Infrastructure Funding & Affordability

Infrastructure Funding

There is no issue more central to NACWA’s advocacy than increasing the availability of infrastructure funding for public clean water utilities, which includes increased federal funding to support this critical infrastructure sector.

Originally founded in 1970 as an organization focused on ensuring appropriate distribution of federal construction grant dollars under the Clean Water Act, the Association has maintained a strong commitment to advancing federal clean water funding. At the same time, NACWA has also evolved over the years to recognize the importance of other water infrastructure funding mechanisms including municipal bonds, innovative financing approaches, and public-private partnerships.

NACWA recognizes that discussions of infrastructure investment cannot be divorced from the critical issues related to affordability. The reality is that many local governments and their utilities are facing huge affordability challenges. Some have shrinking rate bases, but even those with growing populations are witnessing increasing segments of their rate base that are unable to afford the rising costs of clean water. In short, higher costs for water infrastructure investments are disproportionately impacting the poorest segments of a given community’s populations.

NACWA has developed a philosophy that guides our advocacy on infrastructure funding and affordability issues. At the same time, we routinely produce, and monitor documents related to these critical topics. The Association had significant success in securing increased clean water funding in the Fiscal Year (FY) 2018 federal budget and is working hard to build on this success for 2019 and beyond.

Affordability

NACWA, along with the American Water Works Association (AWWA) and the Water Environment Federation (WEF), published a report in April 2019 proposing a new approach to evaluating affordability and financial capability. The report,Developing a New Framework for Household Affordability and Financial Capability Assessment in the Water Sector, is now available.

Over the last year, NACWA, AWWA, and WEF collaborated to fund a comprehensive evaluation of how the US Environmental Protection Agency (EPA) can best implement the recommendations made by the National Academy of Public Administration’s (NAPA) Developing a New Framework for Community Affordability of Clean Water Services report published in 2017. The NAPA report included a number of recommendations for how and why EPA should revise its existing methodology for evaluating affordability across its Clean Water Act and Safe Drinking Water Act programs.

NACWA, WEF and AWWA’s final report includes an alternative framework to the current reliance on median household income as a singular measure of affordability in regulatory decision-making. The report suggests implementing a two-part metric to capture both per-household burden of water service and the level of economic stress on households in a community. These metrics can be calculated using readily accessible data and will reflect both the economic burden that relatively low-income households in a community face and the prevalence of poverty in the community.

The report also outlines a new approach to the financial capability assessment, essentially a cash flow forecast for the impacted community: how much does it need to spend to meet its statutory requirements and at what pace can it spend that money without putting an undue burden on the households it serves.

NACWA and its partners will be working with EPA moving forward as the Agency updates its affordability guidance and documents, hopefully using input from the water sector report to guide its process.

Infrastructure Funding & Affordability

Infrastructure Funding

Affordability

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