Water Infrastructure Finance Commission
Working Group 1: Current Water Infrastructure Needs and Long Term Challenges
Monday June 13, 2011, 9 am
State House, Room 350

In a meeting duly posted, Working Group One (Current Water Infrastructure Needs and Long Term Challenges) convened at 9am in Room 350 of the State House.

Members attending: Rep. Carolyn Dykema, Chair; Bill Callahan, Phil Jasset and David Terry.

Also attending: Leah Robins from Rep Dykema’s office.

Representative Dykema, Chair opened the meeting at 9 am.  The group unanimously voted to accept minutes from 3-31-11 meeting.  The following information was covered during discussion:

Gap Analysis Alternative for Water and Waste Water

• Lee Murphy’s work on the Pennsylvania Gap Report and his presentation set the thinking for Bill Callahan’s work on an alternative methodology for Water and Waste Water.
• The aim is to use a methodology that will develop a number that the rest of the Commission can use to try on solutions.  A more detailed report with the stamp of approval from an engineering firm is still the desired analysis for WG1 members .
• Analysis relies on several assumptions which will be explained in the text of report:
  • Rates cover O&M and debt service
    • Rates gathered from Tighe and Bond yearly survey, changed to 70,000 gallon annual consumption
  • Existing annual costs will escalate (used 3% based on bell curve of aging pipes)
  • EPA Needs surveys are not comprehensive in covering all of the needs, understated
    • Used for particular purpose of distribution of federal dollars
• Gap Formula: Needs survey + escalating cost of 3% compared against current rates
  • Current Gap is $21B in present day dollars for Water and Waste water
• Assumption that gap is understated, explanation of why that number is low will need to be included in text of report
  • ie: EPA Needs survey is not comprehensive—does not include public safety projects, projects likely required on Cape Cod  or the city of Worcester which does not complete the survey.
• Given the number of assumptions, consensus to check our number against available data sources
  • ie: IEP grant requests
  • Invite John Sullivan of Boston Water and Sewer and Fred Lasky or Mike Hornbrook of MWRA to come to the next meeting of WG1
  • Request for members to make a list of easily available data that can be compared against formula or could be added to formula to improve its accuracy
• Using PN model, developed a chart showing rates as a percentage median household income (from MAPC) along x axis and gap across the y
  • Average annual cost for water per house hold is $344/ year, 0.52% of median household income.
  • If increased to 1%, the gap disappears for medium sized systems and at 1.5% median household income, there is only a small gap remaining for small systems with no gap for large or medium systems.
  • Discussion about the appetite to raise water specific and/or statewide funds for water with the suggestion to raise at full commission meeting on Wednesday June 16^th.

Gap Analysis of Storm Water

• Bill Callahan used a formula cost of treatment per impervious acre for 90% storm which in MA is 1 inch of rain
  • Cost based on available data, used $50,000 based on earlier presentation to WIFC that assumes some lovel of treatment and retrofits
  • Unsure if state roadways are included- David Terry will check and be back in touch
  • Cost would be $17.8B
• Given the number of assumptions, consensus to check our number against available data sources
  • Many towns have MS4 cost estimates for  draft of phase 2 which is currently available
    • Based on conversations with Mystic River Watershed, suggestion to draft letter to municipalities inviting them to submit existing cost estimates
      • Would engage towns who are already rallied around the issue, waiting for suggestions from Mystic River Watershed for what particular data WG1 should ask for/ suggested questions
  • Will need to check cost of $50,000/acre based on 495, VHB and CRW studies
• Potential discussed to bring in transportation finance committee to discuss their role in storm water costs

Review of Interim Report

• Vision of this report is to set the stage for the final report by describing the findings and needs in broad strokes with data to support the discussion and recommendations to be included in the final report
• Suggestion to include only one recommendation: for an engineering firm to sharpen our number using their considerable resources and knowledge to ensure our recommendations for funding are based on the most accurate understanding of need
• Disappointment expressed that little financial information or findings were included (ie true value of water, management of utilities)
• Concern that centralized systems are minimized, focus should not be on criticizing whats been done, but building consensus for moving forward.  General agreement that decentralized systems are important in conjunction with centralized systems
• Discussion of importance of bringing administration more into the conversation for things to progress.

Options for the next meeting will be circulated by email, likely to be held in June, to meet with MWRA and Boston Water and Sewer.

Meeting adjourned at 11:30am.