Getting Ready for Temporary Increases in Water Finance in Georgia
By Stacey Isaac Berahzer
The last year has brought numerous challenges, many of which have financial impacts. But with some of those challenges come opportunities. The fight to curb the spread of COVID-19 has highlighted the importance of a well-functioning and well-funded water sector. The economic stimulus packages that the pandemic has spawned include opportunities for new careers as the nation’s infrastructure gets an upgrade. In the case of water infrastructure, the upgrade is much needed in many cases. This post outlines some of the new financing options that Georgia local governments can tap into for water projects. It also discusses how water utilities can get their ducks in a row to receive these funds.
Household Water Bill Assistance
A December 2020 funding package included $638 million in funding to help customers with their water and wastewater bills. The new program is being called the Low-Income Household Water Assistance Program (LIHWAP). The appropriation language states that the money will go to “owners or operators of public water systems or treatment works to reduce arrearages of and rates charged to such households for such services.” The water program is expected to be similar to an energy program that has been around since 1981. In both cases the funds come through the Department of Health and Human Services (HHS). Currently, the energy program is administered at the state level by regional “community action agencies.” The water program in Georgia will likely be run through these agencies as well. No LIHWAP funds have reached customers yet. Since HHS is less familiar with water and wastewater utilities, and the community action agencies also have less experience with water, utilities should be on the alert for what they need to do to receive these funds. The Georgia Community Action Association provides a list of the groups in the state. Current indications are that water and wastewater utilities will need to enter into an agreement with the state in order to receive these funds. Some level of tracking and reporting by the utility will also be required. The funds need to expended by the end of 2023.
LIHWAP may be a short-term program that addresses the pandemic and then disappears. But many water stakeholders have wanted a program like this for decades. So, there is some discussion about the program becoming permanent, but that is still to be determined. Regardless, a March Act added an additional $500 million in funding to the program. So, even if it is short-term there is now over $1 billion in LIHWAP funding for all the states. The specific portion of funding that will come to Georgia is based on the proportion of households at or below 150% of the federal poverty level, and the percentage of Georgia households spending more than 30% of their income on housing, relative to other states.
Infrastructure Funding
The March American Rescue Plan Act of 2021 involved much more than LIHWAP funds of course. The $1.9 trillion economic stimulus bill covers many areas beyond water. The state of Georgia is estimated to receive almost $8.4 billion. The Metropolitan North Georgia Water Planning District estimates that $1.8 billion will go to its local governments alone. A breakdown of how much individual cities and counties will receive is being tracked by the U.S. House Oversight and Reform Committee, and the Georgia Municipal Association links to a copy of it here. This money that will show up in local government bank accounts in the next couple of months can be used for many different government functions. But water and wastewater infrastructure are specifically called out as one of the four “bullets” in the text: “to make necessary investments in water, sewer, or broadband infrastructure.”
It appears that it will be up to the local government officials on how to allocate this money among their different government functions. While details are dribbling in, water departments can assemble project information from their asset management and capital improvement plans to start making the case for their highest priority projects. In regular times, there are very limited ongoing grant opportunities for some types of water projects, with low-interest loans being more common. So, this funding represents a unique opportunity to address historic water sector issues, such as catching up on deferred maintenance. It is also a chance to get ahead on emerging issues such as lead service line replacement (LSLR).
LSLR is an issue that is gaining more attention. The next Drinking Water Infrastructure Needs Survey and Assessments (DWINSA) will include an estimate of the number of public and private lead service lines as well as an estimate of the costs to replace all lead service lines. This can represent a huge undertaking for utilities. So, these stimulus funds may be a good opportunity to start addressing this issue.
The funding described above is temporary. For more established, stable, long-term funding options see this table that summarizes the state and federal programs in Georgia. Water utilities should also be aware that many of these familiar programs are also receiving a significant increase in allocations this year as part of the stimulus.
Taking Action
As inaugural financing programs are quickly being developed to stimulate the economy, guidelines are trickling in slowly. But the water utilities that wait until all of the guidance has been released before starting to take any action will probably be left out. While there are many worthy projects outside of water, the pandemic has helped to underscore this sector, creating an important opportunity to implement projects. Where the utility serves multiple cities/counties, conversations with these stakeholders should begin soon. On some types of projects, non-profit partners may be a possibility so it is important to start communicating with community action agencies etc. To increase their chances of securing these funds, water utilities will do well to get organized now.
This is part of a blog post series funded by the Georgia Environmental Finance Authority (GEFA).
Disclaimer: The opinions of the writers should not be considered legal advice or endorsement by GEFA.
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