10/25/2011

WG4 August 10, 2011 Minutes

Water Infrastructure Finance Commission
Working Group Four: State and Federal Finance and Investment Practices
Wednesday August 10, 2011, 2pm
State House, Room 511

In a meeting duly posted, Working Group Four (State and Federal Finance and Investment Practices) convened at one pm in room 348 of the State House in Boston.

Members Attending: Martin Pillsbury, chair; Enrique Zuniga; Becky Smith; Phil Jasset; Paul Niedzwicki.

Guest: Nate Keenan from MWPAT; Leah Robins from Rep Dykema’s office; Roz Frontiera and Ann Phinelade from Who Decides; Valerie Nelson from Water Alliance; Marianne Connolly and Mike Morris from MWRA; and Maggie Atarasov from MWRA’s Advisory Board.

Chairman Martin Pillsbury brought the meeting to order at 2:15 ensured that all members and guests had copies of the 3 handouts emailed in advance:

• General Recommendations compiled by Sally Schnitzer

• Limiting use of the CPF Model for Financing Water Infrastructure compiled by Dr. Cole

• Possible funding sources chart and narrative drafted by Phil Jasset

Discussion centered around the General Recommendations sheet, in an effort to continue defining the structure on both sides of the ledger: raising funds and distribution of those funds. There was agreement around the first section.

Mr. Jassett raised a concern that legislation and regulation both take a significant amount of time to pass, if at all, and suggested that short term solutions be explored on a parallel track. This second idea was encouraged by Chairman Pillsbury who also emphasized that these solutions are seen as long term solutions to a long term problem.

Revenues

• General agreement that funds will need to be statewide in nature

• Possibility of decreasing to less than 1 mil raised, Chairman Pillsbury will calculate potential to be raised using information from DEP on residential and non residential

• There was discussion around the potential of using new revenue exclusively or including funding from other preexisting sources. Mr. Jasset proposed several state wide funding sources for the new “Blue Communities Act” including 3% lottery revenues, $2 M bottle bill, % meals and lodging tax. Concerns included already allocated revenue streams proposed would require a multi front approach; strengths include the possibility of decreasing the mil charge, easier on voters. Conclusion is to present both proposals to the full Commission.

• Mr. Zuniga suggests leveraging the funding up front as is done with SRF. Quick discussion on financial future of SRF which, based on original proposal, was set to sunset in coming years once full complement of funds had been released by federal government. Construction and fiscal inflation not included nor new regulatory impacts that drive up need.

• Ms. Frontiera expressed concern that fertilizers and pesticides came off of the list of possible funding sources and is very concerned about toxins and impacts on water quality. Also expressed concerns about the presumptions about public response to options on the table which were echoed by Ms. Nelson who suggested a poll to the general public.

Eligibility for Funds

• Chairman Pillsbury raised concern that if the entry requirements are absolutes, few cities/towns will qualify. Possible alternatives discussed include a requirement for communities to have started the work towards requirements and use the funds to get the rest of the way there, suggestion to look at Green Communities Act for possible language.

• Discussion around concept of regionalization. Ms. Smith raised concerns that targeted, specific criteria for incenting are necessary to ensure mitigating factors and potential drawbacks are also considered.

• Discussion around the use of the term “regionalization” as one of the additional point earning options. Resulted in the consideration to replace it with “watershed planning approaches” or “regional coordination” to assure that a regional entity is not assumed but that towns will be encouraged to work more closely together.

• Proposal to include affordability/economic justice incentives

Distribution of Funds

• General agreement to send funds to WPAT for investment

o Concern that managers understand that the program will be different than SRF

o Concern about amount of policy overlay

• Menu of options grows to include:

o 0%, 1% and 2% loans using separate eligibility than SRF criteria

o Grants for consent decree community

o Targeted grant for planning/regionalization

o Debt service

o Adding funds directly into existing SRF account for programs that qualify under SRF criteria

o Ms. Smith presented additional handout with further suggestions for distribution of funds

• Mr. Jasset was concerned that perhaps a 0% loan is not enough of an incentive, noting that none of the communities on the Cape have yet taken advantage of them. Mr. Niedzwicki discussed that several towns are in line for the funding, that the projects are coming down the line. In some communities without any infrastructure, however, some funding for initial start up would likely be helpful or perhaps necessary.

• Discussion around retroactive debt service option. Mr. Zuniga explained that it would be very difficult to implement based on the way compounding impact on loans and that the bond indentures may not allow. Chairman Pillsbury suggested that loan forgiveness could perhaps be built in going forwards with funding to towns from Blue Communities Act paying directly for debt service.

• Mr. Jasset suggests meeting with Jay Gonzalez of ANF to discuss debt reduction for cities and towns, concerned that cities and towns be abile to reduce principal costs and eliminate debt

General agreement that the current proposal is based on having rates and that there needs to be an option for those without any existing infrastructure that want/need to install and will require assistance. This discussion, highlighted in one of the handouts, was tabled until Dr. Cole can attend the next meeting of the working group.

There was general agreement to meet again in the early fall to come to final agreement when all or most members are present.

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