WG4 May 17 2011 Minutes

Commonwealth of Massachusetts
Water Infrastructure Finance Commission
Working Group Four
State and Federal Finance and Investment Practices

Approved Minutes:  May 17, 2011

In a meeting duly posted, Working Group Four (State and Federal Finance and Investment Practices) convened at ten am in the Senate Reading Room of the State House in Boston.

Members Attending:  Martin Pillsbury, Peter Shelley, Phil Jasset, Bruce Tobey, Tom Tilas, David Reidell (for the State Treasurer), Becky Smith

Guests:  David Cole, Steve Long, Valerie Nelson, John Clarkeson, Sally Schnitzer, Brendan Jarboe, Nate ? from the Water Pollution Abatement Trust

The group was called to order by Mr. Pillsbury, who noted that this meeting is a continuation of conversations about a “Blue Act” modeled after the Community Preservation Act.  The goal is to see if the group can come to consensus on various aspects of the approach.

Mr. Pillsbury gave an overview of the “Blue Act” idea – briefly, that the state would designate a sustainable revenue source (a charge on rates, a tax, a fee) to support local water infrastructure projects.  Communities would be required to meet certain program requirements (perhaps items such as full cost pricing, enterprise funds, capital improvement plans, asset management, sustainable best management practices for water management) in order to participate.

Today’s conversation is to try to reach consensus about how to distribute funding, and how the program might fit with the existing SRF program.  For example, the money could be loaned through the existing SRF funds, but at a lower or zero interest rate in order to incent certain types of investments.

Can the group suggest some principles or policies that might inform us as we move forward?

Some of the items put on the table included:

  • It was suggested that as a general concept it makes sense to  borrow and pay debt service to  cover the cost of a long term asset, rather than
  • Does it make more sense to use grants for planning and design, which are not long term assets?
  • Can we use various SRF levels (0%, 1%, 2%) to incent certain things, like sustainable projects, watershed-based projects, or projects that enhance affordability for low income customers?
  • It was pointed out that as we use lower interest rates, we reduce the leveraging ability of the SRF
  • Should programs benefit towns that don’t step up themselves to address infrastructure issues?
  • Should the funding be used to address the primacy issue?
  • Will there be an administrative fee?
  • How do we deal with communities that do not have rates?

The Working Group had a discussion about some of the pros and cons of spending the money on “experimental” or “innovative” projects, or decentralized projects that might serve fewer individuals.  This gets back to the issue of risk that the Commission has wrestled with in the past.

Mr. Tilas suggested that the state fund an “LSP” type program to prove the worth of innovative approaches.  Mr. Shelley noted the UNH stormwater program as a model for innovation.

It was agreed that the next step for Working Group Four is to meet with members of Working Group One to see what the size of the Gap is.

Also, Mr. Tilas and Mr. Tobey would like some time on an upcoming agenda to discuss primacy and how taking primacy could save money in the long run.

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