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HomeMy WebLinkAboutmemo and letter to Baucus re WIFIA1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Craig Woolard, Director of Public Works Chris Kukulski, City Manager SUBJECT: Letter to Senator Max Baucus regarding the Water Infrastructure Finance and Innovation Act pilot program as part of the Environment and Public Works Committee’s draft Water Resources Development Act legislation MEETING DATE: February 4, 2013 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the City Commission to sign a letter to Senator Max Baucus supporting the Water Infrastructure Finance and Innovation Act pilot program. BACKGROUND: A Water Infrastructure Finance and Innovation Act pilot program is being considered as part of the Environment and Public Works Committee’s draft Water Resources Development Act legislation. This program could provide the City of Bozeman with low-cost financing options for future large water infrastructure projects. FISCAL EFFECTS: This program would offer low cost financing options for large water infrastructure projects. ALTERNATIVES: As suggested by the City Commission. Attachments: Letter CITY OF BOZEMAN Bozeman, Montana Office of the City Commission Street address: 121 N. Rouse Ave. Phone: (406)582-2320 Mailing address: P.O. Box 1230 Fax: (406) 582-2339 Bozeman, Montana 59771-1230 TDD: (406) 582-2301 January 30, 2013 The Honorable Max Baucus United States Senate 511 Hart Washington, DC 20510 Dear Senator Baucus: The City of Bozeman deeply appreciates the inclusion of a “Water Infrastructure Finance and Innovation Act” (WIFIA) pilot program as Title X of Environment and Public Works Committee’s draft Water Resources Development Act (WRDA) legislation. Just as the committee’s WRDA bills have historically enjoyed strong bipartisan support, we believe that well-crafted WIFIA legislation that creates jobs as well as promoting public health, fire protection, environmental protection, and economic growth will attract similar widespread backing. A recent study commissioned by the American Water Works Association (AWWA) has found that restoring our existing drinking water systems and expanding them to serve a growing population will cost at least $1 trillion in the next 25 years. Wastewater infrastructure needs roughly parallel those for drinking water. In addition, many communities face serious affordability problems as they struggle to address the twin challenges of crumbling infrastructure and additional regulatory requirements. Studies of water infrastructure finance options have identified a WIFIA as a particularly innovative and effective finance tool, which is important in the current fiscal climate. As you know, WIFIA would offer low- cost financing to major water infrastructure projects, and require loans to be repaid in their entirety to the U.S. Treasury. This approach will help local water systems stretch their dollars further, with limited or no long- term federal budgetary impact due to the historically low default rate of local water and water utilities. In addition, under the provisions of the Federal Credit Reform Act, a WIFIA would leverage a large volume of lending for a relatively small federal investment. A WIFIA’s ability to offer loans for large water infrastructure projects is crucial. As you know, even though we don’t have “large” cities in Montana, our water projects can be large in scope and cost. Over the last several years, the City of Bozeman has invested over $40 million in a new water treatment facility and over $40 million in a new wastewater reclamation facility to serve our growing and vibrant community. These projects could have benefitted from the proposed WIFIA program. As Bozeman continues to grow there will be needs for additional large water and wastewater infrastructure projects and having the proposed WIFIA program in place could save our community millions of dollars of financing costs over the life of these projects. Other communities in Montana would benefit as well. Large projects, particularly those costing more than $20 million, are often beyond the means of most drinking water and clean water state revolving loan fund programs, which tend to focus on small to medium-sized projects. We envision WIFIA complementing the existing SRF programs, thus ensuring that communities of all sizes have an opportunity to upgrade their water infrastructure with low-cost financing. In reading the draft, we have some suggestions to make this legislation even more effective. Those are attached. We applaud Sen. Jeff Merkley’s introduction of a WIFIA bill as well and look forward to working with the committee on passage of water infrastructure finance legislation. Again, we commend the Committee on Environment and Public Works for taking these important steps in addressing the nation’s water infrastructure challenges and gladly offer our assistance. Sincerely, Sean Becker Jeff Krauss Carson Taylor Mayor Deputy Mayor Commissioner Cyndy Andrus Chris Mehl Commissioner Commissioner