By Jason Brooks, P.E.
Because infrastructure lies underneath the surface, most people only become aware of its necessity when something goes awry. However, a recent bill introduced in the U.S. House of Representatives intends to make it easier to fund much-needed water infrastructure projects.
Reps. John J. Duncan Jr. (R-Tenn.) and Bill Pascrell Jr. (D-N.J.) recently introduced the Sustainable Water Infrastructure Act of 2014, which removes water and wastewater infrastructure projects from the Private Activity Bond (PAB) volume cap for 20 years.
This would be an important funding shift because PABs are a type of financing that allow local governments to offer tax-exempt bonds to private investors to help fund large public projects. Removing the cap limits allows local governments to actively seek vital funding for water infrastructure repair and replacement projects.
Much of our nation’s infrastructure for drinking water, wastewater and storm water is now more than 100 years old, and the problems caused by this aging system are going to increase in costs over the next few decades. Weakened infrastructure can lead to water main breaks, pipes bursting and significant expenditure for local governments. In fact, the U.S. Environmental Protection Agency (EPA) estimates that a $682 billion investment in water infrastructure will be required over the next 20 years to continue to meet safe drinking water and sanitation standards.
Under the current PAB structure, the state gets an annual quota of tax-exempt PAB bonds that it can issue each year. All public projects fall under this cap, which is tied to population. In 2014, states received the larger sum of either $100 per capita or $295.83 million. Due to its structure, this annual cycle generally precluded long-term, multiyear projects – the type that tends to encompass water infrastructure. Removing water infrastructure projects from the cap will allow governments to more readily fund these long-term projects using private investment.
A similar bill was introduced in 2011, but was referred back to the committee for deliberation. The new version of the bill will come up for a vote for a second time during the 2014-15 congressional term and has received a wide range of industry support, including the National League of Cities, Sustainable Water Infrastructure Coalition, Associated General Contractors of America, American Council of Engineering Companies, Associated Equipment Distributors and Laborers International Union of North America.
If this legislation passes, water infrastructure projects will join a list of other types of projects already exempt from the volume caps, including airports, high-speed rail and waste disposal. The legislation could cost approximately $354 billion in lost tax revenue, but could create 1.4 million industry jobs and leverage $50 billion in private capital investment.
Duncan has urged fellow representatives to make water infrastructure projects a priority, saying: “If we do not start investing in our water infrastructure now, it is going to cost our nation many billions more in the future.”
Aging infrastructure is a major issue that will greatly affect the future of our communities. At LDA Engineering, we work with our clients, many of them local governments and utilities companies, to make sure they know the condition of their infrastructure and understand the risks that accompany aging pipes. We are on the verge of a significant crisis in hydraulic infrastructure in our country, and a proactive approach is required to make sure our drinking water remains safe.
For more information on the Sustainable Water Infrastructure Act of 2014, click here.