1. Financing Climate Resilient Water Infrastructure Sanjiv K. Sinha, P. E
Financing Climate Resilient Water Infrastructure Sanjiv K. Sinha, P.E., Ph.D. Webinar – Great Lakes and St. Lawrence Cities Initiative & Mayors Innovation Project
Greeting. Thank Yous.
Intro to individuals
The assignment requested by Pittsburgh requires a diverse set of skills, and experienced professionals that can look beyond traditional public works financing and delivery. The ECT Team bring those skills to Pittsburgh by:
Experience in identical assignments
Agnostic to financing methods but able to evaluate various financing set ups for least cost
Recognition of the “municipal view” of the challenge
Unbiased - Unencumbered by expectations of being the ultimate delivery contractor.
February 21, 2019

2. P3GreatLakes: A Team Focused on Alternative Delivery/Financing Frameworks

3. Outline Status and needs Alternative financing frameworks
Status of water infrastructure
Past funding levels
Needs
Resilience impacts
Federal programs: SRF and WIFIA
Alternative financing frameworks
Rating agencies, Environmental, Social and Governance (ESG) criteria, resilience, and the future
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset

4. Water Infrastructure: Diversity and Needs

5. Water Sector Diversity
Water Resources
Sector Challenges and Considerations
Funding sources
Affordability issues
Aging infrastructure/deferred maintenance
Resiliency
Operational efficiency
Regulatory requirements
Life-cycle asset management
New technologies and green infrastructure
Financing and delivery constraints

6. ASCE’s Infrastructure Report Card
Estimated needs at over $3.6 Trillion by ($4.7T by 2025) just to keep pace with GDP (OECD/WEF).
Every dollar of deferred maintenance costs taxpayers $4-5 in future capital expenditures.
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: ASCE Infrastructure Report Card,2017

7. Clear Need for Investment in Resilient Water Infrastructure
$472.6 billion
20-year capital need for drinking water
EPA’s 2015 Drinking Water Infrastructure Needs Survey and Assessment (2015$)
$271.0 billion
20-year capital need for wastewater
EPA’s 2012 Clean Watersheds Needs Survey (2012$)
$448 - $994 billion
needed to prepare water infrastructure for the impacts of climate change
2009 estimate from the National Association of Clean Water Agencies (NACWA) and the Association of the Metropolitan Water Agencies (AMWA)

8. Infrastructure Investment Gap is Growing
Public Spending on Transportation and Water Infrastructure, by Level of Government, 1956 to 2014

9. And the Challenges Go Beyond Funding . . .
Infrastructure delivery system is flawed
Limited life-cycle asset considerations
Lack of incentivized performance
Taxpayers and ratepayers deserve a better deal
Alternative finance and delivery options
Pay for performance
Community co-benefits
Of all of the world’s megaprojects, 9 out of 10:
Overrun their budget
Are delayed
Don’t deliver the expected benefits
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: Bent Flyvbjerg, University of Oxford Said Business School

10. Climate Resilient Water Infrastructure

11. Climate Reality The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: “The Midwest Is Getting Drenched, And It’s Causing Big Problems” by Ella Koeze, fivethirtyeight.com

12. Design Challenge
National Oceanic and Atmospheric Administration’s Atlas 14
Provides widely used precipitation estimates for most of the country
How much rain qualifies a storm as a “10-year,” “50-year” or “hundred-year” rainstorm in each area — that is, storms that might be expected to occur only once in each of those timespans
Water infrastructure in Minnesota
Atlas 14 was updated in and released for Minnesota in 2013
Until then the most recent estimates available for Minnesota had been last updated in the ’70s => Problem
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset

13. Water Infrastructure Funding/Finance: State Revolving Loan Funds

14. Drinking Water & Clean Water State Revolving Funds: Eligible Projects
Drinking Water SRF
Drinking water treatment
Transmission & distribution
Source water
Finished water storage
System consolidation or creation
Water security
Water infrastructure energy & water efficiency
Clean Water SRF
Wastewater treatment
Stormwater management
Agricultural best management practices
Watershed management
Pollution prevention
Wastewater infrastructure energy & water conservation
Aquifer recharge
Desalination

15. Cumulative SRF Assistance Agreements
$126B cumulative
CWSRF
assistance
$35B
cumulative
DWSRF
Source: Natural Resources Defense Council, 2018 Presentation at Great Lakes Adaptation Forum.

