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President launches Water Finance Center and proposes new form of Municipal Bond to spur investment in Drinking Water and Wastewater System Improvements

  • Time:Tuesday, 20 January 2015 00:00
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Last Friday, the Obama Administration announced an important step to facilitate much needed private sector investment in the nation’s drinking water and wastewater treatment facilities. The newly created Water Finance Center at the Environmental Protection Agency will help spur public private partnerships and help state and local governments to get more projects off the ground. The Administration also announced proposed tax incentives so that state and local governments can work more easily with the private sector to get projects underway, including creation of a new municipal investment vehicle, the Qualified Public Infrastructure Bond (QPIB). In the United States alone, we lose about 20% of our drinking water to leaks. Not only is there a significant cost attributable to the lost water, but also a significant energy cost in the production of that lost water. Every day there are 700 new leaks in US water systems. Repairing those leaks costs $2.6 billion.

The infrastructure is 40–80 years old. The US Environmental Protection Agency’s Drinking Water Needs Survey and Assessment estimates $384 billion will be needed for US drinking water infrastructure and repairs by 2030. Of that, $247.5 billion is needed for distribution and transmission repairs and improvement, and $72.5 billion is needed for water treatment.

It is no secret that municipalities are facing significant funding challenges on both water-related and other projects. Nationwide, municipalities, cities and states are actively exploring how to use innovative financial tools such as P3s to funds projects. The Water Finance Center should help. It will help bring private investors together with project sponsors.

Education is key to Success

P3s are already being used successfully, both here and abroad, but we believe one of the impediments to more widespread use is education. There exists a level of uncertainty and, in some cases, distrust as private investors begin to have an ownership interest in municipal utilities, even though they are working well in many cases. In New Jersey, KKR completed the first private equity investment in a municipal water system. It partnered with United Water to commit to over $300 million of funding for the city of Bayonne. In the UK, seven of the ten water utilities in the country are privately owned. India and The Asian Development Bank have successfully created a joint initiative to aid in the formation of P3 structures in the water sector. The experience and knowledge of the partners in these projects can be tapped to educate other participants.

Here is a link to the press release from the White House: http://www.whitehouse.gov/the-press-office/2015/01/16/fact-sheet-increasing-investment-us-roads-ports-and-drinking-water-syste

Last modified on Time: Thursday, 09 June 2016 17:15