WASHINGTON, DC, Sept. 19, 2014 -- Today, the National Association of Water Companies (NAWC) announced its support for the report, "Public-Private Partnerships: Balancing the Needs of the Public and Private Sectors to Finance the Nation's Infrastructure," released by the Transportation and Infrastructure Panel of the U.S. House of Representatives.
In the wake of last week's WaterWorks Initiative by the Value of Water Coalition and President Obama's Infrastructure Investment Summit at the U.S. Treasury Department, Michael Deane, NAWC executive director, considers this report a strong example of the kind of collaboration necessary to dramatically transform the nation's aging water and wastewater infrastructure.
"This report calls attention to the unique advantages and opportunities for public-private partnerships (PPPs) to accelerate investment and promote operational efficiency for water and wastewater infrastructure projects in the public sector."
Deane also agreed with the report's view that Congress needs to "appropriately incentivize" a private water partner to ensure the long-term sustainability of water and wastewater systems, noting that federal limitations on tax-exempt bonds for public-private water and wastewater projects must be removed to give municipalities certainty that private activity bonds (PAB) are available for innovative water projects.
"The use of PABs spurs capital investment in public projects for upkeep and construction, and investors prefer PABs because interest accrues tax-free," Deane said. If Congress and the Administration were to remove the volume cap for PABs on water and wastewater projects, it could support up to 142,500 jobs with $400-500 million in increased state and local tax revenue.
Private sector capital is a viable option to finance water and wastewater infrastructure, and more municipally-owned water and wastewater utilities should factor this into future planning. Today, more than 2,000 communities across the nation benefit from water-related PPPs. Two current water-related partnerships cited in this report include:
- Bayonne, New Jersey: The Bayonne Municipal Utilities Authority (BMUA) signed a 40-year concession agreement with United Water (and investment firm KKR) for its water and wastewater systems. In this concession agreement, BMUA retains ownership of assets and responsibility for setting rates, while the private entity operates the system, invests $107 million and retires $130 million of debt.
- Rialto, California: The city of Rialto signed a 30-year concession agreement with Rialto Water Services LLC, in which Rialto retains asset ownership, while the private entity oversees a $41 million investment in capital improvements and provides operation and maintenance of the water facility.
"In addition to providing access to capital and flexible financing models," Deane said, "the private water sector also brings innovative solutions to complex water and wastewater infrastructure challenges by collaborating with the public sector to share expertise, discipline and accountability for a project."
See also:
"NAWC commends introduction of bond cap removal bill"
"World Water Day 2014: NAWC executive director makes statement about day's importance"
About the NAWC
The National Association of Water Companies (NAWC) is the voice of the private water industry and the organization exclusively representing this group of quality water service providers, innovation drivers, creative financiers and responsible partners. For more information, visit NAWC.org.
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