16. Cumulative SRF Assistance Agreements
DWSRF
CWSRF
$473B
drinking water need
$271B
wastewater need
Source: Natural Resources Defense Council, 2018 Presentation at Great Lakes Adaptation Forum.

17. Water Infrastructure Finance: WIFIA

18. The Water Infrastructure Finance & Innovation Act (WIFIA)
Operation since 2017
Provides long-term, low-cost, supplemental credit assistance to creditworthy water and wastewater projects
Can lend money to corporations, trusts, partnerships, joint ventures, Clean Water SRF and Drinking Water SRF programs, and local, state, tribal, and federal government entities,
Limits support to 49% of project cost, with exemptions for certain projects, such as those built in Indian tribal communities
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset

19. Authorized & Appropriated Funding Each Fiscal Year
Appropriated Total Expenses (million $)
Total Amount of Credit Assistance
2015
2016
2017 30
2,300
2018 63
5,500
2019
68a
7,000a
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: “What we have learned in the two years of WIFIA’s existence” by Vedachalam & Lindquist, March 2018, Journal AWWA

20. WIFIA’s Strategic Objectives as Identified by U.S. EPA Are Evolving
FY2017
FY2018
Extreme weather and climate change infrastructure
Included
Not listed
Enhanced energy efficiency
Green infrastructure
Clean and safe drinking water
Repair and rehabilitate old infrastructure
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: “What we have learned in the two years of WIFIA’s existence” by Vedachalam & Lindquist, March 2018, Journal AWWA

21. Distribution of WIFIA Criteria Weights Are Also Evolving
15% 5%
32%
34%
80%
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
34%
Source: “What we have learned in the two years of WIFIA’s existence” by Vedachalam & Lindquist, March 2018, Journal AWWA

22. WIFIA 12 projects selected in first year of program Some examples:
Median cost for large community project = $253 Million
Only one small community project
Some examples:
City of Baltimore planned to receive $200 Mil in WIFIA funds for wastewater treatment upgrade/repairs, and stormwater management systems
Indiana Finance Authority used use SRF balance of $453 Mil, and was able to issue $890 Mil in projects across the state
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset

23. 2019 Omnibus Appropriations Bill

24. Appropriations for U. S. Department of Interior & U. S
Appropriations for U.S. Department of Interior & U.S. Environmental Protection Agency
Clean Water State Revolving Fund — $1.7 billion
Equal to the 2018 enacted level and $300 million above the President’s budget request
Direct 10% of funds to be used for green infrastructure, water & energy efficiency improvements, or other environmentally innovative activities
Safe Drinking Water State Revolving Fund — $1.2 billion
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: Feb Stormwater Newsletter, Water Environment Federation.

25. Appropriations for the U. S. Department of Interior & the U. S
Appropriations for the U.S. Department of Interior & the U.S. Environmental Protection Agency
Water Infrastructure Finance and Innovation Act (WIFIA) Grants — $68 million
$5 million above the FY 2018 enacted level and $48 million above the President’s budget request
Forecasts total potential loan capacity at greater than $7 billion in water infrastructure projects
Directs the EPA to prioritize funding to address lead and emerging contaminants, including PFOA and PFAS
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset
Source: Feb Stormwater Newsletter, Water Environment Federation.

26. Conclusions There is a massive funding gap
Funding gap is only part of the problem
Climate change is exacerbating the challenge of the funding gap
SRF and WIFIA can be further enhanced to address climate resiliency needs
Rating agencies will have a say in how it all plays out
Alternative sources of finance are needed, and are rapidly emerging
The assets of the city remain with the city
The goals for the program are clearly understood and articulated by the city
The program is established with goals that are aligned between the city and the private partner through incentives associated with attaining various goals, and could include workforce development and other social goals, as well as the performance of stormwater control systems
The management of the partnership is controlled by the city, and
The financial benefit to both the city and the private entity is well defined at the onset

27. Water Infrastructure Finance: 2.0

28. ssinha@ectinc. com 734-272-0859 www. P3GreatLakes. Org www. twitter