Water Infrastructure: Cities Shouldering Most of the Cost

By: Bill Eller

Water utilities are struggling with water loss, aging water infrastructure and rising maintenance costs across the country.

Bill Eller, Senior Vice President of Business Development at HomeServe, recently interviewed Carolyn Berndt, National League of Cities Legislative Director of Sustainability, about the unique challenges facing water utilities.

“Water loss is an inefficiency in the system, and, beyond the loss of the actual water, it also means increased energy use for the utility to pump water that isn’t getting delivered to a paying customer,” she said. “This boils down to extra costs for the utility and, ultimately, the rate payers.”

Water loss is linked to our aging infrastructure, with much of our infrastructure dating back to shortly after World War II. Some of it dates back more than 100 years and even some Civil War-era plumbing has been found in modern times.

Why is so much of this vital infrastructure so old? Local governments are making significant investment in local infrastructure, but the federal government is not matching the level of commitment.

“Local governments are responsible for funding 95 to 98 percent of the investments in water and sewer infrastructure,” Carolyn said. “And local governments have invested more than $2.3 trillion dollars between 1993 and 2019 – and that is not adjusted for inflation. In 2019 alone, local governments spent $134 billion. And, even with this significant investment by local governments, many communities struggle to upgrade their drinking water and wastewater systems.”

In addition to funding most of the water and wastewater infrastructure improvements, local governments are limited in how they can raise money for those improvements. Smaller systems also have challenges in applying for federal funding and meeting federal grant requirements.

“If you look at the infrastructure funding gap, the federal loan and grant assistance to local governments has continued to decline in real dollars over the past decades for water infrastructure,” Carolyn said. “This really means that local governments are spending more of their own funds for water infrastructure improvements, and, again, because it’s funded largely from ratepayers and municipal bonds, this really falls on those ratepayers in terms of the cost.”

During that same 1993 to 2019 period, the federal government appropriated $2 billion annually for the Clean Water and Drinking Water State Revolving Funds, so the passage of the bipartisan infrastructure bill, with its billions set aside for drinking water and wastewater infrastructure and lead water line replacements, represents one of the largest federal investments in the vital infrastructure.

“The White House has resources to help local leaders and cities, towns and villages navigate the funding opportunities under the bill and to understand what the programs are, the timeline and who to contract,” Carolyn said. “They released a playbook specifically for small and rural communities to identify the programs and sources of funds with specific set-asides for rural communities and some of the key flexibilities and benefits for rural communities. The NLC is going to be there, every step of the way for local leaders to help them find the programs that best suit their communities and maximize and leverage this historic opportunity.”

The NLC has partnered with Bloomberg Philanthropies to create a local infrastructure hub to aid small and mid-sized cities in applying for federal grants.

Learn more about the water infrastructure, affordability and scarcity challenges facing local governments and the innovations that can help address these obstacles in Bill and Carolyn’s 20-minute interview. To learn more about our programs, contact us.