Commonwealth of Massachusetts
Water Infrastructure Finance Commission Meeting
March 1, 2011
In a meeting duly posted, The Massachusetts Water Infrastructure Finance Commission convened at 10 am in the Senate Reading Room at the State House.
Members Attending: Senator Eldridge; Representative Dykema, Philip Jasset, Becky Smith, Robert Zimmerman, Paul Niedzwiecki, Bruce Tobey, Dave Terry(for DEP), Martin Pillsbury, David Riedell (for the Treasurer).
Also attending: Sydney Schneir, Jonathan Goldberg, Marianne Connolly (MWRA), John Clarkeson (EEA), Jennifer Pederson (MWWA), Stephen Estes-Smagiass (MWRA), Sally Schnitzer, Leah Robins, Ann W. Rhinelander, Garret Bringer (Cape Cod Times), Tom Philbin (MMA).
Senator Eldridge opened the meeting and welcomed the members and guests.
The minutes for the February 8 meeting of the Commission were approved.
Senator Eldridge asked Becky Smith to introduce the two guest speakers. Dominic Kulik and Edward Clerico represent a sustainable water company, Natural Systems Utilities, whose mission is to “meet human needs for safe, reliable water while preserving and protecting freshwater resources, habitat, and biodiversity”.
Mr. Clerico spoke first, emphasizing that their approach has a proven track record of developing and deploying innovative infrastructure that is based on natural systems and processes while at the same time delivering financially sustainable systems as long term asset managers and utility operators.
Mr. Clerico stated that this is a story of innovation, not a story of a specific technology. In an industry that can be risk-averse and less “fluid,” innovation can have barriers, especially when it comes to underwriting the risk posed by new ideas. Much was learned during the 1990’s when the Green Building industry developed, and those new ideas moved into the mainstream. This company is trying to build on that experience, but in a “water-centric” milieu.
Natural Systems Utilities is water-centric. The idea is to look at every aspect of the water and waste water cycle, and to identify a holistic approach that considers opportunities for using efficient natural systems, water reuse, and organic byproducts, while understanding their relationships to energy, in order to minimize water extraction, minimize energy consumption, contribute to water and soil health, and support livable, healthy, and sustainable communities.
The financial model is flexible and integrated, taking into consideration the project-specific constraints and the appropriate business model for success. So, for example, a project might use some private funding where there is high risk, with a long term operating agreement on public or private property. Each project is individually planned, optimizing efficiency via integrated benefits, and improving reliance by reducing the burdens on public entities.
Mr. Clerico and Mr. Kulik presented slides showing various examples of systems that are up and running across the country. Rehabilitated buildings in New York City, Gillette stadium in Massachusetts, and a more rural plan in upstate New York were all mentioned.
Mr. Kulik stated that the company tries to be “triple bottom line” oriented – good for the environment, good for the pocketbook, and energy-saving.
Talking specifically about financing, the approach is to balance risk versus reward, and leverage the opportunities. Using grants and loans for pilot projects, revenue mechanism, appropriate regulatory controls, and effective partnering mechanisms, one can encourage innovation to scale. For example, in the case of low income housing, the federal low income housing tax credit can be used to give incentives for private equity to develop affordable housing for low income Americans. There are many other examples of funds that can be leveraged.
The goal is to provide green jobs, higher efficiency, stronger resilience, lower costs, and sustainable infrastructure.
The Commission asked a number of questions. Mr.Tobey and Representative Dykema both emphasized that this Commission is looking at identifying changes to regulations and statutes that might make it easier to achieve these goals. Are all these approaches possible now, under current regulation? Or can Mr. Kulik and Mr. Clerico suggest some regulatory or statutory changes that are required? Mr. Kulik said that he would try to suggest some items in the coming weeks.
Senator Eldridge asked about political issues. What has been the reaction to these types of solutions in other states? Answer: Communities have generally been happy with the creation of successful, sustainable, renewable assets.
Mr. Pillsbury stated that Massachusetts has some good examples of water reuse and green energy being used. But I would like some additional information about how nutrients are part of the solution. Answer: It depends a bit on scale. I know here in Massachusetts you have huge nutrient issues on the Cape. I would look at the issue on a life cycle basis. We want to avoid chemical treatment, and look at how we might take advantage of nutrients to create products such as ammonia. We want to mimic what nature does. We have seen the irony of eutrophication in waterways near to dying wetlands. We need to look at finding a new balance.
Mr. Pillsbury: do you look at “trading”? Answer: Chesapeake Bay is trying this.
Mr. Tobey: What kinds of roadblocks do you run into? Answer: this is a very challenging problem. The Green Building movement has created a climate that opens up opportunities, and we find many good opportunities where cities are doing green zones. The driver is sustainable urban development, but this “inadvertently” opens up additional public benefits. We have often found support with unions. Fire chiefs need to be part of the solutions. Strong leaders are needed.
Mr. Zimmerman: If we want to mimic nature, don’t we need a city or state to start on that from “A to Z”? Do you know of any place where this is happening? In my home town of Littleton, we are trying to do a large overlay district from “A to Z”. Answer: So far, I would say that we have done projects from A to Z but rarely do governments work that way. I am comfortable with that, even though we are not solving all the city’s problems at once. It is an evolving technology and there is a continuum of innovation. We keep learning.
Mr. Kulik noted that the key is to keep looking at the underlying water balance. Externalities need to be viewd as ASSETS. Wetlands are unbelievably rich and valuable to society. We need to optimize and support them. Hawaii is the only state that I can think of where there was an attempt to take on the issues more systematically.
Getting to the Final Report
Ms. Schnitzer reminded the Commission that our final report is due in June. Between now and then, the Commission needs to finish submitting its Working Group Reports, and the full Commission must come together behind specific recommendations. She passed out a spreadsheet that includes many of the recommendations being suggested by the working groups, and asked that Commissioners come to the next meeting prepared to identify any glaring omissions or conflicts in the “big picture”. Working Groups were also asked to complete their work this month, and circulate drafts to the Commission. We will start to set up meetings approximately once every three weeks until the report is done.
Updates from the Working Groups
Working Group One: Lee Murphy from the state of Pennsylvania met with the group to discuss the Gap Analysis part of the puzzle. We are looking at various ways to utilize the data types that we do have.
Working Group Two: Individual members are working on drafts of specific topics. They will meet later in March to put those together.
Working Group Three: This group is meeting later today.
Working Group Four: This group had a meeting last week with a phone-in interview with the Commissioner of Public Utilities in Connecticut. Connecticut has a larger number of private water companies that provide water for communities, so the rate setting structure is different.
Mr. Jassett suggested that the Chair write a letter on behalf of the Commission to our delegates in Washington, concerning proposed cuts to the EPA Clean Water and Drinking Water funds. It was so voted.
The meeting was adjourned. The next meeting will be on March 22.