Water Infrastructure Finance Commission
Working Group 1: Current Water Infrastructure Needs and Long Term Challenges
February 3^rd, 2011
State House, Senate Reading Room
Approved

In a meeting duly posted, Working Group One (Current Water Infrastructure Needs and Long Term Challenges) convened at 2pm in the Senate Reading Room of the State House.

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

Also attending: Ralph Jones, Chi Ho Sham, Michelle Young of Cadmus, and Laurie Potter all from Cadmus, Jen Pederson, Leah Robins, and Brendan Jarboe.

Representative Dykema, Chair opened the meeting , welcomed members and guests and turned the floor to representatives from Cadmus.

Ralph Jones, CEO and founder of Cadmus

Chi Ho Sham manager of water group at Cadmus

Lauri Potter, 20 years experience of working with EPA and looking at water systems in all 50 states

Michelle Young, 20 years experience with designing and implementing EPA needs surveys

The data that is currently available looks at infrastructure need only and does not include operation and maintenance costs:

• EPA surveys are not designed to be a picture of entire need but rather the need that the SRF is allowed to fund.  EPA surveys are a bottom up approach that involves talking to individual systems to get documented need.
• AWA surveys are a top down survey showing miles of pipe, generally resulting in a higher amount of need.
• NACWA and GAO also have national estimates of need, but these may not be broken down into useful components for MA report.

AGap Analysis which accounts for infrastructure costs and operation and maintenance (O&M) is more likely the type of number that Group 1 is looking for.  A good estimate of infrastructure costs can likely be obtained by combining the information we already have available. 

• Steve Albee (asset management) and Dave Travers (DW) at EPA have done some work on establishing O&M costs

Restorative Systems Options

Bob Zimmerman discussed how he was interested in also looking at how much it would cost to implement new, more restorative systems rather than continuing to implement the current types of systems in place.  There was discussion about including dollar amounts for how these other types of systems could reduce costs in other types of problems (ie road flooding, additional water treatment, etc), stranded costs would need to be addressed. 

There was a proposal to include a number showing the cost of traditional infrastructure/business as usual and then showing a menu of opportunities for how to reduce the costs and show the motivators to encourage pilot programs.

Establishing Cost

Rep Dykema questioned, considering our 20-25 year time horizon of investigation, which of the following are generally included in considerations of cost:

• Maintenance usually assume .5% pipe replacement UNLESS documented in capital improvement plan
• Economic growth usually not included except that when replacing old pipes could increase size OR could assume current growth trend continues
• Regulatory changes stormwater is still an acknowledged unknown when making calculations, may also need to change to include other chemicals in 3-4 years

4 pillars of Water Infrastructure

• Full cost pricing
• Alternatives/innovative conservation
• Watershed approach
• Asset management

Discussion of the Pennsylvania Approach

Pennsylvania Approach required large amounts of time to create and then collect data from systems across the state. 

Water:                                  estimated need came out with similar number to EPA

Waste Water:                    larger gap

Funding for Survey:       Surveys were developed and collected by Cadmus.  Cadmus was funded jointly by PN’s DEP and EPA.  Cadmus is able to help states do some particularization for some objectives, re-funnel money through federal contract.

Alternatives to Pennsylvania Approach:

Clean Water:                     EPA survey data is strong and could be edited to make more applicable. 

Drinking Water:              -Exact raw data available for large

-Medium systems have stratified data available

-Small systems have a national sampling that could be edited, needs are often fairly similar

Storm Water:                    Pilot program towns in MA have data that could be extrapolated out for the rest of the state, likely make a range for potential storm water costs

Small systems in MA are likely mobile home locations, where infrastructure is not likely to be a huge cost.  Therefore it is not as large a concern that national data would be used to establish costs.

Back of the napkin estimate of calculation to arrive at a number similar to Pennsylvania:

• Assume needs survey underestimated by x%
• Add operation and maintenance costs
• Add debt service

Discussion of Stormwater

Phil Jasset questioned the wide variation of category 6 storm water needs in the last EPA needs survey, noting region 2’s very high numbers.

• It could be that New Jersey and other states already have higher requirements for stormwater management.  All numbers do have to be evaluated.  There was a general acknowledgement that MS-4 category are changing the picture for storm water dramatically and likely using category 6 will not be the best way to evaluate our gap analysis.

Source water preventative approach discussed as a possible cost saver, noted that the program is voluntary and that some decentralized approaches have potential to impact drinking water.

Discussion of Water and Energy

Massachusetts had some of the most innovative renewable energy and green projects that were funded by the stimulus bill, however many opportunities for cost saving are not realized because there is not up front funding.  Retrofitting buildings to contract roof space for solar panels would not qualify for SRF despite the costs savings that would ultimately result.

Discussion of EPA future plans

Storm water questions:

When is guidance coming?

                Phil expects 2015-18 implementation statewide

                Bob expects that in 4-5 weeks private property regulations will likely come out, lots of debate centrally on MS-4

Phil proposes establishing a separate subcommittee on stormwater

Future Funding possibilities:

SRF grant program not likely to return, loans will remain the norm

Likely some money from federal government, but likely state and local governments will take increasing burdens

Next steps

Broad agreement that a strong, defensible number is an important club to push for changes advocated for in the commission report. 

Next meeting of the working group is set for February 22^nd at 1pm to hear from Lee Murphy of Pennsylvania.  From that meeting’s discussion the working group will have the opportunity to consider all options for how to move ahead in establishing a dollar amount for infrastructure needs.

Meeting adjourned at 3:20pm.