge of home rule

A general conversation ensued regarding the history of the watershed approach in Massachusetts which was part of state policy from the mid 1990’s to around 2004 when it was phased out.  The program broke the state into 27 watersheds, and there were teams for each that were to make integrated decisions.  Some on the Commission spoke to the positive experiences of that approach, while others felt that the process lacked scientific rigor.

A second conversation ensued regarding obstacles to innovation, and the financial risk that innovators take in the current regulatory environment.  If a city or town is encouraged to try a new approach, they must take the risk that if the innovation fails, they will lose their tax-payer financed investment as well as the need to start anew while facing potential fines for failure to meet regulatory deadlines.   This is probably a federal-level problem.

Group Four

Martin Pillsbury reported that he is chair of Group Four, (state and federal finance and investment practices) which met for the first time on September 13 at the State House.  This group is also looking at the needs assessments, as well as a recent GAO report, and trends in the SRF program.  The SRF program has been highly effective, but inadequate to the challenges.  The treatment plants built in the 1970’s and 80’s are now an aging fleet and we will be facing a bulge of capital needs.  The group will be looking at a variety of measures, including stormwater utilities, private activity bonds, public private partnerships, new taxes.  The feeling is that the SRF will not be enough.  Martin raised the question of whether we can work with some of the other states that are looking at these same issues to push for change at the federal level.

Phil Jasset ran some estimates based on trends in the Clean Water and Drinking Water programs to make some rough guestimates of the size of the gap.  He noted that our share of the Clean Water money may drop if the federal bill passes next session, but the actual amount may remain steady.  The federal rules may become more complex.

Mike Martin pointed out that municipalities are at the point where even paying back the SRF loans that cities get is becoming more problematic.   Should we be looking at model rate structures?

Other points mentioned:  Is there a revenue source for a grant program?  Is there an opportunity to work with advocates in other states to push for meaningful federal assistance?

Stormwater utility costs are a big unknown, with widely varying estimates as to costs.  A few towns in the region and in Massachusetts are breaking new ground with new and proposed utility rate structures to pay for the costs.

Mike Martin reminded the group of the importance of looking at a model rate structure.  Would this be covered by Group Two?

The meeting adjourned shortly before noon.

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